IBuyHousesSEQ

I have a contact high enough up in one of the major banks to be in the know, and friendly enough to share his information with me in advance of the general public, such as the recent bank interest rate rises. He somehow knows what the other banks are up to in detail. Don’t ask me how. Maybe they sit around at tea parties sharing inside information.

Anyway, you get the picture. He’s reliable. So rather than string this out, here it is in a nutshell:

The Reserve Bank is mighty miffed at being ignored by the banks. Again. So much so that they want to lower the base rate in an attempt to “stick it to the banks and show them who’s in charge.” Problem is the banks will win. They’re the ones with all the power because they have the money. The Reserve Bank has been reduced to no more than a figurehead, much like the Queen. The banks are still smarting from a cut in their margins ever since the Global Financial Crisis and they have slowly, inch by inch been clawing this back. They have shareholders to answer to and big fat paychecks to justify!

What does this have to do with anything? Well there could be a few games of silly-buggers about to take place to confuse the heck out of us, and the government is bound to get vocal again. But the facts are that the banks are putting up interest rates, no matter what the Reserve Bank does, no matter what the government says. Australia has the most expensive interest rates in the world (triple the rate of many Western countries) and those rates have little chance of moving lower, but a big chance of heading higher.

And inflation is on the way whether we like it or not. If you think your mortgage payments are high enough now, then put your house on the market and get out. Bank your profits whilst you can, like the banks do. Don’t let them steal your profits from under your nose.

The great Australian dream isn’t about owning your own home. It’s about enjoying our wonderful way of life.

The theory of evolution, according to Darwin, is simply put as survival of the fittest.

This basic premise of natural selection is responsible for humans not looking, nor limping around, like lopsided three-legged hairy jellyfish. The theory of evolution is also responsible for a culling of the weak, the infirm and those with inferior genes. Cruel and Nazi-ish, but fatally true.

Imagine if this wasn’t the case, if the reverse were true and the smart, fit and strong were at the bottom of the food chain instead, and the weak and stupid ruled the earth.

Enter Kevin Rudd.

Enter the warm stab of a steroidal injection to the first-time home buyers grant (FHBG) and the whole order of natural selection is turned on its head.

There was a reason that first-time buyers were unable to afford to purchase a property, and therefore a reason why they should not be buying. There was a reason that greedy property investors were mortgaged to their eyeballs and were starting to get caught with their pants down. Continue reading…

DIVING into debt, Katie and Brett Nash are living the great Australian dream.

Having boarded with Katie’s parents for a year to save a deposit, the Brisbane couple borrowed $350,000 to buy a four-bedroom brick house with a big back yard in the outer bayside suburb of Alexandra Hills in Brisbane six weeks ago.

But Brett then lost his job as a cement truck driver, so his wife is spending half her take-home pay as a nurse to meet the $1900-a-month mortgage. Despite the difficulties, the Nashes are delighted they will no longer have to pay “dead rent” to a landlord.

“You’ve got to get into the market some time,” Katie reasons. “It’s for security. We were paying out dead money in rent – I paid $17,000 in rent one year – but buying is an investment.”

Brett, 28, does not feel that his life is any tougher than that of his grandparents’ self-sacrificing generation. “I think a lot of people these days are probably a bit more selfish and want everything,” he says.

“Our grandparents wouldn’t have contemplated things like travelling or spending $500 on a pair of shoes. Nowadays there’s more to be had, and everyone wants everything now.”

The Nashes are among a record number of Australians who took on a mortgage in April, as first-home buyers rushed to cash in on the federal government’s first-home buyers grant ($14,000 for established homes and $21,000 for new properties) before it is phased out from September. Continue reading…

I only just launched this blog last night, so please give me a few days to get the hang of it and into the swing of it. I’m still feeling my way around in the dark.

I will start posting more topical articles and adding my take on things, much like I would on twitter. It’s baby steps at the moment though I’m afraid.

One thing I’m not keen on with blogs is just how much people like writing pages and pages of boring gumph just for the sake of it. They turn me off straight away, so I will endeavour to be short and sweet. Yes, I know I’ve posted two articles in their entirety– as I said, dark, lost, fumbling…

James

Property remains a solid investment but be aware there won’t always be low interest rates and rising rents.

A virtuous combo of low interest rates and a tight rental market is sparking renewed interest in residential property among investors.

Interest rates have now fallen to such low levels that, for the first time in years, astute buyers are able to find a selection of “positively geared” (or “positive cash flow”) investment properties: that is, dwellings where the rental income is greater than the mortgage repayments and other costs associated with owning the property.

This is in sharp contrast to the housing boom of recent times, when investors were willing to buy a property with rental income that was not sufficient to cover all their costs. That means they were negatively geared in the expectation of eventually making a healthy capital gain. In addition, they could generally expect tax benefits from their ongoing losses.

However, experts warn these circumstances may not last. In particular, interest rates could eventually start heading back up again, while continuing rises in unemployment and other factors may place downward pressure on rent levels. Continue reading…

The property market in Australasia is experiencing a mixed ride with some parts of the region reporting signs of recovery and others still struggling.

In New Zealand the latest published figures show that the numbers of new property listings have declined for the third month in a row, with listings in May dropping a further 5% on April.

It would appear that many sellers are adopting a wait and see attitude and only listing their property for sale if they have to. The May NZ Property Report shows that listings are now down 29% since the same time last year.

Asking prices are also down. The figures show they are 1% below those in April and 6% down on the market’s peak in October 2007.

But according to NZPR’s chief executive Alistair Helm prices are softening rather than collapsing and 2008 was a dormant period with many properties just sitting on the market.

But in Australia first time buyers are boosting the property market helped by low interest rates and government grants. According to Yvonne Chan, head of research at Australian Property Monitors, monthly auction figures for the year showed clearance rates were back to the levels they were in 2007.

‘The market has recovered from last year. Month on month clearance rates show some real promising signs and in Sydney and Melbourne clearance rates are around the long-term averages,’ she said.

But there is concern that buyers other than those seeking their first home need to start entering the market if there is to be a recovery. ‘All the action in the market this year has come from first home buyers and demand from first home buyers is definitely still very strong,’ Chan explained.

‘With government grants available and interest rates at an all-time low, there’s a lot of people who believe now is a good time to be entering the market,’ she added.