Majority of Australians Believe House Prices Will Rise in Next Twelve Months

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Fresh back from a whirlwind trip to Adelaide to see Victoria smash South Australia in cricket and watch the Tour Down Under up close, your editor finds the financial markets in a state of acute anxiety, while investors, according to a survey, are keeping on the sunny side of life. Reality is keeping a low profile these days. But let’s see if we can find some clues about where he’s hiding out.

He (Mr. Reality) left a calling card in New York on Friday, that’s for sure. Stocks in New York fell 2.09% on the Dow. Wall Street has realised that it’s become the political whipping boy for a President who needs a popular enemy. It’s all probably a bunch of bluster to get the President some political momentum.

But if anything has momentum, it’s the volatility index. It’s up 55% in the last three days (see chart) The VIX measures implied volatility on the S&P 500. It’s nominally a measure of the cost of options on the U.S. exchange. It goes up when uncertainty increases. It does that because options are a way of hedging against future outcomes (positive and negative). When the future becomes more uncertain, the cost of insuring against it (at least in the stock market) goes up.

Vix rearing its nervous head

Vix

It’s all basic supply and demand really. But in this case, demand for uncertainty insurance is rising because the supply of uncertainty is soaring. The U.S. economy, the Japanese economy, the European currency, the Chinese bubble, the Australia resource super cycle…these are all part of the complex adaptive system that is the global economy. Hmm.

84% of Australians think house prices will rise in the next twelve months, according to the January Westpac-Melbourne Institute Consumer Sentiment Survey. Mr. Reality is clearly giving these Australians a wide berth. Twenty one percent of those surveyed believe house prices will rise by 10% or more in the next twelve months.

Doing a little back of the envelope math, and if our calculations are correct, a $450k property compounding at 10% a year for 10 years would turn into a $1.16 million dollar property. It would be a gain of 160%. And one million dollars would be the new median house price in Australia.

Now you have to assume a lot of income growth from here for affordability to remain the same with house prices at those levels. Or you’d have to assume much lower interest rates. That would be a stupid assumption, though, given that interest rates are headed up at the moment, and that we are likely at the low end of the interest rate cycle.

Perhaps the 21% of people believe house prices will go up by 10% a year are all real estate agents and bankers. Or perhaps they are functionally illiterate in the financial sense. Either way, it’s a large percentage of people surveyed to believe such clap trap. It’s this kind of belief that is the rocket fuel for the blow off stage of a bubble.

But we’re not going to win that debate this week. We’d just like to point out that this is whole point of the Daily Reckoning really, to scrutinise received thinking and conventional wisdom. Whether it’s the housing bubble, the economy, or global warming, your best defence against a world full of bogus thinking is to question it.

Of course that doesn’t mean you’ll always be right. For example, we’re obviously not a climatologist. The mail bag was full of some choice words for the comments we published last week (Burn More Coal). The polite synopsis is that we were told to stick to our knitting.

But calling out mainstream thought IS our knitting. And climate change is fair game because the financial stakes are extremely high. Indeed, all the stakes are high (political too). We’re not going to rehash the argument here. However, if you don’t like uncomfortable ideas, don’t read them!

Don’t worry though. We will say, yes, most of the time our beat here is investing. And there is plenty to think and write about on that score. So we’ll get back to the main game this week. Until tomorrow!

Dan Denning
for The Daily Reckoning Australia

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
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Comments

  1. Dan, looking at the longterm world temperature graphs for the past couple of million years, it would appear that the entire scope of human civilisation sits on the top of the latest warm peak. Those peaks seem to last between 10K and 20K years, and this one is already about 10k years old. I would think that global warming is not the biggest climate problem in the long term. It would be much more difficult growing crops under a kilometre of ice. Moreover, our ancesters adapted to constant climate change without resorting to world blab fests. And anyone who thinks that they can alter the climate by leaving the airconditioner off for a few hours probably has great faith in modern government.

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  2. It is after all a survey for which we have no means of auditing the validty and accuracy of the respondents. In fact, you could argue if the survey has in fact be done at all. The results were never certified by an independent body as true.

    Given the rosy house price expectation, perhaps Westpac should do a U-turn and not run away from the Australia mortgage market.

    In other words, the may as well have said 99% of all Aussie believe house prices will rise and the 50% of those believe house prices will rise 20% in 2010.

    But then again, it will be overdoing it.

    Reply
  3. Demand is still outstripping supply. Money is being printed and will float around until it finds a home… literally. That’s at least what the majority appears to be thinking, and it’s not unreasonable (though it may be completely wrong).

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  4. Well someone should tell the BANKS, perhaps they need reminding house prices only ever go up, just look around the world, not a single house market crash ever.? I bet these same people would have also said the world was flat a few hundred years ago. Just because the majority think something it true doesnt make it so. Like I’ve said for the past 3 years the BANKS themselves will be to blame for the bursting of the bubble through restriction of credit and higher interest rates. So far they are on track. I think this survey just points out how many house speculating debt junkies there are in Australia, lets face it if there wasnt we wouldnt have a bubble to start with. Before I get ah you must be a renter, I own my own home.

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  5. People who own houses are hopeful prices will rise, and in Australia I think that is most of us.

    Also some words on China’s bubble and the resources fueling it
    http://www.cnbc.com/id/35056774

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  6. Dan said it perfectly. Money is being printed and will float around until it finds a HOME. (I like it). If a company with 1 million shares on issue gives its employees share bonuses etc and over time increases the shares on issue to 2 million then the share price should be half. Right? So when governments around the world dug their way out of the GFC by printing money (which will make the value of that money drop in proportion), house prices will rise by nothing more than the fact that it is an asset and not cash. We won’t even mention what the ADDED effect of demand outstripping supply and China and India’s once in a generation growth will do to the property market over the next few years, especially in Western Australia. If you are on the property sidelines waiting for a fall then you best get out your thermals and pull up a chair besides Australia’s biggest property mug Steven Keen and set yourself for a long wait whilst others with less total wealth than you (and possibly a lot younger) who did get aboard buying assets wave to you as their net worth screames past yours.

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  7. Oh, I still don’t write off a house price correction (up to 30%). The current house pricing trend is hard to sustain domestically (by the middle and lower classes), purely because people are so heavily indebted. So there either needs to be:

    1. Wage increases
    2. A fall in the CPI (excluding housing) resulting in increased disposable income
    3. Influx of money from abroad (eg: some kind of corporatization of non-commercial real estate … either directly or by stealth)
    4. Continuing, significant increases in the first home buyer’s grant
    5. Other kinds of blatant government intervention

    And for a housing correction, I think another stock market crash (overdue) would go some way towards that, which would create an ugly scenario of an indebted government taking higher taxes, companies laying off workers, etc. Look to Pakistan/India/China for a possible trigger. There are big efforts being made by superpowers to destabilize the region.

    We might have ‘dodged a bullet’, as the boss said, but I rather think the government just delayed things and has taken a big gamble. They say ignorance is bliss, but even more true is that bliss is ignorance. I’d be very very wary of sinking all my cash flow into interest repayments, and concentrate on reducing future exposure to a high inflation situation without wages growth.

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  8. Thirty percent crash? Good luck with that, Dan!

    Yes, the following are likely:

    1. Wage increases

    3. Influx of money from abroad

    5. All kinds of blatant government intervention to support construction and provide shelter.

    Some states will see rents rise as never before. I’d modify Brian’s post to read:

    “….set yourself for a long wait whilst others with less total wealth than you (and possibly a lot younger) who did get aboard buying assets ‘own rentals while you kindly pay them off for them’… ”

    We all have choices. We live with those choices, wise and foolish. Anyone who thinks any tangible on Maslow’s hierarchy (other than food and water) comes before shelter, is courting disaster… .

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  9. Yes, right you are Pete. The 30% is just based on long term trends for Australia (ie: since 1920’s).

    But do you think rents can rise so rapidly? Who has the money for it? From the public service agreements I’ve read about and seen, wage rises are incremental at best.

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  10. The world’s most prolific gamblers are always keen to bet on a bubble.
    They just can’t help themselves. A medical person would probably classify the condition as addiction.
    When the bubble bursts they will all look to the government to bail them out of their own foolishness same as always.

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  11. Dan: “…wage rises are incremental at best… ” Well, we’re advised that a massive skills shortage will hit WA within months. As with accommodation, demand will drive prices.

    Bargearse: “The world’s most prolific gamblers are always keen to bet on a bubble.” Some of us suspect gold is a bubble right now, BA. Valued at $350 per oz more than it costs to produce. A medical person would probably classify the condition as terminal. ;)

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  12. Pete, What price do you think average house prices in Australia will have to reach before you think they are in a bubble?

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  13. How long is a piece of string? We’ll only know what is, or isn’t a bubble, if/when it bursts.

    Where is your money placed, Steven?

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  14. If Aussie housing is in a bubble it’s not a very big bubble and once it pops prices will be back up quick smart

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  15. Don’t worry Dan, As a geologist with a more realistic long term view of climate change, I can tell you people are just as unhappy to listen to my views on the historical facts about the con of man-made climate change as they are listening to historical facts about housing bubbles. It’s dogma that’s been drummed into them since they were in their cots! Facts and past events have no place in Dogma and Religion.

    This bubble situation is like when your father overinflated a balloon at a party to entertain the kids, there comes a point where people start putting their fingers in their ears and squinting their eyes. The father keeps puffing and the ballon may expand another 50% after people start preparing for the bang. When it does people remark, “I didn’t think it would get that big!” But with our housing bubble, no one’s got their fingers in their ears. They’re all staring in amazement despite the fact the signs of strain are right in front of them. And when it pops, they’ll be standing there, with their ears ringing, bits of the balloon all over them and they’ll still be remarking “I thought it had a lot more to go!”

    Cameron Clawhammer
    January 26, 2010
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  16. “They say ignorance is bliss, but even more true is that bliss is ignorance.”

    Actually, bliss is getting the tax mix _exactly_ right. By July 2010, we should be there.
    (Go for it, Stars-n-Thumbs Boys! ;) As Ned has noted, that must be all you’ve got.)

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  17. I’ve been doing some calcs Biker – Unfinished as yet but will try to say more about them over the next few days. In the interim, about all I’d suggest is that betting long term against Oz house prices doesn’t seem to have a strong track record for producing lots of new multi-millionaires.

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  18. I gave you a “5” Cameron – Whether I agree or disgaree is irrelevant – You wrote in a somewhat entertaining fashion about Oz’s most tired old topic! :)

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  19. I’ve just thought of something! With all of this supposed immigration, where are our wage increases going to come from? Not really sure, but it won’t be from a labour shortage!! :) :)

    Time to dig Ned’s soakwell :)

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  20. Nothing like a post on housing to get a bit of interest

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  21. If my wages go up even $5 a week this year so I can leverage more debt to keep the debt-driven economy afloat I’ll eat my hat.

    “How much more debt can I get with $5 a week paying back over 5 years at 15% interest?” That is the question many will ask.

    However I will not hold my breath until the June performace reviews. 24 months on the same income, with 24 months’ worth of CPI which was a long way off being 0 or negative. Can we make it 36? You know you can!

    But Australians are resilient, and our banks are accommodating. “What recession?” we ask. The income lost through stagnant wages and a non-negaive CPI, and what should have equated to reduced spending, is made up by credit spending, and then some.

    The private debt stats speak for themselves.

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  22. Up here at the northern Gold Coast (the former boom capital of Oz) the property market has been flat to slightly decreasing for the last year. There are less houses for sale, and less buyers looking at them, according to rpt data. I interpret this situation like this:
    -many heavily mortgaged owners cant afford to sell (or their banks wont let them), they want to hang on
    -others like to believe that Santa will increase their property value this year, so they hang on
    -many of the sales that actually go through (after the buyers contracts collapse a few times) are forced and the sales figures are way less than the advertised prices
    -buyers believe that the property values are overpriced
    -these lead to a gradually deflating bubble, but the bubble tries to repair itself as its skin has very high surface tension.

    Reply
  23. Sorry Bertie, this is as interesting as a rental agreement. The same people Biker and Ned S make comments and rebuttals to show everyone how superior they are. They are the investment GODS who can’t be touched in good or bad times and the scoff at any fool who isn’t in the market right now and with minimal exposure.

    Revelling in the misery their generation has caused others is so revolting it makes me want to vomit all over my keyboard

    No interest
    January 27, 2010
    Reply
  24. Interesting times afoot. Keep an eye on the metal prices to see what will happen in Oz – I know I am!

    http://www.metalprices.com

    Reply
  25. my money is placed in the bank obviously

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  26. deep article!!!
    hi Dan,can you have a point of Chinese property?

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  27. and according to what that Chinese property is a big bubble?.

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  28. What exactly is your “misery” No interest – Living at home on the cheap? Having to pay some landord 3.5% rent rather than 6% to a bank? With the landlord paying the rates and insurance – Rather than you!

    I don’t love the system one little bit either – And I sent Tanya Plibersek (the Commonwealth government Housing minister) a letter about 18 months ago suggesting one way that they could take a lot of pressure off housing prices.

    Have you done as much? Or are you just one more of the whingers who makes me want to vomit all over your keyboard too?

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  29. They are the investment GODS who can’t be touched in good or bad times

    I would go one step further No Interest they think they are invincible!

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  30. And by saying that you’ve just proved yourself wrong again Steven. :)

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  31. Sorry Ned mate, I’ve changed my mind on the whole Reel Estate machine.

    This video did it for me, it’s compelling.

    http://www.youtube.com/watch?v=1PLr2pKkzEs

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  32. I just scored you a “5” too No interest – As I reckon Steven needs (as opposed to “deserves”) all the help he can get. :) :) :)

    Lordy, you are such silly children. Wonder if we can swap you blokes for a chinaman or two? Probably not – The chinks plan to rule the world in another decade or three. And figure they have an uphill enough battle as it is I guess.

    “Aussies really are battlers” … Take ya blinkers off Biker!

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  33. Don’t watch vids mate – My Oz “battler” cheapy home dial up connection doesn’t support same? But yeh, I can understand you folding and rushing to offload all your Oz property risk – The We wanna, we wanna, we wanna wee arguments being offered by all my fellow bears of late, really are QUITE compelling I must say!!! :)

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  34. Ned mate, not offloading mi-land just yet. Far too much debt! A millionaire on paper (but don’t mention the banks share! :) )

    I am becoming sympathetic to these first home BYEr’s though. Sort of. If things keep going like this my grandkids will need to be real estate agents, pollies or even worse, renters!

    Maybe we should both rethink our position. Bah, i’m too old for this :)

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  35. I’ve seen mentally tough people in my life. Few if any of them being Aussies who would now be under 55. Which at 51 still makes me a bit of a sooky squealer like lots of the other “girls” on this site. But at least having seen the competition, I’m under no illusions as to the fact that it exists. And will mince thee up and spit thee out – Barring a bit of gonad growth!

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  36. Yeh, yeh sure mate … Whatever “you” say! :)
    As I’ve done the affordability calcs and these kids are in the sweetest smelling clover!!! Which is why so many of them bought recently of course.
    Except for the odd We wanna, we wanna, we wanna wee bearlings what want Great Depression II and WWIII and a cheapy … :)

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  37. The boogeys are taking my name in vain again, Ned*. :) They come in four handy handkerchief sizes: 1.) the fellas who used to say you couldn’t make a buck in realty… and now realise they’ve blown it; 2.) the blokes who predicted a major crash and blew it; 3.) angry tenants who realise where rents are going, but can’t face putting _that_ into print… and talk about the next generation rather than their own mess; 4.) those who just don’t understand how investment and taxation work. ‘Cash Obviously’ is in the latter group.

    * My last blog ended: Go for it, Stars-n-Thumbs Boys! As Ned has noted, that must be all you’ve got.
    Anything after that is their nose clearing… ;)

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  38. Or rather than “grow gonads” one can rely on good ole Uncle Kev and Co (aka the tax payer) ta carry you as always of course.

    Hey, ya know people are mentally strong when you are offering the usual Oz type commisserations to a pretty poor family that has just lost its principal bread winner – And the response is to show a bit of concern for your expressed thoughts and say something like Gee, don’t take it TOO hard mate – People DO die yunno! :) And that’s without even BEGINNING to chat about some of the mentally “hard” types out there. ;)

    And Oh yeh, Aussie house prices are a bit high and some of us are really sad about it … Sniff, sniff … Cry, cry …

    My God! You Aussie “girls” are SUCH a hoot!!! :)

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  39. OS family stuff incoming mate – And I said I’d call today. Will pop back online before snooze time maybe? :)

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  40. And Oh yeh, Aussie house prices are a bit high and some of us are really sad about it … Sniff, sniff … Cry, cry …

    “Adjusted for inflation, the average house price in Australia is now more than twice what it was 20 years ago.” SMH 26/01/10.

    Ned you would be crying too if you had to pay twice as much for a house than what it should be.

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  41. No OS connection right now so just popped back for a quick chat – Have you ever pulled one of your own adult teeth No interest? Or burnt off a skin cancer yourself with HCl? And thought of such things as quite normal and reasonable things to do? I must admit that I see “misery” as a somewhat relative term in the great global experience of life! :)

    Must pop off and see if international comms are available again … Toodle pip! :)

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  42. Wtf are you on about?

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  43. First Home CRYers, haha I am a genius!

    I’m like you Ned, I don’t care for the younger generations. Boo, hoo, hoo …

    SO much for the Aussie “battler” … the youth of today wouldn’t know a battle. Our generation are the real battlers Ned (we fight a few battles in here eh?)

    Generation WHY deserve to pay DEARly for their homes: we never had dem iPods! :)

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  44. You talk rubbish Ned are u on the Pis tonight or what???

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  45. Piss orf retard!

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  46. Wouldnt know how to battle???
    You talk rubbish too

    “Adjusted for inflation, the average house price in Australia is now more than twice what it was 20 years ago.” SMH 26/01/10.

    and you are the battlers??? give yourself an uppercut Pete

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  47. Snorts are at it agin mate. Last post wasn’t mine.

    Speaking of the ole hydrige chlor, we used to add a nip to our spirits to liven things up a bit! Imagine these duffers tryin that one on eh?

    Unlike these GRASShoppers we’ve been through the rough Ned. It’s about time they felt it too.

    Mind those ICs mate, right costly

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  48. The PO comment was meant to the dill pretending to be “Pete” Steven. And no, I do NOT talk rubbish … Although I DO know that many younger Aussies have little awareness of what the broader world is like.

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  49. What???
    I state a fact to you, and then you start dribbling crap about have I ever pulled one of my teeth out or cut a cancer off, and expect me to draw some kind of relevance as to WTF you are on about!!!

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  50. The more HCl “you” glug, the better place the world will be “Pete”! :)
    But I really must run now …

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  51. Me n my mate Ned could easily take your uppercut StEVE.

    We might be old, and old fashioned, but we’re hard as nails.
    Considerin’ uppin’ shop to northern Canada even! The wife has me convinced. What ya reckon mate?

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  52. Yep, we just don’t relate at all. But MUST run as I said! And good luck with your gamble too … :)

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  53. Ned mate, why so SERIOUSSSH?? :)

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  54. Marry any boy you can afford Pill Boy – I’m not given to getting concerned about the bedroom antics of others. Ho hum …

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  55. Ned mate, we’re desTINed to be with each other :)

    See what I did there? TIN? I’m pretty clever with words eh Neddy. But so are you, and that’s why we’re great together. If only we had a willing audience! :)

    Sea you later mate :) :) :)

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  56. Can you feel the rage radiated by the Property Bears? They’re angry because they’re winners… ! ;)

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  57. Is tin going up a bit in price prozak? That’s nice – I sincerely hope you profit from your trade. But seriously mate, I’d suggest you try a different drug.

    But ni nite anyway – Gotta get me beauty sleep. As tomorrow’s a new day with more Gen Ys to oppress and crippled Haitians to collect body parts from etc … It’s all go, go, go for us ole boomers ya know! :)

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  58. Us boomers will shop until we drop!

    Might be a short shopping spree :) :)

    Toodle-pip Ned mate. Tomorrow i’ll show you that tattoo I got on my inner thigh.

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  59. Heck, ya’d think a bloke had pinched their favourite chook or somesuch because he bought a house in 1996 and then went OS and worked his arse off and came back and bought two more in 2008. Silly little buggers!

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  60. “Toodle-pip Ned mate. Tomorrow i’ll show you that tattoo I got on my inner thigh.” Mate, me and Ned are just friends, right?

    Pill-popping tin-men who pay their fortnightly dues to us Ned, that’s all they are.

    On that note, i’ll see you tomorrow mate. Think i’ve found myself a nice shack in Ravensthorpe, should do up nicely. Will tell ya some more tomorrow mate

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  61. Prozak, the fluoxetine isn’t working, son. Your multiple personalities are leading you down the AIDS path, mate.
    (Fairies at the garden of your bottom. But at least we can discern your gender preferences. God save your queens, Prozak… ! Think we’ll call you Butch, from now on. ;) )

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  62. I’ve heard of white noise, pink noise, as forms of random and meaningless interference, but this would have to be termed brown noise. Would be good to come here and read stuff that is even vaguely on-topic please!

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  63. Thanks Pete, that youtube video you told us about is awesome, and oh so true

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  64. When I was working in retail, there was this guy who came in pretty much every day. Now this guy who reckoned he was a federal cop. Among other wonderful stories, he also reckoned that he won second divison in the lottery (for the second time, apparently).

    Ran into him one day at his work. Turns out he was actually a security guard. To his credit, he was able to spin this wonderful story about how he had to leave the force because he was a corruption whistleblower, but he got a packet of cash on his way out. I guess he was just a lonely bloke with a penchant for fantasy.

    When I read Ned and Pete’s conversations, I’m reminded of this chap. By my reckoning, there’s a fair bit of crap going on in these conversations … quite possibly by the same author.

    Could be wrong, of course, but it wouldn’t be the weirdest thing I’ve seen.

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  65. Both the share market rally (contrived as it appears to be) and the housing bubble (it IS a bubble, contrived due to the FHOG) are deliberate measures to prop up banks and prevent thrift on the part of the general population – ensuring their continuing obedience due to dependence on banks and government. Of course, as Bill says, it means that natural adaptation of the economy doesn’t happen. The situation favours banks which have no intention of suffering the effects of their own poisonous credit policies. But ultimately all of it is worsening the long term economic future for everyone else. It’s amazing how people just gaze into the headlights like a dazed wombat.

    I reckon the collapse of both stocks and the removal of the FHOG will be carefully timed to have maximum impact on middle income Australia, which has become hooked on shares and ever growing mortgages. It’s like the nation is borrowing to buy casino chips. They will get wiped out and will have to start at the bottom, working harder for less and into old age. It will be too late to be angry when it happens – the only way to prepare for it that I can see is to get out of debt as soon as possible.

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  66. Wow!
    I’ve been on hols since before xmas and haven’t even read a DR article let alone posted here and yet I am still at the front of the mind of two people.

    Please forget about me you two. You both need as much of your spare brain capacity as possible. But, if you insist on obsessing over me please ensure you post a few replies by me also as I wont be on DR very often (due to poor content) this year, otherwise you look like two sad pathetic old men arguing with yourselves and obsessing over someone you’ve never met.

    For all other DR readers with IQ’s above 50. Hope you all had a great xmas and new year.

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  67. Ned S, man you are a frackin looney!! I can’t believe we have been buried as a generation by shining examples of post modern mental health patience such as yourself. I would also like to ad that you making assumptions such as

    “What exactly is your “misery” No interest – Living at home on the cheap? Having to pay some landord 3.5% rent rather than 6% to a bank? With the landlord paying the rates and insurance – Rather than you!”

    Just reinforces the belief i have the you are a greedy deluded individual who for all intended purposes should be the poster child for the baby boomers with the slogan splattered across your chest “i’m right thanks Jack!!”

    Now because i am 28 (lived out of home since i was 19) and looking to buy my first home and unable to do so within 35km of the CBD where i work, please tell me what i am missing with your calcs

    “As I’ve done the affordability calcs and these kids are in the sweetest smelling clover!!!”

    I wanna be in the sweetest smelling clover Ned, emlgihtrn me with you untapped knowledge and let a no good gen y whinger have a leg up on that first rung. I earn $53,000pa she earns $38,000 we have one debt my wifes car $140pw (have payed off hecs, credit card personal loans. We have to pay for 2 mobiles for work $185 pm with broadband double up as home phones to avoid line rental, health insurance $225pm (pre-existing illness) rent $320pw food around $150,

    We eat out once a week and RARELY buy clothes, with a little help of family we have saved $43,800 odd for a deposit. Tell me how i can afford the median house price, so not the best and not the worst just average old ‘C’ grade housing (in Melb right now by all reprts $517,000) without having to move 35km out of the city or live in an apartment (which is a false economy given the extra costs to get back into the city daily)

    Oh and heres the kicker, we have a baby due in October do for about 6 months i will be down to just my wage.

    Parameters : a Logical loan term and setup – 25 years and principal and interst payments.

    PLEASE enlighten me

    No interest
    January 28, 2010
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  68. No Interest – For what it’s worth, people we know who are in your situation did this:

    1. Paid off the car before they bought any other major item.
    2a. Changed mobile phones to pre-paid, only used them for emergency calls (eg: for roadside assistance if the car breaks down, etc)
    2b. Changed broadband to naked internet (or bought telstra’s homeline budget and then broadband on top), and then only made calls via VOIP. This reduced the monthly communications bill to less than $100.
    3. Found work outside of the capital city where rents are better value for money.
    4. Only bought when it was clear that per week ownership was equal to the rent, plus the job security was there.

    The thing is not to try to save money by removing fresh food from the diet, etc, but to avoid all the scams, like mobile phones, personal loans, car loans and so forth. Monthly costs are best cut through systematic changes like car pooling, consolidating your communications bills, avoiding shopping at large glamorous shopping centres, etc, and trying to make sure things are as tax efficient as possible. Point is to make 48K go further. People on 60K+ generally waste a lot of their money, and a thrifty person on 48K can do as well as them with a bit of effort.

    In other words, I reckon 48k is not enough currently to live comfortably in Melbourne (but elsewhere in Australia you can do OK on 48k), and besides, Melbourne’s infrastructure is way underdone. I’d dust off my shoes and move town, if possible.

    Reply
  69. All very funny, in fact so funny I wish I could say I’d thought of it myself.

    Reply
  70. No Interest: “…one debt my wifes car $140pw” . Mate, Dan is right… you cannot _afford_ to live in Melbourne.
    While Dan and I disagree on many things, he’s got that one completely correct. You want a house? Sell the car.

    Can’t figure out what a FHB is doing on an investors’ site… let alone in a property investors’ blog, No Interest… .

    Just a frequent lurker, eh, Prozak? ;)

    Reply
  71. No Interest, im a couple of years older than you and have been in your situation. the key is to start low and build up. its nice to buy the ‘average house’ but i think its pretty unrealistic for a first home owner.

    get something cheap and work your arse off to fix it up, get a bit of a bigger deposit together etc.

    alternatively if that is not the kind of thing you are into and want to walk straight into a decent house with nothing to do you’ll need to spend some time and money increasing your skills & lifting your income.

    either that or move. i cant work out why people live in melbourne anyway.

    Reply
  72. Not that i want to sprout things that are TO personal and i won’t delve into this but as i alluded to in my 2nd post i have a medical conditions that requires me to be close to Melb, my specialists and teatment facilities. Selling our car and moving to the fringes complicates this to no end and giving up the only car we have just in the hope i can have an over inflated house price/mortgage doesnt seem to be the solution either

    We would then have to buy 2 cars because i have trouble walking for long distances public transport could be a nightmare from lets say Berwick or Kilsyth to the city.

    I also don’t want my kids to grow up in low social and economical area’s, i did and it was one of the most painful uprbingings. Surrounded by people you (and everyone there) fear in a house thats decades old in an area you hate becuase it is so far away from family, friends, work etc. Only to realise you are stuck thee for the next 25 years becuase even these area’s are $350,000+

    Very easy to make this generalised statements but Matto i highly doubt you moved to the fringes and sacrificed all you had, living on bread and water to survive and if you di, all for just some dirt and bricks and the ability to say i own a home…..ah mortgage then i am saddened you would want others to do the same.

    I need to be in Melbourne and so does my soon to be family, why should we have to move because investors are driving an already heated market.

    Any way, we have lost the point of what i was hinting at and no one has managed to tell me how on my average wage i can afford the average house……………..

    No interest
    January 28, 2010
    Reply
  73. Matto, 28/01/10: “…the key is to start low and build up. Its nice to buy the ‘average house’ but I think its pretty unrealistic for a first home owner.”

    Spot on, Matto. Our family could not afford to buy in Perth thirty two years ago. We commuted into the city. Nor could we afford a new car.

    I expect another new DRA article prophesying the collapse of the Australian property market(s) within a few days, as interest rates rise. While I understand that this is the line DRA _has_ to take, it would be foolish to take comfort or hope from any such prediction. The Perth median price has just jumped 8.7% for example. That’s a lot faster than you can save (especially after taxes).

    Matto’s counsel: “…get something cheap and work your arse off to fix it up…” is a good plan. Been there… .

    In conclusion, whacking Ned for posts he hasn’t written is a bit rich. Personally, I don’t mind you blistering me, even for crap others have written. Seething with anger? Direct it here… . ;)

    Reply
  74. And Dan just in case you havent noticed buying a car on loan isn’t something only Gen y’s do, what was unique though is we had a $5,000 deposit purchased second hand and did the loan over 3 years at 8.3 %.

    May not impress you all that much but in todays reckless spennding frameworks and habits i thought we were being more sensible than most. The fact that you feel we can detach ourselves from everyday life and become almost twice removed from everything that this worlds has come to rely on is surprising and i would ove to see those who say this is so easy DO IT.

    Anyway lets say i take your advice, how long would it be in this scenario before i can manage to own that average house price in Melbourne? Assuming i saved the difference of course and not spent it on something reckless as us gen y’s generally do

    No interest
    January 28, 2010
    Reply
  75. Well you simply can’t afford the average 3 bedroom house – you might afford half of one though. Refugees over the past few generations were faced with even bigger challenges – bigger families, their qualifications not recognised, and having to work as underpaid labourers. In those days families shared houses, pooled costs, etc. It’s cheaper to feed 6 people out of one kitchen than to feed 6 out of two separate kitchens. I know plenty of single child families who are living in with their parents and sharing living costs. What’s so bad about that?

    You also can’t afford to have silly debts like a car debt. You are better off with 10k savings and no debt on your car. Avoid finance, credit cards etc. whenever possible, and plan for double the current interest rates when going for a mortgage.

    But I agree with what you’re hinting at. Melbourne is going backwards in that it’s pushing nonetheless capable and hard working people towards poverty by its high cost of living. From a town planning perspective it’s a city that is failing. There is no way that house prices will be sustained in this way in the longer term in Melbourne’s vast suburbia without some big changes.

    Reply
  76. Well, with respect to cars, we saved up and bought a second hand diesel 4×4 at what is today 10k, fully self maintained it etc, which got us about 5 years trouble free use. So it was about $2k per annum to own the thing, less what we sold it for (about 5k). We saved a packet doing that. We rented at what is today about $300/wk, but had no TV, all furniture from St. Vinnie’s, cloth nappies and all of that. Holidays were basically national parks and free camping, which gave us a chance to see other towns and see what job opportunities were about. But when time came to buy a house we waited until we could get out of the capital city.

    We earnt more than today’s 48k equivalent, but our budget was tight and we lived like we were earning less than 48k. Help from others made a big difference also, but there were times when this was practically absent, for various good reasons.

    Reply
  77. Oh and to finish off Pete, when you purchased you did so at 3-4 times your annual salary at the time. A mean feet as you have stated with what would be considered reasonable sacrifice.

    Your asking me to go to the fringes and still be nearly 7 times my yearly income and lets not talk about combined income as this is irrlelevant. We would like the option of my wife being able to raise our kids not a creche, the same options you had when in the same position before you realised you had inadvertantly and by default mind you, purchased the fastest growing asset on the planet and changed your mind on what housing is for (wealth not a home)

    No interest
    January 28, 2010
    Reply
  78. It’s sad the hairshirt brigade are telling young people to get rid of their supposed “indulgent” habits, and buckle down to buy a house. It’s all a total crock – housing in the cities is unafforable for 85% of single wage earners, and most working people I know who rent will never be able to buy a house. It’s just plain sick …

    Reply
  79. I have been accused of “Revelling in the misery ” my “generation has caused others” … So a couple of online dictionary definitions of misery follow:

    * intense unhappiness, discomfort, or suffering; wretchedness
    * squalid or poverty-stricken conditions

    And if by “others” No interest is including him and his in those “others” (which I do assume?), then having read his synopsis of his current life situation, then sorry mate, the plea is definitely Not Guilty.

    And you obviously can’t be serious about wanting me to crunch your personal financial figures No interest … What did your last slave die of? Don’t think so!

    Maybe you actually do end up buying an apartment in town rather than a house in the outer suburbs? But I’d hardly call that “misery”. Do you?

    Reply
  80. Our cars? 89 Honda; 90 Toyota; 91 Magna; 92 Magna. All running perfectly. Nothing worth over $2K. Very low insurance. Service them ourselves. Our bikes? 86 Honda, 87 Honda, 92 Honda. Service them ourselves. Belong to the RAC in case there’s an issue we can’t fix on-road.

    Have to laugh at a post two years ago, in which Bubblefeet Pete derided realtors because they weren’t driving the latest models. Puts everything into perspective. :)

    Reply
  81. I don’t think anyone is pleased about the fact that wages in Australia are so pathetic that nobody can afford a house (or that houses are so expensive.. whichever way you look at it). But when we worked for some charities in Melbourne a few years ago it was striking to see homeless late-teens and early twenties people walking around, not in rags, but in fashion-label clothing, talking incessantly on their mobile phones, smoking, drinking, and buying junk food. They did _not) )one_ _thing_ that was even remotely efficient, or that would help them get out of the rut.

    The first step to getting out of the crap life that low wages gives you is to make those wages go further. Expecting others to fix it just won’t happen – it’s like the economy as a whole – unless there is internal structural change, no amount of bailouts will fix anything.

    Reply
  82. No Interest, your wife is working. Mine wasn’t. You have a double income.

    Clearly the decision to have children young was planned. Had my first child at 36, when I could afford to raise one.

    It’s all about decisions, isn’t it? It’s what I like about Oz. Freedom to move, relocate, plan and _prioritise_.
    Or you can gamble.

    And that’s the problem. The trouble is that so many were misled by academics, whose mountain-top promises gulled young Aussies into believe in a 40% discount. and rejecting a $21K gift.
    You could legally live in the thing for just six months(!) then rent it… ! Gawd, I wished I was a FHB… !! :)

    You can respond that I’m gambling too. There’s you’re comeback… . ;)

    Reply
  83. Youre in a different situation to me No Interest but yeah, i bought shit. i cant even tell you how bad one place was. i dealt with the dirtiest filth imaginable. putting holes in the walls to find the rats nests was nothing compared to getting the sewer/drainage system functioning again. basically thats the path i chose, there was no way but up from there but i understand thats not a path everyone can go down (it does work though).

    my only advice is to keep saving and look for ways to lift your skills/training/income. thats the other path.

    who knows, im not really a property bull from the price levels we are at now anyway.

    perhaps finding a lower socio-economic area on the verge of gentrification is a possibility. theres lots of websites and publications that try to find these areas.

    Reply
  84. Oops – i put a swear word in. i’ll repost without the swearing

    Youre in a different situation to me No Interest but yeah, i bought ‘rundown’. i cant even tell you how bad one place was. i dealt with the dirtiest filth imaginable. putting holes in the walls to find the rats nests was nothing compared to getting the sewer/drainage system functioning again. basically thats the path i chose, there was no way but up from there but i understand thats not a path everyone can go down (it does work though).

    my only advice is to keep saving and look for ways to lift your skills/training/income. thats the other path.

    who knows, im not really a property bull from the price levels we are at now anyway.

    perhaps finding a lower socio-economic area on the verge of gentrification is a possibility. theres lots of websites and publications that try to find these areas.

    I also sold my car and bought a $2,000 87 model econovan, using the difference for a deposit. definately made some sacrifices (its a struggle to keep the thing on the road now and i know i cant drive too far in it)

    Reply
  85. Matto, 28/01/10: ” …im not really a property bull from the price levels we are at now…”

    Sorry about this, but I am! Mind you, it’s a different scene over here in the West. I probably wouldn’t consider Melbourne. Or Sydney. WA is hopelessly cheap… and we’re about to lift off.

    Just had a personal letter from a realtor. He has three buyers “… interested in your street… ” That’s a street in which we have three houses. He has buyers waiting. They’ll pay $400K, $420K and $450K. The homes exactly fit their criteria. I suspect a least one is a tenant. So I phone him. “How much is your commission?” said I. “17.5K on $400K” he responded. Go figure. He has the buyers. He has the seller. He wants $17.5K to draw up papers. No sale!! :)

    Reply
  86. Time to change the name of this site from DRA to Pete, Dan and Ned’s fishing hole. Fzzzzzzzzz there goes another one! Reel it in boys…. :)

    Reply
  87. Matto i have to thank you for being the only one that realises that it is a struggle and for offering a ray of hope rather than standing on the top of the supreme tower of home ownership and thumbing your nose at anyone who is beneath you (e.g. Ned S, Pete)

    The rality is though NO ONE can take my example leaving out the health issues, because other than this my scenario is pretty normal and by using the merely rational parametres i gave tell me how i can afford a median house in Melbourne……………………..

    If the answer is that i can’t then i think we all may come to the realisation that this goose is cooked

    Or on the other hand the outer fringe of Melbourne, which in case you haven’t noticed used to be zoned as RURAL 8 years ago, will gor and grow and soon i could afford to live in affordable suburbs like Bonnie Doon or Daylesford

    No interest
    January 28, 2010
    Reply
  88. No interest – feel for all young people who can’t get into owning their own homes. I have 2 teenagers, both still at school, and unless they get better than average jobs, they will also struggle in years to come. The Gen X’ S and Y’s may need a “leg up” from us baby boomers, if we can afford it.
    That’s what caring for your family is about.
    Our first home in Brisbane cost us $70K in 1988, pre-kids, and our combined gross income was around $55K, so affordability was there. But its was a 10 square fibro shack, hot as hades in summer and cold in winter. Thankfully, Brisbane doesn’t get too many extremes. We were able to trade up over time by buying and selling, doing some work ourselves to improve the property and taking advantage of the market.
    It won’t be easy for your generation or ones that follow.

    Reply
  89. “And that’s the problem. The trouble is that so many were misled by academics, whose mountain-top promises gulled young Aussies into believe in a 40% discount. and rejecting a $21K gift.
    You could legally live in the thing for just six months(!) then rent it… ! Gawd, I wished I was a FHB… !! ”

    You really think that most young aspirant home buyers even know who Steven Keen is? They don”t. Seems in fact there was a rush to the FHB grant – most of those out of the market simply don’t have the deposit or the income to service a mortgage when an average home in an average outer suburb in Brisbane is now over 400K. There is a major structural problem that policy makers don’t want to look at …

    Reply
  90. No Interest – im in SE qld so i dont really know the melbourne market but my sister lives down your way and was asking about buying a unit. i couldnt really give her much help because the suburbs she liked started from $400,000 for a real bad 2 brm (northern suburbs) and she didnt want to live somewhere that was cheaper and had the scope to move up a bit.

    another alternative is to rent where you want to live and invest elsewhere but that takes a fair bit of planning and commitment. the goose could well be cooked for melbourne but id say that as long as the banks are willing to lend the prices arent about to plummet. theres (almost) always someone willing to take a 5 year interest only with little consideration for actually paying it off.

    Pete – i dont know what the market is going to do, i do think there are compelling arguments to buy specific properties in specific regions but i dont know if say a place like melbourne can keep storming on from here. if i was looking for a place to buy now there’d have to be a distinct reason to purchase that one place and try to fix it up etc, then maybe keep, maybe sell. i could find places id want to buy now for the chance to make some money but i doubt id like to buy the average house, move on in and just wait for something to happen… if you know what i mean.

    im sure in 10-15 years prices will be up especially from inflation but i worry about our chance of a global hiccup getting in the way between now and then.

    Reply
  91. anyway i think housing is so tied up at the moment that the average person isnt going to have a shot at the average house. you really have to work harder then the rest if you’re chasing a scarce resource. keep studying, investing or renovating,,, or all 3.

    Reply
  92. There is some intelligent discussion of Aussie house prices out there, believe it or not, the arguments put forward are hard to dispute

    http://www.youtube.com/watch?v=oHg5SJYRHA0

    Reply
  93. hmmm interesting argument bertie.

    did you give yourself 5 stars?

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  94. Matto, 28/01/10: “i worry about our chance of a global hiccup getting in the way between now and then.”

    It’s predictable, Matto. Anyone who only as one timeline over a three-to-seven year period may be affected.

    Michael, 28/01/10: “You really think that most young aspirant home buyers even know who Steven Keen is? They don”t.” I agree he’ll soon be forgotten, Mike. But the culture won’t be. There were too many Keens, Karans, HaHas, Louise Hs, Greg-of-Brizzies, Barefoot Investors, Brett-of-Geo-Cities and yes, Bubblefeet Petes, to ignore the Sky-is-Falling scenarios screamed from our TVs, newspapers and websites. I suspect that probably 30% of contributors here bought that line.

    Let’s face it: This is an investment site. This is a Property Investment blog. If the bears are gathered here to talk the market(s) down, against a steadily rising trend in a very low interest rate environment, this is the wrong place to be. If they’re furious because the KeenKaranKloneKlan got it wrong, this is a forum which must just bring them unnecessary grief. Why put yourselves through this pain? Your claimed misery and poverty in Australia are laughable. Can you imagine the tsunami south to Oz if we allowed all the teeming hordes to our north to emigrate? (Boat people? A mere drop in the water… .)

    Reply
  95. Matto, you’re worth 5 stars and a thumbs
    I think at this stage something more serious is needed in this debate
    http://www.youtube.com/watch?v=J—aiyznGQ

    Reply
  96. Bertie, you were always my favourite beatle.

    Reply
  97. You have my symphony, Bertie. When you’re taken _seriously_ you’ll lose your rating rights!! ;)

    The other day, when Steven was shouting “You lose! I win again!! ” and other garbled screams of victory, I nearly posted this:

    http://www.youtube.com/watch?v=2eMkth8FWno

    I decided not to, but now, considering the ‘uppercut’ doled out, I think I will! :)
    (I’d be carefully embarking from Mascot, Sydneysiders. One particular baggage handler is in a Black Mood.)

    Reply
  98. Hmm, which one’s the black knight?

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  99. We have a growing population. And one can only fit so many houses with decent sized blocks of land within X km (or Y minutes; or Z dollars travel cost) of the centre of Melbourne. And while with apartments, the sky is the limit so to speak, at least some Aussies figure apartments aren’t what they want. And reason along the lines that as the boomers got to buy a house on a decent sized block of land within X km (or Y minutes; or Z dollars travel cost)of the city centre, for Q multiple of their wage, they should/will(?) get to as well. Is that putting it too simplistically?

    Reply
  100. The Black Knight? Tone in the Black Mood. The one who’s punch-drunk, still swinging, but relatively armless. The one who has screamed a few times at me, over the years “I WIN!! YOU LOSE! Come back and fight.” (You’d scarcely know the years have passed… he’s hardly grown at all. In fact, he’s shorter in stature throwing left hooks and uppercuts online. Childish rants do not a domicile create! :) )

    Reply
  101. Sorry, got that wrong. It should be: “I WIN!! YOU LOOSE! Come back and fight.”

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  102. Ah so he’s a murkin?

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  103. Ned, surely you’re not suggesting it’s all to do with ‘Location, location, location’ (?)

    As time passes and our population rises, this old truism will haunt those who missed the change in tides… missed the boat completely; far too busy deriding FHOs who scrambled to get on board.

    Reply
  104. Far be it from me to attempt to state the obvious Biker – It doesn’t seem to be a particulary great strategy for winning friends and influencing people on Oz property blogs.

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  105. Pete honestly you talk sh1t

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  106. so have we decided prices are going up, down or sideways??

    ive gotten involved in 3 properties, (all renos), and am selling out of 1 to hedge my bets. my game plan at the moment i guess is to look into more renos but only hold 2 places long term, i’ll use the money from other renos to pay down debt and have a few holidays. least then if it all goes belly up i got to have some cool holidays.

    Reply
  107. Might have been in Casanova’s time; but he’s more pawn-like than porn-like. Steven is just an angry young bloke who knows what he wants.. and he wants it NOW. Doesn’t seem to be as much flexibility in the young these days. I’d blame my generation for not teaching them patience and resilience, but many of us taught our kids these character-building traits the most effective way… by example… just as our parents modelled the same behaviours for us.

    In life, things don’t always go the way we want. When our kids occasionally pulled a tantrum, we’d leave them in their room to reflect on the matter. Perhaps Steven (24) has been left in his room too long. There’s no real challenge to become independent when the cocoon is too warm and amniotic. It’s just too easy to bitch when things don’t fall right into your lap. His flights to physical violence online aren’t a good sign. Unresolved anger means his future doesn’t look too good… . Mix it with a little too much alcohol and his wish for free accommodation may be a self-fulfilling prophecy… .

    Reply
  108. Steven 28/01/10: “Pete honestly you talk sh1t”
    Heard you. Now stop kicking the door, Steven.

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  109. Heard you. Now stop kicking the door, Steven.
    No you are the one who mentioned my name, so you are the one knocking on the door

    Pete if you had worked as hard as I have when you were my age the FACTS ARE YOU WOULD HAVE HAD EVERYTHING by then that I don’t have now
    All I want is a fair go, but you and your type have denied me that FACT

    Flexible???
    I never wanted a mcmansion Pete, a simple 1 bedroom unit in a half decent suburb would be nice, but I can’t even have that

    Reply
  110. Steven, 28/01’10: “…a simple 1 bedroom unit in a half decent suburb would be nice, but I can’t even have that…”

    Ned found you one, Steven. You abused him for it. You have well over $100K deposit, Steve. Go for it.*

    Steven, 28/01/’10: “…you are the one who mentioned my name, so you are the one knocking on the door…”

    No, you threw a punch… missed… and got called for it. Funny thing about online punches. You’ve thrown quite a few and not one has connected.
    (You’re no Cassius Clay, son. What are you gonna do next(?)… bleed on me?!)

    * You don’t want a McMansion? We must have been misled by the Springfield link you sent. Be honest, now, Steve. It’s what you really, really, really, really, really want, isn’t it?! :)

    Reply
  111. coming to conclusions once again I see you are good at that aren’t you

    When did I ever say I wanted something similar to that mansion???
    (knockout punch)

    I was comparing it to what you could by for a similar price here

    When did I say I wanted something like that?????
    (knockout punch)

    I know you too well Pete, you are not going to answer this question, you will try to SPIN your response Too EASY

    All my punches have knocked you out every single one thats why you are flyweight

    Reply
  112. Steven, 28/01’10:” …(knockout punch); (knockout punch); All my punches have knocked you out every single one thats why you are flyweight…”

    Mate, you are a silly, angry (and probably very violent) little kid. Stay in your room until you’ve stopped playing air guitar with your fists. You can pay for any damage you do to the door. ;)

    Reply
  113. yep you see completely ignored the question. Once again (knockout punch)

    Reply
  114. Steven, who raised you? Men don’t need to SHOUT… nor do they need to blindly throw punches at their computer screens or televisions if someone has an opposing view. It’s infantile behaviour. Infantile.

    We can learn a lot of about people by what they _do_ … in fact, I believe we can learn more about them by watching what they _do_ rather than what they _say_. Had you sent us all a link to a one-bedroom unit in Springfield, for $200K… and then another for $500K in Sydney, you might have convinced me. I don’t blame you for punching the air, son. You were sucker-punched by a publicity-seeking academic… and now you’re blaming everyone but yourself. You were eligible for a FHOG and you ducked that one. No wonder your arms and mouth are working overtime… .

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  115. Matto said: “so have we decided prices are going up, down or sideways??”

    I’ve given up making predictions. As my most recent claim to fame is that when my best mate asked me what I thought of buying a full-on negatively geared investment type property in Melbourne maybe 9 months ago, I opined: “Sounds risky; I’d wait!” … With mates like me, who needs enemies as they say!

    Leaving my own home out of any calcs, I’m maybe 60% property and 40% cash at the moment? But looking at poking my head back up out of the hole and putting maybe half of the cash into property this year. Which is not a recommendation! Just a statement of what I’m currently considering doing given my own circumstances. (And unlike many(?), I don’t have significant income to negative gear against and have minimal fondness for mortgages.)

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  116. Cash is no good IMO except to cover emergencies and day to day stuff. Best invested, practically all the time, albeit carefully. Even precious metal is probably better if you can’t decide on anything else.

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  117. Pete maybe you could have looked at it in this way I could have been comparing an average looking house here to a similar priced property over there,
    but no you jumped to the conclusion THAT I WANT A MANSION, maybe I wanted the average looking Australian house????

    but even that would be jumping to conclusions too, because as I said I would be happy with a 1 bedroom unit in a half decent suburb.

    just because I was comparing 2 things doesn’t mean I want it.

    Reply
  118. Matto said: “So have we decided prices are going up, down or sideways??”

    Starting the next house, ASAP, so, considering my old adage about doing rather than talking, I’d have to be very confident about WA. Over a year ago, I suggested that after any realty plateau in the past, things had gone ballistic. I now fear I might have been a little too conservative.

    Dan said: “Cash is no good IMO except to cover emergencies”

    It’s also useful in offset accounts, Dan… or as main income against which to negatively gear. If you’re getting 6.8% in the bank and have a few properties (as a very close relative has :) ) cash is OK… . If there’s one piece of advice I can give the young, it would be to consider offset accounts working against loans. Our main bank will only allow eight of these… so we’ve had to go to a second lender, to run a few more… .
    The benefits? Reduced interest, available cash, no tax on it… .

    Reply
  119. Don’t know if Mascot is a half decent suburb on not Steven – But as Biker says, I did point you in the direction of a 1 bedroom unit there for $267k not that long back at all. Given my assumption it would be convenient for your work. And the fact it certainly sounded extremely affordable given other info you’d provided on your general financial situation: $100k deposit; Above average wage etc.

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  120. Fundamental difference between you and me Biker – You work on credit. I work on cash. Given that the RBA targets a positive inflation rate (all central banks do) my strategy that dates back to Great Depression I days hasn’t been nearly as flash as yours. Such is life; We live and learn – Some info for when next I do get some Oz employment income to negatively gear against perhaps? … :)

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  121. Cash in an offset account is not money, it’s a balance of what you can borrow against the asset. It looks like money, and you can spend it, but all you are doing is borrowing at the rate of interest of your loan. Offset accounts are good but they do not represent positive value – only less debt.

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  122. what state are you from Ned???

    Mascot is a working class suburb, but I think that is too much money to be honest an average house should cost less than that, it really is too much.
    I dont think its affordable at all.

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  123. Got to admit Biker, I’ve given your offest strategy a bit of thought. And couldn’t see the particular advantage – Outside of giving you leverage perhaps. BUT, did also have the thought that if the dirt you are building on isn’t that dear, and the new houses you are building are, the 2.5% pa depreciation just could pop up in the calc as being handy? But never got the calcs finished with all the We hate Oz property Investors that have ruined our lives type noise since.

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  124. I’m in Brisbane Steve – Also live in a working class suburb – About 25 km from town. A 1958 timber fixer upper that I haven’t got around to fixing up yet.

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  125. Offsets: Huge advantages if you get the mix right. Dan thinks they aren’t cash. They sure look and smell like money to me!

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  126. Ned, 28/01/10: “… also have the thought that if the dirt you are building on isn’t that dear, and the new houses you are building are, the 2.5% pa depreciation just could pop up in the calc as being handy…”

    Ned, we actually got the tax situation slightly wrong last year… . Whacking huge amounts into salpack and, with the large number of tax claim write-offs we have, we actually created a situation where we had a little too much to write off. I could tell you the outcome of that situation, but the online retching which would follow is not something we’d all want to hear for several days.

    Yes, land is cheap(er) in WA. And Keen scared a sufficient number of Aussies spitless for us to pick up two nice blocks at gift prices during that brief plateau.

    Depreciation is up to 20% on some items… and it isn’t just depreciation which provides write-offs, Ned. We don’t even claim capital depreciation of 2.5% on some homes… particularly the ones most likely to sell first. We don’t need the write-off… and it counts against you at sale. We do keep excellent documentation of every item, including log books for travel. My missus is more knowledgeable than any FA we’ve met so far… runs _rings_ around them. Our tax accountant is brilliant, though. Honest as the day is long (videotapes all clients’ interviews!) and works his butt off for his customers.

    Could write a book about what we’ve learned… generally through trial-and-error. Saved over $6K on a project today… . :)

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  127. I’ll ask my bean counter about them then Biker – As some of this stuff with all the never ending government fiddles definitely DOES get a bit hard on my head – Ta again! :)

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  128. Steve, 28/01/’10 “…that is too much money to be honest an average house should cost less than that, it really is too much.” So, to be fair, it isn’t ‘can’t’, it’s ‘won’t’, Steven(?)

    Where I’d differ, Ned, is that I’d counsel Steve to put 15% deposit on that unit (or another) with the rest in an offset account, from which payments are taken. Had he taken the $14K, he’d be laughing now.

    (I’m still reeling from his last KNOCKOUT PUNCH, so my thoughts may be adrift. As a silly old biker I don’t know all that much about EEKanomics, so I’m always open to positive suggestions about how to get ahead. :) )

    Reply
  129. The one that I find really perverse at the moment is that the moment I take an Oz job which brings in more than 10% of my yearly income, the super I get from that job is all the super I can get a tax break on. These lads definitely know how to discourage a bloke from working as an employee in this country.

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  130. I’d be looking for a job which gives access to salary packaging, Ned. The first benefit is that whatever you invest in, within super, you can add 15% profit to it. Remember too, that at 55, you get access to a TTR pension, tax-free, on top of your salary… . And at that point your super is also working for you in a tax-free environment.

    I can’t think of any single government initiative which has encouraged older employees to stay in the workforce, which competes with TTR. Yes, there were a couple of other benefits in our tax situation last year, but _nothing_ comes close to Transition-to-Retirement. Just can’t stop grinning… . :)

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  131. It’s a “working class” thing maybe Biker? Where we just don’t understand all the tax fiddles etc that are on offer. And have this puritanical urge to rail against them and say “That’s NOT Fair!” when we do get a wee sniff that that’s how it works. Including the storey that central banks are “inflation fighters” that “try” to preserve the value of our money; When the fact is that central banks specifically try to do the exact opposite – But just not so quick that “we” actually wise up! :)

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  132. I’ve had that thought mate – But suspected that my parting question of “Can I salpack 100%” just might not be a winner in an employer’s eyes? But who’s to know – Maybe they’ll say This boy wasn’t born yesterday! Geez, he could maybe even be useful around the place some day? … :)
    Ahhh … Rock on the KHR!

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  133. Well, they’re legal, not ‘fiddles’, Ned. I only recently read the ‘Rich Dad, Poor Dad’ series, at friends’ homes in Canada… and although I found aspects of it all disconcerting*, I did recognise that the first twenty years of my working life, I was fairly ignorant of the many claims I might have legally made.

    What astounds me is that our sons figured out their tax benefits without us telling them. That’s not just the power of the internet (information IS money) but their realisation that we do all pay an immense amount of tax. Maybe because they were raised in a culture where little went to waste, where recycling (including our cars) is a way of life, where work of any kind is valued. And maybe it IS a cultural thing. Walking down a Vancouver street with a woman who is a multimillionaire (and we’re talking _hundreds_ of millions here) we had to smile when she paused, stooped and picked up a one-cent coin. I’d have done so, but this gal has well over twenty times our assets…! :)

    Remember my missus and I will get no pensions or concessions at retirement. On that basis we have no issues whatsoever about claiming our legal tax entitlements, Ned. :)

    * I have to wonder how many Americans were caught out by Kiyosaki’s leveraging suggestions. Millions?

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  134. Most you can salpack is $50K if you’re over 50, Ned. That includes your employer’s contribution. $25K if under 50.

    We were salpacking 75% each, then switched to 70% when tax levels changed, then cut back to $50K each p.a.

    Cutting back again, now we’ve seen our accountant. Just don’t need it, now… .

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  135. I agree with Pete. The tax system is nuts, but it’s really just a game. Exploring the tax office website is worth the boredom – the education is useful, and if you can find legal ways of doing clever things, well then you’ve simply discovered what (probably) others are already doing – just that it was not announced on morning TV.

    I learnt, for example, that you don’t even need to live in a house for any longer than the time it takes to get a postal address there in your name, maybe a phone connected, etc to say you lived there (could be as short as a month), and then you can rent it out as your primary dwelling for as long as 6 years (and longer if you live in it now and again in between) and not pay CGT on sale (of course you should check with the ATO/accountant first). Nice use of the FHOG indeed, especially if thereafter you go back and live with your parents for a while and pay them a bit of rent, plus travel around for work – nothing saying you can’t as far as I can tell.

    I also think that offset accounts are a good idea because you can pay off your mortgage sooner without incurring fees, and avoid having to go to the bank for the next purchase. While it feels like having a ‘savings’ account (paying the variable mortgage rate) it’s just principal off the loan, so it’s virtual money (if you understand that money issued in a loan is merely based on a promisory note … if not, read about it and learn).

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  136. “Walking down a Vancouver street with a woman who is a multimillionaire (and we’re talking _hundreds_ of millions here) we had to smile when she paused, stooped and picked up a one-cent coin.”

    Hahahaha. Classic. You do spin the darndest stories (Ned/Pete).

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  137. And, don’t forget, Dan… the banks _love_ offsets. You lower their risk. It reduces _your_ risk, too.

    Yes, ignorance kept many from receiving a government gift. The excuses were: a.) I’m ideologically opposed to handouts (Jeez, _I_ never got one in my life!); b.) They’ll push prices up (prices were going to go up, anyway!); c.) I don’t want _anything_ Labor is offering (OK, cut off ya nose to spite ya face!); d.) Prices will fall. Everyone says so. (George Soros: “Spot the lie and bet against it.”)

    To divert: Soros is invested in lithium. So is Buffett. But we’re not (yet). Full ‘electrics’ appear to ‘die’ after five years. Expensive battery replacement. The Tesla is in doubt! :( Any views on lithium? My son the doctor (very Jewish… haha) says forget lithium. Technology will leapfrog it… . We’re going solar, despite this. What are your views, if any?

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  138. It’s a precise indictment of your values that you either a.) doubt the story is true; or b.) smirk at the values of the woman involved, SteveG. What’s even more amusing is that you believe Ned and I are the same poisson. We’re very different fish. I admire Ned’s patience, ability to compromise; and his ability to forgive the worst kind of crap fed up by The Bears.

    I’ve no such forgiveness or compassion. From DRA’s first day, I’ve given public gratitude to an asset class which ensures our family lives in comfort and freedom for the rest of our lives. Vacuum it up and digest it, son! :)

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  139. Please don’t take offense, Pete – I’m a big fan of your work. The quality of the stuff you come up with is gold.

    Getting back off-topic, if I was you, I’d be listening to your son’s advice on lithium. He’s a (Jewish) doctor afterall. Brilliant!

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  140. Rack off SteveG. If I needed more fanboys i’d move back in with Ned.

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  141. Thought you’d confuse the cultural cliche, SteveG. We’re no more Jewish than you’re solvent if you’re a Bullion Bull. But feel feel free to work the racial slur if you feel it’s good for a laugh. ;)

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  142. And the Boogey Boy is back. Use a handkerchief, Son. ;)

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  143. You used to live with Ned? I just had a vision of “The Odd Couple”.

    You guys really are a couple of characters. Where’s Ned? Bring Ned back, Pete.

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  144. SteveG, Pill-boy is playing a prank on me.

    My son Ned is out back skinnin’ some rabbits.

    I’d really like to have you as my biggest fan. Like some stew mate?

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  145. To be honest, Pete, I wouldn’t feel safe. I’ll just watch your side-show from here, mate.

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  146. OK, got it, SteveG/Prozac. Took a while. Happy to amuse you, son… :)

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  147. Biker, solid state fuel cells are not a sure thing. No good for cars at the moment (not without several hundred million spent in research IMO) and no competition for liquid fuels / combustion engines, at least not for the coming 5-10 years. You’ll have a long lead time before the shares sky-rocket, but it’s still a better buy than some never-before-head-of drug (most of those die a quick death).

    Read here: http://hardware.slashdot.org/story/10/01/27/2318247/Lithium-Air-Batteries-Get-Boost-From-IBM-and-DOE

    Read the commentary especially. I think the idea is reasonable and a fair bet, but it’s probably 60% success probability (I think hydrogen fuels might eventually win out). Lithium will hang around for a while anyway, as it has uses outside of cars which will continue. But if they do go for the air lithium fuel cell, then you’ll strike it rich.

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  148. I should say the lithium air battery is not a fuel cell ;) But hopefully you got my drift.

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  149. Thanks, Dan. Found the feedback which followed the article almost as useful as the article itself. “I think hydrogen fuels might eventually win out.” Yes, that was also our son’s belief. His real concern is longevity of the existing Li-ion batteries and the expense of replacing 6800 cells after five years. Not cheap, so you’ve got to wonder about the ‘savings’… .

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  150. Yeah it kind of looks like they made the Prius as a practical joke, a bit like Picasso painting garbage cubism to poke fun at rich socialists, who to this day still can’t see the joke.

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  151. Incidentally: “Lithium is plentiful, you can mine it from seawater indefinitely for about $60 per kg. It’s just that some countries can supply lithium at smaller prices.”

    Lithium is not like gold (unless someone *cough* does to lithium what De Beers has done to diamonds) . So investment ought to be targeted at companies researching how to use the metal effectively, not at miners, because they are likely to be ubiquitous once demand picks up.

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  152. I’ve got no issues with legal tax “fiddles” Biker. (Although when I mentioned fiddles I was thinking more in terms of government continually fiddling the rules.) But the other point is that when people don’t know what is quite legitimately available, they can tend to get a bit miffed when they do. (As apparently evidenced by your statement: “I could tell you the outcome of that situation, but the online retching which would follow is not something we’d all want to hear for several days.”)

    Kiyosaki did concern me a bit with one of his comments that went along the lines of Find yourself an accountant that when you ask what’s 1+1 ?, answers What would you like it to be? Without considerable elaboration, some might misinterpret such a comment. :)

    Leveraging suggestions – Fiscally conservative types don’t seem to rush into degrees of leveraging that can readily bankrupt them. But the Americans have their own ways of doing things of course. And pretty obviously, Kiyosaki doesn’t need financial advice from me.

    Yes, I agree that one probably doesn’t want to make a habit of sitting in cash Dan! And am starting to warm to the idea of offsets.

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  153. offsets are good if you got nothing better to do with the money. if youre holding cash temporarily you’ll save the interest that you’ll earn in a high interest account, without the tax, and theres less incentive to blow it flippantly somewhere else, its already working to pay off the mortgage right?

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  154. Well, we’ve got plenty of other things to do with the money, Matto. As you say, it’s paying off the mortgages. Years back, I argued that it would be better to actually _pay off_ the mortgages, but my missus put up numerous (good) arguments why that path was flawed… and our accountant agrees.

    One of the strongest arguments of many she gave went like this… . A chief arguments against putting money into realty is it becomes illiquid… ie., you’ve little guaranteed access to it if/when you need it. By placing it in offsets you can not only transfer the cash from one account to another (if one property is vacant/ underperforming / sold / other) but you can also pull a large amount (or all) from one or more accounts if an brilliant opportunity arises. I’d use my Super to pay out debt, but her plan has half a dozen benefits mine doesn’t… .

    Thanks for all the comments, Dan and Ned. Off to dig some ‘wells before it gets too warm out there… :)

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  155. Would be great if there was an “ignore user” function on this board. So much drivel and not much relevant comment.

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  156. Some of you need to take your pent up financial guru “wanna to be” info and start your own blog topic somewhere else e.g “I am the god of investment, all hail me”.

    This is blog about house prices rising in the next 12 months and the reasons for and against this happening. It’s got nothing to do with the dribble that has been posted for about the last 50 comments.

    Can we get back on topic or agree to bury it.

    Where the bloody hell are we?
    January 30, 2010
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  157. The question for now is will the RBA show a bit of backbone or continue to encourage the Australian Property Casino to an even more dangerously overvalued level.

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  158. The majority of Australians also gamble on poker machines while drunk.

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  159. Bargeass, unfortunately they wont have the backbone, it will only be 0.25.
    I hope I am wrong, but the governments of this country have got alot to answer for, they are responsible for this mess.

    But what can we do about it? there isn’t anything, Labor/Liberal are both the same.

    I saw this gook on TV today who paid 500K for an average looking 2 bedroom unit in Strathfield, honestly strathfield, it aint exactly an affluent suburb pfft they have rocks in their head

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  160. Reading the boomers versus the y’s here is very entertaining. It seems Ned and his ilk are more concerned about scoring points over Gen Y’s like No Interest than seeing what No Interest represents. Despite all the advice being given to No Interest, the advisors miss one thing. The great majority of Gen Y (and Z) don’t know this advice and given the consumer mentality their parents generation conceived for them they never will. They will most likely make ‘misinformed’ decisions and the result, like No Interest, will be to decide that they simply cannot afford to buy in cities like Melbourne and Perth. They’d rather have the gadgets. The question is, who will? Who will be able to keep paying more each year to support growing house prices? Will the dwindling cancer ridden, alzhemier suffering Baby Boom generation like NedS continue to buy up investment properties as their underpaid tenant nurse wipes the gruel and spittle from their mouth? Immigrants from the third world? Australia has some of the highest house prices in the world so they certainly won’t be able to nicely downsize into our market. And how are we going to water and feed all those extra people anyway?

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  161. Eat ya hearts out, Steve/Bargearse. The folks with rocks in their heads are those who failed to pick up Uncle Kev’s FHOGs. Angry? Shake your heads about. Rattles, right?!

    Fellas, it is going to get worse, but you’re both OK. Mum will look after you, Steven… and Bargearse has a rental on the beach for $150.00 per week. Can’t figure out why you are both grizzly bears… ! You’ve got it made!! :)

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  162. Read that link Pete then go eat your heart out,
    Uncle Kevy was trying to bribe us me thinks

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  163. “Steve Keen, professor of economics at the University of NSW said last year that the homeowner grants were a “disaster waiting to happen”.”

    Well, there you are, Steven. Steven K is going to save ya… or is that Saviour? Looks like _you’re_ right, after all. Property is going to drop 40% and that Springfield McMansion is yours…! Queues will form outside your bedroom… . “Buy our home!” they’ll plead, jingling their house keys in your face. “You _waited_ so hard, Steven. You deserve our home!!” (Giggle!~ ;) )

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  164. Arrr yes the king of SPIN at work again

    Out of a whole article you managed to find two sentences that mentioned Keen and to try to imply the whole article is about him and his thoughts HAHA
    GET A SENCE OF PROPORTION

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  165. A ‘sence’ of proportion? (Typical) You ‘thinks’ Uncle Kevy was trying to bribe you, Steven? Of course he was. He was trying to a.) keep employment high; b.) maintain Australia’s tax base; c.) protect Australia’s third largest industry; d.) help 200,000 + families into homes; e.) rein in high rents. He actually succeeded on all five counts.

    You’re amusing, son. You pay your union dues fortnightly like a good lad, but you don’t see any further than the tip of your nose. You’re wishin’ and hopin’ that your fellow Aussies will lose their homes, so you can step into a 40%-reduced McMansion in Sydney. I’d call you a scumbag, but scum floats… and you’re a bottom feeder, Steven. About now, I’d expect a left hook, politically speaking; but since you’re known for your brilliant uppercuts, let’s have one of those, you lame duck…!!~

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  166. HAHAHA

    “You’re wishin’ and hopin’ that your fellow Aussies will lose their homes, so you can step into a 40%-reduced McMansion in Sydney.”

    How many time do I have to tell you I DON’T EXPECT TO LIVE IN A MANSION, I don’t want to live beyond my means.

    “I’d call you a scumbag”

    Do you know what I would call a scumbag?

    *A rat that owns 10/20 investment properties that wants to suck the blood out of their fellow Australians

    Do you know what I would call a scumbag?

    *A rat that expects to get money for doing nothing, like property investors do

    Do you know what I would call a scumbag?

    A group of people who go out of their way to cause a situation where prices become so high that a correction is needed and those people who fell for it will have to pay the price for it

    Now I am sorry that some of my fellow Australians gave into rats like you, who were not smart enough to see the mess they were getting themselves into and not smart enough to see through gimmicks like the FHOG and real estate spruking ,
    But I for one choose not to give into rats like you, and I will gain the rewards for that,

    I can say with all honesty I don’t hate my fellow Australian that fell for the trap,
    But I can say with certainty that I hate my fellow Australians that set the TRAP

    So don’t you get on here and take the HIGH MORAL GROUND when you were the one who wanted a situation that put people on the edge of their financial situation, bleeding them for your desire of greed and forcing a situation that a correction is needed

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  167. I don’t think anyone is wishing/hoping for anything except to have some kind of idea of where things are headed. It doesn’t matter if you own or don’t own land, etc, but you stand to benefit if you can tell if things are going up or down.

    If someone says watch out houses are gonna implode, then cashing up in preparation is not a sign of hoping, but of preparing. Yes, it’s immoral to profit from other people’s misery – ill-gotten profits – and to defraud workers of their wages and so forth, but investment is resource allocation. To me, predicting a housing correction has a lot to do with wealth preservation (and self preservation!) rather than profiteering.

    If you wanted to save every Australian from financial hardship because of the games that banksters play, then maybe the argument is not about which way prices are headed, but why we are letting banks issue loans at all.

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  168. Steven, 31/01/’10: “…those people who fell for it will have to pay the price… ”

    Yep, typical response from a property bear sitting on the edge of his chair waiting for the crash.

    “… a correction is needed…” Because _you_ need it. Someone has to lose so that you can win.

    The TRAP was of your setting, son. You sat on your hands when you could have picked up something during the plateau. And here’s _your_ high level of moral ground: “I saw this gook on TV today who paid 500K for an average looking 2 bedroom unit in Strathfield, honestly strathfield, it aint exactly an affluent suburb pfft they have rocks in their head…”

    Same kind of stuff you were spouting over a year ago. We’ll be reading it two years from now. Grow up…

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  169. “Someone has to lose so that [someone else] can win.”

    Good grief! I’m don’t want to butt-in to another Steve’s fight, but Pete, surely you can see that that’s going to be the case regardless of whether prices move up or down.

    You could argue it’s a zero-sum game except that there are leeches skimming at each transaction.

    I don’t think he was claiming the high-ground as much as he was point out that you don’t have it.

    In my experience, those that start with borish personal attacks (“you don’t see any further than the tip of your nose”, “I’d call you a scumbag, but scum floats”, “you’re a bottom feeder”, “you lame duck”) are the ones losing the argument.

    Don’t fear though – I’m sure Ned’ll can help bail you out ;-)

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  170. My advice to Ned would be to stay out of it, SteveG! :)
    He’s already accused of all kinds of statements he has never made…

    You’re spot on about the name calling, though. Leeches?

    Here’s Steven (April ’09): “Rich bastards who own more than 1 or 2 houses are the Greedy ones… GREEDY CAPITALISTS… ” ” I will be happy to see all rich greedy capitalists go under… HAHAHA” ” I would call this legalised “theft” and I make no Apology for it… ”

    Yes, name-callers lose the argument. He lost not only the argument, but also the best chance he had for a home… .

    His conclusion on house prices, back in May 2009?: “So I think they should drop by about 50percent, even then they would still be above what would be considered a fair price, ie even a 50percent drop would be considered unaffordable What do you al think?” April ’09

    Classic Steve drivel/dribble…

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  171. “I saw this gook on TV today who paid 500K for an average looking 2 bedroom unit in Strathfield, honestly strathfield, it aint exactly an affluent suburb pfft they have rocks in their head…”

    Gook? You are a class act aren’t you Steve.

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  172. “You’re spot on about the name calling, though. Leeches?”

    I did say “borish personal attacks” so I’d reckon you’d have a point if I called YOU a leech (but I didn’t). Glad that you’re man enough to acknowledge your wrongs though.

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  173. Did you mean ‘boorish’… swinelike(?)
    Getting yourself in deeper every post, son… . ;)

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  174. If the first sign that you’re losing an argument is personal attacks, then the second would definitely be resorting to pointing out spelling and grammar mistakes.

    Feel free to retrospectively correct yours, Pete.

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  175. Ok, quick pause to the current pissing contest.

    So, will house prices go up, or down?

    There. Now you continue pissing.

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  176. I reckon it’ll be the exact opposite of whatever Pete reckons ;-)

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  177. This sums up the consensus establishment view at the moment reasonably well I’d say Dan:

    http://www.globalpropertyguide.com/Pacific/Australia/Price-History

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  178. I reckon it’ll be the exact opposite of whatever SteveG/Pillman/Steven reckons ;-) Fifty percent crash? Clueless. You with Steven there, ‘SteveG’?
    Of course you are… .

    Throw Keen in with these bears and just watch prices rise… !

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  179. Thanks for the support guys!!!

    This is what Pete said:

    Steven, 31/01/’10: “…those people who fell for it will have to pay the price… ”

    Yep, typical response from a property bear sitting on the edge of his chair waiting for the crash.

    “… a correction is needed…” Because _you_ need it. Someone has to lose so that you can win.

    Ok Pete when Prices were AFFORDABLE (3/4 times income)lets just go back and see what was going through Biker Petes mind hmmm it might have went a little something like this:

    “Gee I hope house prices become unaffordable, 7/8 times yearly income would be nice”

    Yep, typical response from a property bull sitting on the edge of his chair waiting for a boom.

    “… a BOOM is needed…” Because _you_ need it. Someone has to lose so that you can win.

    And now you try to take the high moral ground, it was ok for you to sit there on the edge of your chair waiting to cash in on other people misery wasn’t it???

    “SOMEONE HAS TO LOSE SO YOU CAN WIN” During the property boom that would have been who???
    YOU

    You hypocrite!!!SCUMBAG, LAME DUCK, Nice to see you have the time to go back and quote me almost a year ago, and on another website too I think, gee someone has too much time on their hands.

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  180. Excellent analysis, Ned. Thanks.

    We’re experiencing the following activity we haven’t seen for a while:

    * Tradies contacting US for work.
    Haven’t ever seen that before;

    * Realtors _repeatedly_ contacting us for sales of both
    completed houses and vacant blocks.

    Both may point to an undersupply. I found the 3% rental vacancy rate in the analysis quite high. In highly desirable locations, I’d be surprised if it’s 1%.

    The comment ‘time will tell’ has been used over and over again since DRA first commenced commenting on Australian property prices. We’ve read scores of reasons why a crash is imminent. No doubt there’ll be a lead article on the likely effects of a quarter percent lift in rates early this week. The ‘negative equity’ threat hasn’t come to pass… nor have the wild 40% guesses made by highly-qualified experts.

    Must be a little disconcerting for those who chose/choose to wait, rather than act… .

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  181. I don’t need a boom, Steven. If prices rise, I sell. If they don’t, I rent ’em. You don’t need prices to _fall,_ either. You have the cash. You have your room at home. You’re simply a whinger with his employer’s time on your hands, blogging at 3:00 am this morning. Handle your own baggage, son. Sounds like a pretty comfortable life to me! ;)

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  182. One thing that people may wish to “bear” in mind is that DR has been warning of an Oz property price crash since the first half of 2005 that I know of. (I forget the exact month.)

    Reading the globalpropertyguide article, I can’t see anything that would especially discourage a well capitalised Oz builder from popping up another house or two.

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  183. SPIN SPIN SPIN

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  184. Too right Steve. We need some real articles published by RP Data or the REIA.

    Or at least from some organisation that can prove it has a long standing bias towards housing.

    None of this “survey” stuff. Like you, I hate REAL data, it is very inconvenient. :) :)

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  185. Enough sarcasm there BIKER Pete.

    I don’t care what happens to everyone else – I am more than fine with my assets. And i’ll be happy to keep telling the same story no matter what! :)

    Besides, my fanboys Steve and Ned are going to move in to my shack and pay me rent!

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  186. LOL “SPIN SPIN SPIN” that was directed at the BIKER Pete, Pete

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  187. You’re a very busy little spider, Steven. (That’s not my post above yours, BTW.) :)

    Ned: “Reading the globalpropertyguide article, I can’t see anything that would especially discourage a well capitalised Oz builder from popping up another house or two.”

    But we may be seeing a falling-off in construction here, Ned. Not sure why:

    * Interest rate unknowns?
    (The likelihood is 1% for 2010. Still low… .)

    * Rising labour costs?
    These were passed, despite industry opposition.

    * Uncertainty regarding the KHR?
    Folks waiting for tax breaks on bank interest?

    * Other(?)

    This construction slowdown is surprising, considering population growth and 457s flowing in here. It may mean very severe accommodation shortage in WA by 2011… .

    We’re finishing one, about to start another… the three-garage experiment.
    Trying to keep the total cost, including land ($134K) under $385K.

    Always appreciate your KHR updates, Ned… .

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  188. “Steve Keen, professor of economics at the University of NSW said last year that the homeowner grants were a “disaster waiting to happen”.

    Keen is always write.

    Reply
  189. That’s OK, Steve. You look like you need a bit of help.

    “Steve Keen, professor of economics at the University of NSW said last year that the homeowner grants were a “disaster waiting to happen”.

    Gotta hand it to Keen, don’t you?

    He’s a genius.

    Reply
  190. yeh biker pete I did know that!!!

    Reply
  191. Life must be a bit of an uphill battle for him, eh Steven? ;)

    Reply
  192. Problems mountin’ for him these days, maybe?

    Reply
  193. Maybe his rent’s just a bit steep, too(?)

    Reply
  194. LOL… that was directed at The Steves, Steven.

    Reply
  195. If I really had a bike, i’d go with him on his Kosci walk.

    I could ride along side and goad him by saying “haha, you old fool Steve Keen, house prices only ever go up! They will never ever go down! Haha! And you know how I have come to these conclusions Steve? No, it’s not my PHD, nor facts and figures…you see it is something far more reliable! It is my extensive experiece of the last two decades! See Steve Keen, two decades is as far as history goes! Therefore I know everything!”

    And when he responded, I would just insult him personally until he stopped arguing! Haha, I am so smart :) :)

    Here Ned, go fetch this stick, good boy :)

    Reply
  196. I’ve got a sneaky suspicion this “problem” will be resolved with more high density “affordable” housing being built. Just like government wants. Rather than Prof Keen’s crash – Which they don’t want.

    Reply
  197. House prices will drop.

    Interest rates will continue to rise.
    The official unemployment figure is “low” but that discounts the under employed, those that have had reduced hours due to the gfc
    China is starting to restrict credit, fearing a bubble.
    Westpac recently dropped their LVR to 87%, the other banks will follow soon enough. LVR at 95% $50000 deposit and the means could get you a million dollar house. LVR at 90% same deposit gets you a $500000 house, now down to 87% It is even less…
    The banks have billions of dollars in loans that they wil need to refinance by June next year, this will be funded at higher rates that will be passed onto mortgage holders regardless of what the Reserve Bank does.. Westpac are offering 8% for a five year term deposit… What does thast tell you for long term interest rates.. Mortgage rates of 13.5% in the near to medium term (2 to 5 years) are a distinct possibility, the aforementioned credit restrictions ( LVR rates ) and impending higher rates will cause a drop in real estate prices.. if China stays strong and continues to support Australia through trade and investment it won’t be as bad a drop.. if China has an economic bubble pop as well then it is going to be nasty…

    Consumer credit debt in Australia is extremely high (Credit Card, Store Credit, Personal Loans)

    Reply
  198. There’s a _few_ here who want it, Ned.

    Here Prozak, here’s a script. Good boy… off you go… chase the nice script…!! ;)

    Reply
  199. Yes, you’re probably right Ned. I can already smell the likes of Westfield Holdings and other property moguls making sure they are handed a handy monopoly on the high-rise contracts. But wait, if they increase the supply, they will get the crash, won’t they?

    Reply
  200. HAHAHA was just watching 7 news, all these baby boomer investors protesting outside the RBA, demanding no rate raise, even demanding a cut HAHAHA
    They are getting desperate now :D

    Reply
  201. There you are, Steve! Three months from now you’ll get that 50% discounted McMansion you’ve been chasing. I imagine the baby boomers who have most to gain from the Great Property crash are your long-suffering parents. Yes, there they are now, on the Channel Ten News, crying out for relief from your endless whingeing…. .

    (Don’t you understand _anything_ about taxation benefits, Steven?! :) )

    Reply
  202. There are at that Biker! :)

    Doubt it Dan – It will just address the “structural” issue they talk about in regards the Oz housing market. Kind of along the lines that if all you have for sale are 8 cylinder automobiles and people are starting to whinge that automobiles are too expensive, then some smarty might decide to build some 6 and even 4 cylinder automobiles. Heck, it could even increase the value of the 8 cylinder jobs if they are still highly prized and become scarcer.

    Reply
  203. Greg Atkinson described the Australian property ‘market’ well when he redefined it as ‘markets’. The price differences between states are one example. The difference in values between cities and rural areas is another. Then there’s apartments versus houses. Age of buildings is another defining issue. These are the most general of classifications. We know that within cities themselves prices vary widely, depending on suburbs.

    High-rise is a category all its own, particularly dependent on location. As a solution to urban overcrowding, it’s an expensive remedy in a ‘good’ area. The missus and I once considered the purchase of a suite atop a converted wheat silo. All those units sold, for a claimed $3 mil each. Even ground-floor units in my son’s (rental) complex start at a million.

    It will be interesting to see just how we weather the population increase. It may well be that _all_ governments conclude that the cheapest effective method of coping is the encouragement of private investment. :)

    Reply
  204. Come to think of it, I don’t actually know a baby boomer who’s neg geared? One of my mates sisters is. But she’s a Gen X. As is he. And he rents from her. She’s a single doc with no desire to marry. And she reckons he can have the joint when it’s paid off.

    He lost his house in a divorce. And has no desire to marry either – Not again!!! But pays for lots of work on the joint. Using his own cash. Which she claims against her tax. “Typical bloody wogs” – God luv ’em! :)

    Reply
  205. Well Australia’s housing worm will inevitably turn methinks. Privately funded high density housing occurred to a degree in inner Melbourne during the boom, but it’s frightfully expensive. During an economic downturn, I somehow can’t see that happening to the necessary degree – if so, it’d have to be some kind of government initiative – socialist housing (yuck!).. or company owned housing (like at the beginning of the Industrial Revolution .. also yuck!).

    Well in any case, I think the time to buy again could be coming soon. Glad we waited – sure we missed this latest (and maybe the last) hurrah over the past 12 months in housing prices, and instead consolidated debts and accumulated cash, but either way it was the right thing to do, rather than increase risk exposure during surreal economic conditions. RBA stops for nobody – their mandate was never to listen to protesters outside their offices. You might as well go to Obama’s house and ask him to reduce spending on nuclear weapons (Nobel peace prize? ha!). You’d just get arrested and locked up or something.

    Reply
  206. Government can compete in providing rentals – Initially. Because they have huge advantages – Initially. But their usual laisse faire attitudes regarding tenant selection and ongoing maintenance catch up with them – Until they figure it is best to bail on what have become tax payer funded hovels. SameO, SameO.

    Reply
  207. Hong Kong may be as good an example of a city where it works; possibly Singapore, too. But, as you say Dan, there are also some magnificent ‘socialist housing’ failures around the globe.

    And, as Ned comments, maintenance issues can be an ongoing loss-maker. W.A.’s state government sold off a raft of such burdens a few years back, introducing the ‘shared-equity’ concept. You own 60%, the government 40%.
    The advantage is that the chief shareholders are more likely to treat the house with respect, because they have a major stake in doing so. I wouldn’t object at all to the resurrection of these shared-equity grants. The state wins, the owner wins, the taxpayer wins… .

    Reply
  208. No Dan, I really don’t think it is that expensive. Not if we are talking about knocking in a missing wedge that’ll see a fundamental adjustment in the structure of the Oz housing market.

    Bring in a few Indians and give them some concrete and steel and say Over there fellahs – 6 stories if you please – And lots of them with an outdoor open carpark each plus a few spares and one open area for the kiddies swings and another fenced in one 20m * 40m where the bigger boys can pretend to be Pele.

    Reply
  209. Having a better think, they aren’t that generous – 12m * 30m would wrap it up.

    Reply
  210. Well none of it’s very concrete yet.

    Reply
  211. Gotta play your hunches I guess Dan? And for the next few years minimum my hunches lean towards governments rather than free markets. But yeh, it all could be a cunning trap as Steven suggests … Guess we’ll know when it hurts hey? :)

    Reply
  212. “RBA stops for nobody”

    You are spot on DAN
    They don’t even stop for a bunch of baby boomer protesting outside the RBA demanding they leave rates on hold or demand rate to be cut.

    HAHAHA It makes you laugh doesn’t it

    Reply
  213. Steven: “HAHAHA It makes you laugh doesn’t it”
    Intend to pay _cash_ do ya, Steve? Mate, you’ll be 45 years old and still living at home. (And you’ll still be laughing… hysterically… . ;) )

    Reply
  214. How many houses do you own Biker?

    Reply
  215. Yeah STEVE, hope you can pay CASH. Ahahahahahha?

    Steve if you haven’t got into the speculative bubble of the housing market, then where will you get that $500K for a house from?

    Silly young man, you’d need to be on pretty good wages!

    Us baby-boomers (my lil fella Ned and me) worked real hard and bought houses on the cheap, so of course we can buy $500K houses no worries. But tough luck for you mate on your Gen Y wage…you’ll have to save up for one, hahaha!

    Take this advice from me, someone who doesn’t work for a wage, just speculates on property, when I say that you like all Gen X,Y, and Z’s need to pour your wages into property until you are 85 years old. Like me.

    And also remember that in doing so, you’ll be helping keep this bubble alive – which is what I want as a property speculator.

    Best of luck mate…or not! Haha :) :) :)

    Reply
  216. Well, you’ll note that I never challenged your guess, Steven. Somewhere between the numbers you estimated. We don’t need to build any more, but we enjoy it. We like our tenants, too.

    The internet makes it all easy, from the planning stages right through to managing the properties, even from abroad. If a tenant has an issue, we can fix it immediately. Missus wants a bigger laundry for a new plan? It’s a cinch moving walls. We need a quote on six new air-conditioners? It’s a breeze.

    You’d love this stuff, mate. Much more fun than a 24 y o imagining he’s beating up on a 63 y o… but each to his own… . :)

    Reply
  217. LOL Your too funny Pete and True mate :D
    The real Biker Pete would love us to keep hold the bubble alive, But I am not going to give him that satisfaction and be part of the problem :D

    Reply
  218. That stuff’s not good for you, Prozak. You’ll begin to imagine all kinds of things… like you once rode a ‘motorbike’ through Asia for a year… .
    Right now you’re imagining you’re me. “Imitation is the sincerest form of flattery.” Charles Caleb Colton, (1780 – 1832).

    Reply
  219. If Asia was your wife…and ‘motorbike’ was…well, now you can imagine something ‘fake Biker’.

    I’m the real ‘Biker Pete’, I have a mate on here called Ned, and you are just some fraud who thinks he knows property better than I? I don’t think so!

    I’ve dug a lot of, erm, ‘soakwells’ (that’s Biker Pete code for ‘posterior’) and know a lot about property, since in the two decades i’ve been into it. And everyone knows that history goes in a straight line! :)

    You WISH you were me. Probably a bit younger though, you’re not too far from the grave :) . But you’ll never be lucky like me, I have a joint burial plot with Ned. I’m going to have him placed on top of me. Smooches forever mate!

    Reply
  220. If Krudd succeeds at anything it will be creating an Aussie version of the US sub-prime crisis as he has the policies that will create one.

    Reply
  221. ‘erm’… and there it is, Pillman. I can see how you get your scripts filled, son. You’re a sick man.

    You’re a dinki-di POM, my son… and a sick one to boot. ( erm…. !! LOL)

    Reply
  222. Well, Ned. You were spot-on, mate. It’s Prozak. Must admit I doubted he’d crawl back, but here he is, necrophilia and all. No wonder he can’t emigrate. Record, probably.

    ‘Motorbike’ was the first clue. But ‘erm’ ? ‘erm’ ???!!!~ Thinks he’s the Sloan Ranger!

    Gawd, I’m glad he’s in Blighty while it’s going under. Wonder if he can swim?!~ ;)

    Reply
  223. And a graduate of the LSE… London School of Ergonomics. Taught Prozak how to bend over for it: “I’ve dug a lot of, erm, ‘soakwells’ (that’s Biker Pete code for ‘posterior’)” Gets it off with all comers, does our Prozak: arse-bandits (watch out BA!), the dead, ‘motorbikes’ he imagines are older women. Classic, vintage Prozak!

    What’s he doing on an Oz Property site? Probably time to start taking a look at the Brit DR site. A serial pest like this leaves a trail of sexual perversity. Just can’t help himself… .

    Reply
  224. OK… take a look at the Brit site:

    http://www.dailyreckoning.co.uk/property-investment.html

    You can see there’s virtually zero interest or feedback re property there.

    So the little greaser has inserted himself into the Oz site to trawl like the troll he wants to be. I doubt the Brits would give this mentally-unstable twatwaffle the time of day.

    Back to your bedsit, Prozak. Follow your doctor’s instructions carefully.
    Find a partner (preferably living)… and try to be _yourself_ in Jolly Old England. ;) ‘erm’ Hahaha…. ‘erm’ !!

    Reply
  225. That Pillman is really starting to bug me Ned mate.

    Taking my name in vain!

    You’d think he’d have lots to talk about in the UK…although now that I think about it, the bubble is here, not there. Oops, didn’t mean to say ‘bubble’! I mean the “don’t miss out or you’ll have nothing Property Boom”. Phew, that was a close call :) . Bubble just doesn’t give it the fear and greed factor that I need it to have :)

    That fraudster Biker Pete is at it again. I tells ya’ll, I’m the real biker. I can trawl better than he can. I’m like a super-troll. But it is hard going, that fraudster is on here 24/7 it seems! You’d think if he wasn’t a fraud, he’d be like me and need some time away from here to dig Neds soakwell* . But he is crazy enough to think we’ll believe he is some property tycoon with all the answers, yet sits on this website (of all places) all the time? I don’t think so ‘buddy’! You’ll need far more than that to make the gentle folk here think that you’re the REAL Biker Pete.

    So buzz off and lick your wounds** please pal :)

    *interpret as you like :)
    **Ned to interpret

    Reply
  226. OK… take a look at the Brit site:

    http://www.dailyreckoning.co.uk/property-investment.html

    You can see there’s virtually zero interest or feedback re property there.

    So the little greaser has inserted himself into the Oz site to trawl like the troll he wants to be. I doubt the Brits would give this mentally-unstable twatwaffle the time of day.

    Back to your bedsit, Prozak. Follow your doctor’s instructions carefully.
    Find a partner (preferably living)… and try to be _yourself_ in Jolly Old England. ;) ‘erm’ Hahaha…. ‘erm’ !!!!!!!!!!!!!!!!!

    Reply
  227. So, who else is ‘Prozak’? Probably Claytonator, definitely SteveG. Now he’ll move in and out of the ‘Pete’ tag. How many of our frequent bloggers really are this little Brit troll?

    You’re sick, mate. Get help. This bloke a friend of yours, Steve?
    With friends like these, you’ll need enemas… .

    Reply
  228. Meanwhile, i’ll get back to swindling the locals Down Under :)

    You know Ned, this double garage has really bad air conditioning! Sometimes reality hits me and I think of how sad my life is living in here. But then i’m back to pretend that it is my house and I am a millionaire property tycoon again :)

    Life is what you imagine it to be after all :) :)

    Reply
  229. Fraudster BIKER, I am the real Biker Pete and unlike you I can PROVE that the Australian property market is not in a bubble.

    Just follow the simple steps in this article and you will all see:

    http://dealbook.blogs.nytimes.com/2010/01/27/schillers-list-how-to-diagnose-the-next-bubble/

    Reply
  230. AdelaideNow 1/2/2010

    “The Investors Club yesterday launched a national campaign against rate rises, stating the Reserve Bank was a “wealth hazard”, sapping prosperity from investors.

    In Adelaide, about 15 people gathered outside the Reserve`s Grenfell St office calling for rates to be lowered to 2.5 per cent to stimulate the housing market.”

    A WEALTH HAZARD LOL, a hazard to their 10/20 properties?

    To stimulate the housing market HAHAHA Adelaide is one of the most expensive cities in the world ahead of New York and London if I am not mistaken and they want it to be stimulated more LMAO

    Too bad for people like me who save, they couldn’t care less if my savings get eaten up by inflation.

    Biker Pete are a member of the “INVESTOR CLUB”?
    I can picture you outside the RBA protesting, throwing a tantrum and having a hissy fit no doubt hahahaha They can be a violent mob these oldies if they don’t get their own way you know :D

    Reply
  231. A fun read, Steve i will be your mate, i also enjoy upercuts and bottom feeding. Not long now!

    Reply
  232. Biker, didn’t you know? Prozak is _everywhere_ .. just not in my medicine cupboard, as it happens :)

    I don’t think there will be a housing price collapse in the near future in Australia (at least not like that in the US) purely because our laws are different – you can’t just walk away from an indebted house and keep the other one – the bank will go after everything you own. But I also think we ARE in a bubble (or at least an overpriced market) – there are artificial measures inflating the housing price, plus wages and staple items haven’t caught up to house prices. The situation is unbalanced. Either way, one will approach the other and house prices will normalize. My bet is wages and the prices of day-to-day stuff will climb, but at the other end the middle classes will wake up and realize they have come out of this the poorer. Before all that happens, though, there could well be a period of turmoil, eg: if China shows signs of rot on its shiny surface then we’ll have to start undergoing some painful but long overdue restructuring as the most recent resource boom begins to fade.

    Reply
  233. Steve, I’ve said it before, I’ll say it again.

    Just buy gold.

    There is no way your savings can be eaten up by inflation when your savings are in gold. Then as in Berlin in 1923, when real estate prices, in gold, fall enough, you can buy.

    Reply
  234. You know, I’m not sure which is funnier… an angry 24 y o holed up in his room, throwing punches while he waits for a 50% property crash, or an over-medicated POM with multiple personalities in a squalid London bedsit, passing wind in an Australian property site.

    Probably (erm…!!) the latter. Steven at least wants a share of the action. Prozak… well, he’s just a sick little sycophant with a worn out (erm…!!) ring to his argument, chained to a depleted, sinking island. An Aussie wannabe, with an incurable disease… . You make refugees arriving in boatloads up north look good, son!

    You take the ‘Pete’ tag, Prozak. You’ve used it a few times, so I figure even penicillin won’t clean it… .

    Reply
  235. Well said Justin. GO GOLD!

    Reply
  236. And trade it later for farmland or a small rural with water access minimum. And then when gold is cheap buy more again.

    Reply
  237. To some people a small rural block covered in fruit trees and vege gardens is desireable. We certainly can live without it now. I say NOW. But unsustainable living is widely practiced here. In the future such blocks (apart from the commercial farms) may be very eagerly sought.

    Reply
  238. “The “INVESTOR CLUB”(?) Never heard of it before, Steven. But as I’ve said previously, you’d be a fool to put all your assets just in one class.
    You’d also be foolish to not have your own back-up plan. Cash and Super are our back-up.

    Take Justin’s comment: “Just buy gold.” But he’s smarter than that. He’s also fully committed to sugar.

    I did look for the news report, Steven, expecting from your description to see hordes of angry investors protesting. There were possibly 25 people there. Probably doesn’t add up to the 50% crash you’re praying for… .

    Dan:”…wages and staple items haven’t caught up to house prices. The situation is unbalanced. Either way, one will approach the other and house prices will normalize.” My first PAYE pay cheque was 2% of my last one, Dan; so I’m guessing that wages will approach prices, rather than home prices falling. My own kids make many, many more times my last pay cheque, weekly. I think there is much, much more money out there competing with ‘the Stevens’ than they suspect! But hey(!) I may be wrong about this.
    I’ve been right about property investment 32 years, now. Not talking about it, but actively _doing_ it. If Steven’s watching the Channel Seven news, hoping to see me throwing punches at the RBA, he’s seriously underestimated not only our planning, but our assets… . ;)

    Lachlan: A small rural block with water, fruit trees, chooks, bunnies and a fenced vege garden is a little slice of heaven, mate. We take it for granted, sometimes.

    Reply
  239. Really, so it’s BIKER Pete now is it? Truly confused you are.

    Though is that the BIKER (i’m a genius cause I buy & sell assets in a rising market) Pete, or the funny one?

    Reply
  240. So is that the REAL Justin, or the one who made the comment about “…bending over and taking it hard up the arse… ” ? Prozak again, I think.
    How many names _do_ you post under, you chamber pot?! :)

    Reply
  241. Biker Pete – “so I’m guessing that wages will approach prices, rather than home prices falling.”

    Yes _prices_ but as indexed against, say, cheeseburgers, there could well be a price correction whereby cheeseburgers appreciate more quickly than houses. That’s still “bad news” for investors, though perhaps just a period of under-performance, and a good time to enter the real estate market if it does occur.

    As for gold – is it the trade of the decade? Better to judge it against cheeseburgers (CB) than dollars or the S&P 500 / ASX 200. It shines less when you do that. See, I’m happy if a house (or rather, a building on a square of _land_), once worth CB$100k, stays at CB$100k (and it will), while still turning over rent (which on average breaks even with a small profit, as long as it’s not all pouring into debt), whereas gold goes up and it goes down, but it can’t feed you unless you can exchange it. Make a good decision on a house – eg: good area, upgrading in a timely manner, etc – and profit – or have a ready dwelling for your kids when they grow up, giving them the best head start they could ask for.

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  242. Dan: “I’m happy if a house (or rather, a building on a square of _land_), once worth CB$100k, stays at CB$100k (and it will), while still turning over rent (which on average breaks even with a small profit, as long as it’s not all pouring into debt), whereas gold goes up and it goes down, but it can’t feed you unless you can exchange it.”

    Many good points, on which we agree, Dan. We’re familiar with the McDonald’s Burger Index. We use it as one of several performance indicators to judge a country’s economic progress, in fact. :)

    There are many myths which don’t stand up to scrutiny. Gold as the Trade-of-the-Decade for example. Yes, if you bought and sold at _exactly_ the right time, you got bang for your bucks. By buying properties carefully and selling at the peak(s) you’d have done even better. (And we did… and we drew incomes… and we rolled profits into Super, rather than CGT. Many others did the same.) Only one of our homes is under-performing. We just spent too much building and equipping it. It’s just covering its debt, after tax benefits. It may, however, create the highest capital gain… .

    Timing is important. We’re getting three or four phone calls or letters a week about properties in our No. 2 suburb. No offer attractive enough to take up (we’re happy with the rentals) but it’s indicative of the market that interest in established homes is buoyant. Building has definitely slowed… . Means we can negotiate with builders for extra concessions and upgrades for the next (March ’10) project…

    Reply
  243. I thought that comment would strike a nerve somewhere ;)

    Reply
  244. A well trodden Fujitsu Consultant report has been showing up in the news lately, nothing mainstream just in the background. It suggests that of 26,000 FHO 49% were in mortgage stress and will find themselves in severe distress as interest rates lift.

    It reaffirms waht i thought and that the $16,000 FHO have overcommitted themselves and the banks have created a debt disaster.

    Thanks Ned S and Pete, i look forward to buying your investments at the firal

    No interest
    February 2, 2010
    Reply
  245. fire sale sorry

    No interest
    February 2, 2010
    Reply
  246. That’s okay ‘No interest’, as long as I get to dig Ned’s soakwell on a regular basis I’m happy :)

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  247. I don’t have any mortgages No interest – So would certainly hope to be able to avoid any fire sale situations.

    It is a common enough assumption though – That someone who owns rental property has debt. But I don’t.

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  248. I think its the protest from the “investors club” that did the trick hahaha

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  249. i look forward to buying your investments at the firal
    It reaffirms waht i thought

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  250. Ned, the difference is you OWN property, whereas others are paying rent to the bank, which holds the title – and the title holder is the owner. Interest rate rises means the landlord is raising the rent. It means nothing else – and so now we see who the great big landlords are, and why they are more powerful than governments – and perhaps people might see how this is so totally wrong.

    Reply
  251. The Aussie Fed and Kevin ‘I like splashing around buckets of other peoples money’ Rudd are determined to outdo the US sub-prime crisis with our own local version.
    Their motto is ‘Anything the US can do we can do better.’

    Reply
  252. If I was absolutely convinced of that Bargeass, I’d be rushing to buy every bit of Oz property on leverage I could lay my hands on. On the assumption Kev and Co would bail me out just the same as the Yanks are doing. But, the RBA still has me a bit bluffed I’m afraid. More fool me perhaps?

    Reply
  253. Dan: “Interest rate rises means the landlord is raising the rent” ???

    I see that thought come through from tenant type bloggers when they post comments like “The RBA put interest rates down; But the landlord didn’t put my rent down!”

    I’d half like to smile at such statements? But actually feel to be more worried by them than amused. The school system has “failed” these people! But did government ever mean for it to do anything else???

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  254. I see you’re wearing those blinkers I bought you Ned mate :)

    But you never wear the matching dress anymore :(

    Reply
  255. You take the ‘Pete’ tag, Prozak. You’ve used it a few times, so I figure even penicillin won’t clean it… .

    Prozak up to his crap again? Immune deficiency should finish him off.

    Reply
  256. Ned I’m not sure what kind of ‘investment’ strategy would lead you to buy overpriced assets near a market top so I’ll stick to my strengths.
    As far the US property bust went I think you’ll find it was the banks and their millionaire management that received all the taxpayer funded bailouts and bonuses rather than the individual suckers who bought the bubble priced properties. In fact I thinks you’ll find the suckers were actually the source of the bailout and bonus dollars.

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  257. He reminds me of one of those little dogs that jumps up and down around your ankles going “Yap, Yap – Yap, Yap!” There’s a bit of entertainment value in glancing through the posts and saying “I recognize that noise” – I suppose?

    He morphs from being a particularly astute 78 yo investment guru who makes 300% on his trades to Coy Roy the immigration expert who handles his stats carelessly to an investor in Thai condos to someone who is keen to engage GA in a deep and meaningful on Oz stocks to …. etc, etc, etc …. ad nauseum.

    Perhaps he’s trying to tell us something? But I guess all us Aussies are just too stupid to figure out his message??? ;)

    Poor little bugger – It must be dreadfully frustrating to be an unrecognized and unrewarded genius! :)

    In fairness though, I did notice one bit of confirming info re finances amongst all the more recent yaps.

    Reply
  258. One would need to be a “flipper” BA. Who is absolutely convinced Kev and Co will gallop (successfully) to the rescue and put a floor under everything again if one’s punt did look like blowing up.

    Even poor old Steve Keen is now conceeding that gov’t will probably do the white knight routine a few more times before the end of his world finally comes.

    But I’m definitely not a “flipper”. So I’ll steer right clear of any such “strategy” too! :)

    Reply
  259. Ned to clarify my point, ‘landlord’ to me means ‘bank’ until someone really owns the house and basically has title to it. Many people who rent out an indebted house are really just managers (and even less so when proxying through a real estate agent) who take a cut whilst the landlord is the bank which collects rent, which it determines, minus the various fees etc. A true owner of a house (holding its title) who has good tenants will not crank up rent just because the banks are tightening their policies. I know examples of this, and people in high-demand suburbs were paying 1/3 of the regular rent until they moved out, at which it was reset for the new tenants. Not everybody is a scheister :)

    Reply
  260. Ned mate, why so harsh to everyone who disagrees with you?

    Oh that’s right, i’m Biker Pete and I taught you well :)

    You follow my lead so well that you place blame on any-and-every person who doesn’t like your babble. Yet so ironically, it is you who needs a gag. I’ve got one in my basement for you, but I know you don’t like that room anymore :)

    _SMILE_

    I do love how you gang up on Steve Keen with me though. He is such a softy, wouldn’t hurt a fly, has a PhD and is world-renowned for his work. I much prefer that Christopher Joye fella, he doesn’t let facts stand in his way. A much more aggressive money maker like you and me eh? :) :)
    I looked up “social responsibility” in the dictionary but I don’t understand it? :)

    Anyhow, i’m really hoping you’ll sell up and move back into my basement mate. I’ve bought all these new leathergoods. And some new attachments.

    Lots of love,
    Biker Pete, aka Prozak, Roy, Greg, Dan, Steve Keen, Fiscal Phil, Jon Bon Jovi, Axel Rose, Ross, Bill, Ned and Bertie.

    Reply
  261. Ignore this little POM sicko, Ned. He’s very seriously ill.

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  262. Prozak, get a life. Your abusive posts are dull, boring, unimaginative and a waste of my mouse-wheel which I have to constantly use to skip your trash talk. Disagree all you like with what people say here, but keep the personal crap to yourself.

    Reply
  263. Like a computer worm. Trying to say he’s decent blokes like Ross and Dan is pretty rude. Although he at least left Lachlan out of it. (Apologies Bertie – I haven’t seen enough of your stuff yet to be absolutely sure – But fully expect not. And Yep, Bargeass and Matto are both “dinki di” – As is “No interest” – For mine anyway.)

    As to “Greg”, Yep, he took that name too – But NOT the real GA name of course. And he’s very obviously not owning up to a lot of other names he’s posted under quite recently.

    But No, I don’t have any trouble ignoring him at all – “Yap, Yap!” – As I said. :)

    Reply
  264. Prozak if Biker Pete looked up “social responsibility” in the dictionary.

    He would be meet with a blank face.

    Social responsibility??? There is no such thing in his books,
    with Biker Pete its all ME ME ME and did I mention ME

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  265. Steve – I know you aren’t especially inclined to listen to my mumblings – About anything – Ever.

    But, just this once, please reconsider – If prozac could find your family needle collection, he’s just the boy to pinch the holes out of them.

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  266. Ned with all due respect,
    I am not going to listen to someone who suggests me to build a granny flat onto my parents house and live in it as oppose to living in my bedroom so why would I listen to anything else you have to say???

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  267. He would be meet with a blank face?
    What other face does meet have, Steve? (What DO you have in your fridge?)

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  268. OK Steve. With total respect also.

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  269. Steven: “…its all ME ME ME and did I mention ME…”

    ME ME ME wants ME ME ME fellow Aussies to lose their homes, so ME ME ME can escape from ME ME ME room!

    ME ME ME wants to administer left hooks and uppercuts because ME ME ME can’t have what ME ME ME wants right now… and did I mention ME?

    Brain of a bunny, all amygdala… no cerebral cortex whatsoever…
    (Look it up, champ… .)

    Reply
  270. Sambo and Mike sound legit to me too. As is CA of course! And Steve/Steven.

    Hmmm … Who’s been missed? Oh yeh, Biker – But that’s obvious. Reckon that bloke who’s still got his shoes on is crook though. As is SBD or whatever he calls himself.

    Like I’ve said, there’s been so many PB morphs lately, with my interest levels being way too low to bother trying to follow them, that there isn’t any real chance of me naming too many names accurately.

    But if my little contribution should be of any help, then no harm done – Leastways not by me hey?

    Reply
  271. Forgot Justin! Our bullion and sugar man – Another one who’s “legit” and “true blue” – I’d like to say he’s “good as gold” – But we all have our personal things against different asset classes. So I won’t and he can throw a housing brick at me in revenge! :)

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  272. ME ME ME wants to put my Fellow Australians under severe mortgage stress just so ME ME ME can get more $$$

    ME ME ME put my fellow Australians in a situation where many of them will loose their homes because they can not afford to pay more than twice as much as ME ME ME did for them in REAL TERMS just because ME ME ME wants more $$$

    You TWAT

    Reply
  273. Ned if you insight Justin to throw a brick you may end up a gold bull by default. Sugar went through 30 dollars recently…I thought it too dear at 26 but it keeps going up.
    Also Ned I think we need a new financial/political disaster to liven up the old hat factory. Last years conspiracy theories all came true and now its boring. Catchya Ned

    Reply
  274. I see fraudster Biker Pete is back! Couldn’t stay away huh? Poor lonely old guy…where’s all your friends gone?

    Dan, “with all due respect” (there’s no respect on here…there used to be before the geriatrics moved in. Remember that?), the fraudster Biker Pete is the one bandying around insults. That’s expected of a fraud though.

    Enjoying your medicine fraudster? Another pill perhaps? :)

    How comical the assumptions that get made about identities on this website. Did I forget to mention some other names that I have been associated with? Haha, geriatrics indeed! Ned and the fraud think they are so beloved that they have only one person dislike them? Now that is vanity.

    Whether you believe it or not, all of those “aliases” are who they say they are. Except for fraudster Biker Pete. He’s just a lonely old man, with outdated ideas he thinks are wisdom. He’ll still be begging juniors to enter the real estate market after it all goes down. And they will point and laugh like they do now.

    _Smile_ :)

    Reply
  275. This oughtta help your cases Ned and fraudster Biker:

    http://bulletin.aarp.org/yourmoney/personalfinance/articles/on_financial_decisions_older_isnt_always_wiser.html

    Turns out that the older you get, the worse you are at assessing risk.

    Lucky no-one listens to you then eh fellas? :)

    Reply
  276. Steven: “…many of them will loose their homes…”
    Homes really tight are they, Steven?

    Steven: “Prozak if Biker Pete looked up “social responsibility” in the dictionary… ”
    Which dictionary has the definition of ‘social responsibility’, Steven?
    Which page, son? Eight years since you consulted a dictionary (Year Ten), I guess. Isn’t there a website for punch-drunk labourers with unresolved anger and literacy issues?

    “Twat?” Best you can do? You’re twatwaffle, son. Now google that… :
    http://www.urbandictionary.com/define.php?term=twatwaffle&defid=2782235

    Reply
  277. Yeh, it’s a bit hard to top that USD run that happened in September of 2008 mate. Things may or may not be great(?), but they are considerably more stable than then. Like why would I care if a few European nations go broke – They’ve been doing that for donkey’s ages eh? SNAFU as they say.

    Reply
  278. Prozak Pete, we make our money from RENT… you know, the stuff you pay fortnightly for your Brit basement(?) We don’t care if you buy property or not. Nor do we care if your silly mate stays with mum ‘n’ dad from maternity to eternity. You’re a sick little fella with a mental problem. Interesting that this is the very first time, after you’ve been caught out here twenty times, that you’re now declining responsibility for your aliases… . Probably because more people here are onto you.

    Dan summed you up pretty well: “Prozak, get a life. Your abusive posts are dull, boring, unimaginative and a waste of my mouse-wheel which I have to constantly use to skip your trash talk…”

    Reply
  279. “Turns out that the older you get, the worse you are at assessing risk.”

    A decent and caring chap will give Warren Buffet and Paul Volcker and George Soros a call on his personal hotline to let them all know they are brain dead old numpties then I guess.

    Yap, Yap! :)

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  280. Awww, my old mate Ned comparing himself and the fraudster to Warren Buffet.

    Do I need to mention vanity again?

    Fraudster, as for the aliases, I find it hilarious. Hilarious that you’re so vain you think no-one disagrees with you (the only reason they don’t is because you jump on the insult train) and that you’re naive that you think someone would go to all that trouble. No-one cares about you lil fella. Except for me of course :)

    Also very ironic that you could say that anyone talks about themselves. Mr Fraud Biker, you’re the #1 of the #2’s in that respect. I’m sure the main reason you post on here is to read your own posts. Love seeing your babble in writing. Convincing yourself more than anyone else. Bah, geriatric!

    Unfortunately I do care what Dan thinks. Wait, did. He is soon to realise that being “with you” means he can’t go against you. And the more you two discuss things, the more you’re going to get upset Fraudster. Which is good I think. Long live the friendship! :)

    Since you joined this place fraudster you have been “…dull, boring, unimaginative and a waste of my mouse-wheel which I have to constantly use to skip your trash talk…”. But mostly just a juvenile in a senile old mans clothing. And messing with you is just so much fun :) :)

    And I couldn’t give a rats if you don’t find this funny. All the more point to it! :)

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  281. Woof, Woof! :)

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  282. Awww, you remind me of your sweet mother Ned.

    Let’s have a beer and reminisce about her. Woof, Woof! :)

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  283. Biker Pete “Silly Mate”
    What silly for not wanting to have anything to do with the biggest property bubble in the world?

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  284. A beer – With me? Gee, what a thoughtful offer – How nice … Can only say it most definitely brings to mind the old lines:

    “You can tell a man who boozes,
    By the company he chooses …
    And the the pig got up!
    And slowly, walked away … ”

    Yap, Yap! :)

    Reply
  285. How old are you ned?

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  286. Young from the perspective of a full grown Eucalyptus regnans; And elderly from the perspective of a cabbage.

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  287. Ned why don’t you just answer the questions that people put to you?

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  288. Because I’ve already provided that information on more than one occassion; And even quite specifically above in this self same blog. You are 24 (or is it 25 now?), I am 51, Biker is 63 – And the world goes on.

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  289. OMG having just returned from living OS I am stunned to see how far we will go to shit on oneanother to get ahead in this country, megalomaina is spreading faster than swine flu. Baby boomers who couldnt care less if their children have to fork out massive amounts just to pay rent/mortgage to a bank so they can be more tax effective. Property speculation has gone mad, oh so in a few short years the avg. price of a house in sydney will be a million? does this actually make sense or is it just a fantasy? But of course it is different here, well yes it is, ozzies actually believe in the shit that they peddle to themselves to the point of delusion.
    Who knows when the bubble will burst, it could be the end of the year or in 5 years, but it WILL happen.

    Reply
  290. Dan said: “…wage rises are incremental at best…. ” And then Dan said: “…plus wages and staple items haven’t caught up to house prices.”

    Then I read the front page of today’s (23/02/’10) ‘West Australian’. Let me word-process it for you (Capitals my own):

    “THOUSANDS of LOW-SKILLED construction workers on the massive Gorgon LNG project will each earn about $150,000 a year under a new deal which will set a new WA wages BENCHMARK…. Qualified tradesmen such as excavators would get at least $160,000 annually…. the workforce will swell to 10,000… The deal would have a serious impact on commercial and residential construction. This would drain the city of tradesmen, forcing a blowout in local building times and putting pressure on prices…. The deal provides superannuation in addition to the salary.”

    Hardly ‘incremental’, Don.

    Don’t look for any WA crash in the next four years, people. Gorgon is just one of many _contracted_ projects about to commence here. We expect a flood of immigrant / interstate workers from all over…. and a wages blowout to match. Hellzapoppin’… !!~

    Reply
  291. Funniest bit is… 12 months on from this article’s headline, prices have indeed risen ;-)

    Reply

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