Compound growth in house prices over ?

[IDT]

Originally Posted by DANNO178

The stark reality Damo is that by holding a modern overlevereged mortgage of today you are ineffect just renting your house from the bank as they own it , not you. But you end up paying more than the average renter for the privalage of rentning from the bank. This is a situation that should never have been allowed to happen , just another way the banks worked out how to suck more money out of everybody to their benefit but at the cost of just about evrything else. Mainly the economy and your living standards will now be sacrificed as a result of the banks and their greed. In effect they have now pulled the plug on themselves , and this is exactly what happens to greedy people. Oh well as they say , all good things come to an end eventually, unfortunately the banks greed and lack lending practices will now be at many peoples expense. Don't worry Damo , with things going the way they are , I might find some spare change I can sling you for a house deposit. You think I'm kidding , no I'm not

You are right to the point that if you only repay the base amount. Unfortunately to many people borrow the maximum the bank will lend them and get caught in that kind of rut. Borrow less than the maximum they will lend you and its an entirely different scenario because you are paying you loan off much quicker (if you have the discipline). Then hopefully you will have your home debt free. The problem is people want the very best of everything right now. Those that do suffer the so called mortgage stress all too often have noone to blame but themselves.

[xisled]

Originally Posted by Keepleft

GFC was nothing, patience please......

Next couple of years the Gov will put Australia in recession, it is in the process at the moment.

[usernametaken]

The important thing here is to put away as much as you can

Home owners: pay as much as you can off your mortgage into your offset or redraw ($1 now save 2 in interest over the lifetime of the loan*)

Renters: save for that deposit (the better the LVR the less your repayments)

My missus and I saved half the value of our first house as a deposit.

We have minimum repayments of $1,000 a month now.

Saving was hard - I changed careers and spent the last two years on 40k with my wife on about the same. But in the meantime I learnt about the markets and invested what I could afford to lose into companies I knew inside out. If I can offer one piece of advice to investors - employ a stop loss!

We now make the sacrifices (yes, our plasma is 5 years old), so we can take a chunk out of out loan in extra repayments just in case the worst happens and we can have some breathing space.

Since November we have payed (on top of the minimum repayments) of $1200 a month. In simplistic terms we pay back an extra 120% every month.

Is it hard, hell yeah!

But, we don't have kids and we both own our bomb cars outright so there is a bit of extra cash then most here perhaps.

Anyways, I'm two months off a 20k pay rise so that will help - and I can get the missus a newer car.

I guess, the key is to use the extra dollars at the end of the pay week wisely

I also reccommend reading Scott Pape's book "the barefoot Investor" for good advice on starting a mojo account

* - illustrative only

[duaned]

Fully agree with the above. Discipline is the key. I payed out my home loan last October (after having a $350000 mortgage over 9 years) and the feeling is priceless! Speaking of books, I have a great one here to donate to anyone that wants it. It is called, " Own your home year's sooner without making extra payments". It certainly opened my eyes to the facts the lenders won't discuss and to benefit you, the mortgagee. If you want the book it will only cost the freight side via australia post. (hope this is OK with posting this here with the mods!)

[SteveJH]

usernametaken,

And if I understand it correctly, the advantage is that the extra $200 a month is straight off the principle, none of it is lost to interest.

[usernametaken]

I'm no gun in this department, but yes. It offsets the principle and reduces your interest rate.

our interest rate varies between $850-950 a month and the extra $1300 knocks off the principle. (2200 total - 900 avg interest)

The best bit (apart from reducing interest) is that extra $$ is available as a redraw if we need it.

As it stands we have over 12 months of breathing space on our mortgage payments should the unthinkable happen.

[mostly_broncos]

Here in the US our brilliant central bank has decided to print an extra 40 billion in money from thin air for an open ended length of time. Right now housing prices are down , interest rates are under 1% for savings and around 3% for mortgages but the banks are barely lending so we don't benefit from low mortgage rates . In any case with prices falling why buy if a house will be cheaper in 6 months. . You would normally choose to rent in that case , however rents are going up due to demand in many areas so some decide to buy and then see themselves underwater almost immediately . Being at negative equity 15 minutes after you sign the mortgage kind of takes the shine off the low interest rates.

Normal people assume that a bank account should pay interest but...... People here are starting to consider the possibility of negative real interest rates . Negative interest rates mean you would pay the bank to hold your money in your savings account

We see it starting , the banks are trying to get ahead of the curve by easing us into it. Service fees of 5$ a month for accounts with less than 100 or 250 or even 500 a month is how they present the idea. When they need to they can just ratchet the lower limit upwards

[Dr Jekkyl]

There is talk from the property and banking lobbyists that Aussie housing is now affordable again.

ABS data says otherwise.......and that it has been unaffordable for a long time!

[DANNO178]

Originally Posted by Yellow_Festiva

Please explain with detail what you mean. I'm in a similar situation to outbackjack and I'm trying to see the logic behind this, if any.

Yellow festiva has asked this question after I made the comment to outback that he seems fully aware that his property is now being double dipped. I also made the comment that over 95% of people were completely unaware of this . You can see that yellow festiva , while being probably more intelligent than the average joe is completely unaware of this as are most of you. The main reason why many of you dont see it , is that you really dont notice it in your own country and this is now happening in every single country in the world .
To help you all understand this , we are going to learn about the real power of money and wealth . While some of you may be confused now , everything will be made very clear so that everybody understands about these things.

Its hard to know where I should start so I will start with a few eye openers about money . Many of us see our dollar as being strong , we have seen it go from about 60 cents in the US dollar a number of years back up to about 1.15 and back to about 1.05 where is is now. If I was to take 100k of my cash over there is has a lot more power than it does here now with our dollar so high . I could buy my self a nicer house for the same amout of money . I can also buy my bmw m3 over there for about 60 k instead of about 180k here . but the price difference in the cars is really only that the government here rips us off blind so they can keep paying themselves stupid amounts of money year after year , for the dissasters they make year after year. So we can see our money looks powerful there right now and it will stay that way for a long time.

To measure the power of our money , we often compare it to other currencies , the fact is all these other currencies including our own are going down and again this is why this is not obvious to most of you. To also measure the power of money , we can compare it to commodities such as oil or gold .

Prior to 1971 , we were still on a gold standard , cos it was used as money as it had been for thousands of years . The reason the Us went off the gold standard completely is so it allowed them to print money for which they did not have . To stay on the gold standard back then, would of meant not being able to pay its bills or meant that living standards would need to drop because the production and money was not there to cover such things . It meant that they would need to live within there means and not behond it and this is exactly why the gold standard was set in stone by our forefathers many many many years ago . they made a rule that coins could only be made out of silver or gold. There rules were made to keep a STANDARD , and not go behond it . They made rules that said paper money could be used as a substitute as long as it was backed completely by gold . The only thing that gave that piece of paper any value or worth was the promise to repay the bearer in gold coins.
I have some old gold coins that were minted in Sydney in the 1850,s , dug directly from our gold fields way back then , just to hold this feels like you are holding real money . Our banknotes , which were printed in the 1920,s said something simliar to this , " This is redeemable for twenty pounds in gold coin on demand from the austrlain government ". So it was a promise to repay the bearer in real money and thats where the paper got any worth from.

If you look at old charts of oil price history or gold price history will will note the following . Prior to 1971 , oil prices had been at about three dollars a barrel for twenty or so years , gold price were also stable and had been flat for years just like oil . house prices were also the same , flat for years . what many also dont understand is that cheaper prices for all these things are good for the economy , they make it stable , they keep it stable , there is more money to be spent elswhere and to build the economy .

When you tie all your money up in overleverged loans , you end up paying so much in interest that there is none to little to spend elsewhere , weather it be the economy , or investing in growing buisiness to help build the economy , that is how an economy is built , from hard work , productions and savings for investing in building the economy and your future. Not by over borrowing and over consumimg like we all do know. there will be nothing left for the future then as you are all seeing now , you can blame all this on the morons that rule countries from all around the world but mainly America , they thought it a good Idea to go off the gold standard so they could print money to pay bills they could not to pay and exactly what the forefathers did not want as they knew exactly what would happen way back then and hence the reason for such rules.

So the moment the gold standerd was removed 1971, wa s the moment that things became unstable , literally instantly . Oil had been flat and stable for years as had most others things , then instantly it shot up and has been climbing ever since , gold climbed from about $35 an ounce to $ 120 an ounce , prices for food went up as the oil had gone up to transport all these goods. So the fact is the US dollar has been going backwards continually since 1971.

If you look at the graph in the link below , you will notice how things became unstable and prices starting rising once the stability of the gold standard was removed .

http://inflationdata.com/inflation/I...ices_Chart.asp

The reason oil is such a good measure of inflation is becuase when the price of oil rises , so does the cost of just about everything because it need to be transported and this has been the hole problem of going of a standard.

On the next page things will get much simpler.

[DANNO178]

Before things get simple I will just cover a few points I have mist .

The other reason of the gold standard was that if x amount of dollars was covered directly against gold , evrybody knew they could always go and get there money back at any time . there would never be a rush to cash your dollar because you knew it was backed by something , and that something was real worth and made things safe . now your dollar is actually backed by nothing AT ALL . the experiment with fiat currencies is now over , they have tried and failed once again , was there ever going to be any other way .

So paper money went from an IOU gold to an IOU nothing .and thats exactly where it is now.

Quickly again on oil , sorry . All governments around the world used to use oil prices to guage our CPI , as I mentioned earlier it goes up , so does evrything else. But now to decieve everybody thay have removed this from the gauge . they all want to tell us both here and the US that inflation is under control , and tell us that it is around 2 or so percent , this is nothing more than a blatant lie and they all know that. that is the reason the real inflation measure is removed . In the US , some monertary agaencies still measure inflation the old fashined way . In the Us it has been running at around 9% for three years in a row , yet they fudge the figure and books and try to decieve evrybody , as you can see they have been doing a very good job keeping evrybody in the dark . Exactly the same goes on here.

So the fact is gold is real money . I will help you all to understand this soon for those that still wont or dont.

Now heres where things get simple and show you exactly what I am talking about.

If I lived in the Us in 2006 , just prior to debacle or start of the unfolding you will notice the folowwing.

If I had a house worth 300 k in the US and held onto it , I would now have a house worth around 150- 180 k depending on where it was.

If I had sold my house and put my money in the bank and not touched it , I would only have slighlty more as interest rates over there are very low.

If I sold my house and bought gold in 2006 at around 500 per oz , I would now have around 1 million dollars .

As you can see your IOU nothings are dissapearing in value against what is real worth . And you can see how much better you would be if you had put your money into something that is scarce and something that will stay scarce and valuable , not something that a government promises to keep valuable , we all know about their promises.

In the link below ,Have a look at one of my top three favourite economists giving it to Bernanke .

http://www.youtube.com/watch?v=2NJnL10vZ1Y

I will continue on shortly .....

[DANNO178]

Now to show you all just how much all the currencies around the world are being devalued against real money , which is gold , have a look at the link below . all currencies including our own are being smashed to pieces.

While not wanting to go into it now , the fact is , every country is now racing to lower the value of their dollar against one another. When the US prints money , it forces our dollar up and everybody elses , it makes their terms of trade harder and more expensive , to counter this , they are all now printing money , and we may also probably start to print money as well ,otherwise our dollar might go through the roof . This is where we are now at.

Anyway look at the link and see the devaluation of your dollar in REAL terms.


http://www.galmarley.com/Chart_pages...ncy_charts.htm

[DANNO178]

To show you how that value of cars are going down like your dollar , I will give this example .

Three years ago the cost of a new g6e turbo may have been about 55k , pretty much same of simliar to now . If I put my 55k in the bank three years ago I would have my 55k + some interest . If I bought gold I could have bought about two kilos back then . that would be worth about 110k now . I could buy two cars for the same price as before with my gold .

Gold has not really gone up , it just that evrytime they print money , it takes more dollars to buy that same amount , it is like you now have more dollars competeing for something. What you all dont understand is holding gold now is about the safest thing you could possible do . You can also see why should should own a good percentage right now as a hedge against the destruction of our dollars.

You see the reason gold is real worth is because somebody had to discover that gold , that had to mine it , refine it and then mint it , all that worth is embedded in that coin . It costs the government the same to print a 1 dollar bill as it does to print a one million dollar , the difference between a one ounce gold coin and a 100 ounce bullion bar is that it took 100 times the effort.

And for those wondering why the prices dropped last year and have been stagnant until recently is that some people thought that there was a solution to this problem and that they would not print anymore money . The money printing game has now kicked into top gear , no limit , indefinately.

[DANNO178]

Was that in enough detail for you Yellow festiva , and hopefully you can see clearly now as will others . Sorry to others for not keeping things quite as simple as I had hoped ,I went off on a tangent sometimes , but helps to see the bigger picture .

[DANNO178]

I read a comment in the gold thread the other day from somebody . they said , oh thats just to easy to go and buy some gold , everybody is jumping on that bandwagon , its going to collapse . Sounds like these comments would be more appropriate to the housing market. Buy a house ,its going to double in price guaranteed ,no worrys . the market that evreybody jumped into , to get rich easy .

How many of you own any real amount of gold , I would guess a handfull by comparison to house owners . how many have there assets diveresified , if you have all your money and wealth tied up in the property market, then when property goes downhill , everything you own goes downhill , and not the safest way to position yourself .

You can do what most people have done in the US , which is sit back and do nothing , which is what most people will do here . OR you can do something about it , the chioce is yours.

While some see doom and gloom and want to whinge its best you know all the facts and there is a lot to learn . Things are not great and will get very tough but we do have a future here in Australia .

I can answer most of your questions about what will happen now and in the future . I dont have a chrystal ball , I have just looked into things and will use nothing more than common sense . The US FED is making things very predictable.

For those that want some light at the end of this tunnel , and until very recently I was yet to see any light at the end , but I can see it now. After the implosion of the american dollar , which will take just about all currencies with it including ours , and could still take years for this to happen and I will explain why shortly with another eye opener for you guys. When they hit the fiscal cliff , which they will , which can be explained if need be , there dolar will implode and become possibly completely worthless . There will be hard times for everybody for some time .

But once America and europe has imploded there dollar , which is a 100% guarantee , unlike most of their other guarantees , china will not need to give free stuff to the usa with their iou nothing piecs of paper( I WILL explain that simply on the next page). When this happens their country will have more money and wealth , eventually the middle class china will grow and grow , there are millions and millions of them , as there middle class grows , so do there needs , there food needs , there luxury and cars need , and so and so on. eventually thay will grow wealthy and prosper within themselves basically , they will come to australia in droves , with all the new found wealth to spend here , australia will prosper again , unfortunately , not for a while yet.

[DANNO178]

To see the bigger picture of the US , I will try and make it simple for all to understand.

Just say jim jones ownes an apple farm , he grown apples there for years as did his father and his father before him. They have done buisiness for generations with the local traders and other farmers and are known for there good worth and well being, they always pay their bills and have always been 100% trustworthy.

Now jimmy chong moves in next door and grows oranges on his property . A year later his buisiness is going well and he trades his oranges for other supplies with the locals , say sugar and tobacco , he also trades his oranges for some of jimmy jonses apples. All is good , this goes on for years and evrything is fine. Then one year a cyclone comes in and destroys jimmy jonses apples, his crop is wiped out and he has nothing to trade with the others. So he goes to the locals and tells them what has happened , they agree to give him the supplies and he agrees to pay him back so many apples , plus some extra apples for interest when he is up and running again. He gives them a piece of paper that states that he owes them so many apples plus some extra for interest , they have no trouble in glving it to him because he is trustworthy and credit worthy and has been for generations. Jimmy chong also agrees to give him some oranges and jimmy jones gives him an IOU so many apples plus extra for interest, all is good , no worries mate.

Then next year a flood comes through and wipes out his apples again , jimmys oranges still faired ok.! So again jimmy jones is forced to go back and ask for goods for which he cannot pay , again they all agree to give him the goods he needs and he gives them more IOU's . This goes on for a few more years ,jimmy getting all his goods and swapping them for IOU's. Eventually jimmy jones realizes he can get all these goods and keep giving them IOU's because his credit worth has always been so good. Eventuallu he relizes that he can be getting all those goods and swap them for those pieces of paper. So then turns his apple orchard into a golf corse and plays golf all day running his new service industry.

How long before the others all get sick of giving all their hard earned goods to jimmy jones and receiving nothing in return but an IOU nothing that can now never be repayed because he is not producing goods and more , just borrowing to consume things he cannot pay.

This is exactly the situation the US is in right now, they are not producing and are simply borrowing to cosume things for which they cannot repay.

When we first hit the wobbles in 2008 ,they owed 10 trillion dollars , they try and fool people that things are improving by printing more money but now owe 16 trillion as of a couple of weeks agao. So as you can see nothing is improving , its just getting worse by the day until the inevitable happens, which is the collapse of their dollar and economy.

[Resurrection]

DANNO178 - are you dave289????

http://www.fordforums.com.au/member.php?userid=37181

[buggerlugs]

Originally Posted by Resurrection

DANNO178 - are you dave289????

http://www.fordforums.com.au/member.php?userid=37181

And you may want to start your own Forum.........

[Dr Jekkyl]

Originally Posted by buggerlugs

And you may want to start your own Forum.........

I haven't had a chance to read what he has to say in depth so I wonder if Danno can condense it bit.

I suggest condensing it to a 3 word slogan for maximal public outreach.

Evidently it works!

[BA GT-HO]

Originally Posted by Resurrection

DANNO178 - are you dave289????

http://www.fordforums.com.au/member.php?userid=37181

I would bet a fair bit of money he is. The way he writes is very similar, the tone and the style.

[BENT_8]

Originally Posted by BA GT-HO

I would bet a fair bit of money he is. The way he writes is very similar, the tone and the style.

And the issue would be...that he may have returned, or he is on the money(pardon the pun) with the comments?

I dont see the problem, he wouldnt be the first to return with a new username.

[Chopped]

Originally Posted by BENT_8

And the issue would be...that he may have returned, or he is on the money(pardon the pun) with the comments?

I dont see the problem, he wouldnt be the first to return with a new username.

Sssshhhh, you are not supposed to mention that DAVE289 had a point and was proved correct in some ways.

But in the end we all need somewhere to live so the practice of buying and selling of houses will continue into the future. Some will lose and some will win.
That's life.

[zilo]

Originally Posted by Dr Jekkyl

There is talk from the property and banking lobbyists that Aussie housing is now affordable again.

ABS data says otherwise.......and that it has been unaffordable for a long time!

image

sorry...this graph doesnt make sense.

[zilo]

@Danno178- you fail to understand one thing about gold versus property..


Gold doesn't pay rent and gold doesn't keep the rain from hitting your head.

You can't grow food on gold.

Better to own property as an assett it at least has a utilitarian application.

[Dr Jekkyl]

Originally Posted by Ugg

sorry...this graph doesnt make sense.

Yes, it does.

If the year 1970 is used as the zero point it demonstrates that, in real terms, average weekly earnings have only marginally exceeded inflation.
House prices on the other hand have increased well in excess of inflation. By a maginitude of 250%, no less.

If house prices were as affordable now as they ever were then these two lines would track evenly.

[IDT]

I dont share this opinion of the gold standard being any good. Its a useless commodity in the real world, can't eat it, can't burn it to keep warm or run machines nor can you build with it. That is why it didnt work to have the dollar tied to it. Worse still if I a country floods the world with new gold it presents more faults than share trading.
Open market, with all of its faults, evens the playing field. The fact that the american system was corrupt has never surprised anyone. What the surprise was is that so many fell for the ruse. When the dollar value was tied to gold things were no better, remember there great depression?
The only measure of strength in an economy is the level of unemployment. Only problem that comes from low unemployment is that it more often than not results in a labor government who screw it buy taxing the life out of those who provide the jobs. But thats another topic all together............

[mostly_broncos]

The gold standard was fine in the US until 1913 , the year they created the federal reserve. The true gold standard was suspended during world war one and never returned. After that war gold got mixed in with the pound sterling and the US dollar and crony capitalism really took off.

It was the federal reserve that killed the US dollar. The central bank began over printing gold certificates until they far exceeded the amount of gold in the whole world . They realized they had to end it because people might figure out there wasn't enough gold if large numbers of certificates were turned in for redemption.

Here is a link where someone took the time to inventory the number of gold certificates and compare that to the gold reserves.

http://www.moonlightmint.com/bailout.htm

[DANNO178]

Originally Posted by Resurrection

DANNO178 - are you dave289????

http://www.fordforums.com.au/member.php?userid=37181

dave who????

[DANNO178]

Originally Posted by buggerlugs

And you may want to start your own Forum.........

Thanks for the support there buggerlugs . I have thought about it , but it would take up a lot of my time , and then you try and help others only to cop ridicule most of the time , so I will do what I can where I can and leave it at that.

Although if I did maybe some threads titles could be :

1 - Are house prices going to rise in the near future

2- Whos your daddy now.

[DANNO178]

Originally Posted by Dr Jekkyl

I haven't had a chance to read what he has to say in depth so I wonder if Danno can condense it bit.

I suggest condensing it to a 3 word slogan for maximal public outreach.

Evidently it works!

Somebody asked me to explain it in detail , and then others whinge it is too long , I thought I condensed it enough for all to understand clearly .

[DANNO178]

Originally Posted by Ugg

sorry...this graph doesnt make sense.

Did you even look at it . Could not be clearer.

Houeshold mortgage debt is now double what is was in 2005 , does that mean anything.