Will we be wrong again in 2010?

It seems our predictions for 2009 didn’t seem to come to pass.

Many thought prices would fall significantly due to the global economic crisis, and they didn’t.

Then we expected prices would ease when government grants to first-home buyers dropped, but that does not seem to be happening either. 

So where do we sit at the beginning for 2010?

“I was hopelessly wrong on house prices! Ask me how.”

Followers of the financial press will by now have heard that doomsday economist Steve Keen has lost his high-profile bet with Macquarie Group economist, Rory Robertson.

Keen rose to national attention in 2008 after predicting that housing prices in Australia were on the verge of a collapse. Unsurprisingly, the tabloid media leapt onto the sensational story, generally failing to mention that Keen’s views were not shared by any other mainstream economist.

Rory Robertson was himself quite pessimistic about Australia’s economic outlook at the outset of the Global Financial Crisis. However, after a public email debate on the Australian housing market, Robertson challenged Keen to a bet on Keen’s views that housing prices would collapse by the end of 2009.

Proposed Privacy Act Changes to Affect Borrowers

The proposed changes to the Privacy Act would allow banks to investigate the type of each current credit account; the date each current credit account was opened; the credit limit of each open account; the date on which each credit account was closed; and credit repayment history.

Access to your credit bureau file will remain limited by the law, with lenders only accessing with permission at the time of a credit application. The greatest fears surrounding this proposed change is that by allowing lenders increased investigative powers into borrower’s credit history  this will cause greater financial exclusion.

In a credit market that has seen severe tightening of credit policies to the point where many borrowers who once had easy access to credit are now being scrutinized over minute details, the proposed change will again exclude even more borrowers from lending.

Now more than ever it’s important that you keep your financial records clean. Ensure sufficient funds in your accounts for direct debits and cheques. Watch your credit defaults. At the time of weighing up the worth of fighting a telecommunication company or the like, consider the cost of the long term effect if you end up with a default.

If you know that you are looking to take advantage of the rising property market, get your finances in order. Don’t wait for the lenders to put on the breaks even further before you take action.

RBA’s running scared about house price rises

I listened to a report last night on the radio relating to comments from Glen Stevens, Governor of the RBA. The crux of this report was the Reserve Bank is concerned house prices are going to continue to rise due to an undersupply in housing and a large population increase on the way. Now property prices have generally risen for as long as the statistics on house prices go back. His concerns, however, are for a rapid increase.

The point the journalist was trying to explain was that if you have a house & it goes up in value; you’re really no better off. This theory has been thrown around by both property skeptics and property lovers (like Dolf Deroos) for many years,