Preparedness for when

Softstuff

GQ, as much as I love beer, I think I'd rather give it up for life than skydive!

Frugalsod, there are certainly people here in Australia that will be in serious trouble. Mining towns are in decline (as are the exorbitant house prices in them), budget cuts are happening to cover loss of mining tax revenue and unemployment gets ever higher (though here there many ways the figures on that get fudged).

In a funny way presently, the fall of the Australian dollar recently has been seemingly great for our local economy here. People who would previously travel overseas haven't been and this summer season has been busier than I've seen in ages. As with any changes in economy, some areas will be hit worse.

Frugalsod

Softstuff wrote: »

GQ, as much as I love beer, I think I'd rather give it up for life than skydive!

Frugalsod, there are certainly people here in Australia that will be in serious trouble. Mining towns are in decline (as are the exorbitant house prices in them), budget cuts are happening to cover loss of mining tax revenue and unemployment gets ever higher (though here there many ways the figures on that get fudged).

In a funny way presently, the fall of the Australian dollar recently has been seemingly great for our local economy here. People who would previously travel overseas haven't been and this summer season has been busier than I've seen in ages. As with any changes in economy, some areas will be hit worse.

Yes Australia has a massively overvalued property bubble and if you sell out now and rent then you can lock in the gains and wait till prices get back to normal. It is a risk. Though if you have little equity in your home you are only renting until you clear the mortgage anyway. There are also problems for Aussie farmers who are being repossessed by the banks so even more trouble ahead.

I have heard that some suburbs of Sydney have huge numbers of empty properties all bought by Chinese investors. Maybe the low exchange rate for the AU$ make it even cheaper for the Chinese, so will keep that bubble going a little longer.

Frugalsod

I found this which confirms my comments about Germany and Deutsche Bank.

http://www.zerohedge.com/news/2015-01-07/who-will-be-hurt-most-if-greece-defaults

Softstuff

Frugalsod wrote: »

Yes Australia has a massively overvalued property bubble and if you sell out now and rent then you can lock in the gains and wait till prices get back to normal. It is a risk. Though if you have little equity in your home you are only renting until you clear the mortgage anyway. There are also problems for Aussie farmers who are being repossessed by the banks so even more trouble ahead.

I think there's a wide variety in the property market in Australia presently. They've been predicting the property bubble bursting for as long as I've been here, but no dice yet. You have areas that have had massive capital gains in the last 10 years, but at the lower end of the market things haven't budged much. Had we bought a house 10 years ago in a neighbouring area, we'd have remained static price wise for a moderate one, but we would have lost money on a higher end one. In our present area the bottom end where we are has stayed static but the higher end has gone through the roof.

What we're starting to see now is people struggling to sell the million dollar plus homes (and having to sell them), but there's actually a surge predicted at the lower end (all of these downsizers are looking to go somewhere). How that pans out in the end is a matter for the crystal ball. Having friends in the real estate market here, their thoughts are that purchasing a cheaper house at the bottom end is a pretty good bet at present in this area.

For us personally, heading for a house at the bottom end of the market seems to make good sense. It cuts $8000 off out annual expenses straight away (no body corp fees), the mortgage payments will be barely higher than rent would be (but with no short lease uncertainty), we'd be able to save in other ways (AirBNB, solar hot water to start, solar power to follow, tank water, productive garden, licensed kitchen).

In any case, we'll see what happens.

Frugalsod

Yes that all makes sense. You still need somewhere to live, but you should not expect a capital gain. The long term demographics do not currently support house prices. Though as you will still need somewhere to live it will give you far more scope in terms of home investments such as solar power and heating and even if you do not make any money from power generation it could effectively cap your bills for a decade or more.

Softstuff

Frugalsod wrote: »

Yes that all makes sense. You still need somewhere to live, but you should not expect a capital gain. The long term demographics do not currently support house prices. Though as you will still need somewhere to live it will give you far more scope in terms of home investments such as solar power and heating and even if you do not make any money from power generation it could effectively cap your bills for a decade or more.

I think there are still folks expecting great capital gains, buying negatively geared rental properties is still very popular here (frankly, the only reason you'd buy a rental property here is for capital gains). I have a feeling those folks will be sorely disappointed.

We're sorry to have missed out on the hellishly good solar rebate scheme here. When our grandparents in law got solar, it was effectively free to have it installed and thanks to the rebates for feeding into the grid, they've not paid a bill since.

Frugalsod

I think that people generally expect rising house prices no matter where they are. Prior to the deregulation of banks in the UK, prices were remarkably stable. They only rose in line with wages. Now they rise far faster than wages and the prospects of buying a home are now outside the range of more and more people. So the baby boomers who have bought buy to lets will eventually discover that there is no one who can afford to buy their property at the inflated values that they want to be able to fund their retirement on. The millennial's that they are hoping will buy their investments are loaded up with student debt that can never be cancelled and so do have the income to afford the ridiculous mortgage multiples to buy the places, because they already have a mortgage called a student loan. Demographics are going to prove that property is not a great investment forever.

1Tonsil

Just a quick update before my ton of firewood arrives and I have to get it in and stack it. It has been bitterly cold but so far Corfu has not got the snow that is covering much of Greece. Crete and Cyprus continue with a deep freeze and over a meter of snow.It was minus six in Crete last night and many villages are cut off. The army has been called in to try to get food for the humans and animals in those areas.

We had a very deep ground frost and the olive groves were white over this morning still at ll am. The standing water was frozen to a depth of about three inches. I have heard that 12 percent of the olive trees and citrus trees have died due to the extreme cold in some areas of Greece, and the same in Italy.

I am still in my thermals and everyone I meet is doing the same. Folks were snapping them up in Lidl. I have never known it feel this cold anywhere in the world I have been to.

There has been a shortage of fire wood as families are having to burn so much just to keep warm. We got some from friends and today our usual supplier is bringing me another ton of olive wood. The government in their wisdom introduced a very expensive license that people had to buy to cut the trees and many of the wood yards have closed completely. The families who went all electric last year are regretting it as many areas have lost electric due to the weather conditions.

We stocked up on food, water and fuel and remain stocked up. We are due to have spring like temperatures over the weekend then back to the arctic weather on Monday, just like last week. I think it makes it worse in a way...you just get used to it being warmer then you are freezing again when the temperature plummet.:eek:

Three people have died in Greece trying to keep warm...two old ladies from fires caused in their home by open fires and one young farmer who died from the fumes from a generator, when his power was off and the temperature dropped to minus sixteen during the night.

We are managing to keep warm but I am reluctant to leave the fire side ...as soon as the sun goes down its freezing cold again. Many buildings here are not insulated and do not have heating for the winter....I can see that changing in future winters!

Keeping warm with lots of hot soup, home made, and plenty of good oils to keep our inner furnace glowing:T

Stay safe in the two storms coming your way, the one tonight looks real nasty:eek:

Frugalsod

1Tonsil wrote: »

We are managing to keep warm but I am reluctant to leave the fire side ...as soon as the sun goes down its freezing cold again. Many buildings here are not insulated and do not have heating for the winter....I can see that changing in future winters!

Keeping warm with lots of hot soup, home made, and plenty of good oils to keep our inner furnace glowing:T

Stay safe in the two storms coming your way, the one tonight looks real nasty:eek:

There are also other solutions to heating a home. You could limit the heating to one room with a candle heater, or alternatively you could wrap up in sleeping bags and blankets and use hot water bottles and just heat the people rather than the entire house.

Longer term insulation can also help as it keeps the homes cooler in the summer, but only if you can control solar heating effects.

It looks like the weather here will be wintery as well so I am prepped for that.

Karmacat

Best of luck, 1tonsil - and to all of those in the storm areas here in the UK today. I think I'm too far south to get anything terribly bad, and as I'm convalescing, I'll probably be in bed anyway but will keep my torch with me in case the power goes off overnight ...