# I have given up buying a house



## krisbarry (20 June 2006)

This will be a hot topic....

I have been living at parents place - free rent, or my mates place free rent!

I have decided to give up on the Great Australian Dream, turn my back on it and deposit extra money into my superannuation.

Housing is the most un-affordable it has been in 20 years according to many experts.

The government gives first home buyers $7,000, but is very happy to take back up to 25% of total monies deposited into housing as taxes.

House prices are now stable, or going down, expect for a very small amount of suburbs in a few cities.  So it does make for a bad investment in the short to mid term.

I am able to gain access to the free $1,500 super co-contribution, each year, and every year, so this will be over-time a better investment than the poxy one off payment of $7,000 for the first home buyers grant.

I have also decided on gearing my superannaution, which is exactly the same as buying an investment property.

and here are the returns...
1 Year %   58.66%p.a.

2 Years % 55.76%p.a. 

3 Years % 55.76%p.a.

5 Years % 48.14%p.a. 

7 Years % 21.07%p.a.

care to discuss?


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## nizar (20 June 2006)

Whats the point of putting so much towards super when you are so young (it seems) ?


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## Knobby22 (20 June 2006)

I agree with Nizar.

You can't touch the money prob. till your 65.(if you are under 45). 
Also if your super is not with an industry fund, someone is making a big commission out of it and your returns will be poor.

Invest your money is assets you can get to. You may not live to 65 and anyway what's the point in being poor till then.

Don't do it!


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## 123enen (20 June 2006)

What do you mean when you say that you have also decided on gearing your superannaution.
Do you have a self managed fund?
If yes, then gearing , that is borrowing money is illegal.
SMSF are not allowed to borrow money.


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## Realist (20 June 2006)

Well I think you have a good point about Super over investment properties at the moment.

The beauty of Super is it comes out of your gross salary - you pay yourself before you pay the govt tax.

However, it is ridiculous at your age to "give up" on buying a house. Especially if you live in such a cheap city like Adelaide.

Houses are mostly overpriced, that does not mean you just "give up" though. It means you save and invest so that when they become fairly valued or even possibly undervalued which they will eventually. You can buy 1 or even 2 with leverage.

I agree wtih putting money in Super - not too much though you need to save to buy a house, but be patient.


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## krisbarry (20 June 2006)

Colonial First State offers a geared share fund, in Australian shares.

Nil % entry fee

It is legal and is offered to all superannuation rollovers, look at the returns above, much higher returns than the housing markert has delivered.

Whats the point of owing your own home and being poor too, there is plenty of stressed people who are morgagted to the max, even with investment properties.

Then once you have finally paid off the home its so out of date, you have to take out a 2nd loan to update it.

Anway in the long run, they will change the super laws, to allow people to use their super funds to buy housing, its just a matter of time.

here is the link to prove my returns:

http://www.colonialfirststate.com.a...dName=CFSI&MainGroup=SF&Month=5&Year=2006#a60


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## bullmarket (20 June 2006)

I am a firm believer in starting superannuation asap.  I see it as a form of 'forced' long term saving since you can't essentially get at it until much later in life.

Sure, in the long term all you can expect is a general average return of ~10%pa but if you then add up all the contributions you make over your working life your super should add up to a very nice nest egg, bonus, call it what you like on retirement.

I started my super when I was 27 and although not wishing my life away any faster than it passes by nowadays, I am looking forward to my 55th birthday in a few years when I will have total access to my super   but with the new tax treatment of super in this year's federal budget I might have to reasses when I take out my super.....but that's another issue.

But imo you also have to keep contributions into your super in perspective.  The younger you are and if raising a family, paying off a house etc then obviously those expenses should have a higher priority but they shouldn't exclude super as a long term 'forced savings plan'.

Regarding buying a house: for me it boils down to lifestyle and objectives for creating wealth.  However, if choosing to rent imo since the rent basically replaces mortgage repayments it is very important to use borrowed funds that would have been used to buy a house in other investments instead and not simply blow the borrowed funds on holidays, luxuries, fast cars and/or fast women   

If choosing to buy a house with a mortgage, my best advice would be to put all 'spare' disposable income into reducing the principle on the home loan.  All interest saved by reducing the principle is essentially *AFTER TAX* and so you would be hard pressed in most cases to find an investment with similar or better pre-tax returns elsewhere to make them worthwhile investing in.

Once you have reduced your principle you can then use that increased equity in your home to help fund other investments to build wealth. 

cheers

bullmarket


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## Stan 101 (20 June 2006)

under the FHBG you'll get $7000 plus you won't pay stamp duty on a purchase under $250000. If you lock your money up in super will you be able to use that as equity in future?


cheersd,


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## RichKid (20 June 2006)

Stop_the_clock said:
			
		

> Colonial First State offers a geared share fund, in Australian shares.
> 
> Nil % entry fee
> 
> ...




stc,
Thanks for the link, I'm intrigued by the easy access to overseas markets and resources stocks via super, will check out the pds, I bet the fees are high!


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## Realist (20 June 2006)

> Whats the point of owing your own home and being poor too, there is plenty of stressed people who are morgagted to the max, even with investment properties.




I agree.  A house can be a great investment, but it can also be a bad investment. At the moment I believe they are a overvalued.

A great house, or a great company is not a good purchase if you pay too much for it.

Wait and be patient, be prepared to buy but not yet. And do your research


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## The Mint Man (20 June 2006)

Stan 101 said:
			
		

> under the FHBG you'll get $7000 plus you won't pay stamp duty on a purchase under $250000. If you lock your money up in super will you be able to use that as equity in future?cheersd,



exactly!


> Whats the point of putting so much towards super when you are so young (it seems) ?



ditto!

When that buy of a lifetime comes up all your money will be tied up.


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## krisbarry (20 June 2006)

a tip is to go through....

www.investsmart.com.au

do a search for the most popular super fund, then follow the links

this will allow you to waive your 4% entry fee

In the past year while housing has returned between -2% to 20% this super fund has returned over 58%


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## krisbarry (20 June 2006)

I would rather live in the back shed at my mums house and bring an annual return of 58% than to break even or lose money buying property at such a peak of the market.


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## krisbarry (20 June 2006)

I also have it on good authority, from a real estate agent (owns his own business) ,saying that it will be a very long time before new home buyers are going to break even or make a profit on a house in the current market, up to 4-5 years at least.  So it really does make to returns out of super a much better investment


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## Julia (20 June 2006)

Hello Stop the Clock

Others have made good points.

It sounds as though you are young and unattached.  As such, it probably works quite well for you living either at home or at a mate's place.
But how will it be when you meet someone you want to have a live-in relationship with, even children, some day?  Then you will want a place of your own.

I am absolutely in favour of home ownership, however modest the home to begin with.  I haven't minded being a landlord but I would not want to be a tenant on any long term basis.  If investors decide rental returns don't make it worth their while, the rental market will diminish and rents will increase exponentially.  Tenants have no control over rising rents.  If you buy a simple home, even just a small unit at first, you can decide what type of mortgage repayments you can afford.

If you are able to borrow against your super equity than I guess it's not such a bad idea and I can understand why it looks so appealing.  But, as others have said, tying your funds up in super while you are still young could be something you will later regret.

One other note of caution regarding the rate of return on the fund you are considering :  the oft quoted phrase "past performance is no guarantee of  future returns" etc.  Remember that return has been achieved in a rampant bull market.  We now seem to be in different times.

Good luck with whatever you decide to do.

Julia


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## bullmarket (20 June 2006)

Hi Mint Man



> =The Mint Man
> When that buy of a lifetime comes up all your money will be tied up.




I certainly wouldn't advise anyone to put *all their money * into super but to use super as a 'forced' savings plan as I described earlier is a very valid option to consider imo.

I certainly have no regrets at all for starting my super back when I was 27   

My only regret is that I didn't start it a few years earlier when I could have.

cheers

bullmarket


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## bullmarket (20 June 2006)

Hi stop_the_clock



			
				Stop_the_clock said:
			
		

> I also have it on good authority, from a real estate agent (owns his own business) ,saying that it will be a very long time before new home buyers are going to break even or make a profit on a house in the current market, up to 4-5 years at least.  So it really does make to returns out of super a much better investment




I'm not convinced it will that long overall in general.......but then the affect of property values on owners will imo also depend on if they were originally buying a home/lifestyle as opposed to an investment property.

cheers

bullmarket


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## krisbarry (20 June 2006)

I have decided on not having children, as I do not want to have children, I have no need, no yearning, and not interested.  So there is one equation to be factored out of my life


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## Realist (20 June 2006)

> I would not want to be a tenant on any long term basis.




Why not?      

I rent, I love renting. Why would I buy a house?

If anything breaks I get the landlord in to fix it.  I have no body corporate fees, no water bills, no rates, no taxes, no repairs, no rennovations, no lawns. NO STRESS.    

AND NO MORTGAGE.  I am completley debt free. I could lose my job tomorrow, and not have a care in the world.

I pay a small weekly fee to rid myself of all these problems.  

If I get annoying neighbours or a great job interstate or overseas, I just find another place and move - I'm free, I can do whatever I want - move overseas, move down the street whenever I want!!

I pay under $10,000 a year to share with a girl a place worth about $650,000.

Hence why I can afford to buy shares. If I had a mortgage I couldn't.

I'm still entiteld to stamp duty excemptions and first home owners grant when I want to buy as well.

RENT!!   (it is great    )


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## The Mint Man (20 June 2006)

> Remember that return has been achieved in a rampant bull market



lucky I read your post.. was going to say the same thing  

Anyway, it dosnt worry me. The more of you out there with those views the more there is for me


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## krisbarry (20 June 2006)

ahhh but even in its worst years (say sept 11th 2001) almost all super funds had losses in that year, and also the following.  Look at the returns on this fund 20+%


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## bullmarket (20 June 2006)

Hi Realist

There are pros and cons to renting just like there are pros and cons to owning your own home....as I said earlier - renting or being an owner/occupier boils down to lifetyle and objectives in life.

But from my point of view I would much rather be a landlord and then 'con' tennants like yourself into paying off my investment loan for me........for me, the landlord is doing the much smarter thing for the long term than the tennant   

cheers

bullmarket


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## Stan 101 (20 June 2006)

There are still great buys in realestate at the moment. just flipped two homes in 2 months less than 10 km from the CBD. Tidy returns on both. There will always be value if you search hard enough..

All the best for what you decide..


cheers,


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## krisbarry (20 June 2006)

The way I see it, is that we will all achieve the same thing at the end of our working life, and that is a nest egg, be it through housing, super, a business, saving etc.

There is no wrong or right answer to building wealth, it is what works for you at the time.

If you wanna work hard in your 20's save for a 5 bedroom house to pop out four babies, then that is what will be your nest egg.

others have different views....there are many paths to which lead to the same thing.


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## Realist (20 June 2006)

> Tenants have no control over rising rents.




And home owners have no control over interest rates.

Tenants can just move to a different suburb or different apartment/house though. Home owners are stuck! If they move taxes, stamp duty, mortgage fees kill them.

Supply and demand means landlords can not charge too much.


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## Realist (20 June 2006)

> But from my point of view I would much rather be a landlord and then 'con' tennants like yourself into paying off my investment loan for me........for me, the landlord is doing the much smarter thing for the long term than the tennant




Hi Bullmarket.

Over the longterm buying a house and investment properties is indeed the smart thing to do I agree. 

But we are talking about now!! Today.    I do not believe buying property is wise to do now.

As I said we rent a $650,000 place for less than $20,000 a year.  The landlord pays $3500 in bodycorporate fees, probably $1000 in Agent fees, $400 in repairs etc. Some water, advertisments and downtime if I leave.'

His return is about $15,000 from $650,000 each year.  

He gets a cool 2% return on his money annually.  Slightly less than inflation.    

He's losing money while I am paying cheap rent, saving and investing!


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## nizar (20 June 2006)

Realist

I agree with bullmarket

In 20 years time or more after paying so much in rent every year, ull have nothing (of course youll still have ur BHP shares lol, but not sumthing u can live in)

But the owner; who is using you to pay off his mortgage plus a bit himself; will have a house worth close to a million dollars

And who says that if you have a mortgage u cannot buy shares?

Why do u think people who are cashed up still get loans?

coz homeloan is 7% a year; if u could make more money investing it elsewhere then why not


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## finnsk (20 June 2006)

Question:

What is the profit on a house that you buy today for say $500.000 and sell in ten years time for $1.000.000, you live in it yourself and have a morgage of $400.000 at 7% for 10 years?


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## Realist (20 June 2006)

> In 20 years time or more after paying so much in rent every year, ull have nothing (of course youll still have ur BHP shares lol, but not sumthing u can live in)




Nizar, you are missing the point.    

I would not buy a house now!!

I will buy a house sooner or later when they are more fairly valued.  I'll buy 2 if they become undervalued.


I treat houses the same as I treat shares - I wont pay too much for them. simple as that.


Any idiot knows buying a house is usually an excellent longterm investment.  

The smarter ones amongst us know to wait and be patient and bargain hard and buy when they are fairly valued.

If you think buying a house NOW is a good investment you are dreaming.  The only exception is if you get a really good deal, a nice house at a discount - then yes I'd buy.




> ull have nothing (of course youll still have ur BHP shares lol,




If I invest in BHP and other shares for the next 20 years and they grow quicker than houses do in value - I wotn have a house, no. But I could afford a huge mansion instead!!


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## cuttlefish (20 June 2006)

but there's also that old cliche/proverb which goes:

"whens the best time to buy property?"

"now"


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## karmatik (20 June 2006)

Realist said:
			
		

> Hi Bullmarket.
> 
> Over the longterm buying a house and investment properties is indeed the smart thing to do I agree.
> 
> ...




If that landlord paid say a 10% deposit on that $650,000 investment, would your logic not equate to a return of 23% on his $65,000 deposit, not to mention the increase in value of his premises plus tax relief on the interest he/she pays on the original loan. Sounds like a pretty decent investment to me?? You cant see the wood for the trees.

Property may be overvalued at the moment. You need to have look at the historical growth.


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## krisbarry (20 June 2006)

when I am 65 I will then be able to take out my super and buy a brand new house/unit/retirement village unit etc, that will suit my needs.  I reckon it is just as smart as buying a property when you are 20 or 30.

That way I have saved hundreds of thousands of dollars in bank interest.

My super will have grown substanially with continued investment from both myself, my employer, and the government.  Then to add in the extra divdends from the companies that will be re-invested into buying more units, a great nest egg awaits me into retirement.

Its the same nest egg, just taken a very different path to the norm.


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## Realist (20 June 2006)

> What is the profit on a house that you buy today for say $500.000 and sell in ten years time for $1.000.000, you live in it yourself and have a morgage of $400.000 at 7% for 10 years?




Excelent question. 

Let's also assume rent is $300 a week. And you do not pay off the principle at all. Just to make it simple.

Mortgage interest is 7% so that is $28,000 a year. 

Buying the house.

In ten years time you'll have paid $780,000 and your house will be worth $1M - so you'll have made $220K (less inflation)

Renting

After 10 years you'll have spent $156,000 on rent.  But Investing the $100,000 you had at the start (the deposit) and the $13,000 you save on not having a mortgage each year.   

You invest this in bluechips that pay franked dividends, you never sell shares just buy more with your savings for not having a mortgage. You get 10% return per annum (including dividends) You'll have $466,000.

Now rents will probably go up - but home owners have rates, repairs, body corporate fees, agebnt fees, stamp duties etc. So they do cancel each other out. so lets leave it simple.


So in this case renting and investing you make $466,000 (if your investments go up 10%)
Buying you make $220,000 (if your house doubles)


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## Realist (20 June 2006)

> If that landlord paid say a 10% deposit on that $650,000 investment, would your logic not equate to a return of 23% on his $65,000 deposit, not to mention the increase in value of his premises plus tax relief on the interest he/she pays on the original loan. Sounds like a pretty decent investment to me?? You cant see the wood for the trees.




If the landlord owed $550,000 on the $650,000 place he'd be paying $38,500 a year in interest.

He'd be losing money hand over fist.  Negative gearig would merely reduce his huge losses.




> not to mention the increase in value of his premises




What increase? houses in Sydney have gone down for the last 3 years!!


P


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## bullmarket (20 June 2006)

Hi stop_the_clock



			
				Stop_the_clock said:
			
		

> when I am 65 I will then be able to take out my super and buy a brand new house/unit/retirement village unit etc, that will suit my needs.  I reckon it is just as smart as buying a property when you are 20 or 30.
> 
> That way I have saved hundreds of thousands of dollars in bank interest.
> 
> ...




I disagree it's the same nest egg because in a way that implies that at age 65 everyone has exactly the same nett worth which of course they do not.

Yes obviously there are various paths to building wealth for retirement but some are more profitable and less risky than others...........the path each one eventually chooses to take imo boils down to, amongst other things, lifestyle and objectives.

cheers

bullmarket


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## Realist (20 June 2006)

> "whens the best time to buy property?"
> 
> "now"




You sound like a prudent investor, expert financial advisor, and millionaire extraordinare all rolled into one.



Do you agree Sydney house prices have dropped since late 2003? or not?


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## bullmarket (20 June 2006)

Hi realist

In Melbourne it's only in the last 6 months or so that prices have generally begun to stabilise........and in Perth it's much the same and in some areas the prices are still going up from what I hear 

cheers

bullmarket


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## Realist (20 June 2006)

> Hi realist
> 
> In Melbourne it's only in the last 6 months or so that prices have generally begun to stabilise........and in Perth it's much the same and in some areas the prices are still going up from what I hear





Well Sdyney is 1 or 2 years ahead of the rest of the country with property prices, it boomed first now it has declined first.  

I do not know about other Aussie prices nor do I care, all I know is Sydney house prices have dropped for the past 3 years and they are still overvalued.  property has been a terrible investment for the past 3 years and will continue to be so for the short term.

Had you bought a $600,000 apartment 3 years ago I suspect you'd have lost up to $150,000 overall.

Had you invested your deposit in shares 3 years ago you'd have made about 80% profit.

It is a no-brainer.

Anyone who thinks houses are ALWAYS a good investment is wrong.


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## krisbarry (20 June 2006)

bullmarket said:
			
		

> Hi stop_the_clock
> 
> 
> 
> ...




Off course we will all have different amounts in our nest eggs, total agree, but we will all have nest eggs, built in entirely different ways.  This of course depends on lots of factors:

Social status
Family Wealth
Inheritance
Sexual preference
Children/non children
Size of home/unit
Managent of money
Lifestyle factors
etc


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## cuttlefish (20 June 2006)

Realist said:
			
		

> You sound like a prudent investor, expert financial advisor, and millionaire extraordinare all rolled into one.




I wish ..   



			
				realist said:
			
		

> Do you agree Sydney house prices have dropped since late 2003? or not?




yeah I agree - was just repeating a proverb I've heard. I believe the message behind the proverb (or the way I read it anyway) is that, given how big an investment property is for most people, its always possible to find an excuse for not buying it just now and waiting for the optimum time - but hindsight often shows that it would have been better to bite the bullet and buy. A bit like 'time in the market' vs 'timing the market'.    

But no I'm not saying now is a time to buy or not in Sydney or anywhere (i.e. I'm not trying to offer an opinion one way or another).


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## The Mint Man (20 June 2006)

Stop_the_clock said:
			
		

> when I am 65 I will then be able to take out my super and buy a brand new house/unit/retirement village unit etc, that will suit my needs.




yeh... when your 65 you could be 6 feet under too or the money could be used to put you up in a home to be looked after for the rest of your life.
Much rather have access to the profits NOW rather then in 42 years time (for me), who knows what could happen in between now and then. What I do know is that I can do whatever I want at the moment.


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## nizar (20 June 2006)

Realist said:
			
		

> Had you invested your deposit in shares 3 years ago you'd have made about 80% profit.
> 
> It is a no-brainer.
> 
> Anyone who thinks houses are ALWAYS a good investment is wrong.




Realist

Its easy to say after 3 years of a bullmarket

From 2000-2003; shares went down and property almost doubled in some cases

Look at long term picture; im sure Buffet would


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## finnsk (20 June 2006)

Realist said:
			
		

> Mortgage interest is 7% so that is $28,000 a year.
> 
> In ten years time you'll have paid $780,000 and your house will be worth $1M - so you'll have made $220K (less inflation)




Also dont forget what it will cost to buy and sell


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## nizar (20 June 2006)

Wayne and others

Do u remember this article?

http://thereisnohousingbubble.blogspot.com/

Was really good and appropriate to post here but too bad its gone


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## finnsk (20 June 2006)

nizar said:
			
		

> From 2000-2003; shares went down and property almost doubled in some cases



Do you belive that house price is going to double in the next 7 - 10 years?
If they double how will people be able to buy?


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## krisbarry (20 June 2006)

The Mint Man said:
			
		

> yeh... when your 65 you could be 6 feet under too or the money could be used to put you up in a home to be looked after for the rest of your life.
> Much rather have access to the profits NOW rather then in 42 years time (for me), who knows what could happen in between now and then. What I do know is that I can do whatever I want at the moment.




Same could be said about about yourself too, your could also be 6ft under when you turn 65.

Much rather see my profits going into re-investing (buying more units in my current super fund) than to see it eroding away in the current housing market.

Guess it just the way you look at it right.

I still have choice with my superannuation money too, I can invest it this way or that way, this market or that market. so its not like its tied up for good.  I have the flexibility to move it around in all different money markets.


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## Realist (20 June 2006)

Realist


> Its easy to say after 3 years of a bullmarket
> 
> From 2000-2003; shares went down and property almost doubled in some cases
> 
> Look at long term picture; im sure Buffet would




But we all agree buying Property in Sydney in 2003 instead of investing that money in ASX shares would have meant instead of making an 80% profit you have made quite a loss.

Therefore Property is not always a good investement!

It is easy for old farts that have owned a property for 50 years to say it was a good investment. I'm sure they made a million dollars from their purchase.  In that time Warren Buffett made $70 Billion though.

Is property a better investment than shares - I personally don't think it is for me. I do think it is for some people - newbie traders that use leverage, people that can't save, people that live outside a main city etc.

Old farts may be better off to sell their property they've owned for 50 years, and invest their money in super.


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## Julia (20 June 2006)

There are really good arguments for and against both owning and renting.

Something which may not mean much to many of you but which means a huge amount to me is simply pride of ownership and delight in where I live.
My home and garden are as I have created them and I feel proud and happy to live here.  I can't imagine getting that warm fuzzy if I were renting anything.

Julia


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## Realist (20 June 2006)

> Do you belive that house price is going to double in the next 7 - 10 years?




A Sydney apartment worth $600,000 now may be worth over $1 Million in 2016. It's hard to see it being worth much more though.

I suspect that same apartment may be worth only $550,000 in 2009.  So it may double, but it may go down a bit before it does double.



> If they double how will people be able to buy?




Wages will be higher, taxes lower, Under 30's will not buy apartments in Sydney, they will rent. More people will rent overall.  Poorer people will leave Sydney, richer migrants move in. Govt will give big incentive to first home buyers. Parents will help kids out more, mortgages will be for 40 years instead of 30. Australia will offshore lower paying jobs - overall Aussie will be more skilled and higher paid.

Easy!


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## Realist (20 June 2006)

> Something which may not mean much to many of you but which means a huge amount to me is simply pride of ownership and delight in where I live.
> My home and garden are as I have created them and I feel proud and happy to live here. I can't imagine getting that warm fuzzy if I were renting anything.




Good point.

Same with me. I take great pride in owning Fosters shares.

Whenever I buy VB, Crown or Penfolds I get a warm fuzzy feeling! (particularly shiraz)

If anyone ever buys a can of VB - Realist gets 0.000001 cents.

Drink up!!


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## krisbarry (20 June 2006)

The ease at which to deposit your money in super is time effect money well spent.  Just a few taps of a keyboard, Bpay's all my deposited money into the super account, then little Johnny Howard sends me a thankyou cheque at the end of the tax year, a nice cash bonus of $1,500 each and every year.  If you gear this up, then its just like having investment properties, that is the way I see it, plain and simple!

Look at the up-keep on housing....

Repairs, Lawnmowing, gardening, painting, insurance costs, local tax costs, utility costs etc etc

ahhhh now where is that BPay button....quick easy and simple!


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## bullmarket (20 June 2006)

Hi stc 



			
				Stop_the_clock said:
			
		

> ................
> 
> Look at the up-keep on housing....
> 
> ...




But there's  a Jim's xxxx for just about all of the above nowadays and maybe eventually for all of them   

cheers

bullmarket


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## Ageo (20 June 2006)

Super to me is like a bank interest earnings account that doesnt allow you to take until your 65. Of course its better than nothing but its not for me, as i prefer to be in control of my money and i would rather have access to it now then 65. Super is a nice safer investement for people that arent comfortable to invest there own money.

my   

Adrian


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## The Mint Man (20 June 2006)

ditto,
exactly what i was trying to say but I think stc missed the point!

Of course i could be dead by 65 I never said I wouldnt be..... what I was saying is,  super wouldnt be much good to me if i was dead or dieing.


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## krisbarry (20 June 2006)

Neither would a house right.  so that argument has been put to rest


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## The Mint Man (20 June 2006)

would also like to point out that Im not just talking about property here, im also talking about other investments such as shares (considering we are on a shares forum  ).
Once again, if I invest in any of the above with money that is not in a super fund then I will have full controll over when I take the profits and put them into my back pocket or re invest them. wont have to wait 42 years.


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## krisbarry (20 June 2006)

true, and that is what works for you.  Like I said it depends on a range of circumstances.

At the present time I am able to get free rent/board and I have chosen a different route in life.

But I bet ya bottom dollar when you and I reach 65, we will eventually end off in exactly the same position, and that is of a much larger nest egg than we have currently have.

Two different routes to wealth building and creating, each with its own positives and negatives.


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## Knobby22 (20 June 2006)

Stop_the_clock said:
			
		

> when I am 65 I will then be able to take out my super and buy a brand new house/unit/retirement village unit etc, that will suit my needs.  I reckon it is just as smart as buying a property when you are 20 or 30.
> 
> That way I have saved hundreds of thousands of dollars in bank interest.
> 
> ...




An old man in a porsche, leading a lonely and shallow existance, no kids, no one who gives a damn about him trying to impress younger women, not missed by anyone much when he dies, all too common.


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## Happy (20 June 2006)

Stop_the_clock said:
			
		

> Neither would a house right.  so that argument has been put to rest




Yes and no.

On occasions, when you are lonely, house can double up as temporary morgue for up to 3 years.

I think that was the longest lonely death before body was found


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## Realist (20 June 2006)

> An old man in a porsche, leading a lonely and shallow existance, no kids, no one who gives a damn about him trying to impress younger women, not missed by anyone much when he dies, all too common.




Sounds great.

The other option is a poor old man still paying alimoney, hen-pecked and bitter, divorced twice, lost the house to his first wife, lost the investment property to his second. The kids have left and now live overseas. He's too bitter to have friends or a partner.  And still has to work just to afford to live. All too common these days as well.


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## Ageo (20 June 2006)

Realist said:
			
		

> Sounds great.
> 
> The other option is a poor old man still paying alimoney, hen-pecked and bitter, divorced twice, lost the house to his first wife, lost the investment property to his second. The kids have left and now live overseas. He's too bitter to have friends or a partner.  And still has to work just to afford to live. All too common these days as well.





you saying thats the only 2 options in life?


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## krisbarry (20 June 2006)

who said anything about being lonely, I never feel lonely.  Don't need to have kids to feel loved, or be loved.

Plenty of people survive just fine, with no kids, and a pet or two instead.

Why buy a family home with 5 bedrooms pop out 4 kids just to feel loved and hope that you wont feel lonely.

That is a very 1950's approach to life....the wholesome family, with the wholesome views etc.

Ohhh would someone from the younger generations wake up these old farts and tell them that the family unit is dead and buried now  

Its a whole new ball game these day.  Family units now exist of very few people, more than 25% of people now live alone, and that is quite accepted.  Even pets can be a better/cheaper option to a family unit!

so my argument still exists....is super a better option than buying a house?

Depends on the person and the lifestyle they want to have!


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## Happy (20 June 2006)

One good thing is no matter what journey you take you must kick the bucket.

Home or no home, chances are you might die and if nobody finds you, your body might have to wait for discovery.

Longer you wait, better chances to make news.

Home or super should cover the cost of funeral, so really doesn’t matter, and super should be fine, no argument from me, and have a nice journey.


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## Knobby22 (20 June 2006)

Yea, good luck.
Life is after all about how much money you have at the end. 
Each dollar is one point.

Your 65th year will be a bewdy.


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## The Mint Man (20 June 2006)

while I do want to have kids I can see where your coming from stc.
from the age of about 17 I have said that I want kids, however I want to set myself up first. I decided that I will not be having kids or getting married to my now long time partner until at least 30 years of age.
I watched my 2nd eldest brother have a kid and get married, buy a house all at once by 18-20. I watched him struggle and thought 'Im not gonna do it that way'. 
for my second experiment    I then watched my eldest brother get married at about 28, then have a kid and by a house by 29-30.
Through these examples I came to the conclusion that I could cut out the marriage and the kids and put all my money into investments so that when I do have kids it will be a bit easier. Im doing things the opposite way to the rest of my family.
Dont get me wrong though, My 2nd eldest brother is doing very well, he bought an investment property before the boom then sold it after. He is a very good builder and hardly has to touch the tools if he dosnt want to(although he cant help himself) and he half owns another buisness with a, lets just say wealthy man.
My eldest brother works for a employer to pay the bills for the moment, he is a qualified graphic designer but dosnt use these skills as a job, he loves his art. My money is on some of his art to be printed on shirts etc. that possibly even celebs would wear one day. some people already have some of his unique style of art hanging from their walls. (by the way if your interested in art drop me a PM)

I think the above outlines what your trying to say STC, we all have different ways and each and every way can be successful.

cheers


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## dj_420 (20 June 2006)

Realist its all well and good to be renting while your young, BUT what about when you want to retire??? you will still be renting paying off someone elses mortage on only retirement benefits. i know people who have gotten to that age and are still renting and honestly the outlook seems pretty bleak to me.

NO savings, no house, still working at 50 yrs plus and STILL renting. IMO renting is not the way to go, you can be paying off a mortgage rent out the house and the rent you pay on where you live is a tax deduction.

The housing market is not overvalued either, its been in a downturn the last year and a half. Some areas may be overvalued but other areas are not.

To assess real estate you have to look at the region, the demographics ie:
1 - current growth rate
2 - future business opportunities
3 - future infrastructure
4 - other microeconomic influences that will affect the region

Areas such as Hervey Bay have one of the highest growth rates in Australia.
Business is booming up there thanks to new infrastructure (airport) and as a result property prices have gone up. if you purchased a 3 bedroom house 2 years ago up there it would have been priced around sub 150 000, now the market is looking at 250 000 plus. 

I had a friend purchase a house there for 200 000 around 9 months ago, today the house is valued at 250 000. 

Some areas in real estate may be overvalued (Sydney) but i wouldnt buy there anyway. If you actually look into demographics into particular regions you will find that many areas are reasonably priced.


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## The Mint Man (20 June 2006)

cathers,
I know what your saying in regards to renting when you retire and i agree with all your coments. 
However in realist's defence, his plan is clearly to invest money that would otherwise be in a house. he has even said that if the price was right he would invest in a house. basically I beleive that his plan is to have more then enough when he retires


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## krisbarry (20 June 2006)

The Mint Man said:
			
		

> while I do want to have kids I can see where your coming from stc.
> from the age of about 17 I have said that I want kids, however I want to set myself up first. I decided that I will not be having kids or getting married to my now long time partner until at least 30 years of age.
> I watched my 2nd eldest brother have a kid and get married, buy a house all at once by 18-20. I watched him struggle and thought 'Im not gonna do it that way'.
> for my second experiment    I then watched my eldest brother get married at about 28, then have a kid and by a house by 29-30.
> ...




I am 31 years of age, and have no interest in having children at all, neither does my partner, so that is a relief, like I said its just one thing to factor out of the equation.  I have no need for a McMansion (3,4,or 5 bedroom home).

My brother and sister are also close in age to myself, and are not interested in having children either, fancy that more people in their early 30's not interested in kids, are we the exception to the rule, I think not, we are becoming the norm!

Who really wants to be on struggle street, having 1,2, or 3 kids and owing a McMansion that you really cannot afford, just to keep up with Mr and Mrs Jones, and their expectations. 

No I say, choose a different path! :


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## Smurf1976 (20 June 2006)

Most people fit into one of three categories:

1. They own the house outright. 

2. They rent the house from a landlord.

3. They rent the house from a bank (mortgage).

Only those in the first category are home "owners" in the true sense of the word. It's those in the third category, renting from a bank, who tend to live in fear of interest rates. They are, ultimately, no more secure than those renting from a landlord.

As for the overall real estate market, the outlook has become steadily worse over the past couple of years. First they said that growth would only slow. Then when that failed they said prices would plateau. Now that has failed and they are predicting that the falls will only be small. Anyone brave enough to say that they'll finally be right this time? Or will "small" falls become "moderate" falls which are actually rather large falls at least in real terms?

Ever hear that joke about "real estate always goes up..."? 

Not in Sydney, Hobart, Brisbane or Melbourne it seems. http://www.homepriceguide.com.au/media_release\Home Price Guide Media Release 0506.pdf


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## bullmarket (20 June 2006)

Hi smurf1976



			
				Smurf1976 said:
			
		

> ...........Only those in the first category are home "owners" in the true sense of the word. It's those in the third category, renting from a bank, who tend to live in fear of interest rates. They are, ultimately, no more secure than those renting from a landlord...................




Regarding those with mortgages, imo the 'fear factor' is largely dependant on the size of their equity in their home.  Obviosly those with low equity and mortgaged to the hilt are vulnerable to interest rate rises, but those with a high equity in their home are much more likely to comfortably cope with rate rises and so are much more secure.

I also think that in say 10 years time residential property values in general will be higher than their previous peaks.

cheers

bullmarket


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## lewstherin (20 June 2006)

I'm on the verge of giving up buying a house in Perth.  Whilst east coast real estate might be in a funk, the market is crazy here.  Like freaking scary crazy.

Houses are being sold within hours of being listed, the land developers have been forced to use bingo wheels to decide who out of the 100 buyers that rocked up will get the 10 lots on offer...just unbelievable.  Median prices are increasing at around $10k a month.

Its got to slow sometime, but even when it does, the recent boom has pretty much priced me out of the market.  
Hell even if I could afford a decent place I probably won't buy it because its too sickening to pay more than double what the property was worth 3 years ago.

Contrary to the renters here, I think decent residential, developed land close to infrastructure is going the way oil has.  
I view decent real estate as an increasingly scarce commodity in the face of slow land release, increasingly tight anti-urban sprawl policies, and the continous influx of migrants.
So I want some for me - at least a primary residence.  
I also want something that I can consider my own rather than having to put up with a landlord.

Given Perth has already had its boom, I'm considering Adelaide.


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## crackaton (20 June 2006)

Realist said:
			
		

> Why not?
> 
> I rent, I love renting. Why would I buy a house?
> 
> ...




I tend to agree. Renting does have advantages, as long as you are not forking out too much of your wage. It's good for young singles or professionals who often move arounds. Plus you can still have investment properties if so desired.


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## crackaton (20 June 2006)

Julia said:
			
		

> There are really good arguments for and against both owning and renting.
> 
> Something which may not mean much to many of you but which means a huge amount to me is simply pride of ownership and delight in where I live.
> My home and garden are as I have created them and I feel proud and happy to live here.  I can't imagine getting that warm fuzzy if I were renting anything.
> ...




Hate to be sexist here, but women seem to be more attached to homes than males. I personally have no fondness for any property, whether it be a five story mansion or otherwise. Being stuck behind four walls or confined in one spot is not particularly appealing to me. To me a home is a roof over my head to sleep, and perhaps entertain occasionally, nothing more.


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## crackaton (20 June 2006)

Knobby22 said:
			
		

> An old man in a porsche, leading a lonely and shallow existance, no kids, no one who gives a damn about him trying to impress younger women, not missed by anyone much when he dies, all too common.



True but then again I see marriages break up, kids go down the wrong track etc etc. You can't predict the future. Personally I see no need to give extra money to some fund which may not exist in 30 years time. Likewise I am happy to have my boss donate money for my retirement. In the meantime I'll try and make a million by other means!!


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## crackaton (20 June 2006)

Stop_the_clock said:
			
		

> who said anything about being lonely, I never feel lonely.  Don't need to have kids to feel loved, or be loved.
> 
> Plenty of people survive just fine, with no kids, and a pet or two instead.
> 
> ...




true but you can't make love to your pet. Well i guess you could if it was your neighbours goat. ROFLMHO


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## krisbarry (20 June 2006)

lewstherin said:
			
		

> Given Perth has already had its boom, I'm considering Adelaide.




Don't even bother with Adelaide, its way over-priced as well, prices here have risen over 150% in 5 years, pricing almost everyone out of the market, not unless you want to live over 1 hour out of the city  

Try Hobart.


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## krisbarry (20 June 2006)

crackaton said:
			
		

> true but you can't make love to your pet. Well i guess you could if it was your neighbours goat. ROFLMHO




Now that is sick, just on the phone to the RSPCA....LOL

You know what they say about people who make love to animals.

I have a loving partner for that!


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## Realist (20 June 2006)

> Realist its all well and good to be renting while your young, BUT what about when you want to retire??? you will still be renting paying off someone elses mortage on only retirement benefits. i know people who have gotten to that age and are still renting and honestly the outlook seems pretty bleak to me.
> 
> NO savings, no house, still working at 50 yrs plus and STILL renting.




Oh for Christ sakes listen      

I do not plan to be renting in 30 years time. I plan to own a mansion outright (hopefully).  Just because I do not own a house now it does not mean I am not wealthier than others that do own a house.

There are plenty of people in Sydney who have bought a house in the past 3 years that have negative equity.  They are far more likely to be renting in 20 years time than I am.

"Owning a house" is as someone said only a true statement for people that do not have a mortgage.  In all other cases the bank owns most of their house and they pay the bank a big premium for it.   My bank pays me money not the other way around.

I will buy soomer or later, but I still do not believe now is a good time in Sydney.  It is much better than 3 years ago, but still has at least 6 months, and maybe as long as 4 years before I can buy safely in the knowledge I have not paid too much and confident the price will go up and it is a good investment.


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## Realist (20 June 2006)

> you saying thats the only 2 options in life?




I was trying to as negative as possible about being married, just to counter the negative as possible being single post. Tongue in cheek of course.   

Single, married, rich, poor - everyone can be happy. It is ridiculous to assume that someone who is "old" and single and poor is not happy.

Plenty of young, rich and married people are very unhappy.


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## Smurf1976 (20 June 2006)

lewstherin said:
			
		

> I'm on the verge of giving up buying a house in Perth.  Whilst east coast real estate might be in a funk, the market is crazy here.  Like freaking scary crazy.
> 
> Houses are being sold within hours of being listed, the land developers have been forced to use bingo wheels to decide who out of the 100 buyers that rocked up will get the 10 lots on offer...just unbelievable.  Median prices are increasing at around $10k a month.



Sounds exactly like Tasmania a 3 years ago. There was an outright buying frenzy in mid-2003 in Hobart and to a lesser extent other parts of the state. The "for sale" boards were going up with "sold" already on them and it was hard to get away from hearing real estate this, real estate that and more real estate.

3 years later and house prices in Hobart are now falling, especially if you're comparing prices for the _same_ house rather than an "average" house which, due to renovations etc, has increased in quality over that time (but even then prices are falling slightly).

After the boom comes the bust. Not a problem for home owners not wanting to be net sellers of property but for first home buyers paying less and saving interest in the meantime is a definate advantage IMO.  

Note that in all of this I am NOT wishing bad luck on real estate investors or for that matter anyone else. I'm just observing where I think the market is heading and it's not up.


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## crackaton (20 June 2006)

Smurf1976 said:
			
		

> Sounds exactly like Tasmania a 3 years ago. There was an outright buying frenzy in mid-2003 in Hobart and to a lesser extent other parts of the state. The "for sale" boards were going up with "sold" already on them and it was hard to get away from hearing real estate this, real estate that and more real estate.
> 
> 3 years later and house prices in Hobart are now falling, especially if you're comparing prices for the _same_ house rather than an "average" house which, due to renovations etc, has increased in quality over that time (but even then prices are falling slightly).
> 
> ...




What gets me are all the people saying sour grapes to those negative about property. People like this live in a world of their own and frankly I hope they get burnt big time.


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## Realist (20 June 2006)

> I'm on the verge of giving up buying a house in Perth. Whilst east coast real estate might be in a funk, the market is crazy here. Like freaking scary crazy.
> 
> Houses are being sold within hours of being listed, the land developers have been forced to use bingo wheels to decide who out of the 100 buyers that rocked up will get the 10 lots on offer...just unbelievable. Median prices are increasing at around $10k a month.
> 
> ...





Oh dear.     

You sound like the guy who in late 1999 thought he better buy Tech stocks before they go up much more, afterall everyone else is making money from them.

Mate you live in WA, the emptiest f'n state in the whole world, each of you could have a spare 100 square kms each and there'd still be land leftover.

If you seriously think real estate is an increasingly scarce commodity in Perth you are sadly mistaken.

Perth has had it's boom 4 years after Sydney. I suspect Perth for the next 20 years wont have a boom another like it.

DO NOT BUY NOW IN PERTH!!   Show some guts and be patient.  In 5 years time you'll thank me for it.


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## robots (20 June 2006)

hello

who's to judge prices are overvalued

surely wages are too low, and this being the real problem

sure people have been fleeced in the property market with banks/valuers tightening valuations and therefore dollars loaned

I believe all good quality "prime" real estate in each state, ie 15km radius of capital city would still be increasing and recent sales in my area indicate this. 

places are getting sold in less than thirty days, there is no stock for demand

thankyou
robots


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## Smurf1976 (20 June 2006)

Stop_the_clock said:
			
		

> Don't even bother with Adelaide, its way over-priced as well, prices here have risen over 150% in 5 years, pricing almost everyone out of the market, not unless you want to live over 1 hour out of the city
> 
> Try Hobart.



Same problem in Hobart. A house in the poorest suburbs costs more now than a house in a good middle suburb did 5 years ago and prices are high everywhere around Hobart relative to the incomes of people that live there. A recent report found Hobart real estate to be amongst the most over valued in the in the world. In Australia, only Sydney is less affordable for locals than Hobart.

As for scarcity of land, perhaps there is in Sydney etc but certainly not in Hobart. There's still plenty of land for sale in reasonable areas and it's cheaper now to build on that land than buy an existing house in the same area. That reality alone, that building is cheaper than buying, ought to ensure that existing houses don't rise in price for quite some time.

All that said, I'll be buying real estate when it's sensibly valued again. That day will come, question is when?


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## Realist (20 June 2006)

> I believe all good quality "prime" real estate in each state, ie 15km radius of capital city would still be increasing and recent sales in my area indicate this.




You must live in WA, SA or Brisbane. Maybe Auckland?

You certainly do not live in Sydney, and I don't think you live in Melbourne either. 



> who's to judge prices are overvalued




Me!

Oh and another 5 million people in Sydney.  Just try selling a house here at the moment. Ask my friends who had an auction on the weekend without one bid!


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## Realist (20 June 2006)

> All that said, I'll be buying real estate when it's sensibly valued again. That day will come, question is when?




Smart man!


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## krisbarry (20 June 2006)

told ya this thread would be a lively one... I love starting threads that members get fired up over :


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## crackaton (20 June 2006)

Stop_the_clock said:
			
		

> told ya this thread would be a lively one... I love starting threads that members get fired up over :



Are you related to Bonkers?


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## tech/a (20 June 2006)

Who commenting on this thread owns more than 5 properties?
Who commenting on this thread develops property?

It is these people I seek out they will be the ones who will have qualified opinion.
I'm one of these but interested in others veiws.(No I dont post on Somerset and dont wish to).

Again there seems to be a great deal of Unqualified--qualified opinion.

When i bought my first home in 1975 it was $30000 if someone told me that in 30 yrs time it and every other house in that area was going to be 10X more expensive I'd have been asking the same question---how the hell will anyone be able to buy a house!! I was earning $27/week.

Esplanade blocks were $6000 in Seaford now $400,000---you do the maths!!

Well 30 yrs later thats whats happened!
So why is $1,000,000 or more for the same home not possible in another 10 to 20 yrs??



> If i wanted to live in Adelaide I sure as hell wouldn't buy there because it would only be short term.




What do you mean? Do you mean youd only be living there short term?

By the way Many Esplanade properties are owned by Sydney investors (here).
That could well be one secret to their ability to own in Sydney.


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## crackaton (20 June 2006)

tech/a said:
			
		

> Who commenting on this thread owns more than 5 properties?
> Who commenting on this thread develops property?
> 
> It is these people I seek out they will be the ones who will have qualified opinion.
> ...




Own a block of four flats in melbourne. I know nothing about development. What's your point tech/a? I choose to live/ rent where I want. If i wanted to live in Adelaide I sure as hell wouldn't buy there because it would only be short term.


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## suhm (20 June 2006)

Unless your buying an investment property or you've found the house you want to live in for the rest of your life I don't see the point of buying a property which your going to sell in a few years. Who wants all the hassle of maintainace and rates, just let your landlord do it and not to mention the stamp duty and conveyancing fees especially considering how low rental yields are now in the capital cities. Though I might be a bit biased because I will be shuttled around Australia for the next decade during the next phase of my course and after I graduate for training.


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## Realist (20 June 2006)

> Well 30 yrs later thats whats happened!
> So why is $1,000,000 or more for the same home not possible in another 10 to 20 yrs??




It is possible, who said it wasn't?

Mate, you live in Adelaide, your 5 houses are probably worth about what 1 house in my suburb costs.

It sounds like you are not qualified to speak either.


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## crackaton (20 June 2006)

suhm said:
			
		

> Unless your buying an investment property or you've found the house you want to live in for the rest of your life I don't see the point of buying a property which your going to sell in a few years. Who wants all the hassle of maintainace and rates, just let your landlord do it and not to mention the stamp duty and conveyancing fees especially considering how low rental yields are now in the capital cities. Though I might be a bit biased because I will be shuttled around Australia for the next decade during the next phase of my course and after I graduate for training.



Armed forces?


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## robots (20 June 2006)

hello

I'm in Melbourne, within 15km from GPO and as mentioned sold stickers are banged up quick as

Sydney's a big place, lets here from people with "prime" real estate as mentioned

not saying house better than share, but just representing whats happening

been looking at next property purchase, and evaluating the numbers on mortgage vs rent, 

as can walk out of current place with rent=expenses

I believe the key is what you do with the difference if rent

thankyou
robots


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## suhm (20 June 2006)

med, clinical schools are all over the place and when you graduate you have to go where the accredited training positions are


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## Realist (20 June 2006)

> Esplanade blocks were $6000 in Seaford now $400,000---you do the maths!!




Yep. The average house price in my area is $1.95M

So 5 of your $400,000 houses would buy 1 here.

Wait till you buy 5 here before commenting please.    


(just kidding   , but see how annoying it is when people say your opinion is not worth anything unless you have done such and such?? get your head in, you're 30 years older than me, I could not possibly buy 5 houses in my area in Sydney at my age - and neither could you - NOW)


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## tech/a (20 June 2006)

Realist said:
			
		

> It is possible, who said it wasn't?
> 
> Mate, you live in Adelaide, your 5 houses are probably worth about what 1 house in my suburb costs.
> 
> It sounds like you are not qualified to speak either.




God why bother.



			
				Realist said:
			
		

> and neither could you - NOW




Hmm You presume I own only 5 houses.
I've already stated I'm also a developer.

Bullmarket challenged me once---so wanna bet!


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## suhm (20 June 2006)

Also stop the clock, if i had put all my money into super I wouldnt be able to go overseas to study now, I'd have to wait until I was 65, saving and investing your money is a good thing to do, but in the end your doing it so that you can spend it and since you don't want kids your probably not going to be giving it to someone else, so why quarantine your money for like the next 30-40 years?


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## crackaton (20 June 2006)

suhm said:
			
		

> med, clinical schools are all over the place and when you graduate you have to go where the accredited training positions are




 Don't you just get your degree and then do intern at a hospital?


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## Mofra (20 June 2006)

The theory of renting when the rental paid is less than non-duductable bank interest is all well and good _in theory_, however in practice very few people have the actual savings discipline to use the spare spending capacity wholly into a savings and/or investment plan.

As some may know I am in the mortgage industry - although have recently changed employment to an investment bank servicing "high net worth" individuals. These people by and large are only borrowing as a result of _independant financial advice_ and the majority of these borrowings are for investment - and only a small prtion of this investment is in residential property.

Yes, houses are overpriced and by and large there will be little return on your investment in some cases - and in most cases the appreciation is pointless, as _most home owners do not use their equity effectively_. 

Many of most financially savvy of my clients do, in fact, have a large property portfolios over more than one property asset class - and believe it or not, many of them still rent (albeit some from third parties inw hich they hold an indirect interest). It is not mortgages these people avoid, it is non-deductable debt.


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## tech/a (20 June 2006)

> It is not mortgages these people avoid, it is non-deductable debt.




Ahhhhh.

I'll add to that the ability to effectively control and use other peoples money----leverage,with no or minimal cost to the investor.
To recognise opportunity and continue to duplicate it for the period of that opportunity.
The knowledge of when to hold'em and when to fold'em.
IE when to be highly geared in one asset class (Maximum exposure) and when not to be.(Minimum exposure)
The constant shift of recognition,application and finally consolidation--realisation.


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## Mofra (20 June 2006)

tech/a said:
			
		

> Ahhhhh.
> 
> I'll add to that the ability to effectively control and use other peoples money----leverage,with no or minimal cost to the investor.
> To recognise opportunity and continue to duplicate it for the period of that opportunity.
> ...




Unfortunately I'm not always privvy to that level of personal information about a client - general balance sheets are enough to get most deals over the line. One could assume the list posted above for many people is applied to more than merely their property investments.


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## Realist (20 June 2006)

> Hmm You presume I own only 5 houses.
> I've already stated I'm also a developer.
> 
> Bullmarket challenged me once---so wanna bet!





So other people challenge you as well, interesting.   

I was merely baiting you, because I took offence at you lording over everyone about how many properties you've bought.  The fact is being old and living in Adelaide it aint hard to buy properties, even at my youngish age I could buy outright in Adelaide - but why would I bother? I'd rather buy shares.

If a 50 year old can't buy a house outright I'd be extremely worried. 

No, I wont bet. Thanks for the offer though.  At your age everyone should be able to afford a house, I'm guessing you are no different.

Seeing as though you have purchased soooo many houses..

Please tell us whether you believe someone should buy a property in the lower North Shore of Sydney right now?

If not, when should they buy.  If so, what should they buy?


----------



## robots (20 June 2006)

Hello,

"Yes, houses are overpriced and by and large there will be little return on your investment in some cases - and in most cases the appreciation is pointless, as most home owners do not use their equity effectively."Mofra 

what relevance does equity have when looking for new opportunities when investing

you go to the bank and tell them you have X equity, they say great we will loan you Y at 7% and secure everything against this asset

so you buy more assets with the new funds and get a return of around 4% and what ever capital growth comes along

so who picks up the short fall in loan payments?

I believe it comes down to cashflow, spare cash, high income, disposable cash whatever 

its a great time to be buying good quality property

thankyou
robots


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## Realist (20 June 2006)

> its a great time to be buying good quality property




A great company (house) is not a good investment if you pay too mcuh for it.

If you can buy a great house at a discount then yes now is a great time to buy, good luck finding a discount now though.


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## Ageo (20 June 2006)

If we are talking about buying a home then obviously most people will be buying in a metropolitan area and with that the prices are likely to be higher etc...


But dont rule out properties for passive income.


I know of about 10 properties atm that are positive geared (residential) and the net Cash on Cash return is not less than 15% (not including capital growth) on each of those.

15%+p/a for passive income is not too bad considering you can buy properties that only require a total outlay of around $15000. Real Estate investing has both its advantages/disadvantages as does shares etc..


But this is about buying a home to live in and even thow i bought a house recently to move into (that has more point to it thow) i would rather rent for the time being to free up cashflow and borrowing capacity so i can leverage my investing capabilities even further.


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## Smurf1976 (20 June 2006)

A question for those who argue that property is a good investment and disagree with those saying not to buy.

If you were offered the opportunity to buy any investment at a reduced price but had to wait some time to be able to do so, then what do you do? Do you pay top $ now to buy an asset that is at best income neutral or do you wait and buy the same asset or one very similar at a lower price? For me it's a no brainer - pay less for the asset and do something else with the money in the meantime. Even cash in the bank is a better option than buying something which then drops in value whilst producing minimal income.

Can anyone explain to me how I would have benefited from paying, say, $580K for a house in Sydney two years ago that is now worth $500K? Interest on the mortgage to buy it would have exceeded rental returns and then there's maintenance, rates etc. Loss, loss and more loss. WHY does it not make sense to wait and buy at a lower price? IMO buying cheaper makes a lot of sense.

And does this apply to shares? If not, why not? Surely it makes more sense to buy XYZ stock at $50 than $58, especially if dividends are minimal. Whether or not the price subsequently goes to $100 or even $1000 is missing the point. Why pay $58 to own it two years ago when you could buy it for $50 now? It just doesn't make sense if your aim is to make a profit.

The way I see it, the bears are talking about timing the market. That is, wait for sensible valuations and then buy. Do something else with your money in the meantime. Few if any are saying don't buy at all. They're just saying don't buy right now.

Bulls on the other hand seem to be arguing that valuation doesn't matter. Rather familiar words to anyone who has seen a bubble before.

At some future date buying the Nasdaq index in early 2000 may well prove to have been a good investment. But I would argue that if you wanted to buy this index then buying it at close to 1000 in 2002-03 was a much better investment than buying it at 5000 in the year 2000.


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## Realist (20 June 2006)

> Surely it makes more sense to buy XYZ stock at $50 than $58.




Not to a trader.    

Good post though Smurf - I agree totally!!



> Can anyone explain to me how I would have benefited from paying, say, $580K for a house in Sydney two years ago that is now worth $500K?




Exactly - thank christ I did not buy 3 years ago, I was very very tempted. 

$580K down to $500K is a loss of maybe $140K when you take out stamp duty and first home owner grants, agent fees, mortagge interest, insurance,  expenses, etc. etc.

Yeeouch.


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## Smurf1976 (20 June 2006)

Ageo said:
			
		

> I know of about 10 properties atm that are positive geared (residential) and the net Cash on Cash return is not less than 15% (not including capital growth) on each of those.



A genuine 15% yield on the property? Or a 3% yield with 5x leverage? It makes a BIG difference to the risk of the investment.


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## Realist (20 June 2006)

> A genuine 15% yield on the property?




Someone must be paying an exhorbetent rent?       

If the property is worth $400,000 - the tenants must be paying $1150 a week in rent.

Would it not be cheaper to live at the Ritz Carlton instead?


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## doctorj (20 June 2006)

Wow! I'm glad I finally popped in to see such a hotly debated thread!

I think the most interesting thing to come out of this is the reason this thread might be so popular at the moment. Around Australia the price of housing is such a hot-topic - prices are relatively still quite high, but have pulled back from their peaks. Yet in places like WA and to a lesser extent Qld, they're still climbing without looking like slowing. Availability of rentals is at record lows around the country and occurances of agents "auctioning" off rentals to the highest bidder are increasing. To me, its all the same issue - evidence suggests that around Australia, housing prices have (and still are) pushing the upper limits of affordability.

Having just joined the thread, I read it and wanted to make the following points.

Stop_the_clock: You _can't_ gear super. You can't secure debt against it. Except under certain circumstances a superfund can't take on debt. Section 67 of the Superannuation Industry (Supervision) Act makes that very clear. If you were to set up a SMSF, claim the co contributions and invest into a geared fund, as Trustee you would be in breach of the act. It will be detected in the compulsary audit you're required to commission and it may result in APRA taking action against you. Superannuation is a very serious business and I can't stress how important it is you understand SIS and other applicable pieces of legislation before trying your hand.

knobby: While it is true, for two funds with equal investment performance and internal control quality, you will be worse off with the one with higher fees. Sometimes higher fees do equal higher investment returns or lower risk (in terms of the Superfund doing something wrong and you're investment underperform as a result or even total loss).

Some other points which I can't remember who to attribute them to:

    * Renting is a valid financial decision if you're bearish or neutral on property and the interest payments of the home exceed the cost to rent it.
    * Paying off a primary home loan beyond your required repayments can be valid if you're interest rate is higher than your expected rate on return on investments. Some times I think people jump too quickly into paying off a mortgage without considering that it can be amongst the cheapest form of debt which has the potential to make geared investing more lucrative.

Buying the first home is always a difficult step, but even more so given the prices they are selling for these days. As Julia so aptly pointed out, sometimes there are valid reasons for purchasing a home beyond simple financial considerations. Most important of all, to my mind atleast, you can always find a way to get more money down the track, but you can never ever get more time. As cliche as it is, you're only young once!


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## lewstherin (21 June 2006)

My previous post was more in reference to buying a home - i.e. less of an investment reason, more wanting my own space to alter, abide and raise a family in as I see fit, without pesky estate agents involved.

I've always been on a mortgage (and agree with a previous poster that its some of the cheapest debt around), and having moved to Perth recently am finding renting doesn't agree with my lifestyle.  Thus far, I've been able to successfully buy my homes ahead of booms and sell at a good premium.  
So naturally I wanted to do the same in Perth, but have never seen a frenzy like this before.  I absolutely believe that Perth's housing will hit a slow-down at some point, but when and at what settling price level is the catch.  So yes, I'm sitting on the Perth sidelines at the moment, but there are pressing personal reasons to get a home of my own sooner rather than later.

In the meanwhile, I mentioned Adelaide primarily because I think SA might be the next "boom" state what with all the defense spending heading Adelaide's way and BHP's Olympic Dam expansion.  I think there's potential for SA to make up some ground on WA/Qld as a resources state.
If I'm going to buy a primary residence, I still want to try get in at the lowest premium and with the highest upside given current market conditions.  I feel Adelaide can offer this better than most other Aus cities.

Regarding investment properties, I agree with some ppl in that for me its just another place my cash could go.  
The downsides of poor liquidity, maintenance, tenants and high entry/exit pricing can be offset if the market is on a decent upswing.  That said, I think Aus property generally is still overvalued, with way too many small players muddying valuations by buying up property to flip or for passive income.  Perth is a clear illustration of this I think, and I'm hoping to see a few of these bit players burn when the correction arrives.  Long term though I doubt any home buyer today will lose significantly over a 10 year period.


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## quinny (21 June 2006)

Just to throw in my two cents worth.   

Stop_the_clock, if you think super is the way to go then good luck to you! Personally I hate super. I wish my money was not forced into it! I could've used the money I have in super a lot better than it just sitting there. Even if the returns are good, it makes no difference to me because I can't access the funds.
It may the case that one day I will be very thankful for it but ever since I've had it I have not wanted it! I do not trust that the money will be there when I need it. My father in law's dad was forced to put money into super and then the funds were locked away and could never be accessed and eventually all went to taxes and fees.  

See this thread for similar complaints:
http://groups.google.com.au/group/a...+horror+stories&rnum=1&hl=en#07f5561c1220afef

As for the renting vs buying I agree that it is up to the individual. I have lived most of my life in rentals and there is nothing wrong with that. I think the major upset about living in a rental is when the owner decides to sell and the new owners do not want to rent the place to you anymore. But maybe that is just me because I like to have a place to come back to and not have to move all the time.

I live in Perth and bought a house to live in about 2 years ago and I thought prices were ridiculously expensive then! They have just kept going up to even more amazing levels. I am wondering who all these people are that can afford these places. I would love for house prices to go down.


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## krisbarry (21 June 2006)

doctorj said:
			
		

> Stop_the_clock: You _can't_ gear super.




You are wrong, you can gear super and I am doing it right now...

Colonial First State offers a geared superannuation fund

here is the link for proof...this is the super fund I am in!

http://www.colonialfirststate.com.au/Prospects/FS1631.pdf


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## dennisll (21 June 2006)

I bought my house in 2004, which is arguably worse than buying a house now as prices have come down a bit since the rate rises.  I was buying shares before I bought the house, and I was still buying shares after I bought the house.  Except for a couple of months when I was busy sorting out the purchase, it made no difference to my share buying at all.  

Took out a Principal and Interest loan for the house.  Before I bought, I was renting at approximately $1k/month.  Now, just 2 years after I bought, the interest component of my repayment is less than $1k -- lower than what I was paying in rent.  Granted I pay maintenance/rates on my place so my real cost would probably still be greater, however I do have an asset that is allowing me to build equity and that the banks will happily take as collateral if I want to borrow more money for further investment.  

I have seen all the studies and data supporting the argument of not buying a house and instead putting the money into super or shares.  However, given a chance to do it all over again I would still buy my house.  Here are my reasons:
1. The amount of knowledge one gains by simply going through the process of buying a house is amazing.  There is so much to do -- researching an area, learning about loans, negotiating, inspecting, etc
2. You don't have to buy the median price, and you don't have to pay the asking price.  People will say, "houses are 20% overvalued!"  But if you can buy a house at 20% below the bank/council valuation, is it then considered a good buy?  This is the key, I think.  Yes, buying an overvalued house is similar to paying too much for a good company, but just because the market is overvalued doesn't mean you can't go out there and fish out the well-priced properties.  Not all sellers will happily sit and wait a long time until a buyer will pay for what the bank valued his property at.
3. Leverage.  You can borrow 100% of your house's value.  Sometimes even 105% or 110%.
4. Forced savings.  Most people, when they have a mortgage, adjust the budgets correspondingly to ensure that they do not miss any payments.  This results in a disciplined savings plan without them even knowing it.  Slowly but surely, equity is being built up in a solid asset.

I'm sure there are other reasons as well but these are the only ones I can think of at the moment (it is quite late).  I absolutely agree with the old saying that the best time to buy a house is now.


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## krisbarry (21 June 2006)

My brother rolled over his super $40,000 in Colonial First State, Australian Geared share fund and within 16 months his account balance had swelled to $68,000.  A great return!

You have the option to place it in Australian shares, then you also have the option to gear it or not.  Of course if you gear it the gains or losses are magnified!

Here is the difference.....

* I was in Hesta(Industry super fund)over the past year & my return was 23%

* while my brothers return in Colonial First State was a 65% return.

can you spot the difference?


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## dennisll (21 June 2006)

Hi Stop the Clock,

It sounds to me like you have made up your mind about putting your money in Super.  If that's the case, there's really not much point debating the issue then.  I wish you luck and hope that the fantastic returns continue for you.

It might be worth noting that the people who deserted the stock market in 2002 in favor of property after seeing the fantastic returns in that sector are the ones that are now stuck with homes with stagnant/declining values.  Will the same thing happen with shares/super?  Who knows?  All I know is that past performance does not guarantee future returns 

Cheers,

Dennis


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## krisbarry (21 June 2006)

Its hard to say, I guess we have to look at all aspects:

* Positives *

More people than ever before now own a super fund, and own shares within Australian companies.

Australian companies are and have been recording massive profits

I see this only increasing.

The government is making sure members add to their own super, with incentives

Generation X and Y seem to be very happy to contribute to their super funds, and see this as their main assest. Not like the babyboomers who seem to think a house is a better asset than super.

Massive growth in China and India are expected to increase the demand for Australian resources, hence the long-term growth may continue

* Negatives *

Higher interest rates, means less chance to gain greater returns

Increasing babyboomers moving into retirement will drain many super funds as they struggle to cope with the decline of members and the mass members exiting at the same time.


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## krisbarry (21 June 2006)

dennisll said:
			
		

> Hi Stop the Clock,
> 
> It sounds to me like you have made up your mind about putting your money in Super.




Yes I have made up my mind...funny enough I have just used the BPay option and deposited a voluntary $270 in my super fund this morning.

better to put $270 into super, than into bricks and mortar in this current market.


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## nizar (21 June 2006)

Stop_the_clock said:
			
		

> * while my brothers return in Colonial First State was a 65% return.




Nice one

I used to hold units in that fund too last year; of course my returns was much higher than that as moved in and out; taking advantage of no entry fees... Nice divvy they pay as well


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## Ageo (21 June 2006)

Smurf1976 said:
			
		

> A genuine 15% yield on the property? Or a 3% yield with 5x leverage? It makes a BIG difference to the risk of the investment.




Smurf, can you please define the risk?

I mean if i outlay $15,000 of my own cash to return net say $2700 p/a to me is a worthy investment (obviously other factors have to be included like occupancy times, vacancies etc..) Even thow the loan my be $80,000 or so it still makes sense to have a 3% return on a 5x leverage.

Its like how i trade. I would rather make 1% on 90x leverage than 100% on 1x leverage. Simply because losses i can cut short and winners i can let run (and its much easier to acheive 1% than 100% so my win/loss ratio is higher). The only issue i would have with my properties is vancancies (and there are ways to minimise this issue). But then again there is wrapping (vendor finance) to solve those issues. Many strategies you can utilize like the share market.


Adrian


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## krisbarry (21 June 2006)

Good to hear another member has been getting excellent returns, I reckon all this crap about staying with industry super funds is just that *CRAP*

Far better returns elsewhere.

I told Hesta where to shove their industry super fund....up their _____

Moved to greener pastures and haven't looked back


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## dodgers (21 June 2006)

Macquarie launched their annual Real Estate Market outlook yesterday - a very interesting read:

http://www.macquarie.com.au/remo

For Sydneysiders, they think we're approaching the bottom now however are in for a longer than usual stabilisation phase (rates dependent) due to a less severe downturn being experienced than in crashes the past - prob next 3 years of flat-moderate growth ahead of next upswing.


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## krisbarry (21 June 2006)

After reading this outlook, I would have to say the housing market looks pretty gloomy for the next few years at least


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## Julia (21 June 2006)

Stop_the_clock said:
			
		

> You are wrong, you can gear super and I am doing it right now...
> 
> Colonial First State offers a geared superannuation fund
> 
> ...



Doctorj was making the point that borrowing is illegal for *self managed super funds* .  That is correct.

Julia


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## Realist (21 June 2006)

Hmm read this...  

It is correct IMHO. Negative gearing becomes less viable now tax brackets have changed.

Property at the moment is a bad investment (in Sydney anyway)



> The super changes and the tax cuts will combine to make negative gearing less attractive for investors of all sizes and incomes, and ages.
> 
> Some analysts see negative gearing of investment as no longer a retirement strategy (providing the budget's Post-60 super changes are not altered as a result of the industry discussions the government is now having).
> 
> ...


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## bullmarket (21 June 2006)

Hi Realist

yep, tax free super at 60 sounds really nice to me   

my original plan was to take out my super when I turn 55 in a few years but I'll now have to do some serious number crunching to see if it will still be worthwhile taking out my super at 55 (and paying tax) or leave it in the rollover fund until 60........anything can happen re rule changes between now and when I turn 60 but I suspect I will still be much better off waiting until I turn 60 to take my super.

cheers

bullmarket


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## Broadside (21 June 2006)

I am with Realist on this one, in fact I am about to sell my house in inner city Melbourne and invest in an income producing asset in NZ.  Will rent and save a lot of money which will be put into equities which long term perform better than real estate.  When the bear market comes in equities I intend to leverage into it, not yet though.  For now I will be debt free and very flexible.

Property has had a golden run but long term interest rates are going up, it seems obvious to me anyway.  I can't see the great returns of the past 10 years continuing.  Flat or down from here I think.

Owning a home can be great for many because it is forced saving and leveraged investment which amplifies returns in the good times.  But I don't mind being an active investor, some don't, each to his own, and it is also a lifestyle choice, nice to own your own patch.

As an aside the tax system is skewed to property at the moment which distorts our economy, too many resources in unproductive assets.  We need to invest more in R&D and education, long term that is going to be our only edge.  We are resource rich but poor in value adding.


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## Ageo (21 June 2006)

Realist said:
			
		

> Hmm read this...
> 
> It is correct IMHO. Negative gearing becomes less viable now tax brackets have changed.
> 
> Property at the moment is a bad investment (in Sydney anyway)





When was negative gearing good anyway? unless you have a surplus of cash coming from somewhere investing in negative gearing properties are useless. why? well they are usually capital growth properties but answer this. According to your income how many properties can you afford to own if they are costing you each time (also take into consideration if they are vacant at times)?

The reason i like positive cashflow properties is simply because i can buy multiples each year as its giving me cash. And then if you wanted to use *some* of the surplus to pay for some negative gearing capital growth properties so you have a balance in your portfolio. That way your income is free'd up and you can be more flexible as to how you go about your finances etc...

makes more sense to me, have someone else fund your debt.


my


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## cuttlefish (21 June 2006)

Ageo,

what happens to that positive gearing situation if interest rates go up by a couple of percent - still positively geared? What if the underlying asset also depreciates simultaneously?


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## Ageo (21 June 2006)

cuttlefish said:
			
		

> Ageo,
> 
> what happens to that positive gearing situation if interest rates go up by a couple of percent - still positively geared? What if the underlying asset also depreciates simultaneously?





Well cuttle i would never go into any investment unless i allowed for such things. I allow for at least a 2 percent increase which still would give me a postive cashflow return. And if wors came to worse i would wrap (vendor finance) the property to someone which ensures a higher return.

As for a depreciating asset since my main goal isnt capital growth it wont affect me. Cashflow is my business and capital growth is always a bonus for me. 

I tend to prefer sharemarket for capital growth as its much more viable IMO.


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## krisbarry (21 June 2006)

I am really glad to have started this thread, seems as if there are many sides to this debate.

Some are headstrong property investors, others own some property, others own none.

Some invest in shares, some in super, some in management investment etc.

I guess it really doesn't matter which way you build your wealth, all wealth building techniques will go through periods of massive growth, flat periods and downwards trends too.

Alls I am saying is the home ownership for me is totally out of the question, both from a financial perspective and from a market trend perspective.  So without giving up all together, I shall be taking a different route to home ownership.  That will buy me a brand new home at the age of 65, and none of my money will ever go to bank interest.

This is my key to wealth building, and I see nothing wrong with the way I am going to achieve home ownership.


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## dj_420 (21 June 2006)

All i have to say is that the WHOLE real estate market is not overpriced. Sure if you want to buy in the city it will be expensive but even if i worked in sydney i would rather commute than buy a house down there.

the housing market has been flat for some time now and will pick up again in 2-3 years. IMO now is a good time to look for land/house in areas that have potential. im not recomending anyone purchase houses in overinflated areas i am arguing that value can still be found. 

areas that are increasing in population and have other positive macroeconomic influences are good areas to buy. someone stated areas around bhp olympic dam that will see growth. this is an influence that infrastructure, population growth, resources boom can all have on an area. 

if you had the chance to purchase a house in an area that would boom like WA would you?? or would you still sit on the sidelines saying that market is overpriced. it comes down to geographical area and macroeconomic influences. it is very simple.

one cannot state that the whole market is overpriced. certain regions maybe but not everywhere. if we are arguing about purchasing house in sydney i agree.

areas of potential
* hervey bay (new infrastructure, high growth)
* bundaberg (high growth)
* mid north coast (high growth)
many areas will benefit due to new infrastructure in hervey bay

i have shares and will be buying land soon. i would like to spread my money across a number of asset classes. im NOT buying a house in sydney or melbourne, i will be looking at demographics of the area first to decide.


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## krisbarry (21 June 2006)

cathers_420 said:
			
		

> even if i worked in sydney i would rather commute than buy a house down there.




So what your saying is that you would be happy to pay $150 a week in fuel or ride the bus/train/ferry for 2-3 hours a day.

Thats a long working day or an expensive ride to and from work everyday.

I live 6km from the CBD of Adelaide and love it.  If I ride the bus it takes me 15 minutes or if I drive I spend $25 a week in fuel, bargain!


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## bullmarket (21 June 2006)

'expensive' is a relative term - what is expensive for someone could be cheap to someone else.


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## The Mint Man (21 June 2006)

Some interesting reading,
http://www.domain.com.au/Public/Article.aspx?id=1150845208483&index=NationalIndex and;
http://www.domain.com.au/Public/Article.aspx?id=1146940522716&index=PropertyNews 

This one I just chucked in as I belive that is your hand in the picture Stop the Clock  
http://www.domain.com.au/Public/Article.aspx?id=1149964569961&index=PropertyNews  Your such a sexy hand model STC :1luvu:


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## krisbarry (21 June 2006)

bullmarket said:
			
		

> 'expensive' is a relative term - what is expensive for someone could be cheap to someone else.




The point I was trying to make is that people get lulled into a false sense of security buying cheaper properties on the outer fringes of the city, then realise their a very little bus/train/tram/ferry services and are forced to commute by car.

And whamo....fuel prices rocket up and what do you have, nothing but a pile of ****.  Interest rates go up due to inflation, then the outer suburb homes lose value the first, and the poor old commuter is stuck paying $100 to $150 a week in fuel.

get my drift....

wasted money down the drain IMO...

I would rather spend $25 a week in fuel and deposit the savings, than to give it all to the fuel companies and the banks in interest


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## Happy (21 June 2006)

You can,   and you can have property too


 – Investment property, even in different state if you wish.


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## Smurf1976 (21 June 2006)

Ageo said:
			
		

> Smurf, can you please define the risk?
> 
> I mean if i outlay $15,000 of my own cash to return net say $2700 p/a to me is a worthy investment (obviously other factors have to be included like occupancy times, vacancies etc..) Even thow the loan my be $80,000 or so it still makes sense to have a 3% return on a 5x leverage.
> 
> ...



The problem is what happens when something changes?

It's like driving past a speed camera that you know to be set at 103 km/h. If you consciously drive at 102.9 km/h then very little needs to go wrong for you to get a speeding fine. Travel at 95 km/h and there is a lot more margin for error.

With investing, it relates to volatility of returns when something changes. If those changes are in your favour then you make a big profit. If those changes are not in your favour then profit quickly becomes a rather large loss.

Some examples. You have an 80K property with 15K equity returning 2.7K per annum net. Assuming that you're paying around 7% interest on the loan your rent per week is around $140. If you have just one month void then there goes 20% of your annual return. If the hot water service needs replacing then there goes a third of your annual net return. If the capital value falls by just 4% then you have a loss (income minus capital value change) for the year. If it falls 10 % then, after selling costs, your investment is basically worthless. If interest rates rise 1% then that would take out 24% of your annual return.

The bottom line is that high leverage massively exposes you to fluctuations. If the leverage is sensible then that's not a huge problem. 5x isn't that bad in that sense, I use similar leverage in some of my trading. But there are plenty of stories of amateur property investors using leverage that makes 5x or even 10x look incredibly low - asking for trouble IMO.


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## wayneL (21 June 2006)

Smurf1976 said:
			
		

> The problem is what happens when something changes?
> 
> It's like driving past a speed camera that you know to be set at 103 km/h. If you consciously drive at 102.9 km/h then very little needs to go wrong for you to get a speeding fine. Travel at 95 km/h and there is a lot more margin for error.
> 
> ...





Yep!

And lets not forget the proverbial Black Swan lurks about, ever present... as does one Mr Seamus Murphy and his infamous law.


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## wayneL (22 June 2006)

Interesting article from the Land of the Poms:

http://www.telegraph.co.uk/property/main.jhtml?xml=/property/2003/09/17/prosy17.xml

The more sober press are turning into housing bears.


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## cuttlefish (22 June 2006)

Ageo said:
			
		

> And if wors came to worse i would wrap (vendor finance) the property to someone which ensures a higher return.




Just curious - how do you provide vendor finance for something you don't own?  (I might be misunderstanding what you mean by vendor finance, or maybe I'm misunderstanding the leverage part ...).


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## Ageo (22 June 2006)

cuttlefish said:
			
		

> Just curious - how do you provide vendor finance for something you don't own?  (I might be misunderstanding what you mean by vendor finance, or maybe I'm misunderstanding the leverage part ...).






Cuttle its called a wrap around your mortgage (instalment contracts is another name).


Lets say you buy a rural home for 80k @ 7% interest rate for 25 years. You then wrap sell it to another person who cant obtain finance/ doesnt have a deposit/ bad credit record etc.. You do all your checks to make sure he can make the payments, get all your legals etc... and basically sell it to them for say 100k and a 9% interest rate (higher price and interest rate because your taking on more risk) and they dont mind because they get to own there own home without worrying about a loan. They pay for all the expenses like in a normal home and you make a 2% interest difference after paying your mortgage off.

If they sell it you lock in a automatic profit (100,000-80,000 = 20k). Thats basically a quick rundown but there is more to it.

Another reason is in the country usually for an extra $50-$100 per week instead of renting they can own there own home so it makes more sense.

So as you see many ways of positive gearing properties.


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## cuttlefish (22 June 2006)

Ageo said:
			
		

> Cuttle its called a wrap around your mortgage (instalment contracts is another name).
> 
> 
> Lets say you buy a rural home for 80k @ 7% interest rate for 25 years. You then wrap sell it to another person who cant obtain finance/ doesnt have a deposit/ bad credit record etc.. You do all your checks to make sure he can make the payments, get all your legals etc... and basically sell it to them for say 100k and a 9% interest rate (higher price and interest rate because your taking on more risk) and they dont mind because they get to own there own home without worrying about a loan. They pay for all the expenses like in a normal home and you make a 2% interest difference after paying your mortgage off.
> ...




What I don't understand is how does the title transfer to they buyer when they purchase - surely the bank won't allow title to transfer until you discharge your mortgage with the bank. If the bank did allow that then aren't they underwriting the low quality debt that you are selling?


----------



## Ageo (22 June 2006)

cuttlefish said:
			
		

> What I don't understand is how does the title transfer to they buyer when they purchase - surely the bank won't allow title to transfer until you discharge your mortgage with the bank. If the bank did allow that then aren't they underwriting the low quality debt that you are selling?





The title stays in my name but basically what they are doing is paying me in installments and then until that is finished i still own the house. But i cant just kick them out as thats all in the legals etc..

Speak to your solicitor if he knows about them and he will fill you in.

this is where i learnt wrapping

http://www.rickotton.com/wrappack.htm

P.S i have no affiliates with that link.


----------



## dj_420 (22 June 2006)

stop the clock



> And whamo....fuel prices rocket up and what do you have, nothing but a pile of ****. Interest rates go up due to inflation, then the outer suburb homes lose value the first, and the poor old commuter is stuck paying $100 to $150 a week in fuel.




Do you realise that as a population increases those areas on the outskirts as a result become populated. AND when a population increases the price of land increases also. that is why rural development on the coast would have cost 30 000 20 years ago and can now be worth 2 million plus.


----------



## cuttlefish (22 June 2006)

Ageo said:
			
		

> The title stays in my name but basically what they are doing is paying me in installments and then until that is finished i still own the house. But i cant just kick them out as thats all in the legals etc..
> 
> Speak to your solicitor if he knows about them and he will fill you in.
> 
> ...





ok - so you generously sell this $80,000 house to some lucky recipient for $100K at 9%.

After 10 years of hard work and saving they've managed to pay $99,000 to you so they've only got $1000 left to pay off "their" house.  But before they make that final payment the bank reposesses the house from you because you haven't been meeting your own mortgage payments. 

What recourse have they got?


----------



## Ageo (22 June 2006)

cuttlefish said:
			
		

> ok - so you generously sell this $80,000 house to some lucky recipient for $100K at 9%.
> 
> After 10 years of hard work and saving they've managed to pay $99,000 to you so they've only got $1000 left to pay off "their" house.  But before they make that final payment the bank reposesses the house from you because you haven't been meeting your own mortgage payments.
> 
> What recourse have they got?




The only way i wont be able to pay my mortgage is if the wrapee fails to pay me and if thats the case i use my own money to pay the mortgage that month or 2 and he defaults and i re-posses the home off them and wrap it again ect..

If they continue to pay it to the end then i will have my mortgage payed off as its principal and Interest.

Remember they are paying 2% above my interest rate plus a loan size of extra of what i paid.


----------



## cuttlefish (22 June 2006)

Ageo said:
			
		

> The only way i wont be able to pay my mortgage is if the wrapee fails to pay me and if thats the case i use my own money to pay the mortgage that month or 2 and he defaults and i re-posses the home off them and wrap it again ect..
> 
> If they continue to pay it to the end then i will have my mortgage payed off as its principal and Interest.
> 
> Remember they are paying 2% above my interest rate plus a loan size of extra of what i paid.




ok - lets say the scenario isn't yourself but someone a little unscrupulous - and instead of paying off their own mortgage they gamble it at the races and a result the bank repossesses the property. What recourse does the purchaser that bought for the 9% have in this scenario?

Also is their rate fixed or is it tied at a percentage above some benchmark rate?

Also - if they fail in making their repayments to you and you decide to repossess it what happens if they've 'wrapped' it and sold it to someone else at $120K and 11%?


----------



## Ageo (22 June 2006)

cuttlefish said:
			
		

> ok - lets say the scenario isn't yourself but someone a little unscrupulous - and instead of paying off their own mortgage they gamble it at the races and a result the bank repossesses the property. What recourse does the purchaser that bought for the 9% have in this scenario?
> 
> Also is their rate fixed or is it tied at a percentage above some benchmark rate?
> 
> Also - if they fail in making their repayments to you and you decide to repossess it what happens if they've 'wrapped' it and sold it to someone else at $120K and 11%?





The answer to your 1st question i have no idea as i would never do that so you would have to ask your solicitor or someone that knows.

2nd There interest rate will be variable as is mine so it will always be around the 2% difference (or whatever agreed apon.

3rd When i set up my contract i would state that only a sale of the property will be valid and no vendor finance will be allowed to be issued on the property. Not sure on the legalities but again its all set up before hand plus it wouldnt be worthwhile for some1 to wrap it again as the interest/repayments would be to high for the other person.

A good solicitor will give you all the details your after.


----------



## cuttlefish (22 June 2006)

Ageo said:
			
		

> A good solicitor will give you all the details your after.




thanks but I think I'll leave you to it - sounds too clever by halves for the likes of me.


----------



## Ageo (22 June 2006)

cuttlefish said:
			
		

> thanks but I think I'll leave you to it - sounds too clever by halves for the likes of me.




Mate i left school in yr 10 and i turn 23 this year so im not that clever hehe.


----------



## Smurf1976 (22 June 2006)

cuttlefish said:
			
		

> ok - so you generously sell this $80,000 house to some lucky recipient for $100K at 9%.
> 
> After 10 years of hard work and saving they've managed to pay $99,000 to you so they've only got $1000 left to pay off "their" house.  But before they make that final payment the bank reposesses the house from you because you haven't been meeting your own mortgage payments.
> 
> What recourse have they got?



According to a real estate agent I heard speaking on the subject of wrapping a few months ago, the short answer is that the person buying the house is completely screwed should the wrapper decide not to pay the mortgage or otherwise go broke.


----------



## cuttlefish (22 June 2006)

Reading the mortgage terms for my loans they all have:

_"No Dealings - not do any of the following: ... (b) sell or otherwise dispose of the property (c) give any one a right over or to use any of the property (d) give or alllow another morgage or charge over the property ... unless the lender first gives consent."_ 

If this practise goes on I think its a shame for the people on the receiving end of it who would generally be unsophisticated investors and not realise the situation they are entering themselves into, and I'm also surprised the law doesn't provide some protection against it.

I could potentially accept an argument for it if the vendor owned the property outright and transferred title to the purchaser but retained security over it until the loan was paid out. (effectively then they're just acting as a finance company, offering higher rates for less creditworthy clients).


----------



## Happy (23 June 2006)

Simple solution would be to give them 7% loan in a first place and monitor progress of the loan repayment.

But nobody is prepared to do that and everybody is up in arms for outrageous shody practices.

Just stupid, both ways.


----------



## robots (5 July 2006)

hello

here's something for you realist, article mentions lower north shore 

http://www.domain.com.au/Public/Article.aspx?index=PropertyNews&id=1151778974533

what many have been saying, good property has not dropped, but been in good demand

as mentioned wages have gone nowhere, 

thankyou
robots


----------



## krisbarry (12 July 2006)

2 Rate rises on the way ...sounds nasty, hope those rates are being locked in. 

Anyway glad I don't own a house or have a morgage.

I will just be dumping more money into my superannuation fund


----------



## Realist (13 July 2006)

robots said:
			
		

> hello
> 
> here's something for you realist, article mentions lower north shore
> 
> ...




Interesting, but it is a "Good News" article. If I was a Real Estate Agent I'd be telling everyone that houses are a great investment. And If I was a stock broker I'd be telling everyone to buy alot of shares, then sell some, then buy even better shares.  I'd list specific examples of success and deliberately overlook any bad news. 

Agents have their own interests at heart not consumers. 

One thing about houses is people in Sydney in particular spend quite a bit of time and money rennovating them and improving them - so when they mention they've made thousands of dollars profit they nonchalantly overlook agents fees, stamp duty, mortgage interest, time and effort spent, builders costs, materials, new kitchens, new carpet, remmovalists costs, insurance, rates, taxes etc.  all which are real costs that renters don't pay. They eat away any profits (if you made any)

So someone buying a 2 bedroom dump and spending 2 years living through the pain of renovations doing it up into a 3 bedroom "palace" may have spent $100,000 and made $100,000 off it - the house price has gone up but they've made nothing. they'll sure as hell tell you they sold it for $100,000 more than they bought it for though.

I'm a bit skeptical of house price figures because of this.

I know Sydney apartments have dipped for 3 years now, menawhile the ASX has soared.  Renting and investing was the best thing to do for the last 3 years, it will change though - when is the question?


----------



## Smurf1976 (13 July 2006)

According to media reports, housing is undergoing a bit of an uptick at the moment. Such an event marks the end of the "plateau" and has preceeded previous crashes in the UK etc.

So I think we're about to see a resolution of the crash / no crash debate. Too early to tell which way though but it should become apparent over the coming months. Either a new boom of sorts, or a crash...


----------



## Realist (13 July 2006)

Smurf1976 said:
			
		

> but it should become apparent over the coming months. Either a new boom of sorts, or a crash...




Well a crash would suit me fine. Can't see it being possible though.

When was the last house price crash?

What is the definition of a house price crash??

Houses have gone down in Sydney 15% over 3 years apparently.  When that is inflation indexed at 3% it equals - about 25%.

And as I said, people are forever adding value ot their house by adding rooms, new storeys, nicer kitchens, new carpets, new gardens etc.  They're pumping money into the houses and they are still going down.

To me we've had a bloody strong correction already.  

My guess is another 5% downturn over the next 9 months then we'll see pissy little 3 to 5% rises for 3 to 4 years then some significant rises.


----------



## cuttlefish (13 July 2006)

Realist said:
			
		

> Well a crash would suit me fine. Can't see it being possible though.




you won't buy if the housing market really crashes.


----------



## Realist (13 July 2006)

cuttlefish said:
			
		

> you won't buy if the housing market really crashes.




What the?    

What do you base that on?  Or are you just baiting me?

You know I top up on dips Cuttlefish!!

I will have a field day during a crash. Value investors always do. I honestly can't wait till the next ASX crash or a house crash (if it ever happens). I'm chomping at the bit for one. The sooner the better. I want interest rates to soar and mortgagee sales aplenty. I want CBA to dive to $10 even though I own it. the cheaper the better. (yes I have cash now ready to buy - always do)

If house prices crash, I'd probably mortgage myself to the hilt buy as many properties as I can and even give up work to become a property developer. I would love it!!


----------



## cuttlefish (13 July 2006)

There's a lot left for you to learn about your own emotions and market psychology.  It's surprisingly difficult to overcome negative sentiment and back yourself against the crowd.


----------



## Realist (14 July 2006)

cuttlefish said:
			
		

> There's a lot left for you to learn about your own emotions and market psychology.  It's surprisingly difficult to overcome negative sentiment and back yourself against the crowd.





I totally agree. 

But having seen what I post, what I do, do you not think that of anyone on this bored I am possibly the most likely to go against the crowd?

I take great pride in doing so.


----------



## cuttlefish (14 July 2006)

You may get there but at the moment I don't think that what you are doing is really going against the crowd that much.

Buying resource stocks on dips in a commodities boom,  buying blue chips that are currently sentimental favourites, this isn't really going against the crowd to a great degree.   

You also don't seem to have that much structure around your approach. When you really start to go against the crowd you'll need that structure to know whether to back yourself or not - because to counter your emotions you will need to have some logical basis to make your head go where your heart doesn't want to.

With smaller amounts of money its easier, but making large investments against the crowd is a difficult thing to do.   And I'm not talking about going short when everyone's going long (thats a different thing altogether and would require impeccable timing and risk management),


----------



## Realist (14 July 2006)

cuttlefish said:
			
		

> You may get there but at the moment I don't think that what you are doing is really going against the crowd that much.
> 
> Buying resource stocks on dips in a commodities boom,  buying blue chips that are currently sentimental favourites, this isn't really going against the crowd to a great degree.
> 
> ...




I don't totally disagree.

But the ASX is so small that you do not have too much option to go against the crowd.  I suppose going agaisnt the crowd would be buying wine stocks, Telcos etc.   I bought Fosters, no Telcos though - wont touch loss making stocks. Just unfavoured ones.

And the fact is it is hard to go against the crowd in a bull market - everyone wants to buy, and there's no point in you not being in the market so you need to buy as well.

When the bear arrives and others are selling is when I'll come into my own and truly go against the crowd. I admit now I aint going agaisnt the crowd.


----------



## krisbarry (15 July 2006)

I got my tax return back, and quickly depositied this into my super fund today, isn't it great to have a war...it just buys me more units in my fund.


----------



## visual (15 July 2006)

Stop,by going on what you are saying on the other thread perhaps if you looked to buy a house in a suburb you could actually afford, you wouldnt have to give up on buying a house.


----------



## krisbarry (15 July 2006)

I am living in this suburb by choice, and its free, so I am not complaining.

All the money I am saving by not paying rent is going into my super account, now that is wise!


----------



## visual (15 July 2006)

Stop_the_clock said:
			
		

> I am living in this suburb by choice, and its free, so I am not complaining.
> 
> All the money I am saving by not paying rent is going into my super account, now that is wise!




So either you are squatting,or living in some elses house that they have paid for,dont you feel a little embarrased to be living off some elses labours.


----------



## krisbarry (15 July 2006)

Not at all, its my partners place, no harm in that!

In return I do all the cooking, cleaning, gardening etc!

and I pay half for all the utlities!


----------



## visual (15 July 2006)

Ok but who pays for the mortgage?
and althought you do all the cooking and cleaning and pay for half of the utilities ,you`d have to do all that anyway regardless of where you live.

At the end of the day it isnt you who can afford to live there.


----------



## krisbarry (15 July 2006)

Ohhh Visual...the nit picker on this board, I should have known....there is always a nit-picker in every group of people!

I will comment no further, you will just nit-pick!


----------



## visual (15 July 2006)

Oh dear, so you can afford to buy a house,you simply choose to let someone else do that,so why didnt you just say that in the first place.


----------



## visual (15 July 2006)

Stop_the_clock said:
			
		

> This will be a hot topic....
> 
> I have been living at parents place - free rent, or my mates place free rent!
> 
> ...




And althought you think I`m a nit picker  which is it,parents,mates house
or partner house,by the looks of it,you dont seem to take responsability for your own living arrangements,it seems that while you grow your own wealth ,someone else is always paying for your abode.


----------



## Realist (16 July 2006)

visual said:
			
		

> it seems that while you grow your own wealth ,someone else is always paying for your abode.




Sounds bloody good to me.

Well Done Stop_the_clock.


----------



## blinkybill (16 July 2006)

How many really successful and wealthy people don't own at least one home.

Buying a house was the best thing I ever did


----------



## krisbarry (16 July 2006)

Nothing wrong with a partner supporting you!

I provide: love, support, cooked meals, a clean house, washed clothes, a maintained garden, help with paying the bills etc etc.

In return I get a (free) roof over my head and a loving partner.

I don't see a problem with the way I live my life.

My partner just wants me to be happy and to save my cash, and that is what I am doing....it all goes into my super fund.


----------



## Realist (16 July 2006)

blinkybill said:
			
		

> How many really successful and wealthy people don't own at least one home.






How many really successful and wealthy people do not own a fridge?

Did buying a fridge make them wealthy, probably not. Buying a house did not make them really wealthy either.



If you buy a house and its price doubles you are no better off, because when you sell your house you will need to buy another one, and guess what everyone else's house has doubled as well.  

Next you are going to say - you are better off than those that did not buy a house?  Really, then what are you doing on a stockforum? Both you and I know the ASX increases quicker than the Aussie house market. So not buying and investing *can at times * be better than buying a house.

I am not saying don't ever buy a house, what I am saying is fer christ sakes think and do the maths for yourself before you do, shares at certain times are a far better option.


----------



## cuttlefish (16 July 2006)

cuttlefish said:
			
		

> With smaller amounts of money its easier, but making large investments against the crowd is a difficult thing to do.   _*And I'm not talking about going short when everyone's going long (thats a different thing altogether and would require impeccable timing and risk management),*_







			
				realist said:
			
		

> When the bear arrives and others are selling is when I'll come into my own and truly go against the crowd.





realist, I just want to also add that the corollary also applies - i.e. I'm not talking about going long when everyone else is going short, which would be equally as risky a thing to do - particularly at the start of a bear market.

With countercyclical investing I'm more talking about investing in things that have cobwebs on them, and when you discover them and ask people about them the usual response is - yeah that old crap - useless - thats why its in the back shed with cobwebs on it.


----------



## Mofra (16 July 2006)

Realist said:
			
		

> If you buy a house and its price doubles you are no better off



I Disagree. I know of many people who leveraged their equity into stocks and have made quite a healthy return.


----------



## Smurf1976 (16 July 2006)

Mofra said:
			
		

> I Disagree. I know of many people who leveraged their equity into stocks and have made quite a healthy return.



Effectively borrowing money to invest in stocks via a housing mortgage. You could just borrow the money and directly invest it into stocks instead and claim a tax deduction on the interest.


----------



## Realist (16 July 2006)

cuttlefish said:
			
		

> With countercyclical investing I'm more talking about investing in things that have cobwebs on them, and when you discover them and ask people about them the usual response is - yeah that old crap - useless - thats why its in the back shed with cobwebs on it.




So would you buy into Railroads, Qantas, Telstra?

I would not.

I like unfashionable, not old fashioned if you know what I mean.  It is clear that the airline and home phone business has nowhere to grow. And Railroads died in the ass 50 years ago as an investment.  Qantas and Telstra may be the new railroads??? Still there but piss poor investments.

Qantas may move to couriering and Telstra is moving to internet and mobile phones - still I am wary. Maybe wrongly, but I just can not see these old dogs as a great investment.

Fosters (wine is out of fashion) may sell billions of litres of beer to China, Westfield (property trusts are out of fashion) may open malls in India.  What are Qantas and Telstra gonna do that will revolutionise their company? Who from overseas uses them? 

Australia is a small country, you need companies with overseas exposure. FGL and WDC are WORLD LEADERS!!  Telstra and QAN are Aussie "Dogs".

I own FGL, and WDC and see them better than TLS and QAN.  Just my opinion...  

Cuttlefish, your thoughts on WDC v TLS and QAN as an investment.

 (FGL is not so cheap, so no comparison)


----------



## Realist (16 July 2006)

Mofra said:
			
		

> I Disagree. I know of many people who leveraged their equity into stocks and have made quite a healthy return.




So they took money out of their housing investment and put it into shares.

So shares were the better investment.  And they did better.

So you are agreeing with me, not disagreeing.   

Thanks!


----------



## clowboy (17 July 2006)

The point being debated was that there is no advantage to owning a house, not if shares/housing is the better investment.  Clearly if housing goes up and you can use this equity to further invest that is a clear advantage to having no equity at all.  I know of many people that have bought investment propities with the equity that has been generated from their PPOR.

As for just borrowing the money outright, while this can be done using equity can be easier and you can still further gear into the investment Ie use home equity to fund a margin loan.

How you borrow the money has no relavance to it's tax advantages, how you invest it does.  I for one have made reasonable gains from money I borrowed from my PPOR and claimed the interest as a tax deduction.  I can with extreme certainty say that it has been highly benificial to my circumstances owning a house, both in the sense that it's value has gone up and in that it has provided a method of using equity to invest.

I would not argue with the point that while you only own one property everything else is going up in value to and that makes it hard to upgrade, but it's easier to upgrade than just buy the expensive model outright.

I reckon the best bet is just to own two or more properties and have a bucket load of shares but if I ever make it that far i'll let you know


----------



## Realist (17 July 2006)

clowboy said:
			
		

> I reckon the best bet is just to own two or more properties and have a bucket load of shares but if I ever make it that far i'll let you know




Amen...


----------



## Mofra (17 July 2006)

Smurf1976 said:
			
		

> Effectively borrowing money to invest in stocks via a housing mortgage. You could just borrow the money and directly invest it into stocks instead and claim a tax deduction on the interest.



If you can give me a lender that lends at home loan rates for a margin loan, please let me know.


----------



## Mofra (17 July 2006)

Realist said:
			
		

> So they took money out of their housing investment and put it into shares.
> 
> So shares were the better investment.  And they did better.
> 
> ...



Gee, you really missed it didn't you?

Whilst equities dollar for dollar offer the better investment in my opinion, from a lending point of view property offers much better and more flexible leverage.

If you can find a lender that offers 95% finance at home loan rates to buy shares with non-genuine savings, please let me know.

Thanks!


----------



## Smurf1976 (17 July 2006)

I must point out that I have nothing against owning a house per se. It's just that with valuations approaching about double historic levels it's an unusually risky time to buy real estate IMO.

A key point is how, exactly, capital values of houses would rise or even remain stable (in real terms) over the next few years. 

Rental yields are ridiculously low by any historic measure so that doesn't support higher prices in the absence of a boom in rents.

House prices are at very high levels relative to wages. Even Hobart and Adelaide are more highly valued than most major overseas cities. As for Sydney, it's one of the most highly valued markets in the world and well above the historic mean. In the absence of a genuine wages boom it's hard to see how house buyers, particularly those buying ordinary homes at the lower end of the market, could possibly pay more.

Likewise interest rates are still near multi-decade lows but are now rising. That doesn't argue for higher prices either. Indeed if interest rates rise more rapidly than wages then it argues for lower prices due to reduced borrowing capacity.

Note that I'm talking about ordinary "average" suburban houses and not mansions etc which are a somewhat different market (though still related to the general economy).


----------



## emma (18 July 2006)

You don't have to buy if you're clever enough - see http://www.smh.com.au/news/TECHNOLO...keys-to-a-house/2006/07/11/1152383702596.html


----------



## Realist (18 July 2006)

> If you can give me a lender that lends at home loan rates for a margin loan, please let me know.




 

Home loans aren't tax deductable from capital gains.

Margin loans are.


----------



## Mofra (18 July 2006)

Realist said:
			
		

> Home loans aren't tax deductable from capital gains.
> 
> Margin loans are.



Most of my clients are longer term investors. Their non-mortgage borrowings are more likely to be capital protected loans & porimary production schemes.

They certainly wouldn't exclude a major source of capital growth when there are so many other avenues of tax minimalisation available to them.


----------



## eddievanhalen (18 July 2006)

Hi guys,

I realise many may not be in a position to do this............yet , but I have paid out my housing loan with trading profits and immediately redrawn it out to 90% interest only (fully deductible) as an investment loan - also redrawn out my IP loan to 90% again (after reval)and re-invested the difference. Effectively my housing loan has become another investment loan with no change in my financial situation (other than a more tax effective loan structure and more $$ to play with) - all I needed was the resources to pay out the loan for one day.

It is my intention to never again have a non-deductible "housing loan".  Any future PPOR I buy will be with cash and that house will then immediately be used as security for an investment loan - interest only and fully deductible.

Many things are possible if you work hard and think outside the square from time to time.

If anyone here has a traditional housing loan for say $250k and has more than that in the stock market (net of margin loans etc.......) , I'd be doing some thinking about restructuring. Ofcourse this is dependent on people's individual situation and any break fees on existing loans etc..........

Just a thought on how you just might be able to use property at traditional homeloan rates as security for investment in the stocmarket.  You could then use that money to buy marginable stocks if you really want to be aggressive    


Ed


----------



## Realist (18 July 2006)

eddievanhalen said:
			
		

> I have paid out my housing loan with trading profits and immediately redrawn it out to 90% interest only (fully deductible) as an investment loan -




Are you living in this house?  

Can you live in your own "investment" property?


----------



## eddievanhalen (18 July 2006)

You're getting confused with the meaning of an "investment property" - yes I'm living in it but it ain't an investment property.  I'm not paying myself rent LOL .

If you borrow money to buy an "investment property" and you put tenants in etc..........then ofcourse it's deductible interest

There's a difference between doing that and using a property *I own* as security for a loan that is to be used for "investment purposes"

In one case you are taking out a loan *to buy a house * that happens to be an investment property - in the 2nd case you are using your house (unencumbered) as security for a investment loan. That could be used for shares or as a deposit for more property etc...........

Two entirely different things but in both cases the interest is deductible.

Clowboy had it right - it's the purpose of the loan that matters , not the security.

Ed


----------



## clowboy (18 July 2006)

Even if you are not in a position to fully pay out your loan, it may pay to investigate this as you can still use this principle on part of your home loan.  As long as the two different loans a clearly identifiable you should noit have any problems (talk to an accountant.)  Most home lenders allow for splits these days which makes it really easier.

As an example, my home loan has several splits, one is my actual home loan which I pay down and the other is an investment loan which I pay interest only on.


----------



## blinkybill (19 July 2006)

Realist said:
			
		

> How many really successful and wealthy people do not own a fridge?
> 
> Did buying a fridge make them wealthy, probably not. Buying a house did not make them really wealthy either.




Buying residential real estate has made a lot of people wealthy   but obviously it depends largely on where and when


----------



## Realist (19 July 2006)

blinkybill said:
			
		

> Buying residential real estate has made a lot of people wealthy   but obviously it depends largely on where and when





You can not get rich by buying a house and paying off the mortgage for 30 years - simple as that.

You can get rich by buying many houses for a cheap price, doing them up and selling them in good times for a much better price.

That to me is like saying you can get rich by working 5 days a week in an office, then on the weekends and weeknights working your ass off doing manual labour as a plasterer.  Yep you'll make alot of money, but have no life either!! 

bugger that, I go to the beach and play golf on weekends.

There aint no point in having money if you have no life.

Shares are more fun too.


----------



## redandgreen (19 July 2006)

Realist said:
			
		

> You can not get rich by buying a house and paying off the mortgage for 30 years - simple as that.
> 
> You can get rich by buying many houses for a cheap price, doing them up and selling them in good times for a much better price.
> 
> ...



once your landlord kicks you out or increases your rent by an unrestrained amount you may start thinking differently....


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## Smurf1976 (19 July 2006)

You could also get rich by buying lots of houses at the bottom of the cycle and selling them at the top. Just like shares.

If you held the houses during the down part of the cycle then, whilst inflation may mean that prices don't actually fall but instead "plateau", interest would wipe out much of your gains. And of course you would lose the profits from doing something else with the money during this part of the cycle. Timing matters.


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## Realist (19 July 2006)

redandgreen said:
			
		

> once your landlord kicks you out or increases your rent by an unrestrained amount you may start thinking differently....




Agreed, but... where I live is cheap, it is okay, quite nice, nothing special though. And I can't get Foxtel.

If i get kicked out so be it, I'll move somewhere nicer with Foxtel.   : 

I am starting to think we are getting close to the optimum time to buy a house in Sydney. I'll wait though at least 6 months. See what spring brings..


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## WaySolid (19 July 2006)

I have only read the first 2 pages of this thread but feel compelled to write something as I was thinking what would I do if the poster was a young nephew of mine?

Frankly I would be grabbing you by the shoulders and shaking you whilst asking 'What on earth are you thinking?'

I guess I also ran over some posts that triggered a reflex response... Listening to a Real Estate Agent for investment opinion? (Be very afraid), listen instead to Real Estate investors instead. 

I'd rather return 50+% on my investments... What the?? Wouldn't we all? Base forecasts on historical means for investments as a good guide, which for super is ... well anything but super if you do your research. The current ASX flood is lifting a lot of quacking ducks with it, but if you can do 50% in an investment then of course thats fantastic.

Super is a very tax advantaged vehicle, but as a primary investment source? How many variables are there between a young person and retirement age?

Take a lesson from the boomers book, get into what you can afford in terms of a house (do what you can to get there) add some value where you can and use that increasing equity as a springboard for future investing. I guess the perception of the X'ers and Y's is that they want the house that is as good as what they are getting at home, but reality is that they will need to settle for something a little less spectacular to get started. It's a boring formula but it seems to have worked reasonably well in the flow of history. A little bit of delayed gratification + hard work = very nice things.

A few possible suggestions to discard as nescessary.

* Save a deposit for a house, getting your foot in the RE market is very important I believe and will knock the socks of anything connected with equities for a beginning investor in terms of the leverage the bank will give you for an IP or PPOR. 
* Research! You can find great deals if you put in some sweat. 
* Just get started, was it any easier for the boomers to buy their first house?

Anyway whatever is chosen good luck!


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## mit (19 July 2006)

I hate to say it but I think Realist is right here. If you buy a house (ignoring deposit) you are up for 7% interest plus around 1.5% costs. That's 8.5% of the  value of a property. A lot of rental properties still have a yield of 3-4%. So you can save 4% of the value of the house by renting. Now, the argument is that you miss the capital growth but where you want to live is not neccessarily where the best growth is. So rent where ever you want and buy an investment property where the return is the better.

Go to http://www.somersoft.com/ and try to argue there with property experts that buying a PPOR is better than renting.

MIT


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## Smurf1976 (19 July 2006)

WaySolid said:
			
		

> * Just get started, was it any easier for the boomers to buy their first house?



Well the price of the house, relative to average wages, was about half what it is now...


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## emma (20 July 2006)

Smurf

Could you give the source for your assertion about the cost of a home/wages ratio.


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## Realist (20 July 2006)

mit said:
			
		

> rent where ever you want and buy an investment property where the return is the better.




Why even bother with an investment property at the moment though?

I do not believe investment properties give a better return or less stress than shares...

And property is not as safe as everyone makes out, "safe as houses"   

Property can lose you money, vacant time, interest rate increases, damage to the property from bad tenants, fall in prices etc. 

Leverage works both ways - your losses can be huge!!

Investment properties can cause more stress than a falling sharemarket. Bad tenants are a nightmare. 

If you like property, buy Westfield...


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## Smurf1976 (20 July 2006)

emma said:
			
		

> Smurf
> 
> Could you give the source for your assertion about the cost of a home/wages ratio.



A report this year by consultants Demographia found that Australian cities, even the likes of Hobart and Adelaide, are amongst the most expensive (relative to wages) in the world with prices aound 6.5 times average earnings. In Sydney the ratio is 8.5, higher than New York or London.

Actual ratios from the report: Sydney 8.5, Hobart 6.6, Adelaide 6.5, Melbourne 6.4, Perth 6.1, Brisbane 6.0, Canberra 4.8, Darwin 4.3.

The same report states that most cities in Australia had prices around 3 times average earnings at some point over the past 2 decades whilst ABS data, reported through various media outlets, suggests that the long term average is between 3.5 and 4 times earnings for Australian cities. A bit more in Sydney, less in Hobart etc. Hence my statement that house prices relative to income are, roughly, double historic levels. Also today's home buyers lack the benefit of inflation rapidly eroding the real value of the mortgage.

The good news is that markets generally revert to the mean. The question is whether that means a wages boom or house price falls.


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## Ageo (20 July 2006)

Realist said:
			
		

> Why even bother with an investment property at the moment though?
> 
> I do not believe investment properties give a better return or less stress than shares...
> 
> ...




tell that to the property millionares.

My dad's builder (he's a bricky) just poured 20 slabs and they are all sold already.

My Real Estate Agent said they already sold 30 properties for this month.

Its quite simple if you have a lack of knowledge and finance (in some cases) then of course your gonna say Real Estate is a lowsy investment, it doesnt mean it isnt thow does it.

Vica versa when a real estate investor says shares a risky etc...

If there are millionaires in both areas then both areas must work. Its that simple


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## Buster (20 July 2006)

Stop_the_clock said:
			
		

> when I am 65 I will then be able to take out my super and buy a brand new house/unit/retirement village unit etc, that will suit my needs. That way I have saved hundreds of thousands of dollars in bank interest.



Why bother matey.. keep bludging off your parents and mates.. Make sure you pick good mates too.. the type that buy pizzas, beer etc that way you can save even more moolaa and put it into your investments..

Grow up..

Cheers,

Buster


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## Young Gun (20 July 2006)

OK their are a number of problems here , firstly I work in the finance industry more specificially superannuation. Why put your money into super , yes i know favourable taxation rules however it is untouchable untill you reach preservation age (retirment age). Whats more , wouldnt you rather invest the money yourself and learn abit then just over pay people to do it for you. 

Secondly , giving up on owning your own home is really bad to hear. I just turned 19 I have a 1/3 stake in an apartment  (and I live in Sydney metro) and $10,000 in shares, you can save up to buy propery you just need to spot the opportunity or get creative. 

The main problem with renting is that rent is indexed meaning it increases with costs and inflation. Your rent is always going to increase. However your loan repayments will decline as you pay off the balance owing and even if you only paid interest only , it would still remain the same (based on the fact interest rates dont go up lots).


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## emma (21 July 2006)

Thanks Smurf for your reply    It seems to me that some of to-day's "can't afford a house" people, can't live without spending on stuff that wasn't even on the radar when we bought a home.  All we could afford to buy for our first home was a bed and a fridge - everything else (what there was of it) was borrowed. We spent a few years without any spare cash to spend on anything but essentials. 

To be fair, credit was a different animal then.  The amount required as deposit was considerable (compared to to-day) before you could be interviewed by your bank manager  be even considered for a home loan.  There in perhaps lies the answer - could the almost unlimited availability of credit be part of the driver of house prices?


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## RodC (21 July 2006)

emma said:
			
		

> There in perhaps lies the answer - could the almost unlimited availability of credit be part of the driver of house prices?




Almost unlimited cheap credit certainly is part of the driver of prices. The whole consumer credit market has certainly opened up a lot in the last 15 years.

Rod.


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## Smurf1976 (21 July 2006)

The way I see it, credit availability is THE driver of house prices at the moment. Even a brief look at the marketing from banks etc reveals that the focus is very much on "borrow as much as the bank will lend and spend the lot buying a house". No surprise then that, with the exception of Sydney, Canberra and Darwin, Australian capital cities all have very similar valuation levels relative to income. Also no surprise that the actual prices are roughly equivalent to the "how much can I borrow" amount that bank calculators etc produce when typical income figures for those cities are entered plus a reasonable deposit (that is, very little deposit for first home buyers, more for those trading up to the larger properties). All driven by credit availability IMO.

My underlying concern is that I think we've seen the peak in easy credit. Inflation is starting to show up in everything from petrol to stocks and it's hard to believe that won't spread to food etc in due course. Indeed central banks are already tightening and "mopping up excess liquidity" as inflation hits the upper end of target ranges in many countries (or central banks foresee that happening).

Once the easy credit ends (it has before so why not again?) then either wages boom or house prices don't. In the case of the latter, those who bought at the peak will be stuck with huge mortgages without the benefit of high inflation eroding the real value of the debt whilst the capital value of their property stagnates at best - not a profitable situation. On the other hand, if wages do start to really increase then the "plateau" scenario for house prices whilst wages and rents catch up becomes far more likely IMO.

A significant complicating factor is that higher wage inflation should, in theory at least, also lead to higher interest rates such that whilst capital values may not fall, repayments on loans would rise. Not a problem as long as _your_ wage is increasing in line with the average but a big problem if you find yourself missing out on those wage rises (unless you're making decent $ from investment etc which most home buyers with big debts are unlikely to be doing). 

Also there is the economic cycle itself. Worst case sees an economic slowdown and rising unemployment. That's when the forced sales start (can't pay the loan with no job...) and at that point you wouldn't want to be holding highly leveraged investment property unless you're able to take a very long term view. Those who find themselves unemployed simply don't have the option of thinking long term when the mortgage payment is due next week and end up selling no matter what the state of the market. If there's enough of these sales then, since the prevailing conditions would also be deterring many buyers, the end result is supply substantially exceeding demand. That ought to lead to price falls and has done so in the past.

So house prices are basically a function of buyers' ability to borrow and repay loans IMO. If the combined set of interest rates, bank lending criteria, wages, unemployment etc leads to higher "how much can I borrow?" amounts then house prices rise. If they lead to a lower amount then house prices fall.


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## REA (21 July 2006)

Emma .  .  .    I think what you say re sacrifices is correct however economic conditions are very different.  After writing this I have decided that what has changed most is the ability to borrow huge amounts of money.  I think that has changed the real estate in Australia and even the Australian way of life.

In the late 60’s it took about 3 years for two people working (one a young 24year old professional) to pay off land worth $5,000 in a Sydney suburb.  You could not get a loan then for house and land.  Bank managers were “God” and you had to wait and practically beg for a loan. Interest rates were around 13% or more. There were “credit squeezes” as they were known.  Very importantly a loan was only allowed on one wage as the wife was expected to have children.

In the 1960’s and 70’s there were many other differences.

No financial assistance from Government for children if you earned a higher wage. No first home owners grant or relief on stamp duty. From memory higher marginal tax rates up to 69%.

No spare money for restaurants on Friday and Saturday night, no expensive liquor (cask wine or beer at the best)

Parents generally were poorer, no help with deposits. Cars were expensive even second hand ones. No money for overseas trips. Women didn’t work as much with far less opportunities, one income often. Often had children in the early 20’s. No one but financial institutions or rich people dealt in shares. 

Admittedly no HEC”s but poorer kids just didn’t go to University (my husband had earned a cadetship). Teenagers today change courses midstream (eg my daughter) Are taxpayers expected to subsidise these extra years? In those days there were far fewer course choices available. If you failed a year you were generally out.

We are much better off than our parents.  Financially we are very successful through hard work and dedication. I am a believer in real estate but even more having a mixed portfolio. I think you can have it all, but take care to pace it so you can enjoy life along the way.


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## Realist (21 July 2006)

Young Gun said:
			
		

> The main problem with renting is that rent is indexed meaning it increases with costs and inflation. Your rent is always going to increase. However your loan repayments will decline as you pay off the balance owing and even if you only paid interest only , it would still remain the same (based on the fact interest rates dont go up lots).




That is simple logic but it does not always work out in reality.  If you get no captial gains on your property in the short term, or worse still losses, you are obviously better off waiting and saving up more of a deposit.

No-one is arguing buying a house is a bad thing. What everyone is saying is for christ sakes wait until capital gains are almost assured, because when you are leveraged and you make a loss it is a big loss. 

Anyone that bought a place in Sydney 3 years ago has lost money - whether they realise it or not.

When did you buy your place?


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## krisbarry (21 July 2006)

Just like the term Peak Oil, we also have Peak housing...the peak at which housing becomes too expensive for the ordinary folk.

I aksed my mum the other day if she had to buy her house over again, would the bank lend her the money in todays dollars, NO!

She has only been a home-owner for 7 years, thats how much things have changed just within 7 years.

I challenge the baby-boomers to think of how they would ask their bank managers for a loan on their current house in todays dollars and just see how many of them are approved, I think very little.

I am even speaking to people who are millionares through the  property market, and they say this is about it for the market, even they are being priced out.   They can no further borrow or grow their portfolios

Housing Afordability has peaked, and thats for sure!


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## professor_frink (21 July 2006)

> Housing Afordability has peaked, and thats for sure!




Why do you assume this will be permanent?


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## krisbarry (21 July 2006)

*Homebuyers relying on inheritances*

21jul06

PEOPLE expect to tap into some form of family support to finance their first home purchase, despite indications an inheritance may not be enough to secure a mortgage, a survey has found

While financial independence still remains a goal for most people, the survey found 32 per cent of people had factored in inheriting some of the value of their parents property as part of their repayment strategy. 

The survey - by the Mortgage Industry Association of Australia (MIAA) and BankWest - also found a quarter of the 842 respondents were relying on some form of family assistance to buy their first property. 

"Mortgages are much larger in absolute terms than they've ever been before and housing prices are much more expensive," MIAA chief executive Phil Naylor said. 

"Sixty-nine per cent say that saving a large enough deposit is holding them back from buying a home. 

"This is a reassuring sign that they are responsible when it comes to entering the market and prefer to demonstrate their saving abilities before committing to a mortgage." 

Fifty-two per cent of Australian would like to own a home without any strings attached and plan to finance their purchases without having to rely on family support. 

But for many, financial independence is a very expensive dream. 

Despite concerns about financial overcommitment, 64 per cent of first-homebuyers believed home ownership has more advantages than renting while 60 per cent expected to enter the market within the next three years. 

MIAA said most lenders looking to approve a mortgage still examine a homebuyer's ability to meet repayments when working, not the ability to utilise inheritance or family assistance. 

The survey also found 89 per cent of first-homebuyers were excited about the prospects of renovating to their taste, 75 per cent looked forward to feeling financially secure and 68 per cent wanted to have a stable family home. 


Meanwhile, 17 per cent were considering buying an investment property before buying the family home.


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## professor_frink (21 July 2006)

was that article meant to be an answer to my question or are you just posting it for the forum to read?


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## Smurf1976 (21 July 2006)

Stop_the_clock said:
			
		

> I am even speaking to people who are millionares through the  property market, and they say this is about it for the market, even they are being priced out.   They can no further borrow or grow their portfolios



If that's correct then the market really is headed for serious trouble, worse than I thought.


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## juddy (22 July 2006)

emma said:
			
		

> Thanks Smurf for your reply    It seems to me that some of to-day's "can't afford a house" people, can't live without spending on stuff that wasn't even on the radar when we bought a home.  All we could afford to buy for our first home was a bed and a fridge - everything else (what there was of it) was borrowed. We spent a few years without any spare cash to spend on anything but essentials.
> 
> To be fair, credit was a different animal then.  The amount required as deposit was considerable (compared to to-day) before you could be interviewed by your bank manager  be even considered for a home loan.  There in perhaps lies the answer - could the almost unlimited availability of credit be part of the driver of house prices?




You may be right and I am not sure when you bought a house, but I assume that it was not when median house prices were 7-8 times the average annual wage (it was probably 3 -4 times) and you were able to afford it one *one* wage, you didn't have HECS and other education debts running up to $30,000, and fuel wasn't $1.20 a litre. 

These are the problems facing the young these days. People in their early twenties are deciding to buy a house instead of having kids (anecdotal evidence). In my and your day this wasn't a choice we had to make, we could have both and one parent could stay home and look after them instead of farming them out.

Basically, as you have alluded to, things are entirely different now. 

As a person who does a lot of work with youths in Perth I see these disaffected youngsters who know they will probably never be able to afford a house and it is very sad. Probably the most scary part of it is the inevitable brain drain away from the urban areas and the consequences of it. Why would you be a teacher, a nurse, a doctor or any other of these caring professions when the salary that you earn in your first ten years (and for teachers and nurses, for the rest of your life) added to your HECS debt will automatically disqualify you from purchasing a property or having kids. This is my greatest fear where these people leave expensive cities and move elsewhere because of the disaffection. My nephew falls into this category. He is a very angry young man, a person who has chosen education as a profession because he cares about the development of our young. He feels both the state and federal government have turned their back on him. If this feeling is widespread what will become of these professions? It scares me to think WA will become a state of miners, construction workers and engineers.


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## Smurf1976 (22 July 2006)

juddy said:
			
		

> You may be right and I am not sure when you bought a house, but I assume that it was not when median house prices were 7-8 times the average annual wage (it was probably 3 -4 times) and you were able to afford it one *one* wage, you didn't have HECS and other education debts running up to $30,000, and fuel wasn't $1.20 a litre.
> 
> These are the problems facing the young these days. People in their early twenties are deciding to buy a house instead of having kids (anecdotal evidence). In my and your day this wasn't a choice we had to make, we could have both and one parent could stay home and look after them instead of farming them out.



All evidence of a housing market that is way overvalued.

Markets tend to revert to mean valuation over time. They always have and probably always will. If you look at history then bubbles always burst eventually - the hard part is knowing when and with what consequences for the general economy etc.

Housing valuation, like share valuation, is measured relative to the earnings of the investment. Dividends in the case of shares, rental yield in the case of housing.

A cyclical relationship also exists between average house prices and average income levels. Whilst not strictly the proper measure of valuation, it does seem to be a reasonably valid measure over time. Prices eventually revert to a level where people can afford to buy. It makes sense when you think about it.

So at some point in the future, probably within 5 years if history is any guide, housing will no longer be overvalued or at least not to the extent that is now.

The questions are how the reversion to mean valuation comes about, when, with what consequences (recession?) and the extent of any overshoot below mean valuation (by definition of being a mean valuation, there must be periods below this level if there are periods above it). Do rents and wages boom or do house prices fall? 

Given that there seems to be growing evidence of inflation, but not at a level high enough to restore normal housing valuations in less than a decade or so, I am inclined to think that there will be an element of both rent/wage rises and house price falls to restore normal valuation. 

Looking at markets such as Sydney, Hobart and the US there is growing evidence of house prices falls, albeit modest. Likewise there is mounting evidence of upwards pressure on rents as vacancy rates fall. And wages have been slowly rising, on average, for years. All this points to house prices and rent/wages meeting somewhere in the middle rather than either a plateau in prices or a dramatic crash. 

That said, a crash in the value of ANY asset is always a possiblity, especially one as overvalued as housing where there has been large scale public involvement during the boom (the public becoming involved in speculation being one of the tell tale signs of a bubble). That much of the investment in housing involves borrowed money, commonly at variable interest rates in the Australian context, increases the risk of an outright crash if general economic conditions were to move unfavourably.

Realistically, I think we will see house valuation (of an average house) in Australian cities except Sydney fall below 4x average earnings in those cities and possibly somewhat lower than that. Sydney does tend to be a higher valued market historically but even there I would expect valuation to fall substantially from the present level.

I have read many well informed comments to the effect that if there was to be a house price crash then it would not be isolated to individual countries (USA, UK and Australia all have a very similar situation at present) and would almost certainly start in the US and spread from there. The theory being that a faltering US housing market would cut consumer spending and in turn affect the entire world economy. Only time will tell if that's true but I'm keeping a watch on what's happening in the US and it looks to be turning down quite rapidly in recent months.


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## Young Gun (22 July 2006)

> Anyone that bought a place in Sydney 3 years ago has lost money - whether they realise it or not.
> 
> When did you buy your place?




Not everyone has lost money I hate to break it to you . Houses in the more expsensive regions have still done well. I bought a couple of months ago and made a fair bit of money on it already as I bought it almost half of wat it sold for a couple of years back ...


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## krisbarry (22 July 2006)

Well there seems to be a growing evidence of truth that young people aged 18-35 are making many sacrifices:

Do I go to uni? if I do, then I will not have two children, I will have only the 1 child, and that child will come later in life (30 to 40 years of age)

Do I go to uni, If I do, then I cannot afford that house deposit, so therefore I rent for 5 to 15 years, or I live with my parents.

Do I then clear my HECS debt with my savings, or do I buy a house?

Do I have another child or do i go to uni?

Should I rent as its cheaper, and save the rest for a house deposit, or do i just buy?

Do I buy at the end of a boom cycle, or do I wait and save more.

or do I just save for retirement and live a transient life till I am 65.

I see plenty of sacrifies here...none of which previous generations have had to tackle.


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## kgee (22 July 2006)

juddy said:
			
		

> It scares me to think WA will become a state of miners, construction workers and engineers.




Don't forget fisherman theyr'e a motley lot as well!!!!


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## Smurf1976 (22 July 2006)

I don't give financial advice (since by law I can't etc) but I would strongly suggest that young people, from a purely economic perspective, note the following:

1. Go to uni only to acquire qualifications that you are actually going to use to earn money. Whilst it might be interesting or expand your knowledge, study that doesn't lead directly to wealth creation represents a massive cost that, to be blunt, you just can't afford unless you are genuinely in an above average financial position. Not ideal but reality.

2. Live with your parents as long as possible. Certainly not ideal from a lifestyle perspective but if you can manage an extra few years then, unless you have a well above average income, that is the only way you are going to save enough to invest or for a deposit on a house etc.

3. There is nothing wrong with renting. A few hassles but you'll survive. In the absence of ongoing house price increases it is considerably cheaper than buying a house using borrowed money.

4. Cars are always expensive. Unless you buy a cheap, old car and can do all maintenance work yourself, it's going to cost a LOT more than just putting petrol in the tank. Tyres, insurance, registration, it WILL break down except perhaps if it's near new, you WILL crash it sometime and so on. Plus petrol of course. Cars are rarely an investment. Spend as little as possible on them unless you really do have money to burn. 

5. Ten years ago mobile phones were still an item that attracted amusement and were just starting to become popular. 20 years ago they simply didn't exist in Australia. Whilst you may need a mobile, it's highly unlikely that you need to spend $2000 a year on it as many seem to. And you certainly don't _need_ a new one every 6 months or a fancy ring tone.

6. Fast food is, in general, incredibly expensive and anything but healthy. Even more expensive when you factor in the expense of driving there to get it. We eat perfectly well for about $85 a week (2 people plus cats and mouse) including lunch. The mouse is admittedly pretty cheap to run.   

7. You don't get credit card bills every month. Apart from the annual fee, credit cards don't give you bills. It's what you buy with them that you are paying for. If you have multiple cards, each with an annual fee, then that is money down the drain for literally nothing.

8. Bottled water is the most ridiculous product ever to become popular IMO. Tap water in Australian capital cities and most regional areas is perfectly safe to drink and in most cases has LESS nasties (according to tests reported in the media) than the bottled variety. Bottled water is responsible for an incredible amount of greenhouse gas pollution too, not to mention the waste of plastic and oil. Previous generations have all drunk tap water and you'll save well over $1000 a year doing the same. Likewise the expensive cups of brand name coffee etc. 

9. There is no need to have any significant amount of money earning less than 5% interest. If you want to keep it as cash in the bank then there are plenty of accounts paying over 5%, generally with no fees and many with no minimum balance. Money sitting in a savings account that pays 0.1% is simply handing potential income straight back to the bank.

I don't doubt that it IS tougher now to buy a house than it used to be. A LOT tougher. But there's absolutely no reason why most people on a reasonable income shouldn't be able to save a deposit to enable them to buy when valuations are more reasonable. In any slump it is those with cash who win since the incredible willingness of banks to lend is itself something that happens only during booms. Odds are that you won't be buying without a _real_ deposit once the slump hits because lenders will tighten their lending criteria. So now is the time to stop blowing money on ring tones etc and start saving for when houses are affordable.


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## Tim (22 July 2006)

Very interesting. 8.5 would surely have to be pay TV (or pay-and-pay-and-pay-and-pay TV as some people call it).

In regards to buying a house these days, unfortunately there are always going to be more people that _want_ to live in a desirable area than those who actually _can_. Hence prices are rarely going to go backwards too much. This is made worse by the fact that many people invest (buy and never sell), so this reduces the supply even more for people who want to own their own home.

And I might add one more no-no to the list. From personal experience, look after the health of you and your family. Aged care (even for people who are not aged) can cost a decent six-figures to get into (for a bond), and then an ongoing five-figures a year is also on the cards. Big bickies.


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## Buster (23 July 2006)

Stop_the_clock said:
			
		

> Well there seems to be a growing evidence of truth that young people aged 18-35 are making many sacrifices:
> 
> Do I go to uni? if I do, then I will not have two children, I will have only the 1 child, and that child will come later in life (30 to 40 years of age)
> 
> ...




Obviously you've not had to make a real sacrifce, nor do I think you really understand what the word means.. I think the word you are struggling to find is 'Decision' or perhaps 'Choice'. Try slotting them in and see how they fit..

And just what exactly didn't I (at 40 I guess i qualify as the previous generation.. ) have to tackle??  

Beleive it or not Uni did exist when I was a young bloke.. Surprisingly, it wasn't free, and many of the 'assistance schemes' you have available today like Austudy etc were not available in my day.. and to add insult to injury if I managed to overcome the dilemma and decided to have children, be it one, two or ten, I didn't receive the generous $4000.00 'baby bonus' that you'd put in your pocket today..  

Renting has always been cheaper than buying a house..   

Everyone seems to be harping on about home prices are a significantly higher now than ever before.  I do not subscribe to this, as i can directly relate it to property I bought in my younger days.. 

My girlfriend (now Wife, two kids refer comments above) and I bought a crappy two bedroom Villa in Guildford (a crappy suburb of Parramatta in Sydney) for just shy of $100k in 86.  At that time i was earning around the 23K mark.. It was what we could afford, and it was the limit that the bank was prepared to lend with a hard saved 10k deposit.. we barely made the cut.  

Today, the average wage is somewhere around the 50k mark, and a snappy check on the net reveals that you could pick up today a 3 bedroom house (with a block, unlike a Villa) fro 310k or a brend new two bedroom apartment very nicely appointed (with _two_ bathrooms) for 280-290k.. 

I would say that is almost bang on the money.  OK, 23 into 100 is just over 4 and 50 into 290 is a little under 6, but considering the extra's it really isn't the huge difference that everyone is carrying on about.. And i'd tip if the crappy villa I owned all those years ago was on the market, given the prices I've just seen on the net, it probabaly would fit in quite nicely around the 210 - 230 mark..  which would be just over the 4 times wage.. Perfect.. 

I look forward to the recession so that we can all listen to you whine about the sacrifice you make paying interest rates of 10%..  You may remember your parents slogging to pay off the home loan interest rate when it was around 17%..  I dare say they, like many others, had many sleepless nights during that era..  

But you kick back mate, and take what you can whilst your parents and mates are willing to let you get away with it.. And don't get preturbed if you hear 'soak' or bludge' creep into conversations, turn a blind eye and soldier on.. You'll get to 65 eventually and wonder what all the fuss was about..

As I said to you before, Grow up.. and just get on with it like everybody else has to.

If you are really lucky, the ol' bird flu will kick in, a few hundred thousand deaths should dampen the demand for housing.  Pick up a bargain then..

Regards,

Buster


----------



## It's Snake Pliskin (23 July 2006)

Stop_the_clock said:
			
		

> Well there seems to be a growing evidence of truth that young people aged 18-35 are making many sacrifices:
> 
> Do I go to uni? if I do, then I will not have two children, I will have only the 1 child, and that child will come later in life (30 to 40 years of age)
> 
> ...




A good hard think is what is required here.

Many years ago many didn`t have the luxury of going to UNI.

Most people don`t get any where because they channel their negative energy into everything.

Find a negative and turn it into a positive even if it has been done by many before - it works!

Have many children and enjoy the happiness it brings.


----------



## tech/a (23 July 2006)

Man are we the LUCKY country.
Here in the UK a house that sells for $300k in Adelaide 25 miles out of London sells for £800K yes thats right $2 million!

So want then to rent fine thats £3750 a month yep $9,500 a Month.

Petrol $2.65 a liter.
Wages on average £30,000 a year a very good wage is £50k-£80k which at the high end isnt much more than Aussi wages at a conversion rate of 2.5:1

Bangkok---live in a sewer for $50 a month---average wage $250 a month.

Stop whinging and start living,Aussi's dont know how lucky they are!!

Rather than doing anything about their life most will be still whinging in 20 years time waiting for prices to fall!!!


Anyway greetings from a Hot busy and exciting London.


----------



## Big Jim (23 July 2006)

tech/a said:
			
		

> Man are we the LUCKY country.
> Here in the UK a house that sells for $300k in Adelaide 25 miles out of London sells for £800K yes thats right $2 million!
> 
> So want then to rent fine thats £3750 a month yep $9,500 a Month.
> ...




No offense mate , but there's a bit of a difference between Adelaide and London. Like where do you go when you're in Adelaide.

I believe the Reality  market is in for a rude awakening very soon. This country runs and relies on transport. The instant it become expensive is the instant we all suffer. Good luck to you in London and I daresay that is a very nice warm climate  this time of year.


----------



## It's Snake Pliskin (23 July 2006)

Big Jim said:
			
		

> No offense mate , but there's a bit of a difference between Adelaide and London. Like where do you go when you're in Adelaide.
> 
> I believe the Reality  market is in for a rude awakening very soon. This country runs and relies on transport. The instant it become expensive is the instant we all suffer. Good luck to you in London and I daresay that is a very nice warm climate  this time of year.





What transport it is terrible. Really it is terrible!

I have been taking the bullet train to work. Australia is backwater stuff.
Governments do nothing, but people have the leverage to do whatever they want.


----------



## Big Jim (23 July 2006)

Snake Pliskin said:
			
		

> What transport it is terrible. Really it is terrible!
> 
> I have been taking the bullet train to work. Australia is backwater stuff.
> Governments do nothing, but people have the leverage to do whatever they want.




Agree.


----------



## Smurf1976 (23 July 2006)

Buster said:
			
		

> But you kick back mate, and take what you can whilst your parents and mates are willing to let you get away with it.. And don't get preturbed if you hear 'soak' or bludge' creep into conversations, turn a blind eye and soldier on.. You'll get to 65 eventually and wonder what all the fuss was about..
> 
> As I said to you before, Grow up.. and just get on with it like everybody else has to.
> 
> ...



*I am using Buster's post as an example only for my point. My point applies to property bulls in general, not solely Buster, and applies to posts on ASF and elsewhere.* 

I see comments like this as evidence of the property bulls getting worried about the state of the market. The denial phase is turning to fear.

On a stock market forum it would seem reasonable to expect that the concept of market timing would be pretty well accepted. Don't buy at the top and don't sell at the bottom. Indeed doing just that is why many are on ASF in the first place. It's a well accepted idea to profit or avoid loss in this way.

But suggest applying this concept to housing and the bulls start hurling the insults about growing up etc. That is not the response of a rational evaluation of the market. It is the madness of crowds. That urge to target anyone who chooses to be different. Also known as "peer pressure" it is what makes it seem necessary to do all manner of irrational things. And it's common near market tops when the masses are heavily invested.

I never take such comments as in any way insulting but they do provide another useful insight into the market. Posts such as these are becoming common on various property forums and even in mainstream media overseas - it looks like the bulls are getting worried. 

Perhaps they have noticed the increasing number of "affordable" houses with their "price reduced" that "must sell" and are finding the photos on sites such as realestate.com.au more useful now that many sellers so thoughtfully remove all the furniture before the photos are taken...


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## Big Jim (23 July 2006)

Smurf1976 said:
			
		

> *I am using Buster's post as an example only for my point. My point applies to property bulls in general, not solely Buster, and applies to posts on ASF and elsewhere.*
> 
> I see comments like this as evidence of the property bulls getting worried about the state of the market. The denial phase is turning to fear.
> 
> ...




Rule No.1  Never go with the flow.


----------



## krisbarry (23 July 2006)

What we are looking at now is a different view of sacrifices, bought on by each generation.  What was a sacrifice back in the 60's is now a luxury, and what is a sacrficie now was a luxury then.

Each generation has it own sacrifies and luxuries.

For example:

Free education was a luxury that the older generation has enjoyed, but is now a sacrifie for the younger genarations.

Older generations sacrificed money to populate, house themselves and educate, but now we have the luxury of the baby bonus, the first home buyers grant and Austudy.

*But eveything comes at a price:*

The sacrifies young people are  making today are indead changing the world significantly:

What I can see now is that housing has gone from a sacrifie to a luxury, even for the hard workers.  You can work 40 hours a week, and still not even afford a house.


----------



## krisbarry (23 July 2006)

The vast majority of my friends and people I know around my age (31) rent.  Why is that so?

But when my parents were (31 years of age) they owned a house and almost all of their friends owned houses too.

So what is the problem here?

It is amazing the contrast of views we have here, all within a hop-skip and a jump of 1 to 2 generations.

We have gone from a majority of home owners to a minority.

Now can someone join the dots here....


----------



## Smurf1976 (23 July 2006)

Stop_the_clock said:
			
		

> Now can someone join the dots here....



Proudly brought to you by *inflation*.

If you keep pumping up the money supply then it has to go somewhere. First it was tech stocks, then housing and more recently hard commodities. Now it looks to be heading into soft commodities (that is, food).


----------



## Knobby22 (23 July 2006)

The next recession is coming with high interest rates.
Plenty of houses will be available then for those who are ready.
The tide has already turned, it will get better.
Also the baby boomers are getting older, they will start selling their investment properties soon. 

Last recession I had my parents family friends who owned about 12 houses, lost them all including the family home as interest rates rose. Be patient. 
My personal plan is to slowly sell off my shares and reduce my debts until I am in the position to upgrade the house in 4 years.

With regard renting, your best way of getting somewhere in your career is to seek great job experience.

Hopefully if you have chosen a career like Engineering or nursing, you can work in Dubai, Singapore or GBR earning great money. So why buy at this stage? Of course if you did a BA then bad luck.


----------



## krisbarry (23 July 2006)

Knobby22 said:
			
		

> The next recession is coming with high interest rates.
> .




The sooner that day comes the better...

I call it re-distribution of wealth...taking from the rich (multiple homes) and giving to the poor (1 home)

there now we all have homes, and we can all be happy little vegimites


----------



## It's Snake Pliskin (23 July 2006)

Stop_the_clock said:
			
		

> The vast majority of my friends and people I know around my age (31) rent.  Why is that so?
> 
> But when my parents were (31 years of age) they owned a house and almost all of their friends owned houses too.
> 
> ...




Well no doubt people are staying at home longer avoiding responsibilities because they can.

As far as renting goes, there is nothing wrong with it and it can serve you better in some circumstances.


----------



## Smurf1976 (23 July 2006)

Stop_the_clock said:
			
		

> The sooner that day comes the better...
> 
> I call it re-distribution of wealth...taking from the rich (multiple homes) and giving to the poor (1 home)
> 
> there now we all have homes, and we can all be happy little vegimites



Whilst I don't want to see ANYONE lose their house, I would gladly welcome an abrupt end to the incredible arrogance that seems to have developed around real estate over the past few years. I suspect a proper slump is the only cure for this unfortunately.

Some examples of what I mean:

1. "It's your fault you're priced out of the market, you should have bought when I did". In truth, the majority of those who bought before the boom have profited due to pure luck. If they were really that good at market timing then they wouldn't be living in ordinary suburban houses to start with. 

If they had made some medical breakthrough, saved people from a burning building, made consistent profits over time through genuine ability to time markets, won gold at the Olympics or whatever then maybe they have reason to boast. But not when they simply got lucky buying a house.

2. Expecting the entire community to change so as to boost your real estate value. This seems to be becoming all too common, at least in Tas.

You build a house on very steep blocks in a valley. On the other side is the major highway which carries virtually all traffic heading south of Hobart. The highway opened in the late 1960's. Since there is no other means of transport in that area,  all freight moves by road to and from one of the fastest growing (in % terms) regions in the country. Being a steep section of road, trucks crawl down using their (very noisy) engine brakes. All things that are common knowledge in Hobart and readily observable to anyone who has travelled on the Southern Outlet. So what do you do? Well, you build a house in this obviously noisy location and then you complain to the Transport Department wanting the trucks taken off the road or banned from using their brakes(!).

Or how about this one. You build a block of appartments literally opposite the entrance to the largest nightclub in Hobart which has operated as a club since 1995 and a live music venue 30 years prior to that. And then you complain about noise to the point of having the issue dominate local media for weeks until the owner finally gave in and closed the sole large club in Hobart (which once won a national award). Never mind all those jobs being lost. Never mind that you just scrapped literally 40% of an entire industry. Never mind the thousands who went there every week. I demand my right to build an unsoundproofed building in a commercial area directly opposite an obvious source of noise and then expect total silence. Incredible.

And again. You buy cheap land across the river from a heavy industrial area with a ferro alloy plant (4 furnaces), power station, major port, petrol storage tanks, 2 woodchip mills, a fibreboard plant, an aluminium smelter and an aluminium powder plant. The aluminium smelter has operated since 1955, the ferro alloy plant since 1962 and the power station since 1971. Hardly new. And just up the road on your side of the river is the Beaconsfield gold mine and a quarry used by the ferro alloy plant. By far the most industrialised part of the entire state. So what happens when someone proposes building another factory? You go running to the media, complaining about how this will reduce your real estate value and form a lobby group to protect your interests. Never mind that well over 1000 people would be employed in the factory, I'm worried that the value of my house, which has more than doubled in a short space of time, might fall a bit! Absolutely ridiculous.

If it takes a recession, house price crash or whatever to end this obsession with houses then bring it on. I have nothing against those who made a profit from the boom. Nothing whatsoever. But to expect an entire community to bend over backwards to maximise that profit is going way too far.

If you buy property near a highway, nightclub, smelter or whatever (or land zoned for such activities) then that's YOUR choice and you live with the consequences. Anyone who doesn't foresee that traffic might increase, hotel opening hours might change or factories might be built in an area zoned "major impact heavy industrial" has only themselves to blame if they don't like what happens. We don't bail out failed investments in shares, business etc and it's time for property investors to stop expecing the community to bail them out when they make poor investment decisions.


----------



## clowboy (23 July 2006)

While I would aggree that buying a house has become far more dificult in the last few years I really don't think that it was any easier for previous generations.

Comparing housing valuations and average incomes is a really futile way of trying to determine who has/had it easier.  Simply becuase there are so many variables.  Looking at an avaerage house price and an average wage (as if there is such a thing) it is clear that houses have become more expensive relative to earning capacity in recent years.  So what?  While this trend is changing, the money to buy these houses is the cheapest it has been in a very long time.

If I was to buy my unit now and interest rates where to go to just 10% I would have to pay 2.5 times my current payments.  If they went to 17% (i think that was the high) I would be paying over 4 times my current payments.


Even if my unit was to lose 70% of it's value (ie be worth about 20% less than what i paid for it 5.5 years ago) and someone was to purchase it with a mortage at 17% they would still be paying 1.5 times my current payments.


Now that would really suck.


----------



## Smurf1976 (23 July 2006)

clowboy said:
			
		

> While I would aggree that buying a house has become far more dificult in the last few years I really don't think that it was any easier for previous generations.
> 
> Comparing housing valuations and average incomes is a really futile way of trying to determine who has/had it easier.  Simply becuase there are so many variables.  Looking at an avaerage house price and an average wage (as if there is such a thing) it is clear that houses have become more expensive relative to earning capacity in recent years.  So what?  While this trend is changing, the money to buy these houses is the cheapest it has been in a very long time.
> 
> ...



The point being that if you pay 6 or 8 times your income for the house, using borrowed money, then you are completely stuffed if the availability of cheap money ceases. It is _much_ safer to owe $150K at 15% than to owe 300K at 7.5% for this reason despite the actual interest cost being the same.

Obviously, you could fix the interest rate and IMO anyone borrowing a high multiple of their income ought to do so. But various reports suggest that around 75% of mortgages are not fixed but variable.

Given the high turnover associated with the boom and the 100%+ mortgages, it seems reasonable to conclude that a substantial number of borrowers have very large loans (relative to income) at variable rates. If interest rates rise faster than _their_ income then that's when the mortgagee sales start. A rise in unemployment would also have this effect.

The way I see it, the argument for or against buying a house right _now_ comes down to speculation on the future direction of interest rates and unemployment.  It's a matter of timing your entry. Houses will almost certainly be more expensive in nominal terms in 2020 than they are now. Likewise the ASX ought to be higher too. But if you had reason to believe that the ASX would fall to 4000 before it went to 10,000 then it wouldn't make sense to buy into an index fund right now. You would wait for the fall and then buy. Same with housing - question is whether or not prices actually fall from present levels before resuming the long term upwards trend.


----------



## nizar (24 July 2006)

Smurf1976 said:
			
		

> Obviously, you could fix the interest rate and IMO anyone borrowing a high multiple of their income ought to do so. But various reports suggest that around 75% of mortgages are not fixed but variable.





Imagine all those people buying houses in the US in June 2004 when interest rates were at 1% with a variable rate; they would be suffering now as prices fall and rates are much higher... OUCH


----------



## tech/a (24 July 2006)

Stop_the_clock said:
			
		

> The sooner that day comes the better...
> 
> I call it re-distribution of wealth...taking from the rich (multiple homes) and giving to the poor (1 home)
> 
> there now we all have homes, and we can all be happy little vegimites





A furphy,those who took advantage of the last R/E Boom will have or will be in the process of maximising equity in holdings.
Simply selling to bring excessive gearing down.

This distribution of wealth theory doesnt cut it.

The wealth is distributed un eavenly because some take the calculated risk.
Others---wellmost are either not in the position to take advantage of the boom OR sit and watch it go by.

Money makes money and the rich get richer are certainly trueisms.
Any property speculator/investor who hasnt decreased his exposure deserves to get caught.

As rents increase and demand for housing inevitably increases prices will march on.


----------



## krisbarry (24 July 2006)

Well I am looking forward to August not only does it mark the last month of winter, but it will also see the reserve bank raise intrest rates.


----------



## Julia (24 July 2006)

Stop_the_clock said:
			
		

> Well I am looking forward to August not only does it mark the last month of winter, but it will also see the reserve bank raise intrest rates.




I agree entirely regarding the last month of winter, but can you explain why you want an increase in interest rates?  How does it affect you one way or the other if you live rent free in someone else's house?

Julia


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## krisbarry (24 July 2006)

THE central bank is likely to lift interest rates again in August with stronger-than-expected wholesale inflation pointing to a significant pick up in consumer prices, economists said today.

Kewl this will knock a few more property investors off their purches  

They will only raise rents so far, then realise that their investments are going backwards, then they will sell out of the property market and move onto greener pastures.


----------



## Smurf1976 (24 July 2006)

Calls for the government to do something to improve housing affordability. Another sign that it has gone about as far as it's going to.

http://www.abc.net.au/news/newsitems/200607/s1694899.htm


----------



## professor_frink (24 July 2006)

Stop_the_clock said:
			
		

> THE central bank is likely to lift interest rates again in August with stronger-than-expected wholesale inflation pointing to a significant pick up in consumer prices, economists said today.
> 
> Kewl this will knock a few more property investors off their purches
> 
> They will only raise rents so far, then realise that their investments are going backwards, then they will sell out of the property market and move onto greener pastures.




So you do acknowledge that current high property prices aren't going to be here forever.  Property will be more affordable at some stage, so why have you given up buying a house then?


----------



## RodC (24 July 2006)

Stop_the_clock said:
			
		

> Kewl this will knock a few more property investors off their purches




Sounds like you've got a touch of property envy.

It is possible to make the most of your own investment decisions without wishing the worst on others.


----------



## Julia (24 July 2006)

Stop_the_clock said:
			
		

> THE central bank is likely to lift interest rates again in August with stronger-than-expected wholesale inflation pointing to a significant pick up in consumer prices, economists said today.
> 
> Kewl this will knock a few more property investors off their purches
> 
> They will only raise rents so far, then realise that their investments are going backwards, then they will sell out of the property market and move onto greener pastures.




Not only are you being selfish and possibly making the comments you do out of envy for the situations of people who have worked hard and achieved the capacity to be invested in property, but you are taking a very narrow view of the results of any further interest rate rises.

Quite apart from the effect on young people trying to get into their first home or families with already stretched budgets because of petrol, food prices etc., interest rate rises are of benefit to very few businesses and will put further downward pressure on the share market.  Are you happy about that too?

Julia


----------



## krisbarry (24 July 2006)

There seems to be this heard mentality in Australia at the monent, in which many boast about their investment properties while forgetting the ones who cannot even get in.

Just like the Murray river, too many taking too much water out while the young trees suffer, give up and die.

Interest rates will put a stop to this, just like water restrictions, dams, and water levies.

Too many porkers at the top, telling everyone that bricks and mortar are the be all and end all.

Thankyou RBA, you will be my savour!


----------



## krisbarry (24 July 2006)

The RBA is only doing their job, and that is to re-distribute wealth.  

I again want to just take this opportunity to thank the RBA :


----------



## visual (24 July 2006)

but the reason you gave up buying your own house is because you refuse to buy where you can afford,even if house prices go down you still will not be able to afford your house in the very wealthy suburb of Adelaide,so making very little sense there.


----------



## visual (24 July 2006)

Stop_the_clock said:
			
		

> The RBA is only doing their job, and that is to re-distribute wealth.
> 
> I again want to just take this opportunity to thank the RBA :




so in effect when you live rent free in other people properties you are doing what the RBA is doing redistributing wealth,from them to you,one difference though they worked for the wealth that you are now distributing to yourself.


----------



## krisbarry (24 July 2006)

The RBA is about to help many millions waiting on the sidelines for more affordable housing.

House Prices are ready to plunge  

and this will be the first of at least 1 or 2 more predicted rate rises over the coming 18 months.


----------



## professor_frink (24 July 2006)

*Re: I have decided to have a cry*



			
				I_like_to_whinge said:
			
		

> There seems to be this heard mentality in Australia at the monent, in which many boast about their investment properties while forgetting the ones who cannot even get in.
> 
> Just like the Murray river, too many taking too much water out while the young trees suffer, give up and die.
> 
> ...




good to see that tall poppy syndrome is alive and well!


----------



## Realist (24 July 2006)

Stop_the_clock said:
			
		

> The RBA is about to help many millions waiting on the sidelines for more affordable housing.
> 
> House Prices are ready to plunge
> 
> and this will be the first of at least 1 or 2 more predicted rate rises over the coming 18 months.





Mate, house prices in Sydney have died in the arss already.  Seriously.

Down over 15% since 2003 highs.

Index that with inflation and that is a 25% loss.   Add in stamp duties, improement costs etc. and it is a serious downturn.

More to come to, interest rates are only gonna go up in the short term, so is the cost of fuel, and while rents are increasing the yield is phenomenally low.

Anyone who bought investment properties instead of shares 3 years ago in Sydney has been sh*at on already.  Negative gearing doesn't work so well after tax cuts as well.


But saying all this, it is only a matter of time before house prices go back to their inevitable march upwards.  In Sydney it could be next year.


----------



## krisbarry (24 July 2006)

Sydney will again peak in 2018, property cycles go in 7 to 14 year cycles, with a major boom every 30ish years.

Property prices peaked in Sydny back in 2004.

I reckon we are 2 years into a 7 year period of a flat/downward trend.

The downward trend will accelerate now with more rate rises on their way. Yipppee


----------



## Knobby22 (24 July 2006)

visual said:
			
		

> so in effect when you live rent free in other people properties you are doing what the RBA is doing redistributing wealth,from them to you,one difference though they worked for the wealth that you are now distributing to yourself.




So what!
If you buy BHP shares on the top of the market, and sell them because you can't make your margin loan. Does that make the person who bought them bad because he thought they were originally overpriced?

I have NO pity for investors who are overgeared and bought at the top of the market. Tech/a said it himself. If you have not reduced your holdings and protected yourself then you are foolish...and a fool and his money are soon parted.

We are in a classic bubble situation. Property has risen too much making some people a lot of money for essentially doing nothing for the good of the country except keep the property off the hands of young couples. One statistic that came out today showed that young couples are delaying having kids because they can't buy.

The bubble correction will allow new people into the market. I believe it is good. When you bought you knew interest rates might rise eventually.


----------



## krisbarry (24 July 2006)

well said Knobby22


----------



## visual (24 July 2006)

Knobby22 said:
			
		

> So what!
> If you buy BHP shares on the top of the market, and sell them because you can't make your margin loan. Does that make the person who bought them bad because he thought they were originally overpriced?
> 
> I have NO pity for investors who are overgeared and bought at the top of the market. Tech/a said it himself. If you have not reduced your holdings and protected yourself then you are foolish...and a fool and his money are soon parted.
> ...




Knobby,I doubt that anyone in their right mind would compare shares with a freeloader,according to him that is exactly what he is.He provides a cuddle and a warm meal she provides the roof,hardly equitable.

And as for young couples who cant buy a house,I`m not really that old but even in my lifetime we have had several booms and busts why is this generation so precious that we all need to give up our houses so thay can have it.If they cant afford the suburb they really want to live in ,then look somewhere cheaper,if they cant afford a house then perhaps they should live within their means instead of funding their lifestyle on credit,thats how their parents did it.Too often I hear, but I dont want to be like my parents who can afford to travel now that they are old I want to do it now,well if thats the case,stop whining.


----------



## Knobby22 (24 July 2006)

I've got a house also and a loan.
You are right it was never easy. 
Smurf said it best earlier about the present situation.


----------



## visual (24 July 2006)

Knobby22 said:
			
		

> I've got a house also and a loan.
> You are right it was never easy.
> Smurf said it best earlier about the present situation.




there you have it :


----------



## Rafa (24 July 2006)

i see a common theme here.... in most of the threads on this forum...


whining and whinging....


are we australians or what!


just get on with it FFS....


----------



## visual (24 July 2006)

Smurf1976 said:
			
		

> Whilst I don't want to see ANYONE lose their house, I would gladly welcome an abrupt end to the incredible arrogance that seems to have developed around real estate over the past few years. I suspect a proper slump is the only cure for this unfortunately.
> 
> Some examples of what I mean:
> 
> ...




Smurf,you`ve heard the saying,a sucker born every minute.
Well,I think your posts explains it well.
It doesnt explain the booming housing market though. Or people who refuse to live within their means. Or did I miss something here?


----------



## krisbarry (24 July 2006)

The youngs are whinging as they cannot afford, or even get into the housing market.

The olds are whinging because their young ones are stepping on their toes, and not moving out of their homes.

The young are whinging and are telling the olds to sell up a few of their investment properties.

The olds are holding on for dear life...screaming bricks and mortar to the youngs, but the youngs have their ipods cranked up and cannot hear a word the olds are saying.

The olds are fearing interest rate rises, and hate hearing the youngs, when they rejoice about higher interest rates.

We are all whinging...


----------



## krisbarry (24 July 2006)

How many Australians are whinging and bitchin' about higher petrol prices....plenty.

Why?

A few fat cats at the top, controlling and dictating how much the rest of the market pays, and the avaliability etc etc

No different to the housing market!

The big property investors, along with many mum and dad investors will always use an excuse to protect their wealth, just like the oil companies do.

Strange how the price of petrol  goes up on long-weekends, isn't it!

Just as strange how after the housing boom all the investors come out and say wait ya turn, next in line, don't wish higher interest rates on us etc etc.


----------



## lewstherin (24 July 2006)

Housing in Australia is pretty ridiculously priced at the moment, particularly in WA.  I've lived in the US and am originally from South Africa, and I have never seen such a pre-occupation with real estate like the locals have here.  
Seems like every Aussie over about 35 that I meet loves to move the conversation to their investment properties.
In Perth, a lot of ordinary people have doubled their money through simply being in the right place at the right time (ie. 3-4 years ago).  While I don't begrudge them, I definitely find the state/federal government's position laughable.

Essentially you have the federal government saying "Young people have lots of kids, go buy a home!", whilst the state governments tax the hell out of first time home buyers and maintains a strangle-hold on the supply of land.  

In WA, first time buyers need to pay less than 250k in order to avoid stamp duties, despite the fact that you can't buy a small plot of land for less than 200k at the moment (established median prices are over 350k).
Unfortunately, it seems that the WA state government is incredibly biased towards its real estate lobby, since land releases have slowed to a trickle and the whole release process is through greedy development groups - many of whom are withholding land to extract higher prices.

The federal government must be smoking something pretty strong to think that 7k is going to make much of a difference, when a 400k house (ie. a decent 3 bed 23kms north of Perth) will set the first time buyer back 20k in duties and $2400 a month in repayments.

As an eligible first home buyer, earning over 85k a year, I just can't stomach the Perth market at the moment.  Its one thing for investors to expect a good return from real estate, but what is happening in Perth is out of control.  
25% growth per year for the past 2-3 years just seems wrong somehow - I figure the only way this has been sustained is due to foreigner's weighing in with Pounds...

My money will stay in various other investments - much of it cash based (bring on the rate rises ) - and maybe in a few years I'll move onto cheaper pastures...and actually pay a reasonable amount for my first home.


----------



## krisbarry (24 July 2006)

This 25% a year growth on real estate started in the east (NSW) and has finally reached the west (WA).

This complete obsession with real estate will eventaully die a painful death, and the sooner it does the better.

Its like a stock that booms in share price (AMU/CDU, ring a few bells) everyone is talking about it and everyone wants a piece of it.

When the stock dumps, nobody will want to own it and no-body will be talking about it.

AUSTRALIA, YOUR OBSESSION WITH HOUSING IS....G A M E   O V  E  R!


----------



## krisbarry (24 July 2006)

lewstherin said:
			
		

> As an eligible first home buyer, earning over 85k a year, I just can't stomach the Perth market at the moment.  Its one thing for investors to expect a good return from real estate, but what is happening in Perth is out of control.




May I point out that your wage is nearly twice the average male wage....yep even the wealthy are finding the market hard to stomach.

More signs of an over hyped, over inflated market ready to crash


----------



## lewstherin (24 July 2006)

Stop_the_clock said:
			
		

> This 25% a year growth on real estate started in the east (NSW) and has finally reached the west (WA).
> 
> This complete obsession with real estate will eventaully die a painful death, and the sooner it does the better.
> 
> ...



As much as a crash would suit me - could buy a house of my own  - I don't think real estate will ever significantly crash.  

This is primarily because: 
a) state governments/local governments seem far more interested in supporting high land prices through restrictions on release, sprawl boundaries, a policy of increasing housing densities (ie. backing apartments over standalone houses), and high land taxations & duties.

b) I believe that foreign purchasers will continue to flood in, artificially inflating prices due to their ability to pay more (in many cases due to a superior currency).  To me the kind of gains made in house prices could not have been driven purely by the locals, since average young families simply cannot afford decent sized standalone residences.  The average locals that have bought in this market now have unprecendented mortgages both in terms of income-relative size and durations.

A protracted slump in real estate can only occur if cheap money disappears and the migration flow slows.


----------



## adobee (24 July 2006)

I would be interested to know the amount of people on this share trading site who actually also own investment property ???? I would assume close to 75%

I do not really understand what is the problem.. Any day of the week you can find the deal of the century, with some knowledge or prior research. Prior to shares (of which I am a total beginer) I have had large dealings in property.

Why give up it is not a hard process -

1. Find the right property
2. Negotiate the right price
3. Finance the property
4. Furnish the property
5. Rent the property
6. Let your 8%+ rental return cover your costs
7. Let your depreciation cover your tax

Grab the BRW richlist and see who is rich and not a property owner.

A few tips -

1. Dont buy a brand new unit and dont buy from a developer, you are going to get ripped coming and going.
2. Buy in an area that their is a reason for demand ie next to the university
3. Dont buy in the western suburbs buy on the city & fringe
4. Dont get jacked by a financial planer who is making commission on you coming and going. You are better of taking advise from the real estate agent.
5. Find people who need to sell are over extended etc and negotiate hard.


----------



## wayneL (24 July 2006)

adobee said:
			
		

> 6. Let your 8%+ rental return cover your costs
> 
> 3. Dont buy in the western suburbs buy on the city & fringe




I'd like to see that


----------



## lewstherin (24 July 2006)

adobee said:
			
		

> Why give up it is not a hard process



I haven't given up, just don't want to jump into the mosh pit with the other lunatics buying property in Perth at the moment.



			
				adobee said:
			
		

> 1. Find the right property
> 2. Negotiate the right price



Virtually impossible in Perth at the moment.  Houses here are commonly selling for 20k+ more than the asking price within _a day _of being listed.  I kid you not - I've been out there, I spoken to the agents, I seen it for myself.  Plots of land are having to be sold by ballot system because 10x the number of buyers rock up at pretty much every land release.

Being a real estate agent in Perth is the easiest & most lucrative job around at the moment - provided you can actually get hold of some properties to sell


----------



## Realist (24 July 2006)

adobee said:
			
		

> Why give up it is not a hard process -
> 
> 1. Find the right property
> 2. Negotiate the right price
> ...




Haha, my landlord gets a 2.8% rental return and pays about 0.6% in water and body corporate fees.


I suggest you grab the BRW richlist and find someone who is rich that does not own a nice watch - does owning a watch make them rich? Doubt it, neither does owning a property.

The simple fact is anyone who bought in Sydney 3 years ago has lost alot of money.  Anyone buying in Perth especially and probably the rest of the country has seen what has happened in Sydney and is fair warned.

I am not saying do not buy a house, I am saying take note of what has happenend in Sydney and be particularily carefull.


----------



## wayneL (24 July 2006)

lewstherin said:
			
		

> I haven't given up, just don't want to jump into the mosh pit with the other lunatics buying property in Perth at the moment.
> 
> Virtually impossible in Perth at the moment.  Houses here are commonly selling for 20k+ more than the asking price within _a day _of being listed.  I kid you not - I've been out there, I spoken to the agents, I seen it for myself.  Plots of land are having to be sold by ballot system because 10x the number of buyers rock up at pretty much every land release.
> 
> Being a real estate agent in Perth is the easiest & most lucrative job around at the moment - provided you can actually get hold of some properties to sell




The thing is, about the only attraction of Perth is the low cost, easygoing lifestyle. It is missing so much of what makes a world class city.

Now that it is becoming an expensive, stressed place to live, it has no attraction. 

When crude is > $100 bbl, it won't be a very good place to live at all.


----------



## It's Snake Pliskin (24 July 2006)

wayneL said:
			
		

> The thing is, about the only attraction of Perth is the low cost, easygoing lifestyle. It is missing so much of what makes a world class city.
> 
> Now that it is becoming an expensive, stressed place to live, it has no attraction.
> 
> When crude is > $100 bbl, it won't be a very good place to live at all.




Wayne, I agree with your assessment of Perth.


----------



## Realist (24 July 2006)

wayneL said:
			
		

> The thing is, about the only attraction of Perth is the low cost, easygoing lifestyle. It is missing so much of what makes a world class city.
> 
> Now that it is becoming an expensive, stressed place to live, it has no attraction.
> 
> When crude is > $100 bbl, it won't be a very good place to live at all.





Agreed.

Anyone who thinks Perth housing should be as expensive if not more expensive than it is now should consider it is the most isolated city in the world. It has a relatively small populations. Its business sector is a joke apart from Resources, WA is so big and so empty it is scary. It is cashing in on the Resources boom, which we all know will not last forever.  

Just drive through some old former gold mining towns in the outback to see what happens to places that cash in on a gold rush when the rush ends.

Perth could be a ghost town in 5 years time when young people move to Sydney and Melbourne to find work to fund the exhorbent 30 year mortgages on the houses they bought and can't sell.


----------



## Smurf1976 (24 July 2006)

visual said:
			
		

> Smurf,you`ve heard the saying,a sucker born every minute.
> Well,I think your posts explains it well.
> It doesnt explain the booming housing market though. Or people who refuse to live within their means. Or did I miss something here?



Nope, you didn't miss anything. It wasn't an attempt to explain the housing market, just that I've had more than enough of the incredible arrogance that the boom seems to have inspired.

It's time to stop buckling to pressure and getting rid of whatever it is that some profit-driven real estate investor (or the person who chose to rent some poorly built and located property) finds annoying. Anyone who doesn't foresee problems with noise near highways, nightclubs or industrial zones shouldn't be making decisions about property, or anything else of importance, in the first place. They clearly aren't thinking too much.

It comes down to one word - GREED.


----------



## krisbarry (24 July 2006)

Smurf1976 said:
			
		

> Nope, you didn't miss anything. It wasn't an attempt to explain the housing market, just that I've had more than enough of the incredible arrogance that the boom seems to have inspired.
> 
> It comes down to one word - GREED.




Well said Smurf.

I keep hearing the same thing....just work hard and you can achieve home ownership, what a load or cr*p.  We have many examples on this board of young people who work hard, and earn good money, that are or have given up on home ownership. 

I just keep getting told to adjust my living style, save harder, and move out into the wide open expanses.

What....eating baked beans for the next 30 years and live 2 hours out of the city, in a 1 bedroom mobile home, no room for a family is there... Thats no life!

All this just to keep the peace and so a few olds can be greedy.

Give me a break....thank god we have the reserve bank...ready and willing to push the trigger on a rate rise come 2nd of August


----------



## visual (24 July 2006)

Stop_the_clock said:
			
		

> Well said Smurf.
> 
> I keep hearing the same thing....just work hard and you can achieve home ownership, what a load or cr*p.  We have many examples on this board of young people who work hard, and earn good money, that are or have given up on home ownership.
> 
> ...




Ye well thats how the olds got their ivestor properties in the first place,what the hell makes you think yu shouldnt be sacrificing anything for something you want,get a life.


----------



## visual (24 July 2006)

Smurf1976 said:
			
		

> Nope, you didn't miss anything. It wasn't an attempt to explain the housing market, just that I've had more than enough of the incredible arrogance that the boom seems to have inspired.
> 
> It's time to stop buckling to pressure and getting rid of whatever it is that some profit-driven real estate investor (or the person who chose to rent some poorly built and located property) finds annoying. Anyone who doesn't foresee problems with noise near highways, nightclubs or industrial zones shouldn't be making decisions about property, or anything else of importance, in the first place. They clearly aren't thinking too much.
> 
> It comes down to one word - GREED.




Smurf,I agree there,
but this is not then connected to a generational issue,this type of behaviour happened with the first boom,remember the tulip story,one bulb ended up costing hundreds of thousands of dollars in todays money and that was,what! more than 200 years ago, I`m guessing here : so it`s human behaviour coming to rear its ugly head,just like the lazy are using the same behaviour to explain their inability for hard work.


----------



## Julia (24 July 2006)

Stop_the_clock said:
			
		

> The RBA is only doing their job, and that is to re-distribute wealth.
> 
> I again want to just take this opportunity to thank the RBA :




Much more of this adulation towards the RBA and you will be representing them as Australia's answer to communism.

I suspect the RBA members might be somewhat confused to be told it is their job to redistribute wealth.

You might prefer to live in a socialist system, Stop the Clock.  But no, in such a system everyone is required to make a contribution so that would count you out smartly.

Julia


----------



## Realist (24 July 2006)

visual said:
			
		

> Ye well thats how the olds got their ivestor properties in the first place,what the hell makes you think yu shouldnt be sacrificing anything for something you want,get a life.




So you are saying - yes you need to sacrifice your life by living cheaply for many years like your olds did.

Then you say "Get a life"

Which one is it?     


You seem confused.


----------



## visual (24 July 2006)

Realist said:
			
		

> So you are saying - yes you need to sacrifice your life by living cheaply for many years like your olds did.
> 
> Then you say "Get a life"
> 
> ...




Realist,honestly I`ve already got two children,do I really have to teach you as well. : 
sacrifice leads to achievement,equals a life,eg.you have to work hard to have a level of satisfaction and pride for a job well done. :


----------



## Buster (24 July 2006)

Smurf1976 said:
			
		

> *I am using Buster's post as an example only for my point. My point applies to property bulls in general, not solely Buster, and applies to posts on ASF and elsewhere.* I see comments like this as evidence of the property bulls getting worried about the state of the market. The denial phase is turning to fear....



Errr.. I dunno if I qualify as a property bull, Yes I own my own home here in WA and own an investment property in the ACT, but a property magnate I aint.. 



			
				Smurf1976 said:
			
		

> But suggest applying this concept to housing and the bulls start hurling the insults about growing up etc. That is not the response of a rational evaluation of the market. It is the madness of crowds. That urge to target anyone who chooses to be different. Also known as "peer pressure" it is what makes it seem necessary to do all manner of irrational things. And it's common near market tops when the masses are heavily invested.



Hmmm.. Not intended to be construed as an insult, more a reality slap.. Not targeting either, he started the thread!! Perhaps you should re read the original thread email and the one I responded to.  Skiting about stuffing your hard earned into investments (I'll be right Jack!!)while your parents and mates are picking up the tab for accomodation, and then whining about the 'sacrifices' his generation have to make.. Puuleeesse!!

I'm tipping he's not yet come to grips with the fact that the world owes him absolutely nothing, and if he wants to make something of himself he better start figuring out what he, not everyone around him, needs to do in order to achieve it.. He needs to get out of the nest and stretch those wings..

*Stop the Clock*  Your parents owned their own home at 31?  Well, they have done exceedingly well, but I wouldn't suggest that as the norm.. My parents struggled and where well into thier forties before they freed themselves of repayments, and the same can be said for many of thier peers.. I would suggest that is probably more the norm...

Cheers boys,

Buster.


----------



## Buster (25 July 2006)

lewstherin said:
			
		

> Housing in Australia is pretty ridiculously priced at the moment, particularly in WA.  I've lived in the US and am originally from South Africa, and I have never seen such a pre-occupation with real estate like the locals have here.



Interestingly I find the prices here in Aust reasonable when compared to many other countries, I too have lived in the US and I don't have a hope of buying a 'reasonable' property in California.. Luckily I didn't have to pay the $US3K a month rent from my pocket.. And the UK isn't much better..  



> As an eligible first home buyer, earning over 85k a year, I just can't stomach the Perth market at the moment.  Its one thing for investors to expect a good return from real estate, but what is happening in Perth is out of control.



Totally agree with you here, although I don't belive investors are driving the market here any longer, nor have they for some time.. I couldn't see too many savvy investors shelling out 400k for a $200 - 250 a week return..



> 25% growth per year for the past 2-3 years just seems wrong somehow - I figure the only way this has been sustained is due to foreigner's weighing in with Pounds....



Perth was seriously undervalued about 5 years ago though, I saw the initial 'boom' as a bit of a catch up.. however as you say it's definately turned into a feeding frenzy.. there is going to be lots of hurt when the rates rise a percent or more.. which is when I will be looking to expand my portfolio..   Always cracks me up to see the current affair shows with the people whining about how they can't continue with a quater percent rate rise.. If you are unable to absorb an extra 80 - 100 bucks a month your are truley living a champagne lifestyle on a beer budget..

Then again, perhaps I'm too conservative, but I still remember watching my repayments 'boom' when the interest rates hit 18% a generation ago..  



> My money will stay in various other investments - much of it cash based (bring on the rate rises ) - and maybe in a few years I'll move onto cheaper pastures...and actually pay a reasonable amount for my first home.



Hope it works out for you.. please tell me you arn't bludging off your parents too.. ;-)

Regards,

Buster.


----------



## Buster (25 July 2006)

Stop_the_clock said:
			
		

> This 25% a year growth on real estate started in the east (NSW) and has finally reached the west (WA).
> 
> This complete obsession with real estate will eventaully die a painful death, and the sooner it does the better.
> 
> ...



Print your post out, save it in a scrap book and revisit it every four or five years to see how it pans out.. I'm tipping you will never be referred to as 'the Oracle'.. 

Cheers,

Buster.


----------



## tech/a (25 July 2006)

Stop_the_clock said:
			
		

> THE central bank is likely to lift interest rates again in August with stronger-than-expected wholesale inflation pointing to a significant pick up in consumer prices, economists said today.
> 
> Kewl this will knock a few more property investors off their purches
> 
> They will only raise rents so far, then realise that their investments are going backwards, then they will sell out of the property market and move onto greener pastures.




*Sounding* a lot like *Kris Barry* with the Adelaide address??

Property investors in the main bought at prices well below current market.
Most I know incuding myself allowed for interest rates to go to 9%.
Some including myself have minimised gearing and as such interest rates would be annoying but a cost of business.

Careful selection of investments particularly when investing capital in the size of Property purchases (How many buy shares on the scale of 2 or more houses???) calculated use of others money (Lenders) will pave the road to financial security.Working for a living ensures survival/mediocrity at best.

Investing in small parcels really will have little influence on life style.
There are times to stick your head on the block (Even momenterily) and times to pull it in.

Few take the opportunities presented in quantities large enough to make a difference.


----------



## Bobby (25 July 2006)

Hey Tech,

Good to here from you mate !

Whats pommy land like ?

bob.


----------



## money tree (25 July 2006)

Realist said:
			
		

> It is cashing in on the Resources boom, which we all know will not last forever.




and from another thread:



			
				Realist said:
			
		

> Anyone who thinks China's demand for resources is a 3 year trend is dreaming, they could quite easily be growing for the next 150 years along with India.
> 
> Where will the 2.5 billion Indians and Chinese get their resources to build buildings, power plants, jewellery, computer parts etc?
> 
> ...






			
				Realist said:
			
		

> Which one is it?  You seem confused.




confused indeed.


----------



## emma (25 July 2006)

Some information to ponder.
*ABC Counterpoint Columnist - Michael Warby - The High Cost of Land & Houses - broadcast 24/7/2006*

"Michael Warby is a teacher and freelance consultant and writer. He explains why it can actually be in the interests of politicians to keep housing prices high.

We are used to thinking Sydney house prices are somewhat over-the-top, but house prices in Australian cities generally are fairly amazing.

Adjusting for differences in income, houses in Australian cities average almost 40% dearer than houses in Canada's 8 major cities. Houses across 67 major US cities average about a quarter cheaper than in Australia's major cities.
Yet, we have a mere 20 million people to share among an entire continent.  Only 0.1% of our land is covered by our major cities. Why are Australian   metropolitan house prices so high?

You probably think of "property" as just a thing. Like a car, or a house, or a fridge. Actually, it is better to think of property as collections of attributes.

For example, if you need official permission to build houses on land, then control of the attribute "suitable for housing" is being shared between the property owner and officials. The owner gets any financial return, but only if official permission is granted to build in the first place.

This is, of course, the current situation in Australia. And has been for many years. But, generally speaking, only from some time after World War Two. It was not always the case.

Now, if control of the attribute "suitable for housing" is shared between the property owner and officials, do we think that this will increase or decrease the tendency for land to be made available for housing?

To ask the question is to answer it. Clearly, it will reduce the tendency for land to be made available for housing. Which is, after all, why the requirement for official permission was imposed in the first place.

And reducing the tendency for land to be made available for housing will clearly raise the value of the land that already has houses on it.

But, how much will it reduce the tendency for land to be made available for housing?

Let us consider the incentives for officials. Increases in the value of land with houses on it, means increased revenue from all taxes derived from the value of said land. Such as council rates and stamp duty on the sale of the land. If officials are more restrictive, governments get more revenue.  Because the price of housing land goes up.

Now, homeowners vote. And they greatly outnumber housing market entrants.  Homeowners sitting on housing land increasing in value are getting wealthier - Which makes them happier voters. Another incentive for officials to restrict the amount of land being made available for housing.

If official permission is required to build things, then the people in the building things business need access to officials. A classic way to get such access is political donations.

Another incentive for officials to restrict the amount of land available for housing (This without even considering the question of bribery & corruption.)

Now, if this is a sensible way to look at things, one would expect that the price of housing land would have gone up far more than the price of building a house.

Which is precisely what has happened. From 1973 to 2003, the price of
building a standard three bedroom house in Australia's cities went up
sevenfold or eightfold depending on the city. Which is at or less than the rate of inflation over that period-consumer prices went up eightfold. But building houses is a competitive business.

Over the same period of time, the average price of the land that house sat on went up 16fold in Melbourne, 18fold in Perth, 19fold in Brisbane, 51fold in Sydney and 70fold in Adelaide.

Which is not exactly what has happened to the value of farming land in Australia.

In 1973, the land was about a third of the cost of the average house in
Sydney, Melbourne, Perth and Brisbane and a mere seventh of the cost in
Adelaide. Now it is about four-fifths of the cost in Sydney, three-fifths of the cost in Adelaide and about half the cost in Melbourne, Perth and Brisbane. That's very expensive land rationing.

The people who are penalised by all this.are not developers, purchasing access to officials through political donations, or officials with tax-paidcareers in making housing scarcer and more expensive. Or folk who already own their homes and get wealthier and wealthier by the effects of land
rationing.

The people who are penalised are the people paying rents that are higher than they need to be. The people trying to scrape together mortgages that are much higher than they need to be. And the people who see the dream of
owning a house rise ever more out of their reach.

Land is a basic resource. Restricting access to it by land rationing does not make for a fairer, more equal or a more harmonious society.

Another way to look at it is that, if you live in urban Australia, much of the value of your home is, official permission. Much of the cost of any mortgage you are paying is, official permission. And much of the value of any rent you are paying is, official permission. Those planning officials, they're from the government and they're here to help you."


----------



## krisbarry (25 July 2006)

*Marriage and family 'on hold'*

YOUNG couples struggling to buy their dream home are putting off marriage and delaying having children.

A national housing summit heard yesterday how the rising cost of home ownership is forcing couples to sacrifice quality of life. 
Housing affordability has deteriorated significantly in the past 20 years, with at least 750,000 households now paying more than 30 per cent of their income on housing.

Professor Julian Disney, who chaired the summit in Canberra, said "crazy" house prices were having a wide-ranging impact on the community.

"In some cases, that's leading to them, for example, delaying marriages, or quite a common impact is not having children because they don't believe they can afford it as well as aspire to a house," he said.

"It's really a pretty grim outlook which has been building for quite a long time."

The summit heard that average house prices relative to income had almost doubled in the past decade. At the same time, the proportion of first-home buyers had fallen by about 20 per cent and average monthly payments on new loans had risen by 50 per cent.

As reported in The Courier-Mail yesterday, the gap between what people can borrow and the cost of an average established house in Queensland has blown out to almost $100,000.

Research by the Urban Development Institute of Australia also showed that local, state and federal taxes account for $90,000 of the average $437,000 price of a new house and land package.

Professor Disney warned that looming interest rate rises would exacerbate the problem.

"Prices are still rising in most parts of Australia. Rents are now starting to rise substantially, and that will get a lot worse," he said. "We've got more mortgage defaults."

Yesterday's summit is part of a push for a new National Affordable Housing Agreement between Commonwealth, state and local governments.

Housing Industry Association managing director Ron Silberberg said national leadership was needed to address the growing "housing divide".

"This is not a typical housing cycle. New factors are affecting the location and cost of affordable housing and (will) be exacerbated by further interest rate rises," he said.

"Without a national approach and a new agreement, the crisis will be lengthy.

"We need leadership to reduce planning and building regulation that creates barriers to home ownership and low-cost rental housing, placing more people on public housing queues."

ACTU president Sharan Burrow said a national affordable housing agreement would strengthen public housing, expand non-profit housing organisations and provide more effective help for home buyers.

UDIA Queensland president Brent Hailey said the process associated with implementing the GST and other state-based policies had increased taxes and charges for new home buyers in Queensland by more than 400 per cent over five years.

At the launch of its Industry Inquiry Into Affordable Home Ownership in Queensland yesterday, the Urban Development Institute of Australia urged the State Government to put a moratorium on infrastructure charges for two years.

The call has been supported by another development industry group, the Residential Property Council, which said a moratorium on new charges was essential.

But Deputy Premier Anna Bligh said that while the cost for home owners should be kept as low as possible, the housing sector had to accept a fair share of developer charges.

She said the existing structure appeared to be the most workable.

"Shifting developer charges on to councils could have councils in debt which would have a negative impact on all ratepayers," Ms Bligh said in a statement.

As part of an ambitious list of recommendations the UDIA has called for an independent authority similar to the Australian Bureau of Statistics and managed by a Board of Directors appointed by the Queensland Government, to be established.

The UDIA wants it to provide annual reports on land supply issues for all major growth centres in the state.

According to the UDIA, this would be money well spent.

But the State Government said the land monitor could add an unnecessary level of bureaucracy which could cost land owners even more.

Ms Bligh said a SEQ Land and Housing Monitor Program had been instituted which would provide quarterly assessment with reports publicly available.

In time this was expected to include a regular survey of land holdings.

A previously arranged meeting between the UDIA and relevant directors general and the Office of Urban Management would be held in coming weeks.


----------



## krisbarry (25 July 2006)

It looks like the chorus of people singing "I am being priced out of the housing market" is getting louder and louder


----------



## nelly (25 July 2006)

The Urban Development Institute of Australia (UDIA) has released a report highlighting a $100,000 gap between household earnings and the cost of an average home.

The group has called for the state and federal governments to dedicate a minister to handle housing affordability.

The report calls for a new independent monitoring authority and a two-year moratorium on increases in government charges, which it says have risen by 400 per cent in five years.

UDIA president Brent Hailey says the charges and a shortage of land are pushing affordability to the brink.

"If we had a minister for housing affordability who looked across the whole spectrum of the issues and brought them all together, rather than a group of individual ministers who look at their own particular portfolios, that would certainly be of benefit," he said.
cheers


----------



## Tim (25 July 2006)

Stop_the_clock said:
			
		

> It looks like the chorus of people singing "I am being priced out of the housing market" is getting louder and louder



And it will continue forever. The fact is, most people can afford a house _somewhere_, but that somewhere is not where everyone wants to live. More people want to live in desirable locations (eg. inner and outer suburbs of capital cities) than there is enough housing for, hence why prices go up.

Investors in fact make the situation worse (but not for themselves), because they increase the number of buyers out there looking for houses, and reduce the supply considerably of houses available for home owners. Basic economics says that if there are too many people wanting to buy a scarce product, prices will go up. There is nothing a government enquiry can do about it.

So if you think it's hard to buy a house now, try waiting ten years.

_"Don't wait to buy property, buy property and wait."_
-Robert G Allen


----------



## krisbarry (25 July 2006)

The problem we have here is that cities are meant to be populated by the young ones, who work, educate themselves, build busines', pay taxes, populate, and bring life to the city.  Once they start aging and retire there is no need for them to still be hanging on in the city.

The olds have hung on way too long, and not only hung on, but bought up around them.

There is the problem  

What use does a young person have out in the middle of no-where, except if they are a farmer or miner or work in tourism/hospitality, not much employment going on in these shanty outback towns.


----------



## Ageo (25 July 2006)

wayneL said:
			
		

> When crude is > $100 bbl, it won't be a very good place to live at all.





hehe Wayne are you getting info from someone we should know about?

P.S if the conflict doesnt get resolved over in the middle east which i doubt it will then you can pretty much be sure it will hit $100 bbl

Sorry for the off topic


----------



## Smurf1976 (25 July 2006)

Stop_the_clock said:
			
		

> The problem we have here is that cities are meant to be populated by the young ones, who work, educate themselves, build busines', pay taxes, populate, and bring life to the city.  Once they start aging and retire there is no need for them to still be hanging on in the city.



Agreed. Walk around any capital city and you'll find that virtually everyone there is working age or under. 

Why anyone over the age of 30 would chose to live in the centre of a capital city I just don't understand. Suburbs OK, but not the city centre. By that age the novelty of going out every night, constant noise and general bustle wears off for many. Unfortunately, this leads some to try and change the city centre itself rather than changing their address.


----------



## krisbarry (25 July 2006)

This same scenario is happening in the inner and central suburbs of all capital cities too.  The youngs need the houses that are close to the city, close to work, close to education campus, close to schools etc

BUT

The olds already have this and not only do they have this but they have multiple of this.

See my point.

Which leeds me onto the path at which youngs are forced to rent closer to the city or pay way over-inflated prices for houses.

OR...

Move 2 hours out of the city, with a lack of employment, education campus', services, etc to be able to afford a house.

Do the olds really need to be in the central/inner suburbs or in the CBD, NO!


----------



## visual (25 July 2006)

enjoy the fruits of your labour,

Old people as you too put it hang around the city so they can enjoy the fruit of their labor.Museums,theaters,city sites,cafes, cinemas,cosmopolitan atmosphere,I dont know where Smurf or Stop the clock,are coming from but maybe I would be very careful ,your parents might find out about your selfish attitudes and leave all their hard earned money to the rspca.And that will serve you right.


----------



## krisbarry (25 July 2006)

Enjoying the fruits of your labour is one thing, but gorging on the fruit till you have a stomach ache, now, well that is a different kettle of fish.

Just checking when its OK for the next generation to start enjoying the fruits of their labour!

When can they sow some seeds so to speak?

No point me moving 2 hours out of the city to find work, and pop out a few kids, who will feed them out there.


----------



## visual (25 July 2006)

Stop_the_clock said:
			
		

> Enjoying the fruits of your labour is one thing, but gorging on the fruit till you have a stomach ache, now, well that is a different kettle of fish.
> 
> Just checking when its OK for the next generation to start enjoying the fruits of their labour!
> 
> ...





You know stop you are such a moron,that I`m speechless,obviously intelligent conversation is never going to work with someone like you,I suppose thats one of the reason why parasites exist such as the Tweed moron.And the list is way too long for the rich parasites,but fortunately our jails are never too full for parasites like you,enjoy freeloading because a warm bed and a nice meal will be waiting for you at her majestys pleasure when you put a foot wrong legally.


----------



## krisbarry (25 July 2006)

May I put it in another way, canning the fruits of your labour, and hoarding them in a bunker, doesn't help the rest now does it.

Some of us would like to eat fresh fruit from the tree and share it with our up and coming families.


----------



## Rafa (25 July 2006)

what the hell is going on here...

everyone is entitled to live wherever they want...! and everyone can do it if they want it badly enough!

i am 27, i bought a house 1 year ago (so it was very expensive... but thats not the point)... 5 kms from the city (Adelaide), 3kms to the beach, with no inheritance, no outside assistance, and certainly no big gains on the share market... (most of my gains have been after i bought the house, with the little money i kept aside for trading... !)

I had been working 6 years earning on avg. 50k a year... But continued living at home, and my parents were more than happy with that... and so was I! 

That allowed me to save most of my salary...  I still went overseas twice (total cost 25k) and i've partied pretty hard, mainly alcohol... certainly no expensive drugs, cigarettes, etc... and no fancy gadgets, few if any brand name clothes, never bought CD's, games, etc... (thanks to the internet...)... and also drive a 99 BMW323i... (half way thru repaying that)

most of my school mates, some who didn't go to uni, but working in retail, office works, etc... all have houses... some brought in 2000 and are doing better than me... but i'm certainly not complaining...

It can be done if you want it too...
BUT.... if you are a slave to consumerism.... forget about it...!


----------



## krisbarry (25 July 2006)

Alas, so we have 1 young person with an opposing view.

I do point out that you bought in at the top of the housing market and you have endured 1 rate rise, with another one on its way, plus the possibility of another one later this year.  It would be nice to check back with you in a years time and see how you are travelling.

I also note that you stayed at home to save money, well done, but not always possible for many.


----------



## Rafa (25 July 2006)

Stop_the_clock said:
			
		

> Alas, so we have 1 young person with an opposing view.
> 
> I do point out that you bought in at the top of the housing market and you have endured 1 rate rise, with another one on its way, plus the possibility of another one later this year.  It would be nice to check back with you in a years time and see how you are travelling.
> 
> I also note that you stayed at home to save money, well done, but not always possible for many.





Agreed, its not always possible staying at home... thats why i illustrated my circumstances exactly, so at to not cause any generalisation...


What I was trying to say it was sacrifices had to be made....  Let me tell you... enduring the 20 questions from mum on a Sunday arvo when you'e just got out of bed.... Its NO FUN AT ALL!!!     



As for the future... i'm locked in for 5 years at 6.85%... naturally, there could be recession tomorrow, i could loose my job and the crap can hit the fan rather quick... but then, when is it ever a safe time buy a house?


PS: as an aside, i didn't buy a house in 2001 cause i was a contractor... and my dad told me to wait till i get a permanent job to get one... !!! well, that cost me about 200k! Oh well... forget about the past... look to the future...


----------



## Realist (25 July 2006)

Rafa said:
			
		

> what the hell is going on here...
> 
> everyone is entitled to live wherever they want...! and everyone can do it if they want it badly enough!
> 
> ...





With all due respect Adelaide is one of Australia's cheapest cities to buy in..

If you had to work 6 years while living with your parents to buy there then please explain how you'd go renting in Sydney saving to buy a house that costs 3 times what they do in Adelaide.

Then please explain to me there is no problem with house prices...


----------



## Rafa (25 July 2006)

Realist said:
			
		

> With all due respect Adelaide is one of Australia's cheapest cities to buy in..
> 
> If you had to work 6 years while living with your parents to buy there then please explain how you'd go renting in Sydney saving to buy a house that costs 3 times what they do in Adelaide.
> 
> Then please explain to me there is no problem with house prices...





Agreed, Adelaide is cheap, but I still paid 400k plus for the house...  in Sydney that would get me a smaller place, townhouse maybe, further out from the city... 

what i've said is with enough sacrifices you can still buy one...
certainly, if i lived out of home, and enjoyed all the freedom that comes with it... and had  lavish lifestyle... i'd still be renting... even in adelaide!


----------



## Ageo (25 July 2006)

Stop_the_clock said:
			
		

> Alas, so we have 1 young person with an opposing view.





Make that 2 as im 22 (going on 23 in Nov) and just settled last wednesday.

But its a home for me and my wife.

Although it was a good price i still think its overpriced. But then again i dont think there are many places in Sydney Metro that isnt overvalued.

As for capital gains, i think its only usefull if you develop property but buy/hold is a waste IMO and too much capital to tie up for a investment considering the risk/reward.

my


----------



## krisbarry (25 July 2006)

The closest I got to owing a piece of real estate, was a bed-sitter valued at $70,000+, about 5km out of the city.

I put in an offer for $65,000 and was approved

Saved up $20,000 and signed with the real estate agent.

...

Long story short, not one bank or finance company would touch me, due to the property.

Banks and finance companies do not like bed-sitters, even tried homestart, the so called experts for first home buyers, no luck there either.

The real estate agent said he could organise on-site finance but it would be over 9%, I told him where to shove it, and cancelled the deal within the cooling off period.


----------



## Realist (25 July 2006)

Stop_the_clock said:
			
		

> The closest I got to owing a piece of real estate, was a bed-sitter valued at $70,000+, about 5km out of the city.
> 
> I put in an offer for $65,000 and was approved
> 
> ...




haha, funny story. 

$65,000 - how much would that place be worth now?


----------



## The Mint Man (25 July 2006)

Ageo said:
			
		

> Make that 2 as im 22 (going on 23 in Nov) and just settled last wednesday.




me three  bout the same age too, 23.
only took me a year to save for a house about half the price of rafa's....


----------



## Ageo (25 July 2006)

The Mint Man said:
			
		

> me three  bout the same age too, 23.
> only took me a year to save for a house about half the price of rafa's....





hehe unfortunately mine cost $364,000.


But for the area anything under 400k and for the quality of the home is a good buy.


----------



## Big Jim (25 July 2006)

Rafa said:
			
		

> Agreed, Adelaide is cheap, but I still paid 400k plus for the house...  in Sydney that would get me a smaller place, townhouse maybe, further out from the city...
> 
> what i've said is with enough sacrifices you can still buy one...
> certainly, if i lived out of home, and enjoyed all the freedom that comes with it... and had  lavish lifestyle... i'd still be renting... even in adelaide!



You paid 400K for a house in Adelaide? Good luck


----------



## visual (25 July 2006)

Oh God,thank heavens some of you are actually coming out and confirming that the world hasnt changed that much,I hope you all enjoy and prosper in you lovely homes.


----------



## Smurf1976 (25 July 2006)

Rafa said:
			
		

> what the hell is going on here...
> 
> everyone is entitled to live wherever they want...!



No problem with that. None at all. My objection to retirees etc chosing to live in the city centre is that they then often want everything else OUT of the city centre in order to transform it into a place where they actually like living. Same with the innermost suburbs.

Live wherever you like. But don't expect business etc to move out after you've bought just because you don't like the traffic, music, noise or whatever else is upsetting you. If you don't like those things then live somewhere in the 99.9% of Australia, or at least 95% of each capital city (the suburbs), that doesn't have them. 

I find it really strange that people move to the inner city to "be where it's at" but then seek to get rid of the very things that make the city different to the suburbs. 

It's like moving to North Queensland and then complaining about heat and humidity - it's common knowledge and if you choose to live there then you put up with it. If you don't like the heat then you move to Victoria or Tasmania. If you like everything about North Queensland apart from the weather then you have to make a choice. Either put up with the heat and humidity in Queensland or accept the different lifestyle in Vic/Tas in order to escape the heat. You can have one or the other but not both. Same with the city centre / peace and quiet trade-off.


----------



## juddy (25 July 2006)

*There is this...*

*Perth house prices soar to second most costly
25th July 2006, 14:00 WST
*
The $406,500 question: When will we overtake Sydney as the nation’s most expensive place to buy property?

DAWN GIBSON

Perth house prices have rocketed past those of Melbourne to become the second highest of the capital cities, figures calculated by WA national property monitor Residex have found. 

They showed the *median house price in Perth has hit a staggering $406,500,* ahead of Melbourne on $379,000. Sydney is the only capital where housing is more expensive, with a median price just shy of $550,000.

The whopping surge in house prices has intensified pressure on the State Government to dip into its bulging coffers to provide tax relief before next year’s Budget, particularly for hard-hit first home buyers struggling to keep up with the spiralling market.

While first home buyers do not have to pay stamp duty on property worth $250,000 or less, real estate agents say they would be extremely unlikely to find a house at that price. The number of stand-alone houses on the market for less than $300,000 has dwindled to almost nothing.

The State Opposition, the Real Estate Institute of WA and the Chamber of Commerce and Industry yesterday renewed their calls for Treasurer Eric Ripper to reduce the property tax burden, which has underpinned an estimated record budget surplus of about $2.3 billion for 2005-06.

REIWA president Greg Rossen said he was not surprised that Perth house prices had surpassed those in Melbourne, saying the question now was whether Perth would overtake Sydney as the most expensive place to buy a house.

He said the Federal Government should more than double the first home owners’ grant to about $15,000 to reflect the increased cost of housing.

REIWA and the Opposition have called for the State Government to index the stamp duty-free threshold for first home owners to reflect the median house price.

Deputy Opposition Leader Troy Buswell said it was time the State Government treated housing affordability as a priority, both in the sense of easing the land shortage and reducing taxes and charges.

“(Treasurer) Eric Ripper has set up a tax review designed to do one thing ”” let him cut taxes at a time when it is politically advantageous to the Government,” Mr Buswell said. “It is not good enough to delay tax cuts for one to two more years so, in the lead up to the next election, Eric Ripper can make tax announcements simply when it is expeditious.”

Last week, Mr Ripper ruled out cuts in stamp duties or payroll tax before next year’s Budget.


*and then this...*



*House prices to soar 20 per cent
*
Rhys Haynes

July 25, 2006 02:00pm
Article from: The Sunday Times



HOUSE prices in Perth are expected to rise a staggering 22 per cent this year as prices across the eastern states remain largely unchanged.
Mortgage insurer PMI Mortgage Insurance Ltd (PMI) today said residential markets across the eastern states have continued to slow.

``In contrast, the cities of Perth and Darwin have experienced solid price growth, as residential prices continue to be underpinned by stronger demand generated by a booming resources driven economy,'' the PMI Residential Property Overview found.

*Median house prices in Perth are expected to soar by 22 per cent to $360,000 this year,* with 3.1 per cent and 1.6 per cent increases expected over the following two years.

PMI forecast median house prices in Sydney would fall 2.1 per cent to $517,000 in 2006, 1.7 per cent in 2007 and 2.6 per cent in 2008.

Prices are expected to rise in Sydney by 1.8 per cent in 2009, according to the report.

``With interest rates on an upward trend, affordability is likely to remain a concern in the Sydney market and prices are expected to weaken further,'' the report said.

In Melbourne, the forecasts are a little more positive, with 2.8 per cent growth to the median house price of $370,000 expected in 2006.

Over the next three years growth is expected to be 1.9 per cent, 2.1 per cent and 3.9 per cent.

``Price growth in Melbourne is likely to be limited to rises coinciding with wages growth after an allowance for the rising interest rate environment,'' PMI said.

The Reserve Bank of Australia lifted interest rates by quarter of a percentage point to 5.75 per cent in May this year and most economists are expecting another rate rise as early as next month.

In Brisbane, prices are expected to rise 5.6 per cent this year to $330,000, but PMI said ``house prices in Brisbane appear to have reached their affordability limits''.
It is a different story in the western states, however.

In Darwin, a rise of 19.4 per cent to $334,000 is expected this year and over the next two years prices are expected to be around three per cent in 2007 and unchanged in 2008.

``Markets such as Perth and Darwin are currently experiencing strong demand and booming economic conditions as a result of substantial resource investment spending,'' the report said.

``Due to this strong economic position, it is predicted that significant price growth could continue, with both cities set to experience a growth in median house prices of around 20 per cent in 2006.''

PMI chief executive Ian Graham said that the number of home loans approved for new dwellings had risen over the twelve months to March 2006 by nine per cent.

``We are seeing that first home buyers are starting to come back into the market in greater numbers, albeit from a lower base,'' he said.

``Investor activity has remained flat, with little change in the value of loans to investor purchasers in the nine months to March 2006.'' 
*
Both posted on same day. Looks like everyone is guessing.* 

*the worst thing they can do is increase the first home owners grant to $15,000 or reducing stamp duty. This will only increase prices. They need to reduce negative gearing claims and make the CGT discount on property after 7 years instead of twelve months. Alas, this will only occur to them after they feel the wrath of the young and disillusioned at the polls in years to come.

Speaking of that, it's about time we had another revolution. Oh yeah... *


----------



## Smurf1976 (25 July 2006)

juddy said:
			
		

> *Perth house prices soar to second most costly*



Anyone like to play "spot the bubble"?


----------



## Rafa (25 July 2006)

Smurf1976 said:
			
		

> Live wherever you like. But don't expect business etc to move out after you've bought just because you don't like the traffic, music, noise or whatever else is upsetting you. If you don't like those things then live somewhere in the 99.9% of Australia, or at least 95% of each capital city (the suburbs), that doesn't have them.




Agree with that...
lot of pubs in Adelaide effected by that...

big Jim.... tend to agree with you too...
but when your buying a home... its not based 'investment' criteria...


an investment property is a completely different story to a personal (family) home...


----------



## Realist (25 July 2006)

> PMI forecast median house prices in Sydney would fall 2.1 per cent to $517,000 in 2006, 1.7 per cent in 2007 and 2.6 per cent in 2008.
> 
> Prices are expected to rise in Sydney by 1.8 per cent in 2009, according to the report.




So don't buy in Sydney until at least 2010...    

I find that hard to believe.   

Perth wont overtake Sydney, ever. IMHO

I hope I am wrong, I wanna buy in Sydney but will wait patiently until I see an opportunity, which I suspect is 1 or 2 years away - I can not believe Sydney will have had falls from late 2003 through to 2009 - impossible I think.

Even a 1.8% rise is in reality a fall when indexed against inflation.


----------



## Realist (25 July 2006)

> the worst thing they can do is increase the first home owners grant to $15,000 or reducing stamp duty. This will only increase prices. They need to reduce negative gearing claims and make the CGT discount on property after 7 years instead of twelve months. Alas, this will only occur to them after they feel the wrath of the young and disillusioned at the polls in years to come.




I disagree.

First home owners only make up a reasonably small proportion of the market.

They should have an advantage over investors of course. And $7K these days is nothing, make it $15K. And eliminate stamp duty for them - like NSW has done.

CGT has been reduced in affect because of the reduction in income tax recently, even those earning $150K + can only claim 45% back. Where as last year it was 48.5% over $90K from memory.


----------



## It's Snake Pliskin (26 July 2006)

Realist said:
			
		

> So don't buy in Sydney until at least 2010...
> 
> I find that hard to believe.
> 
> ...




Looking at the effects on business in Cronulla, it could flow onto property.


----------



## It's Snake Pliskin (26 July 2006)

Stop_the_clock said:
			
		

> It looks like the chorus of people singing "I am being priced out of the housing market" is getting louder and louder




That wouldn`t worry communists though. No connection to yourself.


----------



## krisbarry (26 July 2006)

I am bakin' a cake this morning, not only to celebrate John Howards 67th Birthday, but to celebrate the release of higher than expected inflation numbers.

Thankyou RBA, you have my blessing to blow out the candles on these property investors by raising rates on Wed 2nd of August 

"and the chorus chants....Happy Birthday to you, Happy Birthday to you, Happy higher interest rates, Happy Birthday to you!"


----------



## krisbarry (26 July 2006)

I better hurry up and bake another cake to celebrate an almost certain 3rd rate rise for the end of this year too

*AN interest rate rise is all but assured after figures today show inflation surging 4 per cent in the past year.*


----------



## blinkybill (26 July 2006)

The RBA has been flagging for at least the last 6 if not 12 months in their press releases and announcements that the next move in interest rates was most likely to be up, from record lows, and not down and so no-one has any justification imo to claim they didn't see the next rise coming whether they agree with the moves or not.

Money markets, like all markets, move in cycles and so we just have to learn to live with cyclical interest rates and take advantage of them


----------



## kgee (26 July 2006)

Smurf1976 said:
			
		

> Anyone like to play "spot the bubble"?




I live in Perth and for a while I suspected what your saying may be true...but then the more research into resource stocks the more I suspect that this boom has still got some legs in it
There's some major construction projects planned over the next 3 years and the labour market is tight ...I know of several companies that are now projecting delays for this reason (+ matarials shortages)
And on anctedotal evidence I applied for a position as an advanced rigger some 12 months ago with monadelphous ...recently they told me they had given my information to an employment database and since then I've been getting text messages from various employers asking for workers every 2 weeks
The last position was a 3 and 1 week roster in Broome at $44 / hour ...when last I was working as a rigger the $ was between 28-36....
which is probably more evidence that inflation is here,well that and gas at 1.42 a litre


----------



## Big Jim (26 July 2006)

Does it really matter if rates go up a percent or two?


----------



## clowboy (26 July 2006)

Big Jim,

Umm in a word "yes"


----------



## wayneL (26 July 2006)

clowboy said:
			
		

> Big Jim,
> 
> Umm in a word "yes"




I was thinking more of two words clowboy....

*$#@ing OATH!


----------



## Realist (27 July 2006)

wayneL said:
			
		

> I was thinking more of two words clowboy....
> 
> *$#@ing OATH!





And I was thinking three words...

Abso  f***ing   lutely




Okay I'll get me coat...


----------



## krisbarry (11 August 2006)

Well today I put another $500 into my superannuation account....some may say I am crazy, I don't care.

I am looking at a long at a long-term savings plan.

Wealth takes a life-time to build, some keep saying that I want it all today.

I am a product of a want it all now generation. 

here is more proof that I want nothing today and everything tomorrow (when I am 65)


----------



## wayneL (11 August 2006)

Just stumbled onto this


The New Road to Serfdom: A Negative-Equity Mortgage
http://www.oftwominds.com/blogmay06/serfdom.html


----------



## Mofra (12 August 2006)

wayneL said:
			
		

> Just stumbled onto this
> 
> 
> The New Road to Serfdom: A Negative-Equity Mortgage
> http://www.oftwominds.com/blogmay06/serfdom.html




Hope I'm not scaring you Wayne, but the "105% lend" and "family equity" type products are either available now or will be very shortly - basically, people starting off with a house purchase under these products are almost assured of negative equity before they begin.

As an side, rental vacancies for inner city Melbourne seem ready to impact on rentals (I would argue they have already), with yields set to rise - bad news for any renter that isn't in a long term lease. Vacancies in my area have dropped from about 7 pages of available properties at the lcoal real estate agents, to barely a page.


----------



## nizar (12 August 2006)

Stop_the_clock said:
			
		

> Well today I put another $500 into my superannuation account....some may say I am crazy, I don't care.
> 
> I am looking at a long at a long-term savings plan.
> 
> ...




And how about if u die before 65??

Enjoy the moment buddy, u only live once

Im not saying go sick; but "nothing" and "everything" are too extreme


----------



## mime (12 August 2006)

Well I've for now given up on purchasing property. I considered buying a investment prop for around $120,000 but found out the stamp duty would cost around $3k. Who on afford that combined with a 20% deposit, conveyancing fees and other stuff?

Unbelievable!!


----------



## Smurf1976 (12 August 2006)

Mofra said:
			
		

> Hope I'm not scaring you Wayne, but the "105% lend" and "family equity" type products are either available now or will be very shortly - basically, people starting off with a house purchase under these products are almost assured of negative equity before they begin.



That in itself sounds very much like the sort of thing that happens at the top of the cycle. Just what Japan did before their crash.


----------



## wayneL (13 August 2006)

Those of you looking for replies in this thread related to commodities, I have created a new thread here 

https://www.aussiestockforums.com/forums/showthread.php?t=4154

and placed those replies therein.

Cheers


----------



## krisbarry (25 August 2006)

There we go...I have just deposited another $650 extra into my superannuation account.

Some say I am foolish, I don't care!

Some also say that our generation (X and Y) cannot save, are greedy and want it all today, may I prove them wrong.

I want nothing today and everything tomorrow.

Rice and beans for dinner


----------



## Big Jim (25 August 2006)

Stop_the_clock said:
			
		

> There we go...I have just deposited another $650 extra into my superannuation account.
> 
> Some say I am foolish, I don't care!
> 
> ...



Good for you. The governement should reward you with another 1500$. As for the beans, well its more healthy than the crap the serve in restaurants and fast food outlets so you'll probably live to use that super effectively, not like most of the lard a@@ses which will be a burden on our society. Keep the good work up.


----------



## krisbarry (8 September 2006)

I have just deposited another $460 extra into my superannuation account.  My account balance is building nicely, thanks for asking.

Some say I am foolish, I really don't care!

Some also say that our generation (X and Y) cannot save, are greedy and want it all today, may I prove them wrong, yet again!

I want nothing today and everything tomorrow.

Tonights dinner is Homebrand Tuna, care to join me?  Just bring a can opener


----------



## tech/a (8 September 2006)

Krsi.

While its not the worst thing you can do for your security,consider this.

You release control of your hard earned to X superfund.If you believe they can out perform your investment skills then fine.

You also lose the ability to leverage your investment which in my view is the single most important aspect of capital growth.

Its fine looking to the future but you may not get there just ask Steve Irwin!

Keeping control you can still look to the future add to the funds regularly and eat baked beens.


----------



## krisbarry (8 September 2006)

tech/a said:
			
		

> Krsi.
> You also lose the ability to leverage your investment which in my view is the single most important aspect of capital growth.




My investment is already leveraged...its a geared share fund.

Gearing ratio currently stands at 51.33%

Current yearly return is running at 35.97%, way out stripping housing, even better than W.A. with its mining boom.


----------



## tech/a (8 September 2006)

Hmm yes maybe so--Which fund is it?

The only difference is those who rode the boom had 10-20% down and benifited from the 80% or so on loan.

As one example I put zero down (Equity secured) paid $90K and sold 3 yrs later at $210K.So I picked up $120K for the grand cost of Zippo.

On the Trading side.
I have 30K which now is $338K (Interest paid) this has taken 4 yrs.

Your not doing the wrong thing I'm just pointing you to looking outside of the square.*Not all investors are DOOMED to ruin from use of leverage.*


----------



## krisbarry (8 September 2006)

tech/a said:
			
		

> Hmm yes maybe so--Which fund is it?




Colonial First State

http://www.colonialfirststate.com.au/Prospects/FS1631.pdf

Australian Geared Shares


----------



## tech/a (8 September 2006)

*Excellent*


----------



## clowboy (8 September 2006)

While I am not condoning good money managment skills,

How ridiculas is it eating home brand tuna (if these are really the meals you are eating I would doubt you will make it to 65, but I am guessing you are exagerating) just to put a losy $400-600 into super every month or whatever.

Have you even stoped to think how much money you are going to have at age 65 if they continue these woderful returns you are so confident on?  And if you are not so confident they will continue to return such fantastic results, then why are you giving them all your money????

Hell a mere 10k would be worth 1.3 mill in 35 years (even accounting for tax at 15%), by the time you get to 65 and have a coll 100 mill you will be so use to baked beans on toast you won't know what to do with the money.
Time to start planning (and training) a hier.

Stop, like I said it is great to see that you can save and are going against the majority, but for pete's sake live a little today as well.  No matter what your beliefs life is short, 100 years out of 6000+ is nothing, 100 out of a few billion is a blip.


----------



## krisbarry (8 September 2006)

clowboy said:
			
		

> How ridiculas is it eating home brand tuna (if these are really the meals you are eating I would doubt you will make it to 65, but I am guessing you are exagerating) just to put a losy $400-600 into super every month or whatever.




I cannot believe you just said that, how crazy is your thinking...

The western world diet of fast fatty fry-ups is filthy.  Generation X and Y, will die b4 our parents if we continue to eat the cr_ap that fills our supermarket shelves.

Some of the longest living people on this planet ate meals like beans, pasta, rice, and tuna!

Who cares if the tuna I eat is homebrand...it still contains essential fatty acids, protien, is low in carbs, and sugar etc.

If anything I may have to worry about the Mercury level, but that is an entirely different topic


----------



## Smurf1976 (8 September 2006)

I wouldn't eat processed **** no matter how cheap it was. 

If it's Homebrand tuna versus some proceessed meal that comes in a box then I'll take the tuna no matter what the price difference. Likewise I'll take the tuna over anything Mc, Hungry, Fried, has dots on the box or is served in a Hut. Quite a few "decent" restaurants serve absolutely unhealthy food too.


----------



## Joe Blow (8 September 2006)

Stop_the_clock said:
			
		

> Who cares if the tuna I eat is homebrand...it still contains essential fatty acids, protien, is low in carbs, and sugar etc.




I like Homebrand tuna. It almost as good as the John West stuff and at almost half the price. Also, tuna is one of the most versatile foods around. Tuna mornay, Tuna and pasta casserole. Cheap, healthy and filling. Another Homebrand product that stacks up well against the premium brands is the two loaf packs of garlic breads. Although I should add that I am speaking of the Woolworths homebrand products. I don't have much experience with the Coles ones.


----------



## krisbarry (8 September 2006)

According to clowboy, I should beg, grovel and plead for a refund of my extra super contributions, make a beeline to my local Coles or Woolies, grab a trolley and load it full of cr_ap. (chocky biscuits, cakes, soft drink, chips). Then sit back on my couch, and wait for the lard to grow until I need gastric bypass surgey  

Ohhh how the mind boggles  

I am laughing so hard internally, at least if the tuna doesn't kill me, the laughter will  

I am really confused  I thought the staple diet of humans came from the earth and the sea not from Coles and Woolies shelves.


----------



## ghotib (8 September 2006)

Stop_the_clock said:
			
		

> I am really confused  I thought the staple diet of humans came from the earth and the sea not from Coles and Woolies shelves.



Um. Do you use long lines or nets to catch your tinned tuna? 

Ghoti


----------



## nioka (8 September 2006)

Stop_the_clock said:
			
		

> I have just deposited another $460 extra into my superannuation account.  My account balance is building nicely, thanks for asking.
> 
> Some say I am foolish, I really don't care!
> 
> ...



One question. Are you paying your own way or do you bludge on your parents and friends for accomodation.


----------



## Bloveld (8 September 2006)

Who is living a long time eating canned tuna?


----------



## lancedefrance (8 September 2006)

tech/a said:
			
		

> Hmm yes maybe so--Which fund is it?
> 
> The only difference is those who rode the boom had 10-20% down and benifited from the 80% or so on loan.
> 
> ...




Hi Tech/a can you please elaborate on the housing example that you used, i am new to all this but i am very interested and would love to learn more   

Also how did you make 338k out of 30 in 3 years


----------



## cogidubnus (8 September 2006)

I've been eating tuna for years and I'm about 2000 now lol Seriously though stc is correct. The crap served up in restaurants is rubbish. I buy fresh veg and fruit and steam them. I eat fruit and fish and sometimes chicken. I am 85 and fit as a fiddle.


----------



## Julia (8 September 2006)

Stop_the_clock said:
			
		

> According to clowboy, I should beg, grovel and plead for a refund of my extra super contributions, make a beeline to my local Coles or Woolies, grab a trolley and load it full of cr_ap. (chocky biscuits, cakes, soft drink, chips). Then sit back on my couch, and wait for the lard to grow until I need gastric bypass surgey
> 
> Ohhh how the mind boggles
> 
> ...



STC
Clowboy hasn't suggested anywhere that I can see that you should pig out on junk food.  He just made the reasonable suggestion that in your quest to pile more dollars into Super, you shouldn't make your life and/or diet too rigid.  

If you genuinely like eating tinned Tuna (and there's nothing wrong with most Home Brand products that I've tried), then, great, have it.  But if you're eating it just because it's cheap, then I agree that you shouldn't do it all the time.  Occasionally instead treat yourself to some fresh raw tuna (very expensive and utterly delicious) .  You'll probably never eat tinned tuna again!

Although I respect your capacity to save money (as long as you're not bludging off others in order to do so), and think more people of your generation should be doing the same, I think it's unhealthy to become so obsessed about it that you lose sight of enjoying the present.  Like all things, balance is best.  Money can become an addiction like other substances and habits.

Julia


----------



## Realist (8 September 2006)

tech/a said:
			
		

> As one example I put zero down (Equity secured) paid $90K and sold 3 yrs later at $210K.So I picked up $120K for the grand cost of Zippo.




Buy House  $90K
Sell House $210K
Profit = $120K ????    

Conservative Estimates...
Stamp duty = $6K
Interest over 3 years on $90K = $15K
Mortgage Fees = $3K
Agent fees/advertising = $5K
Repairs, improvements, insurance, rates, = $10K
YOUR TIME = $20K
CGT Tax = $30K

Your profit = $30K

Sounds more realistic to me...      


Don't fool yourself into thinking your killing it with property, your house more than doubled and you made $30 to $50K.

Guess what will happen if your house dipped just 10% in value...


----------



## krisbarry (8 September 2006)

Julia said:
			
		

> STC
> Clowboy hasn't suggested anywhere that I can see that you should pig out on junk food.  He just made the reasonable suggestion that in your quest to pile more dollars into Super, you shouldn't make your life and/or diet too rigid.
> 
> If you genuinely like eating tinned Tuna (and there's nothing wrong with most Home Brand products that I've tried), then, great, have it.  But if you're eating it just because it's cheap, then I agree that you shouldn't do it all the time.  Occasionally instead treat yourself to some fresh raw tuna (very expensive and utterly delicious) .  You'll probably never eat tinned tuna again!
> ...




Come on, come on people....lighten up, I still enjoy great food occassionally.  Nothing beats a thick cut of steak or a tasty chicken breast.

I was also poking fun at Clowboy...running with a little humour on this fine Friday!


----------



## krisbarry (8 September 2006)

On a more serious note, it still puzzles me why my generation have to pay for our education and our pensions and still afford to eat nice cuts of meat and buy over priced homes, while listening to ipods and jet-setting around the world  

How insane is that


----------



## cogidubnus (8 September 2006)

Stop_the_clock said:
			
		

> On a more serious note, it still puzzles me why my generation have to pay for our education and our pensions and still afford to eat nice cuts of meat and buy over priced homes, while listening to ipods and jet-setting around the world
> 
> How insane is that



I agree sonny. I think all you young whippersnappers should give all your worldly goods to old codgers like me.


----------



## krisbarry (8 September 2006)

Ohhh thats right it was the previous generation that got free education, affordable housing and nice cuts of meat from the backyard farm, all while listening to the wireless and collecting a pension... how times have changed  :


----------



## cogidubnus (8 September 2006)

Stop_the_clock said:
			
		

> Ohhh thats right it was the previous generation that got free education, affordable housing and nice cuts of meat from the backyard farm, all while listening to the wireless and collecting a pension... how times have changed  :



Ah yes I remeber them well.. the good ol days


----------



## Smurf1976 (8 September 2006)

Totally off the topic of housing but relevant to the debate about tuna. 

My mother acquired two kittens in 1984. One was quite normal whilst her sister seemed to be the weak runt of the litter, was small, easily bossed around by the other cats and lacked strength.

The stronger cat ate normal things like tinned cat food etc while the weaker one refused to eat such things. She ate mostly raw mince, tinned tuna and cheap cat biscuits. She simply wouldn't eat brand name biscuits or tinned cat food.

Bottom line is that the "strong" cat eating processed cat food passed away in 1998 while her sister remained in good health until 2004. The "weak" cat eating natural food lived a lot longer than the "strong" one eating processed food and remained reasonably fit right to the end.

I tend to avoid processed foods...


----------



## Jay-684 (8 September 2006)

Realist said:
			
		

> Buy House  $90K
> Sell House $210K
> Profit = $120K ????
> 
> ...




Going off S.A stamp duty rates stamp duty would be $3,000 not $6,000
Interest assuming a 20yr loan, 90,000 principal, 7.5%p.a. compounded monthly, Interest payments after 3yrs = $19815.90
Mortgage fees - approx 1% = $900
RE fees - $5,000
Rates - again going off SA rates, for the 3 years (assuming the rates are calculated off the market value of the property which they clearly arent, and assuming an annual growth rate of 32.64%) - $1866
Repairs and improvements - who says there were any?
Your time - $20,000 is very excessive. Going off average wages of $1043 per week, thats 920 hours on the property over 3 years assuming a 48hr working week. To be realistic maybe 6 weeks is reasonable, so assume $6258
CGT based on 05/06 taxation rates would be 30% of $120,000 (not getting into depreciation allowances, tax deductions on interest repayments etc) 3$36,000

Total expenses = $72839.90

So total gain on the initial value of the investment is $47160.10

However realist, what your not realising is that Tech/A put NO MONEY DOWN ie he had no initial investment! 100% debt finance was used, therefore the return is quite impressive indeed. He still had 100% of his equity to invest in other areas.


----------



## Realist (8 September 2006)

Jay-684 said:
			
		

> However realist, what your not realising is that Tech/A put NO MONEY DOWN ie he had no initial investment! 100% debt finance was used, therefore the return is quite impressive indeed. He still had 100% of his equity to invest in other areas.




Agreed,

But please consider the house went up 233% in value in what is one of the biggest property booms ever.

He made at most $47,000 - which will buy you a nice second hand German car. Woop de do.


----------



## AAA (8 September 2006)

And how much did you make out of the property boom?


----------



## tech/a (8 September 2006)

Realist said:
			
		

> Buy House  $90K
> Sell House $210K
> Profit = $120K ????
> 
> ...




Tax deductable taken off the capital gain at sale.



> Interest over 3 years on $90K = $15K



Rent return over the 3 yrs $35,800





> Mortgage Fees = $3K




If you mean conveyencing then that was $1690



> Agent fees/advertising = $5K




Was actually $7500 I gave them an incentive over $200k


> Repairs, improvements, insurance, rates, = $10K




Around the mark.



> YOUR TIME = $20K




We self manage our properries so any cost you wish to allocate we keep.



> CGT Tax = $30K




After our complete business dealings for the year were calculated the figure was around $18500.Thats for the accountants.




> Don't fool yourself into thinking your killing it with property, your house more than doubled and you made $30 to $50K.




Realist the last thing I do is fool myself.This is one of 4 sales in the last 3 yrs.
Leaving me with 3 freehold including my business property reciently valued (before buying Cash for my superfund) $550K.



> Guess what will happen if your house dipped just 10% in value...




Urrrr it would be worth 10% less.

*There are a few people here who "get it"*

Zero down and X profit---be that 120K or 20K fact is its ZERO DOWN.



> Also how did you make 338k out of 30 in 3 years




Im a systems longterm trader.
I trade 3 Mechanical systems Each with a starting base of $30K.
One is fully disclosed on Reefcap and is the same as one of the methods I trade.My results are similar to that which has been running live for 4 yrs on Reefcap.

The trick is Margin leverage,Positive expectancy,re invested profit.Which is all explained in the Techtrader Forum on Reecap.


----------



## professor_frink (8 September 2006)

Realist said:
			
		

> Agreed,
> 
> But please consider the house went up 233% in value in what is one of the biggest property booms ever.
> 
> He made at most $47,000 - which will buy you a nice second hand German car. Woop de do.




$47,000 profit on no capital outlay at all. I'd say that's worthy of a bit more than a woop de do 

47,000 wopp de so's may be in order!


----------



## NettAssets (8 September 2006)

Realist has not sold anything ever - so any profits are only illusory and therefore untaxable. I would not be suprized if he still has his first nappy still in its original wrapping
He is incapable of understanding that there is no difference between the taxes that you are forced to pay while selling your soul to a boss and those on a trading transaction.
John


----------



## cuttlefish (8 September 2006)

Realist - I believe that investment properties also earn rental income - don't see this anywhere in the equations above.   

And if you bought out of Sydney at the right time you could get yields that matched or exceeded the interest payments (i.e. positively geared).


----------



## Jay-684 (8 September 2006)

Realist said:
			
		

> Agreed,
> 
> But please consider the house went up 233% in value in what is one of the biggest property booms ever.
> 
> He made at most $47,000 - which will buy you a nice second hand German car. Woop de do.




Your not thinking about it properly.

He made $47,000 from nothing! Didnt use one cent of his equity to gain that money.

Explain to me how you can do that with shares!

And as was stated above, it didnt even include rental income!


----------



## nioka (8 September 2006)

I haven't had an answer to the question as to thether or not you are still living at home and bludging on your parents (or your mates). Does no reply mean YES.?


----------



## Realist (8 September 2006)

Well what I said is correct, you need to take all expenses out before quoting what you made.

Property investors and traders forget this simple fact.

Tech/a did well obviously, better than me. I did not buy a house before the housing boom and have not bought one ever.   Laugh as you may but Sydney property has gone down for 3 years in a row now, I'm quite enjoying having shares and no mortgage thank you very much.

My point was twofold : that Tech/a made a profit but nowhere near the $120K he first spouted.  And secondly his profit considering the house went up 233% in value was not that impressive in reality.

$47,000 in Sydney would get you a carspace for 2 years.

Anyone who says "yeah but he put no money down" is not taking into account the huge risks in doing this.  HAd Tech/a bought in Sydney 3 years ago with no money down he could be bankrupt by now, he'd have lost hundreds of thousands of dollars.

His example worked, if you want I can look up an example of someone spending $5 on a lottery ticket and becoming a millionaire overnight. Because it worked in the past does not necessarily mean it will work for you, or even for him in the future.

Everyone's a property guru and a share expert during bull markets.

Tech/a's strategy will backfire big time for those that try this when houses turn for the worse - AND THEY WILL!!


----------



## brisvegas (8 September 2006)

ASF integrity taking a hammering here . this guy is krissbarry reincarnated . instead of telling people how to do it when YOU have little experience how about listening to those that HAVE done it and learning something . how about a little intelligent critical thinking with meaningful dialogue based on logical conclusions . belligerance and pompous rhetoric will lead nowhere fast . 


keeping it real .................... bris


----------



## lancedefrance (8 September 2006)

tech/a said:
			
		

> Im a systems longterm trader.
> I trade 3 Mechanical systems Each with a starting base of $30K.
> One is fully disclosed on Reefcap and is the same as one of the methods I trade.My results are similar to that which has been running live for 4 yrs on Reefcap.
> 
> The trick is Margin leverage,Positive expectancy,re invested profit.Which is all explained in the Techtrader Forum on Reecap.




Thanks for the reply although i didnt really understand it  because I am a complete NOOB  :hide: 
I will be heading over to the techtrader for a read soon so hopefully it will all make sense once i start understanding the basics


----------



## wayneL (8 September 2006)

Folks,

Lets be careful not to polarise into property is No 1, or, property is crap.

Clearly, there are times when RE is a truly magnificent investment. 5- 8  years ago it was obviously fundamentally cheap, particularly in parts of the UK. It would not have mattered if there wasn't this speculative boom to jack up equity so fortuitously. The investment was still sound.

Perhaps not so clearly, there are times when it is a lousy investment. In my opinion, now is such a time, unless doing something very creative. Of course this is a matter of opinion and only time will confirm or negate this view.

It looks to me like Techs was a great investment, no matter how you look at it.

Cheers


----------



## krisbarry (8 September 2006)

nioka said:
			
		

> I haven't had an answer to the question as to thether or not you are still living at home and bludging on your parents (or your mates). Does no reply mean YES.?




Read the first post on this thread and your questions will be answered.

I have no problem with it...if people are offering, just accept it.

But note b4 sprouting off...I moved out of home at 18 years of age with nothing more than a garbage bag full of clothes due to domestic violence and have paid well over $40K in rent since that time.


----------



## tech/a (8 September 2006)

Wayne.
I agree.

Re this Sydneys more expensive than the Backwater known as Adelaide rubbish.

Sydney housing has decreased around 20% in some parts 12% in most.
Savvy Sydney buyers are buying (Or have bought) in Adelaide,Perth and Darwin.Why do you think that is?

The point Im making here is I'm no genius.
Anyone can use the power of Compounding and leverage.
It doesnt have to be Housing nor Shares or Futures.

BUT it CAN be and SHOULD be when the time is right.

In times of adversity there is ALWAYS opportunity.

Buying outright housing now is high risk,but building high density low cost apartments for sale and or Rent is LOW RISK.
Rental vacancies are low,low cost housing is still in demand and will remain so.
Interest rates will rise,less will be able to afford to buy,particularly high value property.Rental pressure is now and will continue to be high.

I have a number of rentals which I have just increased 15% across the board.
Did I hear a whimper on the increase.----Not a 1.

Shares are the same---there will always be dips and corrections,there will always be trends.Provided my trading remains within the Blueprint from which my trading originated then I will be there.
Sure there could and probably will be a catastropic event,but like housing when the opportunity arises to freehold (Take out the risk) occurs then I take it.
If and when I find myself forced to sell my portfolio those funds will be placed against property which is not freeholded.I can access it when ever I want from any of 6 lines of credit.

If I see a great block for development I turn up to the agent or auction armed with a cheque!

Anyone can do it,I just encourage all to think out of the square stop belly aching about how all those who take calculated risks in their lifetime will go down in a screaming heap and actually *DO SOMETHING*.

In my short 52 yrs Ive come close to Bankruptcy twice and wouldnt change that part of life for one minute---WHY---Because I learnt more with my back to the wall than Ive learnt in ALL of the good times.

Infact if you ever get in that situation (Possible bankruptcy) look me up.
Here is why---
Those that you owe money to have the problem--They want their money and you dont have it!
YOU ARE IN A POSITION OF ENORMOUS POWER---not them!
So dont panic.
All you need is a good Solicitor and a great Self Appointed Reciever.

Ernst & Young are/were sensational.

Realist hop on a plane there is a whole world out there---GO GET IT!


----------



## nioka (8 September 2006)

Stop_the_clock said:
			
		

> Read the first post on this thread and your questions will be answered.
> 
> I have no problem with it...if people are offering, just accept it.
> 
> But note b4 sprouting off...I moved out of home at 18 years of age with nothing more than a garbage bag full of clothes due to domestic violence and have paid well over $40K in rent since that time.




Fair enough but dont complain later if they spend what you consider is your inheritance.


----------



## krisbarry (8 September 2006)

nioka said:
			
		

> Fair enough but dont complain later if they spend what you consider is your inheritance.




There are no complaints in my family...My mother is making damn sure that her 3 children are left with inheritance :


----------



## Realist (8 September 2006)

tech/a said:
			
		

> =Savvy Sydney buyers are buying (Or have bought) in Adelaide,Perth and Darwin.Why do you think that is?




Cause they aren't smart enough to buy shares?


----------



## robots (8 September 2006)

hello,

those that what for the downturn in quality property are dreaming

you will be like those who around 00 - 01 were saying it will drop

there's plenty for buyers and sellers at the moment and i'm sure there is still plenty of very happy Sydneysiders

uncle just sold in Newtown, well over purchase price 3yrs ago

all the crap is being sorted out

thankyou
robots


----------



## Realist (8 September 2006)

tech/a said:
			
		

> Realist hop on a plane there is a whole world out there---GO GET IT!




I'm in Singapore at the moment. I've seen most of the world. It aint that exciting.   

Just cause I am a housing Bear does not mean I do not realise that money can be made from housing.  All I am saying is the horse has bolted where I live, and that I believe investing in shares suits me better personally, I enjoy it more, I believe I can make more longterm, and I believe with the exhorbetent Sydney prices combined with exhorbetent taxes and poor rental yields I am better off renting and investing in shares at the moment.

It is amazing how many old farts disagree with my theory cause of what they've done in their lives.  They bought a house years ago and it has increased dramatically. So they believe houses are the way to go.

I do not disagree it was the way to go for them, I disagree it is the way to go today in Sydney for me though!!


----------



## professor_frink (8 September 2006)

Realist said:
			
		

> I'm in Singapore at the moment. I've seen most of the world. It aint that exciting.
> 
> 
> Just cause I am a housing Bear does not mean I do not realise that money can be made from housing.  All I am saying is the horse has bolted where I live, and that *I believe investing in shares suits me better personally, I enjoy it more, I believe I can make more longterm*, and I believe with the exhorbetent Sydney prices combined with exhorbetent taxes and poor rental yields I am better off renting and investing in shares at the moment.
> ...




Realist,

For the part I've put in bold, could you explain that please?

How do you think you can do better out of shares, when you won't use any leverage?


----------



## rub92me (8 September 2006)

tech/a said:
			
		

> Infact if you ever get in that situation (Possible bankruptcy) look me up.
> Here is why---
> Those that you owe money to have the problem--They want their money and you dont have it!
> YOU ARE IN A POSITION OF ENORMOUS POWER---not them!



Now THAT'S a great way to make money: don't pay your creditors!


----------



## tech/a (8 September 2006)

Yeh well before you take the narrow minded view,on BOTH occasions large contractors I subcontracted to went belly up. I was (as well as quite a few others) caught in the knock on effect.
Worst was in the late 80s when also holding Commercial property which got belted by inflation and we had 18% interest.
Other small businesses couldnt pay rent so My business was left to cash flow the rest when a biggy goes belly up many like myself find themselves deep in it.


----------



## nizar (8 September 2006)

professor_frink said:
			
		

> How do you think you can do better out of shares, when you won't use any leverage?




data shows that in the long term shares return 13%pa and property 11-12%pa


----------



## tech/a (9 September 2006)

Nizar.

The difference is that 99% of the populace put their deposit down for a house of say $300,000 and away they go.

.01% of the populace does the same with shares.


----------



## cogidubnus (9 September 2006)

Realist said:
			
		

> I'm in Singapore at the moment. I've seen most of the world. It aint that exciting.
> 
> Just cause I am a housing Bear does not mean I do not realise that money can be made from housing.  All I am saying is the horse has bolted where I live, and that I believe investing in shares suits me better personally, I enjoy it more, I believe I can make more longterm, and I believe with the exhorbetent Sydney prices combined with exhorbetent taxes and poor rental yields I am better off renting and investing in shares at the moment.
> 
> ...





Who are you calling an old fart young whipersnapper?


----------



## cogidubnus (9 September 2006)

nizar said:
			
		

> data shows that in the long term shares return 13%pa and property 11-12%pa



lol Whose data? Where did you pluck those figures from? Over my years I have made 1000% returns on shares and about 15% on property.  :


----------



## Julia (9 September 2006)

cogidubnus said:
			
		

> lol Whose data? Where did you pluck those figures from? Over my years I have made 1000% returns on shares and about 15% on property.  :




I suppose it depends on the cycle in which you buy and sell with both.
i.e. if you managed to always buy at the bottom of the market in housing or shares and sell at the top, obviously you're going to do better than someone whose timing is less astute.

I made most out of property when interest rates on second mortgage were 22% - inflation at the time pushed property prices up and rents were anything you wanted to ask if you were in the right area.

Julia


----------



## tech/a (9 September 2006)

cogidubnus said:
			
		

> lol Whose data? Where did you pluck those figures from? Over my years I have made 1000% returns on shares and about 15% on property.  :





Hmm lets say you have been using just the capital for a singular house investment let alone multiple,with 1000% returns you must be a well known trader having made Multiple Millions.?

Is that you Larry?


----------



## cogidubnus (9 September 2006)

Julia said:
			
		

> I suppose it depends on the cycle in which you buy and sell with both.
> i.e. if you managed to always buy at the bottom of the market in housing or shares and sell at the top, obviously you're going to do better than someone whose timing is less astute.
> 
> I made most out of property when interest rates on second mortgage were 22% - inflation at the time pushed property prices up and rents were anything you wanted to ask if you were in the right area.
> ...



Exactly. Right now the housing is still trying to find it's bottom, the sharemarket is in between so what does that leave us with???


----------



## Realist (9 September 2006)

professor_frink said:
			
		

> Realist,
> 
> For the part I've put in bold, could you explain that please?
> 
> How do you think you can do better out of shares, when you won't use any leverage?





Shares including dividend returns outperform and will continue to outperform house prices IMHO. And the stress and effort involved and the risks are less than owning a property. People may baulk at the idea that property is risky, but leverage works both ways and there are alot of people who've lost money, and have negative equity in property recently in Sydney.

I am not totally against leverage, but I have not used it and will not use it at the moment.  Much like I am not totally against buying an investment property, but I would not buy one now.


----------



## Realist (9 September 2006)

cogidubnus said:
			
		

> Exactly. Right now the housing is still trying to find it's bottom, the sharemarket is in between so what does that leave us with???





How do you know the sharemarket is in between?

That is the key point you see, you are just guessing. I happen to believe the ASX will be up a fair bit over the next year, and I believe property will be down.

Still I've been wrong before...


----------



## nizar (9 September 2006)

cogidubnus said:
			
		

> lol Whose data? Where did you pluck those figures from? Over my years I have made 1000% returns on shares and about 15% on property.  :




WELL PUBLISHED AND RESEARCHED DATA, MY FRIEND

I cant find a link right now, but they are well known facts

The sharemarket measures the index (not the cogidubnus return); look at XAO for the last 50 or so years, and its about 13%pa over the long term

I have made several hundred percent from the stockmarket in the last 18months and exactly 0% from property.

Does that make my stats any more valid that yours?

Funny guy...


----------



## nizar (9 September 2006)

tech/a said:
			
		

> Hmm lets say you have been using just the capital for a singular house investment let alone multiple,with 1000% returns you must be a well known trader having made Multiple Millions.?
> 
> Is that you Larry?




haha tech

Larry Williams with his futures was a genius, well at least he was in THAT year (was it 1983?)....

Entered a competition with $10,000 of your own money, see who can make the most in a year trading futures. By end of first quarter 1mil, end of the year 2mil...!! Second place guy was $40,000, still a good effort but way behind.... 

Then of course started his own fund money started flooding it, by the first month down 50%... he just couldnt do it, maybe coz it was too much money, hard for entry and exit, or just in the mind, i dunno...

But of course he's made several comebacks since then... trader/promotor extroadinare!


----------



## cogidubnus (9 September 2006)

nizar said:
			
		

> WELL PUBLISHED AND RESEARCHED DATA, MY FRIEND
> 
> I cant find a link right now, but they are well known facts
> 
> ...



I cant find a link right now, but they are well known facts
Must be good because you can't even spell to begin with.


----------



## wayneL (9 September 2006)

cogidubnus said:
			
		

> I cant find a link right now, but they are well known facts
> Must be good because you can't even spell to begin with.




Well we try to be a friendly forum, even if we can't spell.  

Cheers


----------



## nizar (9 September 2006)

cogidubnus said:
			
		

> I cant find a link right now, but they are well known facts
> Must be good because you can't even spell to begin with.




Hmm... yep i thought so!

Interesting how nobody on here disputed my initial remark except u

Maybe its not me with the problem then???


----------



## astroboydivx (9 September 2006)

Realist said:
			
		

> Just cause I am a housing Bear does not mean I do not realise that money can be made from housing.  All I am saying is the horse has bolted where I live, and that I believe investing in shares suits me better personally, I enjoy it more, I believe I can make more longterm, and I believe with the exhorbetent Sydney prices combined with exhorbetent taxes and poor rental yields I am better off renting and investing in shares at the moment.




I'm the same as you Realist. 

I choose to rent. I'm 29 years old. I owned a PPOR (a 1 bedroom flat in Glebe) outright, made 25% or $50k on it, but sold it at the start of last year and put the money in the sharemarket.

Since then my $300k is $450k, and I'd rather buy BHP than get 4% yields renting a house to tenants or owning my own.

One day I'll own a PPOR again, probably two actually. But not before I'm financially independent and worth $2million.


----------



## krisbarry (9 September 2006)

Here is another example...my sister works in the medical profession earning between $80 to $120 per hour.  I spoke with her just yesterday and she said that she would not even touch housing...both from an investing point of view, or just to purchase.

She mentioned that they are over-priced and their is simply little return in this present market.

That coming from an above average joe blow...

God help the average Jow blow and the below avergae Joe blow.

Yep even the wealthy are giving up on the great Australian Dream!


----------



## WaySolid (9 September 2006)

nizar said:
			
		

> WELL PUBLISHED AND RESEARCHED DATA, MY FRIEND
> 
> I cant find a link right now, but they are well known facts
> 
> ...



Not meaning to pick on you but I do like telling people there is value in dissecting printed wisdom and forming your own judgement based on your own analysis. I note some recycled views on LW as well.

XAO 31/1/1956: 120
XAO 31/6/2006: 4880

Which is a 50 year CAGR of 7.69%

And yes we are a dividend loving nation indeed, which will add sauce to your meat pie if you are measuring an accumulation index. But how would an investor in 56 access that index return without the stock specific disasters? Betcha their PPOR from 56 is still standing though.

Gosh I spend too much time on bulletin boards.

** Hmm I should add that anyone making several hundred percent in the market over any 18 month period with anything other than a lunch money account needs to attempt to quantify the lucky fool ratio in their results. 

I have plenty of time on my hands at the moment.


----------



## YChromozome (9 September 2006)

astroboydivx said:
			
		

> I'm the same as you Realist.
> 
> Since then my $300k is $450k, and I'd rather buy BHP than get 4% yields renting a house to tenants or owning my own.




Good to see I'm not alone. I was looking for a house to buy. I'm 28, got just a little over 400k in my portfolio (Shares/Cash) and as of June/July given up on looking - Too expensive. I've been looking for a while. The warning bells (beep, beep, beep) went off in 2003, the evacuation tone (Woop, Woop) went in June/July this year. I evacuated quickly and am now waiting outside the housing market and  looking in waiting for the smoke to dissipate.

Oh, and my BHP shares are doing well.

Not to mention those CCP Credit Corp ones too. Just hope there are not too many bankruptcies as debt is harder to recover in these cases. Otherwise business is booming.


----------



## WaySolid (9 September 2006)

YChromozome said:
			
		

> Good to see I'm not alone. I was looking for a house to buy. I'm 28, got just a little over 400k in my portfolio (Shares/Cash) and as of June/July given up on looking - Too expensive. I've been looking for a while. The warning bells (beep, beep, beep) went off in 2003, the evacuation tone (Woop, Woop) went in June/July this year. I evacuated quickly and am now waiting outside the housing market and  looking in waiting for the smoke to dissipate.
> 
> Oh, and my BHP shares are doing well.
> 
> Not to mention those CCP Credit Corp ones too. Just hope there are not too many bankruptcies as debt is harder to recover in these cases. Otherwise business is booming.



I recently heard Peter Spann complaing about gen Y being the laziest, most spoilt and over educated generation in history. But us oldies complaing about youngsters is nothing new in the course of human affairs.

Personally I have no such views, though I wish I had the toys and trips my nephews and nieces seem to always have! 

Perhaps the Gen Y's will be very reluctant to become home owners in the future? In Europe it's quite an acceptable idea to rent for life. Who knows?

I would note that the median price for housing rarely takes a dip (ever?) in places like BrizVegas, yes you can't buy a median specifically but it does illustrate the idea that people will tend to hold onto their houses rather than sell at a substantial loss; bank willing. Excellent time to be on the hunt for a PPOR presently I estimate, well at least I am


----------



## barnes (9 September 2006)

Was a property investor, made good fortunes, but not anymore. Not worth it.


----------



## Smurf1976 (10 September 2006)

WaySolid said:
			
		

> I would note that the median price for housing rarely takes a dip (ever?) in places like BrizVegas, yes you can't buy a median specifically but it does illustrate the idea that people will tend to hold onto their houses rather than sell at a substantial loss; bank willing. Excellent time to be on the hunt for a PPOR presently I estimate, well at least I am



Just because you don't sell in a downturn doesn't mean you haven't made a loss at the time.

Same with shares. If you buy XYZ at $5 and it drops to 50 cents then continuing to hold the stock doesn't mean you haven't made a loss. You may well recover that loss if the price goes back up or through dividends, but it's a loss at the time no matter what happens in the future. 

"You can't lose with property" is only true if you can be absolutely certain of holding for at least a full market cycle. Given that bubble peaks seem to be about 15 years apart, you can't be certain. Property is thus risky as an investment as are shares - hold the S&P/ASX-200 long enough and that too is "certain" to make a profit. The problem is that you can't be certain of being able to hold long enough.

Not that I'm against investing in property. Just pointing out that it IS possible to lose. Those who bought 2 or 3 years ago in Sydney (and I would argue Hobart too) have done just that so far - lost. They'll probably make a profit eventually, but cash in the bank and delaying the property purchase would have been a lot more profitable over the past 2 years.


----------



## clowboy (10 September 2006)

astroboydivx, you can't own two PPOR


----------



## cogidubnus (10 September 2006)

WaySolid said:
			
		

> I recently heard Peter Spann complaing about gen Y being the laziest, most spoilt and over educated generation in history. But us oldies complaing about youngsters is nothing new in the course of human affairs.
> 
> Personally I have no such views, though I wish I had the toys and trips my nephews and nieces seem to always have!
> 
> ...



Yes I can see that sitting on aproperty that is making no income and costing me money makes a whole lot of sense. Interest rates are not going up again anytime soon, so all is good on the good ship lolly pop. Actually I would compound those loses by buying another property!! ->


----------



## cogidubnus (10 September 2006)

Smurf1976 said:
			
		

> Just because you don't sell in a downturn doesn't mean you haven't made a loss at the time.
> 
> Same with shares. If you buy XYZ at $5 and it drops to 50 cents then continuing to hold the stock doesn't mean you haven't made a loss. You may well recover that loss if the price goes back up or through dividends, but it's a loss at the time no matter what happens in the future.
> 
> ...



What is certain in life is death and taxes, and if you are really lucky a death tax. lol ---------------->


----------



## juddy (10 September 2006)

http://news.ninemsn.com.au/article.aspx?id=143258

*Borrowers lose homes at record rates*
Sunday Sep 10 08:08 AEST
In 2002, there were 2,189 home repossessions in NSW following default by the borrower, said a report. (Getty Images)

Borrowers are losing their homes at record rates because of climbing petrol prices and high personal debt, according to the latest NSW Supreme Court figures.

Fairfax quoted figures from the 12 months to March showing repossessions by financial institutions climbed to 4,873 - more than double the number of three years ago.

In 2002, there were 2,189 repossessions in NSW following default by the borrower, it said.

Real estate agents told Fairfax the trend in mortgage repossession sales was gaining pace alarmingly.


----------



## Smurf1976 (10 September 2006)

From the article 







> "The Reserve Bank has said there are serious bottlenecks in the economy," he said.
> 
> "Identified prominently among them are two things: first, *a lamentable collapse in training in relation to trade skills, and the second has been a lamentable lack of national leadership on infrastructure issues*."




Emphasis mine. Yet another massive cost of privatisation and outsourcing. You pay more for power, water, road maintenance etc and then you pay again through broader effects on the economy through lack of training of apprentices, lack of long term infrastructure planning and so on. At least those with the assets and contracts make a profit...   



> Real estate agents told Fairfax the trend in mortgage repossession sales was gaining pace alarmingly.




Sounds like the sinking prices etc in the US isn't confined only to that country. Some other reports on this story suggest that houses that were bought for $400K in Sydney are now lucky to get $300K. Taking account of inflation over the past 3 years, that's getting pretty close to a genuine crash IMO, at least in "real" terms. 

Whilst I do genuinely feel sorry for anyone losing their home, I disagree absolutely with the notion that the overall trend of an increasing number of repossessions is anything other than one of the most easily foreseeable events of the past decade. It would be truly amazing if such outright market euphoria combined with easy credit _didn't_ end in tears. 

I note that politicans are preparing for the inevitable, with John Howard now seeing high house prices as a "bad" thing. That's part of the conditioning process to prepare the public to see falling house prices as "good". Something you wouldn't do if the market were expected to rebound any time soon.


----------



## astroboydivx (12 September 2006)

clowboy said:
			
		

> astroboydivx, you can't own two PPOR




The wife and I plan on dividing our time between Sydney and Byron Bay 

Mind you, early retirement and two houses is a big call for someone who is worth less than half a mill...


----------



## Julia (12 September 2006)

astroboydivx said:
			
		

> The wife and I plan on dividing our time between Sydney and Byron Bay
> 
> Mind you, early retirement and two houses is a big call for someone who is worth less than half a mill...




Are you kidding???

How could you possibly retire early and own two properties with a net worth of less than half a million?

There must be some other factor you've not  mentioned????

Julia


----------



## noirua (13 September 2006)

You could all try building your own house, and there will be no need to look around or even give up buying. Plots of land come really cheap and with a bit of effort, well errr, "a lot of effort", and then you could post the progress on ASF.


Half price land, here's your big chance: http://www.escapeartist.com/efam/71/Property_In_Australia.html


----------



## noirua (13 September 2006)

... and here's your house. It's an Australian Steel Frame Kit House and for just $105,000 you get a 4 bedroom ensuite with bay windows. They go down to just $30,000.


----------



## Happy (13 September 2006)

juddy said:
			
		

> http://news.ninemsn.com.au/article.aspx?id=143258
> 
> *Borrowers lose homes at record rates*
> Sunday Sep 10 08:08 AEST
> ...




Big problem is to stick to commitment of budgeting, eEspecially for people who never had any financial commitment and spent money whenever they felt like it.

Another problem is people fail to have 3 to 5 years buffer against forced sale and also mentioned rising fuel and general cost of living.

One of quickest crutches, besides tightening expenditure and or picking up another part time job is to rent part or all of the property.

I know, for some anything is too hard, but on the other hand if trend continues and glut accelerates, there will be some nice properties budget priced to pick up on the market, and if industrial boom doesn’t absorb all the spare builders there will be some room for negotiating of good price for house erection.


----------



## juddy (13 September 2006)

noirua said:
			
		

> ... and here's your house. It's an Australian Steel Frame Kit House and for just $105,000 you get a 4 bedroom ensuite with bay windows. They go down to just $30,000.




not bad to live in either.

In Perth, there are builders of these homes screaming for business, but development restrictions in metroploitan areas mean people must build with double brick. These houses would be ideal, but they're not permitted.


----------



## lancedefrance (13 September 2006)

So when would be a good time to bu an investment property? Now or wait till the anticipated rate rise in Nov?


----------



## Happy (13 September 2006)

This is balancing act and only later, that we can say for sure that we bought at the very bottom.

In my opinion we did not see anything yet, and recession or correction is yet to come.
At the moment only overcommitted and not serious and some unlucky investors that have to sell.
Of course my opinion, I can be right-wrong and only time will tell.

Having said that, you can always try.

Best shot to see if somebody is desperate, give them ridiculously low price, price that you know you cannot lose. 

Be ready to make the next move, as sometimes ease of negotiation can overwhelm you to the point of smelling the rat.

Having money pre-arranged is a must and not have money available subject to approval inspection.

Make sure you have good lawyer, who can write contract that you can recoup your time and expenses should person selling property have change of heart.


----------



## ggumpshots (13 September 2006)

Stop_the_clock said:
			
		

> I have decided on not having children, as I do not want to have children, I have no need, no yearning, and not interested.  So there is one equation to be factored out of my life





Me too. except things changed and now I have 2 great kids........so the motto is............. uhmmmmm


----------



## Happy (13 September 2006)

> Originally Posted by Stop_the_clock
> I have decided on not having children, as I do not want to have children, I have no need, no yearning, and not interested. So there is one equation to be factored out of my life




This will sound ridiculous, but we also have added dimension of direct competition with many families who have almost addictive drive to have 6 or more children, which in time will definitely change balances in Australia.


----------



## Realist (13 September 2006)

lancedefrance said:
			
		

> So when would be a good time to bu an investment property? Now or wait till the anticipated rate rise in Nov?




In 2011 maybe.  2012 Probably.


----------



## juddy (13 September 2006)

Happy said:
			
		

> This will sound ridiculous, but we also have added dimension of direct competition with many families who have almost addictive drive to have 6 or more children, which in time will definitely change balances in Australia.





I've got 4, have done my part.


----------



## krisbarry (13 September 2006)

Those that bought b4 the property boom, will always say that property has served them well...They have made X amount and their properties are worth Y amount.

Then they go on to say, anyone can do it...in this current climate I say Bulldust!

The current dwelling count in Australia is around 9 to 10 million for a population of 20 million. If we all wanted to own 3 or more properties then we would need another 30+ million dwellings, a massive population growth and plenty of trades people to build them.

Remember we have just witnessed the biggest boom in property for 30 years and many people will be 6ft under b4 they see the next!

Its a slippery slope from here on in...

Did someone call a crash!


----------



## Realist (13 September 2006)

STC you need to be more patient man, you are getting caught up in this hype like I was 5 years ago. Chill out dude.

I am just so glad I did not buy t5 years ago.  Not that buying a house is a bad thing, but mortgaging yourself to the hilt to buy into an overvalued market when interest rates are gonna rise is not wise.

Over time it will even out.  Perth went from clearly undervalued to now where it is clearly overpriced.  No offence to WA people but Perth is the middle of nowhere has hardly any people and its economy is laughable - just a few mining companies and government departments.

Perth will crash or at least heavily correct itself. That I have absolutely no doubt about. When though is the question - between next year and 2010 I say.


----------



## juddy (13 September 2006)

Realist said:
			
		

> Perth will crash or at least heavily correct itself. That I have absolutely no doubt about.




yes, we are seeing much more negative sentiment over here lately. Some economists are starting to make comparisons with the peak and subsequent slide in Sydney.

I believe we may see it come off 15-20% in the next 2-3 years.


----------



## krisbarry (13 September 2006)

LOL Realist,

I was telling you the very same thing just a couple of weeks ago, calm down! I remember you were hashing out the very same issues when you were going off in a little tangent about housing affordablibility.

Off course the property experts who have bought up squillions of investment properties and said anyone can do it, were taking a good swipe at you. 

By the way I live in Adelaide, not Perth as you keep mentioning!


----------



## krisbarry (13 September 2006)

Anyway I am glad you (Realist) and I are on the same page...this chorus is getting louder and louder.

I reckon I could add a few more members this this list...Smurf and Wayne maybe.  They both seem very bearish about the housing market.


----------



## Realist (13 September 2006)

Woops sorry, dunno why I keep thinking you live in Perth. Adelaide is the same, it will correct itself like Perth.

I am of the opinion property investment negatively geared works extremely well for 30% of the years and 70% of the years you lose money.

So if you hold for 30 years you get 9 great years and 21 years where you actually lose money.  You'll be ahead over all, of course, as the 9 great years are so good adn the 21 years are not so bad.

But my point is I believe those 30% of years have just passed, the other 70% of losing years started in sydney 3 years ago and are about to start in the West.


----------



## tech/a (13 September 2006)

Why would you negatively gear.

And dont give me that old line about tax write offs!!

If you can't positively gear a deal dont do it.
Negative gearing is not for those who have only a rudimentary understanding of property investment.

Love your figures Realist you must me a Professor in Economics.
Where do you get these figures from?


----------



## Realist (13 September 2006)

tech/a said:
			
		

> Why would you negatively gear.
> 
> And dont give me that old line about tax write offs!!
> 
> ...





Show me one property in Eastern or Northern Sydney that you can positively gear?  Are you saying you should never buy in Sydney?

Funnily enough if you say yes then you are probably right.

However you negatively gear for one reason and one reason alone - Capital gains.

Forget tax write offs, captial gains are what counts, and if you can get in while the property is cheap and sell after it has risen alot you are laughing. Leverage works wonders as you always harp on about.




> Where do you get these figures from?



   A book, a few books infact, the most recent one is 130 properties in 3.5 years. the author like yourself and like me does not agree with negative gearing, however if there is an almost certain capital gain I think we'd all agree it is worth it.

The author like you does not buy in major cities though.   There are advantages to living outside of Sydney and Melbourne for sure.


----------



## nioka (13 September 2006)

Realist said:
			
		

> STC you need to be more patient man, you are getting caught up in this hype like I was 5 years ago. Chill out dude.
> 
> I am just so glad I did not buy t5 years ago.  Not that buying a house is a bad thing, but mortgaging yourself to the hilt to buy into an overvalued market when interest rates are gonna rise is not wise.
> 
> ...




Have you been there? I doubt if you eould make those remarks if you had. If I was 30 or 40 years younger I would be there in a flash.


----------



## krisbarry (13 September 2006)

Poor Realist, he has put his foot in it again and is copping it from the head-strong property bulls!

The trick is to not get too personal, and try and avoid replying.


----------



## Bronte (13 September 2006)

During a property seminar held in Sydney last week....
It was stated that 1000 to 1500 people a week are presently leaving Sydney / Melbourne, and moving to Perth / Queensland


----------



## Realist (13 September 2006)

nioka said:
			
		

> Have you been there? I doubt if you eould make those remarks if you had. If I was 30 or 40 years younger I would be there in a flash.





Been where?    

I've been to every state in Aus except Tasmania.

Been to Perth twice, Adelaide only one, is that what you are asking?


----------



## wayneL (13 September 2006)

Bronte said:
			
		

> During a property seminar held in Sydney last week....
> It was stated that 1000 to 1500 people a week are presently leaving Sydney / Melbourne, and moving to Perth / Queensland




Time to fade 'em then


----------



## krisbarry (13 September 2006)

Bronte said:
			
		

> During a property seminar held in Sydney last week....
> It was stated that 1000 to 1500 people a week are presently leaving Sydney / Melbourne, and moving to Perth / Queensland




Ahhh but the trick is...how many are returning?

Thats the reason why the 2006 Census asked more liquid questions to show the flow to and from, rather than just one way.

Next year in May we should see a more accurate picture of the movements of Australians when they release these figures.


----------



## Bronte (13 September 2006)

Haven't sold our South Perth IP as yet.
It has nearly tripled in seven years.
Lots of interest though


----------



## Realist (13 September 2006)

Bronte said:
			
		

> During a property seminar held in Sydney last week....
> It was stated that 1000 to 1500 people a week are presently leaving Sydney / Melbourne, and moving to Perth / Queensland





Hahahaaaaaaaaaaa.   : 

Yeah. I remember the same story 5 years ago in Sydney that 1500 people a week were moving to Sydney. As if there was a flood of people rushing to buy houses.

It was true and probably still is.

It impresses newbies!!  not me though.

That means Sydney is growing by 0.03% of the population each week though.

Or 1.5% a year!!

Would you be happy if your investment property grew 1.5% a year - cause that is what the population is growing.   

And that is alot slower than it has grown in the past of course.   The growth as a percentage is slowing tremendously.


----------



## tech/a (13 September 2006)

> Show me one property in Eastern or Northern Sydney that you can positively gear? Are you saying you should never buy in Sydney?
> 
> Funnily enough if you say yes then you are probably right.
> 
> However you negatively gear for one reason and one reason alone - Capital gains.




Now no but in 1996 yes.

Is now the time to buy IP's--NO and hasnt been for a few years.
There are very rare exceptions. I havent seen one. But know of a few that have changed hands.

If in property you would be developing high density low cost low rental community title apartments.In of course areas of high rent demand.


----------



## Realist (13 September 2006)

Bronte said:
			
		

> Haven't sold our South Perth IP as yet.
> It has nearly tripled in seven years.
> Lots of interest though





Bollocks!


----------



## Bronte (13 September 2006)

We took your advice Realist and listed this property for a silly high price.
It is positively geared of course, we do not have to sell immediately


----------



## tech/a (13 September 2006)

Realist said:
			
		

> Bollocks!




I normally dont believe Bronte on anything but hey hes a long way short of Bollicks in this case.
I know of many that have more than tripled in less than 7 yrs.


----------



## Realist (13 September 2006)

Which suburb is it in?

It frustrates me no end when people tell me such and such has tripled or doubled.

I'm pedantic about these claims sorry.


----------



## nioka (13 September 2006)

Realist said:
			
		

> Been where?
> 
> I've been to every state in Aus except Tasmania.
> 
> Been to Perth twice, Adelaide only one, is that what you are asking?




You must have gone to Perth on a bad day. My sister and brother in law went there to work for 3 years. That was 35 years ago and they won't come back. My daughter and son in law went for a look and are still ther after 3 years.  ???


----------



## Realist (13 September 2006)

tech/a said:
			
		

> I know of many that have more than tripled in less than 7 yrs.





More than tripled??

I am suspicious.


----------



## wayneL (13 September 2006)

Realist said:
			
		

> Hahahaaaaaaaaaaa.   :
> 
> Yeah. I remember the same story 5 years ago in Sydney that 1500 people a week were moving to Sydney. As if there was a flood of people rushing to buy houses.
> 
> ...




Yep heard the same plaintiff protestations in QLD as the last boom sagged into negative equity for many.

LOL


----------



## Realist (13 September 2006)

nioka said:
			
		

> You must have gone to Perth on a bad day. My sister and brother in law went there to work for 3 years. That was 35 years ago and they won't come back. My daughter and son in law went for a look and are still ther after 3 years.  ???





I like Perth, my second favourite city in Aus infact.

However it does have limitations.   It's a bit quiet, small, isolated, limited job wise, and boring, it lacks top restaurants, bars, etc.

That is not being rude, just factual when you look through the eyes of a young unmarried person.

On the other hand Sydney has exhorbetently priced crappy apartments, crap traffic, too much stress, queues, rude people, expensive tolls, overpriced food and drink, etc. etc.  if you look from a family perspective.


----------



## wayneL (13 September 2006)

nioka said:
			
		

> You must have gone to Perth on a bad day. My sister and brother in law went there to work for 3 years. That was 35 years ago and they won't come back. My daughter and son in law went for a look and are still ther after 3 years.  ???




Perth USED to be nice.

It is now a pretentious boring ####hole, with the worst drivers in Australia; and that is some achievemnet.


----------



## Realist (13 September 2006)

You really know if a city is crap when the locals keep asking you (a tourist) if you like their city.

I was in Singapore last week and everyone I spoke to said "Do you like Singapore, what you do think of Singapore?"

I always said "Yeah, sure I like it, it is nice".

I lied of course, it is the most boring place I've ever been to, truly sterile and yawn worthy. No natural beauty, nothing going for it at all, it is just a large business park.


----------



## wayneL (13 September 2006)

Re Perth... a great post by "Ross B" next door at RC, in particular the latter part of the post which is spot on.



> I do not have the understanding of economics or fundamentals to make any comment on the article content, but something is NOT RIGHT about the extreme and enduring boomtime conditions in WA, and especially NOT RIGHT is the almost unbelievable and enduring real estate value escalation, both in Perth, and regionally state-wide.
> 
> 
> A friend of mine bought a strata title place in North Perth just over 1 year ago for 520K, which at the time I thought was a very inflated price. He's just scored a great job in Melbourne and advertised his place for sale a week ago. He was expecting to get 600K - 650 tops. 2 agents valued it at 600K. Another said he could get 700K. My mate spoke to the neighbours and they pointed out that a bigger free-standing but much less well appointed place down the road had gone for 800K. He ended up putting it on the market with a starting price "from 740K". Within a week two offers had come in and to cut the story short, he ended up getting 762K. He made 220K tax-free in just over 12 months - and this place is nothing special!! That is MADNESS, and not at all unusual in these times.
> ...


----------



## Realist (13 September 2006)

> How is it possible that Perth house prices are now second only to Sydney's, with a population of only 1.3 million?? A couple of years ago, Perth was the second cheapest city in the country for housing.




This is the key question I have as well.

Seems really weird to me.

WA is the emptiest place in the world - how it can have a housing boom is beyond me.


----------



## wayneL (13 September 2006)

Realist said:
			
		

> This is the key question I have as well.
> 
> Seems really weird to me.
> 
> WA is the emptiest place in the world - how it can have a housing boom is beyond me.




IMO it is panic buying. People believe Gold will be $10,000 oz, Iron ore $4000 lb and even the humble rutile will be $20,000 tonne by the middle of next week... Chindia will never have a recession, oil/petrol will always be relatively cheap and abundant, and every sane billionaire in the world will want to live in the most isolated and boring city on the planet.

Buy now before it's too late!


----------



## Bronte (13 September 2006)

wayneL said:
			
		

> most isolated and boring city on the planet.



Isn't Geraldton a city then


----------



## krisbarry (13 September 2006)

The funny thing is that Melbournians are migrating to Adelaide in the search for cheaper housing, only to realise when they get here that housing is less affordable than Melbourne


----------



## wayneL (13 September 2006)

Bronte said:
			
		

> Isn't Geraldton a city then




It thinks it is, but it ain't.


----------



## Bronte (13 September 2006)

You say some crazy things Wayne.
Geraldton has to be more isolated and boring than Perth.


----------



## juddy (13 September 2006)

Realist said:
			
		

> Which suburb is it in?
> 
> It frustrates me no end when people tell me such and such has tripled or doubled.
> 
> I'm pedantic about these claims sorry.





 Here you go Realist. A real story for you.

Just got off the phone to a friend. They bought their house in Joondalup in 2000 for $182,000 (4x2, D/b Tile). Spent $70k on renovations. Sold it on the weekend for $590,000.

Crazy people who bought it. Just crazy.


----------



## wayneL (13 September 2006)

Bronte said:
			
		

> You say some crazy things Wayne.
> Geraldton has to be more isolated and boring than Perth.




Despite any title accredited to this place, it is not a city.

It is slightly more isolated than Perth.

It did have more of a social/community structure making it preferable and less boring than Perth. However the real estate boom has now destroyed the social fabric of the community. Therefore it is now only slightly less boring than Perth.

It is less boring than Perth because the range of activities are more readily accessible due to its small size. For instance, I can ride a horse, catch a fish, and go to a committee meeting in town, all in the space of one afternoon/evening, and still catch the US open; an impossibility in Perth.

Cheers


----------



## REA (13 September 2006)

I visited Perth from Sydney for 8 days late August and I thought it was fabulous.  We stayed in Fremantle and then Bunker Bay(Margaret River) great restaurants, no traffic fantastic.  Certainly is progressive.

For Bronte  -   I cannot understand your unit in Stanmore not appreciating, my daughter bought a house in Annandale 1/2 kilometre away late 1999 for $365.000 and it is now worth $745.000 maybe try another agent.


----------



## Realist (13 September 2006)

wayneL said:
			
		

> Buy now before it's too late!




Haha, that is exactly right.

People buy out of fear, or out of greed.

Most do not buy based on fundamental facts and simple logic.

Hence we get wild swings of ups and downs.

I've done it myself, bought shares that were going up cause I thought if I leave it any longer I'll miss out. DUMB!!


----------



## wayneL (13 September 2006)

juddy said:
			
		

> Here you go Realist. A real story for you.
> 
> Just got off the phone to a friend. They bought their house in Joondalup in 2000 for $182,000 (4x2, D/b Tile). Spent $70k on renovations. Sold it on the weekend for $590,000.
> 
> Crazy people who bought it. Just crazy.




Holy Cr@p! Joondalup FFS!


----------



## Bronte (13 September 2006)

"Well known as the "Sun City", Geraldton is also a sought after destination for chasers of the wind. Windsurfers are attracted throughout the year to the perfect conditions for their water sport and the national competitions that are held here annually. The magnificent beaches and sunny weather plays haven to a multitude of water activities or just enjoyed for a leisurely sun-bake or stroll.

Located just *4 ½ hours drive or 55 minute flight north of Perth*, Geraldton is in easy reach for a weekend getaway, a longer vacation or a permanent getaway! It provides an ideal base for exploring all that Geraldton and the surrounding areas have to offer including the wildflowers, Greenough Hamlet, Kalbarri Gorges or the heritage or walk trails in the area."
_Quote from the City of Geraldton website._


----------



## wayneL (13 September 2006)

Bronte said:
			
		

> "Well known as the "Sun City", Geraldton is also a sought after destination for chasers of the *wind*.




Yup, there is the occasional sea breeze up here.


----------



## Smurf1976 (13 September 2006)

Stop_the_clock said:
			
		

> Anyway I am glad you (Realist) and I are on the same page...this chorus is getting louder and louder.
> 
> I reckon I could add a few more members this this list...Smurf and Wayne maybe.  They both seem very bearish about the housing market.



I'm bearish on any asset where (1) it is over valued by most or all measures and (2) there has been mass widespread public involvement speculating on further price rises and (3) the rug is being pulled out from beneath the asset's ongoing inflation.

Property fits all 3 of those with ridiculously low rental yields in many areas, public involvement to the point of being a TV ratings winner, rising interest rates and first home buyers simply unable to pay the asking prices.

When yields are high it's time to buy and I will.


----------



## Smurf1976 (13 September 2006)

tech/a said:
			
		

> Now no but in 1996 yes.
> 
> Is now the time to buy IP's--NO and hasnt been for a few years.
> There are very rare exceptions. I havent seen one. But know of a few that have changed hands.



Exactly...


----------



## Out Too Soon (13 September 2006)

Instead of investing in super, astute investing at the same level in the right shares & when you have enough purchase your house for cash.
Super that gets taxed going in and coming out, annually feeÃ©d to the max & invested in parts of the share market you wouldn't touch with a barge pole is a lazy alternative & a govt & financial industry rip off of the working man. Dont agree, hey it is compulsory.  
pls dont take me tooo serious on this


----------



## wayneL (13 September 2006)

Smurf1976 said:
			
		

> I'm bearish on any asset where (1) it is over valued by most or all measures and (2) there has been mass widespread public involvement speculating on further price rises and (3) the rug is being pulled out from beneath the asset's ongoing inflation.
> 
> Property fits all 3 of those with ridiculously low rental yields in many areas, public involvement to the point of being a TV ratings winner, rising interest rates and first home buyers simply unable to pay the asking prices.
> 
> When yields are high it's time to buy and I will.




What about this for a truly 1st rate, world class investment with an uncommonly high yield.

http://www.royweston.com.au/content...=&fa_range=&min_farange=&max_farange=&oid=171

Quick Quick! Before it's too late!

Oh bugger! Too late, it's sold.  

Seriously though, you would have picked this up for $40k 3 years ago.

The higher current price tag doesn't mean that you'll actually get paid for the rent though.


----------



## Bronte (13 September 2006)

Out Too Soon said:
			
		

> Instead of investing in super, astute investing at the same level in the right shares & when you have enough purchase your house for cash.
> Super that gets taxed going in and coming out, annually feeÃ©d to the max & invested in parts of the share market you wouldn't touch with a barge pole is a lazy alternative & a govt & financial industry rip off of the working man. Dont agree, hey it is compulsory.
> pls dont take me tooo serious on this



Nice thinking OTS
We decided in 1999 to buy an investment property every year for 7 years knowing that property could double in value every 7 to 10 years.We could then harvest the equity every year in retirement.


----------



## juddy (15 September 2006)

Bears and bulls can fight over this one. lol

*Daily Economic Round Up: All about Housing*
http://www.financialstandard.com.au/index.php?id=8533
Friday, 15 Sep 2006 12:55PM

Australian Bureau of Statistics data just released showed that housing starts were down 2.3 per cent over the last quarter on a seasonally adjusted basis and this represented a 5.5 per cent fall over the last year. On this national basis new private sector houses were down 2.5 per cent although the other residential building category fell 10.3 per cent. *The HIA said that if WA and Queensland were excluded from the analysis, housing starts would be down by about 9 per cent.*

Western Australian Premier Alan Carpenter has announced the further $1.5 billion development of the Wagerup Alumina refinery south of Perth which will make it the largest such processing plant in the world. *This is expected to take over two years and employ 1500 workers in the already stretched local labour market.*

In other news from the west, a joint survey from the Western Australia Chamber of Commerce and BankWest has shown that business confidence fell to a 12 month low as a result of concerns about cost pressures especially those do to with wages which have reached record levels in WA.

Housing prices in the Perth region have increased 40 per cent a year with investor loans rising 200 per cent per year since 2003 compared to a 20 per cent reduction for the nation. T*he median house price in Perth of $411,000 now makes it the second most expensive city in Australia and the fifth on an internationally comparable basis when incomes are considered.
*
T*he IMF has just revised down its GDP forecasts for Australia from 3.3 per cent to 3.1 per cent and inflation up from 2.6 per cent to 3.5 per cent. *In its latest report the US is expected to finish this year having grown 3.4 per cent although this is anticipated to fall to 2.9 per cent next year. *The IMF has expressed concerns that world growth is threatened and some uncertainty is likely to continue in equity markets as a sharper than expected US slowdown scenario concern the market psyche.*

Peter Bell


----------



## tech/a (15 September 2006)

> Peter Bell




The Footballer???


----------



## juddy (15 September 2006)

tech/a said:
			
		

> The Footballer???





well why not? Scott Watters (ex Freo, WCE) is finding the bargain house buys on Today Tonight every Monday. 

He certainly looks like a real estate rep.  lol


----------



## Bronte (15 September 2006)

Bronte said:
			
		

> Nice thinking OTS
> We decided in 1999 to buy an investment property every year for 7 years knowing that property could double in value every 7 to 10 years.We could then harvest the equity every year in retirement.



We enjoyed the process of buying quality property so much.....we bought more than we planned for


----------



## wayneL (15 September 2006)

Bronte said:
			
		

> We enjoyed the process of buying quality property so much.....we bought more than we planned for




Indeed

It has become a pastime for many folks. It is a part of the sociologically negative knock on effects of R/E bubbles. I observe this phenominum has destroyed community/social intercourse. 

The bust will be a positive in this regard.


----------



## Bronte (15 September 2006)

Yes...we did go overboard with buying IP.
We know that now....& are selling some.


----------



## juddy (15 September 2006)

Fifth most expensive city in the world! That's the part I can't get over. 

And we had Greg Rossen (REIWA president) on the wireless not even a month ago telling us Perth was still highly affordable because of the high incomes and that first home buyers should jump in '"to get a foot in the door".

geez, I reckon REIWA are going to get a hammering in the next couple of years.


----------



## Bronte (15 September 2006)

juddy said:
			
		

> Fifth most expensive city in the world! That's the part I can't get over.
> And we had Greg Rossen (REIWA president) on the wireless not even a month ago telling us Perth was still highly affordable because of the high incomes and that first home buyers should jump in '"to get a foot in the door".
> geez, I reckon REIWA are going to get a hammering in the next couple of years.



Agreed juddy  
We used to say to people....
"It doesn't matter how you make your money....
Buy Real Estate"
So pleased we followed our own advice   
We made our money 'Trading the SPI' using Gann.


----------



## Smurf1976 (15 September 2006)

wayneL said:
			
		

> Indeed
> 
> It has become a pastime for many folks. It is a part of the sociologically negative knock on effects of R/E bubbles. I observe this phenominum has destroyed community/social intercourse.
> 
> The bust will be a positive in this regard.



The single most annoying thing about the whole real estate bubble for me is the mentality that people will do or support practically anything that leads to an increase in their property values. 

Things that they would not have supported before the "my house is an ATM" mentality took hold. For example, shutting down businesses in the area or opposing new ones in order to create some sort of "exclusive residential" community which is perceived as leading to higher values. Or keeping out children, animals, solar panels or anything else which doesn't fit the McMansion "vision" of ever spiraling property prices.

Down here in Tassie we've already seen the Christmas carols moved and two businesses closed, one of which was very high profile and long established, to keep residents happy in inner Hobart. At the other end of the state there's a campaign against new industry being established in an existing "major impact heavy industry" zone on the basis that doing so would slow the growth of property values.

This mentality has reached the stage of being a cancer. When you start undermining the fundamentals of our lifestyle and economy in order to prop up a bubble then you are consuming the very basis that supports the bubble in the first place. It's gone way too far and I've heard plenty of stories of similar things happening elsewhere in Australia and overseas - "you can't do that, it might lower my house's value".

It's like deciding to take out some vital organs as a means of losing weight. Short sighted in the extreme and with a highly predictable result of disaster if it's actually done.


----------



## Julia (15 September 2006)

Bronte said:
			
		

> Agreed juddy
> We used to say to people....
> "It doesn't matter how you make your money....
> Buy Real Estate"
> ...




Yet you said on the Superconnuation thread which you started that you would not have enough for retirement?

If you've bought so many IP's and made money on Trading the SPI, what has gone wrong???

Julia


----------



## visual (15 September 2006)

http://money.cnn.com/popups/2006/real_estate/hud_homes/frameset.exclude.html

Stop,
I know you think you cant afford to buy a house,but I`ve found one,well it`s in New york,Rochester,but it`s only 45 grand,ok aus.maybe 90thousands,but think New York.
:


----------



## wayneL (16 September 2006)

visual said:
			
		

> http://money.cnn.com/popups/2006/real_estate/hud_homes/frameset.exclude.html
> 
> Stop,
> I know you think you cant afford to buy a house,but I`ve found one,well it`s in New york,Rochester,but it`s only 45 grand,ok aus.maybe 90thousands,but think New York.
> :




Nice find.

There are parts of the US that are still excellent value. On the same page as the above link is a house in Apex NC for $130,000.

This is about 5 minutes drive from my uncle in Carey and about 10-15 min drive from the Raleigh-Durham Technology Park (read: plenty of good jobs available) and is a fairly nice area.

A church on every corner too if so inclined


----------



## visual (16 September 2006)

personally I`d go for the one in Appleton,WI.for 93 grand, by the way is that Wisconsin?
looks good,thats about 150 grand aus. :


----------



## wayneL (16 September 2006)

visual said:
			
		

> personally I`d go for the one in Appleton,WI.for 93 grand, by the way is that Wisconsin?
> looks good,thats about 150 grand aus. :




Yes cute house... and yes thats Wisconsin. Don't forget your winter woolies


----------



## wayneL (16 September 2006)

visual said:
			
		

> personally I`d go for the one in Appleton,WI.for 93 grand, by the way is that Wisconsin?
> looks good,thats about 150 grand aus. :




http://www.jefflindsay.com/Appleton.html

Typical small town USA... very nice


----------



## clowboy (16 September 2006)

Does anyone own any houses overseas?

It is something that has aroused my interest but I have not pursued the matter much as I know very little about it and therefore am skeptical.


----------



## Bronte (16 September 2006)

We own property in England.
Just sold one.


----------



## wayneL (16 September 2006)

clowboy said:
			
		

> Does anyone own any houses overseas?
> 
> It is something that has aroused my interest but I have not pursued the matter much as I know very little about it and therefore am skeptical.




Lots of Ozzies have IPs in NZ. I have some in the UK. There is even a group of Ozzies who have IPs like the ones in the link in the US.

So there are quite a few.


----------



## Bronte (16 September 2006)

Julia said:
			
		

> Yet you said on the Superconnuation thread which you started that you would not have enough for retirement?
> If you've bought so many IP's and made money on Trading the SPI, what has gone wrong???
> Julia



Hi Julia,
We only had / have a small amount in Superconnuation.
That is WHY we decided to buy Investment Property.


----------



## wayneL (16 September 2006)

Bronte said:
			
		

> Superconnuation.




Apt term


----------



## Bronte (16 September 2006)

Yes  It really is a con.


----------



## wayneL (16 September 2006)

wayneL said:
			
		

> Yes cute house... and yes thats Wisconsin. Don't forget your winter woolies




http://www.jefflindsay.com/aplshots4.shtml


----------



## wayneL (16 September 2006)

A Cautionary Housing Tale from Japan

http://www.bullnotbull.com/archive/japan-tale.html



> by Michael Nystrom
> September 8, 2006
> Cambridge, MA
> 
> ...


----------



## Realist (16 September 2006)

Good article Wayne.

It comes back to intrinsic values I suppose.

And almost everywhere in Australia it seems houses are still very much higher than wages compared to the rest of the world.

Perth especially is due for one hell of a fall, Sydneys already had a bad 3 years.

Be interesting to see what happens, I'll continue to rent and watch. While yields are low that is obviously the smart thing to do.

Fear of missing out can lead to silly decisions that cost hundreds of thousands of dollars.


----------



## visual (16 September 2006)

wayneL said:
			
		

> http://www.jefflindsay.com/aplshots4.shtml




Pretty :


----------



## nizar (16 September 2006)

> Between 1955 and 1990, land prices in Japan appreciated by 70 times while stocks increased 100 fold!




Damn thats a fair effort!

Thanks Wayne, thats a really good article...


----------



## Bronte (16 September 2006)

Bronte said:
			
		

> We used to say to people....
> "It doesn't matter how you make your money....
> Buy Real Estate"
> So pleased we followed our own advice
> We made our money 'Trading the SPI' using Gann.



*Boom leaves Perth houses more pricey than Sydney ’s * 
Found this:http://www.thewest.com.au/default.aspx?MenuID=77&ContentID=6962


----------



## juddy (16 September 2006)

The US housing market: a Japanese comparison

from http://www.shloky.com/files/Japland.jpg


----------



## wayneL (16 September 2006)

juddy said:
			
		

> The US housing market: a Japanese comparison
> 
> from http://www.shloky.com/files/Japland.jpg




A man what an excellent chart... saving that one.

Thanks Juddy

Cheers


----------



## cogidubnus (17 September 2006)

It will end in tears. What happens if the government decides to do away with personal income tax or reduce it to 30%? There will be no benefit of negative gearing but people will still owe lots of money on homes. As with anything, the minute the entire poplace gets on to a perceived good thing it becomes blown out of proportion.


----------



## clowboy (17 September 2006)

Wishful thinking,

Doing away with personal income tax.

If they where really smart and really want to minimise/get rid of negative gearing then they would slowly phase personal income tax down to 30%.

When you actually stop and think about it the small 3% (or whatever it was) reduction in the top tax bracket actually has a very big impact on negative gearing, and yet noone has said a thing.  year by year a 2% reduction is the way to go.  That and an increase in super contributions and softening of rules.

An article in yesterdays west was saying that an average worker (50k Pa) still had to contribute 4k a year of there own money to super just to retire on 40k a year or something like that, I thought, Ha how many people are going to do that?


----------



## cogidubnus (17 September 2006)

clowboy said:
			
		

> Wishful thinking,
> 
> Doing away with personal income tax.
> 
> ...




Is that 4K on top of what the bemployer contributes? You mean something like 8K into supa a year?


----------



## clowboy (17 September 2006)

Yes 4k on top of employer contibutions.

I haven't actually tested any of the figures from the article becuase to me it seems irelevant but they where saying that even someone on a much as 100k a year still needs to add like $1000 a year of there own money.

It also mentioned a doubling of the cost of the age pension over the next X years which it stated would cause this years budget surplus of 10 billion to become a deficiet of 10 billion.

Personally I have always looked at it that I will have to fund my own retirement myself and any super I have will be the luxuries.


----------



## cogidubnus (17 September 2006)

I will buy a bus and live in it.


----------



## YChromozome (17 September 2006)

For a fraction more than a bus you could of brought a 1 bedroom unit in Cabramatta last weekend for $95k

It sold in 2003 for $262,500. A bargain.

Bought for $262,500 in 2003, sold for $95,000 last week - Sydney Morning Herald, 17 Sep 2006


----------



## brisvegas (17 September 2006)

in todays brisbane sunday mail the median house price in my suburb is up 14% in last 1/4er at 385k which compares nicely with 05 median at 330k . it aint all gloom and doom guys . right place and right property still provides opportunity


.................... bris


----------



## Julia (17 September 2006)

brisvegas said:
			
		

> in todays brisbane sunday mail the median house price in my suburb is up 14% in last 1/4er at 385k which compares nicely with 05 median at 330k . it aint all gloom and doom guys . right place and right property still provides opportunity
> 
> 
> .................... bris




Pretty much the same as in my area, also in Qld.

However, I can only too clearly recall that I bought this house at the beginning of 1993 and for the next five years would have lost a substantial amount had I wanted to sell.  These days it's worth well over double what I paid, so it just demonstrates again the cycles in which housing prices go and down.

Julia


----------



## clowboy (17 September 2006)

ycromozome,

what sort of an area is that, if you know?

As in, is it inner city, outer suburbs, posh, trashy etc etc?

Just to get a feel for the area and compare that to my local backyard.

Thanx


----------



## Smurf1976 (17 September 2006)

YChromozome said:
			
		

> For a fraction more than a bus you could of brought a 1 bedroom unit in Cabramatta last weekend for $95k
> 
> It sold in 2003 for $262,500. A bargain.
> 
> Bought for $262,500 in 2003, sold for $95,000 last week - Sydney Morning Herald, 17 Sep 2006



I don't give a damn about averages... If you just want a house to live in then delaying your purchase has been a _very_ smart move if you're wanting to buy in Sydney.

I haven't seen any falls this dramatic here in Tassie but there are more and more examples of asking prices 15% down from the peak and still sitting there with no apparent interest. Assuming they are willing to negotiate, we're looking at falls in the order of 20% from peak selling prices.

That said, there are still some properties selling quickly so the market seems to be mixed. The falling prices started in houses priced around the average and this now seems to be spreading to the cheaper suburbs as well. More expensive properties don't seem to have really been affected so far. So a "split" market - those willing to spend a more than the average are still buying but the other half is haggling down the price or not buying at all. 

Just based on my own observations around Hobart. Not a hard thing to do when Friday's paper is literally about 55% filled with "real estate". That in itself says rather a lot IMO.

Adjusting for population difference, Melbourne would have a 1000 page real estate section in the paper and even Adelaide would have over 300 pages of houses for sale to be comparable with the space taken up by it in Hobart. A lot of houses for sale down here. Rising supply, demand stagnant at best - you know the next bit...


----------



## Happy (30 September 2006)

> From ABC, September 29, 2006
> Housing affordability 'deserves federal focus'
> 
> 
> ...




With bit of luck, we might have an answer and topic starter affordably priced property or rental accommodation.


----------



## krisbarry (17 October 2006)

Glad I didn't listen to the rest, yep as I have stated before, that over the past year I have diverted all my house deposit savings into my superannuation, geared it up and its all in Australian Shares.

*...And today I am saying WOOOSHKA!*

Glad I didn't follow the sheep and buy an over-hyped over-priced house, knowing now that I would have no equity in it, or even worse negative equity!

Sometimes its always good to take a different route in life, no matter how many people say I am wrong, today I couldn't give a stuff. I actually made the right choice, the best choice, the most profitable choice.


----------



## krisbarry (13 November 2006)

Still running at an impressive return:

Colonial First State Geared Share (superannuation)

1 year 42.92%  
2 Year 43.98%  
3 year 42.36% 

Better returns than any bloo_dy over priced, over hyped Australian housing market, even better than the Perth housing market.


----------



## clowboy (13 November 2006)

Well the latest stats out on perth market was 45% for the last year so not quite.

Still 42% is fantastic, can't complain with that


----------



## tech/a (13 November 2006)

Stop_the_clock said:
			
		

> Still running at an impressive return:
> 
> Colonial First State Geared Share (superannuation)
> 
> ...





Read the fine print.

NETT DISTRIBUTED RETURN.

*You cant fool all the fools all of the time*
But you can fool most of the fools most of the time.


*Thats 10% since inception.*

Had to take 2 piks as it was/is to wide.


----------



## Ken (13 November 2006)

sustainable returns?


----------



## nizar (13 November 2006)

clowboy said:
			
		

> Well the latest stats out on perth market was 45% for the last year so not quite.
> 
> Still 42% is fantastic, can't complain with that




WOW.... It was only 5 or 10 years ago when 200k would get you a mansion in Perth...


----------



## clowboy (14 November 2006)

5 years ago you could have bought a very comfortable house in a very comforatable suburb in perth for 200k.  Now you can buy a very uncomfortable box in a crappy suburb and still need more than 200k


----------



## Flathead Flick (14 November 2006)

I think what people are missing here is that property is just another asset class, an investment no different from shares or managed funds. Sure, it went through a dream run from 99-03, but it has sucked for the last three years. The major difference with property is that you have hundreds of thousands of dollars locked into one 'company' (to compare it to shares), which is illiquid. Would you ever do that with any other investment?

But, it is really no more than an investment. What's happened is that the media and the government in Australia has conned everyone into thinking that they 'have' to buy a home. Why would they do this? Because it locks you into the stability of a long-term contract - your mortgage - which means that you're more likely to stay in your job, pay your taxes and generally be a good citizen.  

All good for the economy and the government. But is it good for us? Do we really want to be locked into a contract, pay the bank hundreds of thousands of dollars in interest, shell out tens of thousands of dollars in repairs and pay the government taxes such as stamp duty, property taxes and then CGT (if it's an investment) - only to be stuck in some crappy brick home for the rest of our lives?  

I think it's the biggest scam going around and the saddest thing is that the majority of Australians have fallen for it.


----------



## nizar (14 November 2006)

Flathead Flick said:
			
		

> I think what people are missing here is that property is just another asset class, an investment no different from shares or managed funds. Sure, it went through a dream run from 99-03, but it has sucked for the last three years. The major difference with property is that you have hundreds of thousands of dollars locked into one 'company' (to compare it to shares), which is illiquid. Would you ever do that with any other investment?
> 
> But, it is really no more than an investment. What's happened is that the media and the government in Australia has conned everyone into thinking that they 'have' to buy a home. Why would they do this? Because it locks you into the stability of a long-term contract - your mortgage - which means that you're more likely to stay in your job, pay your taxes and generally be a good citizen.
> 
> ...




Great post.


----------



## marklar (14 November 2006)

Flathead Flick said:
			
		

> All good for the economy and the government. But is it good for us? Do we really want to be locked into a contract, pay the bank hundreds of thousands of dollars in interest, shell out tens of thousands of dollars in repairs and pay the government taxes such as stamp duty, property taxes and then CGT (if it's an investment) - only to be stuck in some crappy brick home for the rest of our lives?



Been there, done that, chipped away at paying back a $300k plus one and gave in when I wasn't getting anywhere.  Am now renting, working and trading/investing in much smaller parcels and am much happier     

Only thing is with low rental vacancy rates at the moment, renters are treated like third-class citizens. Three weeks to get an answer on a rental application, having to almost jam the Tennants Act up the real-estate agents' clacker to get her to call in a warranty fix for the damn dishwasher, etc.

m.


----------



## nioka (14 November 2006)

Flathead Flick said:
			
		

> I think what people are missing here is that property is just another asset class, an investment no different from shares or managed funds. Sure, it went through a dream run from 99-03, but it has sucked for the last three years. The major difference with property is that you have hundreds of thousands of dollars locked into one 'company' (to compare it to shares), which is illiquid. Would you ever do that with any other investment?
> 
> But, it is really no more than an investment. What's happened is that the media and the government in Australia has conned everyone into thinking that they 'have' to buy a home. Why would they do this? Because it locks you into the stability of a long-term contract - your mortgage - which means that you're more likely to stay in your job, pay your taxes and generally be a good citizen.
> 
> ...



You are so wrong... Print out your post. Look at it each year and see if you end up coming to the same conclusion as I have.  It may take 10 years or so but you will get there.


----------



## Flathead Flick (14 November 2006)

nioka said:
			
		

> You are so wrong... Print out your post. Look at it each year and see if you end up coming to the same conclusion as I have.  It may take 10 years or so but you will get there.




Thanks for the sage advice, o wise one. How about you put $500-$1m in just about any ASX200 share and look at it in 10 years or so. It's amazing what leverage can do...


----------



## tech/a (14 November 2006)

> All good for the economy and the government. But is it good for us? Do we really want to be locked into a contract, pay the bank hundreds of thousands of dollars in interest, shell out tens of thousands of dollars in repairs and pay the government taxes such as stamp duty, property taxes and then CGT (if it's an investment) - only to be stuck in some crappy brick home for the rest of our lives?




There are actually quite a few of us who quite happily live in our crappy properties which we couldnt have afforded FREEHOLD without having invested wisely in realestate.

Frankly I hate Esplanade living,running on the beach in the morning,a quick workout in the gym,a sauna after work.Few friends around for a game of billiards a few beers and a BBQ.

*Yeh rental sound great!!*


----------



## Flathead Flick (14 November 2006)

tech/a said:
			
		

> There are actually quite a few of us who quite happily live in our crappy properties which we couldnt have afforded FREEHOLD without having invested wisely in realestate.
> 
> Frankly I hate Esplanade living,running on the beach in the morning,a quick workout in the gym,a sauna after work.Few friends around for a game of billiards a few beers and a BBQ.
> 
> *Yeh rental sound great!!*




Another brainwashed one.   

Sure, tech/a there's no way you can get that one-of-a-kind lifestyle renting... no rental properties at all on the Esplanade...


----------



## tech/a (14 November 2006)

Yeh but I own the property your paying me a passive income on!

Have a couple coming up soon at $600 a week, if your in Adelaide you maybe interested.

If this is brainwashed bring on the psychologist!


----------



## Casper (14 November 2006)

Hi Flathead

I think the Packers, Murdochs, Foxs etc etc etc in this world would have a nice little chuckle if you tried to tell them that they should never have bought their houses.

Imo buying a house can be a pure investment or pure lifestyle decision and I think in the majority of cases it's probably a combination of the 2.

I certainly have no regrets buying my first house nearly 20 years ago now when mortgage rates were in the high teens %. 

Sure, housing has generally come off the boil recently but it has also done so occasionally in the past as well.  I doubt very much that residential property won't be worth more in 10+ years than it is now and so if you can ride it out in the short term you should be sitting pretty in the long run.

In terms of buying real estate as a pure investment I don't see anything wrong with getting a tennant to pay it off for you.  Sounds like a pretty good deal to me 

We could could go on for ever talking about housing affordability now, in real terms, compared to 20 years ago and yes it is much lower now but that is a different discussion alltogether imo.

If you can can afford repayments with a buffer of say interest rates rising another 1-2% in the next 12-18 months as the worst case scenario then buying property to widen or enhance your asset base is definitely worth considering, especially as prices are coming down in some parts of the country.


----------



## Julia (14 November 2006)

Owning my home is much more than an investment decision for me.  I simply just love it.  I like where it is, I have great neighbours, I've created a beautiful garden from bare dirt, and it's my haven when the world isn't a great place.

But at the same time, it continues to appreciate in value.

Similarly, I would never have had the funds which I presently have in the share market had I not bought investment property many years ago.

Personally, I don't care what you do, Flathead.  Just don't be so dismissive of others whose choices have served them well and from whom you just possibly could learn something.

Julia


----------



## nioka (14 November 2006)

Flathead Flick said:
			
		

> Thanks for the sage advice, o wise one. How about you put $500-$1m in just about any ASX200 share and look at it in 10 years or so. It's amazing what leverage can do...



I always thought a low interest housing loan on practically no deposit was as good a leverage as you can get. and you can borrow against the home again later. I doubt if I have 10 years to look forward to but I have a hell of a lot to look back at.


----------



## Flathead Flick (14 November 2006)

marklar said:
			
		

> Been there, done that, chipped away at paying back a $300k plus one and gave in when I wasn't getting anywhere.  Am now renting, working and trading/investing in much smaller parcels and am much happier
> 
> m.




I hear you marklar. Good to see you've come back from the dark side.   

And nizar - great to have a real investor around, who can see through the home ownership propaganda we have in Oz. 

The ABS reports that in 2004 35% of the 7.7m households owned their home outright and 35% had mortgages, a total of 70%. This puts at us no.4 in the world for home ownership, just ahead of the US, the UK, almost double Germany (42%) and double Switzerland (35% in 2000). _See links below_ 

But the media and the govt will keep hammering away - they've got to keep the 70% tied down and also have the other 30% of us to work on...

http://news.yahoo.com/s/fool/20061025/bs_fool_fool/116179047707
http://www.abs.gov.au/Ausstats/abs@.nsf/e8ae5488b598839cca25682000131612/99e1db0d9f148da0ca256e7c00805a11!OpenDocument


----------



## nizar (14 November 2006)

Casper said:
			
		

> In terms of buying real estate as a pure investment I don't see anything wrong with getting a tennant to pay it off for you.  Sounds like a pretty good deal to me




The only sort of property worth getting into for pure investment purposes is commercial or even industrial. Residential is only good for capital gains and you get better capital gains from shares in my opinion. And i like shares better because:
(1)more liquid
(2)divisible

In residential property you can have problems with tenants and even if you dont, the yields are so low, because the rental price appreciation wasnt proportionate to the house price appreciation in the last few years. You get maybe 4-5%nett. Thats a joke, and less than the interest you are paying on your loan.

With commercial, you are dealing with professionals, they pay all the outgoings, contracts are much longer, CPI increases, and 8-9%nett is the going rate. 

Im talking about melbourne by the way, may be different in other states.

The only way you can really clean up in residential is through development. Definately residential property is the wrong way to go if you are looking for yield.


----------



## Flathead Flick (14 November 2006)

Julia said:
			
		

> Owning my home is much more than an investment decision for me.  I simply just love it.  I like where it is, I have great neighbours, I've created a beautiful garden from bare dirt, and it's my haven when the world isn't a great place.
> 
> But at the same time, it continues to appreciate in value.
> 
> ...




As it happens, I worked as a lending manager for years before becoming a manager of a property division for HNW clients at Macquarie. As much as I may be able to glean from your personal circumstances, I think I'll trust my experience with my ex-clients. Almost without fail, my (mostly male) HNW clients said that their property was the worst investment they ever made, and was usually done simply to please their partner...

BTW, you don't need to buy a house to create a garden.


----------



## Flathead Flick (14 November 2006)

nizar said:
			
		

> The only sort of property worth getting into for pure investment purposes is commercial or even industrial. Residential is only good for capital gains and you get better capital gains from shares in my opinion.




Too true, nizar. Right on the money - commercial, retail and industrial are another kettle of fish altogether.


----------



## tech/a (14 November 2006)

Nizar.

All have their time now is commercial/industrial.

1996-2003 residential.

Now Zinc/Resources
Early 90s .coms

But those who dont understand that there are opportunities in all sectors even in down turns are obviously not our age!


----------



## Casper (14 November 2006)

I agree in principle with what you say nizar but I think that most people buy their first house as an investment/lifestyle combination and some may even buy purely for the location and lifestyle.

The more your decision to buy a house is based on investment, as opposed to lifestyle, then obviously the more thorough your research and expected nett returns calculations have to be, just like for any investment in any asset class, not just property.

If looking at pure investment criteria for buying a house then yes you should compare the nett returns from the house and compare it to the expected nett returns from other asset classes and see which is greater over the time frame you are looking at holding the asset.

I think you'll find that if looking at say a 5-10 year time frame you could find areas in Australia where property returns should exceed those from shares and vice versa.

Key words: research, research, research and location, location, location


----------



## The Mint Man (14 November 2006)

Casper said:
			
		

> I think that most people buy their first house as an investment/lifestyle combination and some may even buy purely for the location and lifestyle.



Hit the nail on the head there casper. I done all in one hit, Ill give a few points.
*For me personally, Im 10 min from work and 10min the other way is the beach. Also fairly close to family etc. so big fat ticks in that area!
*Bought house for $215000, valued at $245000= $30000 equity straight off the bat which, as Julia said, can be used for other investments including shares. I belive the market has reached its bottom (here) so I doubt I'll lose that 30k buffer. up from here!
*Got loan just on the 1st rate rise but its locked in from there. Also got FHOG and Stamp duty concession which saved a heap.
*Good location 100m from lake, close to everything (10min or less!) shops, schools, freeway etc. 1-1/2 hours to sydney Max 45-60min to Newcastle. 
*expanding population, Industrial estates going ahead more Jobs being created, huge parcels of land earmarked for development in future, Shopping centers and homemakers type centre being developed as I speak, Train station being built in area, also theres an air strip near freeway which has the potential to become similar to Newcastles airport in the future.
The list goes on....

For someone thats probably half way across the country to come in here and generalise like you have, that being that property is a dud investment everywhere and that its some kind of Government conspiracy, is a joke. There are deals to be had in all asset clases. Full Stop. 
As casper said, go tell it to someone like the Packers! they will laugh you out the door. Especially when you tell them that you know better cause you were once a top notch lender.  

cheers


----------



## arlee123 (14 November 2006)

Stop_the_clock said:
			
		

> This will be a hot topic....
> 
> I have been living at parents place - free rent, or my mates place free rent!
> 
> ...




Hey guyz..just have a question, say if you put your money into this super fund..and can only touch the money when you're 65...what if the super company that you put your money broke ..ie.bankrupt...then what will happen to your super ?


----------



## Smurf1976 (14 November 2006)

Would it have been a smart move to buy shares in XYZ at $5.80 paying a 15 cent annual dividend using borrowed money in 2004 when you could now buy the same shares for $5.10? Didn't think so and it's no different with property - if prices are going down in the short term then it makes sense to wait before buying no matter what you expect to happen in 10 or 20 years time.

Cash in the bank earning 6 - 6.8% beats property earning 3% with ongoing maintenance costs pretty easily. When property is returning a decent yield, I WILL be buying it. That's not now.


----------



## chops_a_must (14 November 2006)

Casper said:
			
		

> I agree in principle with what you say nizar but I think that most people buy their first house as an investment/lifestyle combination and some may even buy purely for the location and lifestyle.



If you are buying for a lifestyle/ location, then it isn't an investment, so much as it then becomes a consumer good.


----------



## ghotib (14 November 2006)

arlee123 said:
			
		

> Hey guyz..just have a question, say if you put your money into this super fund..and can only touch the money when you're 65...what if the super company that you put your money broke ..ie.bankrupt...then what will happen to your super ?



A VERY good question. I don't know the answer. When it happens, I would expect some form of guarantee system to come into effect, but as far as I know there's no such thing yet. 

For the moment, I think spreading your super around among a few managers is a sensible idea, so long as you can keep track of it. Many funds managers enable you to do this: your super is with XYZ company which has arrangements with AXD, ZYX, FPL, SMR etc etc so that they can invest some of your super money. The retail managers charge fees, but you could think of them as a kind of insurance. Better yet, investigate the industry funds - very good returns and no shareholders demanding dividends from your money.

Cheers,

Ghoti


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## Ferret (15 November 2006)

I don't think a super fund can go broke.  

They are not allowed to borrow.
The only expenses they have are management etc and they recoup these from the fund members.

Sure, the value of the fund might drop (meaning the member's balances drop) and this could be a big % if markets crashed.  But actually go broke? - no.

Ferret


----------



## ghotib (15 November 2006)

I hope you're right. But there's an almighty ocean of money under superannuation now, and that has to be attracting attention from people who are... um... more interested in the integrity of their own assets than those of   super funds. And there's always  the possibility of mistakes. Financial institutions can fail.

Cheers (really)

Ghoti


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## nioka (15 November 2006)

Smurf1976

Cash in the bank earning 6 - 6.8% beats property earning 3% with ongoing maintenance costs pretty easily.  [/QUOTE said:
			
		

> Wrong. Inflation and tax will reverse the equation.


----------



## Flathead Flick (15 November 2006)

The Mint Man said:
			
		

> For someone thats probably half way across the country to come in here and generalise like you have, that being that property is a dud investment everywhere and that its some kind of Government conspiracy, is a joke. There are deals to be had in all asset clases. Full Stop.
> As casper said, go tell it to someone like the Packers! they will laugh you out the door. Especially when you tell them that you know better cause you were once a top notch lender.
> 
> cheers




Yeah, great point TMM - the Packers have made their entire fortune investing in property, not any of their other piddly investments in media companies, casinos and mining companies...  

We'll see how much you love property in 5 years' time. Actually, I'll bring that back to two. Property is about to go down big time TMM, but you keep telling yourself that your $30k 'profit' is safe.

FF


----------



## tech/a (15 November 2006)

> Property is about to go down big time TMM, but you keep telling yourself that your $30k 'profit' is safe.




Define Big Time.
Australia wide? Or selected areas such as Mint Mans Suburb.


----------



## Flathead Flick (15 November 2006)

Ferret said:
			
		

> I don't think a super fund can go broke.
> 
> They are not allowed to borrow.
> The only expenses they have are management etc and they recoup these from the fund members.
> ...




Yep, you're right Ferret - they simply can't go broke, unless the whole world melts and then it doesn't really matter. They can't borrow, and they've got both ASIC and APRA looking over their shoulder - ASIC makes sure they abide by company law and APRA regulates how they operate so they don't make stupid investments and lose all your money.

With the changes to super in the 2006 budget, for the cautious investor there probably isn't a better place to put your cash.

Check out the gov website (and yes, I do see the irony in recommending a gov website  ) or do a Google search to find out why.
http://www.simplersuper.treasury.gov.au/


----------



## Flathead Flick (15 November 2006)

tech/a said:
			
		

> Define Big Time.
> Australia wide? Or selected areas such as Mint Mans Suburb.




Big Time, as in Australia wide. For that matter, globally. The US and the UK have been teetering on the edge of a precipice for a while, and as with war and other matters, we'll sign on to their dance card as soon as they ask.

We've had three rate rises this year and inflation is still sitting at 3.9%, while unemployment is at all time lows - putting pressure on wage growth. What's more, everyone is WAITING for a crash. When emotion mixes with economic fundamentals, all hell breaks loose. Just look at property in the late-80s and the tech wreck of 2001.

Sure, not everyone is going to lose their house, but there are certainly going to be a lot of hard luck stories thanks to bloody loose lending policy from most of the banks. Mortgage brokers hitting the scene over the last decade hasn't exactly strengthened lending policy, not to mention competition from players like St.George and GE Money. 

And when the crash comes, I'm almost certain that one of the banks will go down too. St.George, for example, has been using mortgage brokers to lift their lending figures - and it's lo-doc or no-doc loans that they've been giving out. Bad for them and bad for the poor suckers who have overborrowed without taking into consideration interest rate rises or a potential rise in unemployment. Both only have one way to go. 

What's different at the moment is the magnitude of the loans that people have taken out. Small incremental rises in interest rates could level most people. Many have $500k+ loans. Do the sums.


----------



## The Mint Man (15 November 2006)

Flathead Flick said:
			
		

> Yeah, great point TMM - the Packers have made their entire fortune investing in property, not any of their other piddly investments in media companies, casinos and mining companies...



I expected this reply  seen it coming a mile away  



			
				Flathead Flick said:
			
		

> We'll see how much you love property in 5 years' time. Actually, I'll bring that back to two. Property is about to go down big time TMM, but you keep telling yourself that your $30k 'profit' is safe.



Firstly, Im not sure why you quoted 'profit', I never said that. the term I used (without even looking over my original post) was equity I belive. I havnt sold the house and dont intend to for quite some time.
Second, Im not an elephant but I do have a good memory. If we and the forum is still here in 2 & 5 years time I will bump this thread back up just to remind you..... Ill even put a post-it on my wall to remind me, as I said Im not going anywhere for a while  



			
				Flathead Flick said:
			
		

> And when the crash comes, I'm almost certain that one of the *banks* will go down too. *St.George*, for example, has been using mortgage brokers to lift their lending figures - and it's lo-doc or no-doc loans that they've been giving out. Bad for them and bad for the poor suckers who have overborrowed without taking into consideration interest rate rises or a potential rise in unemployment. Both only have one way to go.



and you thought what I said about the packers was bad enough to be sarcastic about....   :bong: 

cheers


----------



## Flathead Flick (16 November 2006)

The Mint Man said:
			
		

> Firstly, Im not sure why you quoted 'profit', I never said that. the term I used (without even looking over my original post) was equity I belive. I havnt sold the house and dont intend to for quite some time.
> Second, Im not an elephant but I do have a good memory. If we and the forum is still here in 2 & 5 years time I will bump this thread back up just to remind you..... Ill even put a post-it on my wall to remind me, as I said Im not going anywhere for a while




And I always thought equity was a term for unrealised profit. Could be wrong there...

I have a feeling you won't want to remind me about my post, but hey, go for you life, chuck it on a post-it note on the wall. I'm tipping it'll last as long as the profit - I mean equity - in your house.   

FF


----------



## constable (16 November 2006)

Flathead Flick said:
			
		

> Yeah, great point TMM - the Packers have made their entire fortune investing in property, not any of their other piddly investments in media companies, casinos and mining companies...
> 
> We'll see how much you love property in 5 years' time. Actually, I'll bring that back to two. Property is about to go down big time TMM, but you keep telling yourself that your $30k 'profit' is safe.
> 
> FF



Cant see a big correction coming ....can see a big plateau.
End of the day people still need a place to live , the new generation grows up and the old generation is living longer and longer and longer. And unless there is a huge correction in rental prices (which i doubt because we all have jobs and there is generally a labour shortfall in this country) every man and his dog will keep his investment property. Which still remains in the eye of 70% australians a far less "scaryier" proposition than shares.
Another point worth mentioning  is that try borrowing 350k to throw at the market.....this is why often property is first choice for investment and will continue to be underpinned in australia, which happens to one of the most liveable countries in the world (we just dont realize it)


----------



## Mofra (16 November 2006)

I am fortunate enough to have access to information most would pay thousands for in terms of residential property (as a function of my employment).

The biggest trend I can see is the panic seems to set in 18 months after the fact ie the quartely price results based on settlements lead even the newspaper articles. Volumes are down Australia wide but prices have stabilised in areas that supposedly are about to "dive" (never mind the fact they are already down 25-30% from their 2003 highs and nobody was saying boo a short time ago).

As a percentage of volume, mass acquisitions (ie buying 5-20 units at a time) appears to be rising & some areas still have a high level of development activity.

In short (to finish this vague rant) developers & higher end purchasers have not been scared off the markets because there are pockets of short supply scattered across Australia that have been uneffected by recet rate rises, and demographically theer are still areas of severe shortage of rental properties, making the rise in yield shield existing owners from a drop.

Not good news overall for those of us (myself included) who have limited current exposure to property, but it does provide some measure of hiope that even in this "doom & gloom" environment there is still plenty of opportunity out there.


----------



## wayneL (16 November 2006)

from the UK:

http://business.timesonline.co.uk/article/0,,9063-2455507,00.html

Snip


> BANKS in the UK have been ordered by financial regulators to assess how they would cope in the event of house prices crashing by 40 per cent.
> 
> The instruction to include a housing slump scenario in their stress-testing models comes after the Financial Services Authority found that some banks were failing to include gloomy enough assumptions in their modelling.


----------



## YChromozome (16 November 2006)

constable said:
			
		

> every man and his dog will keep his investment property.




Nope. Maybe every women, though.

Women 'waiting out' property slowdown - The Age - 15th November 2006

The number of Australian men with an investment property dropped by almost 19 per cent from 568,000 in June 2004 to 462,000 in June 2006, showing one in five male property investors quit residential property altogether.

But in the same period, the number of women dipped by less than one per cent from 405,000 to 401,000.

Among singles, from 2004 to 2006 males with a property investment dropped by 39 per cent to 41,000, while the overall rush away from property was led by 35 to 44 year olds.

Or if you would like a graph, I posted one over in the Sydney Property Price History Charts thread :

This graph shows investor's credit growth to buy existing dwellings


----------



## constable (16 November 2006)

YChromozome said:
			
		

> Nope. Maybe every women, though.
> 
> Women 'waiting out' property slowdown - The Age - 15th November 2006
> 
> ...



i want to know how lady investor has time away from her domestic duties to buy property?
               no look im just kidding........   geez you cant be too politically correct these days !


----------



## YChromozome (16 November 2006)

constable said:
			
		

> i want to know how lady investor has time away from her domestic duties to buy property?




I guess at first they borrowed our credit cards and went shopping, pushing consumer credit growth into unsustainable double digit figures. This has in turn underpinned company profits, increased employment and inflation with money we don't have. Now they are working on housing keeping housing debt growth in unsustainable double digit figures.

While we thank them for keeping the economy rocketing along (We admit, we couldn't do it without them), I suspect it will end it a lot of domestics around the country and in fact around the world. You crashed the economy - no, you crashed the economy!


----------



## constable (16 November 2006)

YChromozome said:
			
		

> I guess at first they borrowed our credit cards and went shopping, pushing consumer credit growth into unsustainable double digit figures. This has in turn underpinned company profits, increased employment and inflation with money we don't have. Now they are working on housing keeping housing debt growth in unsustainable double digit figures.
> 
> While we thank them for keeping the economy rocketing along (We admit, we couldn't do it without them), I suspect it will end it a lot of domestics around the country and in fact around the world. You crashed the economy - no, you crashed the economy!



i love this .....lets date!


----------



## constable (16 November 2006)

constable said:
			
		

> i love this .....lets date!



i take it all back i just googled y chromozone thats a male!   never was any good at biology


----------



## The Mint Man (17 November 2006)

Flathead Flick said:
			
		

> And I always thought equity was a term for unrealised profit. Could be wrong there...



my point was that you cant quote someone on something they didnt actually say  yes it is an unrealised profit but as my post suggests its going to stay that way for quite some time. So I dont care what will happen over the next 12 months or so. 
I know my area fairly well and I know how much it has already droped before I bought, I doubt its going much further.
Like I said, for you to come in and say that I, as well as everyone else that owns property, will lose huge amounts over the next 2 & 5 years (C'mon now, which one is it... 2 or 5 years   ) In my case to the tune of $30000+, is a joke. Have you ever been to my area? as well as everyone elses?

A song for you Donald Fisher (flathead)
Sing it with me everyone:
Ive been everywhere man
I've been everywhere....

cheers


----------



## The Mint Man (17 November 2006)

Thought some of you may be interested in these articles:


> Author: John Collett
> Date: November 16, 2006
> Publication:  The Age
> Most economists and property industry experts polled by Money expect the Reserve Bank to keep the cash rate on hold at 6.25 per cent during the first half of next year before cutting rates in the second half.



To read the whole Article click here http://www.domain.com.au/Public/Article.aspx?id=1163266684406&index=NationalIndex 

By the way, good post Mofra.

cheers


----------



## Rafa (17 November 2006)

I really don't know what the big deal is...
even if i loose 30-40 k, thats under 10% of property value in 2 years...

the share market fluctuates that much on a weekly/monthly basis!!!


----------



## The Mint Man (17 November 2006)

Good point but the share market can also do the opposite in a week. 
I like both investments.

cheers


----------



## Rafa (17 November 2006)

agree, i love the share market, but i bought a house to live in 2 years ago.

the reason...
markets go up..., markets crash... 
your nett worth is in the end, a bunch of electronic numbers on your statement...!

inflation can mean in a few years 300k will get you next to nothing...

till you turn it into something tangible, like a 300k ferrari, or a 300k house, that is all it is.....

and your own 300k house to live in, even if it is worth 200k the next year, just like the 300k ferrari, which will be worth 200k when your drive it off the lot, is a lot more enjoyable than reading an electronic statement!

its real!


----------



## Flathead Flick (17 November 2006)

The Mint Man said:
			
		

> A song for you Donald Fisher (flathead)
> Sing it with me everyone:
> Ive been everywhere man
> I've been everywhere....
> ...




Thanks for the song Skint Man - I'm touched. 

Your mistake is that you're getting emotional about your investment. Easiest way to lose money. Rather than just saying what you hope will happen, perhaps you should do a little research and see what some of the leading economists and strategists are saying about the property market. Or you could just keep flapping away. And yes, I have been the the Central Coast - you're one of the areas that will be hit the hardest when rates rise and unemployment rises.

While you're at it, you can pretty much ignore everything that anyone with a vested interest in property says, e.g. real estate agents, property councils, real estate institutes, property mags (who make their money from advertising and the more buoyant the market, the better).  

Check out this link for some info from Shane Oliver, who happens to know a thing or two about property.
http://www.amp.com.au/display/file/...6,00.pdf?filename=olivers_insights_230206.pdf

I've given you a taste of it below:

"Australian housing remains very overvalued. 

Australian house prices remain extremely high relative to average weekly wage earnings. They need to fall about 20% for the ratio of house prices to wages to return to more normal levels.

House prices need to fall about 28% to bring the ratio of house prices to rents (the PE ratio for housing) back to its long-term average (after adjusting for inflation)."

Dr Shane Oliver 
Head of Investment Strategy and Chief Economist 
AMP Capital Investors 
24th August 2006


----------



## tech/a (17 November 2006)

Flathead Flick said:
			
		

> And I always thought equity was a term for unrealised profit. Could be wrong there...
> 
> FF




Thought you were a lender at one time? No wonder most of your clients complained about losing money.

Whats the point of all this "The sky is falling" on Real Estate stuff!

You want to be seen as a leader in forward thinking?
Hell you should have started forward thinking back in 1996.
Then youd have had an opportunity to be wealthy in your own right.



> Check out this link for some info from Shane Oliver, who happens to know a thing or two about property




He's a damned Economist which makes him a pretty poor model for a RealEstate of any other type of investor.Too conservative.


You obviously watched it all pass you buy.

My comiserations!


----------



## Flathead Flick (17 November 2006)

tech/a said:
			
		

> Thought you wrere a lender at one time?
> Whats the point of all this "The sky is falling" on Real Estate stuff!
> You want to be seen as a leader in forward thinking?
> Hell you should have started forward thinking back in 1996.
> ...




Wow, you seem to know a lot about me...funny, I thought I had bought and sold property before...

Just because I don't like property now, doesn't mean I didn't like it previously. Sure, it had its run, which I took advantage of, but you're living in the past if you think it's a good investment now.

And if you argue that you can't get the leverage you can get with property anywhere else, you're wrong. CFDs will allow you as much, if not more, leverage than you can get with property, on just about anything you like.

At the end of the day I'm not really that fussed whether you stick with property or not. You're tying up good money you could have elsewhere, but hey, we all have our own investment choices, and that's obviously yours. You and Skint Man can defend it all you like, but it isn't going to change the economic fundamentals underpinning the likely scenario that the best case scenario is that it won't even beat inflation over the coming years. And if you also think that it's not going to go up, but just sit, then don't call it an investment - it's a lifestyle choice.


----------



## tech/a (17 November 2006)

Your look is single minded.

There are more ways to making a profit in R/E than buy and hold or flip.

Ive been a developer for many years and will remain so.
There are a few of us around.

Still interested 

Why the continual posts on Real Estate doom and gloom?
Got any positive ways you can make a quid in R/E.
Or just-----Your a nutter if you consider R/E now?

BTW you can still positively gear property in most areas of AUST.


----------



## Rafa (17 November 2006)

tech/a said:
			
		

> Why the continual posts on Real Estate doom and gloom?
> Got any positive ways you can make a quid in R/E.
> Or just-----Your a nutter if you consider R/E now?




Exactly... what is the point of all these doom and gloom posts on RE!
this ain't today tonight or a current affair where your trying to get ratings!

Besides, there is a severe shortage of infrastructure equipped land around the country... Govt's are no longer going to pay for this, so its up to the developer...

So, house and land packages have gone up in price cause of supply costs...

And for those talking about yield... well, rent is already on the way up!

Every market situation presents an opportunity...
Thats what this forum should be about...


----------



## The Mint Man (17 November 2006)

Flathead Flick said:
			
		

> And yes, I have been the the Central Coast - you're one of the areas that will be hit the hardest when rates rise and unemployment rises.



Ok, fair enough. But I think your mad or blind one of the two. I'll leave that at that.
However you failed to answer my other question which was:
as well as everyone elses? You have already said that the Australian RE market is going to go down big time so you obviously have a deep understanding of each RE market in each city, suburb and state?
As I said way back, I think that you generalise too much when you basically say RE is doomed, going down everywhere Full Stop... as there is value in all asset classes at any stage, be that up, down or sideways.

Cheers :jump:


----------



## krisbarry (15 December 2006)

Update...well I checked my superannuation account balance just yesterday and I noticed I had receiced the $1,500 super co-contribution from the government.  That was a nice early Xmas present.

I must also add that the Aussie market has been running hard of late, and will again today.

Glad I have a geared fund in Australian shares, adds significant profit to what has been a very bullish year.

Property or super?

I will take the super thanks...

Poor buggars in Sydeny sitting on massive losses in the property market, but I must not be biased....as plenty of Perth residents have made squillions.


----------



## bingk6 (15 December 2006)

The value of property investment really does depend on the economic conditions. At the moment, we have had 3 interest rate rises this year and the economy has slowed as a result, which will hopefully take the heat off any further interest rate increases.

It is true that in some parts of Sydney, in particular the South Western areas, that property values have dived. Interest rates have really taken their toll on these folks with a large number of mortgagee sales. 

The problem overall is that during the boom periods, with interest rates at record lows, they have borrowed too much (up to their eyeballs in most cases). Therefore they are particularly susceptible to any interest rate increases. 

The other major problem facing them is that simply income has not kept pace with the rise of property prices. This is not such a big problem when interest rates are low, but when interest rates are rising, it is a HUGH problem.

Without the assistance of a low interest rate environment, the only way in which property prices can rise is if income grows, so that people can borrow and repay more. Without  income growth, there is simply no “fuel to light the fire” beneath property prices. The gap between income and property prices have expanded in the last few years.

What about the yield on investment properties ? At present, the rental yield (in Sydney at least ) is sweet F all, at a measely 2 – 2.5%, compared to interest rates of  approx 8%. This means that that the price of houses have to rise 5.5% to 6% just for you to break even (not withstanding negative gearing etc etc). If property does not rise, you are behind from day one. 

Right now, as things stand, I do not believe that it’s a good time to invest in property. There is simply no fuel to burn. The big caveat to that statement is if there is a big stock market correction (heavens forbid) and investors who have made a s***load of money withdraw from the stock market and park it into the property (ala 87 crash). If that happens, there will be plenty of fuel to light up the property market.

Finally, the recent interest rate increases were meant to target the growth states of WA and QLD. The unfortunate part of it all is that the Reserve Bank has such a blunt instrument that in trying to rein in WA and QLD, everything else gets hammered. This is especially bad for NSW as the economy was already rats*** before those interest rate increases, who knows where it will end up when the full effect of those interest rates come on song. 

Property may be a good investment in other states of Australia, not so good in NSW.

Just my


----------



## Happy (15 December 2006)

Timing comes to mind.


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## Deadcat (15 December 2006)

While I prefer shares over property, I do have a ppro that I am currently building and thanks to booming WA market, has increased $200,000 in past 6 months.  That is the beauty of property.  It is unpredictable.  As an investment though, I have decided to buy one investment property next year in a seaside suburb on the south coast of NSW as this will be where I retire.  The rental returns in WA now compared to what you are paying for a property are extremely poor.


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## hilly1981 (30 December 2006)

Just out of interest Stop_the_clock, how much are you estimating that you will have in your super by the time you are 65?


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## krisbarry (30 December 2006)

Currently have $33,000 which is pretty much the average for a 32 year old.

By 65 it should be well over $3 million, (using superannuation calculator) which in todays dollars will be around $1 million, enough for a small house and a pocket full of change to throw on the market.

(Current returns still over 35% per annum)


----------



## hilly1981 (30 December 2006)

Stop_the_clock said:
			
		

> Currently have $33,000 which is pretty much the average for a 32 year old.
> 
> By 65 it should be well over $3 million, (using superannuation calculator) which in todays dollars will be around $1 million, enough for a small house and a pocket full of change to throw on the market.
> 
> (Current returns still over 35% per annum)




Nice one! Myself and my wife (both 25yrs old, work fulltime and have 2 kids aged 6 and nearly 3) plan to retire on roughly $4 million in super (approx 1.2mil in todays dollars), as well as fully own our own home.

We are currently paying additional contributions after tax (not too much at the moment, just enough to claim as much co-contribution as we can) and are currently getting ourselves into position to buy our 1st home in approx 12 months time.

My personal view on what you are doing, I think it is good that you have established yourself a long term goal, and are going all out to achieve it. What ever makes you happy is the main thing. Sure people could say you could cark it before you even see the money, but I doubt that you would be sitting up on cloud 9 regretting pumping your money into super as your financial plan. You know what I mean?

I suppose if it is a risk you are willing to take, then why not? Its your life and your money. You do what you want with it. I know when my wife and I retire that we will be having the time of our lives providing we are in good health. If it all turns sour with our health, then at least I know my son and daughter will be given a good boost financially.

BTW - Good thread! Some very good reading in here thats for sure.


----------



## krisbarry (30 December 2006)

Well done with you savings plan.

This coming week I will be depositing a further $600 into my super, some of which is share trading profit and the rest is my own money.

So yes its very true that I may die b4 reaching retirement, but the chances are much higher of living well into my 70's and 80's.

Will Centrelink exists in 33 years time to pay my pension...who knows?

I reckon any money saved now is a nest egg for the future.

There are so many worse places to stash my cash...I could gamble it away on the pokies, piss it up against a wall (urinal) after hitting the booze, choke up a lung or two with a packet of ciggs a day or shoot up in a back alley with the latest party drug.


----------



## insider (30 December 2006)

Stop_the_clock said:
			
		

> Well done with you savings plan.
> 
> This coming week I will be depositing a further $600 into my super, some of which is share trading profit and the rest is my own money.
> 
> ...




Pensions will be a thing of the past... if they are around in 33 years they will be so bad that you'll be made to work or something like that... It seems like you are prepared for the worst... you're doing well.


----------



## Happy (4 January 2007)

> From ABC, January 4, 2007
> 
> YOUNGER GENERATION BEING SQUEEZED OUT OF HOUSING MARKET: REIA
> 
> ...




This trend is not created by high interest rates, it is rather result of new generation preference to lavish lifestyle instead of saving money for deposit and making sacrifices to own the property.

I am not saying it is good or it is bad, all I am saying it is.


----------



## judge (4 January 2007)

I don't think it as simple as you suggest Happy.

The boom in house prices over the last few years (especially over in WA) has been driven primarily by demand from property developers, new home buyers and home owners wanting to upgrade along with record low interest rates making finance relatively cheap.  This resulted in buyers junping over each other trying to get into residential property, for their own reasons, before the music stops.

I don't think the music has stopped yet, but on the east coast the pause button is on 

The cost of paying off an "average" home as a percentage of average household income is much higher now than it was 20-30 years ago. And that is not all due to young people now wanting a more lavish lifestyle/home imo.

A basic home is becoming out of reach of low income earners in some parts of the country.  Low income earners are not in a position to make many sacrifices to help them save for a home deposit.


----------



## theasxgorilla (4 January 2007)

judge said:
			
		

> I don't think it as simple as you suggest Happy.
> A basic home is becoming out of reach of low income earners in some parts of the country.  Low income earners are not in a position to make many sacrifices to help them save for a home deposit.




This is probably true.  The "renter" class has seemingly expanded, as has the "landlord" class.  We're a lot less "egalitarian" than we used to be.  This is the price we pay for lower taxes and the promise of making it big some day.

In Sweden the middle-class is a lot larger (and a lot narrower).  The lower-middle is much higher, thanks to hand-outs and subsidies, and the upper-middle is lower thanks to a 55% top tax-bracket that kicks in at approx. $60k AUD p.a.

In Sweden investment properties are unheard of.  *Nobody* has one.  If you rent you rent from a state-run housing commission.  Rent controls mean that if you are a private landlord you must charge rent in line with the commissions guidelines.  If you over charge there is a tenant union who will take you to the cleaners.

Worth noting though is that per capita Sweden has the largest second home and personal watercraft ownership in the world.  I'm yet to get to the bottom of it, but something is making it all tick!


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## Happy (4 January 2007)

It is as simple as you want it to be and it is as difficult as you want it to be.

All depends on your mindset, if you want excuses you’ll find many, if you want reasons they are there too, if you want to change something you have to change something.

As Tech-a used to say, -you cannot do the same thing and expect different result-.

Congrats if you are bull and you are back already, apologies if not.


----------



## judge (5 January 2007)

Happy said:
			
		

> Congrats if you are bull and you are back already, apologies if not.




Hi Happy

It's common knowledge I change my nic regularly.  Others change theirs as well.

We were away over Christmas/New Year.  We're back now until tomorrow when we head off again 

Best wishes for 2007


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## krisbarry (28 January 2007)

My current super account balance is now $36,000.  It has grown about $3,000 in less than a month.


----------



## hilly1981 (28 January 2007)

Oh nice one how much did you put into it in the past month?


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## krisbarry (28 January 2007)

$1,000 of my own money and the other $2,000 is profit from the super fund


----------



## markrmau (28 January 2007)

> It's common knowledge I change my nic regularly.



People who have the balls to stand up for what they believe in see no need to change nics.


----------



## theasxgorilla (28 January 2007)

markrmau said:
			
		

> People who have the balls to stand up for what they believe in see no need to change nics.




...or use pseudonyms!

The ASX Gorilla.


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## krisbarry (9 February 2007)

My current super account balance is now $37,000 Easy Money  

Glad I am geared!

Now how many years to retirement?

60 years - 32 (current age) that makes 28 years


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## krisbarry (9 February 2007)

By the way I have my eye on an awesome tent from Kmart for $29.95 and a great place to pitch it by a park bench...then wait, and wait, and wait till 60 years of age.  Ahhh home ownership is just a dream.


----------



## theasxgorilla (9 February 2007)

Stop_the_clock said:
			
		

> Now how many years to retirement?
> 
> 60 years - 32 (current age) that makes 28 years




If you ever wanted to own your own home, unless you are a nuffy, I can almost guarantee that I could help you come up with a plan that would get you there in less than 28 years.


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## krisbarry (9 February 2007)

I dumped another lazy $2,000 into my super today, so that makes it over $39,000.


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## Mofra (10 February 2007)

Stop_the_clock said:
			
		

> I dumped another lazy $2,000 into my super today, so that makes it over $39,000.



$39K? As a lender, I could have found you a home and 1-2 smaller investment properties for that size of deposit if you are earning even close to an average salary.

No offense intended, but why such a defeatist attitude?


----------



## Smurf1976 (10 February 2007)

Mofra said:
			
		

> $39K? As a lender, I could have found you a home and 1-2 smaller investment properties for that size of deposit if you are earning even close to an average salary.



Nothing personal Mofra, but that this level of debt is so easily available is precisely why housing has become so unaffordable.

Even close to an average salary I would take to mean anything over 40K given that the average isn't much over 50K. 

A house and two investment properties - surely that's at least $500K debt in total with at best a 5% deposit once all the costs of buying, moving, etc are considered. 

500K at present interest rates means literally 100% of wages income going straight to the bank just to pay the interest. Then there's insurance, maintenance on the properties plus personal living expenses. Just hope you never have a rental void, nothing expensive breaks and interest rates rise no faster than income.


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## krisbarry (10 February 2007)

Mofra said:
			
		

> $39K? As a lender, I could have found you a home and 1-2 smaller investment properties for that size of deposit if you are earning even close to an average salary.
> 
> No offense intended, but why such a defeatist attitude?




How is this showing any attitude, considering my returns are averaging around 35%, cannot find that in the housing market anymore.

Sorry mate bricks and mortar...is so yesterday...superannuation is all the talk nowdays, much better returns and low risk too.  

....and ya going to hear a damn lot more superannuation talk in the lead up to the end of this financial year, with the new changes on the horizion.

The stock market is going to be flooded with money for the next 5 months, every man and his dog, and his dogs, dog will be selling up their investment properties and dumping their million dollars tax free into super.

Ya think I am dumb and showing attitiude, na...just thumbing my nose at an over hyped over priced housing market.

No need to worry mate, I thought I was the only one not buying a house...it appears the norm nowdays not to buy, and its the smart ones that don't buy!

Even the best in the business are telling young people, either to hold off buying, or save more before buying, or live at home longer, or to move to a cheaper state etc etc.


----------



## nizar (10 February 2007)

Stop_the_clock said:
			
		

> How is this showing any attitude, considering my returns are averaging around 35%, cannot find that in the housing market anymore.
> 
> Sorry mate bricks and mortar...is so yesterday...superannuation is all the talk nowdays, much better returns and low risk too.
> 
> ...




Brother from my understanding, Mofra wasnt recommending you to BUY A HOUSE RIGHT NOW, but simply stating that home ownership for you is possible and is a viable option, and this was in response to your comment:



			
				Stop_the_clock said:
			
		

> Ahhh home ownership is just a dream.


----------



## krisbarry (10 February 2007)

Off course I could buy a house right now and possibly 1 to 2 investment properties as well, but as Smurf mention, this is damn high risk, lending at such extremes.  Buying at the top of the market, and gearing with invesment properties is just down right foolish in this current climate.  Even the most dopiest of dick_heads could see that.

There is no way in the world I would risk working up to 7 days a week just to support a loan of this size. I have worked 7 days a week before and all it did was make me sick.  What fun is life if ya working 7 days a weeks, no time for your own mental health, no time to socialize with friends or family etc etc.

Thats where Australian's are F-cked!

We are so obsessed with owning bricks and mortar and have forgotten about the art of having fun.

In most countries around the world most people rent, and have way more fun.  It really is sad to see so many people with morgagte stress in this country trying to live the great Australian dream.

ITS THE BIGGEST CROCK OF SH_IT TO OWN YOUR OWN HOME....meanwhile you are crying yourself to sleep, or not getting any sleep due to skipped morgagte payments.


----------



## theasxgorilla (10 February 2007)

Stop_the_clock said:
			
		

> I have also decided on gearing my superannaution, which is exactly the same as buying an investment property.




How does one _gear_ their super?  I thought it was against the rules for a superfund to borrow?


----------



## krisbarry (10 February 2007)

I sleep very well at night and come monday I am dumping another $500 into my super account.

No morgagte stress for me, no working 7 days a weeks for me.

I have learnt the art of living with less, pity the rest couldn't.

Naaah...they are too damn dopey and have to max everything to the limit...buy as many investment properties as they can, max out every credit card they can then work 7 days a week to keep up with the loan repayments, then wonder why they are so sick.  

Meanwhile their kids never see them, their marraige fails, then they end up spending thousands of dollars seeing a shrink to sort out their problems, then later die of a heart attack due to all this stress.

WHAT KINDA LIFE IS THAT...A WASTED LIFE, BUT VERY TYPICAL, AND THAT SAD FACT IS IT IS BECOMING A SERIOUS ISSUE WE CANNOT IGNORE.

I CALL IT ILLEGAL LENDING PRACTISES!


----------



## nizar (10 February 2007)

Stop_the_clock said:
			
		

> Off course I could buy a house right now and possibly 1 to 2 investment properties as well, but as Smurf mention, this is damn high risk, lending at such extremes.  Buying at the top of the market, and gearing with invesment properties is just down right foolish in this current climate.  Even the most dopiest of dick_heads could see that.
> 
> There is no way in the world I would risk working up to 7 days a week just to support a loan of this size. I have worked 7 days a week before and all it did was make me sick.  What fun is life if ya working 7 days a weeks, no time for your own mental health, no time to socialize with friends or family etc etc.
> 
> ...




Some things in life require patience.
Sometimes you have to make sacrifices.
Sometimes you have to suffer a bit now, work hard, but then enjoy the rewards later.

You cant have everything at once. 

A good friend of mine (i consider him my mentor) spent a good part of his 20s working like a dog, i mean, close to 100hours per week. Now he owns 2 businesses, earns about 500k a year, and goes overseas every 6 months with his family. He's 37. And yeh - he owns his own home.

So maybe time to stop complaining, and time to do something constructive??


----------



## tech/a (10 February 2007)

> We are so obsessed with owning bricks and mortar and have forgotten about the art of having fun.




So you cant do both.

Interesting,I had a ball when I was younger,I sure as hell am having a ball  now.



> Buying at the top of the market, and gearing with invesment properties is just down right foolish in this current climate.




I've shown you so many ideas and so have others. I have friends who's kids are in co ops pooling their $$s and getting further ahead than their piers.
Mind you at least your not frittering your hard earned away on rubbish.



> There is no way in the world I would risk working up to 7 days a week just to support a loan of this size




Hell neither would I.

Work smarter not harder.
Grab your $2k and turn it into $4k (You seem to believe thats pretty easy on stocks). Then to $8k  then $16k you've got the idea.--Cant that be done either? its the top of the market no doubt!!!




> ITS THE BIGGEST CROCK OF SH_IT TO OWN YOUR OWN HOME




To you it is. Remember due diligence.
You can have it all particularly in this country----but like those penniless immigrants who came years ago and who DID something about it---you have to start somewhere.

If you start at the bottom you have little to lose!!


----------



## krisbarry (10 February 2007)

If my memory serves me correctly tech/a, didn't you go bankrupt in the last housing bust, or the previous, or was that your small business?

I do remember a conversation in which you went under.

See you can be king of the castle and lose it all too.

Plenty are beating their chests at the moment, saying look at me, look at all my wealth, I've done this so you can too.

I have already done it too, only 4 years ago I had $8 grand in my super and by weeks end I will have well over $40,000.  Its all relative!  I now have 5 times my wealth!

...I also suspect that in 4 years time I will be another 5 times richer too, thanks to the compounding effect and gearing.

...and I have done it all by never touching a bank, nor a house, nor a morgagte, nor an investment property nor a real estate agent, nor a tennant.

...time others worked outside the bricks and mortar square!  Its a new generation now, a new breed of people, with new ideas, and new ways to make money, and smart ways to make money, without ever touching real estate.


----------



## The Red Baron (10 February 2007)

I'm kinda at the crossroads are the moment. 

24, living with parents and have saved a $50K deposit (but its barely a 10% deposit now in the Perth market) and trying to add $300 a week while I can. 

But my problem is my earning capacity, which is $30k a year. Short term i'm applying for Nightfill positions just to get a bit extra a week. Taking the good old pushbike to work, oh and toasted sandwiches for lunch   

Long term i'm off to Europe on a Contiki holiday for 2 months in August, then come back and look at studying or a new career path.

There seem to be alot of younger people in Perth realising the need to do something to get ahead.


----------



## krisbarry (10 February 2007)

50k is a great deposit, but I feel for you living in Perth, you might even have a better chance buying a house in Sydney   

Be careful buying at the top of this market, especially in Perth, we could see a double bust their with the commodities and the housing market crashing at the same time.  Then you know what comes next...you turn your 50k deposit into negative equity and the bank takes the house and you are left with nothing.

BE VERY CAREFUL


----------



## nomore4s (10 February 2007)

Stop the clock,

That's not entirely accurate, the bank will only take the property if he/she fails to make the repayments, if he/she keeps debt levels managable, he/she can ride out the downturn for the next boom. This is especially true if its just a residential house and not a investment property. My advice would be to find a property he/she considers good value and he/she wants to live in for a number of years(depending on his/her circumstances of course). And don't rush into anything. There is also the option of renting rooms out for extra income.


----------



## krisbarry (10 February 2007)

nomore4s said:
			
		

> Stop the clock,
> 
> That's not entirely accurate, the bank will only take the property if he/she fails to make the repayments, if he/she keeps debt levels managable, he/she can ride out the downturn for the next boom. This is especially true if its just a residential house and not a investment property. My advice would be to find a property he/she considers good value and he/she wants to live in for a number of years(depending on his/her circumstances of course). And don't rush into anything. There is also the option of renting rooms out for extra income.




Sorry mate but its just not true, banks right around Australia are checking market prices suburb, by suburb.  When they find a house that is worth less than the mortgagte, they repossess it.  Even if the person has made all payments on time.  God you only have to watch the usual trashy ACA or Today Tonight to see this happening, at least once a week they show this sorta crap.

It will happen more and more now with all these 100% finance loans, no need for a deposit, but the banks will come knocking if the property prices fall.


----------



## krisbarry (10 February 2007)

...anyway I started this thread a while back...playing the victim role, poor me etc etc.  It is quite amazing to step back now and look at it from a survivor role and to see the progress I am making.

Everytime I dump money into my super, it makes me feel better and better.

I am not that victim anymore!

I am also making sure I stick a few fingers up at others that have a hard time understanding my logic


----------



## nomore4s (10 February 2007)

The red baron already has a good size deposit


----------



## nomore4s (10 February 2007)

Stop_the_clock said:
			
		

> ...anyway I started this thread a while back...playing the victim role, poor me etc etc.  It is quite amazing to step back now and look at it from a survivor role and to see the progress I am making.
> 
> Everytime I dump money into my super, it makes me feel better and better.
> 
> ...




lol fair enough


----------



## nioka (10 February 2007)

Stop_the_clock said:
			
		

> ...anyway I started this thread a while back...playing the victim role, poor me etc etc.  It is quite amazing to step back now and look at it from a survivor role and to see the progress I am making.
> 
> Everytime I dump money into my super, it makes me feel better and better.
> 
> ...



Are you still living at home rent free? or bludging on your mates for a place to live as you said in opening post.


----------



## krisbarry (10 February 2007)

nomore4s said:
			
		

> The red baron already has a good size deposit




As he stated though: (but its barely a 10% deposit now in the Perth market) 

...also its pretty easy to lose 50k on a property if the prices go south by 5% a year for a few years.


----------



## krisbarry (10 February 2007)

nioka said:
			
		

> Are you still living at home rent free? or bludging on your mates for a place to live as you said in opening post.




I am not bludging..I am paying rent, so therefore I am a tenant...I have moved up the ranks now


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## nioka (10 February 2007)

Stop_the_clock said:
			
		

> I am not bludging..I am paying rent, so therefore I am a tenant...I have moved up the ranks now



Good to hear it. Was it voluntary or imposed?


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## krisbarry (10 February 2007)

nioka said:
			
		

> Good to hear it. Was it voluntary or imposed?




Voluntary, but what does it matter?


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## Smurf1976 (10 February 2007)

Stop_the_clock said:
			
		

> We are so obsessed with owning bricks and mortar and have forgotten about the art of having fun.
> 
> In most countries around the world most people rent, and have way more fun.  It really is sad to see so many people with morgagte stress in this country trying to live the great Australian dream.
> 
> ITS THE BIGGEST CROCK OF SH_IT TO OWN YOUR OWN HOME....meanwhile you are crying yourself to sleep, or not getting any sleep due to skipped morgagte payments.



I don't agree with your comments about OWNING your own home. OWING a lot of money to the owner (lender) is another matter...

But a question came to mind as I read this. It takes 6 - 7 years of average earnings to buy an average home in this country at the present time. 

But does it actually take 7 years of labour to build a house? That includes clearing the land, producing materials as well as actual construction. But not including maintenance, repairs or financing which aren't included in the initial purchase price.

Obviously there are costs for materials etc that are set by global markets but the overwhelming cost of actually building a house (and clearing the land etc) is ultimately the labour of Australians. It's not as if the average house is built from anything other than 90%+ local materials.

If it does take that much time to build a house then it suggests that around 17% of Australians are employed building houses (assuming an average working life of around 40 years). Possible, I don't have actual data, but it seems unlikely.

If it really is that high then a formal inquiry is warranted as to why the productivity of the building industry has dropped 50% compared with established performance over several previous decades. 

If it's not that high then we're paying far more for established houses than their underlying replacement cost (on the basis of a generic average location). When the cost of production plus reasonable profit is far less than the selling price then either you set up a cartel (illegal in Australia) to artificially restrict supply or the inevitable price falls will eventually occur.


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## Smurf1976 (10 February 2007)

Stop_the_clock said:
			
		

> Sorry mate but its just not true, banks right around Australia are checking market prices suburb, by suburb.  When they find a house that is worth less than the mortgagte, they repossess it.  Even if the person has made all payments on time.  God you only have to watch the usual trashy ACA or Today Tonight to see this happening, at least once a week they show this sorta crap.
> 
> It will happen more and more now with all these 100% finance loans, no need for a deposit, but the banks will come knocking if the property prices fall.



I wasn't aware of that happening but I note that at least one major lender in California has stopped offering 100% loans as the housing market downturn gathers steam in the US.

Also 20 or so sub-prime lenders have gone bust in the US in just the past 2 months. That's nearly one every 2 working days.

A credit tightening would seem to be underway in the US. It's hard to believe that it won't spread to Australia in some form sooner or later.


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## krisbarry (10 February 2007)

Smurf1976 said:
			
		

> I don't agree with your comments about OWNING your own home. OWING a lot of money to the owner (lender) is another matter...
> .




completly agree, its a myth to say you own your own home.  The bank owns it for the entire life of the loan.  Until that very last dollar is paid it is never yours.


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## The Red Baron (10 February 2007)

Stop_the_clock said:
			
		

> I am not bludging..I am paying rent, so therefore I am a tenant...I have moved up the ranks now




I think I might be joining you as a tenant soon. My 25th might be the moving out of home party.

The  board is on the way up and a new couch thrown in if I move out, think the old man is gearing up for retirement. Now he only has to get rid of the 21yr old and 19yr old.


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## theasxgorilla (10 February 2007)

The Red Baron said:
			
		

> I think I might be joining you as a tenant soon. My 25th might be the moving out of home party.




Whatever you do RB, take good care of that $50k.


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## krisbarry (10 February 2007)

Yes its a tough time finding your feet in this world.  My story is a little different though, as I moved out of home at the tender age of 18 years old, by choice. Some would say thats old, but the average age now is about 28 years of age.

Paid more than 10 years rent, them moved back home for a couple of years to save money again.

I am able to move back home at anytime.  There is an open door policy in my family home.  I have a key and can drop in at anytime.

If my life turns to sh_it I can always pack up my life and move home, that is a great feeling to have.


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## nioka (10 February 2007)

Stop_the_clock said:
			
		

> Voluntary, but what does it matter?



Voluntary gives you more credence.Imposed means you didn't want to but.....
(I've seen so many of my friends end up retired with very little because greedy children milked the dry.)


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## The Red Baron (10 February 2007)

theasxgorilla said:
			
		

> Whatever you do RB, take good care of that $50k.




It's not doing anything special with it at the moment, sitting in a 6.8% bank account. 

I know I should be making it work harder, but all the talk about a share market correction and overheated Perth property market. I'm just sitting on the sidelines at the moment.

I was in the share market when BHP was $12, WBC $10, ALN $2.90.. took my 10-20% profit and got out. I can't look at them anymore, it makes me feel sick.


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## juddy (10 February 2007)

Just saw the A Current Affair promo for the week and it made me feel physically ill. Two people who have gone from "rags to riches" by buying 97 houses between them. The concern for me is how the promo seems to portray them, as people that others should aspire to be. These are people who have stolen the dreams of 95 others and that is the only way I see it. 

The message: "get rich at any cost". But alas, that is Australia in 2007. What the hell are we teaching our kids? and what are we taking away from them?

I would imagine there would be less than 10% of people on this site who would understand my concerns.


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## Smurf1976 (10 February 2007)

juddy said:
			
		

> I would imagine there would be less than 10% of people on this site who would understand my concerns.



To be fair, it is "Aussie Stock Forums" so most of the people on this site would have found it via some sort of internet search looking for ways to make money.

But you can count me in the 10%. Housing is an absolute social necessity. Likewise affordable clothing, food, transport, water and fuel/power (all of which are ultimately under threat for various reasons relating mostly to greed).


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## Wysiwyg (10 February 2007)

Smurf1976 said:
			
		

> Likewise affordable clothing, food, transport, water and fuel/power (all of which are ultimately under threat for various reasons relating mostly to greed).




Looking around me I don`t see myself as greedy (just so you know) but I do wonder at what point  or number does greed kick in.I think we all like to have at least a similar quality of life as those who desire to do.


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## krisbarry (10 February 2007)

juddy said:
			
		

> Just saw the A Current Affair promo for the week and it made me feel physically ill. Two people who have gone from "rags to riches" by buying 97 houses between them. The concern for me is how the promo seems to portray them, as people that others should aspire to be. These are people who have stolen the dreams of 95 others and that is the only way I see it.
> 
> The message: "get rich at any cost". But alas, that is Australia in 2007. What the hell are we teaching our kids? and what are we taking away from them?
> 
> I would imagine there would be less than 10% of people on this site who would understand my concerns.




Yep completey agree...its just pure greed. Nothing about being smart, or wise with your money etc, its just pure greed.  Why cannot we have these 2 people buying shares or business' instead, and leave those other 95 homes to families in need.

Why do we have families living in tents, caravans, cars and shipping containers? Not because they have made the wrong choice, but simply they have be caught up in a housing super cycle caused by greed.

Ya never know A Current Affair might screen an episode next year them losing all 97 homes in a massive housing downturn and they might be the first in line at Centrelink.

Sometimes the mighty  (greedy) fall...


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## krisbarry (10 February 2007)

Just for the greedy, take a look at the chart; Its pretty obvious what we need here to survive.


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## nioka (10 February 2007)

Stop_the_clock said:
			
		

> Yep completey agree...its just pure greed. Nothing about being smart, or wise with your money etc, its just pure greed.  Why cannot we have these 2 people buying shares or business' instead, and leave those other 95 homes to families in need.
> 
> Why do we have families living in tents, caravans, cars and shipping containers? Not because they have made the wrong choice, but simply they have be caught up in a housing super cycle caused by greed.
> 
> ...



Are they really that greedy. They are not living in them all. They are providing homes for a lot of people who, like a lot of people on this forum, say it is better to rent than to buy. Can't have it both ways. I tried owning rental properties but after 2 "tennants from hell" gave up the Idea. I believe owning you own home is the best investment you will ever make but owning someone elses home is the worst.


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## Julia (10 February 2007)

Stop the Clock

You are vehemently defending your position.  That's fine.  We should all feel free to make our own choices.

However, Nioka asked you if you are now paying rent voluntarily.  Apparently so.  You have also said you can move back home at any time, presumably rent free if necessary.  So you are in a position of choice.

I'd just like to refer to the hundreds of thousands of people who are in middle age or later who are forced to rent because they weren't prepared to make the sacrifices required for buying their own homes when they were younger and were earning enough to support a mortgage, perhaps going without travel, designer clothes etc.  Now they are on Centrelink benefits which fail to keep up with rent increases, and they simply can't manage.

Where I live property prices continue to rise, rental market is very tight and consequently rents are rising exponentially.  Many people are several weeks in arrears.  On Centrelink payments they have no way of catching up.  They also cannot pay electricity accounts or car rego.  So they can't drive their cars.  It's a miserable existence.  They often end up with a grotty room in an emergency housing hostel.

There is a huge waiting list (about 6 years] for Housing Commission units with their cheap rents.

The anxiety of this woeful existence exacerbates pre-existing physical illnesses.  Psychological breakdowns and depressions are common.
These people cannot get jobs.  They are entirely dependent on the State and their community.

Certainly, most people on this forum won't ever find themselves in such a position, but redundancy, illness and a thousand other unforeseen circumstances can occur.  At least if you have your own home, it's a sense of security like no other.  If you have your own home, you are in control.
It's worth making some sacrifices when you are younger for the peace of mind later.

And with one property, it's possible to gear into further investment properties.
As Tech and some others have said, there are always opportunities there.
Those who continue to wait for "the perfect time" will just possibly find the years slipping away from them.

Julia


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## juddy (10 February 2007)

Stop_the_clock said:
			
		

> Ya never know A Current Affair might screen an episode next year them losing all 97 homes in a massive housing downturn and they might be the first in line at Centrelink.
> 
> Sometimes the mighty  (greedy) fall...




Hi STC,

I don't wish that on them. I just wish the Australian culture was different, especially that of the older set of my baby-boomer generation, the ones that revolted against the greed they now perpetuate.

Where did this come from? Is it a legacy of the Howard government or is it driven by fear manipulation from those services who stand to maje so much money out of this culture?


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## nizar (10 February 2007)

Stop_the_clock said:
			
		

> I have already done it too, only 4 years ago I had $8 grand in my super and by weeks end I will have well over $40,000.  Its all relative!  I now have 5 times my wealth!
> 
> *...I also suspect that in 4 years time I will be another 5 times richer too, thanks to the compounding effect and gearing.*




So you think the stockmarket will produce the same returns in the next 4 years as it did in the previous 4 ??

Dream on   

Gearing means you WILL LOSE MONEY when the markets go south, more than those ungeared super funds.


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## krisbarry (10 February 2007)

Yes I am in a very fortunate position to have choice, the choice to pay a small amount of rent for a good quality of life, or move back home rent free.  I do understand that many people don't have those options.  I guess its the luck of the draw.


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## Smurf1976 (10 February 2007)

Stop_the_clock said:
			
		

> Just for the greedy, take a look at the chart; Its pretty obvious what we need here to survive.



Interesting chart but I would say that, in the short term at least, physical safety is somewhat more important than sex. You may want the latter but you won't be alive to get it without the former.


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## krisbarry (10 February 2007)

nizar said:
			
		

> So you think the stockmarket will produce the same returns in the next 4 years as it did in the previous 4 ??
> 
> Dream on
> 
> Gearing means you WILL LOSE MONEY when the markets go south, more than those ungeared super funds.




The super fund I am in now has had consistant profits for over 6 years.  In 2001 and 2002, while most super funds went into negative, mine was up by 20%.  I wasn't in my current super fund at the time, hence mine went south too.

It is very much possible for the ASX to continue its record run for many years to come.  Back some 6 years ago the ASX was over priced and running at a figure of 20, now its back down to 14 and is considered fair priced.

China and India want everything under our feet, and we are becoming less reliant on the movement of the DOW.  So it appears that we will continue this growth period, with a correction or two.

Don't forget about the next 5 months we will see massive amounts of money flowing into the ASX due to the new super rules, which start in July.  Heres to some awesome times ahead!


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## nioka (10 February 2007)

Stop_the_clock said:
			
		

> The super fund I am in now has had consistant profits for over 6 years.  In 2001 and 2002, while most super funds went into negative, mine was up by 20%.  I wasn't in my current super fund at the time, hence mine went south too.
> 
> It is very much possible for the ASX to continue its record run for many years to come.  Back some 6 years ago the ASX was over priced and running at a figure of 20, now its back down to 14 and is considered fair priced.
> 
> ...



Sounds a familiar story. Heard it in the 50's and the 70's and the 80's and the 90's. ??????????????


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## theasxgorilla (10 February 2007)

Stop_the_clock said:
			
		

> Just for the greedy, take a look at the chart; Its pretty obvious what we need here to survive.




Take note...we need more sex than love.


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## krisbarry (11 February 2007)

theasxgorilla said:
			
		

> Take note...we need more sex than love.




Silly boy, thats not how you read the chart.

This chart is about Maslow's theory in regards to the Hierarchy of Human Needs.

For sure...the need for sex, rates higher than love, but to have more sex doesn't always mean you are going to find more love either now does it?

The chart defines the most basic human needs and moves upwards.  I posted this charts as I believe the cost of housing is having a direct effect on how humans are failing at following a simple theory.

Ask a homless person, a stressed out morgagte holder, or a renter (paying over priced rent) how they feel about their personal safety, their sense of beloning, their self esteem etc...bet its very different to the relaxed home owner.


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## vida (11 February 2007)

I have never had a mortgage, never bought a property. I have super but only the 9% or whatever my employer ensures is removed from my salary, and I have a share portfolio I manage myself. I also invest in art and have a very good australian contemporary art collection. HOwever, I do not know if all the money I've invested in art is going to pay off, as selling it is not easy - one needs 'connections' with the right people in the right places. I have rented in past and loved the mobility it provides. I currently live in a home which my elderly mum owns and is my future inheritance - yes I love the security that provides too. If I had been paying a mortgage I would not have the share portfolio which since past four years, after restructuring following heavy losses a while ago, is now in profit between 86-98% (current volatility) and I trust it will improve on that during 2007. Now and then I think of investing in a property but i like the lightness of being i currently feel, which becoming a property owner may take away. A mortgage is a lifetime burden.



			
				Stop_the_clock said:
			
		

> Silly boy, thats not how you read the chart.
> 
> This chart is about Maslow's theory in regards to the Hierarchy of Human Needs.
> 
> ...


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## clowboy (11 February 2007)

tech/a said:
			
		

> If you start at the bottom you have little to lose!!




Now that is worth reposting


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## theasxgorilla (11 February 2007)

Stop_the_clock said:
			
		

> Silly boy, thats not how you read the chart.
> 
> This chart is about Maslow's theory in regards to the Hierarchy of Human Needs.




Sorry boss...I thought it was a scientific break thru...proof of what I'd suspected for a long time already


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## BIG BWACULL (11 February 2007)

I'd love to own my own house and investment property but for now i need to build up the $$$$, Did any one see that episode on ACA i think, where there was that loophole in the law where anyone could claim they had rights to your land and home and pretty much sell it out from under you. One minute your on Holidays living it up only to find out when you get back that your on the street homeless because some C%&T has sold your house on you   . Life stinks when the Crooks have more rights then genuine law abiding citizens.


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## krisbarry (11 February 2007)

Well I have just filled out the paperwork to switch funds...looking into the fund below.  The returns look pretty decent too

http://www.investsmart.com.au/funds/profile.asp?FundID=8912


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## nizar (11 February 2007)

Stop_the_clock said:
			
		

> The returns look pretty decent too
> 
> http://www.investsmart.com.au/funds/profile.asp?FundID=8912




Look how they performed during bear markets.

Gotta love it how those funds quote 3yr/5yr returns, all u need is *one* great year, and even subsequent or previous negative or mediocre years will be covered up.


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## Julia (11 February 2007)

Stop_the_clock said:
			
		

> Well I have just filled out the paperwork to switch funds...looking into the fund below.  The returns look pretty decent too
> 
> http://www.investsmart.com.au/funds/profile.asp?FundID=8912



Why do you use managed funds instead of managing your own shares and saving the management fees?

Julia


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## krisbarry (11 February 2007)

To run your own super fund it cost around $600 per year, you cannot gear and you cannot get the super co-contribution payment either...thats why!


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## BIG BWACULL (11 February 2007)

Management FEES? SUPER?  
If you own your own home Better just double check to see if you still own it, You may have to pay rent to your new landlords, It looks like the only way to own your own home these days is to steal it. 
I knew i should have put my money into my SUPER F%$# The house.


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## Mofra (11 February 2007)

nizar said:
			
		

> Brother from my understanding, Mofra wasnt recommending you to BUY A HOUSE RIGHT NOW, but simply stating that home ownership for you is possible and is a viable option, and this was in response to your comment:



Nizar, exactly. In two threads I hear STC talk constantly about about how unaffordable housing is (I believe in many cases it is overpriced). 

Now everyone is free to make whatever choice they like, but to deny the choice exists in the first place is ignorance. "Giving up" on the "dream" (his words, not mine) of home ownership is fine, but that is a choice STC has made and that is not anyone elses fault.


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## krisbarry (11 February 2007)

Ahhh but when is a choice, not a choice...that is the BIG question.  At the point when something becomes over-priced for the majority, thats when a choice seizes to exists.  

Why is it that more and more people cannot afford a normal family sized home?

Why is it that we see people living in tents, shipping containers and caravans.  Sure some is by choice but the majority would rather a family home.

So again when does choice become choice...at the point of something being affordable, then turning un-affordable.


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## Kauri (11 February 2007)

Stop_the_clock said:
			
		

> Ahhh but when is a choice, not a choice...
> Why is it that we see people living in tents, shipping containers and caravans. Sure some is by choice but the majority would rather a family home.




From the W.A paper on *15 Jan*..*2006*...


> The demand for mining and resources workers in the Pilbara is so strong that a dishwasher can earn $100,000 a year.
> As resources companies scramble for skilled labour, the need for support staff is also growing.`
> In some cases, unskilled wages in remote areas are rivaling those paid to enty-level surveyors.
> On resource construction sites, house-keepers,kitchen-hands, cleaners and dining-room attendants can earn $80,00-$100,000...




I know, I know, it is easier to complain and whinge about the situation you have been placed in by others rather than get out and do something about it yourself. 
The real problem is not the problem, the real problem is the way you deal with the problem.


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## krisbarry (11 February 2007)

Kauri said:
			
		

> From the W.A paper on *15 Jan*..*2006*...
> 
> I know, I know, it is easier to complain and whinge about the situation you have been placed in by others rather than get out and do something about it yourself.
> The real problem is not the problem, the real problem is the way you deal with the problem.




80 to 100k is nothing when you have to fork out $500k for the house, then why bother.  

My brother lived in Sydney on 80K a year and said it was impossible to buy a house, so your point is?

Its all relative right.

You go some place where the jobs pay higher, but then the cost of living are much higher too!


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## nioka (11 February 2007)

Stop_the_clock said:
			
		

> 80 to 100k is nothing when you have to fork out $500k for the house, then why bother.
> 
> My brother lived in Sydney on 80K a year and said it was impossible to buy a house, so your point is?
> 
> ...



Just look for one you can afford,  not one to keep up with the Johnses


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## Kauri (11 February 2007)

Stop_the_clock said:
			
		

> 80 to 100k is nothing when you have to fork out $500k for the house, then why bother.
> 
> My brother lived in Sydney on 80K a year and said it was impossible to buy a house, so your point is?
> 
> ...




The cost of living for you in the mines.... free accomodation, free food, free transport, mind you if you drink to drown your sorrows it could get expensive.
$80,000 in Sydney whilst living in Sydney with the costs involved is hardly comparable to living in the Pilbara on $80,000-$100,000 with the minimal costs involved for someone like you. 
$500,000... for a house..... you want to start half way up the ladder??? I'm sure $300,000 will buy you something better than a shipping container. If you want to make the effort.
Yes, it is relative. Relative to how much you prefer to be a victim of circumstances as opposed to being master of them.
Any other excuses????


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## happytrader (11 February 2007)

Stop_the_clock said:
			
		

> 80 to 100k is nothing when you have to fork out $500k for the house, then why bother.
> 
> My brother lived in Sydney on 80K a year and said it was impossible to buy a house, so your point is?
> 
> ...




Hi STC 

Sounds like you are very comfortable living the way you are and as long as you are comfortable there is no way you will consciously or unconsciously allow change. BTW are you living at home? If however, things changed, then I am sure you would be asking the question "how can I afford to buy a house?" From that perspective anything is possible. 

Cheers
Happytrader


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## krisbarry (11 February 2007)

Kauri said:
			
		

> The cost of living for you in the mines.... free accomodation, free food, free transport, mind you if you drink to drown your sorrows it could get expensive.
> $80,000 in Sydney whilst living in Sydney with the costs involved is hardly comparable to living in the Pilbara on $80,000-$100,000 with the minimal costs involved for someone like you.
> $500,000... for a house..... you want to start half way up the ladder??? I'm sure $300,000 will buy you something better than a shipping container. If you want to make the effort.
> Yes, it is relative. Relative to how much you prefer to be a victim of circumstances as opposed to being master of them.
> Any other excuses????




Yep just like the guy I saw on TV, who was working in the mining industry in QLD, on a great wage of $100k.  The mining company did not offer any accomodation, so he was forced to rent a run down caravan for $500 per week.  So you take out the taxes on 100k and the 25k for accomodation and what have ya got left...an average wage.  Like I said its all relative!


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## krisbarry (11 February 2007)

By the way I am no victim..I am a survivor...I live very well on a low wage and save so much more money than many around me on an average wage.

Hey just 12 years ago I left home with nothing more than a garbage bag full of clothes and 12 years on I am living in one of the most wealthiest suburbs in Adelaide in an appartment over-looking the city lights...with views stretching to the sea.  Sometimes its not how hard you work, or what ya do with your money, or how good you were bought up...sometimes luck just deals you a good hand! 

I live within my means, but its not my problem that wealthy people around me what to share their lives with me.

Yep even the wealthy boat owner needs a sailingl crew!


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## Kauri (11 February 2007)

Stop_the_clock said:
			
		

> *Yep just like the guy I saw on TV,* who was working in the mining industry in QLD, on a great wage of $100k. The mining company did not offer any accomodation, so he was forced to rent a run down caravan for $500 per week. So you take out the taxes on 100k and the 25k for accomodation and what have ya got left...an average wage. Like I said its all relative!



   Ah, you saw it on T.V... I stand corrected...   
   Have you ever been to the mines in the Pilbara, or even the gold mines throughout the goldfields? Unless you want to commute out of a regional centre such as Kal. it goes no accomadation, no job. 
   If you are not a victim stop acting one, it's the greedy Baby-Boomers fault, it's the greedy developers fault, it's the real estate investors fault.


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## krisbarry (11 February 2007)

Thats why i am sticking my fingers up to people like yourself who are critical of the way I live my life and clicking the Bpay button transerfing more money over to my super fund...each to their own.

I was a victim once, always blaming somebody else, but now I am doing something about it.  I am making the best of my life...the best way I know how.

Thanks again for your concern, its much appreciated.

Were you born with a silver spoon in your mouth?

Walk a day in my shoes and you might know what life is really like.  Having the crap beaten out of me as a child and watching my mum being beaten up by my father....no  you wouldn't have a clue.

I really do appreciate the Aussie batler!

Now move on, I have a life to live and you are getting in the way!


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## krisbarry (11 February 2007)

I have asked for this thread to be closed off now, as I think its runs it course.

I also think its a wise idea for my own health and well being that it be closed.

Thanks to all members who contributed to this pretty heated thread.  I have learnt lots in the process.

S_T_C


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## Kauri (11 February 2007)

Stop_the_clock said:
			
		

> *Were you born with a silver spoon in your mouth?*
> 
> Walk a day in my shoes and you might know what life is really like. Having the crap beaten out of me as a child and watching my mum being beaten up by my father....no you wouldn't have a clue.
> 
> ...




   No, my early years were spent in Northern Ireland wearing wooden clogs. As for violence, both at home and elsewhere, well I no longer feel the need  go there.


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## Joe Blow (11 February 2007)

I have closed this thread at Kris' request, as it does seem to have run its course.

Please feel free to start other threads on real estate related topics in the 'General Chat' forum.


----------

