I’d like someone to explain to me what happens to house prices and our economy when interest rates inevitably rise again.
When interest rates rise, so will house repayments for most people, even those on fixed mortgages will have less than 5 years respite at the most, but what will the consequences be? Investors will need more money to service their loans, but negative gearing will give them a larger tax break, and they can always put up rents. Owner occupiers, however, may be pushed beyond their capacity to service their mortgage ending in forced sales or foreclosures.
What I want to know is how the market will react in the scenario where we begin to see an increase in the number of people who can’t afford their mortgage? Will we see the bubble burst, with all of the flow on effects that we’ve seen in the US, UK and Europe, or will the equity rich investors simply concentrate the ownership of real estate further still and continue the bubble?
The combination of negative gearing, combined with the capital gains tax discount, seems to me to be distorting the market so much that my latter scenario doesn’t seem implausible. Would the banks tighten up lending if they saw more defaults, or would they double down on investors in an attempt to save the value of their assets? At what point would propping up the market become untenable? How much worse would the collapse be then?
The Australian real estate market looks to me like a financially ruinous game of chicken. If I’m wrong, I’d like to know why. If I’m right I’d like to know how the hell to get out of the way.
This September I’m heading to Cambodia as part of a volunteer group organised by the Apex Club of Albury. Our aim is to improve the facilities at Battambang Ophthalmic Care (BOC) hospital and schools in Phnom Penh and Tonle Sap Lake. You can read more about our trip on our crowdfunding page at chuffed.org.
Buster Boy is now a LEGO and video gaming obsessed nine year old, this is what happens when those interests collide.
Aperture Industries Test Lab
Subject Number One Hundred and Fifty
Carrying a cube
Peering through a blue portal
BREAKING: Globally respected present delivery specialist Santa Claus has revealed that due to the newly announced carbon price he will cease visits to Australia.
Despite the fact that his reindeer led sleigh runs on magic, and is therefore unaffected by a price on carbon, Mr Claus believes that there will be impacts on other parts of his business.
“Traditionally I’ve delivered coal to people on the naughty list,” intoned a disappointed Claus, “and with the number of lies being told by some members of the Liberal and National Parties with regards to carbon pricing, not to mention some of the folk at News Ltd, I’d need a record load this year. That much coal means a financial burden that I can’t bear, and that I have no capacity to pass on”
Asked whether he would seek compensation, or an exemption, from the carbon price Santa gave a resolute “No”. He explained “Everyone understands that we need to take action on climate change, and that a market based price on carbon is a part of that. The simplest and best solution is for Malcolm Turnbull to have a serious talk with some of the anti-science nutbars that he works with, if Tony Abbott could “Stop the Bullshit” about carbon pricing we might be able to get a few of his colleagues off the naughty list and bring my coal order back to a manageable level.”
Efforts to convince Santa to switch to a renewable resource for people on the naughty list have thus far failed to find an alternative. “The reason that I have a naughty list is to convince people to modify their behaviour, I can’t be held responsible if some of the people are too stubborn or ill-informed to make the necessary changes.”
Neither the Prime Minister or Opposition Leader were available for comment, although a spokesman for the PM’s office said that she was particularly disappointed, as she had hoped that finally taking a step towards addressing climate change would have been enough for her to get a pony and a plastic rocket from the man in red this Christmas.
One of the favourite pieces of anti-National Broadband Network nonsense is that wireless technology will make it obsolete. But a group of residents in Thurgoona have demonstrated precisely why that will never be the case.
Both parties pleaded their case to councillors last night in their scrap over Optus’ plans to build a 25-metre mobile phone tower on Thurgoona Golf Course
The Thurgoona residents, who claim the phone tower is a visual blight that will affect the value of their homes, were last night furious with Optus for refusing to reveal statistics showing a need for the new tower.
Good luck getting a mast on every street corner for a nationwide high speed network.
Earlier this week Buster Boy announced that he thought he should have a podcast. When I asked him what it was going to be about, he told me that he wanted to tell people all about the board games and video games that he liked. So without further ado, I’d like to introduce Rupert Reviews.
You can download it straight into iTunes and hear exactly what cuts the mustard as far as this 7 year old gamer is concerned. The inaugural episode looks at Lego Star Wars.
I can remember when I was Buster Boy’s age how much fun it was to make recordings on my Dad’s tape deck, they usually only lasted a few weeks until the tape was full and I’d start recording over it again from the start of the tape. How amazing that this little snapshot of my son can not only be captured in perpetuity, but shared with our friends who are so far away. Living in the future is cooler than I could ever have imagined.
While visiting some friends in Bendemeer, NSW, I came across this closed, but almost intact butcher shop. After taking a few photos I ran into the woman who used to run the butcher shop, and she told me some of her story.