# The Australian property market



## KIWIKARLOS (7 August 2007)

Well we all know the yanks are screwed house prices are falling and troubles on the horizon. My question is how will this effect the Australian housing market.

Been a first home buyer only 1 year ago there is the thought that i may have bought at peak and am in for some loss.

But i've been reading up and there seems to be many differences between the US and Aus markets and im now thinking we will be spared the brunt of the problems in the US.

A few things i have considered is:
1. The fact that house prices "sydney" have been relatively stable for the last couple years and haven't been sinking rather just platued. 
2. Australia has no foriegn debt
3. We are experiencing a commodities boom that will unlikely end (but may slow down) for the next 20 years. Thus giving our economy a steriod shot for quite a while.
4. We have inflation increasing but because our wage growth and economy is strong it appears that if controlled should have a minor effect on the market as a whole.
5. If there are probs in the world economy and our economy slows wouldn't the RBA be likely to lower interest rates thus increasing house prices or we let our economy slow and dont increase rates to curb inflation and house prices remain stable.

I understand the US consumer drives alot of global growth through consumption but i see alot of other potential consumers out there in developing countries.

One other thing i have thought is that perhapes if our economy does slow people may move from the booming mining centres as production slows and "come home" to other states with their pockets full of cash.

Any thoughts


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## KIWIKARLOS (7 August 2007)

One other thing is that from what I understand "subprime" lending wasn't ever as big as it was in the US and Aus lending standards are tougher.

Plus I know we have alot of personal debt but doesn't a steaming economy and high productivity and low job rate negate any problems that may come from this ? Although I still believe personal debt levels are unsustainable if we slowed down.


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## eMark (7 August 2007)

Without knowing where you bought, what you bought, or the type of loan you have, or even how much you paid, it's hard to determine your position.

But forget all of that. 

The bottom line is (at least in the Eastern states), property has been DEAD since the end of 2003. Most of these states have gone through a retraction already, and now as we head through 2007 property is picking up again. 

So when you say you bought one year ago, that will probably turn out to be a pretty good entry point. Have a look around you, property is beginning to go crazy again.

Regarding interest rates. I think the opposite. The higher the interest rates go, the less affordable housing becomes for the first home buyer, the more demand for rental properties. Thus with the current climate, there are not a lot rental properties out there, this appeals to the investor, which drive up demmand for investment properties, and therefore general house prices.

It's a very basic explanation, but I hope this helps. It's all part of the cycle.

My  worth.



KIWIKARLOS said:


> Well we all know the yanks are screwed house prices are falling and troubles on the horizon. My question is how will this effect the Australian housing market.
> 
> Been a first home buyer only 1 year ago there is the thought that i may have bought at peak and am in for some loss.
> 
> ...


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## kyme (7 August 2007)

KIWIKARLOS said:


> few things i have considered is:
> 1. The fact that house prices "sydney" have been relatively stable for the last couple years and haven't been sinking rather just platued.
> 2. Australia has no foriegn debt
> 3. We are experiencing a commodities boom that will unlikely end (but may slow down) for the next 20 years. Thus giving our economy a steriod shot for quite a while.
> ...




I think you will find that Australia's overseas debt level is at record levels, albeit not in hands of federal govt. Like the US we are not a nation of savers, we borrow as a nation to support our lifestyle. Overseas borrowings has propped up our over the top increase in assett prices, especially housing. I can only see stagnation in housing prices for next few years at best. Interest rates will continue trending up worldwide as they return to more normal long term levels, we will follow in that regard. Having said that, If you bought your first house for lifestyle decisions and not looking for quick turnover I wouldn't be too worried.


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## theasxgorilla (7 August 2007)

KIWIKARLOS said:


> Been a first home buyer only 1 year ago there is the thought that i may have bought at peak and am in for some loss.




It all depends on where you bought.

If you bought in the right place a year ago, then on the contrary, you bought into upward momentum due to demand outstripping supply.  You are probably sitting on a buffer of increased positive equity...any weakness may only bring you back to where you started.  My opinion is that I don't think Aust is going to see weakness in the next 5 years.  And that sucks because I really want to buy a holiday house over there, but I expect I'm going to really have to have my finger on the pulse to buy any small dips.  The trend will be up...just hope Sweden/EU can keep up, lest my kronors become worth less and less against the mighty AUD!


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## Rafa (7 August 2007)

I only bought my first property two years ago... so your not alone KIWIKARLOS.



KIWIKARLOS said:


> 2. Australia has no foriegn debt




Our foriegn debt is actually around 500 BILLION DOLLARS  Close to 70% of GDP... 
and rising at over 1 BILLION a month!!!

mainly cause we import heck of a lot more than we export, not to mention the money the banks lend us to pay for our houses is also borrowed from overseas...

No only is that the main cause of the pressure on interest rates... it also means that overseas happening will effect us.

Unfortunately, as recent events in the stock market illustrate... in this globalised 21st century anyway, we don't live on an island! Our boom times are not of our own making... neither are our bust times...

One thing in Australia's favour tho, is regardless of what people say.... housing in Oz is cheap... when you consider land size of blocks and the fantastic country that land belongs to


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## nioka (7 August 2007)

Rafa said:


> Our foriegn debt is actually around 500 BILLION DOLLARS  Close to 70% of GDP...
> and rising at over 1 BILLION a month!!!
> 
> mainly cause we import heck of a lot more than we export, not to mention the money the banks lend us to pay for our houses is also borrowed from overseas...
> ...




And in the process of running up that debt we have also sold off, to overseas interests, most of Australia's iconic companies and closed down the biggest part of our production. We have also helped a large number of primary producers towards peasantry. (and we call ourselves a clever country)


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## Smurf1976 (7 August 2007)

KIWIKARLOS said:


> 2. Australia has no foriegn debt



Foreign debt is roughly triple now what it was in the mid-1990's. It's amongst the fastest growing things we have and it's rising rapidly both in absolute terms and as a percentage of GDP. 

More alarming than the debt itself is the reality that it continues to soar amidst the commodities boom. We ought to be doing incredibly well at the moment but in reality we're borrowing to the hilt.


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## KIWIKARLOS (8 August 2007)

In regards to primary producers and the minerals boom i think that we have been lucky in regards to the commodities boom but we are still technically in the worst drought in 100 years so our agricultural output is significantly less.
If we had good agriculture on the back of minerals it may be different.

My question is what happens when foriegn debt hits 100% of GDP? does that mean people will start lending Aus less and our imports will slow.

In regards to ways to boost our exports or reduce imports there is little we can do labour is so cheap in asia it makes manufacturing impossible and we have nothing else to export. 

I think e should start looking for new industries and opportunities such as exporting technology and education maybe renewable energy technologies to. But i can't see any way of curbing imports without slapping a few trade restrictions and tariffs on imported goods.

I for one am in favour of some industry protection here in Aus particularily with primary producers. Free trade is a joke when millions are willing to work for a fraction of the price you are particularily without environmental protection etc lacking in other countries.


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## kyme (8 August 2007)

Be careful what you wish for re industry protection. Think US political knee jerk reaction towards industry protection in 1930's was one of contributing factors to the great depression.
I think our primary producers are disadvantaged by some current overseas industry protectionism eg US, europe, japan etc.  Not sure what you are proposing, more government handouts to our primary producers/fixed prices?. The end result of that would probably be increased costs to consumers, therefore increased inflation and therefore higher interest rates. I hate to think what our inflation rate/ interest rates would be without all those cheap asian imports we rely on these days. Maybe our society might be better off if we lived more within our means so we don't have to rely on cheap imports and supported our primary producers/ industry more. Money isn't everything after all.


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## KIWIKARLOS (8 August 2007)

Perhaps the Gov should consider launching a "buy Australian made" campaign. I'm not sure how this would go as far as WTO rules go and I imagine that even if the products were more expensive people would buy if there was a certain prestige/feeling that you were helping your country. 

Sort of like the heart foundations "tick of approval" if marketed properly it could have a real impact.


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## Temjin (8 August 2007)

Like Kyme said, if you brought your house as a lifestyle decision and don't planned to move out anytime in the next 10 years, then you shouldn't be worried too much.

However, if you are buying on the basis that you want to turn it over in a few years for a profit, then yes, you should be worried because the money spent (interest payment, house maintainence such as rates, repairs, etc and any other expenses) may be better spent on investing elsewhere at a time like this.


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## KIWIKARLOS (8 August 2007)

It was a lifestyle choice just got married and was renting but I wanted a place that i could make my own. I was surprised actually we bought in May last year its a 3 bedroom townhouse with 2.5 dunnies and garage etc for $425K (people not from Sydney prob can't believe the price for a townhouse) but a few weeks ago another townhouse in my place sold for $437 K thats 3% in 1 year which isn't to bad.

But ill be looking to stay put for 5-10 years.


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## numbercruncher (8 August 2007)

KIWIKARLOS said:


> It was a lifestyle choice just got married and was renting but I wanted a place that i could make my own. I was surprised actually we bought in May last year its a 3 bedroom townhouse with 2.5 dunnies and garage etc for $425K (people not from Sydney prob can't believe the price for a townhouse) but a few weeks ago another townhouse in my place sold for $437 K thats 3% in 1 year which isn't to bad.
> 
> But ill be looking to stay put for 5-10 years.





Thats actually terrible, but typical of the current market - once you subtract Interest, Realestate commissions, stamp dutys, rates, maintenance your looking at a massive loss.

Its even worse when you add that loss up and place the hypthetical amount into the stock market a year ago - or better still the entire amount invested in say BHP may last year would be like way over 600k plus dividends.

Hell the 425 in a bank account would be over 450k now.

Each to there own with investment thou, but like the others mentioned if Realestate isnt about making money or caring about losses it really doesnt matter.


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## KIWIKARLOS (8 August 2007)

hahahaha i didn't say it was my investment.

Besides the fact i have my missus sister currently livin with us which means my house is now also  45% investment property which gives me about 8 G a year in real return.

I keep money in my offset account about 30G started with and invest in the market. After tax i was 10% up last financial year (still learning) but so far this financial year im up 24% after tax in two months !

With the additional repayments and a few lump sums i've chicked into my home loan its down from 30 years to about 18 now after one year and i still have cash in the bank for market investment and holidays


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## KIWIKARLOS (8 August 2007)

PS you say 425K in a bank account or BHP is better. Of coarse it is but you show me one lender that will give me that much cash to put in a bank account or speculate in the market 

I think if you spread your investments you can have a house (for lifestyle reasons) and a good return on investments. Enough to pay off your house in max 15 years and have fun along the way.


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## numbercruncher (8 August 2007)

Thats good Karlos, your doing well. (compared to many others (>: )

I wasnt having a dig or anything, I guess im just saying that on average realestate isnt all its cracked up to be.

Its a crazy ole' world when your actually better off renting and buying an Investment property for the tax advantages, I once knew some brothers in Sydney whom did that, bought Houses and just rented them off each other for the win ....

ANother example and i guess theres hundreds (but the media like to focus on the big wins to keep the game going!) I sold a House on the Gold Coast in 02' for 330k, its now worth 400k - So the guy who bought it after duty etc paid 340k and if he sold after realty fees gets 390k - Wow thats way less than bank interest, and had he bought $340k BHP back in 02 they would now be worth 1.2m+ plus divvies.

In short im just saying that i think realestate stinks worse than a sumo wrestlers back side.


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## KIWIKARLOS (8 August 2007)

totally agree with you mate.

I saw some figures the other day when reading about subrime mess that when inflation etc taken into account the US housing market on;y really increases between 0.4 and 0.7 % per annum and that it has always increased since the great depression the interesting thing is that they are now decreasing and technically that hasn't happened since the depression 

I still believe the market is one of the best return investments but i entered in a bull market and haven't experienced trading patterns like this before so im still learning how to trade current conditions


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## Kimosabi (8 August 2007)

KIWIKARLOS said:


> totally agree with you mate.
> 
> I saw some figures the other day when reading about subrime mess that when inflation etc taken into account the US housing market on;y really increases between 0.4 and 0.7 % per annum and that it has always increased since the great depression the interesting thing is that they are now decreasing and technically that hasn't happened since the depression
> 
> I still believe the market is one of the best return investments but i entered in a bull market and haven't experienced trading patterns like this before so im still learning how to trade current conditions




I'm not sure what data the guys were using for the article you were reading but this is a graph of the US housing bubble adjusted for inflation since 1890


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## KIWIKARLOS (8 August 2007)

Well you've just proven my point mate:

do the maths 100% gain in 116 years ! from 1890 to 1996 
That equates to an average annual gain of 0.6%

Imagine what the gain pa would be if the investment time frame was from 1955 to 1995 Its 0% over 40 years!

Proving that realestate is one of the worst investments around. Also notice that with the other booms they have returned to just a fraction above their starting point after they run their course. That a huge loss if history repeats itself


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## sharechaser (8 August 2007)

eMark said:


> Regarding interest rates. I think the opposite. The higher the interest rates go, the less affordable housing becomes for the first home buyer, the more demand for rental properties. Thus with the current climate, there are not a lot rental properties out there, this appeals to the investor, which drive up demmand for investment properties, and therefore general house prices.
> 
> It's a very basic explanation, but I hope this helps. It's all part of the cycle.
> 
> My  worth.




eMark - I actually never thought about that before, and I was under the impression that an interest rate rise could actually make housing more affordable for first home buyers due to decreased demand. In my opinion, I think if interest rates went down then more homebuyers and investors would be encouraged to take out mortgages and buy homes, therefore increasing demand and also the price. 

On the flip side, I would have thought that the rise in interest rates would result in a less desirable return on equity for potential property investors, causing them to perhaps switch to higher NPV investments such as shares. Around times of increased interest rates you always here many stories of people who can't afford the repayments and are forced to sell, thus creating more supply.

I understand that a higher interest rate would cost more for the home loan of course, but is it possible that for a first home buyer the lower price resulting from a decrease in demand could outweigh the increase in home loan payments, therefore making housing more affordable. 

I never considered the idea of more demand for rental properties, and it's a very good point. However as rents rise (as they have been lately) it starts to make sense for more people buy instead of rent, as renting is no longer cheap.

Of course this ignores facts like people moving due to the resouce boom etc and I'm just hypothesising ceteris parabis. Does anyone have any ideas as to exactly what interest rate changes do have on housing affordability?

(Btw i'm obviously using the term housing affordability to include the price of houses, not just loan repayments)


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## eMark (8 August 2007)

sharechaser said:


> I understand that a higher interest rate would cost more for the home loan of course, but is it possible that for a first home buyer the lower price resulting from a decrease in demand could outweigh the increase in home loan payments, therefore making housing more affordable.
> 
> I never considered the idea of more demand for rental properties, and it's a very good point. However as rents rise (as they have been lately) it starts to make sense for more people buy instead of rent, as renting is no longer cheap.




Hi sharechaser

The way I understand it is that it all depends on what combination of factors that are involved at the time. Since 2003 (the unofficial end of the last property boom), was because of a surplus of developments & general property available in the market place (which was a direct repsonse to the boom itself), and prices had reached a top. Due to the surplus, developers started to pull out. A natural course developed of very little to no new stock over the next 3 years, which is culminating in todays shortage of properties to rent. Higher rentals are resulting from a lack of stock, which in turn is enticing investors back in to compete with homebuyers equaling higher cost of housing. Higher home prices & interest rates forcing renters to continue to rent. The wheels keep turning.

Of course a few years ago, someone who rented and got sick paying rent could buy a home due to the monthly payment not being much more than the rent itself. But try buying a 3 bedder in middle to outer Melbourne now, and the monthly payment far outweighs what it costs to rent.


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## theasxgorilla (8 August 2007)

eMark said:


> Of course a few years ago, someone who rented and got sick paying rent could buy a home due to the monthly payment not being much more than the rent itself. But try buying a 3 bedder in middle to outer Melbourne now, and the monthly payment far outweighs what it costs to rent.




The key reason for this is that interest is only tax deductable on investment properties.  It means that the tax payer subsidises the living of renters...or put another way, encourages investors to make available rental accomodation.

In other parts of the world like the US, Sweden and Denmark the interest on your primary place of residence is tax deductable.  Discrepancies between the cost to rent and own still develop, since speculators are still willing to take a hit to participate in cap gains...but the discrepancies don't get as far out of wack as they do in Aust.


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## numbercruncher (8 August 2007)

theasxgorilla said:


> The key reason for this is that interest is only tax deductable on investment properties.  It means that the tax payer subsidises the living of renters...or put another way, encourages investors to make available rental accomodation.





I prefer to look at it as the Tax payer Subsidises the property speculator, and to the tune of 5 Billion a year, which could pay for a ship load of public housing stock that could be a national asset that inturn rents back to the Government/Tax payer.

If i was a politician the first thing id do is start reducing negative gearing interest claimability by 10pc a year for 5 years to sort out the trash investments.Let them claim everything at the end added to the capital cost.

House prices in Australia are really a national disgrace in comparison to average incomes. Sometimes i wonder how the CBDs of places like Melbourne and Sydney get any low paid workers outside of the Backpacker industry working in them.

The whole system encourages people to live in a rental and buy an Investment property to gain tax advantages, should start a website negativegearinghookups.com to marry up like minded investors.

Well thats my simple view on the subject and im sticking to it


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## toothfairy (9 August 2007)

numbercruncher said:


> If i was a politician the first thing id do is start reducing negative gearing interest claimability by 10pc a year for 5 years to sort out the trash investments.Let them claim everything at the end added to the capital cost.
> 
> House prices in Australia are really a national disgrace in comparison to average incomes. Sometimes i wonder how the CBDs of places like Melbourne and Sydney get any low paid workers outside of the Backpacker industry working in them.




Hi there,
there is no difference in negative gearing properties (residential or commercial included) or gearing shares, or borrowing money to run your business etc. As long as they are legitimate income producing business. All borrowing costs should be 100% tax claimable. Don't always think people negatively geared their properties ALWAYS make lots & lots of money, there are also risks involved. Why don't you try it? Yes, some people don't like the idea of the rich gets richer, normally they work harder for their income so instead of paying more tax there should be ways to have another business (like being a landlord) to make their money work harder.
House prices in Australia is low compare to most developed countries with good infrastructures. It seems expensive because we want big houses on own land with nice gardens and close to city, and we object to any high rise developments. We are greedy.
Cheers.


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## krisbarry (9 August 2007)

toothfairy said:


> .
> House prices in Australia is low compare to most developed countries with good infrastructures.




I would check your facts again before posting such a ridiculous comment as this...according to latest stats...Australia has become one of the most expensive OECD countries in the world to own real estate.

We now have 3 capital cities where the average house cost are about $500,000+.  (Perth, Sydney and Melbourne).  More than half of Australia's population live in these 3 cities alone.


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## marklar (9 August 2007)

Stop_the_clock said:


> More than half of Australia's population live in these 3 cities alone.



This certainly is a contributing factor, ACA (I think?)had a story on last night about house prices in Stawell and the so called "tree changers" that they were trying to attract into the area.  Nice idea, but how many jobs with decent salaries will be available?  How many people have been forced to move to Sydney and Melbourne to find work? How can that be turned around?

m.


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## KIWIKARLOS (9 August 2007)

theres two sides to this arguement should the gov release land and increase the sprawl even more or should they undertake urban consolidation to produce more living space.

I for one am for consolidation, Urban sprawl is costly for installing services and in particular transport + its destroys what little environment is left around Sydney etc.

My work gets me involved with the council planners in Sydney and there 10 year stratagy is to build large multi story units and commercial areas with more parks etc around already established rail infrastructure such as is happening along the whole northern rail line in Sydney.

From their predictions they believe elderly people who's kids left home and young singles will move into these areas freeing up the traditional suburban houses with land etc for familys with children etc. They plan to build i believe about 100000 in 10 years. 

I think to make housing more affordable we are going to have to let our wages increase with time rather than dropping house prices or opening up large land releases


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## toothfairy (9 August 2007)

Stop_the_clock said:


> I would check your facts again before posting such a ridiculous comment as this...according to latest stats...Australia has become one of the most expensive OECD countries in the world to own real estate.
> 
> We now have 3 capital cities where the average house cost are about $500,000+.  (Perth, Sydney and Melbourne).  More than half of Australia's population live in these 3 cities alone.




I would rather let you have the pleasure of checking HOUSE prices near the CBD (not flats or apartments as they call in NY) in other cities that we Aussies so adore. Say :
New York
London
Paris
the cheapo Hong Kong (they used to live in Sampans)
the not so popular Singapore
Ok Ok apartments prices will do for the last two as long as they are the same sizes and equal distances from the main city.
Please let me know if you can find any bargains at A$500000 even at today's inflated A$. BTW, good properties in Singapore are sold per square foot.(around $2000).
Good Luck.


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## toothfairy (9 August 2007)

Further to my last post. I am going to do a simple maths exercise to prove our property prices are not excessive.
I am old enough to tell you that a house in Richmond, Vic was worth $200,000 in 1991, and an average house in Kew, Vic was worth $400,000. I know because I bought both. After 17 years now both triple, ie Richmond worth $600000 & Kew 1.2M. Using formula of compound interest 1.07 ^ 17 results in slightly over 3. ( the sign ^ means raise to the power of). So the annual capital gain can be considered as 7%. Taken into account of the interest rates you have to pay (or missed out if you pay cash) during this period, the appreciation is hardly considered as exciting or profitable. It just is ....er.... ordinary or let say reasonable. Mind you, back in those days, everyone thought Richmond (a poor suburb near Melbourne for those who don't know) was way too expensive @ 200000. Conclusion : everybody thinks property prices are expensive today, but in a few years' time they wish they have bought at that less expensive price. I have seen it over & over again.
Just my thoughts, I also missed out on an "expensive" Toorak property in 1995 for 500000. 
Cheers.


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## numbercruncher (9 August 2007)

toothfairy said:


> Further to my last post. I am going to do a simple maths exercise to prove our property prices are not excessive.
> I am old enough to tell you that a house in Richmond, Vic was worth $200,000 in 1991, and an average house in Kew, Vic was worth $400,000. I know because I bought both. After 17 years now both triple, ie Richmond worth $600000 & Kew 1.2M. Using formula of compound interest 1.07 ^ 17 results in slightly over 3. ( the sign ^ means raise to the power of). So the annual capital gain can be considered as 7%. Taken into account of the interest rates you have to pay (or missed out if you pay cash) during this period, the appreciation is hardly considered as exciting or profitable. It just is ....er.... ordinary or let say reasonable. Mind you, back in those days, everyone thought Richmond (a poor suburb near Melbourne for those who don't know) was way too expensive @ 200000. Conclusion : everybody thinks property prices are expensive today, but in a few years' time they wish they have bought at that less expensive price. I have seen it over & over again.
> Just my thoughts, I also missed out on an "expensive" Toorak property in 1995 for 500000.
> Cheers.




Just gos to show how crappy an Investment Realestate is, now had you invested your 600k in BHP back in 1990 youd now be sitting on about 8m and be getting 200k a year in Divs , youve still done well though!


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## toothfairy (9 August 2007)

numbercruncher said:


> Just gos to show how crappy an Investment Realestate is, now had you invested your 600k in BHP back in 1990 youd now be sitting on about 8m and be getting 200k a year in Divs , youve still done well though!




Yup, from here I am just wondering which is better from now on. For property I am comfortable to negatively gear it, margins on share is never long term. For example, during 1992/3 my properties went cheaper than I bought, if they were BHP, I may have sold them to cut loss. Properties, for better or worse, you are more stucked with them for longer term. Very few people kept BHP (without trading at all) for 17 years. Itching to take profit every now and then, LOL.


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## pedro64 (9 August 2007)

toothfairy said:


> Hi there,
> there is no difference in negative gearing properties (residential or commercial included) or gearing shares, or borrowing money to run your business etc. As long as they are legitimate income producing business.



[...]

income producing, sure, but i suspect that the majority of housing investment income is passive and therefore contributes little to national productivity and gdp. the government provides us with work and business tax concessions to encourage *productivity*.

-- pedro


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## toothfairy (10 August 2007)

pedro64 said:


> [...]
> 
> income producing, sure, but i suspect that the majority of housing investment income is passive and therefore contributes little to national productivity and gdp. the government provides us with work and business tax concessions to encourage *productivity*.
> 
> -- pedro



Sure, there are many types of business. Some are productive like lollies factories (good for toothfairies ), some are passive like renting out your houses ( but still promoting a service not dissimilar to hoteliers) and some are counter productive like CASINOS. I reckon a landlord has more rights for tax deduction than casino owners. Don't you agree? So look at them first.
PS. gearing to trade shares are NOT productive either.


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## bvbfan (10 August 2007)

KIWIKARLOS said:


> Well we all know the yanks are screwed house prices are falling and troubles on the horizon. My question is how will this effect the Australian housing market.
> ...
> Any thoughts




Let me guess that you fell for John Howards pork pies and you voted Liberal?

There are several issues I have with here.
1 - Prices in some western Sydney areas I believe have dropped around 20% or more from peaks and some buyers face negative equity. (There loans are more than the value of the home now)

2- Australia has very little government debt but a huge personal debt run up on credit cards, personal loans, home loans.
Business also have a lot of foreign debt as bonds issued here and overseas.

3 - The mining boom and corporate profits are doing nothing but funding tax cuts for high income earners, and providing some superannuation benefits to low to middle income earners. The benefits of the current boom are being wasted.

4 - Inflation is only low because of the way it is calculated, if you look at the things that the majority of people use everyday you will have noticed they have gone up a lot more than inflation in the past 5 years or so. (petrol, food, accomadation costs etc)
The blowout in inflation hasn't happened because wages have been kept low (Workchoices, AWA's are great in this respect) and generally wage growth is the last area to catch up in the economic cycle.

5 - The RBA will only lower rates if inflation is in the target band of 2-3% and the growth rate is stagnating around 1-2%.
If inflaton stays around 3% you make actually face further interest rate rises because the RBA primary objective is to control the rate of inflation.

It still seems Australia may be heading for the banana republic that Keating talked about 20 years ago. Except the foreign debt has been transferred from the government to the general public.

Australia may not have the sub prime issues but the low doc and 100%+ finance being offered is a recipe for disaster.


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## robots (10 August 2007)

hello,

yes another drop of 3% on the DOW overnight, great stuff

be plenty with cfd trades out of this world, 

be another big weekend for RE as people get the real assets and not the fanciful instruments around at the moment

thankyou

robots


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## wayneL (10 August 2007)

robots said:


> hello,
> 
> yes another drop of 3% on the DOW overnight, great stuff
> 
> ...



No asset class will be unscathed as the biggest credit bubble the world has ever seen unravels right before our eyes.

If you believe RE will appreciate from here.... well good luck.

Even London is down MoM.


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## robots (10 August 2007)

hello

thankyou

thankyou
robots


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## wayneL (10 August 2007)

robots said:


> hello,
> 
> yes another drop of 3% on the DOW overnight, great stuff
> 
> ...



BTW, volatility = $$$$$$$

Cheers


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## Kathmandu (10 August 2007)

wayneL said:


> No asset class will be unscathed as the biggest credit bubble the world has ever seen unravels right before our eyes.
> 
> *If you believe RE will appreciate from here.... well good luck.*
> Even London is down MoM.




Not *all* RE will appreciate in the short term ,but some will.

Just had Val's done on a large parcel of my IP's and they have gone up close to 30% since same time last year.

Houses that *I *want to buy near were my PPOR in Brisbane are, have gone up just over $100k in 6 mth's about 35%..

A lot of that buying is passionate first home buyers buying with their heart and not their head, desperate to get the house they feel they have to have.

The number's don't stack up for investor's so we leave them to it.

Fool's with their money.....................well the bank's anyway.

Dave


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## tech/a (10 August 2007)

Dave very similar in Adelaide.
Particular inner Adelaide.

Auctions bringing 50-100K above reserve.
I specialise in Southern Beach. Pricing here has risen 12% in the last year and Agents are reporting great clearence rates and high demand.
While not to the magnitude of Inner Adelaide I expect around a 30% increase in the next 2 yrs as we become more on par with Brisbane and Perth median pricing.


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## robots (10 August 2007)

hello,

cant see much changing when you have 70,000 people coming to Victoria only

no tent city has been erected yet

thats around 250 new residences a week, no way is that being built

thankyou

robots


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## cutz (7 June 2009)

Goodmorning all,

Does anybody know where to get accurate information regarding the state of play in the housing market around Melbourne, i.e vacancy rates, developments in the pipeline, price trends, expected housing requirements in the future ect. ect.

I’m doing a bit of preliminary research but all google brings up are figures which I suspect to be skewed one way published by real estate  affiliates. ( i.e overly optimistic figures)

Basically what i'm getting at is whether the proliferation of multistory developments amongst heritage homes in the inner suburban area is justified, developments which should be confined to areas like the docklands or new released estates in former industrial areas.

Thanks in advance.


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## kincella (7 June 2009)

Cutz...interesting that you found this old thread .....last post 10.08.07
to direct the request to, rather than the very active thread on houses....
and funny to look back in hindsight at the doomsayers...in light of where we are at now...and they are still in the same mindset of nearly 2 years ago.

has it got anything to do with the proposed new high rise for Williamstown ??
and Ron Walker involved

the Vic govt's 2030 plan is the problem, although they recently released new land for development which goes against the 2030 plans...

theres been a stack of information in most news/media recently...but maybe its been more about QLD putting projects on hold...
try this link ...mainly related to ASX listed property companies
and Justin Madden may not be around too much longer
might be hard to get info thats not coming from those in the industry...

http://www.theaustralian.news.com.au/business/industrysectors/commercialproperty/


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## robots (7 June 2009)

cutz said:


> Goodmorning all,
> 
> Does anybody know where to get accurate information regarding the state of play in the housing market around Melbourne, i.e vacancy rates, developments in the pipeline, price trends, expected housing requirements in the future ect. ect.
> 
> ...




hello,

and if you want overly bearish figures go to GHPC, Keen, Grittens, Scott Pope any other anti-housing blogger

seriously, if you want to find out about developments you will need to walk the street and take notice of permit applications or get an "in" in the marketing/design companies that are compiling the brochures/advertising prior to launches

title searches, gossip press on RE (business, Age saturday)

for instance:

http://www.voguesouthyarra.com.au/

this development commenced prior to having permit, yet all advertising, signage etc completed well before

thankyou
associate professor robots


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## kincella (7 June 2009)

your right Robots...remember a month or so ago I saw 9 massive big developments going on in Glenferrie Rd, between Toorak Rd and Malvern Rd....well I have lost count of all the others I have seen since....
I guess considering they are taking over a year to get approvals from councils, its turned out perfectly for some...with the lower interest rates...

I looked at the development at the back of Chapel St last year, to buy off the plan, at the time they only had a few unsold at the higher end of the range....way above the 600k mark....just the same as years earlier I looked at the high profile building on the corner of Chapel and Malvern Rd....off the plan they were 310.000 and very smart....for a one bedder....
I was looking for an IP not for my own housing....


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## cutz (7 June 2009)

kincella said:


> Cutz...interesting that you found this old thread .....last post 10.08.07
> to direct the request to, rather than the very active thread on houses....
> and funny to look back in hindsight at the doomsayers...in light of where we are at now...and they are still in the same mindset of nearly 2 years ago.




Thanks for the info guys,

I thought I’d tack on to this thread rather than start a new one, the active threads seem to be talking about the direction of property, I was just after general info.

The one near my area seems to have gone straight to VCAT due to the local council unable to make a decision,( I suspect the council wants it to go ahead due to extra revenue)  I’m not able to find out anything about the developer, numerous searches reveal nothing.

Another thing I’ve just discovered is the developers have agreed to some sort of option with the existing owners which prevent them from selling up for a certain period of time, strange stuff indeed.

Anyway this matter had aroused quite a bit of suspicion,  a reno I did several years ago was quite a process getting through the local council, I actually copped a hard time but on the other hand developers seem to get away with whatever they like, it really annoys me and the fact that I can’t get reliable research like you can with financial products really gets under my skin.

Bit like a fish out of water i am when it comes to property.


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## Trevor_S (7 June 2009)

robots said:


> any other anti-housing blogger




I don't think anyone is anti housing.  Well, I have yet to come across anyone who is.  I do see lot of people that see property, and residential property in Australia in particular as overpriced.  So overpriced it's a burden on future generations to pay for it, so overpriced compared to the fundamentals, so overpriced that it consumes vast amounts of capital exchanging properties that are already built, leading to much less capital available for productive growth of the economy.  I see lots of people that would like to see the housing price bubble popped (or deflate) (and any look at long term growth trends should show a bubble has formed, it has to deflate or pop but who the hell knows when ?) for lots of the above reasons, and a return to housing to be viewed as a domicile but I don't see anyone that is against "housing" per se ?  

On the other hand, property spruikers do seem to have the ear of Government


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## robots (7 June 2009)

hello,

ah yes, but past performance is no indication of future performance

it may not go up 5000% but it may not revert to the average either(birth rite supposedly)

who knows, i dont

thankyou
associate professor robots


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## cutz (11 June 2009)

G’Day all you property gurus,

I have another question,

Anyone know were I can get hold of accurate unbiased inner city apartment ownership statistics, in particular the ratio of owner occupier verses investor living elsewhere.

I’ve trawled through the ABS site, heaps of great info but couldn’t get the above info.

Once again, thanks in advance.


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## Stan 101 (11 June 2009)

Try BIS Shrapnel. You'll probably need to pay for it, though.


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## cutz (11 June 2009)

Stan 101 said:


> Try BIS Shrapnel. You'll probably need to pay for it, though.




Thanks Stan,

Yeah i found a report at BIS, it's just a tad expensive, about 10K.

I'll keep searching, see what else i can find.


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## kincella (12 June 2009)

just keep googling for it...
ages  ago I had a link....but lost now...South yarra was about 70% investors...explains all the units down there....and I would believe a similar or higher number may be assumed for the city....although Docklands may have more owner occupiers...it appears more family friendly than the city itself
or I could be very wrong...
heres some bits...
By Bob Wilson, 26th October 2007 The trend might not yet be too obvious in official statistics of new dwelling types, but some of Australia's hottest residential markets are seeing a subtle shift in preference for apartments over houses. 

Sydney's trend is clear cut - the ratio now between freestanding houses and attached homes is almost 1:1. 

Brisbane's apartment market has also demonstrated a shift towards owner -occupiers in the past four years. Apartments and townhouses claimed almost 30% of the Queensland housing market in 2006-2007 and the trend is more marked in Brisbane, where buyers are bypassing the rental phase and investing in the apartment/townhouse market. 

In 2003, owner-occupiers represented only 25% of the inner-city apartment market in suburbs like Fortitude Valley, the CBD, Newstead and West End. In the past financial year this proportion has jumped to more than 50%, which has caused a shortage of rental properties and ramped up prices. 

Tight rental vacancy rates (1.3%) and a soaring median house price are the main factors driving the renewed interest in apartments. 

http://www.hotspotting.com.au/index.php?act=viewArticle&productId=167


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## cutz (13 June 2009)

Thanks kincella, 

I appreciate the info you've dug up.


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