Just down the road from Owen there is a legitimate tent city - people living rough with nowhere else to live- he likely has no idea it's there.

What country was this Flollo, if you don't mind me asking?

freeride76 wrote:

Just down the road from Owen there is a legitimate tent city - people living rough with nowhere else to live- he likely has no idea it's there.

Lets be real though, being Byron if not directly a lifestyle choice, it would be a result of past lifestyle choices.

DudeSweetDudeSweet wrote:

Flollo- Are you vested in property investment or development of any type?

Not as an investment but I developed my own home where I live now. In my case that meant buying a piece of land in 2013 and then slowly building a house with my own hands (literally). My wife and I went through design (I had an engineer but I told him what to do), approvals, financing (with construction loan + numerous maxed out credit cards and personal loans), council approvals, and building all by ourselves. The only trades we used were the plumber, electrician, and the tiler (couldn't be bothered with tiles). In the end, this enabled us to get a very customised, special build we could never afford if we handed it over to someone else. Going through the whole end-to-end process taught me a lot, I have nothing but utmost respect towards people who do this properly. The risk one takes is enormous and taxing, financially and emotionally. When we bought the block we had no kids and by the time we finished (there's actually still some stuff to do around the house haha) we had 3. To push through all of that + work and other things is so bloody hard.

I had a valuation recently and there is a fair bit of equity so I'm keen to invest it into another project. I don't want to let the skillset I gained go to waste. Hence my questions about morality; some seem to indicate that what I'm trying to do is somehow immoral. If I now develop 4 townhouses somewhere I would be 'part of the problem.' Well, that is fine but it won't make me feel guilty at all. Quite the contrary actually, I reflected on it and I'm 100% confident that I'm on the right track.

Not anymore Indo.

These are people who work, and are homeless, not wasted drug addicts.

Or people made homeless by floods.

Don't be so quick to judge- if I showed you the tent city, you'd be shocked.

I don't blame you Flollo- in any race back self interest, at least you know they are trying.

I don't mean any insult by that.

I do wonder if you have thought about what has been said here- or just dismissed it because it conflicts with your self interest?

Not having a go, you seem like a thoughtful bloke, so I'm genuinely curious.

flollo wrote:

indo-dreaming wrote:

flollo wrote:

Another thing to look at is a price per sqm. This is one of the rankings I found:

https://www.numbeo.com/cost-of-living/country_price_rankings?itemId=100

Culture in Australia is that we need a big square meter property to feel like we’re achieving something. I grew up in Europe in a 50 sqm unit. My parents were generous enough to let me and my 2 sisters have our own rooms while they slept on the couch in the living room. Nobody felt poor, this is the way most people live. Garage was a luxury, street parking only.

And price wise, European market is quoted in price per sqm, something that Australian market never embraced. Price seems to be very subjective and unpredictable which also adds to the overall anxiety.

I wonder if people in Australia will ever accept any form of space consolidation to improve house ownership?

Interesting post, do you think you were poor?

Thats kid of how lots of people live in Indo, my wife family house tiny two bedrooms part had one, wife and sister shared a bed, brother slept in the lounge room

No, never. This is how most people lived. However, by modern Australian standards possibly yes. For example, we never went out for dinner, only on rarest, special occasions which were 1-2 times a year. My mum was regularly cooking stew type of food - a massive pot that would feed the family for 3-4 days and we were not allowed to eat anything else until we finished the whole lot. You would put the cheapest ingredients in there - potatoes, beans, and a piece of meat with the bone, usually a pig leg or something like that. There was no food wastage allowed.

Few other examples - avoiding road tolls on the freeway to save money, especially several hundred km trips to another city. Doesn't matter if it's 2-3 hours longer, it saves money. Never paying for public transport while using it daily. They had inspectors but we were all taking a risk. You could get a cheap annual pass through school or my mum through work but we would regularly sell them for cash in the black market. Buying second-hand books for school. If you had the money you could order them through school so they are waiting for you when the term starts. But if not, you had to go into the city with cash and haggle with people selling them in public spaces. And this doesn't mean my mum driving me and doing it for me like I drive my kids in Australia, it meant me catching public transport and going in with cash, hoping it will be enough to get all I needed.

But none of this felt strange or poor. These things were widely spread. What we saw as poor is a little 4yo gypsy kid playing harmonica on the tram and begging for money. Homeless people who slept on public transport overnight, driving in circles because it's too cold outside. People digging through the rubbish on every corner (bins there were open, skip type placed next to the road in front of large, socialist buildings). I never had to do any of this, I was fell fed with a place to stay. And that's not what we called poor over there.

Interesting.

I have a picture of Charlie and his family in Charlie and the Chocolate factory :D

Ha ha i hate tolls, i still avoid them only thing i dont agree with being privatised, and often got second hand books for school and I use too avoid paying for trains as knew where you could get off and avoid inspectors.

But yeah ive got the picture not dirt poor, but lower mid working class doing it a little hard.

BTW. I like your post, they are informative and balanced...

freeride76 wrote:

Just down the road from Owen there is a legitimate tent city - people living rough with nowhere else to live- he likely has no idea it's there.

What country was this Flollo, if you don't mind me asking?

Ex Yugoslavia, later Croatia. I was born in 1985. Yugoslavia fell apart in 1991. The whole era was also interesting because of the transition from full socialism into a market economy. So society was going through all sorts of transitions. I could talk about this for ages if people want. Many books were written about it as well.

freeride76 wrote:

I don't blame you Flollo- in any race back self interest, at least you know they are trying.

I don't mean any insult by that.

I do wonder if you have thought about what has been said here- or just dismissed it because it conflicts with your self interest?

Not having a go, you seem like a thoughtful bloke, so I'm genuinely curious.

No, I think about it a lot. Daily I would say. There are definitely many problems that need to be solved. I don't want to live in a society where I'm all happy in my little corner but people are sleeping in tents 20 mins down the road. Look at LA; Skid Row is only 20 mins from Rodeo Drive. You have properties selling for dozens of millions of $ in Hollywood Hills while 20 mins down the road people are starving and sleeping in tents. How can the richest country in the world allow this? I don't want this to happen to Australia, it would be a disaster.

But in my experience, society prospers when we all collectively do more not less. Build more public housing, infrastructure, and schemes to help people own properties. Do not go straight into restricting others from creating.

flollo wrote:

Ex Yugoslavia, later Croatia. I was born in 1985. Yugoslavia fell apart in 1991. The whole era was also interesting because of the transition from full socialism into a market economy. So society was going through all sorts of transitions. I could talk about this for ages if people want. Many books were written about it as well.

G'day flollo, I'm interested in hearing more. I haven't been to that part of the world and it's so far removed from the stable governing structures here and our materially rich society.

Not entirely comfortable with this.

abc today
https://www.abc.net.au/news/2022-04-24/foreign-investment-review-board-…

AndyM wrote:

Not entirely comfortable with this.

Go in for treatment for a stinger, come out with a timeshare unit at the resort.

abc today
https://www.abc.net.au/news/2022-04-25/will-rba-lift-rates-before-may-2…

Robwilliams wrote:

abc today

https://www.abc.net.au/news/2022-04-25/will-rba-lift-rates-before-may-2…

Interesting article RW , so this is the position that the better economic managers have left us in and are currently encouraging home buyers with a 2% deposit carrot . ‘ OFF COURSE’ it will be all labor’s fault.

That's one ominous carrot. The pressure is real, click on 90 day bill and 6 monthly to view trend in price (yield is inverse to price)

https://www2.asx.com.au/markets/trade-our-derivatives-market/derivative…

https://www.asx.com.au/documents/products/90-Day-bank-bill-factsheet-20…

Im a novice when looking at the way the reserve bank does it's thing. Although I do know as I heard this morning on the radio that it is supposed to be A political. Understanding the economics and how it all relates, and is managed is quite complex for me. I just post what I find interesting or relevant to current topics. Thanks velocity for that informative link.

A good explainer of how our banks fund loans: https://www.rba.gov.au/education/resources/explainers/banks-funding-cos…

Note I believe the term funding facility is still in play ( hence possibly why we still have low mortgage rates say compared to Canada and the USA (the latter now at 5%) despite the US Bond market demanding higher yields now.

5% mortgages by July (still low IMO but the debt is larger).

This is an awesome blog if you are interested - its Canadian but its full of financial wisdom: https://www.greaterfool.ca/

Good links and great blog there monkeyboy.

"On Friday the stock market laid an egg. That came hours after the US central bank said rates may surge next Wednesday. And they will. As this week opens Mr. Market is taking bets on a hike of three-quarters of a point, maybe even a full 1%. More will come in June, then again in July. In Canada we get the next rate bomb June 1st.

Because the CBs in both countries have watched inflation surge out of control – almost 7% here and 8.5% there – the pace of monetary tightening will be something today’s Millennials (and most GenXers) have never experienced."

Wow at the Canadian situation, going 3/4 or a whole % in one go...
We've been showing our Gen Z's what's coming for some time now (over drinks their mates are saying "Bring it!"), and it's a bit like how Riddick watches the Necromongers approach Helion Prime in the cult movie...

Very interesting on the term funding facility. Wonder if this had any influence on Aussie RE going nuts after the policy was announced? (See: explanation box in link)

The Canadian housing market is seriously stuffed. Think Ireland 2007.

Yeah 2mil for a place 1 hour from Toronto centre. Whoa. Did you ever see that old online game 'crack shack or mansion'? Subject was Vancouver about 10 years ago...

velocityjohnno wrote:

Yeah 2mil for a place 1 hour from Toronto centre. Whoa. Did you ever see that old online game 'crack shack or mansion'? Subject was Vancouver about 10 years ago...

Hah ! No I hadnt heard of that but seems like thats what's been happening over there. Perhaps a little of that here too.

https://www.crackshackormansion.com/

have fun :)

(I think link is ok?)

It's from 10 years ago, so prices are *cheap*

Edit: just tried it, got 14/16, my eye is still sharp on distinguishing dumps from palaces after all these years.

abc today
https://www.abc.net.au/news/2022-04-26/inflation-surge-could-see-super-…

I am a little amused that raisng the cash rate from 0.25% to 1% is causing such a panic...feck ! At least you can get a yield on bonds now. Albeit still negative in reality.

monkeyboy wrote:

I am a little amused that raisng the cash rate from 0.25% to 1% is causing such a panic...feck ! At least you can get a yield on bonds now. Albeit still negative in reality.

Wait til the real rises start!!!! Housing market will tank hard. The double whammy is inflation. Rates rising due to inflation means higher mortgage servicing costs as well as inflation driving up the cost of living. All means less money to service debt and consumables per household, which means more financial hardship to service the mortgage.

Bring it.

Could be time for a little bit of regressing in living standards.

Redgum knew it was inevitable decades ago.

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monkeyboy wrote:

I am a little amused that raisng the cash rate from 0.25% to 1% is causing such a panic...feck ! At least you can get a yield on bonds now. Albeit still negative in reality.

Hey Mb, yeah, in one sense it’s hard to understand given that we had 17% interest rates in the 90s, but there is a huge problem which the Reserve Bank and ASIC should have been all over, but weren’t. Both said ‘sorry, not my job’. That problem is that so many people are hocked to the eyeballs and a 1% interest rate would start to really squeeze some. A 3.5% interest rate in a few years, which is being suggested, would kill a lot, with large flow on effects in the economy. That still not close to a ‘neutral setting’ which is generally a couple of points above inflation.

In a sense, due to poor policy and por governance, we have climbed to the top of a very high mountain and haven’t worked out how to get down. There is no established path down from this, and no government anywhere has successfully managed an asset bubble comedown.

Whoever wins government will have tricky times ahead. But then again, I said that last time.

When is this Ponzi scheme going to bust?

Craig wrote:

Bring it.

I’m with you Craig, I think we need this to come down hard, but the hangover is unrelenting and could take 10 years to get over. I’ve got two kids in their 20s whose only hope of getting a house is for mum and dad to croak. That’s a disaster.

I think you’re in your 30s or thereabouts. You are yet to live through a recession as an adult.

Increasing the interest rates on mortgages from 0.25 % to 1.0% isn’t just devastating to borrowers because of the sheer percentage increase, it’s going to be so impactful because it’s an exponential increase in repayments.
Unlike raising the interest rates from a base of 12% to a base of 12.75% , the proposed 0.75% rate rise difference at current rates equals three times the size of interest repayments that already hard lining borrowers have to come up with just to keep the wolf from the door each month.

Raising interest rates from 0.25% to 1.0% means someone who is currently paying $250 per month in interest now has to pay $1000 per month in interest.

Hands up who feels like outlaying hundreds more per week for housing on top of rocketing cost of living inflation ?

Prepare for the economy to shit the bed.

what makes you think that a housing crash will benefit y/z gens and not the corporate landlord / banker vultures feasting on the ruins? The benefit from any sort of housing crash predicted on this thread to the current locked out young will be at the expense to the recent FHB youth coaxed into buying by FOMO.

Craig wrote:

Bring it.

You think that forecasting surf conditions will hold up as a secure position in a fully blown depression?

I’m not saying this to gloat at any potential misfortune to which you may be exposed, just saying that if you really wish for something to happen you’d better have all your ducks in a row in case the wishing pays off. I hope that you are OK if the economy circles the drain. Are you prepared?

A nice, solid adjustment/correction would be handy. Not a full blown recession.

Have weighed all posts above, and I'm with the locked out young: "Bring It".
As Gozer said to the Ghostbusters, "choose the form of your destructor."

Term facility expires March 2023 tho...

monkeyboy wrote:

I am a little amused that raisng the cash rate from 0.25% to 1% is causing such a panic...feck ! At least you can get a yield on bonds now. Albeit still negative in reality.

5 to 7% would be nice... the old man picked the absolute top in yield in 2007 just as GFC started, incredible timing, tip of hat

batfink wrote:

There is no established path down from this, and no government anywhere has successfully managed an asset bubble comedown.

Japan *kind of* has, what has it taken, 30 years of 'lost decade'? A whole generation. They kept the bad debts on the books and papered over them, there was no marking to market of the horror bad debts, means anemic growth forever after. Not nice for the young. But we did get octopus hentai and Pokemon Go.

Craig wrote:

A nice, solid adjustment/correction would be handy. Not a full blown recession.

Can't have one without the other Craig.

velocityjohnno wrote:

Have weighed all posts above, and I'm with the locked out young: "Bring It".

As Gozer said to the Ghostbusters, "choose the form of your destructor."

As stated by Bonza, I don’t reckon the house price collapse will be the big Kumbaya egalitarian moment we’d like to imagine. It will probably exacerbate inequality.

DudeSweetDudeSweet wrote:

Increasing the interest rates on mortgages from 0.25 % to 1.0% isn’t just devastating to borrowers because of the sheer percentage increase, it’s going to be so impactful because it’s an exponential increase in repayments.

Unlike raising the interest rates from a base of 12% to a base of 12.75% , the proposed 0.75% rate rise difference at current rates equals three times the size of interest repayments that already hard lining borrowers have to come up with just to keep the wolf from the door each month.

Raising interest rates from 0.25% to 1.0% means someone who is currently paying $250 per month in interest now has to pay $1000 per month in interest.

Hands up who feels like outlaying hundreds more per week for housing on top of rocketing cost of living inflation ?

Prepare for the economy to shit the bed.

This is exactly my point above. Doubling repayments plus cost of living increases can only mean one thing. Down down down with property prices.

Craig wrote:

A nice, solid adjustment/correction would be handy. Not a full blown recession.

Unfortunately with A comes B. You don’t get housing dumping without at least a recession if not even worse. It’s coming. Just be patient.

DudeSweetDudeSweet wrote:

velocityjohnno wrote:

Have weighed all posts above, and I'm with the locked out young: "Bring It".

As Gozer said to the Ghostbusters, "choose the form of your destructor."

As stated by Bonza, I don’t reckon the house price collapse will be the big Kumbaya egalitarian moment we’d like to imagine. It will probably exacerbate inequality.

100% all the first home buyers that have bought in at high prices and low interest rates in recent years will be the first to lose their homes, and if prices drop by a decent degree their will plenty of well off investors ready to buy up.

Can't see the house price collapse really occurring in premium areas (i.e. anywhere within say 20kms to a capital city, anywhere coastal etc.). There's too much money and demand for these places to really drop. People here also just won't sell if they feel they won't get the price they want.

The collapse/easing of prices will be in the development belts. In the suburbs you've never heard of.

Hence it will cause more inequality.

well, how did the big housing price collapse in the US turn out? ....it turbo charged homelessness and large coronations buying up housing stock.

Very irresponsible to wish for an aggressive interest rise. Don't forget that it also affects consumer credit, business credit, lines of credit etc.

Try trading under 30 days after the EOM (end of the month) terms (these are the norm, there's worse than this). If you issue the invoice the first week in a month it will become payable nearly 2 months later. You have to obviously keep going with the business and maintain cash flow which often comes from a line of credit.

Many businesses rely on credit as a form of working capital. A higher cost of working capital often equates to the need to drop costs. Unfortunately, this cost-cutting often comes in the form of salary cuts, fewer hours for casual employees, freeze on a salary increase, or even redundancies. So massive rate rise will very likely trigger an increase in unemployment. There's plenty of historical evidence for this.

Be careful what you wish for. Housing is out of control, I agree but I am certainly not hoping for some aggressive rate rise and a crash, that will hurt all of us. Some rise is definitely coming and it will have an effect but to fix housing we need to think much broader than the interest rate discussion.

Thanks Flollo

flollo wrote:

Very irresponsible to wish for an aggressive interest rise. Don't forget that it also affects consumer credit, business credit, lines of credit etc.

Try trading under 30 days after the EOM (end of the month) terms (these are the norm, there's worse than this). If you issue the invoice the first week in a month it will become payable nearly 2 months later. You have to obviously keep going with the business and maintain cash flow which often comes from a line of credit.

Many businesses rely on credit as a form of working capital. A higher cost of working capital often equates to the need to drop costs. Unfortunately, this cost-cutting often comes in the form of salary cuts, fewer hours for casual employees, freeze on a salary increase, or even redundancies. So massive rate rise will very likely trigger an increase in unemployment. There's plenty of historical evidence for this.

Be careful what you wish for. Housing is out of control, I agree but I am certainly not hoping for some aggressive rate rise and a crash, that will hurt all of us. Some rise is definitely coming and it will have an effect but to fix housing we need to think much broader than the interest rate discussion.

+1

Another informative sensible well balanced post.

unfortunately neither major party in this election willing to address or consider the "broader" options. lets just hit em with more fhb grants.
so depressing. as was albo's reported 'never ever be a carbon tax' response on hadley today despite the recent documented screw ups on the coalition's stupid carbon offsett schemes. 15 years of this crap. anyway that's another thread

@bonza

What would you suggest?

I don't think anything would really make much difference, the same problem is being seen in most if not all developed countries.

No matter policy on negative gearing or who can buy, it's really just a limited supply increasing demand thing.