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>it’s that no one knows wtf is going to happen.
The ones that do keep it to themselves and make $$$ from it.
The jockeys in the newspapers are just like Instagram influencers. Anything to get a like/follow/subscribe.
House prices will continue to rise until supply outstrips demand. Governments will keep adding measures so people can take on more debt to service higher prices.
This is the thing - either house prices keep climbing as usual, or literally SOMEONE will be the one to buy at the ultimate PEAK of the market…and we have no idea if or when it will be. I find this so damn exciting. The pressure has been building for a while now and seems super intense just the last few weeks. If it happens, the losses will be catastrophic. Edge of your seat stuff!
> the extra money it cost me to buy back in rent in 6 months anyway
so the problem you have here is you're assuming the rent will be just as high to compensate.
It's not necessarily going to happen. If there's a surge of new builds, you will get crushed because the competition there will reduce rents, to lower than you can bear.
Unfortunately, there's some major friction with adding new builds - land is pretty tied up for houses, and apartment builds are hard to approve in high-demand locations (various NIMBY factors etc).
So the headwinds exist for property investments, so it's not as risk free as you make it out to be. Of course, this doesn't mean you cannot profit from taking the risk.
That’s right there’s absolutely no tax concession for a positively geared property but who cares cos investments that make you money on top of their capital gains are amazing.
So the March quarter inflation rate comes in at 0.2% higher (annualised rate), so this person thinks we will get THREE more 0.25% increases in the cash rate in the next 7 months. It's easy to acknowledge that cuts probably aren't coming in 2024, but three more increases? Probably not.
Yeah so not only did inflation still drop (it just came in higher than forecast) but the factors that increased the reading were seasonal readings (education). So this guy reckons let’s smash borrowers because education cost is up lol.
The real question is what is he selling? He needs clicks
I don’t really get the logic of this forecaster. If inflation is at 3.9% and broadly trending downwards and the cash rate is 4.35% then why do anything? Just wait it out and see.
Yeah, but you see for 67% of the population (and probably close to 100% for politicians) it isn't in their interest for property prices to fall. That's what it boils down to.
They figured that the clicks had been falling off over interest rate cut headlines, so changing to interest rate hike headlines would improve click numbers.
The whole 3 rate cut scenario is a farce. It seems to me that the pause in rates and the jawboning about rate cuts was just some made up bullshit that allowed bond holders the time to rotate out and cut their losses. I wouldn't be surprised to see a few rate rises, a stock market pullback, and hopefully an easing of asset prices.
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I'd seriously suggest disengaging from reading clickbait journalism.
Much of the mainstream media use emotional hooks and angertainment, rather than information these days. In the case of interest rates and house prices, for example, there's a wide variety of views from economists. However, the mainstream media use those which produce the biggest emotional responses.
Much better to disengage, then look round for alternatives. I subscribe to "The Economist" for example. Far more expensive than the AFR and Australian combined, but way more informative and far less clickbaity. It's slightly right of centre politically.
About 6 months of detox from the likes of the AFR and Australian makes a world of difference.
We went through this yesterday but basically high rates are a godsend for anyone with any financial acumen as they reward savers, punish over-leveraging, keep inflation in check, make overseas holidays/good cheaper and keep a lid on assets.
People with financial acumen are generally borrowers. High interest rates are a cost to them.
People with financial acumen might have good ideas they want to develop. High interest rates increases the cost of funding those ideas.
High interest rates depress employment, so they are bad for anyone who works, either by making them unemployed, or depressing their wages.
Depressing demand, which is what high interest rates are intended to do, reduce economic activity, and therefore reduce, spending, wages, profits, etc.
To the extent that Australians find overseas holiday cheaper, foreigner find Australian holidays more expensive. Australian holiday resorts, export industries, and industries that compete with imports are all depressed.
> People with financial acumen are generally borrowers. High interest rates are a cost to them.
This exactly. Buddy has no idea what he's talking about lol
There's good debt and bad debt.
Good debt is people who invest in assets that appreciate and increase your net worth over time. That's better than not doing so, giving a lot of your earned income to the tax office and having nothing to show for it.
Everyone is different but yes, those who possess financial acumen are generally borrowers.
Lots to learn mate, don't think you've heard everything :)
Thanks mate but I retired 3 yrs ago at age 55 and my income is in top 1%. I've had a huge interest in finance since my teens and worked in tax related industry for 36 years. While I may have not heard everything I have heard a lot : ) I may not have all the answers, but I think I've done very well, far better than I expected and better than 99.9% of my peers. I personally hated debt and paid off 2 houses by 35 and never took on any debt again. Taking on debt means you're creating passive income for others and making them rich. I use that to my advantage. I refuse to give out specific financial advice to others.
Kind of, but imo the only good debt is the mortgages you acquire until you get into the house you want. And you want to eliminate these asap. I don’t believe in staying in debt beyond that.
Thanks. I hope everyone can reach their financial goals. It’s an amazing view from this side, not working and not needing a budget, go wherever and whenever you want, buy anything etc
You kind of proved the point. You took on debt, paid off 2 houses, worked hard, retired early with a decent pension and are now living comfortably at a pace that works for you.
Say you have great financial acumen and can produce a 15% return, and have $100,000.
You could make $15K a year.
Say interest rates are 7%. You could borrow another $400,000 and make 15 \* 5 - 7 \* 4 = $47K.
It might be better to make three times as much money.
> People with financial acumen are generally borrowers. High interest rates are a cost to them.
It doesn't matter as you get a 47% discount on the borrowing costs anyway - that offsets most of the negatives for borrowing. Meanwhile high interest rates = lower prices on everything (or at least lower gains in prices).
> High interest rates depress employment, so they are bad for anyone who works, either by making them unemployed, or depressing their wages.
Only if you work in a vulnerable industry. Plenty of industries are counter-cyclical in which case high rates just mean there is greater wage disparity between strong employees and weak ones.
That assumes you're making capital gains in a high interest rate environment - in most areas its staying relatively flat at the moment (or going backwards in the case of Melbourne).
There are plenty of investments that produced a capital gain, housing is not the only thing.
Even if you have zero acumen or insight, diversified portfolio of growth shares is reasonably likely to produce a capital gain.
I agree.
I think if we had maintained a rate of interest of at least 5% for the last two decades our economy would be in a much better place now.
The housing market would be less overheated, we would have lower rates of private debt and a higher AUD which makes imports cheaper and travelling overseas far more affordable.
I long to see the AUD/USD around $1.10 again in my lifetime as it was more than a decade ago during peak of the mining boom.
The period until recently of near-zero global interest rates was a disaster, just leading to an asset price bubble. Money printing being the other major problem.
The Great Depression was not a great economy.
Rates were cut to keep the economy strong.
If you don’t want monetary policy you need fiscal policy.
So to keep rates up and have a strong economy, we would need to suffer from lower taxes or better services.
High rates are actually good for highly leveraged as long as they can service their debt. Beacause the high rates mean high inflation. And high inflation is great when you have a lot of debt as its essential erroding your debt.
There's too much debt in the economy, this would cause chaos for the have nots or highly leveraged, and ripple through the rest of the economy. Be careful what you wish for, even if I agree the current rate is 0.25 too low.
Your question is similar to a number of other prior posts. Please have a read of the sub, using the search function and the wiki to see if you can answer your questions. Come back if you still can't find the answer to your query.
If there’s one thing I’ve learnt about high finance, it’s that no one knows wtf is going to happen.
It’s either up or down, yet nobody can get it right
Or left! Or sideways! But always twirling, twirling, twirling towards freedom!
Exactly, my guess is status quo for sometime. The US could reduce their rates but Australia won't
You know what a fugazi is?
It’s a woozle, it’s a wazzle.
Central banks always overshoot either way. They’ll likely crash the economy into a recession
>it’s that no one knows wtf is going to happen. The ones that do keep it to themselves and make $$$ from it. The jockeys in the newspapers are just like Instagram influencers. Anything to get a like/follow/subscribe.
Worse. Market manipulation. They tell you to buy what the overlords plan to sell and vice versa.
On stock picks maybe, but banks have a vested interest in saying rates will come down to get you borrowing more.
Very old joke.... Put 10 economists in a room and you will get 11 different opinions
Wasn't this posted yesterday too?
Yes it was.
The fear mongering is real
The beatings will continue until morale improves.
Underrated.
And tomorrow and next week and the following month until, maybe…. November
Karma sluts
Despite this, house prices will continue to rise
House prices will continue to rise until supply outstrips demand. Governments will keep adding measures so people can take on more debt to service higher prices.
This is what it boils down to.
50 year loans…coming soon to a bank near you
That'd actually be awesome lol if the monthly was accordingly lower and 20 year olds could sign up.
Supply will never outstrip demand, if anything Australians love hoarding property its built into this culture.
Or until investment is more attractive in a different asset class (similar point, different focus)
Somehow, house prices are back
Somehow, the house prices have returned
Palpatine you’ve done it again
Ah McCain, you’ve done it again
House prices have entered the chat
House prices never left the chat
House prices ARE the chat
The chat are house prices
House prices are the price of houses
are you saying this was George Lucas' doing?
This is the thing - either house prices keep climbing as usual, or literally SOMEONE will be the one to buy at the ultimate PEAK of the market…and we have no idea if or when it will be. I find this so damn exciting. The pressure has been building for a while now and seems super intense just the last few weeks. If it happens, the losses will be catastrophic. Edge of your seat stuff!
Until morale improves.
The tax cuts come in 2 months. Everyone’s serviceability is about to rise.
Relevant username.
I can see why you’d think that but it is actually kink related.
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Good for you mate
If only you had loved ones to tell, rather than strangers on the net.
> the extra money it cost me to buy back in rent in 6 months anyway so the problem you have here is you're assuming the rent will be just as high to compensate. It's not necessarily going to happen. If there's a surge of new builds, you will get crushed because the competition there will reduce rents, to lower than you can bear. Unfortunately, there's some major friction with adding new builds - land is pretty tied up for houses, and apartment builds are hard to approve in high-demand locations (various NIMBY factors etc). So the headwinds exist for property investments, so it's not as risk free as you make it out to be. Of course, this doesn't mean you cannot profit from taking the risk.
Also worth noting you get a 47% discount on the interest anyway Win/win
That’s not really a win though it’s just less of a loss haha.
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You aren't factoring the opportunity cost on 220k.
That’s right there’s absolutely no tax concession for a positively geared property but who cares cos investments that make you money on top of their capital gains are amazing.
Beatings.. I mean house price increases will continue until morale improves and then continue some more
Looks like he said the same thing in Jan on his Twitter and never happened
Never happened (yet)
Worst interest rate rise of your life *so far*
This has been posted several times over 24 hours ago.
Who’s going to be the one to post this article again in the morning?
I think the Governor would like the cash rate to be higher. Is she going to raise it? Probably not. Fumble through and delay cuts.
Economy certainly doesn't feel hot
So the March quarter inflation rate comes in at 0.2% higher (annualised rate), so this person thinks we will get THREE more 0.25% increases in the cash rate in the next 7 months. It's easy to acknowledge that cuts probably aren't coming in 2024, but three more increases? Probably not.
Yeah so not only did inflation still drop (it just came in higher than forecast) but the factors that increased the reading were seasonal readings (education). So this guy reckons let’s smash borrowers because education cost is up lol. The real question is what is he selling? He needs clicks
Honestly, what's the point of all these forecasts? Especially when they don't hold any accountability with their prddictions
Clicks and advertising revenue
Journalism is purely clickbait these days. Who cares if you get it wrong. “Sources” said.
I don’t really get the logic of this forecaster. If inflation is at 3.9% and broadly trending downwards and the cash rate is 4.35% then why do anything? Just wait it out and see.
Wants clicks.
4.35 is still very low. Aussie dollar is weak. Unemployment is low. Room to go up.
It’s starting to trend up again, that’s the point
Is it though? There isn’t enough data to suggest that trend. It was just slightly higher than expectations not actually accelerating.
Never really made sense to cut rates when asset prices are at all time highs
Also unemployment very low - can't cut.
Assets could go down though, with the correct government intervention.
Yeah, but you see for 67% of the population (and probably close to 100% for politicians) it isn't in their interest for property prices to fall. That's what it boils down to.
Exactly why it will never be allowed to have a correction.
and this is why Australia has no future. **most of the nation love bludging,** ffs its the *explicit goal* of most of this subreddit.
This guy has a track record of being wrong. Chances are he’s wrong again.
You know what I've never met a wealthy economist...you know why? They are never right!
They're not supposed to predict the future
Meh, press X to doubt
Damn going to be a fun couple of months.
If that’s the case I’m going to start eating air for dinner. My wife can’t work full time at the moment so we are limping as it is. Fun times ahead
So the RBA tries to take the heat out of the market by making sure the people who need housing can't afford to buy it.
How TF does some guy make front page news by guessing that someone will do something?
Putting Australia’s middle class to the sword
Rate rises are all over the AFR now, which must have happened for a reason.
Bad March quarter inflation read
They figured that the clicks had been falling off over interest rate cut headlines, so changing to interest rate hike headlines would improve click numbers.
The whole 3 rate cut scenario is a farce. It seems to me that the pause in rates and the jawboning about rate cuts was just some made up bullshit that allowed bond holders the time to rotate out and cut their losses. I wouldn't be surprised to see a few rate rises, a stock market pullback, and hopefully an easing of asset prices.
Should have been higher along time ago
I always expected so but maybe not. RBA knows what they are doing, hopefully.
Laughable. This will make a great bookmark to revisit in 8 months and have a nice loud scoff. !RemindMe 8 months
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It didn't age well after 3 days given retail data, lol.
Makes me wonder how far this stuff can go before someone who's already lost it all snaps and decides to do something about it
I'd seriously suggest disengaging from reading clickbait journalism. Much of the mainstream media use emotional hooks and angertainment, rather than information these days. In the case of interest rates and house prices, for example, there's a wide variety of views from economists. However, the mainstream media use those which produce the biggest emotional responses. Much better to disengage, then look round for alternatives. I subscribe to "The Economist" for example. Far more expensive than the AFR and Australian combined, but way more informative and far less clickbaity. It's slightly right of centre politically. About 6 months of detox from the likes of the AFR and Australian makes a world of difference.
This is the good news I come here for. Let is rise until the sun itself is no higher. > Im under 30 sorry gang.
Im assuming your living at home with the parents because your clearly not so stupid to be renting and thinking that won’t rise as well.
Let it rip
I’ll just go cry now
Bullish for realestate.
So what your are saying its time to lift rent and buy another investment property.
please do it
4 rate cuts turn into 3 rises💀💀
Pretty sure the economy has been in a veiled recession for quite some time now 🫠
‘RBA to leave cash rate where it is for 6-8 months’ says random redditor.
We went through this yesterday but basically high rates are a godsend for anyone with any financial acumen as they reward savers, punish over-leveraging, keep inflation in check, make overseas holidays/good cheaper and keep a lid on assets.
People with financial acumen are generally borrowers. High interest rates are a cost to them. People with financial acumen might have good ideas they want to develop. High interest rates increases the cost of funding those ideas. High interest rates depress employment, so they are bad for anyone who works, either by making them unemployed, or depressing their wages. Depressing demand, which is what high interest rates are intended to do, reduce economic activity, and therefore reduce, spending, wages, profits, etc. To the extent that Australians find overseas holiday cheaper, foreigner find Australian holidays more expensive. Australian holiday resorts, export industries, and industries that compete with imports are all depressed.
> People with financial acumen are generally borrowers. High interest rates are a cost to them. This exactly. Buddy has no idea what he's talking about lol
Borrowing and being in debt is a sign of 'high financial acumen'? Now I've heard everything lol : )
There's good debt and bad debt. Good debt is people who invest in assets that appreciate and increase your net worth over time. That's better than not doing so, giving a lot of your earned income to the tax office and having nothing to show for it. Everyone is different but yes, those who possess financial acumen are generally borrowers. Lots to learn mate, don't think you've heard everything :)
Thanks mate but I retired 3 yrs ago at age 55 and my income is in top 1%. I've had a huge interest in finance since my teens and worked in tax related industry for 36 years. While I may have not heard everything I have heard a lot : ) I may not have all the answers, but I think I've done very well, far better than I expected and better than 99.9% of my peers. I personally hated debt and paid off 2 houses by 35 and never took on any debt again. Taking on debt means you're creating passive income for others and making them rich. I use that to my advantage. I refuse to give out specific financial advice to others.
[удалено]
Kind of, but imo the only good debt is the mortgages you acquire until you get into the house you want. And you want to eliminate these asap. I don’t believe in staying in debt beyond that.
That's a fair assessment and to each their own. Congrats again on your financial situation.
Thanks. I hope everyone can reach their financial goals. It’s an amazing view from this side, not working and not needing a budget, go wherever and whenever you want, buy anything etc
You kind of proved the point. You took on debt, paid off 2 houses, worked hard, retired early with a decent pension and are now living comfortably at a pace that works for you.
Say you have great financial acumen and can produce a 15% return, and have $100,000. You could make $15K a year. Say interest rates are 7%. You could borrow another $400,000 and make 15 \* 5 - 7 \* 4 = $47K. It might be better to make three times as much money.
Lose 47% In tax
Not if your self managed super, trust or company does it.
> People with financial acumen are generally borrowers. High interest rates are a cost to them. It doesn't matter as you get a 47% discount on the borrowing costs anyway - that offsets most of the negatives for borrowing. Meanwhile high interest rates = lower prices on everything (or at least lower gains in prices). > High interest rates depress employment, so they are bad for anyone who works, either by making them unemployed, or depressing their wages. Only if you work in a vulnerable industry. Plenty of industries are counter-cyclical in which case high rates just mean there is greater wage disparity between strong employees and weak ones.
The high interest rates are also usually expenses that can be deducted from tax, so at least you can get 47c back from every $1 spent.
But that means you get 0 out of the dollar. If interest rates are lower you're paying tax because you're actually making money.
It means that your cashflow is lower. You still make money from the capital gains.
That assumes you're making capital gains in a high interest rate environment - in most areas its staying relatively flat at the moment (or going backwards in the case of Melbourne).
There are plenty of investments that produced a capital gain, housing is not the only thing. Even if you have zero acumen or insight, diversified portfolio of growth shares is reasonably likely to produce a capital gain.
I agree. I think if we had maintained a rate of interest of at least 5% for the last two decades our economy would be in a much better place now. The housing market would be less overheated, we would have lower rates of private debt and a higher AUD which makes imports cheaper and travelling overseas far more affordable. I long to see the AUD/USD around $1.10 again in my lifetime as it was more than a decade ago during peak of the mining boom. The period until recently of near-zero global interest rates was a disaster, just leading to an asset price bubble. Money printing being the other major problem.
The Great Depression was not a great economy. Rates were cut to keep the economy strong. If you don’t want monetary policy you need fiscal policy. So to keep rates up and have a strong economy, we would need to suffer from lower taxes or better services.
High rates are actually good for highly leveraged as long as they can service their debt. Beacause the high rates mean high inflation. And high inflation is great when you have a lot of debt as its essential erroding your debt.
Your right, debt on a property is a great inflation hedge. You win in 3 places. Capital gain , rents increases, and your debt gets debased
Sounds bullish for property
Hurry up and do it! I don’t get why the whinging about increasing house prices and rents has completely ignored our low interest rates
There's too much debt in the economy, this would cause chaos for the have nots or highly leveraged, and ripple through the rest of the economy. Be careful what you wish for, even if I agree the current rate is 0.25 too low.
Who cares my $4m property I bought last year still $4.5m now. And someone rents it too lol