My sister in law is buying a house in Australia. Sigh..

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Subprime JD's picture
Subprime JD
Status: Platinum Member (Offline)
Joined: Feb 17 2009
Posts: 562
My sister in law is buying a house in Australia. Sigh..

Even a cursory look at the Aussie housing market will show that it is in bubble territory. Especially Perth in Western Australia where median home price is 7.5 times earnings. For the last year i have repeatedly warned her NOT to buy. She is 22 years old, works for a engineering firm, brings home 4300 a month. Her and her boyfriend are applying for the FIRST TIME HOME BUYER GRANT of 10k. They are buying in the 500,000 range. Everyone in Perth believes that home prices will double AGAIN in the next 5 yrs due to the resouce sector.  There are many good prospects for this area longer term but buying a home at these prices is just insanity. Her mom (my mother in law) has been pressuring her to buy a "investment property" for months now. Finally the girl caved in. Granted, 4300 net a month isnt bad but people should know what they are getting into before signing the dotted lines.

Again and again i have showed them charts, graphs, data, etc strongly showing that Perth's home prices were severely overheated and that a strong correction is due. The correction began in 2008 but the fed gov of AUS pumped out the 20,000 dollar first buyer tax credit which cushioned the correction. Also, stimulis efforts from China bosted the resource sector from a correction which helped keep unemployment low. Now, prices are back to all time highs and are ready to break through the highs of feb 2007. 475,000 is the median home price in perth. My sis in law is looking for a investment home which will provide "capital growth". People out here are getting low doc loans, 95 even 100% financing when it used to be 30% down payment. Homes are selling just days after being put on the market. My wifes uncle put his home on the market on fri and had 4 bids on Sunday, selling it to the highest bidder in 3 days. Thats a speculative frenzy if u ask me.

Sis in law has applied for the gov tax credit, and is waiting for approval. Her and her bf recently got pre approved for $890,000 i kid you not. He also brings home 4200 a month. They will have DTI's of 40%. Both work for corps and thus are subect to layoffs when the real correction hits. Sadly, they both refuse to listen and will be "home owners" soon. When prices here in Perth collapse and the median home price falls to 300,000 (possibly more) i will then buy a house  for half the price. Maybe then they will listen to the bear.

 

Peace

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: My sister in law is buying a house in Australia. Sigh..

Hi bear

I know a couple of people in WA, and what they tell me is going on over there is astonishing.....  WA has to now be the most unsustainable part of our country.

In the end though, all your sis in law will lose is money.  She and the bf won't be losing a support system like we have here, because they have nothing now, and they will have nothing later.  In reality nothing changes.

If we on the other hand lost our property, in which we have 95% equity, due to a financial crash - then we'd lose everything.  See the difference?

It's hard to fathom what will happen when the bubble bursts... it'll be another America.  Are YOU planning to stay?

Mike

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: My sister in law is buying a house in Australia. Sigh..
agoodhuman's picture
agoodhuman
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Joined: Feb 7 2009
Posts: 13
Re: My sister in law is buying a house in Australia. Sigh..

Here's an article I wrote last October after a visit home to Australia (currently living in California).

Is a housing bubble looming in Australia?

Let's put it this way.... I've been selling my Australian properties to First Home Owners. I can't see how this isn't one giant bubble waiting to pop, but I won't underestimate the Australian Government's resolve to keep it inflated.

I await a correction so I can get a piece of productive land at some sort of reasonable price.

Mia

Bankers Slave's picture
Bankers Slave
Status: Platinum Member (Offline)
Joined: Jul 26 2012
Posts: 523
The mortgage scam

"Mortgage"...from the French..."death pledge"

The banksters lend you your own money created by your own signature on a promissory note (your own credit is where the illusory funds come from and then they steal it from you and lend it back at interest).

Then they sell the mortgage as a securitised interest on the money markets making themselves even more money.

Ask to see the original mortgage contract with your signature...they cannot produce it because they sold the debt, but they will tell you they have mislaid it or something else that is a lie. If the debt has been sold on, how can you be due these fraudsters anything?

UK website www.getoutofdebtfree.org

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