Aussies Living Simply

Families Struggling to Repay their Mortgage

Home Forums OVER THE BACK FENCE General chat and catching up Families Struggling to Repay their Mortgage

Viewing 15 posts - 1 through 15 (of 18 total)
  • Author
    Posts
  • #257231
    McKewMcKew
    Member

    Some of the news I have been reading lately is worrying, like this article about how more and more people are dipping into their superannuation funds as a last resort against defaulting on their mortgage: http://www.brisbanetimes.com.au/national/home-owners-forced-to-take-super-20120818-24f1j.html

    I am concerned about what effects it would have on the economy if people are no longer able to repay their mortgage and have to default. This would be a problem not just for those who lose their homes but for the economy as a whole because more defaults inevitably lead to falling house prices, which have already fallen over the past months. What effect would this have on retirees for example, who have invested in property either directly or indirectly through their superannuation fund?

    I believe the current problem we are facing is due to government policies, which encouraged skyrocketing house prices that in turn led people to borrow more than they could afford just to get into the housing market.

    #527120
    Anonymous
    Guest

    g’day mckew,

    some of us have been tending to chat this way but sadly humanity takes a low scale to the science led bullies.

    it will mean more people living in the street.cars/tents/caravans hidden in the bush, with no basic human facilities those to are being made unaffordable by the new trends. and for those who think they have found a place of solitude to live there are those who then feel the urge to dob them into the local council, this is where our science led world is going. no wonder we can’t figure out what to do with the boat people per-say.

    this treatment of aussies must stop before it is too late if it not already is so?

    our floated economy model is failing, miserably.

    len

    #527121
    SnagsSnags
    Member

    Interesting theory on science there Len, has nothing to do with reality or the subject though nor does the floated economy,but globalisation and Capitalist desire for exponential growth does.

    House prices are the result of greed and stupidity.

    Renovation/Realestate tv shows,massive immigration,negative gearing and first home owners grants and Banks handing out mortgages to people who couldn’t afford them, didn’t help.

    There will be a correction as the prices can only be propped up by fantasy for so long.

    We have seen it happen every where around the world except here yet.

    At least in the US you can walk away from your house and the bank is left with it while here you own it and the debt for life.

    Unfortunately the correction will come with a lot of pain as they always do.

    #527122
    MiaowzenMiaowzen
    Member

    I agree that government has a lot to do with it. All government policies have one purpose only and that purpose is to be re-elected next term. It is much better for the government to be seen to be helping people build equity by increasing house prices and then come up with a rescue package at the last minute (with a lot of fanfare) than to prevent it in the first place which is not interesting and might lead to people becoming bored and dissatisfied. In addition to that, it’s in the government’s best interest to inflate real estate as the government both sells land and raises taxes as a proportion of each property’s value.

    #527123
    Anonymous
    Guest

    the trend is a long way from modest houses these days all mcmansion type structures with architectural artistry to make them look appealing, complex roof design all to be pretty to look at but also costly to build. along with they sue lots of power as the design has moved away from a single fluro on the middle of each room. a light on at all times in some places no natural light anymore unless the roof integrity is compromised by skylights.

    build affordable homes. showed a young tradie what we live in his words “my wife would never wear it” that’s indoctrination.

    len

    #527124
    MiaowzenMiaowzen
    Member

    I can’t stand McMansion houses 🙁 But I think that is a different issue, there is a trend for building the biggest houses that will fit on a block, and as a result people don’t think about aesthetics anymore, because they can’t afford to have both a big house and a beautiful one. New subdevelopments are an eyesore and will probably be amongst the first to go down when the housing bubble pops as those houses are just commodity items, no-one has really put their heart and soul into them.

    #527125
    benobeno
    Member

    i don’t buy it. House prices went up 100% and now that they have retracted 20% or so people are screaming blue murder. I feel for the people that got sucked into the bubble after all the capital gain was made and will now make a loss.

    Most off the plan houses are made to last 25 years and are not good quality even though they look nice. My uncle is a master builder and that was his prediction as to how long these new flimsy houses will last. Think of slabs filled with styrofoam to save concrete or larger distances between roof trusses or floor joists. They use cheap pine framing and gyprock and some houses now have panel external walls. Very cheap so people feel they can build bigger for the same cost of a sturdy well build house.

    #527126
    casalentacasalenta
    Member

    McKew post=347849 wrote: I believe the current problem we are facing is due to government policies, which encouraged skyrocketing house prices that in turn led people to borrow more than they could afford just to get into the housing market.

    Can’t say I agree with this actually as people can always buy smaller houses. I think, as others have said, the fundamental problem is people are taking on bigger mortgages than they can afford in order to buy bigger houses than they need. Not only do they buy massive houses on tiny blocks, but every room has to be fully furnished with new furniture (bought on credit) before they’ll move in.

    Previous generations to the last couple (every single one of them going back thousands of generations) lived within their means and were satisfied with modest houses furnished at first with hand-me-downs and second-hand furniture as they could get it. I well remember in the 70s going to house warming parties where we sat around on boxes and used packing crates for tables. People slept on mattresses on the floor until they could afford a bed. I had a box covered with a tablecloth as a bedside table for years.

    It isn’t government policies IMHO (although they don’t help), it’s debt-driven rampant consumerism and a media and political milieu in which people are told they ‘deserve’ to have everything they want whether they can afford it or not. People spend on average 3-4 hours a day watching TV, and you could even argue that its main purpose is to make people ‘need’ things they never would have otherwise known they even wanted.

    Remember George W. Bush’s response to 11th Sept 2001? ‘Americans go shopping.’ Well, Australians have gone shopping too, buying bigger and bigger houses filled with more and more stuff, none of which they can afford, and now the inevitable proverbial is hitting the fan!

    #527127
    purplehatpurplehat
    Member

    I agree with the above, although I’d like to say that in our case, the government policies have helped! The first home buyers grant was very helpful for us getting our first home only 4 years ago, but unlike others, we got a cheap house (under $100k) and have tried to improve it over time.. most furniture is second hand, etc.

    When we applied for a loan, we were told we could borrow a fair bit more than we did, but we looked at the worst case scenario (not able to get work in the new area) and used that to determine our maximum mortgage, not what the bank said we could afford. Perhaps some people have a more rosy point of view than we did and went with “what we can afford right now” option. 😆

    #527128
    df418df418
    Member

    quick survey

    How many people on ALS have a storage unit?

    #527129
    McKewMcKew
    Member

    purplehat post=347917 wrote: in our case, the government policies have helped! The first home buyers grant was very helpful for us getting our first home

    purplehat, it is interesting that you bring up that the first home buyers grant helped you purchase a first home. On the surface, the first home buyers grant does appear to make buyers better off, but in fact, the overall effect is to increase house prices by more than the value of the grant. This is because a grant from the government allows buyers to get a larger home loan, which in turn pushes up house prices. In turn, the sellers get more money for the property that they just sold, and they are therefore able to make a larger deposit on the next home they purchase, which pushes up house prices even more. So while it seems that buyers are gaining by getting free money from the government, the buyers are actually losing because house prices rise more as a result of the FHBG than the amount of the grant itself. In other words, if the government had not given away free money to buyers in the form of the FHBG, buyers would have less money with which to purchase a house, but that wouldn’t matter because house prices would be lower as well. The only way that a home buyer would win from the FHBG would be if they bought a house immediately after the government doubled the first home buyers grant (i.e. before the house prices had a chance to jump in response to the grant).

    You can read more about this here in an article by University Professor Steve Keen: http://www.businessspectator.com.au/bs.nsf/Article/property-prices-RBA-bloxham-joye-pd20110404-FL7ED?opendocument

    If you scroll down to Figure 12, which shows how how house prices in Sydney and Melbourne responded to increases in the first home buyers grant, you will see for yourself how house prices jumped in response to each of the four times that the grant was introduced or increased.

    The latest boost of the first home buyers grant temporarily postponed the bursting of the housing bubble, but now the concern is that the fall in house prices will be even steeper because they were artificially inflated even more by the doubling of the grant.

    #527130
    Anonymous
    Guest

    mcmansions make for higher mortgage to pay back, young people add in new white goods even a car, so the mcmansion puts a lot of pressure on the purchaser to keep up with the jones.

    we built our own 6mX6m 2 bay shed for storage.

    when grants are on offer they are generally called for by the industry and as with rebates eg.,. solar all along the way tack on a bit more.

    len

    #527131
    MiaowzenMiaowzen
    Member

    We rented a storage unit to hold all the worldly possessions we cared about while we ran a house-sitting venture for a year.

    It was one metre by one metre! Our family thought we were nuts, but we were happy to only keep the things that mattered. We still felt we had kept too much.

    Now that we own a house again we have bought furniture etc but are not attached to it other than the few pieces that I hand-painted and sewed etc. I got everything second hand at auctions. Our house in only 80 sqm so we don’t have room for much stuff anyway. I just feel like the simple life is the way to be.

    My parents on the other hand saw their house value drop 10%. They were mortgaged to the hilt and as a result they now still have mortgages exceeding the price of my house, however they are a couple of years off retirement.

    Purplehat, I agree that you did get a good deal with FHOG in your case. It sounds like your house wasn’t a typical FHB house and so it didn’t suffer an increase in price. Well done! Sounds like a great deal!!

    #527132
    purplehatpurplehat
    Member

    Well.. I hope it was. Don’t we all! 😆

    I think perhaps things are a little different away from the capitals. I noticed house prices don’t increase as much, but neither do they decrease as dramatically either. This old cottage has increased a little in value, but I imagine more because of the renovations and improvements than the general value of property increasing in Stawell. That’s ok with me though, because it still beats paying ever increasing rent for the terrible unit we use to live in. The good part is that now we’re ready to move on, we have this place to help us achieve that goal.

    Of course, our situation is different to people who want to live in the suburbs of the capitals, stay where their work and friends and family are.. what choice do they have, then, other than pay the crazy house prices? Sometimes I hear them on talkback radio (abc) talking about how they feel they will never be able to afford a home of their own.. Well, they can.. but.. it might mean moving further out this way, but I don’t hear anyone saying that.

    #527133
    Anonymous
    Guest

    about 8 years ago or so the real estate people in brissy, were saying that our values were 25% lower than sydney or melbourne, and in their estimations brissy prices should be equivalent so they began pushing values up (they do most onsite valuations for resale properties) this would also increase their commissions and help the lending institutions along the way with people borrowing more and paying that much more interest.

    so their plan was put into play and blossomed when the market place became hot and very viable, just to explain about 5 or so years ago in a suburb to the north of brissy, buyers were going mad, the place over the road sold within 1/2 an hour of being listed and at a price the owners could not believe they got at least $50k more than they could ever have expected, and buyers were buying and forgoing having and checks. that’s rel estate whipping up a frenzy, so this place was signed even before the 4 sale sign went up.

    then by 3 or so years later the market took a plunge from that artificial high.

    even where we are now the local agent is keeping prices high the agent won’t accept offers unless forced so houses sit stagnant for 2 years or more, people down the road put their place on the market planning not to be able to sell it for 2 years, some plan hey meanwhile the price of where they want to go could rise, some localities do. most here have over capitalised for the area. the common agent is a real stumbling block we can now see people tending away from them and having multiple signs which again my not make the property that attractive to buyers. yet if one asks the agent that things aren’t selling he say they sold 5 or 8 properties last month, hardly ever see a sold sign, and some sold signs reappear as for sales again.

    anyhow that’s how we observe it, we had to drop around $30k from our agents suggested price to even begin to get tyre kickers, the auction was a farce, it was only attended by other agents. the market still falling up this way, on TV you see bundy claiming rise in house builds and sales the next week they say the opposite, real estate pulling the strings.

    len

Viewing 15 posts - 1 through 15 (of 18 total)
  • You must be logged in to reply to this topic.