# House prices to stagnate for 'years'



## krisbarry (19 September 2005)

House prices to stagnate for 'years'
By Nicki Bourlioufas

19sep05

HOUSE prices will likely stagmnate for "many years," dragging on consumer spending and economic growth, according to analysts at ABN AMRO.

Rising petrol prices are also causing shock to consumers, which will weigh on the economy, the analysts said in a report on consumer spending.

"House prices are likely to stagnate across the country for many years, most likely drifting lower as wages and rents slowly catch up," said analysts Felicity Emmett and Kieran Davies at ABN AMRO.

"Record high petrol prices and interest-servicing costs have both contributed to the slowdown in household spending, with growth in real household income slowing sharply, but the weakness in house prices also seems to have played an important role."

"House prices remain wildly out of line with wages and incomes, so it seems likely that household wealth will be a noticeable drag on spending for a very long time," the analysts said. 

Households finances are in a fragile state, with people spending more than they earn and drawing down on the value of their homes to support spending, the report said. 

"The admittedly poorly-measured saving rate is still negative, with income slowing in tandem with spending over the past year or so," the analysts said. 

"Similarly, households are still actively drawing down equity in their homes." Households draw down on equity in their properties if rises in debt exceed the increase in the value of housing.

"New South Wales householders have been the most enthusiastic extractors of household equity, consistently withdrawing equity at the highest rate," the analysts said. 

"This reached a peak in late 2003 when (NSW) households were withdrawing the equivalent of 12.5 per cent of consumption spending.

"Surprisingly, with Sydney house prices falling for a more than a year, households in New South Wales are still withdrawing equity at a rapid rate, equivalent to around 6 per cent of consumption spending.

"Elsewhere, housing equity withdrawal continues in the smaller states, but at more modest rates than seen in New South Wales," the report said.

Sydney house prices are around one-third more expensive than the next most expensive city, Melbourne, the report said. Sydney prices are around 12 times average earnings, while Melbourne prices are only around 9 times average earnings. 

Rising petrol prices are also causing shock to the economy, the analysts said.

"Almost all industrialised countries, with Australia no exception, are net oil importers of oil, so the rise in energy prices is a negative for growth." 


Source: 
http://www.theadvertiser.news.com.au/common/story_page/0,5936,16649116%5E1702,00.html


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## krisbarry (19 September 2005)

So why bother buying into a flat housing market?

The boom is over!

Thank bloody god!

Time to save for those house deposits and sit back for the next 4-5 years then enter the market.


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## Happy (19 September 2005)

Like boom, bust will be not necessarily fast.

Of course keen eye out for sign of any change in the property market mood will prevent us from sitting on our hands while something important happens.

This does not mean that every price will be lower, some ‘popular’ suburbs will grow in popularity and price, same as in Stock Market, some robust shares rise irrespective of Bull-Bear presence.

Patience is one of the keys to success.


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## krisbarry (19 September 2005)

Only a fool would be buying a property in this current market.

Not unless I was living in a car or a tent would I even consider the plunge!


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## tech/a (19 September 2005)

Yes it is possible that housing will flatten.

There is still opportunity for developers.
With housing now at a price which is out of reach of some people,rent demand will be on the increase.Particularly one and two bedroomed apartments or flats.
Community title high density,low rental or purchase price developements are the new low end demand.
The higher end builders are also busy with investors selling their 1 or 2 investment properties and building their dream homes.

Unless you are a professional property developer,fool or investor quick $$s in property will be hard,but not impossible to find.


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## krisbarry (19 September 2005)

tech/a said:
			
		

> With housing now at a price which is out of reach of some people.




Well done Tech/a you have finally hit the nail on the head!  I thought I would never hear you say that housing is now at a price which is out of reach for some people 

Tech/a has had a light bulb moment here, I think he is onto something!

Maybe he is now looking at the housing market from a buyers point of view and not a seller.

Finally you and I agree on something.

Why is this so....?

Greed!

This is now the time to start implementing a range of affordable housing programs for all.  It should be the right of every Australian to be able to afford a house.


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## tech/a (19 September 2005)

krisbarry said:
			
		

> Finally you and I agree on something.
> 
> Why is this so....?
> 
> ...




Actually I'll rephrase the above.*Some people cannot afford the home they want*.EVERYONE can buy a home even now,buy it may not be exactly what you want.
You can buy land at $60K even less! out of Adelaide and you can buy a new Transportable for $49,900.Thats cheaper than some cars.

*Why is this so-----DEMAND*

Greed has nothing to do with it---as much as you would like it to play a part.
Greed is your perception of holders of larger housing portfolios.There was a 12K first home buyers grant around 3 yrs before the boom---few takers--then $7000 still few takers--older wiser investors recognised opportunity and took advantage of positive geraing---some younger ones as well(Remember the air hostess).Now we have a new breed who missed the boom--the whingers!

Interesting-----Could you explain what an affordable housing programme is,by that I mean how does it work---get paid for?
There are already community building programmes,which have their positives and negatives.


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## Smurf1976 (19 September 2005)

tech/a said:
			
		

> Now we have a new breed who missed the boom--the whingers!



To be fair I must point out that many young people foolishly believed their parents, teachers etc. who said something to the effect of "work hard and save" when in reality "borrow to the limit and speculate, walk away from the debt if it goes wrong" would have been better advice in view of the actual market.

At least the house price rises are a good way to shoot down anyone who mutters something about 2% inflation. Both the RBA's money supply data and movement in the house price reveal the truth.


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## krisbarry (19 September 2005)

tech/a said:
			
		

> You can buy land at $60K even less! out of Adelaide and you can buy a new Transportable for $49,900.Thats cheaper than some cars.
> 
> .




Now that must be about an hour out of the city...too far for work/friends/family/city/social life.

Hmmm I think I will keep renting instead.

And a transportable house, now I must be really lucky to afford this.

Amazing how within a few years, you could buy a family home 7km from the CBD of Adelaide, now you are forced to live with the hill-billies 1 hour out of the city in a transportable....give me a break!

I am not some Jerry Springer Trailer trash!

I would have to give up my friends/family/social life/work, just for this, get real man.

It would cost me $100 per week in fuel to commute to work or visit my friends or family. Not worth the outlay for a boring life down in the poverty/welfare/crime ridden/drug dealing areas.

Elizabeth/Norlunga ring a bell!


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## Dan_ (19 September 2005)

krisbarry said:
			
		

> Now that must be about an hour out of the city...too far for work/friends/family/city/social life.
> 
> Hmmm I think I will keep renting instead.




Kris,

Iif I understand correctly, if an investor didn't own the property you are currently living in and rent it out, you would not be able to afford to live where you currently do?

Yet you claim due to investors being greedy and amassing multiple houses they are marking it unaffordable for the masses?

I think you find that a true "investor" will buy a property solely on a return basis which will either be rent or capital gains. It's simply a numbers game and when the numbers don't add up they usually move on.

It's your owner occupiers that form an emotional attachment to a property the instant they see it that causes frenzied bidding at auctions, or immediate sale when a property is advertised and drives prices up

This is of course fuelled by supply and demand, and as you mentioned above your could by a cheaper house, but don't wish to incur the inconvenience it provides to the discounted price, if that is the case then you have to play like everyone else and pay the price accordingly.

At the end of the day a house is only worth what someone will pay for it. and that value directly correlates to supply and demand, it's irrelevant if 1 person owns the whole street, or each house is individually owned.


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## Bloveld (20 September 2005)

krisbarry said:
			
		

> Now that must be about an hour out of the city...too far for work/friends/family/city/social life.
> 
> Hmmm I think I will keep renting instead.
> 
> ...





So your some sort of elitist snob. Not prepared too live amongst the people that you have pretended to stick up for?


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## tech/a (20 September 2005)

krisbarry said:
			
		

> Now that must be about an hour out of the city...too far for work/friends/family/city/social life.
> 
> Hmmm I think I will keep renting instead.
> 
> ...




As I said some people cannot afford the home they want.
I'll also guarentee that you wouldnt be able to tell the difference once on the block,between a transportable home and one built on site!
As for your fuel bill---ever heard of public Transport?
Funny I havent noticed all the rich living further out as they are the only ones that can afford the fuel bill.

Your 31 Kris look behind you and see what you've got to show for the last 10 yrs---now look ahead!!!!

Come over to the DARK SIDE.

Anyway must go have to stick it up one of my tennents--with any sort of luck I'll be able to sack an employee. Aint life grand!


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## krisbarry (20 September 2005)

You have all missed the point.  Older people on this site tell me to move out of the city, give it all up to own a house.

Sorry but I cannot see most young people moving this far out of the city, or further.

The CBD would collapse!

Who works in the city?

Who works in the surrounding suburbs?

This generational shift will completly change they dynamics of a city, it culture etc etc.

Who builds all the infrastructure an hour or more out of the city?

Who strains the public purses, by expecting essential services so far out.

Adelaide is one of the most spread out cities in the world, with such a small population, why extend it further? (some 150km-pop 1.3 million)

We should be building up/not out!

I am not a snob, far from it. I just expect the same quality of life that the last generation had/ and were able to afford.  

Oppps forgot that times have changed.

Maybe the the next generation on from me will be able to afford match stick houses sitting on a garbage tips

TIP : Rent the DVD "End of Suburbia"


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## Kauri (20 September 2005)

_ I am not a snob, far from it. I just expect the same quality of life that the last generation had/ and were able to afford. 

Oppps forgot that times have changed._

You are going the right way about it..    

  I am finally beating the taxation system at their own game. I no longer work full-time, given that up, it ain't worth it for the high levels of tax.

I now work part-time (casual rate-much higher) meaning I have to work less hours for more money.

I contribute to my super using the co-contribution scheme, this now gives me free money up to $1,500 per year.

I have also borrowed money from the bank to trade on the stock market and the interest is deducted off my taxable income.

Pretty smart, and I have almost eliminated the need to pay tax, execpt for the GST and hidden taxes which are unavoidable for most.

There is always a better way, just do a little research and play the same game the ATO does, but better!
__________________
K.Barry B.V.A.


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## krisbarry (20 September 2005)

Its called taking control of your future!

How about trying it yourself?

A snob is one who sips on champagne ,living in a million dollar mansion and driving the latest BMW

My wealth is so far from the average 31 year old, I aint no snob, nor do I act like one.


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## Kauri (20 September 2005)

O.K. You have taken control of your future. If you don't like it, change it, if you are happy with it, stop bleating.
  I find it amusing that you blame,
  a) parents as role models
  b) teachers 
  c) retailers 
  d) property owners/speculators
  e) the baby boomer generation
  f) successfull business people
  in fact just about anyone and everyone, but the most important person i.e. yourself, doesn't get a mention. If you want to change your situation, stop talking about it and do it, no-one will do it for you.


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## krisbarry (20 September 2005)

Many other members on this board mention some of the list you have gathered, I was replying to their posts.

Remember that the people that came b4 you shaped your world that you live in now.  So generations b4 must take the credit and blame for it.

One tick of a politicians pen has left me with less money now than the previous generation.

I have the chance now to determine the world my children live in. Hence I question, fight, agree...etc

So it is fair to question others, how they have acted, what they have done right/wrong etc and to express views, change people views.


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## clowboy (20 September 2005)

Who says everyone has a right to own property?

Contrary to what you may think Kris you can afford to buy a house (even if it is not your dream home), many people out there cannot even afford food for the week.


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## Rockon2 (20 September 2005)

My 2 cents worth.  

krisbarry, save , save , save . And put your head down and your bum up, Go without some things and DO the hard yards, Like each and every other house investor / owner.....

Over the years , Nothing has changed .. there are Always opportunities to do and get anything you want in Australia....Done winge! Get stuck in and do it, And when youve been there and done that , you can sit back like the rest , and tell the young ones the same story... " We did it tough once, So can you" Smile and go for it......

The other Road aint worth it...


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## Bloveld (20 September 2005)

Well I looked for the definition of a snob. Couldnt find anything about champange or BMW's. But did find these 2.

"One who affects an offensive air of self-satisfied superiority in matters of taste or intellect."

"a person regarded as arrogant and annoying"

Yep, your definately a snob.


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## krisbarry (20 September 2005)

Rockon2 said:
			
		

> My 2 cents worth.
> 
> krisbarry, save , save , save . And put your head down and your bum up, Go without some things and DO the hard yards, Like each and every other house investor / owner.....
> 
> ...




I am saving and damn hard, just the prices around me rocketed up far beyond my wage.

But I compensate by these methods...

My weekly food shopping....

Almost all homebrand foods and marked down meat, stale bread ,cannot lower that bill anymore!

Mobile phone...I have not paid for credit on the phone for 2 years, I fill out surveys and are credited with cash on the phone

I fill out competitions on the web to win free movies, cd's etc, so there is my enetertainment covered.

I drive less, and use fuel vouchers where I can

I work weekends, weeknights and public holidays to get more money for less work.

Most of my furniture is from garage sales and I wear clothes from St Vinnies.

I fill up my printer cartridges with food colouring, instead of ink

I eat free food at work, save cooking at home

Every fortnight when payday rocks around, I buy more shares, thats my invesment.

Can I go out without anymore?

I did just pay my fees off so that is why I am almost stripped of funds!

Give me a break....oh the stress of all these money hungry greedy investors is driving me mad.

They all rant and rave how good it is on the other end.

I am just another struggling young person doing my best.


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## krisbarry (20 September 2005)

Bloveld said:
			
		

> Well I looked for the definition of a snob. Couldnt find anything about champange or BMW's. But did find these 2.
> 
> "One who affects an offensive air of self-satisfied superiority in matters of taste or intellect."
> 
> ...




LOL, you got me laughing on this one!


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## Smurf1976 (20 September 2005)

krisbarry said:
			
		

> Adelaide is one of the most spread out cities in the world, with such a small population, why extend it further? (some 150km-pop 1.3 million)



Going off topic for a moment. Last time I was in Adelaide (2004) I decided to have a bit of a look away from the normal areas that tourists end up in. So I got on a train that went, well, I'm not sure but it was somewhere South I think and the track was literally right next to the water in parts.

Anyway, there's plenty of unused land (just grass) within walking distance of that rail line. My point being that anyone who believes that land prices in Adelaide are in some way justified by lack of supply is kidding themselves.

Of course there are the nice spots, but your run of the mill suburban block is realistically worth what it costs to clear the land, put in the services etc. It just ain't scarce. Flying into Adelaide you have to remember that it IS a city because there's trees, trees and more trees everywhere if you look down. PLENTY of land. (And no I'm not talking about the green belt around the CBD).

Same in Hobart and any other low population area and yet there are plenty of property types in Hobart saying that "they don't make land anymore". Maybe, but when you can stand in the city centre and see natural bush then you know that land isn't scarce!

So I do think this bubble's going to burst... Indeed it must already be doing so in some parts. The rates that builders charge are such that if they would agree to it (they wont since there's some sort of price fixing in the industry from what I can tell) then you could bring mainland builders to Tassie, put them in a top hotel and still get the job done cheaper than using locals. The bottom has just fallen out of the prices they charge on the mainland (some states at least) so all can't be well with the property bubble.


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## krisbarry (20 September 2005)

Must have been on the suburban trains, city to Noarlunga, I am guessing.

Or if it headed into the hills (south-east direction) it was the city to Belair line

Yes true there is much land.  

A new sub-division has just opened up down the street from me and blocks of land start @ $500,000 for a 650sqm block and up to $750,000 for a 900 sqm block.

Add on the cost of a normal sized house of between $175,000 to $300,000.

Now you can see that, that even for the wealthy it is starting to get out of control.

The problem with Adelaide is its population is very low for such a wide expanse, hence its infrastructure is stretched to such great distances.

Some buses only run once an hour in very outer suburbs and trains can run hourly on the weekends too.

Adelaide has the land to building, just the lack of population growth to warrant spending the money on services, and a very aging population too.

What we do need is youth in the city and surrounding suburbs to keep it alive, vibrant, and a skilled workforce to build a better city.

We should not drive them out of the city and into rural South Australia due to housing/land costs.  It just does not make any sense at all.


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## Fleeta (20 September 2005)

I don't understand how you can say that property prices have to slow down to allow wages to 'catch up'. People can only buy what they afford. Take me for example.

I am 25
I saved for a deposit for the first 4 years of my working life (2001-2005)
I bought a house (with my GF) for $430k - 2 bedroom, new brick house, 7kms from CBD.
I earn $70k per annum
My repayments are 32% of my salary.
How is this a struggle?

Housing is affordable to everyone who has any kind of discipline. I know that will outrage people, but you just need to look closely at your situation and realise that opportunity is there. Try buying something in London or New York and then complain. We are the lucky country remember.


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## It's Snake Pliskin (21 September 2005)

krisbarry said:
			
		

> Its called taking control of your future!
> 
> How about trying it yourself?
> 
> ...




You have been reading Mao and Lenin haven't you. 

Snobs generally have personality problems. Don't confuse materialism with snobbishness. What's wrong with champagne? Enjoy life; it is short after all.

Anybody who complains about money or says it is bad, doesn't have any.

John Howard will make you richer than that other fat idiot, or the skinny tall greenie.


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## wayneL (21 September 2005)

Fleeta said:
			
		

> I don't understand how you can say that property prices have to slow down to allow wages to 'catch up'. People can only buy what they afford. Take me for example.
> 
> I am 25
> I saved for a deposit for the first 4 years of my working life (2001-2005)
> ...




You're doing nicely Fleeta.

However, I must point out that $70k p/a is well in excess of average for someone of your age.

The award wage for a tradesman upholsterer, for example, is something like $30k p/a. For this privilage, one must complete a 5 year apprenticeship!!!!

Even a basic family house way out in the outer suburbs is probably about $250,000...~9x earnings including stamp duty. :-o

This is truly struggle street, no?

Cheers


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## krisbarry (21 September 2005)

Fleeta said:
			
		

> Try buying something in London or New York and then complain. We are the lucky country remember.




Are we a lucky country?

Our RBA boss says to a whole generation of young people move out of Sydney now,  you have no future there!

We have a London, or New York in our own backyard its called Sydeny.

That same disease that is affecting Sydeny is spreading right around Australia.  Its called the rocketing housing syndrome...have you heard of that!

Your wage of $70,000 is way beyond that of the average folk, as already mentioned by WayneL.

How much did your parents/relatives kick in for the deposit?

You have a partner, their wages are also taken into account, and her savings too.

All factors in being able to borrow money to be able to afford a $430k house @ the age of 25.

So consider yourself lucky, very lucky!

You did this in 4 years, thats pretty good, but you are above the average!


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## tech/a (21 September 2005)

*So find a way of being above average.*

I consider myself "Average"---my performance---above average.
I'll bet Fleeta feels the same.

*Its not what you earn or how you earn it it's what you do with it that will determine your financial future.*
Sticking it in a bank at 2% isnt going to help when prices are even rising 5% let alone 20%.
WORSE losing it in the stock market!
WORSE denying yourself the stark reality that you'll need more and more of it to exist as life goes by.
WORSE seeing accumulation of wealth as greed!

In general terms

Anyone can be a bum---simply you can choose to be so and then choose to remain so.There are in one of the richest countries in the world Australia---1000s---no skill,no effort,no thought or even help needed---simply choose.

To be happy with your lot,without envy or pretence,and to truely enjoy life and those travelling the same path----isnt simple at all.

*Anybody who complains about money or says it is bad, doesn't have any.*
How true that is Tina.
Ive also found that he with the biggest mouth (Boasting) has shallowest pockets.


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## wayneL (21 September 2005)

tech/a said:
			
		

> *So find a way of being above average.*




I used to think this way.

But missus and I took in a few street kids to try and make a difference.

Some of these are indeed capable, and have turned out, being above average...some, through reasons that are psychological, sometime biological, are below average even though they try very hard.

I feel for these people, whom we have grown to love as though they are our own.

There will always be avenues for the above average to succeed, but I'm not comfortable with a society that consigns the rest to the economic scrapheap.

Housing is historically, exceptionally expensive at the moment. The social implications will not be positive if this does not correct itself.

It all depends what sort of society we want. Presently, we are taking a turn for the worse IMO. That may not be entirely the fault of house prices, but it certainly is a factor.

Cheers


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## krisbarry (21 September 2005)

Dinner last night was a can of home brand Tuna (77 cents) and a dash of home brand mayo. and a glass of water.

I am sacrificing now to save for a house deposit.  4 years of hard saving will pay off!

I know its tough to save, but I am a fighter and a true aussie battler.

Ohhh how I would love to eat steak. LOL

Now where is that steak?


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## tech/a (21 September 2005)

Wayne while they are there these people are in the minority.
The majority wont even try to think for themselves--or take responsibility for their lot.

Those on the so called scrap heap that are disadvantaged by some mental or physical incapacity have ample avenues and options available.

*THEY DONT WHINGE EITHER!!!!!*

Anyway I now put these types of discussions in the enough said basket----for me anyway.


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## krisbarry (21 September 2005)

If you take a look at Maslow's chart below you will actually find that once the physiological needs of a human are meet, then safety and security become a priority.

Saftey and security means a roof over your head, job security,the need to feel safe and some sense of order, or structure.

If this is out of balance then a defecit of the following will occur:

* The love and belonging needs
* The esteem needs
* Self-actualization

So I support wayneL's comments completely.

With emotional or physical disabilities the road ahead is even harder!

We are doing serious harm here and not any good will come from the increase in house prices.

* The safety and security needs.  When the physiological needs are largely taken care of, this second layer of needs comes into play.  You will become increasingly interested in finding safe circumstances, stability, protection.  You might develop a need for structure, for order, some limits. 

Looking at it negatively, you become concerned, not with needs like hunger and thirst, but with your fears and anxieties.  In the ordinary Australian adult, this set of needs manifest themselves in the form of our urges to have a home in a safe neighborhood, a little job security and a nest egg, a good retirement plan and a bit of insurance, and so on. *

Source:

http://www.ship.edu/~cgboeree/maslow.html


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## Dan_ (21 September 2005)

wayneL said:
			
		

> I used to think this way.
> 
> But missus and I took in a few street kids to try and make a difference.




Wayne,

This is fantastic to read and I salute you for your efforts and the heartfelt wisdom in your post.

I wish you every success (it's well deserved)


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## It's Snake Pliskin (21 September 2005)

Dan_ said:
			
		

> Wayne,
> 
> This is fantastic to read and I salute you for your efforts and the heartfelt wisdom in your post.
> 
> I wish you every success (it's well deserved)




Yes, I agree Wayne!

If only more of us could do the same.


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## Julia (21 September 2005)

wayneL said:
			
		

> I used to think this way.
> 
> But missus and I took in a few street kids to try and make a difference.
> 
> ...




Wayne,

You've made my day/evening.  I've just spent the day dealing with the homeless, drug addicted, simply sick, and abused and felt powerless to make more than a small difference in terms of arranging payment of electricity, a week's rent etc.  None of that makes much difference to their ongoing difficulty.  Kris is correct in emphasising the importance of Maslow's hierarchy of needs.  Some people - certainly a very small minority - cannot meet their basic needs of food and shelter.  As I've said before, sometimes this is their own fault, but often it is simply that life has dealt them a series of blows.

Fleeta,

congratulations, you are doing really well.  It's easy for people to say you are "lucky" because you are earning very good money.  However, I have rarely seen people earn plenty because of luck - as a wealthy friend of mine sometimes says "the harder I work , the luckier I get"

Kris,

are you necessarily committed to living in a capital city where costs of housing are necessarily high?  Have you considered a move to a regional area with good prospects for capital growth in housing, thus making it easier to get a modest property for a start, then work your way up, eventually returning tothe city if that's what you really want.  You can trade your stocks from anywhere.  Lots of regional areas still offer really good buys in housing and can offer pleasant, relatively stress-free lifestyle.

Julia


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## Fleeta (22 September 2005)

krisbarry said:
			
		

> Are we a lucky country?
> 
> Your wage of $70,000 is way beyond that of the average folk, as already mentioned by WayneL.
> 
> ...




Kris,

Firstly, the deposit that I had ($55k) was a fair chunk of my savings after 4 years - none from relatives. You are right in that my GF had a similar deposit which enabled us to borrow more. My salary is above average because I work harder than the average person...simple as that. Also helps that I entered a field of work where demand is high and supply is low. I know people my age who earn much more than me - but like tech says, earnings are irrelevant if you can't save and make the assets work for you. My strategy to save for a deposit was this simple:

1. When I got my full time salary, I made a concious effort not to change my spending habits - pretend like I was still at Uni scraping to get by.

2. Track what I spent each month - make sure it was less than 50% of what I earnt. Forget making a budget - tracking actuals is the key.

3. Use that spending to invest in shares (took out a margin loan in June 2003 - and reaped great benefits from it in the 2 years following).

I am lucky. Lucky to have parents who let me stay at home rent-free til I was 24. Lucky to get a decent job and get promoted. But surely you also make your own luck too!

Kris - if you are so conscious of what you spend - why on earth would you risk it on LVL shares!!!!!!!!!!!!!

Wayne & Julia - You are very admirable people, and remember that Karma will look after you - as long as you are doing it for the right reasons. Keep up the good work. It must be frustrating trying to help the unhelpable - which is why I could never do it. I like effort to equal results.

Tech/a - I am an average person too, its above average effort that puts you on top of the pile. Wish it was easy to get there - like being a Hilton sister - but there is no use stopping to complain when it isn't easy.


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## krisbarry (22 September 2005)

Well done Fleeta on your investment.

I guess there is huge differences in your circumstances to mine.

I moved out of home at 18 and started paying rent from that time on.

I have also never earned a wage higher than $25k per year.

Just the typical aussie battler, i guess!

All in time, I will be able to purchase just takes discipline, something I have much of and will continue to save.


----------



## tech/a (22 September 2005)

tech/a said:
			
		

> *So find a way of being above average.*




Fleeta---a perfect example.

Kris.

Do you smoke---no not a trick question.
I'll show you what you can do with the price of a pack of Fags over a few years.
For those who think making big $$$s is for the fat cats!


----------



## Fleeta (22 September 2005)

Kris - you sound like a pretty smart guy - and you are moving in the right direction. Keep making progress and don't get frustrated. I went through times pre-buying a house when I thought I would never get there...especially when I was out-bidded twice.

I assume you are a tradesman....If you wanna make some serious dough, why don't you start your own business? No guts, no glory...


----------



## krisbarry (22 September 2005)

No I do not smoke, 

but I know they are around $10 per pack = $70 per week = $3640 per year X 4 years = $14560 (there is my house deposit) right there...


I get that, but sorry don't smoke!!!


----------



## krisbarry (22 September 2005)

I can borrow money right now through "homestart" 100% finance, for degree only applicants, but I would be mighty foolish to buy in current market.

Will continue saving, then only need to borrow 90%, and wait for house prices to drop, thats my plan.


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## krisbarry (22 September 2005)

Fleeta, 

I sold out of LVL on a profit, so there is more money for my house deposit, no harm done there.

I made more money in this trade than I would have made putting it in a 5% term deposit account.  I see it as a no risk trade as I have taken profits!

Still believe LVL is a great company and will do very well-long-term!

I have now risked the lot on BTV-far more volatility and a better play short-term.


----------



## tech/a (22 September 2005)

krisbarry said:
			
		

> No I do not smoke,
> 
> but I know they are around $10 per pack = $70 per week = $3640 per year X 4 years = $14560 (there is my house deposit) right there...
> 
> ...





Hmmm seems you know everything.

Have another go I was thinking of something even more creative,
with a return of more than 2 X  that in th same period and off the scale in 10 yrs.
All for the cost of a pack a day.

But maybe your not interested.


----------



## Fleeta (22 September 2005)

Yeah - but how did you feel when it dropped to like 4 cents! I would have been a nervous wreck!

I agree with you on 100% financing - not a good idea. I was never gonna buy on anything less than 20% deposit. Being so highly geared is dangerous.


----------



## krisbarry (22 September 2005)

Yeah didn't feel too good...so I just picked up more shifts at work, then bought more shares with the cash at a lower price and waited for the uplift.

I was actually going to sell all my BTV shares at a $2,000 loss yesterday and buy FSL @ 6 cents.

My heart pumped a few times, and my head said no!

But what a ride that would have been.  Too late now, all in hindsight.


----------



## AnUbIs (22 September 2005)

I hope the market crashes big time and all the fools who didn’t buy a property for its worth, but rather its cost, get burnt so badly. 

I can’t see how someone could believe a property say around the inner west of Sydney is worth near 700 or 800Ks. When building a new 4 bedroom house on it would ranger from 250 to 300Ks, that means you paid between 400 & 500Ks for the land, we’re not in Japan there’s plenty of land


----------



## tech/a (22 September 2005)

AnUbIs said:
			
		

> I hope the market crashes big time and all the fools who didn’t buy a property for its worth, but rather its cost, get burnt so badly.




Why would you wish this on anyone?????
Why is it so important that these "Fools" get burned!!!!????
Whats it prove---those who didnt buy are full of wisdom??


I remember A Current Affair chasing down property sharks in Brisbane who were selling property to interstate buyers at highly inflated prices.
Next thing there is a property boom and ZAP all those who got "stung" went real quiet---they were sitting on 1000s of un realised profit way way over even the inflated prices.

When wll people take responsibility for their own actions and lay off those who already do!


----------



## AnUbIs (22 September 2005)

tech/a said:
			
		

> Why would you wish this on anyone?????
> Why is it so important that these "Fools" get burned!!!!????
> Whats it prove---those who didnt buy are full of wisdom??
> 
> ...





Because their greed burnt generations to come!!!!!  My kids your kids and their kids OK!!!


----------



## tech/a (22 September 2005)

Rubbish!!!


----------



## AnUbIs (22 September 2005)

tech/a said:
			
		

> Rubbish!!!




My friend you're allowed your opinion and I’m allowed mine, be it rubbish or not!!!!!!!


----------



## tech/a (22 September 2005)

True.


----------



## krisbarry (22 September 2005)

Looks like the heat is off me for a while...LOL

I'll get back to trading now!


----------



## Kauri (22 September 2005)

LOL


----------



## It's Snake Pliskin (22 September 2005)

AnUbIs said:
			
		

> My friend you're allowed your opinion and I’m allowed mine, be it rubbish or not!!!!!!!




You don't have to be nasty on this forum by saying people should get burnt for buying property.   This kind of posting is pure trash talking.


----------



## krisbarry (22 September 2005)

Phew... someone turn up the heat in this kitchen!

This topic tends to be very debatable, almost like sex, drugs, religion and politics.

There are the haves, the have nots, the winners, the losers, the knockers, the beggers on so on.

Damn I keep starting these threads which errupt into explosions of fury!

Pass me the valium I need a lie down


----------



## Smurf1976 (23 September 2005)

Snake Pliskin said:
			
		

> You don't have to be nasty on this forum by saying people should get burnt for buying property.   This kind of posting is pure trash talking.



Strongly agreed. Let's be civilised (hope I spelt that right!) here. Whilst I do think that many people _will_ get burnt through property, there is a difference in saying could/might/will versus "should" IMO.

I don't wish anyone bad luck with anything reasonable in life. Obviously if you point a gun to my head then that's a bit different and I do wish you very bad luck with your plans... 

So I think we ought to do something constructive and take the emotion out of this thread.  

Let's forget all the emotional  :swear: and focus on the property market itself. Yes, this is a stocks forum and not a property one. But the question about housing keeps coming up. So where do you think the price will actually go over the coming years? That's an open question to everyone whether they be bull, bear or somewhere in the middle.

Personally my expectation is that prices in real terms will fall. Whether or not they fall much in nominal terms is a good question though. Whilst there have already been some nominal falls in Sydney and to a lesser extent Hobart, I'm also expecting an increase in general price inflation so the housing market could possibly achieve the real fall through a period of stagnation rather than actual major nominal price falls.

What do others think the market is actually going to do? This is a serious question and I will respect the opinions of the bulls and hope that they are equally willing to respect the opinions of the bears. We wont agree of course, but let's keep off the emotional stuff.


----------



## wayneL (23 September 2005)

Agree with your post Smurf,

Australia hasn't had a price crass since the great depression...in nominal terms that is....but the UK has!

Therein lies the clue "since the great depression". I think it will depend upon what our economy does. The world economy is balanced pretty precariously at the edge of a precipice.

If the economy doesn't decend into the abyss, then stagnation is the best case scenario.

If we get one or another trigger....oil blows up, increase of unemployment or some such thing. (there are many potential triggers) Then just watch the tankage.

For years I have been asking people - How long could you survive if you lost your income?

The answer is getting shorter and shorter on average, to the point that today, it guarantees instantaneous bankruptcy for many people. You can imagine the effect on house prices with a few too many distress sales on the books....the snowball effect.

My view


----------



## AnUbIs (23 September 2005)

Snake Pliskin said:
			
		

> You don't have to be nasty on this forum by saying people should get burnt for buying property.   This kind of posting is pure trash talking.




I never said they should get burnt for buying property, I said should get burnt for paying way more than the property is worth! 

There is a difference!!!!!!!!

And I don’t care about others, they don’t care about me!! I can live with it!

Why are so many people in these forums so sensitive?


----------



## It's Snake Pliskin (23 September 2005)

AnUbIs said:
			
		

> I never said they should get burnt for buying property, I said should get burnt for paying way more than the property is worth!
> 
> There is a difference!!!!!!!!
> 
> ...




It's not about being sensitive, but, purely, about right and wrong. What you wrote was wrong. And now your last post shows no compunction at all. Your posts have really irritated me since you joined this forum due to what I just pointed out.

Point taken on the actual preciseness of your posts word for word.


----------



## AnUbIs (23 September 2005)

Snake Pliskin said:
			
		

> It's not about being sensitive, but, purely, about right and wrong. What you wrote was wrong. And now your last post shows no compunction at all. Your posts have really irritated me since you joined this forum due to what I just pointed out.
> 
> Point taken on the actual preciseness of your posts word for word.




Which part? 

Am I wrong about not caring for people who only care about their own interests,

Well I’m sorry I’m like them!!


----------



## Julia (23 September 2005)

To get back to the original question of where do we think prices will go in the future:  I don't think any of us know.  There are just too many variables which can have a flow-on effect to the housing market.

Basically I view the housing market in the same way I view the stock market.  If I buy good quality I shouldn't be too worried about fluctuations in the short and medium term.

When I had investment property I applied the philosophy of never buying anything for rental that I wouldn't be prepared to live in myself.  If the capital valuation of the property drops for a few years, you still have rents coming in, and you know the value will rise again eventually.  That is the nature  of the cyclic character of markets.

Similarly, if I own Woolworths shares, do I get worried if the share price goes down temporarily?  No, of course not.  The dividends (like rent) continue to flow in, and I know people will always contiinue to eat, wash and clean their houses.

When I first bought the house I'm living in now (12 years ago), it happened to be at the top of the market.  Had I wanted to sell for the next five or six years, I would have had to accept a loss of about 20 percent.  The next few years things turned around, and it is now worth about 3 times what I paid for it.  It's all about timing.  The sad part is if someone has to sell at a particular time because of personal circumstances, but if that doesn't apply, then one just needs to wait until the next upturn to achieve a good sale price.
That is, *as long as you have bought quality in the first place*

Julia


----------



## AnUbIs (23 September 2005)

Julia said:
			
		

> To get back to the original question of where do we think prices will go in the future:  I don't think any of us know.  There are just too many variables which can have a flow-on effect to the housing market.
> 
> Basically I view the housing market in the same way I view the stock market.  If I buy good quality I shouldn't be too worried about fluctuations in the short and medium term.
> 
> ...





Can I add at the right price? because the rest is good for me!


----------



## tech/a (24 September 2005)

Agree 110% Julia.

AnUbIs
It doesnt even have to be at the right price---long term.
Even those that found themselves owning properties 20-30% above market value in the late 90s early 2000's--curtouesy of sharks in QLD--are today beeming in greedy bliss!

This can be argued till your blue in the face and was when my Father was a boy.
I remember him "thinking of buying a house for $30,000---and I remember comments like--Rediculous,Will never pay it off,cant afford it.
He never bought it--that was in the late 60s--today the exact same home went a year ago for $650,000.


In 30 yrs time the houses your all saying the exact same thing will be worth 2 if not 5X todays value.
*Ever remember your parents saying.
"If I knew then what I know now!!"*

Well you *DO*--what you do with it makes the difference.


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## krisbarry (24 September 2005)

The opposite can be said too.

May parents built a house valued at $250,000 back in the 80's.  sold it in the 90's for $150,000.  Massive loss!

Thats what divorce does!

Struggled to sell it, only had a few bidders at the auction.

Amazing what 10 years in the property market does.

But on the other hand if they kept it and sold it in todays market it would be worth $450,000.

Timing is the key in the property market.  I will buy in 4 years time, thats when I beleive that I will get better value for money


----------



## AAA (24 September 2005)

Krisbarry,

Value in 80s = 250k. Value now at least 15 years later = 450k???

Where was this house located. I find it hard to believe there could be a house in Australia that hasn't doubled in value since the 80s. Most have doubled over the last 5 years.


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## krisbarry (24 September 2005)

Outer southern suburbs of Adelaide.

Very much price sensitive areas!

Split level, 4 bedroom, open planned house on 1/2 an acre.

It may be valued at a lot more than $450,000 that was just a rough estimate.


----------



## tech/a (24 September 2005)

A $250k home in the outer suburbs (southern) of SA would have been quite a house.The average price back then was 50K I was selling back then with interest rates of 18%

That would be a million $$ property now.
I live here and know of a handful.

What was the address?


----------



## monoply (24 September 2005)

KrisBarry,

I think your approach is the correct one at the moment. Best to wait but save hard for a deposit. Generally I would not buy at the moment myself, but would wait for tougher times to come, or until you find a good buy. 

I actually have an offer on a property at the moment, but only because I think its a very good buy.  I have not seen anything else that has even tempted me besides this one for a long time.

Keep Saving hard, and buy when you see value


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## krisbarry (26 September 2005)

Listening to the radio this morning and up go the interest rates!

The RBA comes to my rescue and answers my prayers. LOL

A prediction of 1% next year

Lock in those variable rates peoples, we are in for a bumpy ride.

Now where is that piggy bank? I am saving for a house deposit


----------



## krisbarry (26 September 2005)

Checked out the new "Air" Apartments yesterday in Adelaide.

Went into one apartment and it was selling for 1.25 million, ouch!

Brilliant views of the hills, but way over priced.

Rental returns of $900 per week or a 4% return, very dismal for property investors.

The boom is most certainly over!  Now just get ready to open those wallets! LOL


----------



## tech/a (26 September 2005)

Have 3 on the market at the moment.

Sold one with an 18 mth settlement a few months ago at considerably over market value.
Sold another last Friday at full asking price.

Sure the run away prices are history but I'm not experiencing a drop in pricing.
If the buyer likes it they are prepared to pay for it.

Investors and speculators have been very fortunate that interest rates haven't rocketed as some would have been in trouble--READ SOME.

They have had and will continue to have for around another 12 mths to decrease gearing or mitigate risk.

Kris I will agree with you that anyone who finds themselves in the position of self inflicted financial difficulty after a 2 yr period of being able to help themselves---was and is GREEDY.


----------



## krisbarry (26 September 2005)

Yes valid points tech/a, the prediction of rocketing/continued interest rate rises didn't eventuate, which is well and good for some.

And yes very true, it has given property owners/investors much more time to consider all options.

This may be the key to a stable downturn in the market and not the blood-bath that was experinced in previous cycles.

By the way, well done on your sales.


----------



## Smurf1976 (26 September 2005)

Everywhere I look I'm seeing more and more evidence of inflation. Petrol, wages, food... 

So either the government/RBA is going to change the way inflation is calculated, ignore it or raise interest rates to contain it IMO. Which one they choose is good question but the key point is that a rate cut doesn't seem likely so there's not much chance of the boom restarting. 

That doesn't mean I'm expecting a massive crash or saying that you should never buy a house. But I just can't see that there's any hurry to buy when prices are unlikely to rise for a while and renting is cheaper than the interest on a mortgage. Saving / investing the difference between rent and a mortgage taken out today would put you well in front IMO.

Not advice, just my opinion of course.


----------



## It's Snake Pliskin (26 September 2005)

Interesting reading in the paper today.

http://www.smh.com.au/news/business/slowdown-hits-home-for-agents/2005/09/25/1127586747071.html

I saw the results of mass property marketing over 4 years ago in the CBD of Sydney when I worked in the industry. People bought and at that time couldn't find tenants, nor could they sell at a profit - more so a loss. That was in 2000! I am surprised it has taken this long to affect the agents to an extent that they are selling their rent roles - the bankroll of any agency - to get capital.


----------



## Rafa (26 September 2005)

another interesting article in The Australian

http://www.theaustralian.news.com.au/common/story_page/0,5744,16700437%5E25658,00.html

excerpt from the article....
------------------------------------------------------
Conclusion:
So what has happened to real housing prices since 1970? The answer is they have risen by around 160 per cent, or 100 per cent after adjustment for quality changes. I'll leave you to work out how much that is a year. Now look at the accompanying chart, (the Treasury price index is previously unpublished data from the Australian Treasury for comparison purposes). There are four housing price booms between 1970 and 2003 -- from 1971 to 1974, from 1979 to 1981, from 1987 to 1989, and from 1996 to 2003, where the figures end. Each boom was followed by a fall in prices and a significant period of flat prices. However, in the long run, real price rises exceeded falls, hence the 100 per cent rise over the 33 years. 

But there has been no boom like the last boom, and December 2003 we now know was the price peak. Since then, Sydney prices have dropped by 7 per cent in nominal terms and more than 10 per cent in real terms over the 18 months to June 2005. Australia-wide, prices have been flat. If history is a guide, we can expect a further fall in real prices and an extended period of flat prices. 
----------------------------------------------------------


comments, especially from some of you guys who have been around for a while is much appreciated... but it does seem to point to a fall in house prices (in real terms), but definitely no crash as widely speculated...

also, for those like kris... it means there should be no rush to get into the market for a couple of years...


----------



## tech/a (26 September 2005)

My view.

Rates will increase.
Prices will come off more in areas of less demand and over supply.
Pricing generally will remain flat.
Opportunity for developers will be high density single bedroom Flats/Apartments--that those who cant afford housing or even rental housing can at least rent.

I also agree with the general consensus here that now and in the forseeable future buying realestate will be less than lucrative,unless you are a developer.As there will always be demand for something!


----------



## ob1kenobi (26 September 2005)

On the news this morning, the following was reported:

"The RBA's latest review follows a new survey from BIS Shrapnel, which warns a chronic skills shortage and subsequent rise in labour costs could force the RBA to push interest rates up to 6.5 per cent next year from the current 5.5 per cent level." (Nine News)

So yes, prices will possibly stay flat, rates will rise because we will all be earning so much more money due to increase wages because of a lack of skilled labour!!! Sounds a bit like a merry - go- round!


----------



## tech/a (26 September 2005)

You know they arent wrong about labour shortage.
I have an ad running constantly in the Employement section.
Even at $60k plus a vehicle I can't get a supervisor.

Its just that they arent out there.


----------



## ob1kenobi (26 September 2005)

Tech, you're right. We have had a job advertised for a History / Geography Teacher with the ability to teach English to Year 10 advertised for 3 months. One of the most common teaching combinations, yet a school in Sydney's north shore area just can't get someone suitable. We filled it with a casual and this term I'll have to take an extra class to make it work! It's not just the building game, it's universal!


----------



## tech/a (26 September 2005)

Well if you find a surplus and they can operate excavators, read site plans, lead by example and hold a HR licence send them my way!


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## ob1kenobi (26 September 2005)

Will do Tech. So long as you send any teachers qualified in English, History, Geography, Maths, Science, .......... my way!!!!


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## ob1kenobi (26 September 2005)

Probably means be cautious of Property Development Stocks in the near term!


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## Smurf1976 (26 September 2005)

Not specifically referring to tech's situation but skills shortages are just one of the hidden costs of privatisation and outsourcing. Whereas government in particular used to train thousands of blue collar workers (and others) now the thinking is purely short term.

The situation now is exactly what many sensible people foresaw. Unfortunately they were ignored and now there is a price to pay that is never counted by those proclaiming privatisation to have been a success.

If it's really such a success then let's count ALL the beans in the economic pot. Something that the politicans and others will never do, at least not publicly. Sure, taxes might be lower but that's only half the story.


----------



## chansw (26 September 2005)

Another interesting article "RBA warns on house prices"

http://finance.news.com.au/story/0,10166,16723853-462,00.html

Personally, I have been trying to buy a house in the areas I like in the last few months with no luck. The house price in Perth is still strong. I found it very difficult because a nice house got offer very quickly and very often been offered with a price very close to the asking price (or close to the top price for those advertise with a price range).


----------



## RodC (27 September 2005)

Smurf1976 said:
			
		

> Not specifically referring to tech's situation but skills shortages are just one of the hidden costs of privatisation and outsourcing. Whereas government in particular used to train thousands of blue collar workers (and others) now the thinking is purely short term.




You're right Smurf, training has been one of the real unseen changes over the last few years. Where once goverment enterprises and large corporates used to have traineeships (2-4 years) they now just hire fresh uni "grads" and throw them in the deep end.

Training for new technology has also changed, I remember doing 4 week full time courses on new equipment, now you're lucky if you get a half day overview.

Rod.


----------



## krisbarry (27 September 2005)

chansw said:
			
		

> Personally, I have been trying to buy a house in the areas I like in the last few months with no luck. The house price in Perth is still strong. I found it very difficult because a nice house got offer very quickly and very often been offered with a price very close to the asking price (or close to the top price for those advertise with a price range).




Wait another year!

I can almost certainly say those very same areas will be 10-20% cheaper this time next year.


----------



## tech/a (27 September 2005)

krisbarry said:
			
		

> Wait another year!
> 
> I can almost certainly say those very same areas will be 10-20% cheaper this time next year.




How can you say that particularly with certainty!
There is nothing indicating a dramatic collapse in R/E prices.
3% possibly.
Is it worth waiting another year or 2 or 3.

Well if you want it to live in no.
If you like it--want it--then buy it.
Lock down low interest rates and enjoy!
In years to come these sort of interest rates will be dreamed about.


----------



## krisbarry (27 September 2005)

No...no...no Tech/a all predictions point to a slow downward trend in housing Australia wide.

Some regions of W.A. will boom due to the mining industry but on the whole all capital city housing prices will fall over the coming year

Will check back with you in Late Sep 06 and see if I was correct


----------



## tech/a (27 September 2005)

Kris.

Happy to re visit in 12 mths.

Even a 10% fall in housing prices would be seen as a crash rather than a down turn.


----------



## krisbarry (27 September 2005)

It is already happening in Sydney and Melbourne


----------



## tech/a (27 September 2005)

Kris.

I think its simply hear say.
I'm not familiar with Inner city suburbs in any capital city that is or alledgedly is suffering from these huge downturns

If someone can give me the suburbs I can verify if there is a drop as alleged.
Here is central Adelaide with a 10% rise in the last 12 mths which suprises me.
-6% on units is as expected due to over supply and price adjustments to move them.


----------



## krisbarry (27 September 2005)

Yes true, just hear say, but the mags, media reports, all suggest a downward trend.

The cities will get hit first then the country areas.


----------



## mime (27 September 2005)

krisbarry said:
			
		

> Only a fool would be buying a property in this current market.
> 
> Not unless I was living in a car or a tent would I even consider the plunge!




One of my teachers who is an accountant said alot of his wealthy clients are now buying properties. You can still make money off property right now. Places in QLD, SA, WA are going up. VIC and NSW are not that popular right now. Rmember you can get some great tax advantages through property.


----------



## Bronte (27 September 2005)

Kris,
Do you think only a fool would be buying stocks in this current market?


----------



## tech/a (27 September 2005)

Rest assured fools buy stock and property in *ANY* market!


----------



## Bronte (27 September 2005)

Remember that it is said:
"The markets will do whatever is necessary to prove that most people will get it wrong"


----------



## Hanrahan (27 September 2005)

tech/a said:
			
		

> You know they arent wrong about labour shortage.
> I have an ad running constantly in the Employement section.
> Even at $60k plus a vehicle I can't get a supervisor.
> 
> Its just that they arent out there.



An article in today's paper begins: "The cost of BHP Billiton's Raventhorpe nickel expansion project has blown out by US$400mil. They blamed increases in labour and raw material costs for the blowout."

The new definition of a millionaire is "anyone working in a building trade".


----------



## Bronte (27 September 2005)

When is the best time to buy?
Real estate agents will always say "Now"
I agree if you are buying for long term investment
& your numbers work out
Trade: Futures / Options / Stocks (if you must) etc
Buy real estate and hold.
IMO trading real estate is not wise.


----------



## chansw (27 September 2005)

tech/a said:
			
		

> How can you say that particularly with certainty!
> There is nothing indicating a dramatic collapse in R/E prices.
> 3% possibly.
> Is it worth waiting another year or 2 or 3.
> ...




I intend to live in the house and then rent out my current apartment. As you said, I will buy it when I find one that I like it and can afford the repayment. Perth house prices are strong and predicted to be strong in 2006 (due to the migration and resource boom), too. 

Tech/A, how do you see the movement of interest rate in the coming years? Thanks.


----------



## It's Snake Pliskin (28 September 2005)

Important reading on the subject.

http://www.smh.com.au/news/business...-into-a-shocker/2005/09/27/1127804477726.html


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## krisbarry (28 September 2005)

Yes the petrol issue looks to be the pivitol point.

If we do see fuel price rises into the 1.50 mark, that will certainly see interest rates rise and house prices to fall, even the RBA warns of high pertol prices!


----------



## Rafa (28 September 2005)

I really can't see how a rising petrol price means they need to increase interest rates...

rising petrol prices means prices go up... but it affects the supply side of the curve ... i.e. its not because there is too much cash in the system... 

if petrol... and therefore food and other essentials become more expensive, that means less disposable income... which should have a contractionary effect on the economy regardless! So unless the aim of the RBA is to send the economy into recession, then why would they increase interest rates!

i really think this whole definition of inflation needs to be re-visited... 
increase in prices of essential items should be considered contractionary (hold rates steady in contract the economy or reduce rates to boost economy... not needed in Oz) whilst increase in prices of non-essential items should be considered inflationary (hence increase interest rates).

hmmm... maybe i am missing something here!


----------



## krisbarry (28 September 2005)

If petrol costs rise, then everything we buy goes up too, including food, transportation, building supplies etc

The CPI (Consumer Price Index) is a list of items bought, and is a key measure of inflationary pressure.  Along with wages, and employment.

When the CPI, rises above the 3% target set by the RBA, the need to cool the market takes affect and rates rise.

The hurricane season runs for another couple of months in the USA, so we are not out of the woods yet in terms of fuel prices.


----------



## Rafa (28 September 2005)

i think i need a lesson in how all this works...

Inflation is one thing... but then I came accross this article in the Australian... I don't understand most of it...excerpts below...

http://www.theaustralian.news.com.au/common/story_page/0,5744,16742518^12250,00.html

The weakness of US economic policy is its inability to curb its budget deficit, its reliance upon China to finance its debt and the fact that on present exchange rates a return of US protectionism is inevitable. Everybody knows the imbalance of US current account deficit/China current account surplus must be corrected; the question is how. 

Macfarlane argues that the imbalance should be assessed from the Asian side. He says the origin of China's surplus strategy lies in the East Asian financial crisis; it has built up foreign exchange reserves as an "insurance" to withstand another crisis. Hence the counter-intuitive situation of the main developing nation lending to the richest developed nation. 

Macfarlane's message to China is that, ultimately, a surplus may be "more difficult" to sustain than a deficit because of its monetary consequences and that China should move into further exchange rate appreciation not to help America but to help itself. 

Garnaut says: "The least damaging method of adjustment is for the US to reduce its budget deficit because that would help to correct the imbalance while easing pressure on US and global interest rates. The alternative is for East Asia to appreciate its currencies but that has the painful incidental effect of raising US and global interest rates. 

"However, because the imbalances are higher this year a substantial response is now needed. In the absence of policy action by either nation, the markets will shape their own solution - speculative capital inflow into China is likely to leave China with no good alternative to currency appreciation." 

The widest lens, as usual, was opened by Paul Keating. In his August 3 speech in Singapore, Keating lamented China's "survival of the fittest" mercantilist policies, hoarding balance of payments surpluses to protect its economic and political status quo. He pointed out that to the extent China's economic success was measured in record reserves it meant the broad mass of the Chinese people were not growing as wealthy as they would otherwise. 
"The currency will inevitably come under pressure for a revaluation," Keating said. "And if a series of discreet currency shifts, even large ones, did not satisfy the markets' lust for snappy profits or its expectation for value equilibrium, the authorities could be pressed into an earlier than expected float of the currency with all the attendant problems and, might I say, benefits." 

As Keating conceded, it is not the conventional view. He argued, however, that "a mature set of institutions is China's best insurance against capricious behaviour by external organisations, whether it be the IMF or for that matter, private ones." Bob Zoellick, taking the long view on this partnership, would agree. 


Is that why Tech/A you talk about the climate of low interest rates witnessing now a thing of the past?

Can someone please explain the article above and what it means? Why does East Asia appreciating its currencies mean that US and global interest rates will rise?


----------



## tech/a (28 September 2005)

Rafa
Is in fact correct.

chansw
I'll answer your query here as well but feel that giving you next weeks lotto results to be more accurate!

There are a number of factors all linked together in the monetary juggling of our economy.
Increasing fuel prices help decrease inflationary trends as there is less disposable income.
Increasing AU$ has an inflationary effect as it gives our money more buying power for imports so demand increases and spending along with it.
Exports become dearer to the end buyer,so demand decreases.
Government has curbed spending and as such has a surplus so this has a deflationary effect.

However slowly but surely we the consumers are pushing our demands for more surplus $$s through higher pricing of goods to cover overheads and maintenance of profits.
PAYE wage earners are now looking for wage increases to maintain their lifestyle---things are getting more expensive.
As these increase so will demand---demand will lead to a rise in CPI--which in turn will need to be controlled.

This will be done initially with interest rate increases--Unless the government starts spending like there is no tommorow---the AU$ jumps to 85c on the back of the US$ dropping dramatically---oil falls to $40 a barrel,and everyone is sucessful in increasing their earning capacity 20%--then I see these rises as small increments reflected by the pressures mentioned above.

Anything can happen particularly the decline of the US$.
My personal veiw and the one I'm working on in my business dealings now is.
Now is the time to lease machinery and lock down such low rates.
Now is the time to decrease loan gearing and maximise reward to risk in housing. I feel that right now you can get the best price you will get for sometime.Because as interest rates creep up then buyers will have a leverage to negotiate.

I also feel that there will not be run away inflation and hence interest rate unless we get a Labour government which decides to spend Billions.
I see a period of sustained growth of 2-3.5% for the Australian economy bought about by Asian demand in particular China.
There will be opportunity in the share market which will be as challenging as ever---but those who can take advantage of it will reap the benifits.

Gear low.
Lock in these low interest rates.
Time for consolidation.


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## Rafa (28 September 2005)

I agree with those sentiments... i certainly feel that now is the best time to get a cheap loan and locking in rates is the way to go... also agree with the Aus Budget surplus... tho i don't believe Labor would spend the billions... their deficits were mainly during a recession, which makes them legitimate policy... plus they cannot risk the negative public feedback... 

I actually see the huge surplusses and the cheap interest rates a missed opportunity by the liberal govt to invest in badly lacking public infrastructure, rail, roads, water supply, eletricity, schools, traineeships, education, etc... if there is supply side pressures in future, it will be becuase of this!!! but thats another topic  

What I am still trying to work out the role of Asia in all this...
We know they have massive amounts of surplus, as a result of loaning massive amounts to the US, by purchasing bonds (hopefully not junk bonds). We also know they gotta keep doing this otherwise their own economy will crash...

If they increase their currency valuation, then the US dollar will fall, and US debts to Asia (in US$ terms) increase... It also makes Asian goods more expensive, and cheaper for them to buy Australian/US goods...

But thats where I don't understand anymore...(from the article)... Why will this mean interest rates will rise... will the US raise interest rates to push up their currency... or is there something else that is going to happen???


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## krisbarry (28 September 2005)

A cheap loan but an expensive house

Better to wait for house prices to fall a little more and buy b4 the next interest rate rise.  That way you are getting an even cheaper house with that very same interest rate. IMO


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## tech/a (28 September 2005)

Rafa.

Asian adjustment in currency valuation will force the US to raise rates to attract investment and decrease spending.
This in turn will cause an increase in our dollar which will have the effect of cheaper inports dearer exports the balance of trade will be skewed.
More spending so increased inflation and hence increased interest rates to dampen spending.Hope that clears it up.

Kris.
Would you really rather lower house prices and higher interest rates?
Whats better?
A $300k house at 6.5% interest OR
A $250K house (same house 15% less) at 7.5% interest---let alone 9%

What your saying isnt happening in the housing market generally.
Infact most areas are still rising slowly.

No one has been able to supply me with a suburb which I can verify that housing has slumped and will continue.There maybe a pocket or 2 but its rare.
I cant think of a reason why you'd wait if you found the house you want and can afford it!---someone else will buy it.

You and I will always differ I guess Kris---thats why I hold and develop real estate and you dont I guess. I dont even wait at bus stops.


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## Rafa (28 September 2005)

Yes, i see how a strengtening Aus$ will be inflationary... So, we raise interest rates to curb that spending... so just cause China strentens its currency... the US will have to raise rates to strenghten its... and eventually the whole world will have high interest rates...!!! So really the best thing is if the US reduces its deficit by tightening spending... ALAS... that ain't gonna happen!!!

Now... as for real estate...
Me and three others tried getting into the property developement business sometime back... but the biggest hassle was getting finance... cause none of us had real eastate! we had cash... but that wasn't enough... 

So then we decided to each get a house... and build up some equity! 

Hopefully when we next look at entering the property development market, getting finance shouldn't be as hard.


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## krisbarry (28 September 2005)

Think you will find most suburbs within Australia are dropping but there are pockets within WA, SA, NT that are still growing a little


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## tech/a (28 September 2005)

Kris 
You really dont READ the posts do you--I'm addressing those buying a house to live in!
The comment about our differences is based upon the fact that your character is such that you would not be suited to property developement.
While you argue the pro's and cons opportunities would pass you by.
You have a bad habit of holding losers.

Anyone in Melb,Syd,Bris,Canberra.
Can you supply me with some suburbs that are likely to show these falls of 10% +

Even if they do exist my arguement is that its simply not blanket.
Why does someone have to be right or wrong?
Just take advantage of opportunities that present themselves. 

*What happened to the other "Nasty" post I liked it better!!!*

Anyway I saw it and here is my reply.


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## krisbarry (28 September 2005)

tech/a said:
			
		

> *What happened to the other "Nasty" post I liked it better!!!*
> 
> Anyway I saw it and here is my reply.




I took it away becuase I am completely exhausted always trying to defend my position.

You seem to cause me much grief, anger and stress and it is becoming very unhealthy for the both of us and all the readers too.

You are always right tech/ a and I am always wrong!

BLAA  BLAAA BLAAAA!!!


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## Rafa (28 September 2005)

I think there is a big difference between real estate for investing and real estate for owner occupier!

For Investing... key points are timing of entry, returns, etc, etc...

For Owner Occupier... only thing that really matters is if you like the place and you can afford it!

The fact is, you'll always have to live somewhere, so when the market it up, your property is up, and so is everyone elses..... so if you just move from one place to another... no nett gain or loss...

Again, when the market is down... you property is down... as is everyone elses... so again... when you move houses, its still no nett gain or loss!!!

So given that owner occupiers can't claim interest on tax... that really leaves you two options...
1. Buy when you find the right place for you...and interest rates low as possible...
OR
2. wait and hope for and if and when why how... the real estate prices do come down... maybe becuase interest rates have risen to some rediculous level and then buy the house with CASH!!!

Given that scenario 2 is unlikely, but even if it does... you can be gauranteed, its only the crappy houses in crappy suburbs bought by investors who don't really know what they are doing which will be put on fire sales and sold on the cheap... that and units/apartment...

Proper houses in blue chip suburbs will fall marginally if at all, cause most will work two jobs, etc, etc like in the 80's to be able to pay the rediculous high interest rates and get by!


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## Bronte (28 September 2005)

Rafa said:
			
		

> I think there is a big difference between real estate for investing and real estate for owner occupier!




I agree with that Rafa
One you buy with your head....
one with your heart.


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## tech/a (28 September 2005)

I prefer to look at it a little differently.

One you buy with YOUR money
The other you buy with YOUR TENANTS money.

Like higher highs dont you think?


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## wayneL (28 September 2005)

Rafa said:
			
		

> For Owner Occupier... only thing that really matters is if you like the place and you can afford it!




This is a subjectivity which has the capability of changing dramatically. 

I have someone close to me who could "afford" his house last year. This year is a different story!

Cheers


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## Bronte (28 September 2005)

I really believe that it is so important to get onto the property ladder,
in any way you can...worst house / unit in best street / suburb etc
Put your money into something and then borrow against the asset.
Please do not wait too long....think long term.


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## tech/a (28 September 2005)

wayneL said:
			
		

> This is a subjectivity which has the capability of changing dramatically.
> 
> I have someone close to me who could "afford" his house last year. This year is a different story!
> 
> Cheers




Without knowing your friends circumstance Wayne---wouldnt it be fair to say that thats life in general--our situations can change dramatically sometimes through no fault of our own.---both positive and negative.

I doubt that you would be frozen in action by what "could happen"?
Many are.


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## Bronte (28 September 2005)

tech/a said:
			
		

> I prefer to look at it a little differently.
> 
> One you buy with YOUR money
> The other you buy with YOUR TENANTS money.
> ...




Sort of....
Our investment properties are bought with the banks money.
The repayments are made using the tenants / tax relief money.


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## brisvegas (28 September 2005)

blah blah  . too subjective , too opinionated , too many POV without applying critical thinking . too many bitter non real estate buyers , too bad so sad.


i'm over it 


........................... Pete


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## wayneL (28 September 2005)

brisvegas said:
			
		

> blah blah  . too subjective , too opinionated , too many POV without applying critical thinking . too many bitter non real estate buyers , too bad so sad.
> 
> 
> i'm over it
> ...




Be seein' you then. Ta Ta


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## wayneL (28 September 2005)

tech/a said:
			
		

> Without knowing your friends circumstance Wayne---wouldnt it be fair to say that thats life in general--our situations can change dramatically sometimes through no fault of our own.---both positive and negative.
> 
> I doubt that you would be frozen in action by what "could happen"?
> Many are.




My rather obtuse point was that the overall economic situation can, and will, change. I used a microcosmic example of an individual to illustrate....not very clear, sorry.

The decision to buy a house because "you can afford it" should be considered in a much broader context.

My friend mortgaged himself to the very limit of his affordability, this, being done in a time of VERY favourable economic conditions.

Many are doing this.

It just so happens that this chaps business is very "price of petrol" ("cost of input") sensitive. He doesn't realise yet that his business is also very "economic activity" sensitive and "interest rate" sensitive.

People (including my friend) have been managing their affairs as if these three factors have been permanently negated.

Factor one is hurting him deeply. Eventually factors 2 & 3 will kick in (as they ALWAYS have and WILL).

It is then I will have to be a friend indeed (because he will be "in need")

Cheers


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## krisbarry (28 September 2005)

Bronte said:
			
		

> I really believe that it is so important to get onto the property ladder,
> in any way you can...worst house / unit in best street / suburb etc
> Put your money into something and then borrow against the asset.
> Please do not wait too long....think long term.




There are good times and bad times to enter or exit the property market.

Today is great for the low interest rates, but high house prices.

A few years time may see lower house prices with a slightly higher interest rate.

And in the 80' it was high intrest rates and lower housing costs.

I guess it depends on where you fit into the market.

I am a "intended first home buyer" and the market does not suit my purposes to buy at the moment.  I will buy in 4 years, when I can save a higher deposit and watch house prices fall in that time.  I am thinking long-term and believe I will be able to save thousands just by being patient.

For those who own property right now is not the time to pull out that equity in your home to buy more property (Short term Pain).

For those intending to retire, maybe it is a great time to sell the family home, while property prices are high and downsize.


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## Julia (28 September 2005)

krisbarry said:
			
		

> There are good times and bad times to enter or exit the property market.
> 
> Today is great for the low interest rates, but high house prices.
> 
> ...





Kris,

How can you be so sure that you will "buy in four years time"?  A huge amount can happen in one year let alone four years.  There are so many possible variables which can all affect the housing market.

Please don't take offence, but you seem to be exhibiting somewhat of a "tunnel vision" approach which effectively blocks out opinions and advice of others who could well be in a position to offer you constructive suggestions.

If I were you, which of course I couldn't be, I would be buying anything I could possibly afford at present while interest rates are still low.  I read reasonably widely about property and have yet to see anything convincing which states definitively that property will fall substantially in the next few years.  I absolutely believe that if you own property, however modest, as long as it's in an area of growth (ie as someone else said "the worst house in the best street") then you are in a better position to move up gradually towards a property which will one day be what you are really looking for.

If you have determined that you are going to "sit and watch" for four years, I can't begin to imagine the opportunities which will pass you buy.

All the best
Julia


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## Fleeta (28 September 2005)

tech/a said:
			
		

> Anyone in Melb,Syd,Bris,Canberra.
> Can you supply me with some suburbs that are likely to show these falls of 10% +




Tech/a - in Melbourne, we have had falls in the housing market of greater than 10% already. I have witnessed it first hand being at auctions and buying a property.

The areas in particular that have declined in value are newly developed areas such as the Docklands, as well as some outer suburb developments. I think the growth will be flat for the next couple of years in Melbourne, which means people like me who pay $20k in interest each year will actually be losing on their investment.


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## markrmau (28 September 2005)

Julia said:
			
		

> I read reasonably widely about property and have yet to see anything convincing which states definitively that property will fall substantially in the next few years.



Of course no-one can state definitively that values WILL fall, but here is a summary of the reasons they MIGHT fall:

i) The return from rental is at historically low levels. I believe it is less than 2-3%, so basically you are paying a premium in the hope of capital growth.

ii) It looks like tax rates (particularly the top tax bracket) will drop. This will make negative gearing slightly less attractive, so investors will not be willing to pay as much.

iii) Very hard to say what will happen to inflation and interest rates. I notice the electrical trades union just won a high pay rise over next few years. Others will follow. Anecdotal evidence from this board indicates labour supply is tight. This COULD lead to interest rates going up .5-1% over the next year. Petrol is a mixed bag. It has both inflationary and deflationary effects. The commodity boom increases demand for the aussie dollar. This puts downward pressure on interest rates.

Things are probably grimmest in Sydney (of course pockets of sydney such as Marrickville are still going up I think).


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## wayneL (28 September 2005)

The Reserve Bank of Australia shares the concerns of the bears:

http://theaustralian.news.com.au/common/story_page/0,5744,16733003%5E2702,00.html



> *RBA warning of 'meltdown'*
> David Uren, Economics correspondent
> September 27, 2005
> 
> ...


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## Smurf1976 (29 September 2005)

wayneL said:
			
		

> The Reserve Bank of Australia shares the concerns of the bears:



I see comments from the RBA in general as being more of an advance warning rather than simple "what if" advice commentary. Central banks choose their words VERY carefully in general and don't start throwing around seriously bearish comments without good reason.


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## wayneL (29 September 2005)

tech/a said:
			
		

> Without knowing your friends circumstance Wayne---wouldnt it be fair to say that thats life in general--our situations can change dramatically sometimes through no fault of our own.---both positive and negative.
> 
> I doubt that you would be frozen in action by what "could happen"?
> Many are.




Tech, here is an article (British but same thing happenning here) that highlights just a part of what I'm seeing out there.

http://today.reuters.co.uk/news/new...ON838707_RTRUKOC_0_BRITAIN-FINANCIAL-DEBT.xml



> LONDON (Reuters) - The consumer boom has come on the back of plastic spending to such an extent that some people are now carrying unsecured debts of 100,000 pounds, a leading personal finance expert said.
> 
> "I ceased being surprised by 100-grand debts two years ago. It's very common," Martin Lewis, author of the bestselling Money Diet, told Reuters on Wednesday.
> 
> Lewis said financial illiteracy, spending compulsion and dyscalculia (where people have difficulty understanding arithmetic) were key reasons behind people taking out high levels of debt that they had little hope of servicing.




I wouldn't take much of a change in the economy to push a whole bunch of people over the edge of the financial abyss...snowball theory from then on.

I have another friend who is a crayfisherman. He has borrowed $3,000,000 (thats right! 3 MILLION) to purchase boat, pot licenses etc.

Crayfish prices are trending down and at multiyear lows due to overseas competition (which australians have set up). At the same time, the Dept of fisheries are reducing their allowable catch  by revoking the right to use a percentage of their pots and are increasing this this season. One worried chappy.

I realise this is an atypical case, but there are many other more mundane and typical examples such as my other friend mentioned above.

This is the tip of the iceberg. The majority of businesses are blithely unaware of the current structural problems in the economy, some aren't, they're battening down the hatches.

Cheers


----------



## It's Snake Pliskin (29 September 2005)

Yes, as I deduced in my property management days, property is an emotional topic. There are a lot of opinions on this thread which makes interesting reading.

I would simply like to say that leverage is the key to financial freedom. How you go about leveraging is up to you, but it doesn't mean you will be destroyed if interest rates go up a half point. Good debt, income producing debt is the key; healthy rental income and low interest rates without overextending yourselves. An example of bad debt is your family home that is an accounting liability. Add high interest rates and you have your state of serfdom. In Japan because of deflation the property you own is not an assett when you go to borrow money. They very much  treat that as a liability and a cross against your application, not to say it is the determining factor in any loan application, but simply a negative aspect. (Actual experience by a friend).

Do your research and look for those growing areas or areas with housing shortages for quick gains in property prices. I have seen too many people with dud dud dud dud properties because they didn't research the areas or markets they were buying into. They didn't educate themselves, and believed hype due to greeeeeeed!  (Not all though) Experienced the leaking shower? The cheap fixtures in the quickly built building? The many strata title, body corporate PROBLEMS? It goes on and on in Sydney apartment investing. I wouldn't buy anything built after the 80's.

I see prices going down for a while in Sydney, but will always buy when I find something that suits my criteria. 

Kris, don't be afraid of buying, just do it smartly.


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## wayneL (29 September 2005)

http://www.stuff.co.nz/stuff/thepress/0,2106,3426610a6009,00.html



> Renting seen as cheaper option
> 29 September 2005
> By ALAN WOOD
> 
> ...


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## tech/a (29 September 2005)

Tina.
Brilliant.

Under the bridge?(Harbor?)


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## RodC (29 September 2005)

krisbarry said:
			
		

> There are good times and bad times to enter or exit the property market.
> 
> .




Yes, but you can generally only be sure which is which with the benefit of hindsight.

Rod.


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## RodC (29 September 2005)

Fleeta said:
			
		

> Tech/a - in Melbourne, we have had falls in the housing market of greater than 10% already. I have witnessed it first hand being at auctions and buying a property.
> 
> The areas in particular that have declined in value are newly developed areas such as the Docklands, as well as some outer suburb developments. I think the growth will be flat for the next couple of years in Melbourne, which means people like me who pay $20k in interest each year will actually be losing on their investment.




Fleeta,

I don't know if those areas are typical of the whole Melbourne market, both the docklands and some of the outlying areas have been subject to overdevelopment and oversupply.

Rod.


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## tech/a (29 September 2005)

Rod.

Exactly.Supply and demand. There will be a correction or flattening in R/E pricing across the board. More areas will decrease--a few % a year---some will do nothing---some with over supply will decrease dramatically---those with under supply and demand will actually rise a few % each year---and the odd area will increase well---but generally and across the board----a pullback.

Thats my view--others may be crash orientated and others Boom--but generally--middle ground.


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## RodC (29 September 2005)

I agree, I think it will mostly be middle ground.

I sold 2 IP's about 18 months ago and then bought another late last year.

Not planning on doing any further buying or selling at the moment.

Rod.


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## It's Snake Pliskin (29 September 2005)

RodC said:
			
		

> Fleeta,
> 
> I don't know if those areas are typical of the whole Melbourne market, both the docklands and some of the outlying areas have been subject to overdevelopment and oversupply.
> 
> Rod.




That certainly was the case in the cbd of Sydney years ago. 

Tech,

Not the harbour bridge, not any bridge.


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## tech/a (29 September 2005)

OK I give in whats the Handle all about then??


----------



## It's Snake Pliskin (29 September 2005)

tech/a said:
			
		

> OK I give in whats the Handle all about then??




Handle?


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## tech/a (29 September 2005)

The name you use in the forum.

Tinaunderthebridge.

Whats it mean,where is its origin,how did you come about using it


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## Smurf1976 (29 September 2005)

Looking locally (Hobart) what I've noticed is that there seems to be a considerable "compression" of the market going on lately. I acknowledge that Melbourne, Brisbane, Adelaide or wherever may be totally different. But I'm not familiar with the suburbs there so I did this research for Hobart using realestate.com.au today.

Looking at prices in typical middle income suburbs, the top end of town (high income) no longer looks that expensive. If you ignore the water views and mansions then just buying a basic house in a top suburb is perhaps 50 to 70% more than buying a similar house in a middle income suburb and only 3 times what you'll pay to live literally right next to a prison which you would expect to be fairly cheap.

Even just comparing neighbouring suburbs the story seems to be much the same with prices between one reasonably wealthy (but not elite) suburb having merged with a neighbouring "middle" suburb to the point that there is now no difference at all if you ignore factors such as water views that some properties have. 

Even amongst styles of houses it's going the same way. Specifically, I could have bought a 3 bed weatherboard house for about $270K (mid point of listed price range) when the boom was on although about $250K would have been more typical either side of the sales mania in Winter/Spring 2003. Now I could go to the neighbouring better suburb and buy a similar sized brick house for about $255K (mid point of listed price range). So, same price but better house in a better suburb. But if I still wanted weatherboards in the cheaper suburb then there's one for sale right now listed at $219K. A drop, but not as noticeable as the market compression IMO.

The other real change I have noticed is liquidity or, more to the point, the lack of it. Whilst there does seem to have been a bit of an increase lately which coincided with the beginnings of the price falls (so that's falling prices on rising volume) the overall rate of sales has been slow to say the least. I've just checked 12 Hobart suburbs spread across the city both geographically and socio-economically on realestate.com.au and the results are that of those 12 suburbs:

Based on the rate of sales it will take, on average, 13 months to sell all of the listed properties in those suburbs. It is at least 10 monts in all but 2 cases and none are below 6 months (rounding to the nearest whole month). There are three areas, all of which are reasonably middle income and are geograhpically dispersed from each other, where the time is at least 2 years.

Anecdotally from my own regular observations I have noted that in some of these suburbs the number of properties withdrawn from sale exceeds the number actually selling. This has been going on for quite some time now. Regular property listings but most never sell. Some come back to let and in other cases the owners presumably just don't move. 

So quite apart from issues of pricing, there is the question of actually being able to sell your property. Of course you can jump the queue and sell quickly, that is quite clearly starting to happen in some cases ("priced to sell NOW!" wording in listings etc) but of course that means dropping the price. And I think this is the real point here. If you have a couple of years to sell then prices probably haven't moved much at all. But if you want to sell in less than a year you are going to have to drop the price. And if too many start doing this (not to say that they will but anything is possible) then with such a lack of overall activity it wouldn't take much to bring on a crash in my opinion.

I'm not saying never buy a house. Nor am I saying never be a landlord. But I just don't see the point in rushing to buy something that yields less than the interest on the debt to buy it, has significant ongoing costs (repairs etc) and is, at best, going nowhere in terms of value. IMO it would make more sense to invest the money in something else for the moment and then come back to property when the valuations are more reasonable and the RBA has stopped threatening action should your investment be profitable.  

As for liquidity, investing in property in Hobart is a bit like buying 100,000 shares in a company with an average daily trading volume of 350 shares. You had better hope that there aren't too many others wanting to sell at the same time you are... And yet properties were selling in a matter of hours (or minutes!) during the boom. Usually before the "for sale" sign even went up. But not any more...

As I said this could all be different in other locations of course, so do your own research.


----------



## tech/a (30 September 2005)

Smurf1976 said:
			
		

> I'm not saying never buy a house. Nor am I saying never be a landlord. But I just don't see the point in rushing to buy something that yields less than the interest on the debt to buy it, has significant ongoing costs (repairs etc) and is, at best, going nowhere in terms of value. IMO it would make more sense to invest the money in something else for the moment and then come back to property when the valuations are more reasonable and the RBA has stopped threatening action should your investment be profitable.
> 
> As for liquidity, investing in property in Hobart is a bit like buying 100,000 shares in a company with an average daily trading volume of 350 shares. You had better hope that there aren't too many others wanting to sell at the same time you are... And yet properties were selling in a matter of hours (or minutes!) during the boom. Usually before the "for sale" sign even went up. But not any more...
> 
> As I said this could all be different in other locations of course, so do your own research.




So you have done your due diligence and your results are similar to any that would be found by a serious investor in Tassy,or anywhere else for that matter.So you would take appropriate action.

So like trading shares look for those that you WOULD buy---simple.
In a raging Bear market is it not possible that traders find outstanding LONG trades?

Property is no different.

Every Property Investor,Developer or trader isnt doomed to extinction due to looming or even falling Property markets,infact other opportunities then exist.

All I'm suggesting to those here who are petrified of hard difficult or challenging times is to adjust your way of thinking--away from the 95% who will ultimately lose or underperform to the ways of the 5% who DO and WILL continue to succeed.


Its these areas I'm willing to discuss and I thought had given some positive hints to those who have asked--HOW THEN?

Its a very important topic,one which people better become experts in--WHY
Well look around you and I'll bet those you know who are comfortable or wealthy have a basis in Realestate.

If you wish to be financially secure in your later years and REMOVE one of the leading stresses in relationships and life itself (Having enough money) then look no further ---- *your looking at the  Universal FOUNDATION of financial security.* and we are lucky enough in this country to be able to take advantage of it-----Cant do it in India--China,South America,Parts of Africa---blah blah.


----------



## krisbarry (30 September 2005)

Here is the crunch...milk prices to rise by 24 cents on a 2 Ltr, due to the increase in fuel costs.

Rising prices on basic foods, will most ceratainly increase interest rates.

**** VERY IMPORTANT ****


----------



## tech/a (30 September 2005)

And when you have financial security the fact that milk rises 16c/L pales in significance.


----------



## krisbarry (30 September 2005)

The snowball affect has started.  Fuel up, basic food items and transporation up.

Inflationary pressures up.

Interest rates will most ceratainly go up

A drop in house prices will occur

Make me happy!


----------



## RodC (30 September 2005)

You really think higher inflation and higher interest rates are going to make you happy and make it easier for you to buy a house in four years time?


----------



## krisbarry (30 September 2005)

It is the overall affect that will bring a downward trend to the housing market.  I am looking at the bigger picture, which will ease me into a more affordable house, at a slightly higher interest rate.

Just a slight upward movement in interest rates will cause a massive snowball affect.

Don't laugh but that 24 cent increase in a 2Ltr milk will have a massive impact on the CPI.  That is nearly a 10% increase on one of the most basic food items.

I believe today marks a significant day for inflationary pressure on the food front

On a positive note the unemployment figures were up, which means an easing on inflationary pressures from that front.


----------



## tech/a (30 September 2005)

Kris.

How much do you think interest rates will decline in 4 yrs as a %?
AND how much of a decline in house prices do you expect in 4 yrs as a %?

Generally speaking and in your case.
In other words what would be your best case scenario?


----------



## It's Snake Pliskin (30 September 2005)

tech/a said:
			
		

> The name you use in the forum.
> 
> Tinaunderthebridge.
> 
> Whats it mean,where is its origin,how did you come about using it




Tech,

Sorry to keep you wondering all night and day, but I have been off the computer. In answer to you questions my username is purely a fictional name and has no real origin except it used to be a joke of a saying with some of my friends. It doesn't mean anything. I guess it's more the sound of it that has an effect. I think it's quite different which is why I used it.

And, are you ready?

I'm not a woman. I don't pretend to be one nor should anyone assume I am one. Simply having a female part in your user name doesn't make you woman. 
I'm sorry if some of you have assumed that to be the case and for that I'm sorry.   I don't think it is important who you are, other than your username; some privacy is in my case was intended. 

Maybe I should change my username to something more blokey. Like: Max driving his truck over the bridge, or Bill constructing the bridge.  

So from now on everyone can be blokey with me and that's ok.

Cheers  
Snake Pliskin


----------



## wayneL (30 September 2005)

Snake Pliskin said:
			
		

> Tech,
> 
> Sorry to keep you wondering all night and day, but I have been off the computer. In answer to you questions my username is purely a fictional name and has no real origin except it used to be a joke of a saying with some of my friends. It doesn't mean anything. I guess it's more the sound of it that has an effect. I think it's quite different which is why I used it.
> 
> ...




Ahahahah! I thought there was a bit too much yang in your posts for a female. My preset gender sterootype remains intact hahahah!


----------



## RichKid (30 September 2005)

wayneL said:
			
		

> Ahahahah! I thought there was a bit too much yang in your posts for a female. My preset gender sterootype remains intact hahahah!




Have to agree, I had the same impression but you can never be sure, not that it matters when it's just an exchange of ideas. So 'Tina' has come out on ASF!


----------



## Julia (30 September 2005)

Snake Pliskin said:
			
		

> Tech,
> 
> Sorry to keep you wondering all night and day, but I have been off the computer. In answer to you questions my username is purely a fictional name and has no real origin except it used to be a joke of a saying with some of my friends. It doesn't mean anything. I guess it's more the sound of it that has an effect. I think it's quite different which is why I used it.
> 
> ...




Tina (is that still the correct form of address in light of your revelation?)

And here I was thinking I had some sort of female companionship on the forum (as suggested by TechA).  I had no idea.  Does this mean we largely see what we want to?  And that we make bland assumptions regarding gender where names are concerned?  Probably.  But, I've yet to meet a bloke named Tina.  Thanks for letting us know.  How would you have responded if I'd addressed a post to you asking for, e.g. "some support of a female point of view"?  Doesn't using a name like this leave you open to some misunderstandings and possible difficulties?

Julia


----------



## It's Snake Pliskin (30 September 2005)

Julia said:
			
		

> Tina (is that still the correct form of address in light of your revelation?)
> 
> And here I was thinking I had some sort of female companionship on the forum (as suggested by TechA).  I had no idea.  Does this mean we largely see what we want to?  And that we make bland assumptions regarding gender where names are concerned?  Probably.  But, I've yet to meet a bloke named Tina.  Thanks for letting us know.  How would you have responded if I'd addressed a post to you asking for, e.g. "some support of a female point of view"?  Doesn't using a name like this leave you open to some misunderstandings and possible difficulties?
> 
> Julia





Hi Julia,

Just for the record my name is not Tina. My user name is Snake Pliskin, one word.

I probably wouldn't have given you any female advice. I was dredding that day actually. But, I can try if you like.

Yes I think this name leaves me open to misunderstandings. Maybe I should change it. Any suggestions?

Cheers


----------



## Smurf1976 (30 September 2005)

Don't be too conservative. Keep the name IMO.


----------



## Julia (1 October 2005)

Snake Pliskin said:
			
		

> Hi Julia,
> 
> Just for the record my name is not Tina. My user name is Snake Pliskin, one word.
> 
> ...




Fair enough, I stand corrected Snake Pliskin.  It's a bit of a mouthful though.  Keep it - we're all probably used to it now.

Julia


----------



## DTM (1 October 2005)

Snake Pliskin said:
			
		

> And, are you ready?
> 
> I'm not a woman. I don't pretend to be one nor should anyone assume I am one. Simply having a female part in your user name doesn't make you woman.
> I'm sorry if some of you have assumed that to be the case and for that I'm sorry.
> ...




Arrrggghhhh.  Everytime I read your posts I imagined a womans voice.  A beautiful woman actually..., arrgghhh.


----------



## It's Snake Pliskin (1 October 2005)

DTM said:
			
		

> Arrrggghhhh.  Everytime I read your posts I imagined a womans voice.  A beautiful woman actually..., arrgghhh.




No I have hairy legs.


----------



## tech/a (1 October 2005)

For those interested 
"A Current affair" on Monday is doing a piece on the best buy areas still around.---should be around 10 seconds of rivveting television!.


----------



## dutchie (1 October 2005)

Snake Pliskin

how about tut bridge (tut for short)

fooled me too!

whats in a name?


----------



## Happy (1 October 2005)

Tinunderthebridge

Would do for sex change, but you still need counselling to make sure you are really ready for it.


----------



## Fleeta (3 October 2005)

Snake Pliskin said:
			
		

> I'm not a woman. I don't pretend to be one nor should anyone assume I am one.




I always knew you weren't a woman. You're posts were way too concise and logical!!


----------



## monoply (3 October 2005)

Watched the segment on A Current Affair. Some properties reduced, but they were expensive to start with. Getting more like fair value now maybe.

Ever seen a realestate not say its a buyers market? lol


----------



## ob1kenobi (3 October 2005)

To Tinaunderthebridge, keep the user name. It has served you well so far, why change. It's meaningful to you, that's important.


----------



## krisbarry (3 October 2005)

I agree...way over-priced to start with.  A year from now they will be even cheaper again, no need to rush!

Of course real estate agents and anyone off-loading property right now would be saying, why wait?

Why buy, I say, waiting is the key now.


----------



## It's Snake Pliskin (4 October 2005)

ob1kenobi said:
			
		

> To Tinaunderthebridge, keep the user name. It has served you well so far, why change. It's meaningful to you, that's important.




Obi1,

Thanks for the support. I think I'll keep it and battle on. The force is with me


----------



## It's Snake Pliskin (4 October 2005)

Happy said:
			
		

> Tinunderthebridge
> 
> Would do for sex change, but you still need counselling to make sure you are really ready for it.




Ha, ha, ha, ha I'm really happy!


----------



## krisbarry (4 October 2005)

A rate rise in coming months is now looking far more promising.  Inflationary pressures are showing marked signs of an increase.

I predict rates to stay on hold, for tomorrows annoucement, but expect a rise early next year.


----------



## The Once-ler (4 October 2005)

I agree fully.

The milk price rise is just the start. And the poor old dairy farmer isn't even getting a cut apparently. What a disgrace.

The oil price will flow through to everything, especially food. Fertilizer has gone up heaps will natural gas. Transport costs to the farm, then from the farm, chemicals are made from fossil fuel, it just goes on and on. Ethanol and bio diesel will just help a bit, but it is impossible for these to solve the problem. If land is used to grow fuel, what do we eat? Wages about to blowout, Inflation is about to go up. 

Houses will be better buying in a few years I feel.


----------



## krisbarry (4 October 2005)

Consumer price index (CPI) figures will be out later this month so if we see upward movement, then up go the rates.

The RBA may want to drop an extra present under the xmas tree...a rate rise, in Dec.

Then the credit card bills come in Jan/Feb... and ouch a few more home owners hit the skids...

Then down go house prices even more.


----------



## Joe Blow (4 October 2005)

krisbarry said:
			
		

> Then the credit card bills come in Jan/Feb... and ouch a few more home owners hit the skids...




These are average Aussies you are describing here, Kris.

I cannot believe that you are wishing misfortune on average hardworking Aussie families. Very mean spirited.


----------



## Milk Man (4 October 2005)

The Once-ler said:
			
		

> I agree fully.
> 
> The milk price rise is just the start. *And the poor old dairy farmer isn't even getting a cut apparently.* What a disgrace.
> 
> ...




I'm a dairy farmer and we haven't, nor will we, see a price rise at the farm gate due to oil prices. The factory raises prices due to lack of supply only. It has been rumoured that we will be getting a 5% price rise in the near future (Pauls suppliers). I won't hold my breath! The price rise from the factory will be tacked straight onto the shelf price and probably then some as supermarkets have proven in the past to be opputunistic scumbags. 

Dairy farmers have no power what-so-ever to dictate terms. We have token representative groups to liase with milk factories and the ACCC. The nature of dairy farming is dictated by the perishability of milk and the need to milk the cows every morning and night. We cant hold off selling because milk can only be stored for 2 days because 1- the factory wont take it any older and 2- no-one has more storage space. We cant afford not to milk either so theres no time to form a militant union the likes of the MUA. 

The blame for the ridiculous milk prices sit squarely on the Govt. for de-regulating the industry and not clamping down on obvious oppurtunistic behaviour by the greedy supermarkets.

Oh and by the way we get not much over *40 cents per litre! *How much do the supermarkets charge? And people whinge and moan about petrol!


----------



## krisbarry (4 October 2005)

Not wishing it at all, this scenario is already playing out right around Australia.  Media reports are in abundance that Aussie are in way over their heads with housing finance and its just about to get harder.  With the price of petrol, driving many to the wall, and basic food items like milk.

The chaos is only just beginning.


----------



## Joe Blow (4 October 2005)

krisbarry said:
			
		

> Not wishing it at all, this scenario is already playing out right around Australia.  Media reports are in abundance that Aussie are in way over their heads with housing finance and its just about to get harder.  With the price of petrol, driving many to the wall, and basic food items like milk.
> 
> The chaos is only just beginning.




In that case, maybe it was just the way I read your post.

But while I was reading it, I couldn't help but picture you sitting there rubbing your hands in glee at the prospect of lower home prices because average Australians may be forced into selling theirs due to interest rate rises.


----------



## krisbarry (4 October 2005)

Equally it is fair to say that it is unfair for hard working Australian to put up with these ludicrous over priced houses.

...And equally it is also fair to say that many hard working Australians on low wages, some 3-4 million of them wouldn't have a chance in hell of ever being able to afford a house with current wages levels and current house prices.

WE ARE CALLED THE AUSSIE BATTLERS!

There is always many sides to this debate...and many that would be happy for the current housing market to change.


----------



## tech/a (4 October 2005)

:swear:   

It was exactly the same for Joe Average in the 80s.

There will be times like these in the future.
There will always be those who do and those who whinge.

I'll say it again.

*FIND A WAY*.

And if it means subsituting a dairy farmers income or getting out of dairy farming all together (I'm using your case loakglen as an example not as a victimsation) then do whats necessary.


----------



## rozella (4 October 2005)

How about tinnyunderthebridge

rozella


----------



## Milk Man (4 October 2005)

tech/a said:
			
		

> :swear:
> 
> It was exactly the same for Joe Average in the 80s.
> 
> ...




I'll just get someone down Mt. Gambier way to go pee-pee in the milk then!  I'm just joking foodsafe if youre listening. I may've wrecked your cup of tea for a couple of days though (hardy-ha). I reckon we're a victim of corporate crime though not circumstance; as in most other cases you might draw parallels with.


----------



## sam76 (4 October 2005)

loakglen said:
			
		

> I'll just get someone down Mt. Gambier way to go pee-pee in the milk then!  I'm just joking foodsafe if youre listening. I may've wrecked your cup of tea for a couple of days though (hardy-ha). I reckon we're a victim of corporate crime though not circumstance; as in most other cases you might draw parallels with.




My folks live in Nelson.

Not sure about them going pee-pee though! :


----------



## Kauri (4 October 2005)

My math has never been too good but the 8c increase in milk price blamed on fuel prices has me a touch baffled. 
   Milk selling at $1.00 litre.
   Cockies getting 40c
   Processors getting 10c margin?
   Retailers getting 10c margin?
   40% increase in fuel costs = 8c increase means fuel cost must have been approx 20c? ( 20cx40%=8c)
_ So of the $1.00/litre currently charged for milk the cost of running the processing plant/wages/ etc is only 20c????_  

   I have also heard/read that supermarkets supplies of own brand/home brand milk is supplied under long term fixed price contracts, so it will be interesting to see if those prices move!!!


----------



## Smurf1976 (4 October 2005)

These "low interest rates" never were here for the long term IMO and those who have borrowed to the limit are going to find themselves in very serious trouble. I am well aware that this is not everyone or even the majority but I do think there's more than enough in this situation for the consequences to be very serious indeed.

This is not to wish any specific outcome on anyone. But there's just no point ignoring the obvious. IMO it is far too late now to do much about it other than pursue whatever opportunities arise or alternatively just watch it all unfold. The time for warnings that might lead people to rethink has passed unfortunately.


----------



## Milk Man (4 October 2005)

I Dunno what you guys pay for milk but I thought a 3L was about $4 so the lowest cost would then be $1.30/L. Not sure: drink it straight out the vat! Pasteurised? Wonder why kids dont have good immune system response?


----------



## Kauri (4 October 2005)

Might be different here in the West but I have never paid more than $3 a litre.     (YET)


----------



## tech/a (4 October 2005)

Smurf1976 said:
			
		

> These "low interest rates" never were here for the long term IMO and those who have borrowed to the limit are going to find themselves in very serious trouble. I am well aware that this is not everyone or even the majority but I do think there's more than enough in this situation for the consequences to be very serious indeed.
> 
> This is not to wish any specific outcome on anyone. But there's just no point ignoring the obvious. IMO it is far too late now to do much about it other than pursue whatever opportunities arise or alternatively just watch it all unfold. The time for warnings that might lead people to rethink has passed unfortunately.





Smurf.

Your kidding!
You can do this.
(1) Sell the house and go rent.
(2) Take on a border.
(3) Fix rates
(4) take on a part time job.

Not to mention stop smoking,cut back on drinking,enjoy home entertainment more,take public transport,car pool,use shopper dockets---*get outta here life is as hard as you make it!!!*


----------



## TrickyRicky (4 October 2005)

hey all,

Krisbarry.... what can i say.. you sound like someone very unhappy with your lot and looking for someone to blame..

I am 27 years old and already have my own business and paying off my home, i am even thinking about buying another one... ( maybe...).

In my job i hear alot of people like you complaining about how the Gov. doesn't do enough to makje your life better... Why do you think they need to ???  What makes you different from someone born in Bangladesh?? 

Perhaps you should try to living in an area where the Government does not give you a thing in return but likes to take everything..  Buying a home was never easy... nothing good in life really is....  

You should start looking at yourself first... put one foot in front of the other and start to Save... by that i mean save to spend(i.e. make more money).. don't blow it on your "lifestyle" in the city... but if you do then don't whinge about it..

my 102 cents


----------



## Knobby22 (4 October 2005)

I tend to agree with you Kris, no need to hurry. Friends of mine sold recently and had to lower their property price to eventually sell. It was a a middle ranked suburb.

After a long time we are in a period where it pays to save as hard as possible. There is a slight possibility that rates may go down! 
This is shown by the long term rates curve being so flat. If this happens it will mean we are in a recession so it won't be a disaster for you (if you keep your job).

Are you renting now? If so then it still may be worth buying short term. If you work out the rent you are paying, add say 25% for the new house, and can afford it, then it is worth considering as you will save in rent long term if you pay it down reasonably quickly. It is pretty easy to work out how realistic it is. 

Also, don't forget, every year we bring in over 100,000 immigrants into the country that further increase demand so it is doubtful we will see a real crash and prices may not get much lower. You are in Adelaide which was not as overpriced as Melbourne and Sydney so the falls may not be at all large.

Also, if inflation raises its ugly head and you are not locked into a property, you may find you cannot save hard enough. Probably, interest rates will rise in this case and help you out anyway.

That's my 2c.   (there was 102c in the post above but hey that's deflation).


----------



## Knobby22 (4 October 2005)

I have to comment.

Who was Tina?
Why was she under a bridge?
Is she still there (buried?).
Is the bridge over troubled water?

I will finish before I go too far and someone tells me to build a bridge and get over it.


----------



## Julia (4 October 2005)

Knobby22 said:
			
		

> I have to comment.
> 
> Who was Tina?
> Why was she under a bridge?
> ...




Knobby,

I'm still laughing.  Good sense of humour.
Tinaunderthebridge:  sorry to "go on" about the name, but I think you have a few people curious???


Julia


----------



## krisbarry (4 October 2005)

More debate...I love it!

I am very happy to wait for a house at an affordable price, and if that means a few years wait, thats kewl with me.

I aint moving out the city, I will just wait, and save, and let the market correct itself.


----------



## tech/a (4 October 2005)

Kris.

Ive asked this before but no response.

What price do you think houses that you'd be interested in will go From-To.?
What do you think interest rates will be at the time you buy?

IE
 Now $250,000 to $100,000 in 2 yrs 
Interest rates from 6.5% to 8%


----------



## krisbarry (4 October 2005)

Probably best if I don't give too many figures, as it will just end up in more fights between you and I.

Lets just say that market corrections in some state have been seen and there will be a knock of affect felt right around Australia.

My prediction over the coming 1-3 years is a 25%-40% fall in prices on the average Australian suburban home and a 1% increase in interest rates.

Over the past 4 years most average suburban homes have risen by 100% - a market corretion is immanent

Plenty of reports have also pointed out that Australian homes are way over-priced (as much as 25%)


----------



## Knobby22 (4 October 2005)

I can see you Kris sitting at home.

The phone rings, it's the real estate agent. 
He/she/it tells you that the three bedroom beachfront mansion owner is willing to sell his house for only $300,000 and his name is Tech/a.

You say to the agent before you hang up the phone:  "Tell him he's dreamin' " 


(Someone is!)


----------



## Milk Man (4 October 2005)

LOL- you should be a comedian knobby!

Milk is over $4 for 3 litres out here. It would have to get shipped 400k to be processed then the same back though! I should just start my own factory. Munny Milk? Milk money- Mundubbera: might be onto something there.


----------



## Smurf1976 (4 October 2005)

tech/a said:
			
		

> Smurf.
> 
> Your kidding!
> You can do this.
> ...



I think you've misunderstood me here tech. I meant it's too late to do much to help _other_ people who have borrowed as much at variable rates as they could get etc. It's too late, for example, to educate them to not have such huge leverage in the first place and it's too late for them to repay without a flood of asset sales which would tend to force prices down (indeed this is exactly what I think may ultimately happen and is the basis of my concern).

Smart people fix rates, keep leverage sensible etc. But many don't and they're the ones I'm talking about. I do think there are enough people in this category to be a problem but I acknowledge that is an assumption which can not be proven unless/untill something happens.

Personally I don't have any debts whatsoever (unless you count leverage via a forex broker as being a form of borrowed money) and have already done or was never in a position to do (because it doesn't apply) every point you mentioned except car pooling. I'm as prepared as I could reasonably be but IMO there are quite a few people who are in a very different situation and are still doing nothing about it. If/when rates rise they will find themselves in big trouble IMO.


----------



## Rockon2 (4 October 2005)

Ive been away for a couple of days, come back and !!!!!!

"Tinunderthebridge "  Has Hairy Legs ! ArGgrrrrr!!! 
There goes the mental image of a real nice looking Female Stock Trader..

AArrrrrggghhhhhhh...........


Sorry Tina


----------



## Rockon2 (4 October 2005)

Oh and have a giggle at this site,,,,Especially the Q and A...  


http://www.trademe.co.nz/Electronics-photography/Other/auction-36725938.htm


----------



## brisvegas (4 October 2005)

if fixed rate interest is any guide rates arent going anywhere in a hurry. with 3 year fixed rates lower than 1 and 2 years rates the banks are betting on rates going down imo

http://www.infochoice.com.au/banking/homeloans/compare/tables/summary/oo/NSW.asp


................. Pete


----------



## dutchie (4 October 2005)

I did not realise that Kiwis were that funny!


----------



## It's Snake Pliskin (4 October 2005)

Knobby22 said:
			
		

> I have to comment.
> 
> Who was Tina?
> Why was she under a bridge?
> ...




I think we'll leave the Snake Pliskin thing there. 

I will in due course change my user name to something a bit more mainstream.

Knobby 22, what's the origin of that? Who's Knobby? An equally ridiculous question don't you think?

Bye there, Knobby!


----------



## It's Snake Pliskin (4 October 2005)

krisbarry said:
			
		

> Probably best if I don't give too many figures, as it will just end up in more fights between you and I.
> 
> Lets just say that market corrections in some state have been seen and there will be a knock of affect felt right around Australia.
> 
> ...




Kris,

You are generalising about the knock on effect of property decreasing. There are areas that won't drop but conversely will go up. Do your research and find those gems that will make you money. 

The average suburban home is state and city specific, not country wide. There are and will be big differences among the states of Australia. 

Why is a market correction immanent? What is your information that compels you to say that? We still have people in need of housing, though the oversupply situation in some states has softened the market.


----------



## It's Snake Pliskin (5 October 2005)

rozella said:
			
		

> How about tinnyunderthebridge
> 
> rozella




Rozella,

That's not bad! This had me in stitches for a while.

Good news on the whole in one.

tinnyunderthebridge


----------



## krisbarry (5 October 2005)

Snake Pliskin said:
			
		

> Kris,
> 
> You are generalising about the knock on effect of property decreasing. There are areas that won't drop but conversely will go up. Do your research and find those gems that will make you money.
> 
> ...




Yes I agree, some states/cities will do better than others.  Perth for example will fair better due to the mining boom.

Although Sydney with it massive migrant intake, which should be pushing house prices higher due to demand, is instead dropping.

Now this one suprises me...Brisbane house prices have been dropping rapidly, while they are experiencing a massive boom in population.  Due to retirees moving up from Sydney escaping the rat-race.

Melbourne is suffering the biggest house price drops.

Market correction is immanent due to the massive rises, far beyond wages and inflation.  It is unsustanable and very unhealthy!


----------



## chansw (5 October 2005)

krisbarry said:
			
		

> Probably best if I don't give too many figures, as it will just end up in more fights between you and I.
> 
> Lets just say that market corrections in some state have been seen and there will be a knock of affect felt right around Australia.
> 
> ...




Kris

Let's hope that will not happen. A few years ago, a crash in the property market happened in Hong Kong. If I remember correctly, it was like 40% down. A lot of people who complained the house price were expensive (and could not afford) did not buy after the crash. Some were fear that was not the bottom but many lost their jobs. Think about the high petrol price now. More and more people will start to cut their spendings. They buy less in the department stores, try to avoid to dine out, maybe even drink less alcohol etc. What will happen next? The shops have to cut the staff if there are not enough business. If the property market here crashes, the ripple effect is huge and affect every part of the economy. Hong Kong experienced a few years deflation and many people suffered (both with and without a property). It is better to find ways to earn more rather than to hope for this type of diaster to happen. Just my 2 cents.


----------



## Smurf1976 (5 October 2005)

chansw said:
			
		

> Kris
> 
> Let's hope that will not happen. A few years ago, a crash in the property market happened in Hong Kong. If I remember correctly, it was like 40% down. A lot of people who complained the house price were expensive (and could not afford) did not buy after the crash. Some were fear that was not the bottom but many lost their jobs. Think about the high petrol price now. More and more people will start to cut their spendings. They buy less in the department stores, try to avoid to dine out, maybe even drink less alcohol etc. What will happen next? The shops have to cut the staff if there are not enough business. If the property market here crashes, the ripple effect is huge and affect every part of the economy. Hong Kong experienced a few years deflation and many people suffered (both with and without a property). It is better to find ways to earn more rather than to hope for this type of diaster to happen. Just my 2 cents.



Agreed with you there about the consequences etc. but in my opinion the boom has gone to far, too fast to avoid the nasty consequences of a boom. IMO it's a choice between high inflation (since we're talking about pretty huge wage rises to neutralize it that way) or a bust. Neither option looks good to me when the broader economic effects of either a wages surge or a property bust are considered. Hopefully I'm wrong.


----------



## krisbarry (5 October 2005)

chansw said:
			
		

> It is better to find ways to earn more rather than to hope for this type of diaster to happen. Just my 2 cents.




Equally said, many profit in times of disaster, and I here that is not a bad/ or evil thing.  It is wise to take advantage of market forces.

Many profited from the 90's crash and are now sititing on much wealth. So what is the difference this time around, nothing!

Sure it is more morally correct to earn more, I agree with that, but being morally right has sent me broke too.


----------



## tech/a (5 October 2005)

Smurf1976 said:
			
		

> Agreed with you there about the consequences etc. but in my opinion the boom has gone to far, too fast to avoid the nasty consequences of a boom. IMO it's a choice between high inflation (since we're talking about pretty huge wage rises to neutralize it that way) or a bust. Neither option looks good to me when the broader economic effects of either a wages surge or a property bust are considered. Hopefully I'm wrong.





Has anyone considered a combination of both.

Some inflation with a rise in rates (Moderate) 1-1.5%
and an easing on property prices (Moderate) overall 8-12% over the next 2 yrs.Obviously for an average--some less some more.

All in all though not Looming economic disaster even for those over committed.
My view is much of the comment here is over reactionary,pumped by emotive attention grabbing headlines,discussion is based upon extremes.

regardless of what occures any deviation to an extreme whether that be wages,interest rates,Inflation,housing--etc etc will eventually revert to the mean.

If you continually live life waiting for extremes then youll miss the opportuinity of getting set for any extreme to happen or taking appropriate steps to avoid a negative extreme.

Kris
Ill bet your savings will be negated by other factors normalising.

*People will always be able to take advantage of one extreme or another but those that wait for all extremes to coincide miss those extremes that are rarely presented.----there will always be an excuse why NOW isnt the time!!!*


----------



## krisbarry (5 October 2005)

I think the wise ones will wait, not dive in like the rest just did and followed the peak of the housing boom, to realize they are over-comitted now, and on a downward slop. Oppps!

No excuse for me, just playing the market game, waiting till it drops, then pick up someone elses trash, and make it my treasure.

Very similar to the stock market I guess.

Tech/a your looking at it from a sellers point of view and I am looking at it from a buyers point of view.  Opposite ends of the scales right now.  Someday you will off load your properties and for that I thankyou for freeing up the market.  And someday I will buy a house.  Timing is critcal, both in the stock market and also the housing market.

No hard feelings!


----------



## It's Snake Pliskin (5 October 2005)

> No excuse for me, just playing the market game, waiting till it drops, then pick up someone elses trash, and make it my treasure.




Yes there's nothing quite like a falling knife.


----------



## Kauri (5 October 2005)

But if you cut yourself there is always Tripeptofen...


----------



## krisbarry (5 October 2005)

Yes that will ease the pain, and I better stock up on Relenza (BTA) just incase I get the dreaded bird flu.  Seems to be all the rage right now. LOL


----------



## tech/a (5 October 2005)

krisbarry said:
			
		

> Tech/a your looking at it from a sellers point of view and I am looking at it from a buyers point of view.  Opposite ends of the scales right now.  Someday you will off load your properties and for that I thankyou for freeing up the market.  And someday I will buy a house.  Timing is critcal, both in the stock market and also the housing market.
> 
> No hard feelings!




Kris.
I look at it from both angles its part of what I do.
A Week ago I sold one of my properties.
Asking price was $235,000. Offer was $210,000 guess what it sold for.
I'm currently looking at a property to buy--why--Because the NUMBERS are very attractive--if you saw them and were in the position to buy youd be falling over yourself to beat me to the agent.

Will I wait---NO!

*Timing is inconsequential*


----------



## krisbarry (5 October 2005)

Well done on selling a property, and once again thankyou.  If the numbers are great then buy it, that is your way of doing business.

My way of doing business will be to wait.

Wait for my savings to increase and wait for the potential drop in Adelaide house prices.

That way we both win...there we go, no arguments

Peace be with you!


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## krisbarry (5 October 2005)

Timing needs to factored into the equation for first home buyers vs existing property owners.

Existing property owners purchasing further homes have had the financial windfall of a booming housing market.  Thus it makes a much smoother transition into another purchase. More capital, less financial stress.

First home buyers have not had this luxuary so timing is more essential.

We need to take advantage of the first home owners grant, and a potential downturn in the market.


----------



## Happy (5 October 2005)

In sense, timing in your purchase decision is important too.
What is the flip side of not doing it now? Property will not be available when you’ll ask for it.

But I suppose my post is in a ‘splitting hairs’ category.


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## tech/a (5 October 2005)

krisbarry said:
			
		

> First home buyers have not had this luxuary so timing is more essential.
> 
> We need to take advantage of the first home owners grant, and a potential downturn in the market.





So taking the opportunity when you could get $12,000 and not $7,000 a few years ago was bad timing??

Dont confuse timing and affordability.

You can time things all you like but if you cant afford a purchase then timing means nothing.
If you have unlimited funds then timing is also un important as you'll buy when the numbers add up OR its want you want!


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## krisbarry (5 October 2005)

The first home buyers grant was $14,000 for new homes and $7000 for exisiting homes.

The better value of the 2 grants was the $7,000 option, as there were no increased building costs involved.  The $14,000 option went into the GST component or the 10% increase building costs, and fees of a new housing.

Now it is $7000 for both.

I never wanted a new home so the $14,000 is irrelevant to me, but others took up the chance.

First hombuyers ususally don't have unlimted funds, so again timing is more important.

When you are as wealthy as yourself, then more options are avaliable.  Thats kewl, and very much understandable.

Yet again we continue to argue...gee I am glad we live in opposite directions in Adelaide.


----------



## krisbarry (5 October 2005)

Here is the latest housing data to munch over...

Housing weakest in NSW

By Nicki Bourlioufas

05oct05

THE downturn in the housing sector was concentrated in New South Wales and Queensland, but would spread as higher petrol prices hurt homebuyers, the Housing Industry Association said today.

For August, dwelling approvals fell 20.8 per cent New South Wales, followed by a 14.6 per cent drop in Queensland. 

Elsewhere, approvals were down 3.3 per cent in Tasmania and 0.1 per cent in Victoria. Rises were recorded in South Australia, up 3.0 per cent and Western Australia, up 2.3 per cent.

HIA's Chief Economist, Simon Tennent said Queenslanders faced a housing affordability crunch in the South East corner, which was magnified by much lower average household incomes than the national average. Homebyvers in NSW also faced the most expensive housing.

Across the nation, higher petrol prices and falling consumer confidence would dampen the building sector further, the HIA, Australia's peak building industry body, said. 

"Nationally, it remains one of the softest slowdowns on record thanks to strong regional activity, but with mounting concerns over higher petrol prices and a clear reversal in consumer confidence, most home and renovation builders in the higher-priced cities are still bracing themselves for further weakness," Mr Tennent said. 

"Our forecasts are for these consumers to continue to pay down debt and add to savings before driving the next upturn in activity in late 2006," Mr Tennent said.

"On the bright side, this period in which cautious consumers are delaying their home purchase decisions is building up demand for new housing as evidenced by near record low rental vacancies in most capital cities," he said.

The number of building approvals plunged 8 per cent in August to a four-and-a-half year low, as the March interest-rate rise hits the property market and the economy.

Building approvals across the nation fell a seasonally adjusted 8.0 per cent to 11,794 units in August, the lowest since April 2001. 

August approvals fell from an downwardly revised 12,813 units in July, the Australian Bureau of Statistics said today. In the year to August, building approvals fell 11.7 per cent. 

And as home owners wind back spending, the value of renovations fell 16.5 per cent to $364.7 million, the lowest level since December 2002.

Source: 

http://www.theadvertiser.news.com.au/common/story_page/0,5936,16822224%5E1702,00.html


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## markrmau (5 October 2005)

http://afr.com/articles/2005/10/05/1128191769593.html

"We estimate that Australian house prices are 22 per cent above fair value - Sydney being the least attractive market with a 36 per cent overvaluation - and that this overvaluation will cause investors to seek alternative investments and/or sit on the sidelines."

I tried to warn family and friends over the last few years, but they patiently explained that I just didn't understand the property market.     This is not good. A lot of decent people just got carried away with the hype, and may end up hurting.


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## tech/a (5 October 2005)

Kris.

I'd like to congratulate you on the way you have handled a fairly lengthy discussion. Both of us have presented our point of view with what I believe to be minimum personal reference.

We will at this time stand apart on some issues---actually most issues.
But even so I hope you achieve your goals.
I look forward to future discussions.

CHEERS


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## It's Snake Pliskin (6 October 2005)

krisbarry said:
			
		

> I think the wise ones will wait, not dive in like the rest just did and followed the peak of the housing boom, to realize they are over-comitted now, and on a downward slop. Oppps!
> 
> No excuse for me, just playing the market game, waiting till it drops, then pick up someone elses trash, and make it my treasure.
> 
> Very similar to the stock market I guess.




Kris,

I found a bargain for you.   

http://dailytelegraph.news.com.au/story/0,20281,16828941-5001022,00.html


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## krisbarry (6 October 2005)

Thanks for the bargain...think I will need to sell all my body parts on the black market or ebay and I will check back with you soon. LOL


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## Rafa (6 October 2005)

Adelaide Bank is now offering 6.55% fixed for 5 years!!!
this is down from 6.95% a few weeks back!!!

yup.... rates are going up!!!!


----------



## Bronte (6 October 2005)

Perth real estate is certainly not stagnant.
86 people a day are presently migrating to WA
This equates to 50/60 extra homes required per day.
We have been busy buying prime real estate since 1998


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## Fleeta (7 October 2005)

More fuel to the fire from todays Melbourne paper...I think Kris may have written this article!!

Renting a home and investing the rest of your money in superannuation makes better financial sense than pursuing the great Australian dream, an industry analyst says.

IBISWorld chairman Phillip Ruthven said that over time, people had been "hoodwinked" into believing that buying a home was the best investment they could make, when this was not true.

"In buying a home, you can expect over a long, long period of time an average capital gain of about eight per cent," Mr Ruthven said.

"However you have to take off at least four per cent each year to allow for the costs involved in buying and selling the home."

Costs such as real estate agents' fees, stamp duties, legal fees and maintenance of the dwelling reduced the capital gain from owning a home to about four per cent a year, he said.

"If you invest in super you're going to earn about 11 per cent a year, in which case you are better to invest in super and then lease your home," Mr Ruthven said.

"Because by leasing a home, you can lease for about 3.5 to four per cent of its value.

"Trying to own a home just doesn't make sense."

Paying rent was not sending money down the drain; paying interest on a mortgage was sending money down the drain, Mr Ruthven said.

Home ownership appealed to people because of the emotional security it offered and because it was a form of forced saving, but it had never been a good investment, he said.

It was not a bad investment but there were far better things to put one's money in, such as super, he said.

Mr Ruthven said he was impressed by the number of young people who were choosing to rent a home rather than buy one, because they did not want to spend the next 10 years struggling to enjoy life.


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## Knobby22 (7 October 2005)

All I can say is
- capital gains tax free
- security of tenure - what about having to move because the landlord.


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## Dan_ (7 October 2005)

I can imagine similar advice being given to people in September 87 "..Look how well your super's done people. Only one more month to retirement.lucky you didn't waste money on a house :goodnight .........(hmmmm)


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## krisbarry (7 October 2005)

Pretty impressive story, Fleeta.

No I didn't write it but it make sense to me.  Since I do not have a morgage I am taking advantage of adding extra payments to my super.  Also taking up the governments offer of super co. too. (free $1,500 each year)

When I am 65 I will be able to buy a house outright and save 25-30 years worth of bank interest. Now that seems pretty logical to me.

I expect to pay between 1 million to 1.5 million, that may be the going rate for houses in 35 years time I guess.


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## Julia (7 October 2005)

Knobby22 said:
			
		

> All I can say is
> - capital gains tax free
> - security of tenure - what about having to move because the landlord.




Agreed, Knobby.

I read the same article as quoted from the Melbourne paper in the Sydney Morning Herald.  

The financial statistics may be correct though actually I'd take issue with some of the figures quoted if I wanted to be picky which I don't.

This just completely ignores the psychological and emotional satisfaction of having a home which is absolutely yours to do  with what you want, and which no landlord can place restrictions on or evict you.  That sense of security is worth a great deal.  I've rented in the past briefly, and would never voluntarily to back to doing so again.

Julia


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## tech/a (8 October 2005)

I would say that this is ANOTHER piece written by someone who hasnt taken advantage of Property.

*TWO of the most basic and most IMPORTANT aspects of Wealth Creation have been simply overlooked.*

*LEVERAGE and COMPOUNDING*

Neither of which can be utilised to anywhere near the same extent in Superannuation.

Owning or creating equity in your home will open the door to up to 10X leverage from a lender.(90% of home value).
This can be then Compounded infinately.

Our example case

"Tech/b" starts with $50,000 equity in home "A"
A lender allows him a 20% deposit on a home of $250,000.
"Tech/b's timing---being a lucky guy or savvy investor has him see a return of 15% on both his house and IP (Investment Property) over 2 yrs.
If his house was also worth $250,000 then thats $37,500/ year / property.
So "Tech/b" buys 2 more at $325,000 each.
Over the next 2 yrs Prices increase another 15% on all 4 houses.
Thats $37,500 each on 1 & 2 and $48750 on each of 3 & 4.
So "Tech/b" buys another 4 IP's at around $350,000 each.(Couple of Townhouses and a few commercial properties)
Over the next 4 yrs all 8 properties rise around 30% in total so thats 
around $700,000.

"Tech/b" then buys one of his IP comercial properties and places it completely in his Self Managed Super fund gaining a $300,000 tax deduction which he uses over 2 yrs 30/6 and 1/7 of year x.
He then sells properties with least equity and freeholds properties with Most equity--for passive income.

Thus releasing plenty that can then be used for other levergaged opportunities.

Remember our example started with $50K in equity,I'll leave it to you to work out the % / Year returns our example made on his pultry $50k.

*The statement above is simply linear thinking.

There is NO creativity,simply blurb that the masses nod knowingly and sit back with a stubby and mutter "Damned right---told you its better to rent even the experts agree!!"*

*Well I'll bet you that the self same "EXPERT" is right there in the RAT RACE struggling to create enough for retirement*

THINK PEOPLE its not that HARD---get out of the crowd and be a station owner not a sheep.


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## krisbarry (8 October 2005)

I guess it comes down to the individual, do they want many properties, to produce income or just the one house to call a home.


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## tech/a (8 October 2005)

Fleeta said:
			
		

> Renting a home and investing the rest of your money in superannuation makes better financial sense than pursuing the great Australian dream, an industry analyst says.
> 
> IBISWorld chairman Phillip Ruthven said that over time, people had been "hoodwinked" into believing that buying a home was the best investment they could make, when this was not true.




Hahaha.
Actually being IBIS World Chairman Phillip probably isnt struggling all that much!! hahaha that cracks me up.

*Clearly this piece is on wealth creation not singular home ownership.*

Anyway I think his view is one from the stand point of the "average" home buyer/Blue collar worker.I'm suggesting that people should aim to be a Phillip rather than a face in the crowd that he is speaking to.

I wonder what his view would be talking with owners of multiple homes?

MR and MRS Average are held back and always will be by *FEAR*
This article would be very comforting and as such limiting and in my view detrimental.

Show me one achiever who hasnt seperated themselves from crowd mentality!

Rather than 'hoodwinked" home owners havent been educated in how to best use their homes to their longterm financial advantage.
Having $1000s locked up in equity doing absolutely nothing not even earning interest is just plain CRAZZZZY.
But hey it sure is comfortable.


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## krisbarry (8 October 2005)

This person may have written this due to todays current housing market and affordablility levels and future trends.

Also have to factor in up-coming generations with so much more wealth tied up in super than in any other area.  All you have to do with super is add money to it and minus the taxation and admin fees, its pretty easy money.

I guess there are so many variables to weigh up.  What was best for past generations may not be as good as newer options for future generations.

Who knows.

I have heard of people using their matured super funds to pay out the remainder of their home loans and using the rest to retire.

I think future generations may need to look elsewhere to create some financial freedom other than housing, and super is a great way of doing just that.


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## krisbarry (8 October 2005)

Here is some more facts and figures to mung over...

Housing prices down: first time since 2000

By LOUISE TRECCASI

08oct05

THE bubble has finally burst. Adelaide's housing market has recorded its first fall in house prices in five years.

A 1.09 per cent fall in the September quarter ends the run of 19 consecutive quarters in Adelaide in which prices had grown or remained constant. 

The last time house prices fell was in the September 2000 quarter. 

State Government figures released to The Advertiser show the Adelaide median house price fell from $275,000 to $272,000 in the September quarter. For the year, prices grew 3.82 per cent. 

The Real Estate Institute of SA said the latest figures were "nothing to be alarmed about". 

"I am not distressed by this at all," president Robin Turner said. "The market is getting some normality back and there is more buyers' resistance. 

"We don't want to drive homeowners out of the market with never-ending increases in prices. 

"We are coming off an incredible high which has been sustained for five years and this is a very small change in value and a very soft landing." 

Metropolitan sales also declined, falling from 4783 in the June quarter to 4412 in the September quarter. 

Across the state, house prices fell by 1.96 per cent in the quarter, but rose 5.04 per cent over 12 months. 

Regional SA outperformed the city, with house prices rising 1.11 per cent in the quarter and climbing 5.33 per cent during the year. 

Other highlights show: 

ADELAIDE metropolitan unit prices grew 2.07 per cent in the quarter, with the median at $209,250. For the year, prices rose 10.13 per cent. 

PRICES for city apartments fell 9.09 per cent in the quarter and by 1.96 per cent in the past 12 months. 

STANDOUT suburbs with strong annual growth were Willunga (37.76 per cent), McLaren Vale (32.61 per cent), Norwood (29.52 per cent) and Highbury (28.14 per cent). 

MAJOR regional performers in the quarter were Whyalla (up 18.97 per cent), Port Pirie (9.62 per cent) and Murray Bridge (6.40 per cent). 

Housing Industry Association chief economist Simon Tennent said Adelaide was still bubbling along nicely. 

"Despite a slight fall, it is still relatively good news for Adelaide," he said. 

"While Sydney has experienced much larger falls, Adelaide is yet to suffer a major crash. It is the first fall in five years, but it is still a very modest easing in prices.' 

Source: 

http://www.theadvertiser.news.com.au/common/story_page/0,5936,16849826%5E2682,00.html


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## Smurf1976 (8 October 2005)

tech/a said:
			
		

> Show me one achiever who hasnt seperated themselves from crowd mentality!



Totally agreed there tech. Following the crowd generally isn't a good idea. 

But focusing on real estate as an investment has been going WITH the crowd in recent years, not against it. 

The idea that house prices will at worst plateau is also very much what the crowd is thinking. 

Time will tell.


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## krisbarry (8 October 2005)

Smurf1976 said:
			
		

> The idea that house prices will at worst plateau is also very much what the crowd is thinking.
> 
> Time will tell.




True, but you cannot argue with facts and figures that are constantly being released, showing plateauing and downward trends in many areas across Australia.


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## Smurf1976 (8 October 2005)

krisbarry said:
			
		

> True, but you cannot argue with facts and figures that are constantly being released, showing plateauing and downward trends in many areas across Australia.



Which suggests that, yet again, the crowd has it wrong.


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## krisbarry (8 October 2005)

Crowd or no crowd, the facts speak for themselves.

Guess its up to the individual to find that house in a location that is going up in price.  Harder now than in previous years, but not impossible.


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## Fleeta (9 October 2005)

Glad to see i've rekindled this debate. I must say I found the article surprising and i'm sure that the man quoted in it has many properties. I agree with your leverage comments tech, but remember you can also get 70% gearing on the share market too!

I was interested in your comments r.e. equity being trapped in your home and not being utilised. The 'crowd mentality' is pay off your house as soon as possible. People are often horrified when I tell people that I am making minimum repayments on my house (about 75% geared at this stage) and have about $50k tied up the market as well. They say things like 'you should put that money on the house' or 'how can you risk losing that money when you are paying 6.5% interest on the loan?'

My question is - how much equity should you have in a home before you 'go and gear up some more' by making other investments. I am thinking about buying another property once I got this loan down to a position where it could be 'positively geared'. My estimate of that is around 50% equity. What do you think of that kind of mentality? Not asking for advice, just thoughts - after all I probably wouldn't take advice through fear of being a sheep!


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## tech/a (9 October 2005)

Fleeta.

You've picked it.

The key to further investment is positive gearing --at very worst neutral.
Find a good accountant who is right up on Investment property tax issues and have him workout where that figure is.
I remember running this past mine and where I was sure I was negatively geared I was infact positive!

So in answer to your question its more about wether you can run the IP at no further cost to your situation.
I'd also allow a buffer of 2% on interest rates both on your own home and the IP.
While your returning more than $3500 on your $50K then why would you put it in your Mortgage?
The only thing perhaps worth considering is putting it in your mortgage---have a line of credit and return profits to the line of credit,drawing on only what you have in the market at anyone time.

Re 70% leverage in the market.
Yes I know.The only disadvantage is that I have to supply cash for the leverage.
Banks accept equity so the cash can remain where it is.

Now that I have equity and capacity to have considerable credit lines---increasing my trading capital is a priority---as I sell some off.That was just my way of doing what you are now doing.

Same but different.


----------



## It's Snake Pliskin (10 October 2005)

Positive gearing is far better for your wealth than negative gearing.


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## Happy (10 October 2005)

If not better, at least much safer, by giving you extra layer of protection, (like extra layeer of skin   ).


----------



## krisbarry (10 October 2005)

Some more facts and figures...

Home loans drop on slowdown

By staff writers with AAP

10oct05

THE number of loans for houses dropped 0.2 per cent in August as investors fled the property market, figures released today show.

The Australian Bureau of Statistics said the total number of dwelling financial commitments in August slipped to 54,709.

It was the fourth fall in the past five months. The total value of financial commitments dropped one per cent to $16.9 billion. 

This fall in the value of home loans was led by a 4.5 per cent drop in loans for investment housing, which fell to $5.1 billion.

Investors have fled the property market as housing prices fall in Australia's larger cities. 

The value of loans for owner-occupied housing rose 0.5 per cent to $11.8 billion.

There was a 0.7 per cent increase in loans for the construction of owner-occupied housing, a 5.1 per cent lift in the number of loans for new homes, but a 0.5 per cent drop in loans for established homes.

"These data suggest that the residential property sector continues to slow," RBC Capital Markets senior economist Michael Every said.

"Although we note that volatile number of new home purchase loans jumped 5.1 per cent, with petrol prices high and – crucially – investors finally seeing that the sector has already had its best days, we expect this overall downtrend to continue."

Across the states, there was falls in total home loans for houses in Victoria (down 2.2 per cent), New South Wales (1.1 per cent) and Tasmania (down 5.1 per cent).

However they were up in Western Australia (4.2 per cent), South Australia (3.6 per cent), the Northern Territory (7.3 per cent), the ACT (3.5 per cent) and Queensland (four per cent).

First home buyer commitments as a percentage of total commitments rose to 17.3 per cent in August 2005. 

The housing market has been slowing since the central bank raised interest rates in March to 5.50 per cent, their highest level in four years. The percentage of commitments at a fixed rate of interest (for at least two years) decreased for the fifth successive month, from 9.5 per cent in July to 9.1 per cent in August. 

Source:
http://www.theadvertiser.news.com.au/common/story_page/0,5936,16869791%5E1702,00.html


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## Happy (10 October 2005)

“THE number of loans for houses dropped 0.2 per cent in August as investors fled the property market”

0.2%  hardly a stampede


----------



## krisbarry (10 October 2005)

Yes I agree, media hype I guess.


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## Kauri (10 October 2005)

Pretty hard in the West too...    
   In our Sunday paper..


----------



## tech/a (10 October 2005)

The problem is producing the work.

We can sign any amount of work.
We simply dont have enough qualified and cant get qualified personel.
This is despite a continuous ad running in the Advertiser Wed-Sat for the last 2 months.
Plenty of unskilled---.


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## krisbarry (16 October 2005)

Was out on a fishing trip a few weeks ago and the topic of house prices was raised, not by me.  It was quite amazing the comments I heard...middle age people saying...."I feel so sorry for the younger generations", "how are they ever going to be able to afford a house", " There is no way I could re-buy back into the market at current prices" etc etc.

So it seems that older generations are now realizing that there are going to be real problems in the future, if something doesn't give, and give soon.


----------



## krisbarry (16 October 2005)

Here is some good news on the housing market within Adelaide, not for sellers but for buyers...

Bargains for homebuyers

16oct05

IT'S a buyers' market and the bargains are only getting better, real estate experts say.

While average Adelaide home prices fell 1 per cent last quarter, in some suburbs prices slipped by more than 20 per cent.

And the northern suburbs were worst hit by declining values.

"It's definitely a buyers' market now and the environment will get better as more properties come on the market this spring," Louis Christopher, spokesman for real estate research firm Home Price Guide, said.

"It's a case of supply and demand and there are more vendors than buyers, which means vendors have to review their price expectations." 

This was reflected by falling advertised prices, homes being on the market longer and auction clearance rates falling well below figures recorded during the real estate boom of 2000 to 2004, Mr Christopher said.

Last month there were at least 12 examples of houses advertised for as much 20 per cent less then when they were first put up for sale, Home Price Guide records show.

Latest sales figures from the Valuer-General also show big price falls across a number of suburbs, with Blakeview in the north hit hardest.

More than 50 homes were sold in Blakeview between April and September and the average price fell from $237,500 to $187,000, or 21 per cent.

Other northern suburbs with sales numbers which also fell significantly included Prospect (14 per cent), Hope Valley and Modbury Heights (10 per cent), Greenwith (9 per cent) and Golden Grove (6 per cent).

Anthony Toop, of Toop and Toop Real Estate, said the northern suburbs were experiencing a price correction.

"Those suburbs experienced a relatively large rise in the boom and now they are being realigned with their historic values," he said.

"For example, Golden Grove got up a head of steam during the boom times and these price falls are just a correction."

Mr Toop said vendors could no longer be greedy.

"No longer are vendors having prices reach their expectations," he said.

And with the onset of the spring selling season, vendors had to be realistic to achieve sales.

"Spring sales haven't hit the market yet, but if they flood in around November, as expected, it won't be good for those who are selling," Mr Toop said.

New Real Estate Industry Association of SA president Mark Sanderson said now was the time to buy.

But he said buyers should not delay their purchases.

"People shouldn't expect prices to fall," he said.

"Yes, there will be more stock on the market (in spring), but also more buyers."

Source:

http://www.theadvertiser.news.com.au/common/story_page/0,5936,16932043%5E2682,00.html


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## Smurf1976 (16 October 2005)

krisbarry said:
			
		

> New Real Estate Industry Association of SA president Mark Sanderson said now was the time to buy.
> 
> But he said buyers should not delay their purchases.
> 
> "People shouldn't expect prices to fall," he said.



Ah yes... People shouldn't expect prices to fall even though they already are.

A bit like you shouldn't expect a hot day when there's clear blue sky, a northerly wind and it's 30 degrees at 9AM.


----------



## krisbarry (16 October 2005)

Smurf1976 said:
			
		

> Ah yes... People shouldn't expect prices to fall even though they already are.
> 
> A bit like you shouldn't expect a hot day when there's clear blue sky, a northerly wind and it's 30 degrees at 9AM.




True, but equally their is a 50% chance that they could continue to fall.

My guess is 4 years of decline at approx. 5% per year.

That still gives existsing home owners an 80% profit margin for a 4 year investment, not bad, not bad at all.

Who would have thought that we would have had 4 years at 25% per year growth, now that is very concerning, and equally unsustainable.

What we need now is a slight decline in prices, a small interest rate rise and wage levels to catch up, b4 affordability levels will be restored, to a more sustainable level.

The above scenario is more likely.


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## RichKid (16 October 2005)

krisbarry said:
			
		

> New Real Estate Industry Association of SA president Mark Sanderson said now was the time to buy.
> 
> But he said buyers should not delay their purchases.
> 
> ...




There is always the perception of bias when someone in the industry tells you something which is in their interests, it normally follows that one should be skeptical about the assertion- for good reason.


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## tech/a (16 October 2005)

krisbarry said:
			
		

> True, but equally their is a 50% chance that they could continue to fall.
> 
> My guess is 4 years of decline at approx. 5% per year.
> 
> ...




Well again I dont think your right---certaintly here in SA.

Infact a 20% fall in any SA metro area over the next 4 yrs simply wont happen.
A 20% rise in 4 yrs in SOME areas is pretty well a certainty.

Seaford Meadows is the next real estate boom area here.
The south is set to grow once again with 5000 lots approved for developement. Better infrastructure and sought after lifestyle will see demand here grow.
Investors from the EAST will flood here as pricing will be way more attractive than in their states.

*The best times to have bought Realestate were--------
1998,1999,2000,2001,2002,2003,2004,2005.

The best times in the FUTURE are,
2005,2006,2007,2008,2009--------*

Start thinking like an investor and you'll see opportunity.


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## Bronte (16 October 2005)

Yes, well put tech/a
As previously posted; WA is also on a strong growth curve.
Battman has just returned from Europe and he says in comparison
"Australia real esate is still very very cheap."


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## krisbarry (16 October 2005)

Think you might have to be careful though.  Many thousands of jobs have been lost in the south of Adelaide, due to the closure of many large business' such as the Pt. Stanvac Oil Refinery, Mitsubishi Engine plant at Lonsdale etc etc.

High unemployment areas surround the location you have mentioned, which will keep a lid on house price increases.

High crime rates and welfare depedancy suburbs lie closely to the one you have mentioned.

Think you will find that the migration of population within Australia is heading North up to Queensland and not so much into SA.

I would bet my life on it that the location you are talking about will be one of the first to drop, following the National downward trend in the housing market.

Seaford Meadows, is a large distance from the CBD of Adelaide, and hence more prone to a fall in the housing market than many inner city suburbs.

Good luck down their mate, but I STRONGLY think your dreaming of getting a 20% return, in 4 years

Have you factored in a couple of interest rate rises in this 20%?

Have you also factored in an increase in unemployment levels?

Have you also factored in a high proportion of buyers in this location will be first home-buyers more prone to default/bankrupcy?

Have you also factored in the lack of employment in surrounding suburbs?

Have you also factored in the rising cost of fuel?

and so on and so forth...

PS....ARE YOU TRYING TO SPRUKE ON THIS SITE FOR YOUR UP-COMING DEVELOPMENTS?  Just curious?


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## wayneL (16 October 2005)

Bronte said:
			
		

> Yes, well put tech/a
> Battman has just returned from Europe and he says in comparison
> "Australia real esate is still very very cheap."




Sorry, but battman hasn't a clue what he's talking about.

One must look at wages/ price ratio. Oz is expensive.

Start thinking like a *value* investor and you'll see little opportunity. (You'll have to go looking)

We're in a Wave 5 blow off top folks.


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## Julia (16 October 2005)

Re:  "Buyers heading north into Queensland"

Yes, so true.  Qld's population has been growing exponentially.
However, in today's Sunday paper the Premier is suggesting an "arrival tax" may be imposed on new residents from other States.  His rationale for this (and I suspect it will receive substantial support from existing taxpayers) is that the influx of new residents is placing unsupportable demands on Qld's infrastructure (eg the water supply and the ailing health system) and it is only fair that if new residents want to come here they should make a contribution towards these increasing costs.

My suggestion to intending new residents to Queensland:  make sure you have good private health insurance!

Julia


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## tech/a (17 October 2005)

wayneL said:
			
		

> Sorry, but battman hasn't a clue what he's talking about.
> 
> One must look at wages/ price ratio. Oz is expensive.
> 
> ...





Wow there is so much here to reply to.So many veiws,so much diversity.

But I like Waynes for its short and simple message.

How very true that we all look at what we do and how we percieve and implement it differently.
We are now qualifying the way we look at property investment.
So I'll qualify my bent as *"Opportunity"* Investment.
In general terms I'll agree with Wayne.
In specific terms I'll stick to my research---as part of our business.

Like everything one should do in business OR investment--in my view-- the most important is to define DEMAND---no demand no opportunity.

A blow off is happening in some areas of realestate but those who take part in developement as a living simply move to another area of demand and opportunity.

This leads me to Kris's reply.

To the Have I considered points.
A resounding *YES * on all counts!!
These people need somewhere to live.Gone are the low price housing both in Singular dwellings and High density.
This is recognised by both the very large developers.
Land S.A (Gordon Pickard) and the S.A Govt---who are now looking at infrasructure for the new area.(Extending the Trainline---Schools---roads etc).Small guys like myself are doing the numbers on high density community title "Flat" style developements---.With the veiw of having units available for under $150K and or rent for under $200 this is what I and a few others see as the up and coming DEMAND.--- (For those in S.A Think Seaford Mews--Think Gawler with demand from workers in the shipping industry)

There is also the HUGE market of Baby boomers who have 2-3 Ip's and are selling these have Cash to burn and are builing a lifestyle---another opportunity and another market (For those in S.A think Ladybay---Port Adelaide Docks---Mawson Lakes.)

This also goes back to Wayne's wages price ratio.

As for spruking---what I do is small fry and my selection of marketing wouldnt be a stock forum.

Finally my posts on the optimistic side of property are seen by many as just that--optimistic.

What I'm trying to do is get people to look beyond the "accepted" thinking and think for themselves.

*Be the Shepherd not the Sheep.
Even better own the station.*

There is Opportunity EVERYWHERE but unless you know the 3 things to do it will *ALWAYS* pass you by.

(1) Recognise opportunity.
(2) Understand how to benifit from this opportunity---(DO THE NUMBERS) 
(3) Take advantage of the Opportunity--- (DO IT).


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## krisbarry (17 October 2005)

I can agree with you on the Port Adelaide front...This area has massive potential.

I think the best buys will be in the surrounding streets around the Port Adelaide area, and no so much the water front properties.   They are already way over-priced and way too hyped up.

I spend most of yesterday down at Port Adelaide, on the dolphin cruises etc.  Although much of it is just ugly industrial waste land their is much potential.

Some of this land may be re-zoned residential at some point.

Plenty of vacant old rundown storge sheds sitting on docks, that can be converted into warehouse appartments.

But I am more of a 'South Boy'  I grew up in the south of Adelaide, and have spent most of my time on that side of the city, until recently.  I find the views in the south much more appealing.  Closer to the beach and the hills.  The terrain is more rugged, unlike the north which flat, hot and full of ugly scrubby saltbush.


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## krisbarry (17 October 2005)

Julia said:
			
		

> Re:  "Buyers heading north into Queensland"
> 
> Yes, so true.  Qld's population has been growing exponentially.
> However, in today's Sunday paper the Premier is suggesting an "arrival tax" may be imposed on new residents from other States.  His rationale for this (and I suspect it will receive substantial support from existing taxpayers) is that the influx of new residents is placing unsupportable demands on Qld's infrastructure (eg the water supply and the ailing health system) and it is only fair that if new residents want to come here they should make a contribution towards these increasing costs.
> ...




Yes, my sister is a doctor in Queensland and she is forced to work 60-70 hour weeks, and is often refused holidays, due to the demand.  Queensland in general is heading for a crisis on all fronts if some measures of population control are not implemented, and soon.


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## Rafa (17 October 2005)

kris... my olds were on the dolphin cruise on Sunday... they did say they noticed some guy standing with a placard on the boat.. DOWN WITH HOUSE PRICES...!!!

HAHA... just jokes...  

Actually, i think the south is a beautiful area, but I do think you are right when you say areas too far out of the city will be the first to fall... not to mention the social problems in the area. 

As a general rule of within 8kms of town always seems to hold sway... and in Adelaides case, the east west corridor bounded by the hills and the water!

i am not surprised by the falls in some of the prices in the northern suburbs... people were asking for some rediculous prices there

As for queensland... i am not surpised at the population boom there, the weather is sensational... i really should have purchased there when i had the chance a couple of years ago.

Regardless, I think queensland is not alone in being under pressure due to population migration and lack of infrastructure... coastlines towns all over australia are being wrecked because of the 'sea-change'... i really think the people moving in there should be made to pay for the lifestyle they wish to enjoy!


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## It's Snake Pliskin (17 October 2005)

This thread has a lot of replies.

I would like to see even more discussion on stocks, particulary now we have a market that looks challenging.

I think everything has been said regarding property, without it getting to obsessive levels.

Snake


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## tech/a (17 October 2005)

My apologies----the content is not to your liking.
Could you direct me to any threads you have going on stocks which arent recieving enough replies?

33000 replies to the MUL thread---is that the sort of quality discussion you wish to see?

Oh and thanks for your input to the discussion.


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## Smurf1976 (17 October 2005)

krisbarry said:
			
		

> Think you might have to be careful though.  Many thousands of jobs have been lost in the south of Adelaide, due to the closure of many large business' such as the Pt. Stanvac Oil Refinery, Mitsubishi Engine plant at Lonsdale etc etc.



At last someone's mentioned an area that I have actually been to!   

The only things of an employment / business nature that I recall seeing there where the Mitsubishi plant, oil refinery and the Lonsdale power station. There were some other industrial type buildings but they looked more like warehouses than anything that's actually productive. With the first two of these closed (although I am moderately optimistic that the oil refinery may re open although it will need some upgrading to do so) and the power station being unmanned and normally idle anyway apart from maintenance and delivering the fuel I'm assuming that most people living in the area commute to work somewhere else? Or did I just miss seeing the business parts of the area? (Quite possible since I didn't venture too far from the train line.)

Is there much else down there? (Genuine question since I really don't know.) I do recall that there was plenty of land though. I mean, thousands and thousands of homes could be built in that area. Land isn't exactly scarce there. Whether or not it would make money is another matter.


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## Julia (17 October 2005)

Snake Pliskin said:
			
		

> This thread has a lot of replies.
> 
> I would like to see even more discussion on stocks, particulary now we have a market that looks challenging.
> 
> ...




As far as I'm aware, there's no restriction on your starting new threads on particular stocks.  A thread keeps going because of the interested response of forum members.  If there's no interest, that thread is replaced by one which has generated more interest.  A bit like the market, actually.

The fact that the property discussion has endured as long as it has and with such interesting  contrast of opinions by members whose points of view are perfectly  valid for their circumstances, is an indication of the general interest in the topic.

If it doesn't interest you, can't you just go on to the next topic, or start a new thread of your own?

I'm personally not interested these days in buying investment property, though I've found it rewarding in the past, but nevertheless have really enjoyed reading this thread with its persuasive arguments on all sides.

Julia


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## It's Snake Pliskin (17 October 2005)

Ok Julia I'll heed your advice.

Snake under the bridge.


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## The Once-ler (18 October 2005)

I agree Julia, fully.

Even though I'm not currently excited about property, I will one day, when the time is right.

Property is indirectly, and directly connected to the stockmarket. It has similar silly booms and busts, although at different times. I think it is possible to creat more wealth from property due to the ability to gear at a much higher level. It will be time to gear into property when the value is there. But  not now, not in the eastern states anyway.

Cheers.


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## tech/a (18 October 2005)

Look around--*ANYONE* you see who has financial security/substantial wealth
will have a foundation built on Property.

While I know a few (2 actually) -- who have substantial share portfolio's both have their basis in property.

To have the substantial share portfolio before the property foundation is very very rare.

Traders in Stock and Futures are for the most part only *dabbling* trading (And rarely investing) under 50K

*Serious traders * will have a sound equity base built on property (Investing and rarely trading over $250K)---lack of capital is the downfall of most---before they have a chance to understand *RISK and EXPECTANCY*--they run out of capital.


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## mit (18 October 2005)

Another reason, I think for the difference is CGT. With property you would never need to sell and can use equity to buy further properties. To get a decent return with shares there would be very few shares you would hold for more than a few years and so have to pay CGT. Also property also covers property developers who (until recently) made quite a large margin on the successful contracts.

Also I think that it is cash flow dependant. If for example you want to make 100k a year cash flow. For a property this is an average NET yield of 3.5% (5% gross) you would need $2.85m of property freehold. This would be a lot of people's definition of rich.

Compared to a long term system return an average of 25% a year. If you ran it at a margin of 60% $200k would enable you to trade $500k of shares. $200k capital would give you an average of cash flow of $100k (After loan costs). I don't think many would call you rich with $200k of capital yet this gives you your desired cash flow.

I know, I know there would be volatility in the returns so you would have say an extra $100k to cover drawdowns but $300k is still a far cry from $2.8m.

So a person can acheive a good cash flow without substantial wealth in shares. And it would be difficult to keep reinvesting the profits without at some


However, knowing the greed of the average person why there aren't people putting their hands up saying I am wealthy through shares (and aren't selling a course). I wonder if they just don't advertise themselves.

Look at property investment Mags. They are full of articles like "Here is John Smith who has a 5 million portfolio of property in five years and this is how he did it". "Ordinary millionaires" is full of property investors/developers and what they are worth. In property investment forums you can figure out pretty quickly what people are worth.

However, in share forums it is more process based and you never know whether one of the gurus has a $5k portfolio or a $5m portfolio.

MIT


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## Milk Man (18 October 2005)

Property is out of favour with me at the moment because too much % capital is reqd to positive gear and still have a good chance at capital growth IMO. Positive gearing is the key I reckon. Seems to be with rural land anyway. Get your cashflow past your interest and living expenses, improve the joint, whack on your price and wait. That way youre never backed into a corner. I never say never, but like.... never  .

Once I get a few mill (if property is still the same- not under water  ) then I may hedge with some "safe as houses". Til then its shares, forex and commodities (good enough hedge?). Unless foreign property is different...


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## Smurf1976 (18 October 2005)

mit said:
			
		

> Look at property investment Mags. They are full of articles like "Here is John Smith who has a 5 million portfolio of property in five years and this is how he did it". "Ordinary millionaires" is full of property investors/developers and what they are worth. In property investment forums you can figure out pretty quickly what people are worth.
> 
> However, in share forums it is more process based and you never know whether one of the gurus has a $5k portfolio or a $5m portfolio.
> MIT



The fundamental difference is quite simple here. A "property millionaire" as the magazines call them, is someone who has $1 million (or more) worth of property under their management.

Any other kind of millionaire is someone who actually has cash or assets which could be sold to raise the sum of $1 million or more in cash that is actually theirs. True, there are genuine millionaires who actually own $1 million or more worth of property. But these aren't the "property millionaires" in the magazines and that spruikers feature. 

Anyone can become a "property millionaire" just by borrowing $1 million and buying some properties. Simple. Instant "property millionaire". This is the exact basis of the "I'll make you a property millionaire" claims of spruikers etc. 
A share investor with $250,000 that is actually theirs has greater financial wealth than a typical heavily leveraged "property millionaire" with their $100K or so equity. 

As I said, there are genuine ones but a lot aren't. No wonder the authorities weren't too keen on those spruikers...


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## tech/a (18 October 2005)

mit said:
			
		

> Look at property investment Mags. They are full of articles like "Here is John Smith who has a 5 million portfolio of property in five years and this is how he did it". "Ordinary millionaires" is full of property investors/developers and what they are worth. In property investment forums you can figure out pretty quickly what people are worth.
> 
> However, in share forums it is more process based and you never know whether one of the gurus has a $5k portfolio or a $5m portfolio.
> 
> MIT




Mit your spot on.
I am however interested in how you can tell from a forum what an individual is worth without him telling you and you accepting what he tells you as truth.


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## Julia (18 October 2005)

Really interesting  responses here - all with valid reasoning.

If I were starting over again, I'd try always to keep a "foot in both camps", i.e. hold both property and shares of pretty much equal value.  That way, whichever is currently in favour, you feel OK about your investments.

I know that's bringing the whole question down to a very basic level, but ultimately for me what it's all about is that very simple feeling OK and not anxious about my choice of investments.

In the past I've engaged in some risky ventures, some of which have paid off handsomely and some of which have bombed and I've lost the lot.  So now, I choose to let go of the anxiety and have a spread over the markets so that not everything looks bad at any given time.  Then I sleep better!

Julia


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## mit (19 October 2005)

tech/a said:
			
		

> Mit your spot on.
> I am however interested in how you can tell from a forum what an individual is worth without him telling you and you accepting what he tells you as truth.




Truth is always an issue. In a share forum I might say that I hold Zinifex (which is down 2.4% atm  :swear: ) but I could hold any amount of the shares. If I then talked about my IP which is a free standing house in Double Bay (which I don't have  :swear: ) you would instantly have an idea of my minimum worth (or at least my minimum debt).

In property forums some people just come out an say that they have x properties worth a total of y or just by their comments you form an idea of the number of properties and the probable value and at least in the Sommerset forum they are social so you get independant verification. Although there are surprises. The naieve (sp?) sounding person suddenly reveals having 19 properties and the guru who doesn't have any.

Not that the value of the person should depend on the value of their portfolio but it is difficult to hide your wealth in a property portfolio.

MIT


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## krisbarry (24 October 2005)

More facts, figures and data out today...

Housing slowdown worsens

By Nicki Bourlioufas

24oct05

THE downturn in the housing construction sector may be worse than previously feared due to a glut of apartments, according to ANZ Bank.

Total dwelling construction permits declined in June, July and August 2005 for a cumulative fall of 18 per cent. The bulk of the fall was for multiple-unit developments, down 42 per cent, according to ANZ Bank. 

But even approvals to construct houses were down 10 per cent over the past two months, ANZ Bank said.

"Recent data on building construction permits are raising concerns that the bottom in this cycle may not yet have been reached," ANZ said in its outlook for the December 2005 quarter.

"The multi-unit sector is highly volatile from month to month, but a continuation of these recent trends would be of concern to the industry," ANZ Bank said. p> The slowdown in the housing sector has weighed on economic growth, which fell to a low of just under 2 per cent in late 2004 and early 2005. 

However, the ANZ Bank expects the housing construction sector to rebound in 2006 as demand for housing outstrips supply. The bank estimates the nation requires 163,000 new houses per year, but current supply stands at around 143,000. 

Rental vacancies have also fallen to their lowest level in since the late 1980s, which will ignite demand for housing from investors.

A booming mining sector is also supporting economic growth and strong demand for houses in mining states, particularly Western Australia. 

ANZ Bank estimates economic growth will rise to an annual pace of 3.5 per cent in 2006 and 3.75 per cent in 2007 due to rising commodity prices and the mining boom.

The housing market has slowed and house prices fallen in Australia's largest states as housing affordability has dived in recent years due to the sharp rise in house prices. 

The central bank in March raised interest rates to their highest level in four years, taking the official cash rate to 5.5 per cent, and standard variable lending rates to 7.3 per cent. That rates rise helped to depress demand for housing.

source: 

http://www.theadvertiser.news.com.au/common/story_page/0,5936,17014957%5E1702,00.html


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## krisbarry (24 October 2005)

Press release just out...

Rates to rise in 2006: ANZ

By Nicki Bourlioufas

24oct05

THE central bank will raise interest rates in 2006 to offset the boom to the economy from the mining sector and a rebound in housing, according to ANZ Bank.

Recent comments from the central bank suggest upside risks to inflation and interest rates, said Tony Pearson, head of Australian Economics with the bank.

The central bank sets interest rates to keep inflation between 2 and 3 per cent. Over the year to June 2005, inflation was 2.5 per cent.

Recent comments from The Reserve Bank of Australia's Deputy Governor Glenn Stevens suggested high oil prices would pressure inflation. 

"Mr Stevens noted that where there is a persistent trend for prices to rise quickly over a longish period, the case for ignoring that (in setting interest rates) is weak," said Mr Pearson. 

"This all sounds suspiciously like the RBA is building a case for another rate rise to further tone down domestic spending and demand for credit, and to offset the boost to the economy from the resources boom."

"We are maintaining our view that there will be no need to further lift rates until late in 2006, as the effects of a rebound in housing construction progressively flow through to boost domestic demand," said Mr Pearson.

The RBA last raised rates in early March to 5.50 per cent, which took official cash rates to their highest level in four years. 

Standard variable home lending rates are currently set around 7.3 per cent after lenders add a margin to the cash rate for profit. 

Economists are increasingly forecasting a rise in interest rates next year as higher petrol prices push up the prices of consumer goods. 

The release of producer price data today confirmed higher oil prices are pushing up prices.

Producer prices rose 1.5 per cent in the September quarter and jumped 3.4 per cent from a year earlier in a sign of growing inflationary pressures Australia faces.

The Australian Bureau of Statistics said during the September quarter 2005, the prices paid by manufacturers for their material inputs increased by 8.1 per cent and 9.3 per cent through the year.

Increases in the price of crude oil was one of the main contributors to the quarterly result. 

Source: 

http://www.theadvertiser.news.com.au/common/story_page/0,5936,17015097%5E1702,00.html


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## Kauri (24 October 2005)

Over here in the West they (the govt ) are in the process of cutting apprenticeships in the building trades to *2 years * to overcome the shortage of skilled workers which has/is causing a shortage of new housing.
  Then they will look at other trades i.e. resources, automotive, metals, and hospitality. And to think it took me *5 years* ....   :swear: 
  Pretty soon it will be quicker to complete a trade and be qualified to build a house than it will be to complete a traineeship and be competent to make a hamburger at McDonalds!!!!!


----------



## Smurf1976 (24 October 2005)

Kauri said:
			
		

> Over here in the West they (the govt ) are in the process of cutting apprenticeships in the building trades to *2 years * to overcome the shortage of skilled workers which has/is causing a shortage of new housing.
> Then they will look at other trades i.e. resources, automotive, metals, and hospitality. And to think it took me *5 years* ....   :swear:
> Pretty soon it will be quicker to complete a trade and be qualified to build a house than it will be to complete a traineeship and be competent to make a hamburger at McDonalds!!!!!



The best tradespeople (I would say "tradesmen" but must be PC...   ) IMO are those that have done proper apprenticeships and preferably worked in a situation where a degree of improvisation is required from time to time.

Using the electrical trades as an example, anyone can swap cards or replace assemblies. But outside of Sydney / Melbourne / Brisbane you can't necessarily get whatever part is required "off the shelf". It has to be ordered and in most cases that means a delay of at least 24 hours if not a few days.

But bosses and customers in rural areas want the machine fixed NOW just as they do in Sydney. The technician in Sydney just gets the new part and swaps it whereas in a regional area it's far more likely that you'll actually have to fix it because of the lack of immediate parts availability. This leads to a far greater range of problem solving skills and an ability to make things happen.

No doubt there are exceptions and I certainly don't mean to offend anyone. It's just something that I and others I know have observed. I have personally spent 24 hours straight fault finding and repairing equipment which I know for a fact would simply have been swapped for complete replacement ($10,000) units (there was more than one faulty unit hence the time taken) in Melbourne or Sydney. Indeed faulty units requiring only simple repairs are virtually given away in Sydney because "we only swap".  

That's not to say that faulty machines shouldn't be swapped. It often does make economic sense when lost production etc. is considered. But there is a huge benefit in being _able_ to fix things if necessary IMO. Something that's unlikely to be helped by shorter apprenticeships.


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## wavepicker (24 October 2005)

krisbarry said:
			
		

> House prices to stagnate for 'years'
> By Nicki Bourlioufas
> 
> 19sep05
> ...





Just hope they don't go the same way that they did in Japan 15 ago(median price down from an average of 1.3 million to 375,000 in 8 years) Nobody really knows what tommorow holds, but history has proven that every financial mania in history has ended up in bust after over extending itself to manic proportions. Borrowing hugely for property investment appears to have become fashionable. It's almost as if the average guy seems to be thinking about one thing , and that is where prices are going. Which means he is following everyone else in thinking that property prices in this country have only one direction. Call it greed, fear of "missing out", or even others saying that "this is your last chance to be able to afford a home".

Personally I think this is their last chance to sell


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## Milk Man (24 October 2005)

Just in reply to Smurf on regional tradesmen. (manus?(man)= hand in Latin therefore it is politically correct  ) Every single tradesman I have hired out here is crap. Thats putting it nicely. They care less because they know damn well that theyre the only tradesman you can get for miles.

To give an example, I fixed in a couple of hours what the plumber couldnt in half a day (priming a pressure pump line). The local mechanic commented that my nephews car had a broken water pump; it has straight cut timing gears (any mechanic in Brizzy could pick this easily). The electrician left a pulsator box with *live wiring* hanging off the wall.

And I thought not turning up, like some of the city ones do, was bad enough. Its not so much being resourceful; its doing a half a.... job in my town. You could train a monkey to do what some of them do and it would do a better job.


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## krisbarry (24 October 2005)

Cathy Jane, the lively Adelaide property guru, featured on Today Tonight.  Looks like shes in the poo now!

Over inflating house prices and promising returns to investors of 30% LOL, what a joke this lady is going down, down with many other property developers.

The Adelaide market is cooling and she going under!  Hence the reason she is leaving the property market and heading up to Queensland.  Funny how that happens.  Stay and promote while the going is good, then nick off when its going bad.

Kinda glad these stories appear...was waiting for the day these property spruikers getting on ACA and TT night after night, would go under.  It was cruel that they continued to get air-time spruiking up the market and telling others how to make squillions.  Its not rocket science to make money when the market is going well. BUT what happens now that she has sucked them all in and the market drops.

Dental Assistant to property guru, hmmm!


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## Smurf1976 (24 October 2005)

Milk Man said:
			
		

> Just in reply to Smurf on regional tradesmen. (manus?(man)= hand in Latin therefore it is politically correct  ) Every single tradesman I have hired out here is crap. Thats putting it nicely. They care less because they know damn well that theyre the only tradesman you can get for miles.
> 
> To give an example, I fixed in a couple of hours what the plumber couldnt in half a day (priming a pressure pump line). The local mechanic commented that my nephews car had a broken water pump; it has straight cut timing gears (any mechanic in Brizzy could pick this easily). The electrician left a pulsator box with *live wiring* hanging off the wall.
> 
> And I thought not turning up, like some of the city ones do, was bad enough. Its not so much being resourceful; its doing a half a.... job in my town. You could train a monkey to do what some of them do and it would do a better job.



Interesting comments there Milk Man. I think there's two kinds of regional tradesmen from what you're saying!   

My own experiences relate to having to maintain plant and equipment belonging to the employer rather than doing work for the public. That is, employers with enough work to do that they employ their own tradesmen and do everything "in house". In that context there isn't really an issue with not turning up etc. since you would simply get the sack. The lack of external technical support for specialised work does require a higher degree of resourcefulness IMO. And the good thing about this is that I get to have a go at everything from media relations to financial costings as well as the technical stuff.   

Point taken that it's different when you are in a regional area and have to use the services of a contractor. If they don't have competition then I can follow the point that they might not be too good...


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## amohonour (31 October 2005)

I am about to move to a new area and as we looked around at the price of houses and then worked things out it was a lot cheaper to build in a new area and not only have a new home but you also get new up to date services in the ground. In saying that it is a bit daunting as you hear so many stories about dodgey builders and it does put you off a bit. Has any one else built and what are your experiences? Is it all doom and gloom or not? Can you recommend a builder in south aus if allowed.


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## krisbarry (31 October 2005)

New home sales in doldrums

By Nicki Bourlioufas
31oct05

SALES of new homes and units plummeted 16 per cent in September with no sight of a recovery in the housing market, figures released today show.

The sale of new houses fell by 20 per cent while the sale of multi-units rose 9.4 per cent over the month, the Housing Industry Association (HIA) said.

Sales of new houses and units totalled 6030, less than than half their level two years ago before the property market had started to cool with higher interest rates.

Australia's peak building industry body said there was no sight of recovery in housing demand.

"This period of bumping along the bottom is expected to continue for another year before the affordability and household debt equations start to improve, kick-starting demand," said HIA's chief economist, Mr Simon Tennent. 

"With rates on hold and incomes rising, this market could best be described as a stand-off between consumers who want new housing but are taking a 'wait-and-see' approach, versus an industry that is struggling to deliver an affordable product and remain financially viable," Mr Tennent said.

The good news for the housing industry was that rental markets remained very tight and weekly rents were on the rise, which was keeping a floor under house prices, Mr Tennent said.

Indeed, house prices were not likely to fall with demand for housing building up the longer people delayed home purchases, Mr Tennent said.

"You'd need interest rates to rise by another 1 per cent over a short time to see house prices fall," he said.

HIA's New Home Sales Survey is compiled from a sample of the largest 100 residential builders in Australia and is the most leading indicator on new housing activity. 

Mr Tennent said it was pleasing to see sales in New South Wales (NSW) jumping up for the second consecutive month by 9 per cent as many large volume builders in Sydney reported modest improvements in enquiries and display home traffic.

"Elsewhere however, the falls were largely a correction from the good month in August, particularly in Western Australia (WA)," Mr Tennent said.

Sales falls were recorded in WA, down 24 per cent, followed by Victoria, down 11 per cent, South Australia, down 10 per cent and Queensland, down 1 per cent.

Source:

http://www.theadvertiser.news.com.au/common/story_page/0,5936,17090274%5E1702,00.html


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## krisbarry (31 October 2005)

Rates to rise globally

By Nicki Bourlioufas and AAP
31oct05
PRICES of goods and services eased in October but with inflation sitting above the central bank's tolerance band, a rise in interest rates is likely, an analyst forecast today.

The TD Securities-Melbourne Institute experimental monthly inflation gauge showed prices of consumer goods and services fell by 0.1 per cent in October following a rise of 0.6 per cent in September. 

The gauge is now 3.3 per cent higher than a year earlier. As measured by the gauge, the annual headline inflation rate has sat above the Reserve Bank of Australia's (RBA) 2 to 3 per cent target band for the past four months. 

"The information on core inflation from the TD-MI data suggests that an interest rate rise is more likely than not in the months ahead as inflation pressures build," said TD Securities chief strategist Stephen Koukoulas. 

And according to Citigroup, inflation risks are rising globally, which will push up interest rates in foreign markets. 

Contributing most to the overall fall in the inflation gauge in October were falls in the cost of automotive fuel and fruit and vegetables. Increases in house purchase, alcoholic and non-alcoholic drinks partially offset the declines. 

Excluding volatile items, the core inflation measure rose by 0.3 per cent in September to be 2.9 per cent higher than a year earlier. 

The central bank sets interest rates to keep inflation between 2 and 3 per cent. Over the year to June 2005, inflation was 2.5 per cent. 

The central bank will meet tomorrow to set the level of interest rates for November. While analysts do not expect a rate rise this month, several economists are forecasting a rate rise next year as higher petrol prices push up prices of consumer goods. 

The RBA last raised rates in early March to 5.50 per cent, which took official cash rates to their highest level in four years. 

Standard variable home lending rates are currently set around 7.3 per cent after lenders add a margin to the cash rate for profit. But rates could rise above 7.5 per cent if the central bank raises rates by 25 basis points next year, as some analysts expect. 

Global rates to rise

According to a Citigroup research note released today, inflation risks are rising broadly, which will push up interest rates around the globe.

"Inflation risks have risen in the wake of higher energy prices, triggering tougher central bank rhetoric and lifting interest rates," the note said. 

"Global growth likely will ease as higher energy costs and interest rates restrain demand, helping to cap inflation risks and rates."

In the US, the Federal Open Market Committee (FOMC) is widely expected to raise interest rates from 3.75 to 4.0 per cent this week.

"The backdrop of strong (US) demand, still accommodative financial conditions and continued hints of rising inflation concerns points to additional rate hikes beyond next week's action," Citigroup said

Source:  

http://www.theadvertiser.news.com.au/common/story_page/0,5936,17089625%5E1702,00.html


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## amohonour (31 October 2005)

They may well say that an interest rate rise will bring prices down but i am trying to sell my house atm which 12 months ago would have got easily 240000 plus but now the buyers just arent there and we have been struggling at under 220000, so i think the proof is in the pudding. I was talking to an agent i know and he said this morning that in adelaide the market is stirring again but it is because the prices have dropped.


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## tech/a (31 October 2005)

Well I sold one in Seaford for the asking price--$235K
The first offer was $210---second $215 both we ignored until the agent said counter offer at what we would accept.
$235K and settled in 3 weeks--they both worked in a bank.

Dont think prices have tappered off that much


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## Smurf1976 (31 October 2005)

amohonour said:
			
		

> They may well say that an interest rate rise will bring prices down but i am trying to sell my house atm which 12 months ago would have got easily 240000 plus but now the buyers just arent there and we have been struggling at under 220000, so i think the proof is in the pudding. I was talking to an agent i know and he said this morning that in adelaide the market is stirring again but it is because the prices have dropped.



It's not just Adelaide where house prices aren't exactly booming. 

What I have seen in Hobart over the past 3 or so years was a volume surge in Autumn / September 2003 followed by a virtual collapse in volume. Even the real estate agents readily admit to the slump in volumes.

Then the sales volume picked up during 2005 until quite recently. But now we have something new. In short, it seems that many of those who have bought a house haven't sold the one they were living in before. They are just empty with a "for sale" sign out the front. Not that anyone seems in a hurry to buy.

The Real Estate Guide is now a full 72 pages. Lots of houses for sale in a city with only 200,000 people (greater Hobart area). But one thing stands out. And that is the increasing number of "Price Reduced" ads. That says it all IMO.

As for the empty properties, presumably they will have to sell sometime. How many people can forever pay two mortgages, insurance etc? But it really doesn't seem that they can sell at present asking prices. If they could then surely they would be selling now! So the price cuts are on the way IMO.

Not that long ago I was still unconvinced about property prices. But now I see the falling asking prices and the growing stock of empty homes. Meanwhile, builders keep on building even though they already have houses they have been unable to sell. Better value prices are starting to appear in increasing number. I just don't see a bullish case for property prices in Hobart over the next couple of years. I could of course be wrong but during the course of 2005 the evidence has steadily mounted in favour of the bears IMO whilst the bulls are reduced to making statements which avoid mentioning house prices or which quote the price of sold properties only without taking into account the value of those withdrawn due to only receiving low offers.


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## amohonour (31 October 2005)

Thanks for that tech I do live in the country could be part of the reason but am looking to shift down your way back to Aldinga. Love the beaches down there. Thanks again for your input.


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## krisbarry (31 October 2005)

tech/a said:
			
		

> Well I sold one in Seaford for the asking price--$235K
> The first offer was $210---second $215 both we ignored until the agent said counter offer at what we would accept.
> $235K and settled in 3 weeks--they both worked in a bank.
> 
> Dont think prices have tappered off that much




Would be interesting to see if you could post this table again in 6 months time, then again in another 6 months.  Will the prices and the returns be the same, higher or lower.


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## tech/a (31 October 2005)

I can do that Kris I get it every week.

There has been a drop I've noticed since the original discussion started.
I remember it being 8% for the South and 10% for Adelaide as a whole.
Its coming off but not to the point of panick.

Even so a rate rise would knock it and 2 would belt it.

I still say now is the best time to get the best price if selling.
As for buying I still think your 4 yr prediction is very optimistic.
In 4 yrs time I doubt you'll be any or much better OR worse off.

I think any drop(Benifit)will be eaten up by rate rises.


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## amohonour (1 November 2005)

The thought amongst the few real estate people that are friends of mine is that they are seeing a price drop not huge but the signs are there that it will go a bit lower soon. Must say though that a couple are from the country and the others are at Aldinga where at the moment there is a bit of a building boom on. Land around $80,0000 to $100,000 in the new areas then put a four bedroom house and it is around the same price if not cheaper than an existing home bit more work but you end up with a new home.


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## Smurf1976 (5 November 2005)

It seems that lenders are now turning bearish on the market. Indeed it seems that at least one expects a pretty big slump down 10% next year and quite some time after that to reach the bottom.

http://www.dailytelegraph.news.com.au/story/0,20281,17142605-5001021,00.html


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## markrmau (5 November 2005)

tech/a said:
			
		

> I think any drop(Benifit)will be eaten up by rate rises.



You agree with the efficient market hypothesis?


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## tech/a (6 November 2005)

Yes and no.
It skews in both directons all the time.
But generally returns to the mean.
When it will skew and how long it will remain at the mean are ofcourse the burning questions.


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## chansw (6 November 2005)

I just watched the Sunday on Channel 9. It started at 6:00am instead of 9:00am (Perth time) due to the cricket game today.  The cover story of this week is "Safe as houses". 

"Get out of the real estate market now. That's the blunt warning to Australians with investment properties from the country's most respected lender, "Aussie John" Symond of Aussie Home Loans"

If you miss out, here is the web site that you can read the story. The transcript of the story is not there yet when I post this message.

http://sunday.ninemsn.com.au/sunday/cover_stories/article_1904.asp


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## RichKid (6 November 2005)

tech/a said:
			
		

> Its coming off but not to the point of panick.
> 
> Even so a rate rise would knock it and 2 would belt it.
> 
> ...




Looks like Aussie John agrees with you going by the Sunday programme on Ch9 today, except he thinks it's going to get worse not stay the same. He says people should cut their losses as it's going to get worse. Particular warnings for high-density apartment dwellers, I feel sorry for those people who thought they'd retire in those units (or off its capital gain).

Also heard some guy on the same programme (Australian Property Monitors?) say that even one rise could put us into some big trouble, especially in Sydney, otherwise it'll just stagnate for years. They also said that most people in their 30's may not recall the hard times of the past. They also showed clips of those high interest rates of the 80's and the protest rallies and meetings- seems like another planet.


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## chansw (6 November 2005)

RichKid said:
			
		

> Looks like Aussie John agrees with you going by the Sunday programme on Ch9 today, except he thinks it's going to get worse not stay the same. He says people should cut their losses as it's going to get worse. Particular warnings for high-density apartment dwellers, I feel sorry for those people who thought they'd retire in those units (or off its capital gain).
> 
> Also heard some guy on the same programme (Australian Property Monitors?) say that even one rise could put us into some big trouble, especially in Sydney, otherwise it'll just stagnate for years. They also said that most people in their 30's may not recall the hard times of the past. They also showed clips of those high interest rates of the 80's and the protest rallies and meetings- seems like another planet.



Richkid, your are right, that is Australian Property Monitors. The guy mentioned 0.25 percent rise on interest rate could start to create some trouble. Perth and Darwin are the only two markets doing well at the moment. He also mentioned 1 percent would even get Darwin market (he did not mention Perth but I think that can hurt Perth, too) into trouble as well.

I heard from a real estate agent here in Perth said a lot of Eastern States investors come to Perth and that is one of the main reasons pushing the house prices up here. The areas that I am looking to buy a house have been so quiet in the last 2 months. Not many new houses are put on the market for sale. He mentioned they usually have 50 properties in stock at this time but only 8 properties this year when I talked to him about 3 weeks ago. That real estate agent mentioned to me a few smaller real estate companies around his have closed the business already.


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## chicken (6 November 2005)

chansw said:
			
		

> Richkid, your are right, that is Australian Property Monitors. The guy mentioned 0.25 percent rise on interest rate could start to create some trouble. Perth and Darwin are the only two markets doing well at the moment. He also mentioned 1 percent would even get Darwin market (he did not mention Perth but I think that can hurt Perth, too) into trouble as well.
> 
> I heard from a real estate agent here in Perth said a lot of Eastern States investors come to Perth and that is one of the main reasons pushing the house prices up here. The areas that I am looking to buy a house have been so quiet in the last 2 months. Not many new houses are put on the market for sale. He mentioned they usually have 50 properties in stock at this time but only 8 properties this year when I talked to him about 3 weeks ago. That real estate agent mentioned to me a few smaller real estate companies around his have closed the business already.



Do what the KIWIS did increase immigration from china and your housing market is fixed..Auckland is going through the roof in prices...Housing is an important part of the total economy...and take of your capital gains tax no one gets any benefits through it..let the market decide where the price should be and everyone wins....just a thought ....I did real estate as a job


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## krisbarry (6 November 2005)

Yes I caught the Sunday program this arvo, recorded it as I was at work.  very interesting.  I think if you live in Sydney and have bought in the last couple of years and have not sold, then your chances are very limited.

As mentioned Perth and Darwin are booming, but a a couple of rate rises would kill these markets off too.  So I think now is the time to sell those investment properties.

And yes I was pretty much correct in saying that 4 years time will be a better time to enter the market as a first home buyer.  There will be plenty of choice, at a much cheaper price within a few short years, as much as 10-25% less.

Yes My eyes light up with glee, when all the doom-and-gloom experts come out of the woodworks and tell us the housing market is stuffed, no matter which way you look at it, for the next 4-5 years!

Thank god, my time is coming closer and closer now!  Too many have had it too good, for too long and have tripped up in their own little mess!


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## RichKid (6 November 2005)

chicken said:
			
		

> ....I did real estate as a job




I will not doubt that for one moment - were you an auctioneer? just having some fun chicken, hope you don't mind! 

Funny thing is that the first thing I saw on the SMH homepage this morning was a headline saying banks think prices will not fall (or something to that effect)- why wouldn't you trust em? On the other hand Aussie John appears to have the average home owner's ear and comes across as far more empathetic, especially as he doesn't have a vested interest in making his claims, apart from building trust with potential customers.


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## tech/a (6 November 2005)

I'm actually wallowing in my "Mess" a 150% gain on 12 properties in 8 yrs is my kinda mess-----.

Dont place everyone in the same toilet---there are only a few in comparison to the many Kris.

Back to Kris's glee in dropping housing prices and increasing interest rates---as its been agreed one will go hand in hand with the other.

Lets take a $300,000 property that you can get a loan for 6.8% over 30 yrs.
*Calc (1)*

30 yrs at 6.8% = $612,000
Plus Property   = $912,000

Lets say Kris gets his 20% reduction in price to $260000 and interest rises 2 points to 8.8%
*Calc (2)*

30 yrs at 8.8% = $686,000
Plus Property   = $946,400

Now I know the calcs arent 100% accurate for principal and interest but they are indicative of the flaw in Kris's arguement.

The best time to buy in my veiw is NOW and in 2,5,10 yrs time the best time will have been NOW 6/11/05
In any year ---any year ago was the best time to buy.And at that time a year before that year would have been even better.

Dont expect spectacular rises as we have seen but played right you wont be worse off buying now.Sure you dont over stretch yourself or buy over priced property---again seek advice.

If you can afford to buy and pay for a property (Seek financial advice) then there will be no better time.
There *have been * better times and in the future there *will have been * better times but *NOW there is no better time*.


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## Smurf1976 (6 November 2005)

In recent years the general public has added terms such as "texting", "internet", "geopolitical" and so on to commonly used words and phrases. The next candidate for a new term in common usage would appear to be "negative equity".


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## tech/a (6 November 2005)

Smurf

Kids have got that now with Card debt. I know of one with 40K debt.

All I'm saying is think outside the square ALWAYS.
Dont be drawn into every argument as gospel. Look at ways to turn adversity into opportunity.


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## krisbarry (6 November 2005)

tech/a said:
			
		

> I'm actually wallowing in my "Mess" a 150% gain on 12 properties in 8 yrs is my kinda mess-----.
> 
> Dont place everyone in the same toilet---there are only a few in comparison to the many Kris.
> 
> ...





NO..NO....NO, the best time buy is *not now*, the best time to sell is now, as discussed, wait till the market becomes flooded with houses, that is when to buy.  Plenty more choice and more bargains to be gained.  I will be the biggest ******** out to buy in this current market with all indicators pointing down!


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## Smurf1976 (6 November 2005)

Whether or not you are better / worse off depends heavily on how much deposit you have.

If you have a 5% deposit as many do then interest rate rises could well offset house price falls. You might have even been better to buy at the peak.

But if you have a 50% deposit then if interest rates rise 2% and house prices fall 20% then the amount you need to borrow has been reduced by 40% and you are clearly much better off.

It also needs to be considered that with most people choosing to not fix their interest rate those who bought at the peak are somewhat vulnerable if interest rates rise. 

It all depends on your specific circumstances. There are some properties which will rise in value whilst others fall.


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## TjamesX (7 November 2005)

These comments will definitly affect the market. On one property forum there was a poster who was holding out on an offer they recieved to try and get a bit more - they took the offer immediatly after the John Symond comments. This was not a mug investor, but they believe the influnece of the comments made will be reasonable;



> JOHN SYMOND: If I'm an investor, I would be selling as soon as I can. If I am a home buyer and I have got to sell the house and buy another house, it evens itself out. If I am looking for a home and I don't have a house to sell, if I could find a property that ticked all the boxes for my own home, for me and my family, I would buy. I think we will see more and more forced sales, mortgagee signs, mortgagee sale signs coming up in the market. That is why I am saying no rush to buy, people, no rush. We will have a wider selection of properties to choose from at probably a lower price. So why would you rush in?




original transcript of the interview

http://sunday.ninemsn.com.au/sunday/cover_stories/transcript_1904.asp

I also found these comments interesting;



> BERNARD SALT: Because between 1950 and 2000 our population went from 8 million to 19 million. Over the next 25 years you will not have that level of population growth. Therefore, the demand for suburban property will diminish and you won't have that price tension. The baby boomer children is Generation Y, that are now between the ages of 14 and 30. This generation has really never experienced anything other than rising gentle prosperity.


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## chicken (7 November 2005)

TjamesX said:
			
		

> These comments will definitly affect the market. On one property forum there was a poster who was holding out on an offer they recieved to try and get a bit more - they took the offer immediatly after the John Symond comments. This was not a mug investor, but they believe the influnece of the comments made will be reasonable;
> 
> 
> 
> ...



what you just posted...the population not growing...Australia will have to get used to it to take a larger proportion of Immigrants than they are used to Queensland gets 200 people per day so John Symonds does NOT know the answers and Scaremongering is also not the answer I said that supply and demand is the answer and....a Builder works for $50 an hour and try and get a builder...not easy as they are all bussy..so house prices will not rise as quick as the last 3 years but rise they will..buy some building material and it all costs......so we all have to pay as far as people giving the houses away....well we can all dream.....at least that is for free....houses will just cost money....even caravans cost money....in Redcliffe where I life....all the land is now subdivided and to buy a section...from $175000.....to $1000000 or you buy an old house and start again...still costs over $200000 so prices dont fall that much and the market will rise further..why...its called inflation....and its just a merry go round what TECH/a said is right NOW is the time to buy..tomorrow its dearer........


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## happytrader (7 November 2005)

Lets get real here!

A high divorce rate, foreclosures, public trustee auctions. As long these events occur you will always find a bargain. Does a tiger change its stripes? Might take a bit of hunting down and some patience but they are there.

Cheers
Happytrader


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## charttv (7 November 2005)

I've seen and heard alot of scaremongering regarding the fact that the baby boomers won't be replaced in the workforce because of the sheer number of them. How often do these scaremongers come up with statistics indicating that they are replaced by a far more efficient workforce thanks to the wonders of technology. 

There are supposedly four baby boomers for each Gen Xer, but is it not possible that thanks to modern management techniques and technology that each Gen Xer is just as productive as four baby boomers? Take banking for example, instead of having rows and rows of tellers waiting for your business, branches nowadays are permanently understaffed, forcing everyone onto the internet and net banking. The banks are processing more and more transactions with less and less staff! 

Also, what about immigration? If the ageing of our population becomes such a huge problem I wouldn't be too surprised to see a massive immigration program similar to the immigration wave we experienced post World War II.  I'm sure there are millions of foreign highly skilled and educated workers who would love to take up the slack in the economy which would help to prop up any shortfalls in the welfare system and potentially lead to further economic prosperity. 

My two cents


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## chansw (7 November 2005)

happytrader said:
			
		

> Lets get real here!
> 
> A high divorce rate, foreclosures, public trustee auctions. As long these events occur you will always find a bargain. Does a tiger change its stripes? Might take a bit of hunting down and some patience but they are there.
> 
> ...



I agree that, Happytrader. Sometimes, peoples situation might force them to sell asap especially for those arranging divorce. Patience is needed for grabbing a bargain.


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## krisbarry (7 November 2005)

charttv said:
			
		

> I've seen and heard alot of scaremongering regarding the fact that the baby boomers won't be replaced in the workforce because of the sheer number of them. How often do these scaremongers come up with statistics indicating that they are replaced by a far more efficient workforce thanks to the wonders of technology.
> 
> There are supposedly four baby boomers for each Gen Xer, but is it not possible that thanks to modern management techniques and technology that each Gen Xer is just as productive as four baby boomers? Take banking for example, instead of having rows and rows of tellers waiting for your business, branches nowadays are permanently understaffed, forcing everyone onto the internet and net banking. The banks are processing more and more transactions with less and less staff!
> 
> ...




I somewhat agree, although many (stats people) use super computers to determin population/trends well into the future and Australia's workforce is falling and more are drawing benefits.


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## MichaelWhyte (18 November 2005)

charttv said:
			
		

> There are supposedly four baby boomers for each Gen Xer



No longer correct.

I was at a presentation by Michael Yardney of Metropole Properties last month where he presented the latest ABS stats on population which showed that about 5 years ago the Gen Xers actually crossed the line and now outnumber the Baby Boomers.  Mind you, I think the model he presented aggregated the Gen Ys and the Gen Xs together so might have been misrepresentative.

Whichever way you cut it though, the BBs are diminishing.  This "mass exodus" from the workforce and its impact has no doubt been over-played.  It certainly hasn't adversely impacted our economy to the extent that some pundits predicted.  Its more likely to result in a gradual redistribution of wealth to the next generation who are more than capable of stepping in and filling the gap.

My 2c,
Michael.


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## tech/a (18 November 2005)

Michael is that an S2000 Honda on your avitar?

My prediction.

Baby Boomers have been the wealth creators.
Next generation will be the "Silver Spooners"
One after will be the "wealth destroyers"As they will have no idea how to grow it or maintain it as will some of the wasteful "Spooners"
Finally there will come the next generation which will complete the cycle out of necessity and become the next "Wealth builders"

Then the cycle will begin again.


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## MichaelWhyte (18 November 2005)

tech/a,

Hope your wrong on those generation predictions.  I'm a Gen Xer (35) and already have $1M net worth.  Through the next property boom I'll be leveraging a large portion of that at 20% down on growth IPs and riding the wave.  For now I'm in stock as most of the mums and pops haven't realised that property is dead for the foreseeable future and still rate it as the better asset category.  Hard to believe isn't it, but that's based on surveys only a month or two back, and 1/3 of Boomers saying they're going to buy an IP in the next 12 months.      If you want to do simple big plays and be counter-cyclical then the ASX is a nice place to be for now despite alot of the "over-heated" stock market talk going on.

I've got a little under $1M leveraged in the XJO blue chips now and have seen my portfolio grow over 5% in a month.  I bought in at 4410 after the big "Ides of October" drop.  Hoping to see a strong rally through to the end of the year.  Not as flashy as the spec guys and the tech traders, but hey, I'm a simple guy!  : 

PS. Nope, that's the Mazda Mx5 Mark III (NC).  I've got the Mark II (NB), a '99 model and she shure is pretty.  I do like the S2000 though, lots of ponies under the bonnet.

PPS.  I'm just a super newbie here to learn some stock stuff coming off an IP background.

Cheers,
Michael.


----------



## tech/a (18 November 2005)

Michael.
 Being a builder--developer I look at R/E a little differently.
Currently doing High density community title developements 6-30 on a developement. Negotiating 8000 Squ mtrs at the moment.

I'm selling I/Ps to decrease gearing and maximise passive income.

Anyway I look at the numbers--thats all I'm interested in.
The wife runs the construction side and I'm involved in civil.

Mentioned the 2000 as I just sold my "Midlife crisis" it was fun great to drive,a real drivers car actually like a slot car. 6 sec 100k and a head turner.

*But at my age they are looking at the car!!!!*

Bugger

Longterm investment filtered by index performance is in my veiw the very best way to work with shares particularly larger investments.


----------



## RichKid (15 December 2005)

Back to house prices, this is a great graphical look from the Fat Prophets (relying on 3rd party reports), just buying an asset because it's dropped in value doesn't mean you'll make a profit antime soon, or ever (ie opportunity cost and other costs associated with holding the asset) similar to buying shares which are going South imo. I'm surprised you don't use more charts in your analysis of housing figures tech? Isn't it easier to see trends and cycles? http://www.fatprophets.com.au/content.aspx?page=Market+Outlook+-+6+Dec+05


----------



## mit (15 December 2005)

RichKid said:
			
		

> Back to house prices, this is a great graphical look from the Fat Prophets (relying on 3rd party reports), just buying an asset because it's dropped in value doesn't mean you'll make a profit antime soon, or ever (ie opportunity cost and other costs associated with holding the asset) similar to buying shares which are going South imo. I'm surprised you don't use more charts in your analysis of housing figures tech? Isn't it easier to see trends and cycles? http://www.fatprophets.com.au/content.aspx?page=Market+Outlook+-+6+Dec+05




It would be nice to see more data. The graphs only show one and a half cycles.

MIT


----------



## tech/a (15 December 2005)

When Ive got time I intend to write up some opinion on the data graphs shown.

But interested in how others interpret them.

like charting what I see may not be what you see.


----------



## RichKid (15 December 2005)

I thought I'd posted the original studies done a few months ago in this thread or a similar one. Read it in the Economist, they had longer time cycles. Maybe someone can dig em up if i can't find it. There were reports by local and international research houses. I think Comsec had some detailed reports recently as well. Be wary of real estate industry sponsored/associated reports, especially in investment magazines. They just want you to part with your money instead of staying out of the market.


----------



## tech/a (15 December 2005)

The Hindsite meter shows 97 as the best time to have bought.

Affordability is now far worse than in the 90s and the balance is with renting currently.(Cheaper to rent).

This will change fairly soon as (2 yrs) as those who cannot afford to buy and come into the rental market find housing hard to find (thats not the case now).A raise in interest rates will see less home buying and a possible exodus of higher geared investors.Many are using their grey matter and leaving the market now.(Taking profit).
So the cycle will start again and by the gap it seems it will be a long while before cost of renting and cost of building or purchasing a home again match or better chaeper to buy.

So if your young enough look for this to happen and then buy all you can afford as the out of balance will occur again one day.The last time they matched was in 84 if I remember.


----------



## tech/a (15 December 2005)

As for house prices its pretty well as expected Melbourne and Sydney coming off and the rest either tappering or continuing.
This will flatten and or fall dramatically once interest rates rise.
There could also be one last splurge before or as interest rates make a move as some lock in fixed rates as pricing dips a little.
Adelaide Brisbane and Perth best.
Opportunity in all states I believe in low density housing for the rent scarcity to come.Also there is a market I believe for the 200-300K semi detached new dwelling of young families who dont want to rent.

Community title will become the low density way of the future in my view.


----------



## ghotib (15 December 2005)

Good ole hindsight meter 

FWIW we're in the process of getting some real estate agent opinions (I refuse to call them valuations) on a 2 bedroom semi in Sydney. Only one so far, but his comment is that first-home buyers are in the market for around $550-595K. 

That seems high to me for this property - I'd put it around $530K. Even so, that's held up pretty well since the other side of the semi (in better condition) sold for about $560K in 2003. 

Now can someone explain how or if that fits to the indexes and what that RHS/LHS investment/affordability graph is trying to say, because I don't get it.

Oh, and Tech - what's community title? Is it what NSW calls Strata? 

Thanks,

Ghoti


----------



## BentRod (16 December 2005)

tech/a said:
			
		

> Fleeta---a perfect example.
> 
> Kris.
> 
> ...





Sorry to drag this up from page 2 but I'm interested   ...even though Kris wasn't   

Cheers


----------



## wayneL (16 December 2005)

ghotib said:
			
		

> .....but his comment is that first-home buyers are in the market for around $550-595K.




At around the same price in my area...

http://www.realestate.com.au/cgi-bi...0&p=10&t=res&ty=&snf=rbs&ag=&cu=&fmt=&header=


----------



## tech/a (16 December 2005)

Ghotib.
The left side axis isnt clear as to wether thats 1000s.
But if it is then that would be a mean average over the metro area I would say.Inner suburbia would be greatly different.But without knowing the axis its hard to say.

Bent.
I'm trying to remember what it was I was going to show Kris.
When I remember I'll post it up.


----------



## BentRod (17 December 2005)

Thx Tech.....will look forward to it mate.

Bent.


----------



## RichKid (17 December 2005)

tech/a said:
			
		

> Bent.
> I'm trying to remember what it was I was going to show Kris.
> When I remember I'll post it up.




From memory I think you went on to discuss the amount of money a regular/heavy smoker could save by giving up smoking and then put then invest the money or something like that I think....see those posts again from about that date...


----------



## tech/a (17 December 2005)

Rich I remember it is the power of capitalizing and compounding.
Stay tuned.


----------



## tech/a (17 December 2005)

Lets take the cost of a pack of smokes at $10 for simplicity.
A pack a day smoker invests $3650 a year into destruction of their body (I did).

At age 20 they decide to invest the same $3650 a year (Hopefully from the funds of not smoking) every year and they find a way to return 10% a year on those funds---each year adding another $3650.

Mind you this is a lot better than Super!!

So year 1
$3650 * 1.1 = $4015 + 3650 = 7665
$7665 * 1.1 = $8431 + 3650 = 12081

ETC

In 35 yrs the figure is $1,088,162
Had you placed $3650 each year under your matteress.--35 * $3650 = $127,750.

*Now for the exciting stuff.*
*At year 42 its $2,158,612 only 7 Years later*

Just imagine in 35 yrs time what $10 a day will seem like--10c
So increasing as we can afford it --RELIGIOUSLY--will be even more benificial.

Many here want that 100-300% a year in their persuit of financial freedom.

Lets take a look at a more realistic approach.--*Slow but steady wins the race.*

If 100-300% a year is achievable then 30% must be a piece of cake.
Well I have recorded evidence over the last 4 yrs that 100% + is achievable so 30% is very real.

http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=get_topic;f=74;t=000001

So lets take a go getter 35 yr old who starts with $100k and each year places $10k as a compulsary saving plan and he finds his constant way to return 30% in the market.

$100,000 * 1.3 = $130,000 + $10000 = $140,000
$140,000 * 1.3 = $182,000 + $10000 = $192,000

In 8 yrs he has $1,044,307.-----$ thats 43 yrs old.
*3 yrs later he's made $2mill and 2 yrs later $3Mill.*

Ever wondered what the adage "Work Smarter not Harder" really means literally???
and another "Money Makes Money".

Etch this into your psyche.

*CONSISTANT* return will find you riches well beyond expectations.

*Sure a 500% windfall is fantastic fun--- but should not form the BASIS of your financial goals
.*
Trust me 0 to 50 comes faster than you'll blink!
Aint that the truth (my older friends here!!).


----------



## BentRod (17 December 2005)

Thx Tech...Much appreciated.

Will take  me a while to digest all that info but I'll get there : 

Cheers


----------



## tech/a (17 December 2005)

Try quickeze you'll need it for Xmas anyway.
Cheerz


----------



## Smurf1976 (13 January 2006)

Well it looks like the results are starting to come in on the great house price debate. The housing industry is doing its best by describing falling house prices as "affordability improves". Technically correct in that lower house prices are more affordable, but really, just admit it, *house prices are FALLING*.

In Sydney they're falling at about the 1% per month house price crash "cruise speed" seen before in the UK and other countries. In the ACT they seem to be falling somewhat faster. 

When you add in inflation and annualise the figures, Sydney houses are losing about 15% a year in "real" terms. If you invest with leverage then potentially it's a lot worse than that.

The safe areas? Nowhere except Hobart and regional WA. It's hard to believe they will be permanently immune from what seems to be a national trend.

http://www.smh.com.au/news/Business...-to-remain-weak/2006/01/12/1136956277419.html

http://www.abc.net.au/news/newsitems/200601/s1546677.htm


----------



## money tree (13 January 2006)

In August last year I paid $220k for a house in Underwood, QLD. 

having nearly finished renovating it, I started looking for a new project. I spotted a house for $250k in Springwood (next to Underwood). I emailed the agent and asked if the seller would consider $220k I would do an inspection.

he replied:

"Im sorry, but your insulting offer is flatly rejected by the owner. I suggest if you only have $220k to spend you go a lot further south, perhaps to Woodridge or Kingston. You will never buy a property in this area for anywhere close to $220k."

to which I replied:

"....actually I recently paid $220k for a house in Underwood, so it would appear you are mistaken....."

so what does it all mean?

well I suspect when I bought it was the bottom of the market. After some further searching it appears the agent was right.....$220k wont buy much....even if you do go down to the bad areas. So.....what the hell is my place worth now? I found a similar property in Underwood asking $309k....but mine is far better. So lets call it $320k.....thats +$100k in 5 months.....ok, ok....its been developed......but hey that only cost me $12k....the other $88k is mine, tax free.

this must kill tech/a  : 

property crash?

say what?!

dont lump Brissy in with Sydney & Melbourne property crap....we are in perpetual growth. All the cockroaches are selling up their $500k dumps and moving to QLD where they can live like kings.

I notice also that units/townhouses around Kingston/Woodridge are acheiving rental yields of around 7%. To me it looks like prices have fallen a bit, and rents have increased a bit. I may even buy a few positively geared ones soon.


----------



## wayneL (13 January 2006)

The property bears will need to be patient..



> "Im sorry, but your insulting offer is flatly rejected by the owner. I suggest if you only have $220k to spend you go a lot further south, perhaps to Woodridge or Kingston. You will never buy a property in this area for anywhere close to $220k."




What a stupid response. I don't imagine this person will survive in the business for long. More diplomacy could have seen an increased offer. But this would almost guarantee that most buyers would not deal with this clown again...EVER.

I wouldn't.


----------



## Smurf1976 (14 January 2006)

Periodically I check several suburbs of Hobart on www.realestate.com.au just to keep an eye on the market - both asking prices and the number of properties for sale.

The key thing I'm noticing is the steady increase in the number of houses for sale. In one suburb that I've been looking at since 2003 (was considering moving there at the time) the increase has been over 400% albeit from a relatively low base. But elsewhere the story is the same - more and more properties for sale since around August 2003. In rough terms it had nearly tripled by this time last year and it's almost doubled again since then. And I know for a fact that several of those houses are empty at the moment. To make things worse, they've just started building more houses in that area.

So, supply is increasing whilst even the real estate industry acknowledges that sales volumes are sharply down. Supply and demand and I don't see it leading to higher prices even though the asking prices don't seem to be falling.

Looking also at the sold properties on that site it appears that in many Hobart suburbs there is a 12 month supply already listed for sale. In popular Kingston (middle income middle-outer suburb linked to the city centre by a highway and with reasonable shops and public transport but limited local employment) there's about 2 years' worth already listed and plenty more being built (it's a long established area but being in Hobart there's no shortage of land).

As for actual land prices, the cheaper blocks seem to be coming down significantly in some suburbs (middle income areas) but I haven't monitored that closely.


----------



## tech/a (14 January 2006)

money tree said:
			
		

> the other $88k is mine, tax free.
> 
> this must kill tech/a  :
> 
> .




 Tree 
I'm not young enough nor do I have the motivation or time to refurbish my principal place of residence and move around to the next opportunity and make $s as you do.

We build Community Title Apartments ideally groups of 6-12 if We can find the land.
We buy the land,the builders build and the Clients buy,We cashflow and my wife oversees.
We aim at $50-80K an apartment(Gross taxable) and we pay tax-- 
We are currently looking for suitable land after completing a JV (Joint Venture) on 10 in Morpettvale.

You have your way I mine.

There will always be opportunities.


----------



## The Barbarian Investor (17 January 2006)

Prices are still on the rise in WA, vacancies are very low, rents are rising, times for building houses are blowing out to 18-24 months, some building Companies are closing thier doors to catch up on backlogs, the HIA is talking about fast tracking some courses....

All is good and not neccessarily regional WA only, Perth is Booming (4.4% CG last 1/4)

My goals for 2006 are coming along fine..


----------



## tech/a (17 January 2006)

Sunday Mail reports very strong figures for 2005.
Unley became SA's first Million dollar neighbourhood.
Average price in 2004 was $800K now $1.2 mill.
Thats a hefty rise.

Hey many stood back and watched the Share boom.
Yeh I know those who didnt understand risk also lost a motzza.
But thats what opportunities are all about,understanding how to make the most of them.

There are 3 stages.
(1) Recognising an opportunity.
(2) Understanding how to make the most of the opportunity.
(3) *TAKING THE OPPORTUNITY*

The last being where 90% fail.

Wheres that megga fone and soap box!


----------



## excalibur (17 January 2006)

tech/a said:
			
		

> Sunday Mail reports very strong figures for 2005.
> Unley became SA's first Million dollar neighbourhood.
> Average price in 2004 was $800K now $1.2 mill.
> Thats a hefty rise.
> ...





A M E N !!!!


----------



## bullmarket (17 January 2006)

Hi everyone

hmmmmmmmmmm   



			
				tech/a said:
			
		

> There are 3 stages.
> (1) Recognising an opportunity.
> (2) Understanding how to make the most of the opportunity.
> (3) *TAKING THE OPPORTUNITY*




Isn't the above straight out of "Creating Wealth 101" ?   

Nothing new there and preaching to the converted   

Anyway, I'm not expecting the residential property market on average to do much for at least the next 12 months, but high demand and popular locations (eg..near water, especially the coast) should still do ok overall imo.  But I don't see a property crash either as some in the media have been predicting. The overall rise in residential property values in the last 5 years or so has been outstanding and the recent general cooling off is just a 'technical correction'  given the slowing down of the economy, rising oil prices, possibility of rising interest rates etc etc.

I believe anyone looking for investment opportunities has to be much more selective and dilligent in their homework/research before committing than say 5 years ago.

Remember the old saying that says it's better to buy the worst house in the best street than the best house in the worst street 

Also the S&P ASX200 Listed Property Trust Sector (XPJ) is still holding up ok atm and so property overall (office, industrial, retail, hospitality and leisure) are still doing ok.

cheers

bullmarket


----------



## tech/a (17 January 2006)

Never heard of "101"

Damn I thought I was original.

Preaching to the converted is fine preaching to those who write the scriptures is pointless.

However people like yourself Bullmarket who have possibly been there done/doing that have a great deal to offer to those even if they are converted.

Understanding,agreeing,and nodding knowingly is a far cry from doing it.
Those that are---are valuable assets to those looking to find their Financial Freedom.


----------



## Bronte (31 July 2006)

Bronte said:
			
		

> As previously posted; WA is also on a strong growth curve.
> Battman has just returned from Europe and he says in comparison
> "Australia real esate is still very very cheap."



Quote from 16th Oct' 05
Of course I should have quoted Battman as saying:
"W.Australia real estate is still very very cheap."


----------



## krisbarry (31 July 2006)

I am looking forward to that rate rise it will just make the housing market plummet in all states and in WA the market will stagnate.

Yippee!

Go RBA!


----------



## Joe Blow (31 July 2006)

Stop_the_clock said:
			
		

> I am looking forward to that rate rise it will just make the housing market plummet in all states and in WA the market will stagnate.
> 
> Yippee!
> 
> Go RBA!




Kris, I think we've all got the picture. Perhaps its time you eased up on your endless wishing for interest rate rises and got onto another topic? There's nothing funny about wishing financial hardship on others irrespective of their financial position. Besides, those affected most by interest rate rises are not the very wealthy but average Australians.

Give it a rest.


----------



## Smurf1976 (31 July 2006)

Joe Blow said:
			
		

> There's nothing funny about wishing financial hardship on others irrespective of their financial position.



Agreed.

But to be fair, I must point out that it's hard to have any view on the housing market without that involving hardship for _someone._ Personally, I would much rather we had never had the bubble. But we do and that's life.

If interest rates go up - hardship for borrowers who speculated on interest rates staying low.

If interest rates go down - even more hardship for those with assets not wanting out of control inflation.

If house prices fall - hardship for housing speculators

If house prices rise - more hardship for first home buyers, families wanting kids (therefore a bigger house) etc who have already lost rather a lot.

Bottom line - when you have a bubble, someone has to lose. Question is who? IMO a modest pickup in both _wage_ inflation and interest rates combined with a modest nominal fall in house prices (but a much bigger fall in _real_ terms) would do the least damage. 

Worst case? A renewed boom in house prices - we've got more than enough inflation "baked in the cake" already without another surge in house prices to fuel the fire. 

It's 6am on Sunday after one huge night out. You can NOT avoid the hangover. You can delay it and make it worse (keep drinking) but you can not avoid it. The "no hangover" option ended when the heavy drinking started. Same with the borrowing binge and house prices.


----------



## TimmyC (31 July 2006)

Investors are the ones that have primarily gained from the bubble.  They don't realise that now their children are going to have such a hard time owning their own home


----------



## Realist (31 July 2006)

TimmyC said:
			
		

> Investors are the ones that have primarily gained from the bubble.  They don't realise that now their children are going to have such a hard time owning their own home





If there's one thing that every bubble has in common, it is they all burst eventually.

Logically, kids in 30 years time will find it no harder or easier to buy a place than we did.  

If people can't afford houses then who is buying them?   If you say investors then you are wrong, because if people can't afford houses they need to rent, and they can't afford exhorbetent rents if they can't afford mortgages so the yield for investors is low - and therefore investors wont buy and guess what no-one buys so house prices go down and everyone is happy.

The bubble is deflating in Sydney and has been for nearly 3 years now, it may pop soon. The rest of Aus will follow eventually. and then sure enough another bubble will form. You need to buy then or before then ideally.


----------



## tech/a (2 August 2006)

What am I missing here.

When I bought my first home 30 years ago my wage combined was $240/week.
The house was $30,000 or 150 times wage.
Today house is say $300,000 and combined wage for average punters of 
$1600 nett or around 180 times wage.

ITS ABOUT THE SAME

The only difference is that when the market was deflated most didnt take uo the opportun ity or more to the point recognise it.

It will happen again but not for atleast 12 yrs.

High density low rental low purchase price 1 and 2 bedroom are my pick if your in the position to develope.
Rents will rise to catch property prices and as such demand will rise for the above in both rent opportunity v investment and or pure sale of developement.

Opportunity is still there but not in the conventional places.

Average UK combined wage is £1000 average house like a $300k Aussie home in adelaide is around £4-500k We have a longway to go.
Imagine how hard it is for kids here!


----------



## wayneL (2 August 2006)

Some gratuitous bearishness from Safehaven.

http://www.safehaven.com/article-5640.htm



> August 01, 2006
> 
> Record Household Deficit - Is There Anything Wrong With This Picture?
> by Paul Kasriel
> ...


----------



## Realist (2 August 2006)

One of the big differences tech/a is that 30 years ago kids (around 20 years old) would leave school or uni debt free, get a job, get married and buy a comparitively large house with a 20 to 25 year mortgage and they'd pay it off maybe 5 years quicker.

Fast forward to today...

Kids go to Uni and leave owing a large student loan, they own a car and pay exhorbetent parking, tolls, rego and especially petrol prices.  They own a mobile phone, have a gym membership, an internet connection, wear trendy expensive clothes, eat out at restaurants, go to expensive nightclubs, and with any spare money (unlikely) they go on an overseas trip. And they do not get married till they are older so there is no-one to share teh mortgage with.

Basically life is easier today, but people 'waste' their money on all sorts of things that were not available or certainly not common 30 years ago.

Were you to leave Uni debt free and get a good paying job, and marry a person in a good paying job, use the bus, use a pre-pay mobile for about $10 a month, not use internet, maybe live at home rent free, not join a gym, not eat out or travel overseas or wear trendy clothes you would easily be able to buy a house and be comfortable.... and boring. 

I'm a housing bear!!     


But I realise there will be a good time to buy soonish in Sydney and I will try and not miss it.


----------



## Bronte (2 August 2006)

Bronte said:
			
		

> As previously posted; WA is also on a strong growth curve.
> Battman has just returned from Europe and he says in comparison
> "(W) Australia real esate is still very very cheap."



This was posted on 16th October 2005
Perth M.H.P. was: $308,000 Sept Quarter
Perth M.H.P. now: $455,000 June Quarter (just relaeased)
*Phew! Up a whopping +$147,000 in nine months *


----------



## Realist (2 August 2006)

Bronte said:
			
		

> This was posted on 16th October 2005
> Perth M.H.P. was: $308,000 Sept Quarter
> Perth M.H.P. now: $455,000 June Quarter (just relaeased)
> *Phew! Up a whopping +$147,000 in nine months *


----------



## krisbarry (2 August 2006)

I really feel sorry for the young people in Perth trying to buy a house, god help them.  I hope they got a pay rise of more than the 4% inflation rate.

More young people out on the streets...a housing crisis in the making


----------



## Realist (2 August 2006)

Stop_the_clock said:
			
		

> I really feel sorry for the young people in Perth trying to buy a house, god help them.  I hope they got a pay rise of more than the 4% inflation rate.





I don't feel for them at all.

Owning a house is not always a wise thing to do.

A smart young person in Perth would find a cheap place to rent, save their money, invest wisely and wait for the bubble to deflate, if not burst.

Young people in Sydney in 2003/4 faced far more difficulties in buying than Perth residents do now.  The smart ones (me included) just flagged buying a place, saved their money and invested elsewhere.  

There is nothing wrong with renting. It can at times be financially wiser not to own.

Perth residents are lucky that Sydney has recently shown what 'will' happen after a boom.

Just be patient, ignore any idiot that tells you "house prices will always go up" - they sure as hell wont!  Sydney has proved that recently.


----------



## Bronte (2 August 2006)

Realist said:
			
		

>



*Love it * 
Who was it that said "All Booms are followed by Busts ?"


----------



## Smurf1976 (2 August 2006)

tech/a said:
			
		

> What am I missing here.
> 
> When I bought my first home 30 years ago my wage combined was $240/week.
> The house was $30,000 or *150 times wage*.



Presently it's about *440 times wage in Sydney and 340 times wage in Adelaide or Hobart*. Most of the other capitals are around 300 times wage.

Worse still, we now have low _wage_ inflation such that the real value of the debt is not rapidly eroded as was the case in the 1970's and 80's. Not that low wage inflation doesn't have benefits, it does, but if you're in debt then inflation is exactly what you want. Those who bought 30 years ago had the twin benefits of lower prices (relative to wages) and higher wage inflation after they bought, neither of which applies today (though IMO wage inflation is coming).

As for the interest rate change, it is the house price boom, not the rise in interest rates, that is the ultimate cause of the coming misery. 

To argue that the interest rate is the problem is like arguing that the price of herion going up is causing misery to drug addicts. The ultimate cause of the problem is the addiction itself, not any change in the price of the drug.


----------



## Bronte (2 August 2006)

Bronte said:
			
		

> *Love it *
> Who was it that said "All Booms are followed by Busts ?"



We have been emailed:
Rivkin's Rules page 7
"All booms must bust! The only question is when."


----------



## Bronte (2 August 2006)

We have lots of property in Perth  
Do you think we should Sell ?


----------



## krisbarry (2 August 2006)

Smurf1976 said:
			
		

> To argue that the interest rate is the problem is like arguing that the price of herion going up is causing misery to drug addicts. The ultimate cause of the problem is the addiction itself, not any change in the price of the drug.





Yes this addiction to housing that some are having will see a marked affect on coming generations and how they perceive that very same market.

Do they have a name for this addiction yet, and a cure?

What about a de-tox program?

or a pill to pop?

or a 12 step program....Hi my name is stop_the_clock and its been 31 years since I have owned a house....  

LOL


----------



## Realist (2 August 2006)

Bronte said:
			
		

> We have lots of property in Perth
> Do you think we should Sell ?




My opinion...

Yes, you should sell some if it is tax effective to do so.


----------



## Bronte (2 August 2006)

Thank you Realist.
We fixed all our loans at 6.47% interest only, long term
Reluctant to break our contract with the bank.
You are probably correct though.


----------



## NettAssets (2 August 2006)

Bronte said:
			
		

> We have lots of property in Perth
> Do you think we should Sell ?



My 
If you want capital gains out of the Perth market you would have to look closely at selling soon.
On the other hand rental incomes are likely to stay high in the current interest environment. 
Housing is tight - office space is still relatively tight - The price of metro commercial space is still bouyant.
Horses for courses.

Only my view and Im not in the market and no expert in real estate.
John


----------



## Bronte (2 August 2006)

Thank you John.
Worth considering


----------



## juddy (2 August 2006)

I would imagine there would be a fair number of speculators in the Perth property market looking for short term gains. Once negative press begins eg front page of today's West, then they would probably look to lock in profits and move on to greener pastures eg cash. The problem comes when everyone gets this idea at the same time. Probably an exaggerated view, but might be worth considering.


----------



## Realist (2 August 2006)

I'd test the market first by putting a property for sale for some exhorbetant price and see what happens.

Some moron might just buy it.


----------



## NettAssets (2 August 2006)

Yeah I think you are right realist

But it doesn't have to be a Moron buying
Just someone with a different imperative.
With the current fuel prices if you have a place 
next door to where someone is shifting to work
the house maybe worth $50.00 a week more to
them than the market value.
But yes in the current environment you are
setting your own market.
John


----------



## Judd (2 August 2006)

One of the generally unnoticed side effects of increased house prices is the impact on land valuations.  In turn this results in rates (ie local government taxes) being increased.  Ours have increased by 14.5% this year.  Managable for this family but it is another after-tax hit to the hip pocket which, along with petrol, etc, etc could cause those home occupiers to go to the wall.  I noticed from an article in the Age that for the first six months of this year, house reposessions were over 1,400 compared with 950 or so for the previous comparable period (and more than 95% of repossessions were owner occupiers.)

So on the face of it it does not appear that the majority of rental investors who will get hit but those who just want a home.  Always sad to see that.


----------



## Realist (2 August 2006)

Well I hate to say it guys, but you guys who live in Perth had it far too easy for far too long.

I went to Perth about 3 years ago and was honestly stunned at how cheap your property was. I could not believe how easy you had it. $650,000 would have bought a bloody mansion, yet in Sydeny 3 years ago you'd get a crappy 2 bedroom apartment for that.

The fact is half of the recent rises have just been getting Perth back to where it should have been in the first place. It was undervalued.

It is now in my opinion overvalued though, so you do have some complaints to grieve - I agree.


----------



## professor_frink (2 August 2006)

Realist said:
			
		

> Well I hate to say it guys, but you guys who live in Perth had it far too easy for far too long.
> 
> I went to Perth about 3 years ago and was honestly stunned at how cheap your property was. I could not believe how easy you had it. $650,000 would have bought a bloody mansion, yet in Sydeny 3 years ago you'd get a crappy 2 bedroom apartment for that.
> 
> ...




Righto then Mr value investor  did you buy any?


----------



## krisbarry (2 August 2006)

Realist said:
			
		

> I'd test the market first by putting a property for sale for some exhorbetant price and see what happens.
> 
> Some moron might just buy it.




Somewhat true, but the higher the prices go...the less morons will be ready to part with their cash


----------



## Realist (2 August 2006)

professor_frink said:
			
		

> Righto then Mr value investor  did you buy any?




Certainly not. What a particularily naieve and stupid attempt to attack me, you can do better than that Prof...    

As you know I avoid brokerage and taxes.

I'd rather not pay stamp duty, and I would like the first home owners grant.

I'm about $37,000 better off buying and owning in Sydney than investing in Perth. I'm not a fan of negative gearing, I do not like to have to maintain, rennovate or fix anything. And I don't want to pay agent comissions, or capital gains taxes when I sell.

I still believe shares are a far better investment than property. Despite the recent boom in Perth.

But also I did not know just how much Perth properties would increase, it was obvious they'd go up but I did not see this boom coming that was for sure.


----------



## professor_frink (2 August 2006)

Realist said:
			
		

> Certainly not. What a particularily naieve and stupid attempt to attack me, you can do better than that Prof...
> 
> As you know I avoid brokerage and taxes.
> 
> ...





Cheeky-yes. An attack on you Realist-not even close! If I attack, you'll know all about it, and it will probably get me banned  

I'm not a fan of neg. gearing either, but if there is value there, it shouldn't be negatively geared for too long.

I'm curious as to how you came up with the $37,000 figure. Why would you have been better off not buying an IP when you thought the housing market was undervalued? The costs involved in buying an IP would be fairly small compared to the capital gain you'd be sitting on after a few years.


----------



## Realist (2 August 2006)

professor_frink said:
			
		

> .
> 
> I'm curious as to how you came up with the $37,000 figure. Why would you have been better off not buying an IP when you thought the housing market was undervalued? The costs involved in buying an IP would be fairly small compared to the capital gain you'd be sitting on after a few years.




Well first of all, had I known how Perth properties would have boomed then yes I would have bought, I knew they were undervalued of course - I think everyone did, I did not see the boom coming though.

Now the question...

$20,000 is the stamp duty exemption for buying first home in NSW and living in it.
$7,000 is the first home owners grant if you live in it.

Other amount is real estate management fees, advertising to rent it out, Mortgage taxes, insurance, repairs, empty time, etc. etc.

I believe it is a fair guess of first year expenses setting up an IP.

Then the big one CAPITAL GAINS TAX - needs to be added as well of course.


----------



## professor_frink (2 August 2006)

Realist said:
			
		

> Well first of all, had I known how Perth properties would have boomed then yes I would have bought, I knew they were undervalued of course - I think everyone did, I did not see the boom coming though.
> 
> Now the question...
> 
> ...





This all would have become a minor inconvenience to you had you bought when you saw the opportunity! Having the house double in 3 years would have left you with a nice lump sum to put into your share portfolio, or would have meant you could use it as a deposit for a house in Sydney.

Tax and expenses shouldn't be an issue when you see an opportunity to buy an investment that you believe to be excellent value. Obviously not knowing how big the gains were going to be might make you think about it a bit, but even modest growth on a house is going to make up for these kinds of expenses.


----------



## Realist (2 August 2006)

professor_frink said:
			
		

> This all would have become a minor inconvenience to you had you bought when you saw the opportunity! Having the house double in 3 years would have left you with a nice lump sum to put into your share portfolio, or would have meant you could use it as a deposit for a house in Sydney.
> 
> Tax and expenses shouldn't be an issue when you see an opportunity to buy an investment that you believe to be excellent value. Obviously not knowing how big the gains were going to be might make you think about it a bit, but even modest growth on a house is going to make up for these kinds of expenses.




Oh god!!  

Of course buying in Perth 3 years ago was wise!!

HOWEVER...

Shares doubled in that time as well, so it is not exactly like I missed the boat!!

Longterm Shares keep going up more and pay dividends and compound and cause less problems than property IMHO.   

I have no regrets about not buying in Perth, I just wish I'd bought more shares 3 years ago actually.

I do not like investment properties!!!!!!

I do like shares!!!!!!!!!

Stop harassing me for not buying in Perth - did you buy an IP in Perth 3 years ago?


----------



## doctorj (2 August 2006)

I believe the craziness we're all seeing in Perth is a product of the fundamental difference between the mindset of citizens in Perth and Melbourne/Sydney. 

I don't have any research to back this up beyond my own observation, but it seems apartment living is still seen as undesirable by the majority of the Western Australian population.  By comparison, I imagine the percentage of people living in apartments in Melbourne and Sydney to be much higher and more acceptable.

I believe this comes about as a result of two key factors.  First of all, there really isn't a great deal of apartment capacity in Perth and the inner suburbs, only now are more developments being advertised and made available.  Secondly, the generation of people 35-50 years old have built most of their wealth in property and the idea that you need land in order to make money on your home has been deeply ingrained in the new generation of homebuyers by their parents.

According to the front page of the Western Australian today, mean home prices in WA have reached $455,000 - well ahead of Melbourne and not far off that of Sydney.  I'd venture to say that the average salary of professionals in WA (ie. people likely to live in the metropolitan area) is much lower than both Sydney and Melbourne.  Soon something has to break - either people need to adjust their values and more apartment capacity needs to come online (and thus hopefully reducing property prices) or salaries need to increase to make the price sustainable and not to mention affordable for young professionals looking to leave the nest.


----------



## wayneL (2 August 2006)

Realist said:
			
		

> Well I hate to say it guys, but you guys who live in Perth had it far too easy for far too long.
> 
> I went to Perth about 3 years ago and was honestly stunned at how cheap your property was.




That was the ONLY attraction of Perth... and the easy going lifestyle. Now that those two are history, I can't think of one good reason to buy a house in Perth, over somewhere else.

I can buy in nice areas of France or Germany for MUCH less AND have decent beer, culture, and a lot of the stuff me and Mrs like in spades.

Germany has had a bad time economically in the last ten years because of re-unification, but are the best placed of the western economies going forward IMO.

The Krauts are good folk too.


----------



## professor_frink (2 August 2006)

Realist said:
			
		

> Oh god!!
> 
> Of course buying in Perth 3 years ago was wise!!
> 
> ...




Realist,

I'm not harassing you for not buying in Perth. I'm harassing you because you said it was undervalued and you didn't buy any! You spend your time on here telling everyone you will only buy property when it's undervalued, and then you admit you saw an opportunity and didn't act. If you had of said you don't like investment properties in your original statement, I wouldn't have said anything.

Did I buy in Perth? No. But then again I wasn't in Perth 3 years ago with an opinion of their property market. That's kind of a childish question to finish up with Realist!


----------



## professor_frink (2 August 2006)

Realist said:
			
		

> Well first of all, had I known how Perth properties would have boomed then yes I would have bought, I knew they were undervalued of course - I think everyone did, I did not see the boom coming though.






			
				Realist said:
			
		

> I have no regrets about not buying in Perth, I just wish I'd bought more shares 3 years ago actually.




This discussion is giving me a headache. I'll withdraw myself now I think.


----------



## Bronte (2 August 2006)

Bronte said:
			
		

> Perth real estate is certainly not stagnant.
> 86 people a day are presently migrating to WA
> This equates to 50/60 extra homes required per day.
> We have been busy buying prime real estate since 1998



Quote #223 from 6th October 2005 01.00PM 
We recognize opportunity and boy do we take it


----------



## tech/a (2 August 2006)

Bronte said:
			
		

> We have lots of property in Perth
> Do you think we should Sell ?




If you do then you wont need to ask that question.

You post like xperts and question like novices.


----------



## chris1983 (2 August 2006)

If you live in Perth everyone knows the reason for the price rise.  They have land all over the place.  Its crazy.  You drive down the road you see vacant land everywhere.  Not like in Sydney.  You cant get undeveloped land in Sydney as close as they have to the city like here in Perth.  They just havn't developed the dirt yet.  All a scam to rise the pricing.  Pricing should stablize or even drop slightly with interest rate rises to come.  The price will slow down because new starters just cant afford it. Then when more land developments come on board supply will once again outweigh demand.  I believe it allready has started to stabalize.


----------



## Bronte (2 August 2006)

I am NOT going to read this tech/a, (you are still on ignore).
Even on holiday I bet you have nothing nice to say to anyone.
I wonder if I am correct?


----------



## Realist (2 August 2006)

professor_frink said:
			
		

> Realist,
> 
> I'm not harassing you for not buying in Perth. I'm harassing you because you said it was undervalued and you didn't buy any! You spend your time on here telling everyone you will only buy property when it's undervalued, and then you admit you saw an opportunity and didn't act. If you had of said you don't like investment properties in your original statement, I wouldn't have said anything.
> 
> Did I buy in Perth? No. But then again I wasn't in Perth 3 years ago with an opinion of their property market. That's kind of a childish question to finish up with Realist!





All I am saying is obviously, I and everyone else should have bought as many properties in Perth as we could 3 years ago.

I had less money then so that would have meant one property.

It is easy to look back though. I knew at the time they were "cheap" but did not know they would boom.

And as I said I have no regrets, everyone has 20/20 hindsight, there's no point in worrying about what you missed.

The fact is people who bought in Perth 3 years ago have profited nicely. They may have made 100% in 3 years before tax and expenses. Fast forward 7 years and if they keep holding they may only make 100% before tax over the 10 years, pretty much less than what most investments make - Perth will flatten out making the investment I missed out on not as appealing. Hence I aint worried about it at all.

My first goal is to buy a home for me, not an investment property.  I will buy in Sydney when I deem the time is right, and I believe that is fast approaching, maybe another 6 months maybe another 48 months- somewhere in between.  I aint overly interested in buiying outside of Sydney for many reasons. So missing out on Perths boom is irrelevant to me.


----------



## Realist (2 August 2006)

chris1983 said:
			
		

> If you live in Perth everyone knows the reason for the price rise.  They have land all over the place.  Its crazy.  You drive down the road you see vacant land everywhere.  Not like in Sydney.  You cant get undeveloped land in Sydney as close as they have to the city like here in Perth.  They just havn't developed the dirt yet.  All a scam to rise the pricing.  Pricing should stablize or even drop slightly with interest rate rises to come.  The price will slow down because new starters just cant afford it. Then when more land developments come on board supply will once again outweigh demand.  I believe it allready has started to stabalize.





Correct. Land in WA is not at a premium.

Having highly expensive apartments in Perth is laughable really.

Sydney has houses out of the city like Perth does, but try driving to work in the Sydney city on a wet Monday morning from 60 kms out.  Half your life would be wasted in traffic. Hence an apartment near the city aint that silly. It is in Perth though - they have no traffic there, just a few cars.

You guys in Perth are lucky really.   :


----------



## wayneL (2 August 2006)

Realist said:
			
		

> All I am saying is obviously, I and everyone else should have bought as many properties in Perth as we could 3 years ago.
> 
> I had less money then so that would have meant one property.
> 
> ...




With oil @ $150 - $200 most Perth property will be worth zippo.


----------



## krisbarry (2 August 2006)

Phew this thread got lively all of a sudden today, I wonder what spark peoples interest today


----------



## NettAssets (2 August 2006)

Quote from "Edstar" from John Bedsons site.



> Yes, in response to your 'stronger for longer' thought Perth property can continue to rise. It is now 87% of Sydney. It could exceed 120% of Sydney (say), even for only for a relatively brief period. Here are my thoughts / reasoning:
> 
> - WA wages growth is very high. People generally buy to the limit of their affordability. Spare capacity still exists (in aggregate - esp. for those who have benefited from the boom).
> - New supply is low (in absolute terms and relative to demand). Bids up prices.
> ...



He could be right


----------



## Bronte (2 August 2006)

Very interesting.
Thanks for posting that NettAssets
We hope he is right


----------



## phoenixrising (2 August 2006)

Neil Jenman on tonights A Current Affair (looking the most relaxed I have ever seen him, no spuikier in the story i guess) said wait a couple of years and buy in for 50% of todays price.

Qld as well as WA is bounding ahead in some places. A month ago in the Courrier Mail was an article on a mining town west of Mackay (can't remember its name now) In 2001 a house was worth $33,000 in 2006 $333.000. Is this a bubble in the making?

This has a 70's look to it now
*US (& Oz) at war, till mid 70's Vietnam
*Oil quadruppling in price
*inflation in a bull run
*An ugly crash then and now.......................????


----------



## nizar (2 August 2006)

Bronte said:
			
		

> Quote #223 from 6th October 2005 01.00PM
> We recognize opportunity and boy do we take it




ok bronte u are the best and a gun and a champion well done


----------



## Bronte (2 August 2006)

Thank you nizar.  
Now... how can we help you?


----------



## Realist (2 August 2006)

NettAssets said:
			
		

> Quote from "Edstar" from John Bedsons site.
> 
> 
> He could be right




He could be wrong, and I think that is more likely.

To suggest Perth should be more expensive than Sydney is laughable.

I hope he is right, I'd love to see Sydney cheaper than Perth. It wont happen, and if by some flukey chance it does you'll be in for a rude awakening somewhere down the track.

Sydney has 4 or 5 times the population and most of the big companies and good jobs, all the money, as well as a more exciting life for young people. It is positioned better for business and Sydney prices have fallen for 3 years (fairly valued?), and Perths have grown for the 3 years (overvalued?). There's no way Perth should be more expensive. 

When Perth has 5 million people and the banks, insurers, media companies, IT companies, pharamceutical companies and other large organisations, as well as talented young people, the top restaurants and night spots and celebrities leave Sydney for Perth then maybe he'd have a point.  Most countries have empty gold rush towns with tumbleweed blowing down the main street, we all know what happens after resource booms end.


----------



## wayneL (3 August 2006)

Realist said:
			
		

> He could be wrong, and I think that is more likely.
> 
> To suggest Perth should be more expensive than Sydney is laughable.
> 
> ...




Exactly Realist


----------



## Smurf1976 (3 August 2006)

Realist said:
			
		

> He could be wrong, and I think that is more likely.
> 
> To suggest Perth should be more expensive than Sydney is laughable.
> 
> ...



Absolutely agreed there.

I would go a bit further though and nominate Hobart as the most over valued of the state capital cities even though nominal prices are less than Perth, Brisbane etc.

The reason is simply that there is NO comparisson between Hobart and Sydney (unless you count both having harbours and bridges). For that matter, even Adelaide is a massive city compared to Hobart.

A few points about Hobart:

Average wage about $40 K (according to the data used in the Demographia report). Apart from Zinifex and Cadbury, there just aren't that many well paying jobs here. You'll be lucky to make $30 K in the state's biggest employer, tourism.

There is basically nothing that is not more expensive in Hobart than in the other state capitals. The overall cost of running a car is a possible exception due to shorter distances but everything else costs more (hence the common tendency of Tasmanians to stare at mainland supermarket prices in disbelief that things are that cheap). Power is cheap but then you'll still use $2000 worth a year due to the climate.

Nightlife? Suffice to say that a normal night in Adelaide has far more going on than New Year's Eve in Hobart. As for Sydney or Melbourne... 

Land scarcity? You can walk to undeveloped bush and back quite easily from the GPO.

Major events - they're spread around the state so Hobart isn't a "centre" of such things. If you want to see an international act then, with the odd exception, you check with Virgin Blue or Jetstar and find a hotel in Melbourne before worrying about tickets...

And yet Hobart has the second highest average house value, relative to incomes, in the country. It's a nice place to live in many regards, but when it becomes so highly valued relative to income and nominal prices catch up to Adelaide then it's hard to see the justification. Even Melbourne doesn't really look that expensive compared to Hobart now in % terms (it's more expensive, but the gap isn't anywhere near as great as it used to be).

Same when Perth overtakes Melbourne and Brisbane. It just doesn't make sense in view of the fundamentals. Such things tend to revert to the mean eventually and IMO Perth will be hit hard in any future global downturn (it will happen, question is when) due to the link to commodity prices. Likewise at some point people will realise that land in Hobart just isn't scarce. 

IMO now isn't the time to invest in real estate. But if I were going to then it would be in Sydney, Brisbane or Melbourne since land there actually does have some scarcity value over the long term.


----------



## NettAssets (3 August 2006)

Thanks guys

I happen to agree but when I saw an opinion like that I thought it would do no harm to add it to the discussion.


----------



## Bronte (3 August 2006)

nizar said:
			
		

> *ok bronte u are the best and a gun and a champion well done*



I am really sorry nizar...I just needed to quote you


----------



## nizar (3 August 2006)

Realist said:
			
		

> He could be wrong, and I think that is more likely.
> 
> To suggest Perth should be more expensive than Sydney is laughable.
> 
> ...




Your best post so far

On the ball, realist


----------



## wayneL (3 August 2006)

The Poms and the ECB has raised rates today, Oz yesterday.

The tide is rising folks and lots of numpties are already up to their nostrils in debt... in all the english speaking countries.

Look up "stagflation" just for a bit of fun.

Ye depression approacheth.


----------



## michael_selway (3 August 2006)

wayneL said:
			
		

> The Poms and the ECB has raised rates today, Oz yesterday.
> 
> The tide is rising folks and lots of numpties are already up to their nostrils in debt... in all the english speaking countries.
> 
> ...




when do u think depression will come if it does come?

http://www.depression2007.com/

Still cant believe this guy may be right?

thx

MS


----------



## wayneL (3 August 2006)

michael_selway said:
			
		

> when do u think depression will come if it does come?
> 
> http://www.depression2007.com/
> 
> ...




There is plenty of precedent for the views of the socionomicists(?)... just not recently.

I don't know how right he will be, but he will be "more" right than the permabulls IMO.


----------



## swingstar (3 August 2006)

michael_selway said:
			
		

> when do u think depression will come if it does come?
> 
> http://www.depression2007.com/
> 
> ...




There are lots of books written on a depression starting around now. All cite various causes... socionomics, demographics, peak oil, etc.


----------



## wayneL (3 August 2006)

wayneL said:
			
		

> The Poms and the ECB has raised rates today, Oz yesterday.
> 
> The tide is rising folks and lots of numpties are already up to their nostrils in debt... in all the english speaking countries.
> 
> ...




Suth Ifrica raised .5% as well 

http://www.moneyweb.co.za/economy/economic_trends/863291.htm


----------



## Bobby (4 August 2006)

wayneL said:
			
		

> Suth Ifrica raised .5% as well
> 
> http://www.moneyweb.co.za/economy/economic_trends/863291.htm



 Hello Wayne,

Your having a drink tonight arn't you ,    ask me how I know !

Best wishes
Bob---himself,.


----------



## Smurf1976 (4 August 2006)

It would be hard to deny that the global trend is towards higher interest rates. A key plank of the permabulls has not only been eaten by termites and collapsed, it's completely vanished.


----------



## wayneL (4 August 2006)

Have a listen to this Financial Planner talking about investment property

UK recording but applies equally here.


----------



## wayneL (4 August 2006)

Bobby said:
			
		

> Hello Wayne,
> 
> Your having a drink tonight arn't you ,    ask me how I know !
> 
> ...




No grog, but in a particularly good mood


----------



## Bobby (4 August 2006)

wayneL said:
			
		

> No grog, but in a particularly good mood



Good on you , have a nice morning now.

Sorry for the grog slur   

Regards Bob.


----------



## Bronte (11 August 2006)

Bronte said:
			
		

> Perth M.H.P. was: $308,000 Sept Quarter
> Perth M.H.P. now: $455,000 June Quarter (just relaeased)
> *Phew! Up a whopping +$147,000 in nine months *



Well our bank is allowing us to sell one property without effecting the existing mortgage (fixed at 6.47%) ......nice of them.
We think our South Perth apartment close to the Swan River will have to be sacrificed


----------



## Bronte (11 August 2006)

Thanks to all ASF members that gave advice, we are happy with this decision.


----------



## Realist (11 August 2006)

A smart investor only has to do 3 things right..


1.  Find the right investment, a solid company, a nice house, a reliable car...

2. Do not buy it if it is expensive. Be very patient.

3. Buy it if it is cheap and hold onto it for as long as possible.


What I am saying is, buyers who jump into purchasing a house when they are expensive are not investing wisely.  

Houses like shares go up and down, people like always have short memories - I think they are forgetting houses can go down.

I'm not in the Wayne bear crash depression camp, but he does have some valid points about housing and it is overvalued - simple as that.

Ben Graham said it himself "Never, ever pay too much for anything"


----------



## globalreverb (11 August 2006)

I guess Krisbarry would be eating his words.
Almost a year ago he said, as the originator of this thread, " only a fool would be buying realestate in this current market."

In that time Perth real estate has climbed around $150,000.
Well there must be many fools out there, including me !
Rob.


----------



## Realist (11 August 2006)

globalreverb said:
			
		

> I guess Krisbarry would be eating his words.
> Almost a year ago he said, as the originator of this thread, " only a fool would be buying realestate in this current market."
> 
> In that time Perth real estate has climbed around $150,000.
> ...





Well Unless you sell today Rob - it aint over yet!!

Perth may stay overvalued for many years to come and interest rates may not rise any further.  

I would not think either is possible though.

I'm not saying you did the wrong thing, only time can tell that.


----------



## Smurf1976 (11 August 2006)

More houses appearing for sale in Hobart at prices below the "band" of the past two years. Looks like it's breaking down finally. A nice 12.5% off so far seems to be achievable. Even more if you put in an offer and don't simply pay the asking price.

But let's not underestimate the benefits of real estate. LEVERAGE. Those who bought with a 95% mortgage, a situation not uncommon for first home buyers, in typical suburbs of Sydney or Hobart 2 years ago are now well and truly bankrupt, at least in a technical sense. They have lost ALL their deposit and repayments over the past 2 years. Don't buy over priced assets, especially not with high leverage...


----------



## wayneL (11 August 2006)

But... but... but.... houses never go down!


----------



## Bronte (11 August 2006)

"In the United Kingdom, the records from the Domesday Book of 1068
show that capital growth (in property) has averaged almost 10%
for more than 900 years."


----------



## wayneL (11 August 2006)

Bronte said:
			
		

> "In the United Kingdom, the records from the Domesday Book of 1068
> show that capital growth (in property) has averaged almost 10%
> for more than 900 years."




Reference?


----------



## Bronte (11 August 2006)

Bronte said:
			
		

> "In the United Kingdom, the records from the Domesday Book of 1068
> show that capital growth (in property) has averaged almost 10%
> for more than 900 years."



_"Perth real estate is certainly not stagnant.
86 people a day are presently migrating to WA
This equates to 50/60 extra homes required per day.
We have been busy buying prime real estate since 1998"_
Quote from last October...this thread.

*We have been buying at least one property per year since 1998
Today we decided to list our first property to Sell.*


----------



## Bronte (11 August 2006)

wayneL said:
			
		

> Reference?



'Building Wealth through Investment Property'  by Jan Somers (Page 46)


----------



## wayneL (11 August 2006)

Bronte said:
			
		

> "In the United Kingdom, the records from the Domesday Book of 1068
> show that capital growth (in property) has averaged almost 10%
> for more than 900 years."




Run an excel spreadsheet to blow that one up.

This is the value of an average property working backwards from £200,000 at 10% for 900 years

£0.000000000000000000000000000000012274562975616

LOL


----------



## wayneL (11 August 2006)

... if a property was worth £0.01 900 years ago, and appreciated 10% per year, here is what it would be worth today:

£162,938,591,294,311,000,000,000,000,000,000,000.00

LOLOLOLOLOL


----------



## Bronte (11 August 2006)

Hehe! It did seem a little too good to be true Wayne.  
We have made well over 10% per year over 20 years.


----------



## Bronte (11 August 2006)

The book did spur us along to buy lots of property...so it can not all be bad..can it? LOL


----------



## Bronte (11 August 2006)

Bronte said:
			
		

> The book did spur us along to buy lots of property...so it can not all be bad..can it? LOL



'Building Wealth through Investment Property' by Jan Somers
Bought in October 1998 Australian author....


----------



## Bronte (11 August 2006)

Jan also writes: 'In the United States, the average long-term growth trend from 1968 to 1990 was 8%, while inflation over the same period averaged 5.9%'

Plenty of suburbs in Perth have returned 10% capital growth over the last 30 years. Reference: The West Australian 24th May 2003


----------



## Bronte (11 August 2006)

Bronte said:
			
		

> Plenty of suburbs in Perth have returned 10 capital growth over the last 30 years. Reference The West Australian 24Th May 2003




These are the suburbs we concentrated on.....thanks to Jans book  
South Perth
Victoria Park
Scarborough
Mount Lawley
Innaloo
Inglewood
East Vic Park
Leederville


----------



## Bronte (11 August 2006)

Do you have any Investment Property Wayne?


----------



## wayneL (11 August 2006)

Bronte said:
			
		

> Do you have any Investment Property Wayne?




In pommyland, but not expecting it to hold it's preposterous valuation.


----------



## wayneL (11 August 2006)

Bronte said:
			
		

> Jan also writes: 'In the United States, the average long-term growth trend from 1968 to 1990 was 8%, while inflation over the same period averaged 5.9%'
> 
> Plenty of suburbs in Perth have returned 10% capital growth over the last 30 years. Reference: The West Australian 24th May 2003




Coincidently, this is the period of the baby boomers influense. Demographics are changing and we are entering the phase of the great die-off.

Property will be is massive oversupply sometime over the next 30 years.


----------



## krisbarry (11 August 2006)

Bronte said:
			
		

> _"Perth real estate is certainly not stagnant.
> 86 people a day are presently migrating to WA
> This equates to 50/60 extra homes required per day.
> We have been busy buying prime real estate since 1998"_
> ...




But twice that head to QLD and their housing market is pretty flat (1000 people a week), so your argument doens't stack up.

Its the mining boom, not so much the migration


----------



## Bronte (11 August 2006)

wayneL said:
			
		

> In pommyland, but not expecting it to hold it's preposterous valuation.



So have we Wayne....in Birmingham, England.
Where is / are yours?


----------



## wayneL (11 August 2006)

Bronte said:
			
		

> So have we Wayne....in Birmingham, England.
> Where is / are yours?




Somerset & East Sussex

Looking at Gloucestershire once prices are slaughtered. Could have a look in Krautenbergerland soon too.
 Cheers


----------



## Bronte (11 August 2006)

Very nice.... we used to own a holiday home in Minehead ?


----------



## wayneL (11 August 2006)

Bronte said:
			
		

> Very nice.... we used to own a holiday home in Minehead ?




Quite close then.  I've seen that on the map. (can't find it now though lol) closest one is probably nr. Yeovil


----------



## wayneL (11 August 2006)

wayneL said:
			
		

> Quite close then.  I've seen that on the map. (can't find it now though lol) closest one is probably nr. Yeovil




Found it... not as close as I thought


----------



## WaySolid (12 August 2006)

wayneL said:
			
		

> Coincidently, this is the period of the baby boomers influense. Demographics are changing and we are entering the phase of the great die-off.
> 
> Property will be is massive oversupply sometime over the next 30 years.



Well only in the normal bust boom cycle of new dwelling construction perhaps. I certainly have seen nothing in the demographic research I have read that would indicate doom for the Jan Somers style of investing in Australia. It's a very robust methodology which will stand the test of time I believe.

If you are not aware that average people per house is falling rapidly then it might appear likely that there will be less demand for dwellings from an ageing populace. Also there is the possibility that Australia's attitude to immigration (think 200 mill in Indonesia, 1 Bill in India, 1 Bill in China, many young skilled and happy to come to Australia). Suffice is to say that there are plenty of things to consider when forecasting.

I predict for the next 30 years property located in an Australian capital city will continue to do pretty much what it has done for the last 50, which is grow a bit over the rate of inflation, roughly 10.5% for houses.

Just an aside as I spend a lot of time reading about such issues there is an excellent article about why inflation is being pushed into things like housing and service industries (things China can't make for us) published by GaveKal research if anyone wants to do a bit of digging. Overpriced? According to what measure and why should that still be relevant?


----------



## wayneL (12 August 2006)

WaySolid said:
			
		

> Well only in the normal bust boom cycle of new dwelling construction perhaps. I certainly have seen nothing in the demographic research I have read that would indicate doom for the Jan Somers style of investing in Australia. It's a very robust methodology which will stand the test of time I believe.
> 
> If you are not aware that average people per house is falling rapidly then it might appear likely that there will be less demand for dwellings from an ageing populace. Also there is the possibility that Australia's attitude to immigration (think 200 mill in Indonesia, 1 Bill in India, 1 Bill in China, many young skilled and happy to come to Australia). Suffice is to say that there are plenty of things to consider when forecasting.
> 
> ...




If we are to analyse holistically then we then must consider factors such as peak oil, environmental concerns, climate change. The American/Australian style of sprawing city is absulutely unsustainable and this will become apparent in an uncomfortably short time frame.

The farmers in my area having the worst season in living memory... climate change? Will Australia even be able to feed itself under the twin burden of expensive energy and changing agricultural conditions?

The growth in housing above inflation has been an anomoly, a statistical abberation of the post ww2 period. Over the long term there have been enourmous lengths of time where housing stagnated and/or moved down. 
Most housing trend charts are conveniently truncated at the post ww2 beginning of the baby boom giving an inaccurate picture of the long term trend.

Further rises in R/E above inflation are not economically sustainable. It's been a fantastic game, but the game is over.


----------



## Realist (12 August 2006)

> I predict for the next 30 years property located in an Australian capital city will continue to do pretty much what it has done for the last 50, which is grow a bit over the rate of inflation, roughly 10.5% for houses.




I predict that you are totally, utterly, and completely wrong.

There's no way a $500,000 apartment in Sydney will be worth $8M in 26 years.

No way in hell.


----------



## Bronte (12 August 2006)

Bronte said:
			
		

> These are the suburbs we concentrated on.....thanks to Jans book
> South Perth
> Victoria Park
> Scarborough
> ...




We also bought into a retirement complex in Dianella.
Not a 10% area although has given great returns


----------



## wayneL (12 August 2006)

Realist said:
			
		

> I predict that you are totally, utterly, and completely wrong.
> 
> There's no way a $500,000 apartment in Sydney will be worth $8M in 26 years.
> 
> No way in hell.




Not unless wages go to $2,500,000 p/a


----------



## nizar (12 August 2006)

Realist said:
			
		

> I predict that you are totally, utterly, and completely wrong.
> 
> There's no way a $500,000 apartment in Sydney will be worth $8M in 26 years.
> 
> No way in hell.




I read somewhere that over the last 30 years in the UK (london); an apartment costing 100k pounds in 1976 would be worth 3m pounds in 2006.

Thats 30-fold, an outperformance of the FTSE-100 which was up only 19-fold in the same timeframe.

Obviously since i have no link theres no credibility for this post but im sure i did read that somewhere

Wayne; what were average wages 26 years ago? relative to house prices?


----------



## Bronte (12 August 2006)

Bronte said:
			
		

> These are the suburbs we concentrated on.....thanks to Jans book
> South Perth
> Victoria Park
> Scarborough
> ...




It is not all good news.
We bought into the "Chocolate Factory Apartments" some 5km from Sydney CBD back in 2000. You would think we made some money....No way!
Six years later we will be lucky to get our money back


----------



## wayneL (12 August 2006)

nizar said:
			
		

> Wayne; what were average wages 26 years ago? relative to house prices?




I don't know nizar.

But I do know the average yearly wage to average house price ratio is about 3.5 times.

We are at about 6-10 times now, depending on the area


----------



## NettAssets (12 August 2006)

wayneL said:
			
		

> The growth in housing above inflation has been an anomoly, a statistical abberation of the post ww2 period. Over the long term there have been enourmous lengths of time where housing stagnated and/or moved down.
> Most housing trend charts are conveniently truncated at the post ww2 beginning of the baby boom giving an inaccurate picture of the long term trend.



Have not really started looking at the trends yet but I would have thought that the post WW2 period pretty well picks the point where the "working class" really started to join in home and land ownership so in essence to compare prices before this time might be an even greater folly. I think we have not had a period in history before when so great a portion of the population where able to accumulate "wealth"
Maybe the period prior to WW1  was a precursor for what was to come but a fair percentage of the private ownership starting then was transfered back to the banks and landlords in the great depression. 
I may be making too many assumtions here I'll have to go for a google and see if the private ownership in the 17 and 1800's was more than I think. 
regards
John


----------



## wayneL (12 August 2006)

NettAssets said:
			
		

> ....I'll have to go for a google and see if the private ownership in the 17 and 1800's was more than I think.
> regards
> John




John,

I actually had a webpage saved that had all those statistics, graphs, the whole bowl of wax. But through various hard drive crashes and computer changes I lost the link.

Do you think I can find it again via Google? Haha, Fat chance!!

I'll keep trying though.

Hows the coutryside looking out your way?

Cheers


----------



## NettAssets (12 August 2006)

wayneL said:
			
		

> John,
> Hows the coutryside looking out your way?
> 
> Cheers



Pretty dry although not as bad as up your way. Drove up a couple of weeks ago for a funeral and there is a lot of pain between here and there. 
A lot of stock are getting sent to the coast on agistment because there is no feed here but the crops will probably break even - if we keep getting these little spots of rain.
Does not help us contractors much - my June/July income is down to about 10% of last year and there will not be any harvest to speak of and the little extras we usually pick up have dried up (pun intended). 
I just hope Legend can get Mt Gibson going so I can get some rigs in there and at least pay their rego. 
The farmers are going to be in a worse plight of course but they haven't felt it yet around here because they wouldn't be expecting any income until December - Jan anyway
Regards John


----------



## Smurf1976 (12 August 2006)

wayneL said:
			
		

> I don't know nizar.
> 
> But I do know the average yearly wage to average house price ratio is about 3.5 times.
> 
> We are at about 6-10 times now, depending on the area



Markets generally revert to the mean eventually. The question is how we get there? Wages up 100% or house prices down?

Judging by what I'm seeing around me, house prices are falling for those not obsessed with buying a specific house but who just want, for example, a 3 bedroom brick house in a given suburb.


----------



## robots (12 August 2006)

hello,

if you call the current trend in property stagnate, then I would have it any day

quality property is solid across AUS

look out for 10% interest rates though, hold on

thankyou
robots


----------



## Big Jim (13 August 2006)

robots said:
			
		

> hello,
> 
> if you call the current trend in property stagnate, then I would have it any day
> 
> ...



10% is optimistic but I hope you are right.


----------



## WaySolid (13 August 2006)

Realist said:
			
		

> I predict that you are totally, utterly, and completely wrong.
> 
> There's no way a $500,000 apartment in Sydney will be worth $8M in 26 years.
> 
> No way in hell.



Units have compounded at a rate several percent under houses. Your example reflect a CG rate of 11.25% so perhaps you might check your maths.

http://www.investopedia.com/calculator/CAGR.aspx

There is data going back a long way backing up these compounding figures. I have personally looked as far back as the 1850's for one of the suburbs I track (Toowong in Bris). Some of the data I have collected includes hundreds of years of pricing information and studies from such places like Norway, Holland and the US. Apparently there is data going back to the domesday book in England around, I can't verify this however as I haven't dug that deep with my research. The rule of thumb is inflation + a tad (1-2% in the long term studies) for the compounding figures. Survivorship bias is the biggest thing to consider in such long term studies, consider for example a mining town that might no longer exist, the long term CG for this town would not be so flash.

I would be interested in any research you have backing up your contention as I collect data involving historical investing as a hobby. I like to think it helps my investing but thats harder to quantify 

With the age of fiat currencies I wouldn't be at all surprised if we do indeed see your 500k unit in Sydney actually priced at 8M in 26 years, but I would still lean towards a prediction based on historical compounding rates.

This following is an interesting bit of data from Barry Pickering who runs a property group called onsite direct in QLD. Predictions made late 2004, make of it what you will. His point which was very valid is how back in 1970 people would have said no way in hell Sydney property in 2004 would average above 500k and so on.

1970:
Average house price: 12k
5.5% yield
$13/week rent
$55/week average income
Rent is 23.63% of average income
Kingswood's sell for 2k
Milk cost 8 cents

2000:
Average house price: 180k
5.5% yield
$190/week rent
$780/week average income
Rent is 24.35% of average income
Commodore's sell for 30k
Milk costs $1.19

2030:
Average house price: 2.7 million
5.5% yield
$2855/week rent
$11,700/week average income
Rent is 25% of average income
Kingswood's sell for 450k
Milk costs $18


----------



## WaySolid (13 August 2006)

wayneL said:
			
		

> If we are to analyse holistically then we then must consider factors such as peak oil, environmental concerns, climate change. The American/Australian style of sprawing city is absulutely unsustainable and this will become apparent in an uncomfortably short time frame.
> 
> The farmers in my area having the worst season in living memory... climate change? Will Australia even be able to feed itself under the twin burden of expensive energy and changing agricultural conditions?
> 
> ...



Hi Wayne,

Just read your post, good to see some data (well at least a graph)

It's an interesting discussion which I don't fancy getting too involved with. I can however dig up the historical data I have to show evidence for inflation + 1-2% over longer term in Holland and Norway, which would trump your data in terms of a longer time frame, what is really the statistical abberation I wonder? 

I guess being flimsy machines that live not so long compared to the length of these studies it's all a bit academic perhaps. 

My research in Toowong revealed how massive the Aussie RE bubble of the 80's was (The 1880's that is). It took a long time for that round of speculation to be smoothed over, perhaps it could be argued that something similar happened up till 2003 in Aus. 

I have plenty more thoughts on the subject but my girlfriend is getting angry at me for wasting my time at the moment so I gotta run... 

A quick cut n paste from my research about Toowong in Brisbane..

I sourced these brief notes from a book I recently read on the history of Toowong in Brisbane. AA.

1823 - Oxley first surveyed the land around the river
1841 - Brisbane was a run down penal settlement with 161 convicts and 59 free people.
1842 - Moreton Bay first opened to free settlement.

A quote from the time I particulary like.

"The Brisbane River was abundant with fish (137 species) including the now rare (of not extinct) Brisbane River Cod, one of which is estimated to weigh 36.5 kg. As the clear water, sand and shingle bottom and sandy beaches disappeared from the Brisbane River, so to did these fish and the deep swimable holes go from Toowong Creek."

Population Toowong :

1900 = 4,700
1920 = 10,000

Total Valuation of Toowong Land in Pounds

1881 = 151,619
1893 = 359,000
1895 = 285,000
1900 = 271,000
1907 = 214,000
1924 = 429,976
2003 = 2 Billion

* Represents the collapse of the 1880's land speculation bubble.

Cheers,
Andrew.


----------



## wayneL (13 August 2006)

I have a problem with the hypothesis that housing increases at 2% greater than inflation.

Lets take the starting point of a house at 3.5 x earnings.

After 20 years houses will be 5 x earnings
After 50 years houses will be 8.7 x earnings
After 100 years houses will be 23 x earnings
After 150 years houses will be 60 x earnings
After 200 years houses will be 160 x earnings
After 300 years houses will be 1,118 x earnings

Clearly this is ridiculous, and this observation, even if apperantly axiomatic during our lifetime thus far, must be punctuated by a calamatous breakdowns in said axiom. In other words the axiom is problematical.

We do see this from time to time and is evident in such markets as Japan, Hong Kong, Argentina, and the west during the great depression/WW2.

Prices will trend ever upwards so long as we have fiat currency and governments willing to debase them for short term political ends. ( and so will the measurement of inflation be understated) However, there will be oscillations in this trend around the concept of "value".

Overvaluation will elicit corrections, undervaluations will incite reactions. So it is in any market. We here on this board observe the truth of that every day.

Many believe a correction is imminent.


----------



## clowboy (13 August 2006)

WayneL,

I actually got it to be ~4.5 after 20 years but my calcs where very rough.

They also neglect to account for wage growth.

Im not sure about waysolid's 2000 avg wage either as I am pretty sure that the avg wage was/is not $40,000PA although that is based on WA Stats

Based on his stats though housing has gone from 4.19*earnings to 4.5*earnings and I would be comfortable saying that while it may not be as high as 2% housing does increase at a rate above inflation over the longer term.

I guess though that your main argument lies in the fact that the reported rate of inflation is a load of ****


----------



## WaySolid (13 August 2006)

wayneL said:
			
		

> I have a problem with the hypothesis that housing increases at 2% greater than inflation.
> 
> Lets take the starting point of a house at 3.5 x earnings.
> 
> ...



Ok my memory. http://www.somersoft.com/forums/showthread.php?t=24714

It turns out that it's a lot less than 1-2% over inflation (which I quoted from memory), and the excess performance is indeed in modern times (post ww2). 

What you said makes sense to me.


----------



## clowboy (14 August 2006)

Interesting article in todays west (page 3).  Not sure if you caught it WayneL.

Have attached the table(hopefully) that accompained the articles.

It clearly shows that the cost of housing has increased by comparison to wages over the last 60 years.  From a base of 2-3*earnings to 6-26* earnings.  These figures fit rather well into your cals I would think greatpig.

Also interesting to note the lack of groth in wages in the last 20 years.

Over 60 years there was growth over 400% then 740% then a mere 150% for each sub 20 year period.  Also the last period includes the recent boom in housing, I wonder if this data indicates that wages are likely to increase rapidly in the near term?

Also it should be noted that the suburbs in the table are the more premium suburbs for perth but the article also contained some stats for more avg suburbs like the one I live in and in 1946 a block of land would have cost you $30 for an 1000m2, now it would cost you $250,000 for 400m2 while the avg wage has gone from $600Pa to $50,000 PA. So roughly speaking the land component of property has gone from 0.05* earnings to 12.5*earnings.

Cheers


----------



## Realist (15 August 2006)

What goes up must come down!!!


----------



## Smurf1976 (21 August 2006)

The blame game is well and truly underway. More importantly, the thinking has changed from "rising house prices are good" to "how to REDUCE house prices and who to blame for them being so high".

The Prime Minister is publicly stating that high prices are a problem. If that isn't a warning of impending falls then I don't know what is. Love him or hate him, John Howard is pretty good at politics - he wouldn't be "wanting" lower prices if it wasn't likely to happen. He needs to prepare the masses to see lower prices as "good" and thus keep voting for him... 

And now WA has jumped ahead of the rest by doing exactly what the PM wants by increasing land supply. Whilst WA prices will probably rise for a while yet, someone living on that new land obviously means someone NOT living somewhere else - even in another state. And of course there's a fair chance that the other states will follow in due course rather than cop too much blame. More supply, same demand - you know the story...

http://www.abc.net.au/news/newsitems/200608/s1719179.htm
http://www.abc.net.au/news/newsitems/200608/s1719352.htm


----------



## Freeballinginawetsuit (21 August 2006)

WaySolid said:
			
		

> Ok my memory. http://www.somersoft.com/forums/showthread.php?t=24714
> 
> It turns out that it's a lot less than 1-2% over inflation (which I quoted from memory), and the excess performance is indeed in modern times (post ww2).
> 
> What you said makes sense to me.




Reply intended for WayneL

If a correction is immenent, why do punters camp out for days at new land releases in West Oz. You were probably considering the same in Gero ( youre home town) when land in Wandina went from 68k to 120k to 180k and finally 250k all in 2 and a half years. More so you probably didn't buy any being the Bear you are. I did on Barrett Drive, bears always dip out in the end.


----------



## Freeballinginawetsuit (21 August 2006)

Its also interesting to note the date this post commenced. Since August last year the average/decent suburb price of a home in Perth has gone up a further 100k.


----------



## markrmau (21 August 2006)

Not in all markets.

http://www.smh.com.au/news/national...-in-debt-crisis/2006/08/20/1156012414995.html


----------



## krisbarry (21 August 2006)

markrmau said:
			
		

> Not in all markets.
> 
> http://www.smh.com.au/news/national...-in-debt-crisis/2006/08/20/1156012414995.html




Although sad, its good to see.

Finally the shoe is on the other foot so to speak.

What happens in Sydney now will spread Australia wide within 2-4 years


----------



## WaySolid (21 August 2006)

Why quote that paragraph and ask Wayne for a reply? I don't see the connection between the two.

WA is/has? experienced a big boom, just like most things it appears they are a few years behind the east coast. 

Just how much fair value has been overshot in the frenzy remains to be seen. I can't think of any smart investors who are saying anything but be very careful with property in WA presently, it's just the way the world works unfortunately that all parties have to end. I believe something very similar happened during the last commodities boom with WA RE.


----------



## Judd (21 August 2006)

Possibly but notice who bought the property and the occupation of those who bid for the other properties.  It certainly was not first home owners and it was highly likely that the couple who lost the property were.


----------



## clowboy (21 August 2006)

Maybee it is still the smart money buying all the property in WA at the moment but I doubt it.  It would seem to me that the smart money is hapy to hold with caution but not willing to buy in ATM.  Everyone who owns any property that I have spoken too thinks (or at least acts) like they are a guru.

I was talking to one associate who owns 4-5 houses and has done most of the boom.  He has done very well for himself but I can't for the life of me grasp his optimism.  I was asking if he was going to reduce his mortage level or diversify into anything else anytime in the future and he replied that he may one day but he is happy just holding property.  I asked how he felt about the possibilty of a fall in prices (short to medium term that is) and he replied that he did not think it was possible.  For someone to make a comment like that is just nuts.

Personally I have no clue where or when the BOom in WA  will end but I think it more important calculating if you can afford to make the payments if property falls and if you can handle the loss in capital if property falls than trying to decide if the boom is over or starting.


----------



## WaySolid (21 August 2006)

Re: The latest SMH article about 'battlers getting burnt' 

The best investors either sold out or more likely transferred CG into the equity markets and have their LVR's under enough control so that they will be ready to go again for the next round with property. It's the naive investors and FHO's who will be hurt the most unfortunately.

Just the natural distribution mechanism of capatilism at work.


----------



## Bronte (21 August 2006)

wayneL said:
			
		

> Sorry, but battman hasn't a clue what he's talking about.
> One must look at wages/ price ratio. Oz is expensive.
> Start thinking like a *value* investor and you'll see little opportunity. (You'll have to go looking)
> We're in a Wave 5 blow off top folks.



_Quote from last October_
Controversial comment Wayne.
Perth +34% in 12 months


----------



## WaySolid (21 August 2006)

Interesting data, thanks for posting it.

One thought is that multiples of the house/salary ratio are higher now simply because they can be. Everything china produces and we consume is a fraction of the price/salary ratio it would have been 60 years ago which basically means a higher % of income is available to push inflation into assets and services in the economy.



			
				clowboy said:
			
		

> Interesting article in todays west (page 3).  Not sure if you caught it WayneL.
> 
> Have attached the table(hopefully) that accompained the articles.
> 
> ...


----------



## WaySolid (21 August 2006)

wayneL said:
			
		

> Run an excel spreadsheet to blow that one up.
> 
> This is the value of an average property working backwards from £200,000 at 10% for 900 years
> 
> ...



Well yes thats probably true, haven't checked it though.

Probably similar issues apply to RE as to why investing in any asset class that appreciates doesn't eventually appreciate to the edge of the universe at some point in the future. I'm too tired to work out what they might be presently but I still believe that for very long stretches of human history property has compounded at a rate higher than inflation, and certainly for the extent of my time on this planet in Australia. Jan Somers book is still a very well researched piece of investing literature for RE.

One point that gives property a bit more breathing space in terms of compounding is the higher use feature. Your county will become farms, then smaller farms, castles, houses, smaller houses, flats, higher story flats, hi rises and so on.


----------



## Bronte (21 August 2006)

WaySolid said:
			
		

> Jan Somers book is still a very well researched piece of investing literature for RE.



Very true WaySolid. She was certainly our inspiration 
We bought one property per year, thanks to Jan Somers books.


----------



## Bronte (21 August 2006)

Bronte said:
			
		

> Very true WaySolid. She was certainly our inspiration
> *We bought one property per year*, thanks to Jan Somers books.



Also check out "The Investors Club"


----------



## Realist (21 August 2006)

Jan Somers is as useful as someone writing a "Buy tech shares cause they always go up" book in 1999.

One of her theories "continue to purchase property by refinancing so that your liabilities (your borrowings or debt) increase with your assets."

Is laughable.

As Ben Graham says "A investment company (house) is not a good investment if you pay too much for it"


People profit in good times, then write books as if they are experts.


Anyone who used Jan Somers theories in Sydney over the past 3 years will have lose alot of money and continue to do so.


Some punters here have taken a swipe at Ben Graham for going bankrupt in 1930. The fact he did means he has seen good times and the worst of times and his theories take this into account. He knows as well as anyone that investing can be dangerous. 

Anyone read the book care to comment on what Jan Somers has to say about Sydney property prices falling and rental yields at an all time low, while shares are doubling?   Does she recommend diversifying into shares? Shares of course outperform property, require little maintenance, have tax advanatges, low expenses,  allow you to diversify easily, you can buy and sell easily. And require little time or involvement.


----------



## Realist (21 August 2006)

From the SMH this morning.

Perth residents take note!!!     

A THREE-BEDROOM brick-veneer house in St Clair sold for just $260,000 at the weekend - down about 42 per cent from its last sale at $450,000 in 2003 in a further sign of the depressed state of the Sydney property market.

Only one person bid on the house in the city's west. The mortgagee sale was forced after the owners could not meet the interest payments on the $405,000 they borrowed to buy the house at the peak of the market.

Auction clearance rates are hovering around 48 per cent since the recent interest rate rise, but plummeting property prices have meant many vendors are confronting negative equity, where they owe more on the property than it is worth.

The Herald checked 16 properties in south-western and western suburbs listed at the weekend and found 60 per cent had prices or had attracted offers at a discount to their last sale price.

At the St Clair auction the buyer was an investor who will spend about $40,000 on essential repairs before leasing it at about $270 a week, said its L.J. Hooker St Marys selling agent, Michael Beatty.

Increasing petrol prices appear to be compounding the impact of repeated interest rate rises on properties in Sydney's outlying suburbs by driving prices down.

Lethbridge Park, near Penrith, recorded the second highest fall, when a townhouse that sold for $257,000 in 2003 was resold by mortgagees for $156,500, reflecting a roughly 40 per cent fall.

At Heckenberg, a four-bedroom house that sold for $330,000 in 2003 resold at $255,000 in another mortgagee sale. Four of the seven registered buyers put in bids before the Adaminaby Street house sold at an approximate 22 per cent discount to the property-boom price.

"There are some people around Liverpool who think that prices have further to fall, but I couldn't imagine this type of house will fetch less in six months' time," said its selling agent, Ray Dimarco.

At Parramatta, mortagees accepted $541,500 for an unrenovated house that fetched $736,000 in 2003 when it was sold as a deceased estate. The bank lent $580,000 on its 2003 sale.

Even the inner-suburban areas are showing signs of depressed prices. In Lilyfield a four-bedroom house on 607 square metres last sold at $1,355,000 unrenovated in boom-time 2003.

It attracted a $1,179,000 top bid after its recent renovation by its owner-builder. Two registered bidders competed at the on-site auction but the property was passed in well short of the owner's expectations. The freestanding house now has a $1.35 million asking price.

Given it has been 16 years since the last recession, long-time estate agents fear the fate of a generation of owners who had not experienced having a loan when times were tough.

Mr Beatty said: "There was a wave of people punting on the expectation of constant price rises until well into 2004, even after the three interest rate rises of late 2003. There has been significant price deflation and many now have negative equity in their homes.

"There are some sad stories. But we have to show the sellers the comparable sales and say honestly this is where the market is realistically at."


----------



## Bronte (21 August 2006)

Bronte said:
			
		

> *We bought one property per year*, thanks to Jan Somers books.



'BUILDING WEALTH _in Changing Times' _ by Jan Somers 1994
We are very glad we listened to Jan Somers & The Investors Club.  
Now thanks to you Realist & other members we are selling a couple.


----------



## Realist (21 August 2006)

That is wise Bronte 

They may go up a little more, but they'll sure as hell go down a lot more in years to come.  When? no-one knows but it will happen, it is obvious.

Sydney is the past example to study.


----------



## Bronte (21 August 2006)

Some of our property has tripled in value in a relatively short space of time.
We could handle a 42% retracement.....if we had to


----------



## Freeballinginawetsuit (21 August 2006)

WaySolid said:
			
		

> Re: The latest SMH article about 'battlers getting burnt'
> 
> The best investors either sold out or more likely transferred CG into the equity markets and have their LVR's under enough control so that they will be ready to go again for the next round with property. It's the naive investors and FHO's who will be hurt the most unfortunately.
> 
> Just the natural distribution mechanism of capatilism at work.





Exactly correct. Of course multiple property investors hold, stamp duty and capital gains would kill you if you sold. You purchase your property in your company name/trust, spend coin on maintenance and rent it for maximum return. You leverage against your property and in my case I trade stocks. The point is that you would have to have been nuts not to have gotten into  investment property in W.A. over the last 2 years. The prices of real estate may go down 10%, but they have already gone up 40% in the last year.


----------



## Realist (21 August 2006)

Bronte said:
			
		

> Some of our property has gone up close to 300% in a relatively short space of time.
> We could handle a 42% retracement.....if we had to




Really?    

Think again....

A $200,000 investment property costs say $225,000 to buy when you take into account stamp duties, mortgage fees, insurance, empty time, time spent looking etc.

Say you spend $10,000 on it for a few minor repairs and stuff over the next few years.

You then pay say $5,000 a year for 4 years in mortgage repayments less rent received. There' ll be times it's empty, you gotta pay agents fees etc. etc.

You claim half of that back in tax...

Okay to cut to the chase.

Your $200,000 investment cost you at least $260,000 over 4 years.

It is now gone up 300% to $600,000      You tell anyone who'll listen how smart you are!!

4 years later you've spent another $20,000 on stuff and it then drops 42%!!! 

It is now worth $348,000.  You paid $280,000 in that time.  Over 8 years.   

You've now had weeks with it empty, no rent at all, cause all the young people have gone to Sydney, the Resource boom is over and Perth has high unemployment. It is a problem city everyone wants out.

You have to sell.

You now pay tax on the tiny profits when you sell it. You pay agents fees to sell it (tough times remember no-one is buying)

You've made absolutely nothing when indexed to inflation!

Infact You've probably even made a loss when comparing it to a term deposit. And you're stressed out to the max, empty house, no rent, can't sell it.

Think again, if you think investment properties are great to hold.  

And think again if you think a 300% gain less a 42% fall is still good.  IT AINT!  Do the maths!


----------



## Freeballinginawetsuit (21 August 2006)

Realist said:
			
		

> Really?
> 
> Think again....
> 
> ...


----------



## Realist (21 August 2006)

Freeballinginawetsuit said:
			
		

> What a naive post. Most property investors are business owners who purchase property in their company/trust name..




 

Naieve, hahaha.   Where is your proof?  Most property investors are Mums and Dads you know it and I know it, go on admit you are wrong.




> They negative gear, claim all the property maintenance watch the property appreciate in value and levarage the gains.




Do you even know what "negative gear" means?  you say it as if it is a good thing.  IT AINT!!!!!!!

Quite simply it means they lose money and claim some of it back off tax.   

Negative gearing is often a bad thing.



> levarage the gains.




What gains?

They've gone down significantly in Sydney the last 3 years.  




> I feel sorry for the young wage earners who earn 1k a week and are considering a martgage with a 20k deposit, at todays prices they are stuffed, a default waiting to happen. They simply cant afford a 10% decrease in property value.




Agreed.


----------



## Freeballinginawetsuit (21 August 2006)

Realist said:
			
		

> Naieve, hahaha.   Where is your proof?  Most property investors are Mums and Dads you know it and I know it, go on admit you are wrong.
> 
> 
> 
> ...





I'm not a Mum or Dad, and my propertys have done quite well for me, very happy thus far. I simply don't aggree with you realist.


----------



## Bronte (21 August 2006)

Bronte said:
			
		

> Some of our property has *tripled* in value in a relatively short space of time.
> We could handle a 42% retracement.....if we had to



The majority of our property has been purchased with "No money down"
Borrowed the lot...even 'set up costs'.
What is the ROI here? The tenant and taxman have been paying the mortgage repayments for us. 
Mostly *new* property and we claim *full* 'depreciation'


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## Realist (21 August 2006)

Freeballinginawetsuit said:
			
		

> I'm not a Mum or Dad, and my propertys have done quite well for me, very happy thus far. I simply don't aggree with you realist.





You live in WA.

Of course you think property is the greatest thing on earth at the moment.

Of course you think I am wrong about property investing cause house prices just keep going up right?

Perth is gonna overtake Tokyo soon right?

Did you read that article about Sydney property?

We've seen it all before.


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## Freeballinginawetsuit (21 August 2006)

Of course I am aware about the retreat in real estate value in Sydney over the last year.
I also believe W.A. may have some down side in the next few years, all my properties are on the coast with views and I think I am well placed.
Again that is my opinion and I don't really care if they go down a bit, they won't go down enough to affect the gains I have made on my original purchase price.

Cheers.


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## Realist (21 August 2006)

> The majority of our property has been purchased with "No money down"
> Borrowed the lot...even 'set up costs'.
> What is the ROI here? The tenant and taxman have been paying the mortgage repayments for us.
> Mostly new property and we claim full 'depreciation'




Bronte, if you can't work out your own ROI I worry for you. Seriously.

As I say with shares, work out all expenses - brokerage, time, fees, tax, books, courses, etc. etc.  and take them off your profits.  Then index that against inflation.

do the same with your house.  Include all time spent, agents fees, empty rent time, tax deductions, tax owed, duties, repairs, paint, carpet whatever.

Take them off your supposed profit - take out any tax owed then index that against inflation.

I have no doubt you'll be ahead of course - Perth has boomed!!

My point is thought fast forward 10 years and you may not be ahead.


----------



## Bronte (21 August 2006)

The ROI here is absolutely HUGE!  

Realist, How would you class yourself financially?
Broke / Poor / Doing OK / Wealthy.....whatever!


----------



## Realist (21 August 2006)

Freeballinginawetsuit said:
			
		

> Of course I am aware about the retreat in real estate value in Sydney over the last year.
> I also believe W.A. may have some down side in the next few years, all my properties are on the coast with views and I think I am well placed.
> Again that is my opinion and I don't really care if they go down a bit, they won't go down enough to affect the gains I have made on my original purchase price.
> 
> Cheers.




Probably not.

But in my original post it shows how you can lose alot of money when you take into account all costs and index it to inflation.

I have no doubt you are ahead now quite markedly probably, and will continue to be ahead for a long time.  The gap you are ahead will narrow now though.

Do not forget that WA is the emptiest state on earth, it is limited for young people, as boring as batsh*t compared to Sydney, London, New York, and if a resource bust hits you guys are gonna cop it, your youngsters will head east, just like ours headed west recently. Your investment properties will be empty and drop in value.

This will happen, maybe next year, maybe in 25 years - I do not know, but there is no doubt in my mind it will happen.

I think just about every WA resident could have seaviews if they wanted them.  You've got about 5,000 km's of ocean views available.  Don't fool yourself that looking at water is the be-all and end-all.  Sydney it is - but Sydney has the best harbour in the world and 5M people.  WA has ocean aplenty and no-one lives there.


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## Realist (21 August 2006)

Bronte said:
			
		

> The ROI here is absolutely HUGE!
> 
> Realist, How would you class yourself financially?
> Broke / Poor / Doing OK / Wealthy.....whatever!




Take a guess??

My age is between 28 and 35.


----------



## Bronte (21 August 2006)

Can you tell us please


----------



## Realist (21 August 2006)

Bronte said:
			
		

> Can you tell us please




Lets say I am about 30.

how much in money/assets should I have to be..

1)  Poor
2) Average
3) Rich

I will answer but I wanna see what you think first.


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## Bronte (21 August 2006)

Are you having trouble working out your age Realist????? 
You sound intelligent......
"Doing OK"


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## Realist (21 August 2006)

Bronte said:
			
		

> Are you having trouble working out your age Realist?????





Haha, I'm not that old.

I know it, but wont give an exact answer....    


a gentleman never tells his age.  :


----------



## krisbarry (21 August 2006)

Realist said:
			
		

> Lets say I am about 30.
> 
> how much in money/assets should I have to be..
> 
> ...




If you are 30 years of age, you should have an average of $27k in your super fund, according to latest stats


----------



## Freeballinginawetsuit (21 August 2006)

Realist said:
			
		

> Probably not.
> 
> But in my original post it shows how you can lose alot of money when you take into account all costs and index it to inflation.
> 
> ...




Oceans views in W.A. (Perth are expensive, and sought after). I live on one side of a road that has a 2ook difference to the other side of the road (Marmion Ave). A small town down south, Yallingup has real estate value mor than most of Sydney, and very sought after ( I own a property here also). I must state That you are not only cynical but also unrealistic. Realist!. Certainly lacking in knowledge of W.A. real estate, maybe you live in BALGA!


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## Realist (21 August 2006)

Bronte, you seem to be one of those people that likes to box people, judge them on their financial worth, and someone that likes to listen to gurus. You probably think someone who lives in a flash house and drives a BMW is rich, and someone who rents and drives a Japanese car is poor.  

You'd be wrong if you do..


----------



## Freeballinginawetsuit (21 August 2006)

Realist said:
			
		

> Bronte, you seem to be one of those people that likes to box people, judge them on their financial worth, and someone that likes to listen to gurus. You probably think someone who lives in a flash house and drives a BMW is rich, and someone who rents and drives a Japanese car is poor.
> 
> You'd be wrong if you do..




Why would a rich person rent and drive a boonga car!. Lifes to short for that.


----------



## Bronte (21 August 2006)

Realist said:
			
		

> Bronte, you seem to be one of those people that likes to box people, judge them on their financial worth, and someone that likes to listen to gurus. You probably think someone who lives in a flash house and drives a BMW is rich, and someone who rents and drives a Japanese car is poor.
> You'd be wrong if you do..



No, I do not think that Realist  
I think you are 'Doing OK'....well are you?


----------



## Realist (21 August 2006)

Freeballinginawetsuit said:
			
		

> Why would a rich person rent  .




 

Read this link...

http://www.smh.com.au/news/national...-in-debt-crisis/2006/08/20/1156012414995.html


HOUSE PRICES CAN GO DOWN!!

Smart young people in Sydney rent, it is as simple as that.

I am smart, young and rent.

you are none of the above..


----------



## Realist (21 August 2006)

Bronte said:
			
		

> No, I do not think that Realist
> I think you are 'Doing OK'....well are you?




How much in assets would a 30 year old who is doing ok have?


----------



## robots (21 August 2006)

Hello,

those agents would of had the busiest days of their lifes today after that article

what bargains

thankyou
robots


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## tech/a (21 August 2006)

Freeballinginawetsuit said:
			
		

> Why would a rich person rent and drive a boonga car!. Lifes to short for that.





Hahaha maybe not to that extreme.
But I agree with Realist here.

Those who I know and are seriously financially independant do own their own homes but dont flash their money about---they dont have to.
Mate of mine who has a company with a T/O of $10 mill + and still growing loves driving his EH Holden around,sure he has a Porsch,which he races,but you'll see him in either the EH or the old Monaro.

I do know of many in our circle of friends who are constantly "Keeping up with the Jones's".They are the ones with Porsches,and huge mortgages,argue at dinner that they didnt drink the wine,make up every excuse under the sun why they cant make time to join you on your next vacation.

Frankly lifes too short for Keeping up with the Jones.
Living beyond your means is the quickest way to poverty and divorce court in my veiw.


----------



## Freeballinginawetsuit (21 August 2006)

Realist said:
			
		

> Read this link...
> 
> http://www.smh.com.au/news/national...-in-debt-crisis/2006/08/20/1156012414995.html
> 
> ...




You are a very simplistic young man by the sounds of it, certainly big on judgements for people you don't even know.

Maybe smart young people in Sydney rent?, dont own property and are quite happy living in a rental and getting kicked out at the landlords whim. 

Personally I would rather own my own home, enjoy spending money on it.
Its quite nice to contol your own destiny, and owning the roof over your head affords this security.

Whoever without punters like you I would have no one to rent my investment properties to!, and once a month I am glad that theirs still a few punters like you around.

Relax a bit Realist not everyones of the same opinion as you and just because they are not, dosen't make them wrong.


----------



## Realist (21 August 2006)

Freeballinginawetsuit said:
			
		

> You are a very simplistic young man by the sounds of it, certainly big on judgements for people you don't even know.
> 
> Maybe smart young people in Sydney rent?, dont own property and are quite happy living in a rental and getting kicked out at the landlords whim.
> 
> ...





Haha, read that article again mate. And again, and again until you figure out buying a house in Sydney the past 3 years was a real dud investment.

Now think about Perth, the population, the economy, the reality. Compare it to Sydney.  

Getting it yet?   

Virtually no-one ever makes much money on residential property despite all the hype.  The sharemarket is a far better investment. Sure there's a few punters who live and work as property developers.  If you break it down and look at reality they are working as builders and maintenance people and would normally be better off just getting a day job, or buying shares.

You keep doing what you're doing and I'll keep doing what I'm doing.

I will buy a home of course, when the time is right.  

Meanwhile I'll let my landlord pay the high interest rates while my savings and shares soar cause of my cheap rent! 

The best thing I ever did financially was not buy property!!


----------



## Freeballinginawetsuit (21 August 2006)

Realist said:
			
		

> Haha, read that article again mate. And again, and again until you figure out buying a house in Sydney the past 3 years was a real dud investment.
> 
> No think about Perth, the population, the economy, the reality. Compare it to Sydney.
> 
> ...





At least you have a Plan, onya!

Hope it works out good, dont be a renter though when you settle down with a missus and kids.

All the best with your future goals.

Mark


----------



## Realist (21 August 2006)

Freeballinginawetsuit said:
			
		

> At least you have a Plan, onya!
> 
> Hope it works out good, dont be a renter though when you settle down with a missus and kids.
> 
> ...




Thanks.


----------



## Jay-684 (21 August 2006)

I too am interested in both your asset portfolio value and your performances of late Realist. For two reasons,

1. I am 22 and would like to see where I'm at myself

and

2. You sometimes post about your BHP/RIO stocks etc going up/down $4 in a day... doesnt exactly get my blood pumping 

looking forward to a reply

In relation to the topic of the thread, I hope to purchase a residential property in Sydney in the next 12 months, somewhere near the Norwest Business Park before construction is completed.


----------



## Bronte (21 August 2006)

Realist said:
			
		

> How much in assets would a 30 year old who is doing ok have?



We hope you are going to tell us Realist


----------



## juddy (21 August 2006)

Realist said:
			
		

> How much in assets would a 30 year old who is doing ok have?





a lovely partner and a number of healthy happy kids. That's all you need really. The rest is just icing.

:


----------



## Freeballinginawetsuit (21 August 2006)

Bronte said:
			
		

> We hope you are going to tell us Realist




Any smart young guy should own a property.I must admit I'm of a different opinion to Realist and certainly don't jump to his assumptions.

Actually Realist, I'm 26 years old, have my own Business, www.contractaquaticservices.com.au, employ 12 people, own 3 properties and trade large parcels of short term shares.
I am a single dad who cares for his son, week about with my ex. Having my own home, business allows me to do this and afford my young bloke the security of a home and quality parenting with me.
I sincerely hope you aren't a worker bee,that dosent ever own his own home,answers to the boss and trades all his spare cash on RIN shares (500 shares at a time).


----------



## WaySolid (21 August 2006)

Realist what have been your experiences with your own property investing?

There are people making money from property investing in all economic environments. It might not have been a great situation for anyone just buying n holding/hoping over the last 3 years but boy the previous 3 years are still compensating me and many others for that. Perhaps people think that there will be no future booms? Perhaps the compound figures won't keep doing what they have been doing for 60 years, thats possible.

In the mean time I will enjoy continuing to make money from my property, I have experienced healthy CG over the last 2 years (Bris + GC) which = real dollars in my pocket for further investing.

PS.... Just read that you will buy your own place in the future, so that answers my first question.

Perhaps it's likely that when others who do have real experience tell you something is possible in a field in which you have no experience that they could be closer to the truth. There is always something to be gained from experienced investors if you are open to learning.


----------



## clowboy (21 August 2006)

Realist,

You make alot of statements without backing them up.

Have you even visited WA and seen the 5000km's of coast?

As for sydney being a dud investment over the last 3 years, yes yes it has, but what an insane investment perth has been over the last three years.

Considering you could have bought a 250,000 prop for zero $ down and turned that into 500,000 I think that is quite good, in fact I even know a few ppl that have had change left over after buying a property. (ie they got 100% finance and the 7k grant and had three k left in the bank for furniture)

What return does it equate to when you start with nothing, buy a house, have three grand left in the bank, then watch it double in three years?

Sure shares have had much better returns over the same time, but you can't leverage them to the same extent.

Anyway, hope your right, I hope this is the begining of the end for perth property prices.


----------



## Smurf1976 (21 August 2006)

Freeballinginawetsuit said:
			
		

> Any smart young guy should own a property.



That depends on what you classify as being "smart".

If the objective is financial gain then whether or not you should own property depends on the market conditions prevailing in the years _after_ you buy a property until you sell it.

If you buy and hold for 50 years then it would be hard to lose (though not impossible). But buying at the bottom rather than at a market peak will give you a much greater profit - even if prices went sideways for 5 years (though in Sydney they are clearly falling and I'm seeing more and more evidence of falls in Hobart too - two _very_ different cities apart from both having a big harbour and mountains to the west) you would be better off with cash in the bank (or avoiding interest on a mortgage) until immediately before prices started to rise again. Unless, that is, rental yield exceeded interest but that's generally the reverse at present.

On the other hand, if you define "smart" in terms of something other than making a financial gain then it could well be argued that owning a property makes a lot of sense. Likewise you could argue that a lot of things make sense depending on what your goals are and what assumptions you make.

If you knew that you were certain to be struck dead by lightning at the age of 35 then there's not much point in worrying about the health effects of smoking or heavy drinking if you happen to enjoy those things. You'll die at 35 anyway so you might as well enjoy life while you have it. But given that we don't know such things in advance, it makes sense to assume you'll be around to age 80 or so and act accordingly with regard to health etc.

Smart to own a property? Depends on what you are hoping to achieve by owning it and the market conditions in the years _after_ you buy.


----------



## Smurf1976 (21 August 2006)

It constantly amazes me how any discussion on house prices turns "personal" ("I did such and such, you could too") rather than being a discussion about where the market is heading.

Not complaining, but I do see some market psychology significance in this.


----------



## Freeballinginawetsuit (21 August 2006)

Smurf1976 said:
			
		

> That depends on what you classify as being "smart".
> 
> Very True.
> 
> ...


----------



## robots (21 August 2006)

hello,

not critical whether you rent or buy

critical though what you do with the difference when renting, your out of pocket cost must be the same as for buying

if mortgage is $400/wk
rates  $20/wk
insurance $15/wk

total $435/wk

or to rent would be $280/wk then you must invest $155/wk 

this is so important, and realist I assume is in this position, numbers show not a lot of difference between them 

thankyou
robots


----------



## NettAssets (21 August 2006)

Freeballinginawetsuit said:
			
		

> I am a believer that the Australian dream of being able to own your own home,comfortably, is rapidly evaporating. We are the first generation to witness it.
> 
> Sad really.






I think you are being a bit tough on previous generations that had a hard time FB.

Through the first war and depression there were a generation that had not much hope for a home until much later in life. Even up in the 60's there where those that maybe had a home but where still washing clothes by hand and walking a lot.

regardsJohn


----------



## Freeballinginawetsuit (21 August 2006)

NettAssets said:
			
		

> I think you are being a bit tough on previous generations that had a hard time FB.
> 
> Through the first war and depression there were a generation that had not much hope for a home until much later in life. Even up in the 60's there where those that maybe had a home but where still washing clothes by hand and walking a lot.
> 
> regardsJohn




Yep, sorry!

Old WW2 settlers up Eneabba,Jerramungup etc. I recently saw some pictures of Margaret River way before the Farmers cleared the land, they certainly had to do it hard.Not much machinery back then.

I aggree we have had it easy, my point is that a lot of the younger generation
don't look to the future. Must be a lot of 20 somethings that wasted money on new cars etc, instead of buying property (W.A.). Imagine how much they would spewin that the cars worth bugger all but if they had used that as a deposit on a house it would have doubled.


----------



## Julia (21 August 2006)

Realist said:
			
		

> Virtually no-one ever makes much money on residential property despite all the hype.





Realist

You've made some extravangant statements from time to time, but this is one of the silliest.

I've had substantial investments in both property and shares.  The property has comprised my own homes plus investment properties.  One investment property doubled its value in about 18 months.

It's the profits from property in years past that has bought me my present share portfolio.

If you just look back to the median price of property in any capital city in Australia 20 years ago you will see how inaccurate is your statement.

Julia


----------



## nizar (21 August 2006)

Realist said:
			
		

> Virtually no-one ever makes much money on residential property despite all the hype.




It seems to me like you are bitter because YOU HAVE MISSED OUT from profiting from the recent boom in property

Would it be better to have owned shares from 2000-2006 or to have bought property in sydney or melbourne in 2000, sold in 2003, and then put the cash into the stockmarket until 2006?? Its not coincidence that the stockmarket started booming when the real estate bubble started deflating

Property outperformed shares 2000-2003 without question...


----------



## Realist (21 August 2006)

Okay alot of questions.

First of all, of course it was a great move to buy property in Perth 3 years ago, and 7 years ago in Sydney. I am talking about NOW though. Now is not a good time to buy investment property.  If you have a wife and kids then sure buy a home to live in - you have a life to live!  But if you are buying purely for potential monetary gain - think again and do your maths.

There is no point in telling me Perth property has soared, I know, and you are merely proving my point that it is not gonna go up much more, and will probably go down.

Secondly, when telling me prices have doubled you need to also mention stamp duty, interest rates, expenses, empty periods, agent fees, repairs, rennovations, insurance, fees, stress, time, and TAX!!  AND INFLATION! Property like shares has expenses and all of them need to be accounted for before you say "I doubled my money!". 

Residential property like shares is a great investment if you buy it when it is cheap and sell when it is expensive.

There are plenty of people that have made money from property, there are far more people, and far wealthier people that have made much more money from shares though.  Shares are a better investment. No question!

How much am I worth?  

Well I earn a good salary and live a cheap lifestyle. I could afford to buy a house, I wont though. I could afford to buy a new BMW, I wont though. I have long term goals, and you know what, I hate working, I'd rather live a cheapish lifestyle and save so when I want I can have time off, and I can retire early. My goal is to buy large successfull slowly growing dividend paying shares and hold, and hold and hold.

That policy is surely the most certain to bring me riches eventually. More certain than Residential property investment, more certain than trading and obviously more certain than buying a flash car and nice overvalued house.

When the time comes I will buy property. I fully understand the advantages, but unlike most I can see the disadavantages and I am prepared to wait patiently for the perfect time.  Wealth is not a race, the journey is more important than the destination and a slow conservative well thought out plan is almost guaranteed to work. That is what I am doing.


----------



## Realist (21 August 2006)

robots said:
			
		

> hello,
> 
> not critical whether you rent or buy
> 
> ...




The average house price where I live is $1.9M. Seriously - Lower North Shore!

I live in an apartment worth $650,000.  It has body corporate fees of about $6,000 per year (it has a shared pool, spa, gardens etc.)

I share with a girl, I pay $175 per week in rent. 

The apartment has gone down about $80K to $100K in the past 3 years.

Do your maths again.  I am right!!!


----------



## Realist (21 August 2006)

nizar said:
			
		

> Property outperformed shares 2000-2003 without question...




Shame I do not have a time machine isn't it?...    

The past is so easy for everyone to analyse.  Unfortunately I can only live in the present and look forward though.

Property in Sydney has gone down about 15% (25% inflation indexed) in the past 3 years in Sydney.  Shares have gone up 100%.

Should I have bought a house, or rented and bought shares 3 years ago?

I rent and buy shares. And I'm proud of it!!


----------



## Realist (21 August 2006)

Jay-684 said:
			
		

> I too am interested in both your asset portfolio value and your performances of late Realist. For two reasons,
> 
> 1. I am 22 and would like to see where I'm at myself
> 
> ...




At 22 years of age I had no money infact owed money from a student loan.

I was basically bankrupt in 2000 - working in IT and having IT shares was not helpful in the biggest crash of our lifetimes.  I've seen bad times. Never been given any money by parents or inheritance. I've done it myself through tough times.

If you wanna ask someone who is rich how to make money send Paris Hilton an email.

If you can buy a house in Sydney over the next year you are doing very very well, especially considering how young you are!

At your age I'd recommend travel, money is one thing, your life is the most important thing.  Mortgaging yourself to the hilt at a young age limits your options.

I've made reasonable money off BHP and RIO recently - bugger all really. Hoping for more though, BHP's earnings are announced on Wednesday, and I am hoping for a share price spike and a bonus dividend!


----------



## Realist (21 August 2006)

juddy said:
			
		

> a lovely partner and a number of healthy happy kids. That's all you need really. The rest is just icing.
> 
> :




I totally agree.

But of course, one should be concerned with what they do with their money, you have a partner and kids to look after.


----------



## nizar (21 August 2006)

Oh u own BHP - good man, that will give u much better return than FGL!!...


----------



## Realist (21 August 2006)

Freeballinginawetsuit said:
			
		

> Any smart young guy should own a property.I must admit I'm of a different opinion to Realist and certainly don't jump to his assumptions.
> 
> Actually Realist, I'm 26 years old, have my own Business, www.contractaquaticservices.com.au, employ 12 people, own 3 properties and trade large parcels of short term shares.
> I am a single dad who cares for his son, week about with my ex. Having my own home, business allows me to do this and afford my young bloke the security of a home and quality parenting with me.
> I sincerely hope you aren't a worker bee,that dosent ever own his own home,answers to the boss and trades all his spare cash on RIN shares (500 shares at a time).




Well maybe you are richer than me, maybe not though.

Owning your own business has pros and cons.  You may be surprised at how much I earn, you may earn alot more than me. If things turn bad I get a new job, or move overseas, I am safe from any downturn.  

Buying only 500 RIN shares is all I can afford at the moment, but I diversify widely, try not to sell, do not borrow, have money in the bank, and yes I can afford a house. I'm too smart for that though.  Trading has pros and cons too, you can make or lose quick money - I prefer not to trade. Wise investing has few cons if any.


----------



## Realist (21 August 2006)

nizar said:
			
		

> Oh u own BHP - good man, that will give u much better return than FGL!!...





FGL is a great company.  Don't dis it!!

And think longterm, very longterm, people worldwide will be buying FGL alcohol in 30 years time, if I have the discipline I'll still be holding then.


----------



## nizar (21 August 2006)

Realist said:
			
		

> but I diversify widely,




Make sure u dont diworseify though...   

You should know this; but Warren Buffet and George Soros DO NOT diversify

They find a good company and put a considerable amount of money behind it

Whether considerable is 100millon or 10Gs its all relative

But in any case, Its much easier to find 3 winners than it is to find 10...


----------



## Freeballinginawetsuit (21 August 2006)

Realist said:
			
		

> Well maybe you are richer than me, maybe not though.
> 
> You really aren't open to any views from others are you Realist, and always have to get one up.


----------



## Realist (21 August 2006)

nizar said:
			
		

> You should know this; but Warren Buffet and George Soros DO NOT diversify
> 
> They find a good company and put a considerable amount of money behind it
> 
> ...




Warren Buffett and George Soros are far better investors than I am.

It is far easier for me to find 3 losers out of 3 shares, than 10 out of 10...


----------



## Realist (21 August 2006)

Freeballinginawetsuit said:
			
		

> Realist said:
> 
> 
> 
> ...


----------



## Freeballinginawetsuit (21 August 2006)

My point was,

You don't have to answer a question with a comeback/bigger and better.


----------



## Realist (21 August 2006)

Freeballinginawetsuit said:
			
		

> My point was,
> 
> You don't have to answer a question with a comeback/bigger and better.




You are right, I don't have to.

Had you said "Realist, there are advantages in owning your own business, tax advantages, the ability to expand and grow and make big profits, have you considered this"

Then I would have agreed. And said yes I have considered it, but after weighing up all the options and possibilities I have decided against it.  Where I am now I will continue to earn a very good salary, and I have the freedom to move and change jobs and locations at will.  If I started a business there is a good chance I will lose money based on the stats of how new businesses do. Where I live is expensive - I do not have the freedom to take such risks, I'm not prepared to work exhorbetant hours, or do manual labour, I know the difficulties in employing staff, wages are higher here as are expenses, and I am not prepared to change because I am heading toward more than financial security as it is.


----------



## Realist (21 August 2006)

The beauty of working for someone else is you are free!

All care, no responsibility.

If I do not like my job, I change.  If I wanna go overseas, I move.

The same can be said of renting.  If I have **** neighbours - I move!  If I get offered a great job the other side of the city - I move!

I am free to do what I like!  

This derogatory theory of working for a boss and paying a landlord is bollocks - if they don't look after me I move.

When interest rates go up, or a new company doing what you do sets up next door and discounts heavily - you are stuck!!


----------



## Freeballinginawetsuit (22 August 2006)

Realist said:
			
		

> You are right, I don't have to.




In considering options why not consider anothers advice rather than quoting statistics or half baked facts.

1. I am aggreeing with you that the topic of this thread is correct, real estate prices may stagnate in the short term even decrease. Accept that this is insignificant to their appreciation over the past years. I thank my lucky stars my accountant led me in the Real Estate direction early. Don't purport to  know all about finances, that why anyone in the know pays financial advisors to diddle the system. I am sure when you research your stocks you check out analysts recommendations, or do you know more than them?

In this thread & others you have been quick to right off my input.

2. In regards to business, you sound like someone who has strong opinions and drive, you would probably make a good business owner. 
I don't actually own a 'pool maintenance business', I provide managers,lifeguards gym instructors etc to Liesure Facilities.I also have a concrete based construction business, sure we build pools we also do civil works at mines as well.  

3. Accept when people are right, without your'e quick judgements. I added my advice on RIN to you previously. You wrote that off broadly.I do work for DOW & get products of RIN.As a business person I said DOW was solid and good for a quick 10% rebound. Dow has done that and I made a quick 10% off them. How much have you made off RIN?


----------



## tech/a (22 August 2006)

FBW--he (realist) does that.

Its something I find common with enthusiastic "L" platers.

Experts in everything----experience in Theory.
I personally thought you were commenting from a "Smart" younger persons veiw point,qualifying and quantifying perhaps "Smart"
As with anyone who discusses assets or net worth,even in example there will always be someone who wishes to pull you down a peg.
Pity as some great posters have been lost.

As for Reply arguements Realist you do argue to suit your veiw.
Frankly your freedom to move from employer to employer is as laughable as employers explaining an advantage of self employment is moving from employee to employee. Or being able to dodge downturns by moving from city to even another country to alter employment.

Frankly taking the time to hone your skills in negotiation and employee value,finding a career that sets your talents alight and excites all those around you,including your boss which could well be yourself---will serve you far better than any of the arguement Ive seen presented here.

FBW in my veiw is right,your skill in discussion is limited to one up manship,a dead givaway to those who have actually "walked the walk".


----------



## krisbarry (22 August 2006)

I reckon "Realist" is looking at it from a gen X/Y point of view, nothing wrong with that its just a product/side effect of our times.

The one job for life/one house for life approach just aint working anymore.

Now days its....The renter, the transient traveler, the free-floating employee.

What I can pick up in the posts is the generation gap


----------



## nizar (22 August 2006)

Realist said:
			
		

> The beauty of working for someone else is you are free!




You have to do what they tell u to do
You have to work the hours they tell u to work
You get paid how much they tell u you will get paid

Sounds like Freedom to me


----------



## tech/a (22 August 2006)

Stop_the_clock said:
			
		

> I reckon "Realist" is looking at it from a gen X/Y point of view, nothing wrong with that its just a product/side effect of our times.
> 
> The one job for life/one house for life approach just aint working anymore.
> 
> ...




Yeh when I was 20 we had a cavern it was the time of Flower power sex drugs and rock and roll. Dont tell me we didnt have a gap then and dont tell me we had the buy one house/keep one job phylosophy them.
God the last think we wanted to do was work---house what was that??? All we wanted was a KOMBI.


There will always be a gap and there will ALWAYS be the SAME tried and proven ways to financial security.
Like it or not Housing is head of the list (More so really land value) and will remain there.
Has since Roman legions went off aquiring land for the Roman Empire and will work the same for You or anyone else who owns land until someone takes it from you.

Gap?


----------



## chansw (22 August 2006)

From: The Sydney Morning Herald

http://www.smh.com.au/articles/2006/08/20/1156012414995.html

*Housing crash puts sellers in debt crisis*

Jonathan Chancellor Property Editor
August 21, 2006

A THREE-BEDROOM brick-veneer house in St Clair sold for just $260,000 at the weekend - down about 42 per cent from its last sale at $450,000 in 2003 in a further sign of the depressed state of the Sydney property market.

Only one person bid on the house in the city's west. The mortgagee sale was forced after the owners could not meet the interest payments on the $405,000 they borrowed to buy the house at the peak of the market.

Auction clearance rates are hovering around 48 per cent since the recent interest rate rise, but plummeting property prices have meant many vendors are confronting negative equity, where they owe more on the property than it is worth.

The Herald checked 16 properties in south-western and western suburbs listed at the weekend and found 60 per cent had prices or had attracted offers at a discount to their last sale price.

At the St Clair auction the buyer was an investor who will spend about $40,000 on essential repairs before leasing it at about $270 a week, said its L.J. Hooker St Marys selling agent, Michael Beatty.

Increasing petrol prices appear to be compounding the impact of repeated interest rate rises on properties in Sydney's outlying suburbs by driving prices down.

Lethbridge Park, near Penrith, recorded the second highest fall, when a townhouse that sold for $257,000 in 2003 was resold by mortgagees for $156,500, reflecting a roughly 40 per cent fall.

At Heckenberg, a four-bedroom house that sold for $330,000 in 2003 resold at $255,000 in another mortgagee sale. Four of the seven registered buyers put in bids before the Adaminaby Street house sold at an approximate 22 per cent discount to the property-boom price.

"There are some people around Liverpool who think that prices have further to fall, but I couldn't imagine this type of house will fetch less in six months' time," said its selling agent, Ray Dimarco.

At Parramatta, mortagees accepted $541,500 for an unrenovated house that fetched $736,000 in 2003 when it was sold as a deceased estate. The bank lent $580,000 on its 2003 sale.

Even the inner-suburban areas are showing signs of depressed prices. In Lilyfield a four-bedroom house on 607 square metres last sold at $1,355,000 unrenovated in boom-time 2003.

It attracted a $1,179,000 top bid after its recent renovation by its owner-builder. Two registered bidders competed at the on-site auction but the property was passed in well short of the owner's expectations. The freestanding house now has a $1.35 million asking price.

Given it has been 16 years since the last recession, long-time estate agents fear the fate of a generation of owners who had not experienced having a loan when times were tough.

Mr Beatty said: "There was a wave of people punting on the expectation of constant price rises until well into 2004, even after the three interest rate rises of late 2003. There has been significant price deflation and many now have negative equity in their homes.

"There are some sad stories. But we have to show the sellers the comparable sales and say honestly this is where the market is realistically at."


----------



## Freeballinginawetsuit (22 August 2006)

Have you considered that this may possably be a buyers market. Compare the prices with a comparable market price a few years back, maybe this a good opportunity for the first home buyer to jump in.

I must say that if I was a first home buyer the current real estate prices in Sydney are starting to look tempting. 

This is bricks and mortar guys, not shares. The SP of a home in Australia biggest City isn't going to tank to prices in the 1980's.

In my opinion and thats all I'm offering.


----------



## tech/a (22 August 2006)

Well if the St Clair property wasnt a bargain then I'll be completely Daffied.

If you could buy BHP for Under $20 you wouldnt get in the queue quick enough.

Nice to see another "Thinking " Poster join us at ASF!


----------



## Ageo (22 August 2006)

My cousin just bought a 4 bedroom home that would normally go for around 400k in the western suburbs of Sydney but he picked it up for 330K.

You can buy real high quality homes for over 400k now which was unheard of before this year around my area.

So many people are defaulting on their loans as well so cheap homes are available.


----------



## Realist (22 August 2006)

Freeballinginawetsuit said:
			
		

> 3. Accept when people are right, without your'e quick judgements. I added my advice on RIN to you previously. You wrote that off broadly.I do work for DOW & get products of RIN.As a business person I said DOW was solid and good for a quick 10% rebound. Dow has done that and I made a quick 10% off them. How much have you made off RIN?




You really are naive.     

I bought RIN last week as a long term hold.

It is up 6% since then!

Anyone that judges a companies value by one weeks performance on the sharemarket really knows very little, if anything.


----------



## Realist (22 August 2006)

What amazes me is how many "rich" experts, and property owners we have from rural areas like Adelaide and WA here.

For christ sakes, the cost of living there is so low, houses have been so cheap in the recent past, there is nothing to spend your money on, it is piss easy to setup a business and live a comfortable life. And it's just had the biggest housing boom possibly ever.

You probably think everyone who rents apartments in a big city is poor.  Ahahahahaaaa.


It is like some cow cocky from Dubbo going to Japan and telling a wealthy Japanese businessman who rents a tiny apartment in Tokyo that he owns 2 houses and 100 acres of land in Australia. And the Japanese businessman should buy houses as an investment cause they go up in value.   

Laughable...


----------



## juddy (22 August 2006)

Realist said:
			
		

> What amazes me is how many "rich" experts, and property owners we have from rural areas like Adelaide and WA here.
> 
> For christ sakes, the cost of living there is so low, houses have been so cheap in the recent past, there is nothing to spend your money on, it is piss easy to setup a business and live a comfortable life. And it's just had the biggest housing boom possibly ever.
> 
> ...





Oh Realist, you really have set yourself up for it with some of those statements.


----------



## professor_frink (22 August 2006)

Realist said:
			
		

> What amazes me is how many "rich" experts, and property owners we have from rural areas like Adelaide and WA here.
> 
> For christ sakes, the cost of living there is so low, houses have been so cheap in the recent past, there is nothing to spend your money on, it is piss easy to setup a business and live a comfortable life. And it's just had the biggest housing boom possibly ever.
> 
> ...





Interesting comment Realist.

So you'd never take any advice from anyone who doesn't live in a big city because they are just a fool from the country, with no idea about wealth creation?


----------



## Realist (22 August 2006)

juddy said:
			
		

> Oh Realist, you really have set yourself up for it with some of those statements.




True.

But it does piss me off when people from a cheapish place harp on about "owning 3 properties". And they know it all about buying property.

If they moved to Tokyo, London, New York, or even Sydney for a long period of time they'd know the reality of how well you have to run your finances to just survive, let alone get ahead.


----------



## Realist (22 August 2006)

professor_frink said:
			
		

> Interesting comment Realist.
> 
> So you'd never take any advice from anyone who doesn't live in a big city because they are just a fool from the country, with no idea about wealth creation?




The Oracle of Omaha is certainly someone I'd listen to.

But he does not harp on about being a property developer, or how someone who rents an apartment is poor does he?

Infact he drives an old car, lives in a small house, himself.  He looks, and lives a  pretty poor lifestyle himself actually.


----------



## Bronte (22 August 2006)

Realist said:
			
		

> If they moved to Tokyo, London, New York, or even Sydney for a long period of time they'd know the reality of how well you have to run your finances to just survive, let alone get ahead.



We own properties in Englands second largest city.
Lived there for many years....Does that count?


----------



## Freeballinginawetsuit (22 August 2006)

I have previously pointed out that their are areas in Perth and nice coastal towns in west oz that are very pricey and sought after.Sydney isn't doing to well at the moment, not past off perth real estate.

West Oz resources are supporting the country at the moment also Realist, so W.A. does its bit for the country. If we went it on our own you might see the Real estate in Sydney go down, Your employer go under, your landlord default on his loan. You wouldn't be in control of your own destiny then.

I do admit to short term holds on shares, large buys also. Its been working fine thanks. In the end share trading is about making money, nothing more!. I do admit to holding fundamental stocks long term as I view their stability akin to property.

Last post on me for this thread anyway, its like flogging a dead horse with you Realist.


----------



## Realist (22 August 2006)

Freeballinginawetsuit said:
			
		

> 3. Accept when people are right, without your'e quick judgements. I added my advice on RIN to you previously. You wrote that off broadly.I do work for DOW & get products of RIN.As a business person I said DOW was solid and good for a quick 10% rebound. Dow has done that and I made a quick 10% off them. How much have you made off RIN?




I gotta go back to this one. I find it quite amusing.    

So you work for DOW, and get products off RIN?? And own a lifeguard leasing place or something?

Why on earth would that help you know anything about either of their shares?  

Seriously, would you take advice on buying WOW shares from a checkout chick?

RIN is a better investment than DOW. I bought RIN and it has since gone up 7% now, because staright after I bought it Australia's largest super investor Perpetual bought $130,000,000 RIN shares late last week. They seem confident in it would you not say?

Should I listen to someone who buys some cement or Australia's largest investor, or do my own research? I did the latter as always.

You are starting to worry me now, big time.


----------



## professor_frink (22 August 2006)

Realist said:
			
		

> The Oracle of Omaha is certainly someone I'd listen to.
> 
> But he does not harp on about being a property developer, or how someone who rents an apartment is poor does he?
> 
> Infact he drives an old car, lives in a small house, himself.  He looks, and lives a  pretty poor lifestyle himself actually.




I wasn't just talking about property. You seem to be dismissive of people in smaller cities/towns in general. The fact that someone lives in Perth or Adelaide doesn't mean that they don't know what they are talking about. If someone had the foresight to start up a business that is successful, or buy up a couple of properties because the housing market was starting to take off a couple of years ago, then they are to be commended. 

As long as they can keep the wealth they've made, then they have done well. It doesn't mean they are inferior to someone who lives on the lower north shore.


----------



## Realist (22 August 2006)

Freeballinginawetsuit said:
			
		

> West Oz resources are supporting the country at the moment also Realist, so W.A. does its bit for the country. If we went it on our own you might see the Real estate in Sydney go down, Your employer go under, your landlord default on his loan. You wouldn't be in control of your own destiny then.





Oh dear, this is getting worse.    

WA sells some rocks overseas and suddenly they are running the country. Hahaha.

With all due respect, the rest of Aus has enough rocks to sell as it is.  We just don't want to damage the more livable areas of this large country.  NSW has all the large companies, and as a state is has high taxes to deter people moving here (so not everyone leaves WA) and to fund the other states (NSW gives WA money just to keep it going).

Don't pat yourself on your back too hard about Perth selling some rocks, we have rocks too, we'd just rather sell yours, and keep our area pristine and looked after, we've got enough jobs to go around as it is, you don't. 

Where do you think Broken Hill proprietary limited is from?  Ever heard of it?


----------



## Bronte (22 August 2006)

professor_frink said:
			
		

> ...or buy up a couple of properties because the housing market was starting to take off a couple of years ago, then they are to be commended.
> As long as they can keep the wealth they've made, then they have done well. It doesn't mean they are inferior to someone who lives on the lower north shore.



Thank you professor..nice post


----------



## Realist (22 August 2006)

professor_frink said:
			
		

> I wasn't just talking about property. You seem to be dismissive of people in smaller cities/towns in general. The fact that someone lives in Perth or Adelaide doesn't mean that they don't know what they are talking about. If someone had the foresight to start up a business that is successful, or buy up a couple of properties because the housing market was starting to take off a couple of years ago, then they are to be commended.
> 
> As long as they can keep the wealth they've made, then they have done well. It doesn't mean they are inferior to someone who lives on the lower north shore.




I am dismissive of property investors from small towns yes. I totally agree!!

Certainly not of share investors though.  Alot of the greats were from small towns. And I have nothing against small towns at all.


----------



## Freeballinginawetsuit (22 August 2006)

Realist said:
			
		

> I gotta go back to this one. I find it quite amusing.
> 
> So you work for DOW, and get products off RIN?? And own a lifeguard leasing place or something?
> 
> ...




DOW do work for Iluka, they stuffed up a quote with them and their bottom line got hammered. I do work at Iluka at Eneabba mine, on behalf of DOW and for ILU,

As a business owner I realize that sometimes you make a mis quote, I actually think DOW is a good business and their drop in SP was a bit harsh.

On the other hand RIN is in a rapidly decreasing market, housing as this thread is all about. If you don't understand my reasoning well thats fine, but its quite logical Realist.


----------



## krisbarry (22 August 2006)

Its just like a game of ping-pong.

"Realist" I got trapped within this game too and realised that it just aint worth the fight.

There are a few very head strong property moungers on this thread, bricks and morta is all they know.  I commend them for their inteligence to invest wisely!

Just keep up your good work of saving for a house and buy when you are ready, until then the more you reply to posts on this thread the bigger hole you will dig for yourself.

Been there done that!

I got so stressed out trying to defend myself  on the whole housing issue it made me very sick.

Take a break and have a coffee


----------



## professor_frink (22 August 2006)

Realist said:
			
		

> I am dismissive of property investors from small towns yes. I totally agree!!
> 
> Certainly not of share investors though.  Alot of the greats were from small towns. And I have nothing agaisnt small towns at all.




Well good luck with that attitude Realist! One day when you get out of Sydney for awhile, you may actually realise that there are some people doing pretty well in smaller cities, and yes, some of them will build their wealth via property.

I'll remember not to tell you when I've bought my first investment property- I could do without the grief from the slick, city investor


----------



## Realist (22 August 2006)

Freeballinginawetsuit said:
			
		

> DOW do work for Iluka, they stuffed up a quote with them and their bottom line got hammered. I do work at Iluka at Eneabba mine, on behalf of DOW and for ILU,
> 
> As a business owner I realize that sometimes you make a mis quote, I actually think DOW is a good business and their drop in SP was a bit harsh.
> 
> On the other hand RIN is in a rapidly decreasing market, housing as this thread is all about. If you don't understand my reasoning well thats fine, but its quite logical Realist.




Well only time will tell whether your opinion is right or not.


----------



## Realist (22 August 2006)

professor_frink said:
			
		

> Well good luck with that attitude Realist! One day when you get out of Sydney for awhile, you may actually realise that there are some people doing pretty well in smaller cities, and yes, some of them will build their wealth via property.
> 
> I'll remember not to tell you when I've bought my first investment property- I could do without the grief from the slick, city investor




I'm from a small town myself Prof. Lived in one over 20 years.

Lived in Sydney nearly 10 years now.

It constantly pis*ses me off when people from smaller towns make judgements on city slickers renting. As if owners are superior.

I've seen both sides.  I like smaller towns more than Sydney actually and will eventually leave Sydney, when who knows, but cause I rent I am free to move when and where I like!

I'm in no way against small towns, I am against owners that think they are superior to renters though.


----------



## Freeballinginawetsuit (22 August 2006)

O.K., thanks for the conversation its been enjoyable. I think your RIN is a good long term hold as a bottom pick. If you ever come to West Oz I will show you some of the nice sites, its not all that bad over here.


----------



## krisbarry (22 August 2006)

Realist said:
			
		

> I'm from a small town myself Prof. Lived in one over 20 years.
> 
> Lived in Sydney nearly 10 years now.
> 
> ...




Realist please....give it a rest, you will do your head in over this!

Don't say I didn't warn ya....been there done that.

I am saying it in the nicest possible way and I mean no harm at all.


----------



## krisbarry (22 August 2006)

This thread needs to ble closed down now...where is that padlock?

...too many people with such conflicting views and it is now becoming very un-healthy for the good of mankind


----------



## Realist (22 August 2006)

Freeballinginawetsuit said:
			
		

> O.K., thanks for the conversation its been enjoyable. I think your RIN is a good long term hold as a bottom pick. If you ever come to West Oz I will show you some of the nice sites, its not all that bad over here.





Thanks, as you can tell I enjoy a good argument.    

I love WA, been to Perth only once but really liked it. I like Margaret River wine, When it's house prices crash I may even move there..    

I rate Perth as a very livable city, nice weather, beaches and friendly people. But I'll be honest the WA economy despite all the recent resource hype is not good, houses are tremendously overvalued now, and you may be in for hard times in years to come, just like sydney is copping now.


----------



## Bronte (22 August 2006)

An absolutely Superb place Perth.  
We saw at least 50 cities around the world before choosing to settle here.
Renting a *new* beach house here in the west is paradise
Why do we rent???  Business premises are tax deductable.


----------



## ducati916 (22 August 2006)

The easiest conclusion is simply to calculate the value of your proposed investment, thus there is no argument.

Investment Value = Annual Rental Return * Required Return [capitalised] - [Interest rate - Inflation rate]

End of argument.
jog on
d998


----------



## Jay-684 (22 August 2006)

Realist said:
			
		

> The average house price where I live is $1.9M. Seriously - Lower North Shore!
> 
> I live in an apartment worth $650,000.  It has body corporate fees of about $6,000 per year (it has a shared pool, spa, gardens etc.)
> 
> ...




Where do you live on the North Shore? I'm guessing Mosman... 

as for saying its expensive, there are plenty of other areas in Sydney cheaper, including on the North Shore eg Crows Nest, Cammeray, St Leonards. They all have an abundance of apartments and the shops etc arent nearly as expensive. Woolies Neutral Bay is a RIP OFF!


----------



## Jay-684 (22 August 2006)

Realist said:
			
		

> At 22 years of age I had no money infact owed money from a student loan.
> 
> I was basically bankrupt in 2000 - working in IT and having IT shares was not helpful in the biggest crash of our lifetimes.  I've seen bad times. Never been given any money by parents or inheritance. I've done it myself through tough times.
> 
> ...




Travel is definately on my list... been overseas 3 times with friends in the last 18 months. Love it.


----------



## krisbarry (22 August 2006)

Jay-684 said:
			
		

> Woolies Neutral Bay is a RIP OFF!




LOL, the whole of Sydney/NSW is a rip-off!

thats why the rest of Australia's population (14 million people) do not live in Sydeny/NSW.

Housing, food, entertainment etc etc.

I just question the true value of Syndey/NSW sure its a nice state/city but is it worth struggle street for an entire life to afford just the average!

That said, I was on the harbour, watching the fireworks on New Years Eve (millenium) and that was just awesome.

Syndey/NSW nice place to visit, but forget living there.


----------



## Realist (22 August 2006)

Bronte said:
			
		

> Why do we rent???  Business premises are tax deductable.




 

You rent.

You must be poor....


----------



## Realist (22 August 2006)

Jay-684 said:
			
		

> Where do you live on the North Shore? I'm guessing Mosman...
> 
> as for saying its expensive, there are plenty of other areas in Sydney cheaper, including on the North Shore eg Crows Nest, Cammeray, St Leonards. They all have an abundance of apartments and the shops etc arent nearly as expensive. Woolies Neutral Bay is a RIP OFF!




Correct, it is Mosman.

And yes Woolies Neutral Bay was on A Current Affair a few years back, it is Australia's most expensive supermarket, and yes I shop there quite often, unfortunately. Not much other choices.

I've looked at buying in Cammeray, nice area, bit quieter, and a bit cheaper.  I play golf at that 9 hole course there every so often. May buy there next year if proces go down a bit more.


----------



## Realist (22 August 2006)

Stop_the_clock said:
			
		

> LOL, the whole of Sydney/NSW is a rip-off!
> 
> thats why the rest of Australia's population (14 million people) do not live in Sydeny/NSW.
> 
> ...




You get what you pay for.

As I said I'm not from Sydney originally, and I don;t want to end up here forever.

However, Sydney has great weather, great beaches, an excellent career opportunities, a great nightlife, restaurants, okay bars, lots of nice golf courses, lots of great sport and events, it is an exciting and beautiful place to live.

On the other hand it is expensive, stressfull, has traffic problems, and people are rude.

There's no Utopia though. Sydney is a world class city, and for young people it provides excitment and opportunity that nowhere else in Australia does.

For kids, and families it aint a great city to live though. I agree.


----------



## Bronte (22 August 2006)

Bronte said:
			
		

> An absolutely Superb place Perth.
> We saw at least 50 cities around the world before choosing to settle here.
> Renting a *new* beach house here in the west is paradise
> Why do we rent???  Business premises are tax deductable.



Poor....used to be  
We rent now and for us it is wise to.
Of course we own lots of Investment Property.
If we see a 42% drop in real estate prices we would consider buying again


----------



## Realist (22 August 2006)

Bronte said:
			
		

> We rent now and for us it is wise to.




Very smart...


----------



## Bronte (22 August 2006)

Realist said:
			
		

> Very smart...



Thank you


----------



## Julia (22 August 2006)

Realist

You promote the benefits of being an employee rather than having your own business.

I can't help thinking, in view of the amount of time you spend on this site, that I'm rather thankful you are not my employee.

Julia


----------



## Realist (22 August 2006)

Julia said:
			
		

> Realist
> 
> You promote the benefits of being an employee rather than having your own business.
> 
> ...





You are exactly right Julia, for once.

If I ran my own company I may have to do some work.


----------



## Jay-684 (25 August 2006)

Not specifically related to the thread topic, but for anyone who thinks more people make more money from shares than property, the industry with the most number of people in the BRW Rich 200 is infact property. Obviously thats not simply through owning investment property, but also through property development, construction etc


----------



## Jay-684 (25 August 2006)

And the approximate total value of Australias residential properties is $2.3 trillion!


----------



## Judd (25 August 2006)

Jay-684 said:
			
		

> And the approximate total value of Australias residential properties is $2.3 trillion!





Which raises the question of why, if it is such a wonderful investment, that every fund manager or superannuation group have not bought every single residential rental propert in Oz.  I asked that question of a fund manager once and the reply was "It's a cottage industry and the yields are cr*p."


----------



## wayneL (25 August 2006)

Judd said:
			
		

> ...and the yields are cr*p."




...and are worse than they've ever been. :bad:

So called value investors should be shunning R/E as a pox upon the investment landscape until value returns.


----------



## Jay-684 (25 August 2006)

I think the wealth is created more through creating/developing resi property rather than through ownership and the income it produces.


----------



## YELNATS (25 August 2006)

Jay-684 said:
			
		

> I think the wealth is created more through creating/developing resi property rather than through ownership and the income it produces.




It's always darkest before the dawn. I'm tipping a definite housing turn around by Christmas 2007 with Sydney out in front. Regards. YN


----------



## Julia (25 August 2006)

YELNATS said:
			
		

> It's always darkest before the dawn. I'm tipping a definite housing turn around by Christmas 2007 with Sydney out in front. Regards. YN




You don't even  have to wait until Christmas 2006 Yelnats:  it was on today's news that property prices in the last quarter have moved up, yes, even iin Sydney where the rise was around 1.5% for the quarter.

What now, Realist????

Julia


----------



## Realist (25 August 2006)

Julia said:
			
		

> You don't even  have to wait until Christmas 2006 Yelnats:  it was on today's news that property prices in the last quarter have moved up, yes, even iin Sydney where the rise was around 1.5% for the quarter.
> 
> What now, Realist????
> 
> Julia




Actually Sydney was down 0.5% Julia.

Us renters are having a field day!!!     

Happy, happy, joy, joy, thanks for asking.   :band


----------



## Realist (25 August 2006)

"Sydney prices were down 0.5 per cent on the same time last year. Mr Ryan said rental vacancies were "unusually low", suggesting scope for rent rises. "Yields are still low, especially in Sydney," he said."


From : www.smh.com.au/news/national/house-...sion-fears-grow/2006/08/24/1156012675593.html

I'll say it again, Happy, happy, joy, joy!!!

Anything to comment Julia?


----------



## clowboy (25 August 2006)

Realist,

I don't know where you are getting your stats from, but I agree with Julia

http://www.smh.com.au/news/BUSINESS...-growth-in-June/2006/08/24/1156012655087.html

It was also stated in today's west Australian.


----------



## clowboy (25 August 2006)

Well now I know where you are getting your data from, but I would sugest you read it again.

Down 0.5% on a year ago but still up 1.5% for the qrter which was the original comment made by julia, and possibly an indication that housing is on the rise again.


----------



## Realist (26 August 2006)

clowboy said:
			
		

> Realist,
> 
> I don't know where you are getting your stats from, but I agree with Julia
> 
> ...




Read the bloody link again - it says and I am cutting and pasting from said article "Sydney prices were still down 0.5 per cent on the same time last year."

So with 4% inflation, highish interest rates, and low rental yields (read the same article) you have no argument.

You're down alot if you own!!!

Renters are absolutely killing it at the moment. No argument.

Happy, happy, joy, joy!


----------



## Realist (26 August 2006)

clowboy said:
			
		

> but still up 1.5% for the qrter  .




Do the maths with cheap rent (as stated in the article) and inflation at 4% home owners are losing. And down 0.5% on a year ago - that is one massive loss, HuuuuUUUGEEE infact!!!   Do your maths again before replying - please.


----------



## swingstar (26 August 2006)

Everyone probably knows the US situation, but here's some more good* news FWIW:

http://money.cnn.com/2006/08/24/real_estate/pluggedin_tully.fortune/index.htm

_* if you're a bear or gen-Y_


----------



## moola (26 August 2006)

Phew! The end... this is one loooooooong ass thread... it's like the thread that never dies or something. People sure are attached to their houses. Me I just need a tent, a backpack and a laptop. There's plenty of couches between here and hollywood don't you worry about that.


----------



## tech/a (26 August 2006)

> Do your maths again before replying - please.




*Here are my maths*

I/Ps I hold

I/Property 1 1996 Cost $92K Sold 2003 $190K
2 1997 Cost $118K still hold Rent return + $70/week on loan Valued at $290K
3 1997 Cost $110K contract for sale Sept 2006 $220K
4&5 1998 apartments Bought $170K each Still hold Rent return $100/week each above Loan Current valuation $420K Each.

There are 5 other I still hold 3 freehold but I wont go on as I'll be lablled a "Braggard"

As an example of Medium density developement I am involved with,some figures.
One developement completed in Morphettvale.
2 other before that.
10 Detached Apartments all sold for a total $600K return.
Was a 2 yr project.
Currently Involved in 1 other with 2 on the Planning board.

Yeh its Adelaide and its a Hick town.
Yeh its peanuts
Yeh but its real peanuts in my tin and not theory.

There is a big difference between theorists/ "Im waiting for prices to come down" camp.
And those that just DO IT.

Now Go do your maths I reckon it amounts to PEANUTS.-----Talks cheap.


----------



## Bronte (8 September 2006)

Bronte said:
			
		

> The majority of our property has been purchased with "No money down"
> Borrowed the lot...even 'set up costs'.
> What is the ROI here? The tenants and taxman have been paying the mortgage repayments for us.
> Mostly *new* property and we claim *full* 'depreciation'



Just thought I would "Bump" this thread as there is some great information here


----------



## krisbarry (19 September 2006)

Some doe-brain was on the radio today saying that she expects a boom in Adelaide house prices over the next 5ish years.  She still believes they are way under-valued!

She was some property guru, living interstate and was looking at expanding her property portfolio in Adelaide.  She currently owns 30 properties around Australia (Greedy women)

Did she just crawl out from under a rock...Adelaide house prices have just boomed over the past 5 years...are now stagnent and/or going down.

She believes that the current mining boom will do what it did in Perth, in Adelaide too.  

Somehow I doubt it very much.

Property in Adelaide has already increased 150% over the past 5 years, so I hardly see where this boom is going to come from.

I think the only boom she will see in Adelaide over the next 5 years is reposessions bought on by over-borrowers and higher interest rates.

Not unless she is just trying to spruke the market for her own self gratification...just another greedy property investor I say!


----------



## wayneL (19 September 2006)

Stop_the_clock said:
			
		

> Some doe-brain was on the radio today saying that she expects a boom in Adelaide house prices over the next 5ish years.  She still believes they are way under-valued!
> 
> She was some property guru, living interstate and was looking at expanding her property portfolio in Adelaide.  She currently owns 30 properties around Australia (Greedy women)
> 
> ...




A case of mistaking a bull market for genius.

Guys like Tech/A will be picking up cheap properties from the likes of her in the future


----------



## wayneL (19 September 2006)

http://www.bloomberg.com/apps/news?pid=20601109&sid=a4Naw1mqxCRw&refer=home



> Housing Slump in U.S. May Lead to First Drop Since Depression
> 
> By Kathleen M. Howley and Matthew Benjamin
> 
> ...


----------



## YChromozome (19 September 2006)

Stop_the_clock said:
			
		

> Not unless she is just trying to spruke the market for her own self gratification...just another greedy property investor I say!




Sounds like she needs to keep the Adelaide Market up, so whe can sell her properties.



			
				wayneL said:
			
		

> Guys like Tech/A will be picking up cheap properties from the likes of her in the future




I'm an Adelaide boy. With cash sitting patiently in the bank, I'll race Tech/A to them.


----------



## Smurf1976 (19 September 2006)

One sure sign that things have got out of hand is when traditional relationships disappear or are reversed for no obvious reason.

Adelaide is a nice place IMO but real estate there is simply not worth more than Brisbane or Melbourne. If a boom were to occur then it would overtake these cities unless there is also a boom in Melbourne too. Why would there be a new boom in Melbourne right now?

More to the point, there's no way that Perth is worth more than Sydney. Simply no way. Simple supply and demand - land isn't exactly scarce in WA. So either Sydney booms from here or Perth grinds to a halt. My money's on the latter.

And taking it to an even more ridiculous level, the cheapest property in Sydney is less expensive than the cheapest property in Hobart. Hobart does have its good points, but no way is it worth more than Sydney. If there were any fundamental basis then people would be leaving Sydney and coming to Hobart. A few do but in general there is no mass exodus from Sydney or mass migration to Hobart. Both have only slowly changing populations but Hobart has plenty of spare land that can be cheaply developed (apparently at well below current selling prices for houses - that says rather a lot...).

At some point we'll almost certainly go back to historic relativities between cities. Sydney most expensive, Hobart the cheapest of the state capitals and Perth cheaper than Melbourne. The only real reversal that might stand long term is Brisbane overtaking Melbourne due to lifestyle factors.

It's worth noting that relative to wages, Adelaide, Hobart, Melbourne and Brisbane are all at roughly the same valuation. The differences in nominal prices reflecting differences in wages. $40K is about average in Hobart, for example, and most Tasmanians would consider $60K as being "high income" whereas $60K isn't uncommon in Sydney or Melbourne.


----------



## YChromozome (19 September 2006)

Smurf1976 said:
			
		

> Adelaide is a nice place IMO but real estate there is simply not worth more than Brisbane or Melbourne. If a boom were to occur then it would overtake these cities unless there is also a boom in Melbourne too. Why would there be a new boom in Melbourne right now?




This is my thoughts exactly. Some people say the Sydney market is two years ahead of the rest, and hence what is happening in Sydney will happen in Adelaide and the other capitals in two years. 

However, when interest rates go up (what has triggered the high number of mortgagee sales) they go up in every capital city at the same time, not two years later than Sydney. The only difference is cheaper housing in other states mean those who have brought there may of not over committed as much as those in Sydney. But then it's really all relative to wages (ability to repay the loan) and poor justification.

And as Smurf has elaborated I can't see how Sydney can fall and not eventually pull the other states down with them. 

Many Sydney siders had invested in cheaper housing in other states. I assume now they would look to cash in those properties, and reinvest back into their own state. Other Sydney siders have moved interstate to find more affordable housing. It's possible soon that residents in other capitals will move to Sydney for affordable housing (and probably better wages too). I've certainly put a bit of thought into it.


----------



## moses (19 September 2006)

Stop_the_clock said:
			
		

> Some doe-brain was on the radio today saying that she expects a boom in Adelaide house prices over the next 5ish years.  She still believes they are way under-valued!




When U mining gets serious, then South Oz has the leap on the rest. That may be good enough reason to think Adelaide has more to go. Even if it doesn't need to boom fundamentally, the Perth experience and the investor lemmings may make it happen anyway.


----------



## krisbarry (19 September 2006)

Its just not possible for Adelaide house prices to rise by another 150% or more.

Even under a mining boom or a defence force boom, both of which are promised in SA under current government.

I think 150% rise over the last 5 years is more than enough to lock out the below average wage earners, the middle class wage earners and many above average wage earners.

With the baby boomers retiring in their millions, selling up their investment properties etc all I can see is a wild ride down in the property market right around Australia, not to mention another rate rise or two!


----------



## Julia (19 September 2006)

Stop_the_clock said:
			
		

> Its just not possible for Adelaide house prices to rise by another 150% or more.
> 
> Even under a mining boom or a defence force boom, both of which are promised in SA under current government.
> 
> ...



Why would the baby boomers want to sell their IP's?  They are going to need a retirement income.  Surely by retirement age all the mortgages will be paid off and the income can form part of their super income?

Julia


----------



## YChromozome (19 September 2006)

Julia said:
			
		

> Why would the baby boomers want to sell their IP's?
> Julia




Costello's new super laws look good? Better tax advantages.


----------



## wayneL (20 September 2006)

Misery quotient
Just how much are borrowers with option ARMs going to suffer?
By Gail Liberman and Alan Lavine
Last Update: 7:28 PM ET Sep 18, 2006

PALM BEACH GARDENS, Fla. (MarketWatch) -- Are you at risk with your adjustable-rate mortgage? More borrowers than originally thought may soon find themselves suffering payment shock. The great fear: Rising interest rates and falling home values.
Most concern stems from mortgages with adjustable rates and more than one payment option, or "option ARMs."................

More - http://www.marketwatch.com/news/story/Story.aspx?guid={88CCCA7E-AE84-4043-8E24-8110F3516FC9}&siteid=


----------



## dj_420 (20 September 2006)

i agree, for those who have variable loans i feel that is slightly crazy.

when the interest rate was around 6.5% i would have locked in a fixed rate. to think that the interest rate in the future will drop below 5% is oportunistic and hopefull. 

i personally would have locked in a fixed interest rate, remember when interest rates were well over 10%, what if economic conditions were to lead to that.

So the ones who have chosen variable rates whilst they got the loan when the rate was 6% they will be the ones to suffer.


few points of my own on the housing comments
i think that given the right area property/land is still a great investment, you have to look at few things first JUST like shares you wouldnt buy before doing some research:

- demographics (for region, growth rate etc)
- industries that exist in region
- macroeconomic influences, eg mining boom
- areas with future growth potential

im sure the people who bought 3-4 years ago in areas affected by mining boom would not be stating that their housing prices have stagnated.
it just depends how hard you are willing to look; the more you look ad research the more likely you are to find a bargain that will grow.

if you are willing to throw your money onto a hot tip, then you are risking buying into an underperforming area/region


----------



## tech/a (20 September 2006)

> when the interest rate was around 6.5% i would have locked in a fixed rate. to think that the interest rate in the future will drop below 5% is oportunistic and hopefull.
> 
> i personally would have locked in a fixed interest rate,




Ah the interest rate illusion.

(1) Maximum term is 7-10 yrs most people fix for 3-5yrs as fixing longer brings the interest rate up dramatically.So short periods of fixing most used.

(2) Interest premium charged for say a 3 yr term--Depending on market volatility--say1%

(3) So to be better off interest rates would have to move up 1.25% immediately on taking out the fixed loan.

(4) If rates remain the same for a year rates have to then rise in the 2nd year 1.75% to be better off than your variable loan. 


THINK ABOUT IT!
1


----------



## tech/a (20 September 2006)

You can play with the calculator here.

http://www.yourmortgage.com.au/calculators/fixed_variable/

Have a look at this example here  where I have had interest rates rise .025% 8 times over the period of the fixed loan.5 yrs


----------



## brisvegas (20 September 2006)

at the bottom of the interest rate cycle you could get fixed rates at or cheaper than variable . i talked a friend into getting 5 year fixed at 6.5% . he thinks im a guru now but he was reluctant at the time . presently he is 1.25% interest in front and with his loan that is substansial saving of over 50 bucks a week


................ bris


----------



## tech/a (20 September 2006)

> at the bottom of the interest rate cycle you could get fixed rates at or cheaper than variable




Rarer than the 30 yr low in the cycle I would suggest.

For all other times---99% of it-------------see above.


----------



## tech/a (20 September 2006)

> - demographics (for region, growth rate etc)
> - industries that exist in region
> - macroeconomic influences, eg mining boom
> - areas with future growth potential




And ofcourse as Les alluded to in an earlier post.
Following behind any boom in housing comes the important factor of "Infrastructure".

Right now COMMERCIAL property and developement are following in the footprint of the domestic boom.

A whole new important topic.(If your serious about property opportunities).


----------



## Jay-684 (20 September 2006)

tech/a said:
			
		

> And ofcourse as Les alluded to in an earlier post.
> Following behind any boom in housing comes the important factor of "Infrastructure".
> 
> Right now COMMERCIAL property and developement are following in the footprint of the domestic boom.
> ...




Am interested on your thoughts on Commercial property as the next performing asset class Tech/A.

Recent Property Council of Australia seminars I have been to have sugested this exact same view.

PM me if you dont want to post it up here.


----------



## Realist (20 September 2006)

Stop_the_clock said:
			
		

> Some doe-brain was on the radio today saying that she expects a boom in Adelaide house prices over the next 5ish years.  She still believes they are way under-valued!




Who is this lady?

I would like to know because when all her mortgagee sales start happening I can profit off her complete incompetence!


----------



## YELNATS (20 September 2006)

Julia said:
			
		

> Why would the baby boomers want to sell their IP's?  They are going to need a retirement income.  Surely by retirement age all the mortgages will be paid off and the income can form part of their super income?
> 
> Julia




That's right. Rather than the baby boomers selling off their IP's, they'll be selling off their own larger homes and down-sizing into smaller dwellings, eg. units & townhouses. And they'll be putting the difference in the prices into their SMSF or into their self-funded pension annuity. As a b-b myself I am already observing this in my neighbourhood. This could mean the market for larger houses becomes depressed, but the market for more compact retirement-sized homes could benefit.

Regards. YN.


----------



## Realist (20 September 2006)

YELNATS said:
			
		

> That's right. Rather than the baby boomers selling off their IP's, they'll be selling off their own larger homes and down-sizing into smaller dwellings, eg. units & townhouses. And they'll be putting the difference in the prices into their SMSF or into their self-funded pension annuity. As a b-b myself I am already observing this in my neighbourhood. This could mean the market for larger houses becomes depressed, but the market for more compact retirement-sized homes could benefit.
> 
> Regards. YN.




But do Baby boomers have compact retirement-sized homes in retirement style locations (beach towns) as investment properties?

I doubt it?   

They probably have apartments in Sydney and Melbourne as IP's...


----------



## tech/a (20 September 2006)

> Some doe-brain was on the radio today saying that she expects a boom in Adelaide house prices over the next 5ish years. She still believes they are way under-valued!




I really love the comments from you 2.
Neither of you have ever been involved in property,have zippo experience but know more about property than any person on earth.

I have no idea if she will be proven correct.
However last year I had some property valued by a valuer for some more $$s to buy some property.
Property A was valued at $275K
Property B was at $230K

Ive just been through the same exercise again and was more than suprised when the valuation 12 mths later and supposedly during a period of negative growth to find a now $350 and B $280.



> Am interested on your thoughts on Commercial property as the next performing asset class Tech/A.
> 
> Recent Property Council of Australia seminars I have been to have suggested this exact same view.





Jay.
Will have to put up with the un informed but Les and a few others may wish to comment.
Its pretty well known that Commercial property follows on from a Domestic boom within 5 yrs. (Realist would have known that and be well in front of us all,but perhaps he is looking for prices to fall---and waiting and waiting and waiting).

This occurs as demand has opened up new subdivisions and the infrastructure in those regions is placed under so much pressure that new Commercial developements are opened and demand for old estabilshed areas increases.Plenty of business opportunity due to the influx of population (Housing,Rental,Units---doesnt matter),but no where to operate from.

So where is the opportunity.
Firstly in the established areas as they will be closest to the action.Plus in most cases there wont be any more land released---this is when prices climb fast.
I have 2 currently,I bought both in 2002.
one 1 acre and the other 1.25 acres.At the time residential was going in the same vacinity for $145K for 750 squ meters.
I paid $115K and 137K respectively,the last 2 un established blocks in the industrial area.Seemed like an opportunity to me as I wanted one for the Business and the other---well was cheap I thought.

I'm now established on the acre and have been offered $390K on the other.
(But I think I'll hold it a little longer then develope).

Sorry back to opportunity.
Councils in their wisdom only release limited commercial developement---Bless them!!
You can make great money 3 ways.
(1) Buy hold and sell
(2) Buy subdivide and sell (Selected blocks,corners best)
(3) Buy Develope and sell

You'll notice I like to sell.
Well Ive learnt from past experience that it is likely that the opportunity will last for around 7 yrs,then it will expire as an opportunity,around 4 yrs to go I feel.

I can go into the way I select a developement and evaluate it if you wish.


----------



## dj_420 (20 September 2006)

there was a member on ASF who was talking about buying property no money down, can anyone remember who it was??

just wanted to ask them some advice


----------



## Jay-684 (20 September 2006)

thanks for that tech/a! very much appreciated!

the reasoning for my curiosity is two fold. Firstly I am currently in my final semester of a Bachelor of Business (Property) degree at Western Sydney University. Obviously firstly I will need experience so I plan to go into property management and asset portfolio management (or gaining a job with Mirvac, Sotcklands etc) for the first part of my career. Secondly, once I feel I have an in-depth knowledge of commercial and indistrial property I plan on becoming a property developer/investor mainly due to the benefits of being self employed and the higher returns (to all the risk averse prople, I know the risk is higher as well).

I am interested in any knowledge you wish to send my way, however it may not be appropriate for this thread (not that half of the posts here are anyway)


----------



## Jay-684 (20 September 2006)

dj_420 said:
			
		

> there was a member on ASF who was talking about buying property no money down, can anyone remember who it was??
> 
> just wanted to ask them some advice




Tech/A has mentioned it in a previous thread I think.

PM him or he will reply to this thread.


----------



## dubiousinfo (20 September 2006)

Tech,

Are the 2 blocks industrial or commercial? You said commercal blocks but then said they are located in an industrial area. I know nothing of Adelaide & its prices, however, the prices you mentioned seem to indicate they are industrial blocks.


----------



## dj_420 (20 September 2006)

thanks jay-684


----------



## tech/a (20 September 2006)

dubiousinfo said:
			
		

> Tech,
> 
> Are the 2 blocks industrial or commercial? You said commercal blocks but then said they are located in an industrial area. I know nothing of Adelaide & its prices, however, the prices you mentioned seem to indicate they are industrial blocks.




My apologies.
Industrial.
While its possible to run a commercial venture in an Industrial developement its Industrial as will be the developement.


----------



## dj_420 (20 September 2006)

ok so i need to use other assets to provide initial capital. what about shares does that count as an asset which you could offset to purchase property?


----------



## dubiousinfo (20 September 2006)

Jay-684 said:
			
		

> thanks for that tech/a! very much appreciated!
> 
> the reasoning for my curiosity is two fold. Firstly I am currently in my final semester of a Bachelor of Business (Property) degree at Western Sydney University. Obviously firstly I will need experience so I plan to go into property management and asset portfolio management (or gaining a job with Mirvac, Sotcklands etc) for the first part of my career. Secondly, once I feel I have an in-depth knowledge of commercial and indistrial property I plan on becoming a property developer/investor mainly due to the benefits of being self employed and the higher returns (to all the risk averse prople, I know the risk is higher as well).
> 
> I am interested in any knowledge you wish to send my way, however it may not be appropriate for this thread (not that half of the posts here are anyway)





For the Sydney market, Industrial property took over from residential but has now softened. Commercial began picking up around 6 months ago & agents have stopped offering incentives for new leases. This is typical of Sydney as its unusual to see more than one class moving at the same time & I don't recall ever seeing all 3 run at the same time.

In smaller towns I have seen all 3 run together, places like Noosa & Darwin come to mind.

Commercial property is very lucrative to be in when it is running & is my personal favourite. The main indicators for us are yield & vacancy rates.

One of the drawbacks when starting out however is finance. When I started out, banks wouldn't lend more than 60% of the development & usually required precommitments. It is getting easier lately & in some instances you can get up to 75%.

Another drawback is the long lead times. From purchasing a property to completion of construction can take from 2 to 3 years, even for medium size developments, so you really need to time it right if you are going to develop. (We are expecting to bring on around 12,000sq meters in the next 6 to 12 months, but this was started 18 months ago)

It's probably best to get in with some experienced partners when starting out, because if you get it wrong it can cost you plenty.

Purchasing strata areas of completed buildings is far less risky. While the yield of residential is currently around 2% to 3%, the yield for commercial is around 7% to 8% depending on location & standard.


----------



## nizar (20 September 2006)

wayneL said:
			
		

> http://www.bloomberg.com/apps/news?pid=20601109&sid=a4Naw1mqxCRw&refer=home
> 
> http://www.bloomberg.com/apps/news?...xCRw&refer=home
> 
> ...





Wayne and others,

Is the above comment accurate??

Coz i thought property, is just like other markets, and u get cycles, one ends, then another begins shortly after. Property last boomed in the late 80s in australia, and then late 90s, and probably in the next 5-7 years we will get another boom.

Obviously over the long-term property, like other asset classes, is a good investment, but dont u get mini booms and cycles in between?

So is it possible that houses in the U.S. rose for 70 years in a row?? (great depression was like 1930s).... without ever going down from one year to the next....

Or am i misunderstanding something?

Thanks


----------



## Julia (20 September 2006)

YELNATS said:
			
		

> That's right. Rather than the baby boomers selling off their IP's, they'll be selling off their own larger homes and down-sizing into smaller dwellings, eg. units & townhouses. And they'll be putting the difference in the prices into their SMSF or into their self-funded pension annuity. As a b-b myself I am already observing this in my neighbourhood. This could mean the market for larger houses becomes depressed, but the market for more compact retirement-sized homes could benefit.
> 
> Regards. YN.



Yes, YN.  That sounds entirely reasonable.  However, I am noticing more and more advertisements for very upmarket retirement villages, resorts really, with indoor and outdoor heated pools, tennis courts, bowls greens, theatres, bar and restaurant etc etc, in which three brm, 2 bthrm, double garage units (room for the grandchildren to stay etc)  villas are priced at about the same as suburban stand alone houses.  So I'm just not sure that retirement is necessarily going to mean financially downsizing for the baby boomers.

Again, I think we are inclined to overdo the lumping together of all baby boomers as an a one size fits all economic model, whereas in fact lots of them who have not managed to save enough for retirement will end up paying rent and existing on a government pension.  The next decade or so will be very interesting.

Julia


----------



## Smurf1976 (21 September 2006)

nizar said:
			
		

> Wayne and others,
> 
> Is the above comment accurate??
> 
> ...



One key point to understand is that what constitutes a "median" house changes substantially over the course of the real estate cycle.

It is reasonably well known that quality property will always find a buyer (a point made often by bulls). It is also no secret that poor quality property is incredibly hard to sell in a slump.

But in a boom, ANY property sells and it does so at a rising price.

Consider an anaolgy using second hand cars. If there were a slump in the market, only the better cars would likely find buyers while the old clunkers would head to the wreckers. But in the event of a major boom in the demand for used cars the old clunkers would be selling rather than being wrecked (just as the poorer quality properties sell). And so the "median" cars being sold would be of declining quality, relative to the average of all cars on the road. 

Likewise in a real estate boom the quality of the "median" house tends to fall relative to the average quality of all houses in existance (as opposed to on the maket). In a slump with only the better properties selling readily, the median quality of houses selling rises relative to the average quality of all houses in existance.

It's a bit like saying you sell more Barinas in the boom but only BMW's sell during the slump. Since the BMW's sell at a much higher price (new), this will tend to hide the full extent of the slump from the "median" figures since the median car sale is now of much higher quality. Likewise the extent of the boom will be understated as median quality declines during the boom as the lower end cars, houses or whatever find buyers.

So the overall effect is to understate the extent of the boom in the value of the SAME house and also understate the extent of the slump in the value of the SAME house by the constant shift in what constitutes a "median" house. Hence the common stories of house price gains that substantially exceed the "median" price rise during the boom and those stories of price falls much greater than the "median" fall during the slump. The changing composition of the market smooths the price figures.

If median quality improves but price stays the same then the price of the SAME house will likely have fallen. Reverse if median quality declines.

*In recent times where I have been looking (Hobart) there has been a marked shift in sales favouring the better quality properties. The ugly ducklings are having real trouble actually selling while the more attractive houses readily find a buyer. Since the better houses tend to be more expensive, this has lead to rising or at least stable (depending on which figures you choose) median prices despite the value of the SAME house being down 10 - 15% from the peak*.

Personally, I consider it far more useful to track the prices of very similar houses in the same area(s) as a measure of the state of the market. This avoids the distortion of changes in what is actually being sold which disorts the "median" figures.

Using my criteria of 3 bedroom 13 - 14 square brick freestanding houses on 600 - 750 sq metres of land in selected suburbs of Hobart, asking prices are now about 12% below peak selling prices and properties are not readily selling at those prices. 

I also run another criteria of "cheapest available 3 bedroom property in selected low income suburbs". That is down just on 20% and still falling. As is clearly evident, the lower end of the market is taking the biggest hit.  

Despite these falls in the price of the SAME or VERY SIMILAR houses, the median continues to rise gradually as buyers get better quality for their money. That doesn't mean there is no slump. It just means that people still have reasonably easy access to credit - they borrow $x and buy the best house they can get with that money. During a slump, they get a better house rather than spending less. Hence any price chart based on "median selling prices" will look a lot smoother than the actual value of the SAME house was over that period.


----------



## Realist (26 September 2006)

Are 93% of people are quite stupid...?    

No regrets for boom home buyers, survey
 September 26, 2006 - 11:29AM

Australian home owners who bought during the property boom have no regrets about their decision despite rising interest rates, a survey shows.

According to research commissioned by Wizard Home Loans, 93 per cent of home owners who purchased after the year 2000 believed it was a good decision to have entered the market when they did.

Chairman of Wizard Home Loans Mark Bouris said home owners have realistic expectations about their purchase.

"While there is little doubt that rising interest rates put people on edge, 88 per cent see rising rates as a reality of having a home loan," he said.

"The subsequent higher mortgage repayments have not made them consider selling up."

Mr Bouris said the survey of more than 200 home owners, conducted in mid-September, also confirmed that Australian homeowners were well educated and focussed on building wealth.

"More than 45 per cent of home owners surveyed intend to purchase an investment property in the next five years," he said.

The research showed 15 per cent of those who bought during the boom have already purchased an investment property and are capitalising on the current low vacancy rates and high rental returns across most cities, he said.

Although money can be made in the sector, Mr Bouris warned short term property speculation was a risky.

"Property is a long term investment so it shouldn't matter what point in the property cycle you enter, as long as your timing is part of an informed strategy," he said.

Mr Bouris said that despite tighter household budgets, and speculation of higher rates, Australian home owners are still a happy bunch with 80 per cent either positive or extremely positive about the fact that they own their own home.


----------



## tech/a (26 September 2006)

Perhaps I look at property differently to the majority.

I'm still developing high density Community title apartments. Which I sell and keep what I can freehold or atleast positively geared.

Those which I bought in 96-2000 Im selling and freeholding the remainder which have greatest potential--Esplanade property.

If you simply bought a home to live in after 2000 then the decisions are limited.

I see times like 96-2001 as outliers in the property market that will take sometime to repeat.
Just like the stock market there will always be opportunity but this 5 yr period was like a stock rising 150%.That may take 15 yrs to increase anywhere near what it has to 2001.
Investors should take advantage of these unusual moves and lighten exposure.


----------



## krisbarry (26 September 2006)

tech/a said:
			
		

> Perhaps I look at property differently to the majority.
> 
> I'm still developing high density Community title apartments. Which I sell and keep what I can freehold or atleast positively geared.
> 
> ...




I very much agree, it would appear that because your success was based on a particular moment in time, that same success cannot be repeated again for quite some time to come.


----------



## Realist (26 September 2006)

tech/a said:
			
		

> Perhaps I look at property differently to the majority.
> 
> I'm still developing high density Community title apartments. Which I sell and keep what I can freehold or atleast positively geared.
> 
> ...




Well you got in at the right time Tech/a.

I believe property is all about location and timing, obviously buying in Sydney 3 years ago was a bad move, and buying earlier was good.

The stock market however always has opportunities for astute traders and investors.  Just because a stock or the market in general has increased significantly it does not mean it is a bad time to buy shares.

The ASX has dropped from 5350 to 4900 recently yet in that time Fosters, Coles, Mayne, AUM, BMN, HDR, MRE, and many others have soared.  And with BHP, RIO, and others selling at low multiples of their current earnings they are arguably quite cheap.   Add to that the huge amount of dividends companies are paying out, it is not all bad news.

Those that invested in RIN, DOW, WPL and some others have been stung though. The housing and oil sectors in particular have been hammered.

I don't believe people should ever stay out of the stockmarket. And I would not even recommend reducing their holdings now either. Because the cost of selling, waiting, and buying back in outweighs any advantages that staying out may bring - afterall the ASX may even go up.


----------



## krisbarry (26 September 2006)

Realist said:
			
		

> Who is this lady?
> 
> I would like to know because when all her mortgagee sales start happening I can profit off her complete incompetence!




Unsure of her name, but she works for or is affiliated with "Destiny Financial Solutions".


----------



## Realist (26 September 2006)

Stop_the_clock said:
			
		

> Unsure of her name, but she works for or is affiliated with "Destiny Financial Solutions".




ahh Margaret Lomas..

Margaret Lomas is the author of the best-selling books "How To Make Your Money Last As Long As You Do", "How To Create An Income For Life", "How to Maximise Your Property Portfolio", and "The Pocket Guide For Investing In Positive Cash Flow Property" . These books explain to new and experienced investors how to manage and profit from a positive cash flow property portfolio without falling for the traps which are often promoted at 'get rich quick' seminars.

Margaret is the founder of the nationally represented company "Destiny Financial Solutions". Commenced in 1992 in Perth WA as a fledgling financial advisory and brokerage company employing just two people, Margaret has built this company into a nationally franchised organisation, offering unique property advisory services to investors all over the country. 

She is also a dynamic presenter who is in great demand as a speaker at financial expos, shows and seminars all around Australia in many categories including Property Investing, Women in Business, Building a National Business and many others. She is the resident financial commentator on five radio programmes across Australia and writes articles for several magazines.

Margaret has Diplomas in Financial Advising and Human Resource Management and a Certificate in Franchise Management. She is an affiliate member of the Securities Institute of Australia and the founder of Destiny Financial Solutions Pty Ltd.

Margaret has also been recently appointed to the Board of Business Central Coast, an independent body headed up by former Olympics Committee Chairman Sandy Holway, in place to foster and build business growth on the Central Coast.

Travels from Sydney, Australia

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----------



## Realist (26 September 2006)

I think the financial advice and property advice industries are much like the fitness industries.

Only for suckers!!

If you eat healthy and exercise then you are wasting you time seeing a fitness advisor.  And if you do not eat healthy and exercise then you are wasting you time seeing a fitness advisor.


----------



## Julia (26 September 2006)

Realist said:
			
		

> I think the financial advice and property advice industries are much like the fitness industries.
> 
> Only for suckers!!
> 
> If you eat healthy and exercise then you are wasting you time seeing a fitness advisor.  And if you do not eat healthy and exercise then you are wasting you time seeing a fitness advisor.




Ah, Realist, every now and again you absolutely justify your existence on this forum with a little gem like this one!

Succinct, and oh so correct.

Julia


----------



## Smurf1976 (29 September 2006)

Well, that's it. The slump looks to be here in Hobart...

Since 2003 I've been closely watching selected suburbs just to keep an eye on the market. The cracks started appearing a couple of months ago and now there's at least one serious fall and plenty of properties a lot cheaper than they would have been.

Have all houses fallen in price? NO! But there are an increasing number of cheap properties such that those looking to buy a modest house can now get one at a substantially cheaper price than they would previously have paid.

I never was concerned about the top end of town (Sandy Bay in Hobart's case) or some statistical average but rather, how much it costs an ordinary family to put a roof over their head.

My criteria has been fairly simple. A typical 3 bedroom house on a reasonable block. Nothing fancy, just a reasonable suburban house that's ready to move into without extensive renovations and doesn't have any obvious major disadvantages (so ignoring houses located on highways, next to pubs / clubs / service stations or anything else disruptive).

For quite some time the market was stuck in a tight range with both brick and weatherboard houses about the same price. Then came the first falls of 10 - 15% and I suspected the long awaited slump was here.

But then more of those properties started to appear. First one, then more. And they still haven't sold. Meanwhile, more expensive houses (above the modest house in my criteria) have started to come down too. 

Earlier this week a colleague who is about to sell their modest suburban house told me that a real estate agent had informed them to be quick as "the top end of the market is simply stuffed". The inference being to get a move on and sell before buyers realise that they can get a much better house for not much more than the one he is selling, thus making his house hard to sell.

And so I just did my weekly check of the market. And what did I find? A modest but perfectly reasonable (so it seems) house for sale that's fully 30% below the peak price. Meanwhile those early cheap offerings 10 - 15% below the peak are still sitting there.

And not only that, but plenty of 2 bedroom houses for sale in another (quite reasonable) suburb at the price of a 1 bed at the peak. 

So, the agents say the market for more expensive houses is "stuffed" while even a quick search on the internet turns up an increasing volume of evidence that the market for first home buyer properties is going exactly the same way. 

As I have noted on several occasions here and on property forums, Sydney has lead this cycle and Hobart has been next in line for some time now. That doesn't seem to have changed.

For those in the other states, there's no need to move to Sydney or Hobart to grab a bargain. You've had the same boom and it stands to reason that in due course you'll get the same slump. 

For those on the commodities boom bandwagon in Perth, I must point out that the largest industry in Hobart is the zinc works (Zinifex) and that Tasmania's exports are overwhelmingly dominated by commodities. Cadbury (a very major employer in Hobart) is expanding production as is Incat (another major employer), the tourism industry is ticking over reasonably well and the largest non-Hydro investment ever proposed in the state, the pulp mill, seems increasingly likely to proceed. Basslink's up and running, natural gas pipes (gas being a new industry in Tas) are going in all over the place and we've got plenty of cruise ships heading here this Summer. None of which have been sufficient to prop up the housing market.

All that said, there's still an awful lot of "boom" priced properties on the market so the falls are somewhat narrowly concentrated rather than broadly spread. But they are slowly spreading...


----------



## clowboy (29 September 2006)

So how long do you give me to save for the deposit on a holiday home down that way smurf? two or three years?

Would love to vistit that area on day and will need somewhere to stay.

will a nice two by one be under the 100k mark in three years?


----------



## noirua (30 September 2006)

Motley Fool's view of the UK housing market that booms on relentlessly and their opinions on a future crash:  http://www.fool.co.uk/news/comment/2006/c060928a.htm?source=ioowftxt0010011


----------



## tasmanian (30 September 2006)

hey realist,

can u write something about property??i need some good entertainment to start my weekend of.lol.

cheers


----------



## cogidubnus (30 September 2006)

realist is a good bloke. I will tell him about kimberlies when I arrive. Today we are driving to perth. My companions cooked a nice meal for me last night. the bus drives well. On monday I will make more money on aar and aex  POS POG and POO will move up soon


----------



## cogidubnus (30 September 2006)

yesterday my house was sold.   I bought it in 1955. It was a good house, many memories but now I must continmue on the journey. I have lots of money to buy stocks and gold. I will visit perth mint and buy lots of physical gold and silver. I will store it in a bank vault.


----------



## tasmanian (30 September 2006)

you sound like a good bloke too.aar,s looking good as well.enjoy your trip sounds good.well yeah everythings good

cheers


----------



## cogidubnus (30 September 2006)

tasmanian said:
			
		

> you sound like a good bloke too.aar,s looking good as well.enjoy your trip sounds good.well yeah everythings good
> 
> cheers



Thank you tasmanian. one day I will visit, but  first I must drive to kimberlies.
Monday will be good


----------



## 2020hindsight (30 September 2006)

cogidubnus said:
			
		

> ... My companions cooked a nice meal for me last night. the bus drives well.



Cog, I'm reminded of a story I heard of a fellow who bought a yacht in San Francisco - advertised for an all female crew.  Troubles started when the replies to the ad came flooding in - so many applicants - and of course he had to interview them individually usually over candlelit dinners - that he took MONTHS to meet them all - and by then it was cyclone season and he had to put it off.   And do the same next year.  

PS this is not necessarily a male sexist tactic - no reason why women cant buy yachts and advertise for all male crews.

PPS at least you ended up doing something with your all female crew.  Maybe I should rephrase that - at least you ended up going somewhere 

PPS we are all pleased to hear your bus drives well lol.


----------



## cogidubnus (30 September 2006)

2020hindsight said:
			
		

> Cog, I'm reminded of a story I heard of a fellow who bought a yacht in San Francisco - advertised for an all female crew.  Troubles started when the replies to the ad came flooding in - so many applicants - and of course he had to interview them individually usually over candlelit dinners - that he took MONTHS to meet them all - and by then it was cyclone season and he had to put it off.   And do the same next year.
> 
> PS this is not necessarily a male sexist tactic - no reason why women cant buy yachts and advertise for all male crews.
> 
> ...



thank you for concerns. I have had fun and will boot them at the next stop. they will hitch a ride from someone else.  :


----------



## cogidubnus (30 September 2006)

cogidubnus said:
			
		

> thank you for concerns. I have had fun and will boot them at the next stop. they will hitch a ride from someone else.  :




I will buy yacht next year. It will be good. I will also sail because I do not need licence to sail boat. It will have tv and navigation system. Perhaps I can persuade some backpackers to sail for me.    :


----------



## noirua (30 September 2006)

Dubai: Which way now for property prices?  http://www.ameinfo.com/97094.html


----------



## YChromozome (30 September 2006)

And a counter agrument closer to home (Thanks Costello)

Bringing the house down - The Australian - September 30, 2006

The combination of lower marginal tax rates and higher tax thresholds with the latest generous incentives to invest in super is expected to see a rethink of Australia's traditional love affair with property investment

. . . . 

But there is little doubt that the combination of the recent tax changes will significantly shift the goal posts away from property towards super for anyone who can afford to wait until 60 to access their funds.

"There is no argument that investment property has been the preferred investment of the baby boomers over superannuation," Rice Warner director Michael Rice says.

"But that may change as a result of the budget.  

. . . . . 

 It is important to note that baby boomers were the biggest buyers of investment property during the Sydney and Melbourne property boom which peaked in 2003.  


And for Realist :

"A lot of people will do the sums and realise if they can save tax through putting money into superannuation over the course of their working life, they will be better off forgoing the great Aussie dream. The way property prices have gone over the last few years many young people have found it impossible to buy their own home in a nice location where they want to live.

"They would rather live in a place close to town or near the beach and pay rent."

For these people, Raftery argues, the pro-super tax changes will only further cement their thinking about not even bothering to enter the housing market at all.


----------



## nizar (30 September 2006)

It seems logical that AMP becomes THE STOCK to hold as it will take full advantage of this new g'ment push to encourage super.


----------



## wayneL (6 October 2006)

Real Estate Anecdotes from Disneyland

A good read for RE bears: http://globaleconomicanalysis.blogspot.com/2006/10/still-more-anecdotes.html


----------



## tech/a (6 October 2006)

Wayne.

I get lost with some of this stuff.
A mate of mine in Tampa FL owns half a suburb,he *locked ALL loans at 2.5% PA over 30 yrs!!!!!*So he couldnt give a rats how high interest rates go.
H'es not alone all holders of multiple investment properties in the US I know both domestic and commercial have done the same thing.

God Bless America wish I could do it here and Id hold indefinately as well!!


----------



## nizar (6 October 2006)

tech/a said:
			
		

> *locked ALL loans at 2.5% PA over 30 yrs!!!!!*




WOW, oh my god, thats unreal, hes pretty much paying CPI for his interest.
Looks like a very sweet deal!


----------



## krisbarry (6 October 2006)

YChromozome said:
			
		

> "A lot of people will do the sums and realise if they can save tax through putting money into superannuation over the course of their working life, they will be better off forgoing the great Aussie dream.




*So I guess I am doing the right thing, the smart thing!

Seems like I am the minority at the moment, but fast becoming the majority*


----------



## Bronte (6 October 2006)

Bronte said:
			
		

> Well our bank is allowing us to sell one property without effecting the existing mortgage (fixed at 6.47%) ......nice of them.
> We think our South Perth apartment close to the Swan River will have to be sacrificed



Now we have a problem....
A very large sum of money will be deposited into our account early November  
The problem is .......we have to reinvest most of it.
Hope the market crashes between now and then


----------



## juddy (6 October 2006)

Bronte said:
			
		

> Now we have a problem....
> A very large sum of money will be deposited into our account early November
> The problem is .......we have to reinvest most of it.
> Hope the market crashes between now and then




that's an extremely selfish point of view. Quite pathetic really.


----------



## Bronte (6 October 2006)

I suppose you are right juddy.
Although it does make good investment sense.
Doesn't have to be the stock market either.
Any market that we consider good buying.


----------



## Bronte (6 October 2006)

Bronte said:
			
		

> I suppose you are right juddy.
> Although it does make good investment sense.
> Doesn't have to be the stock market either.
> Any market that we consider good buying.




Could even be the 'Real Estate' market.
We all enjoy making money.....do we not?


----------



## juddy (6 October 2006)

Bronte said:
			
		

> Could even be the 'Real Estate' market.
> We all enjoy making money.....do we not?




never through the misfortune of others though. You can make money without hoping for that, whatever market it is.


----------



## krisbarry (6 October 2006)

Bronte said:
			
		

> Now we have a problem....
> A very large sum of money will be deposited into our account early November
> The problem is .......we have to reinvest most of it.
> Hope the market crashes between now and then




You could always make large donations to others....hmmmmm let me think!

Hey I am povo... I would gladly hand over my bank details in return for a lump sum deposit of cash


----------



## Julia (6 October 2006)

Bronte

I totally agree with Juddy's comments.  You know very well that a lot of members of this forum are just starting out and your gratuitous "complaining" about having too much money seems  pretty insensitive to me.

Julia


----------



## Bronte (6 October 2006)

There is only two types of money problems...
Not having enough or having too much.
We have experienced both.


----------



## Bronte (6 October 2006)

Active members here at ASF,that have no money are well on their way to learning how to make some.
Just by posting questions / reading and learning from others. 
There is some great information here.


----------



## tech/a (6 October 2006)

Julia said:
			
		

> Bronte
> 
> I totally agree with Juddy's comments.  You know very well that a lot of members of this forum are just starting out and your gratuitous "complaining" about having too much money seems  pretty insensitive to me.
> 
> Julia





Julia

*He with Biggest mouth has shallowest pockets.*

Pretentiousness is *UGLY*


----------



## wayneL (6 October 2006)

Another saying comes to mind:

When trying to get out of a hole, it pays to stop digging.


----------



## Smurf1976 (6 October 2006)

tech/a said:
			
		

> Wayne.
> 
> I get lost with some of this stuff.
> A mate of mine in Tampa FL owns half a suburb,he *locked ALL loans at 2.5% PA over 30 yrs!!!!!*So he couldnt give a rats how high interest rates go.




So he/she isn't at all concerned about the capital value of their properties then? I suppose I could argue that some dot.com stock bought for $10 in 2000 is still a good investment, even though it's now practically worthless, as long as I hadn't sold it because it might turn out OK in 20 years time. A loss IS A LOSS whether you sell or not - it's still a loss. 

Whether choosing to buy/hold that asset AFTER the value has fallen makes sense is another matter, but buying BEFORE the fall is rarely the best strategy (unless yield is high, which in RE it generally isn't at the moment). At best you've suffered a huge opportunity cost waiting out the fall and subesequent climb back to square one.

Rising interest rates would seem likely to be negative for the capital value of real estate, at least compared to other assets, for pretty obvious reasons.   



> God Bless America wish I could do it here and Id hold indefinately as well!!



Wish you could do it here? I seem to recall you being against fixed rate loans on the basis that, on average over the life of the loan, they are more expensive than variable rate?


----------



## wayneL (6 October 2006)

tech/a said:
			
		

> Wayne.
> 
> I get lost with some of this stuff.
> A mate of mine in Tampa FL owns half a suburb,he *locked ALL loans at 2.5% PA over 30 yrs!!!!!*So he couldnt give a rats how high interest rates go.
> H'es not alone all holders of multiple investment properties in the US I know both domestic and commercial have done the same thing.




2.5%? 

I suggest your mate is spinning you a porky. Here is the history of adjustable rate mortgages... fixed rates would not have varied substantially and at most times, are higher than AR.

http://mortgage-x.com/general/indexes/prime.asp



			
				tech/a said:
			
		

> God Bless America wish I could do it here and Id hold indefinately as well!!




Indeed! 

America, the worlds newest dictatorship, needs Gods help right now.


----------



## Bronte (6 October 2006)

wayneL said:
			
		

> 2.5%?
> I suggest your mate is spinning you a porky. Here is the history orm ARM mortgage rates... fixed rates would not have varied substantially and at most times, are higher than AR.



Agreed


----------



## tech/a (6 October 2006)

Wayne.

I had the rate wrong I gave him a call and its 6.75%
But it is fixed for 30 yrs.The downside is that if rates are lower than the fixed rates then the penalty to get out is massive.
But he feels rates will in the majority will be above the rate fixed.
Which from your table Wayne is pretty right.

SMURF
Yes and I still am as we can only lock for 5 yrs generally.
Smurf he has a sizable chunk which is his so he is well in the positive territory.It is cashflow for him.They are larger apartment blocks--30-50 in each.
He has 2 sets.
And a Car wash.


----------



## krisbarry (7 October 2006)

Bronte said:
			
		

> Now we have a problem....
> A very large sum of money will be deposited into our account early November
> The problem is .......we have to reinvest most of it.
> Hope the market crashes between now and then




I hope it doesn't crash  

You have had your time making serious money from the housing market (how much more wealth do you need?)...now it is my turn to make serious cash from the stock market  

I have 100% of my superannuation in Australian shares and geared at 50%, so I need to make squillions!

Please don't spoil it for the rest by wishing us bad luck...remember the Karma theory :


----------



## wayneL (12 October 2006)

This article is UK based, but identical conditions exist here.



> Economists have a blind spot for finance
> 
> A collapse in asset prices can occur, regardless of the economic laws of supply and demand.
> Ann Pettifor
> ...


----------



## Bronte (24 November 2006)

Bronte said:
			
		

> Well our bank is allowing us to sell one property without effecting the existing mortgage (fixed at 6.47%) ......nice of them.
> We think our South Perth apartment close to the Swan River will have to be sacrificed



Just an update. We certainly are bearish property
We have now sold this South Perth apartment 
and also our two houses in England.
We expected them to double in seven to ten years,
they actually almost tripled in six years.
We thought this was a very good reason to sell  
Also thanks to ASF member for advice in this thread.


----------



## YChromozome (25 November 2006)

West's housing boom finally slowing down 



> Median prices in the West Australian capital are now unlikely to overtake Sydney by the end of the year, as one researcher had forecast.
> 
> House price growth in Perth eased to 6 per cent in the three months to September, down from 11 per cent in the three months to June, according to the Real Estate Institute of Western Australia.
> 
> Listings surged by 20 per cent in the same period, caused largely by investors seeking to crystallise massive gains made during the boom.




Umm, maybe the end is near? Quiet - Did you hear that? POP!


----------



## Smurf1976 (25 November 2006)

YChromozome said:
			
		

> Listings surged by 20 per cent in the same period, caused largely by investors seeking to crystallise massive gains made during the boom. [/COLOR]



Another way of saying that investors are getting out of the market. Smart investors that is.


----------



## Bronte (9 December 2006)

Bronte said:
			
		

> Just an update. We certainly are bearish property
> We have now sold this South Perth apartment
> and also our two houses in England.
> We expected them to double in seven to ten years,
> ...



This may be of interest to some members:
http://www.theage.com.au/news/business/wa-house-prices-come-off-boil/2006/12/08/1165081153014.html


----------



## wayneL (9 December 2006)

Bronte said:
			
		

> This may be of interest to some members:
> http://www.theage.com.au/news/business/wa-house-prices-come-off-boil/2006/12/08/1165081153014.html




Mrs & I have noticed that up here in the world class, exciting tourist mecca of Geraldton as well.

Houses are staring to stick... and lots of year old SS commodores and Tickford Fords for sale on the side of the road.  

Still buckets of money up here, but folks are overcommitted and prices lost touch with reality some time ago.


----------



## BREND (8 January 2007)

Home prices may not remain stagnant for years.

I had done some research in my blogs. There is an inversed relationship between mortgage rate and housing starts, due to the simple reason, low mortgage rate makes housing more affordable. Housing starts have fallen sharply while mortgage rate has remained low. As long as mortgage rate continues to remain low in 2007, housing starts is likely to recover.

And unemployment rate in US stays at 4.5%. US employment market is still strong and healthy.   

Details inside:
http://basemetal-trading.blogspot.com/2006/12/us-will-not-have-recession.html


----------



## robots (21 January 2007)

hello,

this thread started on the 19/09/05 and guess what house prices are still going up

I know my place has

even three interest rate rises havent stopped it

the price hasnt crashed and burned, and with rents increasing the way they are in inner city Melburn I expect the price to go up further

thankyou
robots


----------



## Smurf1976 (21 January 2007)

robots said:
			
		

> hello,
> 
> this thread started on the 19/09/05 and guess what house prices are still going up
> 
> ...



Not so down here in Tassie. I could now buy a nice 3 bed brick house with pool for the same money that would have bought a smaller weatherboard house on less land (in the same area) 3 years ago. Or alternatively I could just buy the same house and pay roughly 20% LESS for it.

Even cash in the bank has massively outperformed property in recent times. And that's without even mentioning that you'll earn even less on property once depreciation, rates, insurance and so on are included. 

That said, at some point getting out of cash and into anything of permanent value (like property) is going to make a lot of sense. But we're not seeing a credible threat of rapidly escalating inflation from the central banks YET. Inflation certainly, but not at a sufficiently increasing rate that would justify current property values. At least not so far.


----------



## Realist (21 January 2007)

robots said:
			
		

> hello,
> 
> this thread started on the 19/09/05 and guess what house prices are still going up
> 
> I know my place has




They've been going down and down in Sydney for 3 years mate.

And Sydney was where the boom started, the rest of the country follows.

Where do you live?


----------



## robots (21 January 2007)

hello,

what a load of rubbish

I live in Melbourne

uncle's place in Stanmore sold just recently and he came out tops, previously he was in St Ives and I would imagine there are plenty more stories like that

where there is demand the prices are solid as

probably all the crap is going down, buy inner city is good

thankyou
robots


----------



## wayneL (21 January 2007)

robots said:
			
		

> hello,
> 
> what a load of rubbish
> 
> ...




While incumbent western governments hopes are pinned on increasing house prices (indeed the entire economies), they will continue to flood the money markets with liquidity. In other word, credit will be loose and fast.

This is all fine while it lasts, but has the effect of undermining the base (the true underpinnings of our western economies) while adding froth to the top.

The end result can be delayed by manipulation of money supply and relevant statistics (as it is now), but the inevitable is recession. This time will be particularly painful. It is just a question of WHEN.

Already, the inflation genie is emerging from the bottle in the fraudulent government numbers... of course in reality it has been out for some time.

The result is that savers have been severely punished. This cannot last.

I will be the first to admit it is taking longer than expected, but most of us were unaware of the extent to which governments would go to prop it up.

Ultimately there can only one result. Peoples precious, ridiculously overpriced pile of bricks will return to fair value, perhaps even overshooting on the downside.

Cheers


----------



## Sean K (21 January 2007)

While generally, it seems that prices have stagnated the past few years, there are suburbs that have done better than others everywhere. 

Anyone have a good summary of the past 3 years housing prices by suburb that has had the best gains....

Must add, I am more bearish generally, but see some short term possibilities.


----------



## robots (21 January 2007)

hello,

in my area St Kilda, demand is high, plenty of people want to live there and I am sure there are similar areas in every capital city

understand you Wayne, savers are getting screwed

thankyou
robots


----------



## Sean K (21 January 2007)

robots said:
			
		

> understand you Wayne, savers are getting screwed



I'm not sure if Wayne is saying this.

It's those borrowing, and getting into morgages over their heads, in a time of rising interest rates, and falling house prices, that will be screwed.....

Exactly what may happen in the next few years.....or not.


----------



## theasxgorilla (21 January 2007)

I have a good barometer that should predict when the hurt is really about to arrive.  Get to know someone who has been saying that when interest rates go up all those people telling dinner party and water cooler stories about their property wins will be _uber_ sorry.  The more they say it and the more tabloid newspaper articles they show you to back it up, the better.  

When the day arrives that they can't take any more of their colleages and associates telling smug stories and they finally decide to buy an "investment property" the next interest rate move will be down and property prices will really go to poo


----------



## krisbarry (21 January 2007)

Looks like the next rate rise is up....On top of Xmas Credit card binges, school fees, books, uniforms...this will be the interest rate rise that breaks the camels back...watch for the March, April, May slump in house prices!

This is it folks!

Poor bity the bastards in Sydney!


----------



## krisbarry (21 January 2007)

By the way I just bought another sh_it load, sorry I mean to say Ship load of Ipods to secure that upward pressure in interest rates  

For those that are long-term followers on this thread and others you will know that I am locked out of the housing market (along with millions of other generation x and y's) and was for many years pissed off by it, but not anymore...couldn't give a rats ****...!

You can have you 40 investment properties and the rate rise that go with.  I will have my superanuation thanks...it is paying me more that a 30% return.

Best to take a different route in life....stuff the bricks n' mortar, just add to your super and buy a house a house when you are 60, best way to beat the 30 year mortgage!


----------



## krisbarry (21 January 2007)

Just for the baby boomers while you munch over your morning weeties...and wondering if you should purchase that 40th investment property this is what you are doing....to your sons and daughters....shame on you!!!!!!!!!!!!

*Key workers 'priced out of cities*

AUSTRALIA is facing a crisis in which key workers will not be able to afford to live in the major cities, the federal Opposition says.

A house in Australia is less affordable for first-time buyers now than at any time in history, and the Opposition claims teachers, police, nurses and other essential workers are being priced out of cities such as Sydney and Perth.

According to Housing Industry Association (HIA) figures published today, the average mortgage repayment in Perth in the December quarter was $2759 per month, which put it ahead of Sydney which was paying $2741.

The West Australian resources boom has pushed Perth prices past Sydney for the first time, with its median first-home price at $444,900, an affordability drop of 7.4 per cent over the quarter.

Sydney's median price was $442,000, for a drop of 4.7 per cent.

The national median first-home price was $376,000, up from $361,500 in the previous quarter.

Labor spokeswoman for housing, Tanya Plibersek said the figures showed John Howard's government had condemned young Australians to a life of never owning their own home.

"The Howard government has given up on a generation of Australians," she said in Sydney.

"They have given up on allowing those people to dream of owning their own home."

Ms Plibersek said even middle income earners could not afford housing in areas close to the city in Sydney and Perth.

"We're actually seeing a situation in major cities like Sydney where key workers - nurses, teachers, police - find it almost impossible to afford to live within commuting distance of their work.

"We're going to have a situation like London where they had to revolutionise the way housing was built to make sure people on middle incomes could afford to live there.

"London had shortages of teachers, nurses and police and we're heading down that same path."

Mr Howard and Treasurer Peter Costello have defended last year's three interest rate rises by pointing out that unemployment is at a record low and the economy is the strongest it has been for decades.

But Ms Plibersek said Australians needed houses as well as jobs.

"One of the main reasons people work so hard is to put a roof over their head," she said.

"People, even if they are employed, if they can't find a roof over their head, aren't going to be very happy with the Howard government."


----------



## krisbarry (21 January 2007)

What a filthy mess...I am meant to be proud to be Australian on Jan 26th. and the great Australian dream is home ownership?

Biggest load of cr_ap I have heart in my life!

*First homebuyers need help,*

PERTH'S historic eclipsing of Sydney as Australia's most expensive city for first home buyers has prompted a call for the West Australian Government to take urgent action to help them.

Last year's three interest rate rises, coupled with an on-going shortage of housing stock, had sent affordability to a record low around Australia, the Housing Industry Association (HIA) said today after it released its quarterly Housing Affordability Index.

But the figures showed Perth had been hardest hit.

Sheryl Chaffer, of the HIA in WA, said Perth was now less affordable than Sydney for first home buyers - based on the average income of first home buyers and the median first home purchase price.

"It is the first time another city has been less affordable than Sydney for first home buyers," she said.

A 6.2 per cent surge in the median first home buyer prices in Perth, to $445,000 in the December quarter, prompted local first home buyer affordability to drop 7.4 per cent over the quarter and 34.5 per cent from a year ago.

In Sydney, a 3.1 per cent rise of the median first home buyer price during the quarter to $442,000 caused the first home buyer affordability index to drop 4.7 per cent over the December quarter, and 4.7 per cent over the year.

Ms Chaffer said immediate action was needed to help first home buyers into the market in Perth.

"It is very urgent, what we have seen over the last 12 months in particular is a significant falling out of the first home buyers in the market.

"From the state Government what we are looking for is action on stamp duty on a number of fronts and faster approvals processes for land release."

The HIA is calling for a review of the stamp duty threshold for first home buyers so it is aligned with the median first home purchase price.

The organisation also wants stamp duty removed on the GST component of the prices and a review of the stamp duty structure that applies to house and land packages.

"Unless there is some immediate action taken the situation will actually worsen if we have another interest rate rise," Ms Chaffer said.

WA's Housing Minister Michelle Roberts was overseas today and unavailable for comment.


----------



## The Red Baron (21 January 2007)

What is everyones feeling about this recent interest rate decession coming up? The papers and internet links ive been reading seems to be 50/50.

I'm a 24yr old perth guy trying workout where were going. Had two mates buy 3 years ago, decent block sized 4x2 for $250k. They have done really well and interest rates arent hurting them too much. Sure they are now drinking Carlton Draught instead of Corona and Rump steak on the bbq instead of Fillet but they are doing really well.

On the other hand i've had another 2 mates just buy in past 3 months. $400k for 3x2 in average suburbs. After missing out on a few properties paid $20k over the asking price to join the Perth property boom. Only to be hit by a few interest rates and the suburb to give up a tiny 0.9% in the December quarter, but still backwards in the Perth market. Another rate rise will really really hurt.


----------



## krisbarry (21 January 2007)

The Red Baron said:
			
		

> On the other hand i've had another 2 mates just buy in past 3 months. $400k for 3x2 in average suburbs. After missing out on a few properties paid $20k over the asking price to join the Perth property boom. Only to be hit by a few interest rates and the suburb to give up a tiny 0.9% in the December quarter, but still backwards in the Perth market. Another rate rise will really really hurt.




Poor bastards, they bought at the top of the market...just imagine a collapse in the resource boom, they will be stuffed for many, many, many years to come.  At least Sydney has the night life, head offices, lifestyle and sights to support it in a downturn, Perth is so damn cut off from the rest of Australa and is only really supported by one thing and that is resources.

Its all downhill from here!


----------



## krisbarry (21 January 2007)

Hey "Realist", I reckon you could almost buy a house in Sydeny real soon, looks like the bottom of the market after the next rate rise in Feb/March.

Good luck mate, its been a hard slog for the rest of us trying to push down house prices but its now our turn to shine!

Much Thanks and support from our friends at the RBA!


----------



## The Red Baron (21 January 2007)

Stop_the_clock said:
			
		

> Poor bastards, they bought at the top of the market...just imagine a collapse in the resource boom, they will be stuffed for many, many, many years to come.  At least Sydney has the night life, head offices, lifestyle and sights to support it in a downturn, Perth is so damn cut off from the rest of Australa and is only really supported by one thing and that is resources.
> 
> Its all downhill from here!




I think that's what they are hoping for, the resource boom to continue. After speaking with them last night, beening tradies they have decided to try get some work in the red dirt up north to keep their houses. 

They did consider putting the property back on the market but the number of houses for sale in the area is now x3 and they aint selling.


----------



## wayneL (22 January 2007)

The Red Baron said:
			
		

> They did consider putting the property back on the market but the number of houses for sale in the area is now x3 and they aint selling.




Noticed that up here now as well... the top is in IMO.

I've just been perusing house prices in Canada, which is similar to Australia in size, economy and resources. Prices there, whilst experiencing somewhat of a boom as well, are nowhere near the absolute insanity of prices here.

On a price/earnings basis, Canadian prices are waaaaaayyyyyyyyyyyy cheaper...rents too.

Cheers


----------



## Smurf1976 (22 January 2007)

The Red Baron said:
			
		

> They did consider putting the property back on the market but the number of houses for sale in the area is now x3 and they aint selling.



That comment alone says all you need to know about the Perth market. It's following what's happened in the suburbs of Sydney and some suburbs of Hobart over the past few years.

Each Friday down here in Tassie we get an 80 page "Real Estate Guide" with the newspaper. 80 pages!!! And it only covers the South of the state (population about 200,000 including Hobart).

Now, I'm not certain as to the population of Perth but I know it is well over 1 million. I assume you don't have literally 400 pages of houses for sale in the paper yet? If not then there's a lot of room for the supply of unsold stock to increase simply to catch up with what's already happened elsewhere.

First they start to "stick" and take longer to sell. Then the poorer quality stops selling altogether. Then the owners of poorer quality properties either give up on selling or drop the price. Then the owners of medium quality properties are forced to drop their prices to compete with the "renovators delights" once the latter becomes a cheaper option even with paying a builder to do all the work.

Then it gets to the point, which is just starting to happen in the suburbs of Hobart, where building projects are either drastically slowed or abandoned altogether. They've cleared the land, started building a few houses and then walked away. Either that or they've cleared the land, put in the roads and it's just sitting there as land for sale, the developer having scrapped the original plan of building houses themself. Those land prices are now starting to fall too, down around 10 - 20% in some cases compared to asking prices 12 months ago for similar blocks in the same area although the falls are not universal. 

As for the building industry, it is to the point in Hobart now that major builders are literally advertising on the radio offering to build cupboards, cabinets, fix doors and so on. Not one man operators, but big builders. It must be bad when they are advertising wanting trivial works that they wouldn't even bother to quote on during the boom.

All coming to a suburb (of Perth) near you soon.

As for interest rates, my best guess is up 0.5% within 6 months, probably in the form of a 0.25% rise in February and another one sometime after. That's just watching the bank bills etc and looking at the underlying fundamentals with inflation, consumer credit etc.


----------



## insider (22 January 2007)

If the housing market goes down... then the share market goes up


----------



## clowboy (22 January 2007)

The Red Baron said:
			
		

> . Another rate rise will really really hurt.




Living/owning in perth so my comments reflect that market.

Yep I think that another rate rise is going to really start to have an effect on people in this catorgory. (ie bought in within the last year.)

Having said that fuel is falling so I think it would take two or more rate rises to really start putting a strain on things.  Up is not a word im using in the same sentance with perth property ATM.


----------



## Sean K (22 January 2007)

insider said:
			
		

> If the housing market goes down... then the share market goes up



Does it depend on how much the market goes down? I have assumed that a softening housing market with higher interest rates would mean that more money goes into the stock market, but what if the downturn in housing was more severe? There is probably a point at which a housing crash would be negative for the market? I'm not sure, don't know enough about it??


----------



## Realist (22 January 2007)

Stop_the_clock said:
			
		

> Hey "Realist", I reckon you could almost buy a house in Sydeny real soon, looks like the bottom of the market after the next rate rise in Feb/March.
> 
> Good luck mate, its been a hard slog for the rest of us trying to push down house prices but its now our turn to shine!
> 
> Much Thanks and support from our friends at the RBA!




Yep, we are getting closer and closer, not yet though, maybe later this year..


----------



## theasxgorilla (22 January 2007)

My grasp of economics isn't all that special but I can't understand why people keep expecting house prices to fall.  The mania may subside, but lets look at what is driving house prices:

1. Expectations/sentiment
2. Record low unemployment
3. Record high wages

Eventually the factors leading to point 1 will let up.  This is what happened in Sydney and Melbourne.  The raising of interest rates convinced people that the party was over.  But factors 2 and 3 remained in place.  What I saw in Melbourne was akin to a pull back on lower volume (in the sharemarket).  Places were listed or went to auction and bottom feeders appeared trying to scoop up bargains.  

But in "blue chip" suburbs the owners of the properties held fast.  They didn't need to sell for lower.  They were not being paid less (the opposite as a matter of fact) and they were not at risk of losing their jobs (the opposite actually, due to a skilled labour shortage).

As investors sold out around the peak they tended to sell to owner occupiers (first home owners could still get the 12k grant from the Vic government).  This led to a decrease in rental stock so those that held their investment properties did so with secure tenants as vacany rates were and still are very low.

Does anybody really expect Perth to exhibit lower wages and higher unemployment and higher vacancy rates in the near future?


----------



## krisbarry (22 January 2007)

When you can buy a house in London or New York for a cheaper rate than many Australian cities then we as a community are farked!

*House cost nearly worst in world*

HOUSING affordability in Australia is among the worst in the world, a further sign that many state and local government polices are inappropriate, the Residential Development Council said.

It said today's release of the Annual Demographia survey rated every Australian city as "seriously" or "severely" unaffordable in a global study of 159 cities, with Sydney, Melbourne, Perth and Hobart among the worst 25 cities.

The Residential Development Council, the residential policy arm of the Property Council of Australia, said Australia's poor result was proof that the current policy mix was a toxic cocktail for housing affordability.

"We have four of our cities in the worst 25 when it comes to affordability – surely the message must get through?" said RDC Executive Director Ross Elliott.

The Demographia Survey, released by the US-based Wendell Cox Consultancy, attributes restrictive land release policies and excessive regulatory and zoning controls, combined with high housing taxes, for the Australian problem.

The Demographia survey rates housing "unaffordable" when the median house price passes three times median household incomes.

Housing is "seriously unaffordable" when it passes four times median household incomes and "severely unaffordable" when it passes five times median household incomes.

The least affordable Australian city is Sydney – where median prices are 8.5 times median incomes – even worse than London at 8.3 times incomes and New York at 7.2 times incomes.

"We have maintained that there are three things largely responsible for the worsening housing affordability in this country. Inappropriate land release policies, excessive housing taxes and unfair infrastructure charges, and dysfunctional systems of development assessment," Mr Elliott said.

"This report now confirms the magnitude of the problem in this country – where with abundant land, there is no excuse for our housing crisis other than bad public policy."


----------



## krisbarry (22 January 2007)

Anyway since the 1st of January 2007 I have traded well and dumped another $1,000 into my superannuation.  

Fark buying a house in Australia, might as well buy one in New York!

What a bloody joke  Australia has 20.5 million people, how many does New York have?


----------



## theasxgorilla (22 January 2007)

Stop_the_clock said:
			
		

> Anyway since the 1st of January 2007 I have traded well and dumped another $1,000 into my superannuation.
> 
> Fark buying a house in Australia, might as well buy one in New York!
> 
> What a bloody joke  Australia has 20.5 million people, how many does New York have?




About the same, but they live in little shoe-box apartments.  Unfortunately the TV-show Friends did not map so close to reality.


----------



## Rafa (22 January 2007)

well, one thing is for sure, we have abundant land...
EXCEPT not much of it has the infrastructure in place to make in 'developable'.

as govt's have pretty much passed the costs of infrastructure onto developers, cost price of land blocks is pushing 100k, and that pretty far out from the city... add 150k to build, thats 250k cost price.

land was cheap in the past cause the taxpayer subsidised it...
that needs to return if there is any hope for land prices to fall.

until then, house prices will remain high...

the other way house prices will fall is if there is a major recession... at that time, while prices will fall, housing affordability is not guaranteed follow suit.


----------



## theasxgorilla (22 January 2007)

Stop_the_clock said:
			
		

> *House cost nearly worst in world*
> 
> HOUSING affordability in Australia is among the worst in the world, a further sign that many state and local government polices are inappropriate, the Residential Development Council said.




This is propagana.  Australia, Canada, Republic of Ireland, NZ, UK and USA is not "the world".  There are 700 million people in continental Europe for starters with cities like Oslo, Copenhagen, Moscow, Zurich, Paris and Milan.  What about Asia?  Tokyo, Hong Kong, Singapore?

It's not just about housing BTW.  There are other cost-of-living factors that will affect whether you can afford to save for and hold onto a house.  For cost of living Sydney rates 19 and Melbourne comes in all the way down at 74.  Perth, Brisbane and Adelaide are 93, 99 and 108 respecitively.

http://www.finfacts.ie/costofliving.htm

You are not disadvantaged by being in Australia.  Go travelling.  Exposure to the big picture might help your perspective.


----------



## Rafa (22 January 2007)

theasxgorilla said:
			
		

> This is propagana.  Australia, Canada, Republic of Ireland, NZ, UK and USA is not "the world".  There are 700 million people in continental Europe for starters with cities like Oslo, Copenhagen, Moscow, Zurich, Paris and Milan.  What about Asia?  Tokyo, Hong Kong, Singapore?
> 
> It's not just about housing BTW.  There are other cost-of-living factors that will affect whether you can afford to save for and hold onto a house.  For cost of living Sydney rates 19 and Melbourne comes in all the way down at 74.  Perth, Brisbane and Adelaide are 93, 99 and 108 respecitively.
> 
> ...





Exactly...i've been all over the world...
there is NO place like Oz...

Also, if cost of houses were so expensive, tell that that to the poms who are flocking here in their 10's of thousands and buying houses outright for cash.

i am not saying that house prices here won't fall, but you can't compare the average house prices in say Sydney to that of London, when in London, the avg house is 50sqm of living space on the third floor of a 100yr old building, and here its 200sqm of apartment, or more likely a free standing house on a 500sqm block... (at the very least)


----------



## krisbarry (22 January 2007)

But Rafa, you bought at the top of the housing market and paid something like $400,000 for a house in Adelaide, since that time there have been at least 4 interest rate rises and a flat housing market.

How are you travelling now?  

You must be just breaking even with your purchase price, 1 more rate rise might place you in negative equity...pretty scary if you ask me


----------



## Rafa (22 January 2007)

that is true, i did...

houses around me, and worse than mine are now selling for 450k!
this is backed up by the sunday mail two weeks ago (you probably saw that...)... my suburbs median has gone from from 360 to 420)...

The thing is, I am not an investor in the property market, so for me, the 400k was money well spent on a place i like, in an area i like... on a house i like...

If the prices don't go up for the next 10 years, i'll be happy...

As it is, i am NOT happy at all with prices going up, cause that will puts my bloody council rates up!

All things considered, as a place to live, 900sqm block, with swiming pool, ensuite, SOLID BRICK, etc... i consider the price i paid a fair price.


----------



## krisbarry (22 January 2007)

*Never compare houses around you, you must compare what the market is willing to pay!*


----------



## Rafa (22 January 2007)

that is true...
the reality is you don't know what your house its worth, till you put it on the market... rather different to shares in that regard.

but, since i don't intend selling for quite a while, i guess i won't know for quite a while what it will be worth...

as there is no compelling reason to move in the forseeable future, i guess we won't know the answer to that for quite a while.

Am i worried about it.... NO WAY!!!!

Cause i my place falls to say 200k, there is a good chance the place i am looking to move into will have fallen by 50% as well...

It took me a long long time to realise this above fact... Once i did, i had no hesitation in buying the first home as soon as i found the right one.


Now Investment property is a completely different ball game...
But that shouldn't stop you from owning your own home to live in, if that is what you want.


----------



## theasxgorilla (22 January 2007)

Stop_the_clock said:
			
		

> *Never compare houses around you, you must compare what the market is willing to pay!*




If you're not going to compare to houses around you, what would you compare to?  For lender valuation purposes this is EXACTLY what happens.

I agree with what you're getting at though, and for that reason it's impossible to know the value of your house, for _sale_ purposes,  until you have accepted a written offer and the cooling off period has expired.  

But over several months you might get offers that vary by as much as 10% (or more to the downside if someone is really trying to screw you or to the upside if someone really wants to buy your property). 

The one you choose to accept is the one that gets recorded in the median house price stats.  If you let the tabloid articles cause you to panic and accept the lowest offer then all the ballyhoo about interest rate rises becomes a self full-filling prophecy.  On the other hand you keep your nerve and wait until you receive a fair market value offer then great, at least you weren't a casualty of all the scare mongering.

Real estate is not like the share market and for this reason median house price statistics or lender valuations have limited meaninig when it comes to actually transacting a property.


----------



## moses (22 January 2007)

theasxgorilla said:
			
		

> The one you choose to accept is the one that gets recorded in the median house price stats.  If you let the tabloid articles cause you to panic and accept the lowest offer then all the ballyhoo about interest rate rises becomes a self full-filling prophecy.  On the other hand you keep your nerve and wait until you receive a fair market value offer then great, at least you weren't a casualty of all the scare mongering.
> 
> Real estate is not like the share market and for this reason median house price statistics or lender valuations have limited meaninig when it comes to actually transacting a property.




Beg to differ.

Median prices are extremely resistant to noise. For example, a one off fire sale is unlikely to influence the median price by even $1, although it will affect the average price. This is because the median price is determined from the middle of the range of prices and is not influenced by data at the edges.

The median house price falls only when most houses are selling for less.


----------



## jkool (22 January 2007)

Rafa said:
			
		

> Now Investment property is a completely different ball game...
> But that shouldn't stop you from owning your own home to live in, if that is what you want.




I think that is what it comes down to. If you are buying for yourself a place to live, your motivations are completely different compared to buying an investment property. 
Since you are going to live in that place yourself, of course your decision is more emotional than if you were to rent that same place out. 

The place you are going to live in needs firstly satisfy the requirements of your standard of living (pools, garden, proximity to you favourite golf course etc), the price you pay comes way down the list. Therefore you should not worry where it goes as long as YOU think you did pay fair price for what you got.

For an IP the situation is completelly different - the question of price comes first and foremost as in any other investment.


----------



## jkool (22 January 2007)

moses said:
			
		

> Beg to differ.
> 
> Median prices are extremely resistant to noise. For example, a one off fire sale is unlikely to influence the median price by even $1, although it will affect the average price. This is because the median price is determined from the middle of the range of prices and is not influenced by data at the edges.
> 
> The median house price falls only when most houses are selling for less.




 I think this is incorrect. Actualy the problem with median prices is exactly that - being influenced by the edges. Median price is the middle value from all the sales regardless of how many houses sold at each particular price (eg. if one house sells for 10 and ten houses sell for 1 the median price is still 5).

Well at least thats how I understood it until now


----------



## theasxgorilla (22 January 2007)

moses said:
			
		

> Beg to differ.
> 
> Median prices are extremely resistant to noise. For example, a one off fire sale is unlikely to influence the median price by even $1, although it will affect the average price. This is because the median price is determined from the middle of the range of prices and is not influenced by data at the edges.
> 
> The median house price falls only when most houses are selling for less.




Maybe I wasn't clear as I didn't mean to suggest that one "fire sale" would affect the median house price in and area per se.

My key statement still stands: median house price statistics or lender valuations have limited meaning when it comes to actually transacting a property.  I don't want to overwhelm the thread with statistical analysis, instead this guy explains it well enough for those that are interested:

"Median Home Prices Are Bogus"

http://www.azcentral.com/blogs/inde...us&more=1&c=1&tb=1&pb=1&blogtype=PhxPluggedin


----------



## Smurf1976 (22 January 2007)

moses said:
			
		

> Beg to differ.
> 
> Median prices are extremely resistant to noise. For example, a one off fire sale is unlikely to influence the median price by even $1, although it will affect the average price. This is because the median price is determined from the middle of the range of prices and is not influenced by data at the edges.
> 
> The median house price falls only when most houses are selling for less.



The median price is heavily influenced by WHAT is selling as well as the price. 

It is entirely possible for the median price to rise whilst acutal house prices fall if the quality of the houses selling is increasing. Indeed that is exactly what's been happening in areas experiencing a slowdown - the poorer quality properties fail to sell thus leading to an increased quality for the "average" property that does sell. No surprise that this quality increase in the statistics  hides the true fall in prices for the SAME house.

It's a bit like concluding that the cost per kilometre of travel has increased without mentioning that you switched from the bus to a Rolls Royce. The actual cost of travel by the SAME means could have halved but due to quality changes your statistic will show an increase.

If you want to keep an eye on house prices then IMO the only valid way to do it is to compare prices for VERY SIMILAR houses (on very similar blocks of land) in the SAME area over time. For example, I have been tracking the price of 13 sq brick 3 bed houses on minimum 600m2 land without unusual views or features in selected Hobart suburbs for 3 years. I have also tracked the price of 11 sq 3 bed weatherboard houses on minimum 500m2 land and of 14sq+ 3 bed brick houses with 2 bathrooms, quality fittings etc in those same suburbs. On the basis of my research I know that the price has fallen and that the trend remains down for the types of property that I have tracked. It may well be a different situation in other suburbs, for different types of properties etc.


----------



## wayneL (22 January 2007)

Rafa said:
			
		

> Exactly...i've been all over the world...
> there is NO place like Oz...




Quite.

But there is no place like England, there is no place like Canada, New Zealand, the USA, Mexico, France etc etc etc.

Australia is only special to people who like it... many think it's a muckhole



			
				Rafa said:
			
		

> Also, if cost of houses were so expensive, tell that that to the poms who are flocking here in their 10's of thousands and buying houses outright for cash.




This is due to the current overvaluation of the pound. For some balance, there are 10's of 000's of Aussies flocking to the UK as well. In fact there are 200,000 Aussies living in the UK.



			
				Rafa said:
			
		

> i am not saying that house prices here won't fall, but you can't compare the average house prices in say Sydney to that of London, when in London, the avg house is 50sqm of living space on the third floor of a 100yr old building, and here its 200sqm of apartment, or more likely a free standing house on a 500sqm block... (at the very least)




This does have some validity, but there are other factors balancing this.

Again for balance. We recently sold some acreage with a house near Horsham (half an hour from London by Train). Acreage properties near Perth are comparable in price. WTF? This is ludicrous! If you want to play around with a couple nags, would you prefer to ride them at Wembley against international competition if so desired, or against 4 brumbies in a dustbowl at Muchea?

Property should be cheap here!!


----------



## tech/a (22 January 2007)

wayneL said:
			
		

> Quite.
> 
> But there is no place like England, there is no place like Canada, New Zealand, the USA, Mexico, France etc etc etc.
> 
> Australia is only special to people who like it... many think it's a muckhole




I'm with Rafa.
We rent apartments in Adelaide often to UK guests and mosstly in Summer peak at $1200/week. They think its cheap. In the 3 yrs we've had them 3 guests have either applied to reside or are in the process. There are places in the US I would live, Europe,and Canada but even so cant go past AUST.
NO PEOPLE. well very few.





> This is due to the current overvaluation of the pound. For some balance, there are 10's of 000's of Aussies flocking to the UK as well. In fact there are 200,000 Aussies living in the UK.




Few own homes there though. The average wage on balance isnt much more than the Aussi average.25-30000 Pounds.





> This does have some validity, but there are other factors balancing this.
> 
> Again for balance. We recently sold some acreage with a house near Horsham (half an hour from London by Train). Acreage properties near Perth are comparable in price. WTF? This is ludicrous! If you want to play around with a couple nags, would you prefer to ride them at Wembley against international competition if so desired, or against 4 brumbies in a dustbowl at Muchea?
> 
> Property should be cheap here!!




Acerage 30 mins from London.
Well friends sold 1.5 acres with a 3 bed home 150 yrs old 1 hr out of London---Barnet for $2.5 Million Pounds dont tell me an acerage 30 mins from London is comparable to Perth 30 mins out!!

Those trying to time an entry into the property market will still be trying in 10 yrs time.


----------



## The Red Baron (22 January 2007)

I understand what you mean Smurf regarding the poorer quality houses failing to sell.

I've noticed in Perth the last 3 months its the cheaper suburbs (where you could get $150K house and land package 3 years ago) taking up the majority of the paper, and it seems to be increasing.

The nice beachside properties and ones in good locations still seem to be going along strong. I know a few people looking at offloading their Investment properties and moving to these suburbs.


----------



## moses (22 January 2007)

jkool said:
			
		

> I think this is incorrect. Actualy the problem with median prices is exactly that - being influenced by the edges. Median price is the middle value from all the sales regardless of how many houses sold at each particular price (eg. if one house sells for 10 and ten houses sell for 1 the median price is still 5).
> 
> Well at least thats how I understood it until now




In tyour scenario the median value is 1 and not 5.

Look at at like this:-

1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 10

what number appears in the middle?

1


----------



## theasxgorilla (22 January 2007)

tech/a said:
			
		

> Acerage 30 mins from London.
> Well friends sold 1.5 acres with a 3 bed home 150 yrs old 1 hr out of London---Barnet for $2.5 Million Pounds dont tell me an acerage 30 mins from London is comparable to Perth 30 mins out!!
> 
> Those trying to time an entry into the property market will still be trying in 10 yrs time.




It's not comparible exactly because Horsham has a fast train.  Perth doesn't, which means in 30 minutes, you don't get as far!  Horsham is 65ks out of central London.


----------



## moses (22 January 2007)

Smurf1976 said:
			
		

> The median price is heavily influenced by WHAT is selling as well as the price.



Agree with your qualification in principle, not sure it makes a great impact in practice. But yes, worth checking in a disorted market.


----------



## wayneL (22 January 2007)

tech/a said:
			
		

> NO PEOPLE. well very few.



This can be the problem with Oz for some



			
				tech/a said:
			
		

> Few own homes there though. The average wage on balance isnt much more than the Aussi average.25-30000 Pounds.



I'm not talking about working visa folk. I am talking about emigrants... these people own homes.



			
				tech/a said:
			
		

> Acerage 30 mins from London.
> Well friends sold 1.5 acres with a 3 bed home 150 yrs old 1 hr out of London---Barnet for $2.5 Million Pounds dont tell me an acerage 30 mins from London is comparable to Perth 30 mins out!!




I'd like to see the property before passing comment... photos?



			
				tech/a said:
			
		

> Those trying to time an entry into the property market will still be trying in 10 yrs time.



I disagree, but agree to disagree, if you agree.


----------



## robots (22 January 2007)

hello,

the issue is prices have risen, they have not been stagnate and will continue to increase for many years to come

buy blue chip unit or house, do not wait for a crash or a major correction it will not happen

plenty of people tried to time it 3-4 yrs ago

inner city within 15km, I was in through eighties and they are sound as

thankyou
robots


----------



## Sean K (22 January 2007)

robots said:
			
		

> buy blue chip unit or house, do not wait for a crash or a major correction it will not happen
> 
> robots



Hi robots,

Interested in your recommendation to buy units. I have always thought that you needed a free standing house with land for a good property investment.

There will never be a correction in housing? Ever?


----------



## wayneL (22 January 2007)

robots said:
			
		

> hello,
> 
> the issue is prices have risen, they have not been stagnate and will continue to increase for many years to come
> 
> buy blue chip unit or house, do not wait for a crash or a major correction it will not happen




Yes it will! If not in nominal terms, in real terms it will with 100% certainty.


----------



## tech/a (22 January 2007)

kennas said:
			
		

> Hi robots,
> 
> Interested in your recommendation to buy units. I have always thought that you needed a free standing house with land for a good property investment.
> 
> There will never be a correction in housing? Ever?




*Kennas.*

Over the longterm its the land value that creates the increase in property value.

However Rental vacancies are at an all time low in many places in Aust.
We just put ours up 15% (First time in 4 yrs) and not a blink---there just isnt alternatives.

Community Title Apartments in medium value suburbs are in very high demand.
Selling off plan is relatively simple here.
Finding suitable land (Corner or 1500-3000 squ meters) is the difficult part.
Anything under $300k in Adelaide is just running out the door. Beats renting for most and they cant find anything even close to comparable anyway.
High rise high price apartments are well behind the eightball.

Thats NOT the Target market!

*Wayne * 

OK I'll agree.---to disagree.


----------



## robots (22 January 2007)

hello,

the day my house goes from 500k to 250k or 300k will never occur

in fact people have to get over this issue prices will crash

20 yrs ago did you think people just walked into buying property with spare change or their ashtray money

people saved every penny just like what you have to do today,

thankyou
robots


----------



## theasxgorilla (22 January 2007)

kennas said:
			
		

> Hi robots,
> 
> Interested in your recommendation to buy units. I have always thought that you needed a free standing house with land for a good property investment.
> 
> There will never be a correction in housing? Ever?




There are strategies to make money with units. For a plain old buy/hold/hope strategy a significant increase in house prices in an area where unit stock is tightly contested can be a tell-tale sign that over the coming 1 to 2 years unit prices will follow.  Generally speaking, premium location units first and main road facing units last.

Improvements are generally limited to the inside and here you need to be uber mindful of the budget as it's easy to over-capitalise on lower prices units.  Any improvements to the outside can be difficult or practically impossible as you'll usually require consent from all parties and this can take many years and headaches.  

You'll almost never be able to knock a unit down and sub-divide/redevelop, unless you play monopoly and buy the entire block.


----------



## krisbarry (22 January 2007)

robots said:
			
		

> hello,
> 
> the day my house goes from 500k to 250k or 300k will never occur
> 
> ...




My parents lost half the value of their home within a few short years, prices crashed in the mid to late 90's.  It can happen, I have seen a bust and I have also seen a boom.  Its time for a bust again!


----------



## wayneL (22 January 2007)

robots said:
			
		

> hello,
> 
> the day my house goes from 500k to 250k or 300k will never occur
> 
> ...




20 years ago, prices were 3.5 times earnings. Today they are 6-8-10 times earnings.

Historically, whenever this has happened, prices have corrected in real terms at least. It will happen again, either nominally or real, it is inevitable.


----------



## robots (22 January 2007)

hello,

still waiting

thankyou
robots


----------



## Smurf1976 (22 January 2007)

theasxgorilla said:
			
		

> My grasp of economics isn't all that special but I can't understand why people keep expecting house prices to fall.  The mania may subside, but lets look at what is driving house prices:
> 
> 1. Expectations/sentiment
> 2. Record low unemployment
> 3. Record high wages



1 has now largely reversed at least according to surveys reported in the media. People now expect prices to fall or at most stagnate.

2 is at least partly a function of the real estate boom which has directly created rather a lot of jobs from construction to financial services. Jobs that disappear when the boom ends.

3 Wages are at record LOW levels relative to house prices and aren't growing at a rate anywhere near that at which house prices have grown. If property prices were to rise in line with wages over the next few years then the total return is at best equivalent to cash in the bank despite higher risk and far greater physical effort of having to actually buy property, maintain it etc. Leaving it in the bank requires virtually no ongoing effort.


----------



## Smurf1976 (22 January 2007)

Rafa said:
			
		

> Cause i my place falls to say 200k, there is a good chance the place i am looking to move into will have fallen by 50% as well...
> 
> It took me a long long time to realise this above fact... Once i did, i had no hesitation in buying the first home as soon as i found the right one.



That this works in reverse too, that if your house doubles in value then so does another one that you could move into, is precisely why ordinary home owners with only one property (that is, most Australiana) do not gain at all when house prices rise. They can't actually spend their profit unless they sell their house and don't buy another similar one.

Those trading up or first home buyers lose when prices rise. They pay more cash for exactly the same thing that previously would have cost less.

The economy as a whole becomes less focused on productive investment and more focused on speculation. Speculation that produces no real wealth but merely transfers it from one person to another with banks, agents and others taking much of it back (over the long term).

Who wins?

Last home sellers and speculators obviously gain. Builders tend to ramp up profit margins at least in absolute $ terms so they gain too. Banks, governments and real estate agents all gain through increased interest payments, taxes and commissions.


----------



## theasxgorilla (22 January 2007)

Smurf,

I hope you are right.  About 3 weeks ago I sold out of my last property in Australia and nothing would make me happier than to see my properties in Sweden go up another 20+% this year while Australia gets cheaper...unfortunately I don't see it happening...inspite of it being to my ultimate benefit.

TheASXGorilla.


----------



## wayneL (22 January 2007)

robots said:
			
		

> hello,
> 
> still waiting
> 
> ...




In the seventies prices stagnated for several years. This was during a period of double digit inflation. In real terms this was quite a calamitous crash in value.

In the early nineties prices crashed in nominal terms. (you need to look to empirical evidence rather than the fraudulent statistical measures)

Both of these incidences were following periods of deteriorating affordability, similar to now.

Go back as far as you like, affordability oscillates around a mean of about 3.5 times earnings. We are greater than 3 sigma above that mean, prices WILL return... somehow.


----------



## nomore4s (22 January 2007)

Smurf1976 said:
			
		

> Last home sellers and speculators obviously gain. Builders tend to ramp up profit margins at least in absolute $ terms so they gain too. Banks, governments and real estate agents all gain through increased interest payments, taxes and commissions.




This is a very valid point. I live in Darwin and we are currently going through a property boom, house prices have gone up over 30% (more in some areas) in the last 18 months.
During this time, builders think they are doing something wrong if they aren't making $100K per house they build - used to be alot less then this. (I'm not a builder but I run a business in the construction industry and deal with builders regularly). 
Real estate fees have gone from 2.5% two years ago to 4.5%.

The only advantage for current home owners is the extra equity in their properties and people are using this money to renovate etc, therefore further increasing the value of the property, but you obviously pay for this through your loan.

The other thing I've noticed is people falling over themselves to get into the market, thinking that if they don't buy now they'll never be able to get into the market (therefore pushing the market up further). The problem this creates is sooner or later is alot of people (up here - first home owners etc) with the interest rate rises and rises in the cost of living, they can't afford the payments and what happens then? 
There is alot of money floating around town at the moment (commodity & housing/construction boom) what will happen when the money dries up? This will happen as Darwin is very much a boom or bust town.


----------



## theasxgorilla (23 January 2007)

wayneL said:
			
		

> In the seventies prices stagnated for several years. This was during a period of double digit inflation. In real terms this was quite a calamitous crash in value.




The difference then was that there was no economic growth either.  It was dubbed _stagflation_.  That is not this environment/market.


----------



## wayneL (23 January 2007)

theasxgorilla said:
			
		

> The difference then was that there was no economic growth either.  It was dubbed _stagflation_.  That is not this environment/market.




I didn't imply it is, it is also not the high % environment of the late 80's-early 90's I mentioned either. What is similar are the affordability issues which have been caused by a set of political expediencies.

However, some commentators worry over stagflation re-emerging. The inflation genie is out of the bottle (though the official fraud continues) at a point where growth is slowing....


----------



## moses (23 January 2007)

OTOH there is sufficient money coming in from OS in the sense that Oz today is a more desirable and accessable place to live and do business than before that breaks the old rules and will keep prices up above what we Aussie's might regard as reasonable or sustainable. Our remoteness is less of an obstacle and the lifestyle makes it worthwhile.


----------



## wayneL (23 January 2007)

Have a read of this article folks:

http://www.ft.com/cms/s/92f7ee6a-a765-11db-83e4-0000779e2340.html

Whilst not directly about house prices, I believe current valuations are symptomatic of the scenario outlined, viz, the derivatives monster.

Check it out:



> *The unease bubbling in today's brave new financial world
> *
> By Gillian Tett
> 
> ...


----------



## GOYCO (23 January 2007)

Hi Guys

If you ignore greed and fear you'll probably find that property is very much like the share market. Supply and demand, and the reasons for the supply and/or the demand. Right now the precursor to yields(rents) are vacancy rates. The Sydney Market and Inner City Melbourne Unit markets are a classic case. Vacancy rates have fallen from around 6% to below 1.5%. Rents are on the rise but the yields are not that fantastic yet. Investors are not entering the market. Population is increasing. No new properties. tighter vacancy rates. higher yields. investors start to come in. Cost of production is higher than4 years ago. prices rise. the reverse is also true. Unit market is oversold in Sydney and Melb. The property market seems to also be inversely proportional to the share market so it makes a lot of sense to me to borrow against property at it's peak to buy shares. Not a fan of margin lending after '87. The problem I see is that most people are a share person or a property person, but I think it's better if you use both. It's a lot safer. 

Just my opinion

cheers


----------



## Bronte (27 January 2007)

And have a read of this:    
http://www.theaustralian.news.com.au/story/0,20867,21124335-643,00.html


----------



## YChromozome (27 January 2007)

Bronte said:
			
		

> And have a read of this:
> http://www.theaustralian.news.com.au/story/0,20867,21124335-643,00.html






> INVESTORS are being urged to reconsider rushing the sale of their investment property to take advantage of superannuation changes, as property market fundamentals improve and the share market continues to defy gravity.




I guess that means Housing as an asset class isn't bloated and continues to defy gravity. Quick everyone, pile in.


----------



## Smurf1976 (27 January 2007)

That article seems somewhat biased to me. They're arguing about long term fundamentals for shares but focusing on the short term for property. Pick whichever argument makes buying a house look good...

1. The share market has done well in the short term but we think it's getting a bit overvalued. Valuation's important so it might be a good time to get out despite no evidence to back this argument on a short term basis.

2. Property hasn't done so well lately but we're expecting it to do better in the immediate future despite being ridiculously overvalued on the same simple basis (yield) that is used to value shares.

Now, either valuation matters or it doesn't. If it does matter then going into property doesn't make too much sense if you're looking at yield, price to income or other simple means of valuing the market as a whole. If it doesn't matter then there goes the argument for getting out of the share market. Either you're focusing on the long term or you're looking at the short term. It's misleading at best to evaluate one market on the basis of the long term whilst looking at another on the basis of the short term.

It's a bit like saying that a big 4WD uses less petrol on a particular trip than a Toyota Corolla does on average. Just don't mention that the 4WD was going downhill during all 5 minutes of that trip whilst the figure for the Corolla is a long term average under all driving conditions. 

Personally I think that valuation DOES matter in the long term but anything is possible in the short term whether it be shares, property or the 4WD travelling 5km downhill without using any fuel.

As for the argument about debt and the sharemarket, oh please! The very argument that house prices are so heavily influenced by a change in interest rates of a mere 0.25% says all you need to know about debt levels and housing. That's not to say that there aren't issues with debt and the share market but they're conveniently omitting to say that much the same applies to property.


----------



## wayneL (30 January 2007)

Access Economics on Today Tonight in Perth:

Synopsis

Perth boom to end in tears... bubble about to burst.... some suburbs already in decline (didn't say which) 

Advise for people looking to enter the market... DON'T! You are better off renting! Wait at least 4 years.

Well DUH!


----------



## juddy (30 January 2007)

Thought you might enjoy the written article from the West Australian too Wayne.  



*Housing expert warns of sharp fall * 
30th January 2007, 6:00 WST

Perth’s housing market will slump sharply over the next two years, one of the country’s leading economic forecasters has warned, with prices falling as population growth slows on the back of an end to the mining boom. 

In a worrying prediction for the city’s property market, Access Economics said yesterday homeowners would endure years of “grinding regret” as the boom turned to bust. 



Access said prices being paid for Perth houses were 10 per cent above “fair value”. This meant that once commodity prices started to fall, the cycle that had underpinned the Perth economy would turn against it. 

“We expect Perth’s housing prices to come a cropper soon, with years of grinding regret lying ahead before housing prices and fundamentals align once more,” Access said. 

“Those of you old enough will know that now is the time to dunk your head in a bucket of ice water. Booms are not merely rare, they are also fragile. Every boom sows the seeds of its own destruction. 

“It is precisely in the middle of big booms that businesses, families and governments make big mistakes. They assume that the experience of the past couple of years will be replicated into the future. Yet much of the last couple of years was the product of unsustainable trends.” 

Access’ warning will stoke fears that some heavily mortgaged homeowners could face the scenario of negative equity, in which they owe more than their house is worth. 

The forecast comes just a fortnight after the Real Estate Institute of WA revealed prices in some outlying suburbs had already fallen up to 10 per cent in recent months. 

Despite this, REIWA expects the median house price, which was $460,000 in December, to rise 8 to 10 per cent this year.
Access said the extent of the turnaround would be determined largely by whether WA’s population growth, which is now the nation’s highest, started to slow. 

“WA’s shift to the top of the population growth league ladder may ultimately prove temporary and the State’s current boom in housing activity could end like most booms ”” with a sudden oversupply of overpriced homes,” it said. 

SHANE WRIGHT 
ECONOMICS EDITOR


REIWA have absolutley no scruples as many youngsters are about to find out.


----------



## YChromozome (30 January 2007)

It's interesting watching the US market unfold. Late last year we saw some of the fastest plunges in the sales of new homes ever recorded, only for the new house market to close the year with sales down 17.3%.

On Friday night, it was reported new house sales jumped 5% for December - a recovery . . . 

. . But the underlying figures are interesting. The inventory of completed but unsold new homes rose to finish the year up 50% yoy to a new record. With builders carrying this glut of houses on their books, they are offering free cars and vacations to help reduce new home inventories and provide incentives for people to buy.

Last night figures came out showing the number of Vacant homes for sale increased 34% yoy, by far the fastest increase ever recorded. One thing for sure, US housing is breaking a lot of records.

Now one has to wonder with the number of vacant homes so high, what is next? Is the next step falling prices? Will that follow current tradition and be a record?

New-home sales rise to highest since April - Market Watch - Jan 26, 2007.

Number of vacant homes for sale surges 34% - Market Watch - Jan 29, 2007


----------



## wayneL (30 January 2007)

juddy said:
			
		

> Thought you might enjoy the written article from the West Australian too Wayne.




Yes Thanks. Bear music!



			
				juddy said:
			
		

> ...prices being paid for Perth houses were 10 per cent above “fair value”.




I just had to LOL at that bit. I suppose they can't scare the horses too much  

Cheers


----------



## Smurf1976 (30 January 2007)

A boom that ends in a bust... What a surprise (not).

Next we'll be hearing that debt has to be repaid and that present interest rates are anything but high.

As I've said before, I have nothing against Perth as a city but to suggest that houses there are genuinely worth more than those in Sydney is outright madness. It just doesn't stack up on any basis other than pure market momentum which now seems to be slowing if not reversing.


----------



## krisbarry (30 January 2007)

Today the SA government released a new loan for low income earners.  you  can now borrow another 30% more to buy a house, but then when the house gets sold in the future, 1/2 of the capital gains must be re-paid back to the government.

This could be as evil as the loans that uni students used to have access to.

Remember the days you could give back 1/2 your Austudy payments back to the government, then they would double this payment and give it back to you in a loan.  So effectively the interest was 100%.

*Bloody filthy pricks I say!

Thats the way to keep the poor, very poor!

Another cycle of poverty, just a new tax within a tax, within a tax*


----------



## Kauri (30 January 2007)

Smurf1976 said:
			
		

> As I've said before, I have nothing against Perth as a city but to suggest that houses there are genuinely worth more than those in Sydney is outright madness. It just doesn't stack up on any basis other than pure market momentum which now seems to be slowing if not reversing.




   I've thought about it and can't really understand why Sydney should be more expensive than Perth at the moment. Is there a reason..


----------



## insider (30 January 2007)

Stop_the_clock said:
			
		

> Today the SA government released a new loan for low income earners.  you  can now borrow another 30% more to buy a house, but then when the house gets sold in the future, 1/2 of the capital gains must be re-paid back to the government.
> 
> This could be as evil as the loans that uni students used to have access to.
> 
> ...





That's retarded...


----------



## YChromozome (30 January 2007)

Stop_the_clock said:
			
		

> Today the SA government released a new loan for low income earners.  you  can now borrow another 30% more to buy a house, but then when the house gets sold in the future, 1/2 of the capital gains must be re-paid back to the government.




I was laughing at this today. I guess one assumes there will be capital gains . . .


----------



## wayneL (30 January 2007)

Kauri said:
			
		

> I've thought about it and can't really understand why Sydney should be more expensive than Perth at the moment. Is there a reason..



You are joking right?


----------



## Kauri (30 January 2007)

wayneL said:
			
		

> You are joking right?




No..


----------



## insider (30 January 2007)

YChromozome said:
			
		

> I was laughing at this today. I guess one assumes there will be capital gains . . .




That's probably the idea... Make them believe there are gains


----------



## rockingham178 (30 January 2007)

Smurf1976 said:
			
		

> A boom that ends in a bust... What a surprise (not).
> 
> Next we'll be hearing that debt has to be repaid and that present interest rates are anything but high.
> 
> As I've said before, I have nothing against Perth as a city but to suggest that houses there are genuinely worth more than those in Sydney is outright madness. It just doesn't stack up on any basis other than pure market momentum which now seems to be slowing if not reversing.




and Sydney has what over any other city?...have I missed something?

lived in Sydney and Perth....give me Perth any day..I like to catch fish and breath fresh air


----------



## Freeballinginawetsuit (30 January 2007)

Hi Mr Rockingham

How are the RE prices in Rockingham going, I'd presume surrounding areas such as PT Kennedy, Success, Atwell etc, might be the first to feel the pinch.
Or are they still holding up?.

Not much fresh air around Kwinana way  .


----------



## wayneL (30 January 2007)

rockingham178 said:
			
		

> and Sydney has what over any other city?...have I missed something?
> 
> lived in Sydney and Perth....give me Perth any day..I like to catch fish and breath fresh air




Fresh air? Perth air quality is not that good.

You can catch fish and breath fresh air in a million places a hell of a lot cheaper than Perth.

Sydney, like it or hate it, is the financial capital of Australia, is the biggest city, has the highest per capita income, has a number of cultural augmentations relative to Perth. Sydney is a "world city", Perth is not.

Perth is a nice place for a certain type of lifestyle, but it should be relatively inexpensive... as it always has been up till about 3 years ago.


----------



## thefisherman (30 January 2007)

generally its only the unfortunate(fools) that bought at the peak of the frenzy last year that will get burnt, had 3 houses in western suburbs, sold 1, 2 years ago, also bought one just before sold other, can retire of these 3 deals, u will never get burnt in property if u have a eye for a bargain, if u buy in a frenzy u will nearly allways lose, quality property in perth will continue to go up in the coming years, crap in the outer fringe suburbs will go down or stay stagnant. banks and buyers fault. perth has noit many quality properties and the wealth that is being created here just gets bigger and bigger every year. per population we r richer than the kuwait's, we just send most of it east to pay for canberra and dole bludgers in sydney and melbourne.


----------



## rockingham178 (30 January 2007)

not sure I don't live there...I do have 2 long term rentals in Bertram though.

Bertram has stalled a little and rents are rising rapidly with a shortage of rental homes. Some speculators are going to get burnt short term but medium term it is going to be just fine.

What i do know of rocky is that the forshore is very high now and sought after....waikiki is worth a look as is Madora in the older area.

Gold atm is Port Coogee


----------



## rockingham178 (30 January 2007)

thefisherman said:
			
		

> generally its only the unfortunate(fools) that bought at the peak of the frenzy last year that will get burnt, had 3 houses in western suburbs, sold 1, 2 years ago, also bought one just before sold other, can retire of these 3 deals, u will never get burnt in property if u have a eye for a bargain, if u buy in a frenzy u will nearly allways lose, quality property in perth will continue to go up in the coming years, crap in the outer fringe suburbs will go down or stay stagnant. banks and buyers fault. perth has noit many quality properties and the wealth that is being created here just gets bigger and bigger every year. per population we r richer than the kuwait's, we just send most of it east to pay for canberra and dole bludgers in sydney and melbourne.




People have been saying that about where I live for over 15 years. I bought for $109k and now worth over $700k....they don't say it anymore....

As for fringe areas it is an overlooked gold mine and many are winning because of that stigma. Bertram is 20 mins from Perth straight along the freeway and less with the new train line. Has new private and public schools and close to some of the best water in the state at Rocky and Pt Peron. Some have seen it and done well.


----------



## Kauri (30 January 2007)

Wayne,
           I'm not sure if this is the same as _per capita income, _its the Full Time average weekly *Ordinary time* earnings..


----------



## chansw (30 January 2007)

Smurf1976 said:
			
		

> A boom that ends in a bust... What a surprise (not).
> 
> Next we'll be hearing that debt has to be repaid and that present interest rates are anything but high.
> 
> As I've said before, I have nothing against Perth as a city but to suggest that houses there are genuinely worth more than those in Sydney is outright madness. It just doesn't stack up on any basis other than pure market momentum which now seems to be slowing if not reversing.



On tonight's Channel 7 Today Tonight program, it mentioned Perth house price is now more expensive than London and New York (That might be based on the multiple of average salary to the average house price).  The economist from Access was interviewed and he said the house price in Perth may be stagnated (if it does not fall) for at least 4 years. His advice is renting instead of buying especially if your budget is tight. The house price in Perth has a lot to do with people's perception on the China growth story. I still remember in a Christmas dinner that someone said to me the commodity boom in Perth will last for 50 years.    Personally, I don't believe there will be no bumps along the way. Have a look at the China's Shanghai Index, it has already gone up 10% in Jan 2007. It might be a bubble waiting to burst.
Let's hope it does not repeat the property bust like in Hong Kong (down 40% after 2000) and Japan (down between 50% and 90% since 1990).


----------



## rockingham178 (30 January 2007)

wayneL said:
			
		

> Fresh air? Perth air quality is not that good.
> 
> You can catch fish and breath fresh air in a million places a hell of a lot cheaper than Perth.
> 
> ...





LOL...Sydney who cares what they think they are.....Melbourne will tell you they are the big boys....usual pissing comp been going on for decades.

yes Perth is a nice place to live and the lifestyle is great....but I prefer the Pilbara and that is more expensive than anywhere.

What the gurus eastern staters have forgotten is the mining boom isn't over...not by a long shot...and next the LNG projects will kick off on top of the biggest infrastructure expenditure of any state govt over the next 3 years.

Sydney the worlds wonderful place may have stalled (and canberra where the guru is never started) but WA is a long way from over. If think otherwise you don't know what is happening in WA atm.

The canberra guru is right about one thing... atm you are better of renting for at least 2 years unless you intend to stay in the home for a very long time and short term gain isn't important.

Sydney..."world city", rolol....now you will tell us sydney has fresh air......


----------



## clowboy (31 January 2007)

Smurf1976 said:
			
		

> A boom that ends in a bust... What a surprise (not).
> 
> Next we'll be hearing that debt has to be repaid and that present interest rates are anything but high.
> 
> As I've said before, I have nothing against Perth as a city but to suggest that houses there are genuinely worth more than those in Sydney is outright madness. It just doesn't stack up on any basis other than pure market momentum which now seems to be slowing if not reversing.




Smurf, while I agree with your statement for the most part, what is it based on?  Have you ever been to perth?  I have never been to sydney so I can not really accurately comment which is better.  Having said that, I am of the opinion, who the hell would want to live in sydney?  And for that matter who would want to live in perth (hence the rise of mandurah).

What exactly makes sydney so much more apealing than perth?  Why should sydney be worth more than perth (aside from population = supply+demand).

Personally they are both over priced in my opinion.

Funny also, there was an article in the west about a week ago where a REA in lodon was marketing an old storeroom in an apartment complex.  The whole "unit" was 7.6 sqm.  Kitchen bed, bathroom, everything.  the asking price  $427,000.  Now that is overpriced, but aparently becuase it is the "place" to live, or so a work college from those parts tells me.

Ridiculas.


----------



## clowboy (31 January 2007)

wayneL said:
			
		

> Fresh air? Perth air quality is not that good.
> 
> You can catch fish and breath fresh air in a million places a hell of a lot cheaper than Perth.
> 
> ...





o o o 

can't resist, is that like saying a stock should be at a $1 and not at 50c when you paid 75c for it?

Maybee the perth RE market should be something, but that doesnt mean it will be any time soon (although the sooner the better).

I also argue that perth is better than sydney as per previous post.  As for it's RE value, well that is whatever fools are willing to pay for it at the time.


----------



## wayneL (31 January 2007)

rockingham178 said:
			
		

> Sydney..."world city", rolol....now you will tell us sydney has fresh air......



Non sequitur is a most disingenuous form of argument. 

Ask anyone overseas what city they associate with Australia, the answer will be Sydney. Sydney is the only world city in Oz despite the delusions of others.

Fact.

Ciao!


----------



## Freeballinginawetsuit (31 January 2007)

wayneL said:
			
		

> Fresh air? Perth air quality is not that good.
> 
> You can catch fish and breath fresh air in a million places a hell of a lot cheaper than Perth.
> 
> ...





And of what relevance is the aforementioned qualities of a  'World City' to real estate prices. Their are many factors that determine real estate prices...........views,lifestyle,rarity and often the solitude the location offers. A few of these that determine the mega buck status are not confined to 'World Cities'.


----------



## theasxgorilla (31 January 2007)

"Sydney ranks first, Melbourne debuts in top 10 in latest Anholt City Brands Index"

http://www.citybrandsindex.com/press-20070125au.asp


----------



## wayneL (31 January 2007)

Freeballinginawetsuit said:
			
		

> And of what relevance is the aforementioned qualities of a  'World City' to real estate prices. Their are many factors that determine real estate prices...........views,lifestyle,rarity and often the solitude the location offers. A few of these that determine the mega buck status are not confined to 'World Cities'.




World city is a mere point foolishly contested above. No need to dwell on that point further.


----------



## Freeballinginawetsuit (31 January 2007)

No offence Wayne but a real estate purchase is a big punt for most. Just like a big punt on the stocks.

Most would have done well on both in this particular economic climate, particularily on WA real estate. Lucky.....maybe, but certainly more foresight than others that would have squandered the opportunities (down the pub or on a new car, blah blah).

If you had enough sense to be into both you would certainly have enough sense to realize this thread is stating the bleeding obvious ., how best to not squander the proffits most would be considering.

So good onya to all that have done well.


----------



## Deadcat (31 January 2007)

Perth has been riding on the back of the mining boom for a while now and that is the only reason that prices have become so over inflated in the real estate market in my opinion.  I know of many contractors who have come over from eastern states for mine set-up and infrastructure.  They will be leaving as soon as their contracts are up and the mines are in full production which will be when staff are culled to operations and management.  Sydney is a beautiful city and does not have the stinking hot climate that Perth has.  It is sitting on the world's most beautiful harbour and is the business capital of Australia.  There is a reason it is so populated and that is because people love living there.  It is outrageous that Perth prices are a little higher than Sydney but that will fall back over the next couple of years when Perth goes through the bust.


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## rockingham178 (31 January 2007)

wayneL said:
			
		

> Non sequitur is a most disingenuous form of argument.
> 
> Ask anyone overseas what city they associate with Australia, the answer will be Sydney. Sydney is the only world city in Oz despite the delusions of others.
> 
> ...




In fact more argumentum ad logicam...but an educated analogy just the same and both could be used out of context.

Your indicated pride in your city is a credit to you, I just happen to not entirely agree with your Sydney is best and all to everyone viewpoint. Yes if you went overseas and mentioned Australia you would probably get a response about Sydney or Melbourne. I would doubt at all if anyone would mention Perth, a fact I actually like very much as most Perth people I know do. Only once in all my travels in over 30 years has anyone mentioned Perth, mostly mentioned Melbourne and occasionally Sydney.

Does that make Sydney or Melbourne a better place to live? IMO no except in the eyes of the beholder. I would gladly live on the North or South coast of NSW though, absolutely beautiful locations.

I lived in Sydney for 3 years in the late 70's and could not wait to leave. NSW is a lovely place overall but Sydney left a lot to be desired.


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## tech/a (31 January 2007)

Whilst in the US I was pulled over 3 times and asked for licence and rental documents.

In UTAH response to South Australian licence.
Your a long way from PORTLAND.---well yes I was.

In FLORIDA.
You dont sound Australian??

In TEXAS
There seems to be a problem with our licence check we cannot find you on the data base so we will have to detain you until we find you!!!!!


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## theasxgorilla (31 January 2007)

In Victoria they're far more efficient.  Cameras detect when you're traveling at 64km/h in a 60km/h zone and if you happen to be unregistered or unlicensed at the time the back-end database will correlate that information and issue you with the appropriate fines or court order.  I'm currently holding RDF as they're signing up traffic camera contracts in the US hand-over-fist 

The ASX Gorilla.


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## The Red Baron (31 January 2007)

chansw said:
			
		

> On tonight's Channel 7 Today Tonight program, it mentioned Perth house price is now more expensive than London and New York (That might be based on the multiple of average salary to the average house price).  The economist from Access was interviewed and he said the house price in Perth may be stagnated (if it does not fall) for at least 4 years. His advice is renting instead of buying especially if your budget is tight.




I did see that the other night. It seems the media in Perth lately have been flogging one way or the other. On programs like Today Tonight or A Current Affair or on the front page of the West Australian. 

One day its going on about the mining boom and how much property is soaring then another day talking about the property market falling 20%. Would be interesting to have all these so called experts make their prediction for the year then come back to them see how good they actually are.


----------



## YChromozome (31 January 2007)

The Red Baron said:
			
		

> It seems the media in Perth lately have been flogging one way or the other.




I hope none of them are in anyway biased or quoting biased sources.

Zimbabwe's CPI is 1,281.1% YOY and overnight cash rate is 500%.

I have no doubt if Howard and Costello was running Zimbabwe, then the economy would be said to be in great shape, and the work of good economic management.

Simon Tennent from the [Zimbabwe] Housing Industry Association would say inflation is under control and the Reserve Bank of Zimbabwe will drop rates by 0.25%


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## wayneL (1 February 2007)

rockingham178 said:
			
		

> In fact more argumentum ad logicam...but an educated analogy just the same and both could be used out of context.
> 
> Your indicated pride in your city is a credit to you, I just happen to not entirely agree with your Sydney is best and all to everyone viewpoint. Yes if you went overseas and mentioned Australia you would probably get a response about Sydney or Melbourne. I would doubt at all if anyone would mention Perth, a fact I actually like very much as most Perth people I know do. Only once in all my travels in over 30 years has anyone mentioned Perth, mostly mentioned Melbourne and occasionally Sydney.
> 
> ...




OK misunderstandings here.

I don't live in Sydney and never would. I don't like it either. And I thoroughly agree it is in the eye of the beholder. Perth is a lovely place if you like certain things over others. I happen to like those things Perth doesn't have to offer, more than those things it does.

But that's neither here nor there as RE values are concerned. One of the major attractions of Perth has been the relative inexpensiveness compared to other capital cities. That is now (temporarily) gone. 

There is absolutely no way in the wide world I would pay current Perth prices to enter the market... NO way.

Right now, I think Melbourne is the nicest spot... eye of the beholder n' all that. 

Actually I'm shortly off to much colder climes fairly soon, so the arguement is moot. (for me anyway)


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## rockingham178 (1 February 2007)

wayneL said:
			
		

> OK misunderstandings here.
> 
> There is absolutely no way in the wide world I would pay current Perth prices to enter the market... NO way.
> 
> (for me anyway)




Neither would I, however DYOR and you will find many bargains in Perth ATM, and not that hard to find either. I follow the Perth/WA property market very closely and plenty to be had for those prepared to look outside the square, providing instant capital gain and very high rental returns.


----------



## tech/a (1 February 2007)

Rents just keep flying ahead.

We have had a number of calls to see if we will rent fulltime our Holiday Apartments. They're booked---by holiday makers.
But the word Ive had is that there have been up to 100 applicants for the one home/and Units are no better.

Now whats that tell  property developers in ADELAIDE?


----------



## Realist (1 February 2007)

Yes all across Australia and New Zealand, and from what I hear the USA rents are rising.

How there has suddenly become a lack of housing so quickly is amazing.


----------



## Kauri (1 February 2007)

*Big jump in new home sales 
*_1st February 2007, 5:30 WST

_The WA new home market may be staging a recovery with new figures showing buyers are starting to return. 

*The latest Housing Industry Association figures showed sales of new homes across the State increased more than 14 per cent in December, following a 12 per cent lift in November. *

Nationally, new home sales were up 6 per cent during the month, largely due to the improvement in WA plus a strong result in Victoria. 

Association chief economist Harley Dale cautioned that although there had been an improvement in December, it would still be a long way back from many buyers effectively priced out of the market. 

“The further widening in the housing deposit gap through 2006 meant that there simply weren’t enough aspiring home owners out there who could afford to push the button on buying a new house,” he said.


----------



## tech/a (1 February 2007)

Realist said:
			
		

> Yes all across Australia and New Zealand, and from what I hear the USA rents are rising.
> 
> How there has suddenly become a lack of housing so quickly is amazing.





Not really.As Home ownership becomes more difficult those that are new to the market---without partners for various reasons (2 Wages) look for cheaper alternatives---renting.

Next step is pooling of rentals common in the UK and larger inner suburb cities.


----------



## Bronte (1 February 2007)

tech/a said:
			
		

> Rents just keep flying ahead.
> We have had a number of calls to see if we will rent fulltime our Holiday Apartments. They're booked---by holiday makers.
> But the word Ive had is that there have been up to 100 applicants for the one home/and Units are no better.
> Now whats that tell  property developers in ADELAIDE?



Has anyone heard of the Scarborough Environs Area Strategy Project (S.E.A.S) ?
We bought luxury Scarborough Beach W.A. apartments back in 2001
Same story: "Rents just keep flying ahead".


----------



## theasxgorilla (1 February 2007)

Realist said:
			
		

> Yes all across Australia and New Zealand, and from what I hear the USA rents are rising.
> 
> How there has suddenly become a lack of housing so quickly is amazing.




This is NOT surprising, nor is it sudden.  There has been a lack of supply of quality rental stock in the desirable middle-to-inner-city suburbs of many  capital cities for the last 2-3 years.  In most cases this has been coupled with strong ongoing demand.

The cause?  Economics.  See the chart below which shows a clear decrease in housing finance for investment purposes against a sustained increase in owner-occupied financing.  It is well known that NEW housing starts have been in the doldrums for several years already. Therefore, this chart  can be interpreted as showing a conversion of properties from rental to owner-occupation.

Against a backdrop of  media scaremongering about interest rates and an inevitable bubble burst, those investors who held their properties have been afraid to raise rents.  They've opted instead for secure tenancy rather than risking prolonged periods of vacancy AND increasing mortgage repayments.

Remember too that during this time there have been several rounds of income tax cuts.  The government probably knew they couldn't eradicate the false rental market created by "negative gearing", but they could reduce the effects of it.  At the same time they've pleased the electorate with surplus budgets and bigger take-home pay packets.  Several birds, one stone.

Pre-boom, the top tax bracket kicked in at $50,000 and was 48.5 cents in the dollar.  As IT and banking/finance sector salaries increased during the late 90's investment in residential property was encouraged and made affordable by "negative gearing" and  depreciation allowances.  

Since the last tax cuts the top tax bracket now doesn't kick in until $150,000 AND has been reduced to 46.5 cents in the dollar.  The tax appeal of property as an investment is considerably less today than it was when the boom was on (as an aside, recent changes have meant that the tax appeal of putting money into super has increased, considerably! what does this mean for residential property?  beyond the scope of this post, but food for thought).  Add to this low rents and a perceived stagnation of residential property prices and what reasons do you have left for investing in property?

Rents _should_ go up.


----------



## Bronte (1 February 2007)

Bronte said:
			
		

> Has anyone heard of the Scarborough Environs Area Strategy Project (S.E.A.S) ?
> We bought luxury Scarborough Beach W.A. apartments back in 2001
> Same story: "Rents just keep flying ahead".



The people behind the S.E.A.S. project seem to be pushing for a
mini Gold Coast type development. Lots of building going on at present.


----------



## Bronte (1 February 2007)

Realist said:
			
		

> Yes all across Australia and New Zealand, and from what I hear the USA rents are rising.
> How there has suddenly become a lack of housing so quickly is amazing.



*Happy Birthday Realist * artyman:  :birthday:


----------



## TjamesX (1 February 2007)

Does it really matter how good you think your city is, house prices aren’t determined by this! They are determined by Supply and Demand.

Demand side factors;

Interest Rates – been historically low for a while
Available Credit – banks have been throwing money at people hand over fist
Emotion – People will always tend to want the best house they can get money for (not necessarily what they can afford)
Population Growth – Ensures that new stock has to be built (usually in outer suburbs)
Economic Growth – primarily reflected in the average wage that people earn in the city and employment levels
Taxing Regime – ie availability of negative gearing etc

But everyone seems to forget Supply Side Factors;

Land Release Policy – ensuring that homes are actually built as population increases (at a reasonable price!, state govts basically determine this)
Development – ability to allow efficient subdivision and higher density living to limit urban sprawl
New Land Taxing – proportion of tax burden put on new developments

From what I have read the US has a fundamentally different reaction to price rises in that the new developments are not heavily restricted. Which result in new stock being built if prices get out of whack – end result is an increase in inventories and prices stabilise.

As much as people would like to blame the federal govt for getting us into the house price rise syndrome (halve capital gains tax etc), they have only fuelled the demand side, state governments have made sure that the supply side hasn’t been able to respond – which we are now seeing in rent increases. It seems to me as the states are in general trying to use the real estate industry as a cash cow out of all their other problems – which I think disadvantages the younger generation as they try and establish an economic footing, if they want population growth then they have to provide some reasonable way for the market to provide housing to these people (young and immigrants).

But some of the stuff I have seen in the media is not that encourageing, Iemma basically staring down the camera and saying first home buyers aren’t getting in the market because they fear higher interest rates – as if its got nothing to do with high prices in the first place (Moris – heard of fixed interest loans? and as far as interest rates go we are in an historically low IR environment). I heard some poli saying the other day that halving stamp duty to investors would fix the probem….. unbelievable.

I reckon there are two paths for property in general;

1) Prices steadily up (3-5%pa) for next 5 years if state and fed govts continue to keep the game going through tax incentives, as a result higher percentage of population will become permanent renters

2) Prices stagnate or down for next 4-6 years as wages catch up. If you think property is unaffordable now try 1 or more of the folowing;

a) interest rates up 2-3%
b) Recession (and double the unemployment rate)
c) Credit tightneing (banks stop lending at 90-100-110% loans as the credit bubble bursts). Forcing people to save for a 20% deposit (how long would it take to save up for a 100k deposit on an average wage in Perth or Sydney!!!)

If you think the commodity boom will keep prices spiralling – consider Canada (similar populaiton and commodity rich), they have house price to income ratios of 3-4 in all capital cities (Aust ratio is 6-8)

If you think population growth will keep it spiralling – consider New York and London, Most Aust capital cities are already on par or exceeding these cities in terms of house price to income ratios.

Having said all this, I will be probably buying my own PPOR later this year– for lifestyle reasons


----------



## TjamesX (1 February 2007)

On the 'easy credit' side of things, a mate of mine went to a mortgage broker and was told he could borrow up to 390k on his single wage (apprx 50-60k gross) for a house.

At 7% he would be paying 27.3k in interest with his after tax income to service this loan. Needless to say - i don't think he will be signing his life away by accepting the offer..... but I'm sure a lot of young people are  

I think the single biggest factor that will constrict the market is if the lending policies of creditors change, it is truly unbelieveable the amount of credit being thrown around at the moment

TJ


----------



## Smurf1976 (1 February 2007)

tech/a said:
			
		

> Next step is pooling of rentals common in the UK and larger inner suburb cities.



So we've gone from an ordinary worker being able to buy a 3 bedroom house just 10 years ago to the point of not even being able to afford rent without sharing.

Incomes, at least in real terms, are quite obviously going backwards rather quickly in this country. Continue the trend and in another decade younger workers will be lucky to share a tent (a rented tent of course).

I just don't see how this situation is sustainable socially. At some point we're headed for either a wages boom, house price slide at least in real terms or some form of social unrest. That's the lesson of history when ordinary workers see their living standards progressively eroded compared to the previous generation.

If the rate of lenders going broke as the market for lower quality debt dries up in the US is any indication then a good old fashioned credit crunch is on the way. Not good news in itself but the market is well overdue a shakeout to restore balance and it's likely to be less damaging than some of the alternative options.


----------



## theasxgorilla (3 February 2007)

This post raises some good an interesting points Smurf.

What if our larger more cosmopolitan cities are heading towards a London-like situation where you have a virtual underclass who almost literally can't afford to live there and will almost certainly never actually own anything?


----------



## chansw (4 February 2007)

The value of  the average Perth house is now $502,441.   

*Perth house prices soar 31 per cent*
February 2, 2007 - 5:59PM
http://www.theage.com.au/news/Business/Perth-house-prices-soar-31-per-cent/2007/02/02/1169919525894.html

Perth house prices jumped by almost a third last year on the back of the resources boom, while Sydney's high prices barely moved as interest rate rises started to bite.

Despite Perth's huge gains, Sydney still retains the title of Australia's most expensive capital city, according to new figures released on Friday.

But there are signs the Perth property market will go off the boil this year - with growth slowing markedly in the December quarter - and start to plod along with the other major cities, which have a flat growth outlook for the next 12 months.

According to research by property price information group Australian Property Monitors (APM), the value of the average Perth house surged an astonishing 31 per cent in 2006 to be worth $502,441.

But growth in the West Australian capital slowed to just 0.9 per cent in the final three months of the year.

In Sydney, houses prices grew by only 0.5 per cent in 2006 to $526,158, making the harbour city 4.5 per cent more expensive than Perth.

Prices in Sydney improved slightly at the end of the year, with 1.2 per cent growth in the December quarter, but little improvement is expected any time soon.

Perth is the nerve centre of the China-fuelled resources boom and house prices there have almost directly tracked the rise in commodity prices.

Adelaide, to a lesser extent, has also ridden the boom to an eight per cent increase in its median house price to $331,407.

But when commodity prices started to stabilise in October last year, house prices in Perth and Adelaide stabilised too.

"There's also the matter of people's ability to pay," APM operations manager Michael McNamara said.

"Wages have not increased at the same rate as commodity prices and house prices.

"That creates a ceiling."

The stabilisation in house prices in Perth and the rest of the nation is likely to continue with the full effects of the three, 25 basis point interest rate rises in 2006 still to pan out.

Rising interest rates scare buyers away, leading to an oversupply of houses, which pushes prices down.

They also trigger more forced selling in outer suburbs when lower to middle income earners can't afford to make mortgage repayments.

On the upside though, a market flooded with houses leads to higher housing affordability.

But while affordability in some suburbs will improve, Mr McNamara doubts rates will fall this year.

"Remember the Reserve Bank of Australia in five years has only raised them eight times, so that's eight board meetings out of 50.

"If the RBA is going to do something as dramatic as change the rate cycle, they're not going to be doing it in a hurry."

Nevertheless, not every house in every city is forecast for flat growth.

A widening chasm is forming between affluent "premium" suburbs and those in the outer mortgage belts more sensitive to rate rises, Mr McNamara said.

For example, houses in high income suburbs like Waverton and Bellevue Hill in Sydney, and Camberwell and Brighton in Melbourne, experienced double digit growth in 2006.

There may also be some positive news for long-suffering investors in apartment markets, particularly in the Sydney market - but not until the second half of this year.

Changes to rules easing the tax burden on deposits to superannuation of up to $1 million before June 30 will stimulate selling of investment properties, weakening the apartment market.

But rental income will remain high as vacancy rates continue to decline.

Then, post June 30, apartment values will start to rise.

"We think there will be a recovery in the apartments market in the latter half of 2007," Mr McNamara said.

"That's right when we will see a demographic change, when the retired babyboomers think about moving from their houses into apartments."

Apartments in Sydney lost 2.9 per cent of their value last year while Perth apartments added 31.4 per cent.

Source: Australian Property Monitors


----------



## exberliner1 (4 February 2007)

Good points there Smurf....I am english live in Sydney now but have also lived in Berlin and London.

I see the Australian capital cities going the same way as London....for the normal working guy......living a long way from work and having to commute....London does however have good train links which lets face it capital cities here lack....

I agree with you something has to break....house prices down....wages up or big unrest.

Although I have solved the problem for me.....I will go back to Berlin in a few months where I can rent a 100sq m appartment in the centre of the town for about AU$800 a month (including the heating and hot water).

EB


----------



## theasxgorilla (4 February 2007)

exberliner1 said:
			
		

> Although I have solved the problem for me.....I will go back to Berlin in a few months where I can rent a 100sq m appartment in the centre of the town for about AU$800 a month (including the heating and hot water).




Does that mean you will become and ex-exberliner??


----------



## chops_a_must (4 February 2007)

TjamesX said:
			
		

> As much as people would like to blame the federal govt for getting us into the house price rise syndrome (halve capital gains tax etc), they have only fuelled the demand side, state governments have made sure that the supply side hasn’t been able to respond – which we are now seeing in rent increases. It seems to me as the states are in general trying to use the real estate industry as a cash cow out of all their other problems – which I think disadvantages the younger generation as they try and establish an economic footing, if they want population growth then they have to provide some reasonable way for the market to provide housing to these people (young and immigrants).
> 
> But some of the stuff I have seen in the media is not that encourageing, Iemma basically staring down the camera and saying first home buyers aren’t getting in the market because they fear higher interest rates – as if its got nothing to do with high prices in the first place (Moris – heard of fixed interest loans? and as far as interest rates go we are in an historically low IR environment). I heard some poli saying the other day that halving stamp duty to investors would fix the probem….. unbelievable.



I'm always amazed at the calls for reducing stamp duty on homes. Instead of doing this and creating a housing bubble, governments would be far better served by implementing measures that would protect value into the future. Building in public infrastructure is the way to do that, and in that way shaping the social culture (something that needs to happen here in Perth). We are in boom times, and what the hell do we have to show for it?

A number of years back now, I was looking at policies to attract people to Perth and WA. The number one reason people stayed here and came here was affordability. It was great for artists, musicians, athletes and anyone looking to start up a business. In the space of a few years, Perth has gone from one of the most affordable, to one of the least affordable cities in the world. My friends can't afford to rent anything (that is if anyone actually takes the risk of letting young people rent their property). It's a joke that a group of my friends left for Melbourne, so that they could find somewhere to live, and that was cheaper than here!

So apart from jobs, what exactly is keeping people here in Perth? There IS nothing. Forget cutting tax on property, they should be spending money on things that will keep people here, once the boom inevitably turns into a bust. Otherwise, people will leave in droves, and people will cry foul once their asset value is halved.

WayneL, where exactly do you live? I thought you were in WA.


----------



## YChromozome (4 February 2007)

The Adelaide Sunday Mail has some top quality journalism today. There is a full two page spread showing, by suburb, what your Adelaide house will be worth in 2016.

Titled "Future Shock : Welcome to our millionaire city", they tell us that Adelaide will have 83 million-dollar suburbs by 2016.

They go on to interview two 16 year olds contemplating their futures in ten years time and if they will be able to buy a house.

"The 2016 projections were made by applying the annual 8.7 per cent growth rate recorded by the Valuer General's office in the past decade to the next ten years."

"Independent real estate analyst firm Australian Property Monitors said the predictions were conservative." "Over the past decade the population and economy have grown and there is no reason why that wouldn't continue to put pressure on prices to grow at around the same rate," APM operations manager Michael McNamara said.

Now if you could only get PUT options on housing . .


----------



## kyme (4 February 2007)

Yeah Right, house prices gonna increase by 8.7%pa for next ten years. And what do people expect salaries to increase by over next 10 years?. Does not compute!.


----------



## YChromozome (4 February 2007)

kyme said:
			
		

> Yeah Right, house prices gonna increase by 8.7%pa for next ten years. And what do people expect salaries to increase by over next 10 years?. Does not compute!.




I know. I had a good laugh when I saw it.

I guess the mistake they have made is to assume the economy will continue to grow at the same rate than in the past - "and there is no reason why that wouldn't continue". 

I tend to believe the economy is running on 72 months interest free.

They do mention that average house prices have increased over the past decade by 160%, but for the same period wage growth was 54% - but that doesn't seem to bother them. Even if the cost to service a mortgage was more than 100%, every Australian would still be able to find the money - no probs.


----------



## Smurf1976 (5 February 2007)

chops_a_must said:
			
		

> Building in public infrastructure is the way to do that, and in that way shaping the social culture (something that needs to happen here in Perth). We are in boom times, and what the hell do we have to show for it?
> 
> A number of years back now, I was looking at policies to attract people to Perth and WA. The number one reason people stayed here and came here was affordability.



Exactly. And it's much the same everywhere outside of Sydney, Melbourne, SE Queensland, Canberra (public service jobs) and defence force towns/cities. 

Whilst there will always be some who want to live in a country town or in the smaller cities (that is, any city other than Syd / Melb / Bris) history has shown pretty well that they aren't the number one choice for the majority.

Perth has had the big attraction of relatively easy to get employment (compared to the other capital cities) since at least the early 1990's recession. Add in cheap housing and a resources boom and it's not hard to see why the population has increased.

But the underlying point is that many in Perth are there for economic reasons alone. They came for money and will likely head back to their home states if/when the money dries up. 

It's not just Perth either. Tasmania has long experienced the exact same situation with workers from interstate during big construction projects - once it's built the workers head straight back home with a fist full of $. 

There is, of course, nothing wrong with people moving between the Australian states (or overseas) to pursue the available opportunities. But a problem arises when a temporary boost to economic growth is assumed to be permanent. At best they stop arriving but more likely some will leave thus pushing population and economic growth heavily down if not into reverse.

As for public infrastructure, we seem to be massively underinvesting in the future of this country. We haven't added serious water supply capacity to Sydney, Melbourne or Brisbane for over two decades. We're not doing much better with electricity (except Queensland and Tas) and we've got no long term plan for gas or what to do about oil depletion or greenhouse.

It's worth noting that those latter 2 points, oil and greenhouse, directly threaten 99% of our transport and 90% of our electricity in this country. Obvious national priorities that we're doing basically nothing about.

Meanwhile, as all this important invesment is neglected, we choose to borrow a fortune and push up house prices - something that fixes no real national or state problem and produces no real wealth. Pure madness.


----------



## wayneL (5 February 2007)

chops_a_must said:
			
		

> So apart from jobs, what exactly is keeping people here in Perth? There IS nothing. Forget cutting tax on property, they should be spending money on things that will keep people here, once the boom inevitably turns into a bust. Otherwise, people will leave in droves, and people will cry foul once their asset value is halved.




I could not agree more with this.



			
				chops_a_must said:
			
		

> WayneL, where exactly do you live? I thought you were in WA.



Geraldton at the moment; though off to Blighty in a month or two... It seems I will be earning an honest living for a change  

Could be a permanent move


----------



## krisbarry (5 February 2007)

YChromozome said:
			
		

> The Adelaide Sunday Mail has some top quality journalism today. There is a full two page spread showing, by suburb, what your Adelaide house will be worth in 2016.
> 
> Titled "Future Shock : Welcome to our millionaire city", they tell us that Adelaide will have 83 million-dollar suburbs by 2016.
> 
> ...




Yep read it too, just another ramp from a "Real Estate Guru".  He must be getting a little frightened about the real truth of the housing market.

Housing sales flat, first home buyers not buying anymore, seniors selling off homes in droves to place profits in super funds, and 8 interest rate rises over the past couple of years.

Sounds like he is floggin a dead horse...where is all this extra money going to come from to pay for these million dollar homes.  We all know Adelaide is the welfare state.


----------



## YChromozome (5 February 2007)

Stop_the_clock said:
			
		

> We all know Adelaide is the welfare state.




Not anymore. More euphoria from quality journalism in today's Adelaide Advertiser :

"Mining set to drive up home prices"

"Mining growth es expected to fuel a property price SURGE in South Australia. "

...

"With at least six SA mining projects expected to be decided this year and more than 40 exploration companies scouring SA for new discoveries, many believe it is only a mater of time before property prices climb sharply"

So there you have it. Can't go wrong with Real Estate in South Australia - Safe as Houses.

Even the auctioneer says, Ladies and Gentlemen, step up, place you bids. Your buying appreciating assets, buy today - worth more tomorrow.


----------



## Rafa (5 February 2007)

The Advertiser is a joke...
sums up everything that is wrong with today's media really...


----------



## robots (5 February 2007)

hello,

the fact is quality houses and units across Aus have continued to rise

people waited for the crash several years ago it did not happen

buy what you can now

you can put whatever spin you want from "real estate guru's", media doing this or doing that

thankyou
robots


----------



## theasxgorilla (5 February 2007)

OMG, Robots, what the heck are you doing?!?!  

Damn, the secrets out...


----------



## Smurf1976 (5 February 2007)

robots said:
			
		

> hello,
> 
> the fact is quality houses and units across Aus have continued to rise
> 
> ...



In other words, the Australian Dollar continues to lose value so you'd better change your Dollars for something else (such as real estate) before they lose what little remains of their value.

Exactly the situation predicted by Keating two decades ago.


----------



## theasxgorilla (5 February 2007)

Smurf, is this really a problem going forward?


----------



## Uncle Festivus (5 February 2007)

robots said:
			
		

> hello,
> 
> the fact is quality houses and units across Aus have continued to rise
> 
> ...




hi robots, unless real estate has gained by more than inflation then it's been treading water at best ( in the Eastern states at least) for the last 3 years.

If the commodity 'correction' gets some legs then those states with exposure to it and consequently housing appreciation will suffer the same fate as the other states, ie stagnation. The savour is rising rents for the moment, which may in itself create a reduction in economic activity and the cycle continues downwards. A property investor friend of mine told me how his agent raised the rent of one of his properties from $230 to $280 per week. The tenant said they would not pay & move out, but had to in the end accept it because there was nothing else available.

This example show the scale of damage being inflicted on disposable incomes for renters. I don't know the exact figures but renters make up some 60%? of the population. How much can the consumer absorb before it starts impacting growth and property prices negatively??


----------



## robots (5 February 2007)

hello,

you can forget the analysis, prices have risen

stagnation has not occured for the quality property

every situation is different in history and in the future

thankyou

robots


----------



## wayneL (5 February 2007)

theasxgorilla said:
			
		

> Smurf, is this really a problem going forward?



Combined with other factors it could be a very serious problem.


----------



## theasxgorilla (5 February 2007)

wayneL said:
			
		

> Combined with other factors it could be a very serious problem.




Such as?  Commodities price depreciation?


----------



## wayneL (5 February 2007)

robots said:
			
		

> hello,
> 
> you can forget the analysis, prices have risen
> 
> ...




Forget analysis! Yeah good idea!

Do not forget the role of gentrification putting an upward skew on housing indicies. Indicies are useless.

In real estate, analysis of anecdotal evidence is far more accurate.

This is showing some big problems in some areas in a world economy that is still strong. WHEN the fiscal pidgeons come home to roost, some people will be truly shocked at what happens to RE.

Governments are currently, desperately propping up RE values via a range of measures as this is what is underpinning the entire world economy. Having undermined our manufacturing base we are left to flog houses at ever increasing prices to each other.

Don't you see the problem here? House prices cannot outstrip inflation _ad infinitum_. Any idiot with Excel could work that out. Add a credit tightening cycle and there is only one possible result, and you won't like it.


----------



## robots (5 February 2007)

hello,

prices are still strong,

16mths for this thread, no crash no correction any idiot can see that

but hey the governments of the world are doing naughty things to help property owners, crap

thankyou
robots


----------



## theasxgorilla (5 February 2007)

wayneL said:
			
		

> In real estate, analysis of anecdotal evidence is far more accurate.




Should we create a "poll" thread?  I think I might.


----------



## wayneL (5 February 2007)

robots said:
			
		

> hello,
> 
> prices are still strong,
> 
> ...




Prices trend, unquestionable.

Prices correct to the mean, either nominally or real terms, unquestionable.

As far as propping, I could go on ad nauseum. But first home owners grant, part ownership, easy credit and importantly, government spin are a few examples of such. So they suck a bit of tax from you... dittums.


----------



## wayneL (5 February 2007)

theasxgorilla said:
			
		

> Should we create a "poll" thread?  I think I might.




Pointless at the moment. Do it in 2009 - 2010


----------



## theasxgorilla (5 February 2007)

wayneL said:
			
		

> Pointless at the moment. Do it in 2009 - 2010




Perhaps.  But I think you would agree that what has happened can be considered FACT, regardless of what might happen between now and 2009 - 2010.  Unless of course people aren't telling the truth...but I can't do anything about that.


----------



## Rafa (5 February 2007)

I am a natural bear...  i am not a property investor, i only have one house which i live in.
but can i just say one thing...

the earth population stands at 6 billion and growing rapidly..
people have to live somewhere...

and the way i see it, the things that are non-essential, will become dirt cheap, where as the things that are vital, will become more expensive.


What is essential...
natural resources (for food, energy, etc)... and a piece of land to live on...

all the rest is not...

i'd be surprised if you compare house prices over the long term, to inflation, whether there is any correlations whatsover... 
rather, compare it to population growth and you have your answer right there...


----------



## Smurf1976 (5 February 2007)

robots said:
			
		

> hello,
> 
> prices are still strong,
> 
> ...



Certainly in Sydney, Melbourne and Hobart house prices have ALREADY crashed heavily when measured against practically anything other than fiat currency.

Down compared to stocks
Down compared to oil
Down compared to gold
Down compared to zinc
Down compared to practically anything that isn't either fiat currency or comes with a remote control.


----------



## Kauri (5 February 2007)

As my old father used to say... Son,their not making land anymore..


----------



## Ken (5 February 2007)

melbourne house prices crashed????

they still expensive to me.....


----------



## Realist (5 February 2007)

Kauri said:
			
		

> As my old father used to say... Son,their not making land anymore..




Hmm, pretty silly logic.

The fact is we're not making people anymore either. The average number of kids for 2 parents is about 1.9.

Only immigration keeps Australia's population slowly rising.

Also younger people are much more likely to want to live in an apartment. Even if it is 10 stories up.

So we are building up not out.

Land in Australia is not at a premium, it is the emptiest country in the world. There's room for us each to have about 4 square kilometres - but no one wants it, most want to live cramped up near a city centre 3 levels up sharing with others.


----------



## Ken (5 February 2007)

i heard on the radio that housing in melbourne is among the most unaffordable in the world, compared to the average wage.

House prices have doubled and trippled over the past 10 years, will this have an effect down the line?

Those who have missed the housing boom, will not be able to afford inner city houses, even at present when they are in high demand.

Majority who home owners in inner city houses I would say are elderly, who have lived in homes for 50+ years.  In the next 20 years, more of these inner city homes come on the market due to elderly passing away, wouldnt that cause a increased supply, and a drop in prices....

or will investors snap these houses up.


----------



## Kauri (5 February 2007)

Realist said:
			
		

> Hmm, pretty silly logic.
> 
> The fact is we're not making people anymore either. The average number of kids for 2 parents is about 1.9.
> 
> ...




   I stand corrected...






> The fact is we're not making people anymore either. The average number of kids for 2 parents is about 1.9.
> Only immigration keeps Australia's population slowly rising.



  Does it matter where the growth is coming from?? 





> Also younger people are much more likely to want to live in an apartment. Even if it is 10 stories up.



  Amazing, most people I know want houses, they settle for multi-level hi-density near communal living because it is all they can afford.





> Land in Australia is not at a premium, it is the emptiest country in the world. There's room for us each to have about 4 square kilometres - but no one wants it, most want to live cramped up near a city centre 3 levels up sharing with others



  Land isn't, serviced land with infrastructure is. Do you want to claim your 4 squares out in the Gibson Desert???


----------



## robots (5 February 2007)

hello,

why wouldnt Melb or Syd or Perth or Brisbane be the most unaffordable in the world

look at the country we live in , superb, far better than US (watch Cops tonight), europe or asia

when was the last property crash in AUS? because I have held property since 1986 and don't recall any issue

thankyou

robots


----------



## Realist (5 February 2007)

Kauri said:
			
		

> Amazing, most people I know want houses, they settle for multi-level hi-density near communal living because it is all they can afford.




In WA yes, not in NSW and Vic where the majority of the population is though. In NSW young people accept and enjoy apartment living, you don't have the traffic issues we do. And the proximity to work and nightlife etc. makes apartments the best option. Price is also a huge factor I agree. 

WA has had a ridiculous boom, and based on population and logic is now tremendously overpriced. I'm not surprised young people can not afford houses. I doubt they can even afford apartments.


----------



## chops_a_must (5 February 2007)

Realist said:
			
		

> In WA yes



In WA you don't get a choice. Lol! Most of my friends would love to live in inner city apartments, but there aren't any. And the ones that do exist, are ridiculously expensive.


----------



## Smurf1976 (5 February 2007)

robots said:
			
		

> hello,
> 
> why wouldnt Melb or Syd or Perth or Brisbane be the most unaffordable in the world
> 
> ...



What has changed so much in the past 6 years? Why were Melbourne etc relatively cheap only 6 years ago? Has the rest of the world really become such a bad place in such a short time?

As for crashes, it's all relative since in the modern financial system there is no fixed measure of absolute value. Houses in Sydney etc have fallen pretty hard compared to lots of other physical things in recent times. But since cash has also lost a lot of value in that time, there hasn't been much of a fall in house prices relative to cash. It's all relative...

There is also the issue of timing where it is foolish to look only at the recent past. I'll use a weather example to make the point.

6 months ago the average daily maximum temperature in Hobart was around 12 degrees. Now it is around 22 degrees. Extrapolating that trend, we can confidently predict an average of 32 for July this year and 42 by this time next year. In January 2020 the average maximum temperature in Hobart will be over 160 degrees and the Derwent River will be literally boiling.  

The ridiculous example above shows what happens when you only look at part of the cycle. Those with a bit more knowledge of the weather would say that we're at or near the peak of the seasonal temperature cycle and June 2007 isn't likely to be that much different to 12 months earlier. It goes up AND DOWN. Just like asset valuations (valuations as distinct from prices).

At some point average houses are near certain IMO to be back down around 3 - 4 times average earnings. The question is how we get there - house price crash versus wages explosion (or a combination of both) - how long it takes and what the broader economic and social consequences are.

Personally, I see the implosion of US sub-prime lenders at the rate of one every three days over the past two months as a sign of a looming credit crunch. Investors just won't buy the risky housing debt anymore thus undermining a key support for house prices. Financial happenings in the US have a habit of spreading to the rest of the world in due course. http://ml-implode.com/


----------



## Ken (5 February 2007)

will houses drop if there is a stock market crash??


----------



## Uncle Festivus (5 February 2007)

As for crashes, it's all relative since in the modern financial system there is no fixed measure of absolute value.

*Measure of absolute value ..... Gold maybe.... how many ounces of gold did it take to buy a house 6 years ago as compared to today?. 
*
Houses in Sydney etc have fallen pretty hard compared to lots of other physical things in recent times. But since cash has also lost a lot of value in that time, there hasn't been much of a fall in house prices relative to cash. It's all relative...

*Looking at it the other way, as a house owner maybe, ie real inflation about 10%, house prices down 10 %, real loss = 20%?. That is, house prices 'to stagnate for years' only to become affordable when wages growth catches up. *

*I really have trouble when listening to advocates of property pronouncing 'property has gone up triple over the last 10 years. Yes, maybe but so has inflation and all the expenses that go with property, so the real gain is somewhat less.*

Personally, I see the implosion of US sub-prime lenders at the rate of one every three days over the past two months as a sign of a looming credit crunch. Investors just won't buy the risky housing debt anymore thus undermining a key support for house prices. Financial happenings in the US have a habit of spreading to the rest of the world in due course.

*Spot on there..... the US housing bust is not over yet, nor are the consequences.....*


----------



## YChromozome (5 February 2007)

Ken said:
			
		

> will houses drop if there is a stock market crash??




You need to look beyond the stock market to the overall economy. What causes the stock market crash?

Lets say consumers are spending more than they earn and credit growth is at double digit figures. This irrational exuberance is providing demand for goods and services and hence boosting company profits, and underpinning the PE ratio. These companies must employ extra people to meet demand, and the goods must be made from resources etc.

So if people run out of money, stop spending, the economy slows and suddenly the PE ratio doesn't look all that good, and future earnings look bleak, the Stock Market might crash. At the same time, lower earnings means these employers no longer need as many staff, nor as many resources from Australia . . Yes, people need to buy goods from China, so China can continue to grow. 

As people become redundant, they can no longer meet mortgage repayments. If people do keep their jobs, many miners might find its no longer necessary to pay above award wages and hence people who brought houses under their depths on above award wages might struggle too.


There is also the 'wealth' effect that applies to houses and the stock market.  Typically while people are making lots on money on these assets, consumer confidence is high and people poor this extra money into goods and services. Stock market crashes, people may tighten their belts.


----------



## robots (5 February 2007)

hello,

what a load of rubbish measuring it against other items etc

if the house doubles in value in 10years ie 150k to 300k and I have paid mortgage & costs similar to what rent is for that property then I have made 150k

forget inflation, forget real return etc I have 150k in my pocket if liquidate

prices have not crashed in Sydney or Melbourne

thankyou

robots


----------



## Uncle Festivus (5 February 2007)

hi robots

Yes you have an extra $150000, but not really. 

You've probably paid twice that in interest alone, so how can you be ahead??

In real life we can't dismiss inflation, costs or interest. Over the 10 years you have gone backwards financially, at best break even. Inflation is the reason we don't have or need 1c & 2c coins (and the 5c soon to follow)


----------



## Kauri (5 February 2007)

Compared to renting??



			
				Uncle Festivus said:
			
		

> hi robots
> 
> Yes you have an extra $150000, but not really.
> 
> ...






> if the house doubles in value in 10years ie 150k to 300k and I have *paid mortgage & costs similar to what rent is for that property then I have made 150k*


----------



## Uncle Festivus (5 February 2007)

Kauri said:
			
		

> Compared to renting??





Huh? Where or why does rent come into it?


----------



## robots (5 February 2007)

Uncle Festivus said:
			
		

> hi robots
> 
> Yes you have an extra $150000, but not really.
> 
> ...




hello,

over a 25yr mortgage the interest would be around that of original loan balance so you're dreaming

thankyou
robots


----------



## wayneL (5 February 2007)

Listen folks,

The last seven or eight years (give or take depending on where) has been an excellent time for owners of real estate, no question about that.

The question is, whether current valuations are sustainable. I, and other bears say no. The bulls obviously say yes.

The bears case is well documented and is starting to play out in parts of the US. Signs of it starting to play out in parts of Oz, UK and other places are in place also.

Gu'mints and VI's are desperate to prop the market up and they have been very successful at it up till now. Economies DEPEND on it. They could keep it going a while longer too, but not forever. The depression has been hidden by an explosion of credit and fiat money; we have been living well beyond our means, as individuals, institutions and government.

There will come a time when:

a/ the credit limit has been reached and can no longer be extended

b/ we will have to start paying down the balance

Traditionally, the tactic has been to inflate our way out of it. But this is contingent on wages being able to rise lock-step with inflation. As we have offshored much of our actual production (the true engine of an economy) it will be very difficult to have wage inflation as well.

At the risk of labouring the point, western economies almost totally rely on house price inflation/building. When this reaches it limit, we are in deep doo-doo.

Make hay while the sun shines folks, but no party lasts forever.


----------



## Realist (5 February 2007)

robots said:
			
		

> hello,
> 
> what a load of rubbish measuring it against other items etc
> 
> ...




That is far too simplistic to be accurate Robots.

First of all ignoring inflation, rents, and interest rates etc. if you buy a house for $150K and it doubles to $300K, you may very well have an extra $150K in your pocket but what are you going to do with it?

Buy a better house?  Well surprise, surprise every house has doubled.

That $250K house you looked at 10 years ago is now $500K and you still can't afford it.

You are no better off at all.

And speaking for Sydney there is no way you can buy for the same price as you rent.

I rent a place worth $650K for $350 a week of which I pay half. I pay no water, rates, body corporate fees, repairs, maintenance, or tax.

Owners are paying highish interest rates, agents fees, stamp duties and all the other expenses.

Capital gains on housing advantage only those who own more than a few houses.

Owning 1 house and house prices going up infact disadvantages you. If you want to move into a bigger house you've got bigger stamp duties, rates, and agents fees on a more expensive house just as a start.


----------



## clowboy (6 February 2007)

Realist said:
			
		

> .
> 
> Owners are paying highish interest rates,





LMAO

Who is paying highish rates?


----------



## Kauri (6 February 2007)

Realist said:
			
		

> Owners are paying highish interest rates,




Paul Keating would love you...


----------



## Realist (6 February 2007)

I did say ....ish.


----------



## Bronte (6 February 2007)

YChromozome said:
			
		

> Not anymore. More euphoria from quality journalism in today's Adelaide Advertiser :
> "Mining set to drive up home prices"
> "Mining growth es expected to fuel a property price SURGE in South Australia. "
> "With at least six SA mining projects expected to be decided this year and more than 40 exploration companies scouring SA for new discoveries, many believe it is only a mater of time before property prices climb sharply"
> ...




http://www.theaustralian.news.com.au/story/0,20867,21176251-643,00.html


----------



## wayneL (9 February 2007)

The great house price crash begins (in the UK at least)



> LONDON (AFX) - House prices in England and Wales edged lower in the final three months of 2006 from the third quarter, figures from the Land Registry revealed.
> The average house price dropped to 207,573 stg from 211,453 stg, a 1.8 pct drop.
> In Greater London, prices fell to 321,971 stg from 330,838 stg, a 2.6 pct drop.


----------



## Bronte (9 February 2007)

Good morning  
So have you sold?


----------



## wayneL (9 February 2007)

Bronte said:
			
		

> Good morning
> So have you sold?



I am a buyer at the right price, which we are currently not even remotely close to.

Cheers


----------



## robots (9 February 2007)

hello,

another conspiracy from the government this week to keep house prices up: 


rates left unchanged

thankyou
robots


----------



## wayneL (9 February 2007)

A bit of fun for the bears:

http://housingpanic.blogspot.com/


----------



## wayneL (9 February 2007)

robots said:
			
		

> hello,
> 
> another conspiracy from the government this week to keep house prices up:
> 
> ...




The interest rate setting mechanism is (allegedly) independent via the central banks.

It is the government statistics (which the CBs are legislated to work to) which are subject to manipulation. This is obvious to all who give them more than a cursory glance.

America is panic stations, UK just starting to see falls, parts of oz seen falls already. Is it a trend yet? There are some trends emerging. But by the time the trend is apparent to all and sundry, blood will already be trickling in the gutters.

Value will eventually be restored.


----------



## tech/a (9 February 2007)

Dont know where you guys get this stuff from but if you keep living your life on expert opinion you'll never be expert in anything you do.

There are opportunities everywhere.
There are simple steps you take to minimise risk exposure.
All you have to do is find the opportunity 
Know how to take advantage of it and 
DO IT.

This housing Rubbish has been going on since 1998.
This Stock Market heading for a crash--for the last 12 yrs Ive been involved.

Bearish rubbish is applauded.
Bullish talk and heaven forbid working examples and your an inflated GURU.

Frankly I believe its only those who dont and havent taken advantage of the opportunities that are and have been presented-----who go on with this doom and gloom stupidity.

If they had they would be well aware of how to deal with all situations.

Youll die WAITING.


----------



## wayneL (9 February 2007)

tech/a said:
			
		

> Dont know where you guys get this stuff from but if you keep living your life on expert opinion you'll never be expert in anything you do.
> 
> There are opportunities everywhere.
> There are simple steps you take to minimise risk exposure.
> ...



Tosh... and calling people stupid because they disagree with your POV is bad form Tech.

The old "you're jealous" argument is absolute nonsense. I expected better than this schoolyard tactic from you.

There are people right now in the US UK and Aus who are in dire financial trouble because they took the "opportunity"... especially in the US where some folks have lost hundreds of thousands in the crash that is in progression there.

It's happening! The only question is the magnitude.


----------



## tech/a (9 February 2007)

Wayne.

I will argue that those who are losing $100,000s are those who didnt conduct due diligence.

Further they had no idea of how to equate risk.
*(You cant tell me that everyone of these people are a victim of circumstance).*

They bought too late
They geared too high
They didnt understand what they were doing
They didnt have a plan that WORKS. No point in having a plan that leads to failure!!!
They just weren't ready.

Further-----again they made decisions that were *ill concieved*.
I've lost a small fortune over the years myself and each time its been my own naivity. Look back on your own disasters---anyone!

We've all had them and I've sat back just like the majority and watched as opportunities go buy *numbed* by the thought of doing something stupid again.

Until I understood QUANTIFIED risk.

Seriously whats the point of hollow rehetoric on doom and gloom when there is stacks of hints that many here can pass on to those who recognise opportunity which comes along at ALL times in life.
The only solution Ive seen here is WAIT---When? What for? Then what?

Its a classic case of Doing the same thing day in and day out and expecting a *DIFFERENT* result.
Dont wait for circumstances to change!!!
Change *YOUR* circumstances!!!

I was contacted by a contributor here today---They know who they are and I hope they also know by now that they JUST ARENT ready.
They havent considered above.
Their plans are ill conceived.
(Not you Simon!)

There is a Major Major RENT shortage---anyone taken that opportunity and run with it???????.
Commercial and or Industrial-----anyone doing their due diligence??????

So its happening ---avoid it.
Look for opportunity else where.

Heavens BHP is falling get out of the stock market.
Look else where.

*Its not that hard.* People make it hard.


----------



## krisbarry (9 February 2007)

tech/a you have been lucky enough to be born at the right time and be in the right place to cash in on a once in a 30 year housing boom.

Just out of interest how would you have performed if the above boom didn't exsist.

I reckon you would be in the same boat as the rest of us.

Can you explain to me how I can ride a once in a 30 year boom, considering I was  in nappies and playing with lego, while you were a little older and wiser.

Its all relative right.  The next boom will come round for me at the same time as it has for you, around the 50 to 60 year age bracket.

Its easy to make money in a booming market...hell just throw a bucket load of cash at a small cap uranium mining comapny and you have a winner too.

Anyway the boom is over...its a waiting game now!


----------



## wayneL (9 February 2007)

Tech,

There is a perception that housing bears are doing nothing but complaining.

That's not true. Many of the bears I talk to are taking opportunities outside of RE. I personally am positioned in RE where I want to be for the current circumstances and likewise, persuing other avenues. I am on the verge of pulling off a deal in the UK which I've been working on for some time. In fact am emigrating shortly to tie it all up.

Becoming a developer, or spending vast amounts of time chasing deals is not everyones cup of tea. That's a good thing, because if every body did that it would ruin it for those who are prepared to/enjoy doing that sort of thing.

All the more for people like you if you want to put it that way.

Most people just want to buy a bloody house to live in at a price that reflects some sort of value. Vested interests, and folks like Robots, advise people to "*just buy"*. Are these your people who have not done their DD? You betcha. They have been sold the myth of the perpetual boom.

Property values always revert to mean of value. Those who have decided not to buy will have their eye on these measures of value and will buy when value is acceptable.

Bear is a legitimate place to be. Just remember bears are bears so they can become bulls. One day I'll be here p!ssing everyone off with rampant bullishness. 

Cheers


----------



## robots (9 February 2007)

hello,

yes I encourage people to get in as early as possibe

prices have not crashed, "quality" houses or units in Melb or Syd have not dropped by 50% or 40 or 20% or 10% or 5% ACROSS THE BOARD

NO-ONE HAS PROVIDED ANY STATS ON THIS

get it quality, these are available in all price brackets and all suburbs 

these are the properties that have increased and remain solid as, which I have been constantly suggesting

you pay a premium to live in quality whether it be the North Shore or St Kilda always

thankyou
robots


----------



## nomore4s (9 February 2007)

Stop_the_clock said:
			
		

> tech/a you have been lucky enough to be born at the right time and be in the right place to cash in on a once in a 30 year housing boom.
> 
> Just out of interest how would you have performed if the above boom didn't exsist.
> 
> ...




All due respect Stop the clock, but you don't have to be in a boom to make money, there are always opportunities around. You just have to look harder for them and do more leg work.


----------



## tech/a (9 February 2007)

> Can you explain to me how I can ride a once in a 30 year boom, considering I was in nappies and playing with lego, while you were a little older and wiser.




Once in 30 yrs!

Well Im 53 and been through 4 of them.
Took advantage of 2. Ive seen mini "Out of charater booms" in your home town 6 times.(Just quickly off the top of my head----Had nothing to do with the economy and everything to do with supply and demand)
(1) The Crafers Freeway
(2) The Holdfast Shores developement.
(3) The Southern expressway--the boom started 18 mths after house prices had risen 25% From $90K for a 4 bedroom to $120K---now $320K min.
(4) Not to mention the Submarine contract---Housing in salisbury went up 30%
(5) Or to mention the Ghan rail link to Darwin---Industrial property doubled and it was telegraphed years ahead that it was happening! You could have still made 60% while it was being built!
(6) Now Whyalla with Onesteel You could buy a house for $50K now $100K + if you can find one.
(7) Port Pirie with Zinifex---same thing.

Thats 10 without even trying---every 30 yrs---your really not trying!

*Thats how!* You dont need $500K you need to spot opportunity and get outside the box.

*Where would I be???  * Right here doing exactly what I'm doing now---do you think I was born a Rich Bastard??? Your the only person who hasnt $20k to his name? (as a point of reference.) I've never been where you are??



> Its easy to make money in a booming market...hell just throw a bucket load of cash at a small cap uranium mining comapny and you have a winner too.




Are you doing that?? Yes OK whats the problem buy a house and get some equity---no OK then buy another Uranium Boomer. Whatever,its an opportunity as you percieve it---youve quantified risk--youve reaped the rewards---see it can be done!!

Not doing it???---why not! Fear of loss that why! (if your not).
Then learn how to quantify risk---you wont get ahead without it!




> Property values always revert to mean of value.




Really!!! When will No's 1-7 revert to the mean.??

The mean is the price that can be demanded by supply and demand.

Find where demand will out strip supply now or in the future.
Those waiting for CBA to return to the mean or Westfields or Berkshire Hathaway will die waiting!!

*Price doest have to revert to anything it can and does become the ACCEPTED mean---thats what its worth!!!*

Why wait for the heart of Sydney to do anything---go elsewhere---many went to Perth/Adelaide, including those who did their due diligence in Sydney
Bugga waiting for it to come back find where it will go ahead!

I see post after post on buying VALUE from these fundmantalists.
Yet the same people go on and on about the over valuation of property--???

Excuses,easier than doing---human nature.


----------



## Smurf1976 (9 February 2007)

tech/a said:
			
		

> They bought too late
> They geared too high
> They didnt understand what they were doing



Precisely the arguments many bears have been expressing. 

The line between bulls and bears seems to have become incredibly thin.


----------



## Julia (9 February 2007)

"Property values always revert to mean of value.  "

Piffle.

Agree entirely with Tech.

Julia


----------



## nomore4s (9 February 2007)

Spot on Tech/a

There are plenty of opportunities around at the moment, there always is and always will be, the trick is getting yourself in a position to take advantage of the opportunities when they come along. 

This requires a certain amount of hard work and sacrifice.
I'm only 30, own a unit in which I have alot of equity in. But to get to this position I had to sacrifice certain luxuries to save the money to be able to buy the unit without getting in over my head with debt. Meanwhile my friends were out blowing their cash, and are now complaining that they can't afford to get into the market.

I'm now using the equity and more savings to build a duplex which hopefully will provide me with another property with low debt levels (planning to keep one and sell one).

One thing I've found/learnt from dealing with builders and developers is that now is the best time to look for opportunities, cause in 10,20,30 years we'll be saying I should've brought back then or if I'd only taken advantage of that or this opportunity. Prices now are not as cheap as 10,20,30 years ago. So like tech/a said what is the mean value?


----------



## tech/a (9 February 2007)

Julia said:
			
		

> "Property values always revert to mean of value.  "
> 
> Piffle.
> 
> ...




Some "Get it"

Hi Julia./Nomore4s

And some dont.

Smurphy my man your brighter than that!!



> Precisely the arguments many bears have been expressing.
> 
> The line between bulls and bears seems to have become incredibly thin.




You do understand the meaning of isolated context! I know you do.


----------



## nizar (9 February 2007)

Some excellent posts tech.
And i thought you were the man for stocks!

There is always opportunity. Sometimes they present themselves, most of the time you have to look for it.

But i personally dont like property, 2 main reasons, being, 1) illiquid, and 2)indivisible, but still if there is a really good opportunity then im keen. 

So i prefer stocks, and it seems easier as well. Though thats maybe because i have a better understanding of stocks.

Just a general question regarding property. Can you sell property before settlement??

(If yes - its like a T+3 equivalent)

Eg. Buy property now (today). 120 days settlement. Pay a deposit. Sell in 60-90 days?? Can you do that??


----------



## wayneL (10 February 2007)

Julia said:
			
		

> "Property values always revert to mean of value.  "
> 
> Piffle.
> 
> ...




Julia

Such intelligent response backed by logic, history and statistics.

Well done (not)


----------



## wayneL (10 February 2007)

tech/a said:
			
		

> Some "Get it"
> 
> Hi Julia./Nomore4s
> 
> ...




Steeled by reinforcements arriving, you have regressed to insults.

You sir, should give yourself an uppercut.


----------



## Dr Doom (10 February 2007)

nomore4s said:
			
		

> One thing I've found/learnt from dealing with builders and developers is that now is the best time to look for opportunities, cause in 10,20,30 years we'll be saying I should've brought back then or if I'd only taken advantage of that or this opportunity. Prices now are not as cheap as 10,20,30 years ago. So like tech/a said what is the mean value?




Not having a go at you nomore4s, but just wondering if this is entirely correct in the context of relative affordability. It's probably been argued somewhere else in here, maybe in this thread, but has anybody compared what it takes to buy a house now relative to the average wage, and what it took say 30 years ago relative to the average wage?. Or is this ratio adeqautly explained with the affordability stats that come out every so often?.

As well as that ratio (ave wage to ave house price), has anybody correlated the percentage of loan amount to total price and percentage of wage going  toward mortgage re-payment?. 

So we have 3 variables which together should give us a relative gauge as to whether now is the most opportune time to buy, or to wait for such a time in the future?. 

Comparing to (say?) 30 years ago (are they the same ratios) - 

1) Average house price compared to average wage (rising?)
2) Percentage of mortgage to total house cost (rising?)
3) Percentage of wage going towards mortgage repayment (rising?)

If the ratio's are rising (have risen) then buying today, maybe, is not a good time (relative to historic values), unless you have to buy out of neccesity.

Does that make sense?.

Also, on another topic, there is plenty of land to build houses on (around Sydney at least) it's just that we (the government?) have to decide if we want to use it as productive farmland or sterilise it as housing, and provide the neccessary increasingly costly infrastructure that nobody wants to pay for.


----------



## noirua (10 February 2007)

My own view is not to get fixated, as the Aussie House price scene may well be similar to that in the US, but, much of the rest of the world is still booming, in the property sector. 

Melbourne is a case in point, where rents are rising and house prices are falling. The $600,000 - $1,200,000 price range is seen to be the one to follow. Follow? - yes, because most of the investment cash is going into stocks and shares. The turning point will come as Australia moves increasingly to the "buy to let" investment property scene. 

Taking a 10 year investment view, get ready to buy the sector, but not under $600,000.


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## nomore4s (10 February 2007)

Dr Doom,

I agree in part to what you are saying, the ratio of current average house prices to average wages is probably high compared to historic values, but doesn't that strengthen the arguement that houses aren't as cheap as they were 10,20,30 years ago?
There is also no guarantee that it will return to historic values(I'm not saying that it won't either). There will always be data out there that will put people off buying, but does that mean you just sit back and wait for something to happen? What happens if it doesn't happen? 
I realise there are alot of overpriced properties around at the moment, all I'm saying is there is also alot of good opportunities as well.


----------



## bingk6 (10 February 2007)

nomore4s said:
			
		

> Dr Doom,
> 
> I agree in part to what you are saying, the ratio of current average house prices to average wages is probably high compared to historic values, but doesn't that strengthen the arguement that houses aren't as cheap as they were 10,20,30 years ago?




Yes and Yes, however this current high average house to average wages ratio cannot continue to increase indefinitely. After all, in the majority of cases, mortgage repayments are draw from wages and if wages grow at a slower rate (% wise) than property prices, then there WILL come a time when the amount that people can (or are prepared) to borrow would have a dampening effect on future growth in property prices.


I suspect that when WayneL referred to property prices revert back to the mean, he was referring to the average house to average wages ratio and NOT the absolute house pricing. The average house to average wages ratio gives an indication as to the ease with which people are able to service their mortgage. A high historical ratio indicates a high pain level and if its at a sufficiently high level will start to put a lot of families off property.


Adding to that argument is that from a rental point of view, the rental yield is not all that flash either. USing Realist's example (which is quite common in Sydney, baring some inner city suburbs), his landlord is receiving 2.8% rental yield (and that is before real estate agent fees, outgoings, council rates, insurances etc etc). Yet he is paying close to 7.5% on his mortgage. SO unless he is very bullish on property prices, he could find himself going backwards real FAST.

Investment in any asset class requires Due Diligence and there are right and wrong times to enter any investment. My own feelings are that property prices will get worst before they get better and therefore will be looking elsewhere for my investment returns until such time as the average house to average wages ratio returns to a more sensible and sustainable level.


----------



## wayneL (10 February 2007)

bingk6 said:
			
		

> I suspect that when WayneL referred to property prices revert back to the mean, he was referring to the average house to average wages ratio and NOT the absolute house pricing.



Yes. Apologies if that was not clear.

I am still open to the idea of nominal falls however... depending on on a whole bunch of factors. We are seeing that already in parts of the prime US markets.

Whether that happens here remains to be seen. It is a possibility, no matter how unpalatable that is to investors.


----------



## tech/a (10 February 2007)

> Yes and Yes, however this current high average house to average wages ratio cannot continue to increase indefinitely.




*Bling6* OF COURSE IT CAN

Below is WHY and HOW it will.

*Wayne* its not an insult its an observation.

Some get it some dont.

*Back to your case of this mean of wage average/house price.*

*(1) * There will always be a side of the market where the demand will be high for first and even second home buyers.This market will and is being catered for.

(a) Suburbia is moving further away from the city centers.

(b) Housing product is moving away from brick more into blue board and some plastics products like hardie,s wall claddings.

(c) Buildings are getting smaller developers are looking at duplex housing and often community title 3,4,5 on a block which used to the the 1/2 acre.

(d) You have investment in the UK---just lately they are importing kit housing from Belgium ---build it yourself from foundation to structure to kitchen to flooring.

(e) Inner city is no different I saw programme on Fox where a 30 apartment complex was built in 10 days---start to finish!

(f) Housing will and has become smaller --- even micro in inner city.


*(2)* Pricing for higher standards of housing will *REMAIN HIGH NEVER * reverting to the "Mean".

Again you've invest in the UK.

(a) For the first time *EN MASS* we are going to enter the age of OLD MONEY. First home buyers in general will struggle in the above. In most cases when their parents pass on there will be old money now combined with the new at 40-60s for most. Where will they go?

(b) You bet they'll want more room bigger housing more luxurious surroundings---*the POPULATION is AGING*---so demand will INCREASE not decrease---thats WHY much property in sought after areas both in size and quality has risen so quickly and will remain so.---"They dont make more Esplanade Property close to city centers"---is ONE demand area which I like in SA.

(c) *To now combine that with your mean wage/housing ratio*
These buyers DON'T have to freehold the house---OLD money will give them the equity in the home for affordability.


Wait and be left behind or be innovative and go where the money is?

AND go there OFTEN!!

Come on people give me some real ammo on why every young undercapitalised person is doomed!!

Simply they JUST DONT GET IT.


----------



## krisbarry (10 February 2007)

tech/a said:
			
		

> Once in 30 yrs!
> 
> Well Im 53 and been through 4 of them.
> .




The difference with this boom was it was a mega super boom.

Just like the drought we are having now, it is a super mega drought.

No doubt you can still make money in proerty and still make good returns, but come on you and I both know that the returns see in the last 4 or 5 years are coming off the boil and returning to normal.

Property runs in cycles of mini booms and bust, then we get the mega boom, and now its a mega bust.


----------



## tech/a (10 February 2007)

*“Playing it safe is what’s risky, because nothing new comes out of it”     Clint Eastwood   Lon. Times   Dec  06*


----------



## Bronte (10 February 2007)

A great quote tech/a.
We are very pleased that we are not 'Playing it safe"
Sitting on the sidelines waiting for something to happen.
We are all going to die.  
70 / 75 if we are lucky  
How long should you wait?

By the way what are you doing for your birthday tomorrow? :birthday:
(11th Feb was also my recently deceased fathers b'day)


----------



## Julia (10 February 2007)

bingk6 said:
			
		

> I suspect that when WayneL referred to property prices revert back to the mean, he was referring to the average house to average wages ratio and NOT the absolute house pricing. The average house to average wages ratio gives an indication as to the ease with which people are able to service their mortgage. A high historical ratio indicates a high pain level and if its at a sufficiently high level will start to put a lot of families off property.



My comment of "piffle" was made on the interpretation that Wayne was talking about absolute house pricing in which case I didn't think it required any statistics to back it up and still don't.  If the above difference had been clear then I wouldn't have made that comment because I simply don't know enough about it.  OK, Wayne?

Julia


----------



## tech/a (10 February 2007)

> We are all going to die.
> 70 / 75 if we are lucky
> How long should you wait?
> 
> ...




Hmm how apt!

Got a phone call from Mum this morning---still going strong---her sister died over night.

You know there are 2 biggies in life.

Birth and Death
We just fill in the time in between.
Its how and what you do that time that determines wether it was a life worth living.And in this country we are lucky enough to be able to determine our OWN destiny---some dont have that luxury.
Now that can be in many different forms other than wealth creation.

There are many like Bronte,Myself and quite a few others that *dont* wish to look back at life and say----

*I wish I'd tried that!!!*

I do even now!
Thanks for the best wishes


----------



## professor_frink (10 February 2007)

Sorry for not quoting the entire post, but this was the only bit I want to comment on



			
				Tech/a said:
			
		

> Come on people give me some real ammo on why every young undercapitalised person is doomed!!




Quite simply they aren't. Not all young people are doomed(unless they resign themselves to that fact like Stop The Clock has, 
but that's a completely different topic). I know quite a few my age(26) that were able to take advantage of the most recent boom, and other's 
like myself are starting to look at entering the property market, now that houses are more reasonably priced(well,in my area anyway)

Hopefully will have bought a house by the middle of this year, and I'm not worried if I get in a little early and 
prices still fall a bit. I'm getting to the point where I don't particularly care if there is a "mega bust" or not-I 
consider prices to be quite reasonable in my area, and I'm gettin to the point where I want in!

Stop the clock,
If it all goes horribly wrong and I lose my money in a mega crash, I'll come back for the I told you so speech, I'll deserve it after you've been 
posting about it for all this time!

If it works out, you can come pitch your tent in my backyard


----------



## theasxgorilla (10 February 2007)

tech/a said:
			
		

> (a) For the first time *EN MASS* we are going to enter the age of OLD MONEY. First home buyers in general will struggle in the above. In most cases when their parents pass on there will be old money now combined with the new at 40-60s for most. Where will they go?




Tech/a, your insight into this entire situation is refreshing.  This observation struck me the most and within it I believe is a solution that too few people consider.

Family.  Learn to get along with them, learn to do business with them, learn to invest with them.  It is going to become increasingly difficult to rise above the challenges of high house prices as a sole family unit.

For decades the immigrants to our shores have operated in this way and they are serving our butts to us on a plate in this space.  Perhaps when your government is corrupt or communist or dictatorial or whatever else made prosperity for the masses impossible in the old country, and you arrive in a place where money is _plentiful_ and everything seems so _fair_ and _transparent_ and _possible_ then, as tech/a says, YOU GET IT and YOU JUST GET ON WITH IT.

Don't believe me?  Ask a second generation Greek what they thought when they went back to the village.  Then ask them why, if it was so beautiful, that they didn't stay?  Ask the same thing of a second generation Indian...or even a first generation Indian who has migrated here.  When the Indian economy is thriving and the share market has gone up 10x in a few years, ask them why they didn't consider moving back.


----------



## Mofra (10 February 2007)

wayneL said:
			
		

> There are people right now in the US UK and Aus who are in dire financial trouble because they took the "opportunity"... especially in the US where some folks have lost hundreds of thousands in the crash that is in progression there.



Wayne, 

I am fortunate enough to receive a multitude of data through my employment on housing defaults. Mortgage Insurers have reported over a 150% jump in defaults for insured loans (figures are comparing Decmbers 05 & 06). One weekend in January had a ridiculously high figure for mortgagee auctions in Sydney (over 30% of cleared properties were mortgagee auctions).
On the face of it (and really, by most definitions) this constitutes a bear market for housing, _however_ the figures made public never seem to provide a breakdown of the housing types that are being hardest hit:

a. Metro locations: established suburbs where the overwhelming majority of owners are living in the property in major cities
b. Properties where the valuations were inflated by recently completed improvements to the property
c. The balance sheets/A&L summaries of the mortagors showed a significant proportion of them were largely debt free.

For mine, point c is the sticking point. As a lender to high net worth clients, I find the hardest deals to get accross the line are those who are highly geared _for investment purposes_ - insurers apply harsh restrictions to these clients, but being financially savvy I tend to look upon them more favourably. Of course, experience with obtaining and managing good debt can only help the ongoing maintenance of loan requirements.

I am personally bucking the trend and am looking to purchase an investment property in the next 6 months - my gearing levels will, for mortgage purposes, be less than half of what I can afford because the greatest opportunities (and rental growth) in the areas I am looking at appear to be in the bottom end of the market. This is, of course, the sector most effected by the rental squeeze, exagerating the opportunity 

There are still opportunities in the market, despite the bear market label being absolutely correct. It just appears that the are less total opportunities available, making the research a little more difficult.

Cheers


----------



## theasxgorilla (10 February 2007)

Stop_the_clock said:
			
		

> Property runs in cycles of mini booms and bust, then we get the mega boom, and now its a mega bust.




This is a very one-dimensional assessment.  Australia is a very rich country.  What if your reference points are all wrong?  What if the wages don't adjust upwards to close the gap to mortgage repayments...what if the middle class in this country has had a permanent adjustment down in living standards, and as tech/a says, the OLD MONEY are the new (middle/upper)-middle class ie. them with the guts to have taken a chance some decades ago when none of what has happened was yet written.

The social ladder in Australia might be longer than it was 20 years ago and the bottom rungs a bit lower (and based on how I see many CEOs being compensated I would say that the top rungs are MUCH higher).  And what do you think George Bush whispers into John Howards ear during those dinners at the White House? "Hey Johnny, if you let heaps of immigrants in you'll have cheap labour to mow your lawns, tend your gardens and keep your houses when you're all too old and rich to do it yourselves".  But when you pick up one end of the stick, you get the other end too.  Once in the population these immigrants can climb the ladder too, and the rules are the same for them.  Why aren't they all complaining??  They're too busy competing and GETTING ON WITH IT.

If this is the case, then your mega bust is fiction.  Frankly I can't see where a mega bust will come from when there is so much money sloshing around in this economy.  Even with 6.25% interest rates the RBA can't soak up enough of the excessive liquidity in the money supply, and so house prices (among other things) keep on rising.  There is still so much money sloshing around!

On a side note, if people are concerned about wages vrs repayments... lowering house prices is just one solution to this _imbalance_  (??).  But do you think that Johnny Howard and his constituent are going to let wealth be redistributed from their demographic to another when it's known they're all so close to retirement and will need that wealth to live?? Heck no!

If you want a piece of the pie that the baby boomers have your are going to have to fight for it.  Wishing house prices to come down is a very indefinite approach.  Rather work out how to increase my income personally.  House prices are not expensive...they're just expensive for YOU!


----------



## nizar (10 February 2007)

theasxgorilla said:
			
		

> This is a very one-dimensional assessment.  Australia is a very rich country.  What if your reference points are all wrong?  What if the wages don't adjust upwards to close the gap to mortgage repayments...what if the middle class in this country has had a permanent adjustment down in living standards, and as tech/a says, the OLD MONEY are the new (middle/upper)-middle class ie. them with the guts to have taken a chance some decades ago when none of what has happened was yet written.
> 
> The social ladder in Australia might be longer than it was 20 years ago and the bottom rungs a bit lower (and based on how I see many CEOs being compensated I would say that the top rungs are MUCH higher).  And what do you think George Bush whispers into John Howards ear during those dinners at the White House? "Hey Johnny, if you let heaps of immigrants in you'll have cheap labour to mow your lawns, tend your gardens and keep your houses when you're all too old and rich to do it yourselves".  But when you pick up one end of the stick, you get the other end too.  Once in the population these immigrants can climb the ladder too, and the rules are the same for them.  What aren't they all complaining??  They're too busy competing and GETTING ON WITH IT.
> 
> ...





Excellent post there, asx Gorilla!
Very well put.


----------



## nomore4s (10 February 2007)

nizar said:
			
		

> Excellent post there, asx Gorilla!
> Very well put.




Ditto


----------



## tech/a (10 February 2007)

> they're just expensive for YOU!




This is a fact. Not only for Kris (S.T.C) but for many others. Even those who do this as part of their living (Myself) have to re adjust whats "expensive".

People in Sydney think our Esplanade properties are a steal/same with inner city.So where are they parking $$s---in Sydney? You can buy 3 houses here for the price of one.A 15% rise is the same here as there---but who's likely to get it? Whos taking less risk---those in Sydney or those investors FROM Sydney.

So you cant afford Adelaide.---Look country.

Why is it that the majority of Posters here follow the Smalls?
I'll guess.

(1) They can make 30-50% in a few weeks even days.
(2) They're cheap I can buy more.
(3) Everyones doing it.
The parellels in the Stock market and the Property market are certainly there.

Just as you look for value in stocks---your gem may well be anothers disaster.

Start at the beginning NOT in the middle.
I'll bet those with fore closures started in the middle!!

Think about it.


----------



## Dr Doom (12 February 2007)

In general I think the thread topic cannot be discussed satisfactorily or to a conclusion due to the disparity between the markets around the country at the moment. If you take Sydney & Melbourne, for eg, should/could we take that as a 'mature' market and as a possible future direction for other markets like Perth now & Adelaide soon?. You could say that, generally, the Sydney market has stagnated for around 3 years now?. Which means that as the other markets 'mature' they will face the same fate. That is, there comes a point where the prospect for meaningful gains diminishes, as the best gains _in this cycle_ have been made.
If you take 'maturity' to be when wages & salaries are unable to service mortgages above the average mortgage then the market comes back to some sort of equilibrium I assume?.

As each city/area gets to this mature (consumer pain threshold?) level then house prices in Australia generally will 'stagnate'?. Or, to put it another way, for those advocating the 'getting on with it' approach what drivers are there to drive Sydneys average house prices higher, because it will always be limited to peoples ability to service their loans. And, what does the record level of loan defaulters imply for the market ?. Possibly that as each level of house price points are breached more borowers will be unable to pay back thier loans. A previous poster implied this level to be currently around $600k, as under this the market was past maturity & in decline.

This is a general statement as obviously there are good investments to be made even in mature markets.


----------



## theasxgorilla (12 February 2007)

The ultimately irony of this entire thread is that the title itself implies that housing should become more affordable IF you continue to develop your earning ability...so why give up now?


----------



## krisbarry (12 February 2007)

Dr Doom said:
			
		

> In general I think the thread topic cannot be discussed satisfactorily or to a conclusion due to the disparity between the markets around the country at the moment. .




Maybe its time this thread was closed down too, its runs its course, and we are all just rehashin the same old stuff.


----------



## tech/a (12 February 2007)

Stop_the_clock said:
			
		

> Maybe its time this thread was closed down too, its runs its course, and we are all just rehashin the same old stuff.




I agree.
Those that do well out of property will always be on one side.
Those that dont---the other.

*BOTH are correct---Both succeed well in their chosen stance.   *


----------



## Bronte (13 February 2007)

Average House price hits 200,000 UK Pounds
No Slowdown as yet!

http://news.bbc.co.uk/2/hi/business/6353321.stm


----------



## KIWIKARLOS (13 February 2007)

perhapes with rental prices set to soar it will attract more investment into housing and potentially give the market a small leg up another factor than may influence pirces in years to come could occur when the mining boom slows. There will be alot of people from WA and QLD with big dollars looking to relocate where to new work or just move out of the desert to a more comfortable environment. Pure speculation


----------



## wayneL (16 February 2007)

Bronte said:
			
		

> Average House price hits 200,000 UK Pounds
> No Slowdown as yet!
> 
> http://news.bbc.co.uk/2/hi/business/6353321.stm




http://www.express.co.uk/news_detail.html?sku=1218

UK Market about to roll over



> TOP STORIES
> HOME LOAN RATES TO SOAR AGAIN
> 15/02/07
> By Graham Hiscott
> ...


----------



## wayneL (16 February 2007)

Should be 230% not 230 times. But RICS is used to exaggerating  

http://firstrung.co.uk/articles.asp?pageid=NEWS&articlekey=4057&cat=44-0-0



> Affordability is 230 times worse for first time buyers than ten years ago - RICS
> 
> RICS' "accessibility index" has found that nationally, constantly rising house prices has meant that accessibility is around 230 times worse than it was ten years ago, and currently as low as 1980.
> 
> ...


----------



## Dr Doom (16 February 2007)

As each week goes by and more information comes out regarding global housing markets it becoming clearer that there is a growing disconnect with what is happening between financial markets and housing markets, so much so that either market will have to re-adjust at more than 'a measured pace' ie a big correction. 

The evidence is such that consumers are being squeezed from multiple directions, mirroring the case in Australia with mortgage interest rates and rents rising. The revelation by HSBC that they underestimated their bad sub-prime loans is but the tip of the iceburg. 

Some negatives for the US, derived from the real estate bust domino effect - 
- as a general measure of how well the US is doing, last qtrs GDP will be revised down by a substantial amount. 
- Capital is leaving the US at record levels
- U.S. industrial production fell in January by the largest amount since Hurricane Katrina devastated the Gulf Coast in September 2005
- Ben Bernanke

The other side of the coin is that the 'goldilocks' bull markets haven't yet priced a hard landing for real estate into the equation yet, preferring to have financial pareidolia.

I think we can forget about stagnation, how about a hard landing?. I'm not 'getting it' yet.


----------



## Dr Doom (16 February 2007)

And closer to home........(emphasis added)

"THE Perth house price boom has ended and Sydney has fallen deeper into the red as the property downturn continues to bite, with analysts predicting months more pain for homeowners.
House price growth in Perth slowed to just 1.7 per cent in the December quarter, with property prices in the city now growing at the fourth-slowest rate in the country, according to Australian Bureau of Statistics figures.

In Sydney, median house prices fell 1 per cent in the quarter - reversing slight gains made earlier in the year - as the impact of last year's three rate rises was digested by the nation's weakest property market.

Housing Industry Association chief economist Harley Dale said housing affordability in NSW remained the lowest in the country, but flat or falling prices were slowly attracting first-home buyers and investors back into the Sydney market.

Mr Dale said the effect of last year's interest rate rises would continue to dampen house price growth until at least June.

National house price growth slowed to 0.9 per cent in the December quarter, resulting in annual growth of 8.3 per cent.

That slowdown was driven by the cooling Perth market, which had delivered total house price growth of 34.6 per cent in the first three quarters of last year as the state rode the resources boom.

Elsewhere in the country, house price growth remained relatively subdued in the December quarter except in Brisbane and Darwin, where prices grew by a respectable 3 per cent.

"We expect Brisbane will lead the housing recovery over the next two years," BIS Shrapnel senior analyst Jason Anderson said yesterday. "Brisbane is where rental growth has been strongest, it's where pressures are greatest and I think that's showing up in this price growth."

*Mr Anderson said Perth prices were likely to fall 1 per cent this year because that market had "overshot" during the boom.*

Macquarie Bank head of property Rod Cornish said interest rates were expected to remain on hold this year as inflation pressures eased.

And he predicted the Reserve Bank would probably cut rates early next year in an attempt to stimulate building activity in the floundering NSW and Victorian markets.

Mr Anderson said Sydney would remain a two-tier market, with house prices in the city's struggling outer-western suburbs expected to fall as much as 5 per cent this year, while inner-city areas could show slight growth.

"There's still this tug of war going on between what buyers are asking and what people are prepared to pay," he said.

*In a sign of the weakness in Sydney's outer suburban housing market, Stockland - Australia's second-biggest property group - last week revealed only 96 of the 1900 blocks of land it had sold in the past six months were in NSW*."


----------



## Dr Doom (16 February 2007)

....and one more......

http://www.afraccess.com/Index_mxml.html?URL=ATL://20070215000018546104


----------



## Bronte (17 February 2007)

Bronte said:
			
		

> Has anyone heard of the Scarborough Environs Area Strategy Project (S.E.A.S) ?
> We bought luxury Scarborough Beach W.A. apartments back in 2001
> Same story: "Rents just keep flying ahead".



Just out of interest:
The West Australian newspaper is reporting today that:
Scarborough was the 'Top Performing WA Suburb' for the December 2006 quarter.
With a whopping *17.9%* increase just for the December three month period.


----------



## wayneL (18 February 2007)

Bronte said:
			
		

> Just out of interest:
> The West Australian newspaper is reporting today that:
> Scarborough was the 'Top Performing WA Suburb' for the December 2006 quarter.
> With a whopping *17.9%* increase just for the December three month period.



It is also reporting that 118 suburbs have gone *DOWN*.


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## Bronte (18 February 2007)

Yes this is true Wayne.
*Not even half* of Perths suburbs (118 of 277)
We are surprised it wasn't more, after such an increase.


----------



## wayneL (18 February 2007)

Bronte said:
			
		

> Yes this is true Wayne.
> *Not even half* of Perths suburbs (118 of 277)
> We are surprised it wasn't more, after such an increase.




Not a bad start to the crash though... could be a gen-u-wine blow off top.

Yankee bubble markets in deep doo-doo. London showing slight falls - BTL in trouble. East coast Oz stagnant/down. West Coast blow off top.

Hark! Is that thunder I hear?

N.B. Expect some government pani... errr, plan to prop up house prices.


----------



## rockingham178 (18 February 2007)

wayneL said:
			
		

> Not a bad start to the crash though... could be a gen-u-wine blow off top.
> 
> Yankee bubble markets in deep doo-doo. London showing slight falls - BTL in trouble. East coast Oz stagnant/down. West Coast blow off top.
> 
> ...




WayneL
The largest reported "drop" was 8.4% with most under 6%.......put in perspective with an average increase over the previous 12 months of 39% I would hardly term this a sell off "panic" situation. The same paper analysts are forecasting a "return to normal growth" of around 2% per quarter.

Also factor in Eric Rippers gaff of announcing "the possibility" of stamp duty cuts in the next budget in June causing a significant drop in first/new home buyer purchases. 

There is no major panic sell off or ongoing major drop in Perth
property prices, there is a levelling off which is healthy. The papers just love to dramatise and report only selected information rather than balancing the picture. The West is no exception.

My disclosure I invest in property and will continue to do so.


----------



## Smurf1976 (18 February 2007)

rockingham178 said:
			
		

> WayneL
> The largest reported "drop" was 8.4% with most under 6%.......put in perspective with an average increase over the previous 12 months of 39% I would hardly term this a sell off "panic" situation. The same paper analysts are forecasting a "return to normal growth" of around 2% per quarter.



But it is very clearly a sharp change in trend from up to down.

As for a return to "normal" growth of 2% per quarter, I assume those analysts are expecting wages to do likewise or interest rates to fall?


----------



## clowboy (18 February 2007)

wayneL said:
			
		

> N.B. Expect some government pani... errr, plan to prop up house prices.




You mean like buying 40% of the house with the first 3000 first home buyers that apply?

I have a friend that applied "just so that he is in the que" and he said that he is numder 600 something.  The next day there was over 3000 applicants registered.

That should hold the market up for a qrter or two.


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## tech/a (18 February 2007)

*Lets try another tact.* 

Rather than convince the Bears of the property market that it doesnt matter if it falls on its butt,if you have taken the appropriate due dilligence and invest in property professionally. Lets agree.

Well the market is definitely coming off all over Australia.
*Excellent opportunities are becoming available.*

(1) Land parcels easier to buy. Offers more likely to be accepted.
Even better JV's with land vendors mean no money down for the land component of a development.

(2)Sell off plan and dont start development until costs covered.

(3)Hang on----That means I dont need $500,000 capital or equity to do a reasonable development!----

(4)No wait a minute---too much risk!!!! Havent got the guts--Easier to moan.

Yep housings getting smashed.Best to watch the carnage.


----------



## theasxgorilla (18 February 2007)

tech/a said:
			
		

> invest in property *professionally.*




I think I've spotted a keyword in tech/a's post.


----------



## wayneL (18 February 2007)

tech/a said:
			
		

> (4)No wait a minute---too much risk!!!! Havent got the guts--Easier to moan.




Interesting some property bulls make these nasty comments about property bears. I think it says much about them  

FYI There are plenty of property professionals OUT of the market for the moment. (Not making further purchases) because of valuation considerations?

Are they moaners and gutless? It's fine to disagree and make opposing points, but stop being a w@nker tech and have some respect for opposing opinions. 

Rockingham (and others) has made his opinion plain for all to see without insulting anyone

FFS!!!!

Gorilla,

Not everyone wants to be a property professional. Most folk just want to buy a house at reasonable historical value metrics. I support them in this.


----------



## robots (18 February 2007)

hello,

people have to realize these prices are fair, not inflated or overpriced

things havent crashed but increased

get in now in quality unit or house, save hard, i didnt get it on a plate nor did Tech or most of us I would say

times are different dont get sucked in by history repeating itself and those promoting it, everything is different, lets see

16mths on for this thread, no crash 

thankyou
robots


----------



## tech/a (18 February 2007)

> Interesting some property bulls make these nasty comments about property bears




Professionals in ANY business are neither bullish or bearish.
I'm neither---Property/Trading/Business. I dont care how others percieve conditions.I'll do business as best I can in whatever I'm doing given whatever is dished up.

Professionals go about business given the conditions dished up to them.
I dont know of any PROFESSIONAL property developer/s who are out of the market.

Land SA make my investments look like a trip to the deli.
The latest release is 5000 blocks.
Hickenbothams (builder) one of our clients have just opened a 300 block subdivision and selling houses on their land and building them as fast as council will approve them.

Wayne the people you speak of arent professional.
They dabble in property. Its not their principal scource of income.
Those of us who are small---professionals look for those opportunities the huge players overlook.For them its not profitable to build a 5-10 apartment developement---but demand dictates opportunity. We fill a hole and service a need.

All jokes aside pro developers who read this thread would simply shake their heads.

Doesnt matter what industry you chose there will always be adversity.
Take the Fuel crisis.Did Toyota roll over and stick up the white flag?
Did the weaker players get taken out or forced to adjust their ways of thinking and doing business?
Did the car industry sit back and say time to stop manufacturing?
Did car dealers stop selling cars?

Opportunity---Identify it.
Opportunity---learn how to take advantage of it.
Opportunity---Take it!

Sure I get frustrated when I see constant excuses why this or that cant happen and how unfair life is.

This is the greatest counrty on earth ANYONE can succeed all it takes is effort.

Most choose to be victims of circumstance---its easier in the SHORT term
but life becomes more difficult in the LONG term.

Just look at most long term un employed who chose to be victims and sat home playing Playstation for anyone of 100 reasons.---easier at 20 harder at 30---lost cause at 40.--their choice!


----------



## wayneL (18 February 2007)

tech/a said:
			
		

> Professionals in ANY business are neither bullish or bearish.
> I'm neither---Property/Trading/Business. I dont care how others percieve conditions.I'll do business as best I can in whatever I'm doing given whatever is dished up.
> 
> Professionals go about business given the conditions dished up to them.
> ...



Once again I must point out the distinction between property investors and property "developer" (traders in SM parlance)

I am a bear *at the moment*. I am also a professional trader. 

Am I out of the market? Nope.
Am I short at the moment? Nope, not one short.
Am I long? Sure.

I'll make money  in any market and I'm sure a professional property developer will also. I would have concerns with liquidity if the poo really did hit the propeller, but I'm sure those sort of contingencies are covered.

Investing is not developing and it's not really fair to consider people who buy houses to stick into a portfolio as amateurs. They're investors (let's presume they do their DD)

Investing is passive. You buy it, collect the yield and watch it grow. Anything else is trading/developing.

By any metric, housing is at the extreme expensive end of the spectrum, no matter who tries to spin it otherwise... let's not delude ourselves.

When it come to property, I am the opposite to what I am in the SM, i.e. an investor. I want to buy at fair value, with a yield at reasonable risk premium and with reasonable chances for growth. I just don't see that at the moment. When value eventually returns (however this is achieved) I will be bullish again, as I was up till about 2002-3.

Funnily enough, being a property bear (and a few familial connections) has opened a monumental opportunity for me in the UK, which I've mentioned before. Amazingly, it is much to do with property... asset management. Part of my remit is to aquire property at value, but my insistence that value is not currently present in the UK market is what clinched it... go figure.



> Opportunity---Identify it.
> Opportunity---learn how to take advantage of it.
> Opportunity---Take it!




You betcha. But diff'rent strokes for diff'rent folks.


----------



## Knobby22 (18 February 2007)

There is definitely a shortage of stock.
I also believe interest rates and inflation are rising at present. So why should the doom scenario happen?

If the government did something about the supply side i.e. advantage builders over investors in tax treatment (this is starting to happen), and also help with the demand side i.e. build low cost housing for the working class and lower middle class in the population sold at a subsidised price like they did in the 60s and 70s (not like it is now with only the problem people being looked after and put together to make more problems), then the builders and populace could both be happy.

I heard some great solutions on "The National Interest" which transmits on ABC Radio National, 12:05 to 1:00pm Sundays. The discussion may be heard fro the ABC website.


----------



## krisbarry (18 February 2007)

tech/a said:
			
		

> Just look at most long term un employed who chose to be victims and sat home playing Playstation for anyone of 100 reasons.---easier at 20 harder at 30---lost cause at 40.--their choice!




True, and it is your taxes that pay for this.  That said...instead of bitching about it, why don't you teach a few of these long-term unemployed the skill sets you have, so they can make the choice to not be unemployed anymore.

You have the power to turn victims into survivors.

Better still, take a few onboard...you own a small business...now here is your chance!


----------



## Knobby22 (18 February 2007)

Stop_the_clock said:
			
		

> True, and it is your taxes that pay for this.  That said...instead of bitching about it, why don't you teach a few of these long-term unemployed the skill sets you have, so they can make the choice to not be unemployed anymore.
> 
> You have the power to turn victims into survivors.
> 
> Better still, take a few onboard...you own a small business...now here is your chance!




Not that simple.


----------



## constable (18 February 2007)

Stop_the_clock said:
			
		

> True, and it is your taxes that pay for this.  That said...instead of bitching about it, why don't you teach a few of these long-term unemployed the skill sets you have, so they can make the choice to not be unemployed anymore.
> 
> You have the power to turn victims into survivors.
> 
> Better still, take a few onboard...you own a small business...now here is your chance!



hmmm..workcover liability is the first thing that pops into my head!


----------



## krisbarry (18 February 2007)

Knobby22 said:
			
		

> Not that simple.




tech/a has a knack to making everything look simple and continually spiels out lines from what sounds like "Anthony Robbins" .  So why should it be difficult for him to take a few of these long-term unemployed people on in traineeships or as apprentices, or even mentor them.

source: http://www.anthonyrobbinsdc.com/


----------



## krisbarry (18 February 2007)

constable said:
			
		

> hmmm..workcover liability is the first thing that pops into my head!




tech/a would have an answer for that, he would find a way


----------



## krisbarry (18 February 2007)

By the way new rules have come in recently that allows companies to take on long-term unemployed people and the government picks up the work cover tab, so there is no excuses now!


----------



## tech/a (18 February 2007)

Stop_the_clock said:
			
		

> tech/a would have an answer for that, he would find a way




*Kris.*

*They have to want to.
They have to have desire.*

The building industry has a high staff turn over.
I hire the staff and its MY STAFF who move those who are less than passionate about what they do---on.

We've had those who start with great gusto and promise only to fall into the __Its a job___ catagory.

The guys in the field work damned hard and get paid well over award rates.
They dont want a slacker getting well over the award rate.

Mind you I have also found some great employees who have walked into our office looking for work.

They are there.
There are those who want to make a difference to their life.

One guy Robert walked in 5 times in a month,A huge man.

He had the desire

"Boss" he said everytime he saw me.
"I know how I look (There wasnt a space on his body that wasnt tattoo'd) and Ive made some stupid decisions but I really want a job with a future"
Rob had been a high ranking Ameteur boxer and had done some time for minor stuff.

I ended up giving Rob a go.
He stayed 3 yrs learnt excavator operation and was a good worker and friend to all his co workers.

He bought a house in that time---something he never dreamt of (he wanted somewhere for his brother and mum to feel safe in) had nothing to do with investment.Mind you it cost him half of what its worth today.

He also travelled to The Himalaya's. Rob was just blown away when he returned.

Hes now operating machines elsewhare but when I caught up with him around Xmas he was a vastly different much more confident man than the one I met almost 4 yrs ago.Mind you I always worried about what methods Rob may employ if he wanted a wage rise!!
From what he told me unfortunately he still does some silly things.

*Wayne*

I see your point and agree with your view.


----------



## krisbarry (18 February 2007)

I am so suprised that tech/a hasn't considered taking onboard long-term unemployed people, he has a wealth of knowledge, a small business, all the skill sets, and the government is throwing bucket loads of cash at business' to take these people onboard.

I see it as a win/win situation!

Take a situation you see around you and instead of bitching about it...be a part of the solution, not the problem.

I would be ever so proud to see tech/a turn a homeless unemployed lost soul into a worthwhile productive member of society and he has the power to do this, and make huge amounts of money along the way

Now that is an oppurtunity of a lifetime!


----------



## theasxgorilla (18 February 2007)

wayneL said:
			
		

> Not everyone wants to be a property professional. Most folk just want to buy a house at reasonable historical value metrics. I support them in this.




I like a quote from one of my favourite 'self helpers' Jim Rohn (inspiration to Anthony Robbins if people are curious):

"Life responds to deserve and not to need."


----------



## krisbarry (18 February 2007)

tech/a said:
			
		

> *Kris.*
> 
> *They have to want to.
> They have to have desire.*
> ...




Ahhh here comes the 100 reason why you won't.

...and here lies the key to the reason why some members of society choose to play playstation and you bitch and moan because they do.

It's a win/win situation!

No one loses, if they don't turn out to be good workers, well hey, you have made money in the process, so how can you lose?


----------



## wayneL (18 February 2007)

theasxgorilla said:
			
		

> I like a quote from one of my favourite 'self helpers' Jim Rohn (inspiration to Anthony Robbins if people are curious):
> 
> "Life responds to deserve and not to need."



I like Jim Rohn. He is the only one I like in fact. Wouldn't P%&$ on Robbins if he was on fire however.

Do you think a family whose breadwinner works in a worthwhile, productive job and earns respectable money, deserves to be able to purchase a house for his/her family at reasonable historical value metrics?

I do. Eventually, "deserve" wins, otherwise social unrest.


----------



## theasxgorilla (18 February 2007)

I'll be honest with you Wayne, I don't know.  If the person who beats your hypothetical bread winner to the punch is a hypothetical ex-blue collar guy who saw the writing on the wall for the manufacturing sector in this country and went off to night school to get a new skill for the new century and ten years down the track he ends up renting his first investment property out to one of his buddies who is about to be laid off in the factory...how much  deserve does each of them measure out?

Do you think wife of ex-blue collar man will let him lower the rent to do a favour for his buddy when it's their lifestyle and their kids up bringing that will be compromised and she experienced first hand the sacrifices her husband made?

I'll borrow another Rohn adage, learn to bring value.  One guy learned how to remain valuable in the new century while the other watched his value diminish until he had so little that he could no longer negotiate.

I'll drop one last quote because Rohn says it a gazillion times better than I could ever hope to:

"Let others lead small lives,but not you.Let others argue over small things,but not you.Let others cry over small hurts,but not you.Let others leave their future in someone elses hands,but not you. not you."


----------



## chops_a_must (18 February 2007)

tech/a said:
			
		

> Did the car industry sit back and say time to stop manufacturing?
> Did car dealers stop selling cars?



Both Ford and GM have really tried hard. Lol!


----------



## dubiousinfo (18 February 2007)

Stop_the_clock said:
			
		

> Ahhh here comes the 100 reason why you won't.
> 
> ...and here lies the key to the reason why some members of society choose to play playstation and you bitch and moan because they do.
> 
> ...




Kris
You just dont get it.

Tech just told you he is hiring people. As is every other contruction company.
It is just that the people he and other companies will hire, are the ones that demonstrate the will and desire to do whatever it takes to succeed. He's not going to go down to the local Centrelink office when Rob is coming to him and showing the sort of commitment he did.

After many years of running commercial construction and property companies, I can tell you that I look for people with the desire and will to succeed before I worry about skill or experience. Regardless of whether it's onsite tradesmen, secretaries, accountants or senior mangement, the desire has to be there.

Skills can be taught (after all its not rocket science) but you can not teach attitude or desire.


----------



## dubiousinfo (18 February 2007)

theasxgorilla said:
			
		

> I'll be honest with you Wayne, I don't know.  If the person who beats your hypothetical bread winner to the punch is a hypothetical ex-blue collar guy who saw the writing on the wall for the manufacturing sector in this country and went off to night school to get a new skill for the new century and ten years down the track he ends up renting his first investment property out to one of his buddies who is about to be laid off in the factory...how much  deserve does each of them measure out?
> 
> Do you think wife of ex-blue collar man will let him lower the rent to do a favour for his buddy when it's their lifestyle and their kids up bringing that will be compromised and she experienced first hand the sacrifices her husband made?
> 
> ...





Great post Gorilla.


----------



## wayneL (19 February 2007)

theasxgorilla said:
			
		

> I'll be honest with you Wayne, I don't know.  If the person who beats your hypothetical bread winner to the punch is a hypothetical ex-blue collar guy who saw the writing on the wall for the manufacturing sector in this country and went off to night school to get a new skill for the new century and ten years down the track he ends up renting his first investment property out to one of his buddies who is about to be laid off in the factory...how much  deserve does each of them measure out?
> 
> Do you think wife of ex-blue collar man will let him lower the rent to do a favour for his buddy when it's their lifestyle and their kids up bringing that will be compromised and she experienced first hand the sacrifices her husband made?
> 
> ...




Been thinking about this...and been thinking why I was a little uneasy about it.

Whilst the general thrust of the post is certainly valid, it doesn't address the fundamental overvaluation of property, which this thread is about. 

The smart guy, in our pseudo meritocratic society would certainly end up with nicer accomodation than the other guy, and that is probably well deserved.

However our other fellow, who could have afforded a modest family home as little as two or three years ago, now (presuming he does not already own) cannot, or certainly not the same accomodation anyway. 

This strikes me as a fundamental imbalance that will surely correct in some way back towards normal value metrics... as all markets do. 

The people Jim was addressing are aiming higher than an average home, yet the property bulls are now expecting above average earnings and/or business acumen to be able to afford the average home.

There is something wrong with that on a number of levels. It is unsustainable and will revert to the mean. (value as opposed to price).

Interesting times.


----------



## tech/a (19 February 2007)

wayneL said:
			
		

> This strikes me as a fundamental imbalance that will surely correct in some way back towards normal value metrics... as all markets do.




Wayne.

These imbalances have occured at least on 2 other occasions nationally in my 50 year lifespan.
The return to balance doesnt and hasnt come about as abruptly as the imbalance. As such those expecting this to happen will be left waiting as the imbalance balances without a discernable change over a number of years.
Those who place themselves in the property cycle will make the gains as balance re distributes but over time. Like looking at the float of CBA and now looking back and saying wow 15 X the initial float---wish Id got on!!



			
				wayneL said:
			
		

> The people Jim was addressing are aiming higher than an average home, yet the property bulls are now expecting above average earnings and/or business acumen to be able to afford the average home.




Well this will happen overtime like it has over the last 50 yrs.
Nothing will change.

*Its not different this time!!*


----------



## Smurf1976 (19 February 2007)

tech/a said:
			
		

> Professionals in ANY business are neither bullish or bearish.
> I'm neither---Property/Trading/Business. I dont care how others percieve conditions.I'll do business as best I can in whatever I'm doing given whatever is dished up.
> 
> Professionals go about business given the conditions dished up to them.
> ...



Totally agreed with your point about taking advantage of opportunity.

But it doesn't answer the question as to what happens next with house prices. Sure, there is an opportunity to develop, buy and hold or stay out of the market etc. But with the exception of the development aspect which most investors aren't going to be doing, you are basically speculating on the house price going up since the yield doesn't make property attractive in itself.

Personally, I can't see housing rising as much as other assets over the next few years simply because it is starting from such a high valuation relative to the fundamentals which support it. I think you could make more profit investing in something else - in recent times even cash isn't doing badly compared to property in many parts of the country. 

If you value houses in something other than fiat currency then a very different picture emerges. They've outright crashed compared to most other physical things - oil, zinc, food etc. It's only the continuing loss of value of the currencies that hides this when house prices are measured in terms of fiat currency.

Long term, borrowing lots of currency at low rates and buying something physical with it is a no-brainer in a world of constant inflation. The question is about what happens in the immediate future. That is, is now the best time to buy or is it better to wait? So far, waiting has done me quite nicely over the past 3 years but that obviously won't continue forever and that's the issue - WHEN to go short the Dollar and long Housing?


----------



## Dr Doom (19 February 2007)

Good post smurf. It's all relative to what else is on offer for investors, and what is affordable for home buyers.

"Investment property lending in NSW has plunged by 38.1 per cent since June, a much greater drop than that which followed the introduction of the ill-fated ``exit tax'' on property investors in that state in 2004.

In a clear sign that the West Australian property boom has run out of steam, investment property lending in the state has plunged 37.1 per cent in six months. In most other states it has dropped by about 20 per cent. "

http://www.news.com.au/business/story/0,23636,21224392-37037,00.html 

The general view, even among the pro's, is to wait until July for some sort of magical turnaround... when people will start withdrawing their super to buy property?.

Isn't the problem that vacant land is just too expensive, at over $340k in Sydney?. 

Tech/a, would you buy one of these blocks?. Then build a home, costing say $250k, so we're getting up to $600k plus with fees etc, & then you still have a mortgage to pay off. 

People are being squeezed and it's starting to hurt. The cycle has turned.


----------



## theasxgorilla (19 February 2007)

wayneL said:
			
		

> Whilst the general thrust of the post is certainly valid, it doesn't address the fundamental overvaluation of property, which this thread is about.




I didn't join the dots very well.

The guy who re-invented himself doesn't find property over-valued.  It's all relative, as other recent posters have also stated.

Thomas Friedman writes about this scenario in his book, "The World is Flat".  While unions are protecting the wage levels of old professions and many here seem to expect that property prices will come back _down_ to be more affordable relative to these wages...there is another scenario IMO.

The old jobs will continue to receive union negotiated pay increases which barely keep pace with inflation, whilst the new professions receive pay increases more in line with the rate at which property prices are advancing.

Longer term its going to be more beneficial for the individual to identify a new profession that will allow them to become valuable and hence make property prices seem less over-valued, relative to them.  If you don't believe me...that's okay.  The forces at play here are global in scale and greater than our mere 20 million populous can do much about.


----------



## legs (19 February 2007)

What the hell has any of this got to do with stagnating house prices...get a bit carried away did we?


----------



## theasxgorilla (19 February 2007)

legs said:
			
		

> What the hell has any of this got to do with stagnating house prices...get a bit carried away did we?




After 47 pages of a thread...what do you expect?


----------



## Smurf1976 (19 February 2007)

theasxgorilla said:
			
		

> I didn't join the dots very well.
> 
> The guy who re-invented himself doesn't find property over-valued.  It's all relative, as other recent posters have also stated.
> 
> ...



I can see your point, but we'll still be needing doctors, engineers, police, tradesmen etc in the future so us all simply moving to a new career isn't an option. By definition the average worker can't "trade up" to a better position unless the economy moves away from lower paid work as a whole.


----------



## chops_a_must (19 February 2007)

theasxgorilla said:
			
		

> The old jobs will continue to receive union negotiated pay increases which barely keep pace with inflation, whilst the new professions receive pay increases more in line with the rate at which property prices are advancing.



Historically, collective bargaining agreements raise wages above that of workers negotiating on their own. That's why employers don't like it.

The case in point being women in the workforce. Women have a lower union representation in the workforce than males do. Wages for women have FALLEN 3% in the last year. End of story.


----------



## Broadside (19 February 2007)

House prices are completely out of whack with earnings which makes them fundamentally overvalued by historical standards.  Has there been a paradigm shift which means we can dismiss historical measures of affordability?  I don't think so.  So either earnings need to increase dramatically which is going to be massively inflationary with severe repercussions for the economy and interest rates, or house prices need to fall or at least stagnate for a time while wages play catch up.

I don't subscribe to the "this time it's different" theory, house prices are like any other asset class and sooner or later fundamentals will kick in, hard.


----------



## Rafa (19 February 2007)

Broadside said:
			
		

> I don't subscribe to the "this time it's different" theory, house prices are like any other asset class and sooner or later fundamentals will kick in, hard.




I may be wrong, but surely, 'this time is different' means, this time housing will actually crash!

I mean, there have been many booms, followed by plateaus, then followed by another boom... (not adjusted for inflation, i am talking absolute figures here...)

When was there a time in Oz when house prices actually fell substantially?
Why should this time be any different?

I have to say, its you guys saying the market is going to crash, that are the ones hoping for it to be different this time...


----------



## Broadside (19 February 2007)

I actually think we will see a plateauing or moderate decline rather than a crash, but the longer it defies gravity the harder the potential fall....there was a fairly severe fall in the early 90s when many people had negative equity in their homes.


----------



## theasxgorilla (19 February 2007)

chops_a_must said:
			
		

> Historically, collective bargaining agreements raise wages above that of workers negotiating on their own. That's why employers don't like it.
> 
> The case in point being women in the workforce. Women have a lower union representation in the workforce than males do. Wages for women have FALLEN 3% in the last year. End of story.




Maybe so, but when property prices boomed out of the low in '97, which industry sectors saw their wages growing in line with the boom in prices?

You refer to collective vrs individual...I'm refering to non-unionised sectors eg. IT, accounting, finance, real estate, self-employed trades people etc.


----------



## chops_a_must (19 February 2007)

theasxgorilla said:
			
		

> Maybe so, but when property prices boomed out of the low in '97, which industry sectors saw their wages growing in line with the boom in prices?
> 
> You refer to collective vrs individual...I'm refering to non-unionised sectors eg. IT, accounting, finance, real estate, self-employed trades people etc.



Then you can't make the comparison. It's like saying a workplace with mandatory union membership has higher wages than the zero workers on the site without a union. It doesn't make sense.

Even workers in the boom industries (like home building) have had increased wages for unionised workers substantially higher than those without.

It's all well and good to say that these builders need a new profession to move into, with wages that keep pace with inflation. But you are still going to need the people to build the houses that allow the rise in wages for the new professions that you are talking about.


----------



## theasxgorilla (19 February 2007)

chops_a_must said:
			
		

> It's all well and good to say that these builders need a new profession to move into, with wages that keep pace with inflation. But you are still going to need the people to build the houses that allow the rise in wages for the new professions that you are talking about.




I didn't say any of this.

I don't think wages that keep pace with inflation is the objective...thats why people are in this predicament in the first place.  Wages need to keep pace with house prices or affordability suffers...this is what we're stating isn't it?


----------



## wayneL (19 February 2007)

Rafa said:
			
		

> I may be wrong, but surely, 'this time is different' means, this time housing will actually crash!
> 
> I mean, there have been many booms, followed by plateaus, then followed by another boom... (not adjusted for inflation, i am talking absolute figures here...)
> 
> ...



This is an interesting point.

In my involvement in property markets during "busts" I have noticed a strange divergence between the indicies and actual empirical examples.

I can state categorically in the places I have lived in at those times, e.g. early 90's, prices did indeed fall on individual properties... and in enough cases, and by enough dollar value, that it should have mattered to the indicies.

But the indicies stayed flat  

I should state this was in fairly premium areas, not just average suburbs.

I have never been able to explain this, apart from the role of gentrification in placing an upwards skew on indicies.


----------



## Dr Doom (19 February 2007)

theasxgorilla said:
			
		

> I didn't say any of this.
> 
> I don't think wages that keep pace with inflation is the objective...thats why people are in this predicament in the first place.  Wages need to keep pace with house prices or affordability suffers...this is what we're stating isn't it?




I think that's exactly what those who do not think it's a good time to buy a house at the moment are saying. Generally, what the pro argument is saying is that the conditions that have given rise to the gains of the last few years in each market will continue, when it is plain to see that each market has matured, plateaued, and is now waiting to see what comes next. Now if economic cycles count anymore then, as shown in the affordability stats, rising rents, rising interest rates, then sometime down the track then the odds are more skewed towards a cleansing recession to 'purge' the system of exuberant liquidity than to a continuation of rising house prices.


----------



## Rafa (19 February 2007)

wayneL said:
			
		

> This is an interesting point.
> 
> ...
> 
> But the indicies stayed flat




Is this becuase of bad data, or is it because the way the median house prices works, a few fire sales here and there don't really move the price much...

And do a few fire sales here and there matter anyway...?

My statements are based on the indices... and I guess you can see when I say, its you guys saying the markets gonna come crashing down, are actually the ones hoping that 'this time is different'!


----------



## wayneL (19 February 2007)

Rafa said:
			
		

> Is this becuase of bad data, or is it because the way the median house prices works, a few fire sales here and there don't really move the price much...
> 
> And do a few fire sales here and there matter anyway...?
> 
> My statements are based on the indices... and I guess you can see when I say, its you guys saying the markets gonna come crashing down, are actually the ones hoping that 'this time is different'!



Rafa, 

With respect, you are spinning my post. This was not a few fire sales.


----------



## Rafa (19 February 2007)

wayneL said:
			
		

> Rafa,
> 
> With respect, you are spinning my post. This was not a few fire sales.




Sorry, that was not my intention...

was merely speculating the possibility of the lower price sales not effecting the indices cause they might have been fire sales... or maybe becuase there simply not that many of them... 

Or, maybe even that the stats are rigged!

So sorry about that...


PS: I need to find out more about gentrification...


----------



## krisbarry (19 February 2007)

legs said:
			
		

> What the hell has any of this got to do with stagnating house prices...get a bit carried away did we?




Hence the reason why I would like this thread closed down, clearly we are all going around in circles and nothing is being solved here.  It really is a useless waste of a thread.

The thread has now become too long, too invloved and inconclusive.

Can we have the padlock please?


----------



## chops_a_must (19 February 2007)

theasxgorilla said:
			
		

> I didn't say any of this.



Sure about that?


			
				theasxgorilla said:
			
		

> Longer term its going to be more beneficial for the individual to identify a new profession that will allow them to become valuable and hence make property prices seem less over-valued, relative to them.


----------



## wayneL (19 February 2007)

Stop_the_clock said:
			
		

> Hence the reason why I would like this thread closed down, clearly we are all going around in circles and nothing is being solved here.  It really is a useless waste of a thread.
> 
> The thread has now become too long, too invloved and inconclusive.
> 
> Can we have the padlock please?



Kris, we are clearly enjoying jousting over this, nobody is being unreasonable (except the bulls  {JOKE}) and nobody is being abused. Just don't read it if you think it is going nowhere  

*Rafa*

Here is a post I put on another forum which gives a very simplified example:



> We've all heard and scoffed at the diktat that houses must only ever rise.
> 
> I would like to open a discussion of how much of this is actually paid for via the process of gentrification, i.e. the money sunk into property in renovations and additions.
> 
> ...




Cheers


----------



## Rafa (19 February 2007)

Ah... thanks for that WayneL
That does make a lot of sense...but i don't think its that simple... 

I can only base this on anecdotal evidence, but i know if you do make all these 'value-adds'... you rarely get that money back if the market is in a slump.... i.e. in reality, in a slump, the person who did 80k of value add would be lucky to see 20k of it...

Conversely, In boom time, the person who didn't do any reno's will probably make 40k, based simply on the potential to renovate.

In the end, its the location that matters, hence the old saying in regards to the best house in worst st vs the worst house in the best st.


----------



## theasxgorilla (19 February 2007)

chops_a_must said:
			
		

> Sure about that?




Yes I'm sure.  I was generally refering to a very hypothetical individual and you started talking about _builders._ 

Perhaps you associated my remark about unionised work forces with the housing industry and tried to join the dots...but in my experience unionisation of the housing industry is low, probably due to the incidence of subcontractors (the "self employed trades people" I refer to) rather than employees.


----------



## TjamesX (19 February 2007)

Rafa said:
			
		

> I may be wrong, but surely, 'this time is different' means, this time housing will actually crash!
> 
> I mean, there have been many booms, followed by plateaus, then followed by another boom... (not adjusted for inflation, i am talking absolute figures here...)
> 
> ...




I personally don't think that there will be a crash and I don't think the Bears are saying this either, the title of the thread is 'House Prices to stagnate for years'.... and that's exactly what I think they will (on average) do...

To me it seems the bulls are the ones arguing against this statement - Housing will continue to do well, better to get in before its too late!!

It took 7-8 years from the last boom before there was any real movement in median house prices... why will this time be any different? This boom was also much larger in real terms than 89 if you consider the high inflation during the last boom

TJ


----------



## tech/a (20 February 2007)

*The has to be a reason why property is likely to rise in any area.*

Whilst not the case in every area of Australia,in MANY areas lack of Rental Property will fuel inflated house prices.
Demand will pick up rents. Investors will build units/apartments.

Those wishing to *start* their property journey would do well looking for these areas and starting with an apartment or unit.

Yeh I know the value is in the land---it is at least afoot in the door and a chance to keep ahead of capital appreciation.

Rent it out if you have enough equity to at least neutral gear it and you can claim all your interest payments.Buy a hammer---repairs to IP.Buy a lawn Mower---Maintenance for IP.--You get the idea.


----------



## Bronte (20 February 2007)

*U.K. House Prices Rose in February*
U.K. property prices accelerated for a second month in February as a shortage of homes for sale mitigated the impact of higher interest rates, a survey showed. 
http://www.bloomberg.com:80/apps/news?pid=20601102&sid=a4tm4DghzSHE&refer=uk


----------



## Mofra (20 February 2007)

As an aside, Dandenong in Melbourne rose 4.1% last _month_ and is highlighted by valuation reports as likely to continue string growth due to the Eastlink works.

I doubt there would be many recent buyers there whining about a housing downturn...


----------



## tech/a (20 February 2007)

> growth due to the Eastlink works.




And there is the reason.
Pretty simple??
Find a REASON


----------



## wayneL (20 February 2007)




----------



## theasxgorilla (20 February 2007)

tech/a said:
			
		

> And there is the reason.
> Pretty simple??
> Find a REASON




...and in this case the reasons could be many:

http://www.revitalisingdandenong.com/dandenong/home/home.htm


----------



## tech/a (21 February 2007)

Wayne.

Do you honestly believe there is going to be an across the board 20-30% decrease in housing prices?
That the wont be opportunities in abundance?

The only way this was likely for this to occur is a world wide recession/depression.

*In which case the arguement * of waiting to buy a home when its cheaper---it would then be cheaper---falls as flat as a pancake---as you couldnt afford to buy---you maybe lucky to have a job---or pay the rent,any savings you had youd be scared stiff of losing.

But hell they could drop a dirty bomb in my backyard tommorow!


----------



## wayneL (21 February 2007)

tech/a said:
			
		

> Wayne.
> 
> Do you honestly believe there is going to be an across the board 20-30% decrease in housing prices?




More. But it may or may not be in nominal terms. Real prices (i.e adjusted for inflation) may be how it happens. But I am not discounting the possibility of a drop in actual nominal prices. 



			
				tech/a said:
			
		

> That the wont be opportunities in abundance?




Absolutely



			
				tech/a said:
			
		

> The only way this was likely for this to occur is a world wide recession/depression.




Not necessarily, but I believe price stagnation/drop would cause recession/depression, given the economies' current reliance on speculative profits, building and mortgage equity withdrawal.

It could happen either way round, however.

One thing for certain, recession/depression WILL happen. It is simply a question of when. It could be this year, five years, ten years, but when you look at the structural inbalances, it won't take much of a trigger to shunt it over the edge.



			
				tech/a said:
			
		

> *In which case the arguement * of waiting to buy a home when its cheaper---it would then be cheaper---falls as flat as a pancake---as you couldnt afford to buy---you maybe lucky to have a job---or pay the rent,any savings you had youd be scared stiff of losing.




I have planned for the eventuality. I own IP in the UK I bought at value, the deeds are stapled to the bottom drawer as a basis for any contingency. I have involved myself in endeavours which are recession proof/resistant (particularly my new position). I have positioned myself to make purchases when value is present.

Sentiment will be diabolical at the bottom and thats when folks need to grow some balls and invest.



			
				tech/a said:
			
		

> But hell they could drop a dirty bomb in my backyard tommorow!



Let's pray that never happens  

It's my view and I'm working to that view, but I'll be OK nevertheless, things are just fine as they are.

The reason I crap on with all the bear stuff is so that people consider possibilities. Perpetual bullishness can be very profitable, but it can be very dangerous. I know this from experience. 

There are some people who have never seen a recession in their adult lives and will be destroyed when it happens, because they refuse to accept the possibility. I would hope that by us bears talking mega doom that people at least consider to cover their @rse.

It's also fun debating this stuff


----------



## wayneL (25 February 2007)

Sub-prime lending: The elephant in the room.

http://www.telegraph.co.uk/money/ma...VCBQUIV0?xml=/money/2007/02/24/cnusecon24.xml



> *US mortgage crisis goes into meltdown
> *
> By Ambrose Evans-Pritchard
> Last Updated: 1:15am GMT 24/02/2007
> ...


----------



## markrmau (25 February 2007)

Love the comment in red.

1200bp over LIBOR? I assume that should be 120bp?


----------



## Kimosabi (27 February 2007)

It's 26 now...

The best place to get info on the US subprime Mortgage Industry Implosion is here ==> http://ml-implode.com/


----------



## kransky (27 February 2007)

wayneL said:
			
		

> I have involved myself in endeavours which are recession proof/resistant (particularly my new position).




care to elaborate on that a little for us noobs?

gold? silver? soft commodities?


----------



## wayneL (27 February 2007)

kransky said:
			
		

> care to elaborate on that a little for us noobs?
> 
> gold? silver? soft commodities?




Trading wise, it's up to my own performance rather than the economy, so yes any or all of the above... options... whatever I think I can lift a few bucks from. A bear market won't make much difference.

What I was referring to was that I have taken a position in a company that aquires and manages assets for itself (through connections and luck more than ability I assure you  ) The nature of the assets makes the business and therefore my income fairly recession proof.

I'll be working for a living for the first time in six years  (apart from a brief stint a couple of years ago)


----------



## wayneL (27 February 2007)

Check out this blog post... straight from the elephants' mouth:



> * Cover of Business Week: How Toxic Is Your Mortgage?  *
> 
> 
> 
> ...


----------



## wayneL (27 February 2007)

url to the above post (wouldn't fit into the post)

http://cryptogon.com/2006_09_03_blogarchive.html#115726846532246735


----------



## noirua (27 February 2007)

Once the stock market boom is over the day will come again for property. It's good for Australia to have this commodity based boom and bad news for property prices. No point investing in a going nowhere property, when you THINK you can make a huge bundle in the stock market.


----------



## trueblue (27 February 2007)

krisbarry said:
			
		

> Now that must be about an hour out of the city...too far for work/friends/family/city/social life.
> 
> Hmmm I think I will keep renting instead.
> 
> ...



In one paragraph you are living with hill billies and in the next you speak of crime ridden/drug dealing areas. You have it wrong! It is not the hill billies out there who are pushing drugs. And a boring life? Get real.
A hill billie and pround of it.
trueblue


----------



## numbercruncher (13 March 2007)

I read an article in yesterdays Melbourne paper, you now need an income of 110k pa to service the average house price/mortgage in Melbourne, ten years ago it was 43k.


The average young person has got buckleys chance.


----------



## robots (16 March 2007)

hello,

a few weeks have passed,

prices solid as, you missed out waitng for the crash again on real estate

demand still strong, people got to live somewhere

get in as early as you can

thankyou

robots


----------



## wayneL (16 March 2007)

robots said:
			
		

> hello,
> 
> a few weeks have passed,
> 
> ...



Oh please!

What's this, a property ramp? Cycles take time. Settle down and watch it play out. The fun is only just beginning.


----------



## robots (16 March 2007)

hello,

where's the fun beginning?

nowhere

buy quality, 

thankyou

robots


----------



## krisbarry (16 March 2007)

numbercruncher said:
			
		

> I read an article in yesterdays Melbourne paper, you now need an income of 110k pa to service the average house price/mortgage in Melbourne, ten years ago it was 43k.
> 
> 
> The average young person has got buckleys chance.




Yep that would be true and Adelaide is not too far behind that with an average house in an average suburb now needeing 81k.

Scenario: Mum and Dad now working about 50 hours a week and under severe morgagte stress, kids never see parents, kids eating microwave dinners in front of the telly, family structure breaking down etc etc ya get the picture.

All this cause some F-ck stick owns 98 homes, and now 97 familes have to endure higher prices.

*Remember that almost all monies borrowed over the last 7 years from banks/finance companies has done very little about building new homes for those 97 families its just jacked up the prices of existing homes.*


----------



## nizar (16 March 2007)

Stop_the_clock said:
			
		

> All this cause some F-ck stick owns 98 homes, and now 97 familes have to endure higher prices.




Those stories should inspire you, not make you bitter.
I reckon that F--ck stick probably wasnt born rich and theres every chance he was once the struggler you now came to be.

He didnt become a champion from crying about it.


----------



## wayneL (16 March 2007)

Jim Rogers has his say:


http://www.reuters.com/article/newsOne/idU...mp;pageNumber=1

Top investor sees U.S. property crash
Wed Mar 14, 2007 12:59PM EDT

By Elif Kaban

MOSCOW (Reuters) - Commodities investment guru Jim Rogers stepped into the U.S. subprime fray on Wednesday, predicting a real estate crash that would trigger defaults and spread contagion to emerging markets.

"You can't believe how bad it's going to get before it gets any better," the prominent U.S. fund manager told Reuters by telephone from New York.

"It's going to be a disaster for many people who don't have a clue about what happens when a real estate bubble pops.

"It is going to be a huge mess," said Rogers, who has put his $15 million belle epoque mansion on Manhattan's Upper West Side on the market and is planning to move to Asia.

Worries about losses in the U.S. mortgage market have sent stock prices falling in Asia and Europe, with shares in financial services companies falling the most.

Some investors fear the problems of lenders who make subprime loans to people with weak credit histories are spreading to mainstream financial firms and will worsen the U.S. housing slowdown.

"Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it'll be worse because we haven't had this kind of speculative buying in U.S. history," Rogers said.

"When markets turn from bubble to reality, a lot of people get burned."

The fund manager, who co-founded the Quantum Fund with billionaire investor George Soros in the 1970s and has focused on commodities since 1998, said the crisis would spread to emerging markets which he said now faced a prolonged bear run.

"When you have a financial crisis, it reverberates in other financial markets, especially in those with speculative excess," he said.

"Right now, there is huge speculative excess in emerging markets around the world. There will be a lot of money coming out of emerging markets.

"I've sold out of emerging markets except for China," said Rogers, long a prominent China bull.

Even in China, the world's fastest expanding economy, Rogers said stocks were overvalued and could go down 30-40 percent.

But he added: "China is one of the few countries in the world where I'm willing to sit out a 30-40 percent decline."

The last stock market bubble to burst was the dot-com craze which sparked a crash from March 2000 to October 2002.

When the last bubble burst in Japan, said Rogers, stock prices went down 85 percent despite the country's high savings rate and huge balance of payment surplus.

"This is the end of the liquidity party," said Rogers. "Some emerging markets will go down 80 percent, some will go down 50 percent. Some will most probably collapse."


----------



## wayneL (16 March 2007)

As an aside, I don't understand all the animosity towards landlords with a few houses. I might question the wisdom of some more recent investments, but that is a risk they take, fully cognizant of the downside (we hope).

Without LLs there would be no houses to rent, or utter rubbish supplied by government.

I'm living in a comfortable house in a nice area rented from a private LL, because a) I don't want to buy at current valuations b) We knew we would be moving around a bit.

I'm appreciative of the LL and he's appreciative that I supply him money and look after the house like my own. As long as everyone fulfills their side of the contract it works great.

As I've got a foot in each camp I understand each side. So let's not down LL's on some extremely ideological and poorly thought out premise, our society needs them.

I would just like to see more understanding and respect from each side and less outright greed. (It is greed that creates poor LLs and poor tenants)

It is not investors "fault" that prices have run up to unjustifiable extremes, it is more to do with inflationary oversupply of fiat money and loose credit. This will change as these factors roll back in the future.

Young people need just wait for the right time  

Cheers


----------



## nomore4s (16 March 2007)

Good post Wayne


----------



## robots (16 March 2007)

hello,

young people need to stop spending their money not wait for RE crash

if more people saved money things would be a lot easier for them, but no, they want to give it to companies

you could get 100 fund managers, economists, yourself and not one of you can predict the future

the fact is quality blue chip RE has not been stagnate and infact has increased

isn't there that saying "time in the market not timing the market", bet there's plenty of happy shareholders who bought pre 2000

thankyou

robots


----------



## Smurf1976 (16 March 2007)

robots said:
			
		

> hello,
> 
> where's the fun beginning?
> 
> ...



Nowhere? Ever heard of Sydney where prices are down 13% in nominal terms and far more in real terms?

Or for that matter Hobart where, by doing literally nothing, I've watched a small weatherboard house turn into a bigger brick one and get cheaper in the processs. All while my money earned actual profits in stocks and bank accounts with no rates or insurance required.


----------



## wayneL (16 March 2007)

robots said:
			
		

> hello,
> 
> young people need to stop spending their money not wait for RE crash
> 
> ...




Robots,

1/ credit is still unbelievably, irresponsibly loose

2/ when credit tightens, as is inevitable (it is starting) RE will start to correct seriously

3/ "time in the market not timing the market" is true for the Loooooooooooooooooooooooooooooooooooooooooooooong term and ignores a whole bunch of other pertinent factors. The real question is, "how long have you got?". Purchasers of any sort of asset immediatly prior to Oct 1929 would be quids in now, but it took decades for their asset prices to just recover. Timing is not a reality for most people, but only buying at value is. 

4/ bet there's plenty of happy shareholders who bought pre 2000 Of course there is because that is when there was good value in the market. But now we have the equivalent of NAB (a blue chip) at a P/E of 40 i.e. very poor value. Elementary stuff. 

5/ you could get 100 fund managers, economists, yourself and not one of you can predict the future Neither then, can you. Which makes your assertions that RE will never go down and to buy now, utterly ludicrous... in fact highly irresponsible. You cannot know that.

6/ Blue chip RE is AT PRESENT under extreme price pressure in both USA and Ireland...

7/ Are you a RE agent?


----------



## robots (16 March 2007)

hello,

I dont know what credit has to do with young people, why do they need credit? they do not save.

no I am not an RE agent

if your buying your own home get in as early as possible, within 10-15km of capital city, prices are strong as, or other popular area

buts things havent been stagnate have they, or crashed, or corrected, 

I havent made any predictions, I have constantly said get in now as things are solid as, and they are

the longer you wait the harder it will be

thankyou

robots


----------



## wayneL (16 March 2007)

robots said:
			
		

> hello,
> 
> I dont know what credit has to do with young people, why do they need credit?



Uuuuuuuuuuuuummmmmmmmmmmm...... To get a mortgage? lol



			
				Jim Rodgers said:
			
		

> "This is the end of the liquidity party," said Rogers. "Some emerging markets will go down 80 percent, some will go down 50 percent. Some will most probably collapse."



You think this won't affect us in Oz. It will. Credit will be MUCH tighter...

....no sub-prime/"creative finance", no 100/120% loans, no ludicrous income/loan multiples, no MEW.

It will be back to 80% minimum LVR and 3 times earnings... and incredibly difficult to get.

The party is over, time to pay the tab


----------



## robots (16 March 2007)

hello,

the party aint over, 16mths on for this thread and guess what, no correction

still waiting

look forward to the next month

thankyou

robots


----------



## wayneL (16 March 2007)

robots said:
			
		

> hello,
> 
> the party aint over, 16mths on for this thread and guess what, no correction
> 
> ...






			
				Smurf1976 said:
			
		

> Nowhere? Ever heard of Sydney where prices are down 13% in nominal terms and far more in real terms?






			
				 Irving Fisher said:
			
		

> prices have reached what looks like a permanently high plateau




LOL


----------



## Kauri (16 March 2007)

*House prices to stagnate for 'years'* ...

  Wish they would... have all but finished renovating a house, putting on a room etc, am now told that people want to buy it at the current inflated rate... to *knock down the house* and redevelop the 1/4 acre into units!!     Would have made the same money sitting on it and doing nothing!!!!!!!


----------



## wayneL (16 March 2007)

Robots,

As a point of order:

RE does not "crash", it takes some time to play out. Talk to you in 5 years


----------



## Kauri (16 March 2007)

Maybe rents need to increase 30% to bring the ratio of house prices to rents (PE)  back to its long term average, and while we are at it how about increasing wages by 25% to bring the house price/wages ratio back in line...  :


----------



## robots (16 March 2007)

hello

no problem will even send you my address if you like and you can send me a postcard

thankyou

robots


----------



## Smurf1976 (16 March 2007)

robots said:
			
		

> hello,
> 
> the party aint over, 16mths on for this thread and guess what, no correction



In some places maybe but it is a FACT that in some other locations there HAVE been house price falls in nominal terms.

If you compare instead to cash in the bank earning interest or real prices after adjusting for inflation then those falls are reasonably common outside the upper end of the market.


----------



## numbercruncher (16 March 2007)

Yep i bet the majority of people who have bought a house in the last 12 months or so would have a paper loss if they take in costs/dutys/realty fees.


----------



## stargazer (17 March 2007)

Perhaps not Numbercruncher.

heres some interesting real figures

Bought 280000 feb 2006

sold     395000 march 2007

half profit subject to CGT
fees etc 

over 70000 profit in 12 months.

This is Adelaide market which has been stable in my opinion.

Cheers
SG


----------



## Mousie (17 March 2007)

stargazer said:
			
		

> Perhaps not Numbercruncher.
> 
> heres some interesting real figures
> 
> ...




If this is not in Adelaide itself, care to name the suburb stargazer?


----------



## crash82au (17 March 2007)

stargazer its easy to have a specific sample of someone profiting from real estate in the last 12 months.  I live less than 25kms from the gold coast where people have made 100's of k's on properties bought within the last 6 months.  I guess its a bit like picking the right stock before it shoots through the roof or being in the right place at the right time. I wouldn't imagine a property going down within the last 12 months but I think investors that have bought in that time frame are looking for a return over a 5 year period IMHO of course.


----------



## stargazer (17 March 2007)

Hi 

*Mousie*
Yes it is in Adelaide itself.  The suburb is Trinity Gardens.

*Crash82au*
I understand what you are saying Crash82au no argument from me.   Although some areas have in fact gone down.

I was just pointing out its possible to make a few $$$.

You can still make a go of it if you pick well enough.  A good street and a good suburb within 10k of the CBD and not the best house.

Cheers
SG


----------



## numbercruncher (17 March 2007)

Yes i understand there are exceptions to the rule.

The Key words in my observation are " Majority of People".

I read the _average_ Melbourne Home has risen 5pc in the last 12months, that doesnt even cover the Interest bill let alone, Stamp Dutys, Insurances, Rates, and Realestate fees if one was to sell.


----------



## wayneL (18 March 2007)

*House prices fall by over £4,500 in February - NAEA*



> The National Association of Estate Agents (NAEA) has released figures from its latest housing market survey, revealing that the residential housing market has begun to feel the full effects of the interest rate rises seen in the past few months.
> 
> * AVERAGE ASKING PRICE FEBRUARY 2007 £213,259
> * AVERAGE ASKING PRICE JANUARY 2007 £217,955




http://firstrung.co.uk/articles.asp?pageid=NEWS&articlekey=4383&cat=44-0-0


----------



## nizar (18 March 2007)

Wayne,

I dont think 2 months is enough to develop a trend and to conclude that the housing market is falling.

But yeh it probably sells newspapers, kinda like those "analysts" comparing the stockmarket now to 1987 pre-crash.


----------



## theasxgorilla (18 March 2007)

nizar said:
			
		

> Wayne,
> 
> I dont think 2 months is enough to develop a trend and to conclude that the housing market is falling.
> 
> But yeh it probably sells newspapers, kinda like those "analysts" comparing the stockmarket now to 1987 pre-crash.




Nizar, you are indeed a wise young man.  This is exactly how such propaganda should be viewed...until we have a a reason to know otherwise.


----------



## theasxgorilla (18 March 2007)

numbercruncher said:
			
		

> Yes i understand there are exceptions to the rule.
> 
> The Key words in my observation are " Majority of People".
> 
> I read the _average_ Melbourne Home has risen 5pc in the last 12months, that doesnt even cover the Interest bill let alone, Stamp Dutys, Insurances, Rates, and Realestate fees if one was to sell.




Indeed I hope there are exceptions to the rule...the opposite of that was called communism, or socialism, or some such.

Let me ask you a question numbercruncher...are you an average person?  If so then what you read is true, for you.  If you choose to be something different then it might help you to speak with people who know better.


----------



## theasxgorilla (18 March 2007)

Kauri said:
			
		

> *House prices to stagnate for 'years'* ...
> 
> Wish they would... have all but finished renovating a house, putting on a room etc, am now told that people want to buy it at the current inflated rate... to *knock down the house* and redevelop the 1/4 acre into units!!     Would have made the same money sitting on it and doing nothing!!!!!!!




That's alright...thats "blue-sky upside potential sentiment" talking.  YOU can also redevelop, IF/WHEN you choose.  And in the meantime you have a higher standard of living or a place that will fetch higher rent.  You have a valueable asset with value that you created.  WHAT IF the market did not continue to boom and there were no developers to sell to?  If you are in a good suburb then by renovating you've hedged your bets nicely.

I've been in a similar situation.  Put in heart and soul only to have people poking around, prepared to give you your money, so they can knock it down!

C'est la vie


----------



## nioka (18 March 2007)

wayneL said:
			
		

> *House prices fall by over £4,500 in February - NAEA*




The quality and type of homes sold or listed during any month is bound to change and , if the quality fell, the average price could fall even if the market was rising. Remember real estate agents can be like used car salesmen and ramping and downramping is not restricted to the stockmarket.


----------



## wayneL (18 March 2007)

Nioka, 

Anecdotally, London is still hot, supported by foreign money, but the some parts of the country are definately cooling/dropping.

Not a trend yet. nut all trends start with the bend at the end of the previous trend.

ASXGorilla,

Hilarious! Rises are to be immediately believed, yet reports of falls are propaganda. The report came from the NAEA ffs.


----------



## nizar (18 March 2007)

wayneL said:
			
		

> Anecdotally, London is still hot, supported by foreign money, but the some parts of the country are definately cooling/dropping.




Yep. All those new money Russians....


----------



## theasxgorilla (18 March 2007)

wayneL said:
			
		

> Hilarious! Rises are to be immediately believed, yet reports of falls are propaganda. The report came from the NAEA ffs.



These reports are great for buying opportunities.  If the overall trend is UP then these stories, coupled with some FUD about interest rates rises (or better still, an actual interest rate rise) scare vendors into thinking that the market won't give them the money they’re asking.  Ever noticed how open for inspections or auction turnouts are at their worst just after the media has beaten the living cr.p out of the market's psychology?

Only thing I know for certain, where I own, and where I just sold, the trend is still UP.

If I bought into the B/S stories that was being fed by the Swedish media about the Riksbank's policy to power ahead with their rate rise schedule then perhaps I would not have bought there?  But in any case I had hedged my bets.  I bought a place with “signficicant building” status (one below heritage listed) with sought after period architecture that needed a makeover, so if the market _stagnates_ I can add value.  And I fixed my interest rate, so no matter what happens, for the next ten years (not that intend to hold that long) my monthly outgoing is a known factor.

The other side of the hedge was if the Riksbank couldn't keep raising rates because inflation wasn't stimulated sufficiently to warrant it (YES, believe it or not, in some parts of the world central banks are actually trying to STIMULATE INFLATION!  Sweden is such a place).  In that instance two things would play in my favour.  The SEK would fall relative to the AUD so I could effect a currency play when I bring money over, and the property market would continue its march upward, to which I have a significant amount of upside exposure.

Guess which occurred?  Inflation still hasn't kicked in.  The Riskbank had to back down on their intended rate rise schedule.  The U in FUD became C (certainty).  Rates would remain lower for longer than people had anticipated.   Imagine that...a country where real returns almost equal nominal because inflation is negligable? 

NB. I also bought right in the centre of town so if oil goes silly I can walk/ride/public transport everywhere.  In the city in which I live the main street is also heated 24 hours.  So if I blow up spectacularly and end up back at zero, or worse still hopelessly in debt, I’ll be a warm hobo…not that the lovely Swedish welfare system would ever let that happen.
_
Laissez Les Bon Temps Roulez._


----------



## wayneL (18 March 2007)

theasxgorilla said:
			
		

> These reports are great for buying opportunities.  If the overall trend is UP then these stories, coupled with some FUD about interest rates rises (or better still, an actual interest rate rise) scare vendors into thinking that the market won't give them the money they’re asking.  Ever noticed how open for inspections or auction turnouts are at their worst just after the media has beaten the living cr.p out of the market's psychology?
> 
> Only thing I know for certain, where I own, and where I just sold, the trend is still UP.
> 
> ...



Gorilla,

I know nothing about the Swedish market, but it certainly is an interesting place... heated main street? I just gotta see that. 

Anyhooz, my comments are directed specifically at the UK and other English speaking markets (US, OZ, Ire, NZ) where I think most of the trouble will be... plus a few European markets where the Poms have lashed out on RE (Spain, France etc)

From what I see, I don't think the rest of Europe will have much of a problem, there is still plenty of value present in many markets of which I have no doubt Sweden would be one.

FWIW, I can see myself ending up living outside the UK, somewhere in Europe and am dying to check out Sweden... the language seems daunting though  You obviously speak the language?


----------



## wayneL (18 March 2007)

Stephen Roach:

http://www.morganstanley.com/views/gef/index.html#anchor4577


----------



## numbercruncher (18 March 2007)

theasxgorilla said:
			
		

> Indeed I hope there are exceptions to the rule...the opposite of that was called communism, or socialism, or some such.
> 
> Let me ask you a question numbercruncher...are you an average person?  If so then what you read is true, for you.  If you choose to be something different then it might help you to speak with people who know better.




Yeah a bit less of the smart **** European attitude wouldnt go astray.

I read the facts, and simply relay them, You talk like a big shot, perhaps you are a big shot, and good luck to you.

Peace.


----------



## theasxgorilla (18 March 2007)

wayneL said:
			
		

> FWIW, I can see myself ending up living outside the UK, somewhere in Europe and am dying to check out Sweden... the language seems daunting though  You obviously speak the language?




It's the second best country in the world, behind Melbourne   If you have sterling (which I presume you would) then you could live like a King in Sweden, sincerly.  I have seen the pic you posted of your English cottage.  You could like that in Sweden for a fraction of the price.  In fact, everything is cheaper, hence my comments about inflation.  Cheaper than Aust and definately cheaper than the UK.

The language is difficult, but everyone under 55 speaks perfect English.  I mean, the Queen's English...it keeps you on your toes being an Aussie, as I'm sure you're well aware, our dialect (IMO) is a degraded version.

If you know any German it can go a long way to getting Swedish as much of the language has loan words from either English or German.  The base of the language is the same as Danish and Norwegian, so if you know Swedish you can get around in Norway or Denmark and read a lot of the signs, menus, timetables, no bother.

I'm not sure what kind of a traveller you are or what activities you enjoy, but I can recommend Scandinavia as a whole in Summer.  It's particularly good for road tripping.  The warm weather (25-30 degrees), plethora of lakes, and endless daylight hours truly make it heaven on earth.  I won't mention the beauty of the local lasses.  Suffice to say it's the reason for me being there.

There is a ferry from Newcastle to Gothenburg but beware that they drive on the right 

FWIW I think Sweden will blow up economically like Aust, UK and US soon enough...but not just yet.  If Germany can push forward reform and gain some traction then Sweden will benefit as they're a significant trading partner.  Denmark is booming across the Ã–resund (very similar economic stats to Australia) and that that is driving the west SkÃ¥ne region where I'm located.


----------



## robots (18 March 2007)

hello,

to all the 20 - 25's, get in now

buy what you can afford comfortably in good area, one bed, two bed whatever

think 5yrs, 10years, 20years, 40years

as mentioned on other thread, it takes around 6-7 years if owning when rent would equal owning and from then on sky is the limit

you cant beat living in Aus, things are solid as

thankyou

robots


----------



## wayneL (18 March 2007)

theasxgorilla said:
			
		

> It's the second best country in the world, behind Melbourne   If you have sterling (which I presume you would) then you could live like a King in Sweden, sincerly.  I have seen the pic you posted of your English cottage.  You could like that in Sweden for a fraction of the price.  In fact, everything is cheaper, hence my comments about inflation.  Cheaper than Aust and definately cheaper than the UK.
> 
> The language is difficult, but everyone under 55 speaks perfect English.  I mean, the Queen's English...it keeps you on your toes being an Aussie, as I'm sure you're well aware, our dialect (IMO) is a degraded version.
> 
> ...




As it happens I do have a little bit of German and can put on the Queens if pressed (missus comes from that stock and is on my back all the time about it lol).

Interesting what you say about Scandinavians and their English, apparently there are lots and lots of them in London, but you can't tell who they are (except that they speak better than most of the locals   ).

I really love England, particularly the rural S/SW, but a few things really p1ss me off.
1/ Chav culture (overtly yobbish underclass)
2/ Encroaching Americanism (not as advanced as Oz, but still discernible)
3/ Big brother surveillance, Bliar/Brownism etc (hopefully somebody other that the stupid Democrats gets these b@stards out next time.)
4/ I see the potential for significant civil unrest if the economic poo hits the propeller.

Anyway, I'll hop on the barge for a Swedish beer one day soon.

Cheers


----------



## wayneL (18 March 2007)

robots said:
			
		

> hello,
> 
> to all the 20 - 25's, get in now
> 
> ...



ramp :sleeping:


----------



## chops_a_must (18 March 2007)

wayneL said:
			
		

> FWIW, I can see myself ending up living outside the UK, somewhere in Europe and am dying to check out Sweden... the language seems daunting though  You obviously speak the language?



So long as you don't speak like those from Dalarna, you'll be fine.


----------



## theasxgorilla (18 March 2007)

chops_a_must said:
			
		

> So long as you don't speak like those from Dalarna, you'll be fine.




Hehe, their horses look a little strange too


----------



## theasxgorilla (18 March 2007)

numbercruncher said:
			
		

> Yeah a bit less of the smart **** European attitude wouldnt go astray.
> 
> I read the facts, and simply relay them, You talk like a big shot, perhaps you are a big shot, and good luck to you.
> 
> Peace.




Apologies numbercruncher, the tone of my comment to you was inappropriate.

I become frustrated with quoted stats about 'average' this and that.  It's not possible (IMO) to extrapolate a Melbourne metro statistic to mean anything about the average price move in a given suburb, let alone a street or an individual house.  And even if you could know the price move in a given suburb (which you can, http://data1.reiv.com.au/trendchart/) you need to know something about the micro situation in that suburb eg. are new developments being released.

Consider this chart from the REIV website.  In March 06 the outer suburbs of Endeavour Hills and Mooroobark actually made 'new highs' while Eltham and Metro Melbourne as an averaged whole dipped quite siginficantly.  3.7 million people and 270 suburbs is a diverse place to use a simple average on.


----------



## nioka (18 March 2007)

wayneL said:
			
		

> Hilarious! Rises are to be immediately believed, yet reports of falls are propaganda. .



Isn't that only for the bulls. Does the opposite apply to the bears.


----------



## wayneL (18 March 2007)

nioka said:
			
		

> Isn't that only for the bulls. Does the opposite apply to the bears.



Of course! LOL


----------



## numbercruncher (18 March 2007)

theasxgorilla said:
			
		

> Apologies numbercruncher, the tone of my comment to you was inappropriate.
> 
> I become frustrated with quoted stats about 'average' this and that.  It's not possible (IMO) to extrapolate a Melbourne metro statistic to mean anything about the average price move in a given suburb, let alone a street or an individual house.  And even if you could know the price move in a given suburb (which you can, http://data1.reiv.com.au/trendchart/) you need to know something about the micro situation in that suburb eg. are new developments being released.
> 
> Consider this chart from the REIV website.  In March 06 the outer suburbs of Endeavour Hills and Mooroobark actually made 'new highs' while Eltham and Metro Melbourne as an averaged whole dipped quite siginficantly.  3.7 million people and 270 suburbs is a diverse place to use a simple average on.





Thankyou for the apology, nice to see people accept responsibility in a forum!

Look I agree with most everything youve just written. But I still maintain my original statement, that _most_ Melbourne buyers would be looking currently at a paper loss if they bought a year ago and sold right now.

Lets take Eltham here in your graph as an example, Purchase price 400k in March.

House                       400k
Duty                           20k
Rates                           2k
Interest                       28k
Conveyancing buy&sell     1k
Insurance/Maintenance    1k
Estate fee to sell           12k
Less rent                    -20k
----------------------------
Breakeven                 444k.

So even in a suburb like Eltham if you where lucky enough to buy at the 2006 low youve lost money.

To me owner occupier realestate in Melbourne currently seems like a suckers investment if your not a cash buyer, I can understand investers still throwing their money at it for the negative gearing benefits is about all.


----------



## theasxgorilla (18 March 2007)

So unless you did some spectacular renovation, 1 year isn't enough for a moderately rising tide to lift you up past breakeven.

And to be honest a $1k maint/insurance budget is on the light side.  Your breakeven would move towards $450k.


----------



## numbercruncher (18 March 2007)

theasxgorilla said:
			
		

> So unless you did some spectacular renovation, 1 year isn't enough for a moderately rising tide to lift you up past breakeven.
> 
> And to be honest a $1k maint/insurance budget is on the light side.  Your breakeven would move towards $450k.





Yes and even worse if you bought in the September high your break even would be a little over 500k.

Theres still reasonble buying out there for those whom put in there homework i guess.

I sold a House on the Gold Coast in 2004 for 330k its currently worth about 360, to me thats an enormously bad investment, especially taking Dutys,Fees,Inflation etc, thats before mentioning how extroidinarily well this person would of done if they dumped that money in the stock market instead.

Before this property Boom, Houses had ben stagnating for like a decade it looks like from my side of the fence that where in for much of the same.

Look theres some awesome tales of realestate profits out there, We have friends in Sandringham Melbourne who bought a house in the 80s for 60k ( only like 2 years wages for a couple then) and thats now worth well over a m.
In the current climate i think the only real winners on average are the Developers  , (My freeloading Hippy baby boomer parents are part of a large Developer group, and there equity returns are seriously ridiculous) and the Governments who collect the Dutys and development fees, and the result is the end user pays for it with massive debt and high hopes.

Look it would be nice for realestate to keep going skyward for ever more, but can you realisitically expect it to ? With current house prices averaging out above what the avergage wage can afford, at best all people can hope for is prices to stagnate, but thats my opinion and one thats shared by alot of people and denied by nearly as many !

Happy Investing.


----------



## theasxgorilla (18 March 2007)

numbercruncher said:
			
		

> Yes and even worse if you bought in the September high your break even would be a little over 500k.




Although the stats are not for a single house, they're for a bunch of houses sold in a suburb during a quarter.  It's difficult to know if the value of an individual house is fluctuating like this.  Any way you look at the chart, the trend is up, with dips.  It's my experience that the dips are caused by interest rate hikes and media hype.  These produce good opportunities to buy off vendors who might become somewhat more motivated to give a little on price.

I do believe you can do your homework, tweak a few of the numbers you've presented (add more cash, for example), and find a place for a good price that you can make improvements to so that your maintenance expenses (done right) can actually improve value, not just maintain it.


----------



## wayneL (19 March 2007)

The contagion is spreading

http://www.belfasttelegraph.co.uk/breaking-news/ireland/article2369491.ece


> *Ireland
> Property prices fall by up to 10 per cent since October
> *
> 
> ...


----------



## Atomic5 (19 March 2007)

wayneL said:
			
		

> Anyway, I'll hop on the barge for a Swedish beer one day soon.



You'll probably be driving to Denmark on the weekend with the rest of them for the cheaper booze and end up partaking in drunken "how stupid are the Swedes" jokes by the Danish   

i digress.....


----------



## theasxgorilla (19 March 2007)

Atomic5 said:
			
		

> You'll probably be driving to Denmark on the weekend with the rest of them for the cheaper booze and end up partaking in drunken "how stupid are the Swedes" jokes by the Danish
> 
> i digress.....




And here I was expecting a comment about Swedish vrs Danish beer


----------



## theasxgorilla (19 March 2007)

wayneL said:
			
		

> The contagion is spreading
> 
> http://www.belfasttelegraph.co.uk/breaking-news/ireland/article2369491.ece




From the article:

"If the trend continues this year, it would be the first reversal in the Irish property market for more than a decade."

In a way I wonder if quoting a 10% drop in Ireland isn't a little bit like worrying about a 9% drop in the Shanghai exchange.  Their markets have been so ridiculously out of control for so long now that it could just be a bit of downside volatility while the market takes a slight breather (that was terrible positive spin wasn't it ?? lol)

They suffer from the problem of having the ECB setting their rates.  Whilst their economy and r/e market has been redlining for years the ECB has had to set rates in accordance with what other larger EU member states require.  Imagine having 20% average annual house price rises for 10 years and interest rates down at 3% because Germany has issues?!


----------



## bingk6 (19 March 2007)

numbercruncher said:
			
		

> But I still maintain my original statement, that _most_ Melbourne buyers would be looking currently at a paper loss if they bought a year ago and sold right now.




I reckon that you could include a large portion of Sydney buyers to this list. Sydney is in a really delicate stage right now in that small pockets in the "richer" suburbs (eg North Shore) can still show reasonable price appreciation, whereas other areas are really getting hammered. It just goes to show how people in different areas react to the 3 interest rises that we had recently, obviously affecting some much more than others.

Sydney is fast becoming a city of "haves" and "have-nots" with the divide growing larger by the day.


----------



## numbercruncher (21 March 2007)

Good article in todays SMH about the Housing boom Illusion    and a Good chance of another Interest rate rise in as soon as two weeks.




> We're at the point of experiencing the downside of the housing boom. Many home owners have been most gratified to see the value of their home at least double over the Howard Government's 11-year term.






> What started as a way to get rich quick has been transformed into a way to bleed slowly. More may decide to cut their losses and sell. It's likely that a lot of the mortgagee sales we're hearing about are of investment properties.




Boom Over 


Happy Property Investing Folks


----------



## Mofra (21 March 2007)

The vast majority of mortgagee sales are instigated by non-conforming lenders (ie Bluestone, Liberty) and smaller boutique lenders. Basically 15% of the lending market is providing 85% of the mortgagee sales, so if you qualify for a traditional mortgage the chances of a major default are actually fairly remote - especially when you consider the vast majoity of UCCC protected lending that does default is due to marriage/relationship breakdown.


----------



## robots (23 March 2007)

hello,

gee another conspiracy to keep house prices up with the US reserve bank keeping interest rates on hold

rubbish

but wayne says the inflation genie is out of the bottle

save hard , get a property

thankyou

robots


----------



## wayneL (23 March 2007)

robots said:
			
		

> hello,
> 
> gee another conspiracy to keep house prices up with the US reserve bank keeping interest rates on hold
> 
> ...




The fed is caught beteen a rock and a hard place. Inflation is rising, but the economy is slowing. Holding interest rates or even lowering will take out the USD... it is already in trouble.

RBA next move is up.

BOE next move is up.

Oh, and house prices are crashing in the US... coming to a town near you  

The Fed statement, revised for reality - from Barry Ritholtz


----------



## wayneL (23 March 2007)

robots said:
			
		

> save hard , get a property....



...when the time is right


----------



## Kimosabi (23 March 2007)

hello,

Up to 2.2 million American's could loose their homes due to predatory lending in an over-inflated property market.

Rubbish.

Buying overpriced property at the top of a boom is always a good idea.

Save hard, buy at the top of the boom, loose your hard earned savings, your house, and ruin your credit rating for the rest of your life.

thankyou

Kimosabi


----------



## robots (24 March 2007)

hello,

prices havent dropped in Aus for "quality" property, but increased

people have been buying well, people with the dollars

solid as in capital cities, go for walk around see whats happening instead of reading the media

so easy picking the top of the boom!!, you will regret it if sitting waiting

thankyou

robots


----------



## wayneL (24 March 2007)

robots said:
			
		

> hello,
> 
> prices havent dropped in Aus for "quality" property, but increased
> 
> ...



Ramp

:sleeping:


----------



## Kimosabi (24 March 2007)

Hello,

To be able to afford to buy *Quality* property.  *Inflation* will have to be contributed to by *Increasing Fees* charged to clients.

Due to everyone increasing prices to be able to afford to pay for *Over-Inflated* Assets, *Interest Rates* will be forced to *RISE*, eventually forcing the *Over-Leveraged* (Greedy and/or Stupid)  to sell or the bank to foreclose on them.

*Credit Crunch* is coming to a bank near you.  Due to banks tightening lending standards, fewer will be able to borrow money to buy over-priced assets, thus prices will have to come down.

Look at what is happening in US.  "AUSTRALIA" will be next, has already started to happen in NSW, Victoria.  This is only the beginning.  As soon as commoditieis boom end, this will spread to the rest of Australia, dragging NSW and Victoria even lower.

An example of what will happen in Australia from our silly friends in the USA.

"For condominiums, the *price fell 31 percent* from $356,600 to $247,600 and the number of sales fell 24 percent from 195 to 149."

http://www.news-press.com/apps/pbcs.dll/article?AID=/20070323/BUSINESS/70323051/1075

Australian Housing prices were 50% over-valued in 2005.

http://www.theage.com.au/news/plann...ugh-for-a-while/2005/07/09/1120704594565.html

When the demand for commodities drops off, unemployment will increase, causing many to loose homes.

Commodities BOOM is the only thing that has kept Australia out of recession in last 3-4 years.

Open eyes, property busts are beginning to happen everywhere there have been booms.

What happened to Japan will happen to US, UK and Australia.  Has already started in US.







People with the *BANKS* dollars have not been buying well.  *Over-Leveraging on Over-Priced assets is not a good investment.*

Get positioned now to pick up Bargains in the Bust.  Save hard now, make sure credit rating is 100%.  Some Aussie Banks are already increasing lending standards NOW.  Borrowing money will be much harder during Bust.

The bigger the boom, the bigger the Bust will be.

You *will* regret buying at the top of a boom...

Thankyou



Kimosabibots


----------



## robots (24 March 2007)

hello,

and you where one who ploughed all your dollars into the stock market in 2000 and 2001, 

thankyou

robots


----------



## YChromozome (24 March 2007)

Kimosabi said:
			
		

> Due to everyone increasing prices to be able to afford to pay for *Over-Inflated* Assets, *Interest Rates* will be forced to *RISE*




Don't forget because Over-Inflated Residential 'Sure Things'(TM) has gone up 160% in the last decade and rents have only gone up in line with inflation (~50%), then now want to increase rents to fix the low yield problem. It is estimated rents will rise 20% this year. Many landlords have already increased rents by a flat 20.00%.

You you look at the weightings used to calculate inflation, Rents make up one of the largest proportions of the CPI - they contribute 5.22% to the overall index. If rents rise 20%, you can work out the rest, and guess at how many interest rate rises there will be to correct it.


Note : 'Sure Things' = houses. They always go up - it's a sure thing.


----------



## Kimosabi (24 March 2007)

Hello,

Reality is a cruel Mistress...

Houses cheaper than cars in Detroit

"We were sent an article yesterday from Yahoo! News detailing the levels to which housing prices in Detroit have fallen, and they have fallen very far indeed. Apparently last week, a Texas auction firm was commissioned to sell off a number of homes there. The prices were unbelievably cheap, with 'house after house [selling] for less than the $29,000 that it costs to buy the average new car.' The auctioneer became so exercised that he enjoined the audience with the simple statement that 'Folks, the ground underneath the house goes with it. You do know that, right?' Several houses that went by the boards sold for less than $10,000... some even for less than $7,000. As one participant said, 'You cannot even buy a good used car for that!'


"Sadly, these 'bargains' are not only in seedy, run-down depressed portion of the city. We read where a house in Bloomfield Hills, an area of the city we've been to several times in the past two years and is really very, very nice indeed, which *had been listed for $525,000 sold for $130,000*! Five years ago, at $525,000 the house was a bargain; at $130,000 it is even 'bargain-er.' However, when nice, tidy, small houses begin to sell for less than the price of a nice, tidy, used car, either cars are expensive or houses are inexpensive... or both. Now, how do we do the arb?" 

http://www.frontlinethoughts.com/article.asp?id=mwo032307

Thankyou


Kimosabibots


----------



## Smurf1976 (24 March 2007)

Kimosabi said:
			
		

> *Credit Crunch* is coming to a bank near you.  Due to banks tightening lending standards, fewer will be able to borrow money to buy over-priced assets, thus prices will have to come down.
> 
> ...
> 
> ...



I suspect that's true and I've long been expecting that to happen at some point. But do you have any firm evidence that major lenders are tightening credit right now? 

Are they just increasing the minimum quality of borrower they will lend to or are they actually reducing the amount that will be lent to high quality (less than 80% loan to value, full time employed, clean credit history) borrowers?


----------



## Kimosabi (24 March 2007)

Smurf1976 said:
			
		

> I suspect that's true and I've long been expecting that to happen at some point. But do you have any firm evidence that major lenders are tightening credit right now?
> 
> Are they just increasing the minimum quality of borrower they will lend to or are they actually reducing the amount that will be lent to high quality (less than 80% loan to value, full time employed, clean credit history) borrowers?




ANZ has started tightening their lending standards, and have also increased their loan loss provision.



> The important point about it all (well there are several really) is that you don’t make house prices more affordable by making credit more widely available. *By the way did you notice ANZ is already tightening its lending practices?* Australia is not America, of course. What will happen here? Hopefully not a repeat of America’s mortgage market.
> 
> http://www.dailyreckoning.com.au/mortgage-market-2/2007/03/15/






> *Profit growth slowing – loan loss provisions rising!*
> 
> ANZ has provided a timely warning about substantially rising loan loss provisions in the coming year. Recent interest rate increases are affecting overall lending with a slowing in the rate sensitive mortgage lending segment. From heady growth above 20% two years ago the growth rate in mortgage lending is currently around 12% and slowing.
> 
> ...



ANZ appears to be one of the more responsible banks.

*The problem with being a ROBOT is that you have no concept of reality...*

Thankyou

Kimosabibots


----------



## The Red Baron (25 March 2007)

The Real Estate Institute of WA has reported the number of homes in the market has ballooned to almost 13,000 mid Feb, twice the number of the same time last year. Initial assessment by REIWA reveals that total house sales has dropped by some 40% below March 2006 and 33% below March 2005 respectively.

Add that rates could also be on the rise. Interesting times ahead.



> http://www.news.com.au/business/story/0,23636,21426591-37037,00.html
> 
> Rates forecast to keep rising
> By Nicki Bourlioufas
> ...


----------



## robots (25 March 2007)

hello,

wow a .75% increase last year, and "maybe" a .25 increase coming up

gee that will knock things over wayne, but there already knocked over aren't they?

things have already collapsed going by this thread

thankyou

robots


----------



## wayneL (25 March 2007)

robots said:


> hello,
> 
> wow a .75% increase last year, and "maybe" a .25 increase coming up
> 
> ...



:sleeping:


----------



## YChromozome (25 March 2007)

robots said:


> and "maybe" a .25 increase coming up
> 
> gee that will knock things over wayne




You have to remember we carry a lot more debt these days. So .25% is more significant today that it was 20 years ago.

We also today have a Triple Leveraged Economy - Leveraged investors, who buy highly leveraged companies, that rely on the leveraged consumer . . . So you need to think off the implications of a 0.25% rise outside of the housing market too, and what effect that will have on employment and people's abilities to service their mortgages.


----------



## BSD (25 March 2007)

YChromozome said:


> We also today have a Triple Leveraged Economy - Leveraged investors, who *buy highly leveraged companies,* that rely on the leveraged consumer . . . So you need to think off the implications of a 0.25% rise outside of the housing market too, and what effect that will have on employment and people's abilities to service their mortgages.




On average - listed companies are by no means highly leveraged at the moment

Corporate balance sheets are historically lowly geared at the moment - hence all the buybacks and private equity involvement

I don't disagree with the rest of your comments

25 bps is way more effective than 10 years ago

Personal leverage is high - corporate leverage is not


----------



## wayneL (25 March 2007)

BSD said:


> On average - listed companies are by no means highly leveraged at the moment
> 
> Corporate balance sheets are historically lowly geared at the moment - hence all the buybacks and private equity involvement
> 
> ...



Would your comments apply outside of the ASX? i.e. How highly geared are the larger and more influential foreign markets, US, Europe et al?


----------



## robots (25 March 2007)

hello,

people dont carry heaps of debt, the "majority" I think are in reasonable positions

things are no different to somebody's parents buying a house thirty years ago

they were nervous then when purchasing and thought it was huge step just like most people today but they dont regret it for one moment

it is all talk, just get out and have a look for yourself before jumping down my throat

thankyou

robots


----------



## BSD (25 March 2007)

wayneL said:


> Would your comments apply outside of the ASX? i.e. How highly geared are the larger and more influential foreign markets, US, Europe et al?




As far as my un-referenced knowledge extends - yes. I would like to provide some links. 

US and Aust corporate debt levels are low and many balance sheets are ridiculously flushed with cash - hence the activities of private equity. 

Credit Defaults Swaps are at all time lows. Some of this pricing results from exuberance, but just as much is related to very low gearing across the majority of companies.  

I would say that large leverage remains in property and infrastructure - but the volatility of cash flows in this sector will always lend themselves to a heap of leverage and financial engineering/wizardry. 

With the exception of the warmongering US - government debt is very low across the major countries

The first-world consumer is the debt laden party at the moment


----------



## wayneL (25 March 2007)

BSD said:


> As far as my un-referenced knowledge extends - yes. I would like to provide some links.
> 
> US and Aust corporate debt levels are low and many balance sheets are ridiculously flushed with cash - hence the activities of private equity.
> 
> ...



OK thanks.

Again unreferenced, but I think the UK gummint is up to its @rsehole in alligators as well, with reference to debt.

Agree re the first world consumer; he's up to his nostrils.


----------



## money tree (25 March 2007)

House prices here in Brisbane are booming.

Cheap properties go under contract within 48 hours at list price or above.

Maybe we need a new topic title?  

Im doing a reno on a house in Redcliffe, paid $250k in December, just revalued @ $390k

Been trying to find another house around the 250k mark but they get snapped up before they are listed on the net. I've given my details to 14 agents & have had no contact. 

In the last few weeks there have been heaps of people cruising my street looking for "for sale" signs. 

Redcliffes boom has a lot to do with the promoting of the area in Brisbane TV ads. But, this area is still real cheap for what you get. Where else in Australia can you buy 400m from the water & 20 mins from CBD for 300k?


----------



## wayneL (25 March 2007)

robots said:


> hello,
> 
> people dont carry heaps of debt, the "majority" I think are in reasonable positions
> 
> ...



Nobody is jumping down anyones throat. It's called a discussion. People may hold opposing points of view in discussions.

Just as hold the opposing point of view to the above post. The levels of personal debt are in no way comparable to 30 years ago. The figures show they are higher by a quantum leap adjusted for inflation even.

...and I think you'll find my, and others comments are from "getting out and looking around".

Many people are just fine. But prices are set at the margins and it is at the margins where the trouble will come from. Just look at the US property apocalypse in progress right now. It started at sub-prime and is now spreading to Alt-A.

There are real price falls because of a few inappropriate loans to unemployed ex-cons and subsequent repos

That contagion will spread to prime and eventually across sectors and across the globe.

The first sign of trouble has appeared in the UK sub-prime now.

Look! There is nothing wrong with owning property and most will be OK. As long as folks can comfortably afford their mortgage with a margin for adversity they will be just fine. But there is quite a substantial group who are way over committed, and have no margin for adversity and are a couple weeks from real trouble should there income become compromised.

Remember prices are set at the margin.


----------



## BSD (25 March 2007)

wayneL said:


> Again unreferenced, but I think the UK gummint is up to its @rsehole in alligators as well, with reference to debt.
> 
> Agree re the first world consumer; he's up to his nostrils.




If I was running the UK Central Bank I would be printing sooooo many GBPs I would be out of debt in a second

The GBP is so overvalued; a printing flurry would hardly be a bad policy

As for the consumer, they are massively over-leveraged by historical standards, but we remain to see whether it is actually a problem

Sustained CADs above 6%, previously unheard of, have been sustained easily by growing economies without problems - who is to say consumers shouldn't/can't carry multiples of the debts of those from decades ago?

Gearing up into the last ten years of property and sharemarket booms has been the way to make money and get tax deductions

Hard to argue with those motives.

I fear the effect of a massive devaluation in assets - but cannot see too many bubbles

The differentiation needs to be made between those who borrow to buy real quality assets and those who borrow to buy cars/LCDs/weddings/holidays etc


----------



## BSD (25 March 2007)

money tree said:


> Redcliffes boom has a lot to do with the promoting of the area in Brisbane TV ads. But, this area is still real cheap for what you get. Where else in Australia can you buy 400m from the water & 20 mins from CBD for 300k?




And 20 KMS from anyone with a job !

Redcliffe is 20min from the CBD by helicopter

It takes 20 minutes to get to the Gateway On-Ramp at Hamilton in commuting traffic


What yield do you get on a $390,000 pad in Redcliffe?


----------



## wayneL (25 March 2007)

BSD said:


> If I was running the UK Central Bank I would be printing sooooo many GBPs I would be out of debt in a second
> 
> The GBP is so overvalued; a printing flurry would hardly be a bad policy




The printing presses can only go so fast and are in danger of overheating already. Increasing money supply would cause an inflation breakout they would be unable to hide even with the currently fraudulent CPI measure. There is already wage-breakout pressure and the BOE would have no choice but the raise the (currently negative in real terms) interest rates substantially.

The British consumer is on a knife edge already and this would cause defaults on a massive scale and take out the property market big time. Though they deny it, there is a substantial sub-prime mortgage market in the UK, nearly as irresponsible as the US version.

Notwithstanding true inflation is in the region of 6-8% (10% or more by some measures) the BOE cannot afford inflation to work itself into the CPI/RPI fraud.

Stay tuned, interesting times approacheth.


----------



## BSD (25 March 2007)

I bristle when I hear 'fraudulent' and 'inflation measure' combined. 

I want to do some more numbers on the UK scenario before I make a call - but why do you think the GB inflation numbers are fraudulant and what effect do you think a 10% - 20% fall in property values would have on this number(?) with the flow through effect on rents and overall demand. 

Perhaps a stagnation in the property market for 5-10 years (like in Australia through the 90s) would sort this out without a more severe event.

I am not a property bull by the way and think the Aussie, USA and GB property markets need to stagnate for years - as per the thread topic. 

I just dont see a savage depression.


----------



## wayneL (25 March 2007)

BSD said:


> I bristle when I hear 'fraudulent' and 'inflation measure' combined.
> 
> I want to do some more numbers on the UK scenario before I make a call - but why do you think the GB inflation numbers are fraudulant and what effect do you think a 10% - 20% fall in property values would have on this number(?) with the flow through effect on rents and overall demand.




CPI is dubbed the Chav Price Index (Chav is a yobbo bludger) as its contents reflect mainly frivolous discretionary expenditure and specifically excludes larger and more important expenditures. One of the latest additions to the CPI is mobile ring tones ffs!!!

RPI is nearly 5% and at it highest point for quite some years. Interest rates were in excess of 8% when RPI was last at this level. But even this measure manipulated measure is ignored.

The BOE's remit is to target CPI and this entirely misses the main economy, henceforth is a fraud.

Add to that the previous BOE governor has come out last week and admitted to this in effect, and that interest rates are unsustainably low.


----------



## Kimosabi (25 March 2007)

BSD said:


> I bristle when I hear 'fraudulent' and 'inflation measure' combined.
> 
> I want to do some more numbers on the UK scenario before I make a call - but why do you think the GB inflation numbers are fraudulant and what effect do you think a 10% - 20% fall in property values would have on this number(?) with the flow through effect on rents and overall demand.
> 
> ...




It's getting rather savage in the US and it's only going to get worse.

Watch US consumer confidence plummet next...


----------



## BSD (25 March 2007)

wayneL said:


> CPI is dubbed the Chav Price Index (Chav is a yobbo bludger) as its contents reflect mainly frivolous discretionary expenditure and specifically excludes larger and more important expenditures. One of the latest additions to the CPI is mobile ring tones ffs!!!




Chav Price Index!!!!!

GOLD !!!

I am fascinated by the Chav and love the connection to the Aussie Bogan - they just have smaller engines!

Unfortunate for the sophisticates amongst us - the Chav/Bogan/Rednecks are the majority. 

Heck people are apparently paying $350K to live in Redcliffe!!!

I dont think the majority of finance focussed people are in touch with the majority of people and their comments on the relevence of the CPI are equally as irrelevant

Why not include TXT or Mobile Ring Tones?

They include things middle class people use - why not bogan expenditure?

More people live in the lower/middle than the upper


----------



## Kimosabi (25 March 2007)

robots said:


> hello,
> 
> people dont carry heaps of debt, the "majority" I think are in reasonable positions
> 
> ...




You obviously live in fantasy Robots land

A significant number of people are up to their necks in debts, paying off "over-priced assets"

I overheard a conversation at one of my clients who is a Life Insurance/Super Advisor and one of the Super Funds Representatives.

And I quote,

"Most people are paying off huge mortgages and aren't putting very much or anything into super"  The average amount in Super for the average person was something like $30,000

Below I have run trend lines on the WA Median House Price graph.

I have been very generous and have run the trend line across the top of the the last boom in 1989.

Now if prices in WA stagnate based on current prices, we could be waiting for  *30 years*  before they start rising again.

Now if anyone finds anything wrong with my Trendline analysis below, please let me know...


----------



## BradK (25 March 2007)

Wayne, 

Are you in England at the moment? I am moving my family across there in late December this year. In terms of money management and creative ways to budget are there any wizz bang products over there that I can research? 

Brad


----------



## robots (25 March 2007)

hello,

employer puts money into super thats the idea of it, a style of compulsory savings which is showing clear signs of being a great thing

not sure what super has to do with anything

quality RE assets are sound and thats my view all along in this thread, they havent stagnated, they have increased

within 10-15km of syd, melb, adel and perth things are sound as

stop reading the rubbish in the media and thinking you r an expert in monetary policy, send your resume to the RBA or the Fed's 

I havent forecast anything!

thankyou

robots


----------



## Dutchy3 (25 March 2007)

Hi Kim

Assuming Perth has actually stopped ... I recently bought a 'Renovators Delight' almost fearing I'd bought at the top of the market in Perth ... seems I'm wrong and the price continues to rise .... China/India et al. are insatiable and will see me out this lifetime


----------



## wayneL (25 March 2007)

BradK said:


> Wayne,
> 
> Are you in England at the moment? I am moving my family across there in late December this year. In terms of money management and creative ways to budget are there any wizz bang products over there that I can research?
> 
> Brad



Not yet, next month I think.

But if you're 102 years old, you can get a 25 year interest only mortgage to invest in "Buy To Let" property. 

http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/03/25/nmort25.xml


----------



## Kimosabi (25 March 2007)

robots said:


> hello,
> 
> employer puts money into super thats the idea of it, a style of compulsory savings which is showing clear signs of being a great thing
> 
> ...




The point I am making is the sentiment expressed by those that see many peoples financials.

Here is another analysis

Interest on a $200,000 home loan = $233,684

compared to

Interest on a $300,000 home loan = $350,526

So if properties drop by 1/3rd (which is happening in the US as we speak) you could wind up saving a cool $116,842.

Wow, thats a pretty big saving.  Who wouldn't want to save $116,000 buying a house, I feel sorry for the poor sucker who bought at the top of the boom thinking they were going to miss out on owning a home and will never be able to afford to buy a house.

Oh, and lets not forget about the banks who lent the money to the poor person to buy (what they know is) overpriced property

Me, I'll be buying in the bust with WayneL, thankyou


----------



## wayneL (25 March 2007)

robots said:


> stop reading the rubbish in the media and thinking you r an expert in monetary policy, send your resume to the RBA or the Fed's



It is accepted that central banks have painted themselves into a corner, even by the bakers themselves. There remit is to administer monetary policy according to the government of the days guideline and are not "truly" independent.

There objectives are different to the individual investor. The investors job is to invest according to the future circumstances as he.she sees them

For this reason your above comment is total rubbish and contains a logical fallacy for which I'm sure there is a neat Latin name for.

Past performance is not a guarantee of future performance.


----------



## wayneL (25 March 2007)

Via Barry Ritholtz


----------



## Kimosabi (25 March 2007)

robots said:


> hello,
> 
> stop reading the rubbish in the media and thinking you r an expert in monetary policy, send your resume to the RBA or the Fed's




ROBOTS = Glenn Stevens






Could it be???


----------



## Kimosabi (26 March 2007)

> *House price dip a 'correction'*
> 
> PRIME Minister John Howard says a fall in house prices in some cities was a natural correction to an overheating market but was silent today on higher interest rates.
> 
> ...




http://www.news.com.au/business/story/0,23636,21446419-462,00.html


----------



## chops_a_must (26 March 2007)

robots said:


> it is all talk, just get out and have a look for yourself before jumping down my throat
> 
> thankyou
> 
> robots





			
				The_Red_Baron said:
			
		

> The Real Estate Institute of WA has reported the number of homes in the market has ballooned to almost 13,000 mid Feb, twice the number of the same time last year. Initial assessment by REIWA reveals that total house sales has dropped by some 40% below March 2006 and 33% below March 2005 respectively.
> 
> Add that rates could also be on the rise. Interesting times ahead.



Yep. When driving to work and back on Saturday, there were more home opens than I can ever remember seeing in my entire life. At least two or three signs on every suburban street I drove past. It was... rather strange...

And interestingly, there were no traffic problems around these areas like usual... Quality areas as well...


----------



## stock_man (26 March 2007)

I would tend to think that properties are more likely to stagnate for a long time rather than fall in enough value to call it a bust. (further modest falls can be expected). Logically, with the way rents are going now, if properties were to drop 20-30% in value, we would have an abundance of potential positively geared properties (thats even when 100% is borrowed). With a 40% drop, you could expect that every single house in this country would fit into this equation.

Now me personally, if this were the case, I would be buying everything I could get my hands on. Even if the value dropped further, as long as the rent was outpacing the repayments (inflation helps here), and you held long enough to own them outright, the new situation is money in pocket every week, plus 1 heck of a super at the end (assuming properties don't fall 100%....)

Given the amount of people that have purchased investment properties purely for gearing (mostly negative), I would bet anything that if properties started showing up everywhere with repayments cheaper than the rent, these people would snap them up as they are already confident with property investments. Bit like when a stock goes down, and you hold and like the company, you top up to decreae your overall average value.

Now if this happens, stock dries up, and prices move again.

Could the future of real estate prices be channeling? (hope so!!!)


----------



## Smurf1976 (26 March 2007)

wayneL said:


> It is accepted that central banks have painted themselves into a corner, even by the *bakers* themselves.



And what a truly rotten cake they've baked...


----------



## wayneL (27 March 2007)

Smurf1976 said:


> And what a truly rotten cake they've baked...



LOL oops

**************

US housing numbers stink:

http://www.marketwatch.com/news/sto...x?guid={A1D8CD82-1EB9-4E46-BDF5-DB0BA246F1DE}

USD and Dow whacked


----------



## Kimosabi (27 March 2007)

wayneL said:


> LOL oops
> 
> **************
> 
> ...




We seem to have very mixed signals from the US, one minute housing is going up, the next down.

I guess it depend on who writes the articles, the ones based on facts or the ones from the Real Estate industry...


----------



## wayneL (27 March 2007)

Kimosabi said:


> I guess it depend on who writes the articles, the ones based on facts or the ones from the Real Estate industry...



Hehe Exactly

Did anyone watch "Difference of Opinion" tonight on house prices?

LOLOLOL


----------



## Kimosabi (27 March 2007)

wayneL said:


> Hehe Exactly
> 
> Did anyone watch "Difference of Opinion" tonight on house prices?
> 
> LOLOLOL




Missed it, but it can be watched bere ==> http://www.abc.net.au/tv/differenceofopinion/

Whats most funny, is how sh1tty people get when you tell them the price of property is going to start going down, especially the 'property never goes down brigade'...


----------



## Kimosabi (27 March 2007)

Trump on San Francisco/Bad Property Markets


----------



## wayneL (27 March 2007)

An excellent lecture from Michael Hudson:

http://www.michael-hudson.com/audio/061208HudsonRealEstates.mp3

*an interesting point about 3/4 the way through is how the housing indices can go up while real prices are actually going down.


----------



## noirua (27 March 2007)

wayneL said:


> An excellent lecture from Michael Hudson:
> 
> http://www.michael-hudson.com/audio/061208HudsonRealEstates.mp3
> 
> *an interesting point about 3/4 the way through is how the housing indices can go up while real prices are actually going down.





Hi, I haven't managed to get 3/4 of the way through yet but will manage it sometime. 

The point on capital gains tax on properties is quite interesting and being allowed to depreciate value on an asset, by any amount, when it is increasing in value, looks very dangerous in America. A very good point on the Asset value increasing whilst making a loss on the rent. 

So much bearish news and opinion here: http://patrick.net/housing/crash.html

The UK hasn't crashed yet and continues to boom on and one reason is, that capital gains tax at 40% is much higher than America. People and companies are just not selling their investment properties. As more money piles into the stockmarket there will be less interest in property and at some point, as in the late 1980's, the slide will begin.


----------



## theasxgorilla (27 March 2007)

wayneL said:


> An excellent lecture from Michael Hudson:
> 
> http://www.michael-hudson.com/audio/061208HudsonRealEstates.mp3
> 
> *an interesting point about 3/4 the way through is how the housing indices can go up while real prices are actually going down.




Wayne...that lecture is GOLD, and timely too.

It's good to be reminded of how the system works in terms of the big picture, lest you're still riding the debt/bubble escalator when it reaches it's conclusion and _lemmings_ you over the edge like the rest of the lower 90% he refers to.


----------



## Kimosabi (27 March 2007)

theasxgorilla said:


> Wayne...that lecture is GOLD, and timely too.
> 
> It's good to be reminded of how the system works in terms of the big picture, lest you're still riding the debt/bubble escalator when it reaches it's conclusion and _lemmings_ you over the edge like the rest of the lower 90% he refers to.




x2

That's a fantastic lecture.

I think the more educated one can become on how the 'real' money/banking systems work, the better positioned one will be to become really wealthy in the next 10 - 20 years.

I have this nasty little feeling that Interest Rates are going to go through the roof in the next couple of years.


----------



## robots (27 March 2007)

hello,

fantastic stuff

goodluck

robots


----------



## numbercruncher (27 March 2007)

What does Divine Brown and the Realestate market have in common ??


----------



## waz (28 March 2007)

Is the answer that they are both overpriced?


----------



## numbercruncher (28 March 2007)

waz said:


> Is the answer that they are both overpriced?





They both go down


----------



## wayneL (28 March 2007)




----------



## robots (28 March 2007)

ramp :sleeping:


----------



## wayneL (28 March 2007)

robots said:


> ramp :sleeping:



Touche' 

LOL

(....but isn't it a DE-ramp)


----------



## Mofra (28 March 2007)

wayneL said:


> Touche'
> 
> LOL
> 
> (....but isn't it a DE-ramp)



Not if you are actually long bond futures :


----------



## numbercruncher (29 March 2007)

> Home prices fall for first time in 11 years
> Case-Shiller price index shows prices dropping in 17 of 20 cities in January
> 
> WASHINGTON (MarketWatch) -- U.S. home prices continued to fall in January, with prices in 10 major cities now down 0.7% year-over-year, according to Standard & Poor's and MacroMarkets LLC, which released the January Case-Shiller price indexes on Tuesday.




http://www.marketwatch.com/News/Story/home-prices-go-negative-first/story.aspx?guid=%7B30B54985%2D2189%2D4AE9%2DB8E5%2DECF89F6095F3%7D&dist=TNMostRead


The slide is just beginning perhaps?


----------



## wayneL (29 March 2007)

numbercruncher said:


> http://www.marketwatch.com/News/Story/home-prices-go-negative-first/story.aspx?guid=%7B30B54985%2D2189%2D4AE9%2DB8E5%2DECF89F6095F3%7D&dist=TNMostRead
> 
> 
> The slide is just beginning perhaps ?



Here is the Chart






:sleeping::sleeping::sleeping: (getting in first  )


----------



## theasxgorilla (29 March 2007)

Mofra said:


> Not if you are actually long bond futures :




Don't they appreciate in value when the interest rates go down?


----------



## wayneL (29 March 2007)

theasxgorilla said:


> Don't they appreciate in value when the interest rates go down?



Yeah, but we knew what he meant


----------



## wayneL (29 March 2007)

:sleeping: De-Ramp :sleeping:

The State of Sth Dublin RE Market (One that has had a huge boom as well) from a RE agent.

http://www.daft.ie/discussions.daft...293&dcn[root_discussion_id]=0&dcn[forum_id]=4



> Hello
> 
> Im an estate agent (can hear the boos and hisses already).
> I work in good south dublin areas - high prices, healthy demand (usually).
> ...




....but, but, but, houses only ever go up.


----------



## money tree (29 March 2007)

you guys still waffling on like the sky is falling?

newsflash!

we arent in the U.S, or Ireland. I doubt anyone here owns property in these places.

We are in AUSTRALIA

here the market is booming. 

what you are doing is effectively stopping your car along the freeway everytime you see a car wreck, jumping out & taking photos cos its just so darn exciting! meanwhile, every other car on the road got to their destination days ago.


----------



## numbercruncher (29 March 2007)

money tree said:


> here the market is booming.




Do you have evidence to support this claim?


----------



## robots (29 March 2007)

hello,

go for youself to an auction 10 - 15kms of a capital city, you will see multiple buyers, solid prices, well over reserves

the longer you wait the more you will regret in years to come

prices in Melbourne started moving around september 2006

cant afford?

thankyou

robots


----------



## krisbarry (29 March 2007)

*Australia has the highest priced houses in the world...*

Is the average joe buying these homes? NOT ANYMORE!!!

*Then that begs the question who is going to buy these homes?*

Why would foreigners invest in the highest priced property market in the world?

*Its the top of the market boy and girls and everyone in between*


----------



## Kimosabi (29 March 2007)

robots said:


> prices in Melbourne started moving around september 2006




:sleeping: De-Ramp :sleeping:

This is commonly referred to as a 'Dead Cat Bounce'


----------



## theasxgorilla (29 March 2007)

Kimosabi said:


> :sleeping: De-Ramp :sleeping:
> 
> This is commonly referred to as a 'Dead Cat Bounce'




OR a wave-B


----------



## Kimosabi (29 March 2007)

:sleeping: De-Ramp :sleeping:

Front Page, The West Australian, 27th March 2007

Interestingly, I was talking to one of my clients yesterday (who owns a Real Estate Agency) about the article below and one of his clients, who after reading the article below accepted an offer $40,000 below what they were hoping for.


----------



## money tree (29 March 2007)

numbercruncher said:


> Do you have evidence to support this claim?




Well I bought a house in 2005 for $220k, sold for $346k in 2006, then bought another house for $257k, just revalued @ $390k

Perth went up 37% also in the last year.


----------



## numbercruncher (29 March 2007)

But you said the market is booming now which it isnt, it boomed in the past, your an attestment to it booming in the past,its finito now pretty much.


----------



## wayneL (29 March 2007)

money tree said:


> you guys still waffling on like the sky is falling?
> 
> newsflash!
> 
> ...



There is correlation however.

The liquidity bubble is a anglosphere wide phenomenon. Credit will tighten in unison.

Didn't you notice they all boomed in unison?

(NB there are local issues which will make this correlation not exact in time and magnitude however)


----------



## robots (29 March 2007)

hello,

oh, I understand you want to keep it quiet

hush hush, okay no problem

get that contrarian view going

thankyou

robots


----------



## wayneL (29 March 2007)

money tree said:


> We are in AUSTRALIA
> 
> here the market is booming.



Comments? (see image from your website)


----------



## BSD (29 March 2007)

From my limited geographic perspective (South East QLD) you need to differentiate between quality and rubbish property - all of which has gone up massive in recent years. 

Quality is not getting any more supply in a hurry - Inner City and Waterfront - so you should be OK

Boomers (the demographic that matters) have only recently started to retire or downsize. 

They are selling McMansions or 3-bedder middle class homes in outer ring suburbs (8kms+) and are buying lifestyle pads. 

Inner city and flash Noosa/Byron/GC homes and apartments (minted boomers) or snoozy coast properties (+100s of kms from capitals) for middle class boomers. 

In my very humble opinion, the (eventual) bust is going to have a large dichotomy of effects - nappy valleys with no boomers and loads of  McMansions built by the 'new middle class" are going to get hit the hardest because of their distance from employment and their monster mortgages.

While regions interesting to boomers will be fine - they are loaded and have no debt

Dont bet against demographics


----------



## tech/a (29 March 2007)

money tree said:


> Well I bought a house in 2005 for $220k, sold for $346k in 2006, then bought another house for $257k, just revalued @ $390k
> 
> Perth went up 37% also in the last year.




Dont often agree with the "tree"
But the holdings in property I have increased 22% and 16% in domestic (Different suburbs) and 
38% in Industrial. Last year alone.

Rents rose 20% mine are still low relative to the market.
Gearing now down to 32%.


----------



## wayneL (29 March 2007)

BSD said:


> From my limited geographic perspective (South East QLD) you need to differentiate between quality and rubbish property - all of which has gone up massive in recent years.
> 
> Quality is not getting any more supply in a hurry - Inner City and Waterfront - so you should be OK
> 
> ...



I think that's quite a sensible analysis in the medium term. However it is the lower tier property values which ultimately underpin the higher tier property values.

So a lot depends on the depth of the bust, and what if anything, busts along with property (shares for eg). One could at least expect a long stagnation of values in the higher tier.

While noting the the demographic point and the differing factors going forward, I recall in the last bust in the early 90's, "prestige" properties where severely whacked as well. depending on which way the butterfly flaps its wings, there remains a possibility that boomer properties get whacked again.

Energy/transport/access to services/money supply/geopolitical risks should all be entered into the mix and this is why in chaotic systems such as economies, definitive scenarios cannot be realistically be relied upon.

But you puts yer money down and yer takes yer chance.


----------



## wayneL (29 March 2007)

Mish discusses employment problems and credit tightening in the US


----------



## tech/a (29 March 2007)

Some good points here BSD.


----------



## Kimosabi (29 March 2007)

BSD said:


> While regions interesting to boomers will be fine - they are loaded and have no debt




I think you may be surprised how much debt the baby boomers have and how much equity they may have using to fund their lifestyles and investment property's, etc...

All this money doesn't come out of thin air.  It also needs to be taken into consideration that Baby Boomers are best positioned to take out the huge loans to be able to purchase some of these property's.

Depending on the bust I think alot of Baby Boomers may get seriously burned.  

Australia is no different to the US, while property prices are going up everything will be fine, but once property prices start stagnating/falling and the economy turns, they may find themselves with huge negative equity and a diminishing capacity to pay.  When employment gets tough, who will be the first to loose their jobs or who will be wanting to retire but will have to remain in the workforce?

Another thing Baby Boomers need to take into consideration, is that screwing up financially when someone is in their 20's or 30's, is much different than screwing up financially in your 50's or 60's.  If you screw up financially in your 20's or 30's, you still have 30 - 40 working years to recover financially.  In your 50's or 60's you don't have those extra years to recover financially.

I suspect the vast majority of Baby Boomers won't have taken this into consideration until it's too late.

This boom will not have a happy ending for any that didn't cash in while to going was good...


----------



## Kimosabi (29 March 2007)

wayneL said:


> There is correlation however.
> 
> The liquidity bubble is a anglosphere wide phenomenon. Credit will tighten in unison.
> 
> ...




The liquidity bubble appears to have happened in all the countries that participated in the War in Iraq.

What better way to pacify/distract the populace while conducting an ill-concieved, illegal war in Iraq than lowering interest rates to historical lows, lower lending standards, and fuel asset boom's...

Remember the headlines: "Australian's have never had it so good".  I'm sure every other country that has had these booms will have had exactly the same headlines.


----------



## YChromozome (29 March 2007)

Kimosabi said:


> I suspect the vast majority of Baby Boomers won't have taken this into consideration until it's too late.




I couldn't agree more. Many Baby Boomers are asset rich, cash poor and turning to equity release products such as reverse mortgages.

I also suspect a lot of Baby Boomers are complacent about the current boom and risk when forcasting if they have enough super to live off. Maybe some should save a little more for a rainy day, should one day their retirement assets are less than what they are today.


----------



## wayneL (29 March 2007)

YChromozome said:


> I couldn't agree more. Many Baby Boomers are asset rich, cash poor and turning to equity release products such as reverse mortgages.
> 
> I also suspect a lot of Baby Boomers are complacent about the current boom and risk when forcasting if they have enough super to live off. Maybe some should save a little more for a rainy day, should one day their retirement assets are less than what they are today.




Yes, some demographical scenarios point to a Boomer bust from 2010ish on... eg Harry Dent's work.

Mind you he was ludicrously wrong on Dow 36,000 by 2008 (so far) sooo...

....butterfly wings.


----------



## The Red Baron (29 March 2007)

Whats going on in South East QLD at the moment?

My parents bought two investment properties in Perth back in 2003 made a bit of a profit, now old man thinks he's a property tycoon (property always goes up and up type)  

They just bought one in South East QLD but the funny thing is so did 3 people I work with all around the same area. All of these were purchased from companies coming to Perth and flogging them off in seminars. Went down to footy training tonight another 5 blokes talking about the same thing in the same area.


----------



## Kimosabi (29 March 2007)

I think the smart Boomers will be the one's who have payed off all of their debts, and have invested the rest of their money 'carefully'.

The other thing that also needs to be taken into consideration, is that a reasonable percentage of Superannuation money would have been used to fund the liquidity bubble and will have invested in mortgage insurance/etc.  

When/if the liquidity bubble pops and the mortgage defaults etc really kick in, don't be surprised to see double digit losses in the super funds.


----------



## money tree (29 March 2007)

wayneL said:


> Comments? (see image from your website)




lol wayne

You and I both know that was written in 2003.


----------



## YChromozome (29 March 2007)

The Red Baron said:


> All of these were purchased from companies coming to Perth and flogging them off in seminars.




Is that what my free Dinner tickets (worth $180) were for. . .


----------



## Freeballinginawetsuit (29 March 2007)

The Red Baron said:


> Whats going on in South East QLD at the moment?
> 
> My parents bought two investment properties in Perth back in 2003 made a bit of a profit, now old man thinks he's a property tycoon (property always goes up and up type)
> 
> They just bought one in South East QLD but the funny thing is so did 3 people I work with all around the same area. All of these were purchased from companies coming to Perth and flogging them off in seminars. Went down to footy training tonight another 5 blokes talking about the same thing in the same area.





Direct marketing of an overpriced investment and sourcing demand from an ill informed demographic............smells of a leveraged developer!.

Rekindles memories of those flogging the virtues of investing in Paulownia Plantations in the late 90's.......although a different investment equity, same targeted demographic!


----------



## numbercruncher (29 March 2007)

The Red Baron said:


> Whats going on in South East QLD at the moment?
> 
> My parents bought two investment properties in Perth back in 2003 made a bit of a profit, now old man thinks he's a property tycoon (property always goes up and up type)
> 
> They just bought one in South East QLD but the funny thing is so did 3 people I work with all around the same area. All of these were purchased from companies coming to Perth and flogging them off in seminars. Went down to footy training tonight another 5 blokes talking about the same thing in the same area.




People quickly forgot about the Realestate marketing scams of the Gold Coast that where rampant in the 80s and 90s, paticularly after the boom hit and all those scammed people that where on TV current affairs shows having paid 50% too much suddenly made their money back and more!

Truth is those same scams are happening now but people are blind to it, because after all, short memories just show that realestate goes skywards and forgets the laws of Physics.  

People also forget that realestate literally didnt budge for a decade before this boom as well.

It also cracks me up with some of these boomers that are in there last few years of work going out and getting their 500k investment property convinced that it'll go boom boom boom some more.


----------



## theasxgorilla (30 March 2007)

BSD said:


> From my limited geographic perspective (South East QLD) you need to differentiate between quality and rubbish property - all of which has gone up massive in recent years.




{warning, longish post}

The quality vrs rubbish comment is key IMO.

I continue to be taken by the Michael Hudson post that WayneL made over on another thread.  The guy is an economic historian and a real brain and something that he presumed about what might manifest in a genuine property bear market was the that top end properties and the low end properties would be hit the hardest.  Since he's American the low-end was constituted by trailer park elements...but the reason for that end getting it worse was simply a supply/demand matter...who wants rubbish property???  Demand dwindles and desperate sellers (made so by poor economic conditions and high interest rates) are forced to sell at what buyers can afford, in either foreclosure or pre-foreclosure scenerios...so prices suffer...and those that can afford to hold are in a negative equitiy situation.

At the top end, those that must sell are selling into a sparcely populated market.  Fewer buyers means that finding the right one may involve selling at a _distressed_ price.

In anycase, one of Michael Hudson's definitions of a bubble involved two factors; the ongoing expection that prices would continue to go up AND/OR the subsidising of rent by landlords ie. the rent doesn't cover the interest and other outgoings...now, someone please tell me, when was the last time that it was possible to positively gear a property in an Australian capital city without a 30%+ deposit???

By Michael Hudson's definition many parts of Australia continue to be in a bubble...some parts are taking a breather, but thats not a bear market...it's just that...taking a breather.

Ponder the thought...the last property bear market in the US was caused by abolishment of their equivalent of negative gearing.  At around about the same time they tried it here, 1985, and effectively ruined the rental market, caused a shortage of rental properties, and were force to reverse the laws.  
This time around they've tried to reel in out of control property prices by increasing interest rates...and they've also tried lowering income tax rates to reduce the effectiveness of negative gearing...another way to skin the same cat...yet we're at 6.25%, almost 6.5%, and property prices are still heading north.

Going forward one or some or all of three things will occur (IMO, of course)...interest rates will continue upward, OR legislation will change ie. change negative gearing or depreciation laws etc. OR income tax brackets will be revised upwards again.  All that will differ is who gets the blame...the Reserve Bank, or the government.  One is appointed the other voted...my bet is on interest rates and taxes...but more likely interest rates...could we really expect further income tax cuts???


----------



## wayneL (30 March 2007)

Topical:

Mortgage Crisis Hits Million Dollar Properties


----------



## noirua (30 March 2007)

Don't worry about todays climate or prices sliding. Buy a property valued at $600,000+, don't hesitate, just do it.


----------



## wayneL (30 March 2007)

*This Is Not My Beautiful House*
As adjustable mortgage rates click upward, a Kentucky family is one of thousands forced from their dream homes and into the nightmare of foreclosure.


----------



## theasxgorilla (30 March 2007)

noirua said:


> Don't worry about todays climate or prices sliding. Buy a property valued at $600,000+, don't hesitate, just do it.




I like it...'just do it'...Nike goes property


----------



## Julia (30 March 2007)

Initially I was surprised when I read some of the preceding comments about boomers being in debt, but I guess that's true when I look at those who are still working.  I don't know anyone in my own circle who has any debt other than investment property, and that's minimal.

Talking with my accountant recently she remarked on the number of clients she has who intend to "just blow" most of their super when they can access it!!!  New car, overseas travel for extended period etc.  In response to her suggestion that it would be smart to plan for income for the retirement years, she says many of them just shrug their shoulders and say they'll always have the Centrelink pension if necessary.  Well, whoopdedo, that's just great until they actually try to live on said Centrelink pension.  I just don't get this attitude.


----------



## chops_a_must (30 March 2007)

Julia said:


> Talking with my accountant recently she remarked on the number of clients she has who intend to "just blow" most of their super when they can access it!!!  New car, overseas travel for extended period etc.  In response to her suggestion that it would be smart to plan for income for the retirement years, she says many of them just shrug their shoulders and say they'll always have the Centrelink pension if necessary.  *Well, whoopdedo, that's just great until they actually try to live on said Centrelink pension.*  I just don't get this attitude.



Not to mention getting rid of all those assets they've splurged on. And if they get it wrong.... no money until they can have another means test 5 years on...


----------



## robots (30 March 2007)

Kimosabi said:


> I
> 
> Australia is no different to the US, while property prices are going up everything will be fine, *but once property prices start stagnating/falling and* *the economy turns*, they may find themselves with huge negative equity and a diminishing capacity to pay.  When employment gets tough, who will be the first to loose their jobs or who will be wanting to retire but will have to remain in the workforce?




great speculation, predictions, you read to much garbage

why cant you discuss solely the property situation, not negative equity will do this, economy will do this, now the sub-prime loans is causing this

18mths on for this thread and it still hasnt occurred

thankyou

robots


----------



## Mousie (30 March 2007)

asxg, this post opened up a whole Pandora's Box so to speak...

The one thing I came to conclusion after reading this is the messed up way in which State and federal governments are elected totally screwed any chance of any effort to combat high house prices being effective.



theasxgorilla said:


> Ponder the thought...the last property bear market in the US was caused by abolishment of their equivalent of negative gearing.  At around about the same time they tried it here, 1985, and effectively ruined the rental market, caused a shortage of rental properties, and were force to reverse the laws.
> This time around they've tried to reel in out of control property prices by increasing interest rates...and they've also tried lowering income tax rates to reduce the effectiveness of negative gearing...another way to skin the same cat...yet we're at 6.25%, almost 6.5%, and property prices are still heading north.
> 
> Going forward one or some or all of three things will occur (IMO, of course)...interest rates will continue upward, OR legislation will change ie. change negative gearing or depreciation laws etc. OR income tax brackets will be revised upwards again.  All that will differ is who gets the blame...the Reserve Bank, or the government.  One is appointed the other voted...my bet is on interest rates and taxes...but more likely interest rates...could we really expect further income tax cuts???




Interest rates come from 'independent' RBA, or so they claim atm, so they'll do whatever they can by themselves.

Income tax cuts? We can definitely do with more of these, but it'll not be effective IMO as long as fat-cat Labors made so from stamp duties continue these same old same old. Same goes for legislation change - it'll help, but not by much since one party can't control what the other's doing. Only when both State and Feds get united on this issue will there be real change, which IMO is close to hopeless.

Solution? Change the way State and Fed govts are elected, and their respective taxation and legislative powers. 

All of which, of course, is easier said than done; we need champions and influential people in politics to do this. Dare we hope? Hmmmmmmm.....

NAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAH...


----------



## wayneL (31 March 2007)

BSD said:


> I bristle when I hear 'fraudulent' and 'inflation measure' combined.
> 
> I want to do some more numbers on the UK scenario before I make a call - but why do you think the GB inflation numbers are fraudulant...



Consumers reveal the truth about UK Inflation



> The Government grossly underestimates inflation figures according to new findings of an online survey* by independent personal finance website Fool.co.uk
> 
> Consumers say inflation is 7.4% not 2.7%
> 
> ...


----------



## Kimosabi (31 March 2007)

robots said:


> great speculation, predictions, you read to much garbage
> 
> why cant you discuss solely the property situation, not negative equity will do this, economy will do this, now the sub-prime loans is causing this
> 
> ...




Ummm, they're all interelated

Australia is in a similar position as the US.

Just about everyone has gone crazy buying over-priced assets with easy money. 

Even in an environment of low unemployment and no real jolt to the American economy, it still went South when reality caught up with fantasy.

Now as far as Australia is concerned, we would be in pretty bad shape economically if it hadn't been for the commodities boom.  When this ends/slows down some people are going to be in for a nasty shock.

And on a side issue ROBOTS.  I have never seen you post anything to support your point of view or perspective.

Maybe you need a processor upgrade or something to help you see the bigger picture...


----------



## money tree (31 March 2007)

*Re: House prices to BOOM for 'years'*



Kimosabi said:


> Australia is in a similar position as the US




no its not



Kimosabi said:


> Just about everyone has gone crazy buying over-priced assets with easy money.




such as resource stocks? XJO over 6000. nah thats not the bubble. the bubble is in property right?



Kimosabi said:


> Now as far as Australia is concerned, we would be in pretty bad shape economically if it hadn't been for the commodities boom.  When this ends/slows down some people are going to be in for a nasty shock.




we ARE IN BAD SHAPE. even with a resource boom we are still doing more importing than exporting, resulting in a trade deficit black hole. strong AUD now making it worse, and then what if rates rise? but this has NOTHING to do with the property cycle. and neither does 99% of the other rubbish logic posted here.



Kimosabi said:


> And on a side issue ROBOTS.  I have never seen you post anything to support your point of view or perspective.




at least he uses logic based on FACTS and makes sense. the rest of you are just scaremongering nancy-boys who dont understand the economic clock. when BHP & RIO earnings started going through the roof in 2004 did you sell them? same situation with property now. rents are skyrocketing. its time to BUY property.

at the end of the day you have all been WRONG. property prices have been RISING since you all started saying the sky is falling.


----------



## wayneL (31 March 2007)

*Re: House prices to BOOM for 'years'*



money tree said:


> the rest of you are just scaremongering nancy-boys




_Argumentum Ad Hominem /\._ Unnecessary and puerile.

As a point of order, you have managed to string together a whole bunch of counterpoints and assertions regarding property without a jot of sound economic reasoning. The correlation between rent and house prices is poor and non-transparent. More on this later...


----------



## BSD (31 March 2007)

*Re: House prices to BOOM for 'years'*



money tree said:


> at least he uses logic based on FACTS and makes sense. the rest of you are just scaremongering nancy-boys who dont understand the economic clock. when BHP & RIO earnings started going through the roof in 2004 did you sell them? same situation with property now. rents are skyrocketing. its time to BUY property.
> 
> at the end of the day you have all been WRONG. property prices have been RISING since you all started saying the sky is falling.




My BHP shares trade at 9 times cashflow and are liquid

My apartment 'trades' at 30 times cashflow and is illiquid

Which one is better value?


----------



## Kimosabi (31 March 2007)

*Re: House prices to BOOM for 'years'*



money tree said:


> at least he uses logic based on FACTS and makes sense. the rest of you are just scaremongering nancy-boys




I have never seen Robots use any facts, all we get are about 5 "don't worry, be happy", "nothing to see here, move along" sentences.

And if Reality = Scaremongering, then I think we are really onto something.



money tree said:


> at the end of the day you have all been WRONG. property prices have been RISING since you all started saying the sky is falling.




Isn't this called irrational exuberance?

Ummm, like about six months ago when people were offering more than the asking price for houses in Perth.

Interestingly, the Sydney market effectively topped out around the same time as the US Market topped and has been pretty much stagnating since then(about the time this thread started).  Now if it wasn't for some money still sloshing into NSW's from the commodities boom, how do you think the NSW market would be looking today after a rather severe drought last year.

How would the Australian economy be looking if it wasn't for the commodity's boom?

Go take some more of your irrational exuberance pills.  Me I'm getting cashed up during the boom and I'll be picking up the bargains when they come my way.


----------



## robots (1 April 2007)

hello,

an example:

13 park St, Abbotsford (within 15km of Melb) extended 3-bed victorian cottage

Feb 1993  Sold 122k

Sep 1997 Sold 155k

Nov 1998 Sold 240k

Dec 2003 Sold 405k

Feb 2007 Sold 480k

on research that seems around the correct price for a property of that type
using a savings calculator thats a return of about 9% over the 14 yrs

that is supposedly the long term average I understand, property and shares are both asset classes

wow what a period of price stagnation on that one wayne, talking property nothing else here not return on investment etc, what a crash there, running at the long term average I understand

can't afford? i think so, so therefore everything has to crash

dont listen to the crap from the media

thankyou

robots


----------



## wayneL (1 April 2007)

robots said:


> hello,
> 
> an example:
> 
> ...



Feb 2012 Sold ?


----------



## robots (1 April 2007)

hello,

going from this thread you already have the answer for 2012 don't you wayne?

thankyou

robots


----------



## Freeballinginawetsuit (1 April 2007)

wayneL said:


> Feb 2012 Sold ?





Feb 2012.....probably a perfect time to buy it again , if you were a first home buyer or property investor.


----------



## wayneL (1 April 2007)

Freeballinginawetsuit said:


> Feb 2012.....probably a perfect time to buy it again , if you were a first home buyer or property investor.



Agree 100%

Watch this bear turn it a raging, foaming at the mouth bull at the right time.


----------



## Kimosabi (1 April 2007)

wayneL said:


> Agree 100%
> 
> Watch this bear turn it a raging, foaming at the mouth bull at the right time.




x2

I'll be buying like there is no tomorrow when no-one would touch property with a barge pole..


----------



## Kimosabi (1 April 2007)

robots said:


> hello,
> 
> an example:
> 
> ...


----------



## money tree (2 April 2007)

mummy, Im scared!

Its curious that some of you think 2012 will be a good time to buy property.

To state the obvious, baby boomers will retire in 2010. Until then, they will be adding funds to their retirement accounts, ie managed funds, ie shares. Come 2010, they will stop adding funds to that market. Furthermore, they will begin drawing on these funds, ie selling. It is quite likely that many retirees will sell large chunks of shares / managed fund units, because they require frequent and consistent income streams. What provides this? PROPERTY. 

Furthermore, retirees cannot live in a managed fund. They will require a residence. Demand for primary residences will increase. Demand for investment properties will skyrocket. This pattern is unlikely to change until the retirees start to die off, maybe 10-20 yrs later.

So the only market that is doomed, is EQUITIES (unless investing in healthcare)


----------



## robots (2 April 2007)

hello,

2 asset classes

dont miss out on one or the other

owning a property(PPOR) is an extremely passive, low risk, capital gains free way of creating wealth

things havent gone bust and things havent gone boom, but solid as

thankyou

robots


----------



## numbercruncher (2 April 2007)

money tree said:


> mummy, Im scared!
> 
> Its curious that some of you think 2012 will be a good time to buy property.
> 
> ...





Are you a realestate salesman by chance?

To state the first obvious, Baby Boomers wont retire enmasse in 2010, some will certainly not all like you seem to imply.

Second what kind of baby boomer (minus ones with rocks in there heads) invest there retirement money in a house, especially seen as most already have one, Lets say the Boomer has a 500k nest egg and they go buy a 500k house, that will return 400pw less outgoings, so perhaps 300pw, enough for a round of golf and lunch at the country club.

Now that 500k just sitting in a bank account earning 6pc PA will return 600pw and the cash is there to pay for that hip replacement when its due!

And lets say some baby boomers get sucked in by the Realestate Sharks and buy a 500k "investment" property, I hope they realise they will need to sell this Illiquid asset,even the next day, for atleast 550k just to break even ! 

Baby Boomers wont be buying investment propertys, theyll be cash/shares and caravans/camperhomes.


----------



## Kimosabi (2 April 2007)

numbercruncher said:


> Are you a realestate salesman by chance?
> 
> To state the first obvious, Baby Boomers wont retire enmasse in 2010, some will certainly not all like you seem to imply.
> 
> ...




Don't forget, having money in the bank is generally very low risk.

Your logic is... too logical...


----------



## money tree (2 April 2007)

numbercruncher said:


> Now that 500k just sitting in a bank account earning 6pc PA will return 600pw and the cash is there to pay for that hip replacement when its due!




wrong. investing in CASH does not pay out weekly like property. it pays out quarterly at best. how many retirees can live on a small lump sum 4x a year without blowing it in month one? besides that, the taxman will take his half before the retirees even get it. furthermore, cash does not experience capital growth. rates are near the top of the cycle. they will drop again. then hows your plan gonna work?

and what about inflation? $600/wk may seem a lot now but in 20 years?


----------



## Kimosabi (2 April 2007)

money tree said:


> wrong. investing in CASH does not pay out weekly like property. it pays out quarterly at best. how many retirees can live on a small lump sum 4x a year without blowing it in month one? besides that, the taxman will take his half before the retirees even get it. furthermore, cash does not experience capital growth. rates are near the top of the cycle. they will drop again. then hows your plan gonna work?
> 
> and what about inflation? $600/wk may seem a lot now but in 20 years?




ING Direct pays Monthly, and low and behold, no fees...


----------



## chops_a_must (2 April 2007)

money tree said:


> wrong. investing in CASH does not pay out weekly like property. it pays out quarterly at best.



Ahhhhhh.... I get paid monthly from my cash account...


----------



## money tree (2 April 2007)

so lets say they all invest in cash. what are the banks gonna do with it all? 

relax the lending criteria, so people will splurge on all kinds of rubbish.........hey presto, INFLATION.......or, they invest the easy money in property.....so we get another property boom. 

either way, if your in cash, your screwed.

the only solution is to invest say 30% of that $600/wk into assets that increase with inflation. so how much they got left to live on now? or are they just gonna hope they drop dead before they cant afford the cost of living?


----------



## numbercruncher (2 April 2007)

money tree said:


> wrong. investing in CASH does not pay out weekly like property. it pays out quarterly at best. how many retirees can live on a small lump sum 4x a year without blowing it in month one? besides that, the taxman will take his half before the retirees even get it. furthermore, cash does not experience capital growth. rates are near the top of the cycle. they will drop again. then hows your plan gonna work?
> 
> and what about inflation? $600/wk may seem a lot now but in 20 years?




Sorry son but it is you whom is wrong, I have an online savings account thats pays 6pc p/a and divvies up the first day of every month!
So now you're worried about the taxman, for a start he wont be taking half for most retirees, second whats better, half of 300 or half of 600?
Rates are top? says who ?

Heres a little compound interest calculation for you on your 20 year time frame, lets just save the income for ease.

500k in bank at 6pc p/a, compounded (with monthly interest payments) for 20 years (not allowing for tax) 1.66m

Im not advocating cash for long term (but its a hell of a lot better for a retiree), they need shares too, perhaps some gold and silver for inflation hedge.

500k house = crap income and baby boomer will be dead before he sees a decent return. Not to mention unexpected costs, such as Structural problems, White ants, recession, crash, Illiquid asset, Bad tenants, no tenants, Rate increases, stress, worry = early death for baby boomer.

Average Baby boomers wont be buying houses for their "Income" but if you keep telling yourself they will at least you ll believe it?

If you were retired would you tie up your money in an Investment property? Whats the point, why on earth did you spend your life earning money if you're not going to enjoy it! Defies Logic, but keep buying Guys, The state Goverments need that 20k from each Purchase or they'll raise my taxes!


----------



## The Red Baron (2 April 2007)

Kimosabi said:


> ING Direct pays Monthly, and low and behold, no fees...




Even better Bankwest Telenet 6.8% paid monthly, calculated daily, and no fees. Another rate rise and we could be seeing 7%+..


----------



## money tree (2 April 2007)

numbercruncher said:


> Sorry son but it is you whom is wrong, I have an online savings account thats pays 6pc p/a and divvies up the first day of every month!




but you said earlier:



numbercruncher said:


> Now that 500k just sitting in a bank account earning 6pc PA will return 600pw and the cash is there to pay for that hip replacement when its due!




so you were wrong........it does not return 600pw. it delivers 2400pm. I was wrong also  

compound interest? how they gonna compound it if its already spent?



			
				numbercruncher said:
			
		

> 500k house = crap income and baby boomer will be dead before he sees a decent return. Not to mention unexpected costs, such as Structural problems, White ants, recession, crash, Illiquid asset, Bad tenants, no tenants, Rate increases, stress, worry = early death for baby boomer.




what about rate reductions? asset bubble? inflation? rent increases? tax deductions?

spot the guy who never played Monopoly.



			
				numbercruncher said:
			
		

> If you were retired would you tie up your money in an Investment property? Whats the point, why on earth did you spend your life earning money if you're not going to enjoy it!




you spent your life earning so you could afford to live when you retire. you seem to think they will all break out into party mode & spend like theres no tomorrow. guess what... there is.


----------



## numbercruncher (2 April 2007)

Money Tree the point i was making is that cash accounts pay monthly not quarterly but i assume you knew that  


Like i said please people keep buying houses because if the Goverment stops getting 20k per house in Duties therell be no option but to raise my taxes.


Buy Buy Buy people !!   Retirees im sick of reading those signs you have up in your homes that read "Busy Spending the Kids Inheritance" !!

Dont spend it leave it for us! Well spend it for yah   Forget keeping your cash aside for Medical bills, Overseas Holidays and Weekends at the Country Club!

LMAO - Suckers and Houses have made me $$$ too, doesnt change the fact that its now (with exceptions) a deadbeat investment especially compared to other investment opportunitys available, Super perhaps?


----------



## Mousie (2 April 2007)

The Red Baron said:


> Even better Bankwest Telenet 6.8% paid monthly




Only for the 1st year you're a customer


----------



## krisbarry (2 April 2007)

*Kachiinnnggg....another rate rise on the way. * 

Glad I applied for another 3 credit cards and bought 40 Ipods just to raise the inflationary pressures 

Did someone say housing crash...yep I can feel it in my bones


----------



## Kimosabi (2 April 2007)

Stop_the_clock said:


> *Kachiinnnggg....another rate rise on the way. *
> 
> Glad I applied for another 3 credit cards and bought 40 Ipods just to raise the inflationary pressures
> 
> Did someone say housing crash...yep I can feel it in my bones




Wow, all that money I've got in the bank is going to make me even more money...   

The next boom is going to be in my bank account when Interest Rates go back up to 10%+


----------



## robots (2 April 2007)

hello,

I will enjoy the interest as well

goodluck

robots


----------



## numbercruncher (2 April 2007)

robots said:


> hello,
> 
> I will enjoy the interest as well
> 
> ...





You should be rapt about the impending realestate bust then Robots youll be able to go snavvle up a bunch of bargains along with us !!

Long live the Bust ! Hip Hip!


----------



## robots (2 April 2007)

hello,

is the bust actually here yet?

let me know the day it starts

goodluck

thankyou

robots


----------



## Kimosabi (2 April 2007)

robots said:


> hello,
> 
> if the bust actually here yet?
> 
> ...




It'll be coming to a town near you...

We'll probably have to wait a year or two until the US Bust flows through to the Chinese and then to our economy...

I don't know if anyone noticed, but the US has started imposing Tariffs on Chinese imports...


----------



## robots (2 April 2007)

hello,

more waiting

you got it all wraped up by the sounds of it

wonderful, you with Macquarie bank yet?

thankyou

goodluck

robots


----------



## numbercruncher (2 April 2007)

haha it seems to be getting so desperate in the US that theyve even found a silver lining .....



> Values drop, so can taxes
> Your home is worth less, but there's a bit of a silver lining: Your property bill may fall.
> Gregory J. Smith, assessor, recorder and county clerk for San Diego County, offers an example: You bought a house in 2005 for $400,000 and today its price would be $325,000 ”” a $75,000 reduction. The tax reduction would be 1% or about $750, Smith said.
> 
> http://www.latimes.com/business/la-...y?coll=la-mininav-business&ctrack=2&cset=true





Woo Hoo so you lost 100k after fees but dont worry, youll save your self 750 on Tax!! lol clutching at straws anyone ?


----------



## money tree (2 April 2007)

whats funny is.......

all you guys acting like financial experts, yet the best investment you can come up with is cash yielding 6%? pfft


----------



## numbercruncher (2 April 2007)

money tree said:


> whats funny is.......
> 
> all you guys acting like financial experts, yet the best investment you can come up with is cash yielding 6%? pfft





Erm that was a demonstration that cash is better for retirees and infact better than houses in the current climate.


Infact you tell us what is better say for someone 10 years off retirement a property returning 3 to 4pc at the top of a housing boom or 500k in a super fund paying 15pc tax only ? what advice would you give your mother ?


----------



## Kimosabi (2 April 2007)

numbercruncher said:


> haha it seems to be getting so desperate in the US that theyve even found a silver lining .....
> 
> 
> 
> ...




I don't know where you got this information, must be false, didn't they teach you in pre-primary, Property prices never go down...

Mind you, I did learn a lot about bubbles in pre-primary, and you know what, they all went POP!!!


----------



## wayneL (2 April 2007)

robots said:


> hello,
> 
> is the bust actually here yet?
> 
> ...



Yes actually, it is. You just don't know it yet. The nuke has gone off, it just takes time for the shock-wave to travel.

Stay tuned


----------



## The Red Baron (2 April 2007)

Stop_the_clock said:


> *Kachiinnnggg....another rate rise on the way. *
> 
> Glad I applied for another 3 credit cards and bought 40 Ipods just to raise the inflationary pressures
> 
> Did someone say housing crash...yep I can feel it in my bones




The first interest rate rise is just a little left jab.. i've got a feeling the second could be a big uppercut.. if we go a third.. knockout.


----------



## robots (2 April 2007)

hello,

there were 3 last year what an affect that had

.75% increase

where's the bust wayne?

thankyou

robots


----------



## wayneL (2 April 2007)

robots said:


> hello,
> 
> there were 3 last year what an affect that had
> 
> ...



That wasn't the bust.

If you can't see it now (one must have a global perspective) you will see it in retrospect. There will be attempts by central banks to avert it, which may draw it out and may even cause some more price rises in certain areas (and make it ultimately worse) but it's on.

Keep some powder dry folks.


----------



## robots (2 April 2007)

wayneL said:


> Yes actually, it is. You just don't know it yet. The nuke has gone off, it just takes time for the shock-wave to travel.
> 
> Stay tuned




hello,

where? where has the nuke hit

thankyou

robots


----------



## wayneL (2 April 2007)

robots said:


> hello,
> 
> where? where has the nuke hit
> 
> ...



The US sub-prime apocalypse is the point of impact, as detailed in this thread. Shock-waves spreading....

Overleveraged muppets should take cover.


----------



## numbercruncher (2 April 2007)

"The Federal Reserve has flooded the market with money, and that money has been chasing returns. Housing has been the “hot” asset class, creating an unsustainable bubble. When that bursts, it will be a lot worse than the tech stock bubble, because it actually hits people right at home.”
-2008 Presidential Candidate, Ron Paul



Wow now even presidental candidates know whats goin on and publicly saying so, whatll happen next!


----------



## wayneL (2 April 2007)

numbercruncher said:


> "The Federal Reserve has flooded the market with money, and that money has been chasing returns. Housing has been the “hot” asset class, creating an unsustainable bubble. When that bursts, it will be a lot worse than the tech stock bubble, because it actually hits people right at home.”
> -2008 Presidential Candidate, Ron Paul
> 
> 
> ...



This is a shocking development!! An honest politician??? lol

Joking aside, Ron Paul is a very honest man. One of the minority (a very sizable one mind) of "good" Americans. Unfortunately telling the truth doesn't win elections.


----------



## Judd (2 April 2007)

An interesting article from The Times

http://business.timesonline.co.uk/t.../construction_and_property/article1599721.ece

April 2, 2007
*Greed could bring America’s housing sector to grief*
Gary Duncan, Economic view

For hundreds of thousands of Americans, it is a personal financial disaster. For the wider US economy, it is a growing economic shock with an increasing potential to inflict severe repercussions on the nation’s prospects and prosperity.

The deepening scandal of the US “sub-prime” mortgage implosion looks more and more like a cautionary tale of financial excess that sits unhappily alongside Enron and the dot-com bubble, both in terms of scale and consequences.

It is story of Dickensian bleakness: of avaricious money-merchants and of the broken dreams of struggling but foolhardy men and women who seized on false promises of an easy leg up the ladder of their own aspirations.

To much of the United States, and most of us in Britain, “sub-prime” lending is another country of which we know little. Yet for millions of America’s poor, it is a financial trend that has turned from seeming salvation to curse in five or six short years.

Viewed in hindsight, the debacle that is now unfolding was, like many such events, an obvious accident waiting to happen.

Around the turn of the decade, as the US housing boom accelerated, a large group of greedy American lending institutions became so rashly intent on maintaining the growth of their loan books at all costs that they began to hand out mortgages to borrowers with varying combinations of poor credit history, no steady source of income and little or no collateral.

As lending criteria grew more and more relaxed, the risks associated with this reckless “sub-prime” lending escalated, with vulnerable borrowers being given access to loans for 100 per cent of property values and high multiples of their incomes. And, just as soaring house prices meant that more people had to resort to such sub-prime loans, so sub-prime lending itself gave more fuel to the property boom.

Two factors turned this trend into a train wreck. First, the vast bulk of sub-prime loans were adjustable rate mortgages, or “Arms”. While these start out at enticing, discounted rates, interest payments jump when such inducements expire.

Now payments on many of these loans are being reset, at a time when official US interest rates are much higher, having been lifted from historic lows of 1 per cent in 2003 and 2004 to more than 5 per cent now.

The result is that borrowers cannot meet repayments, so that mortgage arrears and defaults on sub-prime loans are surging. In turn, more than 30 mortgage lenders have shut up shop since last year. For borrowers and lenders, this was an Arms race on a road to financial destruction.

The second factor makes the picture still worse. For many sub-prime borrowers, these financial horrors have been compounded by seeing their repayments leap just as the US housing market boom hit the buffers. Tens of thousands who were already struggling to service their loans had resorted to refinancing, taking on still more debt at disadvantageous terms. But with falling house prices in some areas now pushing these overstretched people into negative equity, the lenders’ doors are barred. Repossessions and forced sales of homes are rising sharply.

It is plain that the social consequences of all of this are as grim as they are scandalous. Yet many US analysts appear excessively relaxed about the wider fallout for a slowing American economy, arguing that the scale of the sub-prime market means that any spillover effects will be slight.

This looks about as complacent as the thoughtless lenders who are now going to the wall. Not only is it clear that the sub-prime crisis is going to get a whole lot worse before it runs its course, but the potential for a domino effect hitting large parts of the United States’s housing market, and the wider economy, looks rather greater.

The sub-prime market mushroomed over the past five years, so that by last year it accounted for almost a quarter of new mortgages, worth about $665 billion. That’s up from 10 per cent of loans, worth some $200 billion, in 2001.

Analysis by Paul Dales, of Capital Economics, notes that the percentage of sub-prime mortgages now in persistent arrears has climbed to more than 13 per cent, from 10.3 per cent at the end of 2004, while default rates have risen to 4.5 per cent of sub-prime loans. As Mr Dales suggests, arrears and defaults are likely to climb more steeply, as many sub-prime mortgages have yet to reset to higher interest-rate levels. And the problems will almost certainly be compounded by weakening economic conditions, as well as falling house prices in some regions that will push more borrowers into the trap of negative equity.

The threat of wider, knock-on consequences will then escalate if forced auctions of repossessed homes drive up the supply of houses for sale just as housing demand is curtailed both by a faltering economy and (inevitably) the greatly reduced availability of sub-prime loans.

An excess of property and a drop in demand will put more downward pressure on US house prices, deepening the slump in the property market. In turn, the impact could then be felt on consumer demand, since American homeowners have for years relied on cashing in on the previously rising value of their homes to finance their high-spending habits.

Sanguine observers believe that the sub-prime market is too small to have such a big impact. But Capital’s analysis highlights a detailed study by the US Centre for Responsible Lending which estimates that 20 per cent of sub-prime mortgages made in the past two years could end in defaults ”” meaning an extra 600,000 US homes could be put up for sale: a rise of 15 per cent compared with the total size of the market in January.

Factoring in lower demand, in the event of sub-prime loans completely drying up, Mr Dales calculates that ”” in a possible worst-case scenario ”” the sub-prime meltdown could end up with ten months’ supply of homes on the US property market, up from about six months’ supply now: enough to trigger significant price drops.

Even if things do not get quite this bad, what is increasingly clear is that the parable of the sub-prime lender is not one that will have a happy ending. 

End

And also recognize that a number of these "sub-prime" loans were bundled up in CDO's and sold as AA+ products.  Now that's what I call financial engineering!


----------



## numbercruncher (2 April 2007)

Moody investor report says Mortgage delinquencies Hit record high in Australia for December!



> Mortgage delinquencies - late payments - reached a historic high in December, the agency's review of residential mortgage-backed securities shows. "With the deflation of the housing bubble and higher interest rates, [an] increasing number of borrowers are running into financial difficulties as reflected by the delinquency numbers," the report says.
> 
> 
> http://www.smh.com.au/news/national...pain-in-suburbs/2007/03/08/1173166897908.html




Two more Interest rate rises should be just enough to nail it hey? If the US implodes maybe we wont even need that!

Also Interesting in the same article is CBA saying this .....



> Commonwealth Bank, the nation's biggest home lender, said late last year it would lose a relatively insignificant $299.4 million from a lending book of $154 billion if property prices collapsed by 30 per cent and there was a sixfold increase in the probability of default.


----------



## robots (2 April 2007)

hello,

sorry which part of AUS has crashed? 

what have they dropped by 10% 20% 30%?

oh it hasnt happened yet, oh okay will sit tight, oh what got to wait 5yrs

buy quality

quality shares quality property

get it

goodluck

thankyou

robots

thankyou


----------



## wayneL (2 April 2007)

robots said:


> hello,
> 
> sorry which part of AUS has crashed?
> 
> ...



Agree, buy quality, but with a qualifier, i.e. "at value".

A very basic investing premise. I have some property bought at value. I will not be buying more until value returns.

Get it? Good!

Forgive me for my observation that your posts are based on previous performance. This can be a grievous mistake. However if you bought at value previously you will be fine, as stated before.

It is overleveraged muppets in any market, whether quality or crap, who will crash and burn.

It is already happening. Defaults are skyrocketing even in Oz. Fact.


----------



## robots (2 April 2007)

hello,

dont ignore the first few statements

sorry which suburb has crashed?

thankyou

robots


----------



## wayneL (2 April 2007)

robots said:


> hello,
> 
> dont ignore the first few statements
> 
> ...



:sleeping: We've been through this before. Please review this thread.


----------



## robots (2 April 2007)

hello,

all I have been claiming is that quality property is solid at the moment, hasnt stagnated but in fact increased

I havent "forecast" any direction for property unlike others (check my posts)

time in the market, yeah I am a strong believer for that

whats cheap today is dear tommorrow, who knows

got to be in it to win it

goodluck

thankyou
robots


----------



## Freeballinginawetsuit (2 April 2007)

Its all relative really............business's or property. One has to admit, credit aside thier is quite a lot of 'real' liquidity around ATM.

I have to agree with Wayne though, speculation always overshoots the mark within the cycles, thats why the mean is always so relative over time...........a two finger job with maybe the pinky thrown in . Timing is everything and making the most of it, the stockmarket being so liquid enables this...........with real estate its a bit more painful.

ATM I still think 'stones throw' coastal RE in Perth is cheap, relative to its demand base and liquidity . As for investment properties, the returns are ****e and the forward view of capital growth is even worse. 
Its a no brainer really as an investment or new entry for the first timer.


----------



## numbercruncher (2 April 2007)

But whats your definition of Quality Realestate ?

Million dollar homes within 10km of cbd i guess? That isnt helping Joe Blow much whose mortgaged 400k home in the back blocks is going to get nailed!


Realestate price growth relys on overall economic growth, nothing seems to point towards the growth weve seen in the last decade, Global Warming for example is becoming a huge Issue and stopping that isnt consistant with economic growth ..... Only thing keeping us humming is Chinas insatible resource demand, if that slows or worse, what then ?

This whole stack of cards is wavering on the Economies of the US and China, IMHO.

Good Luck


----------



## Freeballinginawetsuit (2 April 2007)

numbercruncher said:


> But whats your definition of Quality Realestate ?
> 
> 
> Good Luck




Real Estate that has some quality that those who are liquid will be willing to purchase, aside from speculation,investment etc etc. 

They simply want to live in it for the aforementioned reasons........nothing more. You will tend to find that no matter how complicated economic issues may become it is irrelevant to those types and moreso those levarage squeezed is grossly negated in these areas by simple supply/demand dynamics.

Lots of comfortable people that don't really give a crapper what happens to property prices in these areas, its thier home and they own it..........simple dynamics, plenty of Grey Power as well .


----------



## astroboydivx (3 April 2007)

numbercruncher said:


> This whole stack of cards is wavering on the Economies of the US and China, IMHO.
> 
> Good Luck




Uhh Brasil, Russia, India and China, which represent ooh about 2.5 - 2.75 billion people, are undergoing a massive and rapid economic transformation. Saying the global economy is a stack of cards wavering on America and China alone is pretty weak.

http://www.gs.com/insight/research/reports/99.pdf


----------



## astroboydivx (3 April 2007)

wayneL said:


> That wasn't the bust.
> 
> If you can't see it now (one must have a global perspective) you will see it in retrospect. There will be attempts by central banks to avert it, which may draw it out and may even cause some more price rises in certain areas (and make it ultimately worse) but it's on.
> 
> Keep some powder dry folks.




Onya Wayne, keep waiting for that crash...

https://www.aussiestockforums.com/forums/showthread.php?t=1162


----------



## wayneL (3 April 2007)

astroboydivx said:


> Onya Wayne, keep waiting for that crash...
> 
> https://www.aussiestockforums.com/forums/showthread.php?t=1162



Are you awake?

Parts of US in freefall, Sydney/Melbourne flat, Ireland going over the edge, Sub etc-prime problems. Only held up by loose credit and increasing money supply.

With historically normal credit parameters we would have had a relatively mild correction and quite possibly be in a situation of good buying value.

But you keep hoping it continues forever.

Cheers


----------



## robots (4 April 2007)

hello,

would be like a dunk in a cold river today for some, wake-up call

conspiracy again the cries will come load no doubt, RBA looking after the government

goodluck

thankyou

robots


----------



## ghotib (4 April 2007)

Not sure how this fits in the thread, but what the heck:



> Sydney's real-estate agents aren't renowned for being dead straight in their descriptions, but faced with selling a complete dump, one of them has decided that honesty is the only policy.
> 
> In a regular property blurb, 25 Waterloo Street, Rozelle, might be described as "quaint", or a "renovator's delight" - realestatespeak for a screaming disaster-zone......




The article includes a picture. 

http://www.smh.com.au/news/national...s-a-500000-dump/2007/04/04/1175366297707.html

For those outside Sydney, the property is within 5Km from the CBD and close to good transport. 

Ghoti


----------



## wayneL (4 April 2007)

robots said:


> hello,
> 
> would be like a dunk in a cold river today for some, wake-up call
> 
> ...



robots

You are getting a bit shrill. 

Chill dude!


----------



## wayneL (4 April 2007)

ghotib said:


> Not sure how this fits in the thread, but what the heck:
> 
> 
> 
> ...



  

There's this agent close to where I'll be living in the UK, famous for his honesty. http://www.ralphbending.com/display.php

Check this description on his website:


> Offers over £190,000 for this extra-ordinary three bed semi detached house. Once bold and secure it clings to its traditional past like **** to a hairy blanket. Now it hangs there forlorn - a mere shell of its former self as it dirties its pants and leaves the washing up until later. Two cramped and dirty flats have been created from this once proud beast. Not pretty - but could be and if it was worth more.



..and


> If I had one I'd want it to be just like this. Gorgeous three bedroom Victorian terrace house with lots of space and character situated in the best spot in town. Lovely house - pity about the owner.



LOL


----------



## wayneL (4 April 2007)

Here's another from the rent list: 



> Nice terrace house in a cul-de-sac off the centre of the town with hall, sitting room, kitchen, two bedrooms, bathroom, garden and parking. Available now. *Suit someone with sense of humour bypass and dicky bladder*.


----------



## Kimosabi (4 April 2007)

astroboydivx said:


> Onya Wayne, keep waiting for that crash...
> 
> https://www.aussiestockforums.com/forums/showthread.php?t=1162




I don't know about WayneL, I love it when I get mocked for taking a it's going to go pop position.

You always get mocked by the 'it never goes down', the 'it's different this time', or the 'It'll just plateau out' crowd, so while all the mockers will be going what just hit me I just got wiped out, we'll be picking up all the assets at undervalued prices.


----------



## astroboydivx (4 April 2007)

Kimosabi,

I take it your post is code for "I just missed WA's property boom  "??

You may have missed it but Wayne's comments were from 2 years ago. What's WA done in the meantime?


----------



## wayneL (4 April 2007)

astroboydivx said:


> Kimosabi,
> 
> I take it your post is code for "I just missed WA's property boom  "??
> 
> You may have missed it but Wayne's comments were from 2 years ago. What's WA done in the meantime?



Become the most overvalued market (vs earnings) in the OECD.

Some may think that a good thing.....


----------



## astroboydivx (4 April 2007)

FWIW Shane Oliver has some pretty damning statistics on Australia's property markets:

http://ampcapital.com.au/K2DOCS/site_corporate/3A11DF47-B030-4380-8106-9982E3A72A65/OINo10.pdf

This hasn't stopped me making $50 000 in property over the last 4 months in inner west Sydney, and nor could have it stopped you guys making 100% returns over in WA over the last coupla years.


----------



## Kimosabi (4 April 2007)

astroboydivx said:


> Kimosabi,
> 
> I take it your post is code for "I just missed WA's property boom  "??
> 
> You may have missed it but Wayne's comments were from 2 years ago. What's WA done in the meantime?




I had a look at property a couple of years ago and it was over-priced, at the moment it's even more over-priced.  I'm not going to go after the market, I'll let the market come to me.

One of the benefits of missing out on the boom, is that you also get to miss out on the bust.


----------



## wayneL (5 April 2007)

US Home prices, adjusted for inflation (via Shiller's Irrational Exuberance), plotted as a roller coaster (using Atari's RollerCoaster Tycoon).

Hat tip Brett Steenbarger via Barry Ritholtz


----------



## Knobby22 (5 April 2007)

astroboydivx said:


> FWIW Shane Oliver has some pretty damning statistics on Australia's property markets:
> 
> http://ampcapital.com.au/K2DOCS/site_corporate/3A11DF47-B030-4380-8106-9982E3A72A65/OINo10.pdf
> 
> This hasn't stopped me making $50 000 in property over the last 4 months in inner west Sydney, and nor could have it stopped you guys making 100% returns over in WA over the last coupla years.




Very interesting Astroboy, the correlation with urbanisation suggests that property is not as overvalued as we think and may be overvalued by perhaps by 20-30% only.

Wayne, good rollercoaster! Looks a bit scary but it is not a real rollercoaster, it won't go back down to ground level unless we have a nuclear war or we get hit by a meteor. A similar ride would be obtained by plotting the Dow Jones.


----------



## robots (5 April 2007)

Kimosabi said:


> I had a look at property a couple of years ago and it was over-priced, *at the moment it's even more over-priced.*  I'm not going to go after the market, I'll let the market come to me.




havent you all been claiming that it has stagnated, flat or even down?

so what is the true position of property in AUS? I think it is solid as

just remember I am not making a forecast here, i wouldnt have a clue what is going to happen in the future and i dont think you do either

thankyou

robots


----------



## Kimosabi (5 April 2007)

robots said:


> havent you all been claiming that it has stagnated, flat or even down?
> 
> so what is the true position of property in AUS? I think it is solid as
> 
> ...




What we have been claiming, is that most Property in Australia is overvalued, and Property Prices are going to go DOWN to a more realistic level.


----------



## adobee (5 April 2007)

the lack of rentals in the (Sydney) market at current is almost identical to about 2000. If you refer to news paper articles in the property section in 2000 you will actually see the same headlines ' rents set to increase 70%' blah blah blah, the media runs the same crap and fuels it on. Anyway there is definetly a lack of available investment property in Sydney. The second overvalued is largley due to o.s investors who can only buy brand new and get suckered into buying one bedroom apartment from meriton and the like for $500k which are worth about $390k as they cant buy anything else. Further pressures on rents will have to see the prices kick off eventually when yields reach a level appealing to investors. I would give it 18-24 months, that being said it is just my view. The best possible scenario I think at the moment is for government to change the fhog rules so that fh owners can buy without having to occupy immediately. Currently it requires people to buy and take occupancy. Why not give the grant when people buy and let them take occupancy when they like, it would make housing more affordable for fhbuyers as they can actually get into the market now with the leverage of the rental income (especially young people living at home say 17-26) and occupy later (they only get the fhog & no stamp duty once) so it makes no difference to the government, and at the same time opens up alot for investment property for renters and a reasonable hedge against inflation and increasing property prices for fh buyers. Anyway 24 months and property will be hot, I am buying now at good prices, however steer clear of brand new property which tends to be over inflated, also steering clear of any big developements 1000+ units which are sure to be the slums of tomorrow.


----------



## wayneL (8 April 2007)

Article in todays Sunday express (UK)


----------



## noirua (11 April 2007)

A bust could come in the UK. Property prices in England rose 9.5% in the last 12 months (Prices rose 14.1% in London); in Scotland 15%; and in Northern Ireland an amazing 57.6% ( up 14.6% in the last three months ), prices in Belfast rose 61% in the last 12 months.  The latter was due to peace in Northern Ireland and house prices coming more into line with the European Tiger Economy, Eire ( Southern Ireland ). 

Every year for three years a bust has been forecast and house prices continued on up in double digits. Forecast for the next 12 months in England is up 8% to 10%, with an increase in London of 14%.  

Foreigners are reported to be still flooding in, to England. Estimates of over 1 million illegal immigrants, many working for peanuts. The present Government welcomes anyone with loads of cash and they buy up properties and even Football Clubs. A blind eye is turned to foreigners who pay little tax in their nominated tax havens. 

My own view is that a bust will truly come but maybe not until prices rise another 30% or so in the next two years.

http://money.guardian.co.uk/houseprices/story/0,,2049736,00.html


----------



## robots (11 April 2007)

noirua said:


> *Every year for three years a bust has been forecast* and house prices continued on up in double digits. Forecast for the next 12 months in England is up 8% to 10%, with an increase in London of 14%.




hello,

thats right, but many people have been ignorant of this with all the usual graphs and affordability issues

affordability issue's are non-existent and is the usual blurb from ACA, TT, the age, smh and all the others to sell media

who knows what is around the corner,  isnt past performance no indicator for future performance ,yet a crash is going to happen because a crash has happen before in some people's opinion

goodluck

thankyou

martin stocker


----------



## Kimosabi (11 April 2007)

robots said:


> hello,
> 
> thats right, but many people have been ignorant of this with all the usual graphs and affordability issues
> 
> ...




I hope you're prepared for +10% Interest Rates...


----------



## wayneL (12 April 2007)

Housing Bubble Accomplices Preparing for Death: Caroline Baum 

...and an allegorical little video  



Hat tip to  immobilienblasen


----------



## Freeballinginawetsuit (12 April 2007)

Had a squizz at a property on Bearing pde in Mullaloo...... ocean glimpses and an elevated view of surrounding treetops. 6 months ago this property would have fetched 650k................now its on the market for 515k.

Fair to say that the dynamics are already tightening in the Perth property market.  


The aforementioned property seemed a bargain IMO. It sold on the same day I inspected it............... 


Wether your leverage/liquidity is in a substantially increased commodity stock or a tightening property market, both are inflated ATM in relative terms!


----------



## Kimosabi (13 April 2007)

> *Rates lift number of bankrupts*
> 
> By Jenny Dillon
> April 13, 2007 06:00am
> ...




hhhmmmm, where have I seen this sort of thing before...


----------



## YChromozome (13 April 2007)

Kimosabi said:


> hhhmmmm, where have I seen this sort of thing before...




Don't worry, it won't happen here.

Likewise house prices can't fall . . 

Bankruptcies climb on property fall out



> In the three years to last December house prices fell an average of 8.8 per cent in Sydney, according to data from the Australian Bureau of Statistics (ABS).
> 
> In real terms, relative to inflation, prices have fallen almost 16 per cent in Sydney over the past three years as values slumped mainly in the western suburbs.


----------



## Smurf1976 (13 April 2007)

Shock! Horror! House prices have actually fallen.

Good news for home buyers except those trading down. 

Nothing to worry about for long term investors. Actually good news for professional landlords looking to accumulate property over time and create a passive income.

The inevitable massive loss for those who speculated on a quick profit buying houses they'd never seen in places they'd never been to with money that isn't theirs.

Joke of the 90's - The internet new paradigm where valuations and actually running a business that makes a profit no longer matters.

Joke of the early 2000's - House prices always go up. Valuation or actually making an income from renting the place out doesn't matter anymore. Banks will just keep lending ever increasing amounts of money to people who can't even pay the interest and that will see house prices keep rising at least 5 times faster than wages forever.

Next one - Water restrictions are temporary and don't really matter, we'll never get to the point of banning showers or limiting clothes washing. High petrol prices are just a blip. And we've got plenty of power.


----------



## robots (14 April 2007)

hello,

looking forward to the auction results across AUS tomorrow 

things are travelling find, wow did anybody pick the rental crisis that is going on, "they" say rental vacancy down to <1% amazing stuff, which economist picked that?

thankyou

robots


----------



## CanOz (14 April 2007)

You know its interesting, when i left Victoria and split with my wife, we put our house up for sale. It was purchsed by a couple from Melbourne as weekender (its a lifestyle home on acreage). Now i just found out that the house is for sale, and i can't help but wonder if the higher interest rates got them in the end and forced them to sell. They're asking 40% more than they paid me for it nearly 4 years ago! 

I just can't see how thats justified? Wheres the reasoning behind that increase?

Cheers,


----------



## YChromozome (14 April 2007)

CanOz said:


> Wheres the reasoning behind that increase?




The reasoning is greed. Fundamentals left the market in mid 2003, maybe even earlier.



robots said:


> did anybody pick the rental crisis that is going on, "they" say rental vacancy down to <1% amazing stuff, which economist picked that?




I'm no economist, but I thought it was inevitable. This is one of Alan Kolher's graphs on investment growth for existing dwellings he showed last year :







It should speak for itself. Mostly set off by rate hikes and poor investment yield.

At the start of this year we have seen a bit of propaganda come out from the industry lobby group, the HIA saying rents yields are too low and that they forecast rents to rise by 20% this year. Well really, the reason why rent yields are so low is because the asset price has increased so much. So now investors are flocking to the market and we see investor credit growth up 8.9 per cent for the month of February!. But what is ironic, most investors have put rents up an entire 20.0% in one hit and with rents having a 5.22% weighting in the CPI, it should put some pressure on inflation. It could take two rate rises to correct it. I wonder what triggered the mass exodus in the first place?


----------



## robots (15 April 2007)

hello,

another solid performance on prices this weekend, those who say is flat or dropped are absolutely dreaming

very much a tale of the inner city and outer city at the moment, and for those who follow the wakelins report or advice would be laughing all the way to the bank

went to 4 auctions all inner city, multiple bidders, and went to 4 open for inspection inner city, cannot believe the number of people interested

thankyou

robots


----------



## wayneL (15 April 2007)

robots said:


> hello,
> 
> another solid performance on prices this weekend, those who say is flat or dropped are absolutely dreaming
> 
> ...



The big end of town is still doing rather well and lending standards incredibly lax. Won't see problems in this sector till later.


----------



## robots (15 April 2007)

hello,

a 350k 2-bedroom unit sold at auction,  big end of town? yeah right

a 417k 2-bedroom tri-level townhouse(sold at auction), big end of town? yeah right

a 240k 1-bedroom unit(sold at auction) big end of town? yeah right

a 380k 3-bedroom unit (sold at auction, today) big end of town? yeah right

all where units, no houses, all where in St kilda (Victoria) and nearby

the affordability crisis that supposedely is around is utter rubbish, this is run of the mill accomodation

these are prices not seen before, get out and look for yourself, peolpe are really fools if they beleive whats been written about property over the past couple of years 

over and out

thankyou

robots


----------



## Kimosabi (15 April 2007)

robots said:


> hello,
> 
> a 350k 2-bedroom unit sold at auction, big end of town? yeah right
> 
> ...




So did you buy anything?


----------



## wayneL (15 April 2007)

robots said:


> hello,
> 
> a 350k 2-bedroom unit sold at auction,  big end of town? yeah right
> 
> ...






wayneL said:


> The big end of town is still doing rather well *and lending standards incredibly lax*. Won't see problems in this sector till later.




What would be the rental yields on the properties mentioned? i.e. On what basis do you think these are fairly valued?

Cheers

PS you're getting shrill again. BTW how many did you buy? If HPs are going to defy fundamentals _ad infinitum_, why don't you go out and buy 100? 

I would, if I thought that.


----------



## robots (15 April 2007)

wayneL said:


> What would be the rental yields on the properties mentioned? i.e. On what basis do you think these are fairly valued?
> 
> Cheers
> 
> ...




read my posts, 

tell me wayne, when have I written property prices are going to go up??? 

I am calling the state of the market, as said, I dont know which way things will go, they are solid now

i purchased unit in Aug 06 to live in and now rent out other unit

I know what the yields would be for those units but will not mention because I know where that will lead, value is a subjective issue

i do my own research

dont read my posts if you don't like the truth

thankyou

robots


----------



## professor_frink (15 April 2007)

robots said:


> read my posts,
> 
> tell me wayne, when have I written property prices are going to go up???
> 
> ...


----------



## wayneL (15 April 2007)

professor_frink said:


>



LOL 'nuff said.


----------



## Royce (15 April 2007)

I went to an auction on sat in Elwood..Inner Bayside suburb of Melbourne.

3 bedroom edwardian on about 400 square metres ...needing a bit of TLC.
House was on the market at 1.325 million..Eventually sold for 1.618 Million.
5 bidders fighting it out.

Absolutely no houses for sale around here...properties going for record prices.
Stagnation ?...only the water in the Elwood canal.

Royce


----------



## Bronte (15 April 2007)

Royce said:


> I went to an auction on sat in Elwood..Inner Bayside suburb of Melbourne.
> 3 bedroom edwardian on about 400 square metres ...needing a bit of TLC.
> House was on the market at 1.325 million..Eventually sold for 1.618 Million.
> 5 bidders fighting it out.
> ...



We have to laugh at your comment Royce   

Thread title: House prices to stagnate for 'years' 
Started 19th September 2005 

No let up as yet......


----------



## Royce (15 April 2007)

Bronte said:


> We have to laugh at your comment Royce
> 
> Thread title: House prices to stagnate for 'years'
> Started 19th September 2005
> ...




Bronte..when it comes time to sell my place ...I'll be laughing all the way to the bank.

Cheers 

Royce


----------



## wayneL (18 April 2007)

Elliott Wave analysis on real estate.


----------



## tech/a (18 April 2007)

Here is the latest count!!


----------



## YChromozome (18 April 2007)

In one of the papers today they have the typical interview with someone on personal wealth asking what has been their best investment, worst etc. This person indicated they didn't like shares because :

When shares goes down, you have nothing.

If property goes down, at least you still have the land, the house and the tenants.


----------



## Spineli (18 April 2007)

YChromozome said:


> If property goes down, at least you still have the land, the house and the tenants.




...but no money to buy food?


----------



## YChromozome (18 April 2007)

Spineli said:


> ...but no money to buy food?




Could do. I think she had something like 11 properties and was was buying 1 property a year on a interest only loan, because rising asset prices will always mean rising equity.

I put to this smart cookie in the paper about her statement :

If BHP falls 10%, you have 90% of your asset left by value and you still get dividends.

If your rental falls in value by 10%, you still have 90% of your asset left by value and you still get a rental yield from your tenant.

What really worries me, is these people actually believe what they are saying. At least I had a little chuckle at it.


----------



## Spineli (18 April 2007)

YChromozome said:


> Could do. I think she had something like 11 properties and was was buying 1 property a year on a interest only loan, because rising asset prices will always mean rising equity.
> 
> I put to this smart cookie in the paper about her statement :
> 
> ...





Investing in the housing market is a lot safer. How you define safe is up to you. What all traders need to remember is that, unless you are an 'informed trader', all you doing is gambling or speculating. You may be heaping up quite a fortune, but be reassured informed traders count on uninformed traders to keep their living. Your loss or gain is also someone else's gain!


----------



## jkool (18 April 2007)

Spineli: While I could maybe agree with you on your argument about trading, you should not forget that investing and trading are (at least by most definitions) two different disciplines.

In other words I think you should be comparing investing in real estate to investing in shares and/or trading real estate (ie. flipping or whats the newest buzzword for this) and trading shares.

What do you think?

Cheers
jkool


----------



## wayneL (19 April 2007)

The prevailing apocrypha on a potential house price correction is that only houses at the low end will suffer. This was not my observation in the early 90's when many top end properties were crushed.

This article shows some trouble in one of the creme de la creme of premium markets.

http://www.bloomberg.com/apps/news?pid=20601093&sid=aMKeLQNc.kVE&refer=home



> Luxury Home Prices Fall in New York's Long Island (Update2)
> 
> By Brian Louis
> 
> ...


----------



## robots (20 April 2007)

hello,

gee another week has past, 

must be a couple of new blogs around claiming a bust, or some "opinion" from gun economist and a few affordability crisis stories in the paper

keep up the hype

thankyou

robots


----------



## Kimosabi (20 April 2007)

robots said:


> hello,
> 
> gee another week has past,
> 
> ...




The biggest thing that has busted around here lately is your record player....


----------



## YChromozome (20 April 2007)

Kimosabi said:


> The biggest thing that has busted around here lately is your record player....




Give the poor guy a break. He just graduated from his Real Estate Agents course and is trying hard now to get noticed by the HIA for a possible job.


----------



## wayneL (20 April 2007)

robots said:


> hello,
> 
> gee another week has past,
> 
> ...




Ironic innit.


----------



## Kimosabi (20 April 2007)

YChromozome said:


> Give the poor guy a break. He just graduated from his Real Estate Agents course and is trying hard now to get noticed by the HIA for a possible job.




Last I heard, most Real Estate Agents in Melbourne/Sydney were driving Taxi's...


----------



## YChromozome (20 April 2007)

Kimosabi said:


> Last I heard, most Real Estate Agents in Melbourne/Sydney were driving Taxi's...




Quite true. The last I heard from the ABS too, was in the three years to last December house prices fell an average of 8.8 per cent in Sydney.


----------



## Kimosabi (20 April 2007)

YChromozome said:


> Quite true. The last I heard from the ABS too, was in the three years to last December house prices fell an average of 8.8 per cent in Sydney.




Oh, you heathen, didn't you know that house prices never go down...


----------



## wayneL (20 April 2007)

Another way for housing to crash  

http://news.bbc.co.uk/player/nol/newsid_6570000/newsid_6575000/6575077.stm?bw=nb&mp=wm


----------



## YChromozome (20 April 2007)

wayneL said:


> Another way for housing to crash :




Gives a new meaning to safe as houses! Even the stock market doesn't crash that fast. .


----------



## robots (21 April 2007)

hello,

is great to see people living in these apartment/unit blocs now, balconies all of sudden have tables, chairs, BBQ's great stuff

people will be a bit more "proud" of their living space

hope some sydney people can let us know the state of their market, because I understand from my own research things are solid there

thankyou

robots


----------



## YChromozome (21 April 2007)

robots said:


> hope some sydney people can let us know the state of their market, because I understand from my own research things are solid there




Sorry, I tend to rely on information from the Australian Bureau of Statistics. No offense, but they are a lot more credible that your unquoted [made up] sources.


----------



## Kimosabi (21 April 2007)

YChromozome said:


> Sorry, I tend to rely on information from the Australian Bureau of Statistics. No offense, but they are a lot more credible that your unquoted [made up] sources.




Ouch, I think someone is due for an oil change...


----------



## robots (21 April 2007)

hello,

solid prices in Sydney at the moment, hope everybody can go out and have a look around 

people are hanging on to their selling price and getting multiple bidders both at auction and private sale

thankyou

robots


----------



## Kimosabi (21 April 2007)

robots said:


> hello,
> 
> solid prices in Sydney at the moment, hope everybody can go out and have a look around
> 
> ...




Where is your evidence to support this?

I thought you are in Melbourne, how would you know what is happening in Sydney?


----------



## robots (21 April 2007)

hello,

good property (over all price brackets) is solid and definitely has not sat idle

has the crash turned up yet?

thankyou

robots


----------



## Smurf1976 (21 April 2007)

Kimosabi said:


> Ouch, I think someone is due for an oil change...



No, no, no... you've got it all wrong. Robots don't like oil - it's too profitable an investment.


----------



## Kimosabi (21 April 2007)

Smurf1976 said:


> No, no, no... you've got it all wrong. Robots don't like oil - it's too profitable an investment.




I don't know, there is a pretty loud squeek in here...


----------



## Bronte (21 April 2007)

House prices; rents continue to grow in March quarter 
http://reiwa.com/art/art-public-view.cfm?id=8681


----------



## Bronte (21 April 2007)

Bronte said:


> Perth real estate is certainly not stagnant.
> 86 people a day are presently migrating to WA
> This equates to 50/60 extra homes required per day.
> We have been busy buying prime real estate since 1998



_Post #223 from 6th October 2005_


Todays West Australian is reporting:  "With an additional 3000 people coming to Western Australia
from interstate or overseas every month,....."

*Approximately: 100 people a day !!!!  Phew!*


----------



## wayneL (21 April 2007)

The parable of the oranges.

http://www.financialsense.com/fsu/editorials/2007/0420.html


----------



## Lucky (22 April 2007)

Interesting article in the Age today.

http://www.theage.com.au/news/busin...out-of-property/2007/04/21/1176697151059.html

It would be interesting to verify some of these claims outlined in the article.  A couple of examples that I have encountered in the past few months which makes me wonder about the state of the market are -

1. Brother in law recently purchased his first house.  He was the only "real" buyer, rest of the bidders were "investor/developer" types.  Bidding started at $250k and was bid up to $324k (his max was $325k) for the property.  He thought it was quite interesting (annoyed  that he was the only party that was interested in purchasing the property for habitation, whereas the other 3 bidders were investors/developers looking for a ROI.

2. I live in Kew and recently attended an auction a few weeks back.  Vendor was asking for $2m+ for said house.  Decent turn out (though probably mostly locals wondering who was going to spend $2m on this place).  There seemed to be interested buyers.  Bidding opened at $1.8m.  No bids.  Vendor bid placed at $1.9m.  "Sound of crickets chirping."  House passed in, sold after auction for $2m.

3. Another house in Kew in a street behind us has just come to market for auction in May.  Asking price is $5m+

http://www.realestate.com.au/cgi-bi...eader=&c=80721251&s=vic&snf=rbs&tm=1177199810

It's sure to attract a lot of interest, but will be interesting to see if this property sells and at what price.  I wonder whether this is a sign for a potential top for the top end of the RE market?

I've been back to Oz for the last 2 years, after spending the last 7 living and working in London.  Whilst in London the same issues were being raised in regards to property - prices, affordability, etc, During this time we went through a property boom(and slight decline), tech boom, sept 11, a commodities boom, resurgent stock markets - globally.  It has shown amazing resilience.  The London/UK property markets took a bit of a bump during that time, but from what I believe have come back with a vengeance with property sales and valuations at highs.(A friend of mine has done pretty well in the RE side of things in the UK and owns a couple of  properties in London - he recently got a valuation on one of his apartments in Greenwich and thought that the valuation they quoted was absolutely nuts, so contacted 3 other parties for valuations and all gave round the same estimate.  So he's looking to sell up and return to Oz.  He'll do nicely coming home with a buck and some change I imagine. 

I thought the UK market was topped out when I left, but that beast just seems to keep on going.  The Oz market seems to be doing the same thing.  The similarities are quite fascinating, but the strength in the RE market just astounds me.  I thought it was all coming to an end a couple of years back, but this thing is just playing out the way it's meant to I guess.  I was wrong back then, so I no longer have an opinion as to what will happen either way, because frankly I have no idea.  I have seen arguments for and against the RE market, but at this point, I would really need a crystal ball to forecast a date and time for when this event.  Like all things cyclical this too will come to an end, but how, when, where and why? :dunno: 

Anyone care to hazard a guess?  

What I do find fascinating is the psychology behind the RE market and how emotional good folk get when discussing the RE market.  That is a subject within itself (and probably also the crux of the who/what/why in this booming RE market).


----------



## BSD (22 April 2007)

The Age article makes an interesting point. 

Buying property for investment, when properly structured, is a far better deal than buying to live. 

Geared investors can deduct the expenses and have the government subside their cash costs. 

Not only can they deduct the cost of interest, rates and body corporate - they can deduct the non cash costs of depreciation. 

Of course the 'investors' are going to out bid the 'residents' - investors have an incredible financing advantage. 

Without the tax advantages - anyone buying property in this market for an investment would have to be a complete idiot. 

2% yield, no liquidity and undiversified. 

The lifestyle benefits are the only reason to buy to live in this market and this is why I cannot understand people buying in far flung suburbs to get 'on the ladder'. 

I cannot understand why anyone would want to travel 3 hours a day to buy a property half of the value of the superior one you could afford if you were an investor and renter.

It is the "great australian dream" brainwash that is going to create a lot of broken dreams when it falls in a heap.


----------



## Kimosabi (22 April 2007)

Lucky said:


> Interesting article in the Age today.
> 
> http://www.theage.com.au/news/busin...out-of-property/2007/04/21/1176697151059.html




I thike the comment at the end of this article:

Most investors are not rich, they're taking the biggest gamble of their lives.
There are so many people who are going to get burnt big time when the property market turns, aka, United States

Now I wonder what happens if the government decides to abolish Negative Gearing.


----------



## Flying Fish (22 April 2007)

Kimosabi said:


> I thike the comment at the end of this article:
> 
> Most investors are not rich, they're taking the biggest gamble of their lives.
> There are so many people who are going to get burnt big time when the property market turns, aka, United States
> ...



no government in its right mind would get rid of negative gearing. they tried this before and looked what happened. negative gearing is the ultimate out for the government they don't have to worry about houssing commision


----------



## YChromozome (22 April 2007)

wayneL said:


> The parable of the oranges.
> 
> http://www.financialsense.com/fsu/editorials/2007/0420.html




Thanks for the link, Wayne. Worth the read.


----------



## nizar (22 April 2007)

BSD said:


> Without the tax advantages - anyone buying property in this market for an investment would have to be a complete idiot.
> 
> 2% yield, no liquidity and undiversified.




You forgot to add indivisibility.


----------



## robots (22 April 2007)

hello,

great stuff, keep it coming

thanks wayne for digging up another great story for everybody to read this weekend

is it buying time yet, got the piggy bank ready

thankyou

robots


----------



## Lucky (22 April 2007)

Kimosabi said:


> Now I wonder what happens if the government decides to abolish Negative Gearing.




I think negative gearing is the biggest con that the gov has conceived regarding property ownership and has help create this bubble in housing.


----------



## Flying Fish (22 April 2007)

Lucky said:


> I think negative gearing is the biggest con that the gov has conceived regarding property ownership and has help create this bubble in housing.




it makes housing more affordable to those who can not buy


----------



## wayneL (22 April 2007)

robots said:


> hello,
> 
> great stuff, keep it coming
> 
> ...



Not yet.

Distress sales showing up in my target market though, thinking of bidding on one. But probably still too many muppets around at the moment who will bid over the odds.


----------



## Smurf1976 (22 April 2007)

Flying Fish said:


> it makes housing more affordable to those who can not buy



Whilst being one of the reasons they can't afford to buy in the first place.


----------



## tech/a (22 April 2007)

Well looks like Inflation will be kept under control by rising food prices.
This will absorb wage rises and curtail discriminent spending.

Interest rates will stay low and increased demand for Rentals will ensure a continuing boyant housing market.

Those waiting will find bargains but wont get the crash in the broad sence they are waiting for.


----------



## Kimosabi (22 April 2007)

tech/a said:


> Well looks like Inflation will be kept under control by rising food prices.
> This will absorb wage rises and curtail discriminent spending.
> 
> Interest rates will stay low and increased demand for Rentals will ensure a continuing boyant housing market.
> ...




Tech/a,

Wouldn't rising food prices add more pressure to Inflation.

My recollection was that rising banana and fuel prices were the main reasons for last years Interest Rates rises.

Now apparently, we are going to have broad increases of food prices due to the drought, so from my understanding, this is going add more pressure for Interest Rates to rise.


----------



## tech/a (22 April 2007)

High Oil prices were said to cap interest rate rises.Curtailing Inflationary spending.

Go figure.


----------



## Smurf1976 (22 April 2007)

Well now I'm confused about inflation...  

Actually, perhaps not. Since inflation is a monetary phenomenon and drought isn't likely to halt the RBA's proverbial printing press (unless we really do run out of power) then inflation ought to just carry on regardless. All that will change is where it ends up - in food (and power) prices rather than houses.

Same if oil goes up in price. If the overall money supply isn't changing then it's simply diverting the price inflation from one thing to another. That's my understanding anyway. Print more money and it has to go somewhere - only question is where.


----------



## Kimosabi (24 April 2007)

Did anyone watch Insight on SBS tonight, about Aussie Housing Affordability etc?

http://news.sbs.com.au/insight/


----------



## wayneL (25 April 2007)

Kimosabi said:


> Did anyone watch Insight on SBS tonight, about Aussie Housing Affordability etc?
> 
> http://news.sbs.com.au/insight/



I saw it, could only half pay attention though.
**********************

http://www.marketwatch.com/News/Story/Story.aspx?guid={C60E8F06-646F-49ED-BFBD-9543E55AD859}




> *Sales of existing homes plunge 8.4% in March*
> 
> By Rex Nutting
> Last Update: 10:00 AM ET Apr 24, 2007
> ...


----------



## Julia (25 April 2007)

Kimosabi said:


> Did anyone watch Insight on SBS tonight, about Aussie Housing Affordability etc?
> 
> http://news.sbs.com.au/insight/




Yes, I saw most of it and, as usual with Insight, it was interesting with balanced representation of various viewpoints.

Too many people who have borrowed to their absolute limit which is OK while all goes well.  But if one gets sick, loses a job etc, then they simply can't make the payments.


----------



## insider (25 April 2007)

Julia said:


> Too many people who have borrowed to their absolute limit which is OK while all goes well.  But if one gets sick, loses a job etc, then they simply can't make the payments.




That's worrying if they expect not to get sick or lose their job over 40 year loans. I believe that when it's time for me to buy a house I'll be buying it off somebody who's selling their home because of debt... This will be reality... USA is of similar land size to Australia yet have 500 million people living there, but for some reason houses there are cheaper and of better value than here... I smell a recession brewing


----------



## Bronte (25 April 2007)

insider said:


> That's worrying if they expect not to get sick or lose their job over 40 year loans. I believe that when it's time for me to buy a house I'll be buying it off somebody who's selling their home because of debt... This will be reality... USA is of similar land size to Australia yet have *500 million *people living there, but for some reason houses there are cheaper and of better value than here... I smell a recession brewing




USA Population Clock: 
http://www.census.gov/population/www/popclockus.html


----------



## Kimosabi (25 April 2007)

Was it just me or did John Symond's from Aussie Home Loans start looking a bit sick when the Amy Kilpatrick from the Consumer Law Centre started talking about subprime lending.

It's a real pity she didn't elaborate on what is happening in the US at the moment.

What is most disturbing is that what is happening in Aussie Property is very similar to what has been going on in the US before they're property market started crashing.


----------



## Bronte (25 April 2007)

Bronte said:


> USA Population Clock:
> http://www.census.gov/population/www/popclockus.html




Australia Population Clock:  
http://www.abs.gov.au/Ausstats/ABS@.nsf/0/1647509ef7e25faaca2568a900154b63?OpenDocument


----------



## Kimosabi (26 April 2007)

Hopefully this hasn't been posted before...​ 


> *The Land Boomers*​
> _“...The boom continued to gather strength. In 1885 the harvest was prolific, the price of wool was high, the railways made a profit for the first time in the colony's history, and optimism reigned supreme. A few warning voices were raised overseas, but heard as from afar...” _​
> A Reader Writes...​
> Extracts from the book "The Land Boomers" by Michael Cannon, published in 1966... Victoria was made rich by gold, and populous by the immigrants who sought it.​
> ...



We will now be crossing to Robots for a Message from our sponsor...


----------



## Smurf1976 (27 April 2007)

> The maximum rentals which tenants were willing to pay often amounted to only 2.5% return



Now where have I come across this situation more recently...


----------



## Kimosabi (27 April 2007)

Smurf1976 said:


> Now where have I come across this situation more recently...




This is why they call it a once in a Generation Boom, because every Generation does the same stupid thing...


----------



## robots (28 April 2007)

hello,

gee another week gone, appears nothing changed in the property market

got anymore stories for the weekend

thankyou

robots


----------



## wayneL (28 April 2007)

robots said:


> *appears nothing changed in the property market*
> 
> robots



Only if you have you head in the sand. There were actually plenty of stories on mainstream TV and papers.

Find them yourself


----------



## Kimosabi (28 April 2007)

robots said:


> hello,
> 
> gee another week gone, appears nothing changed in the property market
> 
> ...




Another waste of perfectly good internet space...


----------



## eternit (28 April 2007)

Kimosabi said:


> Another waste of perfectly good internet space...




So do you think the property market in South of Sydney can drop anymore or will it rise up again anytime in the future?


----------



## Smurf1976 (28 April 2007)

robots said:


> hello,
> 
> gee another week gone, appears nothing changed in the property market
> 
> ...



Certainly have. It was on the ABC yesterday about people losing their homes in NSW. Said it was the worst on record and expected to get worse.

Not quite the weekend, but Friday's near enough I think.


----------



## Kimosabi (28 April 2007)

eternit said:


> So do you think the property market in South of Sydney can drop anymore or will it rise up again anytime in the future?




I don't know, you'll have to find a real estate agent in South Sydney to ask, oops, that's right, their all driving taxi's now, just catch a Cab in South Sydney and ask the Driver...


----------



## wayneL (28 April 2007)

Hello,

Some weekend reading especially for Robots.

http://www.dailyreckoning.com.au/australian-housing-market-2/2007/01/19/

Thankyou



> Is the Over-Leveraged Australian Housing Market About to Crash?
> Posted by Dan Denning on Jan 19th, 2007
> 
> If the RBA tries to keep pace with the Bank of England by raising interest rates again, it could be Australian home-owners who are left behind. “Higher interest rates are forcing people selling their homes to drop their prices while a rising number of home owners say their mortgage is worth more than their home, a new survey has found,” according to Nick Bourlioufas at news.com.au.
> ...


----------



## YChromozome (28 April 2007)

And some Video taped economics lectures which makes good watching (and studying) for robots. Exams next week.

Real Estate Bubbles and California's Economic Growth, Part 1
Real Estate Bubbles and California's Economic Growth, Part 2
Real Estate Bubbles and California's Economic Growth, Part 3

Not to mention, Wayne - part two is out :

Financial Sense University : Sydney's Housing Disaster, Part 2


----------



## robots (29 April 2007)

eternit said:


> So do you think the property market in South of Sydney can drop anymore or will it rise up again anytime in the future?




hello,

My understanding in Syd at the moment is that prices are going well, people are holding to their asking prices, 

looking forward to the next five years in life

thankyou

robots


----------



## Flying Fish (29 April 2007)

Anyone know if this robots guy is for real or is he just joking?


----------



## wayneL (29 April 2007)

Don't worry! House prices are going well!​


----------



## Kimosabi (29 April 2007)

Flying Fish said:


> Anyone know if this robots guy is for real or is he just joking?




I think he is a Taxi Driving Real Estate agent from Melbourne...


----------



## Flying Fish (29 April 2007)

Kimosabi said:


> I think he is a Taxi Driving Real Estate agent from Melbourne...



lol 
Obviously couldn't afford to rent in Sydney hey   Next stop will be lightning ridge!!


----------



## robots (29 April 2007)

hello,

go out and have a look around because if you think prices have stagnated then you are dreaming big time

I cannot understand why people are so ignorant of this, its not about who has money or doesnt just be truthful to yourself

blue chip property over the last 4 years (as wasnt it 2003 that everything peaked) has still been solid as with good gains

where things go who knows, keep saving

thankyou

robots


----------



## Flying Fish (29 April 2007)

robots said:


> hello,
> 
> go out and have a look around because if you think prices have stagnated then you are dreaming big time
> 
> ...



hello

ok
 
thankyou


----------



## YChromozome (30 April 2007)

robots said:


> go out and have a look around because if you think prices have stagnated then you are dreaming big time




Robots, Maybe you could fill us in on the Gold Coast Market?

Report reveals lower Gold Coast house prices - The ABC, Monday, 30 April 2007.



> A national group of real estate analysts says the median price of Gold Coast houses fell 3 per cent in the first three months of the year.


----------



## Kimosabi (30 April 2007)

robots said:


> hello,
> 
> go out and have a look around because if you think prices have stagnated then you are dreaming big time
> 
> ...




We're just waiting for the "stupid money" cycle to play out...


----------



## WaySolid (30 April 2007)

Ahh... years of stagnation... May I have the fortune of living to see a boom if this is stagnation!

Presently sitting on gains of 15% or so on a 4 month old purchase in Brisbane, the market in my price range and areas is smoking. Houses are selling above list price, stats will no doubt catch up given time.

Guess I could have theorized about why the market wasn't going to do or shouldn't be doing such things.

** edit... I purchased well.. Hence the cracking CG figure.. But most of Bris from what I can work out (I do a fair bit of research) is growing comfortably above longer term averages to put it in conservative figures. Just thought I would post that to counterpoint the negative posts I am seeing here with some real world feedback.


----------



## Uncle Festivus (30 April 2007)

*Looks like a have/have not economy - the rich get richer, the poor get the picture

-------------------------
SPECULATION of an interest rate rise has hampered a recovery in the housing market, an industry group said today.*
                                                                                                                  The Housing Industry Association (HIA) survey showed new home sales were flat in March, holding level at 8191 dwellings. 

Private detached house sales increased by a 0.2 per cent in the month, while the sale of multi-units fell by two per cent. 

Sales in the first quarter of 2007 were 16 per cent lower than in the three months to March 2006. 

HIA said speculation of an interest rate increase had discouraged would-be buyers and investors, and any upward momentum in new home sales had now stalled.

----------------
Step 1 - borrow more than you can afford
----------------

*TIGHTENING home affordability means that first-time home buyers are cutting back on the size of their deposits and opting for bigger mortgages, industry people say.*
 Average deposits for first-time buyers have shrunk to between three and six per cent in recent years compared with the traditional 10 to 20 per cent, Raine and Horne Financial Services said. 

"Very few applicants have a 20 per cent deposit," said Gary Lees who is the general manager of Raine & Horne Financial Services. 

Shrinking deposits highlight how housing affordability is increasingly out of reach for more people across Australia.

----------------
Step 2 - realise your mistake
----------------

*IMPROPER and aggressive lending practices compounded by rising interest rates have led to a huge increase in the number of people in NSW filing for bankruptcy.*
                                                                                                                  Total insolvencies soared by more than 20 per cent in the first quarter of the year to 2859 cases, according to the Insolvency and Trustee Service Australia.
 There were 2404 new bankruptcies in NSW in the March quarter, a rise of 21.54 per cent, 446 debt agreements (up 31.56 per cent) and nine personal insolvencies (up 28.57 per cent). 
 "This is an alarming reflection of the NSW property crash that people don't want to acknowledge," said insolvency partner and trustee at Hall Chadwick, Geoff McDonald. 

----------------
Step 3 - walk away
----------------

*STRUGGLING homeowners in Sydney's west are having their properties repossessed in record numbers as rich Harbourside postcodes enjoy surging real estate prices.*
 The cruel reality of Sydney's two-tier economy is revealed in detail in Supreme Court documents identifying the location of thousands of repossessions by banks and financial institutions over the past 15 months. 

The top suburbs where homes have been snatched are all in Sydney's economically embattled suburbs where property prices are continuing to slide. 


----------------------
There is anecdotal evidence that the reason repossessions in the more affluent suburbs do not show up is because people sell their homes before it gets to this stage, due to the embarrassment of repossession.


----------



## WaySolid (30 April 2007)

Kimosabi said:


> We're just waiting for the "stupid money" cycle to play out...



Well this stupid money is doing just fine.

Where is the smart money these days?


----------



## YChromozome (30 April 2007)

WaySolid said:


> Where is the smart money these days?




Debt collectors and credit services . .


----------



## WaySolid (30 April 2007)

I'm not sure I would be buying where I bought at current prices though, just that I did a lot of research and identified an area I thought perceptions were lagging reality, and was very good comparitive value compared to surrounding postcodes, and I was proven right very quickly which is probably a huge stroke of good luck as much as anything else.

And I think you can find areas right now (instead of telling everyone on a bulletin board how they won't make money in property) and do the same thing I did. Do some research, add some sweat equity, purchase well (Yields for houses in my areas are 5-6%) It's not a complex formula.

Property still rocks right at this moment in Australia as a wealth creation vehicle, don't let anyone tell you otherwise.


----------



## WaySolid (30 April 2007)

YChromozome said:


> Debt collectors and credit services . .




I don't know anything about this area but enjoy learning new things.

How do you invest in this and how are you presently doing so?


----------



## robots (2 May 2007)

hello,

any word on the interest rate decision yet?

did they lift them to 10%?

thankyou

robots


----------



## macca (2 May 2007)

Hi Robots,

No change, the country is flying, now just watch someone come along and stuff it up


----------



## tech/a (2 May 2007)

WaySolid said:


> Well this stupid money is doing just fine.
> 
> Where is the smart money these days?




When I bought my properties many friends labelled me as "Stupid".
I've sold a few since and building now---I'm evidently still "Stupid"

Stupid is comfortable so happy to remain and continue on my stupid way.


----------



## Kimosabi (2 May 2007)

tech/a said:


> When I bought my properties many friends labelled me as "Stupid".
> I've sold a few since and building now---I'm evidently still "Stupid"
> 
> Stupid is comfortable so happy to remain and continue on my stupid way.




OK, maybe stupid was a bad word to use, I was referring to the irresponsible lending environment we have been in.

I wasn't calling anyone stupid, except maybe the irresponsible lending institutions and reserve banks who have fueled the Real Estate Bubbles Worldwide by making too much easy money available.

If you've made money through this cycle, good on you, just don't get caught naked when the music stops playing.


----------



## tech/a (2 May 2007)

Kimosabi said:


> OK, maybe stupid was a bad word to use, I was referring to the irresponsible lending environment we have been in.




Irresponsible Borrowers more to the point.



> I wasn't calling anyone stupid, except maybe the irresponsible lending institutions and reserve banks who have fueled the Real Estate Bubbles Worldwide by making too much easy money available.




They are a business just like any other.
They Identified opportunity and took advantage of it.
Stupid people,made stupid decisions,which have placed them in positions which only stupid people would find themselves.



> If you've made money through this cycle, good on you, just don't get caught naked when the music stops playing.





Thanks I'll do my best.
Id rather be in my position than paralised by FEAR.


----------



## wayneL (2 May 2007)

tech/a said:


> Id rather be in my position than paralised by FEAR.



Oh Puuullleeeeeeze!!!

An economic decision to not buy RE is not necessarily fear FFS! Anyone who is fearful would not be here trading stocks now would they?


----------



## Bronte (2 May 2007)

tech/a said:


> When I bought my properties many friends labelled me as "Stupid".



Yes, we can certainly relate to this tech/a  
Fortunately we managed to help a few of our friends overcome the fear of buying their first investment property.
They have become even better friends now....strange that.


----------



## wayneL (2 May 2007)

Bronte said:


> Yes, we can certainly relate to this tech/a
> Fortunately we managed to help a few of our friends overcome the fear of buying their first investment property.
> They have become even better friends now....strange that.



Sounds like something straight out of a Jamie McIntyre course.


----------



## robots (2 May 2007)

hello 

could i get a ruling on FFS please

thankyou

robots


----------



## WaySolid (2 May 2007)

The Brisbane market is looking stronger than I first thought.

I can't believe some of the stories I'm hearing from agents and investors at the moment. I guess I will be skeptical till I get two valuations done myself in the next few months, signs are very positive for me though.

A broker who deals with quite a few HNW individuals was mentioning to me late last year how his W.A clients were bringing their equity over to bayside Brisbane and even Sydney (shock horror). Great call that has turned out to be for Brisbane.

I have done research in my suburbs going back to government grants of farming land and the original subdivision of farming land into residential lots. I'm aware of historical precedent and how property is expensive by the standards of the past, more so than most investors I would say.

Also I was told by a prominent financial educationalist last year that 'now was not the time to be buying -ve geared property' and I know a fellow investor who recently sold his entire portfolio as he didn't see property going anywhere for a long time. This really piqued my interest, and I recently decided to chop into my trading account to buy two properties in Brisbane.

I would like to make a few points.

* You don't buy the whole property market. You buy an individual property. This means you can add instant value and reduce your risk with the use of research and a great purchase price, also sweat equity is a good way to reduce your risk exposure and get better tenants, it's still happening, even today in this mini boom we are having, and I venture it will continue to happen for the next 150 years much as it has for the last 150.

* Be aware of the game you are in. If you are buying property on ridiculous earning multiples then it's possible you are playing the greater fool game. There are plenty of other games to be playing though. I have bought on 20x (or less) earnings multiples, with very strong indications of a rocket under rental prices for some time to come, these properties are also 3's out of 10 on the scale and are rock solid renters for the future.

* Yes there will be a recession/depression, I wish I could place a bet on that! It will continue to have to be of ever greater magnitude to erase the nominal gains I have received over the last few years. Cash will once again be king, but at the moment it still sucks big time, please phone me when you see the changeover happening.

Stagnation rocks!


----------



## WaySolid (2 May 2007)

tech/a said:


> When I bought my properties many friends labelled me as "Stupid".
> I've sold a few since and building now---I'm evidently still "Stupid"
> 
> Stupid is comfortable so happy to remain and continue on my stupid way.



It's considered a great contrarian compliment by me.

I was looking at a blue chip suburb of the future in SEQ in January, at the moment it's still considered 'Boganville' by most however, a clear case of attitudes lagging reality as I'm convinced this suburb will outperform for the next 10 years or so until attitudes catch up. I was told 'buy there.. and we will never visit you!' by a family member who incidentally never visited me when I lived at Mermaid Waters on the Gold Coast.. (go figure)... and 'You can't buy there... that's a terrible area' which convinced me I was spot on with my analysis.. But I chose somewhere else that is 'On the wrong side of the tracks' according to my Dad (A dad who loved Bond Corp, Quintex and Ariadne) thanks Dad!

Of course sometimes people will call you stupid and they will be right


----------



## tech/a (2 May 2007)

wayneL said:


> Oh Puuullleeeeeeze!!!
> 
> An economic decision to not buy RE is not necessarily fear FFS!





True its not.
But I'm sure there are many who are not making an economic decision even though they could well be in the position to make one that wouldnt involve the paralising fear of risk which obviously the majority on this thread appear to have.

An economic decision not to buy R/E as a blanket decision IE---period--- or until prices fall---- I would say IS fear based.

Those with blinkers on are in my view not capable of making a balanced economic decision.

A *personal* decision based upon whatever--- entirely different.


----------



## tech/a (2 May 2007)

Of course sometimes people will call you stupid and they will be right.

They will always be right---its their perception. 

I'm often wrong---thats my perception.


----------



## wayneL (2 May 2007)

tech/a said:


> True its not.
> But I'm sure there are many who are not making an economic decision even though they could well be in the position to make one that wouldnt involve the paralising fear of risk which obviously the majority on this thread appear to have.
> 
> An economic decision not to buy R/E as a blanket decision IE---period--- or until prices fall---- I would say IS fear based.
> ...



That's a lot of assumptions based on zero information. Therefore the blinkers appear to someplace other than you imagined.


----------



## tech/a (2 May 2007)

wayneL said:


> That's a lot of assumptions based on zero information. Therefore the blinkers appear to someplace other than you imagined.





1300 posts---Zero information?


----------



## robots (4 May 2007)

hello,

here we go, is this really whats going on

http://www.domain.com.au/Public/Art...py days here again: Sydney market on the rise

had a great week, 

thankyou

robots


----------



## Kimosabi (4 May 2007)

Or is this the real story about what's really going on???



> *Is the great Australian dream out of reach?*
> 
> Alison and Bryce Morgan had to give up on their dream rather than borrow hundreds of thousands of dollars to buy a house up to 40 kilometres from their work and friends.
> 
> ...


----------



## robots (4 May 2007)

hello,

remember the title:

house prices to stagnate for "years"

you can pull up what ever crap you like about affordability issues, unethical lending practices, government should do this or that

i would love to live in a 100sqM apartment in Paris too, think someone should help me out? 

i think its very evident that prices are not stagnant, around 18mths, their must be another article from the FSU (financial sense university) for the weekend

thankyou

robots


----------



## wayneL (4 May 2007)

robots said:


> hello,
> 
> remember the title:
> 
> ...



Remarkably, 100sqM in Paris would cost less than 100sqM in Sydney.

4 beds with a few acres cheaper in Bordeaux than Gerladton.

I know where my weekend getaway will be.  Baguette anyone?


----------



## BSD (4 May 2007)

tech/a said:


> When I bought my properties many friends labelled me as "Stupid".
> I've sold a few since and building now---I'm evidently still "Stupid"
> 
> Stupid is comfortable so happy to remain and continue on my stupid way.




Buying the Lotto or entering into a game of russian roulette with a sixshot pistol can make people heaps of money - but calling the participants fools BEFORE the result is known is rational. 

Eventual winners look very smart for the dumb;  but most intelligent people can establish that a winner of either game is lucky but not smart.

We should never confuse luck and smarts. 

And who gives a **** what your friends thought? 

I would assume that 80%+ of most people's  'friends' wouldnt know what makes for a good investment anyway. Many (in any investment environment) would say rubbish like, "my uncle lost money on stocks/property/options etc  count me out" 

We need to look forward not backward

Idiots who bet on lotto, pokies etc are not smart.  If they win  - their success is due to randomness and not shrewd investment.

Buying an illiquid, indivisible, undiversified asset with a 2% gross yield and 90% leverage is not good finance - regardless of previous results. 

Why rent assets to bogans for 2% return when you can sell Iron/Copper/Oil to the Chinese for enormous returns on equity?

BTW:  I firmly believe that many good property assets still exist but they represent about 4% of stock.


----------



## robots (4 May 2007)

wayneL said:


> Remarkably, 100sqM in Paris would cost less than 100sqM in Sydney.




I think that's a bit of a porkie their wayne, 

22sqM, yes 22sqM in suburb of paris (400K aussie) not talking the champs here, good area though 

thankyou

robots


----------



## Freeballinginawetsuit (4 May 2007)

wayneL said:


> 4 beds with a few acres cheaper in Bordeaux than Gerladton.




Not 5 years ago, isn't that the point?, and the correct spelling is Geraldton.

Property dosent have the same returns as the market's presented the last few years, no argument thier.

Like wise its reasonable to asume those that have speculated in recent times on both........ have simply spread the risk of investments. 

Those that continually speculate without real liquidity conversion, are akin to the house odds at the casino  .


----------



## wayneL (4 May 2007)

Freeballinginawetsuit said:


> Not 5 years ago, isn't that the point?*, and* the correct spelling is Geraldton.
> 
> Property *dosent* have the same returns as the market's presented the last few years, no argument *thier*.
> 
> ...



Thank you, for pointing out my typo.

Boy am I going to have fun with your spelling and punctuation now.


----------



## wayneL (4 May 2007)

robots said:


> I think that's a bit of a porkie their wayne,
> 
> 22sqM, yes 22sqM in suburb of paris (400K aussie) not talking the champs here, good area though
> 
> ...



Nope, not at all.


----------



## wayneL (4 May 2007)

wayneL said:


> Thank you, for pointing out my typo.
> 
> Boy am I going to have fun with your spelling and punctuation now.



BTW Dylsexia rules, KO?


----------



## Freeballinginawetsuit (4 May 2007)

wayneL said:


> Thank you, for pointing out my typo.
> 
> Boy am I going to have fun with your spelling and punctuation now.




Yeah point taken ..........  I'm an illiterate retard though, sorry .


----------



## nomore4s (4 May 2007)

Freeballinginawetsuit said:


> Yeah point taken .......... i before e, except after c (thier) and (asume) seem's o.k. !.
> 
> Could be that I'm an illiterate retard though, sorry .




lol, freeballing. Still wrong, should have been there not their.


----------



## Freeballinginawetsuit (4 May 2007)

Yep I know, had a look at the dictionary, lol. Wayne did say to watch and learn  , should have had him teaching me lit!.


----------



## Julia (4 May 2007)

It's not just Freeballing, Wayne.

If you are really going to start correcting spelling and grammar on this site, you'll have little time for anything else!

If we could just eliminate the misuse of apostrophes that would be a wonderful start.


----------



## robots (11 May 2007)

hello,

whats been happening this week, any crash, has it dropped by anything, got things ready

see reiv in Melbourne say 100% clearance rate at auction within 10km of melbourne, probably same in syd and bris, what a situation

thankyou

robots


----------



## YChromozome (11 May 2007)

robots said:


> say 100% clearance rate at auction within 10km of melbourne




What does a 100% clearance actually rate mean?

Like, if everyone discounted their houses this weekend by 50%, or there was so many mortgagee sales, wouldn't you get close if not 100% clearance rates. I would surely be in for a bargan.

Reporting clearance rates is like a company that mentions revenue is up without mentioning what it's profit is. Personally, I don't understand what the relevance is?


----------



## wayneL (11 May 2007)

robots said:


> hello,
> 
> whats been happening this week, any crash, has it dropped by anything, got things ready
> 
> ...



zzzzzzz.....zzzzzzzz.....zzzzzzzz......zzzzzzzzz......zzzzzzzzz.......zzzzzzzzz


----------



## Kimosabi (11 May 2007)

robots said:


> hello,
> 
> whats been happening this week, any crash, has it dropped by anything, got things ready
> 
> ...




I think I have found the source of Global Warming...


----------



## wayneL (11 May 2007)

Kimosabi said:


> I think I have found the source of Global Warming...



That is the funniest thing I've heard all week! ROTFLMAO.


----------



## Smurf1976 (11 May 2007)

YChromozome said:


> What does a 100% clearance actually rate mean?
> 
> Like, if everyone discounted their houses this weekend by 50%, or there was so many mortgagee sales, wouldn't you get close if not 100% clearance rates. I would surely be in for a bargan.
> 
> Reporting clearance rates is like a company that mentions revenue is up without mentioning what it's profit is. Personally, I don't understand what the relevance is?



Practically any business can sell all the product it has to offer as long as the price is right.

Everyone from supermarkets to power utilities and airlines drop the price when needed on the basis that a reduced profit on product / capacity that hasn't otherwise been sold is better than ending up with stale food, idle generators or empty seats. A smaller profit is better than no profit. 

All a high clearance rate really means is that sellers and buyers are agreeing on prices. Buyers are willing to pay a price that sellers will accept. That could be $1 million just as it could be $1.


----------



## Kimosabi (11 May 2007)

Smurf1976 said:


> Practically any business can sell all the product it has to offer as long as the price is right.
> 
> Everyone from supermarkets to power utilities and airlines drop the price when needed on the basis that a reduced profit on product / capacity that hasn't otherwise been sold is better than ending up with stale food, idle generators or empty seats. A smaller profit is better than no profit.
> 
> All a high clearance rate really means is that sellers and buyers are agreeing on prices. Buyers are willing to pay a price that sellers will accept. That could be $1 million just as it could be $1.




It could also be mortgagee fire sale auctions for the poor suckers that bought over-priced property with money lent to them by irresponsible lenders...


----------



## robots (11 May 2007)

hello,

should be some great results tomorrow, plenty to look at, great to see Sydney finally getting some attention

those inner blue chip areas are red hot at the moment plenty of people wanting to live, socialise and work in those areas

walking around the streets you really see a difference in the community as more people adjust to apartment living, 

thankyou 

robots


----------



## wayneL (11 May 2007)

robots said:


> ...plenty of people wanting to live, socialise and work in those areas
> 
> walking around the streets you really see a difference in the community as more people adjust to apartment living,
> 
> ...



Actually, I agree with you. Inner cities are now great places IMO. 

This opinion is separate to that of value however.


----------



## robots (12 May 2007)

hello,

if new record prices are being achieved then whats it matter if they are mortgagee sales or not? and you really are getting around with blinkers on if you think a house in St Ives for example has dropped from 1m to 500 thous

most think prices are too HIGH to THEM, but what about people who can afford these properties? and therefore why do they have to drop as many want

thankyou

robots


----------



## Kimosabi (12 May 2007)

robots said:


> hello,
> 
> if new record prices are being achieved then whats it matter if they are mortgagee sales or not? and you really are getting around with blinkers on if you think a house in St Ives for example has dropped from 1m to 500 thous
> 
> ...




Well this is what can happen to you when you buy overpriced property in an environment of irresponsible lending during a housing boom...

*The ugly face of foreclosure*

Video ==> http://www.cnn.com/video/player/pla...eyerick.home.auction.shocker.cnn&source=money

Article ==> http://money.cnn.com/2007/05/02/real_estate/face_of_foreclosure/index.htm?postversion=2007050718

I wonder if we'll keep hearing from Robots when the inevitable bust happens?


----------



## robots (12 May 2007)

hello,

just got feedback from friends in Sydney and indicates strong day on the auction front

it appears people are buying/investing well in the capital cities at the moment, some observers are talking up big time but I am not so sure whats around the corner

solid times at the moment though, enjoy the day

thankyou

robots


----------



## Mousie (12 May 2007)

Just too bad we can't short properties like we short shares  

I'll pay a fair price for a put with the right expiry and value anytime in a market like this!

Anyone willing to buy a naked put on a property from me?


----------



## Flying Fish (13 May 2007)

robots said:


> hello,
> 
> just got feedback from friends in Sydney and indicates strong day on the auction front
> 
> ...




Hello

Sounds like a lot of mortagee auctions to me. 

thankyou


----------



## biff (13 May 2007)

Ive listened to people trying to talk the housing market down for over 30 years, Id be missing a million dollars or so if I listened to them. Where I would be buying at the moment is in some of the more under rated suburbs in Melbourne within 20 kms of the city.


----------



## Smurf1976 (13 May 2007)

biff said:


> Ive listened to people trying to talk the housing market down for over 30 years, Id be missing a million dollars or so if I listened to them. Where I would be buying at the moment is in some of the more under rated suburbs in Melbourne within 20 kms of the city.



Fair enough. But if I'd listened to those trying to talk the market up over the past 3 years then I'd have lost an outright fortune.

House prices may well have risen a little since then in terms of the average selling price. But once you factor in the massive investment needed to keep up with the rising quality of "average" houses over that time it's been worse than cash in the bank.

A lot of people seem to be forgetting that if you take a house in, say, 2003 and compare that price to today's price then you need to deduct the cost of a decent "reno" from that. Those properties in essentially the same condition (less wear and tear) as 2003 have, in my area at least, gone down in value despite the "average" (renovated) property price going up.

I wonder why the real estate groups etc never mention quality of houses selling, only the price? It's like saying the average TV has gone up in price without mentioning that you're comparing a modest CRT 5 years ago with a giant plasma now. The price of the_ same _TV has outright crashed in that time even though the "average" TV selling price has gone up.


----------



## YChromozome (13 May 2007)

Flying Fish said:


> Sounds like a lot of mortagee auctions to me.




Families are forced onto skid row news.com.au - May 13th.



> FAMILIES are being forced to live out of cars and in motels as a rental crisis and a lack of affordable housing creates a new breed of desperate and homeless Australians. Despite low unemployment, NSW welfare agencies report they are turning away about 60 families a day seeking help because of mortgagee sales, a shortage of rental properties and domestic violence.




Thats the problem with robots, unlike Humans they don't have a conscious.

BTW robots, Auction clearance rates (if they actually mean anything) has fallen to 60% in Adelaide this weekend . .  Must be a slow news week, no media outlet ever reports falling clearance rates?


----------



## biff (13 May 2007)

Smurf1976 said:


> Fair enough. But if I'd listened to those trying to talk the market up over the past 3 years then I'd have lost an outright fortune.



Not if you didnt sell, a loss is only a loss when realised. I think the key to the whole thing is buying something you can afford and being prepared to live in it. 30 years ago my first property was a dingy 1 bed flat in the back blocks but it did give me an entry into the housing market. These days no one wants to start out without a 4x 2 in a nice area it seems.



> House prices may well have risen a little since then in terms of the average selling price. But once you factor in the massive investment needed to keep up with the rising quality of "average" houses over that time it's been worse than cash in the bank.
> 
> A lot of people seem to be forgetting that if you take a house in, say, 2003 and compare that price to today's price then you need to deduct the cost of a decent "reno" from that. Those properties in essentially the same condition (less wear and tear) as 2003 have, in my area at least, gone down in value despite the "average" (renovated) property price going up.
> 
> I wonder why the real estate groups etc never mention quality of houses selling, only the price? It's like saying the average TV has gone up in price without mentioning that you're comparing a modest CRT 5 years ago with a giant plasma now. The price of the_ same _TV has outright crashed in that time even though the "average" TV selling price has gone up.



well this is true to an extent, investors frequently overlook the fact that housing is high maintenance in order to keep the value of the investment. And many homeowners do too, in a flat market which is what a lot of the country has experienced in the last few years no one can expect to buy a property not do any maintenance for a few years and then sell without losing money.
In many cases a reno is just catch up property maintenance.


----------



## robots (13 May 2007)

hello,

I hope people can differentiate between the title of this thread and the affordability issue

if you want to discuss why people should get handouts, affordability issues etc then start a new thread

if I started a thread "CBA to stagnate for years" and the opposite happened but I continually campaigned that CBA had stagnated I would be laughed at as well

quality property across Aus has done well over the last 3 years and creams cash in the bank

thankyou

robots


----------



## biff (13 May 2007)

robots said:


> quality property across Aus has done well over the last 3 years and creams cash in the bank
> 
> thankyou
> 
> robots



Wheres your evidence to support this?


----------



## AAA (13 May 2007)

Smurf1976 said:


> Fair enough. But if I'd listened to those trying to talk the market up over the past 3 years then I'd have lost an outright fortune.
> 
> House prices may well have risen a little since then in terms of the average selling price. But once you factor in the massive investment needed to keep up with the rising quality of "average" houses over that time it's been worse than cash in the bank.
> 
> A lot of people seem to be forgetting that if you take a house in, say, 2003 and compare that price to today's price then you need to deduct the cost of a decent "reno" from that. Those properties in essentially the same condition (less wear and tear) as 2003 have, in my area at least, gone down in value despite the "average" (renovated) property price going up.





SMURF,

A check of the ABS figures show average Hobart prices are up 25% in the 3 years up to March 07. Do you really think you can put this significant price increase down to value adding by renovations.

If someone could tell me how to post a link I would.

Thanks


----------



## Julia (13 May 2007)

YChromozome said:


> Families are forced onto skid row news.com.au - May 13th.
> 
> 
> 
> Thats the problem with robots, unlike Humans they don't have a conscious.



Much of this is genuinely beyond the control of the people concerned, but not all of it.  Often rent is not paid because the choice has been made to spend that money on alcohol or drugs or even a holiday.

Because of poor role modelling when they were children, many adults simply have no conception of budgeting or money management.  If you suggest to them, e.g. that if they put the equivalent of the electricity account aside on a pro rata basis every fortnight (Centrelink will deduct this from benefits and pay to the electricity supplier) then they don't get that large bill to pay all at once, they are often simply uninterested.  Easier to take the electricity bill into some kind charity or community organisation and ask them to pay it.

That said, there is a huge need for safe accommodation for victims of domestic violence and people who are mentally ill.  The country's miserable, drug filled caravan parks are full of vulnerable people who simply have nowhere else to go.


----------



## robots (13 May 2007)

hello,

bif, go around the inner areas of capital cities, new higher prices are being achieved everywhere for units, townhouses, houses etc

the quality property out there has continued to do well since the so called end of the boom in 03

if you think the current prices are some abberation then goodluck, everybody can make their own decisions

who konws what happens in 10 yrs, 20 yrs or 30 yrs, all I know is shares and property will be leading the way, hold onto your assets

thankyou

robots


----------



## YChromozome (13 May 2007)

Julia said:


> Much of this is genuinely beyond the control of the people concerned, but not all of it.  Often rent is not paid because the choice has been made to spend that money on alcohol or drugs or even a holiday.




There is two sectors. I don't believe people renting have any excuses unless rents do dramatically go up. Historically rents up to 2006 have never increased any more than inflation. This year could be the first year in history where rents increase much more than inflation and this deviation could put many out on the streets. However all this hype of rents increasing 20% have not yet appeared in the first quarter CPI and rent index figures, so I guess we can only wait and see the effects.

However in the other sector, the owner occupier, while some could use the typical social excuses of alcohol and drugs, but the bottom line is the level of debt we have today and where it came from.







In the '80 household debt was 40% of disposable household income. Today, it is 160%. The single cause has been housing asset prices, mainly direct but also indirect through the wealth effect where owners feel richer hence they spend more on credit (or take holidays). Historically, house asset prices have never increased much more than wage growth or inflation. Fair enough, we have seen some booms followed by busts, but these are all dwarfed by the bubble we are currently in.  

There is also not a week that goes past now where there is another example of a lender, lending money to someone that can't afford it, be it lending hundreds of thousand of dollars on a 40 year loan to someone in their 80s, or loans to someone unemployed. 

Not everyone is on drugs. Lots of people are genuinely struggling. How long this lasts though, is anyones guess.


----------



## Julia (13 May 2007)

YChromozome said:


> Not everyone is on drugs. Lots of people are genuinely struggling. How long this lasts though, is anyones guess.




Of course not everyone is on drugs.  I didn't suggest any such thing.
One of the problems for people on welfare is that rent assistance has not increased in line with the actual rent increases they are having to pay.


----------



## robots (14 May 2007)

hello,

in today's australian

http://www.theaustralian.news.com.au/story/0,20867,21725066-25658,00.html

great reading, looking forward to the reply's, some more great sales over the weekend by the looks of it

thats right, its the blip before it goes bang

thankyou

robots


----------



## tech/a (14 May 2007)

This thread started back in 2005.

Since then in Adelaide (Where the instigator of the thread lives).
Average prices have risen 20-35%.

Sadly this will be a similar case (No 20-30% rewind in pricing across the board) for those who wait and wait and wait for the "right" time to enter the housing market.

Ive said it before and I'll say it again.
There is *NO BETTER TIME *to enter the realestate market than *NOW*.

Just be smart in the way you enter it.(be creative).
That doesnt mean all can afford to enter the market either.


----------



## YChromozome (14 May 2007)

tech/a said:


> There is *NO BETTER TIME *to enter the realestate market than *NOW*.









But I guess we should all pray tonight that someone comes up with some means that we can all spend more than we earn and it is still sustainable long term.


----------



## Kimosabi (14 May 2007)

tech/a said:


> This thread started back in 2005.
> 
> Since then in Adelaide (Where the instigator of the thread lives).
> Average prices have risen 20-35%.
> ...




I'm sure this was said about 1 day before the US housing market turned to sh*t as well.

They were very creative over there and gave out mortgages to anyone and everyone who had a pulse, including cats. Oh let me think, they've been doing the exact same thing here in Australia as well, hhmmm, let me think, how could this play out...

Oh, that reminds me, if I don't bite the bullet and buy a house now, I'm going to miss out and never going to be able to afford my own house, I don't think so...

Don't get sucked in people, just as rising housing prices feed on themselves going up, they'll feed on themselves going down.

And whatever you do, don't listen to people who have property, because they have a *vested* interest in seeing the continual value of their property appreciate or will happily sell you their overpriced property for a massive profit..

When this current bubble pops, and it will pop, those with cash or minimul debt will be King. Because, while the rest of the bubble suckers are struggling, just to keep their bubble homes and bubble investment property's those with cash or minimul debt will be in a prime position to pick up bubble free property at their true value...

And on to Mathematics 101

If a property a year ago was worth $300,000 and and has gone up 30% in a year it would now be worth $390,000.

Now for that same property to drop back to $300,000, it only has to drop 23%.

What this means, is that a 30 percent increase in property prices is very different to a 30 percent decrease in property prices.

If anyone wants a real life, happening as I write this post, case study on the aftermarth of a housing boom, just have a look here and get yourself educated ==> http://ml-implode.com/


----------



## tech/a (14 May 2007)

When I bought my first home it was $30k back in 75.
Back then it was an insane amount of money.

Its all relative.


----------



## wayneL (14 May 2007)

tech/a said:


> When I bought my first home it was $30k back in 75.
> Back then it was an insane amount of money.
> 
> Its all relative.



What was the earnings/pirce ratio then? I'll bet it wasn't 6 - 10 times.

I'll bet yield was greater than 2.5 - 4.5% too


----------



## Kimosabi (14 May 2007)

tech/a said:


> When I bought my first home it was $30k back in 75.
> Back then it was an insane amount of money.
> 
> Its all relative.




Buying houses is no different to buying shares, it's all about the timing...

The only real difference is that housing cycles are much longer than share cycles.


----------



## stock_man (15 May 2007)

tech/a said:


> When I bought my first home it was $30k back in 75.
> Back then it was an insane amount of money.
> 
> Its all relative.




Slightly of topic, but what was the interest rate figures like back in 75?
I have checked the rba web site, and inflation was high at 14.4% for the year.

Given the average income now of $50K, the average income in 75 was $9.3K (rba).

That results in an earnings/price ratio was about 3. Definately lower than today, but a more reasonable comparison would be the actual yearly interest cost as a percent of income.

Lets examine the figures more closely:

2007 at $300K, interest 7.25%, interest/income percent = 43%
1975 at $30K, interest 13.25%, interest/income percent = 43%

As you can see, its easy to say the house was cheaper when looking at multiples of income, but during a booming inflation economy, interest rates were often high. Of cause, this is all blown out of the water if today's interest rates went to 13.25% (79.5% of gross income)


----------



## Kimosabi (15 May 2007)

Goodbye Housing Bubble



Boom Bust - UK housing bubble set to burst



www.ablemesh.co.uk/thoughtsboombust.html

Some of the music sucks, but anyway, you'll get the message...


----------



## YChromozome (15 May 2007)

stock_man said:


> but a more reasonable comparison would be the actual yearly interest cost as a percent of income.
> 
> As you can see, its easy to say the house was cheaper when looking at multiples of income, but during a booming inflation economy, interest rates were often high.




The RBA also publishes Debt to disposable income ratio for Households (B21) which detail interest payments to disposal income of which is housing.

A graph looks like this :






It doesn't go back as far as 1975, it starts at 1979, but the blue line shows interest payments (housing) vs disposable income. 

In 1997 the average Australian household spent 3.8% of disposable income on housing payments. In December 2007, it was 9.7%, or a 150% increase. . .

You can also see from the graph that the difference between the red and blue lines is the other household debt - revolving credit, personal loans etc. It hasn't increased anywhere near the rate housing debt has.


----------



## Kimosabi (15 May 2007)

Interesting article from news.com.au



> *Economy buffers mortgage crisis*
> 
> May 15, 2007 09:55am
> Article from: AAP
> ...




Good to see we don't have anything to worry about, now where are those mortgage papers...


----------



## WaySolid (17 May 2007)

tech/a said:


> This thread started back in 2005.
> 
> Since then in Adelaide (Where the instigator of the thread lives).
> Average prices have risen 20-35%.
> ...



It is interesting isn't it? All of this energy devoted to how the bubble is going to burst, meanwhile you and I have been making money in real estate.

Quoting newspaper articles to support a view only leaves me underwhelmed though, unless the journalists have studied more history than me. You can feed your confirmation bias on anything these days, just use 'The Google' as Dubya would say.

I'm comfortable with the idea that you can be a fool and be wealthy.


----------



## WaySolid (17 May 2007)

YChromozome said:


> The RBA also publishes Debt to disposable income ratio for Households (B21) which detail interest payments to disposal income of which is housing.
> 
> A graph looks like this :
> 
> ...



Data is often pure but what conclusions to draw from it might be the challenge.

The house to white good ratio is sky high by historical standards, the same for the house to car ratio, have you seen what those things used to cost in the 60's and 70's? I submit that there will be nothing special happening in terms of mean reversion here 

The China Price is encouraging appreciating asset inflation as when your fridge and plasma TV cost so little of your weekly wage you can afford more of a mortgage, also there is the ocean of credit which doesn't hurt.

Also you need to compare the first house Jan Somers bought (a little wooden box basically) with what first home buyers expect today... It's normally a bit different as the expectation to reality ratio is also sky high these days. Housing affordability crisis indeed, come let me show you some places in Brisbane that cost less than 150k.

In the end I retain the general view that at decent P/E (sub 20 especially) multiples and desirable locations; residential property is an excellent place to be investing at the moment in this country, much as it has been for the last 150 years.


----------



## tech/a (17 May 2007)

Clearly W/S most who post on this thread in particular those who wish to support the veiw of an impending doom scenerio---arent involved in property.

Fear quite possibly may see this stance solidified in more than housing investment for most of these posters. Infact its seen in the Imminent doom and Panic,XJO is Crashing and many other like threads.


----------



## Kimosabi (17 May 2007)

WaySolid said:


> Data is often pure but what conclusions to draw from it might be the challenge.
> 
> The house to white good ratio is sky high by historical standards, the same for the house to car ratio, have you seen what those things used to cost in the 60's and 70's? I submit that there will be nothing special happening in terms of mean reversion here
> 
> ...




No problemo boys, just keep blowing those bubbles...


----------



## wayneL (17 May 2007)

WaySolid said:


> ...also there is the ocean of credit which doesn't hurt.



This is the crux of the whole argument. While the credit/economy relationship my be a chicken and egg conundrum, one thing is for sure...

Loose credit => Rising prices
Tight credit => Contracting/stagnant prices

Credit in Oz is still very loose. However:
in the States it is now tightening 
in the UK, Prime is tightening while sub-prime is loosening

While there is loose credit, there will always be some muppet willing to hock themselves up to the friggin' eyeballs, because re "only ever go up"... a fallacy some are only beginning to discover... a fallacy many discovered in the early 90's.

NB (Loooong term they may of course go up, but servicing a ludicrous mortgage in the meantime, when equity may be negative for a time, has shown to be crushing at times)


----------



## WaySolid (17 May 2007)

I was going to say 'I too can post funny You Tube videos', which require little involvement and thought from me.. But turns out I can't, not sure why.

Anyway here is my funny you tube video:

http://www.youtube.com/watch?v=dGvw6WpHSF4

I only took an interest in this thread as I have become aware of how toxic information can be, just mosey back to the first post in this thread and imagine you were basing investing decisions on that information. 

I wanted to add some input based on my amateur historical research and real world experiences, that was my only motivation, I certainly don't feel smart for all the CG I have experienced in property, grateful but not smart.

Your investing results will cut like a hot knife through butter when it comes to idle speculation anyhow.

Bye and good luck!


----------



## WaySolid (17 May 2007)

tech/a said:


> Clearly W/S most who post on this thread in particular those who wish to support the veiw of an impending doom scenerio---arent involved in property.
> 
> Fear quite possibly may see this stance solidified in more than housing investment for most of these posters. Infact its seen in the Imminent doom and Panic,XJO is Crashing and many other like threads.



Just noticed this post, yes I suspect that is the case, it's usually a different perspective when you are uninvolved.

My understanding is it's more likely that a bull market rolls over rather than crashes, and you really need exquisite timing to provide anything but robust longer term results for buy and hold.

Accumulate quality assets and keep repeating, a formula that has worked fairly well for some time.

Rolling 5 and 10 year nominal forward returns for the XJO accumulation index in the 1980's. Note how very accurate your timing would have to be to nail negative returns once you extend your time frame to 5 years.


----------



## wayneL (17 May 2007)

tech/a said:


> Clearly W/S most who post on this thread in particular those who wish to support the veiw of an impending doom scenerio---arent involved in property.
> 
> Fear quite possibly may see this stance solidified in more than housing investment for most of these posters. Infact its seen in the Imminent doom and Panic,XJO is Crashing and many other like threads.



That's an assumption that is not necessarily correct.


----------



## WaySolid (17 May 2007)

wayneL said:


> This is the crux of the whole argument. While the credit/economy relationship my be a chicken and egg conundrum, one thing is for sure...
> 
> Loose credit => Rising prices
> Tight credit => Contracting/stagnant prices
> ...



Agreed.


----------



## tech/a (17 May 2007)

> Clearly W/S *most*




Not all.


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## robots (17 May 2007)

hello,

most property owners are sitting on around a 10% return per annum over the last 10yrs, isn't that the long term trend?

if you go out to 20 yrs things are around the same, so where is the bubble?

sure some have excelled more and others not excelled so much, 

its loud and clear though that things are good

thankyou

robots


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## YChromozome (17 May 2007)

robots said:


> most property owners are sitting on around a 10% return per annum over the last 10yrs, isn't that the long term trend?
> 
> if you go out to 20 yrs things are around the same, so where is the bubble?




Actually, long term houses don't increase anymore than inflation, otherwise they become un-affordable and out of reach.

Yale economist, Robert J Shiller has a US real home price index dating back to 1890. Sure there are booms, followed by busts, but prior to this decade house prices over the 100 years had not gone up much more than inflation.

Dutch economist, Piet M. A. Eichholtz created a real house price index for one street going back 400 years. It was the same outcome, house prices over those 400 years didn't increase much more than inflation. Sure, again there were plenty of booms, but they were always followed by busts. 

If house prices rise more than inflation, they become un-affordable.


----------



## CanOz (17 May 2007)

YChromozome said:


> Actually, long term houses don't increase anymore than inflation, otherwise they become un-affordable and out of reach.
> 
> Yale economist, Robert J Shiller has a US real home price index dating back to 1890. Sure there are booms, followed by busts, but prior to this decade house prices over the 100 years had not gone up much more than inflation.
> 
> ...




Great post YC...when you think about it...its just supply and demand....like everything else!

Cheers,


----------



## robots (18 May 2007)

hello,

any changes on the property prices this week, another week passed, faithful still hanging in there for the bust

around 3 months form the 2 yr anniversary, anyone post a count down clock

thankyou

robots


----------



## tech/a (18 May 2007)

YChromozome said:


> Actually, long term houses don't increase anymore than inflation, otherwise they become un-affordable and out of reach.
> 
> Yale economist, Robert J Shiller has a US real home price index dating back to 1890. Sure there are booms, followed by busts, but prior to this decade house prices over the 100 years had not gone up much more than inflation.
> 
> ...




As an investor in ANYTHING.

Its the constant challenge to find *outlier moves *in the vehical of investment.
Recognise the potential----take advantage of it---maximise profit and minimise risk..
Property/Shares/Art/Coins/Commodities---whatever your choice.

I think most here miss the point of sound investing.

*In a nut shell*

(1) Most can recognise opportunity.
(2) Few know how to take advantage of that opportunity.
(3) Fewer again actually DO SOMETHING with the opportunity.


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## YChromozome (18 May 2007)

tech/a said:


> Recognise the potential----take advantage of it---maximise profit and minimise risk..




I couldn't agree more. As a director of a company, we sold our rental property assets in February to minimise risk. We are very happy with our returns over the years.

At the end of 2003, we were cautious with property being overvalued by 51% based on Fundamentals. The warning bells were ringing. Now the alarm bells are ringing and we have moved that money into other assets and reduced all exposure to the residential property market.


----------



## robots (18 May 2007)

hello,

another great weekend coming up chromo for property holders

open for inspections are insane at the moment, so many people, many bidders

great stuff across australia

thankyou

robots


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## YELNATS (18 May 2007)

wayneL said:


> NB (Loooong term they may of course go up,




Wasn't it John Maynard Keynes who said in the long term we're all dead. In fact, some of us are closer to that than others. LOL


----------



## Kimosabi (18 May 2007)

robots said:


> hello,
> 
> any changes on the property prices this week, another week passed, faithful still hanging in there for the bust
> 
> ...




*Post Housing Bubble Robots*


----------



## tech/a (18 May 2007)

YChromozome said:


> I couldn't agree more. As a director of a company, we sold our rental property assets in February to minimise risk. We are very happy with our returns over the years.
> 
> At the end of 2003, we were cautious with property being overvalued by 51% based on Fundamentals. The warning bells were ringing. Now the alarm bells are ringing and we have moved that money into other assets and reduced all exposure to the residential property market.





Exactly

Maximise geraing when opportunity presents and minimise when you deem it appropriate.
Done similar myself.
The only property I hold is well and truely positively geared to 11%.
Which is highly likely given a Labor Govt.


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## slooi1 (18 May 2007)

I've been reading this thread for quite a while. The bears seem to think that the housing market is uniform and that the stats capture all essential details (similar to the stockmarket). Well it's not. That's why people like robots and tech/a are bulls.

Housing in the right area will continue to go up. I've seen it in the inner city areas of Melbourne where I live, comparable houses have been going out in prices to the extent of 50% in the past 3 years. Hardly a crash.
Houses in the outer suburbs/mortgage belt are not going up as fast (note I did not say that the prices were going down).

The market isn't uniform, not all house sales are reported and compiled - so the stats that people quote and glean from the papers are pretty much useless. The real check is when you go out and pound the hard yards and find comparable houses in location/condition and then compare the price. And from my checking, houses of comparable location/condition are going up, rapidly.

Agree with Robots that affordability is another issue and should be dealt with separately. People may say talk about the rising interest rates - you have to differentiate between houses. To me there are really two subclasses of houses:
1) Good family homes in good locations that always sell well and are never sold in a "fire sale" situation. Ie if the owners can account for repayments easily.
2) Investment type houses - normally average in location and condition. Rising interest rates will affect these investors who will sell in a "fire sale" situation

If a "crash" did occur, you'd see more houses of 2) being sold, and those would be the rubbish ones. The good houses in good locations won't be sold. I know I wouldn't be holding out to buy houses in the characteristics of 2). A caveat to this is that this is what I've seen in inner city. Outer suburbs, I would never purchase to live or invest.

slooi1


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## Flying Fish (19 May 2007)

robots said:


> hello,
> 
> another great weekend coming up chromo for property holders
> 
> ...




hello

Are you the original crystal ball reader? Or perhaps you are  just on the stuff. 


thankyou


----------



## wayneL (19 May 2007)

slooi1 said:


> The good houses in good locations won't be sold.



Nonsense! How old are you?

In the early 90's I lived on the Gold Coast. Primo waterfront properties were being flogged off at huge discounts. One across the road from my folks was sold at a 30% discount to it's late 80's purchase price, after a 100k reno/addition. This was not a one off either. It was happening everywhere. I recall Sydney waterfronts copped a caning as well.

When the poo eventually hits the propeller, no class of property will be immune.


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## Flying Fish (19 May 2007)

wayneL said:


> Nonsense! How old are you?
> 
> In the early 90's I lived on the Gold Coast. Primo waterfront properties were being flogged off at huge discounts. One across the road from my folks was sold at a 30% discount to it's late 80's purchase price, after a 100k reno/addition. This was not a one off either. It was happening everywhere. I recall Sydney waterfronts copped a caning as well.
> 
> When the poo eventually hits the propeller, no class of property will be immune.




I totally agree with you. Its a bit like a pyramid, take enough of the bottom bricks away and eventually the top ones also crumble. While I admire all the positive thinkers out there, the problem is that the majority are living in a fantasy world of their own. When the brown sloppy stuff does hit the fan, I for one would not like to be standing in its path.


----------



## tech/a (19 May 2007)

> That's why people like robots and tech/a are bulls.




In my case,Ive been in Property (again)  heavily since 96 and developing as part of business since 2000.

I look at property not as an investment/commodity but as a business (As the Developement side is!!)
It is neither bullish or bearish to me.
It is a vehical to run a business in and as such I look for ways of improving the profitability of my business.
I look for opportunities and exploit them.

Looked in this way I'm sure youd find property more *dynamic* than as a commodity which rises/falls/or is flat.

*Big difference!*




> When the brown sloppy stuff does hit the fan, I for one would not like to be standing in its path.




And those of us involved in the Industry will take it as it comes ,finding opportunity when it presents itself.
This isnt fantacy,but the difference between those who perhaps look a little differently at Property/Trading/and Business than most others.
No point in "What if's", Opportunity doesnt look you in the face for ever.
You simply structure Business differently.


----------



## Flying Fish (19 May 2007)

tech/a said:


> In my case,Ive been in Property (again)  heavily since 96 and developing as part of business since 2000.
> 
> I look at property not as an investment/commodity but as a business (As the Developement side is!!)
> It is neither bullish or bearish to me.
> ...




No offence tech. because doubtless you have and will do we ll, but is not this an admission of defeat?

Wait for the onslaught, you reckon 11% interest rates.... I aim a little higher


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## Smurf1976 (19 May 2007)

I seem to recall the point of this thread being whether house prices would rise, fall or be flat rather than whether or not it's possible to make money running a housing related business.

Now, if I just invest in 20 randomly selected properties to represent real estate as a whole and then do nothing with those properties apart from maintenance then, after holding costs, can I expect a reasonable profit? 

If "yes" then the bulls are right. If "no" then the bears are right. That I could start a property development company or go into the business of renovation for profit is an entirely different question as to whether house prices, as a whole, are headed up, down or sideways.


----------



## tech/a (19 May 2007)

Flying Fish said:


> No offence tech. because doubtless you have and will do we ll, but is not this an admission of defeat?
> 
> Wait for the onslaught, you reckon 11% interest rates.... I aim a little higher




Defeat?

If you take the black and White stance of Smurf,then yes.
If you take the stance of Property just as another form of business then no.

With rentals at such a high demand,and with it possible to positive gear (just invest more in the initial deposit),there will always be ways even for those not highly cashed to turn a good/satisfactory profit.

Commercial and Industrial property is currently 3 yrs behind the Housing Boom.
An area ignored by retail investors.


----------



## Mofra (19 May 2007)

tech/a said:


> Commercial and Industrial property is currently 3 yrs behind the Housing Boom.
> An area ignored by retail investors.



I would argue that this area is not so much ignored, as it is more difficult to obtain finance for such proposals (especially with little equity) so many give up.

Comparing the ease of obtaining a 95% lend on residential compared to 70% as a stardard lend against commercial (up to 85% if you're willing to pay the extra margins), residential property is more accessable and thus more obtainable for the average investor.


----------



## Clubsharer (19 May 2007)

Hi all.  This is the first post from me and I'm very much a novice compared to most of you guys, so be kind to me if I come accross as simple.  The housing and stock markets appear to be both quite healthy, with plenty of cashflows coming in both areas.  My question is, how much of the Australian property market is actually owned by the banks/martgage brokers?  Coversely, how much of the stock market is actually owned by outright cash?  It would appear, going from the little I know, that the housing market's artificially inflated by the over borrowings. This could be some cause for concern if there's ever (and there will be sooner or later) a recession where many home owners and investors are forced to sell off their properties because of no cash flows.  So to summarise my post; how much of the property market  is owned by the general public?  Is the stock market artificially boosted as well?  Which is more vulnerable in hard times?  Thanks for this great site.  Rob


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## YChromozome (19 May 2007)

Clubsharer said:


> My question is, how much of the Australian property market is actually owned by the banks/martgage brokers?




The RBA publishes Housing Debt to Housing Asset ratios. For the December 2006  quarter, the figure was 26.1%. 

Between 1977 and 1990 the figures stay reasonably flat and hovered around the 10% mark. Since about 1990 it has started to accelerate upwards. This is consistent with Household debt (as a percentage of household disposable income) figures I posted earlier, as housing makes up most of Australian's household debt.


----------



## Kimosabi (19 May 2007)

Clubsharer said:


> Hi all. This is the first post from me and I'm very much a novice compared to most of you guys, so be kind to me if I come accross as simple. The housing and stock markets appear to be both quite healthy, with plenty of cashflows coming in both areas. My question is, how much of the Australian property market is actually owned by the banks/martgage brokers? Coversely, how much of the stock market is actually owned by outright cash? It would appear, going from the little I know, that the housing market's artificially inflated by the over borrowings. This could be some cause for concern if there's ever (and there will be sooner or later) a recession where many home owners and investors are forced to sell off their properties because of no cash flows. So to summarise my post; how much of the property market is owned by the general public? Is the stock market artificially boosted as well? Which is more vulnerable in hard times? Thanks for this great site. Rob




Well, this has got to be the Post of the Year so far, well done.


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## Bronte (19 May 2007)

*Perth Median Home Price Tipped to Reach $500,000*

Very interesting article in todays West Australian:
http://www.thewest.com.au/default.aspx?MenuID=77&ContentID=8874

*"Median house prices in Perth will break through $500,000 in the next fortnight, a key property analyst predicted yesterday, as John Howard said he expected the commodities boom to continue for years."*


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## robots (19 May 2007)

hello,

great post slooi1

i think your example of house 1 & 2 is spot on, and remember 1 doesnt have to be some primo multi million dollar house, house type 1 is over all price brackets

houses are so individual and I doubt if any here go out and do the hard yards looking at what things are going for, i have and people think you make things up

i dont know what is going to happen to property, all I am saying is things are definitely not flat, yet people assume from that your campaigning property never goes down

please go out and have a look around, have a great day

thankyou

robots


----------



## Freeballinginawetsuit (19 May 2007)

tech/a said:


> And those of us involved in the Industry will take it as it comes ,finding opportunity when it presents itself.
> This isnt fantacy,but the difference between those who perhaps look a little differently at Property/Trading/and Business than most others.
> No point in "What if's", Opportunity doesnt look you in the face for ever.
> You simply structure Business differently.




Too True,

Unlike chilly Scotland thats cold & expensive with a generational wealth gap wider than the Grand Canyon. They do like us holidaying Aussies though


----------



## wayneL (19 May 2007)

tech/a said:


> I look at property not as an investment/commodity but as a business (As the Developement side is!!)
> It is neither bullish or bearish to me.
> It is a vehical to run a business in and as such I look for ways of improving the profitability of my business.
> I look for opportunities and exploit them.
> ...



This is such an important distinction.

Most people when speaking of RE investment are speaking of buying a pile of bricks, renting it out so somebody and look to create positive cashflow and/or capital gain. In other words a fairly passive "investment".

What you're talking about Tech is not really relevant to the topic at hand which is more about the passive investment in RE. Valuable information though it is and certainly an option if folks are inclined towards that sort of thing. But in reality, it is only viable/achievable/desirable for a minority.

You actually wouldn't want too many $%^&ing muppets involved in development as they would destroy your advantage. just like too many video shops or pizza parlours wrecks it for all.

I would argue that too many $%^&ing muppets have ruined the residential property market. Sure lots of folks have made a motza in the run up. I have two houses in SW England still that are still ludicrously overvalued, so not much to complain about there. But it has ruined my investment model, it has created over indebted muppets, panic buyers and would be johnny-come-lately property tycoons who are now crapping themselves over 0.25% rate rises ffs. I means I can't find investments that fit my specific model.

Defaults and repossessions are climbing astronomically (and quietly) and debt is getting right out of hand for many.

Governments are now actively manipulating the markets via grants, part ownership schemes and stamp duty concessions as they know RE tankage would result in the end of their tenure.

In the UK BTL (buy to let) loans are rising astronomically in number, yet the supply of rental properties has not really risen all that much... so someone is selling their BTLs. Anecdotally (and in simplistic terms) the professionals are selling their BTLs to the $%^&ing muppets. Classic distribution, in share market parlance.

...and we've seen this all before.

...and we've seen the results before.


----------



## robots (19 May 2007)

hello,

buy to let happened here in Aus around 01-03, the likes of Kaye et al, and still happens today

have I got a deal for you, we have bought 100 units of a developer and are going to pass them onto you for X, join our club will save you thousands, our valuer's with appraise in 12 mths etc

it hasnt brought the market to its knee's though

I have a friend heavily involved in BTL in the UK, was a very successful developer in Melburn and went to UK when things blew up here in Aus in relation to the Kaye et al and started, he is doing well albeit with morality an issue IMO

http://www.ticltd.com/

and those who have held will be now doing okay here in AUS

money here in Aus will get easier to get hold of, whether thats good or bad who knows

thankyou

robots


----------



## Freeballinginawetsuit (19 May 2007)

wayneL said:


> This is such an important distinction.
> 
> Most people when speaking of RE investment are speaking of buying a pile of bricks, renting it out so somebody and look to create positive cashflow and/or capital gain. In other words a fairly passive "investment".
> 
> ...





IMO real estate investment for passive/capital gains by value investors, have been and gone from a value perspective  . 

Whatever the mix of Capital exposure vs leverage on a relative basis, certainly no longer stacks up to R/R.

Recently that property of mine at Carine sold over the asking price by 30k ( appreciated 60 percent last 18 months), to a South African engineer and his family..........representative dynamic of at least 4 of potential purchasers.

So Wayno, like you, value in real estate/stocks is probably way past the mean from our perspective. Not too sure though if those picking up the slack are indeed investment muppets........... from a retrospective analysis! 

Could be that those exiting stocks ATM & realising profits/protecting capital, are the muppets. 
Can't stick all that capital/leverage under the mattress indefinately hoping history repeats itself, maybe thats the logical punt but could be the wrong one!


----------



## Smurf1976 (19 May 2007)

wayneL said:


> This is such an important distinction.
> 
> Most people when speaking of RE investment are speaking of buying a pile of bricks, renting it out so somebody and look to create positive cashflow and/or capital gain. In other words a fairly passive "investment".
> 
> What you're talking about Tech is not really relevant to the topic at hand which is more about the passive investment in RE. Valuable information though it is and certainly an option if folks are inclined towards that sort of thing.



You've hit the nail on the head there IMO.

It's funny how tech and I seem to be disagreeing with each other so much on this thread. 

In actual fact I strongly agree with what tech is saying about there being an opportunity in property. HOWEVER we're on this thread to talk about what is essentially "buy and hold" or passive investing rather than property development or any other way of running a business with property other than being a conservative buy, hold and collect the rent landlord. The opportunity that tech seems to be pointing out, whilst perfectly valid, is very different to that. 

It's like having a thread on oil prices - most will want to know whether the price is headed up, down or sideways and will invest (or not invest) according to their conclusions on the direction of price alone. Suggesting that acquiring some prospecitve land and a drilling rig is the way to go and then posting about geology is, whilst a perfectly valid idea, a somewhat different subject as far as most are concerned. 

It comes down to speculating on the price of something versus going into the business of producing it. Both legitimate but somewhat different subjects.

I think we really need two separate threads here:

1. The direction of house prices in the context of buy and hold conservative investing and

2. Property development, renovation etc as a business.

At the moment, I and others are arguing that 1 hasn't been the best place to invest due to market cycles whilst others are saying that 2 is a good way to profit. Both would seem to have been right based on what's actually happened (in some areas at least) to date.


----------



## wayneL (20 May 2007)

We probably need a separate thread on general economic issues, but this from The Daily Reckoning:



> ...Meanwhile, according to an article at news.com.au, “A survey conducted by career networking site Linkme.com.au shows that 34.3 per cent of Australians live ‘pocket-to-mouth’. And while 82 per cent would like to plan their finances better, 43.5 per cent say they did not make enough money to be able to budget any differently. And for 29.6 per cent in the survey of more than 800 respondents, they say unexpected expenses always get in the way of getting ahead financially.”
> 
> Hmm. Unexpected expenses are unavoidable. Sometimes you break your arm and need a cast. Sometimes your car needs work. And if there’s a hole in your roof, you can’t afford not to fix it.
> 
> ...




Prices are set at the margins and that margin is getting bigger and more precarious.


----------



## robots (20 May 2007)

hello,

doesnt the thread clearly have a title, "house prices to stagnate for years"

and that hasnt happened, good property where people really want to live has done well and if as an investor you could AFFORD the holding costs you would have done nicely

another big weekend

thankyou

robots


----------



## Kimosabi (20 May 2007)

Well let me think for a moment...

We currently have record low Unemployment, low Interest Rates and low Lending Standards.

Now has anyone thought what happens when either Unemployment goes up, Interest Rates go up, or if Lending Standards are tightened, or if all of the above variables are tightened at once?


----------



## tech/a (20 May 2007)

Kimosabi said:


> Well let me think for a moment...
> 
> We currently have record low Unemployment, low Interest Rates and low Lending Standards.
> 
> Now has anyone thought what happens when either Unemployment goes up, Interest Rates go up, or if Lending Standards are tightened, or if all of the above variables are tightened at once?




All are likely to happen come October/November. After elections.

If we have a labour government then I'll be joining the ranks of Kris on the topic.
There will still be opportunities though.


----------



## slooi1 (20 May 2007)

robots said:


> hello,
> 
> great post slooi1
> 
> ...




Robots,
What I don't understand is why the "bears" persist in standing on the side and saying that the price isn't rising. The evidence from doing the hard yards says so.

Also I think a lot of people don't factor in externalities. It's said that housing should be going up the same rate as inflation, ceteris paribus (all other things being equal). But the reality is that it's not! Our economic climate right now has these factors:
1) Taxation policy favouring investment and negative gearing
2) Supply side constraints due to state governments not releasing more land (I know of Melbourne and Sydney as being in this category)
3) Net migration into certain cities like Melbourne (meaning more demand)

People have to consider these factors as well instead of just saying "It's gone up so high, so it has to crash!".

Having said all that, note that I'm not a housing bull. I have a house, interested in the housing market, but there are better returns to be had from less effort in the share market. It's just that the housing market is rising at a slower rate than shares.

slooi1

P.S. Did the original poster end up buying his home or not?


----------



## Kimosabi (23 May 2007)

slooi1 said:


> Robots,
> What I don't understand is why the "bears" persist in standing on the side and saying that the price isn't rising. The evidence from doing the hard yards says so.
> 
> Also I think a lot of people don't factor in externalities. It's said that housing should be going up the same rate as inflation, ceteris paribus (all other things being equal). But the reality is that it's not! Our economic climate right now has these factors:
> ...




What you've got to understand slooi1, is current housing prices are a reflection of a DEBT bubble, and this DEBT bubble is just starting to deflate.

When you see articles like the one below, this means that the lending institutions are start getting nervous, and are therefore less willing to lend money.



> *Bad debt blowout drag on GE*
> 
> *IN a clear sign that credit conditions have taken a turn for the worse, a blowout in bad debts has resulted in a profit slump for the local consumer and business finance operations of GE*
> Loan impairment losses for GE Capital Finance Australasia, which bought AGC from Westpac five years ago, jumped 54 per cent from $185 million to $285 million.
> ...




This then leads to banks etc start going back to wanting a 20% deposit for a mortgage and will only lend money to people with low debt loadings.

In the meantime, we start seeing a rise in the number of distressed borrowers who have overcommitted themselves. 
While asset prices have been rising and money has been easy to get, they have been able extract themselves from their position and maybe even make some money on capital appreciation.

This all ends when the credit supply dries up. We then go into a scenario where we have distressed borrowers, and no buyers for over-priced property's because people can't get the same level of debt anymore and have stricter lending conditions imposed on them by the lending institutions.

So then all of a sudden, we have a situation where people are forced to have to sell or be foreclosed on, and people who who want to buy, but can't get the same levels of debt, this then leads to a housing bust.

Underneath all of this, the CDO's and Bonds that the lending institutions use to fund their lending start getting downgraded and then they can't get the same levels of money to lend out, restricting their capacity to lend anyway.

I think the Aussie housing bust/credit crunch has just begun...


----------



## tech/a (23 May 2007)

*Hmm nothing to do with housing.*



> with stresses appearing in unsecured lending and credit-card operations, in particular.
> 
> "The consumer is getting overextended with debt in certain pockets and that will always come out in danger areas like credit cards and unsecured lending," Mr Stewart said.
> 
> ...


----------



## wayneL (23 May 2007)

tech/a said:


> *Hmm nothing to do with housing.*
> 
> 
> > Comparative rates for the big-four banks were far lower, at less than 20 basis points, but this was because of their massive, low-risk home lending books.



That comment only relates to "the big four" and is most likely true. However there is a ton of lending now from outside the big four and I would suggest the situation is remarkably different.


----------



## tech/a (23 May 2007)

Even so Wayne they are secured and there will be mortgage insurance with all low doc loans.


----------



## Kauri (23 May 2007)

Watch out Tech...  

*



			<H2>Adelaide rental market 'remains tight'

Click to expand...


*


> _23rd May 2007, 12:03 WST_
> 
> Adelaide's tight rental market continues with a vacancy rate of 1.01 per cent last month, the Real Estate Institute of South Australia says.
> 
> ...



</H2>


----------



## trading_rookie (23 May 2007)

Property prices to stagnate everywhere 'cept in the "oasis". Now I've been thinking about this long b/f the article came out and believe they've taken global warming out of the equation so some of those places they're recommending as an 'oasis change' could infact be underwater 

Drought 'to create oasis change'    
May 21, 2007 - 12:28PM

The drought will propel the newest property trend with homeowners moving in search of water, a national property researcher says.
The owner of property investment advisory service Hotspotting, Terry Ryder, today said the "sea change" and "tree change" phenomena would be followed by an "oasis change" as water availability became a major influence on property buying patterns.
"The ongoing drought, the subsequent introduction of water restrictions and the increased cost of water use has already propelled the issue up the list of buyers' priorities," Mr Ryder said.
He today released a list of the top six "oasis hotspots", chosen for their high rainfall or secure water supplies from dam or groundwater stores.
Mr Ryder identifies Townsville, in north Queensland; Perth; Maleny, in south-east Queensland; Dubbo, in central NSW; and Hobart.
Other notable locations were Darwin; Atherton Tableland, in north Queensland; and Port Macquarie, Taree and Bathurst, in NSW.
"While hordes of people are not going to move immediately to the wilds of Tasmania or western Queensland purely for water reasons, the 'oasis change' will be a factor among baby boomers looking to find a nice place to retire and working families who just want to plant some cherry tomatoes and keep their car and driveway clean," Mr Ryder said.
He said dwindling water supplies in Sydney, Melbourne, Brisbane, and south-east Queensland mifght affect the property market in the long term in those areas.


----------



## Kimosabi (23 May 2007)

wayneL said:


> That comment only relates to "the big four" and is most likely true. However there is a ton of lending now from outside the big four and I would suggest the situation is remarkably different.





The big four are generally a bit smarter than the rest.

How many people do you hear saying that ANZ is quite hard to get a Mortgage with, for example.


----------



## tech/a (23 May 2007)

kauri.

Opportunity.
One which I take advantage of with developements.


----------



## robots (23 May 2007)

hello,

the lending standards will get even looser here in AUS, many organisations are starting to offer these discounted loans for 3yrs, the ARM style, it will get looser

yes the un-informed will get involved, yes they will get in trouble, will it bring down the housing market who knows, so far no it hasnt

note in Melb people are jumping in BIGtime and buying properties prior to auction, many in my area selling couple of weeks before auction day, great stuff for all

note one forumite has been staying away from recent discussion, has their view changed?

thankyou

robots


----------



## Captain_Chaza (23 May 2007)

I doubt it

I think "Property" is a generational thing

In my generation Properties rose because of Supply and Demand and the Baby Boomers Demand was huge

My sons are now in the Property market and You guessed it 
"They are the sons of a baby boomer"

Their demand for Property will be as insatiable as it was for us 
one generation ago

Here comes the next generation

What ever the interest rate will be? Will be!

You just can't stop progress IMO 
Just as you can't tame the seas

Salute and Gods' speed
PS 
A generation is roughly defined as 25 years
ie; 4 generations per century
ie; 80 generations since Christ


----------



## wayneL (23 May 2007)

Captain_Chaza said:


> "I believe the future is only the past again, entered through another gate." Sir Arthur Wing Pinero 1893



Indeed!


----------



## Kimosabi (23 May 2007)

Captain_Chaza said:


> Here comes the next generation




And, as yet they have never experience economic bad-times, yet...


----------



## YChromozome (23 May 2007)

Kimosabi said:


> I think the Aussie housing bust/credit crunch has just begun...




It's interesting watching the tell tail signs.

One of the early signs in the US was the builders had such a glut of houses they were offering free cars and vacations.

Over here in Australia _AUSTRALAND is cutting the price of houses and apartments in its Sydney estates by up to $100,000 during May_ . . 

Houses on sale as mortgages bite - South-West Rural Advertiser, 23rd May 2007.


----------



## YChromozome (23 May 2007)

Kimosabi said:


> And, as yet they have never experience economic bad-times, yet...




There was an article about the Boomer bank today :
Boomer bank right behind Gen Y - May 23, 2007.



> Mr Salt says Gen Y's day of reckoning will come at the next recession, which he believes is a decade or less away.




I'm not quite sure if I agree with it all. Most of the debt Australian's hold is in housing, and it's not the Generation Y that have houses. Debt in personal loans and revolving credit hasn't grown anywhere near the rate housing debt has.

In a recession, No doubt many Generation 'Y' will default on credit cards and personal loans. For that time in their life, its not too much of a problem, they will recover from it.

However it's the Baby Boomers that are asset rich (housing) and cash poor, expecting their super to fund their current lifestyles. If housing was to deflate and the economy slow due to the wealth effect and the fact we are spending more than we earn each year, who's super is going to be hit too? I don't think Baby Boomers should be all that complacent, either.


----------



## stock_man (24 May 2007)

YChromozome said:


> It's interesting watching the tell tail signs.
> 
> One of the early signs in the US was the builders had such a glut of houses they were offering free cars and vacations.
> 
> ...




Just read the above mentioned article, and the following stood out to me:

''Savings as big as this can be the break many people need to escape the rent trap,'' he said, citing figures that indicated dwelling commencements in NSW in 2006-07 would fall below 30,000 for the first time since 1958-59.


With a rental crisis (?), and the lowest amount of dwellings being constructed in more than 48 years, where are all the people going to live? Sydney alone has a massive migration and birth rate. This has to impact somewhere. Rents increase, property values increase, or everyone just moves to QLD?


----------



## Smurf1976 (25 May 2007)

robots said:


> hello,
> 
> the lending standards will get even looser here in AUS, many organisations are starting to offer these discounted loans for 3yrs, the ARM style, it will get looser
> 
> ...



That second paragraph looks like a certain robot might be having a few doubts about the long term health of the property market.

Who's been staying away? (serious question as the regulars seem to be alive and well).


----------



## robots (25 May 2007)

hello,

good to see you kicking off the weekend, had a great week,  

property market seems to be as SOLID as ever and as always said, I wouldnt have a clue what happens in the future

what I do know is there is 2 asset classes, shares and property and its best to be involved in both

goodluck

regards

robots


----------



## wayneL (25 May 2007)

> Half the population (52%) could survive financially for just 17 days, should they suffer an unexpected loss of income, according to research by Combined Insurance



Make of that what you will.


----------



## wayneL (25 May 2007)

Article from the UK, but equally applies here:
http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=457505&in_page_id=1770


> Houses 'are priced 65 per cent too high'
> by SAM FLEMING - More by this author  » Last updated at 22:17pm on 24th May 2007
> 
> Annual payments on an average £150,000 mortgage are already £1,200 higher than this time last year
> ...


----------



## Smurf1976 (25 May 2007)

robots said:


> what I do know is there is 2 asset classes, shares and property and its best to be involved in both



Bonds?
Gold?
Commodities?
Cash?


----------



## robots (25 May 2007)

Smurf1976 said:


> Bonds?
> Gold?
> Commodities?
> Cash?




hello,

could you help me out and tell me how to INVEST (not trade) in those items you have listed

new to this

thankyou

robots


----------



## YChromozome (25 May 2007)

wayneL said:


> The research in the OECD's biannual Economic Outlook compared the price of the average house with annual rental incomes. This indicator in Britain is now 65 per cent above its historic average since 1970.
> 
> An alternative-measure compares house prices with average annual incomes. This shows that UK prices are 45 per cent higher than their long-term average, the OECD reported.




Interesting. I don't have data from the OECD Economic Outlook Issue No 81, but I do from Issue no 78. The graph is attached.

Back then when the U.K. was 60% overvalued, Australia was about 75% overvalued based on price to rent ratios. On house price to average income ratios the UK was about 45% overvalued, compared to Australia at 50%.

I wonder where Australia stands now? Does anyone have access to these figures?


----------



## Kimosabi (25 May 2007)

YChromozome said:


> Interesting. I don't have data from the OECD Economic Outlook Issue No 81, but I do from Issue no 78. The graph is attached.
> 
> Back then when the U.K. was 60% overvalued, Australia was about 75% overvalued based on price to rent ratios. On house price to average income ratios the UK was about 45% overvalued, compared to Australia at 50%.
> 
> I wonder where Australia stands now? Does anyone have access to these figures?




  It's good to see there isn't a housing bubble in Australia


----------



## YChromozome (25 May 2007)

YChromozome said:


> I wonder where Australia stands now? Does anyone have access to these figures?




Data just in for Australia up to the December 2006 quarter. (I don't have wage data for March 2007 qtr yet)

Also note that the ABS has modified parameters of its house price index, and started a new one, so the data is the two indexes merged together. I also haven't moved the average - I don't have data prior to '86 (OECD average was from 1970).

The fall after 2003 was predominately the softening of the Sydney market. The current surge is Perth. Too bad for a two stage economy. We might need graphs for each state. .


----------



## Kimosabi (25 May 2007)

YChromozome said:


> Data just in for Australia up to the December 2006 quarter. (I don't have wage data for March 2007 qtr yet)
> 
> Also note that the ABS has modified parameters of its house price index, and started a new one, so the data is the two indexes merged together. I also haven't moved the average - I don't have data prior to '86 (OECD average was from 1970).
> 
> The fall after 2003 was predominately the softening of the Sydney market. The current surge is Perth. Too bad for a two stage economy. We might need graphs for each state. .




Try this ==> http://www.anz.com/Business/info_centre/economic_commentary/Snapshot_April07.pdf


----------



## Smurf1976 (26 May 2007)

robots said:


> hello,
> 
> could you help me out and tell me how to INVEST (not trade) in those items you have listed
> 
> ...



Bonds. Just buy and either hold to maturity or sell at some future date prior to maturity.

Gold. Just buy and hold it for as long as you like and then sell.

Commodities. The obvious one is simply buy stocks in commodity producing companies but that's not the only option.

Cash. Banks generally offer accounts which accept cash deposits and pay interest. Just put it in one of these.

Note that I'm not suggesting that anyone SHOULD invest in any of these, just that it is possible to do so. And it's generally a lot easier in a practical sense than buying property. Whether or not it is profitable will depend on the markets as with property.


----------



## wayneL (26 May 2007)

off the subject of price direction for a git of levity.  

http://www.tedtruitt.com/

LOLOL


----------



## Flying Fish (26 May 2007)

How about buying land? If housing crashes then there will be lots of builders out of work right? You should be able to bargain well to build a new home on a decent block?


----------



## YChromozome (27 May 2007)

In the Adelaide Sunday Mail today :

*'What Rental Crisis'
Some properties on the market up to five weeks*

_ADELAIDE's rental crisis is over, according to real estate agents. Rental properties which earlier this year were being snapped up before being advertised are now are more than a month on the market, a property survey shows. Other rental homes in traditionally high-demand locations are falling to attract anyone to open inspections. 

"Greedy landlords and an increase in investors had seen the rental market return to normal much quicker than expected, real estate agent Anthony Toop said."_

I guess putting up rents higher than inflation does effect the supply and demand cycle, Really who would have guessed?


----------



## krisbarry (27 May 2007)

I have my doubts about this Anthony Toop dude, he is always on the radio spruking up the housing market, obviously for his own interests.  I wouldn't trust what he has to say.  He says 1 thing and does another...I hear his radio ads saying the rental market is hot, sales are going balistic etc etc.  I have been to many of his auctions and the houses just don't sell, and some with no bidders at all!

Better to go by the latest sales figures, etc. and take a non real estate agents point of view. Then you will really get the truth!


----------



## krisbarry (27 May 2007)

Same as Devine Homes...slogan: Rent Money is dead money.

What a load of crap...as proven by many people on this discussion board that renting in many cases makes a far better investment than buying.

Again...take out the comercialism and put in the truth!


----------



## YChromozome (27 May 2007)

Stop_the_clock said:


> Better to go by the latest sales figures, etc. and take a non real estate agents point of view. Then you will really get the truth!




True. The article was written around stats from a property survey. The article was padded out with quotes from Real Estate agents, but they were not the source. The opening statement/quote comes from a property manager, "The crisis is over - some rental homes are now up to five weeks on the market," Elders Real Estate Glenelg property manager Sue Belleli said.

Maybe all the investors can see Anthony Toop about selling their investment properties. Keep that commission coming in. It's a bit like share brokers, now only if they made a cut of your portfolio, not brokerage on buy and sells.


----------



## prawn_86 (27 May 2007)

i am young and cant afford to own a house, and even if i could im not sure i would.
As has been mentioned, various studies have shown investing to achieve higher results than property, especially if you take the boom out o it. The only reason however, i would like to own a house, is that of security. As it is for us at the moment, there is nothing stopping the landlord saying 'ok time to move out', but i think if you can get a good long term renting agreement and a good relationship with the landlord, renting can definetly be the better option. Especially in the current market


----------



## robots (27 May 2007)

Stop_the_clock said:


> Same as Devine Homes...slogan: Rent Money is dead money.
> 
> What a load of crap...as proven by many people on this discussion board that renting in many cases makes a far better investment than buying.
> 
> Again...take out the comercialism and put in the truth!




hello,

could someone give me say a 5 yr, 10yr or 20yr result on their success in renting?

i dont think so, many people always say renting the house is cheaper than buying the house, and that is true for typically the first 6-7yrs and therefore if you save/invest the difference you will be better off

who on the forum has done this over 5, 10 or 20 yrs? 

but their would be plenty who have made themselves plenty of coin with the heavily criticized view of owning property

you can do both

any crash yet?

thankyou

robots


----------



## krisbarry (27 May 2007)

Just stiring the pot


----------



## wayneL (27 May 2007)

robots said:


> hello,
> 
> could someone give me say a 5 yr, 10yr or 20yr result on their success in renting?
> 
> ...



Long term it is better to buy a house at reasonable value. no question about that.

The value bit is the rub, there are times when renting makes more economic sense.


----------



## Kimosabi (27 May 2007)

wayneL said:


> Long term it is better to buy a house at reasonable value. no question about that.
> 
> The value bit is the rub, there are times when renting makes more economic sense.




Like now, when we are at the Top of a Worldwide Property/Liquidity Bubble...


----------



## wayneL (27 May 2007)

Kimosabi said:


> Like now, when we are at the Top of a Worldwide Property/Liquidity Bubble...



Yes, Si Oui, Ja, Da, etc etc etc


----------



## Kimosabi (27 May 2007)

wayneL said:


> Yes, Si Oui, Ja, Da, etc etc etc




What is most disturbing, is the ability to live in city that has just turned into a massive housing bubble, and meanwhile watch a housing bubble pop before our eyes in the US...

There is sooooo much to be learnt at the moment.


----------



## Mousie (27 May 2007)

When my missus came over to the comp I told her "they're talking about renting vs buying" on the ASF page I'm reading, and she said: "Again??!!"

LOL  

Says it all really - both parties will believe and say what they wanna believe.

I'm a renter for over 5 years now, and will be eternally grateful for my landlords for allowing me a priceless opportunity to invest my hard-earned in the stockmarket. I truly wish them well, but will be looking to buy in when no one wants in to investment property any longer. The stockmarket has been where I truly earned multiples.

Whether you treat Warren Buffett with respect or contempt, this is what he said: "Why should I invest in property when I can do so easily and earn so much more in the stockmarket?"


----------



## wayneL (27 May 2007)

Kimosabi said:


> What is most disturbing, is the ability to live in city that has just turned into a massive housing bubble, and meanwhile watch a housing bubble pop before our eyes in the US...
> 
> There is sooooo much to be learnt at the moment.



In my target market (regional UK), the fear is indeed building. The press are turning bearish, the price graphs are rolling over, and the bears are starting to get that knowing smirk. Yet there is no shortage of muppets "getting into" BTL.

I'm in the interesting position of having some stock in the SW, but have never accepted that the current market value is real. They are not for sale, and haven't MEW'ed the equity either. Technically I'll lose a motza when it tanks. 

But taking the broader view it will be a massive positive.

I don't want to live in a world of Victorian era landed rich and alienated working poor. We're supposed to have evolved past that. A working slob should be able to comfortably afford a mortgage on a modest house.

Look at the social consequences, is my view.


----------



## wayneL (27 May 2007)

wayneL said:


> In my target market (regional UK), the fear is indeed building. The press are turning bearish, the price graphs are rolling over, and the bears are starting to get that knowing smirk. Yet there is no shortage of muppets "getting into" BTL.



From "The Guardian"

They've tried to keep a positive spin, but reading beteween the lines, they know the MPC is between a rock and a hard place. Whatever they do now will damage the economy... &^%$ing Muppets!!!



> *UK housing market hits tipping point*
> 
> 
> Prices frozen or falling in most parts of Britain
> ...


----------



## biff (27 May 2007)

Kimosabi said:


> What is most disturbing, is the ability to live in city that has just turned into a massive housing bubble, and meanwhile watch a housing bubble pop before our eyes in the US...
> 
> There is sooooo much to be learnt at the moment.




I would put more faith in the bubble theory in Perth if the economy also was in a bubble, its not. House prices are based on availibilty of land, cost of building, average wages and amount of supply. If anyone thinks these factors are going to ease radically any time soon then they are severely mistaken. The resource boom that WA is experiencing atm and which is impacting on house prices is not a boom and bust cycle as we experienced in the 80's but is in a long cycle of demand perhaps even decades long for mineral resources. We will continue to see increased amounts of immigration and we will continue to see prices rise. Some eastern states twit calling himself a property expert and charging money for his regular newsletter was in the paper this weekend predicting a property bust in Perth based on in his words " people just wont pay the prices", of course the biggest resource boom in history didnt even factor into his thinking.  Its a bit like buying a share thats gone up 100% and saying it wont go up any more by ignoring the fundamentals.
My personal prediction is a median home price in Perth of 1Mil within 5 years.


----------



## wayneL (27 May 2007)

biff said:


> I would put more faith in the bubble theory in Perth if the economy also was in a bubble, its not. House prices are based on availibilty of land, cost of building, average wages and amount of supply. If anyone thinks these factors are going to ease radically any time soon then they are severely mistaken. The resource boom that WA is experiencing atm and which is impacting on house prices is not a boom and bust cycle as we experienced in the 80's but is in a long cycle of demand perhaps even decades long for mineral resources. We will continue to see increased amounts of immigration and we will continue to see prices rise. Some eastern states twit calling himself a property expert and charging money for his regular newsletter was in the paper this weekend predicting a property bust in Perth based on in his words " people just wont pay the prices", of course the biggest resource boom in history didnt even factor into his thinking.  Its a bit like buying a share thats gone up 100% and saying it wont go up any more by ignoring the fundamentals.
> My personal prediction is a median home price in Perth of 1Mil within 5 years.



I'll bet you a carton of expensive beer on that.


----------



## biff (27 May 2007)

wayneL said:


> I'll bet you a carton of expensive beer on that.



I never gamble, just take informed risks.: besides, Ive got all the expensive beer i want, I was right about the last 5 years.


----------



## wayneL (27 May 2007)

biff said:


> I never gamble, just take informed risks.: besides, Ive got all the expensive beer i want, I was right about the last 5 years.



OK, a gold star for you then.


----------



## biff (27 May 2007)

wayneL said:


> OK, a gold star for you then.



Why not post your reasoning why prices in Perth wont go up instead of resorting to childish retorts?


----------



## wayneL (27 May 2007)

biff said:


> Why not post your reasoning why prices in Perth wont go up instead of resorting to childish retorts?



Pot?
Kettle?
Black?

Do some reading then, rather than being rude, Mr Gold-Star. I've written plenty on that subject already. All that is left now is to see how the future unfolds. It's not about the carton, it's like a "Trading Places" sort of bet. (Good movie, you should watch if not done so)


----------



## Kimosabi (27 May 2007)

biff said:


> Why not post your reasoning why prices in Perth wont go up instead of resorting to childish retorts?




WayneL, do you do this as a 'Tag Team'?


----------



## wayneL (27 May 2007)

Kimosabi said:


> WayneL, do you do this as a 'Tag Team'?



Tag-Team is good.


----------



## biff (27 May 2007)

wayneL said:


> Pot?
> Kettle?
> Black?
> 
> Do some reading then, rather than being rude, Mr Gold-Star. I've written plenty on that subject already. All that is left now is to see how the future unfolds. It's not about the carton, it's like a "Trading Places" sort of bet. (Good movie, you should watch if not done so)



 Still waiting for your reasoning as to why house prices wont go up in Perth, O wise one.
and I do not agree with your statement here


			
				waynel said:
			
		

> A working slob should be able to comfortably afford a mortgage on a modest house


----------



## wayneL (27 May 2007)

biff said:


> Still waiting for your reasoning as to why house prices wont go up in Perth, O wise one.



There is nearly 1500 posts in this thread. You need not wait as, I repeat, I have written extensively... as have others. Read the thread.



biff said:


> and I do not agree with your statement here



So a man and/or woman who is/are  gainfully employed should not be able to afford a modest house? Interesting.... and revealing.


----------



## Smurf1976 (27 May 2007)

biff said:


> I was right about the last 5 years.



But will the conditions of the last 5 years likely be repeated? Will we really get to the point where interest alone takes 100% of average pay and home buyers with a mortgage don't eat? Do the math and it's seriously scary...


----------



## biff (28 May 2007)

Smurf1976 said:


> But will the conditions of the last 5 years likely be repeated? Will we really get to the point where interest alone takes 100% of average pay and home buyers with a mortgage don't eat? Do the math and it's seriously scary...



I dont see any evidence of this but what i do see is indiscriminate lending by banks and people buying properties they cannot afford. For instance there is a lot of talk in  Perth atm about the average person being unable to afford to buy a home. This is bs im afraid, despite the median price approaching 500,000 there are still many properties for sale under 250,000, are they 4x2's in desirable locations? No, the people getting into trouble as in the last slump in the early 80s are people that have over borrowed. Anyone who cant do simple arithmetic to work out what they can really afford should not be contemplating buying property.


----------



## biff (28 May 2007)

wayneL said:


> There is nearly 1500 posts in this thread. You need not wait as, I repeat, I have written extensively... as have others. Read the thread.



Of course, the classic cop out when asked to give evidence "just read all my posts" Lol



> So a man and/or woman who is/are  gainfully employed should not be able to afford a modest house? Interesting.... and revealing.



 That wasnt your quote,have you forgotten already what you posted? Let me remind you


> A working slob should be able to comfortably afford a mortgage on a modest house



I think you have forgotten the basis of our economy is capitalism and not socialism. There is no stigma to renting, home ownership should be for people who wish to work hard and achieve not for someone that just wants to be comfortable.


----------



## wayneL (28 May 2007)

biff said:


> I dont see any evidence of this but what i do see is indiscriminate lending by banks and people buying properties they cannot afford. For instance there is a lot of talk in  Perth atm about the average person being unable to afford to buy a home. This is bs im afraid, despite the median price approaching 500,000 there are still many properties for sale under 250,000, are they 4x2's in desirable locations? No, the people getting into trouble as in the last slump in the early 80s are people that have over borrowed. Anyone who cant do simple arithmetic to work out what they can really afford should not be contemplating buying property.



Cognitive Dissonance


----------



## Kimosabi (28 May 2007)

biff said:


> Still waiting for your reasoning as to why house prices wont go up in Perth.
> and I do not agree with your statement here




1. Read the rest of this thread.
2. Mining Boom is good, but this was mainly driven by over-demand and under-supply, this pushes up the the prices of commodity's. With many projects/expansions being completed in the next few years, commodity's will most likely go into oversupply/underdemand scenario which will push commodity prices down.
3. Why would China continue to want to pay "Top Dollar" for Commodities? They are in a position to quite easily crash commodity prices just by reducing demand for six months. This could plausibly be done after the Olympics. They have also taken strategic 20% stakes in many Aussie Resource Company Boards, inside information, voting power, etc, etc.
4. China's biggest customer is going into recession, the American Consumer's ATM has pretty much run out of money, their housing is crashing and US unemployment is set to rocket.
5. The US is pretty much set to start a Trade War with China, this is going to put pressure on Chinese Export profitability, if they can't remain competative at one end, they will have to do other things to remain profitable at the other end, crashing commodity prices would be a good mechanism for this.
6. Many of the Mining Boom jobs have been in construction/expansions, not digging holes in the ground, when these construction/expansion projects are completed, watch unemployment kick upwards.
7. Perth is heading for an over-supply of housing in the next year or two, when much of the back-log is completed. This will most likely tie in with the mining boom slowing/ending and people leaving the state.
8. We are currently in a Low Unemployment, low lending standards, low interest rates environment, what happens when one or all of these variables change.
9. Just about everyone except the rich and the smart are up to their necks in debt, changes in unemployment and Interest Rates could destroy anyone hopping on the edge of the debt abyss.
10. The whole planet has been in a massive debt bubble which has just started deflating. I wouldn't be surprised to see everything going back to early 2000 prices...

There is so much more

Biff, Can you give me 10 reason why prices should keep going up?

If you are so convinced it is going to keep going up, you should be confident enough to max out your lending capacity...


----------



## wayneL (28 May 2007)

biff said:


> Of course, the classic cop out when asked to give evidence "just read all my posts" Lol




No, the classic cop out is not reading what is already posted. Why should anyone duplicate what is already in the thread? You are using silly arguments.



biff said:


> That wasnt your quote,have you forgotten already what you posted? Let me remind you
> 
> I think you have forgotten the basis of our economy is capitalism and not socialism. There is no stigma to renting, home ownership should be for people who wish to work hard and achieve not for someone that just wants to be comfortable.



Let me introduce you to the concept of metaphor. 

Working (gainfully employed) slob(average guy)

These post where people start spitting hairs to be argumentative are tiresome. Reasoned argument please. I do not want to have to start culling posts here.


----------



## biff (28 May 2007)

wayneL said:


> No, the classic cop out is not reading what is already posted. Why should anyone duplicate what is already in the thread? You are using silly arguments.



Please show where exactly in this thread  you posted argument or substantive debate as to why house prices in Perth will not rise and I might perhaps see your point. Simply asking someone to search for evidence of your statements through your previous postings is not much of an argument. 



> Let me introduce you to the concept of metaphor.
> 
> Working (gainfully employed) slob(average guy)
> 
> These post where people start spitting hairs to be argumentative are tiresome. Reasoned argument please. I do not want to have to start culling posts here.



My reference was to your use of the word "comfortably", obviously that was not evident to you. There is no splitting hairs, either you posted a statement or you didnt. Either you can back up your statements or you cant, I am still waiting for your reasoned argument. Should I post examples of your posts to try and find one?


----------



## wayneL (28 May 2007)

:sleeping:

This is turning into willy waving. Kimo has done a good review.

I'm going to go and read some poetry.

Ciao


----------



## Sprinter79 (28 May 2007)

biff said:


> I dont see any evidence of this but what i do see is indiscriminate lending by banks and people buying properties they cannot afford. For instance there is a lot of talk in  Perth atm about the average person being unable to afford to buy a home. This is bs im afraid, despite the median price approaching 500,000 there are still many properties for sale under 250,000, are they 4x2's in desirable locations? No, the people getting into trouble as in the last slump in the early 80s are people that have over borrowed. Anyone who cant do simple arithmetic to work out what they can really afford should not be contemplating buying property.




Do you live in Perth? I do, and i don't think what you're saying is quite true. I do agree that uneducated people (ie Cashed Up Bogans) are the ones getting themselves in trouble, not fully grasping the implications of things like Harvey Norman's buy now pay later 'schemes'.

I"m sitting just below average wage here in Perth, and I can't afford to borrow 250,000 for a house. Even if i could, i wouldn't be able to live anywhere near work, unless I bought a 1 bedroom dogbox. I don't want that, I'd much rather stay where I am, in a nice house in a nice area paying rent, and putting the rest into the sharemarket.

If you have been past West Perth (as an example) recently, you'll see that there is a massive amount of residential buildings going up. These won't be ready for a few more years, and by then, the market will have changed (in my opinion) and there will be an oversupply of apartments.

Im your average working slob, and I can't afford to live comfortably in a house that I part own.


----------



## Lucky (29 May 2007)

*Vizard's mansion sets sale record of more than $18m*

http://www.theage.com.au/news/natio...ets-sale-record/2007/05/28/1180205160419.html

_DISGRACED businessman Steve Vizard has sold his palatial Toorak mansion for more than $18 million as real estate records continue to tumble for Melbourne's trophy homes._

_"It's not a triple-A Toorak address," he said. "Your Triple-A addresses are more your boulevards like Albany, St Georges, Irving; this (Orrong) is a busy road."

Mr Morrell said demand was strong for luxury property.

"The top end at the moment seems to have no boundaries; it's a classic case of undersupply of quality products."_


----------



## Broadside (29 May 2007)

Lucky said:


> *Vizard's mansion sets sale record of more than $18m*
> 
> http://www.theage.com.au/news/natio...ets-sale-record/2007/05/28/1180205160419.html
> 
> ...




I love this part:  ""It wasn't on the market. Someone basically knocked on his front door and gave him an offer he could not refuse," the source said.

"*It's a stroke of luck and he certainly needed one.*"

Yes, he needed some luck, boy has he been hard done by these past few years, what a joke, ASIC went easy on him.  He had it all, directorships in some of the most powerful company boards in Australia and misused his position for greed, pure and simple.


----------



## robots (29 May 2007)

hello,

the guy who bought vizard's house must be the biggest fool ever going by the majority of the post's here

they are about to wipe out 9 or so million aren't they?

those with coin keep getting in, amazing stuff

thankyou

robots


----------



## Lucky (29 May 2007)

Just to keep the balance 

*Housing affordability at record low*

http://www.theage.com.au/news/busin...y-at-record-low/2007/05/29/1180205229824.html
_
Housing affordability has fallen to its lowest level yet recorded by a key industry measure of the market set up 23 years ago._

_The Housing Industry Association (HIA) said the index was at its lowest level since the group was established in 1984, with the monthly loan repayment on a typical first home mortgage rising to $2,387 from $2,352._

_The March quarter result was the fourth consecutive decline in affordability, with the monthly loan repayment on a typical first home mortgage rising by 1.5 per cent.

Mortgage repayments now account for 30.7 per cent of an average first home buyer's income, up 0.2 percentage points on the December 2006 quarter._


----------



## wayneL (29 May 2007)

robots said:


> hello,
> 
> the guy who bought vizard's house must be the biggest fool ever going by the majority of the post's here
> 
> ...



I remember when Laurie Connell bought at the top of the last boom. Bought several blocks in Peppermint grove to demolish and build his palace. At the same time he developed his Bedfordale property

His estate took a drubbing on it.

Rich men aren't immune from buying at the top.

But in fairness, the big end of town is doing exceptionally well ATM and on less tenuous foundations than then. As the butterfly flaps it's wings, we do not yet know where the cyclone will hit.


----------



## robots (29 May 2007)

hello,

any ASF members buy in the last bust?

any ASF members lose out in the last bust?

thankyou

robots


----------



## Kimosabi (29 May 2007)

robots said:


> hello,
> 
> any ASF members buy in the last bust?
> 
> ...




Is this an admission that there is actually a boom/bust cycle?


----------



## wayneL (29 May 2007)

robots said:


> hello,
> 
> any ASF members buy in the last bust?
> 
> ...



I personally know a lot of people who lost their @ss. Connell was at my 21st birthday. I know plenty of the St Georges Tce corporate cowboys of the era.

A had lunch with one of these guys a couple months ago (who actually wrote a book on WA inc) and told me he lost 50 million at the time. Not all of that was property, but a lot was.

Some have never recovered. 

Anecdotally, the majority of small developers at that time went bust and of the ones I know/knew, that certainly is the case.


----------



## robots (29 May 2007)

hello,

you should re-read my posts kimosabi, I have never written, commented or denied anything about a boom or a bust, I have continually said that the good property is solid as

and challenge you to refute that

wayneL you mention high fliers and prop developers but what about the average joe holding one or two properties, thats what I would like to hear about?

in my case I had a unit in Elsternwick (suburb of Melb, nice 2-bed), mortgage of 70k, in 1986, didnt really think much of things at the time except I new I had to pay my mortgage

thankyou

robots


----------



## wayneL (29 May 2007)

robots said:


> hello,
> 
> you should re-read my posts kimosabi, I have never written, commented or denied anything about a boom or a bust, I have continually said that the good property is solid as
> 
> ...



The bust was early 90's and yes I know plenty that lost lot's.

One example. Somebody bought a canal property across the road from my folks at just under 300k. They spent nearly 100k on it and sold it at less than 250k in the bust.

Another: We lived in Biddaddaba. The acreage block across the road was bought for 207k, sold for 125K in the bust.

There are many more but I can't remember the exact figures.


----------



## YChromozome (29 May 2007)

Housing slump longer than predicted - The Australian, May 29th, 2007.



> THE residential property slump is likely to last longer than initially predicted, with developers now saying building activity will probably not pick up for at least another few years.


----------



## Kimosabi (29 May 2007)

YChromozome said:


> Housing slump longer than predicted - The Australian, May 29th, 2007.




"We underestimated the downturn in New South Wales. I don't think anyone was expecting it to be this bad." 

I picked up on the above quote in the article.  The problem for all of these "Analyst's/Experts" is that I don't think they have a clue how hard some "working" families have it.

When your earning at least $250,000/year, which I'd expect most of these analyst's would earn, and you only hang around similar people who earn $250,000/year, live in expensive inner city apartments and drive Mercedes, you don't have a clue how tough the majority have it.

I wonder how many of these analysts get out into the suburbs and see first hand what's really going on.

NSW is a classic example of what will happen to the rest of Australia when our commodities boom ends, because other than playing with other people's money, digging holes and growing stuff, Australia doesn't have much else to fall back onto.


----------



## Lucky (29 May 2007)

*Investors stranded by property group collapse*

http://www.theage.com.au/news/busin...-group-collapse/2007/05/29/1180205202186.html
_
Administrators have been appointed to the Australian Capital Reserve (ACR) Group, with $330 million invested by 7,000 investors now in peril.

It is the third major collapse of a property group in recent years, following the failure of Fincorp and Westpoint, which has left thousands of investors owed millions from the failed high-risk investments._

Maybe Vizard could help out and throw a few bucks there way?


----------



## Kimosabi (30 May 2007)

Well Perth has finally done it, we are now the most expensive city in Australia, and I suspect when this years Demographia Report is released later this year, we'll probably be the most expensive city's in the World for Real Estate.



> *Perth cements spot as Australia's priciest city*
> 
> Perth has cemented its position as Australia's least affordable capital city after new figures released today revealed housing affordability has fallen to its lowest level yet recorded.
> 
> ...




http://www.thewest.com.au/default.aspx?MenuID=145&ContentID=30019


----------



## Lucky (30 May 2007)

It's property stories galore at the moment!!!

Here's one for Sydney-siders

*First home payments hit $3000 per month*

http://www.smh.com.au/articles/2007/05/29/1180205251509.html?from=top5

_THE average monthly repayment needed to buy a typical first home in Sydney has hit $3000 for the first time.

This is up $442 on a year ago, and second only to Perth-based first-home buyers who shell out $3009 a month, says the Housing Industry Association's latest housing affordability report.

About half the increase is due to last year's three interest rate rises, which added almost $200 a month to repayments on a $400,000 loan.

The rest is due to rising home prices, which have forced people to take out bigger loans.

Although house prices have fallen in some Sydney suburbs, the median Sydney first-home price rose 9.6 per cent to $507,400 over the year to March, figures collected by the Commonwealth Bank for the report show. This exceeds the national first-home price of $403,800._


----------



## Kimosabi (31 May 2007)

I came across the following graph on another forum, but this is probably the best graphical representation of price vs volume and the impact the loss of volume has on price I've ever seen.

Unfortunately it's in French, but the bottom axis is Volume and the Vetical Axis is Price(I think).

I'd love to see a graph like the following but for Aussie housing.







This type of graph could be useful for shares as well...


----------



## insider (31 May 2007)

Kimosabi said:


> I came across the following graph on another forum, but this is probably the best graphical representation of price vs volume and the impact the loss of volume has on price I've ever seen.
> 
> Unfortunately it's in French, but the bottom axis is Volume and the Vetical Axis is Price(I think).
> 
> ...




The X axis says Number of Apartments
The Y axis is price per square meter In Euros

In Paris


----------



## insider (31 May 2007)

insider said:


> The X axis says Number of Apartments
> The Y axis is price per square meter In Euros
> 
> In Paris




It's an interesting graph... I think that each next revolution will have a larger price hike every time... You could super impose a graph like that of the share market and offset it showing which market is favored  of the other at the particular time... I think houses in Australia are rolling of the top which means Shares in Australia are still bouncing


----------



## Kimosabi (31 May 2007)

insider said:


> It's an interesting graph... I think that each next revolution will have a larger price hike every time... You could super impose a graph like that of the share market and offset it showing which market is favored of the other at the particular time... I think houses in Australia are rolling of the top which means Shares in Australia are still bouncing




I'd love to run this graph over some indvidual stocks as well...


----------



## insider (31 May 2007)

Kimosabi said:


> I'd love to run this graph over some indvidual stocks as well...




Hmmm... I'd like that too...

If the Sharemarket offsets the housing market... Then according to this graph the bull run may be going for a few more years and will end in 2013... Interesting...


----------



## Kimosabi (31 May 2007)

insider said:


> Hmmm... I'd like that too...
> 
> If the Sharemarket offsets the housing market... Then according to this graph the bull run may be going for a few more years and will end in 2013... Interesting...




Forget the housing cycle, what I'm looking for is volume/price cycles within a particular stock...


----------



## insider (31 May 2007)

Kimosabi said:


> Forget the housing cycle, what I'm looking for is volume/price cycles within a particular stock...




:dunno: That's what she said!!!


----------



## insider (31 May 2007)

I'd say a graph like this wouldn't suit short term situations as it requires a median... What is this graph called? Spiral, a spring, a coil


----------



## robots (5 June 2007)

hello,

there you go ychromo, some stats from ABS, no doubt you will still be in denial

http://www.tradingroom.com.au/news_...ished/2007/6/156/catf_070605_115100_9443.html

goodluck

thankyou

robots


----------



## Kimosabi (7 June 2007)

Well, imagine that, Loan Defaults are on the rise, who would have thunk it.



> Loan defaults on the rise
> 
> By George Lekakis
> June 07, 2007 12:00am
> ...


----------



## theasxgorilla (7 June 2007)

Kimosabi said:


> Well, imagine that, Loan Defaults are on the rise, who would have thunk it.




And those poor mortgage insurance companies are being forced to honor claims...F%&K 'EM...I bet they thought they had a cash cow when the going was good.


----------



## BradK (7 June 2007)

theasxgorilla said:


> And those poor mortgage insurance companies are being forced to honor claims...F%&K 'EM...I bet they thought they had a cash cow when the going was good.




I Second that!!! 



Brad


----------



## Kimosabi (7 June 2007)

theasxgorilla said:


> And those poor mortgage insurance companies are being forced to honor claims...F%&K 'EM...I bet they thought they had a cash cow when the going was good.




Well according to some people on this forum, Real Estate is always a good investment, no matter how much you pay for it.

Well, the good old Mortgage Insurance companies had better get used to making some big losses, because it's only going to get worse.

Now we haven't seen much about Mortgage Insurers in the US's housing bubble bust which I find quite interesting.  I'll have to try and dig up some info on the impact of the US Housing Bubble Bust on US Mortgage Insurers.


----------



## theasxgorilla (7 June 2007)

Suffice to say the different parts of the world do it differently.

Sweden doesn't have mortgage insurance as such.  Instead, if you don't have the right amount of deposit (80-90% LVR) then you must take a "top loan".  The interest rates for this portion of your mortgage can rival that of credit cards.  

Imagine that?? Buying a house on your credit card!  Obviously the exhorbitant interest payments go toward mitigating the bank's risk for lending at such a high LVR.


----------



## wayneL (7 June 2007)

theasxgorilla said:


> Suffice to say the different parts of the world do it differently.
> 
> Sweden doesn't have mortgage insurance as such.  Instead, if you don't have the right amount of deposit (80-90% LVR) then you must take a "top loan".  The interest rates for this portion of your mortgage can rival that of credit cards.
> 
> Imagine that?? Buying a house on your credit card!  Obviously the exhorbitant interest payments go toward mitigating the bank's risk for lending at such a high LVR.



Sounds pretty sensible to me.


----------



## tech/a (7 June 2007)

theasxgorilla said:


> And those poor mortgage insurance companies are being forced to honor claims...F%&K 'EM...I bet they thought they had a cash cow when the going was good.





They did and do.

Mortgage insurance picks up the difference between what the property is sold for and what the Mortgage is left owing.

It will be a rare case where they will be left paying the gap.
Even so it will be only a small % of book value written.

Few are written against 100% lending---this was only taken by companies in cases where total asset bought the LVR to 95%.
In most cases it was/is 90% so there is a 10% buffer straight away.

They aint stupid.



> Well according to some people on this forum, Real Estate is always a good investment, no matter how much you pay for it.




Good property is never to expensive.There are many good property deals out there. Idiots dont do the numbers.
If I can positively gear for a great passive income return (And I can often right now ) I'll buy. In time (This varies ) I'll also have capital gain.
In 10 yrs Ill have massive return on initial investment.(Not only from Capital gain but passive income relative to initial investment will be staggering.)

Its pretty obvious many havent done or dont understand how to make property work for you.

let me know if you want an example.


----------



## theasxgorilla (7 June 2007)

wayneL said:


> Sounds pretty sensible to me.




From the banks point of view, yes...and from the consumers perspective they get their place to live, so in that sense they're satisfied.

Why people don't save a 10-20% deposit would possibly be asking just one too many smart a%&e questions


----------



## theasxgorilla (7 June 2007)

tech/a said:


> They did and do.
> 
> Mortgage insurance picks up the difference between what the property is sold for and what the Mortgage is left owing.




Yes, because you and I both know that property price (on the whole) STILL haven't gone down.


----------



## wayneL (7 June 2007)

Why would they be "feeling the pinch" then? (genuine question)


----------



## theasxgorilla (7 June 2007)

wayneL said:


> Why would they be "feeling the pinch" then? (genuine question)




A 500% increase in claims is what the article said.  It's a blip on the radar at least.  It all comes down to how they've managed the business..."feeling the pinch" were the words used by the journalist.


----------



## wayneL (7 June 2007)

tech/a said:


> Good property is never to expensive.There are many good property deals out there. Idiots dont do the numbers.
> If I can positively gear for a great passive income return (And I can often right now ) I'll buy. In time (This varies ) I'll also have capital gain.
> In 10 yrs Ill have massive return on initial investment.(Not only from Capital gain but passive income relative to initial investment will be staggering.)



This seems to be self contradictory.

You say good property is never too expensive, yet you will buy if the numbers stack up. This implies that if the numbers don't stack up, then the property is too expensive. 

NB Please refrain from generic insults like "Idiots don't do the numbers."... Thanks


----------



## Lucky (8 June 2007)

tech/a said:


> let me know if you want an example.




Example from personal experience?


----------



## tech/a (8 June 2007)

*Wayne*

Good property will have numbers that stack up.

Good meaning I guess (to me right numbers) right numbers it will never be TOO expensive---not to the buyer (me) the rest of the world may disagree.

*Lucky*.

Yes.
I develop property,among other things.


----------



## slooi1 (8 June 2007)

tech/a said:


> *Wayne*
> 
> Good property will have numbers that stack up.
> 
> ...





tech/a,
It'd be appreciated if you could provide an example. From my calcs, in order to generate a decent enough return (or offset possible interest rate risk), I'd have to put quite a large % of equity in a purchase.

I compared this to shares, and the numbers came through better for shares.

slooi1


----------



## theasxgorilla (8 June 2007)

This wise old man,  Michael Hudson, seems to suggest in an interview (which you can listen to at his site) that the idea of borrowing money for buying assets to produce an income is a long forgotten myth and that name of the game for the last century or perhaps even longer is about capital gains.  In this case you could be neutrally or negatively geared, so long as your getting the capital gains...which is how a great many people run their property investments.


----------



## Kimosabi (9 June 2007)

Property is a great investment, if you have equity in your property/s and aren't over leveraged.

In the past, this meant putting down a 20% deposit and being able to service the debt from 1 (one) income.  There are very good reasons why this 

But now we have no-doc, low-doc, 0% down mortgages that are maxed out to the re-payment capacity of two incomes.  This has obviously pushed asset prices out to historically low affordability ratios.

Anyone that has accumulated large amounts of debt in the last 5 years is headed for a very bad time unless they can unload the excessive debt burden that they are carrying ASAP.

We are on the verge of hyper-inflationary/hyper-deflationary period which is going to wipe out anyone who is currently holding large amounts of unservicable debt.

Don't believe me, think about the impacts of the following:  America is nearly bankrupt and is well on it's way to recession/depression, the American Dollar is on the verge of collapsing, some countries have already started removing their peg against the US dollar because the US dollar peg has been sending Inflation in these countries through the roof.  Has anyone thought what happens when the Chinese realised they have been duped by the Americans and basically given away millions of Plasma TV's and trinkets for free and guess who the biggest customer of Chinese goods are, America.

All hell is about to break out and the worst part of this is that the rich bankers of the world engineer the boom to rip off the poor and middle classes in the bust.  Rich people don't have debt, they either play with other peoples money or lend money (which they create out of thin air) to the poor/middle classes.

We are in the blink of an eye going to go from never having it so good to never having it so bad.

The people who are really going to get rich in the next cycle are those that don't have debt now.


----------



## Mousie (9 June 2007)

Kimosabi said:


> The people who are really going to get rich in the next cycle are those that don't have debt now.




Couldn't agree more.

Couldn't wait to attend those fire-sales in a few years' time


----------



## tech/a (9 June 2007)

sloo1 over here.

https://www.aussiestockforums.com/forums/showthread.php?p=167424#post167424


----------



## Kimosabi (12 June 2007)

Don't these people know that housing prices always go up



> *ABN fears world housing crash*
> Daily Mail
> 11 June 2007
> 
> ...


----------



## robots (26 June 2007)

hello,

http://www.tradingroom.com.au/news_research/index.jsp?page=aap_article.jsp&id=136895

looks like things going along well for established property

i think the LPT's that are in the "good" areas will be loving this in the future

fairly clear the economy is being supported on immigration by the looks of it, 1300 people a week to melb, thats around 300 new dwelling or existing, 1300 mouths to feed and so on

thankyou

robots


----------



## WaySolid (26 June 2007)

Just had a rental increase from $260 to $290 on a unit.

Expecting a hefty valuation increase in less than one year on a Brisbane house shortly.

Going strongly.


----------



## theasxgorilla (26 June 2007)

Seriously...you can't tell me that the sharemarket is going to go up for 4 consecutive years at the rate of knots that it has and that the wealth effect that that has created would not eventually filter through into property.

Not like '97-'03, but its always seemed like a fairly reasonable join-the-dots conclusion to me.


----------



## Flying Fish (26 June 2007)

theasxgorilla said:


> Seriously...you can't tell me that the sharemarket is going to go up for 4 consecutive years at the rate of knots that it has and that the wealth effect that that has created would not eventually filter through into property.
> 
> Not like '97-'03, but its always seemed like a fairly reasonable join-the-dots conclusion to me.




ROFLMAO.


----------



## wayneL (26 June 2007)

theasxgorilla said:


> Seriously...you can't tell me that the sharemarket is going to go up for 4 consecutive years at the rate of knots that it has and that the wealth effect that that has created would not eventually filter through into property.
> 
> Not like '97-'03, but its always seemed like a fairly reasonable join-the-dots conclusion to me.



It is not so much the wealth effect of the share market, as the availability of credit and loose lending standards. 

Tightening of credit will put a serious dent in this market as it has in the US and as is starting to happen in the UK.


----------



## theasxgorilla (26 June 2007)

wayneL said:


> It is not so much the wealth effect of the share market, as the availability of credit and loose lending standards.
> 
> Tightening of credit will put a serious dent in this market as it has in the US and as is starting to happen in the UK.




I see a Labor government as a bigger catalyst for a serious dent than interest rates...interest rates seems to translate to mere dips.


----------



## Flying Fish (26 June 2007)

wayneL said:


> It is not so much the wealth effect of the share market, as the availability of credit and loose lending standards.
> 
> Tightening of credit will put a serious dent in this market as it has in the US and as is starting to happen in the UK.




great so borrow up till the hilt while you can


----------



## wayneL (26 June 2007)

theasxgorilla said:


> I see a Labor government as a bigger catalyst for a serious dent than interest rates...interest rates seems to translate to mere dips.



Not so much interest rates, lending standards. 

Ironically, rises in interest rates have resulted in a decrease of lending standards as cash from lower interest rate regimes flood into economies such as OZ, NZ & UK. The banks must get a return on the influx of cash, so throw it at anyone who can steam up a mirror.

Result, muppets overpay for RE.


----------



## wayneL (26 June 2007)

Flying Fish said:


> great so borrow up till the hilt while you can



No thanks. Apart from the fact I have no need to, I have no desire to borrow anything other than responsibly.


----------



## tech/a (26 June 2007)

I have no problem using other peoples money (Borrowing).
Provided its being used to generate income---not debt.


----------



## wayneL (26 June 2007)

tech/a said:


> I have no problem using other peoples money (Borrowing).
> Provided its being used to generate income---not debt.



Neither do I, so long as the debt is serviceable under a range of contingencies.

This is where many will have trouble. (and are)


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## tech/a (26 June 2007)

wayneL said:


> Neither do I, so long as the debt is serviceable under a range of contingencies.
> 
> This is where many will have trouble. (and are)




Using other peoples money 101
Should be part of all school curriculum---might learn something useful!


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## Knobby22 (26 June 2007)

The problem is that most people are like frogs in a pot on a stove, when it comes too property. When they realise it is getting too hot, they are cooked.

Everything at the moment is pointing  to the fact that the stove has been lit.
Loose liquidity, the start of real rising interest rates and a final boil over happening in prices. The shock to me is obvious too, peak oil.

I'm sure we are approaching the nadir in this market.


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## doctorj (26 June 2007)

The Bank for International Settlements (often referred to the Central Banks' Central Bank) released there annual report yesterday. It draws a lot of parallels between now and the period leading up to the Great Depression.

Check it out here: http://www.bis.org/publ/arpdf/ar2007e.htm


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## robots (26 June 2007)

hello,

the thing is the big banks here in Aus arent lending for the so called liar loans, they say they cater for them, but when you get to the paperwork they dont

its the likes of wizard, rams, mortgage choice and all the other "sub-prime" ads you here these days

this will get even worse the slackening of lending standards here in Aus, and if those (the money suppliers) want to take the risk then so be it,

6mths ago a self employed person applying thru' Wizard for eg always paid a 0.5% higher rate, now they r at the same rate as a full doc

thankyou

robots


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## theasxgorilla (26 June 2007)

wayneL said:


> Not so much interest rates, lending standards.
> 
> Ironically, rises in interest rates have resulted in a decrease of lending standards as cash from lower interest rate regimes flood into economies such as OZ, NZ & UK. The banks must get a return on the influx of cash, so throw it at anyone who can steam up a mirror.
> 
> Result, muppets overpay for RE.




Hahaha, no more need be said...seems to be how it is.

Still better to be on the asset-bubble conveyor-belt for now though, it would also seem...or?


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## theasxgorilla (26 June 2007)

tech/a said:


> Using other peoples money 101
> Should be part of all school curriculum---might learn something useful!




Ooooh, can u imagine trying to get that one through???  Many a capitalist and central banker probably prefer we don't know so many useful things about other peoples money...stick to house loans, car loans, credit cards and mobile phone plans...feeling adventurous, get a margin loan, buy an IP...try CFDs!


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## WaySolid (26 June 2007)

Muppets probably overpay for shares as well.. Which is why they are muppets perhaps? 

One thing I have noted in wealth creation is that a muppet can get financially independant (say 1-3M range) just from being a plodder (and even overpaying) for Australian RE, I know plenty of these people, will this stop in the future? I don't know.

Look.. I have bought two houses in Brisbane this year on 5% yields, nice chunks of land with what I think is great future location potential, yields are under pressure and rising, I am about to realize through a reval a significant increase (20% after costs) in value in the first house. At what point do I transform from a muppet to an investor or should I just call myself Kermit?


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## robots (26 June 2007)

hello,

top effort waysolid, got to be in it to win it 

for many people even one property would be helpful, your home, an extremely passive investment

replacement cost of a house is having a huge impact, material companies want massive profits, contractors want massive profits 

thankyou

robots


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## wayneL (26 June 2007)

doctorj said:


> The Bank for International Settlements (often referred to the Central Banks' Central Bank) released there annual report yesterday. It draws a lot of parallels between now and the period leading up to the Great Depression.
> 
> Check it out here: http://www.bis.org/publ/arpdf/ar2007e.htm



Here is a report on that in a UK newspaper

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/06/24/cnbis124.xml



> BIS warns of Great Depression dangers from credit spree
> 
> By Ambrose Evans-Pritchard
> Last Updated: 5:11pm BST 24/06/2007
> ...


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## wayneL (26 June 2007)

robots said:


> hello,
> 
> the thing is the big banks here in Aus arent lending for the so called liar loans, they say they cater for them, but when you get to the paperwork they dont
> 
> ...



Same thing happened in the US. 'cept now they have nearly 100 mortgage lenders in bankruptcy, hedge funds involved in the securitization of subprime lending falling over, and a RE market showing nominal falls for the first time in decades.

For a view of the future, look to the US.


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## robots (27 June 2007)

hello,

its just a pity that many have no hard evidence of where the good property is at the moment

havent commentators claimed the boom ended in 03 and things have dipped or stagnated since, yet many have seen capital growth of around 10% per year during this time

but hey, keep working on those cfd or option trades or futures contracts in your jocks at 4am in the morning

thankyou

robots


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## wayneL (27 June 2007)

robots said:


> hello,
> 
> its just a pity that many have no hard evidence of where the good property is at the moment
> 
> ...




OK,

So long as you get up and go to work every day away from your home and family, I'll stay home and play the markets in my pyjamas, take days off whenever I like, live wherever I like, associate with who I like, sleep in as long as I like.

:fu:


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## tech/a (27 June 2007)

> its just a pity that many have no hard evidence of where the good property is at the moment




Your Kidding!

Good god the Building/developement industry is doomed!



> So long as you get up and go to work every day away from your home and family,




Wayne youve not had a few days at my place.
I go to work for a break!


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## robots (27 June 2007)

hello,

its good living that way isnt it wayneL, I enjoy doing the same

i dont have a job wayneL

I like to get up early each morning and go for a ride on my bike into Melbourne, go for a walk around the streets

its fabulous

thankyou

robots


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## gfresh (29 June 2007)

I have been musing over this the last few weeks.. and torn every time.

With the stock market, I think the general consensus is that, it's not so matter of a correction, but when.. So assuming this in the next 12 months or so, my current plan is to mostly get out of stocks and poor it all into 1, or 2 investment properties (i will have at least a 25% on the average family home in qld or vic at least). So many things being thrown around, stockmarket is strong due to never-ending demand from China & India.. and the bull run has a long way to go.. then you have the massive debt levels, subprime fallout in the US, house prices to crash here, etc. So every time I think about one thing, some expert comes out with the other side to the story. 

As I see it..

2002-04 generally was the housing downturn in sydney and melbourne especially.. which by all rights in the 7-10 year property cycle, this means 2010 is the next big run (e.g. now is actually the start of the climb, and get in now according to the prop investment literature). But I think the debt levels will swamp many.. as Australia goes into recession this is going to hit a lot of people hard, esp. middle class families.. Jobless rate will climb back towards 10% (and beyond?), interest rates back to 10-11%, times are tough, no luxuries, etc.. I was early 20's through the early 90's with not a rich family so remember what it was like.

So I'm just curious as to how this should effect any timing.. I guess the sort of property I'd want would be around the 'lower' end of the market to begin with, where i'd imagine most of the fallout will be .. new home buyers over-leveraged having to get out, some beginning investors missing the mark, and buying it at the wrong time... lots of houses on sale, many at low prices? OR will these be swamped with buyers taking up the slack due to the sudden affordability?  Obviously the two will be quite opposed, and obviously if prices fall, I'd also be caught out too.. this is fine as I don't need massive capital growth to begin with (having a quite sizeable deposit/equity to begin with)

Any thoughts?


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## lakemac (29 June 2007)

There are two keys to capital gain but they are not orthogonal to each other (ie independent of each other) to borrow a term from mathematics.

1. Time
2. The rate of credit creation/destruction.

Capital gain is only possible if you can find someone else prepared to give you more money some time in the future than the money (or effort) you gave away in the past in order to aquire the thing.

The important question to ask here is where does that money come from in the first place...

The second important question is can money be created and conversely can it be destroyed, because if it can be destroyed, guess what? capital gains are next to impossible as there is less money around. Related to that the two keys come in - it makes no sense to get more money sometime in the future if there has been a lot of money created. You might have more money but it is worth less than what it was in the past. If money became like leaves, several deciduous forests would be required just to buy a loaf of bread (with apologies to The Hitch Hikers Guide to the Galaxy).

The trick for a captial gain is to get in before the expansion of credit (I use that word carefully - it has a specific meaning that is different to the term money) occurs, ride the expansion then exit with your pot of money (again a specific term) hold that in a non-depreciating asset until the credit restriction happens and enter again before credit expands again.

So with property the last major expansion of housing credit was back in 1998 and slowed in 2003. That credit expansion is currently flowing into the stock market as we speak (hence bull market).

Due to the continual increase in credit in (most) world markets for the last 30 years (the exceptions are Japan and Germany) over time any investment will ultimately provide a captial gain (key 1 above) as long as the credit keeps growing (again I cite Japan and Germany where this has not been the case and hence asset prices are depressed).

What you want are investments that pay for themselves over a long period of time, positively geared property, shares with dividends, bonds etc. and hope the credit expansion continues in the market you are in.


----------



## gfresh (29 June 2007)

Very good explanation there.. I probably haven't looked at it this way, and it does make some good sense as to what is/may happen in future.


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## lakemac (29 June 2007)

gfresh said:


> Very good explanation there.. I probably haven't looked at it this way, and it does make some good sense as to what is/may happen in future.



Ask anyone in Japan after 1990...

There is a simple proxy you can use to determine the rate of credit creation/destruction - apply for a house or margin loan.

If you have a standard credit rating and normal job and thus fairly normal loan servicibility ie. ability to repay the loan; from a bank's perspective then the ease or difficulty with which they lend you the money will give you a guide as to where credit is currently being created.

If you get fobbed off for a house loan then you know that credit is being restricted, if margin loans or car loans are easy to get then you know credit is awash there - probably a sign that a growth market is in play.

Similarly the news about corporate take overs, mergers and buyouts - the big end of town is being given credit. Get out of the stock market when hear big companies complaining they are cutting back and takeovers are just not in the news.

Governments awash with deficits - credit being given by the central banks. Watch when the government is told no more by the central banks. I point you to the record of the Whitlam government here in Australia. Their credit was pulled. End of that government... Who controls who?

Best quote I heard recently which was the Medici family motto:

"Money to get power, and power to guard the money."

Mayer Amschel Rothschild knew that all too well when he said:

"Give me control of a nation's money and I care not who makes her laws."

John Howard please take note...


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## robots (30 June 2007)

hello,

most people aren't really interested in monetary policy or what may or may not happen in the future when buying their first house, and even many multiple property owners dont care what happens

most look at their own income and what they can buy, and go from there

whether it be rent or loan you have to live somewhere

whats happening is no aberration

looking forward to the 2yr anniversary of the thread, might have a bottle of bubbly (will pour one for you WayneL)

regards

robots


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## Kimosabi (30 June 2007)

robots said:


> hello,
> 
> most people aren't really interested in monetary policy or what may or may not happen in the future when buying their first house, and even many multiple property owners dont care what happens
> 
> ...




Robots, you have absolutely no idea what you are talking about.

Until you understand the monetary system and who controls money supply, you are living in a *fools* paradise.

The only truly rich people in our current society are those without debt, because they aren't enslaved to the banks who lend you money they create out of thin air.

The primary reason housing prices and shares have gone up so much in the last few years, is because the US, UK and Australian central banks have been printing money like there is no tomorrow and this money has to flow somewhere, ie Housing Prices and Shares. At the same time they have lowered lending standards and flooded main stream media that Real Estate is a 100% guaranteed, never goes down, Rock Solid investment. 

Robots along with the rest of Australia needs to wake up. Our current monetary system is a scam and a farce.

*It is the method of a few to enslave us all.*

Robots, you need to go and educate yourself.

For starters I would recommend you watch Money Masters ==> http://video.google.com.au/videoplay?docid=-515319560256183936 and learn some history about Money and the Monetary System...


----------



## lakemac (30 June 2007)

one suggestion Kimosabi when explaining this stuff,
be very particular about the definition of your terms as most people are not aware of subtle distinctions.

To most people money is just money. They don't understand.
Terms like "printing money" are rather misleading as the average person thinks that refers to the stuff in their wallets.

I came up with the following definitions which I use to clarify my explaination to people:

CASH - this represents the coins and paper/plastic notes you have in your wallet, piggy bank or under your matress. It is manufactured by the mint. It represents a very very small part of the overall economy. It is sometimes referred to as "currency" or "money in circulation".

MONEY or DEPOSITS - this is the number the bank keeps in its computer systems and you see on your bank statements. It is just a number nothing more. It represents about 10% of an economy.

CREDIT - this is the "goodwill" created out of thin air by the banking system. It does not initially represent money - it really is just one bank writing to other banks saying "please accept our goodwill and we will continue to accept yours". Banks create credit by just entering a number into their computer system. The creation of credit does not require a corresponding amount in the form of deposits. It literally is thin air.

"You think that's air your breathing..." - Morpheus from The Matrix.

To prove the last point, grab a copy of any bank's year end report. Look at the asset figures then the liability figures. Assets for a bank are the loans (credit) they create. Liabilities are the deposits you have in the bank (ie the bank has to pay deposits back to you hence it is a liability for a bank). How is it that loans (assets) are larger than deposits (liabilities)? Thin air. Thin air.

"There is no spoon..." - Neo also from the Matrix.


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## lakemac (30 June 2007)

Another way to explain the scale of each:

Most people might have about $100 cash in their wallet.

Similarly they might have a savings account with $1000 in it.

Then they may have a mortgage for $100,000 to $300,000.

Ratios:
cash : money : credit = 1 : 10 : 100 - 300

You can see how credit swamps everything else.

There is another more complicated effect with credit caused by a thing called fractional reserve banking - but that is better explained by the Money As Debt videos.


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## wayneL (2 July 2007)

Consternation in the US CONgress.


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## Temjin (2 July 2007)

Kimosabi said:


> Our current monetary system is a scam and a farce.
> 
> *It is the method of a few to enslave us all.*




Too true, even though it's off topic. 

There is a reason why only less than 1% of the world populations control more than 90% of the world's wealth. The middle class is amoung the 99% of the population.


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## wayneL (2 July 2007)

An economist talks about the housing bubble


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## Kimosabi (2 July 2007)

wayneL said:


> Consternation in the US CONgress.





It'll never happen here...


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## Kimosabi (3 July 2007)

> *Home prices set to surge again, fuelling debt crisis*
> 
> HOME prices are about to surge again and fuel a phenomenon that a leading property analyst has dubbed "peak debt", where mortgage repayments outstrip the spending capacity of home owners.
> 
> ...




Aussie housing is so heading for a massive crash...

I predict we'll go back to 2001 prices.


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## robots (3 July 2007)

hello,

looks like the complete opposite is happening though kimo

money is getting poured into the existing home/unit market, some of the info out today indicates Aus is around 30k homes short a year

companies want mega profits for their building materials

thankyou

robots


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## Flying Fish (3 July 2007)

robots said:


> hello,
> 
> looks like the complete opposite is happening though kimo
> 
> ...




this so great 
I will sell all my crappy land loving property and buy a boat


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## robots (3 July 2007)

hello,

go for it

thankyou 
robots


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## gfresh (3 July 2007)

> Aussie housing is so heading for a massive crash...
> I predict we'll go back to 2001 prices.




I don't believe so.. That sort of drop (20-30%+) has never been seen EVER in the history of housing here in Australia, and won't ever be.. you may get (and we probably will see) some negative trends for a year or two in some areas, but usually that picks up. There may be a correction, but not to that extent. 

You have to remember that owner/occupiers control the majority of the market, and they just don't jump out when things get tough. Investors make a portion, but it's not a huge majority. If a massive number were forced to sell out, where would they go? Nowhere, as there wouldn't be sufficient investors to make up rentals to house them. There's definitely a certain amount of self-sustainability in the housing market, which is not matched by other forms of investment. 

The current problem is with new dwelling construction not meeting supply due to higher costs posed by materials and labour.. That will be where the problem is - quite soon I can see a crash in many property investment firms (already another one today - just the start of the iceberg), which invest heavily in exactly that. This will have a large flow-on effect to the economy, jobs, etc.. however, my bet is that established property will continue to go up (in smaller extent true), rather than down.. 

Established houses make up the majority of housing obviously, which prevents things falling too far.

Any move to help people get into the housing market, such as the Labor Government is proposing may actually have the opposite effect, making affordability easier (debt easier as lakemac explained), and therefore prices higher.. i.e. everybody can now afford a home that was once unaffordable = more demand = prices rise.

Government really wants to make housing affordable? they slash incentives for investments, negative gearing breaks.. make it attractive to only own one home, *and* do the above. They don't want to do that, tread on too many upperclass toes, make the rich get poorer.

Here is a good article actually.. from 2005, but still relevent

http://www.rics.org/NR/rdonlyres/89...E0626301F/0/RICSAusHousingmarket_June2005.pdf

Note the following ..



> For every new dollar lent for house purchases in
> 2003, around 40 cents went to investors,
> compared with only 25 cents in 1994.
> According to the RBA this is higher than in
> ...




 and..



> ...In fact, there are no specific aspects of the current
> Australian tax system that are designed to
> encourage investment in property over other
> assets.


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## WaySolid (3 July 2007)

Just had a bank valuation returned on a house in north Brisbane

273k Base cost for house (Purchase + reno's/repairs) in January 2007
310k Bank valuation in July 2007

13.6% increase in 6 months

Fairly basic renovations done inside the house, mostly just to make it a liveable PPOR.

Have another house with a similar cost base and CG in the area bought this year. Yields are still 5% gross on both. Options exist to bump up the yield to 7-8% with more active management.


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## WaySolid (3 July 2007)

robots said:


> hello,
> 
> top effort waysolid, got to be in it to win it
> 
> ...



I'm not sure what 'should' happen with my own patch of dirt.

The only fundamental thing I can reliably pin down is that there is an indeed a robust supply/demand imbalance in my area and I think the whole of Brisbane actually. There are some very good reasons for this, you can start with policy makers who talk about housing affordability problems and suggest demand side stimulation policy measures, and local councils that are continuing to pile costs on developers as a beginning. Also I note the continued population growth, strong economy and sentiment measures amongst people buying homes to live in.

I have capital growth in my suburb going back 80 years that shows 10-11% on the dirt plus the yield added for sweetener for vanilla 16 perch residential blocks. At times it can be very lumpy growth, and I'm sure I will see further lumps in the future, I'm interested in finding an ideal investment if it exists.

Presently I'm looking into fixing a % of my loans and selling what I consider my worst property as risk control ideas. Make hay while the sun shines and think winter while it's summer and all that!


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## gfresh (4 July 2007)

I think Brisbane is very well placed.. Just as a small straw poll, next year I plan on buying in Brisbane (first owner), and also my good friends are going to be buying a place up there. They own on the goldcoast presently, I'm just renting. 

When I think when things slow down, a lot of people will be off to Brisbane, or Melbourne or Sydney, for better job prospects (most here seem to be in construction and building), putting further increase on house prices. This won't be good for goldcoast prices, nor does it have any established industry to keep it propped up IMO. There will be strong effects here I think. 

They say holiday areas are the first to boom when the going is good in the economy, the first to suffer when it goes bad.


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## Uncle Festivus (4 July 2007)

It is good to see some primordial financial thought processes being applied to the real estate market, instead of the 'house prices always go up' mantra. The reserve bank has it's interest rate setting hands mostly super glued to their backsides for fear of further reducing exporters competitiveness by a rising $AUS as well as the detrimental effect to the current account deficit & local real estate industry.

So what does it have at it's disposal to devalue the currency without using interest rates - money supply, currently estimated to be increasing by approx 14% per annum. This initially had the effect of creating a real estate boom, but it then ran into the affordability conundrum; so now we see it progressing along the chain to the stock market.

So along with every other 'asset', I would think that to find out if real estate is actually appreciating that this monetary inflation/asset deflation should be taken into account. If your house isn't appreciating by more than 14% then you are going backwards, let alone stagnating.

Wages certainly aren't keeping up with this either, so we have affordability at record lows. Doesn't leave much room for further appreciation (except maybe at the upper price levels, but this is slowly being squeezed ever higher too). Specific examples and hot spots excluded to an extent, but eventually they all succumb to the invisible laws of silent monetary devaluation, unless you get a better return than monetary expansion eg the share market @ 20%.


----------



## tech/a (4 July 2007)

*Uncle*
So basically most Superannuation is a joke!
Currently 99% of people have no hope in hell of making time let alone getting ahead!


----------



## lakemac (5 July 2007)

Funny how wages have not kept up.
Wages are not paid by credit creation, they are productivity based.
You work harder, faster, smarter then and only then can your income go up in the non-inflationary adjusted sense.

Also remember wages represent a *real* output from an economy (unlike credit) so that is why banks like to lock in your future wages as the interest stream on the thin air they lend you. They know that the loan represents thin air and your wages represent *real* output.

Be careful Uncle about using any of the "M" (M1 - M...) measures of money supply. They measure *money* not credit. See my definition of cash, money and credit in the other thread about the economy.

Super is not a joke as long as you are getting a return above inflation.
However you have to realise that at 9% savings rate it is designed to perform one function - save the government from paying you a pension. If you calculate your super forward you will find the ultimate return in retirement is typically equal to that of what a pension would pay.

On another note - also consider the current baby bonus is also a way of the government being able to find a way to fund baby boomers (currently 45-60 yo) retirement. In 20 years time these new babies are entering the workforce just as baby boomers are in need of medical assistance (65-80 yo at that point). Guess what, I would hate to be a baby right now.


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## Uncle Festivus (5 July 2007)

tech/a said:


> *Uncle*
> So basically most Superannuation is a joke!
> Currently 99% of people have no hope in hell of making time let alone getting ahead!




Super has probably been the main game for the last 4 years feeding off itself returning above (real?) inflation so getting ahead in real terms?   
I guess what I was trying to imply was that, yes, the general population has no idea how they are getting fleeced by inflation, and when calculating the returns from any investment, namely real estate here as it applies to stagnating prices, then it should be inflation adjusted?

So apart from Perth & maybe SEQ on average, in inflation adjusted terms, has real estate stagnated since 2004?


----------



## robots (5 July 2007)

hello,

to the average home owner living in their home, the issue of inflation is *irrelevant*

even most property investors couldnt care less about inflation, it makes no difference

thankyou

robots


----------



## WaySolid (5 July 2007)

Uncle Festivus, I'm no expert but I suspect your view on inflation is wrong.

My simple understanding is you are not including the growth component in your view of inflation, so you can increase supply at 14% and if growth is 10% then you only have 4% inflation. Would be happy to learn if this thinking is wrong or learn more about the subject.

Also define real terms.. Most people just think CPI as a proxy for inflation when talking this way. In terms of gold ounces, CPI units ($/latest CPI figure) and working weeks my property has powered along in Brisbane since 2004.

Robots, Have to disagree with you on that one. Inflation is linked at the hip with property, depending on your strategy it can really be a fantastic friend for the property investor as well.

There are multi century studies showing the powerful mean reversion to inflation when looking at property returns, and investing is always about inflation + premium return, which is really the sauce on your hamburger.. What makes it all worthwhile in what can be called 'real terms'.

I find the issue of real value is rarely discussed while the focus is always on the nominal returns. I track the value of my investing portfolio in Gold ounces, working weeks, teacher's salaries and Big macs! as a method to try and generate more useful info.


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## Kimosabi (6 July 2007)

robots said:


> hello,
> 
> to the average home owner living in their home, the issue of inflation is *irrelevant*
> 
> ...




If we knew who really are, I'm sure we'd find an article about you on http://www.jenman.com.au/


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## Judd (6 July 2007)

Kimosabi, robots is only a little bit partially right but probably for all the wrong reasons.

If a home owner has paid off the mortgage and intends to reside in that residence for the rest of their days, then inflation is irrelevant.

However, inflation is very relevant to people paying off the mortgage for two reasons. It is the background to interest rates payable on the mortgage (Interest=cost of money+inflation+risk) and has the effect of attrition of the value of the mortgage payment over time.

In respect of the majority of property investors they "couldnt care less about inflation" mainly because they are generally financially illiterate.


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## gfresh (6 July 2007)

> In respect of the majority of property investors they "couldnt care less about inflation" mainly because they are generally financially illiterate.




 big call there.. I think many property investors would have a very good understanding of economics. But I guess too many are blinded by the simple affirmation 'house prices always rise' - and don't consider the broader issues.


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## chrisdedavid (6 July 2007)

Judd, you're a smart cookie 

If anyone wants to learn about property investing, there is a guy called Steve McKnight who is an Australian Property investor, started from Melbourne and has wrote at least one book that I have  "From 0 to 130 properties in 5 years"


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## Kathmandu (6 July 2007)

Hi all, new poster here and am amazed at the length of the thread and the amount of Doom and Gloomer's and dissbelievers here.

Would I be correct in thinking that a lot of you infact took krisbarry's advice a few year's back and did not buy property and missed the boat so to speak.

I note that Kimosabi is from Perth [apparently].

Did you miss out Kimosabi ???

Have you not seen evidence of a boom???

D


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## robots (6 July 2007)

hello,

yes thats right, some-one living in their own home for 10, 20, 30 or more years inflation is irrelevant even with a mortgage, and we are talking a straight out mortgage

you take mortgage of 250k in 2007 and pay it down by 2032

a hairdresser, supermarket worker, accountant or building worker income and what they can buy is critical

most people have to have a roof over their head, rent or mortgage, typically after 6-7 yrs, rent of equivalent property would equal payments of mortgage & outgoings 

how are prices looking in Aus?

thankyou

robots


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## gfresh (12 July 2007)

Seems like this is going to be a hot election issue. Keep hearing it every day, in every form of media. Rudd seems to be missing the mark really.. and nobody is really willing to acknowledge the fundamental problem of reducing demand. Instead, apparently if you make it easier to get into the housing market, this reduces demand 

http://www.theage.com.au/news/opini...ft-the-building/2007/07/11/1183833595640.html

Of course, the short-term effects would be catastrophic to investors, although you only have to look at what incentives are provided for housing investment at the moment. Even a more simple solution such as allowing equal 100% tax deductions for capital loss on share investment, rather than the current offset system - could encourage a great change in where money was distributed.


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## Smurf1976 (13 July 2007)

Kathmandu said:


> Would I be correct in thinking that a lot of you infact took krisbarry's advice a few year's back and did not buy property and missed the boat so to speak.



My personal concern is simply that most people ultimately lose from inflation. And inflation is exactly what the property boom is all about - INFLATION. 

Now we're starting to see real pressure on non-housing consumer prices. Everything from milk to electricity is threatened with substantial "overnight" rises and no offset. Same milk, same power but you pay more for it. 

Next it will be business screaming when the big wage demands start. That's the only non-house price crash answer to the affordability problem (unless you count living in a shoe box) and most know it whether they admit it or not. 

Then business will scream something about not being able to afford massive pay rises (at least partly true). Then the economy sinks - all thanks to the wonders of debt fuelled inflation.

Inflations historically end in tears and I see no reason whatsoever as to why Australia in 2007 is in some way special and exempt from the fundamental principles which apply everywhere else. Inflations do not end well for most people.

Personally, I'm invested in things that are quite profitable. Certainly doing better than real estate has done over the past 4 years. My concern is thus for the social and broader economic damage the housing situation will bring rather than any missing of boats. I suspect at least some others will be thinking likewise.

That said, I'm actually about to purchase some real estate. Just one house, to live in, but real estate nonetheless. And guess what? The last thing I want to happen after I buy is another boom. Do the sums, think about it and you'll know why (hint - I'm not about to be a "last home seller", real estate agent, developer or government).


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## Kathmandu (14 July 2007)

Smurf1976 said:


> Personally, I'm invested in things that are quite profitable. Certainly doing better than real estate has done over the past 4 years. My concern is thus for the social and broader economic damage the housing situation will bring rather than any missing of boats. I suspect at least some others will be thinking likewise.
> 
> That said, I'm actually about to purchase some real estate. Just one house, to live in, but real estate nonetheless. And guess what? The last thing I want to happen after I buy is another boom. Do the sums, think about it and you'll know why (hint - I'm not about to be a "last home seller", real estate agent, developer or government).




But there have been a lot of people that have made a lot of money from property over just not the last 4 years, but over all time.

In the last 4 years property has gone through the roof, just like share's, if you brought the right stuff.

Just like mining stock, think WA, Mackay, Townsville ,Rockhampton , Darwin and Gladstone.

Some of these have gone up 30% per year for the last 4 year's with rent increases to match.

I honestly don't understand your last comment about not wanting your property to go up in value as the same annalogy can be used for stock.

Prices drop and the panickers rush for the exit and some get caught holding the bag.

The bold and smart few have reserves to buy more at the same time and pick up a bargain reaping the reward's in the next cycle.

Dave


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## robots (30 July 2007)

hello,

things are rollin' on nicely, 89% clearance in Melb over the weekend

hot hot hot, the rises people are experiencing is awesome

think a lot of the money is coming from family, inheritance, wills etc

with many couples purchasing existing property as opposed to a new house in new estate

look forward to the future

thankyou

robots


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## TjamesX (30 July 2007)

robots said:


> hello,
> 
> things are rollin' on nicely, 89% clearance in Melb over the weekend
> 
> ...




nice ramp robots...

happened to be checking out the homepriceguide sales from the weekend as well.....and of the *16* houses listed for auction.... *14* sold, so yes that would make a clearance rate of 88%. I have no idea why there were so few houses listed - but its hardly statistically relevant, and hardly time to start calling for another boom 

I'm not saying prices have to go down, but lets not kid ourselves what the boom has been driven on.... debt. Not income, not productivity, good old 100% no doc, low doc heaven and low interest rates.... sure prices can rise, theoretically until 100% of our income goes to interest payments...

If you think the US is the only one with a problem, think again


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## wayneL (30 July 2007)

TjamesX said:


> nice ramp robots...
> 
> happened to be checking out the homepriceguide sales from the weekend as well.....and of the *16* houses listed for auction.... *14* sold, so yes that would make a clearance rate of 88%. I have no idea why there were so few houses listed - but its hardly statistically relevant, and hardly time to start calling for another boom
> 
> ...



Exactly!

And with a credit crunch just breaking from the starting gates...


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## Awesomandy (30 July 2007)

I've been looking at properties for a while now, and it seems to me that there are quite a few people looking to buy at the moment, especially new home owners who fear that not buying during the trough now would mean they will miss out on owning a home forever. Combine that with the fact that credit is still quite cheap and easily obtained, it looks like the housing market will, sooner or later, do what the share market has done last week - risks being re-priced. And, when that happens, we might just as well find a few people with negative equity, unfortunately.


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## Smurf1976 (31 July 2007)

Kathmandu said:


> I honestly don't understand your last comment about not wanting your property to go up in value as the same annalogy can be used for stock.



The answer is simply that I'm not expecting to be a net seller of real estate for a long time to come. If I chose to trade up to a better property in 10 years time then I would be _worse_ off if prices had risen.

Let's do some math...

2007 I buy a property valued at $300K and decide in 10 years time to trade up to a property valued at, in today's dollars, $400K. It costs me $100K plus stamp duty etc to make the swap.

But let's say house prices have doubled in that 10 years. I sell the existing one for $600K and buy the new one for $800K. It now costs me $200K plus stamp duty etc to make the swap.

The price of the existing house having gone up only benefits me if I sell it and either buy a cheaper property or rent. That's not what most are likely to do. 

Think about it. I have enough money now to buy a certain house. In 10 years time that house has doubled in price. If I sell it then that doubling in price means I can buy... another identical house. I'm no better off. 

Consider if car prices all doubled. I could sell my 2000 model car for enough cash to buy, in today's dollars, a brand new one. But with the new one also having doubled in price, I don't gain a damn thing on my existing asset. Meanwhile anyone looking to trade up or buy their first car has massively lost. An awful lot of people trade up their cars...

To benefit from the price of something going up then you need to be in the business of selling, rather than buying, whatever it is that has gone up. Those who are net sellers of housing (eg developers) benefit from rising prices just like the Arabs benefit from a higher oil price. They are sellers of the commodity. 

But those buying their first home or trading up to a larger property lose when prices rise, just like those filling the tank with more expensive petrol aren't happy to see the price going up.

I think the greatest problem with real estate is that most people don't seem to have done the math to see how the price changes affect them personally. I'd be surprised if 1 in 100 people have given it any serious thought.

How, exactly, does the average family that just wants a roof over their head gain from higher prices? I can see how the banks, developers, builders, real estate agents and governments gain. But how does the home buyer gain? They buy the same house but pay more for it and then they pay interest on a higher debt.


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## theasxgorilla (31 July 2007)

TjamesX said:


> but lets not kid ourselves what the boom has been driven on.... debt. Not income, not productivity, good old 100% no doc, low doc heaven and low interest rates....




I profoundly disagree with this and think blaming low interest rates and lending standards for this boom will cause you to miss some of the actual factors that drove the boom.  The factors you mention, particularly the lower lending standards, came in much later and have helped the banks keep the ball rolling and have probably turned the situation into a Ponzi scheme we see now...but at the beginning it wasn't this.

And if you want to talk about low lending standards, take a look at how Steve McKnight made a fortune in the late 90's early 2000's lending to people that the banks refused to give credit to at 2-3% above the fixed bank rate.  I believe low-doc loans arrived in response to "wrappers" like McKnight, BTW, but thats another story.

*Children of the baby boomers reaching some level of maturity and entering the work force and then buying houses started the property boom back in the mid-to-late 90s.*

People say that through supply/demand economics population increases  ought to drive house price rises.  *But we also know that our population hasn't doubled when house prices did.*  What can and I believe did happen is that the internal demographics of the population changed around the mid-90s.  The 2.3 kids that each baby boomer produced became 2.3 extra property owners.  This is a situation of supply outstripping demand.  Yes, interest rates made the fruit low enough to pick, but it wasn't the core driving force.

Then you have the PC and Internet revolution making many people very rich. Low interest rates also encourages money out of savings into investment or consumption eg. buy a new PC, a big screen TV, the new Commodore, house to live in, an investment property etc.  "dotcom" was a bubble in the end...but there was also real actual wealth created.  Hard to differentiate the two or even determine the proportions, but it was real.  Income, therefore, also drove property prices into the late 90's and early 2000's.  In inner and middle suburbs initially, where the IT consultants, and the business owners and the finance people lived...then the outer suburbs and apartments when they all started buying investment properties to save tax *(remember, the 48.5% tax rate kicked in at $50k back then...you had to invest in property or give away nearly half your income in tax).*

Then you had income tax cuts, a rising share market, skilled labour market shortages due to commodity price led mining boom, and subsequent wage increases in many core and ancillary industries...*all this means more disposable income in the hands of people who want to buy property.*  With standard variable rates up around 8% in Australia surely you have to find a few more good reasons why property is still going up??


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## tech/a (31 July 2007)

*ASX* nice piece---all of it!



> How, exactly, does the average family that just wants a roof over their head gain from higher prices? I can see how the banks, developers, builders, real estate agents and governments gain. But how does the home buyer gain? They buy the same house but pay more for it and then they pay interest on a higher debt.




*Smurf.*
Securing a first home 30/20/10 years ago or today means that you AT THAT TIME have an asset which by and large will keep pace with similar assets.As you point out ---on its own you just mark time.
The benifits are that in 10 yrs time it will appear cheap and the cost of ownership will be less than those starting in that 10 yrs time.

In 10 yrs time (But I'll call it X years time.) there will be a time when established housing is far cheaper than new housing----its happened 3 times in my 50 yrs that I can recall.This balance will return to the mean by seeing housing prices rise.As it did from 1996-2002 in general terms---and in some cases still is.

This is the time where those who have a home can use the Equity gained in the last X years to buy I/Ps that will also rise exponentially,simply continue to do the same thing,equity--purchase I/P or as time goes by 2 or 3 etc.
Then 1/3 years after the boom you get a second bite with Industrial and Commercial property.Tennent pay the Interest which we claim anyway and we pocket the Capital Gain.
Reading up on McKnights "Wrapping" is enlightening and I know a few of my clients (Re building work) who followed suit to a lesser degree.Have done well--not as well as a sole investor but less risk.Works even better in flat times.

*Careful Forward Planning *will put people in a position in which they can take advantage of these anomolies---both in Property/Trading and in some cases business.

There ARE clear cut goal posts of pending opportunity in ALL fields,trick is to be able to
(1) Recognise pending opportunity
(2) Know what to do to take advantage of it.
(3) *DO IT*



> Personally, I'm invested in things that are quite profitable. Certainly doing better than real estate has done over the past 4 years. My concern is thus for the social and broader economic damage the housing situation will bring rather than any missing of boats. I suspect at least some others will be thinking likewise.




So am I *BUT* are you or I investing the sort of $s that most invest in Realestate?
For me its less than 10% of my Capitalised Real estate holdings.
Here in lies the difference between mediocrity and stellar performance in ALL fields of investment
*DOING IT.*


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## TjamesX (31 July 2007)

Well I profoundly agree to disagree! 



theasxgorilla said:


> I profoundly disagree with this and think blaming low interest rates and lending standards for this boom will cause you to miss some of the actual factors that drove the boom.  The factors you mention, particularly the lower lending standards, came in much later and have helped the banks keep the ball rolling and have probably turned the situation into a Ponzi scheme we see now...but at the beginning it wasn't this.




But seriously I do agree that there were some fundamental reasons for the start of the boom, I'm not saying houses were not undervalued in the late 90's they were a good buy, add to that halving of capital gains tax, a growing economy with stable inflation, and a shift of money away from equities to real estate after the tech boom.

However I would debate that part of the initial spark for the worldwide appreciation in real estate was lit by easing fed policies throughout the world in response to the tech bust and subsequently september 11 (specifically the US) - Note that the RBA decreased the cash rate by 2% in 2001 when house prices were already running very fast

Initial fundamentals were amplified by easy fed policy (that assumes house price appreciation is not inflation) and continued to be facilitated through easy lending (in late 2002, 2003) and competition to lend people money since then.

Prices can be bid up through transactions of a relatively small % of houses (even if they are bid up on fundamentals) which requires little money, but over time they have to be supported by the weight of the whole market - this requires a lot of money, which is currently being funded mostly by debt (not savings or income)



> And if you want to talk about low lending standards, take a look at how Steve McKnight made a fortune in the late 90's early 2000's lending to people that the banks refused to give credit to at 2-3% above the fixed bank rate.  I believe low-doc loans arrived in response to "wrappers" like McKnight, BTW, but thats another story.




I Agree with this. Banks have been overly conservative in the past, I assume partly in response to some of them almost going bust in 1990's. However I believe the worm has well and truly turned the other way at the moment. S McKnight made his furtone buying undervalued (on fundamentals) property and watching them appreciate - wrapping helped the cashflow and accelerated the process... he is a very good investor



> *Children of the baby boomers reaching some level of maturity and entering the work force and then buying houses started the property boom back in the mid-to-late 90s.*




Well I'm a child of a baby boomer but I was in my early to late teens at that time - and wasn't buying??



> People say that through supply/demand economics population increases  ought to drive house price rises.  *But we also know that our population hasn't doubled when house prices did.*  What can and I believe did happen is that the internal demographics of the population changed around the mid-90s.  The 2.3 kids that each baby boomer produced became 2.3 extra property owners.  This is a situation of supply outstripping demand.  Yes, interest rates made the fruit low enough to pick, but it wasn't the core driving force.




That assumes each baby boomer kid buys a house by themselves (currently not happening amongst my peers) and does not shack up with other baby boomer kids (in marriage) to form a two person household??

Don't agree with this - population growth provides the fundamentals for a specific house over time to increase faster than wage growth (as the status of the house changes over time due to expanding city). If population growth didn't occur then fundamentals would be supplied by wage increases and/or decreasing hosuehold density.

Demand for quality houses is always there, price is what limits people on an average wage not to buy on Sydney Harbour. The fruit always gets picked, just depends what price it gets picked at.... interest rates and lending policies are allowing fruit to be picked at a price (whether that is good for the people doing the fruit picking or not).



> Then you have the PC and Internet revolution making many people very rich. Low interest rates also encourages money out of savings into investment or consumption eg. buy a new PC, a big screen TV, the new Commodore, house to live in, an investment property etc.  "dotcom" was a bubble in the end...but there was also real actual wealth created.  Hard to differentiate the two or even determine the proportions, but it was real.  Income, therefore, also drove property prices into the late 90's and early 2000's.  In inner and middle suburbs initially, where the IT consultants, and the business owners and the finance people lived...then the outer suburbs and apartments when they all started buying investment properties to save tax *(remember, the 48.5% tax rate kicked in at $50k back then...you had to invest in property or give away nearly half your income in tax).*




Agree, so fundamentally you're saying wage and income increase (+ employment growth) allowed people to bid up prices. The funny thing is real average wages have gone nowhere for a long time



> Then you had income tax cuts, a rising share market, skilled labour market shortages due to commodity price led mining boom, and subsequent wage increases in many core and ancillary industries...*all this means more disposable income in the hands of people who want to buy property.*




Agree this has kept it going (especially at the high end). But again on average this is not being reflected by significant average household income growth



> With standard variable rates up around 8% in Australia surely you have to find a few more good reasons why property is still going up??




Well in a word.... on average..... increasing volumes of *debt*

and 8% home loans in a historical sense are still very cheap...

IMO

TJ


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## boxon (31 July 2007)

From Nightline
By VICKI MABREY and CHARLES HERMAN
July 27, 2007



In Sacramento, Calif., not far from where prospectors sought quick
riches in the gold rush more than a century ago, another speculative
boom is going bust.

This time, however, it's not the lure of precious metals -- it's real estate.



"The market was hot, and I decided to give it a shot," said Casey
Serin, a modern-day speculator who hoped to strike it rich quick by
buying homes, fixing them up and then flipping them for a profit.

The Lure of Quick Cash

Serin said he has always had an entrepreneurial spirit. Born in
Uzbekistan, the 24-year-old came to the United States with his family
in 1994 and became a U.S. citizen nine years later.

After graduating from high school, he found a full-time job as a Web
site programmer. But Serin was always interested in starting his own
business.

In particular, he was drawn to real estate. So Serin attended real
estate seminars and bought how-to CDs, DVDs and books.

"My first set of seminars was $15,000," he said. He was hooked,
eventually spending nearly $35,000 on what he calls his real estate
education.

"I kept spending because I thought, 'I need more education,'" Serin said.

And after he made a profit buying and selling one property, he
eventually jumped into the real estate boom that was gripping the
nation.

"My first deal was $30,000. I got a bit of euphoria. I thought I could
do this more and more. Exuberant feelings led me to buy more
property."

Buying Spree

Starting in 2005 Serin went on a real estate shopping binge, buying
eight homes in eight months in four different states. Along the way,
he quit his job to devote himself full-time to real estate investing.

In October 2005, he bought one home in Sacramento, then another one in
January 2006. The next month, he purchased two properties in New
Mexico. Next, he closed on a home in Modesto, Calif. In March 2006, he
bought a home, sight unseen, in Utah as well as another in California.

In May of that year, he bought a home in Dallas, the same way he
bought the house in Utah -- sight unseen.

In all, he acquired eight homes over eight months, and a lot of debt.
"In total I was $2.2 million in debt between mortgages and unsecured
lines of credit and credit cards," said Serin.

"It was a very tough thing to face."

Cracks in the Foundation

Serin's problems started when the home repairs often took longer than expected.

"My goal was always to fix up the house and resell it for profit
quickly," he said, "say within three to four months. [The] problem is
three to four months turned into six months, and then my money ran
out, and I couldn't finish fixing it."

Another problem was timing.

Serin started buying just as the real estate market boom was going
bust. His houses sat unsold, and his debt continued to climb.


"I created a logistical nightmare for myself trying to do too many
properties too fast. And what happened was, I ran out of money," he
said.

Creative Financing and 'Liar Loans'

To make matters worse, Serin told ABC News that he purchased his homes
using what are known in the lending industry as "low documentation"
loans. With these mortgages, borrowers provide limited documentation
-- or proof -- to confirm their income and assets, and lenders base
loans on that information with little to no verification.

Serin said that he told lenders on his loan applications that he was
making more than his actual salary of $50,000 a year from his computer
job.

"I ended up stating more than I was really making because I was able
to take advantage of what's called 'stated income loans,'" he said.
"In the industry they call them 'liar loans,' because the bank
basically allows you to state anything you want."

"Low doc" and "no doc" loans were originally intended for the
self-employed, whose income can vary year to year or for the very
wealthy, who don't want to disclose their earnings.

"Low-doc and no-doc [are] very viable … for a certain segment of the
buying public," explained Ed Smith of the California Association of
Mortgage Brokers. "For example, a person with high credit scores, the
ability to make their payments, a long-term history of being
financially prudent with their finances -- however, they don't want to
disclose full documentation of their income."

But as home prices soared, especially in states such as California,
lenders loosened credit requirements and made these loans available to
more people.

These higher-risk loans also came with higher interest rates. It is
many of those borrowers -- like Casey Serin -- who are now having
problems making their mortgage payments.

"The [loan] products that were available were mismatched in many cases
with the wrong customer's financial profile," said Smith. "Many
customers got into loan products that were ill-advised or maybe not
well thought out. There's no such thing as a bad loan; there's loan
products that fit everyone's individual profile."

Zach Gast. who analyzes the mortgage lending industry for the Center
for Financial Research and Analysis, said pressure on lenders to
continue making loans as home prices increased led to a loosening of
lending standards.

"The standards dropped in nearly everything you can imagine," he said.
"Borrowers were not required to provide documentation of their income.
They paid less in down payments. And they were also allowed to have
higher mortgage payments as a percentage of their income."

According to Credit Suisse, an international financial services group,
"low/no doc" loans accounted for nearly half of all home purchase
loans issued in 2006 in the United States, up from only 18 percent in
2001.


The Walls Come Down

Serin admitted he lied about his income on his applications.

"It was fairly common to do stated income loans. I thought, well this
must be gray area. It's kind of like speeding on the freeway.
Everybody does it. As long as you do it within reason, it's all right.
Well, I crashed my car."

And as his homes sat unsold and he couldn't make the payments, he
continued to dig himself deeper and deeper into debt.

Part of that debt was a result of how he structured his mortgage
deals, where he not only got a home a closing, he got cash back. Serin
said he used the money to fix up the properties as well as to live on,
something that could possibly land him in trouble with law
enforcement.

"I was able to structure the deals in such a way to where I will
borrow 100 percent of the value and find a way to have the seller give
me of the money back for my repairs."

He didn't think it was illegal because, as he put it, "I just thought
as long as it was a win-win deal, it was all good."

According to his attorney, Serin is currently under investigation by
the FBI. His attorney, Kevin Mark Wray, told ABC News that "as of yet,
no charges have been brought against Mr. Serin. However, based upon
conversations with the U.S. attorney's office in California, federal
charges related to Mr. Serin's real estate transactions are expected
to be brought against him. At this time, my office is reviewing Mr.
Serin's real estate transactions. I have engaged an expert on mortgage
law and mortgage foreclosure. I expect to have a complete response in
the next two weeks."

Even before the investigation began, debt collectors were harassing
Serin, and his mailbox was filling up with delinquent notices.
Eventually, his lenders started foreclosure procedures. According to
Serin's Web site, five of his eight homes have been foreclosed on, two
of his homes have been sold and one is under contract to be sold.

Going Public

Despite what he has done, Serin has been remarkably candid about his
actions. He started a Web site where he posted everything from
pictures of his homes to a detailed list of his personal finances. His
blog, which started out as a place for him to share his experiences
with others, later became a possible business opportunity. "The
entrepreneur in me thought, 'Hey, this is great. I can maybe leverage
this into some other business later on.'"

"There was a time where I was embarrassed," he said, "but after a
while I decided, you know what? What's there to be ashamed about?
Successful people go through several of these, you know. Failure is
part of success."

Serin once envisioned the Web site and blog becoming a place where
people facing foreclosure could learn about what to expect, as well as
what options might be available to them. However, the attention from
the media, Web watchers and legal authorities has become too difficult
for him. He recently sold the domain and will soon stop blogging about
his activities. For those who loved (and hated) his adventures in real
estate, as of after Friday, August 3, Serin's story, as told online,
is expected to end.


In the Hot Seat

"I have a lot of critics that say because of me, the market is
overpriced," he said. "Because of me, the renters are priced out. It's
interesting. I've been put in a position where I'm blamed for
macroeconomic problems. I'm kind of like a mascot for what's really
going on."


----------



## boxon (31 July 2007)

The rest of the story.                Commentators on Serin's and their own blogs also express anger at
Serin's lifestyle.

"I make things worse by telling them part of the money last year was
used for my wife, and I to go on vacation. Well, people don't realize
this is one thing we did. Everything else was very frugal," he said.

"We have scaled back in a lot of ways, and we have cut our expenses
down. But what happens is people focus on the drama. They see that I'm
supposedly living a frivolous lifestyle, they see that I went to a
Starbucks or a Jamba Juice … and they say, 'You need to be on rice and
beans all the time. You need to be eating Top Ramen all day.'"

Undeterred Despite Debt

Serin maintains that his critics don't realize the severity of his situation.

"You can't just send $5 toward your credit card; they will still
continue their collection process," he said. "With foreclosures you
can't just pay them a partial payment. They will still do the
foreclosure."

While Serin wants to work out deals for his remaining debt, he said he
is trying his best to avoid declaring bankruptcy.

"People say maybe you should give up after eight bad deals," he said.
"Well, I'd like to say they weren't all bad, and I have learned a lot
through it. So I'd like to think the next deal I am going to do is
going to be successful."

So, Serin continues to search for his eureka moment and hopes to strike gold.


----------



## robots (31 July 2007)

hello,

not everybody's wage has stayed the same, plenty of people have had good increases and save and use this money appropriately,

the Banks, as in big four, are as tough as ever for getting money, it is more the XYZ Finance Company which is more likely to give the low/or no doc

not everybody upgrades their home, some people stay in home for 20-40 yrs and in those circumstances inflation means jack

there is no affordability crisis, plenty everywhere for people to buy easily

keep doing the numbers, 

thankyou

robots


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## robots (31 July 2007)

hello,

article today about the construction of new houses & units

http://www.theaustralian.news.com.au/story/0,25197,22161433-643,00.html

I think this will be a long term trend, with more boutique unit buildings arising, 

the developer margin has been hit hard as people get better value in existing property

thankyou

robots


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## theasxgorilla (31 July 2007)

TjamesX said:


> Well I profoundly agree to disagree!




Thanks for the thoughtful post.  Apologies in advance for another long post.

I'm glad we can do that here on ASF   Its what makes it a great forum.

I would agree on one thing...almost every goverment in the developed world has figured out how to play the same game ie. *the game of using house price appreciation guided by interest rates to run a stable economy with sustainable growth.*  What many bears and analysts are betting on is that this is some kind of Nash equilibrium where it will only take one significant player of the game being forced to change their strategy before the whole lot unravels.  Greenspan famously referred to "irrational exuberance" back in 1995.  In otherwords, the game has been going on for over a decade and perhaps the arrival of new players ie. China, India, rebuilt-Germany, Russia, has helped prevent the folly of this game from being revealed in the form of a proper bust.  Crystal ball anybody??



TjamesX said:


> Prices can be bid up through transactions of a relatively small % of houses (even if they are bid up on fundamentals) which requires little money, but over time they have to be supported by the weight of the whole market - this requires a lot of money, which is currently being funded mostly by debt (not savings or income)




People taking on debt can be considered a vote of confidence by people on the system and the future.  Back when we had defined contribution pension systems* there was actually a situation where pension funds would give money back to contributors because they had too much!*  People were retiring at 65, expecting to live until 72, and dying at 67.  The fund had a surplus of cash.  Now many of us are expected to live beyond 80!  Think about how that could translate to confidence on behalf of the people who take on more debt using 40 or 50 years loans instead of 25 or 30 years.  And so house prices go up.  Now I ask you this...are those who sit on the sidelines waiting for a bust actually risking missing out all together in what might not be a part of any boom/bust cycle but is instead a shift in the way the system is structured, which will lead to higher house prices forever after...once again, crystal ball anyone?



TjamesX said:


> Well I'm a child of a baby boomer but I was in my early to late teens at that time - and wasn't buying??




*From my experience those who were best positioned to take advantage of what started in '96/'97 were those who were 1. old enough to work and 2. had worked long enough to have a stable work and savings history.*  As you said yourself, banks were overly conservative.  The youngest person I knew who bought a house in '97 was 19.  *Those best positioned, IMO, were 25+.*  If you weren't at least 20 in '97 then by my measure you were just on the cusp of Gen X/Gen Y.  Now, ten years later it is Gen Y who are forced to take on stupid amounts of debt for longer periods of time.  It is the Gen Y kids I know who think that while you're there taking a $400k no-deposit loan on a new apartment you might as well tack on another $60k and buy an Audi too...if the bank will let you have it...the people who approve the appliation are gatekeepers, not their own sensibility.

*I don't subscribe to the seemingly well accepted belief that older 30-60 something Aussies are/were financially reckless.  Why don't we hear more stories on threads like this about the people who paid off their houses before they were 35 during the tech-boom and only then did they buy a second investment property*.  I think many older Aussies have less debt and more equity than we give them credit for (no pun intended).  Gen Y, different story.

ASX.G


----------



## nomore4s (31 July 2007)

theasxgorilla said:


> *I don't subscribe to the seemingly well accepted belief that older 30-60 something Aussies are/were financially reckless.  Why don't we here stories on threads like this about the people who paid off their houses before they were 35 during the tech-boom and only then did they buy a second investment property*.  I think many older Aussies have less debt and more equity than we give them credit for.  Gen Y, different story.
> 
> ASX.G




Good post, ASX.G

I agree with this bit whole heartedly. It's the younger generation that have no problem taking on huge levels of debt, even people around my age (30-35) seem to have no second thoughts about hocking themselves up to the eyeballs in debt, if the bank will give it to them they'll take it.One of the major problems I see is that it's not just on houses but also on depreciating assets like cars and electrical goods (plasma tvs etc). 

Some of the guys at work constantly use their home loans as revolving credit, one of them owes more on his house now then 3 years ago and in that time we've paid him about $40k in bonuses and now he's got a $40k car loan as well!


----------



## Smurf1976 (31 July 2007)

robots said:


> not everybody upgrades their home, some people stay in home for 20-40 yrs and in those circumstances inflation means jack



Precisely.

(Think about it...)


----------



## TjamesX (31 July 2007)

theasxgorilla said:


> Thanks for the thoughtful post.  Apologies in advance for another long post.
> 
> I'm glad we can do that here on ASF   Its what makes it a great forum.
> 
> I would agree on one thing...almost every goverment in the developed world has figured out how to play the same game ie. *the game of using house price appreciation guided by interest rates to run a stable economy with sustainable growth.*  What many bears and analysts are betting on is that this is some kind of Nash equilibrium where it will only take one significant player of the game being forced to change their strategy before the whole lot unravels.  Greenspan famously referred to "irrational exuberance" back in 1995.  In otherwords, the game has been going on for over a decade and perhaps the arrival of new players ie. China, India, rebuilt-Germany, Russia, has helped prevent the folly of this game from being revealed in the form of a proper bust.  Crystal ball anybody??




I'm actually not much of a conspiracy theorist, I don't believe that governements (or central banks) intentially architecture imbalances... but I do believe that once imbalances exist, they will do anything in their power to keep them going as long as possible if it's in their interest.... and momentum is very hard to stop.... hence imbalances will tend go on much longer than any predict.

But IMO the game has a use by date - especially in democracies. A lot of people think the govt polls against howard are a sign that people want a change because they don't know any better, or want change for the sake of it.... I know amongst my peers (affluent late Gen Y) there is a growing resentment for his policies and seeming lack of any leadership on things that affect them (whether justified or not), and this group is growing.

This game could go on for a very long time yet.... even if fundamentals don't support it. Japan had an extremely productive economy with all the fundamentals and still couldn't avoid the lure of transacting the same unrpoductive assets for ever greater amounts of money.... So they got 10+ years of deflation... in a country with less land and a larger population

But I don't think we're close to Japan territory...



> Think about how that could translate to confidence on behalf of the people who take on more debt using 40 or 50 years loans instead of 25 or 30 years.  And so house prices go up.  Now I ask you this...are those who sit on the sidelines waiting for a bust actually risking missing out all together in what might not be a part of any boom/bust cycle but is instead a shift in the way the system is structured, which will lead to higher house prices forever after...once again, crystal ball anyone?




Forget 40-50 year loans, the trend is I/O with intention to repay principle 'some time in the future'!!! 

Once you max out on I/O we can go to negative amortisation reset, and home equity loans... so there is plenty more room : Both of these rely on the debt market to expand credit and ease lending policies more... which may happen.

I would advise anyone who's sitting waiting for a bust, to buy within your means if you're at that stage... as their aint no guarantee that there will be a bust soon. But I'd also advise that anyone speculating on rises IMO is playing with fundamental fire. I think prices are overpriced but I will probably buy a PPOR within the next few months - because i'm at that stage of my life.



> *From my experience those who were best positioned to take advantage of what started in '96/'97 were those who were 1. old enough to work and 2. had worked long enough to have a stable work and savings history.*  As you said yourself, banks were overly conservative.  The youngest person I knew who bought a house in '97 was 19.  *Those best positioned, IMO, were 25+.*  If you weren't at least 20 in '97 then by my measure you were just on the cusp of Gen X/Gen Y.  Now, ten years later it is Gen Y who are forced to take on stupid amounts of debt for longer periods of time.  It is the Gen Y kids I know who think that while you're there taking a $400k no-deposit loan on a new apartment you might as well tack on another $60k and buy an Audi too...if the bank will let you have it...the people who approve the appliation are gatekeepers, not their own sensibility.




People will always talk from their own frame of reference, and mine is of Gen Y - the lazy want it all now generation . But i do find it amusing that people often deride the willingness of a generation to take on debt at 100% finance beyond their means - because if on mass they actually didn't (saved 20% deposit and borrowed within means) house prices (at the low to middle end at least) would drop.... 

people who know better preach individual responsiblity and ownership knowing full well that on average the masses will not behave rationally or responsibly.



> *I don't subscribe to the seemingly well accepted belief that older 30-60 something Aussies are/were financially reckless.  Why don't we hear more stories on threads like this about the people who paid off their houses before they were 35 during the tech-boom and only then did they buy a second investment property*.  I think many older Aussies have less debt and more equity than we give them credit for (no pun intended).  Gen Y, different story.
> 
> ASX.G




Agree completely!!! Anyone who gets into any sort of bother while being on the other side of the asset appreciation truly does deserve it. I would say that the 40-60 range (and asset owners) are in the perfect position (provided they aren't over leveraged). They have the luxury of seeing if the overleveraged (20-30's) actually do turn out to be overleveraged and pick up any bargains in a credit contraction.

Make no mistake, the overleverage are the 'bull bar' on the 4wd so to speak. We may or may not have a crash, but if we do they will bear the brunt... but they have time on their side.

TJ


----------



## theasxgorilla (31 July 2007)

TjamesX said:


> Make no mistake, the overleverage are the 'bull bar' on the 4wd so to speak. We may or may not have a crash, but if we do they will bear the brunt... but they have time on their side.




Great analogy...!  Can I borrow it???


----------



## wayneL (1 August 2007)

A very interesting video here from Jim Cramer on real estate.

http://video.google.com/videoplay?docid=2885272539300360327&hl=en

He is still a muppet. You can tell by one particular comment on interest rates, but he knows doom when he sees it.


----------



## theasxgorilla (1 August 2007)

wayneL said:


> A very interesting video here from Jim Cramer on real estate.
> 
> http://video.google.com/videoplay?docid=2885272539300360327&hl=en
> 
> He is still a muppet. You can tell by one particular comment on interest rates, but he knows doom when he sees it.




I watched that video for a nugget of wisdom...sad to say I just lost 5 minutes of my life...yet another talking-head juiced up the "you're all f%&ked but I already sold and have a lot of money so this should be fun to watch" ideal.

Of course the fed will pull rates down a whole percent to deal with this issue...clearly the ball is in their court...I don't see that they have a choice 

Congrats on the 5000th post WayneL!


----------



## Sean K (1 August 2007)

theasxgorilla said:


> I watched that video for a nugget of wisdom...sad to say I just lost 5 minutes of my life...yet another talking-head juiced up the "you're all f%&ked but I already sold and have a lot of money so this should be fun to watch" ideal.
> 
> Of course the fed will pull rates down a whole percent to deal with this issue...clearly the ball is in their court...I don't see that they have a choice
> 
> Congrats on the 5000th post WayneL!



Jim Cramer is a personality and is always like that. His show 'Mad Money' on CNBC is a rock show with bells, whistles, hooters and bulls and bears all over the place. He does have a brain though, and he's written a few books, so he must be very smart.


----------



## wayneL (1 August 2007)

theasxgorilla said:


> I watched that video for a nugget of wisdom...sad to say I just lost 5 minutes of my life...yet another talking-head juiced up the "you're all f%&ked but I already sold and have a lot of money so this should be fun to watch" ideal.
> 
> Of course the fed will pull rates down a whole percent to deal with this issue...clearly the ball is in their court...I don't see that they have a choice
> 
> Congrats on the 5000th post WayneL!



How this man has the position of influence he has, I just don't know.

Nice video for a bear though.


----------



## theasxgorilla (1 August 2007)

wayneL said:


> How this man has the position of influence he has, I just don't know.




_http://www.absolutelyrics.com/lyrics/view/bad_religion/only_entertainment/_


----------



## numbercruncher (1 August 2007)

What t-shirt should i wear today "I shorted your House" or the " I shorted your lender" one ?


----------



## TjamesX (1 August 2007)

numbercruncher said:


> What t-shirt should i wear today "I shorted your House" or the " I shorted your lender" one ?





Today I'd go with the lender's T-Shirt 

But I think there are some wider issues developing here and while my initial reaction to the sub prime mess were that of 'it's just another short term correction in a longer term debt bubble' I think I'll sit on the fence for now...... 

there seems to be a lot more things starting to unravel as we have now finished the financial year and auditors start running through the books - this process may take a few months.

turns out Mac Banks fortress fund was made of sticks;

http://www.theaustralian.news.com.au/story/0,25197,22168528-643,00.html

For things to continue swimmingly for all, the debt market will need to stabalize, after all that's what's been propping a lot of stuff up - maybe China can come to the rescue and prop up the private debt markets, it doesn't seem to mind propping up the US govt through treasuries?..... that last question was actually serious 

TJ


----------



## TjamesX (1 August 2007)

TjamesX said:


> there seems to be a lot more things starting to unravel as we have now finished the financial year and auditors start running through the books - this process may take a few months.




OK... I think I'll extend that timeline out to the end of the year....



> The peak month for the resetting of mortgages will come this October, according to Credit Suisse, when more than $50 billion in mortgages will switch to a new rate for the first time. The level will remain above $30 billion a month through September 2008. In all, the interest rates on about $1 trillion worth of mortgages, or 12 percent of the nation’s total, will reset for the first time this year or next. A couple of years ago, by comparison, only a marginal amount of mortgage debt ”” a few billion dollars ”” was resetting each month




http://www.nytimes.com/2007/08/01/b...ccf8d6e7d8e446&ei=5088&partner=rssnyt&emc=rss

Wouldn't you love to meet the guy that invented negative amortisation mortgages!!

*Step 1.* Asset price is high(er)
*Step 2.* Hard to manage cash flow through standard loan
*Step 3.* How about we lower initial rate and capitalise interest into the loan, becasue we know asset prices will rise faster than capitalised interest!!
*Step 4.* Buy asset now that cash flow problems are sorted!!
*Step 5.* Go to step 1

*Endgame* Interest resets to 'normal rate' and cash flow problems still exist 

US markets will be fascinating tonight..... I think we'll get a rebound 

TJ


----------



## robots (1 August 2007)

hello,

here we go, awesome weekend ahead most likely

another 3% off the ASX, 10% rise for Melb real estate holders in 3mths, get another 10% in the next quarter I would suggest

people renting have had it good for too long, things are changing as property investors pass on the costs now, good stuff

thankyou

robots

ps. how's the house hunting going smurf


----------



## numbercruncher (1 August 2007)

Hello,


Here we go, US housing industry imploding spurring on a Credit crunch that will extend itself to that hot Aussie realestate market that is returning the princely sum of 3pc p/a in rental return.

Housing at its most unaffordable level in Australias history requiring an Income of 100k to be just affordable in every major city.

Keep pumping that "sure thing" realestate mantra itll make the end game all the more interesting ... and profitable (>:




PS. I sure hope Melbourne realestate jumps 10pc for you this weekend let alone just the next quarter!


----------



## tech/a (1 August 2007)

numbercruncher said:


> Hello,
> 
> 
> Here we go, US housing industry imploding spurring on a Credit crunch that will extend itself to that hot Aussie realestate market that is returning the princely sum of 3pc p/a in rental return.
> ...




Now I'll bet in the years 1996-2002 you were one of the many who watched the property market treble and did F/A.---actually sweet F/A.


----------



## Kimosabi (1 August 2007)

robots said:


> hello,
> 
> here we go, awesome weekend ahead most likely
> 
> ...




I'm not sure how housing prices are going to keep rising when the Banks Stop Lending Money and all the Aussie Mortgage company's start going belly up...


----------



## robots (1 August 2007)

hello,

even with all the talk about credit crunch around the globe, money will get easier to get here in Aus,

only is Aus just starting to see the arm loans, ie, commbank 3 yr economiser special

you have cash converters, pay day loans etc, as with whats happening now it will be the fundies who take on these sophistacated (ha ha) CDO packages and the most indirect person who will wear the burden of poor decisions

didnt warren buffffet make an error on US dollar punts?

thankyou

robots


----------



## numbercruncher (1 August 2007)

tech/a said:


> Now I'll bet in the years 1996-2002 you were one of the many who watched the property market treble and did F/A.---actually sweet F/A.




That would be a negative to that swiper ......



And i bet your one of the many who waited till 2006 to buy ?? 

Wonder how many folks are seeing Realestate as a one way street after paying 400k + 20k duty + 30k Interest in the last year , oh and dont forget to throw in the 15k realty fees when they decide to dump and run or maybe they just post the keys back to the bank or something now a days?

Please folks all go get 105pc mortgages, many are enjoying betting against this little bricks n' mortar fiasco.

Peace.


----------



## robots (1 August 2007)

hello,

not everything is bought on finance,

look at the tv show Tech eluded to, two people were left an inheritance in Bondi that sold for 3.6mil

so grant the purchaser may have used finance, but the two recipients would most likely go and buy a property outright with that sort of dough,

there's a lot of pre-inheritance being handed out to buyers,

3% return?, strange how people always forget the capital growth component

thankyou

robots


----------



## Kimosabi (2 August 2007)

robots said:


> strange how people always forget the capital growth component




Good Try Robots...

Unfortunately for you, some of us are now pretty wise to your spuiker Real Estate Salesman crap!?!?!

Capital Growth is a Furfy...

Capital Growth is primarily caused by the Reserve Banks of the World printing more Money out of "Thin Air", which devalues the existing money and eventually the extra money that has been created flows into higher Prices or Capital Growth.

If we had a Sound Monetary System, Real Estate prices along with everything else would slowly decline, but, and this is the kicker, we would have a rising Standard of Living...


----------



## wayneL (2 August 2007)

robots said:


> strange how people always forget the capital growth component



Or the possibility of a capital loss.


----------



## theasxgorilla (2 August 2007)

numbercruncher said:


> Please folks all go get 105pc mortgages, many are enjoying betting against this little bricks n' mortar fiasco.




I'm curious, how are they doing that exactly???


----------



## theasxgorilla (2 August 2007)

robots said:


> didnt warren buffffet make an error on US dollar punts?




I don't know if he did or didn't, but what I've read suggests he got it wrong.  

He should probably have considered this quote from Donald Trump:
_
"Experience taught me a few things. One is to listen to your gut, no matter how good something sounds on paper. *The second is that you're generally better off sticking with what you know.* And the third is that sometimes your best investments are the ones you don't make."_

People who know real estate shouldn't have anything to fear.


----------



## wayneL (2 August 2007)

theasxgorilla said:


> I'm curious, how are they doing that exactly???



Short builders and financials.


----------



## wayneL (2 August 2007)

wayneL said:


> Short builders and financials.



http://www.bloomberg.com/apps/news?pid=20601087&sid=as0tW6Fr8gTM&refer=home


----------



## robots (2 August 2007)

hello,

that may well occur wayneL, a capital loss

but at the moment it is the complete opposite with appreciation happening

dont know why people are so jaded by property? 

everybody gives each other high fives if they have traded a stock to profit, yet if people make money on property they are the devil, lucky, dont have clue and the rest, astonishing

kimosabi, how is you're girlfriends credit card debt going, all paid off?

goodluck

thankyou

robots


----------



## Kathmandu (2 August 2007)

Kimosabi said:


> Capital Growth is a Furfy




Gotta get me some more of that Furfy, where can I get me some.

That's 30 years of capital gain, not capital loss.

Dave


----------



## Kimosabi (2 August 2007)

Kathmandu said:


> Gotta get me some more of that Furfy, where can I get me some.
> 
> That's 30 years of capital gain, not capital loss.
> 
> Dave




And how much money has been printed out of "Thin Air" in the last 30 years.

Let get into a discussion about VALUE, what is the VALUE of todays Dollar compared to a Dollar 30 Years ago...

Just because the price of something has gone up, doesn't mean it has increased in VALUE.

The people who duped us with this Ponzi scheme we call Modern Money, must giggle on the couch everytime they see a newspaper article like the one above, at how happy everyone is that the price of their property's have gone up, not realising that the money they had 30 years ago has been massively diluted by the printing of more money out of "Thin Air"...


----------



## numbercruncher (2 August 2007)

Thats a way cool return now isnt it!!


Wonder if itll do the same over the next 30 years and multiply 1154x that puchase price too! 6.92 Billion dollar Byron home anyone ?

Wonder if well be using 100k bills and thousand dollar coins in those days ?


Will we look back and sigh how cheap it was back in 2007 ?

Something to ponder .....


----------



## Kimosabi (2 August 2007)

The MOGAMBO GURU describes modern money the best.

*What is a dollar worth these days?*


----------



## Kathmandu (2 August 2007)

Kimosabi said:


> Let get into a discussion about VALUE, what is the VALUE of todays Dollar compared to a Dollar 30 Years ago...
> 
> Just because the price of something has gone up, doesn't mean it has increased in VALUE.




I think their $6,000,000 today will buy lots more than their $5200 would have 30 years ago.

Dave


----------



## Flying Fish (2 August 2007)

Kathmandu said:


> I think their $6,000,000 today will buy lots more than their $5200 would have 30 years ago.
> 
> Dave




A lot more wacky weed at least.


----------



## theasxgorilla (2 August 2007)

Thats all good and well...and MOGAMBO GURU the nutter can cleverly point out what used to be vrs what is now...but the question is, short of starting some central-bank-overturning-revolution, what are you going to do about it NOW?

There are plenty of people who used property to achieve _upward social mobility_ since 1913.


----------



## Flying Fish (2 August 2007)

theasxgorilla said:


> Thats all good and well...and MOGAMBO GURU the nutter can cleverly point out what used to be vrs what is now...but the question is, short of starting some central-bank-overturning-revolution, what are you going to do about it NOW?
> 
> There are plenty of people who used property to achieve _upward social mobility_ since 1913.




Put a new captain at the helm of the titanic lol


----------



## wayneL (2 August 2007)

theasxgorilla said:


> There are plenty of people who used property to achieve _upward social mobility_ since 1913.



The point of the bears (most of us anyway) is not that property is a bad investment, it's that there are good times to buy and bad times to buy. Of course property can be a sterling investment.

But people who buy at the wrong time, can, and do, lose shedloads of money. The argument is that this is not a good time to buy under many circumstances. Folks in the US are learning this lesson right now. Recent buyers in regional UK and Eire are also discovering that, with further pain ahead.

Oz has had a few problems here and there as well. 

The key is availability of credit. With the mortgage apocalypse in full swing, borrowing capacity everywhere will be affected, with all the knock on effects that entails.

As I've said many times, bears are only bears so they can eventually be bulls.


----------



## chops_a_must (2 August 2007)

Who would have thunk it? It's the cashed up bogans demanding more money that has made buildings more expensive than ever before. Not the states. Oh well. Im sure they will be put back in their proper caste in the impending apocalypse.


----------



## Kathmandu (2 August 2007)

wayneL said:


> The point of the bears (most of us anyway) is not that property is a bad investment, it's that there are good times to buy and bad times to buy. Of course property can be a sterling investment.
> 
> But people who buy at the wrong time, can, and do, lose shedloads of money. The argument is that this is not a good time to buy under many circumstances. Folks in the US are learning this lesson right now. Recent buyers in regional UK and Eire are also discovering that, with further pain ahead.
> 
> ...





Have I missed something????

This happen's with shares as well, and usually a lot faster.

Yes, I do understand that you can get out and in faster, but property historicaly comes back up, so the only loser's are those that need or feel that they need , to sell.

As property is a long term investment, it could be argued that any time is a good time to buy.

Dave

Dave


----------



## Flying Fish (2 August 2007)

wayneL said:


> The point of the bears (most of us anyway) is not that property is a bad investment, it's that there are good times to buy and bad times to buy. Of course property can be a sterling investment.
> 
> But people who buy at the wrong time, can, and do, lose shedloads of money. The argument is that this is not a good time to buy under many circumstances. Folks in the US are learning this lesson right now. Recent buyers in regional UK and Eire are also discovering that, with further pain ahead.
> 
> ...



what does it all mean though/ You get access to easy money now or latter. Anyone get in on hedleys float?


----------



## wayneL (2 August 2007)

Kathmandu said:


> Have I missed something????
> 
> This happen's with shares as well, and usually a lot faster.



Bloody hell, there's more straw men here than in a corn field today.

No you haven't missed anything at all, just created a point that was not made by me. Who was comparing to shares? 



Kathmandu said:


> Yes, I do understand that you can get out and in faster, but property historicaly comes back up, so the only loser's are those that need or feel that they need , to sell.
> 
> As property is a long term investment, it could be argued that any time is a good time to buy.
> 
> ...



Well seeing you have invoked the comparison to shares argument, the exact same thing can be said about shares. A balanced portfolio always historically comes back up, so the only loser's are those that need or feel that they need to sell.

If treated as a long term investment, it could be argued that any time is a good time to buy.

Utter nonsense.


----------



## wayneL (2 August 2007)

Flying Fish said:


> what does it all mean though/ You get access to easy money now or latter. Anyone get in on hedleys float?



I'm not sure of your point here.


----------



## Smurf1976 (2 August 2007)

wayneL said:


> The point of the bears (most of us anyway) is not that property is a bad investment, it's that there are good times to buy and bad times to buy. Of course property can be a sterling investment.
> 
> But people who buy at the wrong time, can, and do, lose shedloads of money. The argument is that this is not a good time to buy under many circumstances. Folks in the US are learning this lesson right now. Recent buyers in regional UK and Eire are also discovering that, with further pain ahead.
> 
> ...



Precisely. There will come a time when Smurf is a property bull. Problem is, by that time I'll have trouble convincing anyone and will thus be in the minority once again. This forum will be chock full of property bears by then. Such is the ebb and flow of sentiment.

I'm thinking I might even have to start my own website to encourage others to take an interest in property investing by that time. I'm thinking of aussiepropertyboomforums.com or perhaps globalhousepriceboom.com ::

Seriously, do the math on an investment property in Sydney or the middle suburbs of Hobart over the past 3+ years and it doesn't look good. Butt it looked _very_ good in the 3 years before that. You would be far better off buying today than 3 years ago. Even better if you bought 6 years ago. TIMING MATTERS!


----------



## wayneL (2 August 2007)

Smurf1976 said:


> TIMING MATTERS!



A few years ago I was looking at a flat in Basingstoke UK on which the asking price was £30,000. The achievable rent at the time was £325 per month. That's a gross yield of 13%.

That was cash flow positive even with principle and interest loan, maintenance, insurance, the whole bowl of wax. It was an absolute no-brainer. (My mate bought it and I bought some larger, less yielding properties, but beside the point) Even without rampant HPI it was a great little investment.

Today that flat would sell for £140,000 and achievable rent £500 per month. That's about 4.3% gross yield; not even enough to cover interest.

Wages in the area have not moved that much in the interceding time.

Today that flat is a crap investment.


----------



## theasxgorilla (2 August 2007)

wayneL said:


> As I've said many times, bears are only bears so they can eventually be bulls.




The Black Star Funds study into trend following in stocks showed that it was possible to make money in equities with a system that bought only stocks that were breaking out to new all-time-highs.  I'd love to see the same study into property   Impossible as it might be to carry out.


----------



## wayneL (2 August 2007)

theasxgorilla said:


> The Black Star Funds study into trend following in stocks showed that it was possible to make money in equities with a system that bought only stocks that were breaking out to new all-time-highs.  I'd love to see the same study into property   Impossible as it might be to carry out.



Note: Black Star Fund's all time high system presumes the all time high is achieved following a substantial retracement; not just any old all time high

It also includes exit conditions.


----------



## theasxgorilla (2 August 2007)

wayneL said:


> Today that flat is a crap investment.




Agree, and disagree.

Depends on what you're trying to achieve.  If you want cashflow...yeah, forget about it.  But if you're happy to play the debt to equity game...convert someone elses debt to your eventual equity...then it might still make sense.

Buy in a rising market, buy in a good area that will be among the last to be affected by a slowing market and one of the first to recover, buy something that is due to be renovated and add value by renovating and doing more with less and you might have a deal worth doing.

These panic times can be the best times to buy.  You can get places for below what people would have accepted just a few months earlier simply based on fear generated by perception.


----------



## tech/a (2 August 2007)

> As property is a *long term *investment, it could be argued that any time is a good time to buy.




This is a very true statement



> If treated as a *long term *investment, it could be argued that any time is a good time to buy.




So too is this.



> TIMING MATTERS!




So too is this. 


There ARE best/better times to buy BOTH property and shares if trading.
Some get it completely wrong.
Others get it sort of right.
Some get it spot on.

The only question to ask yourself is.
*Am I a longterm investor or a trader---of both/either asset.*

For the investor of both Property and shares the arguement of timing has little bearing.
For the trader it is the difference between profit or possibly loss.

In the end in both assets its the CAPITAL GAIN we are after.


----------



## theasxgorilla (2 August 2007)

Smurf1976 said:


> Seriously, do the math on an investment property in Sydney or the middle suburbs of Hobart over the past 3+ years and it doesn't look good.




So don't buy there if your take on it suggests it's no good.  It's hardly a representative sample.  LOCATION MATTERS!  Country, city, region, suburb, which side of the highway, which street, which end of the street, which side of the road.

Soooooooo much more to chosing a property than a graph which shows a spike in credit followed by a fall.


----------



## theasxgorilla (2 August 2007)

wayneL said:


> Note: Black Star Fund's all time high system presumes the all time high is achieved following a substantial retracement; not just any old all time high
> 
> It also includes exit conditions.




Can 2004 be a significant retracement, in the context of property relative to what we've had historically?  Otherwise how long is a bear prepared to wait for the next '91-'96 period?


----------



## theasxgorilla (2 August 2007)

wayneL said:


> It also includes exit conditions.




Really good point.  I should also comment on this.  With property a key question to ask regarding your exit condition should be, "Who the heck are you going to sell your property to???".  With shares, it doesn't matter, just drop your order in the market and let liquidity (or lack of) sort it out.  

With property, liquidity matters if you're selling a fairly homogenous type of property in a fair homogenous location.  The decision makers here are making decisions based around fairly homogenous reasons and if each house is more or less the same as the others they'll often be forced to buy what they can afford ("I'm sorry honey I would have liked that 3 bedroom two bathroom with a spa in development X, but we can't afford it, we have to buy just the 3 bedroom 2 bathroom one in the next street").  But at the end of the day, you still only need one decision making group (buyer) per property.  

If you've got something unique then even in the flat market you can reasonably expect to hear this question, "How much do I have to pay to BUY this property, no negotiations".  Music to a property developer/improvers ears.  

People often fail to realise, that _value_ means something different in property markets.  You can use the scarecity factor to your advantage.  And it is very much about how much money the person you are targetting has or can get access to.  This is why the subprime sector is screwed.  They targetted people with no money!

Beyond this if you plan to access the equity in a property without selling then its very much about how much you can convince the bank's valuer that your property is worth.  That is yet another game of perception.

You see why property can't be approached with charts and numbers in quite the same way as shares?


----------



## tech/a (2 August 2007)

> You see why property can't be approached with charts and numbers in quite the same way as shares?




*ASX*

I think it can both on a technical and fundamental level.


----------



## Bushman (2 August 2007)

theasxgorilla said:


> So don't buy there if your take on it suggests it's no good.  It's hardly a representative sample.  LOCATION MATTERS!  Country, city, region, suburb, which side of the highway, which street, which end of the street, which side of the road.
> 
> Soooooooo much more to chosing a property than a graph which shows a spike in credit followed by a fall.




Location matters, security of income matters and asset class matters. My company buys and holds retail property at the trust level. We also have a corporate funds management side to out business for which we are paying in the market at the moment.  When buying a shopping centre, we look for two things - 
1. initial yield based on the leases on the properties books. If you have a major tenant with a long term lease, lease negotiated rent reviews and specified terms, you have security of income and investors are willing to place a premium on that. This locks on your distribution. 
2. Then comes in factors like demographics (ie location, per capita income, infrastructure and the like) and development potential which locks in distribution growth. 
3. Obviously this all operates within the cocoon of the strength of retail, industrial, commercial sales.

Equally important in our game.  To only look at location is simplistic depending on the property class. 

If it is your own home, the game changes. Hard to determine a cap rate when there are not too many homogenous sales to compare it to (as has been said elsewhere in this thread).


----------



## MyNameIsEarl (2 August 2007)

Been reading for a while- first post.

Just thought I'd add my own Gen Y financially naive view on why I bought a house (could be useful to see how people who aren't "in the game" financially may think).

Two years ago it was still the same talk as today- housing unaffordability etc. etc. everybody saying how hard it was to buy a house etc. I was able to buy a 300K house on my own with a below average salary (<50K). And it is a comfortable 3 bedroom brick home, decent yard etc. basically what everyone wants as a starter (and has realistic expectations). I figured if I am able to buy this property (i.e. the bank has confidence in me repaying the loan), and most other people buying property in my age group have a much larger spending capacity (i.e. professional couples 100K+) then shouldn't the natural market tendency be for prices to increase? 

Basically I couldn't see an affordability problem if a single 25YO on crap money could afford a block of land with a house on it.

As I said, probably a very naive view but I just thought why should I assume that all average earners will be able to afford to OWN a house one day without waiting for the olds to pass.


----------



## theasxgorilla (2 August 2007)

tech/a said:


> *ASX*
> 
> I think it can both on a technical and fundamental level.




I'll hedge and say that I did say _quite_ like shares 

You could be right...but I don't think the property market is anywhere near as refined or efficient as the equity markets, which is what makes stuff like charting possible.  There just isn't enough data to 'read the tape' with property, so to speak.  And you're not comparing apples to apples with each piece of data anyhow.  But the mechanisms which make it possible to do this with shares also also make it difficult to get any more for a given share than something close to the current offer price.  And there-in lies the opportunity with property, IMO.


----------



## numbercruncher (2 August 2007)

MyNameIsEarl said:


> Been reading for a while- first post.
> 
> Just thought I'd add my own Gen Y financially naive view on why I bought a house (could be useful to see how people who aren't "in the game" financially may think).
> 
> ...





I cant understand how mortgage repayments of a 300k loan of 470 a week before any other out goings rates/food/power/car etc etc can come even come close to being affordable on a 750 a week take home pay.

I have to assume you have lodgers etc, you surely cant service that loan with no other income , when you got this loan did you tell the bank youd have rent coming in too or that it was an investment property ? 

Who are you bankers ?


----------



## MyNameIsEarl (2 August 2007)

numbercruncher said:


> I cant understand how mortgage repayments of a 300k loan of 470 a week before any other out goings rates/food/power/car etc etc can come even come close to being affordable on a 750 a week take home pay.
> 
> I have to assume you have lodgers etc, you surely cant service that loan with no other income , when you got this loan did you tell the bank youd have rent coming in too or that it was an investment property ?
> 
> Who are you bankers ?




300K house but 240K loan- I wouldn't buy until I had 20%. I got the loan on 47K gross income plus around 1.5-2K investment income from shares (still under 50K per year). I have had someone in some of the time, but got the loan on the assumption there was no rental income. Any bank at that time would give me a loan for that amount- I was approved very quickly. This was 2 years ago and I am on a higher income now so things are easier at the present r.e. lifestyle, but the point is I still lived on that income paying the mortgage (even in times when I didn't have a boarder). Not on dog food either- just don't have the plasma, the leather lounge, the car loan etc.


----------



## Kathmandu (3 August 2007)

wayneL said:


> A few years ago I was looking at a flat in Basingstoke UK on which the asking price was £30,000. The achievable rent at the time was £325 per month. That's a gross yield of 13%.
> 
> That was cash flow positive even with principle and interest loan, maintenance, insurance, the whole bowl of wax. It was an absolute no-brainer. (My mate bought it and I bought some larger, less yielding properties, but beside the point) Even without rampant HPI it was a great little investment.
> 
> ...




Your 4.3% yeild today is not a true indication though, as the purchase price was in fact 30,000 not 140,000.

Look's even better if only 20% deposit was paid, 6000 ,and an interest only loan used.

Your 500 per mth would well and trully cover the 162/mth interest payment at 7.5% and the 140,000 look's like a good return on the initial 6000 investment.

Dave


----------



## Kathmandu (3 August 2007)

MyNameIsEarl said:


> 300K house but 240K loan- I wouldn't buy until I had 20%. I got the loan on 47K gross income plus around 1.5-2K investment income from shares (still under 50K per year). I have had someone in some of the time, but got the loan on the assumption there was no rental income. Any bank at that time would give me a loan for that amount- I was approved very quickly. This was 2 years ago and I am on a higher income now so things are easier at the present r.e. lifestyle, but the point is I still lived on that income paying the mortgage (even in times when I didn't have a boarder). Not on dog food either- just don't have the plasma, the leather lounge, the car loan etc.





Good on ya mate, who need's a leather lounge and plasma.

When are you getting the next one???

Dave


----------



## Smurf1976 (3 August 2007)

theasxgorilla said:


> So don't buy there if your take on it suggests it's no good.  It's hardly a representative sample.  LOCATION MATTERS!  Country, city, region, suburb, which side of the highway, which street, which.



Agreed with your argument that location etc matters.

But Sydney isn't representative of the market for a typical Aussie investor? That's like arguing that a Commodore or Falcon isn't representative of a typical car. There's more people in Sydney than anywhere else in Australia. I threw in Hobart just to make the point that much the same situation has also occurred at the other end of the scale.


----------



## theasxgorilla (3 August 2007)

Your perception, your reality Smurf.

While Sydney siders were moaning about negative equity not so long ago and even more recently than that I had work colleagues telling me to look at today's Herald Sun article so I could find out how much my suburb had gone down...I was making money in bayside Melbourne.  You've heard the saying about the baby and the bath water?


----------



## wayneL (3 August 2007)

Kathmandu said:


> Your 4.3% yeild today is not a true indication though, as the purchase price was in fact 30,000 not 140,000.
> 
> Look's even better if only 20% deposit was paid, 6000 ,and an interest only loan used.
> 
> ...



Kat,

To buy today it's a piece of crap.

Way under the bar for what I want and in the current risk riddled environment. 

Don't forget that is GROSS yield, net is substantially lower.

If you like this sort of investment, good on you.

Not this little black duck.


----------



## theasxgorilla (3 August 2007)

wayneL said:


> If you like this sort of investment, good on you.




I've actually also noticed that here there are places that less than a year ago made sense to buy in but just don't anymore.

I saw some buy-fixup-sell people buy a house for 3 million kronor and put the same property back on the market for 5.5 million just a few months later with one of the most _insulting_ renovation jobs I've ever seen.  Now we're forced to rethink our strategy a little bit.  Look at other arrangements in other areas catering to other types of buyers.


----------



## wayneL (3 August 2007)

theasxgorilla said:


> ...buy a house for 3 million kronor and put the same property back on the market for 5.5 million...



Phew! I was under the misapprehension that 1 AUD was roughly 1.4 SEK.

Looked it up when you started talking telephone numbers for fixer uppers. (~5.79 in case anyone was wondering)

ASX, They weren't Poms were they.


----------



## theasxgorilla (3 August 2007)

wayneL said:


> ASX, They weren't Poms were they.




I have a feeling they might have been.  Or at least one of them ie. Swedish g/f, Brit b/f...or Swedes who'd been working in London for a while.  I was told today there are about 5 'renovate-or-simply-just-rip-someone-off-and-make-millions' property shows on TV there at the moment.

I'm almost certain there is a connection.


----------



## wayneL (3 August 2007)

theasxgorilla said:


> I have a feeling they might have been.  Or at least one of them ie. Swedish g/f, Brit b/f...or Swedes who'd been working in London for a while.  I was told today there are about 5 'renovate-or-simply-just-rip-someone-off-and-make-millions' property shows on TV there at the moment.
> 
> I'm almost certain there is a connection.



Figures.

Yes, without "property pr0n" as they call it, British TV would scarcely have anything to show. 

Very popular in no small part to the lady with the big, errr..... eyes. 






_Sarah Beeney, presenter of "Property Ladder"_


----------



## theasxgorilla (3 August 2007)

Mmmm, in Sweden we have lovely Isabelle for all your interior decorating _needs_...I mean, ideas and advice.






As you see, I'm not here by accident


----------



## wayneL (3 August 2007)

Well this is nicer than bickering about property prices! LOL





_Amanda Lamb, presenter of "A Place in the Sun"_


----------



## wayneL (3 August 2007)

Oh My!!! 

Brianna Meighan, Host of Hot Properties Panama TV


----------



## theasxgorilla (3 August 2007)

wayneL said:


> Oh My!!!
> 
> Brianna Meighan, Host of Hot Properties Panama TV




Wow...yep she gets my GOD award (Girl Of the Day).

It'll be a sad day when prices really do stagnate, not that I think she'll struggle with finding a new job or anything


----------



## Kathmandu (3 August 2007)

wayneL said:


> Kat,
> 
> To buy today it's a piece of crap.
> 
> ...




Totally agree, if buying today at 140.

Dave


----------



## wayneL (3 August 2007)

I just thought I'd let you all know; I'm no longer interested in house prices and am moving to Panama.


----------



## nomore4s (3 August 2007)

wayneL said:


> Oh My!!!
> 
> Brianna Meighan, Host of Hot Properties Panama TV






wayneL said:


> I just thought I'd let you all know; I'm no longer interested in house prices and am moving to Panama.




I might come with you Wayne, hope they show pleanty of repeats


----------



## bowser (3 August 2007)

wayneL said:


> Figures.
> 
> Yes, without "property pr0n" as they call it, British TV would scarcely have anything to show.
> 
> ...





Big eyes... as the website says:

http://www.funjunkie.co.uk/comments.cfm/article=eb7a1495-8523-42c6-bf5d-ee952f521977


----------



## Kathmandu (3 August 2007)

nomore4s said:


> I might come with you Wayne, hope they show pleanty of repeats




Has she any other ASS-ets.

Dave


----------



## Kathmandu (3 August 2007)

bowser said:


> Big eyes... as the website says:
> 
> http://www.funjunkie.co.uk/comments.cfm/article=eb7a1495-8523-42c6-bf5d-ee952f521977




She look's much purdier in the above pic compared to the site, is it the same girl??

Dave


----------



## numbercruncher (4 August 2007)

> The fallout from the worst US housing bubble in history has much further to run, investor Jim Rogers has warned.
> 
> Mr Rogers, a former partner of George Soros who retired at the age of 37, told Bloomberg: "This is only time in world history when people were able to buy houses with no money down and in fact, in some cases, the builders gave them money for a down payment.''
> 
> The debris from the steepest slump in US housing for almost 20 years has contributed to the turmoil in credit and equity markets.




http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/03/bcnrog203.xml&CMP=ILC-mostviewedbox


SO how long till it spreads global i wonder .......


----------



## robots (4 August 2007)

hello,

Dow down ANOTHER 2% on friday

bumper weekend for RE i would imagine, looks as though the credit crunch everybody is fascinated with is only knocking the share markets around, amazing

get me some of that furphy, great stuff kathmandu

thankyou

robots


----------



## Kimosabi (4 August 2007)

robots said:


> hello,
> 
> Dow down ANOTHER 2% on friday
> 
> ...




I'm sure I saw an article about you on http://www.jenman.com.au/


----------



## WaySolid (5 August 2007)

robots said:


> hello,
> 
> Dow down ANOTHER 2% on friday
> 
> ...



Well buying RE straight after the 87 stock market crash would have been a cracker move. 

Though you could have sold in the early 90's and saved yourself a decade mostly.


----------



## robots (13 August 2007)

hello,

http://www.tradingroom.com.au/news_...ished/2007/8/225/catf_070813_113700_8550.html

even the RBA looks at auction clearance rates, gee amazing

another BIG weekend in most capital cities, 85% clearance rate in Melbourne over weekend

thankyou

robots


----------



## numbercruncher (13 August 2007)

If theres ever a recession again there will be total carnage im sure of it.

House prices at 10x average salaries - was 3 when i bought my first house.

Its maddness, its also kinda cute and kinda amusing.

Keep up the good work realestate dudes.


----------



## Kimosabi (13 August 2007)

robots said:


> hello,
> 
> http://www.tradingroom.com.au/news_...ished/2007/8/225/catf_070813_113700_8550.html
> 
> ...




I'd better rush out and get a Mortgage while the banks are still lending...


----------



## tech/a (13 August 2007)

> House prices at 10x average salaries - was 3 when i bought my first house.




10x?

In my area the average wage would be 55K
The average house $300k.

Sure in some areas you could get that but who on an average wage would be looking at $1mill or even 700K properties.

Take into account deposits and this figure gets less.

You can make it what you want to suit an arguement.


----------



## numbercruncher (13 August 2007)

> Figures released by the Real Estate Institute of Victoria reveal the median price jumped more than 10 per cent in the June quarter to a new high of $420,000.




http://www.abc.net.au/news/stories/2007/07/28/1990794.htm


Excuse the oversight, make that 8x ....... (maybe after stamp duty etc 9x)


Big difference though eh ? Nation of debt slavery .....

Happy house buying punters !


----------



## numbercruncher (13 August 2007)

Just cracked some numbers .....


Australia average Mortgage 300k, average income 55k (43 after tax) , average Interest rate 8.3pc.

Monthly income                   3580
Monthly mortgage repayment 2264
----------------------------------
Left over                            1316


Would someone please raise Interest rates 5pc so average wages match average mortgage repayments  afterall Inflation is our primary concern!


Anyone got a pin ?


----------



## numbercruncher (14 August 2007)

> THE prospect of interest rates jumping to 6.75 per cent in early 2008 increased significantly yesterday following the release of the Reserve Bank of Australia's statement on monetary policy.




http://www.news.com.au/heraldsun/story/0,21985,22241622-661,00.html


Credit crunch coming, Lenders turning away High risk people , Recession in SA, Stock market break down, familys going broke ....

Let us know how things boom this weekend Robobotics  see if you can hook up some 105pc mortgages. Maybe a 10pc jump in prices this week as well ?


----------



## robots (14 August 2007)

hello,

no problem numbercruncher, 

will let you know what happens on the weekend, but all looks good since the numbers are coming into the country

I just hope you have read all my posts to understand that I am only reporting on the state of the RE market, no predictions, no crystall balls, just the real life facts

property is a very individual thing, go for a walk and see what you find

thankyou

robots


----------



## numbercruncher (14 August 2007)

robots said:


> hello,
> 
> no problem numbercruncher,
> 
> ...




Thanks Robots ...


I do read all your posts with great fervor! and probably more so at this point in time than ever!

Looking forward to the update

NC


----------



## bingk6 (14 August 2007)

numbercruncher said:


> Just cracked some numbers .....
> 
> 
> Australia average Mortgage 300k, average income 55k (43 after tax) , average Interest rate 8.3pc.
> ...





Yes SFA left over, for every day living.

If you're looking for parity between wages and mortgage repayments, try the sydney market, Avg  house price ~500K and earnings ~55K-60K. Reckon that will go pretty close.


----------



## robots (14 August 2007)

hello,

will update on Saturday evening

thankyou

robots


----------



## tech/a (14 August 2007)

numbercruncher said:


> Just cracked some numbers .....
> 
> 
> Australia average Mortgage 300k, average income 55k (43 after tax) , average Interest rate 8.3pc.
> ...




Forgetting the idiot factor who take out lodoc loans---they deserve to go belly up.

20% down leaves $260K
Lets say 8% = $1,733 (nominal) / mth.
Get creative and get a boarder + $480/mth.

Do as a friend of mine did and rented out / room to hosties staying O/N's in Perth both domestic and international (Nice pad). and obviously single.

Look its tough for those starting out but was just as tough for me when I was on $27/week.35 yrs ago.


----------



## numbercruncher (14 August 2007)

> Housing affordability fell to a record low in the quarter to June as the federal government failed to address the issue, according to the Housing Industry Association (HIA).
> 
> The affordability index fell by 2.7% in the quarter, and was 6.5% lower than a year ago. HIA blames the 5% rise in the median house price that outweighed the benefits of a stronger income growth and a stable rate environment.
> 
> The monthly loan repayment on a typical first-home mortgage increased from $2,387 to $2,506.




http://www.yourmortgage.com.au/news/1747/default.aspx


wow its even worse than i realised, must be alot of baked beans on toast happening now a days


----------



## stockGURU (14 August 2007)

numbercruncher said:


> http://www.yourmortgage.com.au/news/1747/default.aspx
> 
> 
> wow its even worse than i realised, must be alot of baked beans on toast happening now a days




Oh no, baked beans on toast! The injustice! How will people manage?


----------



## toothfairy (14 August 2007)

I don't think the property market in prime areas of interests is affected at all by the affordability of the first home buyers. Pushing up the market by first home buyers from the bottom is negligible compared to people with money sucking the price up from the top. A few multi-million dollars transactions will boost up the median prices in good suburbs, while the investors mop up all the inner city smaller properties. The outer areas are left for first home buyer if & when they can afford it, if not, the prices of these will decrease. Since they are not high priced properties to start off with, 10-20% decrease in say $200000 range is not going to affect the big picture. I think there are enough people with real money to keep the market UP.


----------



## robots (15 August 2007)

hello,

gee numbercruncher you could be right with your prediction of 10% rise in RE this weekend with the DOW diving AGAIN last night, ASX will probably follow

the big four are standing tall, so those on above board income (payg) and deposit will be fine i believe

thankyou

robots


----------



## numbercruncher (15 August 2007)

You go you good thing !!


Make sure they understand to bid up up up ^ , 105pc mortgages to maximise those neg gearing incentives !!


Skys the limit !! 500k house today is the million dollar house of next month !

All that speculative cash puring out of stocks and driven by bad sentiment has to go somewhere!! and god forbid people actually wanting to sit on cash when opportunity abounds like this!


----------



## Kimosabi (15 August 2007)

numbercruncher said:


> You go you good thing !!
> 
> 
> Make sure they understand to bid up up up ^ , 105pc mortgages to maximise those neg gearing incentives !!
> ...




Your dreaming, within three months nobody in Australia will be able to get a mortgage without 20% down.

Aussie Real Estate Boom is over boys and girls.  Better hold onto your hats, because this bust is going to be a humdinger...


----------



## chops_a_must (15 August 2007)

tech/a said:


> Forgetting the idiot factor who take out lodoc loans---they deserve to go belly up.



But they are likely to be the ones that turn the market...


----------



## numbercruncher (15 August 2007)

Shhhhhhh they dont know it yet, mums the word.




> INTEREST rates are set to rise for hundreds of thousands of mortgages - regardless of official increases by the Reserve Bank - because lenders are struggling with a global credit squeeze caused by the crisis in the US housing market.
> 
> The big banks could follow non-bank lenders such as RAMS Home Loans, which yesterday flagged its financial distress, leading to predictions that it may have to pass higher borrowing costs onto customers.
> 
> Non-bank lenders such as RAMS account for 30 per cent of the $830 billion mortgage market, and have been able to offer low-cost mortgages by borrowing cheaply out of the US.




http://www.smh.com.au/articles/2007/08/14/1186857512018.html


Come in spinner, head em up!


----------



## Atomic5 (15 August 2007)

Kimosabi said:


> Your dreaming, within three months nobody in Australia will be able to get a mortgage without 20% down.
> 
> Aussie Real Estate Boom is over boys and girls.  Better hold onto your hats, because this bust is going to be a humdinger...




I can't see what's wrong with that, or why that would contribute to a bust in RE. It might merely slightly change the demografics of who can and who can't buy RE, but with the current affordability problem I can't see that 20% down changes anything at all. 

'Owning a home is a privalege not a right' anywhere else in the world. Its when those who can't afford a home starting thinking they should buy one that you start having sub-prime market type failures causing everyone else to lose their a$$ as well.

Sorry, but these wierd ideas that spring up in various colonies about poor people buying houses is getting to be a bit of a pain.    - rent instead. rent is good: it doesnt get you into trouble and it pays off mortgages for people who can get loans and who can guarantee loans, and all goes well with the economy after that .... - rent boom ... 

Markets that belong to the affluent usually hum along better anyway don't they? They also tend to become even more expensive and more affluent as markets, once the rich get more greedy. Lack of affordability hasn't stopped global RE prices - look at Europe! No-one talks about "affordability" gees .... 

roll on RE boom!


MHO - DYOR  
- flame me who cares


----------



## Kimosabi (15 August 2007)

Atomic5 said:


> I can't see what's wrong with that, or why that would contribute to a bust in RE. It might merely slightly change the demografics of who can and who can't buy RE, but with the current affordability problem I can't see that 20% down changes anything at all.
> 
> 'Owning a home is a privalege not a right' anywhere else in the world. Its when those who can't afford a home starting thinking they should buy one that you start having sub-prime market type failures causing everyone else to lose their a$$ as well.
> 
> ...




What people fail to understand is that the real estate industry needs new entrants/suckers to enter the market so that those already in the market can climb up the next rung.

Now to go to the next rung, you need to to borrow more money, but if the supply of money dries up the whole ponzi scheme starts freezing up.  

The next thing that happens is the rungs on the property ladder start popping out caused by low lending standards and increasing interest rates which leads to mass foreclosures and defaults.

Bubbles feed on themselves going up, and the feed on themselves going down.  I still think once the fat lady finishes singing, Aussie Housing prices are going to go back to 2003 levels..


----------



## sam76 (15 August 2007)

Kimosabi said:


> Aussie Housing prices are going to go back to 2003 levels..




I, for one, am looking forward to that!

All cashed up and ready to purchase


----------



## numbercruncher (15 August 2007)

I can see it now on telly, Instead of the plethora of Realestate millionaire stories theres going to be thousands of hard luck stories on How the Government is to blame for misleading on interest rates etc etc etc ....


----------



## robots (16 August 2007)

hello,

bricks and mortar, bricks and mortar, bricks and mortar

another smashing for the ASX today

thankyou

robots


----------



## numbercruncher (16 August 2007)

Hello,


Seems the market might have some of your buyers licking wounds this weekend.

Keep us updated.



Thankyou


----------



## Broadside (16 August 2007)

robots said:


> hello,
> 
> bricks and mortar, bricks and mortar, bricks and mortar
> 
> ...




hi robots...property next....far more leverage and certainly more overvalued.  Good luck.


----------



## Flying Fish (16 August 2007)

Crunch time approaches. Cash is the way to go.


----------



## robots (16 August 2007)

hello,

wow, 5 big ones at one stage

keep collecting those share certificates numbercruncher, might be able to use them in the "library"

got nothing to do with leverage

people will still be lining up for the quality assets on the weekend

goodluck

thankyou

robots


----------



## Broadside (16 August 2007)

robots, property is an asset class like any other - its value is determined by the value of its future income streams.  Median property prices are at all time high multiples of median incomes, and rental yields near historic lows.  Good luck bargain hunting.


----------



## Kimosabi (16 August 2007)

robots said:


> hello,
> 
> wow, 5 big ones at one stage
> 
> ...




The future for anyone who listens to Robots...


----------



## wayneL (16 August 2007)

robots said:


> hello,
> 
> bricks and mortar, bricks and mortar, bricks and mortar
> 
> ...



Why are you here if you view the share market with disdain?

I think you're the Oz version of the infamous Bruno Powroznik


----------



## robots (16 August 2007)

hello,

when have I shown disdain for shares?, I have shares and follow those posts and post for those as well

I found this thread gave out commentary that is not right, 

many are saying property has gone nowhere since 03/04, then they say it is going to drop to 03 prices, but hasnt it gone nowhere?

you show me one post where I have said RE is going to boom, I have continually stated the good property is solid as, and you are in denial if you think this is not the case

thankyou

robots


----------



## wayneL (16 August 2007)

robots said:


> hello,
> 
> when have I shown disdain for shares?, I have shares and follow those posts and post for those as well
> 
> ...



Did you watch Bruno?

BTW, I predict you won't be posting here by the end of '08


----------



## wayneL (16 August 2007)

I have removed the link to Bruno's youtubes. He has gone over the top and putting up some truly revolting stuff which I had not realized.

The intention was to show Bruno's real estate videos.

Apologies for any offense.


----------



## robots (16 August 2007)

hello,

i dont watch any of the attachments people send through wayne

almost 2 yrs for this thread and will look forward to 3 yr anniversary in 08,

the handout crew will still be about i guess

thankyou

robots


----------



## wayneL (16 August 2007)

robots said:


> hello,
> 
> *i dont watch any of the attachments people send through *wayne
> 
> ...



And you accuse others of denial? Look around you, there is a credit crunch happening. As I said well back in this thread. HPI is all about loose credit. Things will change when credit tightens.

It is tightening.

Happy investing.


----------



## robots (16 August 2007)

hello,

the so-called credit crunch/tightening isnt really doing much when you see auction clearance rates of around 85% in melbourne on a weekend, up around 20% on last year even with the interest rate rises that have occurred

even RBA comments about housing picking up based on the auction clearance rates, 

good property is fine

thankyou

robots


----------



## Flying Fish (16 August 2007)

wow great


----------



## Judd (16 August 2007)

That is interesting about the clearance rates.  The only hassle I have with it is that

results of auctions are reported on a voluntary basis by real estate agents who, obviously, have absolutely no bias or conflict of interest in the matter; and

auctions are only a relatively small part of housing sales.

Even median price figures by suburb collated some considerable time after exchange of contracts are distorted to some extent as that figure could comprise one house sold for $2m and four houses sold for $700,000 each and so the median figure reflecting the sale price of none of them.

Nevertheless, it is interesting.  I think the Reserve Bank was grappling with something similar in respect of movements in measuring house prices according to this 2006 abstract from one of its discussion papers:

"House prices are intrinsically difficult to measure due to changes in the composition of properties sold through time and changes in the quality of housing. I provide an overview of the theoretical nature of these issues and consider how regression-based measures of house prices – hedonic and repeat-sales measures – can control for compositional and quality change. I then explore whether these regression-based alternatives can provide accurate estimates of pure house price changes in the Australian context.

Using unit record data for Australia’s three largest cities – Sydney, Melbourne and Brisbane – between 1993 and 2005, the results suggest that the two regression-based approaches provide similar estimates of the pure price change in housing. The measures are comparable in terms of statistical fit, with around half of the variation in prices growth (for those houses sold more than once) explained. The regression-based measures also produce similar estimates of pure price changes to those obtained by a mix-adjusted measure. However, all three measures behave quite differently from a simple median, implying that compositional change matters empirically. These results confirm that regression-based measures are likely to be a useful analytical tool when measuring pure house price changes in Australia."


----------



## toothfairy (16 August 2007)

Hi Robot,

so sad to see you get harassed by a bunch of  ______s who probably do not own properties and try to talk it down.

Facts :

I own and dis-own shares (in all nations) during UPS & DOWNS(my favorite in OZ is ZFX), that's why I am on this forum
I own properties (4 in Melbourne, inner inner suburbs) during UPS & DOWNS
Shares are more headaches, properties less
Shares are (were a few weeks ago) @ all time high, so are properties in metro Melbourne
In a 20 years time frame, shares has increased more than properties, so you can't say shares are not overpriced compared to properties
Properties increases on average of 7% PA, slow & steady is winning the race
I profited heaps more from properties than shares, shares are for entertainments and fun (unless you are insider/expert), keep you in touch
I don't see many people invested in properties crying, can see some share traders crying (more common now)
Leverage ( -ve gearing) on properties is good healthy strategy, margin trading on shares is gambling
OZ property market surged in 1987-1990 after the 1987 stock market crash, at high interest rate

That's some of the differences, I beg you guys don't be one sided, doesn't do you any good financially.

Cheer UP, do some research, stop arguing blindly.


----------



## numbercruncher (16 August 2007)

Hello Toothfairy


1/ We are debating not arguing

2/ We are not _________s thankyou

3/ Congratulations on your success


Thankyou


NC


----------



## wayneL (16 August 2007)

toothfairy said:


> Hi Robot,
> 
> so sad to see you get harassed by a bunch of  ______s who probably do not own properties and try to talk it down.



Sorry, that's a non-sequitur and a childish argument.


----------



## toothfairy (16 August 2007)

wayneL said:


> Sorry, that's a non-sequitur and a childish argument.



1) ________s could be complimentary, like "experts"
2) probably don't own properties does not put anyone down, I know of some very well to do people (multi-millionaires) renting, they put all their $ in business which generates more cash. I can't do that.
Cheers


----------



## toothfairy (16 August 2007)

numbercruncher said:


> Hello Toothfairy
> 
> 
> 1/ We are debating not arguing
> ...



Dictionary says debate is "argument about a certain topic".   Same thing.


----------



## wayneL (16 August 2007)

toothfairy said:


> 1) ________s could be complimentary, like "experts"



Nice triple backflip with a half twist. But I think we all know you didn't mean something complimetary. 


toothfairy said:


> 2) probably don't own properties does not put anyone down, I know of some very well to do people (multi-millionaires) renting, they put all their $ in business which generates more cash. I can't do that.
> Cheers



Well I do own property and want to buy some more, which is why your point was a non-sequitur.

However I refuse to buy at ludicrous valuations. A restoration a sane value to the housing market, which may be negative for some speculators and recent buyers, would ultimately be an enormous sociological positive for society. (and time to invest )

It is inevitable, however the path and time-table by which this occurs is not.


----------



## Smurf1976 (16 August 2007)

Atomic5 said:


> I can't see what's wrong with that, or why that would contribute to a bust in RE. It might merely slightly change the demografics of who can and who can't buy RE, but with the current affordability problem I can't see that 20% down changes anything at all.



It was easy credit that fuelled the boom in the first place. Guess what's likely to happen when it dries up...

20% down would get rid of quite a lot of buyers from the market altogether. They'd likely end up living in shared accommodation in order to save a 20% deposit rather than buying or renting. 

The reduced leaverage ends up resulting in the same houses but less money with which to buy them. That's not bullish for prices...


----------



## toothfairy (16 August 2007)

wayneL said:


> Nice triple backflip with a half twist. But I think we all know you didn't mean something complimetary.
> Well I do own property and want to buy some more, which is why your point was a non-sequitur.
> 
> However I refuse to buy at ludicrous valuations. A restoration a sane value to the housing market, which may be negative for some speculators and recent buyers, would ultimately be an enormous sociological positive for society. (and time to invest )
> ...



OK, forgive me for the weird comments, I withdraw them, sorry.
Now, can we seriously discuss why do you think that OZ property market is over-valued? On the following basis,
1) Apart from "affordability" which is on everyone's lips, there are not any other reasons. Some can't afford, others can, same as share trading.
2) Been stagnant between 2002 & 2005 (or there about) while shares are going up,
3) I mentioned the average 7% PA increase which is only steady, nothing spectacular. That is to say an average property has triple in 17 years but average share like BHP / CBA had done better than that.
Please comment.


----------



## Smurf1976 (16 August 2007)

Another rate rise is looking pretty likely judging by the 90 day bank bill yields. Only thing is, if they keep going up at this rate the RBA will have to get rid of the 0.25% at a time bit and go for something larger...


----------



## robots (16 August 2007)

hello,

the RBA could raise by 1% and nothing much will happen,

I find it amusing when all the media report the RBA has increased by 25 basis points, and this amounts to $50 per month on the average mortgage

thats missing out on a couple of cafe latte's a week

goodluck

thankyou

robots


----------



## BentRod (16 August 2007)

> Now, can we seriously discuss why do you think that OZ property market is over-valued?




There's no yield!


----------



## Kathmandu (16 August 2007)

BentRod said:


> There's no yield!





Only in some places.

Dave


----------



## toothfairy (16 August 2007)

BentRod said:


> There's no yield!




Give you an example of two extremes, many are in the middle.

1) New, luxury high-rise apartments loaded with mod cons attract tenants who pay higher rents and thus better yields. Some developers even guarantee 3 years 7% rent. ( I am not saying anyone should fall for such scheme). I myself would love to rent one to stay for a year or so with full sea or city vew.

2) Old, no-thrill houses on land 3km from CBD attract 2-3% yield but the capital gain is more.

The choice is yours, I know which I will choose to buy.
How many people pick shares purely base on their yields and PE and judge whether it is overpriced or not?

Cheers


----------



## Kathmandu (18 August 2007)

toothfairy said:


> Give you an example of two extremes, many are in the middle.
> 
> 1) New, luxury high-rise apartments loaded with mod cons attract tenants who pay higher rents and thus better yields. Some developers even *guarantee 3 years 7% rent.* ( I am not saying anyone should fall for such scheme). I myself would love to rent one to stay for a year or so with full sea or city vew.
> 
> ...




There would be a pretty good chance that guaranteed 7% has been added into the buy price though, and what happens after the 3 years, do you then get a flock of 3 year old units on the market at once, do you find out that you can only realy get a 3% yield?

Dave


----------



## nioka (18 August 2007)

robots said:


> I find it amusing when all the media report the RBA has increased by 25 basis points, and this amounts to $50 per month on the average mortgage
> 
> thats missing out on a couple of cafe latte's a week




 Maybe it is a couple of cafe latte's for you I guess it could take a fair amount of bread and milk off the table for others.


----------



## numbercruncher (18 August 2007)

When people cant afford the repayments on there Mcmansions they receive (and rightly so) no sympathy for over extending themselves outside there means.

But the problem now is not people living outside there means but being unable to afford average houses in average suburbs without over extending themselves, Nurses unable to afford realestate near Hospitals, Familys unable to afford near Schools, its morphed into a problem for society.

Either house prices need to drop or substantial salary increases are required for Teachers , Nurses , Police etc.

I beleive Vic Police are soon planning a strike for wage increases, thats not out of Greed its out of need

Its beyond a joke and its offical that average wages can no longer afford average houses, it is a nation wide problem that needs to be addressed.

I saw a show on TV the other night a School teacher dumped his job to get a truck licence and drive trucks in the mines for treble his teacher salary - if this started happening enmasse it will be catastrophic for society.

It needs to be fixed asap imho. To me the maths seems simple, on average across society house prices cant Increase as they are near price saturation unless substantial wage increases start flowing.


Im amazed the government has let it get out of control like this.


----------



## tech/a (18 August 2007)

And so the cycle goes on.

The same rhetoric was heard in the late 80s and will be heard again throughout time from generation to generation.


----------



## numbercruncher (18 August 2007)

Well i think every Sailor, police man, nurse and teacher etc should quit there jobs and drive trucks in mines for treble the salary .....

Truck drivers get treble teachers salaries back in your heydays tech ?


----------



## tech/a (18 August 2007)

Firstly your taking an extreme case.
Driving a Truck in a mine underground.
Wages for high risk occupations have always been much higher than low risk.

So YES examples of 3 x average wages can and will always be found.



> “Those who cannot remember the past are condemned to repeat it.”




Sound familiar.


----------



## Flying Fish (18 August 2007)

very true.


----------



## numbercruncher (18 August 2007)

tech/a said:


> Firstly your taking an extreme case.
> Driving a Truck in a mine underground.
> Wages for high risk occupations have always been much higher than low risk.
> 
> ...




I never mentioned anything about this ex teachers job being underground or high risk. But it is in an isolated location, but loads of jobs for anyone that wants to stop nursing the needy/old or whatever and spin some cash.

Heres another example back in the late 80s i had an after school/w end job that paid more than the Government gives our old age pensioners now, and thats not even adjusted for inflation.

Its cool if you cant see that average people are getting screwed, no need to get narci though.


anyway give us some examples from the 80s that you remember instead of dismissing me outright, Ill give another one, back in the 80s my parents take home pay was well over 1k a week combined and a GOOD house cost 100.

But babyboomers did always just have a cake walk.


----------



## wayneL (18 August 2007)

tech/a said:


> Firstly your taking an extreme case.
> Driving a Truck in a mine underground.
> Wages for high risk occupations have always been much higher than low risk.
> 
> ...



I would argue teaching is more dangerous.:


----------



## jet328 (18 August 2007)

numbercruncher said:


> It needs to be fixed asap imho. To me the maths seems simple, on average across society house prices cant Increase as they are near price saturation unless substantial wage increases start flowing.
> 
> 
> Im amazed the government has let it get out of control like this.




What a great idea 
We'll give people more money, so that they can borrow even more and that will make housing more affordable 

I don't think you've thought this through. 

I think we need more multi storey development inner city and more land released on the outer.

Also I disagree that housing is unaffordable (only familiar with the melb market)
Its more that the houses that people can buy differ to what they feel they are "entitled" to. 
They've grown up with their parents in nice inner to middle city houses and are now upset they can't afford what they are accustomed to or feel they are "entitled" to.

Cheers


----------



## numbercruncher (18 August 2007)

jet328 said:


> What a great idea
> We'll give people more money, so that they can borrow even more and that will make housing more affordable
> 
> I don't think you've thought this through.





Excellent idea .....


Lets reduce everyones wages instead and force the pesky buggers out of public service into mines.

Oh wait weve already effectively reduced there wages substantially with our sneaky inflation accounting method.


sweet.


----------



## Flying Fish (18 August 2007)

jet328 said:


> What a great idea
> We'll give people more money, so that they can borrow even more and that will make housing more affordable
> 
> I don't think you've thought this through.
> ...




WOW so what does that mean?


----------



## Smurf1976 (18 August 2007)

tech/a said:


> And so the cycle goes on.
> 
> The same rhetoric was heard in the late 80s and will be heard again throughout time from generation to generation.



The late 1980's. Just before the last recession after which houses were back to selling at low multiples of income.


----------



## Smurf1976 (18 August 2007)

jet328 said:


> Also I disagree that housing is unaffordable (only familiar with the melb market)
> Its more that the houses that people can buy differ to what they feel they are "entitled" to.
> They've grown up with their parents in nice inner to middle city houses and are now upset they can't afford what they are accustomed to or feel they are "entitled" to.



Easy way to prove this one. 

Can someone earning the median wage realistically afford to buy the median priced house with a mortgage which will remaing serviceable at all points in the interest rate cycle?


----------



## wayneL (18 August 2007)

Smurf1976 said:


> The late 1980's. Just before the last recession after which houses were back to selling at low multiples of income.



Exactly, that one leaped out at me to. I was wondering who would pick up on it.


----------



## Kathmandu (18 August 2007)

So, how much would you all like to pay for a first home?

How far from Transport , shops, schools and GPO.

I know that I have got on RE.com and found houses in every capital city in OZ for around the $300k mark that are within 30Klm of GPO, most with transport nearby.

Are these affordable enough ??

Dave


----------



## toothfairy (18 August 2007)

Smurf1976 said:


> Easy way to prove this one.
> 
> Can someone earning the median wage realistically afford to buy the median priced house with a mortgage which will remaing serviceable at all points in the interest rate cycle?



Just because they are both described as "median" does not necessary mean people on median wage should be owning a median price house for at least 3 obvious reasons that I can think of :
1) there is a phase shift between the time frames of the 2 median points. By that I mean people start off at low wages and they rent or better still, stay @ parents'; then if everything goes on track or better, they save a deposit AND earn median wages before they buy their first home at lower end of the market. Then they upgrade to a median price house when they earn ABOVE median wages, etc, etc.
2) it is very common to have a partner (trendy word) who earns wages to buy together.
3) as mentioned above, people who buy median price houses (usually joint effort) have a previous asset to trade up to, so they may have above average down payment, they may only need to borrow 70%.
Cheers.


----------



## Smurf1976 (19 August 2007)

toothfairy said:


> Just because they are both described as "median" does not necessary mean people on median wage should be owning a median price house for at least 3 obvious reasons that I can think of :
> 1) there is a phase shift between the time frames of the 2 median points. By that I mean people start off at low wages and they rent or better still, stay @ parents'; then if everything goes on track or better, they save a deposit AND earn median wages before they buy their first home at lower end of the market. Then they upgrade to a median price house when they earn ABOVE median wages, etc, etc.
> 2) it is very common to have a partner (trendy word) who earns wages to buy together.



Some fair points there although I must point out that if (2) is required now then that in itself is outright proof that housing is less affordable. If one wage bought a house and raised a family 25 years ago then at the very least the wage paid for that job today ought to buy a comparable house and standard of living. If that were the case then we would have had effectively zero economic progress for the working individual over the past quarter century, at least in terms of housing affordability. That a single wage for the same job now buys a lesser house, or more likely no house at all, means we've gone backwards.

Someone made the point in a local newspaper not long ago. 20 years ago the family bought a house that cost 2 times the husband's income from a public service job. Today that same house costs 7 times the income paid to someone doing the same job in the public service. No matter how you look at it, housing costs more now than it did then relative to wages. We've gone backwards.

The only way the house costs a comparable amount is if you factor in a halving of intrest rates, assume a 100% mortgage and two incomes instead of one. On that basis the mortgage repayments aren't that different as a percentage of total household income. However, it now requires a near doubling of work effort to buy the exact same thing. Better than 3.5 times as much but we've still clearly gone backwards. An that's assuming that interest rates _peak_ at half the 17% rates of the previous cycle - a rather big gamble to say the least given that to do so is to see a _peak_ below the long term _average_.

More likely, interest rates will undergo the full cycle and we'll see rates back at 15%+ at some point - those who paid 7 times earnings are truly stuffed if that happens unless there's a wages explosion to match. But then if we're going to factor in rising wages we need to consider that they were also rising pretty quickly in the 70's and 80's. Indeed it is that inflation which largely paid off, via destruction of the real value of the debt, the "big" mortgages taken on at the time. 

Today's mortgages are even larger relative to income and indeed interest costs are higher than at any point for several deades. Do the math and we need wages growth on a scale that exceeds even the unions' wildest dreams before we end up with a comparable overall housing affordability. 

At some point I think we will see the wages boom as there's certainly a lot of pressure building there with labour shortages etc. Indeed inflation is realistically the only thing that will enable the massive debts taken on in recent years - from Australian mortgages to the US government - to be repaid in nominal terms without posing a major long term drag on consumption and the general economy.

My best guess is inflation is exactly what we're about to see and it's a lot closer than most think - the turmoil in the makets at the moment providing the perfect trigger and also being at least a partial recognition of the situation. Bond holders and those with cash are about to get seriously shafted IMO in order to bail out the debtors. Exactly what's happened plenty of times before.


----------



## Flying Fish (19 August 2007)

"Bond holders and those with cash are about to get seriously shafted IMO in order to bail out the debtors. Exactly what's happened plenty of times before"

HI don't understand what you mean by cash holders. If rates go to 15%, then cash in the bank is ideal is it not?


----------



## wayneL (19 August 2007)

Flying Fish said:


> "Bond holders and those with cash are about to get seriously shafted IMO in order to bail out the debtors. Exactly what's happened plenty of times before"
> 
> HI don't understand what you mean by cash holders. If rates go to 15%, then cash in the bank is ideal is it not?



No, because by the time you account for inflation and taxation, the return is negative.

At the moment, because of true inflation (not the fraudulent CPI), real interest rates are actually negative and you can be sure this will continue even as interest rates increase.

Cash is only a good thing in a deflationary environment.


----------



## Flying Fish (19 August 2007)

wayneL said:


> No, because by the time you account for inflation and taxation, the return is negative.
> 
> At the moment, because of true inflation (not the fraudulent CPI), real interest rates are actually negative and you can be sure this will continue even as interest rates increase.
> 
> Cash is only a good thing in a deflationary environment.




So what does one do? Buy into shartemarket that is tanking? Borrow big time to invest in inflated property?


----------



## tech/a (19 August 2007)

wayneL said:


> Exactly, that one leaped out at me to. I was wondering who would pick up on it.





Yeh and they did that from 1990ish to around 1998 and they will one day---around 12-15 yrs do it again.


----------



## nioka (19 August 2007)

Flying Fish said:


> HI don't understand what you mean by cash holders. If rates go to 15%, then cash in the bank is ideal is it not?




If rates go to 15% inflation will probably go to 10%. You will be taxed on the 15%. net result= negative real income. I've seen it happenin the past.


----------



## toothfairy (19 August 2007)

Smurf1976 said:


> Some fair points there although I must point out that if (2) is required now then that in itself is outright proof that housing is less affordable. If one wage bought a house and raised a family 25 years ago then at the very least the wage paid for that job today ought to buy a comparable house and standard of living. If that were the case then we would have had effectively zero economic progress for the working individual over the past quarter century, at least in terms of housing affordability. That a single wage for the same job now buys a lesser house, or more likely no house at all, means we've gone backwards.



Yes, in the sense of affordability, we have definitely gone backward. Hence there is a phase shift in the time frames of the median prices. This shift may get worse unless we have real wage increases. And that's not impossible.
It's quite obvious that nowadays couples are having children later so that they can work longer to pay mortgages compared to our parents' time. You just have to walk around local schools (particularly expensive private schools) and sometimes you can't work out whether the kids are being dropped off by their parents or grandparents. Either the parents are working or they are in their 50's .
Another point about house prices is, the top end (million dollars ++) ones are old money accumulated through generations. While wages paid to an individual cannot be inherited. So one cannot equated these top properties to  owners' wages. I know of a lot of old people who sit on one million dollar houses in Richmond, Vic who are on pensions. Can't do anything about it, may be put yourself up for adoption by one of them.


----------



## tech/a (19 August 2007)

> Another point about house prices is, the top end (million dollars ++) ones are old money accumulated through generations.




As is and has been the case in many other countries so to will it be the case in Australia THAT---most housing will be owned by OLD money and passed on down the ancestory line.


----------



## robots (19 August 2007)

hello,

save your money flying fish and put into shares or property, 

84% clearance rate in melbourne yesterday, 

thankyou

robots


----------



## numbercruncher (19 August 2007)

robots said:


> hello,
> 
> save your money flying fish and put into shares or property,
> 
> ...





Heya Robots,


Glad you had a smoking weekend, good work.


Tell me this clearance rate figure that you come up with the day after auctions do you ring around all the agents in Melbourne during the night to check, or how exactly do you come up with this figure ?


I understand this rate is based on voluntary submission, is it all above board ?, I mean we all know that RE agents are the most honest and straight forward members of society but surely they must occassionly be tempted to smudge the figures ?


Thankyou.


PS: Did the prices jump 10pc this weekend ?


----------



## robots (19 August 2007)

hello,

all above board, 

the results are sumitted to the REIV who submits the results to the relevant media, yes you can believe what you like 

why dont you choose say 10 to 20 auctions for the day and go and visit them for yourself to see what happens, I always go to ones in my local area

I think most got an easy 10% rise

thankyou

robots


----------



## numbercruncher (19 August 2007)

Wow nice work im impressed !


So last week a 10pc rise - say 500 where selling at 550 , so this week 550 went to about 600 ....


Its tempting to jump on the wagon before i miss out.


What Melbourne suburb are you invested in yourself Robots ?


You doing anymore auctions today ?


Enjoy the rest of your weekend!


----------



## robots (19 August 2007)

hello,

invested in St Kilda,

no, not going to anymore auctions today,

going cycling on the beach rd bicycle path, red helment, black shorts, green top so say hello if you see me

you also enjoy the weekend

thankyou

robots


----------



## tech/a (19 August 2007)

> Its tempting to jump on the wagon before i miss out.




*Too late.*


----------



## tayser (19 August 2007)

Hilarious thing happened to a mate's flat in Balaclava (St. Kilda East) last month, his landlord put his flat (2bed, 1bath, one of the thousands of walk-up flats that went up all over the innercity in the 60s and 70s) up for auction... the bozo who bought it was visiting her first auction and was only to see what was happening in the market... well anyhow, for some reason she started the bidding at $270k (auctioneer was asking for bids to start for about 3-4 minutes - perhaps she felt sorry for him? lol) - the asking price, and she ended up buying it at $350k... 

is that champagne for the vendor or what?!


----------



## Flying Fish (19 August 2007)

tech/a said:


> As is and has been the case in many other countries so to will it be the case in Australia THAT---most housing will be owned by OLD money and passed on down the ancestory line.




This sounds scary. So average joe can't buy a house anymore?


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## numbercruncher (19 August 2007)

tech/a said:


> *Too late.*





Huh, but Robots said they went up 10pc last week and another 10pc this week, this surely is the investment opportunity of a lifetime ?


----------



## tech/a (19 August 2007)

> This sounds scary. So average joe can't buy a house anymore?




Getting harder and harder,2 incomes for even a unit.
In the UK its 2 very good incomes and possibly a boader in many cases.
Same in Europe in many cases (Larger cities).

Eventually most will rent until the olds pass on and the House equity split between sibblings and houses then purchased.

Wont be un common to see people buying Reasonable homes for the first time in their 50s+.


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## Broadside (19 August 2007)

alternatively house prices return to long term trend so a median house is within median income


----------



## Flying Fish (19 August 2007)

tech/a said:


> Getting harder and harder,2 incomes for even a unit.
> In the UK its 2 very good incomes and possibly a boader in many cases.
> Same in Europe in many cases (Larger cities).
> 
> ...




Wow. So where is all the money going?


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## Flying Fish (19 August 2007)

here is a 4 bedroom house:
Owner says buy it now!! ( I think he has been on ebay too long)
http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=103886385&f=0&p=10&t=res&ty


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## Flying Fish (19 August 2007)

And another:
http://www.realestate.com.au/cgi-bi...eader=&c=46874795&s=vic&snf=rbs&tm=1187492316


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## Flying Fish (19 August 2007)

http://www.realestate.com.au/cgi-bi...eader=&c=46874795&s=vic&snf=rbs&tm=1187492316
This looks ok as well. heaps of family homes out there for under 300K


----------



## Broadside (19 August 2007)

Broadside said:


> alternatively house prices return to long term trend so a median house is within median income




AFR yesterday  Shane Oliver, AMP: "In 1987, the 42% slump in October was preceded by a residential market that was 5 to 10% below its long-term historical average.  He says the current market is 20% over the long-term average, with house prices around 9 times average weekly earnings* compared with 5 times in the 1980s."

*must be a typo, average annual earnings...if it's weekly earnings I will be buying property next weekend!


----------



## Flying Fish (19 August 2007)

Broadside said:


> AFR yesterday  Shane Oliver, AMP: "In 1987, the 42% slump in October was preceded by a residential market that was 5 to 10% below its long-term historical average.  He says the current market is 20% over the long-term average, with house prices around 9 times average weekly earnings* compared with 5 times in the 1980s."
> 
> *must be a typo, average annual earnings...if it's weekly earnings I will be buying property next weekend!




maybe not. depends how much you have borrowed, inflation credit cards cost of living PETROL prices etc etc etc


----------



## wayneL (19 August 2007)

tech/a said:


> Getting harder and harder,2 incomes for even a unit.
> In the UK its 2 very good incomes and possibly a boader in many cases.
> Same in Europe in many cases (Larger cities).
> 
> ...



Still the lucky country huh?

I wonder what Nokolai Kondratieff would make of the current situation, particularly in light of recent credit market problems?


----------



## numbercruncher (19 August 2007)

Cheapest place in Western nations for housing is the USA it seems!


Ive seen nice brick veneers in Florida for 200k.

If your on a budget move to Detroit, Cars cost more than Houses ....


Wonder if we will catch the bug too ?


----------



## numbercruncher (19 August 2007)

> The mortgage crisis in America has deepened so much that family homes can now be bought for less than £15,200 - the price of a new car.
> 
> 
> Another Detroit house goes under the hammer
> ...




http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/04/06/wdetroit06.xml


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## Kathmandu (19 August 2007)

Flying Fish said:


> http://www.realestate.com.au/cgi-bi...eader=&c=46874795&s=vic&snf=rbs&tm=1187492316
> This looks ok as well. *heaps of family homes out there for under 300K*




Hey, thats what I said.

So, why are people bleating about housing unaffordability again??

Dave


----------



## wayneL (19 August 2007)

Kathmandu said:


> Hey, thats what I said.
> 
> So, why are people bleating about housing unaffordability again??
> 
> Dave



Those are the cheapest homes you can find in the melbourne metro area and still 6 times average earnings, well above historical norms.

Bad value.


----------



## Kathmandu (19 August 2007)

wayneL said:


> Those are the cheapest homes you can find in the melbourne metro area and still 6 times average earnings, well above historical norms.
> 
> Bad value.




Good value if bought now and they go up in val while tenant pays holding costs.

Dave


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## wayneL (19 August 2007)

Kathmandu said:


> Good value if bought now and they go up in val while tenant pays holding costs.
> 
> Dave



Bad value if they don't go up for a fair while. With a credit crunch and recession looming, I can't think of a place I'd least like to put my money than these sorts of houses. 

Tenant will not pay all of holding costs... and would suspect maintenance issues looking at them = losses while waiting extended periods for cap gain to overcome transaction and holding expenses.


----------



## Kathmandu (19 August 2007)

Not what I'd buy that's for sure, but for some??

As a first home though they would be great me thinks.

Some close to beach, close to train, more affordable than $500k Mcmansion as a first home, so lees chance of losing it if/when rates rise.


Dave


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## numbercruncher (19 August 2007)

Why would people buy those falling down shacks when they can rent the mcmansion for the same/less (invest the difference elsewhere too?) weekly repayments with no exposure to interest rate rises and the impending housing slowdown ?


----------



## Kathmandu (19 August 2007)

Mate , you wouldnt know what a falling down shack was...................

Every one of those houses is better than the house I live in, and certainly better than what my parents had as a first home and possibly better than what your parents had as a first home.

What people need to realise is that you cant expect a flash inner city appartment, or a 5 bedroom 3 bathroom as a first home.

Just not the way it is.

As to your comment on why buy these when you can rent ?

That's the stuff us landlords just love to hear,  Please dont buy.


falling down shack:

http://www.realestate.com.au/cgi-bi...eader=&c=31873032&s=qld&snf=rbs&tm=1187510395

Dave


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## numbercruncher (19 August 2007)

Davo your doing it the wrong way sir, you should have that house of yours rented out let the tax payer pick up the tab and rent a place to live in .....

Pfft whos buying 3 bathroom homes off the bat ?


----------



## Kathmandu (19 August 2007)

numbercruncher said:


> Davo your doing it the wrong way sir, you should have that house of yours rented out let the tax payer pick up the tab and rent a place to live in .....
> 
> Pfft whos buying 3 bathroom homes off the bat ?




Well that I could, except it is damn near un-rentable, all my tenants have really nice houses, so I cant rent it as is. (who said all us landlords are arseholes)

I would rather hold it while the next Brisbane increase goes on and then still have access to all the extra $$ if deciding to sell after a quick tart later.

If tenanted I'll pay CGT on the increase.

Anyway, it owes us less per mth in repayments ($30k PPOR debt) than it would to rent elsewhere.

Dave


----------



## Smurf1976 (19 August 2007)

Flying Fish said:


> "Bond holders and those with cash are about to get seriously shafted IMO in order to bail out the debtors. Exactly what's happened plenty of times before"
> 
> HI don't understand what you mean by cash holders. If rates go to 15%, then cash in the bank is ideal is it not?



Consider this. 

A decade ago a certain amount of cash bought you a nice house. Today, that same cash is at best a one third deposit on the same house.

A decade ago a certain amount of cash was enough to put food on the table for a year. Today, you'll die of starvation if forced to rely on that amount of cash to buy food.

It wasn't that long ago that $100 was a significant amount of money. Today, that won't buy you a night out. 

The cash itself is reasonably safe but it's purchasing power is steadily eroded. It's like a battery that slowly goes flat just sitting there on the shelf. Come back in a few decades and your cash is still there but it has lost it's purchasing power. 

Practically every major central bank is inflating at over 10% in recent years. At best, you'll get 7% interest on your cash and you'll lose some of that in tax. There's no way you'll keep pace with inflation holding cash. Sure, the nominal value of your cash will rise due to interest but that won't generally be sufficient to offset the loss of purchasing power.


----------



## numbercruncher (19 August 2007)

Depending on the depth of the Credit crunch and repricing of risk cash imho now has a good opportunity to gain back some of its purchasing power that was eroded by Irrational exhuberance.


----------



## Hopeful (19 August 2007)

There's a lot of knowledge on this board, and so I'd like to ask a general sort of question and get some advice from you kind folks.

I'm from Sydney but living in Japan at the moment and will be for the next few years, probably 3-4 years. It's a bit hard to be stuck here and watch the Aussie economy go up hard whilst my salary has barely moved in that time. I've been wanting to buy something in Oz but the prices have just kept moving away so I gave up long ago.

Anyway, where do you see the Aussie dollar and real estate in 4 years from now? For me the best situation would be for the A$ to keep falling against the Yen, and for R/e prices in Melb/Syd/Bris (I'll go where the value is) to move down or at least stay flat. How likely is that? Let's not forget that the A$ was at 0.47 cents only a few years ago. I have a cheap unit in Japan worth about $130,000 at the current rates (15% better than a few weeks ago!), so that will be a good deposit when the time comes.

If you were in my shoes what would your rough plan be for the next 4 years?

I could also borrow in yen and buy in A$, but as the fall in the A$ recently demonstrated that could be very dangerous because if the A$ were to fall further that would produce a huge margin call due the the loan/value ratio. On my peanut salary I wouldn't be able to make margin.

Any comments would be great, looking forward to it, thanks!


----------



## toothfairy (19 August 2007)

Hi everyone,
this thread has become quite hot since the share market had a bit a correction. More people have become interested in properties and are wondering whether it will crash like the stocks. Quite a few bears around this thread as well, some has been here for a long time since 05, much longer than myself.
This thread was actually started by krisbarry in Sep 05, haven't heard from him much lately, must have bought in 05 and enjoying. The title of the thread has been proven WRONG for the last 22 months. See my charts below from REIV.
If someone still wants to debate (I won't say "argue" because I got told off last time by someone) about the topic, we should start a new thread called "House prices to stagnate from 08/2007 for 'years' " ! Any takers?


----------



## wayneL (19 August 2007)

toothfairy said:


> If someone still wants to debate (I won't say "argue" because I got told off last time by someone) about the topic, we should start a new thread called "House prices to stagnate from 08/2007 for 'years' " ! Any takers?



No takers.

Why have 2 threads with the same debate? Notwithstanding the title of the thread, timing of actions and opinions, the points are the same. Points have been scored on both sides and for the purposes of discussion this thread shall remain a satisfactory place for the same.


----------



## toothfairy (19 August 2007)

wayneL said:


> No takers.
> 
> Why have 2 threads with the same debate? Notwithstanding the title of the thread, timing of actions and opinions, the points are the same. Points have been scored on both sides and for the purposes of discussion this thread shall remain a satisfactory place for the same.




I guess not, no one is brave enough like krisbarry


----------



## numbercruncher (19 August 2007)

No more arguing Toothfairy.


As your little graph thingo clearly shows, house prices are going to rise by 40k a month for eternity.

Perhaps you should be leveraging yourself further into the market to enjoy its gravity defying rise into the stratosphere.

Why arnt prodcuers increasing there prices in tandem, you know milk and Bread should surely be rising by 20pc a month as well, it really isnt fair on the poor farmers and bakers it needs to be looked into asap.

Zimbabwe has got a cool thing going down with price rises at the moment too, one week you earn 1000 next week you earn 5000, Houses treble in value every month, its pretty neat really.

But then theres Detroit, second hand cars cost more than Houses, thats surely a rock solid investment too ?


----------



## MultiFinanceIT (19 August 2007)

Here are two related thread's that I have posted (in) on the WPW IT and eCommerce forum:

Real Estate Bubble Concern Spikes Among Searchers

Real estate and global stock markets. What is happening?

The important questions are, when will we reach the bottom?

Generally when everybody hate the market.
There may also be a flat bottom going on for years.


----------



## wayneL (19 August 2007)

toothfairy said:


> I guess not, no one is brave enough like krisbarry



Nonsense

Had a look at the US market? UK starting to record MoM fall in some areas as well, some of the stuff the bears have talked about is happening.

The major overriding point is availability of credit, and this may be the factor that finally torpedoes HPI.

Some very basic excel skills will expose valuation difficulties at present; looking deeper into the figures in Oz, already reveals increasing repos, mortgage stress, etc, all before the current credit market difficulties.

It's been fabulous for those of us who bought in the late 90's early 00's, but it's time to find a new party for a while.


----------



## toothfairy (19 August 2007)

numbercruncher said:


> No more arguing Toothfairy.
> 
> 
> As your little graph thingo clearly shows, house prices are going to rise by 40k a month for eternity.
> ...



I am not arguing anything, I am just stating some facts for everyone else who is interested. I know both you & Wayne are not.
I am also not suggesting to anyone to buy anything now, except milk & bread.
I am simply saying I bought properties long long time ago and they have increased in value since this thread started.
Lucky me, I didn't buy them to annoy you.


----------



## wayneL (20 August 2007)

toothfairy said:


> I know both you & Wayne are not.



Schoolboy stuff toothfairy.


----------



## numbercruncher (20 August 2007)

toothfairy said:


> I am not arguing anything, I am just stating some facts for everyone else who is interested. I know both you & Wayne are not.
> I am also not suggesting to anyone to buy anything now, except milk & bread.
> I am simply saying I bought properties long long time ago and they have increased in value since this thread started.
> Lucky me, I didn't buy them to annoy you.





Its great debate though ! 


Im not having a dig at you, I know you bought your properties a long time ago and deserve your return on that investment , But having purchased your properties so long ago did you at the time of purchase think they would be worth anywhere near the prices they are now ?


----------



## Smurf1976 (20 August 2007)

toothfairy said:


> Hi everyone,
> This thread was actually started by krisbarry in Sep 05, haven't heard from him much lately, must have bought in 05 and enjoying. The title of the thread has been proven WRONG for the last 22 months. See my charts below from REIV.



With all due respect to all involved, I must point out that asking the REIV to comment on house prices is much the same as asking Ford to comment on whether the Falcon is a good car. They are biased to put it mildly.

One particular problem with most house price data is that it is not quality adjusted. This is significant given the renovation boom - "average" selling prices ought to have risen due to renovations even if the market was falling and the _same_ unrenovated house had declined in price. 

I personally put a bit more faith in the Australian Property Monitors data for individual house sales though it's far from perfect. Amongst other things, it's interesting to note that agents seem to be consistently overstating selling prices. Houses are cheaper than you might think when you look at the price they actually sell for rather than what the agent would like you to believe. One high profile agent actually admitted that prices are overstated both asking and sold when questioned on the matter.


----------



## MultiFinanceIT (20 August 2007)

If financial time series have fractal structure, the central banks can only postpone the real underlying problem.  When have central banks been successful in fighting the market? 

Related thread:
SIXTH WORKSHOP ON STOCHASTIC ANALYSIS

Scroll down to my lecture:

"Determinism and stochastics in economics"

That paper should have been scanned in and published on the internet.


----------



## numbercruncher (20 August 2007)

> Criminal Deception In Real Estate
> Real estate agents in Victoria are often unaware that practices regarded as "standard" in the real estate industry are, in fact, serious criminal offences.
> 
> Furthermore, because the concept of agency involves a high degree of trust, an estate agent who commits a criminal offence through a "breach of trust" will be sentenced more harshly if found guilty.
> ...





http://www.lawyersconveyancing.com.au/deception.asp


Wonder if an RE agent has ever been imprisioned for "breach of trust" or even charged with it ?


----------



## Smurf1976 (20 August 2007)

tech/a said:


> Getting harder and harder,2 incomes for even a unit.
> In the UK its 2 very good incomes and possibly a boader in many cases.
> Same in Europe in many cases (Larger cities).
> 
> ...



Agreed this is quite possible. 

But surely you are not arguing that this is a good thing? Should we not as a society be aiming to improve the standard of living of future generations relative to the present rather than sending them backwards?


----------



## MultiFinanceIT (20 August 2007)

Smurf1976 said:


> Agreed this is quite possible.
> 
> But surely you are not arguing that this is a good thing? Should we not as a society be aiming to improve the standard of living of future generations relative to the present rather than sending them backwards?




A good economist plans as if future generations are present.  It is very important to apply the correct discount rate for future generations. 

Greed favors present generations.


----------



## toothfairy (20 August 2007)

numbercruncher said:


> Its great debate though !
> 
> 
> Im not having a dig at you, I know you bought your properties a long time ago and deserve your return on that investment , But having purchased your properties so long ago did you at the time of purchase think they would be worth anywhere near the prices they are now ?



I didn't expect anything but just solid investment. As I said only 7% PA compound. It's only worthwhile if negatively geared & for long term. Shares have gone up heaps more. But they are risky to gear unless you go for MacQuarie Bank's GEI (Guaranteed Equity Investment) which they charge high interest. No downside except interests which are tax deductions.


----------



## Fleeta (20 August 2007)

Smurf1976 said:


> With all due respect to all involved, I must point out that asking the REIV to comment on house prices is much the same as asking Ford to comment on whether the Falcon is a good car. They are biased to put it mildly.
> 
> One particular problem with most house price data is that it is not quality adjusted. This is significant given the renovation boom - "average" selling prices ought to have risen due to renovations even if the market was falling and the _same_ unrenovated house had declined in price.
> 
> I personally put a bit more faith in the Australian Property Monitors data for individual house sales though it's far from perfect. Amongst other things, it's interesting to note that agents seem to be consistently overstating selling prices. Houses are cheaper than you might think when you look at the price they actually sell for rather than what the agent would like you to believe. One high profile agent actually admitted that prices are overstated both asking and sold when questioned on the matter.





I'll give you some more realistic returns from my experience. Melbourne, 2 bedroom house, 7kms from CBD.

Purchased - Jan 04 - $430k
Sold - July 07 - $519k
Return = 21% or 8% per annum
Take out costs in (stamp duty) and out (commission), more like 5% per annum. Basically lived rent free for 2.5 years (recovered interest costs)

Would you call that booming prices - I think not. Property is still 'fairly' priced I think.

If it wasn't for the Principal residence CGT exemption, it wouldn't have made sense to buy.

I am now renting - although I could buy my place with cash instead of paying rent - so why don't I - good question. Maybe I should. For now I am basically living rent free because the capital I have is giving me a return greater than the rent I pay, whereas if I put it into buying the place, I am no longer getting interest/dividends. This strategy of course only makes sense if you think house prices will 'stagnate'. It's a gamble I am only going to take for 12 months I think.


----------



## Kathmandu (20 August 2007)

Fleeta said:


> I'll give you some more realistic returns from my experience. Melbourne, 2 bedroom house, 7kms from CBD.
> 
> Purchased - Jan 04 - $430k
> Sold - July 07 - $519k
> ...




Was'nt that when Melbourne was in a bit of a flat period, dont do Melbourne so havent been following, but had heard that it is getting picked over again, possibly read for another jump.

Dave


----------



## tech/a (20 August 2007)

Smurf1976 said:


> Agreed this is quite possible.
> 
> But surely you are not arguing that this is a good thing? Should we not as a society be aiming to improve the standard of living of future generations relative to the present rather than sending them backwards?





No.

But it has manifested itself in other countries.
I'm sure it will here.
Sure you can go out further and further and in 
Aust there is no land shortage.
but inner city and sought after R/E like
Great views or larger blocks/tennis courts are likely
To be in this lot I'm afraid.


----------



## wayneL (20 August 2007)

tech/a said:


> But it has manifested itself in other countries.



I think you are making that assumption on limited information, if, as you mentioned before, you are referring to Europe.

Don't forget the credit bubble is worldwide. Based on multiples of local earnings, many western European countries, EVEN NOW, are cheaper than Oz.

Germany for instance, is at bargain basement prices in comparison. Even the UK at the beginning of the boom was WAY better value than here (which is part of the reason I invested there). Check out Berlin if you want to see value.


----------



## wayneL (20 August 2007)

wayneL said:


> Germany for instance, is at bargain basement prices in comparison. ... Check out Berlin if you want to see value.



e.g.

http://www.immowelt.de/Immobilien/I...riMa=500000&ECat=1&ESR=1&Sort=createdate+desc


----------



## tech/a (20 August 2007)

> But it has manifested itself in other countries.




Dont see the word *ALL* in the above sentance.
Perhaps the addition of the word *SOME* would be more appropriate.
AND
Just my opinion could have been another.


----------



## Ageo (20 August 2007)

tech/a said:


> Dont see the word *ALL* in the above sentance.
> Perhaps the addition of the word *SOME* would be more appropriate.
> AND
> Just my opinion could have been another.




Hehe tech not good enough!


----------



## tech/a (20 August 2007)

Ageo said:


> Hehe tech not good enough!





Open to suggestions.


----------



## moses (20 August 2007)

Lets not forget the effects of a tradie shortage, plus greater expectations (bigger houses), higher "eco" standards and tougher OHS standards are having on the the cost of building a new home, all of which maintains price pressure on existing homes.


----------



## Ageo (21 August 2007)

tech/a said:


> Open to suggestions.




was tongue in cheek


----------



## TjamesX (21 August 2007)

robots said:


> hello,
> 
> save your money flying fish and put into shares or property,
> 
> ...







toothfairy said:


> Hi everyone,
> this thread has become quite hot since the share market had a bit a correction. More people have become interested in properties and are wondering whether it will crash like the stocks. Quite a few bears around this thread as well, some has been here for a long time since 05, much longer than myself.
> This thread was actually started by krisbarry in Sep 05, haven't heard from him much lately, must have bought in 05 and enjoying. The title of the thread has been proven WRONG for the last 22 months. See my charts below from REIV.
> If someone still wants to debate (I won't say "argue" because I got told off last time by someone) about the topic, we should start a new thread called "House prices to stagnate from 08/2007 for 'years' " ! Any takers?




Predicting the future is a mugs game, but valuing something is not necessarly about predicting price action *and* time - only what the price in all probability will tend towards.... as an investment theory it does have some heavyweights in its corner (ie W.Buffet)

You can debate current price action V's fundamentals till the cows come home - they're two different methodologies looking at different things.

Fundamentals for a house price asset should be seen in things like average income, savings & deposits. These support the fundamental future cash flows and deposits for purchasing the assets. Things like 'economic & population growth', 'commodity boom' are all good catch cries but ultimately should be revealed in increases in deposits and average income.

Supply and demand is another favourite - ofcourse housing demand is not going away, just like i'm sure waterfront mansion demand in sydney currently outstrips supply... what matters is the price at which demand and supply clears.... debt and debt enabling facilities have a huge role to play in the price at which houses clear, but do not necessarily affect the fundamental future cash flow and servicibility of the asset.

Have a look at the RAMS home loans prospectus - maybe i'll post the chart sometime... look at debt growth CAGR for australian mortgages, that is the key... that will need to continue at its current growth.... debt expansion (beyond fundamentals) is a game of CONfidence.... buyers today need to convince buyers tomorrow to increase debt proportions relative to anything of importance (ie income, GDP etc)....The US are currently having trouble facilitating this, and if you think Aus is fundamentally different then you need to go back and have a look at some very basic ratios (income/interest debt/wages debt/GDB) and compare the two markets...


But please keep updating on what the current housing market is doing.... Although its adds about as much value as telling me the the speedo reading for a car traveling at 100kph heading towards a brick wall.... keep your eyes fixed on the speedo so you can tell me exactly when things turn 

or you can replace the words "brick wall" with "optimus subprime"


----------



## robots (21 August 2007)

moses said:


> Lets not forget the effects of a tradie shortage, plus greater expectations (bigger houses), higher "eco" standards and tougher OHS standards are having on the the cost of building a new home, all of which maintains price pressure on existing homes.




hello,

thanks moses, I think these items you have listed are the main reasons why existing homes have been "re-valued" upwards across AUS

material supply companies want massive profits for there tiles, plasterboard etc, the tradie wants his cut, the local council wants his share and so it rolls

replacement cost has skyrocketed

save your money

thankyou

robots


----------



## WaySolid (21 August 2007)

Residex house price trading data for Brisbane in 2007.

My personal estimate was 10% growth in 3br houses in my postcode over the first half of 2007, seems to be about the same averaged over Brisbane from these stats. 

31/01/2007	H	Brisbane	9.73522	0.11%
28/02/2007	H	Brisbane	9.78018	0.46%
31/03/2007	H	Brisbane	9.91202	1.35%
30/04/2007	H	Brisbane	10.2146	3.05%
31/05/2007	H	Brisbane	10.2276	0.13%
30-Jun-07	H	Brisbane	10.5122	2.78%
31-Jul-07	H	Brisbane	10.7711	2.46%


----------



## theasxgorilla (21 August 2007)

Fleeta said:


> I'll give you some more realistic returns from my experience. Melbourne, 2 bedroom house, 7kms from CBD.
> 
> Purchased - Jan 04 - $430k
> Sold - July 07 - $519k
> ...



*
Finally, someone provides a solid example!*

You are right with everything you say here Fleeta.  The tax,the purchase costs, the selling costs...all need to be considered in a property deal and all tend to conspire to screw you out of profits.  All are reasons why many _property investors_ say: never sell.  Drawdown on the equity you've accumulated or collatoralise against another purchase, but never sell.  Although, you've identified one of two ways to solve this problem.  One, CGT exception for primary place of residence.  Or two, hold for over 12 months and get a CGT discount of 50%.  

Is anyone bothering to keep track of the tax brackets these days???  You now have to be earning over $150,000 AUD a year to get into the top tax bracket.  Lets say you're a slightly above average Joe and you make $75k a year.  If you sold an investment property after 12 months and made $100k cap gain you would pay a tax at a rate of 21% on your gains.  If you were a bit of a high roller and managed to make $150k a year you'd still only pay 23.5%.  None of these figures take into account the tax benefits of negative gearing or depreciation on investment properties, so you can assume on the sum of things these rates will go down even further.  

Still seems like a lot of tax to pay on a deal?  But over on other threads people are scrambling for solutions to their share market tax problems with answers like, "I'll incorporate and get the 30% company tax rate"...it's all relative...< 20% tax ain't that bad.  Maybe you take a long holiday the year you sell your house in Australia...hmmm.  Perhaps you can get your tax down to 15% that way, and a free holiday.  Its not just about money accumulation, we've all got to _live_ as the years pass by.

I only wonder which area of Melbourne 7kms from the CBD...and also notice you bought in Jan 04...prices were generally flat or falling in Melb into late 04, so if you bought then instead you would have fared better since you would have got a greater %age increase and have had less holding time hence less interest payments.

Imagine you said to someone they could *live for rent free in their own house for 2.5 years*...what kind of leg-up might that provide the average person in life??  "Hey, your rent is going to be taken care of for 2.5 years, do you think you can save $x for investing in the sharemarket or starting a business or going on an overseas holiday without having to come back with maxed-out credit cards???

Those days of the late 90's where you could buy a run down shack, slap on a coat of paint and sell for double are gone.  But you don't need to hit home runs to make it worth it...looks like you just proved that property is still a viable way to get ahead.  All you need is a further 10, 15 or perhaps 20 years of smart decisions and you'll be as wealthy as a baby boomer 

ASX.G


----------



## Flying Fish (21 August 2007)

theasxgorilla said:


> *
> Finally, someone provides a solid example!*
> 
> You are right with everything you say here Fleeta.  The tax,the purchase costs, the selling costs...all need to be considered in a property deal and all tend to conspire to screw you out of profits.  All are reasons why many _property investors_ say: never sell.  Drawdown on the equity you've accumulated or collatoralise against another purchase, but never sell.  Although, you've identified one of two ways to solve this problem.  One, CGT exception for primary place of residence.  Or two, hold for over 12 months and get a CGT discount of 50%.
> ...




Most baby boomers i know, are not all that r9ich, they just like to spend money to give the appearance


----------



## wayneL (21 August 2007)

I could have put this in any number of threads as it affects a lot of things, but this as good a place as any:

FWIW



> Market corrections are coming.
> 
> 
> Jim Rogers
> ...


----------



## numbercruncher (21 August 2007)

> Economic pressure boosts personal bankruptcy filings
> By PAUL WENSKE
> The Kansas City Star
> Economic pressure on many U.S. families ”” including in Missouri and Kansas ”” is boosting personal bankruptcy filings, despite a change in the law intended to reduce them.
> ...




http://www.kansascity.com/business/story/236639.html


You can easily envision how this tally will soar further in the next 6 months considering there has been gridlock in Credit Markets already and massive tightening of the standards to get loans or refinance not to mention much higher Interest rates for non conforming borrowers(and lenders) ....

Agreeing with Jim Rogers here shorting US financials has to be the best most logical and fun bet around atm!


----------



## theasxgorilla (21 August 2007)

numbercruncher said:


> Agreeing with Jim Rogers here shorting US financials has to be the best most logical and* fun *bet around atm!




Indeed, for some it's hard to beat the satisfaction of winning when others are known to be losing.


----------



## numbercruncher (21 August 2007)

theasxgorilla said:


> Indeed, for some it's hard to beat the satisfaction of winning when others are known to be losing.





Hence why sport is the most popular passtime in the world i guess ?


----------



## theasxgorilla (21 August 2007)

numbercruncher said:


> Hence why sport is the most popular passtime in the world i guess ?




That's clever, I never thought of that.  You could be onto something there...if only the stakes were a little higher...not coming home with the cup and forfeiting the entry fees is is one thing...but not coming home 'cos you lost that too.


----------



## numbercruncher (21 August 2007)

hehe and there's plenty losing their houses it seems .....

Sometimes i wonder if the US administration was expecting alot of this, its worth reading the "New Bankruptcy Law which went into effect on Oct 17, 2005"

http://www.creditinfocenter.com/bankruptcy/NewBankruptcyLaws.shtml



> The credit card industry has spent untold millions in lobbying fees and donations to Congressional "re-election" funds to ensure the legislation would pass.
> 
> It should also be noted that the new bankruptcy laws leave in important loophole which benefit only the wealthy: the homestead provisions and the Asset Trusts.


----------



## professor_frink (21 August 2007)

numbercruncher said:


> hehe and theres plenty losing there houses it seems .....




It's great that you find that funny numbercruncher. Hopefully there will be quite a few people laughing at any misfortune you have in the future.


----------



## theasxgorilla (21 August 2007)

numbercruncher said:


> Sometimes i wonder if the US administration was expecting alot of this, its worth reading the "New Bankruptcy Law which went into effect on Oct 17, 2005"




To say _expecting_ it kind of infers that the politicians are nasty people, and I like to believe that there are a number of them (even in America) that are actually there for the good they can do.  But I did blog on this exact topic recently and called it "debt to equity".  To me it's _the_ name of the game (and has been for a very long time, but now more than ever things are getting out of balance) and this is another element which props up the institutions of the wealthy by making it harder for those screwed by debt to get off the hook.  Knowing this, what do you do?


----------



## numbercruncher (21 August 2007)

professor_frink said:


> It's great that you find that funny numbercruncher. Hopefully there will be quite a few people laughing at any misfortune you have in the future.




I didnt quite mean that how you took it.

There no misfortune in this, just the biggest scam in financial history as far as i can see. I say good on people for walking away from these homes, worth less than what they paid for them and bought under fraudulent circumstances for the better part.

But anyhow ask yourself why they are losing there homes, it was armies of crooked mortgage brokers backed by wall street sharks that repackaged this scam as a sure fire investment . And thats before we even start on the Fed who facilitated this monster bubble of all monster bubbles with low interest rates.


There always comes a time to pay the piper and if it seems like its too good to be true then it probably is (ie/ Houses rising in value 10pc a month what a joke)

So the more i think about it i do think its funny, hilarious infact.


----------



## numbercruncher (21 August 2007)

theasxgorilla said:


> Knowing this, what do you do?





You refer to that dusty old book ...


"Neither Borrower nor lender be"


----------



## theasxgorilla (21 August 2007)

numbercruncher said:


> There always comes a time to pay the piper and if it seems like its too good to be true then it probably is (ie/ Houses rising in value 10pc a month what a joke)
> 
> So the more i think about it i do think its funny, hilarious infact.




Geez numbercruncher...how old are you?  Do you live in a real society or are you holed up in someones basement somewhere with painted over windows???

I think you are missing the perspective of the bigger picture.


----------



## Kathmandu (21 August 2007)

theasxgorilla said:


> Geez numbercruncher...how old are you?  Do you live in a real society or *are you holed up in someones basement somewhere with painted over windows*???
> 
> I think you are missing the perspective of the bigger picture.




Bring out the Gimp.

Dave


----------



## numbercruncher (21 August 2007)

Well Gorilla i just dont get it then.

Explain it to me because it sure doesnt make much sense, lend people money on an ARM knowing full well they cant afford repayments when reset time comes, the borrower buys it under the pretext that house prices rise forever and interest rates will "never" go up and if they do they just sell and make squillions, wall street then packages the mortgage as an awesome aaa bond and suckers come from all over to buy them. And im spost to fee l sorry for someone in this equation ?


On a local level Average wages cant buy average homes anymore, prices according to posters here show houses rising more every year than average after tax incomes. Houses cost more of peoples incomes now than they did during 18pc interest times. And whilst some of us say this is unsustainable and destined to end in tears , im told im missing the perspective of the bigger picture, i dont get it ....

Please explain this bigger picture.


----------



## numbercruncher (21 August 2007)

Kathmandu said:


> Bring out the Gimp.
> 
> Dave




Hows that fishing shack coming along Davo? any miners snapped it up yet?


----------



## Kathmandu (21 August 2007)

numbercruncher said:


> Hows that fishing shack coming along Davo? any miners snapped it up yet?




Be a few months yet before I put it up for sale, but thanks for asking.

Dave


----------



## theasxgorilla (21 August 2007)

numbercruncher said:


> Please explain this bigger picture.




Take a look around, there is enough to go around.  And while you're at it you might take time to notice that not everyone is as _smart_ as you are and some of the people caught up in this situation also didn't see the big picture and only wanted what they were told they could have; a place of their own to live.


----------



## numbercruncher (21 August 2007)

theasxgorilla said:


> Take a look around, there is enough to go around.  And while you're at it you might take time to notice that not everyone is as _smart_ as you are and some of the people caught up in this situation also didn't see the big picture and only wanted what they were told they could have; a place of their own to live.




I prefer to look on the bright side, out of every Joe Blow loser in this fiasco there will be a joe blow winner, ok the guy who got sucked in as the last aboard the scam loses, but not much, he didnt have much in the first place, probably not even a deposit, just a dream that never was.

The winners are the people who next own the houses after forclosure, or anyone needing a home for that matter, house prices in the US have dropped considerably, all of a sudden making them affordable again for the masses.

Good result.And itll clean up the risky overleveraged credit market, hopefully in an orderly fashion.

Thanks for the chat though Gorilla, i always respect opinions from all angles, Ill just never surrender my own opinion even (if Im in the minority seat) is all


----------



## theasxgorilla (21 August 2007)

numbercruncher said:


> I prefer to look on the bright side, out of every Joe Blow loser in this fiasco there will be a joe blow winner, ok the guy who got sucked in as the last aboard the scam loses, but not much, he didnt have much in the first place, probably not even a deposit, just a dream that never was.




This is the _bright_ side...hmmm.  Please let us know if someone ever gives you the power to make important decisions!   And be careful what you say about Joe Blow...he's the boss around here


----------



## numbercruncher (21 August 2007)

lol, Ive toyed with the idea of pursuing a career of important decision making , but figured someone from the new wold order would bump me off before i even managed to crawl out of the basement window! 


Despite what you said about Joe Blow, I think hes a top bloke


----------



## Fleeta (22 August 2007)

theasxgorilla said:


> *
> Finally, someone provides a solid example!*
> 
> You are right with everything you say here Fleeta.  The tax,the purchase costs, the selling costs...all need to be considered in a property deal and all tend to conspire to screw you out of profits.  All are reasons why many _property investors_ say: never sell.  Drawdown on the equity you've accumulated or collatoralise against another purchase, but never sell.  Although, you've identified one of two ways to solve this problem.  One, CGT exception for primary place of residence.  Or two, hold for over 12 months and get a CGT discount of 50%.
> ...




Thanks ASX.G - love your blog by the way, makes me want to go to Sweden again!

The house was in Moonee Ponds, to the north of Melbourne.

I agree with your comments on not being able to make good properties cash flow positive. I did the maths on mine and we would have had a rental yield of 3.4%!! Pretty pathetic hey. Assume this is after tax due to negative gearing benefits, at the moment you can get 6.7% interest, which is around 3.9% after tax depending on where you sit.

I'm taking the proceeds from my house and putting into high yielding, fully franked stocks. If I can get an average of 4.5% fully franked, then any capital gains are a bonus.

However, with the CGT exemption on principle residence, it makes no sense to rent does it....

BTW, I will be as rich as a baby boomer in about 20-30 years when my parents kick the bucket....now just to stop them from spending it all in the meantime!


----------



## numbercruncher (26 August 2007)

Great little piece on 60 minutes tonight about the mortgage madness .....

In the following Peter Overton demonstrates how cushy his baby boomer parents copped it back in the day ....



> PETER OVERTON: Just to show you how crazy it has all got, how tough it is to afford a home these days, this is the street I grew up in. In the late '60s, my parents bought their house for $15,000. That was about three times the average salary. Now, the average Australian house price is $420,000. That's nearly 10 times the average wage. But no matter how hard it gets, we're obsessed with owning our own home ”” whatever the cost.




http://sixtyminutes.ninemsn.com.au/article.aspx?id=289100


The story went on to support one of my many arguments with this "house price boom" and that is that its sucking soooo much money out of other areas of the economy, the people in the article where saying how at the end of there month they have like 100 bucks or less left over .... crazy .... ie/ less money sent on Entertainment, shopping, holidays etc etc etc ....

Gov better hope the Mining boom never wobbles!


How did the sales go this w/end Robots ? Break anymore records ?


----------



## robots (26 August 2007)

hello,

yes another big weekend, 85% clearance rate, with around 100 more properties on sale as opposed to same time last year

bumper prices for all, looks as though a lot coming on for spring but general concensus is that demand will pick them up with ease

I say good if people dont spend as much money on entertainment, Harvery Normans, restaurants, holidays etc 

its only the start of the affordability crisis here in Aus, all being part of the world economy which aus entered seriously 6-7 years ago

thankyou

robots


----------



## numbercruncher (26 August 2007)

Heya Robots!

Thanks for your reply, glad too hear you had another rip snorter!

Well thatll be good news for all those folks on 60 minutes tonight, instead of foreclosure they can sell up and reap the Profit$!

So you say its only the beginning of this "affordability" crisis, thats at 10 x Income, whats your tip for the future 20 x income ? Multi generational mortgages? Or maybe average wages will jump substantially keeping the multiples down? (giggles at that idea) Maybe theyll slash Interest rates to coincide with price rises to keep around the 10x multiple?


Thankyou.


ps those people who are in the Business of entertainment, Harvery Normans, restaurants, holidays etc might disagree with you, but who knows as long as their house prices go up they will perhaps look the other way


----------



## wayneL (26 August 2007)

robots said:


> its only the start of the affordability crisis here in Aus, all being part of the world economy which aus entered seriously 6-7 years ago



A startling incongruence in the two parts of this statement.


----------



## robots (26 August 2007)

hello,

absurd, no way

thankyou

robots


----------



## wayneL (26 August 2007)

robots said:


> hello,
> 
> absurd, no way
> 
> ...



I said incongruent, not absurd.


----------



## toothfairy (28 August 2007)

numbercruncher said:


> How did the sales go this w/end Robots ? Break anymore records ?



I am quite surprised for someone so actively debating about the trends of real estate prices on this thread is not actively following sales every week.
It is readily available on newspapers, probably just slightly more reliable sources than "60 minutes".
I keep track of prices for years but I still do not predict. I can only tell price history.


----------



## numbercruncher (28 August 2007)

toothfairy said:


> ..... probably just slightly more reliable sources than "60 minutes".





LMAO


----------



## Mofra (28 August 2007)

toothfairy said:


> It is readily available on newspapers, probably just slightly more reliable sources than "60 minutes".



Quite a number of properties were sold on auction day Saturday, but many were after failing to reach reserve and had to be negotiated with either the highest vendor (or in two cases I know of in Nth Carlton, Melb) with whoever walked in the door after the sole bid in each was a vendor bid.

REIV window dressing doesn't fool everyone, especially those of us in the industry


----------



## theasxgorilla (28 August 2007)

Mofra said:


> REIV window dressing doesn't fool everyone, especially those of us in the industry




...and hopefully those selling houses don't tell those in the industry what they paid for them...lest the salesperson let the stats and not the market determine their belief as to the potential selling price.


----------



## numbercruncher (29 August 2007)

Our American cousins arnt having much luck with there surefire bricks n mortar Investments ....



> S&P Says Housing Prices Fell in 2Q by Steepest Rate Since Its Index Was Started in 1987
> 
> 
> NEW YORK (AP) -- U.S. home prices fell 3.2 percent in the second quarter, the steepest rate of decline since Standard & Poor's began its nationwide housing index in 1987, the research group said Tuesday.
> ...




http://biz.yahoo.com/ap/070828/home_price_index.html?.v=10


Imagine the same result say in Melbourne in a 3 month period , buy a House 440k ( -3.2pc  14k, -stamp duty 20k , - realty comission to sell 15k , - Interest, conveyancing etc 10k , = 54k loss ouchers.

Hell you just need that 440k house to rise 10pc just to break even ..

Lets hope it doesnt happen here hey, after all when did we ever follow US market trends ?


----------



## KIWIKARLOS (29 August 2007)

the difference in aus is that we dont have the huge inventories of unsold properties and very limited space to build new houses. 
Rents are huge at the moment and will prob only go higher so still good for investing. That said i dont think propoerty is a good investment in any case compared to historic returns from the stock market.

In Sydney there are units and townhouses going up everywhere and houses don't seem to be sitting there for long before been snapped up but im located about 5 mins east of parramatta so I'm not sure how the further out suburbs are doing. 

In my opinion we won't see a boom again for a long time but unless there is some serious land opened up for development or a major economic event we will rise between 1-5 % PA in most areas for the next few years


----------



## Sean K (29 August 2007)

numbercruncher said:


> Our American cousins arnt having much luck with there surefire bricks n mortar Investments ....
> 
> Lets hope it doesnt happen here hey, after all when did we ever follow US market trends ?



NC, please humour me for a moment. 

I am trying to understand your interest in this thread.

Do you own a house?
Do your friends or family own a house?
Do you own shares or units in any Australian real estate entities with interests anywhere?
Are you projecting a downtrend in the Australian the housing market?
Are we headed to a bottom?
Are you thinking of investing in the housing market when you think there is a bottom?
Are you trying to convince us to sell our houses and move into rental?

I am very confused as to your intent in this thread, other than to spell gloom and doom.


----------



## explod (29 August 2007)

kennas said:


> NC, please humour me for a moment.
> 
> I am trying to understand your interest in this thread.
> 
> ...





Sometimes there is a fine line between gloom and doom and reality.  Some want to see the light and some dont'.

Matters are absolutely dreadful for ordinary Americans as things are panning out and unfortunately some of it will rub off.


----------



## numbercruncher (29 August 2007)

> kennas said:
> 
> 
> > NC, please humour me for a moment.
> ...


----------



## Kathmandu (29 August 2007)

Something tells me Number cruncher spends a lot of time over at GHPCF. and trolling on other sites as well. 

Dave


----------



## numbercruncher (29 August 2007)

Kathmandu said:


> Something tells me Number cruncher spends a lot of time over at GHPCF. and trolling on other sites as well.
> 
> Dave




lollercoaster Davo since when is presenting links and personal opinions on a subject trolling ?

Something tells me that Davo is fretting that his little piece of Queensland mango farm wont return his projected 50pc.

If you guys think Housing prices at 10x plus Earning ratios is good buying, well go ahead knock yourselfs out, Im basically showing its detachment from any time in history.

ps. whats GHPCF ?


----------



## Sean K (29 August 2007)

numbercruncher said:


> lollercoaster Davo since when is presenting links and personal opinions on a subject trolling ?
> 
> Something tells me that Davo is fretting that his little piece of Queensland mango farm wont return his projected 50pc.
> 
> ...



So, what is your intent NC? 

What are you telling me to do?


----------



## numbercruncher (29 August 2007)

kennas said:


> So, what is your intent NC?
> 
> What are you telling me to do?




Merely adding to the debate that "House prices to stagnate for 'years'"

I dont think that Ive attempted to tell you to do anything ? 

Each to their own on Investment decisions!! and after all we all need a roof over our heads hey!


----------



## Sean K (29 August 2007)

numbercruncher said:


> Merely adding to the debate that "House prices to stagnate for 'years'"
> 
> I dont think that Ive attempted to tell you to do anything ?
> 
> Each to their own on Investment decisions!! and after all we all need a roof over our heads hey!



Aren't you telling me, and anyone else, to sell my house?


----------



## numbercruncher (29 August 2007)

kennas said:


> Aren't you telling me, and anyone else, to sell my house?




Nope not this little black duck, are you telling me and everyone else to buy a house?


----------



## Sean K (29 August 2007)

numbercruncher said:


> Nope not this little black duck, are you telling me and everyone else to buy a house?



Since we're putting it on the table, buying a house to live in, is a financially bad decision, imo, atm. 

However, buying a home, as a lifestyle investment, can not be financially assessed. It can be priceless!! 

So, depends on the angle...

I still don't get your point exactly. 

Investors - stick to stocks away from real estate?
Investors in real estate - sell up?


----------



## Kathmandu (29 August 2007)

numbercruncher said:


> lollercoaster Davo since when is presenting links and personal opinions on a subject trolling ?
> 
> Something tells me that Davo is fretting that his little piece of Queensland mango farm wont return his projected 50pc.
> 
> ...




Actually, I think you will find I was in it for a *20% slice ($390 spend $470 sell)*, but since I started, prices have passed that.

Similar 12 mth old houses have sold recently for $500k+, so I have no reason to expect mine not to.  While I cant see the $600k like the REA's have priced them at, I feel $550k will be achievable, which put's my not quite as flash house around $520k (about 35%)

GHPCF = Global House Price Crash Forum (Australia)  have a look, make new friends.

Dave


----------



## robots (3 September 2007)

hello,

looks like you will do well kathmandu,

http://www.theaustralian.news.com.au/story/0,25197,22353393-12377,00.html

i think you're increases are locked in, as might see a period of little flatter growth over the next few months

good stuff, keep bringing in those immigrants little johnny

thankyou

robots


----------



## robots (3 September 2007)

hello,

global house price crash forum, is it still going?

does anybody have the new address

thankyou

robots


----------



## wayneL (3 September 2007)

robots said:


> hello,
> 
> global house price crash forum, is it still going?
> 
> ...



There are dozens of Bearish RE forums and hundreds of blogs... google is good.


----------



## Flying Fish (3 September 2007)

robots said:


> hello,
> 
> looks like you will do well kathmandu,
> 
> ...




Fudged figures. Does anyone really believe that units cost 400K lol

The housing market is in for a rude awaking


----------



## numbercruncher (3 September 2007)

Its actually starting to get quite amusing ...

We live in a country the size of Europe yet have a population not much more than some of the larger cities in the world , so its not like we have a shortage of land.

Its kind of fun to see how high the realestate/lending sharks can talk this whole deal up before implosion time!

Implosion will probably coincide with Johnny being voted of the Island so he can blame his opposition and get back in as the boss in four years time


----------



## chops_a_must (3 September 2007)

Flying Fish said:


> Fudged figures. Does anyone really believe that units cost 400K lol
> 
> The housing market is in for a rude awaking




They very well do here in Perth. It costs about $100,000 more for a 2 bed 1 bathroom unit in West Perth than the same thing in Southbank Melbourne. Just silly... long term that is just moronic.


----------



## Kathmandu (3 September 2007)

Flying Fish said:


> Fudged figures. Does anyone really believe that units cost 400K lol
> 
> The housing market is in for a rude awaking




Well, heres 20 pages worth of units in QLD over $2,000,000.00 (two million dollars for those that can't understand big numbers)

http://www.realestate.com.au/cgi-bi...t+Living,Serviced+Apartment,Studio,Unit&o=def

I'd say their toilet cost about $400k

Dave


----------



## numbercruncher (3 September 2007)

Would you not be asking yourself _why_ there is over 20 pages of these shacks forsale ? If demand was hot would there not only be 1 or 2 pages ?


----------



## numbercruncher (3 September 2007)

> AN AVERAGE house in an average suburb, with an average mortgage ”” a decade or so ago, it almost would have been a birthright. But not now. With Australia having the worst housing affordability of any developed English-speaking nation, a growing chorus of economists, lenders and politicians are calling for interest payments on mortgages to be tax deductible.





http://www.theage.com.au/news/national/the-australian-nightmare-can-we-find-a-better-way-/2007/09/01/1188067438559.html


I like the idea of tax deductible mortgages like other countries, even up the playing field, but it would essentially have no one paying income tax anymore Investors and occupiers alike writing of there entire income tax in deductions virtually!

Whats you feeling folks ? Realestate bulls would probably love it too, would keep prices up im sure!


----------



## doctorj (3 September 2007)

I doubt making interest payments on mortgages will make houses any more affordable for anyone but those who already own them (primarily the baby boomers).

As we saw with the first home buyers grant, all it seems to achieve is to drive up prices.  What would make this any different?

Furthermore, it would encourage further investment in unproductive capital.



numbercruncher said:


> http://www.theage.com.au/news/natio...d-a-better-way-/2007/09/01/1188067438559.html
> 
> 
> I like the idea of tax deductible mortgages like other countries, even up the playing field, but it would essentially have no one paying income tax anymore Investors and occupiers alike writing of there entire income tax in deductions virtually!
> ...


----------



## wayneL (3 September 2007)

numbercruncher said:


> http://www.theage.com.au/news/national/the-australian-nightmare-can-we-find-a-better-way-/2007/09/01/1188067438559.html
> 
> 
> I like the idea of tax deductible mortgages like other countries, even up the playing field, but it would essentially have no one paying income tax anymore Investors and occupiers alike writing of there entire income tax in deductions virtually!
> ...



According to the Austrian economic theory (as per the videos I posted elsewhere) a bust is unavoidable where there has been a boom.

Trying to avoid the bust is counterproductive and prolongs malinvestment.

One way or another, house values will return to historic norms.


----------



## trinity (3 September 2007)

> I doubt making interest payments on mortgages will make houses any more affordable for anyone but those who already own them (primarily the baby boomers).
> 
> As we saw with the first home buyers grant, all it seems to achieve is to drive up prices. What would make this any different?
> 
> ...




Agree, an increase in first home buyers grant and the such would only drive prices up.

But, I read a few months ago, that Mr Rudd is suggesting that a "super"-like savings account for first home buyers.  Not too sure whatever happened to it after he had his housing summit.

What are your opinions on that?

thanks.


----------



## Lucky (3 September 2007)

Flying Fish said:


> Fudged figures. Does anyone really believe that units cost 400K lol
> 
> The housing market is in for a rude awaking




Flipping through the good old Herald Sun today; Business section; sub-category Property; read that a 2 bedroom ground floor unit went for $535k as an owner occupied property.  From memory it was either Malvern or Hawthorn(or neither of them?!?).  So I guess someone believes it's worth it...:dunno:  :sheep:


----------



## theasxgorilla (3 September 2007)

numbercruncher said:


> I like the idea of tax deductible mortgages like other countries, even up the playing field, but it would essentially have no one paying income tax anymore Investors and occupiers alike writing of there entire income tax in deductions virtually!




In Sweden it works as you describe.  When most people pay 32% tax, and the top bracket is 52-55% (there are only 2 brackets) the savings each month are extra-ordinary.  Imagine a $2,100 p.m mortgage repayment costing $1,400 after tax.  $700 p.m if you're a couple.  Then imagine what kind of a place you could buy with a 4% mortgage instead of 8%!  Thanks to low interest rates and the interest deductions I get three times as much house for half the monthly outlay than I had in Aust.

Would it work in Australia?  Well, it's already in Aust, just in a different place within the system.  Rental properties.  If you want the same benefits in Aust you have to get it via rental properties.  This has the benefit of encouraging the upper/middle classes to provide flexible housing solutions for the society.  Unfortunately it also results in run down houses maintained on a shoe string budget lived in by tenants who couldn't care less about up keep cos it's not their house.  There is definately more pride in the way people look after their houses over here.  And next to no-one owns rental properties because you don't need one to save tax cos you can do it with you PPR.


----------



## robots (5 September 2007)

hello,

great news today with the RBA leaving interest rates on hold, one extra ruski with dinner tonite

outlook is for fed banks across the world to drop rates commentators are reporting (thanks to the credit crunch), awesome stuff

hold on

thankyou

robots


----------



## Flying Fish (5 September 2007)

robots said:


> hello,
> 
> great news today with the RBA leaving interest rates on hold, one extra ruski with dinner tonite
> 
> ...



great so i can borrow up to the hilt again


----------



## robots (5 September 2007)

hello,

borrow what you like, 

thankyou

robots


----------



## numbercruncher (5 September 2007)

Hello,


Youve surely sold every available House by now ?

It must be time for your Government mates to release some more land and your developer mates to build some more is it not ?


----------



## Flying Fish (5 September 2007)

So this means houses will rocket !!


----------



## robots (5 September 2007)

hello,

who know's flying fish, your guess is as good as mine

all I know is, if rates stay the same then mortgage payment stays the same

thankyou

robots


----------



## Flying Fish (5 September 2007)

robots said:


> hello,
> 
> who know's flying fish, your guess is as good as mine
> 
> ...




mmm but in real terms mortgage rates are not staying the same.....
think about it


----------



## robots (5 September 2007)

hello,

sorry, thats right there getting lower 

thankyou

robots


----------



## Flying Fish (5 September 2007)

hello,

sorry, thats right there getting lower

thankyou

robots


----------



## wayneL (5 September 2007)

Oh please!!!!

It's "that*'*s" & "the*y're*"! 

Thank You!


----------



## Flying Fish (5 September 2007)

give robots a break.

he's been through the ringer lately lol


----------



## Kimosabi (5 September 2007)

robots said:


> hello,
> 
> great news today with the RBA leaving interest rates on hold, one extra ruski with dinner tonite
> 
> ...




hahaha, you are such a Spruiker Robots.

The RBA might be leaving interest rates on hold, but banks and Mortgage Lenders are increasing rates and lending requirements regardless of what the RBA is doing because of the Global Credit Crunch.

The Reserve Banks are soon to be irrelevant when the next lot of shockwaves hits Global Credit Markets.

The Reserve Banks are just prolonging the ineviatable...


----------



## Flying Fish (5 September 2007)

Kimosabi said:


> hahaha, you are such a Spruiker Robots.
> 
> The RBA might be leaving interest rates on hold, but banks and Mortgage Lenders are increasing rates and lending requirements regardless of what the RBA is doing because of the Global Credit Crunch.
> 
> ...




Oh no money for nothing and my cheques for free lol


----------



## numbercruncher (6 September 2007)

> The Reserve Bank left the official interest rate on hold yesterday, but in the real world, with the rates that matter, it's a different story.
> 
> Key money market interest rates that determine the cost of finance for households and companies are soaring.
> 
> ...




http://www.abc.net.au/news/stories/2007/09/05/2025287.htm


Ouchers ....


----------



## tech/a (6 September 2007)

Well I just bought another one.

Esplanade.
Land value $460,000
House 360 square meters.
Cost to build this quality $1500/ meter.$540,000.

Thats a Mill.
Purchase price $690,000.

No brainer!


----------



## BentRod (6 September 2007)

Which esplanade Tech?

Largs Bay area?


----------



## tech/a (6 September 2007)

Moana.

Its a forgotten Esplanade---keep it quiet.


----------



## Kathmandu (7 September 2007)

tech/a said:


> Moana.
> 
> Its a forgotten Esplanade---keep it quiet.




Got to be happy with that, even if it did nothing, after looking at RE.com, it still looks like a nice bit of beach to play on.

Bit of new stuff getting built around there and closer in as well.

Hard to imagine doing nothing though,quiet little Yeppoon close to me has $400k places 5 years ago going for $2mill+ now.



Dave


----------



## Kathmandu (10 September 2007)

When do you all reckon those house prices are going to stagnate again?



http://www.news.com.au/couriermail/story/0,23739,22383886-5011140,00.html




PROPERTY prices are skyrocketing in the state's most exclusive suburbs as cashed-up Queenslanders splash out for lifestyle locations.

New figures released today by the Real Estate Institute of Queensland show huge growth in house prices around the state, especially in thriving regional centres. 
Mining centre Mount Isa was up a massive 47 per cent on the previous year, Rockhampton 33 per cent, Gladstone 26.6 per cent, Townsville 20 per cent and neighbouring Thuringowa 15.1 per cent.

What your house is worth: Suburb-by-suburb liftout guide in The Sunday Mail

REIQ chairman Peter McGrath said the fast-growing economy had made a lot of people very wealthy and they were ready to spend up big to get what they wanted.

"The top end is just getting stronger and stronger and stronger – and not just in Brisbane and the Gold Coast," Mr McGrath said. "It's right up and down the coast from Cooktown to Coolangatta.

"Places like Yeppoon on the Capricorn Coast are booming. If it's overlooking the water, people want to be there and they are ready and willing to pay for it."

Brisbane has a new millionaire's row, with the median house price in the inner-city suburb of Newstead exploding by more than 50 per cent in the year to June to $1.137 million.

It pushed the riverside suburb past nearby Hamilton – traditionally the capital's priciest property area.

Hamilton recorded a median sale of $1.056 million in the 12 months, up 29 per cent, and neighbouring Ascot also edged closer to the magic million mark at $948,750.

Overall, the median price in the Queensland capital increased 9.5 per cent in the year to June to $405,000. It reached $434,000 in the last quarter – ahead of Melbourne ($420,000) and close behind Sydney ($525,000) and Perth ($446,500).

Nearly a third of Brisbane's suburbs, 43 of 151, now have a median price above half a million dollars. At the other end of the market, only five suburbs are now below $300,000.

On the Sunshine Coast, Minyama – with its riverside and canal frontage homes – saw the median price more than double from $454,250 to $956,000 within a year.

Steve Turner, from Ken Guy Real Estate agency, said he had sold $40 million worth of properties in the past 12 months. Most buyers were business owners upgrading from existing Sunshine Coast properties and many more families were moving in.

Other Sunshine Coast hotspots were Buddina, up 24.9 per cent to $585,000 and Alexandra Headland, up 24.5 per cent to $644,500.

At the Gold Coast, the median price of $420,000 was up 6.3 per cent. But demand for the most desirable beachfront suburbs pushed values up 19.8 per cent to $1.198 million at Mermaid Beach while Surfers Paradise rose 18.9 per cent to $1.44 million.

In Townsville, real estate agents said they had waiting lists of people wanting to get into the city's most prestigious addresses, such as Milton Hill and Castle Hill. 

"Our problem is we don't have enough listings to meet the demand, especially at the upper end," said Janice Gallagher from North Ward Realty. "People realise big capital gains are being made and they are sitting on properties longer to make even more. 

"For a house on Milton Hill, prices would start around $2 million and go up to about $5 million. 

"For that, you get spectacular views of Cleveland Bay and Magnetic Island, probably a three-storey house, four or five bedrooms and study, a cinema and inground pool. 

"We're selling properties without any view for $900,000." 

Ms Gallagher said multimillion-dollar buyers included doctors and surgeons and self-employed tradespeople. 

In Mackay, the median price for homes at Shoal Point on the northern beaches rose 20.9 per cent – double the average for the city – to $535,000. Glenella also broke the half-million-dollar mark. 

"Queensland's lifestyle is one of the big factors that continues to draw people from all over the world," Mr McGrath said. "With the resources and infrastructure boom, companies have set up offices in Queensland and that's brought a lot of wealth. 

"There are a huge number of firms and people who control those firms who are making very good incomes and profits on the stock exchange . . . It's mainly people supplying products or services to the mining industry of State Government and those associated with them: engineers, surveyors, architects, accountants, lawyers - and real estate agents." 


Dave


----------



## robots (10 September 2007)

hello,

great article kathmandu, 

in Melbourne we had clearance rate of 82% for saturday, down 2% from last weekend but still really good considering 100 more properties from last weekend and around 200 from same time last year

in my area (St Kilda) REIV reporting 29% increase for the year on houses and 9% on units, although some house and units have done a lot better

me to looking for the next round of property stagnation

thankyou

robots


----------



## toothfairy (10 September 2007)

Kathmandu said:


> When do you all reckon those house prices are going to stagnate again?
> 
> Dave



Well, your guess is as good as mine, I can tell you many people on this thread will tell you "TOMORROW".
One thing I know though, I am sitting on huge profit from the Carlton (Vic) property I bought in 2005, roughly when this thread was started.
Of course the bears always say it will vaporize soon. Well, they can say that to anything but nothing. Same for shares & cash! I am happy.
Cheers.


----------



## numbercruncher (11 September 2007)

*Look realestate bulls, you might be able to fool some of the people some of the time but youll never be able to fool all the people all of the time.

You all coming here quoting price gains of individual suburbs and hoping to fool us that they are representive of the over all market are cracking me up, its like me coming here and Quoting some stock thats increased 200pc and thinking people will see that as a refelection of the overall sharemarket.

Lets explore an example, young Robotic here likes to quote lines from his bible, the REIV.

According to the REIV website metropolitan house prices in Melbourne between 2002 and 2007 have increased from 336k to 420k representing a 25pc gain for the 5 year period - Adjusted for Inflation, Less stamp duty and Realestate fees when selling this represents an absoloute MASSIVE LOSS.

If the Sheeple that you guys have sucked into the "realestate boom" had invested there money in an outstanding Australian company such as BHP back in 02 they would now be retired millionaires, Instead they sit there bleeding to financial death waiting for this house price boom that you folks convinced them was coming.

Happy realestate investing dudes.*


http://http://realestateview.com.au/median/median-prices-metro-melbourne.html


----------



## Judd (11 September 2007)

Hmmm, $336 to $420 over 5 years is compound annual growth rate of 4.56%  Nothing much to write home about......but then they're only numbers.


----------



## numbercruncher (11 September 2007)

Judd said:


> Hmmm, $336 to $420 over 5 years is compound annual growth rate of 4.56%  Nothing much to write home about......but then they're only numbers.





Thats isnt even the half of it (because of the misleading way everything is accounted for nowadays) as i mentioned prior .....

the purchase price is actually 336 + 16 (stampduty) = 352

The sell price is actually 420 - 10 (RE fee) = 410

so a 58 profit over 5 years is like 15pc or 3pc p/a

BUT thats before we start on other nastys, the purchaser probably borrowed 300k, and lets say they where smart enough to lock in at 5pc interest, thats 75k interest over 5 years, for the hell of it lets add in rates, insurance, maintenance, conveyancing = 15k, now for a true measure lets also take into account inflation @4pc p/a on the original purchase price of 352 = 70k.

So for the true cost .....

352 + 75 (interest) + 15 (rates etc) + 70 (inflation loss) = 512 (true cost)

512 cost less 410 sale price = 102k min loss over 5 years, you could of rented the house for that money !

Now lets explore alternative investment in BHP back in 02 of 352k worth (what the house originally cost) .....

35200 @10 each in 02 is now 35200 @ 38.30 each = 1.34m plus about 50k in taxpaid divs  (less say 100k in interest and 50k to rent an apartment over the 5 years.)


Net result property buyer still in debt , still losing money. But still beleiving the RE boom will happen again.

Share buyer, rich, retired and laughing about how many Realestate shows used to be on TV.


----------



## Kathmandu (11 September 2007)

And I'm sure it would be easy for some here to show RE examples that could do as well if not better.

Where did you get the money for the shares?

What did you use as collateral?

What % of val would they lend ?

If renting, would most use the difference to invest, or would they just piss it up against the wall and buy new Cars and Holidays ( note I didnt say Ipod's, I know how it upsets some)

Dave


----------



## numbercruncher (11 September 2007)

Kathmandu said:


> And I'm sure it would be easy for some here to show RE examples that could do as well if not better.
> 
> Where did you get the money for the shares?
> 
> ...





Forget about the borrowing part, add it all again using cash buyer if you like, or most banks will do a 70pc LVR anyways for the shares.


Lets do it on this fishing shack that your selling for 600k and see what the sheeple will need to sell if for in 5 years to break even ....

600 - purchase
20   - stamp duty
240  - Interest @ 8pc
120  - Inflation loss @ 4pc
20    - Rates/insurance/maintenance
20    - cost to sell

So in 5 years they need 1.02m to break even, fantastic! They could probably rent in that area for 4 or 500 a week huh ?

Wonder what 600k of BHP will be worth in 5 years ? The dividends will be juicy in 5 years to boot at this rate !


----------



## juw177 (11 September 2007)

What number cruncher says is true and I am not much of a property bull myself. But there are other factors to take into account when owning a property:

If it is your residence, the sense of comfort having a place to live cannot be measured in dollar value.

If it is a rental property, there is rental income.

And then there is taxation: if it is your residence, you pay no capital gains tax when selling. If it is a rental property, the income tax you pay to the ATO will instead go towards paying off your property.


----------



## happytrader (11 September 2007)

Firstly, I can only talk about where I live. Secondly anyone up here in North Qld who has an interest in real estate will tell you the same thing. The real estate up here over the last 6 months is getting bought at ask, revalued and sold again within weeks and months at +20% profits. Obviously lots of knowing and unknowing real estate millionaires in this town.

Cheers
Happytrader


----------



## Kathmandu (11 September 2007)

numbercruncher said:


> Forget about the borrowing part, add it all again using cash buyer if you like, or most banks will do a 70pc LVR anyways for the shares.
> 
> 
> Lets do it on this fishing shack that your selling for 600k and see what the sheeple will need to sell if for in 5 years to break even ....
> ...




Well gee, if things go pear shaped with the resources boom , they'll probably not be worth much.

Just as well we dont have 5 year loan's, and just as well that I aint buying (or selling) $600k Houses

As a matter of interest, one of those houses just had a contract signed for $575k, so market looking fine thanks.

Dave


----------



## Kathmandu (11 September 2007)

happytrader said:


> Firstly, I can only talk about where I live. Secondly anyone up here in North Qld who has an interest in real estate will tell you the same thing. The real estate up here over the last 6 months is getting bought at ask, revalued and sold again within weeks and months at +20% profits. Obviously lots of knowing and unknowing real estate millionaires in this town.
> 
> Cheers
> Happytrader




Come on mate, Numbercruncher would have us all believe that theres no money in it.

Dave


----------



## robots (11 September 2007)

hello,

thats the thing with the rent & invest brigade, its all hypothetical

not one example on this forum

thankyou

robots


----------



## numbercruncher (11 September 2007)

Kathmandu said:


> Come on mate, Numbercruncher would have us all believe that theres no money in it.
> 
> Dave




Stop manipulating what ive said Davo, there is money to be made in Realestate in *select* markets subject to many factors including demand.

If its any consolation to you realestate perma-bulls I do have a little invested in a land development in WA (only because of an invite to a family trust investment)

But back to your fishing shack investment, personally I would rather live in the local Hilton Hotel for the next five years, which would incidentally cost less than the required 400k gain the purchaser needs to break even on that joint of yours and investing the cash in the resource boom 

Oh and BTW if it all goes pear shaped with the resource boom, its going to go a hell of alot more pearshaped with this so called "realestate boom"

Happy realestating though champ.


----------



## toothfairy (11 September 2007)

NC,
posting message in BOLD is rude and lacks netiquette. With people like you around I am going to retire from this thread. I will just keep all my profits and ideas to myself. Suits me fine. Millions may listen to you, I am not interested.
Goodbye.
Just two last tips for people interested. Negative gear it to the max and buy near CBD.


----------



## numbercruncher (11 September 2007)

toothfairy said:


> NC,
> posting message in BOLD is rude and lacks netiquette. With people like you around I am going to retire from this thread. I will just keep all my profits and ideas to myself. Suits me fine. Millions may listen to you, I am not interested.
> Goodbye.
> Just two last tips for people interested. Negative gear it to the max and buy near CBD.




As you wish Toothfairy, and as i said before you deserve your return as your a buy and hold investor, whos held throughout the cycle. But as ive demostrated RE on average is the most appalling of investments over the last 5 years for the average owner occupier.

Your tips serves my strategy perfect, rent from Negative gearers at half the price of buying, its a perfect relationship, cant you see we need each other .... Baby   Guess the biggest loser in the Equation is the Government whos picking up the Tax deductions to the tune of Billions a year. Maybe its why we have broken Health and Education systems ?


----------



## Flying Fish (11 September 2007)

Also when buying your shafted with council rates water rates, insurance, maintenance.... the list goes on and on


----------



## happytrader (11 September 2007)

numbercruncher said:


> As you wish Toothfairy, and as i said before you deserve your return as your a buy and hold investor, whos held throughout the cycle. But as ive demostrated RE on average is the most appalling of investments over the last 5 years for the average owner occupier.
> 
> Your tips serves my strategy perfect, rent from Negative gearers at half the price of buying, its a perfect relationship, cant you see we need each other .... Baby   Guess the biggest loser in the Equation is the Government whos picking up the Tax deductions to the tune of Billions a year. Maybe its why we have broken Health and Education systems ?




Numbercruncher

Out of interest and with a view to getting a bargain, where specifically are these hard done by owner occupiers located?

With thanks

Cheers
Happytrader


----------



## robots (11 September 2007)

hello,

things going really well for property at the moment

record prices, its been amazing the price increases that have occurred over the last 12months

thanks for the compliment NC, 

in relation to the rent/invest vs buy arguement I just couldnt work out how the rent option was better after 7 or 8 years when rent started to equate to total outgoings as an owner of an equivalent property

when that time hits, that rent equals the same as owning the owner excels, 

thankyou

robots


----------



## numbercruncher (11 September 2007)

happytrader said:


> Numbercruncher
> 
> Out of interest and with a view to getting a bargain, where specifically are these hard done by owner occupiers located?
> 
> ...





Hi Happytrader

Are you asking me where is there stressed selling by owner occupiers ? So you can potentially grab a bargain from there misfortune and bad investment choices/money management etc??

Im not sure that even a small percentage of these owner occupiers realise how bad there homes are performing from a purely financial standpoint.

Its actually big business in the US atm, agents specialising in RE in various stages of distressed selling.

Im not in the business but i would suggest contacting your local estate agent as a reasonble place to start.

Hope this helps.


----------



## robots (11 September 2007)

hello,

http://www.theaustralian.news.com.au/story/0,25197,22397402-25658,00.html


seems the dwellings being built is short, although I believe the cost of materials and labor is having a greater impact than many believe

have a nice day

thankyou

robots


----------



## numbercruncher (11 September 2007)

Hello,


Yes i read that earlier that residental construction is pretty much in recession.


Shouldnt come as any surprise though 200k + for a block 200k + for the house and average folks earning like 40 to 50k p/a and interest rates rising.

Youve heard of Peak Oil, well Australia is quickly approaching peak debt.

It needs radical Government intervention asap. Obviously as the figures show population is rising so they must be living somewhere, staying at home longer ? Shared living arrangements ? Camper homes ? Overseas Holidays ? Park benches ? Who knows, but it doesnt look very good.


----------



## robots (11 September 2007)

hello,

no crisis NC, 

people always putting their hand out, you're probably in the line, ownership rates are around the same as 10 yrs ago

maybe people are buying established homes?

what is wrong at the moment?

thankyou

robots


----------



## wayneL (11 September 2007)

numbercruncher said:


> Hi Happytrader
> 
> Are you asking me where is there stressed selling by owner occupiers ? So you can potentially grab a bargain from there misfortune and bad investment choices/money management etc??
> 
> ...



It's how Robert Quackysaki allegedly got started. Bought distressed sellers in Phoenix Arizona. 

i.e. He bought at value or better. Leaving the ethical argument aside for the moment, that's what makes the most financial sense.


----------



## numbercruncher (11 September 2007)

Good read on the concept of Peak Debt



> Australia is fast approaching peak debt. By 2016 we will spend so much of our discretionary income on mortgages there will be nothing left for putting food on the table. We will be paying 15 times our yearly income to buy a home, if wages, debt and house prices keep growing at the present rate. That's what I call really living beyond your means.




http://www.domain.com.au/Public/Article.aspx?id=1183351260524&index=NationalIndex

Next Government/s have their work cut out for them for sure


----------



## numbercruncher (11 September 2007)

robots said:


> hello,
> 
> no crisis NC,
> 
> ...







> Some 85 percent of Australians don't trust real estate agents, according to a survey by a home lending group




http://money.ninemsn.com.au/article.aspx?id=291207

What can I say, for once Im just part of the majority.


----------



## numbercruncher (11 September 2007)

wayneL said:


> It's how Robert Quackysaki allegedly got started. Bought distressed sellers in Phoenix Arizona.
> 
> i.e. He bought at value or better. Leaving the ethical argument aside for the moment, that's what makes the most financial sense.




As per usual Wayne you are spot on


----------



## tech/a (11 September 2007)

wayneL said:


> It's how Robert Quackysaki allegedly got started. Bought distressed sellers in Phoenix Arizona.
> 
> i.e. He bought at value or better. Leaving the ethical argument aside for the moment, that's what makes the most financial sense.




Wayne.

a bit different here.

The majority will have been caught in the lo doc trap.So they will have Mortgage insurance which will pick up any varience between the mortgage price and the buy price.
If your connected enough to take part in mortgagee sales pre listing then you can do well IF YOU HAVE CASH.
If they go to agent then chances are the property is trashed,and the Financier is willing to accept subject to's,that will and does come at a premium.Prices are suprisingly very good and often more than the debt being recovered and in line with retail.

Sounds good in theory but rarely happens in practice.


----------



## theasxgorilla (11 September 2007)

numbercruncher said:


> You all coming here quoting price gains of individual suburbs and hoping to fool us that they are representive of the over all market are cracking me up, its like me coming here and Quoting some stock thats increased 200pc and thinking people will see that as a refelection of the overall sharemarket.




Numbercruncher, you crack me up.  I once heard that a study was done into the incidence of bad news stories and their correlation with the actual state of the economy.  Admittedly I'm making up the stats but it was something like even during really good times the newspapers sampled ran an average of 4 bad news stories.  And when it was bad times the average increased to 7.  Moral of the story...you're never going to struggle to find URLs to support your attitude (pitiful as it might appear to on-lookers).  BUT, finding opportunities like the suburbs and individual houses that still went up in spite of the hopelessness of it all, well, this might be a little tougher to do just sitting in front of your computer screen.  At the very least you're gonna have to scratch away the black paint from those basement windows and look out at the real world.  Don't be scared now...it's much, MUCH nicer than think


----------



## Mofra (11 September 2007)

tech/a said:


> The majority will have been caught in the lo doc trap.So they will have Mortgage insurance which will pick up any varience between the mortgage price and the buy price.



Tech, 

Mortgage Insurance protects the _lender_ not the mortgagor, so if there is any shortfall the MI provider will pay the lender, then pursue the defaulting party for the shortfall + "costs". 
Most mortgagee sales are passed through RE agents anyway, so unless you are a NSW gazette subscriber (not sure if they still list default auctions) or know someone within delinquencies, it is difficult to pick up the same sort of bargain in Australia


----------



## numbercruncher (11 September 2007)

Thanks for your words of wisdom theasxgorilla 


I sincerely hope that you too are having a profitable stay on the RE investment scene.

My debate isnt against you individual Investors/Speculators/Flippers its about the overall health of the RE market.

But im glad I crack you up, its good for your health  Youd soon become suicidal if everyone just agreed with you, wouldnt you? oh nm ...


----------



## wayneL (11 September 2007)

tech/a said:


> Wayne.
> 
> a bit different here.
> 
> ...



There have still been times in Oz in the last 20 years when RE has been good to excellent value without going the mortgagee sale route. I have reeled off examples on this thread before.

As ever, my argument is that value in todays market is rare and that there is a cycle at play... and that value will eventually return.

In the meantime, capital can be placed in other ventures with an emphasis on liquidity.


----------



## theasxgorilla (11 September 2007)

numbercruncher said:


> My debate isnt against you individual Investors/Speculators/Flippers its about the overall health of the RE market.




Thats largely my point...there almost isn't such a measurable thing as the 'overall health of the RE market'.  There is no market index, even if there were I have no idea how it would work because housing, unlike company shares, isn't all that homogenous.  For this reason the article writers can play smoke and mirrors with the stats and sell news with fear.  I'm sure you're familiar with this concept? Make the reader think they need to keep abreast of what is going on in the news otherwise they might miss the moment their house dropped 20% in value overnight??


----------



## theasxgorilla (11 September 2007)

wayneL said:


> In the meantime, capital can be placed in other ventures with an emphasis on liquidity.




Thats the risk in this market...housing ain't liquid, and if you're the greatest fool when the 5th of the 5th arrives   Can we use Elliott Wave on housing?


----------



## numbercruncher (11 September 2007)

theasxgorilla said:


> Thats the risk in this market...housing ain't liquid, and if you're the greatest fool when the 5th of the 5th arrives   Can we use Elliott Wave on housing?




Probably not but you can see whos swimming naked when the tide gos out with housing


----------



## numbercruncher (11 September 2007)

> The housing affordability crisis continues to wreak havoc upon the Australian construction industry, contributing to a further deterioration in activity last month, new figures show.
> 
> Although the Reserve Bank of Australia kept interest rates on hold this month at 6.50 per cent, nine interest rate rises since May 2002, including one in August, are continuing to hamper growth in the construction industry.
> 
> ...




http://www.smh.com.au/news/Business/Housing-affordability-slows-construction/2007/09/07/1188783465252.html


These are the sort of effects you get when society reaches Peak Debt.

Our population is growing quickly, its publicly stated that there is a shortage of housing stock yet residential construction is shrinking, its a warning for the New Government to act, and act fast.

I have a loose prediction that they will eventually have to release swathes of land at massive knock down prices which would stimulate a building boom. Im thinking Government backed estates that have a building convenant with Enviromentally friendly / energy efficant / water wise bias will have to be considered.


----------



## numbercruncher (11 September 2007)

theasxgorilla said:


> Thats largely my point...there almost isn't such a measurable thing as the 'overall health of the RE market'.  There is no market index, even if there were I have no idea how it would work because housing, unlike company shares, isn't all that homogenous.  For this reason the article writers can play smoke and mirrors with the stats and sell news with fear.  I'm sure you're familiar with this concept? Make the reader think they need to keep abreast of what is going on in the news otherwise they might miss the moment their house dropped 20% in value overnight??




Anyway Gorilla besides having swipes at me im not sure what your point in this thread is.

I think weve agreed that some localised RE markets will do well.

But whats your overall opinion, I mean the average House price in Melbourne is 420k which already isnt servicable by the average income, so how much further do you think the boom has to go, how rich can you guys get out of Realestate before it hits an ultimate peak. You know everything has a peak, youd only pay so much for a car, a holiday, a house or anything for the matter, there must be a ceiling.

I think I effectively demonstrated using average price increases over 5 years to show its been a bad investment.

I mean if you buy the average 420k home now you will need to get atleast 600k for it to break even in 5 years (as an owner occupier), wheres the potential in this equation, I mean if an average Policeman or Nurse or Carpenter cant afford this home now, do you perhaps think there wages may increase massively over the next 5 years to be able to afford it at 600k?

Im interested in a logical explanation how it can continue. Because i cant for the life of me see how it can.


----------



## happytrader (11 September 2007)

As a point of interest, up here in the North, its actually 'the average, Policeman, Nurse and Carpenter' doing the buying.

Cheers
Happytrader


----------



## numbercruncher (11 September 2007)

happytrader said:


> As a point of interest, up here in the North, its actually 'the average, Policeman, Nurse and Carpenter' doing the buying.
> 
> Cheers
> Happytrader





Hello Happytrader,

Thats nice.

You must be in the Business of selling realestate to know the professions of the clients ? Are your Police and Nurse clients paying cash or hooking up with Jumbo mortgages usually ?

So what sort of prices are you getting, I saw you mention 20pc gains in weeks and months, are we talking 400k home becoming 480k a month later ?

Be interesting to know.


Cheers.


----------



## happytrader (12 September 2007)

Hi Numbercruncher

I am in the healthcare industry, and I also have family and friends in the building and real estate business.  No one pays cash. If any profession has the character and financial ability to service debt its members of the emergency and healthcare industry, from the orderly to the anaethetist.
Keeping a fulltime position as well as working a couple of agency shifts to finance investments is a common practice around here.

Yes that +20pc since the beginning of the year is a fact whether its just been built or its existing.

Cheers
Happytrader


----------



## theasxgorilla (12 September 2007)

numbercruncher said:


> Im interested in a logical explanation how it can continue. Because i cant for the life of me see how it can.




Hehe, forget logic.  Just observe what is and wonder, in ernest, how on earth can this be?  I bet if you let you let your imagination go and tried to play devils advocate you could come up with a _logical_ explanation.  My hunch is that any answer must involve China, resources and debt.  If you put interest rates into your explanation, look at it from the opposite angle...high interest rates coupled with high relative debt levels means much more leeway for the RBA to ease, stabilise and re-ignite, if it comes to that.  The BoE did this in the UK during the last few years.  And if you want to know how really out of hand and illogical things can get, take a look at Ireland.


----------



## numbercruncher (12 September 2007)

happytrader said:


> Hi Numbercruncher
> 
> I am in the healthcare industry, and I also have family and friends in the building and real estate business.  No one pays cash. If any profession has the character and financial ability to service debt its members of the emergency and healthcare industry, from the orderly to the anaethetist.
> Keeping a fulltime position as well as working a couple of agency shifts to finance investments is a common practice around here.
> ...





Thanks Happytrader,


Ahh excellent, thats 20pc over this year !


What NQ Town are you from ?


----------



## Flying Fish (12 September 2007)

numbercruncher said:


> Thanks Happytrader,
> 
> 
> Ahh excellent, thats 20pc over this year !
> ...




Probably a town near the mines.


----------



## Kathmandu (12 September 2007)

Flying Fish said:


> Probably a town near the mines.




Have alook at that article i posted a couple of pages back.

All major regional citys Glady to Cairns have done 20%+, but Townsville has done 20%.

If 500k from a mine is a mining town, well I suppose Brisbane Sydney Adelaide and Perth are mining towns as well

Dave


----------



## numbercruncher (12 September 2007)

You pretty much need a 20pc gain in the First 12 months just to break even anyways


----------



## Flying Fish (13 September 2007)

Don't know why one would spend so much money on a place there because:

a) there are cyclones:
b) there are thousands of acres of cane farms which will one day be filled with legoland so anyone paying 300000+ for a house there will be shafted.


----------



## numbercruncher (13 September 2007)

Exactly FF, these guys would have you beleive thats there is a land shortage in Australia 


If you buy a 400k owner occupied house in QLD with cash you and you decide to sell the very next day through a RE agent you need to get atleast 420k to break even. (430 in Vic, 425nsw)

If you buy 400k of BHP and decide to sell the next day you need to get 400.04k to break even.

Pretty cool hey


----------



## numbercruncher (13 September 2007)

> *Claims of soaring rents and a crisis facing tenants around the country may be an exaggeration by a real estate lobby desperate to turn around the moribund property market*.




http://www.realestate.com.au/review/mar07/article3.html?from=review


Oh whoever would of thunk it ???


----------



## nioka (13 September 2007)

numbercruncher said:


> Exactly FF, these guys would have you beleive thats there is a land shortage in Australia
> 
> 
> If you buy a 400k owner occupied house in QLD with cash you and you decide to sell the very next day through a RE agent you need to get atleast 420k to break even. (430 in Vic, 425nsw)
> ...




You would be pretty thick up top to want to sell the next day so your point is of no use to this discussion. There dosen't seem to be many day traders in the home market. However it can happen. I once bought a block of land for $1000. After we had signed the contract another buyer came along and wanted it. I told him it was for sale at $6000 and he agreed to buy it. ( 10 years later it sold for $250,000 and recently for $1,200,000) That beats shares.


----------



## numbercruncher (13 September 2007)

Once i bought a MArs bar for $1 and this hungry guy came along and Bought it for $6, he saved it and sold it 10 years later all moldy for $250 then this collector of Mars bars came along and paid $1200 for it.

Like yourself i dont have any proof of this claim, but none the less it beats shares.

 Have a nice day !


----------



## Fleeta (13 September 2007)

numbercruncher said:


> Once i bought a MArs bar for $1 and this hungry guy came along and Bought it for $6, he saved it and sold it 10 years later all moldy for $250 then this collector of Mars bars came along and paid $1200 for it.
> 
> Like yourself i dont have any proof of this claim, but none the less it beats shares.
> 
> Have a nice day !




Bit rough to presume that people are lying on this forum mate, sounds to me as though you are a little jaded. You gotta admit that property gives you leverage you could never get out of the share market (without taking stupid risks).


----------



## numbercruncher (13 September 2007)

Fleeta said:


> Bit rough to presume that people are lying on this forum mate, sounds to me as though you are a little jaded. You gotta admit that property gives you leverage you could never get out of the share market (without taking stupid risks).




85pc of Australians dont trust Realestate agents and Im one of them, one of the Agents that posts here every week Has been claiming a 20pc jump in prices every weekend for the last 3 months - Dont need to be a genius to work out its all ramp and lies.

You can get loads of Sharemarket leverage if you wish, one fund im in borrows 3 for every 1 - with no borrowing risks to me and to boot I can increase the exposure as comsec offers 50pc LVR on the fund.

Just got a lease on a brand new house today, the owners are getting less than a 3pc return, the taxpayer obviously picks up some of the difference, heaps of rentals available ......

Ive made my decision, and im stoked so many realestate moguls are keen to rent me their brand new homes till I get bored of the view and move along.


have a nice day


----------



## wayneL (13 September 2007)

The dominoes are starting to fall.


----------



## numbercruncher (13 September 2007)

Heya Wayne !

Good to see some mainstream media publishing the Truth !!

As the tide gos out we will get to see whos wearing Boardies, whos wearing speedos and whos swimming naked !!

They say its the Flippers who get burnt the hardest in the Squeezes, up to there eyeballs at the turn of the tide and no one to catch the hot potato.

Interesting times ahead


----------



## robots (13 September 2007)

hello,

just got back from signing up new vendor

vendor has set reserve at 675k, so going to advertise at 500k plus

auction in 4 weeks, will be good

thankyou

robots


----------



## Kathmandu (13 September 2007)

nioka said:


> You would be pretty thick up top to want to sell the next day so your point is of no use to this discussion. There dosen't seem to be many day traders in the home market. However it can happen. I once bought a block of land for $1000. After we had signed the contract another buyer came along and wanted it. I told him it was for sale at $6000 and he agreed to buy it. ( 10 years later it sold for $250,000 and recently for $1,200,000) That beats shares.




Bet your kicking yourself, but hindsight's a wonderful thing

Dave


----------



## explod (13 September 2007)

numbercruncher said:


> Once i bought a MArs bar for $1 and this hungry guy came along and Bought it for $6, he saved it and sold it 10 years later all moldy for $250 then this collector of Mars bars came along and paid $1200 for it.
> 
> Like yourself i dont have any proof of this claim, but none the less it beats shares.
> 
> Have a nice day !




There are day traders who claim to be able to exceed 10% per month.

If that is right and they maintain just that growth then in ten years, $100 at 10percent per month compounds to $6 million.  Now that sure beats real estate.


----------



## numbercruncher (13 September 2007)

Some further info for Waynes headlines ...



> House prices fell for the first time in nearly two years in the three months to August and the outlook for the market is subdued because of higher borrowing costs and financial market troubles.
> 
> The Royal Institution of Chartered Surveyors' house price index for August fell to -1.8 from a downwardly revised 10.8 in July -- the first negative reading since October 2005.
> 
> Enquiries from potential homebuyers fell for the ninth month in a row and at the fastest pace since August 2004, while newly agreed sales fell for the third straight month and at their fastest rate in nearly three years.




http://today.reuters.co.uk/news/articleinvesting.aspx?type=personalFinanceNews&storyID=2007-09-13T061852Z_01_NOA322700_RTRUKOC_0_HOUSE-PRICES-RICS.xml


And this is on a tiny Island nation with a huge 60m+ population !

Imagine the potential drops if they had an oversupply of land ... say like Africa or something


----------



## Kathmandu (13 September 2007)

explod said:


> There are day traders who claim to be able to exceed 10% per month.
> 
> If that is right and they maintain just that growth then in ten years, $100 at 10percent per month compounds to $6 million.  Now that sure beats real estate.




Are you one of them ?

Dave


----------



## wayneL (13 September 2007)

robots said:


> hello,
> 
> just got back from signing up new vendor
> 
> ...



You said you weren't in the industry, now you say you are :headshake

Exactly as I suspected of you, a VI. :twak:


----------



## numbercruncher (13 September 2007)

> Housing crisis set to worsen
> Thursday Sep 13 16:45 AEST
> The housing sector remains in bad shape with the housing affordability crisis tipped to worsen amid predictions that interest rates will likely rise again.
> 
> Australian dwelling commencements fell by four per cent to 36,512 units in the June quarter, figures released Thursday by the Australian Bureau of Statistics (ABS) show.




http://news.ninemsn.com.au/article.aspx?id=59380


----------



## numbercruncher (13 September 2007)

wayneL said:


> You said you weren't in the industry, now you say you are :headshake
> 
> Exactly as I suspected of you, a VI. :twak:






> Some 85 percent of Australians don't trust real estate agents, according to a survey by a home lending group




http://money.ninemsn.com.au/article.aspx?id=291207


A good mate of mine used to sell realestate, at an " Auction " another agent was taking phone bids, as he was calling out the new/higher phone bids his phone rang because being a dumbarse he forgot to switch it of for the price pumping act.




Realestate industry virtually needs a Royal enquiry IMHO.


----------



## explod (13 September 2007)

Kathmandu said:


> Are you one of them ?
> 
> Dave





Working on it Dave but not consistent enough at this stage.  Maybe we should question some of the hig flyer traders


----------



## Smurf1976 (13 September 2007)

numbercruncher said:


> [Realestate industry virtually needs a Royal enquiry IMHO.



Just imagine if food, petrol, power, car rego or anything else essential to most Australians had gone up in price to the extent that houses have in the past few years.

Petrol goes up 10% and its headline news. I once remember a huge fuss about literally 2 cents per litre. 

Power goes up a few % and we hear talk of changing governments, utlilities ripping off consumers and so on.

Houses go up well over 100% and hardly a word is said for years. 

And let's face it, 10% extra for a house is going to cost (with interest) far more in actual $ terms than 10% on petrol, food or power anyway.


----------



## theasxgorilla (13 September 2007)

Smurf1976 said:


> Petrol goes up 10% and its headline news. I once remember a huge fuss about literally 2 cents per litre.




I'm paying $2.10+ for a litre of 95-octane over here...Aust has plenty of buffer space to downsize cars and use more public transport...although I do pity the poor b@stards in Melbourne with what they're passing off as a world-class public transport system.


----------



## theasxgorilla (13 September 2007)

wayneL said:


> The dominoes are starting to fall.




Tell me about it...every man and his dog starting a blog, sheesh, I dunno


----------



## theasxgorilla (13 September 2007)

numbercruncher said:


> They say its the Flippers who get burnt the hardest in the Squeezes, up to there eyeballs at the turn of the tide and no one to catch the hot potato.




Who are 'they' anyway?

Want to flip and protect yourself in a downturn?  Buy in an upmarket suburb.  Booms tend to contract inward, toward where the rich live.  The booms also tend to emanate out from these areas so if the rich areas are affected at all they'll be affected for the least amount of time, so IF you're left holding the bag its for a shorter period.

ASX.G


----------



## Mofra (13 September 2007)

robots said:


> hello,
> 
> just got back from signing up new vendor
> 
> ...



Gee, those nice, trustworthy agents _never_ underquote, do they...

... and guess which agent will feign surprise when the property goes for "30% above the quoted price" 

Their complaints about an "image problem" make me laugh :


----------



## theasxgorilla (13 September 2007)

Mofra said:


> Gee, those nice, trustworthy agents _never_ underquote, do they...



 Ah, not when they want to list your house, no, those situations are few and far between


----------



## numbercruncher (14 September 2007)

> Loan defaults up almost 30%
> September 14, 2007 - 11:49AM
> 
> 
> ...




http://www.theage.com.au/news/Business/Loan-defaults-up-almost-30/2007/09/14/1189276948189.html


A staggering amount of consumers in the woods, and during the Greatest economic boom in history?


----------



## happytrader (14 September 2007)

numbercruncher said:


> http://www.theage.com.au/news/Business/Loan-defaults-up-almost-30/2007/09/14/1189276948189.html
> 
> 
> A staggering amount of consumers in the woods, and during the Greatest economic boom in history?




There are a lot of kids in adult bodies out there.

With this in mind, when it comes to priorities, spending on the mobile phone and the credit card come way before paying that pesky mortgage payment.

The housing commission up here automatically deducts the rent from clients bank accounts. Its probably saved a lot of them from further homelessness.


Cheers
Happytrader


----------



## numbercruncher (14 September 2007)

I just find the figure amazing, I read there is 4.5m under 16 so we would assume they dont have credit, that leaves 16m to get the 1.8m defaults from.

Wonder how this compares to other countries, its surely got to be one of the highest default rates in the world.


----------



## Flying Fish (14 September 2007)

111000 $ is not that much


----------



## robots (14 September 2007)

hello,

great stuff NC, 

are you going to any open for inspections or auctions this weekend? hope you can get an observation of the "real" market out there at the moment

the state revenue office has the figures that count, and thats the prices which prop is sold for everything else is the chase, just like when you plonk BHP on the market at SELL for X

thankyou

robtos


----------



## Kimosabi (14 September 2007)

robots said:


> hello,
> 
> great stuff NC,
> 
> ...







> *THE DEFINITION OF A GOOD DEAL*
> 
> 
> *A good home or a good price? Both, if possible.*
> ...



http://www.jenman.com.au/news_article.php?id=217


----------



## numbercruncher (14 September 2007)

robots said:


> hello,
> 
> great stuff NC,
> 
> ...





Hello Robotics,


No i wont be wasting any precious time at Auctions this weekend ! Especially when your Investor clients are queing up to rent these places out for a 3pc return.

BHP has oodles more potential than Suburban realestate in my humble opinion, so ill stick with shares and other misadventures and leave you experts to your untold realestate wealth.

Dont you get tired of having to work weekends ? Does your boss give you penalty rates ? Oh wait i think Johnny abolished that sort of stuff ...


Ive seen some articles of price rises lately, looks like you guys might even beat Inflation this year ?


----------



## Smurf1976 (14 September 2007)

Real estate agents? Don't give me no damn real estate agents!

Just spent 2 hours driving around one suburb looking for a house. No, I don't mean looking at houses and finding one that looks OK from the outside. I mean looking for one specific house because the agent's office either doesn't know where it is (only listed today!) or for some stupid reason have decided not to tell me.

I'd be outright furious if I were the vendor of that house. A cash buyer able to pay 100% of the asking price (if it's worth it) can't find the damn place.


----------



## wayneL (14 September 2007)

Don't feed the troll.


----------



## robots (14 September 2007)

hello,

great story Kimo, its all stories though

but the state revenue office has the facts, what properties are actually selling for,

just like second hand cars, washing machines or shares, property is bought and sold on the open market, 

good weekend coming up though, inner city is going extremely well in Vic still

hope I get a reply

thankyou

robots


----------



## numbercruncher (14 September 2007)

Found this article interesting !!

If i lived in the US id be tempted to grab one  




> Nearly 700 homes in the Detroit area will be auctioned on Sept. 21 through Sept. 23, one of the biggest home auctions ever
> 
> The properties come with clear titles; there are no liens or encumbrances, such as back taxes on them. There's also a wide range of houses available with pre-auction prices running from about $5,000 to a bit more than $600,000.
> 
> "[In some cases] the sellers have indicated that any bid will be OK," said Webb. "It's costing them too much. Even if a house brings just $100, they'll still have to sell it."




http://money.cnn.com/2007/09/10/real_estate/biggest_motown_auction/index.htm?postversion=2007091117

Now detroit is the Literal definition of a Real Estate crash ....


----------



## Kathmandu (15 September 2007)

Kimosabi said:


> http://www.jenman.com.au/news_article.php?id=217




And why does Jenman do it???

And what does it prove, that as a buyer you should do due dilligence, grow a brain and try and get a better deal, or maybe even get a "buyers agent", but hold on, they cost a motza as well.

And as a seller, who will you want, the agent who sell's the house short? or the one who get's max price?


If you cant negotiate, and don't know how the rules work, well don't play the game, keep renting, and certainly don't try and shift the blame if you paid too much.

After all that's what the seller pay's the agent for, to get the maximum price, not to do the buyer a favour.

Just had all property revaled, and for this they use *previous sales as proof of valuation*

Very impressive thank's.

Now where was that small island nation that I wanted to buy again

Dave


----------



## tech/a (15 September 2007)

I keep reading this thread its amazing.

Most will never buy a house infact if you own one your a nutter.
If your thinking of buying one your ready for committing.

Ive searched high and low and I cant find a thread that in 1997 was urging people to BUY BUY BUY realestate.
Plenty of doom and gloom about both Realestate AND the stock market.

Everyone seems to know what and how to avoid disaster but havent seen much on taking advantage of the endless opportunities out there.

You all sound like a group of poms at the last test match.
Moaning and whinging.


----------



## numbercruncher (15 September 2007)

Hello tech/a

Did you settle on that esplanade property yet ?

What yield do you expect to get as a rental ?


----------



## robots (15 September 2007)

hello,

the global house price crash forum is up and running again

must of got funds from one of the mortgage brokers that advertise on the site

thankyou

robots


----------



## tech/a (15 September 2007)

numbercruncher said:


> Hello tech/a
> 
> Did you settle on that esplanade property yet ?
> 
> What yield do you expect to get as a rental ?




They didnt accept my offer.(Market is increasing not decreasing.)
It was an alternative to building my own home on the Espy.
I have a block there and have done some building figures.
Line ball for building (Myself I'm a builder) and quiting own home and land and freeholding another if I can find one I like or with potential.

I dont buy for yeild.
While my Ip's are positively geared,either due to the increase in capital value/rents or the initial capital in the property,I buy for capital gain and most importantly in the not so distant future a hedge for INFLATION.


----------



## numbercruncher (15 September 2007)

robots said:


> hello,
> 
> the global house price crash forum is up and running again
> 
> ...




Hello Robots


You must spend a bit of time over there to always be up to speed on the uptime / downtime !


Be sure to let us know the clearance rates / price gains this weekend.


Ill be busy packing for the move back to Qld into a nice brand new rental, ive been genorous with this investor crowd and agreed to pay them the equivalent of a 3pc return,  good tenants are hard to come by.

Have a nice day


----------



## numbercruncher (15 September 2007)

Seems in my home town of the Gold Coast even the top end realestate is getting awesome 2pc rental returns.

Heres a 5m+ property on Hedges ave that you can rent for 2k a week, gee if i was a young tacker back in the day would of hooked up with 10 mates and taken this badboy on ....

[URL="http://http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=402802618&f=30&p=10&t=ren&ty=&fmt=&header=&c=58022478&s=qld&tm=1189824361"]http://http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=402802618&f=30&p=10&t=ren&ty=&fmt=&header=&c=58022478&s=qld&tm=1189824361[/URL]


----------



## robots (15 September 2007)

hello,

for some reason many people keep forgetting about capital growth,

I hope Kathmandu can repost the great article on the 6k house in Bryon Bay,

a bit hypocritical from GHPC to accept advertising from mortgage brokers isnt it?

went to a few auctions in my area, all is going well, clearance rates will be down on the last few due to the massive increase in property for sale

just a bit more to choose from so people will most likely hang out, the price range from 300-500k will be solid as though

thankyou

robots


----------



## numbercruncher (15 September 2007)

robots said:


> went to a few auctions in my area, all is going well, clearance rates will be down on the last few due to the *massive* increase in property for sale





Thanks for alerting us to some more warning signs Robots !


----------



## robots (15 September 2007)

hello,

no problem, dont mind helping out the forum members by keeping my ear to the ground,

more than happy to put the info on the forum for eveybody to read, much better than trusting whats in the media articles

thankyou

robots


----------



## tech/a (15 September 2007)

Cruncher



> Seems in my home town of the Gold Coast even the top end realestate is getting awesome 2pc rental returns.




You make me laugh.
You think your having the last laugh!

Ever contemplated that the owner may have purchased at 1/3 of the current property valuation put 50% down and is returning 15% or more!

Nah---didnt think so.
Your like that bird on the add for breakfast cereal---you think the older folk are plain stupid!

You can crunch numbers till your blue in the face,until you actually take part in investment you'll just be one of those unfortunates that talk a lot and do bugger all.

Oh there are more states in Australia than QLD,grab an atlas and have a look.


----------



## Kathmandu (15 September 2007)

Here you go number cruncher, just to refresh your memory, heres that article I posted earlier 

http://www.news.com.au/couriermail/story/0,23739,22383886-5011140,00.html

MMMmmmm nice fat capital gains.

and some pictures may help as well, with the Byron Bay one that Robot's likes


----------



## numbercruncher (15 September 2007)

Tech/a your little pyramid scheme only holds up whilst youve got buyers willing to pay more than the previous buyers.

As an owner occupier you pretty much need 10pc p/a capital gains for break even.

And as im sure you are aware residental home construction is pretty much in recession showing your little pyramid scheme isnt holding up so well.

Yes i did consider your possibility, I also considered that the owner of that house could of paid alot more than 5m as well, just do some research on what Hedges ave sells for, its probably more like 10m - plonked in a bank acount would return 700k a year instead of 100, but like ive said before I love you realestate investor dudes, you rock !! We have a relationship that seems to keep both parties happy. We get to move when we are tired of the view, you get 2 to 3pc returns year after year.

Once Australia is looking like running out of land, let me know, i might jump back in then.

No use getting upset though now is there ?

Have a nice day


----------



## Kathmandu (15 September 2007)

But wait, theres more.

Just for numbercruncher, the Gold Coast

And who could forget that Dud, Rockhampton.

Property never go'es up              

Yeah right


----------



## numbercruncher (15 September 2007)

Nice one Davo,


Perhaps you should sit on that fishing shack for 30 years, might get the same return somewhere around 5 Billion dollars for it ??


----------



## numbercruncher (15 September 2007)

Kathmandu said:


> But wait, theres more.
> 
> Just for numbercruncher, the Gold Coast
> 
> ...





There you go typical Realty talk mincing my words, can you quote one of my posts that say Realestate never gos up ?

Nice list though, anyone who bought a year ago as an owner occupier and didnt see 10pc for the 12 months loses


----------



## Kathmandu (15 September 2007)

numbercruncher said:


> Yes i did consider your possibility, I also considered that the owner of that house could of paid alot more than 5m as well, just do some research on what Hedges ave sells for, its probably more like 10m - plonked in a bank acount would return 700k a year instead of 100, but like ive said before I love you realestate investor dudes, you rock !! We have a relationship that seems to keep both parties happy. We get to move when we are tired of the view, you get 2 to 3pc returns year after year.




Say he did buy it for $5 million, he would have only had to cough up $1 million to purchase and if it is worth $10 million now, he get's $9 million.

Not bad

Yes he still has holding cost's, but on the original $1 million which = $1471/week in interest

He get's $2000/week in rent

How can that be



Dave


----------



## Kathmandu (15 September 2007)

numbercruncher said:


> Nice one Davo,
> 
> 
> Perhaps you should sit on that fishing shack for 30 years, might get the same return somewhere around 5 Billion dollars for it ??




Nah mate, the profit's i'll take on the sale will pay off a couple of the ones I purchased 5 years ago.

Dave


----------



## numbercruncher (15 September 2007)

Kathmandu said:


> Say he did buy it for $5 million, he would have only had to cough up $1 million to purchase and if it is worth $10 million now, he get's $9 million.
> 
> Not bad
> 
> ...





Bold assumption@!


Lets assume he bought it yesterday for 5m and hes now renting it for 2k a week - his repayments on a 30 year 100pc mortgage(using CBA standard variable) are 9,453 + rates, Insurance, maintenance.

Or maybe he paid double that at 10m ? and repays 19k a week, waiting on the massive capital gains? who knows!

Tasty!


----------



## tech/a (15 September 2007)

numbercruncher said:


> Tech/a your little pyramid scheme only holds up whilst youve got buyers willing to pay more than the previous buyers.




Hmm interesting,Ive been on the planet 50 odd years always been the case.
But then you'll be in fear for the rest of your life and have missed the opportunity to own a home---but of course thats not your goal.
Your goal is to justify in your own mind why you never had the guts or accumen to get one of your own.



> As an owner occupier you pretty much need 10pc p/a capital gains for break even.




As owner occupiers 99% dont give a rats what the return is or needs to be *THATS WHERE WE WANT TO LIVE.*



> And as im sure you are aware residental home construction is pretty much in recession showing your little pyramid scheme isnt holding up so well.




Now that statement just shows total ignorance of the industry.Our company has expanded 20% a year for the last 3.I cant get good tradesmen.My forward orders stretch YEARS! In residential developement in SA of which I'm involved in.10,000 new homes are being constructed in Seaford area in 8 stages,we are in stage 3.Recession---hahaha.I know of 2 others.
Mt Barker and Mawson Lakes.---you crack me up!



> Yes i did consider your possibility, I also considered that the owner of that house could of paid alot more than 5m as well, just do some research on what Hedges ave sells for, its probably more like 10m - plonked in a bank acount would return 700k a year instead of 100, but like ive said before I love you realestate investor dudes, you rock !! We have a relationship that seems to keep both parties happy. We get to move when we are tired of the view, you get 2 to 3pc returns year after year.




Do you really thinkpeople who purchase $5 mill or more properties are "Normal" wage earners? Do you really think these guys give 2 hoots about return.
*Do you really think they want to make a $$* Their earning capacity AND their tax situation has them placed where they *KNOW EXACTLY *what they are doing negative gearing.
Nievety becomes you.
If numbercrunching is to be your profession perhaps you should re consider?



> Once Australia is looking like running out of land, let me know, i might jump back in then.



True but do you really want to live in a galvanised iron shed 100ks from a major city?---Would you rent it?! No?--So why would you buy there?



> No use getting upset though now is there ?
> Have a nice day




Hell no----lifes dandy!


----------



## wayneL (15 September 2007)

OK some nasty comments going on here, let's just cut the _ad hominem_ crap out.

Stick to facts, figures, projections, opinions; casting aspersions on peoples character will quickly turn a forum to sh!te. 

Let's not go there.


----------



## Kathmandu (15 September 2007)

numbercruncher said:


> *Bold assumption@!*
> 
> 
> Lets assume he bought it yesterday for 5m and hes now renting it for 2k a week - his repayments on a 30 year 100pc mortgage(using CBA standard variable) are 9,453 + rates, Insurance, maintenance.
> ...




Bold assumption@!

Lets say he did pay $5 million and then got another 19.8% Cap Growth next year like this year at Mermaid Beach.

That'd be a pick up of *$990,000*

Something tells me he aint worrying about the outgoings

Tasty!

Dave


----------



## wayneL (15 September 2007)

Kathmandu said:


> Bold assumption@!
> 
> Lets say he did pay $5 million and then got another 19.8% Cap Growth next year like this year at Mermaid Beach.
> 
> ...



What if values come off like they are starting to in the rest of the world.

In a deep recession notional values can (and have done in the past) come off a long way. There is great sense in using historic norms of valuations like yield, when considering illiquid investments such as property.

On the other hand if the cash is sitting in boxes around the house and that's where you want to live, that may be a different matter. But that reality is a for a minority. Most of us have to consider future value even if it's a PPOR.


----------



## Kathmandu (15 September 2007)

numbercruncher said:


> Lets assume he bought it yesterday for 5m and hes now renting it for 2k a week - his repayments on a 30 year 100pc mortgage(using CBA standard variable) are 9,453 + rates, Insurance, maintenance.
> 
> Or maybe he paid double that at 10m ? and repays 19k a week, waiting on the massive capital gains? who knows!
> 
> Tasty!




Probably should do your numbers again numbercruncher

If he bought for $5m his repayments if borrowing 80% would be more like $5961/week, not $9453/week and probably less with a better discount (I get a full% point off on way less)

If he did the same for $10m it would be $11,923/week not $19k

Dave


----------



## Kathmandu (15 September 2007)

wayneL said:


> What if values come off like they are starting to in the rest of the world.
> 
> In a deep recession notional values can (and have done in the past) come off a long way. There is great sense in using historic norms of valuations like yield, when considering illiquid investments such as property.
> 
> On the other hand if the cash is sitting in boxes around the house and that's where you want to live, that may be a different matter. But that reality is a for a minority. Most of us have to consider future value even if it's a PPOR.




Well if it drops 20% in your crash that has to happen, he'll be back where he started from last year

If he bought it several years back it'll hardly matter, it could probably drop 50%

Bit like the last drop in the share market, who cares, back to January and up it goes again.

Dave


----------



## wayneL (15 September 2007)

Kathmandu said:


> Well if it drops 20% in your crash that has to happen, he'll be back where he started from last year
> 
> If he bought it several years back it'll hardly matter, it could probably drop 50%
> 
> ...



This is true, buyers who bought at better value should be shielded from any real effect apart from a notional level of wealth. I bought my properties several years ago. I expect that the values of those houses (as expressed at todays value) will suffer steep declines in the years ahead. In fact they are officially declining now, according to the latest figures (they are in the UK).

I don't give a toss. 

However, if I had extracted equity from them to make more recent purchases, I would be worried (depending on the extent of course)

This is where I think a lot of portfolios will come unstuck. Bubble equity is being used to make purchases where there is a risk of declines on the entire portfolio.

Many LLs came unstuck in the last bust this way. Those with conservative LVR's will survive and benefit in the longer term.


----------



## numbercruncher (15 September 2007)

tech/a said:


> Hell no----lifes dandy!




Pleased to hear it, be nice to see it demonstrated, you seem awfully stressed at the fact that some snotty nosed dumb **** punk like myself doesnt beleive in the realestate selling pyramid.

but to that we say ...

"Que sera, sera,
  Whatever will be, will be;
  The future's not ours to see.
  Que sera, sera,
  What will be, will be."


The fact that average priced realestate now needs to rise in value each year by the average wage to see any growth what do we say ?


"Que sera, sera,
  Whatever will be, will be;
  The future's not ours to see.
  Que sera, sera,
  What will be, will be."


The fact that your baby boomer generation that outnumbers the rest is quickly getting wrapped up in nappys and shipped to nursing homes flooding the market with realestate what do we say ?


"Que sera, sera,
  Whatever will be, will be;
  The future's not ours to see.
  Que sera, sera,
  What will be, will be."


The fact that the crash has already started in other countries what do we say ?

"Que sera, sera,
  Whatever will be, will be;
  The future's not ours to see.
  Que sera, sera,
  What will be, will be."



I neednt continue theres overwhelming evidence showing just how detached your little realestate scam is from the long term PE average.

In closing


"Que sera, sera,
  Whatever will be, will be;
  The future's not ours to see.
  Que sera, sera,
  What will be, will be."




Have a pleasant evening


----------



## tech/a (15 September 2007)

> Pleased to hear it, be nice to see it demonstrated, you seem awfully stressed at the fact that some snotty nosed dumb **** punk like myself doesnt beleive in the realestate selling pyramid.




Not at all I was where you are once.It was once impossible for me as well,I couldnt see myself getting ahead certainly seemed hopeless.The older generation knew nothing then---not much has changed you know!

Wayne IF prices did drop 20% or more.
Who do you think would buy that R/E?

Those that are waiting for prices to drop who are just outside of "affordability"?
I dont think so.


----------



## Kathmandu (15 September 2007)

numbercruncher said:


> The fact that your baby boomer generation that outnumbers the rest is quickly getting wrapped up in nappys and shipped to nursing homes flooding the market with realestate what do we say ?




Just so you realize,this will be you soon enough as well, so don't be too smugg..

And not all of us with balls and brains are baby boomers.

Dave


----------



## tech/a (15 September 2007)

Kathmandu said:


> Just so you realize,this will be you soon enough as well, so don't be too smugg..
> 
> *And not all of us with balls and brains are baby boomers.*
> Dave




Intelligent males?


----------



## Kathmandu (15 September 2007)

wayneL said:


> Those with conservative LVR's will survive and benefit in the longer term.




All your comments are correct wayneL, and if it does happen, i'm one of the above, and I hope to be buying.

Dave


----------



## numbercruncher (15 September 2007)

Kathmandu said:


> Just so you realize,this will be you soon enough as well, so don't be too smugg..
> 
> And not all of us with balls and brains are baby boomers.
> 
> Dave




Youre swimming naked arnt you David ?


If the market turns as quick as it has in the US and seems to be in the UK, youll get that same feeling that you get after having a few laxatives wont you ?


----------



## Kathmandu (15 September 2007)

tech/a said:


> Intelligent males?




You know what I mean, 

nunbnuts is having a dig at BB's and i'm pointing out that they are'nt the only ones who have property.

I aint no BB, not that theres anything wrong with that, my parents are BB's and they seem quite nice.

Dave


----------



## wayneL (15 September 2007)

tech/a said:


> Wayne IF prices did drop 20% or more.
> Who do you think would buy that R/E?
> 
> Those that are waiting for prices to drop who are just outside of "affordability"?
> I dont think so.




I don't know. But I suspect hardly anybody, that's how the psychology works.

It would also largely depend on who could secure financing, and at what level, because it certainly won't be as easy to get money at that point as it is to get now.

But even a 20% drop would not make real estate good value by historical norms. (speaking in real price terms) It would still be a speculative purchase rather than on the basis of value.


----------



## Kathmandu (15 September 2007)

numbercruncher said:


> Youre swimming naked arnt you David ?
> 
> 
> If the market turns as quick as it has in the US and seems to be in the UK, youll get that same feeling that you get after having a few laxatives wont you ?




If 35 ish% LVR is swimming naked, well I suppose I must be

Add in the sale of the "Fishing Shack " as you cal it and much better again.

Look at the numbers on Rocky I posted numbnut's, wash of this years 33% and where will I be???

Take that back 5 years.

Dave


----------



## numbercruncher (15 September 2007)

tech/a said:


> Not at all I was where you are once.It was once impossible for me as well,I couldnt see myself getting ahead certainly seemed hopeless.The older generation knew nothing then---not much has changed you know!
> 
> Wayne IF prices did drop 20% or more.
> Who do you think would buy that R/E?
> ...




I GENUINELY beleive that realestate is in for long term stagnation or worse (but subject to Central Bank actions, play the game by there policy), I certainly dont feel hopeless and unlike yourself i dont feel irrational exhuberance towards realestate - Ive consciously chosen to sell my house, invest in a better vehicle and rent property from you RE bulls at a mere fraction of the cost of ownership.

From all you realestate bulls i have not received any economic information that would support the argument of continued price growth, other than your irrational beliefs that it always goes up!!

As long as people believe it will go up the psychology drives it, but your at the end of the run until you can convince people otherwise with facts.

But yes I can imagine your generation disregarded the previous generations ideas as nonsense just as mine does ! 

To me its just simple, prices are so high that they need to increase by to big an amount each year for them to be considered an investment, and a 3pc yield, give me a break, a decade ago you could get nearly 10pc.

Show some proof of continued price rises, ive provided heaps in this thread to support the zero price growth theory.

Thanks.


----------



## numbercruncher (15 September 2007)

Kathmandu said:


> If 35 ish% LVR is swimming naked, well I suppose I must be
> 
> Add in the sale of the "Fishing Shack " as you cal it and much better again.
> 
> ...




Your laughing then Davo!

Your shout bud


----------



## numbercruncher (15 September 2007)

Kathmandu said:


> Probably should do your numbers again numbercruncher
> 
> If he bought for $5m his repayments if borrowing 80% would be more like $5961/week, not $9453/week and probably less with a better discount (I get a full% point off on way less)
> 
> ...




Neat trick Davo,


You altered the amount I worked on(5 to 4), and changed from full repayments to interest only and rounded down the interest rate to make yourself look smart and attempt to make me look like a doofus.

Good work.


----------



## wayneL (15 September 2007)

tech/a said:


> Wayne IF prices did drop 20% or more.
> Who do you think would buy that R/E?
> 
> Those that are waiting for prices to drop who are just outside of "affordability"?
> I dont think so.



Just as an addendum to my earlier comments:

I suspect many who think they will be buyers if prices come off, won't be.

As far as those just outside of affordability. I wouldn't be so haughty as to discount all of them.

Some for sure are ne'r do wells, some are financially competent and have made an alternative choice to "buy at all costs".


----------



## Kathmandu (15 September 2007)

numbercruncher said:


> Neat trick Davo,
> 
> 
> You altered the amount I worked on(5 to 4), and changed from full repayments to interest only and rounded down the interest rate to make yourself look smart and attempt to make me look like a doofus.
> ...




Yeah well, I only ever use IO on IP's so had forgotten about P&I

Dave


----------



## cuttlefish (15 September 2007)

Is there anyone that believes that blue chip Sydney property (e.g. free standing brick homes on good land in Eastern suburbs, Mosman, North Shore, or well constructed, well maintained established apartments in the inner city ring) could fall by more than 30% in a property bust?

I have heard people talk of the slump that occurred in the UK (in the early 90's I believe) whereby values went down by up to 30% or more in some areas but I'm wondering how blue chip london property fared in those scenario's?

I've no idea whats going on in the US market, but would be curious if there is anyone in the US that can comment on whats happening in well positioned suburbs in the larger cities on the east and west coast at the moment price wise?

Also in Australia I know that in the early 90's (90/91) there were very significant slumps in some areas, including blue chip Sydney suburbs. I saw units in good sydney suburbs languish on the market for months at yields that would have made them positively geared if borrowed at the variable rate of the time.  I've also seen instances in large regional Australian cities where properties were yielding well above bank interest rates and still languished on the market for long periods.

Also I'd be curious to people's thoughts on how inflation could impact this equation.  Strong wage inflation has the potential to bridge some of the yield gap.  Also in densely populated areas with little or no land supply (e.g. inner city Sydney) if there is a general shift from owning to renting then there is marked upward pressure on rental yields - this has already been seen over the past couple of years and in particular the past 12 months in Sydney and has brought yields a little closer to being in line with historical levels, particularly in the unit market. 

A lot of Sydney property, unlike many parts of regional Australia, has shown little significant growth over the past two years as well, however Sydney also led the initial boom and so has historically low yields as well, like most parts of Australia do now.


----------



## numbercruncher (15 September 2007)

Kathmandu said:


> Bold assumption@!
> 
> Lets say he did pay $5 million and then got another 19.8% Cap Growth next year like this year at Mermaid Beach.
> 
> ...





Sure Davo lets work on that then 5m purchase 20pc gain to 6m. Investment property 100pc finance interest only.  Leaving out rates too probably massive on a 5m home.


5 000 000 Purchase price
   217 475 stamp duty
     11 924 Transfer fee
      20 000 stamp duty on loan
       115    mortgage registration fee
      1000   conveyancing
   400 000  Interest @ 8pc
------------------------------
5 650 514

Then 100k+ to RE to sell it, less 100k rent return. 350k profit for 20pc price jump. No profit if adjusted for inflation. If prices stagnate for a few years youll spend years more chasing the Interest and Inflation losses.


So the pick up isnt anywhere near what you would hope it too be  


Like i said we are at the stage that you need 10pc pa for break even virtually across the board. Prices eventually get to a level that they simply cannot grow on average realestate because of wage etc constraints.


----------



## wayneL (15 September 2007)

Cuttlefish,

IIRC Sydney harbour-front got swatted in the early 90's... the high falutin stuff came off more than the low-brow housing.


----------



## theasxgorilla (15 September 2007)

wayneL said:


> It would also largely depend on who could secure financing, and at what level, because it certainly won't be as easy to get money at that point as it is to get now.




This is a really good point.

If it gets as bad as bears are predicting (and some sick people are hoping) its not a foregone conclusion that those cashed up opportunitists can get the financing they will need to take advantage of cheaper real house prices.  Sure, you might get a payout when you are made redundant, but in times of tight credit (not that long ago, anybody try to get a housing loan in 1999? vastly different landscape) having cash does not supercede not having the means to repay.  

Better to have got your credit approved 2 years ago when everything was going gangbusters and there was no rear-vision mirror.


----------



## numbercruncher (15 September 2007)

Well theoretically its already harder to get money.... 

1/ non bank lenders like wizard financing out of the US are struggling.

2/ Some people who would of qualified for loans before latest Interest rate rises would no longer do so.


And its already reflecting in the building figures, just need it to show in the sales figures, Even our resident perma bull realestate agent Robotics has informed us of a MASSIVE increase in the amount of houses coming to market in his suburbs which is potentially a warning.




> Activity in the construction industry has deteriorated for the second consecutive month in August, with the Australian Industry Group-Housing Industry Association Performance of Construction Index (PCI) falling 0.4 points to 48.4.
> 
> The fall in activity meant the index remained below the key 50 point level that separates expansion from contraction.




http://www.smh.com.au/news/Business/Housing-affordability-slows-construction/2007/09/07/1188783465252.html

Its pretty much the concept of Peak Debt upon us in my humble opinion.


----------



## numbercruncher (15 September 2007)

theasxgorilla said:


> This is a really good point.
> 
> If it gets as bad as bears are predicting (and some sick people are hoping) .





I understand your european or whatever.

But do you appreciate that in the country of Australia the Average wage can no longer afford the average property. (at current prices)

These "sick" people you refer too on average are probably Mums and Dads that just want to put a roof over there Childrens heads, Im sure they arnt hoping for price drops because they want to see you lose money, I imagine they couldnt care less about your money, I personally dont understand peoples overwhelming desire to own a house at all costs, but im sure for the most part Home ownership isnt a get rich scheme for these people.

Cheers.


----------



## Kathmandu (15 September 2007)

numbercruncher said:


> I understand your european or whatever.
> 
> But do you appreciate that in the country of Australia the Average wage can no longer afford the average property. (at current prices)
> 
> ...




Now because I've paid attention, I'm sure I picked up somwhere through this thread that ASX is Australian and just happen's to live in ABBAland

Might be wrong

Dave


----------



## numbercruncher (15 September 2007)

Kathmandu said:


> Now because I've paid attention, I'm sure I picked up somwhere through this thread that ASX is Australian and just happen's to live in ABBAland
> 
> Might be wrong
> 
> Dave





Yes I know hes Australian, I was being vexatious incase thats what he was doing too


----------



## cuttlefish (15 September 2007)

wayneL said:


> Cuttlefish,
> 
> IIRC Sydney harbour-front got swatted in the early 90's... the high falutin stuff came off more than the low-brow housing.




thanks Wayne - good point and quite true - and particularly so for actual waterfront properties and any property with a large element of vanity pricing. 

I'd still argue that the peak of this current boom is a bit different to the last boom in that the regional cities seem to be feeling the heat of the boom the most and this is partly due to the population shifts and wage inflation that have occurred in these area's as a result of the commodities boom. On the flip side for the past two years Sydney has actually experienced relatively flat prices, construction slowdown and rising yields (though not significant enough in my opinion to justify the current prices as yet).

I'd be curious to hear more about people's view on how inflation can affect things because it is a potential wild card. Depending on how central banks act (and in particular the RBA for the Australian situation) we can end up with different type of bust scenario's from deflationary to inflationary (as described in a video Wayne recently posted).

Also Australia differs from the UK and America because of the heavy impact that resources has on the economy as a whole - could this potentially shield us from a slump? (or exacerbate one depending on outlook in this regard).


----------



## Flying Fish (16 September 2007)

A friend bought a house some years back, she has about 10 or twenty K left on the loan, can this help her get another loan for another house?


----------



## So_Cynical (16 September 2007)

numbercruncher said:


> I understand your european or whatever.
> 
> But do you appreciate that in the country of Australia the Average wage can no longer afford the average property. (at current prices)
> 
> These "sick" people you refer too on average are probably Mums and Dads that just want to put a roof over there Childrens heads, Im sure they arnt hoping for price drops because they want to see you lose money




Forget the mums and dads..i just want to buy a house somewhere nice
where theres some crappy job for me...for no more than 10% more 
than i pay in rent.

Impossible ATM


----------



## theasxgorilla (16 September 2007)

cuttlefish said:


> Also Australia differs from the UK and America because of the heavy impact that resources has on the economy as a whole - could this potentially shield us from a slump? (or exacerbate one depending on outlook in this regard).




It's a question worth asking.  IMO contemplation of the answer is at least a good reason not to go panicing just yet and throwing the baby out with the bath water.


----------



## Flying Fish (16 September 2007)

theasxgorilla said:


> It's a question worth asking.  IMO contemplation of the answer is at least a good reason not to go panicing just yet and throwing the baby out with the bath water.




You must be joking. lol Australia is not the only resource centre of the world. China Russia Africa have heaps of the stuff. Pull your head outa the sand guys


----------



## Sean K (16 September 2007)

Flying Fish said:


> You must be joking. lol Australia is not the only resource centre of the world. China Russia Africa have heaps of the stuff. Pull your head outa the sand guys



Maybe they'll do OK to?


----------



## theasxgorilla (16 September 2007)

numbercruncher said:


> I understand your european or whatever.
> 
> But do you appreciate that in the country of Australia the Average wage can no longer afford the average property. (at current prices)
> 
> These "sick" people you refer too on average are probably Mums and Dads that just want to put a roof over there Childrens heads




For those not already aware there is a spelling and grammar thread here (or there):

https://www.aussiestockforums.com/forums/showthread.php?t=8241

...if you're not sure how to appropriate the correct form of a given word that thread should be your next point of call.  Lest you find yourself in the embarrassing position of being taught English by a European, even though it may not even be their native tongue.

BTW, they're not the sick people I'm refering to.


----------



## theasxgorilla (16 September 2007)

Flying Fish said:


> You must be joking. lol Australia is not the only resource centre of the world. China Russia Africa have heaps of the stuff. Pull your head outa the sand guys




You know I thought about my comment a bit more Flying Fish and I realised you are right...when our house prices stagnate it's practically a given that the rest of the world will start to boycott our commodity markets.  Can't believe I didn't join those dots myself.  Carry on.


----------



## Shane Baker (16 September 2007)

FF



> You must be joking. lol Australia is not the only resource centre of the world. China Russia Africa have heaps of the stuff. Pull your head outa the sand guys




The US consumer is responsible for about 30% of Chinese GDP. If (when) the US has a recession then there will be effects upon the world markets as demand for Chinese and Asian goods is reduced. However the Chinese economy is growing at 10-11% per year so a reduction to 8% due to a US recession may not be a bad outcome for the Chinese. The pdf article at the lead post of this thread shows the domestic consumption/gdp figures.

https://www.aussiestockforums.com/forums/showthread.php?t=8013

Demand for commodities by the BRIC countries (and soon the Western World as it is forced to re-engineer its infrastructure for new energy paradigms) will continue even with a recession in the US. Just at a reduced pace of growth...which may not be a bad thing given the capcity constraints present in the Australian economy. If the Chinese had all the commodities they needed then they wouldn't be importing commodities from us at inflated prices.

The problem with  a lot of commodity producing countries is sovereign risk. When you buy a stake in something you would like to know that you may get the return on your investment that you had planned for. Recent past events in Russia, Venezuala and African countries have shown that sovereign risk is a real concern even for multinational companies.

My  worth is that we would have continued but reduced growth in Australia and Canada.  Peak oil is the big unknown. If it bites hard then economic output will suffer in an environment of increasing inflation (food,transport, etc etc). The possible outcome is similar to the 1970's when stagflation occurred. Even the Courier Mail had its lead article on page 1 about peak oil on Saturday's paper.

Cheers

Shane


----------



## cuttlefish (16 September 2007)

Flying Fish said:


> You must be joking. lol Australia is not the only resource centre of the world. China Russia Africa have heaps of the stuff. Pull your head outa the sand guys




Thats true but a big difference for Australia is that resources make up a very large component proportionally of our relatively small economy. This is not the case for the US, UK, Europe or China where by proportion resources aren't the main contributor to economic growth.

So Australia's forward outlook is very much dependant on the sustainability of commodity prices, and this is in turn very much dependant on the direction of the emerging Asian and Middle Eastern economies as they are the main consumers at the moment of resources.  There appear to be differing views on how much impact a US slowdown will have on these economies as illustrated by the post Shane Baker made above. The US does not necessarily have the same proportional impact on the world economy as it once did. China and the Middle East are generating demand of their own that can possibly replace US demand to some extent.

Is is also quite possible that the US currency may also not sustain the dominant position it currently maintains.  Macro shifts in the currency landscape can have all sorts of unpredictable impacts , however if demand for commodities remains then the value of Australia's proportionally large commodity resource for our population size means we're potentially shielded from all sorts of earthquake style changes in the global economy, in the same way countries for whom oil production is the main source of wealth tend to be shielded.  (which creates another question about how much the US economy is dependant on oil and how a shift away from oil to other fuels can also impact this).

We should also not forget that China thinks strategically and so will quite likely support shifts that may accelarate a move away from a US dominant world economic position.

I don't believe we're likely to see real growth in property prices, but if inflation appears, particularly strong wage inflation (and there's strong pressure at the moment on this within the Australian economy) then we may see an inflationary led continuation of the price increases, or at least maintenance of current property prices. The corresponding inflation in other area's including wages and the price of goods would mean there could still be a reduction in real terms of property value even if prices rise.


----------



## Flying Fish (16 September 2007)

Thanks guy to all the above. Makes interesting debate. So in reality, it is probably a better bet to keep money out of property and put it in commodities, like wheat, corn and of course minerals.


----------



## theasxgorilla (16 September 2007)

Flying Fish said:


> Thanks guy to all the above. Makes interesting debate. So in reality, it is probably a better bet to keep money out of property and put it in commodities, like wheat, corn and of course minerals.




In this part of the world thanks to extreme weather wheat crops were smashed this year.  We all know the drought has done likewise in Aust.  Commentators and analysts seem to be drawing logical conclusions that wheat prices will rise.


----------



## numbercruncher (16 September 2007)

theasxgorilla said:


> For those not already aware there is a spelling and grammar thread here (or there):
> 
> https://www.aussiestockforums.com/forums/showthread.php?t=8241
> 
> ...




Thanks for the spelling lesson ASX, as im sure you can imagine im not real smart (but i can lift heavy things)

If you think the grasp on English is bad down here you should check out the mathmatics ability, apparently we have been convinced that investment Houses that return less than inflation = awesome.

I guess you can blame your Idol Johnny "big brows" Howard for the state of affairs.

Anyway my IQ issues aside(which incidently came back negative at last test)..

You still havnt told me who these sick people are ? Do you think perhaps there is some sickos waiting on the sideline for a drop to snap up 100 houses or something ?

I for one think that most Aussies arnt one eyed capitalists and actually want to see affordable housing for the masses (they just dont want it affecting the perceived value of there own homes/investments)

Do you have an opinion on this ? Do you own realestate in Australia ?


----------



## robots (16 September 2007)

hello,

the affordability crisis is load of rubbish NC,

look at the "australians for affordable housing", they want donations, come on

the hand out crew are everywhere, I see them going to get $5 pills from the chemist while I pay $20 for 10 tabs of amoxycillin, sick of them

get them going with hammers, nail guns, concrete mixers and build some houses, oh no, work

others have shown RE is available at reasonable prices all over Aus

big day yesterday, around 83% clearance rate, great stuff for buyers

thankyou

robots


----------



## Mofra (16 September 2007)

robots said:


> get them going with hammers, nail guns, concrete mixers and build some houses, oh no, work



A RE (snake oil) agent talking about real work - now I've heard everything


----------



## numbercruncher (16 September 2007)

Speaking of one eyed capitalists (no offense Robotics)


Hello,

How are you ?

You know when i realised that this problem was getting out of hand ?

Was when 60m ran an article about the mining boom one example was a School teacher who enjoyed his Job (incidently in a Industry with a MASSIVE shortage of Males).

He threw in His teaching job to do a two week course to get a Truck licence and go work in a Dusty open cut mine for over double the Income because his Teachers wages wernt cutting it.

Thanks Johnny "big brows" you really are speeding up the rate of dumbing down Australia.

Thankyou.


----------



## Kimosabi (16 September 2007)

robots said:


> hello,
> 
> the affordability crisis is load of rubbish NC,
> 
> ...




These wouldn't be Repo Auctions would they Mr RoboSpruiker?


----------



## Flying Fish (16 September 2007)

numbercruncher said:


> Speaking of one eyed capitalists (no offense Robotics)
> 
> 
> Hello,
> ...




Frankly I'd rather drive a truck than have to put up with the misshappen youth of todays society. They are all hyped up through the media and most think and probably do know more than the teachers., then there is hassles with parents etc etc. Much rather sit in a comfy airconditioned cabin and do something that is challengning. Besides, can always go back to teaching later


----------



## numbercruncher (16 September 2007)

Flying Fish said:


> Frankly I'd rather drive a truck than have to put up with the misshappen youth of todays society. They are all hyped up through the media and most think and probably do know more than the teachers., then there is hassles with parents etc etc. Much rather sit in a comfy airconditioned cabin and do something that is challengning. Besides, can always go back to teaching later




Hi FF,

Im with you on that from a personal perspective.

But it was an example to make a point of the severity of the problem, if teachers are doing it, surely Nurses, Police, Military, Social workers, child carers etc etc are to - I think its a serious problem!


----------



## robots (16 September 2007)

hello,

couldnt care less if are repo auctions kimo, does it matter

the issue is kimo record prices are being achieved, prices havent stgnated

still cut up from missing out

thankyou

robots


----------



## Kathmandu (16 September 2007)

numbercruncher said:


> Well theoretically its already harder to get money....
> 
> 1/ non bank lenders like wizard financing out of the US are struggling.
> 
> ...




Well, from someone who has just finnished securing some more NO-doc lending from RAMS, I did not see any problems.

Higher interest rate than last time, but that's the cost of doing business.

Dave


----------



## Flying Fish (16 September 2007)

numbercruncher said:


> Hi FF,
> 
> Im with you on that from a personal perspective.
> 
> But it was an example to make a point of the severity of the problem, if teachers are doing it, surely Nurses, Police, Military, Social workers, child carers etc etc are to - I think its a serious problem!




No problem, little johnny will just let in more professionals, just like beatty let in semi qulified doctors. Not a problem.


----------



## Kathmandu (16 September 2007)

Flying Fish said:


> Thanks guy to all the above. Makes interesting debate. So in reality, it is probably a better bet to keep money out of property and put it in commodities, like wheat, corn and of course *minerals.*




Of course if things go belly up in the world like some here dream about, and consumerism drop's way off, Chindia wont need the resources.

Dave


----------



## Flying Fish (16 September 2007)

Kathmandu said:


> Of course if things go belly up in the world like some here dream about, and consumerism drop's way off, Chindia wont need the resources.
> 
> Dave




ok but most of the gear for housing boom is made in China anyway. Go look at all the tools hardware etc. ALL made in China.


----------



## Kathmandu (16 September 2007)

numbercruncher said:


> Hi FF,
> 
> Im with you on that from a personal perspective.
> 
> But it was an example to make a point of the severity of the problem, if are doing it, surely Nurses, Police, Military, Social workers, child carers etc etc are to - I think its a serious problem!




So, how's your training going to be a teacher, Nurse, Police, Military, Social worker, child carer.

Dave


----------



## numbercruncher (16 September 2007)

Kathmandu said:


> Of course if things go belly up in the world like some here dream about, and consumerism drop's way off, Chindia wont need the resources.
> 
> Dave





Morning Davo,

I havnt come across anyone here dreaming of things going belly up !


Why are you getting more no-doc lending , buying another House ? Whats the deal with no-doc anyways you just go in there show your drivers licence and in like flynn ?

Whats the interest rate ?

Cheers.


----------



## Kathmandu (16 September 2007)

numbercruncher said:


> Morning Davo,
> 
> I havnt come across anyone here dreaming of things going belly up !.



I'm sure there are a few, then they could maybe make up for the losses from not buying before




numbercruncher said:


> Why are you getting more no-doc lending , buying another House ?.




No, getting another "Free" house




numbercruncher said:


> Whats the deal with no-doc anyways you just go in there show your drivers licence and in like flynn ??.




And a 30% deposit



numbercruncher said:


> Whats the interest rate ?




8.29% on a deal that will have a conservative 200% gain in 3 months




numbercruncher said:


> Cheers.




Cheers


----------



## Flying Fish (16 September 2007)

why 30% deposit?


----------



## Kathmandu (16 September 2007)

Flying Fish said:


> why 30% deposit?




Cause that be the rules NO-doc 30%, Lo-doc and documented 20%

Dave


----------



## noirua (16 September 2007)

It does look as if Australia will stay good even if America and Europe slow down. Fortunately, China and India are set to expand quickly and should hold the world economies together.

If a hold for property represents 7, then Australia is probably 6.8, America 5.7, UK 5.5 (excluding Northern Ireland), France and Germany 6.


----------



## Flying Fish (16 September 2007)

noirua said:


> It does look as if Australia will stay good even if America and Europe slow down. Fortunately, China and India are set to expand quickly and should hold the world economies together.
> 
> If a hold for property represents 7, then Australia is probably 6.8, America 5.7, UK 5.5 (excluding Northern Ireland), France and Germany 6.




Why 7?


----------



## Smurf1976 (16 September 2007)

Shane Baker said:


> Peak oil is the big unknown. If it bites hard then economic output will suffer in an environment of increasing inflation (food,transport, etc etc). The possible outcome is similar to the 1970's when stagflation occurred. Even the Courier Mail had its lead article on page 1 about peak oil on Saturday's paper.



If the north gets even an average (as opposed to warm) winter this season then to my understanding there is essentially zero chance that oil production meets demand. At least not without a serious recession or some other means of cutting demand below where it would otherwise be. 

At some point it's a choice between stock drawdowns delaying the inevitable and increasing strategic risk, price spikes forcing a lowering of demand initially in the Third World (ALREADY HAPPENING) or outright rationing. I think we'll see all of those in the next decade.

Economic growth? Not without energy you won't.


----------



## numbercruncher (16 September 2007)

Smurf1976 said:


> Economic growth? Not without energy you won't.




Precisely.

The shift to rewables has to be the single biggest priority on every nations agenda - Those who fail to mitigate this problem are doomed to failure. And on the flip side those who are first to embrace it enmasse stand to reap untold fortune.

If the US had spent there Trillion from the Iraq war rolling out renewable instead of desperatley seeking Oil security they could of retained there place as undisputed economic powerhouse - I just hope Australia learns from this huge error.


----------



## Shane Baker (16 September 2007)

> At some point it's a choice between stock drawdowns delaying the inevitable and increasing strategic risk, price spikes forcing a lowering of demand initially in the Third World (ALREADY HAPPENING) or outright rationing. I think we'll see all of those in the next decade.
> 
> Economic growth? Not without energy you won't.





It is all about timeframe and perspective. Certainly over the intermediate 5-10 year horizon we can expect a strong effect upon world growth by increasing energy shortages and risng energy costs feeding into the costs of products including food.

And the rising cost of energy will feed inflation and associated energy demand destruction via reduced economic growth will lead to stagflation. 

I still think that commodity countries will have a better time of things as countries are forced to re-engineer their energy infrastructure to accomodate the new energy paradigm of renewables etc. In fact later developing countries such as China, India and parts of Asia will have an advantage to some degree as their infrastructure is relatively new and may be adapted to incorporate new technologies as they are developed. Western countries infrastructure is all generally immediate post WW2 war 2 vintage and in desperate need of renewal.

Cheers

Shane


----------



## Mofra (16 September 2007)

numbercruncher said:


> If the US had spent there Trillion from the Iraq war rolling out renewable instead of desperatley seeking Oil security they could of retained there place as undisputed economic powerhouse - I just hope Australia learns from this huge error.



Big call NC. For a start, you're assuming the house of Saud (who reportedly control 10% of listed US equity wealth) would let them bypass OPEC (and not the meeting Dubya went to in Austria recently). Wonder why the majority of 911 hijackers were Saudis (like Bin Ladin) yet no repercussions were felt in Saudi Arabia?


----------



## numbercruncher (16 September 2007)

Im not certain Mofra but I suspect it has something to do with oil and Saudi "offical" cooperation.


----------



## numbercruncher (16 September 2007)

tech/a said:


> I buy for capital gain and most importantly in the not so distant future a hedge for INFLATION.





This is about the only sensible argument for continued price growth, and its a very real risk, depending on Central bank actions we could see some huge Inflation in the coming years - Its pretty scary really. Is why i like Gold.

And further I beleive the most econmically sensible way to be in Realestate (if you must) is to Rent the place you live in and Negatively gear a Investment property to reap the same tax breaks as Investors.


----------



## Flying Fish (16 September 2007)

numbercruncher said:


> This is about the only sensible argument for continued price growth, and its a very real risk, depending on Central bank actions we could see some huge Inflation in the coming years - Its pretty scary really. Is why i like Gold.
> 
> And further I beleive the most econmically sensible way to be in Realestate (if you must) is to Rent the place you live in and Negatively gear a Investment property to reap the same tax breaks as Investors.



Crikey how do you do that? Do you do that? Is it worthwhile if you are on the average wage?


----------



## robots (16 September 2007)

hello,

the negative gearing aspect of investment property is slowly being eroded as tax breaks are given, I dont think negative gearing counts for all that much actually

your income is what gets you through investment property, no income no chance

if your out of pocket 10k for the year then you may get 3-4k back, what about the other 6-7k, where's that come from centrelink

what happens after 6-7 years when the property becomes neutrally geared

this is why in years to come developers will not build units because investors are extremely hesitant to buy of the plan in these multi-level complexes (this has been happening for the last couple of years)

more tax breaks will be given to property investors or developers

developers at the moment are heavily involved in building boutique complexes

thankyou

robots


----------



## Flying Fish (16 September 2007)

This is why in years to come developers will not build units because investors are extremely hesitant to buy of the plan in these multi-level complexes (this has been happening for the last couple of years)
So what will they build?


----------



## robots (16 September 2007)

hello,

stats show that dwelling starts are down,

they are building more boutique complexes for owner-occupiers 

so instead of a tower with 200 units they will build a tower with 50 units, exclusive etc, lifts which service only one unit 

thankyou

robots


----------



## Flying Fish (16 September 2007)

robots said:


> hello,
> 
> stats show that dwelling starts are down,
> 
> ...




hello robbie, i dont understand, can you put this in simple person talk?


----------



## Kathmandu (16 September 2007)

Flying Fish said:


> Crikey how do you do that? Do you do that? Is it worthwhile if you are on the average wage?




Pretty easy really as 75% of the rental income of the purchase will show up as extra money coming in to service debt, and of course that debt is tax deductable, unlike repayments on PPOR.


Dave


----------



## Kathmandu (16 September 2007)

Flying Fish said:


> This is why in years to come developers will not build units because investors are extremely hesitant to buy of the plan in these multi-level complexes (this has been happening for the last couple of years)
> So what will they build?




I'd dissagree and add in what I feel Robots is alluding to.

With well off BB's wanting ti downsize I believe they will want to go to some style of "Lifestyle" retirement complex, which is upmarket and has all the trappings they are accustomed to like coffe shop's, wine bars, wood fired Pizza restaurant's, and also have on site staff to take care of certain aspects of their life.

They will still want to remain in the areas that they have frequented as well.

There is evidence of this sort of thing happenning.

Is this what you were on about Robots, or was it as simple as young urban proffessionals wanting the three bedroom house with large entertainment area in unit format.

Dave


----------



## Julia (16 September 2007)

Kathmandu said:


> I'd dissagree and add in what I feel Robots is alluding to.
> 
> With well off BB's wanting ti downsize I believe they will want to go to some style of "Lifestyle" retirement complex, which is upmarket and has all the trappings they are accustomed to like coffe shop's, wine bars, wood fired Pizza restaurant's, and also have on site staff to take care of certain aspects of their life.
> 
> ...



Agreed.   Only about a decade ago retirement villages were pretty dull affairs.  These days they are right up there with the best five star resorts with indoor and outdoor pools, gyms, restaurants, bars, community centres,
tennis courts, bowling greens, etc.  Plus transport for shopping and other outings.  Plus complete security and emergency call buttons  for onsite management.  Choose from stand alone houses, or apartments.  Do your own garden or have it done for you.  Pretty damn attractive imo.


----------



## theasxgorilla (17 September 2007)

Julia said:


> Agreed.   Only about a decade ago retirement villages were pretty dull affairs.  These days they are right up there with the best five star resorts with indoor and outdoor pools, gyms, restaurants, bars, community centres,
> tennis courts, bowling greens, etc.  Plus transport for shopping and other outings.  Plus complete security and emergency call buttons  for onsite management.  Choose from stand alone houses, or apartments.  Do your own garden or have it done for you.  Pretty damn attractive imo.




Mine too!  Gimme something to look forward to, thats what I say...sounds alright to me...finally a post to put happy thoughts back into our head on this thread...thanks Julia


----------



## Smurf1976 (17 September 2007)

Shane Baker said:


> It is all about timeframe and perspective. Certainly over the intermediate 5-10 year horizon we can expect a strong effect upon world growth by increasing energy shortages and risng energy costs feeding into the costs of products including food.
> 
> And the rising cost of energy will feed inflation and associated energy demand destruction via reduced economic growth will lead to stagflation.
> 
> ...



Can't argue with that. We're talking about a medium term crisis not the end of civilisation. Medium term = 20 years duration from start to end in this context.

This is a housing thread not a political / national security / energy thread so I don't want to go too far off topic but suffice to say Australia's energy policy is "leave it to the market and don't actually plan anything" which means we will take no action until there is an acutal crisis too big to ignore.

The water situation provides the best example - first we'll ignore it, then we'll try band-aid solutions quite likely involving some sort of rationing. Only when the pain gets too great will we take the plunge and begin to implement a long term plan - that's when the 20 years starts.

This does have a lot of implications for real estate investment when you think about it. Some areas will certainly do a lot better than others. Cities with food and viable energy production not too far away ought to do fairly well. Anywhere heavily reliant on tourism for its economic base with food and energy brought in from distant locations is at the other end of the scale.


----------



## wayneL (17 September 2007)




----------



## Kathmandu (17 September 2007)

And I reply with this.(3rd year in a row now) and we have a way's to get to $5,000,000 yet 

Just because houses wash off some Val does not mean it is all over, look at shares, what happens?

They roar up, wash off a wad, roar up some more, wash off some more.

Houses historically do the same.

Is anyone suggesting share prices will stagnate for years or to sell those shares because of a price drop?

Some wally's always buy at the top of the market 'cause everyone else was buying, and then get in a panic when prices drop, so have a fire sale. (too bad for them)

Those that bought at the bottom have little to fear though.

Dave


----------



## cuttlefish (17 September 2007)

Property prices do stagnate for years. Rockhampton prices were flat for pretty much an entire decade after the end of the 80's property boom, and probably only started to show some life in the early 2000's.  There is an abundance of land in regional area's which typically enables large developers to generate supply through large scale housing and unit developments.  Development guidelines are typically less restrictive than in inner city area's of the larger Australian cities as well.  

That being said, inflation is another factor to consider in all of this, as I've raised in other posts in this thread.  Labour shortages and wage inflation can push up the cost of producing housing and can also push up rentals and prices.  Because regional area's start from a low population base this effect can be exaggerated significantly, particularly if there is significant migration into area's as a result of something like a resources boom (or simply a flight from expensive capital city property prices). The reverse is also true when everyone leaves again when the party's over though.


----------



## Kathmandu (17 September 2007)

cuttlefish said:


> Property prices do stagnate for years. Rockhampton prices were flat for pretty much an entire decade after the end of the 80's property boom, and probably only started to show some life in the early 2000's.  There is an abundance of land in regional area's which typically enables large developers to generate supply through large scale housing and unit developments.  Development guidelines are typically less restrictive than in inner city area's of the larger Australian cities as well.
> 
> That being said, inflation is another factor to consider in all of this, as I've raised in other posts in this thread.  Labour shortages and wage inflation can push up the cost of producing housing and can also push up rentals and prices.  Because regional area's start from a low population base this effect can be exaggerated significantly, particularly if there is significant migration into area's as a result of something like a resources boom (or simply a flight from expensive capital city property prices). The reverse is also true when everyone leaves again when the party's over though.




Agree in part, except that I don't expect Rocky to wash of huge amount's, probably just 20%, if a crash comes along.

At the moment, I feel it's just playing catch up (ten years behind)

The population has'nt increased that much, (According to ABS) so doubt that there will be an exodis when the coal stop's (in 10/20 years???)  Mackay may well be different.

And there is a shortage of easily built on blocks in the area, so there is in fact a land shortage (of sort's) in Rockhampton (city)



Point being was  don't buy at the top, and no one get's hurt

Dave


----------



## numbercruncher (17 September 2007)

Great little article here supporting continued house price deflation in the medium term because of the baby boomers houses flooding the market over the coming years/2 decades, written using the New Zealand market specifically but we have virtually the same boomer ratio.

I think youll find the concept and reasoning hard to argue against.




> The House Price Crash in 2010
> 
> A thought-provoking article by Graeme Kennerley
> 
> ...





http://www.babyboomersguide.co.nz/Articles/Will+there+be+a+crash+in+2010/The+House+Price+Crash+of+2010.html


----------



## Bronte (17 September 2007)

Great link numbercruncher ty


----------



## Shane Baker (17 September 2007)

A very simplistic article that fails to take onto account that when the baby boomers sell their large family home they have to move somewhere. Also the fact that they will invest the proceeds of the sale of their large homes to generate income. It fails to take into account that people rarely choose their housing by needs alone unless they are poverty stricken. People who can afford a better standard of accomodation often choose to simply because they can. Basic human nature. Otherwise most of us would live in 2/3 bed apartments and drive Hyundai's.

My family has had to go through this process and although quite hard on the parent initially...once they adapted to leaving the family home, they quite liked the freedom of not maintaining such a large family home.  Interestingly the family home which raised five children is now filled with a "standard" family of mum, dad and two kids. Expectations have been raised over the size and quality of accomodation and people are willing to pay for the extra living space. 

The article fails on several accounts;

1. It appears to assume that everyone will all sell at the same time (otherwise how will the massive oversupply occur?) when in fact people are reluctant to leave the family home and the area they have spent the last twenty or so years raising their family. The boomers are moving on but it will take at least twenty years for it to happen. In the meantime they are sitting on some of the most desirable realestate.

2. It fails to take into account that baby boomers will need to purchase somewhere to live when they sell the family home. This may generate competition for the smaller houses. 

3. It fails to take into account that the baby-boomers expect to live longer and better lives than their forebears and so will stay at home as long as possible. When they do downsize, they will want to invest their excess capital. Where will they invest it? In the stock market as it is relatively liquid and can provide a regular income stream ala dividends. Doh!!! Especially since they are expecting to live longer and have learnt the value of compound interest better than almost any other generation.

In twenty years we will see who has been right. That will be when the last of the  baby boomers will finally have moved through to 65. Is that when you are waiting for the bargains to appear? 

Cheers and good luck waiting,

Shane


----------



## numbercruncher (17 September 2007)

Shane Baker said:


> In twenty years we will see who has been right. That will be when the last of the  baby boomers will finally have moved through to 65. Is that when you are waiting for the bargains to appear?
> 
> Cheers and good luck waiting,
> 
> Shane




Challenge accepted Shane.

You continue to invest in Houses.

I will rent one of your houses returning you 3pc per annum.

I will take the alternative route and invest in Aged care, respite care, lifestyle apartments and other vehicles aimed at the largest demographic group in Australia.

in 20 yrs we will meet back here and compare digits.

Cheers and goodluck to you to as well.


----------



## Shane Baker (17 September 2007)

Hi Wayne

Irish house prices have gone up 270 % since 1996 and Dublin house prices 26% in the last two years. It's the old story about timing and being in the market. 

http://www.finfacts.com/biz10/irelandhouseprices.htm

Like trading....being the last one on the trend is not a happy place to be.

Cheers

Shane


----------



## Kathmandu (17 September 2007)

numbercruncher said:


> I will rent one of your houses returning you 3pc per annum.




Again you assume that all property only returns 3%, you never take into account rental, tax, depreciation etc etc.

And um, if you are investing in Aged care, respite care, lifestyle apartments , what would you call that????

Dave


----------



## Kathmandu (17 September 2007)

Shane Baker said:


> Hi Wayne
> 
> Irish house prices have gone up 270 % since 1996 and Dublin house prices 26% in the last two years. It's the old story about timing and being in the market.
> 
> ...




Yep, I'd be happy to take a 30% haircut if I had bought into that market, infact, I would have expected it.

$270% - 30% = 240%, how could I live with myself, the returns are shocking.

Dave


----------



## numbercruncher (17 September 2007)

Kathmandu said:


> Yep, I'd be happy to take a 30% haircut if I had bought into that market, infact, I would have expected it.
> 
> $270% - 30% = 240%, how could I live with myself, the returns are shocking.
> 
> Dave





$100 x (270%) = 370
$370 - (30%)  =  259
---------------------

*100 to 259 = 159%*

159/11 = 14.45 p/a (less inflation,Interest and other outgoings)



Becareful out there Davo


----------



## wayneL (17 September 2007)

Shane Baker said:


> Hi Wayne
> 
> Irish house prices have gone up 270 % since 1996 and Dublin house prices 26% in the last two years. It's the old story about timing and being in the market.
> 
> ...



Exactly.

But this is just the start.


----------



## wayneL (17 September 2007)

numbercruncher said:


> $100 x (270%) = 370
> $370 - (30%)  =  259
> ---------------------
> 
> ...



OOPs.

The cruelty of mathematics.


----------



## Kathmandu (17 September 2007)

numbercruncher said:


> $100 x (270%) = 370
> $370 - (30%)  =  259
> ---------------------
> 
> ...




No matter how you do it, better than a poke in the eye,

and dont forget the rental, depreciation and other tax benifits.

Dave


----------



## Kathmandu (17 September 2007)

wayneL said:


> Exactly.
> 
> But this is just the start.




That's what you've been saying since 21st-September-2005, 01:28 AM 

Oop's, the cruelty of missed opportunity

Dave


----------



## wayneL (17 September 2007)

Kathmandu said:


> That's what you've been saying since 21st-September-2005, 01:28 AM
> 
> Oop's, the cruelty of missed opportunity
> 
> Dave



Oops, RE isn't the only game in town. 

BTW, I didn't miss it, I bought at value. 

Oops, sold one in 2006, held for a few years, all documented somewhere in this thread. 

I'm comfortable and happy and not interested in a pissing contest. 

I have always said RE is a great investment... at value.

Cheers


----------



## Kimosabi (17 September 2007)

wayneL said:


> Oops, RE isn't the only game in town.
> 
> BTW, I didn't miss it, I bought at value.
> 
> ...




Timing is everything.

For those that missed the last cycle, wait until this cycle finishes.  This is happening as we speak and load up early in the next cycle.

The stars seems to be pretty nicely aligned for a Global Housing Price Crash IMO...


----------



## numbercruncher (17 September 2007)

Kimosabi said:


> The stars seems to be pretty nicely aligned for a Global Housing Price Crash IMO...




Exactly kimosabi ....


And as soon as prices start to fall the Largest demographic group in society the Baby Boomers many of whom are completely dependant upon the Equity in there Homes and scared of further price drops will desperately flood the market so as to free up there cash to fund retirement.

The clear cut winners will be the Boomers who have already had the foresight and downsized to appartment living.


----------



## Kimosabi (17 September 2007)

numbercruncher said:


> Exactly kimosabi ....
> 
> 
> And as soon as prices start to fall the Largest demographic group in society the Baby Boomers many of whom are completely dependant upon the Equity in there Homes and scared of further price drops will desperately flood the market so as to free up there cash to fund retirement.
> ...




I'm waiting for this current Credit Cycle to end, and will probably enter the RE market sometime in the next two years when Interest Rates start falling.

The contents of this thread will be very different in a years time.


----------



## Kathmandu (17 September 2007)

numbercruncher said:


> And as soon as prices start to fall the Largest demographic group in society the Baby Boomers many of whom are completely dependant upon the Equity in there Homes and scared of further price drops will desperately flood the market so as to free up there cash to fund retirement.




And as I've put to you before the market will only be flooded if 

a) they are scared of further price drops (they have been in the market and seen up's and downs before, unlike this generation) if not, no flooded market

b) they all decide they want to move into retirement on the same day/week/month, if not, no flooded market

c) they have no other investment, so have to sell, but see a) and b) if not, no flooded market

do you beleive they will all sell at the same time?

do you think that a drop in Val. will worry them much (it will some)

do you think that the PPOR is the only asset class that BB's have? (some it will be)

Dave


----------



## Kathmandu (17 September 2007)

Kimosabi said:


> I'm waiting for this current Credit Cycle to end, and will probably enter the RE market sometime in the next two years when Interest Rates start falling.
> 
> The contents of this thread will be very different in a years time.




Interest rates falling in the next 2 years,?????


Dave


----------



## numbercruncher (17 September 2007)

Kathmandu said:


> Interest rates falling in the next 2 years,?????
> 
> 
> Dave




There wont be falling Interest rates (in Oz) in the next 2 years im almost certain unless its to ward off some massive economic disaster or ARMageddon.


Chinas quickest growing export is now Inflation, at the beginning of the boom it was deflation they provided us with via cheap stuff but now with soaring resource demand (ie/oil) and growing internal Inflation such as wage growth feeding into dearer exports. Even the Yuan has been rising in value vrs USD, notice how the US have gone all quiet on the demands to China to revalue the Yuan ? That is because the US is now quite desperate to lower interest rates in the face of ARMageddon and a higher Yuan would serverly feed Inflation


----------



## numbercruncher (18 September 2007)

> Future holds 10% + interest rates: Greenspan
> 
> "Former Federal Reserve Chairman Alan Greenspan said in an interview published on Monday the Fed would have to raise interest rates to double-digit levels in coming years to thwart inflation."




http://www.reuters.com/article/businessNews/idUSN1728325720070917


Unfortunately that would bring investment property yields down below 2pc assuming "average prices" remain at there current unsustainable level.

Interest bill on a current "average" priced house fully financed for the owner occupier would probably exceed an entire after tax income.

Peak Debt, coming to a disco near you soon.


----------



## krisbarry (18 September 2007)

Tomorrow marks 2 years to the day that I actually started this thread..and in all honesty not much has changed most states have had a little bit of growth, but better growth has come from the stock market. 

Sure some suburbs have had major growth, but averaging it out state by state and suburb by suburb little has changed!

*Hip, Hip Horray, looks like the housing bear is dancing for joy as house prices are about to fall, with higher interest rates on the way, according to the new RBA head honcho*


----------



## Shane Baker (18 September 2007)

> Interest bill on a current "average" priced house fully financed for the owner occupier would probably exceed an entire after tax income.




So developers stop developing. No new stock. Less people per household and immigration  increasing to offset  declining worker numbers leads to more competition for existing rental stock therefore rising rental returns.

Be careful what you wish for


----------



## theasxgorilla (18 September 2007)

Shane Baker said:


> A very simplistic article that fails to take onto account that when the baby boomers sell their large family home they have to move somewhere.




Exactly...simplistic, fear inspiring and controversial.  Perfect tabloid fodder.

I know of numerous instances where the family home was not sold until it was incredibly necessary (ie. 80+ years)...and I know of numerous instances where larger (not large, just too big to be bothered tending the garden) houses were sold and the people moved into a similar configuration houses in a better suburb.  Dollar for dollar they were either the same or they used savings/investment profits to actually pay more for the next house.  

This was the generation preceding the boomers...not a poor generation, but not typically wealthy either.  The boomers have a LOT more money.  I expect many will keep the family home and buy a holiday house as many don't want to move far away from their family and social groups.  So you end up with a high rate of second home ownership, which drives demand.  Everyone is looking for the obvious, which means that the unexpected, when it inevitably comes, can't be obvious by definition.  I'd look beyond the story of the poor boomers being forced to move to shoe boxes because their house prices crashed.  I'd look to kids and grand kids peaved because the house that gran held onto isn't worth as much in real dollars as it was 20 years earlier when her and grand dad retired.

Most stubborn old people don't move themselves into aged care voluntarily... expect 80-something, not 65 to be the ball-park for when these services come under heavy demand.  Once again, too far off into the future for anyone to know whether the boomers will still have money or whether someone has robbed it from them somehow.  In the short to medium term, I still see game on.

ASX.G


----------



## Kathmandu (18 September 2007)

Stop_the_clock said:


> Tomorrow marks 2 years to the day that I actually started this thread..and in all honesty not much has changed most states have had a little bit of growth, but better growth has come from the stock market.
> 
> Sure some suburbs have had major growth, but averaging it out state by state and suburb by suburb little has changed!
> 
> *Hip, Hip Horray, looks like the housing bear is dancing for joy as house prices are about to fall, with higher interest rates on the way, according to the new RBA head honcho*




A shame you won't be able to take advantage of fall's (if any) as all your dollars are tied up in super

Oh well, roll on 60 eh.

Dave


----------



## numbercruncher (18 September 2007)

theasxgorilla said:


> In the short to medium term, I still see game on.
> 
> ASX.G




Hello G,


So whats your prediction in percentage growth terms for average realestate in this short/medium timeframe ?

Which Realestate market are you invested in ?


----------



## WaySolid (18 September 2007)

Stop_the_clock said:


> Tomorrow marks 2 years to the day that I actually started this thread..and in all honesty not much has changed most states have had a little bit of growth, but better growth has come from the stock market.
> 
> Sure some suburbs have had major growth, but averaging it out state by state and suburb by suburb little has changed!
> 
> *Hip, Hip Horray, looks like the housing bear is dancing for joy as house prices are about to fall, with higher interest rates on the way, according to the new RBA head honcho*



If I had chosen not to invest in property over the last 2 years based upon reading the first post in this thread then I would be poorer today. If this is little growth or no change then I would settle with the same for the rest of my life, many people have become much richer over the last two years from property in this country.. I have met and talked to a lot of them.

I'm pretty happy with the way my portfolio has performed over the last two years, which strangely enough is pretty much in line with my analysis of how property in my areas has performed for over 100 years now.

Beware of toxic information and follow your own investing plan, refine and repeat and don't let fear guide your decisions.


----------



## numbercruncher (18 September 2007)

Shane Baker said:


> So developers stop developing. No new stock. Less people per household and immigration  increasing to offset  declining worker numbers leads to more competition for existing rental stock therefore rising rental returns.
> 
> Be careful what you wish for




And rising Interest rates will easily devour your rising rentals, also you will get more people per household in shared accomodation arrangements and Gen ys staying at home alot longer than they are already, negating demand and pushing residential construction further into recession than it already is.


Next idea ?


----------



## Shane Baker (18 September 2007)

> And rising Interest rates will easily devour your rising rentals, also you will get more people per household in shared accomodation arrangements and Gen ys staying at home alot longer than they are already, negating demand and pushing residential construction further into recession than it already is.
> 
> 
> Next idea ?





Sorry missed that point entirely.
Did you say you had no idea?

Did you miss the part about fixed interest loans when they taught you finance at high school??? Doh!!

I'd suggest you have a look at some free sites with hard info re demand and supply for housing, such as Michael Matusiks site before receiving your fail mark for economics 101 on ASF. 

While you are looking around a basic economics 101 textbook may I suggest you look at a few basic things such as multistrategy approaches to investment of which direct and indirect property investment is one.  Once you get some substantial money together you need to have a multistrategy approach that takes in different asset classes, portfolio allocation, taxation strategies etc etc etc.

But don't let me bore you with those tedious concepts. You must be really be too busy looking those houses in Cleveland now you have built up your nest egg and prices have fallen 30% to bother with some fundamental principles. Let me save you some time. Here's one that may be suitable.

http://www.10realty.com/detail.asp?id=2921

Cheers and good luck

Shane


----------



## wayneL (18 September 2007)

Shane Baker said:


> So developers stop developing. No new stock. Less people per household and immigration  increasing to offset  declining worker numbers leads to more competition for existing rental stock therefore rising rental returns.
> 
> Be careful what you wish for



This is exactly what normally happens.

The rent cycle and the price cycle are almost inversely correlated.


----------



## theasxgorilla (18 September 2007)

numbercruncher said:


> So whats your prediction in percentage growth terms for average realestate in this short/medium timeframe ?




I don't know and it's not important as I don't invest in average real estate. In any case I didn't say that I could see what would happen, but have an idea about what is happening.

Tech/a said earlier that he invests for capital gains and soon to be a hedge against inflation.  I would argue that for the last 5-10 years investing in real estate has been a hedge against _asset price inflation_.  And since CPI based inflation has been benign relative to asset prices then in consideration of the low cost of living it has been possible to get ahead by investing for capital gains in real estate.  I don't know if this will continue, but suffice to say if you're already ahead all you need to do now is maintain your position.

ASX.G


----------



## cuttlefish (18 September 2007)

Wage inflation can skew things a lot.


----------



## numbercruncher (18 September 2007)

Shane Baker said:


> Sorry missed that point entirely.
> Did you say you had no idea?
> 
> Did you miss the part about fixed interest loans when they taught you finance at high school??? Doh!!
> ...




Not capable of playing the Ball are you Shane, in a desperate attempt to portray yourself as an expert you belittle the person rather than substantiate your side of the debate ? *applause your our hero*

Despite you being a prudent and sophisticated investor figures show that as of May this year Fixed Interest rate mortgages account for only 17.4pc of the market, my argument would be that average people really dont understand that we are in a Inflationary enviroment and they continue to sit on these rising variable rate mortgages right upto the point of forced selling.

Id be interested in your response if you can do so in a civilised manner otherwise dont bother.

Cheers, Good Luck and Good Karma


----------



## Shane Baker (18 September 2007)

> And rising Interest rates will easily devour your rising rentals




It didn't appear to me that you were playing the ball. I took the tone of you post to be personal and responded in kind. If I misinterpreted your tone then I apologise.

To lump sophisticated investors in with everybody else and to believe that everybody who has property is in the same situation as the poor unfortunate people who are struggling in Wetern Sydney or in those similar regions in the US is quite naive. The numbers that you quote probably reflect the large proportion of the investor market as opposed to the owner occupier market who tend to take out P&I variable rate loans.

I agree that we are an inflationary environment and in fact my real concern is that over the medium term we could be heading for a stagflation environment as higher energy prices gradually erode economic growth whilst continuing to feed inflation. On a personal front to this end for the last eighteen months I have gradually reduced leverage to a low LVR and increased cash assets parked in a mortgage offset account to deal with any adverse circumstances arising.

I get very concerned when people advocate a one size fits all or single focus strategy as being the end all of investing or even trading. The needs and requirements of people are all different dependent upon age, risk profile, assets accumulated, stage of life expenses (kids, aged parents, etc etc). Successful wealth creation rarely relies upon a single method and what may suit your personal requirements may be totally unsuitable for someone in different circumstances. 

Your example of people who are in over their head hanging on with variable rate mortgages is an excellent example of people requiring different things. It could be argued (and I am pretty sure that in the US there will be litigation) that some of these people should never have been given the mortgage of that amount in the first place. The repricing of risk to more prudent levels will affect a lot of people associated with the finance and mortgage industry (brokers, lenders, financial planners etc) adversely as well as the poor person who was enticed into a loan they couldn't really afford.

Most of the contributors here are at least financially literate if not sophisticated in their wealth creation strategies. The forum tolerates a lot of different perspectives (because we all have differing circumstances) but I might suggest that you are flogging the dead horse a fair bit in this thread. You are doing what suits you and that's great. 

I wish you well and hope you reach a level of wealth that requires a multistrategy approach. Once again if I misinterpreted the tone of your post then I sincerely apologise.

Cheers

Shane


----------



## numbercruncher (18 September 2007)

No Shane I certaintly wasnt launching a personal attack, had I just omitted the word "your" I guess i could of avoided copping that eye full 


I concur that lumping all in together is naive, but committing an argumentum ad crumenam or an argument of the purse hardly benefits a blanket debate about house pricing stagnating for years ....... perhaps a new thread needs to be started such as House prices to stagnate for 'years' (except for investors) or House prices to stagnate for 'years' (but only for the owner occupier).

See the only way this debate can really be run is using publicly available news, figures and statistics  - anyone can come up with a personal argument or experience, and that includes myself , I can add an example of my own I am currently fortunate enough to have a little invested in a land delvelopment in Perth, I cant go wrong(but this single investment isnt representive of the re market), yet I still believe the Mum and Dad retail buyer who whacks a Home on this will find that House prices stagnate for years especially when adjusted for the ongoing cost of these properties.(actually im currently very bearish and think they will fall)

The core of my argument is that average house prices have now passed the affordability threshold, the average wage can no longer afford the average House or more importantly service the required mortgage, public fact, and all whilst we are in a Inflationary enviroment and probably facing more interest rate rises.

I guess what im looking for here is a logical argument as to why and how they can continue to rise (minus the personal arguments such as My house located beside a new copper mine doubled in value etc!)



Cheers mate.


----------



## cuttlefish (18 September 2007)

The only way that I can see house prices continuing to rise is if there is a strong breakout of wage inflation, and even then I don't believe the rise will be in real terms.

In terms of them being 'stagnant for years' then I think this will come down to location.  Property in high population growth area's with scarce supply traditionally recovers more quickly because the inevitable yield increases drive price recovery.   In these area's people have to live somewhere and the choice is limited.  There is no doubt that in a recession when consumer confidence is low people will go for lower cost approaches to acommodation (more people to a dwelling basically) but overall if there is population growth but no growth in supply, yields will start to rise in real terms.  Price growth will usually lag yield growth quite a bit after a slump, but it will eventually catch up to yield growth. (and even if it doesn't, as long as the yield growth continues investors will still see improving returns which would justify increased investment).


----------



## nioka (18 September 2007)

Another angle. The tougher things get the more thoughts go towards security for the future and the harder people work towards that end. Home ownership becomes more the primary goal and new cars, travel, entertainment become less important. That is why those of us brought up in really tough times made a point of owning our home early in life. Not that times are tough now, they aren't. It only seems like it to some who have been in the habit of too much unnecessary spending.
 The demand for property will continue to maintain prices and anyone waiting to get in cheap will end up in the back blocks in in a dying country town. ( Although the way this state is managed this could be the heart of Sydney)


----------



## theasxgorilla (19 September 2007)

Shane Baker said:


> Your example of people who are in over their head hanging on with variable rate mortgages is an excellent example of people requiring different things. It could be argued (and I am pretty sure that in the US there will be litigation) that some of these people should never have been given the mortgage of that amount in the first place. The repricing of risk to more prudent levels will affect a lot of people associated with the finance and mortgage industry (brokers, lenders, financial planners etc) adversely as well as the poor person who was enticed into a loan they couldn't really afford.




About two years ago people in Sweden had the opportunity to lock a mortgage for 10 years at 3.5%.  It never ceased to amaze me the proportion of people I was meeting (some working in finance related jobs themselves) who felt compelled to play the market and let at least half of their mortgage float...many floated the lot.  This is what I see as a key difference in the mindset of an investor (even if we're talking about investor's PPOR) and a misguided, news affected, dinner-party/peer-group influenced home owner.  12 months after the fact news came to light that the prime minister himself had locked his 12 million kronor loan back at 3.5%.  Variable rates were already at about 4.5% at this stage and now we're at 5%.  Boat = missed.


----------



## robots (22 September 2007)

hello,

checked out the outer suburbs today, was interesting to see the auction process wandering out

I think it is fair more transparent way than the private treaty,

all properties sold that I went to, good bayside areas

dont shoot the messenger (got that from one of wayno's post)

thankyou

robots


----------



## numbercruncher (22 September 2007)

> Australian New Home Sales Decline to Seven-Month Low (Update1)
> 
> By Victoria Batchelor
> 
> ...




http://www.bloomberg.com/apps/news?pid=20601081&sid=aTSqegGeXC_M&refer=australia


Amuses me how these stories never appear on TV, but the prices up 80pc this week ones do ?


----------



## Kathmandu (22 September 2007)

numbercruncher said:


> http://www.bloomberg.com/apps/news?pid=20601081&sid=aTSqegGeXC_M&refer=australia
> 
> 
> Amuses me how these stories never appear on TV, but the prices up 80pc this week ones do ?




Don't want the sheeple to stop buying all the over priced stuff now do we

Dave


----------



## Smurf1976 (22 September 2007)

I've found a commercial building going real cheap right in the city centre.

Myer Hobart store, just metres from the mall and the only proper department store in southern Tas.

Location, location, location! Nice and warm too... 

(Seriously, my condolences to all those who have presumably lost their jobs due to the massive fire in the Hobart CBD today. Thankfully there aren't thought to be any deaths or serious injuries.)


----------



## robots (23 September 2007)

hello,

great that people can highlight all the NOISE that surrounds RE, but NC find me 10 blue chip properties  that have decreased in value, you will come up with nothing

even the apartments in docklands that people bought of the plan are thriving

and in 5-yrs time in the US the same will happen

82% clearance rate in Melb yesterday, with some 360 more auctions than this time last year

goodluck

thankyou

robots


----------



## numbercruncher (23 September 2007)

Hello Robots


Im Not really debating Blue Chips but the overall market, evidence is mounting.




> WHAT does it feel like to cancel your home loan? The financial equivalent of cancelling your wedding, I suppose, or your 21st birthday party.
> 
> Home loan cancellations are soaring and it makes me wonder what sort of recovery we are really seeing in house prices.
> 
> ...




http://www.theage.com.au/news/business/house-prices-yet-to-feel-the-trickledown-effect/2007/09/22/1189881828855.html


----------



## WaySolid (23 September 2007)

Have been pleasantly surprised by the strength of the SEQ market again this week, it's very impressive the strength being shown on the ground in terms of real $$ rather than economic speculation. 

All the feedback I'm getting shows that the 2007 'mini boom' is still going strong.

Wonderful stuff for a property investor  Probably not quite as wonderful as the weird and unsustainable situation we had in 2000 and 2001 when you could positively gear so much wonderful stuff.

Rock on!


----------



## WaySolid (23 September 2007)

robots said:


> hello,
> 
> great that people can highlight all the NOISE that surrounds RE, but NC find me 10 blue chip properties  that have decreased in value, you will come up with nothing
> 
> ...



It's a funny game of ping pong to watch Robots, it's like you and your opponents have great technique and style but are playing on different tables 

Simple fact is this market is very robust at the moment in Bris, don't follow Sydney or Melbourne that closely but I also understand Melbourne is surprising a lot of people on the upside.

The auctions and open houses in my area are smoking. The simplest explanation I can come up with is that demand is strong and supply is not keeping up.

It's probably quite a painful time to be not owning property at the moment if you are waiting for some pullback to buy, though I'm not a believer in the housing affordability crisis either.. You can still get stuff for 200k or so near Brisbane if you are prepared to start somewhere. Of course that somewhere will not be a McMansion, close to CBD and coffee shops, or your dream house.. but if you are earning any sort of half decent salary it's a way to start.


----------



## tech/a (23 September 2007)

No different in Adelaide.

Those buying cant possibly be those who have been waiting for prices to "Crash"----can they?


----------



## WaySolid (24 September 2007)

Thought I would include monthly changes in Brisbane house prices since this thread was started. Total increase of 20.95%, you add the yield you would be getting as an investor on top of this like a fine sauce on a dish to create an excellent meal.

Residex House Trading Data for Brisbane since September 05. Monthly changes

2.04%
-1.06%
0.24%
0.12%
1.13%
0.45%
0.29%
0.40%
0.75%
0.73%
0.75%
0.88%
0.47%
1.14%
0.28%
0.87%
0.89%
0.11%
0.46%
1.35%
3.05%
0.13%
2.78%
2.46%
0.24%

This is more or less closely tracking the sales data I have go back 100+ years in terms of nominal appreciation.


----------



## Kathmandu (25 September 2007)

WaySolid said:


> Thought I would include monthly changes in Brisbane house prices since this thread was started. Total increase of 20.95%, you add the yield you would be getting as an investor on top of this like a fine sauce on a dish to create an excellent meal.
> 
> Residex House Trading Data for Brisbane since September 05. Monthly changes
> 
> ...





Yep, My House Price Crashed.........................Through the roof

Dave


----------



## wayneL (27 September 2007)

From the New York Times


----------



## Kathmandu (27 September 2007)

Yep, there is always Bust with Boom, be it property or stocks.

If you believe otherwise then you are a fool.

I'm fine with that, and have prepared accordingly,

But when will it happen here ?

And by how much will it drop?

Is 20% off a bust, or just part of the cycle?

And in which areas will it drop?

Like everything , stock included (even more so, think margin call) if you buy at the top it can hurt if val's wash off 20% and you are forced to sell.

If you purchased lower down the price scale, probably not an issue.

Dave


----------



## caleb2003 (27 September 2007)

I think the real estate agents are drumming it up much more than it is, for instance here in Noosa, the EAs would have you believe every house is going straight away and at full price and over, they're in the papers every day about it, but we've been to see dozens of houses recently that have been on the markets 6 months+ and they are still trying to keep the overinflated price the EAs have put on them. 

Most people think they are 'losing' money if they drop the price of their house but its the pride thats making them wait.

For me, I'm just going to put offers in $100k less on some houses, someone is bound to crack!


----------



## robots (10 October 2007)

hello,

article out today by ABS and others showing housing is not meeting demand, 

looks like things are going well for existing RE still,

anybody spotted any bears running for cover again,

gearing up for the weekend action

thankyou

robots


----------



## Kimosabi (10 October 2007)

robots said:


> hello,
> 
> article out today by ABS and others showing housing is not meeting demand,
> 
> ...




Is there a Troll Festival this weekend???


----------



## kyme (10 October 2007)

HOUSING SHORTAGE?
Read an article today stating that according to recent statistics there are currently 7.5 million unoccupied dwellings in Australia being made up of holiday homes, city pads and second homes. That is enough dwellings to house the entire Australian population at just under 3 people per house. Stated that if just 3% of them came on to the market it would solve existing demand. Those numbers seem incredible to me although I know my mate has 4 houses and at moment his family only living in 1 with others vacant, not my idea of financial sense. I have confidence in article source but can't help wondering whether he's misread those stats. Any housing stat gurus out there clarify this.? If correct, surely would mean downward pressure on future house prices in event of eventual economic downturn.


----------



## tech/a (11 October 2007)

kyme said:


> HOUSING SHORTAGE?
> Read an article today stating that according to recent statistics there are currently 7.5 million unoccupied dwellings in Australia being made up of holiday homes, city pads and second homes. That is enough dwellings to house the entire Australian population at just under 3 people per house. Stated that if just 3% of them came on to the market it would solve existing demand. Those numbers seem incredible to me although I know my mate has 4 houses and at moment his family only living in 1 with others vacant, not my idea of financial sense. I have confidence in article source but can't help wondering whether he's misread those stats. Any housing stat gurus out there clarify this.? If correct, surely would mean downward pressure on future house prices in event of eventual economic downturn.




Sounds more rumor than fact.
If your in the position to buy IP's your also smart enough not to have them sitting doing zip.

With a population of 22 million 7.5 million houses seems like the total number of dwellings in Australia.Infact I doubt there are 7.5 million houses/apartments/units in total.

Found the stats. Definately badly informed.


----------



## kyme (11 October 2007)

Thanks for those stats tech/a.
On those census figures looks like about 800,000 unoccupied private dwellings. Sounds more reasonable but still seems like a lot, maybe taking up squatting the way to go.


----------



## robots (26 October 2007)

hello,

http://www.theage.com.au/news/business/housing-crisis-set-to-worsen/2007/10/26/1192941321711.html

wow, some good increases, 

vic, qld & sa going well, sydney slow and steady

anything on the ptc route around melb is hot as, tram lines in particular with walk up conditions

thankyou

robots


----------



## trendsta (26 October 2007)

yup thats rite house prices keep on going up ... 
melb, brisbane, adel have finally caught up .. are there any other 'undervalued' areas we can hunt for?? ... there are few outlying islands with a yield of 5% ...

forget about inflation and IR .. we have record unemployment and uncle China is always going to be there providing growth to our economy, esp with inflation also rising there and stock market having gone up 500% in a year .. 

oo wait a minute gold has tripled since 03, and oil similar, coal, iron, metals, hmmm .. something fishy here ... so houses have increased respective to paper with george washinton's head, but has actually dropped based on other "commodities" that our paper currency was linked to   

such merry times we live in ..


----------



## Kimosabi (26 October 2007)

An interesting article from the The Daily Reckoning today:



> *Why Real Estate a Consumer Item, Not an Investment*
> 
> We keep saying: housing is not an investment; it’s a consumer item. Here comes an old friend with new evidence:
> 
> ...


----------



## robots (26 October 2007)

hello,

no problem trendsta, 5% yield and 18% growth on a leveraged buy I will have that any day,

just a shame those text books get it a bit wobbly,

so on a medium house of say 420k in melb, an 18% rise gives me roughly 74k for the year, i dont think many would be to worried about inflation, the greenback, etc

thankyou

robots


----------



## BentRod (26 October 2007)

5% yield?

Any Links????


----------



## wayneL (26 October 2007)

BentRod said:


> 5% yield?
> 
> Any Links????



I find that hard to believe too.


----------



## tech/a (26 October 2007)

Could do it on a Commercial of Industrial property but not on a house unless----You built 3 sold 2 to cover costs or the larger majority and kept one.
Or 4 and kept one.
Can be done but not a straight out buy on 20% down.
Unless rents in Melbourne are $1000/week.on a $400K property.

If so I'm on my way over.
I'll see you there Wayne for that beer!


----------



## BentRod (26 October 2007)

Save a spot for me too.


----------



## trendsta (27 October 2007)

robots said:


> hello,
> 
> no problem trendsta, 5% yield and 18% growth on a leveraged buy I will have that any day,
> 
> ...




hi robot
sorry i didnt understand ur post?
are you implying 18% growth on a median melb house of 420k ?? 

i think the worry robot will not be for the disciplined property investors.. however in this current boom there arent as many disciplined investors..

with higher IR you may see more distressed sales and if US keeps printing money as it is we may see higher rates than we would have initially expected.. 

many prop investors have high leveraging and variable rates... the problem will occur when many house in the same area start dropping due to servicability issues .. this will mean the bank will not lend any more money to investors as prop values are actually falling and no more equity mate.

unlike 80s when prop went thru the roof due to high IR rates and inflation, the same is not likely to happen as many have allready borrowed up to the hilt and hit servicability levels.. similar event has happened in west sydney, even though many could not imagine it only a few years back .. 

instead persistently high inflation will hit debt and servicability ...


----------



## Kimosabi (27 October 2007)

trendsta said:


> hi robot
> sorry i didnt understand ur post?
> are you implying 18% growth on a median melb house of 420k ??
> 
> ...




Plus the bottom rung of the Housing Market has been taken out due to the Credit Crunch...


----------



## Sean K (27 October 2007)

The average Melbourne house price went up $50K this year. 

Can't find the ref now, it was in one of the newspapers...


----------



## trendsta (27 October 2007)

btw. my point is the very high levels of household debt are exposed to external shocks such as one that nearly eventuated ... 

robot, you may personally be a smart property investor with low LVR and good servicability. The problem is not all prop investors are like you... Once they get affected the asset you are holding also gets affected (if you dont sell, it doesnt really matter) ... i not saying sell.. but im saying if you plan to buy be cautious.

bottom line being it will be difficult for resi. property to continue to perform well in a rising IR environment, when most ppl are already maxed out on debt... yes, there are micro markets that may buck this trend, but generally the market will suffer ... and in the end its about supply and demand. If investment demand dries up prices will stall (e.g. parts of syd and NSW for past few years)


----------



## trendsta (27 October 2007)

kennas said:


> The average Melbourne house price went up $50K this year.
> 
> Can't find the ref now, it was in one of the newspapers...




fair enuf .. 
do you expect the same performance to be repeated next year, and year after?? 

the main problem i see is inflation and higher rates ...


----------



## Sean K (27 October 2007)

trendsta said:


> fair enuf ..
> do you expect the same performance to be repeated next year, and year after??
> 
> the main problem i see is inflation and higher rates ...



Maybe not, but I do note this thread was started in Sep 05 ...


----------



## theasxgorilla (27 October 2007)

trendsta said:


> bottom line being it will be difficult for resi. property to continue to perform well in a rising IR environment, when most ppl are already maxed out on debt.




What qualifies as a rising interest rate environment?


8 Aug 2007  	+0.25  	6.50
8 Nov 2006 	+0.25 	6.25
2 Aug 2006 	+0.25 	6.00
3 May 2006 	+0.25 	5.75
2 Mar 2005 	+0.25 	5.50
3 Dec 2003 	+0.25 	5.25
5 Nov 2003 	+0.25 	5.00
5 June 2002 	+0.25 	4.75
8 May 2002 	+0.25 	4.50
5 Dec 2001 	-0.25 	4.25

Ask the not so obvious question...if property continues to go up in value in many parts of the country, and we have evidence which shows that interest rates have indeed been rising...what could this mean???

Spare me the obvious response which dodges the question and tries to point to the fact that interest rates used to be 10%+ etc. etc.  Most realise, as you pointed out in your post, that debt levels are proportionately higher today, so its not an apples to apples comparison.

Could it be that those who are sitting on the sidelines passively commanding that property prices should inevitably stagnate or fall, are actually missing out on an opportunity at personal wealth creation by participating in the biggest economic boom in the last 100 years?  How else can an economy withstand the aforementioned tightening of monetary supply and yet continue to grow, and grow, and grow and...you get the picture.

ASX.G


----------



## trendsta (27 October 2007)

theasxgorilla said:


> What qualifies as a rising interest rate environment?
> 
> 
> 8 Aug 2007  	+0.25  	6.50
> ...




not all prop has gone up during IR rises.. outer syd and melb for example, many regional areas in NSW etc .. exactly right a 2% interest rate rise resulted in outer syd and melb areas being affected .. additional IR rises WILL  impact more areas ... 

the question is how much more IR are likely to rise, and how many areas are going to get affected ..

just because ppl arent in prop doesnt mean they arent investing .. and in fact by standing on the side i am making a decision and saying 'i am not willing to pay this price' ... if more and more people take this view as IR rise then the investor demand will in fact slow down .. so yes, by sitting on the sideline i am in fact slightly impacting the market by allocating my funds elsewhere..


----------



## theasxgorilla (27 October 2007)

trendsta said:


> not all prop has gone up during IR rises.. outer syd and melb for example, many regional areas in NSW etc .. exactly right a 2% interest rate rise resulted in outer syd and melb areas being affected .. additional IR rises WILL  impact more areas ...




Well lets not beat around the bush like has been done on this thread for the last 2 or so years...which areas exactly...suburb names would be good...and how were they affected exactly?

You see I have first hand experience with property in outer Melbourne and delta in buy price and sell price suggests it must not be one of the areas you're talking about.


----------



## trendsta (27 October 2007)

theasxgorilla said:


> Well lets not beat around the bush like has been done on this thread for the last 2 or so years...which areas exactly...suburb names would be good...and how were they affected exactly?
> 
> You see I have first hand experience with property in outer Melbourne and delta in buy price and sell price suggests it must not be one of the areas you're talking about.




for syd pick any in outer west areas... also some south, and north west... all have negative growth for last 3 years or so (i.e. less than 0% over 3 years). Theres prob a list of 50 suburbs... 

also have a look at 2006 melb property guide ... there you will see numerous outer suburbs that hardly moved since 03 .. they have started moving a bit only recently - first qtr 07 .. add the negative cashflow, maintenance and insurance etc costs and you will see that in 03 it may have been better to wait than buy in outer melb or syd ... 

Finally have a look at the figures for units in Syd and Melb ... again Melb has started moving so use 06 as a guide, u will see units hardly moved and in many cases even in inner-city suburbs went backwards from 03-06.

Good luck with your prop investments.. I hope to join you sometime later, when prices in my preferred areas have come down.


----------



## trendsta (27 October 2007)

theasxgorilla said:


> Well lets not beat around the bush like has been done on this thread for the last 2 or so years...which areas exactly...suburb names would be good...and how were they affected exactly?
> 
> You see I have first hand experience with property in outer Melbourne and delta in buy price and sell price suggests it must not be one of the areas you're talking about.




asxGorilla,

im NOT saying prop all over australia is going to crash, or that there is going to be a massive collapse .. 

Im saying that certain parts of the property market have ALLREADY come down, and some more will continue to do so, due to rising rates and increasing inflation. Thus, the next few years will represent better buying opps in these areas than now..

I am keenly waiting for the increase of credit and increased rates to filter through. Usually it takes 3- 6 months.. hence even the august rates havent been priced into the prop market yet.


----------



## explod (27 October 2007)

theasxgorilla said:


> Well lets not beat around the bush like has been done on this thread for the last 2 or so years...which areas exactly...suburb names would be good...and how were they affected exactly?
> 
> You see I have first hand experience with property in outer Melbourne and delta in buy price and sell price suggests it must not be one of the areas you're talking about.





In the Age today the following drops for the 12 months ending Sept 07,  Dromana -13.2%,  Emerald -6.2%,  Keysborough 6.2%.  The key here would be fuel costs to work and lack of public transport.   There are a dozen other suburbs with a drop in 1 to 2% area, closer to city such as Chelsea -1.8% which would be mortgage related.

So no big deal at this stage.   Interesting figures out last week from California for the month of September median house prices fell by $US50,000

At this time also the cost of fuel is being offset by the rise in our Aussie dollar.

I would contend that some dark clouds are rising and that when it does strike this huge property spike could go pear shaped very quickly IMHO.

Not being a property person it does not worry me too much, just my 2 cents


----------



## robots (27 October 2007)

hello,

how people can seriously look at these figures produced by ABS, APM etc amazes me,

sure as an average things may exist, but on an individual situation things can be way different

thats why you have to get out there and beat a path on the ground, following auctions, private sales etc and basically only researching the numbers provided by the State Revenue Office, not many do this except the hardcore

in my area of st kilda, st kilda east, prahran, caulfield, port melbourne things have been moving for around twelve months or more, with units getting some big gains

all clear on the horizon IMHO

thankyou

robots


----------



## wayneL (27 October 2007)

robots said:


> hello,
> 
> how people can seriously look at these figures produced by ABS, APM etc amazes me,
> 
> ...




Agree, housing indices are inaccurate for a few reasons, gentrification being just one. Nothing beats eyes on the ground, comparing like with like etc. 

Indices are total rubbish.


----------



## Flying Fish (27 October 2007)

robots said:


> hello,
> 
> how people can seriously look at these figures produced by ABS, APM etc amazes me,
> 
> ...




Robots get real!! Of course bloody property in those areas will never go down. GEES
In fact if youy can afford to buy and live in those areas why even bother posting on this thread!!!


----------



## wayneL (27 October 2007)

Flying Fish said:


> Robots... if youy can afford to buy and live in those areas why even bother posting on this thread!!!



Because he's an industry VI. It's in his interests to ramp property.


----------



## Kimosabi (27 October 2007)

Well my strategy is to enter property when Interest Rates Start Dropping at the beginning of the next credit cycle, until then I'll keep getting cashed up...


----------



## Flying Fish (27 October 2007)

Kimosabi said:


> Well my strategy is to enter property when Interest Rates Start Dropping at the beginning of the next credit cycle, until then I'll keep getting cashed up...




Any idea when this will happen?


----------



## robots (27 October 2007)

hello,

please dont shoot the messenger, 

surely people can comment "on the market" without always being labelled as some RE bull,

still some awesome affordable places in those areas, with plenty of run left I believe

anything with walk-up PTC is going to kill it in the future,

if I was kimo, and looking to buy something to live in over in Perth I would seriously be looking now

thankyou

robots


----------



## wayneL (27 October 2007)

robots said:


> hello,
> 
> please dont shoot the messenger,



But you're not simply a messenger, you're in the industry, which you denied for the longest time.

So not only an industry VI, but a bit a BSer as well.

This warrants people viewing your comments with suspicion.

In any case, nobody is trying to shoot you, just stating your VI, and their own opinions.


----------



## robots (27 October 2007)

hello,

would like to know which part of writings is BS?

dont remember being asked if was in the industry, but know many started to call me a real estate agent which I clearly arent

thankyou

robots


----------



## Kimosabi (27 October 2007)

robots said:


> hello,
> 
> please dont shoot the messenger,
> 
> ...




Sorry, I don't listen to spruikers...


----------



## wayneL (27 October 2007)

robots said:


> hello,
> 
> would like to know which part of writings is BS?
> 
> ...



You told us you are an auctioneer IIRC. The line between agent and auctioneer is very fuzzy; as far as the public is concerned, same thing.


----------



## theasxgorilla (28 October 2007)

trendsta said:


> I am keenly waiting for the increase of credit and increased rates to filter through. Usually it takes 3- 6 months.. hence even the august rates havent been priced into the prop market yet.




This is an economist perspective.  And in an economic measurement sense I agree, it takes time for the reality to filter through.  But if you're putting your feet on the ground and actually going to auctions or open houses during the weekend just after a rate rise you might notice as I have that the sentimental impact IS immediate.

IMO decision making based on property investment magazines is a bit like trying to trade off quarterly bar charts.  Maybe fine for setting a strategy, but to manoeuvre into a good deal you gotta be physically in touch with the market on a weekly basis.  Robots is right...averages and medians and other summary tokens of information are so not indicative of what happens week to week.

Housing can be like poker in the sense that you can play the man (or woman).  Try that with shares???  You can't, 99.9%, if not 100% of us on this forum are too small to play games in the share market.  But in the property market you can use the exact same statistics and media stories you are reading and believing in, and the same government or central bank planted propaganda about consumer and wage inflation and rate rises and labour market tightness etc. etc., to your advantage.  The person you are buying the house off is being inundated with the same information.

With all due respect to Robots and other real estate agents you even have to play them because they've got their own set of beliefs and biases and the information you give them, or withhold, can directly influence your success within a deal.

And why do you want to buy property anyhow?  The answer to that question determines your buying strategy.


----------



## theasxgorilla (28 October 2007)

Flying Fish said:


> Robots get real!! Of course bloody property in those areas will never go down. GEES
> In fact if youy can afford to buy and live in those areas why even bother posting on this thread!!!




Flying Fish...if you can't afford to live in those areas, ask why...and then maybe ask how...if that's what you want.

But this is how property works...up to a point most people can only afford so much.  But sometimes investors don't buy as much as they can afford, they purposely buy less to make things like LVR and the cash flow numbers work, or to spread risk/opportunity around.

These suburbs are real suburbs where people live and invest so they're as relevant as picking outer west Sydney and using it is a token example that rising interest rates are killing the market.


----------



## robots (28 October 2007)

hello,

i am not an auctioneer or RE agent, I never said that, yes i said I go to many auctions on the weekend, went to three yesterday

anything wrong with that? its the only way to get the research on how things are going

inner city around 90% is auctions, they have become a very transparent way of selling I believe

yes it is easy when so many auctions so close to each as I can ride my bicycle to them

the flavour yesterday was minimal bidding and the negoitiation after leading to the sold sticker going on board

thankyou

robots


----------



## trendsta (28 October 2007)

theasxgorilla said:


> This is an economist perspective.  And in an economic measurement sense I agree, it takes time for the reality to filter through.  But if you're putting your feet on the ground and actually going to auctions or open houses during the weekend just after a rate rise you might notice as I have that the sentimental impact IS immediate.
> 
> IMO decision making based on property investment magazines is a bit like trying to trade off quarterly bar charts.  Maybe fine for setting a strategy, but to manoeuvre into a good deal you gotta be physically in touch with the market on a weekly basis.  Robots is right...averages and medians and other summary tokens of information are so not indicative of what happens week to week.
> 
> ...




Hi AsxGorilla,

My perspective is based on my own views. And many may not share those views, which is fine. I follow a simply philosophy buy low, sell high, and in case of prop dont sell at all ..

I agree property is a different beast. Its a case by case scenario for buying a house etc, and each prop has its own merits. However, the median prices, although not 100% correct, do show an underlying trend ..

Also prop is a big investment with large tranaction costs. Hence you have to be very selective .. For me, i believe there will be golden opportunities coming up. I do not subsribe to the notion "buy now or u'll miss the train"... 

the fact is there have ALWAYS been opportunities and there ALWAYS will be opportunities, whether in stock market or prop or any other market.


----------



## Rough_Trade (28 October 2007)

robots said:


> hello,
> 
> just got back from signing up new vendor
> 
> ...






> hello,
> 
> i am not an auctioneer or RE agent, I never said that, yes i said I go to many auctions on the weekend, went to three yesterday
> 
> ...




Some more detail please.


----------



## Kimosabi (28 October 2007)

> Originally Posted by *robots*
> 
> 
> _hello,_
> ...






> Quote:
> hello,
> 
> i am not an auctioneer or RE agent, I never said that, yes i said I go to many auctions on the weekend, went to three yesterday
> ...




robots 


Rough_Trade said:


> Some more detail please.




Going, going, GONE to the spruiker in the corner!!!


----------



## robots (28 October 2007)

hello,

if you look at previous posts around that time, I think it was numbercruncher who started calling me an RE agent, and others started putting the RE agent words when responding to my posts

so I went along with it for that post,

thankyou

robots


----------



## robots (28 October 2007)

hello,

and whats it matter if I was an RE agent, Auctioneer, street sweeper or employed doing anything else, the property market is solid as, 

thankyou

robots


----------



## YChromozome (28 October 2007)

robots said:


> the property market is solid as




Sounds as creditable as Howard saying he will keep interest rates at 30 year lows. Amazing what a year or two may bring.


----------



## Kathmandu (28 October 2007)

YChromozome said:


> Sounds as creditable as Howard saying he will keep interest rates at 30 year lows. Amazing what a year or two may bring.




Actually I would be interested if someone out there new if this were true.

I have been buying houses since the early 90's and I would think that the current interest rate is still low, but of course my recollection only goes back that far.

Have interest rates been lower?

Dave


----------



## theasxgorilla (28 October 2007)

robots said:


> inner city around 90% is auctions, they have become a very transparent way of selling I believe




You mean even when the low end of the buyers-interest range is 25% lower than your client's reserve??  Hmmm.  That sounds more misleading than transparent.

500k plus advertised price, vendors reserve 675k, to refresh your memory.


----------



## theasxgorilla (28 October 2007)

trendsta said:


> I agree property is a different beast. Its a case by case scenario for buying a house etc, and each prop has its own merits. However, the median prices, although not 100% correct, *do show an underlying trend *..




Now we're getting somewhere 

And what is the trend, pray-tell?


----------



## wayneL (28 October 2007)

robots said:


> hello,
> 
> and whats it matter if I was an RE agent, Auctioneer, street sweeper or employed doing anything else, the property market is solid as,
> 
> ...



Vested interests are invariably biased and/or attempt to manipulate sentiment.

Credibility now FUBAR.


----------



## Julia (28 October 2007)

Kathmandu said:


> Actually I would be interested if someone out there new if this were true.
> 
> I have been buying houses since the early 90's and I would think that the current interest rate is still low, but of course my recollection only goes back that far.
> 
> ...




I'd be interested to know this also, Dave.
Although there have been five interest rate rises under John Howard,
they have only been .25 each time, so that's only 1.25 % which isn't all that much.


----------



## toothfairy (29 October 2007)

Only a blind (I don't mean literally) or stubborn person will argue that property prices in inner suburbs has not gone up since this thread has started. As a matter of fact, it is going up consistently. I am glad that some people didn't see the trend in 2005 and still deny the trend, that gave some of us more advantages to pick up properties on the way cheaper. Thank you guys.
As for the fear of interest rate hike (use a term from the media), firstly for the pro-active, one can fix the rate now for 3-5 years without much extra costs. That means the consensus is the hike will not be drastic for long. For those who are more defensive, they should also not invest in stock market but put ALL their savings in fixed term deposit to get rich. The only trouble is, don't forget the reason for the rate hike is INFLATION, which will destroy your fix interest. So why bother.


----------



## Happy (29 October 2007)

Interest rise is a dampener on spending, which explodes because of increased employment, so in effect measure of success to some extent.

How success can be used against the successful government team?
Just exaggerate one thing, not mention another.

We all know, the information can be masaged, to stop short of saying manipulated.


----------



## Julia (29 October 2007)

toothfairy said:


> For those who are more defensive, they should also not invest in stock market but put ALL their savings in fixed term deposit to get rich. The only trouble is, don't forget the reason for the rate hike is INFLATION, which will destroy your fix interest. So why bother.




Good heavens, toothfairy, if we can't do better in the sharemarket than in a term deposit, then I guess, no, we should not in fact be in the sharemarket!


----------



## Happy (30 October 2007)

> From ABC, 30 Oct. 07, By business editor  Peter Ryan
> 
> 
> MORE AUSTRALIANS DEFAULTING ON MORTGAGES
> ...





I don’t want it to make sound trivial, but not knowing exact number of defaults; report looks deliberately making it sound bad. 
We instantly feel that 50% is a big jump, but if it is jump from 200 to 300 on 500,000 loans, despite being traumatic for people involved, it is relatively small percentage of total number loans.

Does anybody know the numbers behind percentages to have better perspective?


----------



## numbercruncher (30 October 2007)

Looking for numbers, but this may help ...



> AUSTRALIA'S insurance regulator has drawn attention to a spike in the number of stressed homebuyers, confirming that claims for mortgage defaults soared by 329 per cent in the year to December.
> 
> Home lenders lodged claims for $210 million worth of bad loans in the 12 months to December compared with only $49 million in 2005, according to the Australian Prudential Regulation Authority.




http://www.news.com.au/business/story/0,23636,22202830-462,00.html


----------



## KIWIKARLOS (30 October 2007)

i dont think that the defaults are a wide spread problem rather just pockets, i would imagine there are very few defaults in port headland :


----------



## numbercruncher (30 October 2007)

Its pretty hard to find this info, as there is no like national register, maybe intentionally ?

heres some info though, seems to point to the default rate rising this year since my last post showed to dec 06.



> The total Australian "prime" loan book of $169 billion in securitised mortgages had a technical default rate of 0.5 per cent in June.




so that points to 850m in default in the "prime" mortgage market.

But sems much worse as a percentage in "subprime" (lowdoc etc)



> MOBIUS FINANCIAL SERVICES, a division of Allco Finance Group, is the worst-performing subprime lender in Australia, with more than 15 per cent of its $680 million loan portfolio in technical default.
> 
> Pepper had the lowest subprime technical default rate (3 per cent), followed by Bluestone (6 per cent), Adelaide Bank and Challenger (both 7 per cent) and Liberty (8 per cent).




http://www.smh.com.au/news/business/allcos-mobius-has-highest-default-rate/2007/10/03/1191091194051.html?s_cid=rss_business

So using these figures defaults look set to skyrocket again in relation to the 12 months to last december.

They really need to introduce some transparency or national database with these figures, would be an interesting insight to the health of things.


----------



## algis (30 October 2007)

numbercruncher said:


> Its pretty hard to find this info, as there is no like national register, maybe intentionally ?
> 
> heres some info though, seems to point to the default rate rising this year since my last post showed to dec 06.
> 
> ...




Check Box B of the Sept 2007 Financial Stability Review from the RBA:

http://www.rba.gov.au/PublicationsA...p2007/Pdf/financial_stability_review_0907.pdf

0.4% of securitised prime loans are more than 90 days in arrears.  The trend appears to be in line with interest rates.  However, between 0.3% and 0.4% of loans were more than 90 days in arrears back in 1997 (what was the standard variable rate back then?).  Otherwise it is broadly unchanged from 2006 after increasing in 04 and 05.

Close to 1% of low doc loans are more than 90 days in arrears.
Over 6% of non-conforming loans are more than 90 days in arrears.

Interestingly, over 0.6% of loans are 90 days in arrears in NSW compared with less than 0.4% in other states.  

5368 application by banks for possession of residential properties in NSW in 2006, equivalent to 0.23% of private dwellings.  This is up from a bit over 3000 applications in 2004.

The Fairfield/Liverpool region in Sydney tops the number of applications for possession in 2006 at close to 0.5% of properties.  Northern Beaches is lowest at a bit under 0.1%.

From the text:


> A comparison of applications for repossession in NSW, relative to the State’s number of
> dwellings, and arrears rates since the early to mid 1990s reveals that, over this period, there
> has been an increase in the number of repossessions for a given number of loans in arrears.
> Over the same period, there has been a significant increase in the relative importance of ‘non
> ...




And some good news (averaged out):



> Even
> allowing for the increase in interest
> payments, real disposable income
> averaged across all households has
> ...


----------



## KIWIKARLOS (30 October 2007)

why would they skyrocket in oz our market is completely different.

Low doc loans are not "subprime" most of the people on these loans are on good money its just they work for themselves or own their own business. Lending standards in oz have been much harder than in the US.

Plus there are no adjustable rate morgages, such there are honeymoon periods etc but not like the US where your rate goes from 6 % to 10 % overnight !

another thing is that there are alot of loans in the US where the morgagee doesn't have liability for the home if they foreclose they can just hand over the keys to the house and walk away they dont actually owe the difference between the loan and the potential sale value of the house.


----------



## KIWIKARLOS (30 October 2007)

plus the % we are talking about here are tiny compared to the figures in the US. double didgit declines in value. MILLIONS of homes in inventory to sell. More jobs been lost than created, their wages are stagnant while ours grow.


----------



## Temjin (30 October 2007)

KIWIKARLOS said:


> plus the % we are talking about here are tiny compared to the figures in the US. double didgit declines in value. MILLIONS of homes in inventory to sell. More jobs been lost than created, their wages are stagnant while ours grow.




Just make yourself aware that we are in the midst of a great credit and resource boom and unemployment rate has been all time low. 

We shouldn't EVEN be expecting such unusually high defaults on mortgage and with signs on more and more people are facing serious financial stress. 

I wouldn't bet that our housing market will not be affected by the credit crisis or any decline in growth from either the US or China exporting less due to demand drop from the US.


----------



## toothfairy (1 November 2007)

Julia said:


> Good heavens, toothfairy, if we can't do better in the sharemarket than in a term deposit, then I guess, no, we should not in fact be in the sharemarket!



I was just being funny and having a go at people who worries about interest rates too much. I have plenty of shares, even buy them on borrowed money.


----------



## robots (16 November 2007)

hello,

http://www.tradingroom.com.au/apps/view_article.ac?articleId=143074

he has to be right, this guy is a senior economist, just like steven keen, who is/will be closest to the pin as such

the gov might have to start giving tax concessions to people who choose to work in the building industry to get the numbers up,

thankyou

robots


----------



## numbercruncher (16 November 2007)

Im glad to see this thread is atleast starting to recognise that a problem exists that needs attention asap


----------



## kgee (16 November 2007)

KIWIKARLOS said:


> why would they skyrocket in oz our market is completely different.
> 
> Low doc loans are not "subprime" most of the people on these loans are on good money its just they work for themselves or own their own business. Lending standards in oz have been much harder than in the US.
> 
> ...





Not sure about that, I went in for a low doc loan and they were throwing money at me...all I needed to show was a bank deposit and last years tax statement....the fact that I hadn't worked in the last 6 months was never looked at....and they were throwing some pretty big money towards me


----------



## Tysonboss1 (17 November 2007)

krisbarry said:


> It should be the right of every Australian to be able to afford a house.




And just about every Australian can afford a house,... Just not in a capital city,

Look at any of the major capital cities in the world,..... they have all become unaffordable at some stage,.... do you think the average family can afford a 1/4 acre block with a 4 bedroom house on it in londan, new york, tokyo or paris.

It is completely normal as cities grow that they will become unaffordable firstly to the low incomes then medium incomes and so on until they get to the stage that even rents are unaffordable and rent control legislation must come in.


----------



## Flying Fish (17 November 2007)

Tysonboss1 said:


> And just about every Australian can afford a house,... Just not in a capital city,
> 
> Look at any of the major capital cities in the world,..... they have all become unaffordable at some stage,.... do you think the average family can afford a 1/4 acre block with a 4 bedroom house on it in londan, new york, tokyo or paris.
> 
> It is completely normal as cities grow that they will become unaffordable firstly to the low incomes then medium incomes and so on until they get to the stage that even rents are unaffordable and rent control legislation must come in.




What do you mean?


----------



## numbercruncher (17 November 2007)

Flying Fish said:


> What do you mean?




I think he means if your a Nurse, Teacher , Policeman , Truck Driver etc he beleives its normal that you cant afford a house in any of Australias capital cities*shrug*

I dont think its normal, or healthy .....


----------



## Flying Fish (17 November 2007)

numbercruncher said:


> I think he means if your a Nurse, Teacher , Policeman , Truck Driver etc he beleives its normal that you cant afford a house in any of Australias capital cities*shrug*
> 
> I dont think its normal, or healthy .....




So who can afford it?


----------



## Tysonboss1 (17 November 2007)

Flying Fish said:


> What do you mean?




I mean it is a completely normal that houses prices in capital cities will increase to a levels where the average person can not afford to buy a home and is destined to be a life long renter,

This has happened in all the cities I listed in my post above,.... the reason is there is simply not enough land,...

yes there used to be a time when even a low income earner could buy a 1/4 acre block with a 4 bedroom house in the suburbs, but this days are over,... low income earner would probally stuggle to even rent a house like this in sydney, and that is normal.

Australian capital cities are getting to the size now where they are unaffordable and there is absouloutly nothing that can be done about it except reduce the population. 

even if you halved interest rates,... returned all government land to develpers,.... developed the national parks,.... you would only delay the process by a few years.

If owning a family home is a big thing then people should move away from the capital cities.


----------



## Flying Fish (17 November 2007)

Tysonboss1 said:


> I mean it is a completely normal that houses prices in capital cities will increase to a levels where the average person can not afford to buy a home and is destined to be a life long renter,
> 
> This has happened in all the cities I listed in my post above,.... the reason is there is simply not enough land,...
> 
> ...




Why would you want to live in a big city? they serve no purpose


----------



## numbercruncher (17 November 2007)

Flying Fish said:


> Why would you want to live in a big city? they serve no purpose





Shhhh dont let out the secret, last thing we need is the masses flooding out into the real world


----------



## Tysonboss1 (17 November 2007)

Flying Fish said:


> Why would you want to live in a big city? they serve no purpose




In my post I didn't say I did want to live in a big city,.... how ever people live in the capital cities for all sorts of reasons,... 

All I said was that so many other people obviously do want to live in the city because the populations of our capital cities are growing and there by putting more and more pressure on the cost of land.


----------



## Tysonboss1 (17 November 2007)

numbercruncher said:


> I think he means if your a Nurse, Teacher , Policeman , Truck Driver etc he beleives its normal that you cant afford a house in any of Australias capital cities*shrug*
> 
> I dont think its normal, or healthy .....




whether it is normal of healthy is not really up to me,...

It's a bit like saying crude oil is to expensive and that it should be $20 a barrel,...

the truth is yes it used to be $20 a barrel,... but like anything when every body wants it and the supply is limited the price must go up. 

there is simply not enough land in and around the cities,.... If people want to buy a home they have to change there attitude,... 

forget about the 1/4 block 4 bedroom home,... it might be the average family home may have to be a 3bedroom town house or Apartment. 

I live in Chatswood in sydney there are 2 bedroom apartments selling next door for $600,000,...... even a smaller home on a average block goes for
 $1.5million.

the simple fact is that there is not enough land,.... even if the government capped house prices at $100,000 and said it is illeagal to sell a house for more than $100,000 it would just mean that half the population would have very cheap housing and the other half would have no house at all because the land does not exist.

I can easily see that in 20years even a high income earner will struggle to get a loan for a house even on the fringe of the suburbs,


----------



## Tysonboss1 (17 November 2007)

Flying Fish said:


> So who can afford it?




In the future ownship of Australian capital city properties will be limited to,

Sopisticated Property investors,,.. High income earners,,.. People that start young with great money managing mindset,... People that look outside the box when it comes to structures which they use to buy the property etc.etc

In the future the people who won't own property are,

Low income earners, middle and high income earners with bad money management, People who can't think outside the box.

Already if you want to raise your family in a home that you own you have to look at it from a 3 or four stage process beginning with a savings and financel education plan from your first job.

you can no longer blow your money through your early 20's and arrive at 28 with nothing and expect to buy a house because you just want one.

the last property boom has knocked alot of people out of property,... the next will be the one that will lock 90% of the people that haven't already got property holdings out of the market for ever.


----------



## numbercruncher (17 November 2007)

There is no shortage of land in Australia, we are a continent the size of Mainland USA or Europe, our entire population is less than the two most populous cities on the planet.

Developers, Governments etc are sitting on loads of land, lack of release contributes to artifically high prices.

The cost of a house (ie/ building a new house) is actually quite cheap and affordable imho, you can get 25sq for like 130k.

Im sorry but i dont share your future vision of 20 years time were you believe even high income earners will struggle to buy in outer suburbs, I envision that everything returns to its longterm mean.

Our American cousins are experiencing that adjustment as we speak.


----------



## Tysonboss1 (17 November 2007)

numbercruncher said:


> There is no shortage of land in Australia, we are a continent the size of Mainland USA or Europe, our entire population is less than the two most populous cities on the planet.




I aggree that we are not short of land,..... what I am talking about is land within 25kms of our major cbds,....

In my first post on this thread I said that housing is not unaffordible,... and that every can afford to buy a house,.. just not in the capital cities,....

a 17 year old part time mcdonalds woker could afford to pay off a 4 bedroom house over 30 years in broken hill,....but he would have buckleys chance in paramatta.


----------



## robots (17 November 2007)

hello,

its utter crap that people think police, nurses, fireman etc are on low wages too, they are renumerated quite well

in VicPol, police are on around 70k a year and I would imagine a healthy 15% super too

even cleaners are getting good dollars now, I saw ad on Seek for $50/hr for cleaner

dead on tysonBOSS, they expext to rock up and get single fronted in bondi straight of the cuff

thankyou

robots


----------



## Tysonboss1 (17 November 2007)

Flying Fish said:


> what utter crap.




House prices in most Australian capital cities adjusted for inflation over the last 30years on average have grown by 10%pa,....

wages have grown by no where near 10%p/a,.....

it's simple maths gradually land around the capital cities will be out of reach,... it's not rocket science. and releasing more land is just a short term fix.


----------



## Tysonboss1 (17 November 2007)

numbercruncher said:


> Im sorry but i dont share your future vision of 20 years time were you believe even high income earners will struggle to buy in outer suburbs, I envision that everything returns to its longterm mean.
> 
> .




Well the longterm mean is that property increases in value by 10%pa.

if somthing increases in value by 10%pa,.... in 7 years its doubled and in 14years it has increase in size by 4 times.

so it is not unlikly that a house in a capital city will be worth 8 times more in 20years.,.. which yes i believe will push the limits of even high income earners


----------



## numbercruncher (17 November 2007)

robots said:


> in VicPol, police are on around 70k a year and I would imagine a healthy 15% super too







> Annual increments are payable. Currently a constable can expect to be earning $50,950 p.a by their fourth year of service.




http://www.police.vic.gov.au/content.asp?Document_ID=117





robots said:


> even cleaners are getting good dollars now, I saw ad on Seek for $50/hr for cleaner




$50 x 38hrs x 52wks = 98,800 p/a 


*yawn* anymore fallacies for debunking please post below .

NC over n out.


----------



## robots (17 November 2007)

hello,

and the 7-weeks annual leave, 15 sick days and other generous benefits

so a cleaner shouldnt earn 98k/year?, get real NC, I hope they can earn what ever they can and you too for that matter

what are you whining about if you dont want to live in capital city, like you say plenty of other places to go, hopefully with out internet connection

thankyou

robots


----------



## numbercruncher (17 November 2007)

Tysonboss1 said:


> Well the longterm mean is that property increases in value by 10%pa.
> 
> if somthing increases in value by 10%pa,.... in 7 years its doubled and in 14years it has increase in size by 4 times.
> 
> so it is not unlikly that a house in a capital city will be worth 8 times more in 20years.,.. which yes i believe will push the limits of even high income earners





And your belief that even high Income earners wont be able to afford even on city fringes is based on ?? Wages never going up ? Perhaps this will happen if the people vote Costello for Prime minister and his fellow cult members from the HR Nicolls society take the reigns, who knows eh ?


----------



## Tysonboss1 (17 November 2007)

numbercruncher said:


> And your belief that even high Income earners wont be able to afford even on city fringes is based on ?? Wages never going up ? Perhaps this will happen if the people vote Costello for Prime minister and his fellow cult members from the HR Nicolls society take the reigns, who knows eh ?





Well wages rarely grow by 10%pa,.. It is not likly that a job paying $100,000 this year will be paying $800,000 in 20 years.
even if inflation does push wages that high, inflation will push property prices equally higher again

I am not saying high income earner won't be able to afford a property,... I am just saying they won't find it as easy as they do today,... offcoarse they would be able to buy an apartment or a town house,.... but proabally not a nice house on a 1/4 acre block,.... infact there would probally not be many 1/4 acre blocks left.

if you looked at the outer sydney suburbs 20 years ago then looked ant them today it amazing how much they have changed,.... imagine the growth over the next 20 years,.... I mean they are already building apartment blocks in suburbs 30kms from sydney,.... as far out as campbelltown, this would have been unimaginable 20years ago.


----------



## numbercruncher (17 November 2007)

robots said:


> hello,
> 
> and the 7-weeks annual leave, 15 sick days and other generous benefits




Still isnt 70k p/a salary Robo, Is that how you hook people up with 500k mortgages bit of "creativity" ?



> so a cleaner shouldnt earn 98k/year?, get real NC, I hope they can earn what ever they can and you too for that matter




I never said anything of the sort, I think Cleaners should be paid substantially more than R/E agents, Mortgage brokers and other similar creatures ... Least its an honest Business, The question is whether they earn 100k p/a as you claim.



> what are you whining about if you dont want to live in capital city, like you say plenty of other places to go, hopefully with out internet connection
> 
> thankyou
> 
> robots




Im not whining, merely adding to opinion/debate , Is that still ok to do ?


----------



## robots (17 November 2007)

hello,

that's right you shouldnt add to the debate, 

because you do NO research in relation to how RE is going except making strange statements after somebody comments on what is happening out in the world

did you go to any auctions today?, look up any recent sales? NO NO NO 

another good day for RE in melbourne today, around 900 properties auctioned, should be around 80% clearance, went to five, solid as, care to refute this NC with you're own research

thankyou

robots


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## numbercruncher (17 November 2007)

Relax Robo, you seem to be working towards a coronary .....


I remember you writing the otherday that no one seems to be buying Investment property unless thier Income is 150k plus and the Government claims the average wage is 55k .... That must have some effect on demand already ?

You claim i do no research, yet Im forever substantiating comments with links and quotes  - you were the one who just claimed 70k police wages with zero proof - pot calling the kettle black or something ?

I have no Problem with realestate going up up up and away, I have no reason to doubt your St Kilda properties are, Im more into the exploring the Hows and Whys, Ifs and Buts of the overall market than specific pockets.

If the Global economy stalls or wages stagnate surely its not so hard to ponder that Houses at 8x average salaries as opposed to the 4 to 5 times long term average must have some take in them rather than just give give give, or is this a sacreligious concept to hardened property bulls, was no one here alive during the 90s? 

On a side note just read the Gold Coast Bulletin, 2001 Census was 10,022 Victorians on the GC, 2006 census down to 3,010, seems house prices have chased them out the article claims (cheaper in Melbourne) ....

Who whudda thunk it.


----------



## Flying Fish (17 November 2007)

numbercruncher said:


> http://www.police.vic.gov.au/content.asp?Document_ID=117
> 
> 
> 
> ...




wat do police do ?


----------



## numbercruncher (17 November 2007)

Flying Fish said:


> wat do police do ?




Is this a trick question ?


I guess they are the thin blue line between order and disorder


----------



## theasxgorilla (17 November 2007)

robots said:


> in VicPol, police are on around 70k a year and I would imagine a healthy 15% super too




Actually most of them get a bit over 50k, but their super is up around 28% (very healthy).  Detectives and specialists get more of course, but not everyone is a detective.

I have a friend who is a cop and he lives 20ks from Melb CBD in a two story 4br house in a very nice setting.  Then again, he didn't actually MAKE his money being a cop...he made it in property


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## Tysonboss1 (18 November 2007)

numbercruncher said:


> Relax Robo, you seem to be working
> If the Global economy stalls or wages stagnate surely its not so hard to ponder that Houses at 8x average salaries as opposed to the 4 to 5 times long term average must have some take in them rather than just give give give, or is this a sacreligious concept to hardened property bulls, was no one here alive during the 90s?
> 
> Who whudda thunk it.




Well I am not a hardened property bull,...

My investing journey begun with shares,.... and I still love investing in shares.

However I personally have made alot more money in property in the last few years,

Offcoarse econmic factors do effect property prices but the driving fundamental longterm factor is population growth,.... so property will have it's ups and downs but over the last 50 years most cities have averaged 10% growth always out stripping wages growth,....

The property cycle generally works in this order,.... Up,... Flat,...Down,...Flat,...up,... Flat ,... Down,.. flat and so on with the up years ranging growth of between 10%-40% and the down years between -1% to -10%. and the flat years are normally 1year between the ups and down

probally even more so than with shares the good investors will be making money in the ups, flats and downs....


----------



## theasxgorilla (18 November 2007)

Tysonboss1 said:


> Offcoarse econmic factors do effect property prices but the driving fundamental longterm factor is population growth




I think that the perceived ability of the population to afford property is what is as likely to drive prices.  IF the lenders and the borrowers think they can risk/afford to lend/borrow $500k over 50 years to buy their piece of the so-called Aussie dream, then every single time a lender lends a bit more or a borrower borrows a bit more then that transaction contributes to an increase in the stats.

And when everyone is believing what is written in the papers about the end of something or another then we all get nervous together and wait for the stories about rate rises and such to become old news again before we wade back in and start bidding prices up again.

Any truly impacting fundamental crunch for property has to be accompanied by unemployment IMO, and we haven't seen a tap of that kind of problem for a decade or so (with the exception of the IT sector, post 2000.  And that was really just a shuffling around of people anyhow...very, very few who wanted to work found themselves unable to get jobs).


----------



## Tysonboss1 (18 November 2007)

theasxgorilla said:


> I think that the perceived ability of the population to afford property is what is as likely to drive prices.  IF the lenders and the borrowers think they can risk/afford to lend/borrow $500k over 50 years to buy their piece of the so-called Aussie dream, then every single time a lender lends a bit more or a borrower borrows a bit more then that transaction contributes to an increase in the stats.
> 
> And when everyone is believing what is written in the papers about the end of something or another then we all get nervous together and wait for the stories about rate rises and such to become old news again before we wade back in and start bidding prices up again.
> 
> Any truly impacting fundamental crunch for property has to be accompanied by unemployment IMO, and we haven't seen a tap of that kind of problem for a decade or so (with the exception of the IT sector, post 2000.  And that was really just a shuffling around of people anyhow...very, very few who wanted to work found themselves unable to get jobs).





the things you have mentioned are the short term things that cause the shorterm up, flat, down, flat,up,flat,down,flat etc etc,

But as I said the steady growth in population is what drives the price of land higher in the long term,.. so if somthing does cause a longer than expected flat period or down period this will just cause the up period do be a sharper and longer boom,...
as happened in brisbane,... brisbane had an extended flat period in the late 90's but when the boom hit brisbanes boom was much sharper and lasted longer and brisbane is still one of the best performing cities. 

the things you mentioned above are all short term factors and do not change the fact that demand for property will continue to grow because,

-people are living longer,
-International migration remains steady,
-growth in single person house holds means even if population was to stay the same more houses would be needeed.
- and many other reasons,

all the econmic factors can do nothing but slow the demand shorterm, eventually the factors of population growth will also cause a market correction and elevate the price of the land,...


----------



## numbercruncher (18 November 2007)

Well if thats the case our falling birth rate and aging population dont look so good for long term price growth.

Maybe Immigration can hold it up ? Itd want to be cashed up skilled Immigration though wouldnt you think ?


----------



## Tysonboss1 (19 November 2007)

numbercruncher said:


> Well if thats the case our falling birth rate and aging population dont look so good for long term price growth.
> 
> Maybe Immigration can hold it up ? Itd want to be cashed up skilled Immigration though wouldnt you think ?




well even with the falling birth rate our population will still be growing,.... and remember probally more so than the actual population growth it's the actual demand for dwellings which as I said even if the population remained the same because of the growth of single person house holds the demand for dwellings around the capital cities will contiune to grow.

I don't really understand what you mean by immigrants would have to be cashed up, 

I really don't understand how you guys are having so much trouble accepting future property growth will lock people out of the market,.... share traders are meant to be able to recognise longterm trends..... the fact is that the number of home owners compared to renters has been steadily falling for the last 40 years,.... and the age at which people can afford to buy there first home has been growing most new home owners are now nearly 30 compared with 20 in the 60's and a much larger % of the take home pay goes towards the payments,..

In sydney now it takes more than 1.6 peoples full time wages to pay the mortgatage on the median house price.


----------



## Mofra (19 November 2007)

Tysonboss1 said:


> I really don't understand how you guys are having so much trouble accepting future property growth will lock people out of the market



In the short term, certainly. I was outbid at auction for an investment property 2 months ago, single bedroom unit went for $245k. Identical unit next to it sold for $272k this weekend. We are now in a phase of panic buying which is reinforcing the short term ternd.


----------



## wayneL (19 November 2007)

Over here in the Old Blighty, the market 4 ¬(+ed. 

Agents are bitching, branches closing down and prices are starting to go down in most areas (even the official figures ).

There are actually some reasonable distressed seller deals at the moment... almost (but not quite) value. Many are stubbornly clinging to early 2007 values and are £20 - £50k overpriced and consequently not much is moving.

Oz RE is starting to look more exy than here in the middle class, reasonably well to do areas. Some may feel that's justified. I don't.


----------



## Julia (19 November 2007)

So how are you liking it over there so far, Wayne?

Just in time to enjoy the UK winter huh?


----------



## theasxgorilla (19 November 2007)

Tysonboss1 said:


> In sydney now it takes more than 1.6 peoples full time wages to pay the mortgatage on the median house price.




I don't know what you'd like to infer from this...when was the last time Sydney was egalitarian enough (or Australia for that matter) to be blanketed with such a stat.


----------



## numbercruncher (19 November 2007)

wayneL said:


> Over here in the Old Blighty, the market 4 ¬(+ed.
> 
> Agents are bitching, branches closing down and prices are starting to go down in most areas (even the official figures ).
> 
> ...





Good old dose of Stagflation starting to rear its head you reckon Wayne ?

Only thing missing to be 70's style might be the unemployment ?

Seems to be alot of Irrational optimism in the Aussie r/e market atm, but we tend to eventually follow the trend !


----------



## Tysonboss1 (20 November 2007)

wayneL said:


> There are actually some reasonable distressed seller deals at the moment... almost (but not quite) value. Many are stubbornly clinging to early 2007 values and are £20 - £50k overpriced and consequently not much is moving.
> 
> .




Yep,.. perfectly normal part of the property cycle


----------



## Tysonboss1 (20 November 2007)

theasxgorilla said:


> I don't know what you'd like to infer from this...when was the last time Sydney was egalitarian enough (or Australia for that matter) to be blanketed with such a stat.




just comparing the average wage (based on the mortgate payment being 40% of there wage) to the repayments of a 25 year loan based on the median house price,.... It would take 1.6 average wage earners to pay of an average home in 25 years.


----------



## Tysonboss1 (20 November 2007)

numbercruncher said:


> Seems to be alot of Irrational optimism in the Aussie r/e market atm, but we tend to eventually follow the trend !




Well the timing is right for optimism to start again,.... sydney has had it's down turn and is working through it's flat period,..... rental yeilds have be increasing. 

I can't really see how it could be irrational optimism, after all if a company had a steaily increasing dividend you would expect it's share price to follow eventually,.... it'd the same with property.


----------



## wayneL (20 November 2007)

Julia said:


> So how are you liking it over there so far, Wayne?
> 
> Just in time to enjoy the UK winter huh?



I was driving in snow last night through the Cotwolds... cold, but lovely. We've picked a particularly nice part of the country (Cheltenham), nice spot and really nice people, so enjoying it a lot. We're hooked.

Actually had an ace opportunity come up over in a town called Basingstoke, but it would be really hard to leave this area... in a quandry at the moment.


----------



## krisbarry (20 November 2007)

Tysonboss1 said:


> In sydney now it takes more than 1.6 peoples full time wages to pay the mortgatage on the median house price.




Surely this figure incorrect.

Even in Adelaide it take 2 full-time wages or $100,000 to service the average house loan for an average house.

Please re-check your figures. Adelaide V's Sydney  Hmmmmmm!


----------



## Tysonboss1 (20 November 2007)

Stop_the_clock said:


> Surely this figure incorrect.
> 
> Even in Adelaide it take 2 full-time wages or $100,000 to service the average house loan for an average house.
> 
> Please re-check your figures. Adelaide V's Sydney  Hmmmmmm!





Well these are not my figures,... they were qouted in a property investment magazine about 12months ago,

I guess it comes down to what the average income is,... maybe sydney is a bit higher,...

what is the median house price in adeliade,.... because based on the $100,000 earnings a family could repay a loan for $430,686,.... I didn't think the median house was that much in adelaide.


----------



## numbercruncher (20 November 2007)

Good little read on rent vrs buy in current market 




> Six-figure salary and still renting
> Author: Alex Tibbitts
> Date: November 7, 2007
> Publication:  Sydney Morning Herald (subscribe)
> ...




http://www.domain.com.au/Public/Article.aspx?id=1194329261897&index=NationalIndex&headline=Six-figure%20salary%20and%20still%20renting?s_cid=FDMedia:RateRiseRent:NA:091107:intratespoll&ref=patrick.net


----------



## gfresh (20 November 2007)

Depends what you do with the money.. bet that bloke paying the mortgage on the $2.25M is using it as leverage against something, say another few properties ..  each also appreciating nicely in value.  

He mentions "If you had $2.25 million sitting in the bank...", but unfortunately not many people are in a position to be in that sort of pure cash position, they only have say 1/10 of that, the rest is leveraged.

If you rent and are able to use the excess savings effectively to gear some other investments that you may be able to achieve the same effect. But it's difficult to obtain as much leverage through any lender, as through a property.


----------



## Tysonboss1 (20 November 2007)

numbercruncher said:


> Good little read on rent vrs buy in current market




What is the piont you were trying to make with your last post number cruncher,...

Gentle man in the article has flaws in his thinking he may have missed some very important points in his deceison ,...

- the amount of Rent he has to pay will increase over the years at a rate higher than inflation,... where as his mortgage payment and the total amount owed on his homeloan would decrease with inflation.

-so If he had bought the house the house (his capital) would go up in value over the years as his repayments went down,... but if he rents and puts his money in the bank the capital will decrease as his rent increases.

-Another piont is that he is obviously living above his means as he said he has choosen to rent a house that is better than the one he could other wise afford to buy,..... so they have choosen life style over longterm security,.. nothing wrong with that offcoarse they just should realise the sacrificices they are making.


----------



## robots (20 November 2007)

hello,

recent study showed also that the average wealth of home owner was around 400k versus average wealth of renter at 50k

both strategies are sound as long as the savings is put away by the renter and that is the big hurdle, 

coming up to the end of the year its great to see RE going well

as many know dwellings being built is down on dwellings required but research indicates that even if council gave green light for development to match required, no way could they be constructed per annum due to labour issue

thankyou

robots


----------



## professor_frink (20 November 2007)

Tysonboss1 said:


> - the amount of Rent he has to pay will increase over the years at a rate higher than inflation,... where as his mortgage payment and the total amount owed on his homeloan would decrease with inflation.




Where did you get that from? If rentals appreciate at a rate higher than inflation, won't most people will end up homeless eventually


----------



## Tysonboss1 (20 November 2007)

gfresh said:


> Depends what you do with the money.. bet that bloke paying the mortgage on the $2.25M is using it as leverage against something, say another few properties ..  each also appreciating nicely in value.
> 
> .




Top end Properties like this one do not normally make great investments, they will have good growth but the cashflow side of things lets them down as the rent is not high in comparison to the price,...

however alot of people by them as "anchor" properties,.... meaning they may be a CEO or some other high flyer than is constantly moving around australia or the world but they one day want to move back and settle in a particle place so they by a property there at todays prices so no matter how much the price goes up they can always move in or sell it and by a diferent one in that area.

I myself have an anchor property in my home town in brisbane, when i eventually move back I will either move into this house because it's in a great location that I love, or sell it and by another that I prefer in that area.


----------



## robots (20 November 2007)

hello,

good point tysonBOSS, and these people can afford the holding cost required,

thankyou

robots


----------



## Tysonboss1 (20 November 2007)

professor_frink said:


> Where did you get that from? If rentals appreciate at a rate higher than inflation, won't most people will end up homeless eventually




YES, rental yeild does grow faster than inflation,... CPI is probally the minimum that rental yeilds grow by,... but then some years such as this year rental grows by as much as 10%

No they won't be homeless, they will pay the higher rent or scale down,... in cities such as NEW YORK rent control legislation has been enforced so that a certain areas and buildings can not be rented higher than certain levels

so back in the 60's most people lived on 1/4 acre blocks in 4 bedroom houses, slowly the block size shrinks, town houses become more common a great portion of people start living in higher density,


----------



## professor_frink (20 November 2007)

Tysonboss1 said:


> YES, rental yeild does grow faster than inflation,... CPI is probally the minimum that rental yeilds grow by,... but then some years such as this year rental grows by as much as 10%
> 
> No they won't be homeless, they will pay the higher rent or scale down,... in cities such as NEW YORK rent control legislation has been enforced so that a certain areas and buildings can not be rented higher than certain levels
> 
> so back in the 60's most people lived on 1/4 acre blocks in 4 bedroom houses, slowly the block size shrinks, town houses become more common a great portion of people start living in higher density,




Oh, I was hoping for an actual link to some facts, not just more speculation. Do you actually have data on this, or are you just assuming that we will be like New York in a few years time?


----------



## Tysonboss1 (20 November 2007)

professor_frink said:


> Oh, I was hoping for an actual link to some facts, not just more speculation. Do you actually have data on this, or are you just assuming that we will be like New York in a few years time?




well inflation has been around 2-3% in recent times but I know rental growth in the areas I have invested in has grown by more that 10%p/a, as a matter of fact most longterm leases have built in rental increases of cpi + a certain %,.... I myself have a rule that every time I renew a tenants lease it goes up by cpi + 1% then after 2 years or when the tenant moves out I readjust back to market rent which has normally increased at a faster rate than my cpi +1% increases.

I bought a rental property in 2002 that was rented for $250p/w, I have not done one piece of renovation work but today it is rented for $385, thats an increase of nearly 65% in 5 years thats a hell of alot more than inflation

I will see if I can get some data though,... I can't believe you think rent only goes up with inflation,


----------



## Tysonboss1 (20 November 2007)

http://www.rta.qld.gov.au/zone_files/Median_Weekly_Rents_Sept_07/sa_3brm_houses.htm

here is a link to a page from the queensland tenancy authority showing rental growth of 3 bedroom houses over the last 3 years,.... you will see the increases easily out pace inflation and wages growth in pretty much every area,

some people on this site seem to find it very difficult to get there head around some of the basic fundamentals of property. If you guys class your selves as investors I think you guys need to skill up a bit on other asset classes other than stocks, maybe you should join a property forum.


----------



## numbercruncher (20 November 2007)

Checked it out ..... I see rents up a average of $20 p/w each of last three years, about 6 Interest rate rises to boot , so investor actually getting less each week ..... Pay rises last three years = Tons more than $20 per week.


I think we need more convincing, let us know when rents go up 100/200 per week at each yearly rent review and maybe we have a case


----------



## Tysonboss1 (20 November 2007)

numbercruncher said:


> Checked it out ..... I see rents up a average of $20 p/w each of last three years, about 6 Interest rate rises to boot , so investor actually getting less each week ..... Pay rises last three years = Tons more than $20 per week.
> 
> I think we need more convincing, let us know when rents go up 100/200 per week at each yearly rent review and maybe we have a case




well they actually averaged closer to $40 in the last year which is about 10% more than the inflation rate.

The rents only have to average 1% higher than inflation and it means year by year they are decreasing affordability,

for example if over 20years your salary increases by 5% per year and your rent increases by 10% what do you think will happen,..... A growing % of your take home pay is used to pay the rent,..... 

mean while a home owner is still paying his same repayment each week while his wages have been increasing so the amount of his take home pay used for his mortgatage is decreasing

interest rates are a completely differant subject over the 30years of your loan they will go up and down so it balances out,.... and interest rates cross over all asset classes any way, so if the renter had a leveraged share portfolio he would also feel the burn.


----------



## Tysonboss1 (20 November 2007)

also the houses that I mentioned earlier that I bought in 2002 are now positive geared meaning the the weekly rent is enough to pay all the expences even with the rate rises. and I have just switched to 3 year fixed loans so I have nothing to be worried about if the interest rates continue to increase


----------



## wayneL (21 November 2007)

Tysonboss1 said:


> YES, rental yeild does grow faster than inflation,... CPI is probally the minimum that rental yeilds grow by,... but then some years such as this year rental grows by as much as 10%




Handy thing, Excel.

It will show that this cannot be possible over any reasonably lengthy period of time. In fact, in this country, rents are cheaper (adjusted for inflation) than they were ten years ago.

The inevitable conclusion is that rents may grow slower than inflation in some periods.

No concrete figures either, but could probably acquire them if pressed.


----------



## theasxgorilla (21 November 2007)

numbercruncher said:


> Checked it out ..... I see rents up a average of $20 p/w each of last three years, about 6 Interest rate rises to boot , so investor actually getting less each week ..... *Pay rises last three years = Tons more than $20 per week*.




And there in lies the insight...we analyse this that and the other about property and shares and economics and underpinning the lot down-under is the glarringly obvious fact that Australia is becoming an increasingly wealthy nation.

Every time we dig up whatever it is we have in the ground and sell it at record high commodity prices and buy our imports with a circa 90c US exchange rate we add to our equity.   Who is the richest country in the world per capita (behind little Luxembourg)...it's Norway!  Is it population growth?  Yeah right.  The weather?  Pwft, please.  Favourable tax laws encouraging multinats to setup shop a la Ireland...ho ho ho.

It's oil.  

Look at where gold was at the turn of the century, then look where it is now (among other commodity prices that were in a so-called cyclical low circa 2000), and I'm sure you'll find as I have that it's not difficult to comprehend WHY property prices are not 'stagnating for years'.

Unfortunately we're not like Norway in our social, political and taxation policies so not everyone gets to live in a nice house, drive two late model cars, own a boat and a summer holiday cottage by a lake or fjord and take several overseas holidays every year.


----------



## ithatheekret (21 November 2007)

If you invested into retail or industrial properties , wouldn't you have the advantage of being able to link any increases to each annual CPI rate ?


.... and write it into the lease ........


----------



## wayneL (21 November 2007)

ithatheekret said:


> If you invested into retail or industrial properties , wouldn't you have the advantage of being able to link any increases to each annual CPI rate ?
> 
> 
> .... and write it into the lease ........



I'd much prefer rent increases at the REAL inflation rate . CPI only would put you behind the eight ball after a while.


----------



## WaySolid (21 November 2007)

Thought there was some excellent property in Trondheim and other Norwegian places when I looked in 05 ASXGorilla, would like to retire them some day when the boring nature of the place wouldn't kill me  Or one of those little islands as you approach Stockholm from the water, nice.

Stralians Increasingly wealthy, good point. I despair now and then when I think what we will do when the rocks are gone, but it's a trend that you wouldn't be betting against continuing at the moment.


----------



## theasxgorilla (21 November 2007)

WaySolid said:


> Thought there was some excellent property in Trondheim and other Norwegian places when I looked in 05 ASXGorilla, would like to retire them some day when the boring nature of the place wouldn't kill me  Or one of those little islands as you approach Stockholm from the water, nice.
> 
> Stralians Increasingly wealthy, good point. I despair now and then when I think what we will do when the rocks are gone, but it's a trend that you wouldn't be betting against continuing at the moment.




The fact that government debt is very low and compulsory super has been in place for what, 15 years?  And has only become more attractive as in investment vehicle over those years, suggests to me that the boomer generation will manage very well.  That we aren't using this increasing wealth to solve problems like proper motorway and rail infrastructure in our super cities (Syd and Melb) along with the water/irrigation issue and stupid political BS like Telstra crippling broadband for business & consumers, suggests that we are squandering a good deal of the opportunity to build efficiencies and a much better country.

Not to mention that the houses we've built and inflated the prices of are of such a low build quality compared with what is possible.  We'll be forced to tear many of them down and build again in 30 years.


----------



## wayneL (21 November 2007)

theasxgorilla said:


> The fact that government debt is very low and compulsory super has been in place for what, 15 years?  And has only become more attractive as in investment vehicle over those years, suggests to me that the boomer generation will manage very well.  *That we aren't using this increasing wealth to solve problems like proper motorway and rail infrastructure in our super cities (Syd and Melb) along with the water/irrigation issue and stupid political BS like Telstra crippling broadband for business & consumers, suggests that we are squandering a good deal of the opportunity to build efficiencies and a much better country.**
> 
> Not to mention that the houses we've built and inflated the prices of are of such a low build quality compared with what is possible.  We'll be forced to tear many of them down and build again in 30 years.*



Buy that man a beer! Spot on.


----------



## professor_frink (21 November 2007)

Tysonboss1 said:


> I will see if I can get some data though,... I can't believe you think rent only goes up with inflation,




Why wouldn't I? I have never seen any data that says rental increases above the rate of inflation is a long term trend. I would agree that it's most definitely been the case in Sydney from what I've seen over the past 2-3 years(I don't live there but have relatives that do), but does that mean it will continue indefinitely, or has been the case over the last 30 years? If it were the case, then surely this thread would have been littered with references to it from the various property bulls trying to make their case.



Tysonboss1 said:


> http://www.rta.qld.gov.au/zone_files/Median_Weekly_Rents_Sept_07/sa_3brm_houses.htm
> 
> here is a link to a page from the queensland tenancy authority showing rental growth of 3 bedroom houses over the last 3 years,.... you will see the increases easily out pace inflation and wages growth in pretty much every area,




thanks for that, but I'm still not convinced. 3 years doesn't equate to a long term trend IMO.



Tysonboss1 said:


> some people on this site seem to find it very difficult to get there head around some of the basic fundamentals of property. If you guys class your selves as investors I think you guys need to skill up a bit on other asset classes other than stocks, maybe you should join a property forum.




Don't worry, I don't classify myself as an investor. I haven't bought a stock in years


----------



## Tysonboss1 (21 November 2007)

professor_frink said:


> thanks for that, but I'm still not convinced. 3 years doesn't equate to a long term trend IMO.




http://www.rta.qld.gov.au/zone_files/Stats_September_2004/sa_3_brm_houses.htm

well here is the the 3 years before the last chart,... again the rental increase is faster than inflation,

House prices have always increased faster than inflation so it is only natural that rents will also increase faster than inflation,..

even if though there are years were the rent might not increase or increase on par with inflation the fact that the 7 year property cycle generally has about 5years where it increases at over twice the rate of inflation makes up for the down time.


----------



## Tysonboss1 (21 November 2007)

ithatheekret said:


> If you invested into retail or industrial properties , wouldn't you have the advantage of being able to link any increases to each annual CPI rate ?
> 
> 
> .... and write it into the lease ........




Yes,... and most generally say somthing along the lines of "cpi + 2%" or "5% rental increase or cpi which ever is larger"


----------



## robots (28 November 2007)

hello,

great reading

http://www.theage.com.au/news/national/housing-shortage-to-worsen/2007/11/27/1196036892774.html

some guy blames 50% CGT discount for housing afforability, 

its name your price, all the out of work IT guys should get some paint brushes or overalls on and hit the building sites, might help ease the crisis,

thankyou

robots


----------



## numbercruncher (29 November 2007)

Hi Robots,

Your mates up in Brisbane have the solution ...




> LANDLORDS are carving up houses in Brisbane's south to house up to a dozen international students who often share one kitchen and bathroom.
> 
> According to residents, one house had its kitchen removed and replaced with more sleeping quarters while students were given a barbecue to cook on.
> 
> ...




http://www.news.com.au/couriermail/story/0,23739,22839431-3102,00.html


----------



## Tysonboss1 (29 November 2007)

numbercruncher said:


> Hi Robots,
> 
> Your mates up in Brisbane have the solution ...
> 
> ...





It's actually a sound property investment stratergy,.... obviously being abused by some people though.

I have a mate who owns a 5 beedroom house that he rents by the room to 5 students,..... 

The house would normally rent for $330 but he rents it for $115 per room and he pays a cleaner to visit once a week to clean common areas and the lawns are mowed fortnightly, he is also looking at options where he could rent the garage out for storage.

So he has turned a negative geared property into a positive cashflow outcome.


----------



## robots (3 December 2007)

hello,

78% clearance rate in Vic over weekend, I think may see a period of flatness for a few months,

change of government, christmas coming up, I am sure some good results will still be achieved for "wanted" RE

thankyou

robots


----------



## Tysonboss1 (9 December 2007)

numbercruncher said:


> I think he means if your a Nurse, Teacher , Policeman , Truck Driver etc he beleives its normal that you cant afford a house in any of Australias capital cities*shrug*
> 
> I dont think its normal, or healthy .....





I found this article which talks about how average town house's sell for up to $5m usa dollars in new york city, I wonder how a nurse could make the repayments a a 4 Bed home on a 1/4 acre block in NY.


http://www.nytimes.com/2007/12/09/realestate/09cov.html?_r=1&oref=slogin


----------



## wayneL (9 December 2007)

Just to let you know, the crash has officially started here in the UK. Whether they can rescue the market with the insane rate cuts, remains to be seen. But good falls are being recorded on the indices.

Some individual areas are being slaughtered.

BTL is dead.


----------



## theasxgorilla (9 December 2007)

Tysonboss1 said:


> I found this article which talks about how average town house's sell for up to $5m usa dollars in new york city, I wonder how a nurse could make the repayments a a 4 Bed home on a 1/4 acre block in NY.
> 
> 
> http://www.nytimes.com/2007/12/09/realestate/09cov.html?_r=1&oref=slogin




Ah, an associated topic well worthy of discussion...modes of living around the world.  I believe you are referring to the "The Great Australian Dream".

This dream is not dead, you just have to look elsewhere to find it.  By that I mean that the expectations people have about where they can achieve it and by what means needs to change.  As your question above alludes to, who in their right mind would expect anyone to be able to live in a house on a quarter acre block on Manhattan island.  Even if one could afford it (Trump???) there has been so many decades of speculation in that part of the world that nearly all the single family houses have been torn down and the land given a higher density program.  Can we really expect any different from our super-successful, super-cities???

The house in suburbia on a 1/4 acre block isn't just handed out, not that it ever was but lets call a spade a spade...it was easier back then.  The script was written, people knew what to expect and what they should be doing.  It seems to me that today possessors of the dream represent a social class (the suburban land-owners?), attained only by being born into a generation who owned property pre-boom or by finding a means to achieve upward social mobility in 2007.

If anyone thinks voting Labour in will bring the dream back, for example, I'd suggest that the forces in play are bigger than any government of the day.  Expectations (not house prices) are being reset daily.


----------



## theasxgorilla (9 December 2007)

Tysonboss1 said:


> It's actually a sound property investment stratergy,.... obviously being abused by some people though.
> 
> I have a mate who owns a 5 beedroom house that he rents by the room to 5 students,.....




Happens plenty in London.  Every liveable space is rented...and those not liveable (of horse stables?!?!) are converted.  Am I the only person seeing the writing on the wall?


----------



## Tysonboss1 (9 December 2007)

theasxgorilla said:


> The house in suburbia on a 1/4 acre block isn't just handed out, not that it ever was but lets call a spade a spade...it was easier back then.  The script was written, people knew what to expect and what they should be doing.  It seems to me that today possessors of the dream represent a social class (the suburban land-owners?), attained only by being born into a generation who owned property pre-boom or by finding a means to achieve upward social mobility in 2007.
> 
> .




this is what I was trying to point out,..... some people that housing beoming un affordable is some un natural phenomnon caused by bad government,... through my posts on this thread I have been trying to point out that it is un avoidable if a city continues to grow.


----------



## robots (12 December 2007)

hello


----------



## wayneL (14 December 2007)

The bend at the end of the trend in NZ?

http://www.stuff.co.nz/4318037a13.html



> SNIP:
> "For the first time we've had a drop in the average sale price, and quite a marked one too," QV spokesman Blue Hancock said.
> 
> It was clear the booming property market, which has slowed for three consecutive months, had turned.


----------



## numbercruncher (14 December 2007)

Ive noticed boatloads of Houses forsale lately, maybe a few spooked punters about ? Just need a couple more rate rises to sort the Wheat from the Chaff


----------



## wayneL (14 December 2007)

The market here in the UK is in deep doodoo. Some parts of the country have dropped 10% since the summer.

Turnover has stopped and agents have taken to playing solitaire on their computers to look busy (true lol). I was talking to an agent in Stroud:

Me: I suppose there is a lot of BTL property coming on the market.

Agent (with plummy accent): Oh loads, we've all got our fingers burnt and those who aren't meeting the market are going to go broke.

Seeing as she had obviously done some dough as well, I didn't press for more info and changed the subject , but at least she was honest enough to tell me.


----------



## wayneL (14 December 2007)

London down 5%

http://www.thisismoney.co.uk/mortga....html?in_article_id=426444&in_page_id=57&ct=5


----------



## numbercruncher (14 December 2007)

ooh thats pretty spooky!

Wonder which UK bank will be the next to become Nationalised ?


----------



## Tysonboss1 (14 December 2007)

Perhaps it's time to start looking for areas with increased yeild,.... perhaps where the price has dropped far enough to bring yeilds close to positive cashflow,....

then find a property that has been owned by a lazy investor where the rental increases and some basic maintenance have not been done so you can kick out the tenant, do a quick repaint and carpet and up the rent and maybe come out with a positve cash flow out come


----------



## numbercruncher (14 December 2007)

Tysonboss1 said:


> Perhaps it's time to start looking for areas with increased yeild,.... perhaps where the price has dropped far enough to bring yeilds close to positive cashflow,....





Wot you talkin bout Willis ?

Aussie residential prop at Postive - noooooo, where is it ?


----------



## wayneL (14 December 2007)

Tysonboss1 said:


> Perhaps it's time to start looking for areas with increased yeild,.... perhaps where the price has dropped far enough to bring yeilds close to positive cashflow,....
> 
> then find a property that has been owned by a lazy investor where the rental increases and some basic maintenance have not been done so you can kick out the tenant, do a quick repaint and carpet and up the rent and maybe come out with a positve cash flow out come



The market would have to drop a freakin' long way from here for that to be a reality...


----------



## robots (15 December 2007)

hello,

I am sure the people(renter's) of the UK will be really happy that BTL is dead,

thankyou

robots


----------



## wayneL (15 December 2007)

robots said:


> hello,
> 
> I am sure the people(renter's) of the UK will be really happy that BTL is dead,
> 
> ...



If it weeds out the muppet LLs they will be, believe me.


----------



## robots (15 December 2007)

hello,

more likely muppet LL's will greatly increase in the future (or complaints against LL's)

if you look at issues since death of BTL in Aus, the renter will be real happy

thankyou

robots


----------



## robots (15 December 2007)

hello,

anybody watch Grand Design on thursday (13/12/07),

great show about guy building 2 houses in London, bought block for 50k 8 yrs ago,

now built 2 houses for total cost of 800k, looks as though sold one for around 800k, bank valued around that

note this episode was finalised around sept 07, looks as though things going reasonably well still in UK

he has 800k asset, nah no way, 

thankyou

robots


----------



## numbercruncher (15 December 2007)

robots said:


> *bought block for 50k 8 yrs ago*,





Hello

Thankyou


----------



## robots (15 December 2007)

hello,

oh yeah, it all just landed on his lap, well done

he put up with it like most who do the hard yards

thankyou

robots


----------



## wayneL (15 December 2007)

robots said:


> hello,
> 
> oh yeah, it all just landed on his lap, well done
> 
> ...



Hello.

You miss the point.

Goodbye.


----------



## theasxgorilla (16 December 2007)

wayneL said:


> London down 5%




London is a pretty big place...difficult to measure such a stat, but of course 'the mob' can only grasp simple ideas.  And as with tradeable markets, a retracement on lower volume doesn't necessarily represent structural damage to an in place trend.  Conversion of BTL to owner-occupied at a 5-10% discount is healthy IMO.  Those BTLs who manage to hold on have eventual higher rents to look forward to due to a shift in the supply/demand balance.

I can't help but wonder how much of the negativity is mass-media induced group think.  How long can we expect 'the mob' to remember to hold a given thought...without actually having any first hand experience of it?  How long before the media get bored of saying, "we told you so", and instead start trying to be the first to predict the beginning of the end of the end?  That is what is already happening in Swedish news.  If you're still a property 'bear' here you're so old-school.


----------



## wayneL (16 December 2007)

theasxgorilla said:


> London is a pretty big place...difficult to measure such a stat, but of course 'the mob' can only grasp simple ideas.  And as with tradeable markets, a retracement on lower volume doesn't necessarily represent structural damage to an in place trend.  Conversion of BTL to owner-occupied at a 5-10% discount is healthy IMO.  Those BTLs who manage to hold on have eventual higher rents to look forward to due to a shift in the supply/demand balance.



Yes. The rent price cycle runs counter to the house price cycle generally, so the standard wisdom is that rents will increase as BTLs bail out. 

<Gross generalization follows>But OOs are not buying the BTLs... They're not buying at all. It's the cashed up, pro LLs that are sitting there with low bids, waiting for the numerically challenged schmucks to capitulate. so actual supply of rented property is not diminishing at this point, and rents are not rising... yet</gross generalization> 

I am firmly of the opinion that the CBs have pulled so many levers they never should have since 2001, that the normal cycle (AKA the economic clock) is FUBAR. Hence I wonder whether rents will rise at all (in real terms).

We're in a brave new world now, so any of several scenarios could unfold. 



theasxgorilla said:


> I can't help but wonder how much of the negativity is mass-media induced group think.  How long can we expect 'the mob' to remember to hold a given thought...without actually having any first hand experience of it?  How long before the media get bored of saying, "we told you so", and instead start trying to be the first to predict the beginning of the end of the end?  That is what is already happening in Swedish news.  If you're still a property 'bear' here you're so old-school.




Well we all know the media really are muppets, but here, the interminable bulls are suddenly bears. Once must consider an important dynamic here in the UK... all journos are into BTL and they've ramped it for all it's worth for years. For them to go bearish here... well, you know the sentiment is really negative.


----------



## Tysonboss1 (16 December 2007)

numbercruncher said:


> Wot you talkin bout Willis ?
> 
> Aussie residential prop at Postive - noooooo, where is it ?




WayneL is talking about the UK,.... all I am trying to say is that if prices drop then yeild by default increases,.... 

there fore making it much easy to create a postive cashflow out come,.... However positve cashflow property is possible in Australia even in capital cities,....

you have to "create" your positve cashflow out come though,... not "Buy" it


----------



## Tysonboss1 (16 December 2007)

wayneL said:


> The market would have to drop a freakin' long way from here for that to be a reality...




Not really,.... as I said you can't expect to walk into a real estate agent and purchase a trophy property and expect it to be cash flow postive,... 

But after the market has droped a bit,.... combined with the factors I mentionen such as a property beening let far to cheaply, thats a bit run down, you should be able to create an outcome where you can increase the cashflow enough to bring it close to being postive,... then after tax deductions and depreation you should have a neutrel or cashflow positve investment,


----------



## numbercruncher (16 December 2007)

In the last approx 12 months rents have gone up by about 10pc on average, Interest rates have gone up about 20pc ..... I still cant see value in this yet ....


----------



## Tysonboss1 (17 December 2007)

numbercruncher said:


> In the last approx 12 months rents have gone up by about 10pc on average, Interest rates have gone up about 20pc ..... I still cant see value in this yet ....




Interest rates affect all asset classes,... not just property,....and interest rate risk is easily mitigated,.. my comments were in relation to people talking about property prices on the verge of dropping in the UK,...

My opinion is that if property prices are dropping it is not a reason to steer clear it is a reason to look for value,... and if you are a proactive investor you will be able to create positive cash flow outcomes,..

Not one of my investment properties is Negative at the moment, and they are all within 35kms of brisbane or sydney,

some were negative but in within 2-3 years had become postive others were positive within the first 3 months, because 3 months is normally the time it takes to kick the tenant out make some changes and get a new higher paying tenant.


----------



## Tysonboss1 (17 December 2007)

numbercruncher said:


> In the last approx 12 months rents have gone up by about 10pc on average, Interest rates have gone up about 20pc ..... I still cant see value in this yet ....




you have to be careful not to sit around waiting for the perfect market because there is never a perfect market,... you just get in there with a stratergy you know will make money,... 

there are stratergies you can use to make money in just about any part of the property cycle,...


----------



## numbercruncher (17 December 2007)

Yes everyone was busy telling me how mad i was when I bought my first property back in 2000, now they are busy telling me how mad I am for not buying now .....

I kinda have these deep restful sleeps atm being completely free of debt whilst a Credit Crunch unfolds and House price falls spread from US to UK to Europe, I can see how Aus must surely be immune to this, I mean our massive population and shortage of land combined with such a fantastic Industry base beyond mining is so reassuring ! 



Renting is such a flexible option atm, runs at 1/3rd the cost of Ownership, Brand new home, lovely view and if the Owner gets annoying, Just sack him and move into another nice new home, perfect relationship!

I disagree I think there is a perfect market, history has shown me its when those around me are screaming sell sell sell or dont buy dont buy dont buy ....

Im flexible though, either way, house prices keep gaining 10pc+ p/a more the fool me, but I still wont be worried about it! Im more concerned with the downside risk than upside, old saying, greedy become the needy ..

Be Interesting to see if your 10pc rule works thou, average 500k house now, will it be worth 1m in 7 years, 2m in 14, 4m in 21 .... I think back to a house my parents bought 20years ago for 100k - should be worth 800k now with this 10pc golden rule, but its not ...


----------



## wayneL (17 December 2007)

Tysonboss1 said:


> Not really,.... as I said you can't expect to walk into a real estate agent and purchase a trophy property and expect it to be cash flow postive,...
> 
> But after the market has droped a bit,.... combined with the factors I mentionen such as a property beening let far to cheaply, thats a bit run down, you should be able to create an outcome where you can increase the cashflow enough to bring it close to being postive,... then after tax deductions and depreation you should have a neutrel or cashflow positve investment,




Sure, but nowhere near that point yet.

The problem here is that every second show on TV is about renovating and reselling/letting. Consequently, people have been paying a premium for "fixer uppers". They've been getting away with it because while the reno proceeds, the market has moved on. The profit has come from a rising market, not so much the reno.

When fixer uppers are at a genuine discount it'll be worth doing, but I think we are a few crises away from that. Meanwhile, capital, and more importantly time, is better utilized elsewhere for mine.

War chest at the ready however.


----------



## numbercruncher (17 December 2007)

Centro Properties Group down 70pc (seventy) today.....


Sign of the times perhaps ?


----------



## wayneL (17 December 2007)




----------



## doctorj (17 December 2007)

I think what's happening to Centro is indicative of how the credit problems are going to slowly migrate their way into the so called "real economy".
It starts with banks taking the hit to their balance sheet, then spreads to the more highly leveraged businesses (as they have to compete with banks for a more limited, more costly pool of funds).

You're already seeing property related companies struggle and companies that insure bonds.  Next you'll see those that invest in these "safe" investments and those that earn fees from them.

Look to brokers, insurers & fund managers next.  

Sooner or later the almighty US consumer will have to stop borrowing either because they lose confidence, their job or their home.  The temporary recovery in US exports supporting the economy (as a result of the falling USD) will begin to fade as economic woes spread.
At this point retail, manufacturing and other discretionaries (travel etc) will take a hit.

I suspect the commodities will remain relatively strong as the credit markets make it harder to bring new supply harder to find (fewer explorers) and bring online.

It is a bit dooms day, but I think the US Fed realises this sort of scenario is relatively likely.  You're seeing measures to increase money supply without cutting rates as they realise rising inflation is also a very real threat.  

I wouldn't like to be a central banker right now.


----------



## tronic72 (17 December 2007)

wayneL said:


> Sure, but nowhere near that point yet.
> 
> The problem here is that every second show on TV is about renovating and reselling/letting. Consequently, people have been paying a premium for "fixer uppers". They've been getting away with it because while the reno proceeds, the market has moved on. The profit has come from a rising market, not so much the reno.
> 
> ...




I don't know about the the UK but in Australia the "fixer uppers" are all fixed. You are spot on though, too many people have paid premium prices for a dump with new curtain, polished floors and new paint with the Real Estate Agents happily claiming these homes to be renovated.

It's been shown for a long time now, that the three over priced real estate Markets have been the USA, UK & Australia. The UK I could understand and the USA to a lesser extent but the Australian market is currently a joke. 

Seems most Aussies have short, short memories. My family lost everything in the 80's so I'm pretty sensitive too high rates. I'm the only person I know who's locked in their home loan which at $180,000 is pretty low (considering we've only been in the house for 4 years).

I think this Christmas is going to tip many, many owners over the edge. Credit card debt is already high, people spent more during the silly season, petrol prices are at all time highs, inflation is way to high and the government is virtually guaranteeing at least 2 more rate rises.

Have just taken some modest losses to take my money out of play. I think cash is suddenly going to become much more expensive. 

My Uncle has been fond of the following saying;
"When everyone can afford and car, house (or two,three or four) and a holiday house the "true" value of those cars and houses suddenly becomes very low" Has anyone tried to sell a second-hand car lately??? What about venturing down to places like Venus Bay (holiday suburb in Victoria) where every second house is on the Market?

Bumpy times ahead.


----------



## tronic72 (17 December 2007)

numbercruncher said:


> In the last approx 12 months rents have gone up by about 10pc on average, Interest rates have gone up about 20pc ..... I still cant see value in this yet ....




Cruncher,

Keep in mind that rental prices stayed pretty much the same for 10 years. My Missus loves to remind me that when she left for the UK at the end of the 80s rental prices for a small apartment in Richmond were the same after nearly 9 years in the late 90s.

Rental rates has and still have a lot of catching up to do.


----------



## numbercruncher (17 December 2007)

tronic72 said:


> My Uncle has been fond of the following saying;
> "When everyone can afford and car, house (or two,three or four) and a holiday house the "true" value of those cars and houses suddenly becomes very low" Has anyone tried to sell a second-hand car lately??? What about venturing down to places like Venus Bay (holiday suburb in Victoria) where every second house is on the Market?
> 
> Bumpy times ahead.




Ha , I visited Venus bay several times in the last year for a spot of fishing and beach combing, your right, its unbeleivable the amount of property on the market there, Literally Hundreds of holiday shacks and blocks on the market, you could get a block there for like 10k and less 6 years ago!

And cars as well, I bought a newy 12mnths ago, its resale is 10k down already!


----------



## Tysonboss1 (17 December 2007)

numbercruncher said:


> Renting is such a flexible option atm, runs at 1/3rd the cost of Ownership, Brand new home, lovely view and if the Owner gets annoying, Just sack him and move into another nice new home, perfect relationship!
> 
> ...




The reason renting is cheap is because you will never own the property,...

and as I have said before Owning a property gets cheaper every year as your repayments decrease with inflation, and the cost of renting increases.

and don't bring up interest rates,.... interest rates go up and down it balances out,....

and secondly if you are not a leveraged investor you are really shooting yourself in the foot,..... sensible borrowers maintaining sensible Loan to valuation ratios are the last to get hurt in a credit crunch.


----------



## numbercruncher (17 December 2007)

Tysonboss1 said:


> and secondly if you are not a leveraged investor you are really shooting yourself in the foot,..... sensible borrowers maintaining sensible Loan to valuation ratios are the last to get hurt in a credit crunch.





I would of thought cashed up folks would be the last to get hurt in a crunch, and the first to prosper ?

And if your a leveraged investor facing asset price deflation your really really shooting yourself in the foot, no ? Maybe we could run that question past our mates at Centros ?


----------



## Tysonboss1 (17 December 2007)

numbercruncher said:


> I would of thought cashed up folks would be the last to get hurt in a crunch, and the first to prosper ?
> 
> And if your a leveraged investor facing asset price deflation your really really shooting yourself in the foot, no ? Maybe we could run that question past our mates at Centros ?




Cashed up folks won't get hurt,... but they won't have spectaclar investment results either,...

In regards to asset price deflation,... well time will see,... I really don't think property prices are going to be going backwards any time soon.

what is your point on centro,..


----------



## robots (17 December 2007)

hello,

wow we, another big day on the ASX, and a 78% clearance rate at auction on the weekend in Melbourne

so NC got your 500k Margin Loan rolling on BHP, or just pipedream? man if its so easy

thankyou

robots


----------



## numbercruncher (17 December 2007)

Hello Robots


No Debt at all for this little black duck, hope you got your mortgage locked in? Banks almost sure to raise rates above RBA next month, and Inflation looking like bringing two more after that next year.


So your 78pc clearance, price Jumps?


----------



## robots (17 December 2007)

hello,

more speculation NC, should remind yourself of the title of the thread and the date

want another 2 yrs, 5 yrs what 20 yrs

goodluck

thankyou

robots


----------



## chops_a_must (17 December 2007)

Whoever said back there that ridiculously high house prices in Australia were the new reality... I just can't buy that argument.

When it costs more to rent and buy in Perth than it does in Tokyo, than something is seriously amiss. When people move from "small towns" i.e. cities like Perth to the big smoke, to reduce costs, things obviously can't be sustained...

But I guess house prices are just on a permanently high plateau hey?


----------



## numbercruncher (17 December 2007)

Hello,

Just for the record I joined the debate 12mnths ago, maybe had I bought a Prop 12 mnths ago I might now be looking at break even ? ie/ paying for Duty and Interest ? But probably not covering your fee to sell ? 


We will see! Hope for your sake your right, either way doesnt fuss me, I smell contagion , just cant smell much Phear yet is all ?


----------



## Tysonboss1 (17 December 2007)

chops_a_must said:


> Whoever said back there that ridiculously high house prices in Australia were the new reality... I just can't buy that argument.
> 
> When it costs more to rent and buy in Perth than it does in Tokyo, than something is seriously amiss. When people move from "small towns" i.e. cities like Perth to the big smoke, to reduce costs, things obviously can't be sustained...
> 
> But I guess house prices are just on a permanently high plateau hey?




I would like to see you buy a 4 bedroom house and land in tokyo for $350,000


----------



## chops_a_must (17 December 2007)

Tysonboss1 said:


> I would like to see you buy a 4 bedroom house and land in tokyo for $350,000




Well, you are paying that much for most dog boxes in Perth these days, or at least seem to be. Crazy when you compare that to other parts of the world, even Melbourne. West Perth or Southbank... West Perth or Southbank... hmmm...


----------



## Tysonboss1 (17 December 2007)

numbercruncher said:


> Hello,
> 
> Just for the record I joined the debate 12mnths ago, maybe had I bought a Prop 12 mnths ago I might now be looking at break even ? ie/ paying for Duty and Interest ? But probably not covering your fee to sell ?
> 
> ...




I bought a house a little over 12 months ago,... for $257,000. It has two units in it One 3bedder and one 1bedder, combined rent was $280.00

I kicked tenants out repainted, fix a few other things costing no more than $1000 today the units are renting for $180 and $270 = $450 perweek in total = positve cash flow outcome. costs me nothing to own, will go up in value and rents will continue to increase and loans are fixed at 7.49% for 3 more years.

there is money in every market you just have to be able to spot it.


----------



## numbercruncher (17 December 2007)

Tysonboss1 said:


> I bought a house a little over 12 months ago,... for $257,000. It has two units in it One 3bedder and one 1bedder, combined rent was $280.00
> 
> I kicked tenants out repainted, fix a few other things costing no more than $1000 today the units are renting for $180 and $270 = $450 perweek in total = positve cash flow outcome. costs me nothing to own, will go up in value and rents will continue to increase and loans are fixed at 7.49% for 3 more years.
> 
> there is money in every market you just have to be able to spot it.




Sure looks like you got some good buying there,well done, which town did you buy in ?


----------



## doctorj (17 December 2007)

Here's some anecdotal evidenced that there is some stress beginning to creep into the more leveraged property players in Perth... 

A friend of mine, who's in the market for their first property had been to visit a property twice.  Today he received an unsolicited call from the realtor suggesting a bid of 15-20% below the current offer price might be successful.  

The property is close to the CBD (~5km) and is the result of the vendor building 4 villas on a largish block of land.


----------



## Tysonboss1 (17 December 2007)

chops_a_must said:


> Well, you are paying that much for most dog boxes in Perth these days, or at least seem to be. Crazy when you compare that to other parts of the world, even Melbourne. West Perth or Southbank... West Perth or Southbank... hmmm...




Wether it is a dog box of not I think you will find land by itself in tokyo would be millions of dollars,... even without the building


----------



## Tysonboss1 (17 December 2007)

doctorj said:


> Here's some anecdotal evidenced that there is some stress beginning to creep into the more leveraged property players in Perth...
> 
> A friend of mine, who's in the market for their first property had been to visit a property twice.  Today he received an unsolicited call from the realtor suggesting a bid of 15-20% below the current offer price might be successful.
> 
> The property is close to the CBD (~5km) and is the result of the vendor building 4 villas on a largish block of land.




the price may be over priced any way,... so the 20% below bid is just bringing it down to market value,

Also I have no doubt that there will be mortgate stress,... But this doesn't mean property investment is bad,... it's just poor judgement from some borrowers,...

also with rates coming off all time lows you can expect people to overextended themselves without protecting them selves to be under pressure,... it's all part of the cycle.


----------



## numbercruncher (17 December 2007)

Tysonboss1 said:


> Wether it is a dog box of not I think you will find land by itself in tokyo would be millions of dollars,... even without the building





Tokyo is a city of some 12 million people, I understand they saw their first price gain in 15 years last year, I doubt they will see many more gains for years to come, such is the fate of export driven economies that bubbled and bubbled I guess ...


----------



## robots (17 December 2007)

hello,

if you bought in Melb or Adel 12mths ago, going on the average, prices are up around 18%, so you would be well ahead, what about the rent most pay, just skip that one

the big credit crunch is happening and the US are LOWERING interest rates, yes LOWERING

RE is not expensive, so you telling me 10yrs ago or 20 yrs, anybody could by any property

things are no different

thankyou

robots


----------



## Tysonboss1 (17 December 2007)

numbercruncher said:


> Tokyo is a city of some 12 million people, I understand they saw their first price gain in 15 years last year, I doubt they will see many more gains for years to come, such is the fate of export driven economies that bubbled and bubbled I guess ...




I was simply pointing out that you can not by a house and land in toyko for under $350,000 as you can in perth,... which chops claimed you could.


----------



## numbercruncher (17 December 2007)

robots said:


> the big credit crunch is happening and the US are LOWERING interest rates, yes LOWERING





Not only Lowering, but pumping Billions and Billions into the system stoking worldwide Inflation, our RBA has a different agenda and mandate, not in your wildest fantasies will you see them lowering in this climate.


----------



## robots (17 December 2007)

robots said:


> hello,
> 
> 
> RE is not expensive, so you telling me 10yrs ago or 20 yrs, anybody could by any property
> ...




hello,

no comment on this

thankyou

robots


----------



## Kimosabi (17 December 2007)

robots said:


> RE is not expensive, so you telling me 10yrs ago or 20 yrs, anybody could by any property




Real Estate prices aren't going up, it's the value of your money going down...


----------



## numbercruncher (17 December 2007)

> Dec. 14 (Bloomberg) -- For U.S. homeowners, builders, bankers and realtors, the crash of 2007 will only get worse in 2008.
> 
> Everyone from mortgage-finance company Fannie Mae to Lehman Brothers Holdings Inc. expects declines next year. Existing home sales will drop 12 percent and existing home prices will fall 4.5 percent, Washington-based Fannie Mae says. Lehman analysts estimate almost 1 million mortgage loans will default in 2008, up from about 300,000 this year.
> 
> ``We're only halfway through the housing shock,'' said Ethan Harris, chief U.S. economist at New York-based Lehman, the fourth- biggest U.S. securities firm by market value. ``It's just a matter of time before the weakness spreads to the rest of the economy.''




http://www.bloomberg.com/apps/news?pid=20601109&sid=af2DBA6IKMLA&refer=home

And this is from a Country with 20x our population and an economy that makes ours look like a peanut, not to mention much lower Interest rates.

We are surely very close to this spreading here


----------



## wayneL (17 December 2007)




----------



## numbercruncher (17 December 2007)

OOoh - for those of you without access to xe.com, 28k pounds is 65k AUD - all in a month, and those not familar with the UK its a rock with over 60m in an area much smaller than Victoria, considering our massive land shortage surely we couldnt suffer a similar fate ? 

Better hope Our Chinese mates keep buying lots of things from our holes in the ground eh ?


----------



## Tysonboss1 (18 December 2007)

numbercruncher said:


> OOoh - for those of you without access to xe.com, 28k pounds is 65k AUD - all in a month, and those not familar with the UK its a rock with over 60m in an area much smaller than Victoria, considering our massive land shortage surely we couldnt suffer a similar fate ?
> 
> ?




6.8% downturn,.... I should just liquidate an my property holdings and place the funds in the rock solid share market where downturn of 6.8% never happen,...

You are forgoting that it is completely normal for property values to go up and down,... as with the share market.


----------



## wayneL (18 December 2007)

Tysonboss1 said:


> 6.8% downturn,.... I should just liquidate an my property holdings and place the funds in the rock solid share market where downturn of 6.8% never happen,...
> 
> You are forgoting that it is completely normal for property values to go up and down,... as with the share market.




You are the first housing bull I've ever heard acknowledge that fact.

So by extrapolation of that logic, housing values could fall 40%?


----------



## KIWIKARLOS (18 December 2007)

If the US goes into recession followed by China slowing and reducing demand for raw material i think the states hardest hit will be WA and QLD. Their house prices have gone up on the back of commodities if the commodity cash goes there prices will fall. I think established markets in Sydney and melbourne will remain around the same prices maybe with some small gainsas people move out of the markets in WA and QLD and into these mature markets. 

Also think about how many people moved to these states for work if the work goes they will be coming home in droves all cahsed up


----------



## KIWIKARLOS (18 December 2007)

Mate house prices in sydney will not fall 40% your forgeting our demand / supply is much different to the US. We have a shortage if people start hitting the wall and foreclosing others will jump intot he oportunity. Alot of investors will also prob move their money from volatile markets into relatively secure property


----------



## Tysonboss1 (18 December 2007)

numbercruncher said:


> Sure looks like you got some good buying there,well done, which town did you buy in ?





Petrie, Just north of Brisbane,....

This property is in the Lower and of the market and is far from the "Trophy" property most Mum and Dad investors go for,

But yes I did negotiate a good deal for a few reasons, 

1, It was the type of property most mum and Dad investors would not even look at,

2,The land lord hadn't done a rental increase in 5years,... so the cashflow looked very weak so alot of other investors walked away.

I like the lower income end of the rental market because it offers higher rental yeilds,... and less risk because if the economy does hit the fan it's the topend that suffers high vacancy rates.

I actually showed my sister this property trying to get her to buy it as an investment but typically she didn't like the look of it and went and bought a property for $400,000 that gets $385 / week rent,.... mine is getting $450 rent and cost me $257,000.


----------



## wayneL (18 December 2007)

KIWIKARLOS said:


> Mate house prices in sydney will not fall 40% your forgeting our demand / supply is much different to the US. We have a shortage if people start hitting the wall and foreclosing others will jump intot he oportunity. Alot of investors will also prob move their money from volatile markets into relatively secure property



Things can't change? A credit crunched deflationary recession just couldn't happen, ever, right?

LOL


----------



## Tysonboss1 (18 December 2007)

wayneL said:


> You are the first housing bull I've ever heard acknowledge that fact.
> 
> So by extrapolation of that logic, housing values could fall 40%?




Offcourse anything is possible,.... But extremely unlikely, Because for a drop to be sustained like that especially in the Australian market you would have to see a Massive drop in the rental yeild too,.... other wise buying would increase and offset the negative pressures,... and the rental market here is far to strong to see yeilds retreat any time soon,

I don't actually think I am a Property Bull as much as I am an all round investor,.... I started in the share market, But now invest in many asset classes including shares, Businesses and Property.

I understand that property can drop in value but that is no reason to right it off as a long term wealth creation stratergy any more than you would the share market,..... I mean how many of your friends and family have brought up the arguement that share investing to risky,.... 

I feel what makes things risky is not the asset class itself, But your level of skill and understanding of how that asset class works.


----------



## numbercruncher (18 December 2007)

Tysonboss1 said:


> Offcourse anything is possible,.... But extremely unlikely, Because for a drop to be sustained like that especially in the Australian market you would have to see a Massive drop in the rental yeild too,.... .





Why wouldnt it? "average" rental yields are running at like 3pc , I cant see any reason why a correction couldnt happen and rents remain stagnant.


----------



## wayneL (18 December 2007)

Tysonboss1 said:


> Offcourse anything is possible,.... But extremely unlikely, Because for a drop to be sustained like that especially in the Australian market you would have to see a Massive drop in the rental yeild too,.... other wise buying would increase and offset the negative pressures,... and the rental market here is far to strong to see yeilds retreat any time soon,




Actually, a drop like that would only return yields to the historic norm of around 7%. 

Like 95% of people (including most economists) you make the error of extrapolating the most recent set of economic conditions into infinity.

The world could be on the cusp of a radical economic change... and I'm not just talking of a classic Austrian bust (though that is a real danger), but also due to climate and energy.

Sydney, would not fare very well in a credit denuded, energy deficient and/or severely energy regulated world.

I'm not saying any of this will happen, but recognizing that it could. "It'll never happen here mate" type thinking is pure hope, but professionals hedge. 

The question becomes, how does one hedge against this possibility?


----------



## KIWIKARLOS (18 December 2007)

I agree we are on the cusp of a major economic change.
The change is we are quickly running out of the cheapest most energy dense liquid on earth and when we do start the downward production trend  the enormous amount of petro dollars in every economy of the world will be worthless.

Sure 40% drop is possible but you have to acknowledge that if we do get to that scenario there will be more things to worry about than having to foreclose on your family home. The queues for basic food , petrol + high chances of social unrest and rioting will probably be a more immediate concern : 

If that happens were all up the creek without a paddle


----------



## tronic72 (18 December 2007)

Just speaking to an older (nearing retirement) friend of mine who has made a heap of money with property over the past ten years. He's now whinging that he's getting to the point where he's "almost" run out of his own money to get them all going. (Rentals aren't covering enough).

If someone who's been in the game for 10 years is struggling I think it won't before the masses follow suite.

TWT (Time Will Tell).


----------



## numbercruncher (18 December 2007)

Weve got Hundreds of thousands of baby boomers retiring each year, once they start to fret or indeed panic, its game on.

Geny-Ys simply arnt buying, banks are getting fussy with whom borrows, sure everyone has to live somewhere, But once the banks stop lending 400k to people earning 50k,,,


----------



## wayneL (18 December 2007)

numbercruncher said:


> But once the banks stop lending 400k to people earning 50k,,,



Already happening here in the UK.

And in further developments, people are having their credit card limits slashed and some are even not being reissued.

Sub-Prime is dead.
MEW is dead.
BTL is dead.
Now CC avenue crumbling right before our eyes.


----------



## numbercruncher (18 December 2007)

wayneL said:


> Already happening here in the UK.
> 
> And in further developments, people are having their credit card limits slashed and some are even not being reissued.
> 
> ...




Wow scary, there is surely no way that Australia can avoid this, but we have this rare and unique position of being forewarned and have an opportunity to position accordingly.


----------



## Tysonboss1 (18 December 2007)

tronic72 said:


> Just speaking to an older (nearing retirement) friend of mine who has made a heap of money with property over the past ten years. He's no whinging that he's getting to the point where he's "almost" run out of his own money to get them all going. (Rentals aren't covering enough).
> 
> If someone who's been in the game for 10 years is struggling I think it won't before the masses follow suite.
> 
> TWT (Time Will Tell).




As I said it's your Up to your level of skill and choosing the right stratergy for the current market,... your current goals and the stage of your life, your friend has obviously purchased the wrong property to suit his needs.

I mean arguements like this is like saying,.... My friend lost all his money investing in the share market there fore the share market is flawed,....


----------



## Tysonboss1 (18 December 2007)

numbercruncher said:


> Why wouldnt it? "average" rental yields are running at like 3pc , I cant see any reason why a correction couldnt happen and rents remain stagnant.




3%,..... what area are you talking about,.... Are you basing your calculations of asking prices,... or actual sale price,... there is a big differance.

Based on my example I used earlier I am achieving nearly 9%,....


----------



## wayneL (18 December 2007)

Tysonboss1 said:


> 3%,..... what area are you talking about,.... Are you basing your calculations of asking prices,... or actual sale price,... there is a big differance.



So you get 10% off asking and get 3.3%? 

...and thats gross BTW (excuse the unintentional double entendre)


----------



## KIWIKARLOS (18 December 2007)

We will be fine as long as our economy stands up through this if you have low unemployment , wage growth etc prices will remain ok. Fortunatly if the commodities markets slow i think we can partially offset that with our agriculture. For the last five years our farmers have been hurting and output low but the drought now looks like it is breaking with la nina well into formation we will prob see ag output increase sharply next year. 

Even if our economy does slow abit that will take the pressure of interest rates a bit well just have to see how expensive credit gets. The other bonus is our mining big guys have good cash flows and dont need to borrow large sums to keep current outputs.

My forecast is a slowdown in Oz economy but still growth with home prices remaining fairly steady for medium term while the rest of the world starts to fill the US consumers role


----------



## Tysonboss1 (18 December 2007)

wayneL said:


> So you get 10% off asking and get 3.3%?
> 
> ...and thats gross BTW (excuse the unintentional double entendre)




I don't know what areas, or types of property NC has been looking at.

4.5% is the rental yeild on the average, Nothing to do trophy investment in my market.


----------



## robots (18 December 2007)

hello,

if its so evident, 

give an example, what suburb, what street, what street no, what was the last registered sale price, 

if so many are dropping like flies should be fairly easy to substantiate,

what BTL companies have gone under,

you got nothing, keep up the doom and gloom

thankyou

robots


----------



## Kimosabi (18 December 2007)

robots said:


> hello,
> 
> if its so evident,
> 
> ...



Robots, I think you need an oil change along with a grease and lube...


----------



## Mofra (18 December 2007)

numbercruncher said:


> OOoh - for those of you without access to xe.com, 28k pounds is 65k AUD - all in a month, and those not familar with the UK its a rock with over 60m in an area much smaller than Victoria, considering our massive land shortage surely we couldnt suffer a similar fate ?



NC, 
As much as you seem to be hoping for a drastic pullback in property prices, we'd need 3 similar months here just to get back to where we were 791 days ago (the date of the original article). Given the recent resiliance of the local markets in a variety of conditions it would appear any drop in Australian residential property prices (commercial is a different kettle of fish in terms of supercycles) would occur at a much more subdued rate.

If this doesn't occur at the rate you are hoping, I hope you can find some other crisis to glean some enjoyment from. Perhaps you might find a few bargains at some business firesales?

Cheers


----------



## numbercruncher (18 December 2007)

Hi Mofra,


Im not actually hoping for anything just commentating on how I percieve the situation.

Surely you can concede most of the property boom can be directly attributed to far too cheap and easy credit ?

Property prices on a historical p/e have averaged at 4x average earnings and now 7+x , Id have no debate in this thread if average wages where 100k rather than 50.

Good luck with your investments.


ps. I have absolutely no problem with and enjoy snapping up bargains during firesales, and surprisingly enough have positioned myself to do so .


----------



## explod (18 December 2007)

Mofra said:


> NC,
> As much as you seem to be hoping for a drastic pullback in property prices, we'd need 3 similar months here just to get back to where we were 791 days ago (the date of the original article). Given the recent resiliance of the local markets in a variety of conditions it would appear any drop in Australian residential property prices (commercial is a different kettle of fish in terms of supercycles) would occur at a much more subdued rate.
> 
> If this doesn't occur at the rate you are hoping, I hope you can find some other crisis to glean some enjoyment from. Perhaps you might find a few bargains at some business firesales?
> ...




No one, with any maturity is enjoying this.   I have family members in the western suburbs, eastern, southern and northern to Melbourne, one in Sydney and two in Brisbane.   I can assure you that from their stories alone we are heading for a problem.

Profile:- children at school, mortgage, both working to make ends meet.  Hung on in the hope that a change of government might help;

Problem:-  rising interest rates, rising fuel costs (big issue), rising food prices, cant cut back here with kids.

Outer suburbs like these, property prices are dropping and with some the mortgage is getting close to total equity.

Some say serves them right.  I say the industries of real estate, banking and government enthusiasm has encouraged it.

Just watch the rush for everyone to start selling once a certain realisation point is reached.   Maybe the Centro fiasco will start something and from what some are indicating, Centro may be just the ring of the bell at the start of the game.


----------



## numbercruncher (18 December 2007)

> RBA reveals global credit turmoil held off rates rise
> 
> It has been revealed the Reserve Bank believed there was a strong case for an official interest rate rise earlier this month but held off because of the global credit market turmoil.




http://www.abc.net.au/news/stories/2007/12/18/2121991.htm


The RBA seriously has its finger on the trigger, the big four are already wearing extra costs and are widely tipped to raise rates in Jan over and above the RBA official rate.


----------



## robots (18 December 2007)

hello,

until replacement cost gets reduced I cant see much happening, if companies reduce the cost of things then RE may reduce

I am talking basic replacement cost 

do you think a bmw price tag will be cut in half at the dealer?

goodluck with you're investments

thankyou

robots


----------



## Santoro (18 December 2007)

robots said:


> hello,
> 
> until replacement cost gets reduced I cant see much happening, if companies reduce the cost of things then RE may reduce
> 
> ...




Yeah, but sometimes its to do with how many folks are in a position to buy and how many can't afford to hold what they got. With less funds available in Aust (30% of loaned money has come from overseas sources currently drying up and more to come over the next 12 months plus).

As an investor I do not want to believe the stock market will go down when it is rising, but @#&^ it does. Why do you think it would be different for other investments, house prices of property in the UK, US are going down. No one wants to buy right now as they can see things ain't right.

(eg. if that dealer has 100 BMW's and 10 customers the price is going down dude)


----------



## robots (18 December 2007)

hello,

last I looked the world hasn't ended, transactions of all sorts are still going on,

cars are still on the roads, the newsagent is still open, father christmas is going to turn up next week, the bank is still creaming it

thankyou

robots


----------



## Santoro (18 December 2007)

robots said:


> hello,
> 
> last I looked the world hasn't ended, transactions of all sorts are still going on,
> 
> ...




Never said the contrary....just saying that maybe the economic conditions are changing, does appear that way, things will progress as they always will, it ain't the end of the world, just damn interesting.....


----------



## robots (18 December 2007)

hello,

anybody know how I can find out what my house is worth?

thankyou

robots


----------



## numbercruncher (18 December 2007)

robots said:


> hello,
> 
> until replacement cost gets reduced I cant see much happening, if companies reduce the cost of things then RE may reduce
> 
> ...






Cost doesnt matter when the punters cant borrow money, Just ask Centro, sitting on about 70pc leverage and can remain solvent until about Feb.
 - Once the " Download an ABN and tell me some lies" financing is out of the game, ouchers. This credit crunch is rapidly morphing into a credit crisis. As the previous poster mentioned 30pc of Credit here comes from OS sources, just take that out of the system and its game over.

People are surely taking notice, slowly edging up out of there seats and walking towards the door, wait till someone yells fire and theres a stampede.

All this easy credit has done is allow the masses to borrow from the future, now the future is catching with the now.

The new CEO of ANZ gave investors a briefing today ....



> Mr Smith did not comment on when or if the ANZ would increase its mortgage rates as a result of the credit crunch, but he confirmed the ANZ was battening down for tough conditions ahead.
> 
> "Obviously the business mix is going to be informed. The reliance on wholesale funding is an issue, and *I would certainly like to improve the amount of domestic deposits we take* to replace that," he said.




http://www.abc.net.au/news/stories/2007/12/18/2121846.htm

Holes appearing in the fractional banking system perhaps ?


----------



## nioka (18 December 2007)

Santoro said:


> (eg. if that dealer has 100 BMW's and 10 customers the price is going down dude)




If I was the manager I would tell my salesman to get the 10 customers fixed up at the normal price and make sure they were happy. (who wouldn't be happy with a beamer) I would ask him to ask them to recommend the dealership to their friends and work hard to sell the other 90. Life wasn't meant to be easy. Where there is a will there is a way.


----------



## robots (18 December 2007)

hello,

no money for centro or just no money at X price

DOOM AND GLOOM

they can get money but it will wack them, big deal

thankyou

robots


----------



## wayneL (18 December 2007)

robots said:


> hello,
> 
> no money for centro or just no money at X price
> 
> ...



The Austrian bust in a nutshell.


----------



## numbercruncher (18 December 2007)

robots said:


> hello,
> 
> anybody know how I can find out what my house is worth?
> 
> ...





Average income of your suburb x4 -2.5pc for some realestate shark to spend 6 hours selling it.

Thankyou.


----------



## robots (18 December 2007)

hello,

might go out with the soup kitchen tonite, probably be a huge line of people with mortgage stories

what a job, 2.5% sale price for 6 hrs work,

thankyou

robots


----------



## Flying Fish (18 December 2007)

robots said:


> hello,
> 
> might go out with the soup kitchen tonite, probably be a huge line of people with mortgage stories
> 
> ...




Yes campbells make a really nice vegetable soup. fat free


----------



## wayneL (19 December 2007)

robots said:


> hello,
> 
> might go out with the soup kitchen tonite, probably be a huge line of people with mortgage stories
> 
> ...



Don't really have to go to the soup kitchen at all, just stand around any High Street queue (British people love to queue) and eavesdrop for a bit, you'll hear them. 

Used to hear the same things in Oz.


----------



## theasxgorilla (19 December 2007)

wayneL said:


> Don't really have to go to the soup kitchen at all, just stand around any High Street queue (British people love to queue) and eavesdrop for a bit, you'll hear them.
> 
> Used to hear the same things in Oz.




Totally agree with you, but here is my recurring point.  People talk about what is in the papers and on TV.  And the media publishes whatever they think will get the readers reading and coming back.  Its no surprise people are telling these tales.  Probably not about themselves mind you, but about other people who speculated, "and now rightly deserve what they've got coming to them, damn speculators".

Here is a thought...more people read papers and watch TV than speculate.  That means a great big audience out there who never participated in the boom, but watched prices go up in local real estate catalogues and probably knew someone directly or by association who sold actually sold a house recently for an extraordinary amount or heaven-forbid actually speculated and tried to make a profit.  This is a feeding frenzy by all those who missed out.  Wishing that those who tried to do what most didn't have the guts (or simply weren't in a position) to do indeed get what they deserve for trying.  Be interesting to see if anything actually comes of it.  I'm still waiting for the real thunder and rain to happen.  So far, lots of talk, very little crashing.

ASX.G


----------



## Tysonboss1 (19 December 2007)

numbercruncher said:


> Centro Properties Group down 70pc (seventy) today.....
> 
> 
> Sign of the times perhaps ?




some money to be made here for people quick to take advantage of the market over reaction,


----------



## wayneL (19 December 2007)

theasxgorilla said:


> Totally agree with you, but here is my recurring point.  People talk about what is in the papers and on TV.  And the media publishes whatever they think will get the readers reading and coming back.  Its no surprise people are telling these tales.  Probably not about themselves mind you, but about other people who speculated, "and now rightly deserve what they've got coming to them, damn speculators".
> 
> Here is a thought...more people read papers and watch TV than speculate.  That means a great big audience out there who never participated in the boom, but watched prices go up in local real estate catalogues and probably knew someone directly or by association who sold actually sold a house recently for an extraordinary amount or heaven-forbid actually speculated and tried to make a profit.  This is a feeding frenzy by all those who missed out.  Wishing that those who tried to do what most didn't have the guts (or simply weren't in a position) to do indeed get what they deserve for trying.  Be interesting to see if anything actually comes of it.  I'm still waiting for the real thunder and rain to happen.  So far, lots of talk, very little crashing.
> 
> ASX.G




Real estate doesn't "crash" like SMs. It's more insidious than that, RE crashes are only really that evident AFTER it has happened. This is why shills like Robots can carp from the side with extremely faulty logic for ages while enough happens for the real facts to become obvious.

I suspect Oz will be more resilient (at least initially) than other frothy markets, but make no mistake, in UK, RoI, Spain and of course the USA, the crash is real, it's happening.


----------



## robots (20 December 2007)

hello,

get off my back,

all I am claiming is that things are extremely sound and that is the thrust of my discussion here,

no magical logic, just what I see every weekend, properties being sold and new high prices being achieved,

in the background people may have all sorts of opinions,

but seriously, who went to an auction last weekend or really investigated what a property would/did sell for?

not long to 08

goodluck and have a merry christmas

thankyou

robots


----------



## wayneL (20 December 2007)

robots said:


> hello,
> 
> get off my back,
> 
> ...




Who is on your back 'bot?   Just folks giving their opinion just like you.


----------



## Flying Fish (20 December 2007)

wayneL said:


> Real estate doesn't "crash" like SMs. It's more insidious than that, RE crashes are only really that evident AFTER it has happened. This is why shills like Robots can carp from the side with extremely faulty logic for ages while enough happens for the real facts to become obvious.
> 
> I suspect Oz will be more resilient (at least initially) than other frothy markets, but make no mistake, in UK, RoI, Spain and of course the USA, the crash is real, it's happening.




So maybe buy over there?


----------



## wayneL (20 December 2007)

Flying Fish said:


> So maybe buy over there?




Yup, but only when Kirsty Allsop thinks real estate is a crap investment. 

Parody:


----------



## wayneL (20 December 2007)

This property ==>> http://www.houseprices.co.uk/e.php?q=NE1+4BB+702 (bought for £221,000 in July 2006)
Just sold at auction for £115,000 

More examples to come as I find them.


----------



## numbercruncher (21 December 2007)

> 3rd Annual Demographia International Housing
> Affordability Survey:2007
> 
> The 3rd Annual Demographia International Housing Affordability Survey expands coverage to 159
> ...




http://www.demographia.com/dhi-ix2005q3.pdf


Pretty good reading if anyone is interested, not sure realestate agents would like it much, they might consider it biased propaganda or something lol 




> In fact, the evidence shows that virtually all of the increase in housing prices has been due to the
> second factor --- a shortage of land. Land prices have skyrocketed, while the price of building
> houses has risen only modestly in real terms. From 1993 to 2006, 88 percent of the combined cost
> of new houses and land has been attributable to inflation of land prices and only 12 percent to
> ...


----------



## robots (21 December 2007)

hello and good evening,

article in the aus paper today:



HOUSING affordability declined by almost 10 per cent over the past year, a report shows, and there appears to be little relief in sight for renters and those looking to enter the property market.

While welcoming the renewed focus on the issue of housing affordability, the Real Estate Institute of Australia (REIA), which this week released its annual summary of residential and commercial real estate markets, warned that renters and buyers alike still faced an uphill battle.

"The REIA looks forward to the introduction of the Rudd Government initiatives including the first home saver scheme, housing rental scheme, and housing affordability fund,'' REIA president Noel Dyett said.

But Mr Dyett said more needed to be done to address the affordability problem after what it said was a turbulent year for renters and buyers alike.

"The Federal Government should also consider including home ownership as the fifth pillar in the Government policy on superannuation and self-funded retirement, together with mandatory superannuation savings, voluntary savings, and aged pensions,'' Mr Dyett said.

The REIA report showed dwelling sales reached $209 billion in the past financial year - the highest level on record.

Investors and first home buyers made a tentative return to the housing market during 2006-07, although their numbers were still comparatively subdued, the REIA said.

Housing affordability declined by 8.3 per cent over the financial year, with yet another quarter where more than 30 per cent of a median family income was required to repay an average mortgage.

The REIA said rental affordability has also declined, with vacancy rates tight across the country.

"As a result, rents have increased by an average of 12 per cent during 2006-07,'' the REIA said.

The REIA said Australian Bureau of Statistics data showed that 24.8 per cent of all renters spend 30 per cent or more of their income on housing.

And with interest rates widely expected to rise again, possibly as early as February, the affordability problem is likely to worsen.

"Increasing rates is going to do nothing for helping housing affordability - that's obvious,'' Mr Dyett said.

"It very much depends on what sort of initiatives the new Federal Government comes up with.''

Mr Dyett said a large part of the housing affordability issue was the lack of supply, adding that developing initiatives that encouraged more people back into property investment would help alleviate the problem.

"And one factor that may be of significance is the current uncertainty in the share market - that may in fact encourage more people back into property investment, direct investment rather than the listed property trusts.''

He said the lack of supply of rental properties, while contributing to the housing affordability problem, may, however, also have a positive spin-off.

"Although interest rates are increasing, the scarcity of of rental properties is of course pushing up rental returns.

"The pendulum may move into a position where people think that with rents increasing, and if they're not highly geared ... they can get a reasonable return out of property and increase the supply.''


amazing situation that even after 5 IR rises, the RE in aus is at an all time high, how can that be, doesnt increasing rates decrease RE,

must be something else going on, surely a text book on this at the library

thankyou

robots


----------



## numbercruncher (22 December 2007)

Interesting stuff here ....



> An estate agent is paid at a rate that is equivalent to $675 per hour, according to author and journalist Terry Ryder.
> 
> Vendor paid advertising has become something of a scam. Supposedly, a vendor pays for the advertising associated with their sale, but in reality the estate agent ends up with a share of the advertising funds
> 
> ...





http://www.lawyersrealestate.com.au/reference.asp


Probably not all that surprising but interesting none the less, sure adds alot to a propertys price !


----------



## robots (22 December 2007)

hello,

great news for fellow ASF members who might be considering a career as an RE agent,

reasonable figure considering the type of work that is involved,

thankyou

robots


----------



## numbercruncher (22 December 2007)

Yes especially considering you can become a fully fledged licensed expert after 50 hours training


----------



## Julia (22 December 2007)

robots said:


> hello,
> 
> great news for fellow ASF members who might be considering a career as an RE agent,
> 
> ...



Robots, don't you find having to be available to everyone so much of the time gets to you?  Phone calls at all hours etc?


----------



## Mofra (23 December 2007)

numbercruncher said:


> Im not actually hoping for anything just commentating on how I percieve the situation.
> 
> Surely you can concede most of the property boom can be directly attributed to far too cheap and easy credit ?



That in itself is an interesting kettle of fish. The ease of credit is only half the equation - the government slow release of land is one of the major factors, however we have major resi development companies with literally billions of $$$ worth of landbanks just waiting for the peak time to release. The fact that they are not releasing this land indicates they believe property prices will not be suffering from a sharp retraction anytime soon (although I personally believe mortgage belt areas, even with no % decline, will have some pullback in real terms).



numbercruncher said:


> Property prices on a historical p/e have averaged at 4x average earnings and now 7+x , Id have no debate in this thread if average wages where 100k rather than 50.



The spread of wages away from the mean is very different to historical figures, so perhaps higher PEs are going to form the norm? A pullback to 6x is (arguably) sustainable, an inflation could get us there in just a few years if price growth is subdued.



numbercruncher said:


> Good luck with your investments.
> 
> ps. I have absolutely no problem with and enjoy snapping up bargains during firesales, and surprisingly enough have positioned myself to do so .



Cheers, I'm happy with my performance. 

If you are positioning for firesales, I assume you're spying on the 19 year office space supercycle ready for a shift in 08?


----------



## numbercruncher (23 December 2007)

Mofra said:


> That in itself is an interesting kettle of fish. The ease of credit is only half the equation - the government slow release of land is one of the major factors, however we have major resi development companies with literally billions of $$$ worth of landbanks just waiting for the peak time to release.




Yes I agree slow land release contributes massively, quite humourous considering the vast tracks of land we have, but still Credit is the ultimate fundamental - Just apply the borrowing standards of a decade ago to now and it would be a vastly different landscape im sure ! 

I wonder if these companies are waiting for the peak time to release or are fearful of supressing prices ? I read some figures on dwindling new home construction .... one would think that now considering all the International goins on, the warnings if you will , would make it the most savvy time to sell from their landbanks ?


----------



## numbercruncher (23 December 2007)

Mofra said:


> If you are positioning for firesales, I assume you're spying on the 19 year office space supercycle ready for a shift in 08?





No, but Im certainly eyeing off opportunity with Australias aging population such as trebling of the over 60s over the next few decades


----------



## Julia (23 December 2007)

numbercruncher said:


> No, but Im certainly eyeing off opportunity with Australias aging population such as trebling of the over 60s over the next few decades



Some bargains in retirement village companies at present, e.g. FKP.


----------



## numbercruncher (23 December 2007)

Julia said:


> Some bargains in retirement village companies at present, e.g. FKP.




Thanks Julia - Good tip from what i Just read .... 

I read a lil while back you broke a bone in you hand? All come better?


----------



## Knobby22 (23 December 2007)

numbercruncher said:


> No, but Im certainly eyeing off opportunity with Australias aging population such as trebling of the over 60s over the next few decades




Healthcare is the most certain.


----------



## Tysonboss1 (24 December 2007)

numbercruncher said:


> Yes I agree slow land release contributes massively, quite humourous considering the vast tracks of land we have,  ?




what is humourous is you keep mentioning that Australia has all this empty land as if that should be some how keeping prices down in the capital cities

It doesn't really matter how much spare land Australia has, There is not enough spare land where we need it.

I mean all the spare land in Australia isn't going to help prices in the capital cities,... Forget about Australia being the most sparsely populated country in the world,... unless we force thousands of people out of the capital cities and into the regions for all intents and purposes Australias capitol cities may as well be islands.


----------



## numbercruncher (24 December 2007)

Ok thats the excuse for the capital cities, whats the excuse for regional areas where average wages are even lower and properties are on atleast that 7x pe multiple ?

If youve ever flown across oz you surely would of noticed we have land coming out our spinkter, should give the stuff away to spur a building boom.


----------



## explod (24 December 2007)

Tysonboss1 said:


> what is humourous is you keep mentioning that Australia has all this empty land as if that should be some how keeping prices down in the capital cities
> 
> It doesn't really matter how much spare land Australia has, There is not enough spare land where we need it.
> 
> I mean all the spare land in Australia isn't going to help prices in the capital cities,... Forget about Australia being the most sparsely populated country in the world,... unless we force thousands of people out of the capital cities and into the regions for all intents and purposes Australias capitol cities may as well be islands.




Absolutely, anyone living (and most do) more than 30 k's out of Melbourne CBD have to sit in their cars for 4 hours per day to get to work.  Unless of course they like to leave at 6.30am and leave work at 3.pm or 7pm.  The Monash freeway, completed only a few years ago is a grid locked car park.  And they wonder at road rage.


----------



## explod (24 December 2007)

numbercruncher said:


> Ok thats the excuse for the capital cities, whats the excuse for regional areas where average wages are even lower and properties are on atleast that 7x pe multiple ?
> 
> If youve ever flown across oz you surely would of noticed we have land coming out our spinkter, should give the stuff away to spur a building boom.




Yes and many of them are running out of water every summer.   Driest most arid continent in the world.   

From 1970, sheep numbers down 110% as just an aside


----------



## Julia (24 December 2007)

numbercruncher said:


> Thanks Julia - Good tip from what i Just read ....
> 
> I read a lil while back you broke a bone in you hand? All come better?




Nice of you to ask, N.Cruncher.  Thank you.
No, the wrist is broken.  I  have six weeks in plaster from my knuckles to the elbow.  Trying to do everything with my left hand which is pretty hard.


----------



## chops_a_must (24 December 2007)

Tysonboss1 said:


> what is humourous is you keep mentioning that Australia has all this empty land as if that should be some how keeping prices down in the capital cities
> 
> It doesn't really matter how much spare land Australia has, There is not enough spare land where we need it.



Pretty much. Our cities suffer from some of the most massive sprawl that can be seen on the planet (people per km within a metropolitan area).

Our cities border on geographical dysfunction because of their size, and therefore any further expansion is very problematic.

But despite all this, my most recent urban design data says that (including apartments) blocks of land have increased in size by about 33% in the last 15 years (published 2004 from memory). Which really is insane when you look at the problem...

P.S. - which I know is actually contrary to what someone suggested previously...


----------



## Tysonboss1 (29 December 2007)

Brisbane House prices have increased by more than 20% in the last 12 months today's paper said.

I Hope not many people took this thread to seriously when it was first posted.


----------



## KIWIKARLOS (29 December 2007)

Sydney councils have massive planns for urban consolidation. Along every existing rail line there is a 20 year plan to install thousands of units / dense residential. 

I was speaking to one of the planners for the North Shore of sydney they are building tens of thousands of units along that line. They expect alot of older couples to move from large family homes into these units as they are less maintainance and close to amenities. I believe in urbn consolidation rather than land release as all i think land release does is create more transport and service problems and destroys what little remaining east coast habitate there is this side of the blue mountains.

look at all the European cities they were built before the motor vehicle was around and they are perfectly set up for mass transit they will be the ones laughing in 10 years time when petrol is $300 a barrel. We should move away from growing outwards and grow upwards with more emphasis on doing away with vehicles.

Personally i don't know how anyone can handle travelling 3-4 hours a day to work just to live


----------



## robots (31 December 2007)

hElLo,

another great year for RE, 

some favourites around melbourne, st kilda east up 44%, caulfield up 48%, malvern similar,

superb effort to all those involved,

thankyou and happy new year

RoBoTs


----------



## explod (31 December 2007)

robots said:


> hElLo,
> 
> another great year for RE,
> 
> ...





Thads goood, wad about Dandenong, Cranbourne, Werribee, Melton, big parts of Geelong etc.., where most of the people live pal

Happy new year for you and I but some are feeling the pinch


----------



## robots (31 December 2007)

hello,

happy new year to those in cranbourne, dandenong, hallam, werribee, melton and any others I missed

spend less and save more

thankyou

robots


----------



## numbercruncher (1 January 2008)

Pretty good advice Robots, that mantra might actually be forced upon people this year, well the spend less part anyways .....




> AUSTRALIAN households are about to be swept up in the global credit crunch, with the major banks raising interest rates across the board to protect their profits.




http://www.news.com.au/heraldsun/story/0,21985,22994037-664,00.html


----------



## YChromozome (1 January 2008)

KIWIKARLOS said:


> I was speaking to one of the planners for the North Shore of sydney they are building tens of thousands of units along that line.




I have no doubt. Below is a photo of the Chatswood Transport Interchange. What you see now is the lower floors of the retail complex. When complete there will be three residential towers built on the site, 40 stories/168m, 36 stories/155m and 30stories/116m.







No less than 100 metres up the track, you have Mirvac's Pacific Place Residential Developments.






The building in the foreground is Mirvac's recently opened Cambridge Apartments. Residents have only been in for a couple of weeks. Just behind it is Mirvac's EPICA and Altura towers. (The Altura is hidden). Up a little further is some of Mirvac's Medium density apartments. (Couple of floors)






And that concrete slab over the rail line, that is Mirvac's next tower.

But it is not much different to St Leonard's two stations into the City on the Northern Line. They have built the forum towers on the St Leonard's Train Station, comprising of 782 apartments complete with supermarket & retail stops. They also have some medium density apartments behind the towers.

And this is only two stations on the North Shore Line.


----------



## ithatheekret (1 January 2008)

I think it's great , if prices fall even better , interest rates are spooky yeah , but ...... after my last visit to Sydney I noted we could have dispensed with the driver and caught a train from the airport . That impressed me , I thought , it was looking like a semi-London . Tenants / owners could walk out the door , shop , get on a train to catch a flight etc. , I can't stand trains and buses , but would use them in that circumstance , because I hate driving period and only do it under protest . 

Those are prime renters too , perfect for overseas students $$$$$


----------



## YChromozome (1 January 2008)

Couldn't agree more. Those photos are taken from my loungeroom window. 

I frequently travel interstate, so I catch the train to central then to domestic. Beats the day parking rate and the tolls. If I go down to the 2nd floor, there is a walkway over the road into a smaller shopping center, then a walkway from that shopping center into Westfield. In the wet there is no need to venture outside.

As Kiwikarlos says, even better for the elderly too. Most of these style developments also have 24 hour security and concierge.


----------



## robots (1 January 2008)

hello,

not to sure if I would want to be the first buyer though, with that many to be built in the vicinity,

ychromosome, the one's that are just are open are they reaonably well occupied?

thankyou

robots


----------



## YChromozome (1 January 2008)

I never thought I would see the day that I was telling Robots that property was selling like hot cakes. The Cambridge was sold out prior to completion and they don't exactly come cheap.

Your right Robots, I wouldn't be a buyer. I can't see how my landlord can make any money on rent, and that's before the huge strata levies and rest of the outgoings. Obviously, they must be investing for capital appreciation only. Two walls of my lounge room is glass, so I have reasonable views in quite a radius, but come a couple of years that could be a different thing. 

Interesting the CRI towers will be build subject to "Market Conditions" . .


----------



## Tysonboss1 (3 January 2008)

YChromozome said:


> I can't see how my landlord can make any money on rent, and that's before the huge strata levies and rest of the outgoings. Obviously, they must be investing for capital appreciation only. Two walls of my lounge room is glass, so I have reasonable views in quite a radius, but come a couple of years that could be a different thing.
> 
> Interesting the CRI towers will be build subject to "Market Conditions" . .




I wouldn't be investing in the building's you are taking about either,... Unless you are investing in the actual developer.

I think as far as chatswood goes the best investments would be those two and three story walk up apartment buidings around chatswood for the simple fact the body corp fees are cheaper and there is a much higher land content.


----------



## robots (3 January 2008)

robots said:


> hello,
> 
> not to sure if I would want to be the *first* buyer though, with that many to be built in the vicinity,
> 
> ...




hello,

huge developer profit most likely tysonBOSS,

this is the catch for people though, who will buy, oversea's investors, locals, maybe developer hold like meriton

thankyou

robots


----------



## numbercruncher (3 January 2008)

More supply + rising Interest rates + credit crunch = downward pressure on prices.

Developers might be wise to bring new projects to market asap.

Australia most unaffordable RE market on the planet, cant stay that way for ever, pay your employees more, solve's problem  make min wage 50k and average wage 100k and alls good :


----------



## robots (3 January 2008)

hello,

ever been to paris NC?

lets say paris's finest area, around champs elsysee, try $700,000AUS for say 40sqM, yes 40sqM, no car parking either

you still get far more in Syd or Melb for that price

friends just bought 22sqM for $400,000AUS in marais area

nowhere near most expensive

thankyou

robots


----------



## ithatheekret (3 January 2008)

Yes , we stayed in Ternes for a little while and I had to walk quite a distance to the parking station , from Rue Descombes off of Avenue de Villiers . I parked a car on the street twice the second time it wasn't there when I went back , I thought it got pinched , it was towed away .


----------



## Flying Fish (3 January 2008)

robots said:


> hello,
> 
> ever been to paris NC?
> 
> ...





Lol How can you compare those cities with sydney and melbourne? Time for a realty check


----------



## Tysonboss1 (3 January 2008)

numbercruncher said:


> More supply + rising Interest rates + credit crunch = downward pressure on prices.
> 
> Developers might be wise to bring new projects to market asap.
> 
> :




time will tell,

developers will only develop property when there is enough demand for it,...

the development of apartments works is a cycle just like the rest of the housing market, once yeilds decrease (both rental yeild and the development margin) then developments will slow down or stop till the population growth catches up and soaks up the overflow and then it all starts again.


----------



## numbercruncher (3 January 2008)

robots said:


> hello,
> 
> ever been to paris NC?
> 
> ...






Thats kinda like asking " ever been to Detroit ? " pick up a three bedroom bunglow there for 10k ..... 

Get far less in Syd and Melb for that price.

lol


----------



## Tysonboss1 (3 January 2008)

numbercruncher said:


> Thats kinda like asking " ever been to Detroit ? " pick up a three bedroom bunglow there for 10k .....
> 
> Get far less in Syd and Melb for that price.
> 
> lol




not really,.... considering sydney has alot going for it such as historically low unemployment, growing population.


----------



## theasxgorilla (3 January 2008)

Tysonboss1 said:


> developers will only develop property when there is enough demand for it,...




This kind of makes it sound like developers never get caught holding the bag, which is not true.  We know that the pro's try to sell as many units off the plan as they can so as to abate their risk as much as possible, but eventually they have to start building.  If/When the music stops, as it did back in '02 there were plenty of developments still in progress, with units left unsold.  That things never got that bad and came good again in time to save many/most of them is more likely due to good fortune in my opinion, rather than supply/demand mastery.

ASX.G


----------



## robots (3 January 2008)

hello,

harry trigiboffin was one who in that period of 02 and onwards converted many to serviced apartments ASXGman,

thankyou

robots


----------



## theasxgorilla (3 January 2008)

robots said:


> not to sure if I would want to be the first buyer though, with that many to be built in the vicinity,




Exactly.  You are buying for lifestyle.  The reasons listed by YChromosome really.  At this point all of the levels of investor have made their money.  From the councils releasing 'air rights' over the stations right through to the import company who sold the chattels.  Short to medium term capital gains you can forget.  Improve the property yourself to increase value...on a brand new apartment?  Probably not.  Wait 20-30 years and see if we end up with a London/New York style market?  Hmmm, time will tell.

ASX.G


----------



## theasxgorilla (3 January 2008)

robots said:


> harry trigiboffin was one who in that period of 02 and onwards converted many to serviced apartments ASXGman,




Never heard of him.  Wonder how he's doing?


----------



## tech/a (3 January 2008)

http://sunday.ninemsn.com.au/sunday/feature_stories/article_1503.asp?s=1

ASX
Might shed some light?
Think he's surviving.


----------



## theasxgorilla (3 January 2008)

tech/a said:


> http://sunday.ninemsn.com.au/sunday/feature_stories/article_1503.asp?s=1
> 
> ASX
> Might shed some light?
> Think he's surviving.




Thanks.

From the article:

"But not everyone's wild about Harry's impact on the cityscape. He fought former Sydney Lord Mayor Frank Sartor for years as council strived to improve the aesthetic quality of Meriton's buildings. As a result of pressure from council, Meriton now holds design competitions attracting the world's best architects to Sydney."

This I support, 110%.  Now in Europe, and having visited places famous for their architecture, like Amsterdam, Barcelona, Paris etc. I can see and feel how it makes such a difference to look out your window or walk down the street and see well designed buildings.  50-70's 'brick venereal' has a lot of answer for.

Rant over.

ASX.G


----------



## theasxgorilla (3 January 2008)

This is a quote from the original article that spawned this thread:

*"House prices are likely to stagnate across the country for many years, most likely drifting lower as wages and rents slowly catch up," said analysts Felicity Emmett and Kieran Davies at ABN AMRO.*

'Many' I interpret as meaning at least two, but perhaps needing to be more like three or four.  Since if you had a house and you bought another one, you still couldn't say you have 'many houses', could you?   Anyhow, precision semantics aside, I conclude that these people were simply wrong, wrong, wrong.  The article was published in Sept '05.  But I bet they get paid a lot of money!  Conclusion: listening to the news and experts is likely to be bad for you long term investing health.  Better to learn to think for yourself.

ASX.G

PS.  Does anybody know Felicity Emmett and Kieran Davies?  Are they still at ABN AMRO?  We'd love to hear from them


----------



## professor_frink (4 January 2008)

theasxgorilla said:


> This is a quote from the original article that spawned this thread:
> 
> *"House prices are likely to stagnate across the country for many years, most likely drifting lower as wages and rents slowly catch up," said analysts Felicity Emmett and Kieran Davies at ABN AMRO.*
> 
> ...




Whilst I think that the people that wrote the article were generally wrong, there have been places that have been stagnant since this thread started.

The area I live in has been stagnant for the past few years. You couldn't find much here for under 300K when the boom was in full swing, and here we are in 2008 and prices are pretty well the same. Property is moving here, albeit very, very, slowly. Mrs Frink's parents bought a house in July 06- some of the houses they looked at then are still on the market today. Mrs Frink and I started paying a lot closer attention to what was happening in the area this time last year, knowing we would be buying our first home at some stage during the year- when we finally started getting serious about finding a place in late August, there were still quite a few homes for sale that had been listed for most of the year. The house we eventually bought, we picked up for nearly 15% less than it had sold for less than 2 years earlier.

Our little hellhole of a town boomed mainly because of the boom in Sydney, as people came up the coast and bought up what they considered to be cheap houses- half the people that went to look at my dad's house when he was selling it in 2001/02 were coming from Western Sydney. When the boom in Sydney ended, everything came to a grinding halt up here. And it hasn't got going again since.


----------



## Tysonboss1 (4 January 2008)

professor_frink said:


> The area I live in has been stagnant for the past few years. .




you could say the same for certain shares on the stockmarket.


----------



## professor_frink (4 January 2008)

Tysonboss1 said:


> you could say the same for certain shares on the stockmarket.




And your point is??


----------



## Lucky_Country (4 January 2008)

robots said:


> hello,
> 
> ever been to paris NC?
> 
> ...



And whats the average income in Paris and how do they compare with percentage of income too meet these prices ?
Now back too AUS interst rates up house prices down !
US house prices dropping UK house prices dropping AUS is always 1 year behind the rest of the world !


----------



## robots (4 January 2008)

hello,

you have the same income issues in Paris as per any other country, alot of workers come in from the outer as trains are very good, as in most of europe

actually I think Aus has led the world, around 03 things stopped for a lot of RE in Aus, our style of BTL evaporated, and then it started up in UK,

why dont many look at getting a higher paying job, I have many friends who are now making $$$ in the building industry, hard work, interesting work but cleaning up

thankyou

robots


----------



## Lucky_Country (4 January 2008)

I agree there is good money in the building industry tradesmen are now some of the highest pais proffesionals going.
My personal point of view is that most people are not getting the big dollars that trades are now therefore they cant afford higher prices and increased mortgage repayments courtesy of higher interest rates that look like climbing.


----------



## robots (4 January 2008)

hello,

i guess someone else who can afford will buy then,

thankyou

robots


----------



## theasxgorilla (4 January 2008)

robots said:


> i guess someone else who can afford will buy then,




...yep, until they can't.


----------



## tech/a (4 January 2008)

> "House prices are likely to stagnate across the country for many years, most likely drifting lower as wages and rents slowly catch up," said analysts Felicity Emmett and Kieran Davies at ABN AMRO.




While this makes perfect sense in the LONGTERM, while demand outstrips supply this is unlikely to occur.
As stated above this *is occuring* in parts of the world and in some CBD's in Australia.
Inflation is on the move.
New housing will become more expensive (estimated by some of our clients,builders and developers,to be as much as 20 % in 2008),making established more attractive.
Units and apartments will thrive where rent demand maintains a high.
Right now where I am prospective renters are out bidding each other to secure an abode.We had 60 to an open pre rent!

A balance at some point will be reached stagnation/price falls will only occur when the balance tips beyond demand exceeding supply.ie supply exceeding demand.

Initially inflation will add to the "urgency" of purchase.
In my view we are a good 12 mths away for domestic housing to take a slow down and a few years before units/apartments get a hit.---across the board.


----------



## YChromozome (4 January 2008)

Tysonboss1 said:


> I wouldn't be investing in the building's you are taking about either,... Unless you are investing in the actual developer.




How about Rhodes Waterside, just metres from Rhodes Train Station on the Northern Line . . .  ?

Rhodes Waterside (Warning page contains a lot of photos)


----------



## robots (4 January 2008)

hello,

interesting article

http://www.news.com.au/heraldsun/story/0,21985,23006192-664,00.html

thankyou

robots


----------



## So_Cynical (4 January 2008)

YChromozome said:


> How about Rhodes Waterside, just metres from Rhodes Train Station on the Northern Line . . .  ?
> 
> Rhodes Waterside (Warning page contains a lot of photos)




Its a nice development...didn't it used to be the union carbide site
the 1 with toxic dioxins in the soil and river bed..i think there still 
treating the soil at the northern end of the area.

http://www.smh.com.au/articles/2002/06/03/1022982671118.html


----------



## Tysonboss1 (4 January 2008)

professor_frink said:


> And your point is??




that just because some areas are snoozing doesn't mean that the property market in other areas isn't a good investment.


----------



## Tysonboss1 (4 January 2008)

YChromozome said:


> How about Rhodes Waterside, just metres from Rhodes Train Station on the Northern Line . . .  ?
> 
> Rhodes Waterside (Warning page contains a lot of photos)





I am not familar with that development,... I live and work in chatswood.

However my property investments are in Brisbane mostly,..

I tend not to invest in trophy properties, such as luxury apartments. If I did invest in sydney  it would be some where with a high land content.

I would probally invest on the central coast more than sydney though because that is where my stratergy will have he highest success rate.


----------



## professor_frink (5 January 2008)

Tysonboss1 said:


> that just because some areas are snoozing doesn't mean that the property market in other areas isn't a good investment.




I'm still not sure why you needed  to address me when you made that comment. I didn't even come close to saying my local was how the entire market is going. The first part of my post yesterday started with me saying that I thought the article that got this thread going was generally wrong.

If I was a property investor, I'd be looking around for a few rentals here. Whilst my area has been pretty quiet the last few years, I think there is some great buying at the moment. I'd have no troubles getting 5%+ gross yield on the house I just bought, and with a couple of minor improvements, could get a fair bit more. Almost as good as a banking stock at the moment


----------



## noirua (5 January 2008)

I can't say I'm at all confident about property prices and ask whether it's worth taking a risk in a sector that looks increasingly in a worldwide recession.
Banks look increasingly unhappy about lending to anyone that's not a solid bet in financial terms.
A sector to keep out of in 2008, imho.


----------



## YChromozome (5 January 2008)

noirua said:


> I can't say I'm at all confident about property prices and ask whether it's worth taking a risk in a sector that looks increasingly in a worldwide recession.
> Banks look increasingly unhappy about lending to anyone that's not a solid bet in financial terms.
> A sector to keep out of in 2008, imho.




I can't agree more, considering Housing in Australia is in the biggest bubble we have ever seen. Biggest bubble plus recession doesn't look like a good mix either.

Sure some people talk about demand outstripping supply as a means to justify the bubble, but they were also saying this in the US in 2006.


----------



## numbercruncher (5 January 2008)

I dont even buy the demand outstripping supply argument, just check out available rentals on realestate.com.au, squillions of places for rent, only shortage is in certain suburbs , but the realestate lobbyists use that as a blanket argument of shortages everywhere which is just false/misleading.

Sydney is jumping on the Urban consolidisation bandwagon adding Inventory, Labor has promised to address the issue etc ... If everyone wants to live in CBDs let them, just whack up massive highrises, too easy.


----------



## robots (5 January 2008)

hello,

much money went into direct property 12-18 mths ago, real returns, real assets

if you can't afford then rent, simple, 

this will go on for you're lifetime

thankyou

robots


----------



## numbercruncher (5 January 2008)

Hello


If You bought realestate 12mnths ago it might of went up 20pc , atleast 50pc of that profit eaten by stamp duty/Interest and the Realestate sharks "fee" , should you sell.

Smart money went long gold 12 months ago, up 30pc, zero hold fee, real asset.

If your not Intellectually developed enough to play the game stick to realestate.

This will go on for your lifetime and that of your offspring.

Thankyou

NC


----------



## robots (5 January 2008)

hello,

you wouldnt even have 10 Oz on it NC, 

thankyou

robots


----------



## numbercruncher (5 January 2008)

Hello

What I have isnt relevant to the discussion, but if we wanted to turn it personal Id be surprised if you even had 1.5 inches.

Thankyou

NC


----------



## robots (5 January 2008)

hello,

did you lay on a few dollars 12mths ago, another no-brainer like you're margin loan on BHP? 

thankyou

robots


----------



## theasxgorilla (7 January 2008)

numbercruncher said:


> I dont even buy the demand outstripping supply argument, just check out available rentals on realestate.com.au, squillions of places for rent, only shortage is in certain suburbs , but the realestate lobbyists use that as a blanket argument of shortages everywhere which is just false/misleading.




I take it you've been out putting your feet to the pavement and looking around, not cooped up in a basement with windows covered over with black paint?

This is not exactly revealing anything remarkable either.  If there is no rental demand in an area then is it any surprise that prices are perhaps, stagnating, and you find fodder for your arguement?  As Prof Frink has pointed out, its not impossible to find places where prices have stagnated these last 2-3 years.  Areas that have experienced price growth on the other hand are now also experiencing rental shortages.  Read into it what you will, but 30-60 people turning up to rental open-for-inspections in Melbourne's outer-east  says a handful of things to me.

1. People are cashing in their gains...ie. they feel uncertain about the future, or they're certain prices will go down, or they're just certain they want their money....who knows, who cares, they don't know jack like the rest of us.  All that is important is the actual behaviour.

2. Massive number of renters squabbling for 'sub-prime rentals' (I made up that phrase, you like it? It means property you wouldn't see fit to put your dog into but landlords can get away with offering it and potential tenants have to consider (at ever increasing prices) because it's all that is available...either that or go back and live with Mum and Dad <gulp>.  OR buy again and find oneself staring down a possible 'new net worth' equation that looks like the following:

"New net worth" = "Before I cashed my gains net worth" - "stupidly ridiculous amount of stamp duty" - "moving costs" - "amount that I fear my house price will fall in price after I buy it" - "incidental costs to fix stuff that I didn't find out about before I bought".

What I see happening, which has already been happening the last couple of years, is rents will continue to go up.  And in decent areas (you know the places where people can get a job and actually want to live??) where prices went up these last 2-3 years people would rather hold their properties than sell because who wants to slug it out weekend after weekend with the crowds or face the prospect of the above 'new net worth' equation?  Price decreases or stagnation on low volume is not the same as a crash or a panic.  Nor do token properties sold for very low prices that the mainstream media discover.  Study consolidation or reversal patterns on share charts to see how this might appear visually.  It's actually a positive thing for patient investors.  The more that TIME overshoots PRICE during such a consolidation the stronger the eventual breakout.  The less time price spends at extreme low levels the stronger that indication that those prices levels are not willingly being supported by the market.  Keyword: "willingly".  When people have no choice then that is something else.  I dare say we're know what it looks like when we actually see this en masse, but we haven't seen it yet in this boom cycle.

Many of us have been getting paid more and more these last few years so we can afford the rent increases (did anyone NOT realise that renting in Australia is incredibly cheap!?!?).  And watch what happens with unions and Labor now.  Rents up, wages up.

Rents up = higher yields = investors re-enter the market eventually, notice I said, eventually.  Hell, their PPOR house prices aren't dropping yet, they can use that as collateral and leverage in, *eventually*.

IF the US and the rest of the world really cr@ps out badly, which it may well, I think Australia will stand to recover faster than many other countries providing nothing happens to derail China in any terminal way.  The 'decoupling' theory ie. China and Europe can make up for a sickly US consumer,  may not play out as such but I don't think it needs to.  If China just keeps chugging along, or even consolidates a little, then we're only really waiting for a US and European recovery...how long should that be?

Bottom line, now is still not a time to bet against property in Aust in the medium to long term.  Short term, I'll pick my time and place to re-enter the Aust market...that could be over 12 months away though.  But what's the hurry???


----------



## wayneL (7 January 2008)

Meanwhile, in the UK:


----------



## theasxgorilla (7 January 2008)

wayneL said:


> Meanwhile, in the UK:




Please do tell about the areas worst affected!


----------



## wayneL (7 January 2008)

theasxgorilla said:


> Please do tell about the areas worst affected!



Most likely, not where I want to buy. 

But I still think this will take 2-5 years to play out, so, 1/ this program is way too early and 2/ No hurry.

I'll tell you about worst affected ares then. (with timely updates of course )


----------



## wayneL (7 January 2008)

In the Torygraph today

http://www.telegraph.co.uk/money/ma...AVCBQUIV0?xml=/money/2008/01/06/cnrock106.xml


----------



## theasxgorilla (7 January 2008)

Nationalisation??? WTF!?!


----------



## wayneL (7 January 2008)

theasxgorilla said:


> Nationalisation??? WTF!?!



Yup!

Remember, free enterprise 2000's style means privatize profits and socialize losses; moral hazard is now an illegal phrase


----------



## professor_frink (7 January 2008)

wayneL said:


> Yup!
> 
> Remember, free enterprise 2000's style means privatize profits and socialize losses; moral hazard is now an illegal phrase




Personally, I'd prefer to see that than see struggling financial companies being bailed out by SWF's. We have already given our manufacturing bases to countries like China under the banner of globalisation, we don't really need to give them our financial companies as well. What power will the west have left if we do?


----------



## wayneL (7 January 2008)

professor_frink said:


> Personally, I'd prefer to see that than see struggling financial companies being bailed out by SWF's. We have already given our manufacturing bases to countries like China under the banner of globalisation, we don't really need to give them our financial companies as well. What power will the west have left if we do?



Can't disagree with that at all.

It's a pity "they" didn't understand that when the bears were being scoffed and ridiculed; when this situation could have been headed.


----------



## theasxgorilla (7 January 2008)

professor_frink said:


> What power will the west have left if we do?




Those things they cannot take, our constitutions, legal systems, and business practises...which of course in the US includes good ol' Chapter 11.


----------



## numbercruncher (7 January 2008)

Hello,

The Average Australian House price is now 442k.

The Average Australian wage is now 55k.

Borrowing calculator says 55k wage can borrow 220k. (using approx 50pc of your after tax income to service loan)

Interest rates are rising.

Better grab a liar loan now before you are forced to share a park bench with the poor people.

Thankyou.

Disclaimer: The above forementioned advice splurted out after my body was possessed by the spirit of a long deceased realesate agent.


PS: Where are War Widows, Elderly etc on 12k pensions living nowadays ?


----------



## Julia (7 January 2008)

numbercruncher said:


> PS: Where are War Widows, Elderly etc on 12k pensions living nowadays ?



They are doing it very tough if they are renting, a little better if they own their own homes.  A couple can cope with their combined pension but for single people their income is woefully inadequate.


----------



## numbercruncher (7 January 2008)

Julia said:


> They are doing it very tough if they are renting, a little better if they own their own homes.  A couple can cope with their combined pension but for single people their income is woefully inadequate.




I agree its a big issue going forward, one that I doubt the Government can afford to remedy ...



> Currently, for every person aged 65 and over, there are about 5.3 people of workforce age. By 2043, this will decrease to about 2.5 people of workforce age.




http://demographics.treasury.gov.au/content/_download/flexible_retirement_income_system/HTML/retirement.asp


So less and less workers to provide ever increasing revenue and aged services!


----------



## radar23 (7 January 2008)

I bought my first house last year in a Perth inner suburb at the height of the WA housing bubble/boom, since then the prices have frozen, if not reduced somewhat.  Since I am an owner occupier and do not intend to sell for many year I figure I'll be fine in the long run.  

Although it is quite unnerving to see bigger and better house go up for say for tens of thousands less than what I bought mine for a year later.  Doh! 

Radar


----------



## numbercruncher (7 January 2008)

radar23 said:


> I bought my first house last year in a Perth inner suburb at the height of the WA housing bubble/boom, since then the prices have frozen, if not reduced somewhat.  Since I am an owner occupier and do not intend to sell for many year I figure I'll be fine in the long run.
> 
> Although it is quite unnerving to see bigger and better house go up for say for tens of thousands less than what I bought mine for a year later.  Doh!
> 
> Radar




You should becareful of sharing such real life experiences around here, the resident Realestate will always be booming anti trust committee will be all over you like a rash.


----------



## professor_frink (7 January 2008)

theasxgorilla said:


> Those things they cannot take, our constitutions, legal systems, and business practises...which of course in the US includes good ol' Chapter 11.




I wonder how much those things will matter if the US can't afford to impose itself on the rest of the world, and China and Russia can. Bring on nationalisation of the financial sector if it keeps them out of the hands of the Chinese, Russians and middle eastern countries.

Or maybe I'm just too paranoid about this sort of stuff!


----------



## Lucky_Country (7 January 2008)

"the next hot spot" "missing out again" all terms used too hype up the real estate market.
Hype combined with real estate fees combined with rising interest rates make property almost not worth the effort not many i trust in real estate !


----------



## prawn_86 (7 January 2008)

professor_frink said:


> I wonder how much those things will matter if the US can't afford to impose itself on the rest of the world, and China and Russia can. Bring on nationalisation of the financial sector if it keeps them out of the hands of the Chinese, Russians and middle eastern countries.
> 
> Or maybe I'm just too paranoid about this sort of stuff!




I have to admit that everytime i heas stories like this i cant help but smirk.

The US's complancey, arrogance, and debt laden government deserves nothing more than to crumple imo. 

Saying that however, i do not wish for our Western lifestyle to change, so its kind of a catch 22 for me...

China has a long term plan (ie > 100yrs) imo, and wether that involves changing the world economy away from a market state remains to be seen, but im happily watching, as there is nothing i can do about it.

If only it was the complacent world leaders that suffered, not the public


----------



## ithatheekret (7 January 2008)

numbercruncher said:


> You should becareful of sharing such real life experiences around here, the resident Realestate will always be booming anti trust committee will be all over you like a rash.




   LMAO


----------



## awg (7 January 2008)

Some personal observations of Real Estate prices in NSW.

I sold 3 townhouses I owned in Northern Sydney Beaches district 4 years ago
( invested the proceeds in Oz stocks!).

My development partner only just sold his 3 identical townhouses in the same development..he got slightly less than i got 4 years ago!

I live in Newcastle NSW. MY suburb is upmarket beachside. Prices have fallen 10% in 07 in my suburb!!. Places are on the market for longer in the last 6 months..ie over 3 months..I have not seen that before.

I recently bought an inexpensive place nearby, after they dropped the asking price 20%. There were some other reasons apart from Capital Gain, that I purchased it..ie it has some storage space, which I need, local place for my kids to live later, good renter, gearing, diversification, etc etc. 

Although statistical info shows prices have risen 6% in the last quarter for that suburb, I did not, and do not believe that it was a really good purchase from a Capital Gain perspective, which is the main deal for RE.

I had it rented out to a very good tenant within 10 days of purchase at a gross yield of 5.2%. I had a large number of applicants and could have got a higher rent if I had chosen to. 

I think we will see a fall in local prices, especially in the middle range, in 08.


----------



## professor_frink (7 January 2008)

numbercruncher said:


> Hello,
> 
> The Average Australian House price is now 442k.
> 
> ...




That part of your post seems to be a rather simplistic argument- there are a wide range of incomes and house prices out there, and you seem to always base these kinds of comments around people having to borrow the entire amount to buy a house.

Never thought I'd be saying this, but I'm going to make a robots-like comment- if someone wants to buy a house, work hard, save and buy something in a price range they can afford and everything should be alright.

If people don't like what's out there in a price range they can afford, then they can rent, and invest the difference until they can afford what they want.

The ones who are going to end up poor are the people who rent instead of buy, and spend all of their disposable income on pointless crap.


----------



## numbercruncher (7 January 2008)

The time has come when people are forced to consider the full ongoing cost of home ownership. Capital gains are no longer guaranteed to cover the gap.


A 440k Median priced home in NSW, will cost you 15k in Duty and another 15k to sell it, you need it to rise nearly 10pc just to break even on the buy/sell spread.

We are barrelling down on an era of 9 to 10pc Interest rates.

How much room for capital Growth does the most bullish of the property bulls realistically see here?


----------



## professor_frink (7 January 2008)

numbercruncher said:


> The time has come when people are forced to consider the full ongoing cost of home ownership. Capital gains are no longer guaranteed to cover the gap.
> 
> 
> A 440k Median priced home in NSW, will cost you 15k in Duty and another 15k to sell it, you need it to rise nearly 10pc just to break even on the buy/sell spread.
> ...




Maybe I'm looking at buying a house from a slightly different perspective to most- The prospect of a capital gain hasn't even been considered by Mrs Frink and myself- buying a house, for us, is a hedge against the general market rising, and locks in(roughly) the cost of us having a roof over our heads. The issue of capital gains is one for the property investor, not a home buyer. Any gain in the price of the house we've bought is going to be offset by the rise in every other equivalent home in the area, making it rather pointless to think about.


----------



## robots (7 January 2008)

numbercruncher said:


> The time has come when people are forced to consider the full ongoing cost of home ownership. Capital gains are no longer guaranteed to cover the gap.
> 
> 
> A 440k Median priced home in NSW, will cost you 15k in Duty and another 15k to sell it, you need it to rise nearly 10pc just to break even on the buy/sell spread.
> ...




Hello,

who knows NC? 

I dont, all I know is prices are still solid in the blue chip areas across Aus, thats all

happy new year

thankyou

robots


----------



## numbercruncher (7 January 2008)

Im not doubting Blue chip Areas are doing well, afterall plenty of Millionaires in Oz.


----------



## theasxgorilla (7 January 2008)

numbercruncher said:


> PS: Where are War Widows, Elderly etc on 12k pensions living nowadays ?




I know where several of them live and it's not a park bench.  If they sell their houses and downsize they can cash in their gains.  What's your point?


----------



## barnes (7 January 2008)

professor_frink said:


> I wonder how much those things will matter if the US can't afford to impose itself on the rest of the world, and China and Russia can. Bring on nationalisation of the financial sector if it keeps them out of the hands of the Chinese, Russians and middle eastern countries.
> 
> Or maybe I'm just too paranoid about this sort of stuff!




Russians are still not that bad.


----------



## numbercruncher (7 January 2008)

barnes said:


> Russians are still not that bad.




Chinese are nice too, its them ME guys that'll have you scrubbing the floor and Ironing their socks.


----------



## Tysonboss1 (8 January 2008)

numbercruncher said:


> The time has come when people are forced to consider the full ongoing cost of home ownership. Capital gains are no longer guaranteed to cover the gap.
> 
> 
> A 440k Median priced home in NSW, will cost you 15k in Duty and another 15k to sell it, you need it to rise nearly 10pc just to break even on the buy/sell spread.
> ...




For me the reason I believe it is a good Idea to Buy rather than rent is as the professor said it locks in the cost of housing,.... Even though it is more costly in the early years the benefits of home ownership are compounded over the years, 

If I use my parents for an example Having bought there first home in the '70's they have finished paying it off so there house which in todays market would cost them about $400 a week to rent is pretty much rent free, 

offcoarse in the early years it would have cost them a decent wack out of dads pay check which was $70 a week at the time over the years his repayments have gotten smaller and smaller compared to his income to the point where he has now repayed the loan, 

But if he continued renting the out come would be much different, today he would have to pay $400 weekly rent and he would not own his home which he could sell today for about $450,000 with no Capital gains tax, to help fund a better retirement.


----------



## numbercruncher (8 January 2008)

Tysonboss1 said:


> But if he continued renting the out come would be much different, today he would have to pay $400 weekly rent and he would not own his home which he could sell today for about $450,000 with no Capital gains tax, to help fund a better retirement.





I fully appreciate the benefits of home ownership, I merely think we are in Bubble territory and so far from fair value .......


Your parents a point in case, they can rent that house for 400 a week , pay no rates/ins/maint etc put the 450k in an online savings account getting 700 a week in Interest. Including the costs and excluding tax about 400 a week better off. If rates rise by 1pc this year thats another 100 a week or close to.



My debate isnt with home ownership, its with fair value, so many better Investment opportunities around imho.


----------



## numbercruncher (8 January 2008)

I would certainly re-enter the RE market if Rents increased 100pc or wages (as reported by the Bureau of Stats) increased 100pc, this would represent a return to the mean and fair value.

Currently the only way from a purely financial viewpoint that home ownership is justified (imho) is to rent the House you live in and own an Investment property.

A Friend years ago did exactly this, he and his Brother both purchased a House and rented them off each other, thats how bizarre the system is.


----------



## KIWIKARLOS (8 January 2008)

There is nothing wrong with that but the tax man has this thing called "at arms reach" which means you can rent your house to a relo if you want but you have to charge MARKET rent and be able to prove that it is a fair market value. If not they will get you for fraud.

Fact is property has never been a good investment when compared to stocks its only been the spec bubble in the last 5 or so years that makes it seem like it could have been a good investment. Long term ie 50+ year trends show that property price barely beats inflation. That said though not all ones investments should be high growth high risk. Problem is property has become more risky because of dodgy lending. 

I bought my first place a year ago my plan is to smash the repayments as hard as i can for first few years then as my wage increases the repayments will become cheaper and cheaper in real terms. 

There are so many life style benefits to owning your own home compared to renting and if heard alot of people saying how can A person afford rent. Fact is back in my folks day and even when i first moved out of home groups of people lived together to make rents cheap. 

Surely noone would advocate a 19 YO fresh from home should be able to afford a two bed townhouse for themselves! One bedroom studios etc are still very reasonable and if you want more comfort get a flatmate.


----------



## professor_frink (8 January 2008)

numbercruncher said:


> I would certainly re-enter the RE market if Rents increased 100pc or wages (as reported by the Bureau of Stats) increased 100pc, this would represent a return to the mean and fair value.
> 
> Currently the only way from a purely financial viewpoint that home ownership is justified (imho) is to rent the House you live in and own an Investment property.
> 
> A Friend years ago did exactly this, he and his Brother both purchased a House and rented them off each other, thats how bizarre the system is.




So that would bring housing prices to around 3 times average earnings wouldn't it? Considering that very few people actually buy a house with only 1 person working, that would mean that house prices will be closer to 1.5-2 times the average household income. I find it hard to believe that wages could double with no effect on housing prices. That leaves rent doubling as a more likely scenario. The question I'd be asking myself here is what kind of state would the world be in for that to happen? A massive, worldwide credit squeeze that sends world markets into absolute turmoil could force enough foreclosures to double rents. But then the question becomes would I even be able to get a loan to buy a house? Probably not.

Thoughts?


----------



## numbercruncher (8 January 2008)

Id like to see it return to 4x, thats pretty much the historical norm, and commonly seen throughout the West. My first House was less than 4x, was even a few (shacks) and plenty of land around available at 2x.


Have a read through "The 3rd Annual Demographia International Housing Affordability Survey". Its pretty Interesting.



> The most pervasive housing affordability crisis is in Australia, with an overall Median Multiple
> of 6.6. Affordability is only marginally better in New Zealand (6.0) Ireland (5.7), and the
> United Kingdom (5.5). On the other hand, the national Median Multiple in Canada is 3.2,
> indicating that housing is one-half as expensive relative to incomes as in Australia. The national
> Median Multiple in the United States is 3.7.




http://www.demographia.com/dhi-ix2005q3.pdf

Interesting to Note that both the US and UK are experiencing a crash, considering a much lower multiple than us, not to mention other obvious things such as Population, available land etc.


----------



## robots (8 January 2008)

numbercruncher said:


> I fully appreciate the benefits of home  .......
> 
> 
> Your parents a point in case, they can rent that house for 400 a week , pay no rates/ins/maint etc put the 450k in an online savings account getting 700 a week in Interest. Including the costs and excluding tax about 400 a week better off*. If rates rise by 1pc this year thats another 100 a week or close to.*




hello,

hang on, this guy is mortgage free, interest rates mean nothing 

so he sells, gets 700/wk and pays 400/wk to rent and invests the 300/wk, 

gets 15k per annum plus a bit of interest (what % do you think?), mean while if stayed in his house is probably doing 12%, on 450k, so 54k, less rates of $900/yr, water $500/yr, insurance $600/yr

so if held, 52k, tax free

now if went sell route, lets give him a 20% return, his 15k is now 18k and the tax man says I will have tax on the 18k + 21k, which is roughly 7k, so he gets 32k for the year, great result

even the last two years have shown things can be even better

thankyou

robots


----------



## KIWIKARLOS (8 January 2008)

House prices 4 x yearly wage and interest rates at 15% sounds good :

Those days of cheap labour and especially materials are gone. Back then houses were built with cheap hardwood etc. Prob is we have been pilaging the worlds / Oz's resources for many years and now the cost of materials can only rise. If i could i would buy a house to live in that was built to last 100+ years because if things keep going the way they are it'll be the materials that will cost much more than the land.

Imagine how much a plastic chinese container will be worth by 2050 when oil is prob $500 a barrel


----------



## numbercruncher (8 January 2008)

robots said:


> hello,
> 
> hang on, this guy is mortgage free, interest rates mean nothing
> 
> ...





Thats a rather bold assumption thinking average house prices will go up 12pc p/a , Thats hit the level where average House increases in value more than an entire average wage each year, you dont seriously think this can continue into perpetuity do you ?

Using this 12pc p/a cap gain in 5 years your assuming it'll be worth 800k , maybe this particular house will be but that concept simply cant be applied broadly to the market. There is no way without a serious wage breakout that house prices are going to gain like that, and a wage breakout will be an Interest rate breakout.

Theres plenty of people in the latter stages of their working lifes Dumping home ownership in favor of renting and taking advantage of the Generous superanuation laws.

Rent for half the cost, salary sacrifice wages at 15pc, dump the sale of home proceed in the fund and pay only 10pc cap gains. I bet that strategy would woop owner occupied RE over a period of 10 years.

But as I said i appreciate people like to own their own homes....


----------



## professor_frink (8 January 2008)

numbercruncher said:


> Id like to see it return to 4x, thats pretty much the historical norm, and commonly seen throughout the West. My first House was less than 4x, was even a few (shacks) and plenty of land around available at 2x.
> 
> 
> Have a read through "The 3rd Annual Demographia International Housing Affordability Survey". Its pretty Interesting.
> ...




Interesting report. I'd be surprised if State governments in this country all of a sudden released a heap of land on the outskirts of the cities to remedy the problem though- I don't think they would have the money to pay for the infrastructure required for an endless suburbia- which was something that wasn't really mentioned in the report.


----------



## theasxgorilla (8 January 2008)

KIWIKARLOS said:


> If i could i would buy a house to live in that was built to last 100+ years because if things keep going the way they are it'll be the materials that will cost much more than the land.




I hear what you are saying...in super-homogenised suburbia houses with quality architecture and quality materials are few and far between.  In southern Sweden there is stacks of land so its really not expensive... definately not by Aust capital city standards...but if you have one of these built-to-last-and-look-good puppies on it then you can expect to pay.


----------



## numbercruncher (8 January 2008)

KIWIKARLOS said:


> House prices 4 x yearly wage and interest rates at 15% sounds good :
> 
> Those days of cheap labour and especially materials are gone. Back then houses were built with cheap hardwood etc. Prob is we have been pilaging the worlds / Oz's resources for many years and now the cost of materials can only rise. If i could i would buy a house to live in that was built to last 100+ years because if things keep going the way they are it'll be the materials that will cost much more than the land.
> 
> Imagine how much a plastic chinese container will be worth by 2050 when oil is prob $500 a barrel




Sounds good, what would you take, 220k house @ 15pc Interest or 440k house at 9pc interest? That reflects prices at 4x and 8x average wage respectively.

A house to build adjusted for Inflation has hardly risen at all over the last 10 years, you can build a nice new home here in Queensland like 25sq for 150k or less.

As I touched on before my First home was 4x my wage and interest rates where much lower, that same home is now 7 to 8 times the average wage and Interest rates are rising and already much higher than when i purchased.

And when we speak of the average wage of 55k, that means 50pc of people earn less than 55k , before we even start on Pensioners, Invalids/Sickness bens etc, where are these folks that dont own a house going to fit into this ongoing 12pc p/a RE boom? 

Anyway Im sticking to my game plan, rent where I live at half the cost of ownership and if I re-enter RE at some stage rent that out for the tax Benefits. Maybe the Gov should make owner-occupied tax deductable as well hey? Save all the hassles


----------



## tronic72 (8 January 2008)

There's two sides too this argument.

Side A: people paying too much for their property, in a market that's totally over priced. Those people would have been better renting

Side B: people like myself who purchased the "worst house in the street" and sat back while the neighbours continued to pay over a third more for their properties. Our property is now worth more than double what we paid for it. The most recent valuation was $380 - $420K and we paid $180 K and borrowed  $150 K. In 4 years!


----------



## tronic72 (8 January 2008)

KIWIKARLOS said:


> House prices 4 x yearly wage and interest rates at 15% sounds good :
> 
> Those days of cheap labour and especially materials are gone. Back then houses were built with cheap hardwood etc. Prob is we have been pilaging the worlds / Oz's resources for many years and now the cost of materials can only rise. If i could i would buy a house to live in that was built to last 100+ years because if things keep going the way they are it'll be the materials that will cost much more than the land.
> 
> Imagine how much a plastic chinese container will be worth by 2050 when oil is prob $500 a barrel




Kiwi,

Not sure if you are in the building industry or not but your information is simply wrong. 

Material costs have plummeted since the introduction of the GST. We now use pine for everything! it's easier to work with an TONNES cheaper than hardwood. The MAJOR cost in building a house is the labour. Fittings and fixtures also push the price skyward but the actual dwelling it's self is quite cheap. It's possible to build an average sized (not a Mc Mansion) for about $50 K in materials. Even less if you shop around.


----------



## Flying Fish (8 January 2008)

$400 dollar homes in the US !! http://www.homes.com/Content/ListingSearchResults.cfm?City=DETROIT&State=MI&Bedrooms=&FullBaths=&MinPrice=&MaxPrice=&PriceRange=&AmenitiesList=&PropType=+&TotalRecs=1243&MinSqFt=&MaxSqFt=&LotSize=&MinYear=&MaxYear=&Canada=0&OrderBy=PRICE%3AA


----------



## numbercruncher (8 January 2008)

Flying Fish said:


> $400 dollar homes in the US !! http://www.homes.com/Content/ListingSearchResults.cfm?City=DETROIT&State=MI&Bedrooms=&FullBaths=&MinPrice=&MaxPrice=&PriceRange=&AmenitiesList=&PropType=+&TotalRecs=1243&MinSqFt=&MaxSqFt=&LotSize=&MinYear=&MaxYear=&Canada=0&OrderBy=PRICE%3AA





wow thats just phenomenal, Guess thats what happens when you destroy your manufactoring base and ship it overseas ....

Sort of an airy warning to some of those dodgy mining towns should the demand vanish or the quarry run dry hey.

Its kinda bizarre too, the US has loads of homeless people skulking around the citys streets, could house them all in Detroit by the looks of it, hook them up with a dodgy $400 ARM lol


----------



## robots (8 January 2008)

hello,

great stat from the ABS, for those who love to idolise

average wealth of home owner 300k, average wealth of renter 50k, check it out

suburbs in melb just had 44% in one year, and probably 10% the previous year,

not everyone is on a pittance, 

thankyou

robots


----------



## Tysonboss1 (8 January 2008)

numbercruncher said:


> I fully appreciate the benefits of home ownership, I merely think we are in Bubble territory and so far from fair value .......
> 
> 
> Your parents a point in case, they can rent that house for 400 a week , pay no rates/ins/maint etc put the 450k in an online savings account getting 700 a week in Interest. Including the costs and excluding tax about 400 a week better off. If rates rise by 1pc this year thats another 100 a week or close to.
> ...




wheather house prices are a Bubble or not is yet to be seen,... Time will tell I guess.

Inregards to my Dad holding the funds as cash rather than as his own home,

If he held the funds in a cash account he would only get the interest which would be added to his income pay tax on, also his funds would not have any capital growth invested in cash, so would be slowly eroded by inflation, so it would begin that his rent is increasing year by year but his cash is decreasing with inflation.

But yes as he contiunes into retirement and depletes other sources of income such as his super and other investments then he can fall back onto his capitol locked up in his home to live off.


----------



## explod (8 January 2008)

Tysonboss1 said:


> wheather house prices are a Bubble or not is yet to be seen,... Time will tell I guess.
> 
> Inregards to my Dad holding the funds as cash rather than as his own home,
> 
> ...




In my view the equity in houses are going to be also eroded by inflation.  The same money put into Woolworth shares (with Coles needing a lot of fine tuning my Westfarmers) the next few years will see WOW (virtually a monopoly on essential such as food) pays a good dividend as well as equity growth.

Do the sums.  And there are a number of other bullet proof stocks like that to give diversification.   After the Wall Street plummet BHP will be a good one to pick off the floor too.  India and China share 2 thirds of the world population, their expansion will drive BHP to heaven in a few years time.


----------



## numbercruncher (8 January 2008)

robots said:


> hello,
> 
> great stat from the ABS, for those who love to idolise
> 
> ...





Which Suburbs went up 44pc in the last year ?


----------



## Tysonboss1 (8 January 2008)

numbercruncher said:


> A Friend years ago did exactly this, he and his Brother both purchased a House and rented them off each other, thats how bizarre the system is.




I rent at the moment,... but I also own a fair few properties in brisbane,

I do this because I believe that brisbane has alot more growth than the area of sydney that I need to live in at the moment,...

it doesn't really matter if you rent as long as you have an Anchor in the market.


----------



## robots (8 January 2008)

numbercruncher said:


> Which Suburbs went up 44pc in the last year ?




hello,

caulfield, malvern, prahran, east st kilda

plenty in syd, bris, perth and adel

thankyou

robots


----------



## numbercruncher (8 January 2008)

robots said:


> hello,
> 
> caulfield, malvern, prahran, east st kilda
> 
> ...





Have links today or just words ?

Thankyou.


----------



## robots (8 January 2008)

hello,

http://data1.reiv.com.au/trendchart/

plug  a suburb in, wow, look at Malvern almost double

TAX FREE

thankyou

robots


----------



## Tysonboss1 (8 January 2008)

numbercruncher said:


> Thats a rather bold assumption thinking average house prices will go up 12pc p/a , Thats hit the level where average House increases in value more than an entire average wage each year, you dont seriously think this can continue into perpetuity do you ?




Saying that house prices can't go up into the future is like saying a share price can't continue to rise,...

Picture the price of land in sydney CBD,... it was affordable housing as 1/4 acre blocks 200 years ago, but valued at $50million a 1/4 acre block is defiantly not affordable there now,.... But if you build a 60storey apartment building then it does become affordable, so comparing the price of land to incomes doesn't give you a true value.

A 1/4 acre block might seem affordable in the 50's but over time as land becomes increasingly expensive it may be subdivided and two dwellings placed on it,.... then years later 4 town houses,... years later three storey apartment block,.... etc.etc.etc.

http://www.propertyinvesting.com/go/228

This link has a brief explanation of how an area transforms.


----------



## Tysonboss1 (8 January 2008)

explod said:


> In my view the equity in houses are going to be also eroded by inflation.  The same money put into Woolworth shares (with Coles needing a lot of fine tuning my Westfarmers) the next few years will see WOW (virtually a monopoly on essential such as food) pays a good dividend as well as equity growth.
> 
> Do the sums.  And there are a number of other bullet proof stocks like that to give diversification.   After the Wall Street plummet BHP will be a good one to pick off the floor too.  India and China share 2 thirds of the world population, their expansion will drive BHP to heaven in a few years time.




There is no reason you can't invest in stocks and own your own home,..

Using the equity in your home for investing in stocks can mean over the years you can build a sizeable portfoilio.

As for my Dads equity decreasing with inflation I don't think this will happen in his suburb in brisbane.

Continuing my dads current position where he has over $400,000 in equity and no rent to pay,... imagine the portfoilo he could put together using his equity and servicing the loan with the rent he no longer has to pay.


----------



## Bill M (8 January 2008)

The original article was posted in Sept. 2005, quite a lot of it stands true, particularly the petrol and energy costs rising and in some cases house prices stagnating.

I downsized from a larger nice property to a smaller unit with a view in Feb 2003, about 5 years ago. We bought our unit for the location and it's views and to date we still love it. It was a move I really wanted to do because I wanted to free up some capital for stockmarket investment as well.

Over the 5 years our new unit did not go up in price (Sydney). The reason is that my suburb has got several newish high rise units available for sale. This of course doesn't worry us because we have the location and the views we have always wanted. The other big plus is that to rent our unit it would cost us $320 a week. Over 5 years that would have cost us $83,200..... money down the drain I think. Although our unit didn't go up we lived in it rent free all those years and eventually when it does go up and if we do sell all will be capital gains tax free. In the end even with no capital gain, we can not get kicked out, we have good views and location, we are happy and most of all no on going rent.

With the money I had left over from 5 years ago I bought some good stocks and they fund our retirement. The stocks have done well and they are still returning good strong dividends.

In my opinion a house or unit for you to live in where you want and how you like is a great investment for your way of life. But to fund your retirement stocks that pay fully franked dividends are very hard to beat. To put it another way, I would rather put 500K into good stocks that pay 6% fully franked than put it into a 2 bedroom unit and get 6%, less water rates, less tenancy problems, less levy payments, less agents fees, less special levies, less council rates, less repair bills etc ect and then from what you have left YOU WILL PAY TAX, cheers.


----------



## robots (8 January 2008)

hello,

great post Bill M

thankyou

robots


----------



## KIWIKARLOS (8 January 2008)

Mate try to build a double brick house with hardwood floor boards in sydney now for the same price as a project home. The building price hasn't changed in real dollar terms but now instead of hardwood your using pine. Even structural grade pine pales in comparison to the life, toughness or quality or traditional hardwoods. 

Now town houses and some houses have windows that extend all the way to the roof to avoid having to brick over window frames which is tricky and expensive. Aluminium window frames instead of wood and concrete slab construction.

How about copper houses today have much more expansive electrical networks the cost of copper is much much more these days than 20 years ago. 

You say building materials are cheaper or the same price I say its because of diminshing quality and economic but inferior substitutes. Project homes are cheap to start with but you start adding things outside the basics and your paying heaps. 

Last thing is labour tradies these days are getting paid heaps more for their services then they were 10 years ago I started in the electrical trade, as an apprentice I made $320 a week the same apprentices now make $440 + and thats 6 years.


----------



## robots (9 January 2008)

hello,

not much happening on this thread,

have any ASF members bought or sold a place recently and have any experiences to share?

thankyou

robots


----------



## professor_frink (9 January 2008)

robots said:


> hello,
> 
> not much happening on this thread,
> 
> ...




https://www.aussiestockforums.com/forums/showpost.php?p=240733&postcount=2394

The home that I'm talking about in the link above was bought end of last year. Settlement is on Friday


----------



## robots (9 January 2008)

hello,

great stuff frinkster, hope you have many happy years there 

I lived with my brothers (3) at the one house here in melbourne for 21 yrs from birth, great time, driveway cricket, pool, footy etc

thankyou

robots


----------



## Lucky_Country (9 January 2008)

http://www.abc.net.au/news/video/2007/12/18/2122179.htm
Interesting video on dipping into super too pay mortgages and home reposessions.


----------



## wayneL (10 January 2008)

theasxgorilla said:


> Please do tell about the areas worst affected!




The full Britains Biggest House Price Falls program aired on ITV this evening.


----------



## numbercruncher (10 January 2008)

robots said:


> hello,
> 
> http://data1.reiv.com.au/trendchart/
> 
> ...





Hello, Checked it out, all those Suburbs you mentioned didnt go up 44pc or more in last year as you said, yes Malvern very nice, East St Kilda, Blue chip Blue chip, rich get richer is the nature of the beast.

So pretty much your post was ramping false Information with exception of those 2 suburbs. But thats exactly what I expect from you and is why I asked for link.

Thankyou.






Here is the graph from your site showing average return over 5 years.(barely beats Inflation so fits definition of stagnation to me)


----------



## robots (10 January 2008)

numbercruncher said:


> Hello, Checked it out, all those Suburbs you mentioned didnt go up 44pc or more in last year as you said, yes Malvern very nice, East St Kilda, *Blue chip Blue chip, rich get richer is the nature of the **beast.*
> 
> So pretty much your post was ramping false Information with exception of those 2 suburbs. But thats exactly what I expect from you and is why I asked for link.




hello,

you got it NC, keep going on your gold futures, and I will take the real estate

the theory hunters will be missing out again

thankyou

robots


----------



## RustyK (10 January 2008)

Bill M said:


> The original article was posted in Sept. 2005, quite a lot of it stands true, particularly the petrol and energy costs rising and in some cases house prices stagnating.
> 
> I downsized from a larger nice property to a smaller unit with a view in Feb 2003, about 5 years ago. We bought our unit for the location and it's views and to date we still love it. It was a move I really wanted to do because I wanted to free up some capital for stockmarket investment as well.
> 
> ...




The decision to buy a house is indeed a personal one and there are numerous lifestyle and other benefits that are worth mentioning.  However to have bought a house 5 years ago out of hard earned capital which has not gone up in value at all and then claim that you are on top because you have saved yourself $83,200 in rent is a little foolish in my opinion.  If this Unit cost you $400,000 which you could have invested in shares at 10% after tax (relatively conservatively the past 5 years) then your capital today would be worth $644,204 which means owning your own house has cost you 244,204-83,200 the lost growth less rent.  Your opportunity cost of renting is $161,004 for the last 5 years.

Of course share markets do not go up every year and history is not an accurate way of forecasting the future but it is the most reliable measure we have.  But history will tell you that shares outperform property over the longer term.

Cheers

PS I am a home owner despite the above as it is a lifestyle decision and it is very hard to put a value on that.  However I do not believe that I am coming out on top regardless that is irrational.


----------



## explod (10 January 2008)

RustyK said:


> [
> 
> The decision to buy a house is indeed a personal one and there are numerous lifestyle and other benefits that are worth mentioning.  However to have bought a house 5 years ago out of hard earned capital which has not gone up in value at all and then claim that you are on top because you have saved yourself $83,200 in rent is a little foolish in my opinion.  If this Unit cost you $400,000 which you could have invested in shares at 10% after tax (relatively conservatively the past 5 years) then your capital today would be worth $644,204 which means owning your own house has cost you 244,204-83,200 the lost growth less rent.  Your opportunity cost of renting is $161,004 for the last 5 years.
> 
> ...




I like your post, it put that facts cleaerly.  My wife and I chose to sell our home as from a text of Robert Kyosaki I did the sums and put the money into share trading.  Now by active share trading and getting on trends following simple rules has made us a safe and steady 60% average per year.  

And we are portable.  Going to live for 4 months in Cairns this winter.


----------



## Tysonboss1 (10 January 2008)

explod said:


> I like your post, it put that facts cleaerly.  My wife and I chose to sell our home as from a text of Robert Kyosaki I did the sums and put the money into share trading.  Now by active share trading and getting on trends following simple rules has made us a safe and steady 60% average per year.
> 
> And we are portable.  Going to live for 4 months in Cairns this winter.





Robert Kyosaki's Teachings say that Property investment is an essenitial part of a wealth creation stratergy. 

Robert kyosaki believes that property investments are the very foundation that supports the rest of your portfolio.


----------



## wayneL (10 January 2008)

Tysonboss1 said:


> Robert Kyosaki's Teachings say that Property investment is an essenitial part of a wealth creation stratergy.
> 
> Robert kyosaki believes that property investments are the very foundation that supports the rest of your portfolio.




A quote from the man himself:



> There is a saying that goes, "When your picture appears on the cover of Time Magazine, your career is over." If you have access to the June 13, 2005 issue of Time Magazine, you will see a picture of a man hugging his home. The title and subtitle say, "HOME SWEET HOME: Why we're going gaga over real estate."
> 
> There is another saying that goes, "As General Motors goes, so does the U.S." Well, today, both General Motors and Ford have had their corporate bonds downgraded to "junk bond" status.
> 
> ...


----------



## Bill M (11 January 2008)

RustyK said:


> The decision to buy a house is indeed a personal one and there are numerous lifestyle and other benefits that are worth mentioning.  However to have bought a house 5 years ago out of hard earned capital which has not gone up in value at all and then claim that you are on top because you have saved yourself $83,200 in rent is a little foolish in my opinion.  If this Unit cost you $400,000 which you could have invested in shares at 10% after tax (relatively conservatively the past 5 years) then your capital today would be worth $644,204 which means owning your own house has cost you 244,204-83,200 the lost growth less rent.  Your opportunity cost of renting is $161,004 for the last 5 years.
> 
> Of course share markets do not go up every year and history is not an accurate way of forecasting the future but it is the most reliable measure we have.  But history will tell you that shares outperform property over the longer term.
> 
> ...




I don't have an argument with you RustyK as you are right. You answered the question for me. Mate, I rented plenty of places before I bought my first property in Sydney, I was always a good tenant. After being asked to vacate the premises a few times just around about Christmas time I thought enough is enough. The lifestyle I have and the piece of mind I have knowing no one can kick me out at Christmas time has no price tag on it. Yes I suppose I could have used that 400K to do better but if I was renting and I was asked to vacate my missus would be running after with meat cleaver all the way to the beach.:samurai:

About shares and 10% return (conservatively).... Just imagine if someone retired on Nov 1st. last year and put their 400K nest egg into the sharemarket when the all ords hit 6,800 points. They would be looking at a 11% loss in what 2 Months? Their 400K would only be worth 356K now I understand the markets quite well but some people don't, I can talk until I am blue in the face about the opportunities in investing in the sharemarket but some people can not cope with this risk. Don't worry RustyK, I'm with you, just trying to show the other side on both counts, cheers mate.


----------



## bvbfan (11 January 2008)

Just speaking to Moneytree and thought you guys might like to know....


He made $202K for 2007 year being long property.

I think he bought $257K and sold $390K (return of 51%) 

2nd property bought $300K and sold $435K (return of 45%)

Both held for 6 months and being the primary residence NO CGT

Well done to him.


PS I have his permission to post this


----------



## numbercruncher (11 January 2008)

> "Adding fuel to the rental market surge are the supply constraints flowing on from fewer new dwellings being developed which is contributing to the undersupply of rental stock."
> 
> The figures show that within the detached housing market, Darwin is recording the highest rental yields, averaging 5.45 per cent.
> 
> ...




http://www.news.com.au/heraldsun/story/0,21985,23033257-664,00.html

No wonder few dwellings are going up with returns like that, Perth is unreal , putting alot of faith in Capital appreciation. Gawd to make it an attractive investment you really need rents to like double from 400 to 800, which we all know is Impossible for a long long time.

tick tock tick tock


----------



## professor_frink (11 January 2008)

robots said:


> hello,
> 
> great stuff frinkster, hope you have many happy years there
> 
> ...




Cheers robots, I plan on doing just that. No pool for me(can't have it all with a first home), but I do have this less than a 2 minute walk down the road, so I think Mrs Frink, the 2 dogs and I will get by


----------



## chops_a_must (11 January 2008)

numbercruncher said:


> http://www.news.com.au/heraldsun/story/0,21985,23033257-664,00.html
> 
> No wonder few dwellings are going up with returns like that, Perth is unreal , putting alot of faith in Capital appreciation. Gawd to make it an attractive investment you really need rents to like double from 400 to 800, which we all know is Impossible for a long long time.
> 
> tick tock tick tock




Considering wages for the majority of renters in Perth HAVE NOT increased in 5 years. Yeah, fly in fly out jobs obfuscate the facts, but the reality of the siutuation is most renters have not had any substantial wage gain alongside massive costs of living increases here.

The news says WA is facing severe mortgage stress, defaults are apparently increasing quickly.

And anecdotally at least, some places around us have been on the market for close to a year, without moving (I can't actually remember the last time I saw a sold sign on one). A lot seem to have given up. And this is in a suburb 2 mins drive from Freo, 2 mins drive from the Freeway and train station. 

Obvious conclusion...


----------



## robots (11 January 2008)

hello,

might want to add another 1% onto that loss for the market now Bill M,

great time for buying stocks isn't it?

thankyou

robots


----------



## ROE (11 January 2008)

Bill M said:


> I don't have an argument with you RustyK as you are right. You answered the question for me. Mate, I rented plenty of places before I bought my first property in Sydney, I was always a good tenant. After being asked to vacate the premises a few times just around about Christmas time I thought enough is enough. The lifestyle I have and the piece of mind I have knowing no one can kick me out at Christmas time has no price tag on it. Yes I suppose I could have used that 400K to do better but if I was renting and I was asked to vacate my missus would be running after with meat cleaver all the way to the beach.:samurai:
> 
> About shares and 10% return (conservatively).... Just imagine if someone retired on Nov 1st. last year and put their 400K nest egg into the sharemarket when the all ords hit 6,800 points. They would be looking at a 11% loss in what 2 Months? Their 400K would only be worth 356K now I understand the markets quite well but some people don't, I can talk until I am blue in the face about the opportunities in investing in the sharemarket but some people can not cope with this risk. Don't worry RustyK, I'm with you, just trying to show the other side on both counts, cheers mate.





Let take another look from business perspective angle....

You own a little business that pay nicely income of 20K-30K a year
say a PE any where between of 15-20, so your business is roughly worth 400K for this retiring chap and it been like that for several years.

On a happy day mr Market decided he will pay 450K for your business which is 10% above your premium you probably want to sell it but thinking will I get the same income when I Sell that business with the money I got?
I decided to hold and get my income. The business going well and my earning start to increase to 30K-40K a year ..Damn I'm glad I didnt sell it.

Then one day Mr Market feel depress and decided to offer you 300K for you business because things don't look too good in the near distance future and your earning may go back to 20K-30K a year, never the less the income still there

would you sell your business now? 

so for this retire person putting 400K into a decent company and now Mr Market wants it for 350K or 300K should worry this person at all. He still get his income and should be merry.

Five or ten years down the track when the business is booming and earning pick up Mr Market will come around again and offer 20,50, 100% premium for his business. Stock that went through this scenario, CBA, WOW, BHP, FLT 
you name it there are hundred of them out there.

Daily price movement of the stocks or your portfolio shouldn't effect your initial investment decisions and that is to buy exceptional stocks and hold it through thick and thin for a long period time. Only sell out when you need the money to do something useful.  The guys that get depress or worry about their stocks are not in there for a long halt and more like a traders rather than investor.

If I identify a good business and if it selling below or at the price I'm willing to pay I buy it even in bear market down 50%.

If you put Residential property market on a stock market you get the same sort of daily price movement. Look at property trust (that the closest thing about property investment on the stock exchange).

Cheers


----------



## Julia (11 January 2008)

ROE said:


> so for this retire person putting 400K into a decent company and now Mr Market wants it for 350K or 300K should worry this person at all. He still get his income and should be merry.
> 
> Five or ten years down the track when the business is booming and earning pick up Mr Market will come around again and offer 20,50, 100% premium for his business. Stock that went through this scenario, CBA, WOW, BHP, FLT
> you name it there are hundred of them out there.
> ...



So, on the above principle, if there is a full blown recession and our market doesn't recover for, say, two years. are you still going to be happy seeing your investment continue to decline or at best go sideways?


----------



## ROE (12 January 2008)

Julia said:


> So, on the above principle, if there is a full blown recession and our market doesn't recover for, say, two years. are you still going to be happy seeing your investment continue to decline or at best go sideways?




Sure I don't know what other people buy ..What I'm buying I dont care if the stock rise or fall on any given day. I buy more if the market drop and the price is right .... I have a dozen of stocks I want to buy but it's not there yet so I just be patient and drink my coffee and snap up the one that pitch right at me for a swing. 

I'm happy to sit in 5-10 years if that what it takes...I got 30 years on my hand do I really care what happen in the next 5 years


----------



## ColB (12 January 2008)

explod said:


> I like your post, it put that facts cleaerly.  My wife and I chose to sell our home as from a text of Robert Kyosaki I did the sums and put the money into share trading.  Now by active share trading and getting on trends following simple rules has made us a safe and steady 60% average per year.
> 
> And we are portable.  Going to live for 4 months in Cairns this winter.




Xplod,  Can't wait till the kids are off my hands, I'll be spending Melbourne winters up north as well.  Have to refine my share trading/investment skills though after the past few weeks as I just entered the market before all this sub prime and US recession talk started. Regards, CB


----------



## explod (12 January 2008)

Tysonboss1 said:


> Robert Kyosaki's Teachings say that Property investment is an essenitial part of a wealth creation stratergy.
> 
> Robert kyosaki believes that property investments are the very foundation that supports the rest of your portfolio.




It was not his preference of investement but the calculations for investment that I took from Kyosaki.   In one book he said, "if you are travelling by air, you dont buy the plane you hire it"  His property deals if you check were  commercial enterprises/undertakings even if some were residential in nature.

In a recent newsletter he said, "Silver under $20 oz is cheap"

The arguments should not be the product itself but what the product returns to our pocket.

The home as "our castle" puts emotion into the equation.  Emotion does not drive good investment decisions.


----------



## robots (12 January 2008)

hello,

I hope Kathmandu DAVE can post the article of the Byron Bay house that went from 5.2k to 6mil,

emotion hasnt caused too much of an issue on that one,

you'r home is probably one of the best passive investments around on a P & I loan

thankyou

robots


----------



## robots (12 January 2008)

hello,

great article here today,

http://business.theage.com.au/house-prices-to-keep-going-through-the-roof/20080111-1lhr.html

if someone could please paste it would be great thanks,

0.4% difference between property and shares over 23 yrs

thankyou

robots


----------



## explod (12 January 2008)

robots said:


> hello,
> 
> great article here today,
> 
> ...




Natalie Craig 
January 12, 2008 
Page 1 of 2 
ONE man's housing affordability crisis is another man's lucrative investment market.

Escalating house prices show little sign of abating and long-term figures confirm Australian residential property is a strong, stable investment ”” sexy qualities in these shaky times.

The ANZ property market outlook for 2008 was unequivocal in its recent forecast: "A severe and potentially intractable shortage of housing will continue to drive house prices and rents sharply higher in the years ahead."

This was despite Bureau of Statistics data on Tuesday showing total building approvals rose 8.9% ”” on a seasonally adjusted basis ”” and were up 14.6% last year.

The Australian Property Council welcomed the figures, but said underlying demand was still outweighing supply. Head of financial analysis at ANZ, Paul Braddick, agreed: "It's probably likely to be very short-lived … Supply remains constrained and demand is still incredibly strong, bolstered by high net migration."

ANZ analysis shows residential property has had remarkable returns over the past 23 years. Since 1984, residential property delivered a compound annual total return of 13.4%, only slightly below equities (13.8%) and well above commercial property (10.3%) and bonds (9.4%).

But once volatility was added to the equation, residential property returns more than tripled those of equities and more than doubled those of commercial property and government bonds.

In stark contrast to the shaky sharemarket, ANZ reported that house prices had "virtually never fallen", apart from a 0.3% drop during the recession in the early 1990s, and a 0.9% drop in 1996.

Mr Braddick said growth continued to defy those waiting for the "bubble to burst", and expected residential property to outgrow equities in 2008. He also predicted the gap between prices in inner-city and outer suburbs would narrow.

But Alliance Finance Group director Craig Dres said he believed sections of the market would decline. "I suspect there will be a fallout, and those glued to the set will find some discounted prices. It's inevitable. The highs can't continue forever, and the cycle will turn, although I think inner suburbia is still solid."

Mr Dres said the market was yet to see the impact of November's interest rate rise, and that the outer suburbs would soon start to feel the pinch. Renters are also likely to suffer from the rate rise and escalating house values. Australians For Affordable Housing chairman Michael Perusco said he hoped some of the money flooding into residential property would be channelled by affordable housing schemes and new tax offsets offered by the Government's National Rental Affordability Scheme.


----------



## Tysonboss1 (12 January 2008)

explod said:


> It was not his preference of investement but the calculations for investment that I took from Kyosaki. His property deals if you check were  commercial enterprises/undertakings even if some were residential in nature.
> 
> The arguments should not be the product itself but what the product returns to our pocket.
> 
> The home as "our castle" puts emotion into the equation.  Emotion does not drive good investment decisions.




I don't own "a castle" that I am emotionally atached to, I actually rent a very modest 1 bedroom apartment in sydney that I share with my partner,

But I do hold a property portfoilio with over $1m of equty, which over all is returning a postive income and most of the properties are in suburbs of brisbane achieving good capital growth.

I have stratergies that I can use to make money in just about any property market whether it be up down or sideways, so saying people won't make money in property is just plain wrong. The problem is when most people bag property investment they are only thinking of the "buy and hold" stratergy.

the "Buy and Hold" stratergy is just one property investment stratergy, the buy and hold stratergy will only make you money 1/3rd of the time, simply because property only goes up 1/3 of the time the rest time its down or flat,
however having said that if you are wise enough with the areas you choose the up periods will always increase the property value by far more than the down and flat periods will bring the prices down, so over the longterm if you buy and hold you will make money.

My property portfoilio has deffiantly been the key  part of my investment portfoilio that has allowed me to grow both my business and my other investments much faster than I other wise would. 

I maintain the opinion that to accelerate your growth you need Property, Business and equity investments. focusing on any one of these three by itself will never Bring the sustained longterm growth you will get by putting together a portifiolio that allows the strengths of each asset class to offset the weaknesses in the other.


----------



## tech/a (12 January 2008)

tyson similar to you but own my own home.

Agree with most you have said but perhaps one.
You can specialise in Property/Business and or equities and excel beyond the "Norm"
Often as has been my case with property this becomes a business in itself quite separate from my core business--Civil Construction.
But agree balance is best.


----------



## explod (12 January 2008)

tech/a said:


> tyson similar to you but own my own home.
> 
> Agree with most you have said but perhaps one.
> You can specialise in Property/Business and or equities and excel beyond the "Norm"
> ...




I was not making a bone with anyone.  In fact I agree with what you are both saying.  I too have made a lot of money from property.  Have brought and sold vacant blocks of land and doubled them in just over 12 months.  At the right time and place edging new developments, no big deal, same as Oxiana going up 100%.  I have also halved my money on deals.

It is the money equation that I refer, the ruler over it, etc., everything in the financial cycle at the right time (if it can be done/difficult to always get it right) is the name of the game.


----------



## professor_frink (12 January 2008)

Tysonboss1 said:


> .............
> 
> I have stratergies that I can use to make money in just about any property market whether it be up down or sideways, so saying people won't make money in property is just plain wrong. The problem is when most people bag property investment they are only thinking of the "buy and hold" stratergy.
> 
> ...................




Hi Tysonboss1,

I'd be interested in hearing a bit more about this- what kind of strategies are out there that allow you to profit from a declining, or stagnant property market

Is there some secret way of shorting a house


----------



## wayneL (12 January 2008)

theasxgorilla said:


> Nationalisation??? WTF!?!



Looks like it could be a done deal. "The Law of Unintended Consequences" comes to mind.

http://news.bbc.co.uk/1/hi/business/7184813.stm



> Treasury lines up new Rock boss
> Northern Rock branch
> Northern Rock is inching closer to being nationalised.
> The Treasury has recruited the former boss of Lloyd's insurance market, Ron Sandler, to lead Northern Rock, should the troubled bank be nationalised.
> ...


----------



## Tysonboss1 (13 January 2008)

professor_frink said:


> Hi Tysonboss1,
> 
> I'd be interested in hearing a bit more about this- what kind of strategies are out there that allow you to profit from a declining, or stagnant property market
> 
> Is there some secret way of shorting a house




Obviously the stratergy you use will be different in each phase of the cycle.

But during a flat or down trending, or on the eve of a down trend you can "lease option" a property which is basically a rent to buy contract where you sign a lease with the tenant stating that they pay a rent much higher than the current market rent (probally almost double the current rent) but they get an option to buy the property at a later date for preset agreed value and all the extra rent they have paid to you is used as a deposit should they decide to take up the option, benefits to you are it turns a neg cashflow property into a positive cashflow through out the term of the lease, the extra money can be used to offset interest costs or for other investments, and it locks in your sale price at a value that you are happy with and making money on,.... even if the value goes down.

a second option and my preferred option is to sell a property on a "vendor finance agreement" also known as a "Wrap" this is where you sell a house to someone who might not otherwise beable to get a loan(suchas selfemployed or exbankrupt) But instead of them getting a loan from the bank they buy the house from you and pay you in weekly instalments at an interest rate of 1.75% more then you are paying to the bank, so I might buy a house for $200,000 then sell it to the client for $225,000, I pay 8% interest to the bank the client pays 9.75% to me, so in effect I become more like a financer than a land lord, an rates, maintance etc is the clients responsibity so my main profit comes from the interest margin and the sale profit,

In a flat period following a down trend you can do renovations(as long as you are prudent with costs, buy well and only spend money on improvements that add value to your target market that you are going to resell the property to), you can search for properties that have been under rented and need quicks sales, you can do small developments and / or subdivions etc.etc

and in a booming market you just put your party hat on and hold as much property as you can because every fool is making money.


----------



## tech/a (13 January 2008)

Wraps are a valid form of Property investment.
Work brilliantly for the Vendor in flat or negative times and terribly (although not disastrously) in runaway bullish periods.

Then of course we haven't touched on Commercial OR Industrial both lag the Retail domestic market.
With infrastructure struggling to keep up here is a great opportunity!


----------



## jet328 (13 January 2008)

Tysonboss1 said:


> a second option and my preferred option is to sell a property on a "vendor finance agreement" also known as a "Wrap" this is where you sell a house to someone who might not otherwise beable to get a loan(suchas selfemployed or exbankrupt) But instead of them getting a loan from the bank they buy the house from you and pay you in weekly instalments at an interest rate of 1.75% more then you are paying to the bank, so I might buy a house for $200,000 then sell it to the client for $225,000, I pay 8% interest to the bank the client pays 9.75% to me, so in effect I become more like a financer than a land lord, an rates, maintance etc is the clients responsibity so my main profit comes from the interest margin and the sale profit,



I'd say good luck on this one.

Who in their right mind would want deal with people whom the bank won't lend money. (doesn't this say something) Sub-prime?

1.75% of 200k is $3500, then pay tax and its less than $2000. Chicken feed. 
Why would you want the hassle of chasing payments, loan administration, legal documents, searching for houses, stamp duty, transaction costs, trying to find the right buyer and not to mention all your time in this. 

And then in a few years time when you want out?

You'd be better off working at KFC


----------



## wayneL (13 January 2008)

We are very careful in the SM to distinguish between trading and investing. This distinction doesn't seem to be made by property people. 

Wraps, Lease options, reno and sell, development etc is not really "investing". It is trading and/or running a business.

BTW, wraps are very risky for the wrappee... unacceptable according to some. http://jenman.com.au/find/index.php?type=simple&query=wraps&button=SEARCH


----------



## ithatheekret (13 January 2008)

I noticed that a piece of improved crown land that has a 125 year lease on it , created for the property , which is coastal , a house built on it in 1981 , renovated throughout , 4 bdrms clifftop views etc etc . now on the market for $7M . 
1st price I saw was at lease beginning $880K , the resale $2.5M , the asking $7M .

For lease land , holy expletive expletive !


----------



## tech/a (13 January 2008)

I love Jenman he has some good stuff and some god awful stuff.

Lets look at this.



> Let's compare any of the major banks with wrappers.
> 
> First, a bank. If a home is worth $300,000 and the loan is $200,000, the borrowers have $100,000 in equity. If they default on the payments, the bank will sell the home and the equity is given to the borrowers. In this example, the borrowers receive $100,000. They get to keep the equity.
> 
> Now, let's look at a wrap loan. If the borrowers default, the wrap sharks snatch the equity and give the borrowers nothing. In the above example, it's the wrappers who receive the $100,000 in equity. That's the exact opposite to a bank.




I really love this.
Half the information.
Firstly the Wrappor comes to a deal with the Wrappee at time of contract for a predetermined sale price at a date in the future--usually 3 yrs.
This can be a 2 way street for BOTH parties.
Lets take the $200K home. Lets say the agreed price is $266K or a 10% Compounding GUARANTEED increase on the Wrappors $200k purchase with a guaranteed buyer.Sure he gets a premium on the property interest rate.The Wrappor has stamp duty to consider so his profit is eroded somewhat.

If in 3 yrs time the property has risen MORE than 10% Compounding a year then BOTH the wrappor AND the Wrappee have capital gain. Dont say it doesn't happen IT DOES and HAS.

The Wrappee knowing the home is to be his will try harder to keep it well maintained,will do everything he can to make his payments as he knows default will mean forfeiting everything. His opportunity will be lost.

So back to these nasty wrappors.
They are smart enough to protect themselves from default.
Banks insist on Mortgage insurance for loans over 80% LVR.
Nasty buggers.
This protects the banks if default and eviction and fire sale--- they can sell it at anything they want then the insurance company starts legal action against the poor mortgagor who THOUGHT his insurance covered HIM---what a joke!

The difference is that Mortgagors could not only default BUT have a very nasty bill on top.
Sub prime lendors are screaming like stuck pigs.WHY?

Wrappors take control,have their home and any equity--the wrappee walks away no more to pay.

Seems to me the Wrappors could teach the banks a thing or 2.
*Infact they have!*
You can now get a lower cost loan that the banks will lock in equity or part equity as a condition.

Its business for Christmas sake,both parties have risk,this one sided crap view is designed to stir up controversy and sell more of his books.
don't tell me Jenman hasn't a hidden agenda!

Haven't seen any reporters chasing Wrappors down streets but seen many reports on banks kicking out Mr and Mrs Average!


----------



## Tysonboss1 (13 January 2008)

jet328 said:


> I'd say good luck on this one.
> 
> Who in their right mind would want deal with people whom the bank won't lend money. (doesn't this say something) Sub-prime?
> 
> ...




Well not really chicken feed when you factor in the a wrapper will normally add $25,000 to the price so that $25,000 profit from the word go, but offcorase your not getting that $25,000 in cash you get it slowly over 5 yrs and in the mean time you are making $9.75% on it because you only lent $200K but they owe you $225K,..and you can end up with up to $100 ( depending on the size of the wrap deal) a week passive cashflow from as little as $6000 of your own money invested in the deal.

and if you renovate the property then wrap it you might only owe the bank $210,000 but you sell the house for $250,000 so you are earning $9.75% on the equity you created in the reno.

There are alot of good people out there that can't get finance, such as self employed people. Obviously you just don't offer a wrap to any random person you interveiw them and conduct checks and the like to make sure they are accepable. 

As for Wrap not being worth it, One of my close mates creates wrap deals for a living, he spends probally about 2 hours a month managing his existing deals and probally about the 10hrs a week setting up new ones.

Wrap deals are not for everybody you have to build win-win situations, If you focas on building win-win outcomes wraps can be fantastic opportunities for both the wrappee and the wrapper,


----------



## Tysonboss1 (13 January 2008)

tech/a said:


> I love Jenman he has some good stuff and some god awful stuff.
> 
> Firstly the Wrappor comes to a deal with the Wrappee at time of contract for a predetermined sale price at a date in the future--usually 3 yrs.
> This can be a 2 way street for BOTH parties.
> ...




your describing a rent to buy lease option here more so than a true wrap arrangement.


----------



## tech/a (13 January 2008)

Yes your right.
Wrapping isn't available here in SA that's why the subtle differences were missing.
My understanding of Wraps was/is that of which is legal in my state.

I stand corrected,however the same applies to the comments made re wrapping.

Here is a more complete explanation in which the subtle difference is evident

http://www.propertyinvesting.com/resources/5


----------



## wayneL (13 January 2008)

Tech

If the Wrapper goes BK and assets repossessed, the wrappee loses their home and ALL their equity through no fault of their own. Not an acceptable risk IMO and it is not generally recognized.

Don't tell me it hasn't happened... it has. 

If wrappers could somehow overcome this risk to the buyer, it would be a great product for those who need/want it.

NB Wrap/LO whatever.

***

PS Interesting that some folks attempt to sully NJ for wanting to make a buck from what he does, yet it's quite OK for them to make a buck in any way they think fit... monumental hypocrisy IMO.


----------



## numbercruncher (13 January 2008)

Tysonn,

Have you actually put these strategies into play or is it something you are considering doing?

If youve already done it, did it all go to plan?


Cheers.


----------



## Tysonboss1 (13 January 2008)

wayneL said:


> Tech
> 
> If the Wrapper goes BK and assets repossessed, the wrappee loses their home and ALL their equity through no fault of their own. Not an acceptable risk IMO and it is not generally recognized.
> 
> ...




You can write what actions are to be taken in the event of a default into the wrap contract,.... you can also protect these deals inside investment structures as you would any other investment.

My mate has only ever had one wrappee default on the loan, he re sold the property under a new wrap aggreement within 2 months and paid out the previous wrapper that had defaulted $35,000 because in the 2 years the property had increased.

Neil Jenman will always spread horror stories of "EVIL" property dealers ripping off the little guy,.... but the truth of the matter is wrap deals are a fantastic opportunity for some people to buy there family home and get off the rent treadmill.

Wrap deals is one of the oldest ways to finance property,... most of sydney was sold under wrap contracts in the early days.


----------



## Tysonboss1 (13 January 2008)

numbercruncher said:


> Tysonn,
> 
> Have you actually put these strategies into play or is it something you are considering doing?
> 
> ...




I have only completed one wrap deal,... all is going great though it is a stratergy that I want to use alot more. It's not really a stratergy worth doing if you are only going to do one or two. 

But as I said my mate is an expert in these deals he has completed many of them and only had issues with one debtor but that was sorted out in a win-win situation.


----------



## wayneL (13 January 2008)

Tysonboss1 said:


> You can write what actions are to be taken in the event of a default into the wrap contract,.... you can also protect these deals inside investment structures as you would any other investment.
> 
> My mate has only ever had one wrappee default on the loan, he re sold the property under a new wrap aggreement within 2 months and paid out the previous wrapper that had defaulted $35,000 because in the 2 years the property had increased.
> 
> ...




I'm talking about the *"WRAPPER"* going broke. As the house title is not in the wrappee's name, they lose the house and all equity.


----------



## Tysonboss1 (13 January 2008)

wayneL said:


> I'm talking about the *"WRAPPER"* going broke. As the house title is not in the wrappee's name, they lose the house and all equity.




As I said you can protect the deals inside trust/ company structures to provide atleast some insulation.

But if the wrapper goes broke and the bank sells the house the bank can only take the money owed to them,... any equity left over will be passed onto the wrappee...

But if a person is in the postion where they can offer a wrap deal they are normally in a pretty secure financel position. 

At the end of the day there is a portion of risk in everything,... One of the biggest risks is that if the family doesn't get a wrap deal,.. property will always be just out of their reach,....and they will be renting for ever.


----------



## wayneL (13 January 2008)

Tysonboss1 said:


> As I said you can protect the deals inside trust/ company structures to provide atleast some insulation.
> 
> But if the wrapper goes broke and the bank sells the house the bank can only take the money owed to them,... any equity left over will be passed onto the wrappee...



Can you explain how this works? How does the wrappee end up with equite?


----------



## ithatheekret (14 January 2008)

Hey Wayne , your on the pulse of the UK house market . Are prices rising still ?
I assume this more so in and around London would be the case , given that it is the hub of culture etc. that it is known for . A City , sorry greater city , that has everything , all compacted in a cosmopolitan basket with everything in close vicinity .

Or is there a decline in housing in the outer regions ?


----------



## wayneL (14 January 2008)

ithatheekret said:


> Hey Wayne , your on the pulse of the UK house market . Are prices rising still ?
> I assume this more so in and around London would be the case , given that it is the hub of culture etc. that it is known for . A City , sorry greater city , that has everything , all compacted in a cosmopolitan basket with everything in close vicinity .
> 
> Or is there a decline in housing in the outer regions ?



We are either about to 

a/ do a repeat of 2005

b/ crap out completely

London is a putative special case, but there are still signs of stress and some falls.

Whatever it is, it will take a few months to become clearer.

Check out: http://sigmaoptions.blogspot.com/2008/01/britains-biggest-house-price-falls.html


----------



## Tysonboss1 (14 January 2008)

wayneL said:


> Can you explain how this works? How does the wrappee end up with equite?




If the wrappee owes say $200,000 on the loan and the house gets sold by the bank for $260,000 the bank can only take the $200,000 that is still owed on the property so that $60,000 left over is the wrappee's equity so it is the wrappee who would get the $60,000.

Or the wrappee can try and refinance the deal with another lender before the **** hit the fan, Even though in the beginning the wrappee was unable to secure finance with a traditional lender normally after 3 years the house has increased in value so they have the equity which the bank needs and the have a prooven track record of paying the wrap payments and the banks like that.

But under normal circumstances it is very unliky that a professial wrapper will go bust simply because it is a positive cash flow investment on the wrapper's side of things, It doesn't require the wrapper to be putting in his own money in regularly so the wrapper can lose his job and not affect the deal,

And if the wrapper does have some higher risk investments such as businesses then they should be held in company structures so as to put a fire wall between them and the wrap deals


----------



## wayneL (14 January 2008)

Tysonboss1 said:


> If the wrappee owes say $200,000 on the loan and the house gets sold by the bank for $260,000 the bank can only take the $200,000 that is still owed on the property so that $60,000 left over is the wrappee's equity so it is the wrappee who would get the $60,000.
> 
> Or the wrappee can try and refinance the deal with another lender before the **** hit the fan, Even though in the beginning the wrappee was unable to secure finance with a traditional lender normally after 3 years the house has increased in value so they have the equity which the bank needs and the have a prooven track record of paying the wrap payments and the banks like that.



Excuse me? The title of the property is not in the wrapee's name, it is in the wrappers name. How does the wrappee end up with the equity? How can the wrappee refinance a property whose title is in someone else's name?

Are you sure of your facts here?


----------



## Tysonboss1 (14 January 2008)

wayneL said:


> Excuse me? The title of the property is not in the wrapee's name, it is in the wrappers name. How does the wrappee end up with the equity? How can the wrappee refinance a property whose title is in someone else's name?
> 
> Are you sure of your facts here?




It is wriiten into the wrap contract the the wrappee benefits from any capital appreation should the property be sold,... weather it is the wrappee who decides to sell or the bank. It doesn't matter weather the property is sold for $200,000 or a million dollars the wrapper will only ever get paid the amount still owing on the loan between him and the wrappee.

for example using the numbers I used earlier If a wrap deal began with the wrappee owing $225,000 to the wrapper, and two years later the wrappee only owed $210,000 but the property was worth $260,000 and for some crazy reason the house had to be sold, the wrapper would probally only owe $180,000 to the bank the wrappee would owe $210,000 to the wrapper. So if the property were sold the bank would get the $180,000 and pass the extra $80,000 to the wrapper, the wrapper would deduct the $30,000 still outstanding by the wrappee and pass on the remainig $50,000 equity to the wrappee.

when it comes to refinanceing most wrap deals are refinanced by the wrappee to a traditional lender within 5 years,.... The point of a wrap deal is not that the wrappee keeps the wrap going until he repays the last $ 30years later, It is a stepping stone to help the wrappee build enough equity till they can qualify for a bank loan, at that point they refinance to a cheaper interest rate.


----------



## wayneL (14 January 2008)

Tysonboss1 said:


> It is wriiten into the wrap contract the the wrappee benefits from any capital appreation should the property be sold,... weather it is the wrappee who decides to sell or the bank. It doesn't matter weather the property is sold for $200,000 or a million dollars the wrapper will only ever get paid the amount still owing on the loan between him and the wrappee.
> 
> for example using the numbers I used earlier If a wrap deal began with the wrappee owing $225,000 to the wrapper, and two years later the wrappee only owed $210,000 but the property was worth $260,000 and for some crazy reason the house had to be sold, the wrapper would probally only owe $180,000 to the bank the wrappee would owe $210,000 to the wrapper. So if the property were sold the bank would get the $180,000 and pass the extra $80,000 to the wrapper, the wrapper would deduct the $30,000 still outstanding by the wrappee and pass on the remainig $50,000 equity to the wrappee.
> 
> when it comes to refinanceing most wrap deals are refinanced by the wrappee to a traditional lender within 5 years,.... The point of a wrap deal is not that the wrappee keeps the wrap going until he repays the last $ 30years later, It is a stepping stone to help the wrappee build enough equity till they can qualify for a bank loan, at that point they refinance to a cheaper interest rate.




But the property is not being sold, it is being repossessed. Somehow I doubt the wrappee would count as a secured creditor. There is no hope in hades that the wrappee would realize 100% of their equity... if any.


----------



## Tysonboss1 (14 January 2008)

wayneL said:


> But the property is not being sold, it is being repossessed. Somehow I doubt the wrappee would count as a secured creditor. There is no hope in hades that the wrappee would realize 100% of their equity... if any.




What are you saying,... the house wouldn't be repossessed it would be sold to repay the debt to the bank, the bank isn't in the business of collecting house,... they are going to sell it. When they sell it they are only going to keep enough money to clear the debt that is owed to them any money left over beening the "Equity" will be handed back up the chain.

Any way using this arguement to bag out wrap is just silly, Wraps are a perfectly sound option. You would be surprised by how common wraps actually are.


----------



## wayneL (14 January 2008)

Tysonboss1 said:


> What are you saying,... the house wouldn't be repossessed it would be sold to repay the debt to the bank, the bank isn't in the business of collecting house,... they are going to sell it. When they sell it they are only going to keep enough money to clear the debt that is owed to them any money left over beening the "Equity" will be handed back up the chain.



Which goes to secured creditors first. If the bankruptcy is severe, unsecured creditors may only get a few cents in the dollar. Don't forget a receiver takes over. 



> Any way using this arguement to bag out wrap is just silly, Wraps are a perfectly sound option. You would be surprised by how common wraps actually are.



No it isn't!! It's a real risk and you would be surprised how often this occurs.


----------



## BSD (14 January 2008)

Tysonboss1 said:


> Any way using this arguement to bag out wrap is just silly, Wraps are a perfectly sound option. You would be surprised by how common wraps actually are.




If these deals are so good for all involved why has someone not successfully commercialised such structures? 

These ventures are the realm of rip-off merchants preying on people who don't know better.

Getting off the rent-treadmill by borrowing at exorbinant rates to have watered-down equity is a mug's deal. 

So many people get burnt by such rubbish deals - a public entity would not last a couple of years in the business. 

Wayne - that UK property link was great, thanks.


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## tech/a (15 January 2008)

BSD said:


> If these deals are so good for all involved why has someone not successfully commercialised such structures?
> 
> These ventures are the realm of rip-off merchants preying on people who don't know better.
> 
> ...




Rubbish. To you and I maybe.But if you've been a bankrupt through no fault of your own---example doing a large project and the principal doesn't pay are struggling to get back on your feet but successful--lost the lot but come hell or high water your going to get it back.
Then a wrappor is one valid solution.
As it is for the recently divorced who have been scun.
Those who are earnings rich but asset poor.Many of these people exist but banks wont look at them.What about Low Doc's I here you say.
Err yeh higher interest,blah blah.

I see Waynes point about the wrappor going broke sure it can happen but as rare as a bank going broke in my view.

Steve McKnight.
Still going.Has over 100 wraps going as far as i know. I'm sure there are many more who specialise in wrapping.

I've not seen 1 wrappor "exposed" 
I've not see one story from one Wrappee warning the masses about these deals.
Only Jenman.

I have seen Queensland developers flying in the Property illiterate to purchase over inflated apartment pricing using their own paid off solicitors and valuers.

Mind you that went quiet as well when the boom came,even those clearly ripped off came out kings.


----------



## Tysonboss1 (15 January 2008)

BSD said:


> If these deals are so good for all involved why has someone not successfully commercialised such structures?
> 
> These ventures are the realm of rip-off merchants preying on people who don't know better.
> 
> ...




So your saying I am a rip off merchant, I don't feel that a person paying an extra 1.75% interest for 3-5 years to help them off the rent treadmill for life is a mugs deal.

After all the interest rate I am charging is 9.75% which is actually 1% lower than I am paying on my Business loan and probally not to much higher than alot of margin loans.

I totally disaggree with the comment about peole getting burnt,... there may be a couple of less than honest people that take advantage of this system but I would think it is less than 1%, And there are less than honest people in just about any industry so picking on wraps is just wrong, I mean there are horror stories involving Mortgate brokers, financel advivisors, franchise systems, trademens, car dealers etc.etc these cases often make the headlines but far from the norm.

As I said in my original post it is about building win-win outcomes,... I know that my mate and myself were extremly careful with the way we structre things to make sure the payments are easily affordable and the client will have a good outcome.

Remember one of the biggest risks is that the family will just continue there consuming life style and never save a deposit for a house or build any equty at all in there life,... so 1.75% interest for 3-5years is really nothing compared to the benefits


----------



## wayneL (15 January 2008)

Tysonboss1 said:


> So your saying I am a rip off merchant, I don't feel that a person paying an extra 1.75% interest for 3-5 years to help them off the rent treadmill for life is a mugs deal.
> 
> After all the interest rate I am charging is 9.75% which is actually 1% lower than I am paying on my Business loan and probally not to much higher than alot of margin loans.
> 
> ...



I imagine you yourself act with good intent and good will. But your clients are still exposed to you ever crashing and burning (and I sincerely hope you don't).

However, there are plenty of unscrupulous and/or risk taking operators out there who wouldn't give a toss about their clients. I once went to a seminar where they taught that "you really hope your wrappee defaults; best thing that can happen" (as you can re-wrap at a higher price and they've probably improved the property)  WTF?

Tech,

You never see where you don't look mate. There was a program I saw a couple/three years ago chockers full of sob stories involving wraps/LOs.


----------



## theasxgorilla (15 January 2008)

BSD said:


> *These ventures are the realm of rip-off merchants preying on people who don't know better.*
> 
> Getting off the rent-treadmill by borrowing at exorbinant rates to have watered-down equity is a mug's deal.




I have to admit, I actually agree.  People should be paid for the value in their offering.  I see this as just another debt-creation layer in the capitalist layer cake.  Kiyosaki explained it perfectly in his original RDPD book...he runs the numbers and then pronounces smugly, 'see, money is really just an idea and can be created out of thin air'.  I won't say more as there are people here who have wrapped and clearly feel good about the whole 'win/win' idea.

ASX.G


----------



## wayneL (15 January 2008)

PS If this one issue could be resolved, the likes of Jenman could be tamed on the whole issue I reckon; and it would have a legitimate and ethical place in RE finance (given adequate legislative safegaurds). IMO


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## tech/a (15 January 2008)

No never saw it.
Never seen a write up in any property mags either on the cons of wrapping.

Much much worse out there than wrapping.Legitimate business which as Tyson says is generally designed to create a win win situation,the only way to do business.

Seen plenty of developers taking life savings of retirees on deals that go crap.
So I suppose that buying off plan is also shady business practice?



> These ventures are the realm of rip-off merchants preying on people who don't know better.




Your missing the point.
There are legitimate cases where people are cash rich asset poor who do know what they are doing and come to a win win *business deal with a partner(wrappor)* in purchasing their home.
I have seen wrappors actually buy the home of the Wrappee's choice. Well they worked on option to purchase here in Adelaide.

There are good and bad in EVERY business dealing----you cant tan ALL with the same brush!
Not all are disasters,very few.
Many are winners and very happy clients.


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## wayneL (15 January 2008)

tech/a said:


> Seen plenty of developers taking life savings of retirees on deals that go crap.
> So I suppose that buying off plan is also shady business practice?



Non-Sequitur. There are risks in any deal and clearly some off plan deals stink. But that doesn't mean all off plan deal stink.

Thought along these lines: http://en.wikipedia.org/wiki/Socratic_method often leads to the crux of the matter and should preclude argument such as the above.


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## theasxgorilla (15 January 2008)

I've seen first hand on many occasions the likes of Steve McKnight demonstrate the alchemy of taking a qualified wrap mortgagee, matching them to a house on the market at $60,000k, buying said house for $40,000, then selling it to his customer for $80,000k, with a 2% mark-up on the going variable rate, all for a positive cashflow of $50 a week (minimum) and some astronomical ROI.

Good for him, good for the happy 'winning' mortgage.  Personally, in spite of the money on offer I just couldn't motivate myself to do it.  Felt too much like I was hiding something from people who just didn't know what they didn't know.

ASX.G


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## Tysonboss1 (15 January 2008)

theasxgorilla said:


> Felt too much like I was hiding something from people who just didn't know what they didn't know.
> 
> ASX.G




I never hid anything on my deal,

When I sat down and explained the concept I Had full disclosure of the numbers in the deal,

The young couple that I wrapped to know exactly how much money I am putting into the deal and how much, how and why I am making the margins that I  am.

And wanyeL my wrap deal is particularly safe,... my other business is held in a company structure and my other properties are held in a company/ trust struture , the only assets I own in my own name are 2 houses valued at about $750,000 which I owe about $390,000 on so there is plenty of fat to absorb any crisis. so as far as going broke and risking there wrap deal It is not really a problem.


----------



## wayneL (15 January 2008)

Tysonboss1 said:


> I never hid anything on my deal,
> 
> When I sat down and explained the concept I Had full disclosure of the numbers in the deal,
> 
> ...




That's cool. Clearly most wrappers won't go broke. Some might however (and do). The wrappee is not aware of this and has no capacity to examine the wrappers finances anyway... RISK!

A few wrappees may see that as an acceptable risk, I don't and would never enter a wrap deal even if it was the only finance available to be, no blinkin' way!

But how many are actually aware of it? Pretty close to zero I would say.


----------



## wayneL (16 January 2008)

In The Times http://business.timesonline.co.uk/tol/business/economics/article3193239.ece



> *RICS says that house price falls are worst since slump of early Nineties*
> Gr�inne Gilmore and Gary Duncan
> 
> Falls in house prices across the country may now be at their most severe since the property slump of the early Nineties, according to bleak figures today suggesting that Britain's housing downturn is gathering pace.
> ...


----------



## wayneL (16 January 2008)

...and from "What Rupert Wants You To Know"

http://www.dailymail.co.uk/pages/li...article_id=508501&in_page_id=1770&ito=newsnow


----------



## robots (16 January 2008)

hello,

wow another cracker on the all ords, dow, hang sunk, nikkei today

fantastic stuff, great to see property here in aus still rolling on,

things will work out in the UK

thankyou

robots


----------



## lusk (17 January 2008)

robots said:


> hello,
> 
> wow another cracker on the all ords, dow, hang sunk, nikkei today
> 
> ...




You are assuming that you can't make money when the markets go down, l'll stick with stocks thanks


----------



## numbercruncher (19 January 2008)

robots said:


> hello,
> 
> wow another cracker on the all ords, dow, hang sunk, nikkei today
> 
> ...





Hello,


147bn vaporised on the ASX this year so far.

Pleased to see you think its fantastic, 147b could buy alot of overpriced realestate, guess it wont be now 

Thankyou.


----------



## tech/a (20 January 2008)

Had dinner last night with 4 Real estate agents and 4 developers.Clearance rates are with these 4 averaging 85%.

Average increase in development property from time of doing the numbers to completion 15%.From the 4 at the table.

Much excitement over the new Super laws to allow use of equity for property purchases through SMSF.

It seems obvious to me that those who aren't "In the property market" place negative view on property in this thread and those who do (Except for Wayne) don't.


----------



## numbercruncher (20 January 2008)

Hi Tech,

You havnt been following the thread very well, there are tons of people in this thread who are in the property market and have negative views on its outlook. Just because someone owns a piece of dirt doesnt automatically make them a RE one-eyed permabull.

Have a read through, plenty of examples of RE rising/falling , something for everyone.

Plenty of action in Equity markets, if they deteriorate much further you would have to be naive to think it wont effect RE.

Ominous warnings abound, RE crashing US and Europe , major trouble in Equity markets, Australia most unaffordable RE market in world on income to price basis - But everyone needs somewhere to live obviously.

Im glad to hear you and your RE/DEV buddys are creaming it, they must still have easy access to credit, some organisations are sweating the credit part.

Cheers.


----------



## wayneL (20 January 2008)

From one of the main Sunday Papers here:


----------



## chops_a_must (20 January 2008)

wayneL said:


> From one of the main Sunday Papers here:




What does Johnny Depp have to do with house prices crashing?


----------



## wayneL (20 January 2008)

chops_a_must said:


> What does Johnny Depp have to do with house prices crashing?



Uhhh, nothing, just highlighting the appropriate bit for the thread.

Slovenly highlighting on my part.


----------



## grubadoo (20 January 2008)

chops_a_must said:


> What does Johnny Depp have to do with house prices crashing?




Hilarious, you gave me a good laugh. By the look of the cover it looks like the world is coming to an end. Oh well at least you get a free DVD.


----------



## Tysonboss1 (20 January 2008)

chops_a_must said:


> What does Johnny Depp have to do with house prices crashing?




lol


----------



## Tysonboss1 (20 January 2008)

wayneL said:


> From one of the main Sunday Papers here:




Lucky I am not investing in english property.


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## wayneL (20 January 2008)

Give me time... I'll dream up some BS socionomic link between the two. 

The Depp indicator???


----------



## numbercruncher (20 January 2008)

How about the Deppernator "Hasta la vista Permabulls"


----------



## wayneL (20 January 2008)

Tysonboss1 said:


> Lucky I am not investing in english property.



Nonsense! English property is a wonderful investment........ when bought at value

Prime English property *at value* can be positively geared, something that can rarely be done in Aus unless you go bush.


----------



## tech/a (20 January 2008)

wayneL said:


> Nonsense! English property is a wonderful investment........ when bought at value
> 
> Prime English property *at value* can be positively geared, something that can rarely be done in Aus unless you go bush.




Wayne Wayne.

Its simply a matter of equity in the property you purchase.
Gone are the days (For many years) where positive gearing on 10% is possible,but not positive gearing.


----------



## wayneL (20 January 2008)

tech/a said:


> Wayne Wayne.
> 
> Its simply a matter of equity in the property you purchase.
> Gone are the days (For many years) where positive gearing on 10% is possible,but not positive gearing.



Yes of course, but the standard formula has aways been 10 or 20%. That's what  I'm referring to

But my view is that this is a temporary situation... a view that is shortening in odds rapidly... (here at least)

Cycles


----------



## tech/a (20 January 2008)

Well that's why every time I visit this thread I find myself shaking my head in disbelief.

If anyone is seriously involved in property they will be geared to a degree which will mean that rate rises are taken care of by increases in rental.

They will search out opportunities which will leave them geared to an extent where they wont be under pressure from rate rises OR downturns.

Downturns simply don't fit into my own equation. 
As my equity ratio is low enough to cover land value.

Cover land value and the rest takes care of itself from an Armageddon stand point.
As mentioned people have to have somewhere to live and if you cover costs of holding then what's the problem?

Its pretty simple.

Fantastic if there is a massive drop.
(1) I'll be able to buy more in-line with land value as I'm looking for pushovers anyway,the dwelling is of little consequence.
(2) Builders will be screaming for work,I'll be able to squeeze better pricing.
(3) Renters will abound,they are falling over themselves now---even out bidding rent offers to get a dwelling!
(4) Most developments I do are 70% geared initially with 25 -30% in them. Normally 4 in a duplex.
(5) Sell 2 and gearing comes back to parity with land price.Equity is increased and rents cover rate increases. 3 even better.
(6) In a few years de to rent rises you have a passive income.

Seriously I don't see what all the fuss is about if your seriously involved.
Market conditions are just a part of business---so take care of business.


----------



## numbercruncher (20 January 2008)

tech/a said:


> If anyone is seriously involved in property they will be geared to a degree which will mean that rate rises are taken care of by increases in rental.




So the average House asking price is 400k, it rents for $400 a week , standard mortgage rates are 8.5pc, what level of gearing does your calculator say an Investor entering the market should have ?


----------



## tech/a (20 January 2008)

numbercruncher said:


> So the average House asking price is 400k, it rents for $400 a week , standard mortgage rates are 8.5pc, what level of gearing does your calculator say an Investor entering the market should have ?




Around 45%


----------



## tech/a (21 January 2008)

Hows Mexico Sound?

http://money.cnn.com/2008/01/20/news/international/bc.apfn.la.fin.mexico.housing.ap/index.htm


----------



## Sean K (21 January 2008)

Aparantly houses in Australia are the least affordable in the world. 

Perhaps we need more income and are paying too much tax? 

Meanwhile, infrastructure building boom continues........



> *Building boom nears $50 billion mark*
> 
> THE construction boom is gathering strength, with the value of work on the books doubling since the middle of 2006 to almost $50 billion.



Maybe unrelated to Australian housing prices.......


----------



## wayneL (21 January 2008)

tech/a said:


> Well that's why every time I visit this thread I find myself shaking my head in disbelief.
> 
> If anyone is seriously involved in property they will be geared to a degree which will mean that rate rises are taken care of by increases in rental.
> 
> ...




You can pompously shake your head ad infinitum. As usual your posts are couched in such a way to de-edify all except yourself (as evidenced by your first sentence), ignoring all previous discussion and logic. When people take this attitude of yours to task, you think it "tall poppy" cutting. (You, obviously the only tall poppy )

FFS, developing is different to passively investing. Have we not gone through this 1,000,000 times?

Granted, you are combining the two, but please, don't try to pass off the "business" of developing as "investment". It ain't. You are using the instrinsic profit from the development to make an investment viable. 

Now please, if you want to talk development, fine, you deserve a reward for your effort, but investing is about buying at value. Not all want to be involved in the business of development, including me. $%^& that! I have other priorities.

In my little corner of the PI landscape, this is starting to happen and I am so glad I didn't join the rest of the Johnny cum lately panic buying muppets who are now in serious financial trouble and stand to lose their entire BTL empire.

It's happening... BTL distress sales and repos all over the place here... and so far, it is happening at a faster pace than 1989.

I had a friend back in the eighties who was a developer (screwed my old man in a deal so no longer a friend) who told me 90% of developers go broke... eventually. He even started a public company called Capital City Properties LTD. Guess what? He went broke in the early 90's. Not saying you will go broke, but to point out that there are risks. 

I'll take my risks in something I know a bit more about, thanks.

I wish you good luck, but please treat us with some respect.


----------



## tech/a (21 January 2008)

wayneL said:


> You can pompously shake your head ad infinitum. As usual your posts are couched in such a way to de-edify all except yourself (as evidenced by your first sentence), ignoring all previous discussion and logic. When people take this attitude of yours to task, you think it "tall poppy" cutting. (You, obviously the only tall poppy )




Yes true and I'll add un informed,and un educated in creative property investment.



> FFS, developing is different to passively investing. Have we not gone through this 1,000,000 times?




Yep sure have----my take has been to encourage thinking beyond passive which as has been agreed a million times in the area of Property is less than the ideal method.



> Granted, you are combining the two, but please, don't try to pass off the "business" of developing as "investment". It ain't. You are using the instrinsic profit from the development to make an investment viable.




Well it should be.I am un aware of a "Development followed by passive investment"---not fair investment practices law?



> Now please, if you want to talk development, fine, you deserve a reward for your effort, but investing is about buying at value. Not all want to be involved in the business of development, including me. $%^& that! I have other priorities.




*If you cant buy/find it then CREATE IT---value.*
Wayne I'm not stopping you from your other priorities,I've posted the above up for those (And there may not be any) who may not have even thought of the above.



> In my little corner of the PI landscape, this is starting to happen and I am so glad I didn't join the rest of the Johnny cum lately panic buying muppets who are now in serious financial trouble and stand to lose their entire BTL empire.




An individual thing,no doubt some have made poor timing decisions and Leverage.
Many have done the exact opposite as well over the years.



> It's happening... BTL distress sales and repos all over the place here... and so far, it is happening at a faster pace than 1989.
> 
> I had a friend back in the eighties who was a developer (screwed my old man in a deal so no longer a friend) who told me 90% of developers go broke... eventually. He even started a public company called Capital City Properties LTD. Guess what? He went broke in the early 90's. Not saying you will go broke, but to point out that there are risks.




Of course there are.
That 90% figure seems to be standard for Property/Trading/and Business. guess I have 3 times as much chance of going broke as Joe average.



> I'll take my risks in something I know a bit more about, thanks.
> 
> I wish you good luck, but please treat us with some respect.




Wayne I find this statement confusing.
Throughout this thread I have been lead to believe you have property all over the world,yet you know little about property (and I know/think-you mean development).Id have thought that someone with such investments would be all over all aspects of property.
Strange?


----------



## wayneL (21 January 2008)

Well excuse me while I go get my rattle and ABC blocks.


----------



## wayneL (21 January 2008)

tech/a said:


> Throughout this thread I have been lead to believe you have property all over the world,yet you know little about property (and I know/think-you mean development).Id have thought that someone with such investments would be all over all aspects of property.
> Strange?




eg This statement. Where have I ever stated this "all over the world" nonsense. Childish.


----------



## E11R (21 January 2008)

Interesting to read the first post from September 2005.....As the share market falls house prices will continue to rise...




krisbarry said:


> So why bother buying into a flat housing market?
> 
> The boom is over!
> 
> ...


----------



## tech/a (21 January 2008)

wayneL said:


> eg This statement. Where have I ever stated this "all over the world" nonsense. Childish.




My apologies.
Perhaps "An International property portfolio" would have been a more appropriate description.


----------



## wayneL (21 January 2008)

tech/a said:


> My apologies.
> Perhaps "An International property portfolio" would have been a more appropriate description.



I invested in UK instead of oz

a/ because yield was better
b/ have some good contacts here
c/ always was going to eventually move here

So it is no longer international... they're just down the road.


----------



## numbercruncher (21 January 2008)

Same study I linked a while ago, now Oz media picking up on it ...




> Australian and New Zealand homes are the least affordable in the world, according to a US-based survey of 227 cities.
> 
> The 2008 Demographia study of international housing affordability listed 18 Australian cities in its top 50 of severely unaffordable markets.
> 
> ...




http://au.news.yahoo.com/080120/2/15kx1.html

Chances are market forces will remedy the situation, if not Labor seems committed to do so


----------



## robots (21 January 2008)

hello,

yeah great stuff lets make us like the US, everybody pop caps into each other

you want the best biro you pay for it, best car you pay for it, nothing different with the housing market in the best country in the world,

FFS, all the handout crew want something for nothing, FFS, is the socialist forum, people are happy making money on the side trades,

get over it, you been going on for over two years, whoopy-do the BTL's in UK have hit the wall, wow, 

thankyou

robots


----------



## numbercruncher (21 January 2008)

Hello Robots

You sound grumpy today.

Im thinking maybe the property crash has started for you too eh?

Thankyou.


----------



## Freeballinginawetsuit (21 January 2008)

robots said:


> hello,
> 
> 
> you want the best biro you pay for it, best car you pay for it, nothing different with the housing market in the best country in the world,
> ...





Yep thats not the way it is and whilst hard assets/derivitives are continually offshore accumalated, a lot of mugs will be left owning useless trinkets, swapped for there real assets. The US is gone IMO, riddled with debt, offshore investment swamped and will be sucked of its knowledge base in due course.

IMO returns/squeezing the average plebs of there mortgages is a while off yet and those holding mortgage bonds..... will be quite happy to let the Fed do the reverse of there investment interests........for the time being!


----------



## wayneL (21 January 2008)

numbercruncher said:


> Hello Robots
> 
> You sound grumpy today.
> 
> ...




How does it go? 

Denial ==> Anger ==> Grief ==> Acceptance.... or something like that?


----------



## chops_a_must (21 January 2008)

wayneL said:


> How does it go?
> 
> Denial ==> Anger ==> Grief ==> Acceptance.... or something like that?




Yeah, just face it Robots, your favourite holiday spot is vegemite valley.

Thankyou.


----------



## robots (21 January 2008)

hello,

so who has bought? NO-ONE

if everything is so stuffed like the All Ords, this must be like utopia at the moment,  

thankyou

robots


----------



## wayneL (21 January 2008)

robots said:


> hello,
> 
> so who has bought? NO-ONE
> 
> ...



Your continued direct comparison between RE & SM says something about your level of knowledge.


----------



## Judd (21 January 2008)

robots said:


> hello,
> 
> so who has bought? NO-ONE
> 
> ...




You're not making any sense.  At least, not to me you aren't.  Speak - or rather type - in the English language to clarify what you are attempting to say so that I may understand it.

All Ords is not stuffed.  It is simply made up of a number of individual companies a majority of which are making, and which will still make, a profit on their operations.  To use it as a benchmark for every company is a rather silly concept.  Almost akin to saying the All Property Index of Australia (should there be one) is representative of individual property prices in Rose Bay or Mount Druit.


----------



## tech/a (21 January 2008)

wayneL said:


> I invested in UK instead of oz
> 
> a/ because yield was better
> b/ have some good contacts here
> ...




Serious question.

How has the exchange rate effected you in the recent move?


----------



## wayneL (21 January 2008)

tech/a said:


> Serious question.
> 
> How has the exchange rate effected you in the recent move?



I suspected that GBP would fall against the AUD so have kept our cash in $oz. I might change some here at ~45p, but I think the trend will continue.

So far guessed right.

As far as local expenses, most things are a bit cheaper here, some things (petrol for eg) are more. Not much difference overall.

(NB - We are outside of London. London is an entirely different story)


----------



## IFocus (21 January 2008)

numbercruncher said:


> Same study I linked a while ago, now Oz media picking up on it ...
> 
> http://au.news.yahoo.com/080120/2/15kx1.html
> 
> ...





Watched this on the news tonight I think the numbers maybe a little deceiving for Mandurah as there is a large population of low income retirees and a lot of weekender canal homes that are owned by Perth zillionaires having said that its not cheap either.  



> *The least affordable city in Australia is Mandurah (sixth-least affordable overall)*, south of Perth, where houses cost 9.5 times a household's average annual income, with Sydney (8.6), Perth (7.6) and Melbourne (7.3) in 11th, 19th and 22nd place overall.
> 
> Demographia rates a city's housing market "affordable" when the cost of an average home is three (or less) times average household income, "seriously unaffordable" for four times the average and "seriously unaffordable" for five times.
> 
> ...


----------



## robots (22 January 2008)

hello,

the mantra all thru this thread is that "i will buy/invest when RE crashes" so who is buying or looking at buying?

"I buy on the dips" 

hasnt it crashed the re market, still waiting

I see is plenty of people turning up and bidding at auctions and properties being sold for record prices

I think Tech sums it up, many will do nothing

thankyou

robots


----------



## wayneL (22 January 2008)

robots said:


> hello,
> 
> the mantra all thru this thread is that "i will buy/invest when RE crashes" so who is buying or looking at buying?
> 
> ...



Same ol' same ol'.

A complete lack of understanding, combined with schoolboy logic.


----------



## tech/a (22 January 2008)

> I think Tech sums it up, many will do nothing




And have done nothing.

Its human nature to be hesitant when out of our comfort zone.
It can and does paralyse the larger majority of the population.

Its hard enough to save up $20-$50K let alone place it in a position of perceived RISK. 
If your earning $20/ hr and lose $1000 in the market that's 2weeks work! and baked beans.

I really do understand I hate baked beans!!

How do you get out of this cycle of fear.

*LEARN HOW TO QUANTIFY RISK*

then

*LEARN HOW TO MITIGATE RISK.*

Don't let fear hold you back.
One good decision can change your life and that of all those around you.

Its NOT the little things that count.
Its the BIG things.


----------



## wayneL (22 January 2008)

tech/a said:


> And have done nothing.
> 
> Its human nature to be hesitant when out of our comfort zone.
> It can and does paralyse the larger majority of the population.
> ...



What to you suggest someone on $20 per hour do at this point in time then?


----------



## professor_frink (22 January 2008)

tech/a said:


> I really do understand I hate baked beans!!




I don't mind baked beans

Though they may taste a little different if I had to eat them out of necessity!


----------



## tech/a (22 January 2008)

wayneL said:


> What to you suggest someone on $20 per hour do at this point in time then?




I'll presume you mean someone on $20/hr with no tangible assets.

*(1)* Analyse how you can become more valuable to your employer,or a prospective new employer.Place yourself in a position of maximum earning capacity in what you do. If necessary change jobs.

*(2)* Maximise your disposable income.
decrease all bad debt,Credit cards,Myer cards,etc if your bad at managing your hard earned seek out a good company who can help you budget.

*(3)* Look at ways of increasing income,this will vary dependant on your skills and personality.

*(4)* Join forces with your Wife or parents or both who maybe able to help with Equity.I initially joined with my best mate,and 24 yrs ago had a business partner.

*(5) *Invest in appreciating assets--not cars--sure have a car but you don't need a Beemer now.

*(6)* Learn all you can about RISK.

*(7)* Search out mentors who are where you want to be.Find out their story. Bruce McDonald was one of mine you'd possibly know him from the Jet Truck "Matilda" years ago.
Yeh I'm that old!

*(8)* Remember.
Anyone can be average,its easy to be average,everyone can achieve average. You have one shot at this life make it your best.Don't find yourself in the position of wondering what if? NOW is the time to start.Make your mark,be proud of your achievements.Become an inspiration.

Now with tangible assets------ Go to *(1)*


----------



## Flying Fish (22 January 2008)

tech/a said:


> I'll presume you mean someone on $20/hr with no tangible assets.
> 
> *(1)* Analyse how you can become more valuable to your employer,or a prospective new employer.Place yourself in a position of maximum earning capacity in what you do. If necessary change jobs.
> 
> ...




No offense mate but you sound like one of those jokers at the cetrelink recruitment centre


----------



## tech/a (22 January 2008)

No offence F/F you sound like one of those guys who hang out at Centerlink.


----------



## Flying Fish (22 January 2008)

tech/a said:


> No offence F/F you sound like one of those guys who hang out at Centerlink.




lol
We'll see how you go with your property crash and swan as treasurer


----------



## Flying Fish (22 January 2008)

4) Join forces with your Wife or parents or both who maybe able to help with Equity.I initially joined with my best mate,and 24 yrs ago had a business partner.

I like that one, pity if you are single hey.....


----------



## Tysonboss1 (22 January 2008)

tech/a said:


> And have done nothing.
> 
> If your earning $20/ hr and lose $1000 in the market that's 2weeks work! and baked beans.
> 
> ...




Hey,

eating Baked beans and 2min noodles in the early years helped me get where I am today.


----------



## Tysonboss1 (22 January 2008)

wayneL said:


> What to you suggest someone on $20 per hour do at this point in time then?




spend less than they earn and invest the differance in income producing and growth assets.


----------



## wayneL (22 January 2008)

Tysonboss1 said:


> spend less than they earn and invest the differance in income producing and growth assets.



Which ones, pray?


----------



## numbercruncher (22 January 2008)

Quote from a fellow forum user .....



> I am going to have to sell a property to cover todays losses..




Multiplied by 1000s of others in similar situation = *?*


----------



## Flying Fish (22 January 2008)

A wealthy firend just sold their property in Albert Park about two weeks ago, word is property sucks, good luck to all you wantabe tycoons hahahahah


----------



## Dukey (22 January 2008)

numbercruncher said:


> Quote from a fellow forum user .....
> 
> Multiplied by 1000s of others in similar situation = *?*




mmm - will be very interesting to see how many "fire sales" come onto the RE market in the next few weeks... and what  effect they have on RE prices.... especially since some folks who have been waiting on the sidelines - with their future home deposit invested in the share market will have seen that deposit diminishing in the last few weeks.

???  any comments??

thankyou

dukey-bots


----------



## Flying Fish (22 January 2008)

Dukey said:


> mmm - will be very interesting to see how many "fire sales" come onto the RE market in the next few weeks... and what  effect they have on RE prices.... especially since some folks who have been waiting on the sidelines - with their future home deposit invested in the share market will have seen that deposit diminishing in the last few weeks.
> 
> ???  any comments??
> 
> ...



smart ones have their money in the bank


----------



## Dukey (22 January 2008)

Flying Fish said:


> smart ones have their money in the bank




agreed - but many will have been sucked into the market at the wrong time....   many folks are not $$$ savvy.


----------



## KIWIKARLOS (22 January 2008)

hahahaha smart money in a bank 

So what happens when this bank which actually only holds less than 8% of the total capital in cash has 10000 of you with "safe" money lining up at its doors to essentially bankrupt it. No one is impervious in a crash or depression, the only difference is how much you loose compared to the next bloke.

Nothing is "safe" in the current environment i dont think the banks themselves even know their exposure to risk let alone you and I


----------



## Flying Fish (22 January 2008)

KIWIKARLOS said:


> hahahaha smart money in a bank
> 
> So what happens when this bank which actually only holds less than 8% of the total capital in cash has 10000 of you with "safe" money lining up at its doors to essentially bankrupt it. No one is impervious in a crash or depression, the only difference is how much you loose compared to the next bloke.
> 
> Nothing is "safe" in the current environment i dont think the banks themselves even know their exposure to risk let alone you and I




So kwiki, where is your money stuck? In depreciating houses ROFLMAO Good luck sucker.


----------



## Dukey (22 January 2008)

Flying Fish said:


> So kwiki, where is your money stuck? In depreciating houses ROFLMAO Good luck sucker.




whats the point of this kind of comment FF??

and Who the hell are you anyway????

if you can't show respect to fellow ASFers I suggest you go post on HC.


----------



## Flying Fish (22 January 2008)

Dukey said:


> whats the point of this kind of comment FF??
> 
> and Who the hell are you anyway????
> 
> if you can't show respect to fellow ASFers I suggest you go post on HC.




hey he was slanging people who have saved there money


----------



## Tysonboss1 (22 January 2008)

wayneL said:


> Which ones, pray?




Which ever assets their own research and opinions tell them will perform the best.

I think that 'Spending less than you earn" and 'Investing the difference" is more important than trying to time and second guess the market.

For instance if you bought toll shares 10 years and about 3 stock spilts ago it doesn't really matter if you timed the market and bought at $1.90 or you over paid and bought in at $2.90 a share you would be sitting pretty right now,... even though there has been some ups and downs you still would be worth over $40 per share by now.

If your saving $100 a week every week and investing it throughout gloom and boom in a range of asset classes I don't think you can go wrong. I don't really believe in trying to time markets I don't trade the bulk of my portfolio.

I probably only trade less than 10% of my holdings, the rest are buy and hold.

If my stocks go down in this slump It doesn't really phase me I am purchasing about $1000 a month every month, so I will pick the stock out of my portfolio that is the best value and increase my holdings,


----------



## numbercruncher (22 January 2008)

Im continually amazed at the amount of people who give no credit to timing.

To me timing is 100pc of everything and is responsible for 80pc of my net worth.

Each to their own strategys though, be a boring world if we all thought the same


----------



## KIWIKARLOS (22 January 2008)

hey FF you goose your money also depreciates year on year its called inflation champ  at least house prices generally go up over time By the time you stick your 50 dollar life saving into a bank decrease its value from inflation, payed tax on the meger profit you get from interest and pay bank fees you will undoubtedly be the same if not worse off than investing in real estate.


----------



## Tysonboss1 (22 January 2008)

numbercruncher said:


> Im continually amazed at the amount of people who give no credit to timing.
> 
> To me timing is 100pc of everything and is responsible for 80pc of my net worth.
> 
> Each to their own strategys though, be a boring world if we all thought the same




Of course there is massive gains to be made if you always timed everything perfectly.

The main point I was trying to get across is that I feel that it is the mindset of spending less than you earn that is the main wealth creator.


----------



## Flying Fish (22 January 2008)

KIWIKARLOS said:


> hey FF you goose your money also depreciates year on year its called inflation champ  at least house prices generally go up over time By the time you stick your 50 dollar life saving into a bank decrease its value from inflation, payed tax on the meger profit you get from interest and pay bank fees you will undoubtedly be the same if not worse off than investing in real estate.




Goose? hey I would rrather have money in the bank short term than in realestate that is depreciating. Then buy when it is low. Who would be the goose then lol


----------



## Tysonboss1 (22 January 2008)

Flying Fish said:


> Goose? hey I would rrather have money in the bank short term than in realestate that is depreciating. Then buy when it is low. Who would be the goose then lol




Brisbanes Booming,.... you'd be fool to have cash at bank.


----------



## numbercruncher (22 January 2008)

Tysonboss1 said:


> Brisbanes Booming,.... you'd be fool to have cash at bank.





Thats the most hailarious thing I have read all year


----------



## Tysonboss1 (22 January 2008)

numbercruncher said:


> Thats the most hailarious thing I have read all year




why


----------



## numbercruncher (22 January 2008)

Tysonboss1 said:


> why





Belittling people who choose to be in cash during a stock market crash.

Im not sitting here calling you a fool for being fully invested in an over priced RE market, even if I am thinking it.

Good luck with your Investing !


----------



## Tysonboss1 (22 January 2008)

numbercruncher said:


> Belittling people who choose to be in cash during a stock market crash.
> 
> Im not sitting here calling you a fool for being fully invested in an over priced RE market, even if I am thinking it.
> 
> Good luck with your Investing !




I was reponding to the following comment by FF

_Goose? hey I would rrather have money in the bank short term than in realestate that is depreciating. Then buy when it is low. Who would be the goose then lol_

The brisbane property market is the second cheapest capital city property market in Australia, so I don't believe it is over priced, and the fact that there is so much activity and it's performing so strongly, I don't think that you have to be a "goose" to invest there

I wasn't belittleing people for holding cash rather than investing in the stockmarket, I was just trying to piont out that realestate in brisbane is not dropping, so if you were holding cash waiting for brisbane to drop I would call you a fool at the moment.


----------



## numbercruncher (22 January 2008)

Realestate hasnt had a chance to drop yet, its not instant like the market ....


Got any price data or clearance rates for this year so far ? come to think about it havnt heard a word from the Australian realestate crowds this year, maybe they are thinking if they stay quiet nooone will notice them ?

Realestate growth is no longer safe, look at the markets, ask yourself where has the money come from to facilitate booming property the last few years.


----------



## Tysonboss1 (22 January 2008)

numbercruncher said:


> Realestate hasnt had a chance to drop yet, its not instant like the market ....
> 
> 
> Got any price data or clearance rates for this year so far ? come to think about it havnt heard a word from the Australian realestate crowds this year, maybe they are thinking if they stay quiet nooone will notice them ?
> ...




I just came back fom spending 2 weeks in brisbane, and i am very pleased with what I am seeing in the area i invest in there, it is performing very strongly.

however like any asset class there is always some sectors out performing others,.... do I realy care if sydney property drops, offcoarse not, I am only focused on the market I invest in.

And yes I am very confident that my areas of brisbane will continue to perform well this year.

My brother in law is a real estate agent in the market I invest in and his biggest problem at the moment is finding enough properties to sell, he simply can't list them as fast as they are selling.


----------



## robots (22 January 2008)

hello,

start getting those chess certificates out, might be able to build yourself a DOG kennel,

gee so hurtful wayne,

people's jocks must be getting soiled pretty quickly these days

thankyou

robots


----------



## tech/a (22 January 2008)

Tyson's on the money in my view.

Most of the money if not all of it came from increased equity in peoples homes followed by bank loans.

Its crazy to lump every Property investor as overweighted and under capitalised.

There are good and bad property investors just as there are Traders/investors.

The arguments presented here are pointless,how people .are geared and how they invest in property isn't for public scrutiny.Forming an opinion based on in sufficient data is not possible.

We all live by our convictions and only we as individuals know if our plans and strategies are successful for us.

There are positive strategies in all investments,regardless of market conditions,perceived or factual.


----------



## numbercruncher (22 January 2008)

Hello Robots 


Still not past the anger phase ?

I think acceptance comes next ....


Thankyou.


----------



## robots (22 January 2008)

hello,

which part of australia has crashed NC?

thankyou

robots


----------



## moXJO (22 January 2008)

robots said:


> hello,
> 
> which part of australia has crashed NC?
> 
> ...




overstretched mortgages?


----------



## Judd (22 January 2008)

robots said:


> hello,
> 
> which part of australia has crashed NC?
> 
> ...




Um none actually.

By the bye which part of the property market in Australia has crashed?  Western suburbs of Sydney maybe?  Possibly Melton in Victoria?  Gungarlin in the ACT could be a goer.  You know, the places where the people are hanging on to their residences by their fingernails hoping and praying like Hell that the RBA/Banks/Mortgage lenders wont smash them with rising interest rates on their credit cards, mortgages or personal loans before they are required pay the increased taxes (water/general rates) to their respective local government irrespective of how much food or petrol prices increase.

Those who can afford Toorak, Northern Shores or, heaven forbid, Yarralumla,  and pay (generally in cash) $$M for the property could not give a toss and are not affected.


----------



## wayneL (22 January 2008)

Tysonboss1 said:


> Which ever assets their own research and opinions tell them will perform the best.
> 
> I think that 'Spending less than you earn" and 'Investing the difference" is more important than trying to time and second guess the market.
> 
> ...




OK I'm confused now. Tech and yourself are advocating property and creating opportunities in it, and when questioned about the $20 per hour guy suggest the stockmarket... something I would suggest. Huh?

What do you property guys suggest a $20 an hour guy do, in "creating value" as tech put it, in the property market?


----------



## robots (22 January 2008)

hello,

i love shares too!

buy a house in an area they can afford, average house in best street/area of suburb principle

this could also be a unit

I would look for house where add-ons can be done, ie landscaping (soft), painting, floorboards, going a step further a front fence, grand entrance

places get tired, renters trash, some owners dont give a rats

take you're time and enjoy living in the place, save money and reduce the mortgage

thankyou 

robots


----------



## wayneL (22 January 2008)

robots said:


> hello,
> 
> i love shares too!
> 
> ...



That's good advice (but I'd caution about value as per my consistent argument), but what about for investing? Even that sort of property would have to be subsidized from wages... at the moment, YUK!


----------



## tech/a (22 January 2008)

wayneL said:


> OK I'm confused now. Tech and yourself are advocating property and creating opportunities in it, and when questioned about the $20 per hour guy suggest the stockmarket... something I would suggest. Huh?
> 
> What do you property guys suggest a $20 an hour guy do, in "creating value" as tech put it, in the property market?





*Wayne*.
My suggestions still stand.
The $20/hr guy with no collateral wont be able to get in the market now or 8 yrs ago or if the property market comes off 40%.

If he's a smart $20/hr guy he wont stay on $20/hr long and will be in a position to become involved as he ticks the boxes so to speak.

I wouldn't be recommending getting into the market either without ticking most of the boxes and learning "The Trade".

No doubt its tough we have all been the $20/hr guy except some of us were the $20 a week guy! But we found a way.
Well some of us did.


----------



## wayneL (22 January 2008)

tech/a said:


> *Wayne*.
> My suggestions still stand.
> The $20/hr guy with no collateral wont be able to get in the market now or 8 yrs ago or if the property market comes off 40%.



That is clearly incorrect. There are thousands of examples of 20/hr guys who became property investors in more rational times; dozens whom I know personally.



tech/a said:


> If he's a smart $20/hr guy he wont stay on $20/hr long and will be in a position to become involved as he ticks the boxes so to speak.
> 
> I wouldn't be recommending getting into the market either without ticking most of the boxes and learning "The Trade".
> 
> ...




So you're saying that to become a property investor, one must first become somewhat of an entrepreneur in their chosen profession, in order to subsidize either a/ a property investment, sucking cashflow each week or b/ to diversify entrepreneurship into development?

This really highlights how imbalanced things have become as there are so many examples of property magnates who have done nothing more than buy properties at value, maybe the odd reno. The ones (here in the UK at least) who stopped buying when the numbers didn't stack up anymore are rolling in cashflow and living the dream. The ones that kept buying speculatively are having problems with many going under already.

I am uniquely placed here to see that first hand and that is what I'm seeing, and it's consistent with my long term views.

The $20/hr guy's time will come again (if of course, he wants it)


----------



## robots (22 January 2008)

hello,

for some just owning the home is a form of property investing, 

now ignoring why, how, cant sustain that etc, people are sitting on healthy returns/money just my doing the above 

that may be all the $20/hr guy can do,

but what is property investing, buying a house to live in, buying a rental property and sitting on it, developing a block into duplexes, developing a block into a 20 level tower

thankyou

robots


----------



## wayneL (22 January 2008)

robots said:


> hello,
> 
> for some just owning the home is a form of property investing,
> 
> ...



Bot,

Some correct punctuation and grammar would help us understand WTF you're on about.

But I suspect from what I have deciphered from the above that you haven't been listening, re investment vs business.


----------



## robots (22 January 2008)

hello,

could someone please explain to me what property investing is?


thankyou

robots


----------



## wayneL (22 January 2008)

robots said:


> hello,
> 
> could someone please explain to me what property investing is?
> 
> ...



Read the thread.

It's not too far above.


----------



## numbercruncher (22 January 2008)

tech/a said:


> *Wayne*.
> My suggestions still stand.
> The $20/hr guy with no collateral wont be able to get in the market now or 8 yrs ago or if the property market comes off 40%.




I swear to god you guys just make it up as you go along ....


8 years ago I earnt $20 an hour and bought the nicest house in the street and borrowed virtually all the money, Governments FH grant gave 4pc of the price.

The figures now clearly show that the average wage cant buy an average property, all high property prices do is screw over the younger generation, property in Australia is in a unsustainable bubble. My punt is this stock crash and rising interest rates is the trigger to bring it back to reality.

And from an investing standpoint , how on earth can you justify 8.5pc interest rates vrs 3.5pc rental returns, placing ALL your faith in capital appreciation ?


----------



## robots (22 January 2008)

hello,

thanks sir

robots


----------



## explod (22 January 2008)

numbercruncher said:


> I swear to god you guys just make it up as you go along ....
> 
> 
> 8 years ago I earnt $20 an hour and bought the nicest house in the street and borrowed virtually all the money, Governments FH grant gave 4pc of the price.
> ...




Good post Numbercruncher and keep looking at things as they are.

Property has been a good investment since I brought my first home in 1976.  From my experience it has at best gone flat now and a poor one at the moment.  If you have for example $200,000 to buy a home you can generate more (by the divvy alone) than it costs to rent by just putting it into Woolworths shares.  And with the hard times on us they will also offer some equity growth on top of that dividend as well.  ( people have to eat food)

Do the sums out there and admit the good property days are gone for awhile.  No big deal, just part of the normal financial cycle.


----------



## robots (22 January 2008)

explod said:


> Good post Numbercruncher and keep looking at things as they are.
> 
> *Property has been a good investment since I brought my first home in 1976*.  From my experience it has at best gone flat now and a poor one at the moment.  If you have for example $200,000 to buy a home you can generate more (by the divvy alone) than it costs to rent by just putting it into Woolworths shares.  And with the hard times on us they will also offer some equity growth on top of that dividend as well.  ( people have to eat food)
> 
> Do the sums out there and admit the good property days are gone for awhile.  No big deal, just part of the normal financial cycle.




hello,

another example of property investing sir,

people have to live somewhere, data coming out will indicate that aus property has plenty more left, bleeding hearts who cant afford it

thankyou

robots


----------



## Tysonboss1 (22 January 2008)

wayneL said:


> OK I'm confused now. Tech and yourself are advocating property and creating opportunities in it, and when questioned about the $20 per hour guy suggest the stockmarket... something I would suggest. Huh?
> 
> What do you property guys suggest a $20 an hour guy do, in "creating value" as tech put it, in the property market?




As I said in lots of my posts I invest in both shares and property,

If someone is just starting I would recomend the stockmarket till they have enough equity to go for the property market,.... the last thing I would want is for them to over extend they selves on a 100% loan.


----------



## wayneL (22 January 2008)

robots said:


> hello,
> 
> another example of property investing sir,
> 
> ...



Another example of appalling punctuation and grammar. What exactly are you saying here? I'm serious, what is your message? It sounds very nasty and mean spirited if I have interpreted correctly.


----------



## Flying Fish (22 January 2008)

heys robots i think you're a screw too loose, or maybe just a stubbie short of a six pack lol


----------



## explod (22 January 2008)

robots said:


> hello,
> 
> another example of property investing sir,
> 
> ...




Of course.  But remember Australia and the US are the highest pro rata property owners in the world (or should we say debt holders he he, except it aint no laughing matter).  In many countries it is the norm to live in rented accomodation.  Not knocking what you advacate, just saying there may be better places to put your money at the moment if you want it to grow.   That is what this forum is all about, the best stratiegic angles and experiences on growing your hard earned.


----------



## Broadside (22 January 2008)

hello

property is different from every other asset class

it is never overvalued and never falls

thank you


----------



## robots (22 January 2008)

hello,

explod, suburbs around melb have had great increases over the past 12 mths, I have been sharing my experiences in relation to this, i apologise

things are going to roll on unless something changes in the labor & materials involved in building

yeah too right I am nasty when it comes to people with their hand out and then getting on forums and newspaper forums canning property because they can't live in a capital city penthouse

feed up with it, down the street corner wanting a dollar of my hard earned, like its someone's right to get a free dollar and get put up at the Windsor 

kids with 5k tattoo's on legs and arms, 20 pairs of trainers, going to every dance party known to mankind and flipping 20 pills

thankyou

robots


----------



## numbercruncher (22 January 2008)

robots said:


> things are going to roll on unless something changes in the labor & materials involved in building




What needs to change with these two Ingredients in your little equation?


----------



## robots (22 January 2008)

hello,

i am not telling you

thankyou

robots


----------



## wayneL (22 January 2008)

robots said:


> hello,
> 
> explod, suburbs around melb have had great increases over the past 12 mths, I have been sharing my experiences in relation to this, i apologise
> 
> ...



ROTFL. I think you have a severe case of cognitive bias. I doubt any of us here fit your description.


----------



## robots (22 January 2008)

hello,

you should check the drug taking thread, even one guy has amphetamine in his nick, lets run a topic on tattoos

thankyou

robots


----------



## chops_a_must (22 January 2008)

robots]things are going to roll on unless something changes in the labor & materials involved in building[/QUOTE]

[QUOTE=numbercruncher said:


> What needs to change with these two Ingredients in your little equation?




People will begin to insulate their houses with paper money. Dats wat hez talking bout!


----------



## wayneL (22 January 2008)

robots said:


> hello,
> 
> you should check the drug taking thread, even one guy has amphetamine in his nick, lets run a topic on tattoos
> 
> ...



Are these people involved in discussion on property?

Nope.

BTW, you might be surprised how many property owners have tattoos and take drugs. Some might even have 20 pairs of trainers.


----------



## robots (22 January 2008)

wayneL said:


> ROTFL. I think you have a severe case of cognitive bias. *I doubt any of us here fit your description*.




hello,

good one, the property owners arent going on about unaffordable prices

thankyou

robots


----------



## wayneL (22 January 2008)

robots said:


> hello,
> 
> good one, the property owners arent going on about unaffordable prices
> 
> ...




Nonsense!

I'm a property owner and perhaps the most vocal. Some of the other bears are also owners. You can cancel that little fallacy.


----------



## numbercruncher (22 January 2008)

robots said:


> hello,
> 
> good one, the property owners arent going on about unaffordable prices
> 
> ...





I try to refrain from using personal examples because publicly available information is more than convincing enough,  at the end of the day anyone can makeup anything on a forum.

But .... two of my closest have equity stakes/part ownership of Land developments all over the countryside and even they know its unsustainable, they just dont admit it publicly ! It doesnt take Einstein to work out average house price divided by average income = BUBBLE

Its you realestate sharks/lobbyists combined with freeballing bankers and the media thats made them stinking rich, all they had to do was buy land off farmer Joe, slice n dice , rinse n repeat, money for jam.

Land developers would and always will continue to clean up even at fair value let alone this ridiculous price level that the realestate sharks have pushed it to, like Ive said, Im convinced that if market forces dont fix it, the Labor party will.

Thankyou


----------



## happytrader (23 January 2008)

tech/a said:


> *Wayne*.
> My suggestions still stand.
> The $20/hr guy with no collateral wont be able to get in the market now or 8 yrs ago or if the property market comes off 40%.
> 
> ...




Hi Tech

Your first paragraph is rubbish. From 2001 new graduates in my industry took advantage of the first home buyers grant to buy properties and I can tell you they weren't even on $20 an hour. To top it off most of them were single. 

Cheers
Happytrader


----------



## chops_a_must (23 January 2008)

ROFL.

Increasing rents are a major reason for the CPI increase.

I would indeed laugh if property investors were the cause of their own demise. Poetic justice for screwing over the youth.


----------



## ROE (23 January 2008)

Buying something and hope someone will come and pay a higher price to me is an unsustainable model, doesn't matter what it is be it property or shares.

I have a house and I do feel my house is over value based on average income and rent yield. I do feel for those people trying to get into the market at the current price.

All I can say is have fate in the system and the market, something that is artificially inflated will be corrected at some point in time by the market.

And that time may be soon 

I repeat my uncle Warren teaching. When you cant find something worth wise to buy, keep it in cash
be it property or shares. 

The time will come when that cash is very handy , like this week for me.


----------



## xoa (23 January 2008)

I hope house prices fall. I'll need to buy a home within a few years, and I'm not looking forward to paying 8x my net income. A lengthy American recession should clinch it.

Baby boomers will cry a river, I just hope the government doesn't try to bail them out.


----------



## Broadside (23 January 2008)

Purely from an economic standpoint, it's an appalling misallocation of resources when so much of our pitiful national savings are poured into such an unproductive asset class.

ROE - it may gall recent buyers of property, but a fall in property prices would not really hurt most owner occupiers (not talking about investors here)...if you move house you are buying and selling in the same market.  Those upsizing would be advantaged by price falls and those downsizing, selling out for retirement would be disadvantaged.  Most  - who don't change residence - wouldn't be affected at all, except for their paper wealth.

Investors would scream blue murder but all investment carries risk.


----------



## robots (23 January 2008)

xoa said:


> I hope house prices fall. I'll need to buy a home within a few years, and I'm not looking forward to paying 8x my net income. A lengthy American recession should clinch it.
> 
> Baby boomers will cry a river, I just hope the government doesn't try to bail them out.




hello,

here we go, the violin out again

how about people get a better paying job, oh no, a bit of hard work maybe

if you dont like the prices or cant afford RE then rent instead

plenty here telling its the way to go, 

thankyou

robots


----------



## xoa (23 January 2008)

robots said:


> hello,
> 
> here we go, the violin out again
> 
> ...




A little unrealistic. A typical Sydney resident would need to boost his earnings 250% for median house prices to became affordable. It's more realistic for house prices to take a significant hit, through many years of depreciation. Of course, it's suits established home owners to chide first home seekers to "work harder" - harder than they themselves ever had to work! 

In the unlikely event that the market doesn't correct, I might keep sharing a flat and buy a more reasonably priced home in Canada or the United States instead.


----------



## numbercruncher (23 January 2008)

Hello Robots,

Never got around to it, but for the record, tell us about your realestate portfolio please 

Thankyou


----------



## robots (23 January 2008)

hello,

I have 2 units

i guess you need some more "noise" because the "property is going to crash" line is wearing thin isnt it 

thankyou

robots


----------



## Bill M (23 January 2008)

My opinion is that property will never crash here in Australia. I have bought and sold about 12 properties over my lifespan and I only lost on one. It was a investment unit on the Gold Coast in the early 90's. I bought it as an investment and it never went up. It was 1 block from the beach in Burleigh Heads. I held for 4 years from memory. The only reason I sold was because where I was living in Sydney I could see much bigger potential for a capital gain so I sold Gold Coast to pay for the deposit in Sydney.

Sydney shot up big time, my decision was wise and I was lucky too but most of it was calculated as I knew there was going to be good capital appreciation with the lead up to the Olympics. 

The most important thing to remember as an investor is that property is still the most preferred investment for Australians in general. There is nothing you can say or do to change another persons view on this, I have tried but in the end they do have valid arguments. The most valid argument is, "yeah but you made most of your money in property didn't you"? And of course I did but I am out now and into the sharemarket except for our own principle place or residence.

What I am trying to say is that residential property will never crash in Australia. Too many people love it, prefer it, understand it and view it as low risk. With that sort of a love affair and demand with property you will always do ok as _*long as you buy correctly in the right area at the right price*._ Good luck to you all.


----------



## numbercruncher (23 January 2008)

robots said:


> hello,
> 
> I have 2 units
> 
> ...





Hello


Thats nice, have good tenants ? you should raise their rents, free loading hippys living cheap off your dime 

Erm im not sure ive quite worded as you have, Im saying it will return to its long term mean, ie/ affordable for the average wage as reported by the Bureau of stats.


----------



## robots (23 January 2008)

hello,

just helping people out NC, like all good members of the community do,

cant cope with those who want it all on a plate as mentioned yesterday

thankyou

robots


----------



## Tysonboss1 (24 January 2008)

Broadside said:


> Those upsizing would be advantaged by price falls and those downsizing, selling out for retirement would be disadvantaged.  Most  - who don't change residence - wouldn't be affected at all, except for their paper wealth.
> 
> .




How so,....

If a person were upsizing how would a drop in the market assist them,... It may lower there buying price,... but there selling price of there current home would be affected.


----------



## robots (24 January 2008)

hello,

http://www.tradingroom.com.au/apps/view_article.ac?articleId=145568

a good way of increasing you're pay, 

get into the building industry, still plenty of opportunities

get away from the desk and you will soon see the "no risk" environment many building workers are in

the amount of money people would be able to "save" is enormous,

this is one reason I got away from the SPI, spread betting, futures trading, etc

a few yoga classes keep the body going strong

thankyou

robots


----------



## Broadside (24 January 2008)

Tysonboss1 said:


> How so,....
> 
> If a person were upsizing how would a drop in the market assist them,... It may lower there buying price,... but there selling price of there current home would be affected.




take it to the extreme so it is more apparent...I want to upsize from a one bedroom studio flat to a 3 bedroom penthouse.  The market was $150k for my studio and $1m for the penthouse.  So I need to pay an extra $850k.

If the market halves (just an extreme example) I only get $75k for my studio but pay $500k for the penthouse, so I only pay an extra $425k....I am much better off upsizing in a lower market.

On the flipside downsizing in a lower market you lose out.


----------



## numbercruncher (24 January 2008)

And save a couple of bob on stamp duty


----------



## numbercruncher (24 January 2008)

This is for those that think RE cant ever go down, yes we know who you are 



> NEW YORK (CNNMoney.com) -- The worst housing financial crisis in decades is only going to get worse, a Merrill Lynch report said Wednesday.
> 
> The investment bank forecasted a 15 percent drop in housing prices in 2008 and a further 10 percent drop in 2009, with even more depreciation likely in 2010.




http://money.cnn.com/2008/01/23/real_estate/merrill_forecast/index.htm?postversion=2008012313

And RE in the US runs at an average of 3x earnings, here over 7 and we have Interest rates double of the US  and Probably another rate rise Feb and considering Inflation is sooo high more will follow surely !


----------



## robots (24 January 2008)

hello,

boring, another FORECAST

you wouldnt find one post where people said never goes down, so wipe that little fallacy 

I just posted a serious piece of advice about increasing your pay easy as, 

infact, if I was out of work I would go and get a job as a labourer with a brickie, spend a year learning how to lay bricks and then presto, 100k wage out there

and that 7x average starts to look pretty ordinary

thankyou

robots


----------



## numbercruncher (24 January 2008)

Hello,

Yes great solution .... Police, Soldiers, Nurses , Teachers , Aged carers , child carers , Retail staff, hospitality workers , etc etc etc , go quit , lay bricks , buy a house , screw the rest of society.


Thankyou.


----------



## robots (24 January 2008)

hello,

maybe also get some tilers, painters, carpenters, plenty to go around, 

it might even bring some pay rises to the people you have listed, 

thankyou

robots


----------



## Flying Fish (24 January 2008)

robots said:


> hello,
> 
> boring, another FORECAST
> 
> ...




where do you become bricky? do you buy a truck, and unload the stuff yourself? tell me about it robo


----------



## lusk (24 January 2008)

robots said:


> hello,
> 
> boring, another FORECAST
> 
> ...




Who cares about the 100K, may as well build your own house why your at it.


----------



## robots (24 January 2008)

hello,

yeah no problem FF, happy to offer my assistance

just reply to an add in the paper for "brickie's labouror", turn up to work at 7am, put in a good days work, 

most labourors (if quality) start to throw in a few bricks on the line and presto you have an awesome skill,

you could also do pre-apprenticeship courses that are around, but if you are smart go for the labouror route,

I am not joking here, the great thing is even as a labourer you can get reasonable wage

any more questions fire away FF, 

thankyou

robots


----------



## numbercruncher (24 January 2008)

robots said:


> hello,
> 
> maybe also get some tilers, painters, carpenters, plenty to go around,
> 
> ...




Yes lets put all the before mentioned occupations on same wages and see how that shows in the Inflation figures, 15pc Interest rates anyone?


----------



## robots (24 January 2008)

hello,

another bonus lusk, 

thankyou

robots


----------



## numbercruncher (24 January 2008)

Flying Fish said:


> where do you become bricky? do you buy a truck, and unload the stuff yourself? tell me about it robo




Dont become a brickie, youll get melanoma, wear out all your cartilage and be forced into retirement at 50, not to mention hanging out with hairy, sweaty, tattooed,  foul mouthed brickies all day isnt much fun, there will soon be an over supply of them anyway, just like an under supply now, theyll over shoot in years to come, and then where will you be? Hairy, tattooed, with a drinking problem and unemployed! and then what good are yah? your Mrs will pack up her stuff and run off with the toy boy next door and your life will be ruined.

Just go do a 20 hour course and become a realestate expert, skim 2.5pc for a few hours of your time


----------



## wayneL (24 January 2008)

http://www.theargus.co.uk/display.v...pounds_to_tumble_from_sussex_house_prices.php


----------



## robots (24 January 2008)

hello,

its like the everlasting gobstopper, the thread and the bull**** just keeps going on and on

take a walk down the street

thankyou

robots


----------



## xoa (24 January 2008)

I want to know where these $100k bricklaying jobs are! Most of the ads I've seen are only offering award wages.


----------



## numbercruncher (24 January 2008)

xoa said:


> I want to know where these $100k bricklaying jobs are! Most of the ads I've seen are only offering award wages.





Hello,


Ask Robots, his 500k p/a labourer mate can probably hook you up 


Thankyou


----------



## wayneL (24 January 2008)

robots said:


> hello,
> 
> its like the everlasting gobstopper, the thread and the bull**** just keeps going on and on
> 
> ...



No bull here bot, just walk down the street. Without the commodity boom, Oz would be in the same boat. Lots of specuvesters here are crashing and burning. 

Fact.

One must ask themselves what will happen if commods top out.


----------



## robots (24 January 2008)

hello,

work for yourself xao, going rate is $1000/1000, actually that is for an okay guy too

care to let us know what award wages xao, eba rates please, even  a wage earner is doing well

all still a bit to hard for the doubters

wayneL that article is the same as all, full of "if's" "could" "maybe" "experts are warning"

thankyou

robots


----------



## wayneL (24 January 2008)

robots said:


> hello,
> 
> work for yourself xao, going rate is $1000/1000, actually that is for an okay guy too
> 
> ...




True, the article looks forward, the same way the bulls predict _x_% rises

But the trend has turned boyo. This guy has momentum on his side. There are real drops that are even recorded in the official stats (which are artificially skewed to the upside). You can find real losses via www.houseprices.co.uk which records the actual paid prices of each individual sale. (And this is free, don't get screwed for this info like in Oz)

If you can be bothered doing the research like some people, it is demonstrable that prices are falling.


----------



## xoa (24 January 2008)

wayneL said:


> No bull here bot, just walk down the street. Without the commodity boom, Oz would be in the same boat. Lots of specuvesters here are crashing and burning.
> 
> Fact.
> 
> One must ask themselves what will happen if commods top out.




They won't listen until they get burned. Some people here in Australia have just convinced themselves that long-term fundamentals have permanently changed, for no apparent reason. Reminds me of the tech boom, when nobody cared about "old" rules like cash flow or profitability.

People are borrowing to buy "investment" properties which yield rents too low to even payback loan interest! Really scary stuff.


----------



## robots (24 January 2008)

hello,

wow look at this one, 

http://www.houseprices.co.uk/e.php?q=RG1+2PU

gone from 153k to 220k in just over 12 mths, 75 big ones

thankyou

robots


----------



## wayneL (24 January 2008)

robots said:


> hello,
> 
> wow look at this one,
> 
> ...



Have a closer look, they're all different properties.


----------



## robots (24 January 2008)

hello,

oh gee really

thankyou

robots


----------



## wayneL (24 January 2008)

Also, the falls have been in the last three months.


----------



## wayneL (24 January 2008)

robots said:


> hello,
> 
> oh gee really
> 
> ...




Doh! You can't compare different proprties without knowing circumstances... condition, intervening renovations, etc.


----------



## wayneL (24 January 2008)

Try this link too. http://www.propertysnake.co.uk/


----------



## wayneL (25 January 2008)

I wonder how much of this sort of thing goes on elsewhere?

http://realtytimes.com/rtpages/20050117_fraud.htm



> *Sickened By Fraud, A Real Estate Appraiser Turns In His Pencil*
> by Blanche Evans
> 
> It may be a sign that the housing party is coming to an end. Rampant fraud has at least one appraiser turning in his pencil, and he's on a rant.
> ...


----------



## Judd (25 January 2008)

wayneL said:


> I wonder how much of this sort of thing goes on elsewhere?
> 
> http://realtytimes.com/rtpages/20050117_fraud.htm




Looks like it.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aKTGgOD1teG4



> Appraiser Exposes Toxic Debt Tie to Inflated Values (Update1)
> 
> Jan. 17 (Bloomberg) -- Home appraiser Julian ``Tony'' Perez conjured $7.5 million out of thin air in the first six months of 2001 by overvaluing 33 condominiums in the Atlanta area.
> 
> ...




But isn't that almost the same as the "independent valuations" associated with Listed Property Trusts.  How the hell would a mug punter such as myself  know it's actually a true independent valuation?


----------



## robots (25 January 2008)

wayneL said:


> Doh! You can't compare different proprties without knowing circumstances... condition, intervening renovations, etc.




hello,

ha ha ha ha ha ha ha ha ha ha ha ha....

thankyou

robots


----------



## robots (25 January 2008)

hello,

http://www.news.com.au/heraldsun/story/0,21985,23104728-661,00.html

great tip there for people in sydney

thankyou

robots


----------



## robots (25 January 2008)

hello,

and again:

http://www.theage.com.au/news/national/melbourne-house-prices-surge-25/2008/01/24/1201157560368.html

pretty easily solved though, just get a higher paying job, 

does that fit in the socialist model?

put up great advice last night, get a wheelbarrow, shovel & trowel from bunnies and of you go

thankyou

robots


----------



## wayneL (25 January 2008)

robots said:


> hello,
> 
> ha ha ha ha ha ha ha ha ha ha ha ha....
> 
> ...




You laugh at your own ineptitude? Admirable. I'd be embarrassed,


----------



## explod (25 January 2008)

robots said:


> hello,
> 
> http://www.news.com.au/heraldsun/story/0,21985,23104728-661,00.html
> 
> ...




Yep Herald Sun is a big fan of the Property Industry and put in ramping articles at every opportunity.   Interesting that in the same issue of the paper this morning "Fully Frank" by John Beverage states in an article headed "Prices may have hit ceailing" that property now appears on the decline.


My other take on this thread is that the moderator ought to be deleting your posts that lack substance or value to the subject.   Not including the one under discussion there seems to be some above.


----------



## Tysonboss1 (25 January 2008)

Broadside said:


> take it to the extreme so it is more apparent...I want to upsize from a one bedroom studio flat to a 3 bedroom penthouse.  The market was $150k for my studio and $1m for the penthouse.  So I need to pay an extra $850k.
> 
> If the market halves (just an extreme example) I only get $75k for my studio but pay $500k for the penthouse, so I only pay an extra $425k....I am much better off upsizing in a lower market.
> 
> On the flipside downsizing in a lower market you lose out.




your right, I had never thought of it like that,

One other thing that would make you better off is that during a down turn the lower end of the market generally holds up better, because people that are downsizing will create more demand at the cheaper end and a massive lack of demand in the top end.

This is why most of my investments are in the lower end of the market.


----------



## Tysonboss1 (25 January 2008)

numbercruncher said:


> then where will you be? Hairy, tattooed, with a drinking problem and unemployed! and then what good are yah? your Mrs will pack up her stuff and run off with the toy boy next door and your life will be ruined.
> 
> Just go do a 20 hour course and become a realestate expert, skim 2.5pc for a few hours of your time




Or you will end up with a million dollar turnover contracting business, and a fantastic property portfoilio.


----------



## robots (25 January 2008)

hello,

perhaps explod they should delete the ones that ridicule myself as well,

its such an emotional issue because its a story of the have's and have-not's,

for twelve mths me and others have been passing on valuable experience, yet we are continually seen as the "enemy", amazing

thankyou

robots


----------



## IFocus (25 January 2008)

robots said:


> hello,
> 
> work for yourself xao, going rate is $1000/1000, actually that is for an okay guy too
> 
> ...




Hate to get into this thread even though I have enjoyed the interaction you guys all lost the plot ages ago...usual suspects LOL 

Here in the West I don't think brickies get out of bed for that rate the rates are much higher plus they drive around in the latest flashest biggest FWD's tax deduction no doubt


Anyway carry on....LOL 


Focus


----------



## numbercruncher (25 January 2008)

Hello,


Found a job for you budding brickies once you qualified ....




> Location: QLD - GOLD COAST MC
> Salary: $33.00 PER HOUR
> Positions: 2
> 
> ...




http://jobsearch.gov.au/SearchResults/Job.aspx?st=10&WHCode=0&rgn=4107qlog%2c4107qglc&print=0&NumMJL=0&CommJobs=0&CurPage=2&TotalRec=190&JobPos=30&JobID=169547990&SortDir=0&SortField=0&


I wonder how they even fill Qualified Brickies positions, I mean apparently if you just go grab an abn youll be on 1m p/a as opposed to the paltry 33p/h ?


----------



## robots (25 January 2008)

hello,

gee NC 24% rise in Melburn, is that a furphy or what

thankyou

robots


----------



## explod (25 January 2008)

robots said:


> hello,
> 
> perhaps explod they should delete the ones that ridicule myself as well,
> 
> ...




No room for emotion and we need to teach the younger ones that also. We need to preach all options so that that they become financially literate.  I am not here to argue, just to put my point across which I have substanciated.  My post, though it may have had a go at you was backed by a reason for that, yours still does not achieve this.  

I am a case in point.  Sold my home 12 months ago as I felt there was little growth.  I was a bit out infact prop has gone up 15% since but has flattened out now.    Did it due to the loss on another previous property deal and at my age needed to work out a way to lift my equity as I am on the retirement lline.    The money from the home I have invested/traded in the stock market and in other assests and have averaged 90%.   5% of that pays my rent.  I have no doubt when the equation changes I will buy back into a home.   The planning ruler needs to be put over all options in my view.

I am unqualified


----------



## Judd (25 January 2008)

robots said:


> hello,
> 
> gee NC 24% rise in Melburn, is that a furphy or what
> 
> ...




Why do you deliberately omit the qualifier in regard to this increase?

From The Age 25/1/2008



> ...the price surge had been skewed by the strong performance of expensive suburbs such as Malvern, Toorak, Armadale and Brighton, which had annualised growth of almost 50%.
> 
> But current rates of growth in property prices were unsustainable, McNamara said, with increased economic uncertainty and official interest rates tipped to rise again next month.


----------



## explod (25 January 2008)

Judd said:


> Why do you deliberately omit the qualifier in regard to this increase?
> 
> From The Age 25/1/2008




Dont' worry too much, I have been testing him on just that point.  He does not understand what the concept of qualification means.     I'd guess, just representing the Real Estate Insititute, nuff said.

A point I see overlooked here is that most of the figures released cover    2007.   From the agents I speak to, the figures for 2008, unless there is some sudden chage of direction could look pretty bad this time next year.

Past figures do not tell the present story.   Higher cost of living and interest rate rises will hit the bottom line this time around.


----------



## numbercruncher (25 January 2008)

Judd said:


> Why do you deliberately omit the qualifier in regard to this increase?
> 
> From The Age 25/1/2008





His entire Brethren do it, Media, Bankers, Agents the scam is atleast as big here as it was/is in the US.

Its all designed by this Realestate lobby group to panic the public into buying before they can no "longer" afford it and to woo investors to easy money, Its the Gold Coast property scam of the 90s on a National scale, its quite hilarious that they are getting away with it so easily.


----------



## robots (26 January 2008)

hello,

perhaps you should do a bit more research explod and juddy,

a few suburbs and their rises for 07:

Bayswater 33.2% 
Bacchus Marsh 36.7%
Berwick 6.6%
Blackburn 63.7%
Braybrook 57.4%
Burwood 55.2%
Seaford 25.3%
Somerville 16.7%
Sandringham 9.8%

thats just a few from the b's and s's, 

most suburbs middle and outer ring,

goodluck, seems as though most members of the brethren would be very very happy

and those that arent in denial

thankyou

robots


----------



## Tysonboss1 (26 January 2008)

explod said:


> No room for emotion and we need to teach the younger ones that also. We need to preach all options so that that they become financially literate.  I am not here to argue, just to put my point across which I have substanciated.




At the end of the day your thoughts and feelings are just your opinion and are no less valid than Robots or any one else.

I think that telling young people not to get into property (atleast in the brisbane market) will end up putting them behind the 8ball in the future...

any way only time will tell, I would like to put a friendly bet out to anybody that disaggrees with me that the brisbane market will move by atleast 15% by this time next year.


----------



## Tysonboss1 (26 January 2008)

numbercruncher said:


> Hello,
> 
> 
> Found a job for you budding brickies once you qualified ....
> ...





I have seen contractors qoute brick laying jobs at up to $1.10 a brick in peak times,... if they have brickies working for them for $33.00/hour thats a decent profit margin.


----------



## theasxgorilla (26 January 2008)

Tysonboss1 said:


> I have seen contractors qoute brick laying jobs at up to $1.10 a brick in peak times,... if they have brickies working for them for $33.00/hour thats a decent profit margin.




And last time I checked, $33/hr is most decent.  Throw in a partner with his/her own earning capacity and you've got a 100k+ a year household.  Or is this possibility lost on all the 'affordability' crisis moaners?

ASX.G


----------



## numbercruncher (26 January 2008)

So thats your guys genius solution ? If people whom want to own a property cant afford it, go get a partner and Quit your Job, be it a Nurse , Police officer or whatever and go earn more ?

You dont even consider for a moment this could be bad for society as a whole ? I for one do, and others agree.




> HOUSING on the Sunshine Coast and the Gold Coast is less affordable than it is in New York, a new international affordability survey has revealed.
> 
> There were no Australian cities among the 59 housing markets in the "affordable" category.
> 
> ...




http://www.news.com.au/couriermail/story/0,23739,23082917-3102,00.html?from=mostpop


It seems to me that because of Australians preoccupation with Home ownership that certain Careers are being sidestepped resulting in massive Labor shortages in so many Industries because of this pursuit of bigger bucks, in my humble opinion its becoming unhealthy for our society.


----------



## robots (26 January 2008)

hello,

i for one dont want the socialist model, 

anybody else want to give bludgers a free ride?

thankyou

robots


----------



## numbercruncher (26 January 2008)

robots said:


> hello,
> 
> i for one dont want the socialist model,
> 
> ...





Hello

Going to the extremes again.

I for one dont want to see the continued decline in Police, Sailors, Nurses, Teachers etc numbers infact most the under paid public sector to continue because of an out of whack economy.

easy to solve though 40pc rise to the whole public sector and just cop the Inflation and Interest rate rises on the chin.

Thankyou.


----------



## numbercruncher (26 January 2008)

Out of curiosity Robots,


How do you feel about those WW2 vets getting $200 a week, the ones that didnt have access to compulsary Super ? I mean are they bludgers in your eyes ?

59pc of Qld retirees draw the Gov pension I read, If they dont/Didnt own a house they are up poop creek I would imagine.


----------



## robots (26 January 2008)

numbercruncher said:


> 59pc of Qld retirees draw the Gov pension I read, If they dont/Didnt own a house they are up poop creek I would imagine.




hello,

great example of why people should be buying a house, to ensure your future circumstances

round them all up NC

thankyou

robots


----------



## numbercruncher (26 January 2008)

Nope, I would see at is an example of why people should contribute extra to their super, pay only 15pc tax and draw it tax free in retirement, Great Labor party Invention that compulsary super eh ? Surely has helped the Property boom along too. Then perhaps buy a property, if you must, in your SMSF , rent for 1/3rd the cost of ownership and bobs yer uncle  How could the youngins possibly compete with that deal ? I understand your Liberals mates have even made it possible for SMSFs to borrow for such a deal


----------



## robots (26 January 2008)

hello,

didnt think they had any spare cash,

they are all struggling with day to day life

thankyou

robots


----------



## robots (26 January 2008)

hello,

check with the stat from the ABS (your higher authority)

the average renter has wealth of 50k to average wealth of a home owner at 300k

thankyou

robots


----------



## numbercruncher (26 January 2008)

Another tricky statistic, the "average" Home owner is alot older than the "average" renter, so that would only be natural wouldnt it ?

23 year old just out of uni, junior wages, 30k in hecs is in the renter box.

55 year old debt free 100k p/a is in the home owner box.

Youll need something better Robots


----------



## So_Cynical (27 January 2008)

I would like to think this is not a personal attack...but i find robots to be 
very very annoying, simplistic and 1 dimensional.

Is it just me? :dunno:

BTW i don't own a house...i used to own 2 (in the country)...then i got divorced and that was the end of that.


----------



## numbercruncher (27 January 2008)

So_Cynical said:


> I would like to think this is not a personal attack...but i find robots to be
> very very annoying, simplistic and 1 dimensional.





I find him kinda cute, in a mechanical kind of way.

He is a valuable warning for ASF and users would be realestate buyers of what to possibly expect when going to visit your local " friendly " realestate guy.

I still dont understand why people cant see that Average Houses at 8x average incomes is really really bad for so many reasons.


----------



## Kimosabi (27 January 2008)

numbercruncher said:


> I find him kinda cute, in a mechanical kind of way.
> 
> He is a valuable warning for ASF and users would be realestate buyers of what to possibly expect when going to visit your local " friendly " realestate guy.
> 
> I still dont understand why people cant see that Average Houses at 8x average incomes is really really bad for so many reasons.



The antidote to ROBOTS is http://www.jenman.com.au/


----------



## theasxgorilla (27 January 2008)

numbercruncher said:


> So thats your guys genius solution ? If people whom want to own a property cant afford it, go get a partner and Quit your Job, be it a Nurse , Police officer or whatever and go earn more ?
> 
> You dont even consider for a moment this could be bad for society as a whole ? I for one do, and others agree.




NC, I'll tell you a little real life story.  Good friend of mine left school at 18.  It was a private school, he got lucky, it was the dying wish of a grandmother to pay the last 3 years of high school tuition at a private school.  If you call not having the choice not to attend lucky.  But I think it served him well...I digress.

First job, manual labour.  Boom!  Saw that coming didn't ya??  Digging holes and laying kerbs and drainage.  Don't know if that's what his grandmother had in mind, but the award wages and his work ethic allowed him to save enough for a deposit on an old 2br house way out in the 'burbs.  Eventually, when he'd decided he wanted something more he got a job working in IT.  Nothing too sophisticated or advanced, but it was more satisfying, which he thought was important.

After work and during the weekends he would work on improving his house.  All the while the market was going up.  Later, he sold the house and bought another one.  He also changed jobs a couple of times and managed to get his salary up to a point where he was making enough so that he could live his life and still have money left at the end of each month.  Then he decided to realise his life dream of becoming a policeman.  He quit his now quite high paying IT job, and started his career as a police officer.  He also halved his salary.  But when he ran the numbers (before making the decision) he figured he could manage.

And manage he did.  That was over 5 years ago now.  He sold and bought another house (of even higher value again) but still hasn't managed to get close to what he made in IT.

At no point during any of the above time did he have a dual-income household.  But yes, he quit many, many jobs.  And no, he is no genius either.

What's the point/moral.  There are LOTS!

1) things have a way of turning out for the best, if you have a well thought out plan and you work hard
2) you gotta work man!
3) you'll be amazed what you can do (sacrifice) if you want something enough
4) sometimes you have a building up phase, other times you have a consumption phase...this is life for some.  The alternative is to insist that your monthly pay should cover everything you want right now.  Sound familiar?  If you're part of the so-called Generation-Y then it probably does.

FWIW, in my opinion, market economies have a way of sorting themselves out.  Socialist economies have a way of hiding deep systemic rot for very long periods of time.  Do you pull your band-aids off slowly, or quick?  Does it matter if it still hurts either way?  I for one do think so, and others agree.


----------



## wayneL (27 January 2008)

theasxgorilla said:


> FWIW, in my opinion, market economies have a way of sorting themselves out.  Socialist economies have a way of hiding deep systemic rot for very long periods of time.  Do you pull your band-aids off slowly, or quick?  Does it matter if it still hurts either way?  I for one do think so, and others agree.



It is indeed unfortunate that western economies have embraced aspects of both then.

Market economies with deep systemic rot and ludicrous malinvestmnet, supported and extended by a perverted form of Keynesian economics, AKA whatever the current tag is, AKA privatize profits and socialize losses.

Shoulda pulled the band-aid off in 2001 IMO.


----------



## theasxgorilla (27 January 2008)

wayneL said:


> It is indeed unfortunate that western economies have embraced aspects of both then.
> 
> Market economies with deep systemic rot and ludicrous malinvestmnet, supported and extended by a perverted form of Keynesian economics, AKA whatever the current tag is, AKA privatize profits and socialize losses.
> 
> Shoulda pulled the band-aid off in 2001 IMO.




Touche.  And I agree in principal, but have managed to do alright since things bottomed in '02.  Back then it was my industry that was suffering (IT, post-bubble) so I have appreciated the 'rescue package'.  Will it be the same for real estate agents and bankers this time around?  Time will tell.  It may turn out that this time, due to not pulling the band-aid off quickly back then that there is no place left to pull a rescue package from.


----------



## robots (27 January 2008)

hello,

i see many people aged 30+ who are still renting and have been for many years prior,

as ASXG indicated, all of a sudden you have a couple on 100k, and there is plenty of opportunites to buy RE, thats 4x for the average house NC so keep up the bollocks

it is all smoke and mirrors, people want the Toorak mansion or the waterfront penthouse first up,

so everyone on struggle street how can they put money in super nc,

jenman is so old news kimo, how is the girlfriend's 20k debt still proud of that one, I am sure the housing industry will get the blame for that

thankyou

robots


----------



## numbercruncher (27 January 2008)

theasxgorilla said:


> What's the point/moral.  There are LOTS!
> 
> 1) things have a way of turning out for the best, if you have a well thought out plan and you work hard
> 2) you gotta work man!
> ...




Hello ASX,


I appreciate your sentiment.


I feel obliged to point out that my continued Interest in this thread is in no way a refelction of my personal circumstance. 

Im certainly no Millionaire (pre-inheritence anyway ) , I have money invested in realestate ( in a land development and shares in a aged care company), I rent the house im in by choice at 1/3rd the cost of ownership and get much better returns for my money elsewhere.

If value returns to realestate or a bargain appears I may choose to go owner occupier for the third time, last two times where profitable but IMHO that apppears to be over.

My advice to young people, dont sacrifice your life for a silly overpriced house, work hard, be good to your mother, seek alternative investments, grab a surfboard, see the world, have fun, you will Inherit the Earth.

Oh and im not holed up in my grandmas basement, Im self employed and do/get as much work as i can be bothered with. 

And if you do harbor ill feelings towards me, Ill add im not a bad bloke (even if I dont mind saying so myself) and respect everyones opinion.

Thankyou.


----------



## numbercruncher (27 January 2008)

robots said:


> hello,
> 
> i see many people aged 30+ who are still renting and have been for many years prior,




Yes and the figures are severly worse for 20 somethings, people living at home for longer than at even given point in history and delaying having families longer and longer, home ownership amongst 20 somethings at a historical low.

Not good for society going forward.

I still maintain the odds are against young people, they often need their entire income to meet expenses, where as the older Generation who have already raised there family and outnumber them, already own their homes, and no longer "need" the income and have higher incomes get to salary sacrifice and pay only 15pc tax, this money then looks for a home to be invested, often finding its way into realestate.

One could argue that the Younger generation is effectively financing the retirement of the older Generation.


----------



## robots (27 January 2008)

robots said:


> hello,
> 
> a few suburbs and their rises for 07:
> 
> ...




hello,

doesnt appear to be over for many with just a few of the melbourne suburbs listed above,

young people are out popping pills, getting tattoo's, spending up at JB, seriously if you go to a music festival they are charging $9/ruski or like and the line is HUGE

and the owner of your house gets some nice capital appreciation for helping out society and in most cases by only putting a minimal amount of own money down

thankyou

robots


----------



## numbercruncher (27 January 2008)

Yes seems a stella performance for some Melb realestate, I hope it continues for you property investors.

once again you harshly and largely falsely judge the younger Generation, where you never young ? Are you suggesting the young should sacrifice their youth to pursue home ownership ? Should we be setting the Fun police onto them ?  Maybe they should be getting second jobs on the weekend instead of hitting the music festival ?

Very unfair imho.


----------



## Kimosabi (27 January 2008)

robots said:


> and the owner of your house gets some nice capital appreciation for helping out society and in most cases by only putting a minimal amount of own money down




After listening to your drivel, I'm off to join the young people popping pills, getting tattoo's, and spending up big at JB.

Now the real question that needs to be asked is, where does all that capital appreciation come from? Oh, that's right, it comes from irresponsible lending and the reserve bank printing money like there's no tomorrow.

I'll be buying property with there's real estate spruikers blood on the streets...


----------



## robots (27 January 2008)

hello,

no no, the younger people will not save money, none

year's ago we had one outfit, one pair of trainer's, now its as many as the weekly wage can buy, this stuff has nothing to do with fun but self gratification

these things are what will ruin the younger generation in the future

most young people if the fridge went on the boil wouldnt have the CASH to buy a new one tomorrow yet with rents so cheap (as you tell us) they should be killing it

thankyou

robots


----------



## numbercruncher (27 January 2008)

Oi,

Stop mincing what I say.

I said rents are cheap comparitive to the cost of home ownership.

Im not sure these things will ruin the younger Generation in the Future, might not bode well for asset prices though if they have no cashola to pay asking prices


----------



## robots (27 January 2008)

numbercruncher said:


> Oi,
> 
> Stop mincing what I say.
> 
> ...




hello,

of course, that is already happening

and will get worse in the future, 

thankyou

robots


----------



## explod (27 January 2008)

robots said:


> hello,
> 
> of course, that is already happening
> 
> ...



]

How do you know that Robots, could you please explain????


----------



## robots (27 January 2008)

hello,

speak to people who we are talking about

is this another one of you're "tests" to keep me on  my toes Explod? 

thankyou

robots


----------



## Lucky_Country (27 January 2008)

No cash,no sales, no sales = prices drop !
Rental yeilds still dont justify prices being pais for the house.
With that in mind do home prices drop or rents jump my guess is house will drop as interest rates rising almost a foregone conclusion.
A period of elavated inflation code for higher interest rates


----------



## krisbarry (27 January 2008)

My Family home was purchased in 1999 at a cost of $150,000 (about 4.5 average male wages).  

This same house now (2008) is worth $500,000 (about 10 average males wages).

Something doesn't compute here....


----------



## robots (27 January 2008)

hello,

what it adds up to is the cost to live in the best country in the world where freedom, chance and democracy are a given,

where a change in government doesnt cause death in the streets, people can get health care and enjoy life

thankyou

robots


----------



## Kimosabi (27 January 2008)

Stop_the_clock said:


> My Family home was purchased in 1999 at a cost of $150,000 (about 4.5 average male wages).
> 
> This same house now (2008) is worth $500,000 (about 10 average males wages).
> 
> Something doesn't compute here....



It's called a credit bubble, don't worry house prices will soon be coming back to their historical norm.

Australia is now at the top of the list for our housing prices to start crashing, I can smell it in the air...


----------



## robots (27 January 2008)

hello,

just for the record there has been 9 interest rates rises and many think a 10th is on its way, yet guess what, property is still rock solid

so the credit crunch is here and the thing people are losing money on is the bubble in share prices on companies like centro, MFS, allco etc

same with the property market in 03-04 where a lot of the development crap got affected and just like BTL in the Uk which is now being affected,

all the crap gets sorted out

goodluck 

thankyou

robots


----------



## Judd (27 January 2008)

Stop_the_clock said:


> My Family home was purchased in 1999 at a cost of $150,000 (about 4.5 average male wages).
> 
> This same house now (2008) is worth $500,000 (about 10 average males wages).
> 
> Something doesn't compute here....




Well, STC, based on the following assumptions.

Purchase price ($150k) plus 5% is purchase cost = $157,500
Loan of 80% of purchase price is $120,000
Loan is at average of 7% over 25 years
Interest paid on that loan over relevant period is $69,400.
Sale price is $500,000
Sale cost are 3% of sale price which leaves net of $485,000
Balance of loan after 9 years is $97,800 which leaves a net of $387,200.

Results in a compound average increase on the money of 7.1%
Compound average inflation rate over the same period (121.9 in December 1998 and 160.1 in December 2007) is 3.1% which leaves a real return of 

a grand total of an 4% annualized return.

So it does compute.


----------



## krisbarry (27 January 2008)

Just seems strange that it now take 5.5 extra men to afford that same house 9 years laters.

How can 2 people...a huband and wife do it, its beyond me!  

*I guess the Husband is working 2 jobs and doing drug deals on the side, while the wife works 2 jobs and prositutes on the side*

A lucky country...I think not!

Why is this lucky country getting media attention pointing out that Australia has the highest price houses in the world?

Lucky, I think not....Happy Australia Day to all who slept in a Caravan Park, Park Bench, Shipping Container, Tent...you are the true blue Aussie...!


----------



## robots (27 January 2008)

hello,

and if you look at the example from a basis of only putting down 37K and getting a return on the 37k its very interesting,

i would guess maybe take off another 50k for simplistic terms (rates, insurance,maintenance) and all of a sudden the 37k has turned to 330k (CAPITAL GAINS FREE)

but then after around 7-8yrs, when rents start to equal mortgage payments the owner kills it

thankyou

robots


----------



## Judd (27 January 2008)

robots said:


> hello,
> 
> and if you look at the example from a basis of only putting down 37K and getting a return on the 37k its very interesting,
> 
> ...




Yes there is a point there.  Of course, rates, insurance and say renovating the kitchen are out goings (after tax) which could have an adverse effect on the real return.  And then if you take the difference between renting and the mortgage payments there is another assumption, ie that the difference is actually invested.  In what?  Other properties, fixed interest, share market.  And so what is the return on that?.  Or is it merely spent?  Really don't know the answer to that so perhaps you could enlighten us.

For some reason which is rather obscure to me, you seem to be presenting arguments without empirical evidence to justify your statements - apart from a rather bland view that the average has gone from X to Y and therefore Z will result.  It does not compute so to speak.  You may, or you may not, be correct, but personally, I would prefer just a little (any) more substance to your position.

Thank you

And you
And you


----------



## Kimosabi (27 January 2008)

Judd said:


> For some reason which is rather obscure to me, you seem to be presenting arguments without empirical evidence to justify your statements - apart from a rather bland view that the average has gone from X to Y and therefore Z will result. It does not compute so to speak. You may, or you may not, be correct, but personally, I would prefer just a little (any) more substance to your position.




It's called ramping.  The only thing is that Real Estate Ramping isn't a violation of the ASF Rules.

If he made these statements in a stock thread, he would have been banned years ago...


----------



## robots (27 January 2008)

hello,

i say 37k (inital outlay) is invested in the house, and it returns 330k over that period as indicated by STC, which gives a return of % (let you fill it in, might be surprised)

definitely not 4%,

similar to a margin loan, STC put down 37k to control a 150k asset, but the return is based on the 37k yes

ABS have proven that those who rent dont save/invest their money,

thankyou

robots


----------



## robots (27 January 2008)

hello,

checked out the perth scene, things going smoothly i see kimosabi

thankyou

robots


----------



## robots (27 January 2008)

hello,

for STC's example,

so invested 37k to make 330k, 10 year period

around 21% compound return after all costs, TAX FREE

and all just for living at home

thankyou 

robots


----------



## Judd (27 January 2008)

You really must be smoking something very powerful (not Golden Columbian by any chance?) or your just off your face because you are not making any sense whatsoever.  You are really a very incoherent poster.

STC was reasonably raising the matter of $150k in 1999 being $500k in 2008  So where on this earth did you get $37K turning into $330k over 10 years?

Go for YouTube bro.  You know that your there.


----------



## robots (27 January 2008)

Judd said:


> Well, STC, based on the following assumptions.
> 
> Purchase price ($150k) plus 5% is purchase cost = $157,500
> Loan of 80% of purchase price is $120,000
> ...




hello,

the figures in this post, purchase cost 157k, loan for 120k so STC came up with 37K upfront

as per your figures leaving net 387k after sale, i am even taking off 50k for other expenses such as rates, insurance building maintenance,

so left with 330k roughly, tax free, pretty easy to follow as its no different to margin loan, cfd etc

STC put down 37k to control an asset of 150k back in 1999, all for living at home

goodluck

thankyou

robots


----------



## theasxgorilla (27 January 2008)

Judd said:


> Yes there is a point there.




The point is that house price growth and ROI are not the same thing Judd.

On the topic of ramping property, it's very difficult, if not impossible to provide so called empirical evidence.  Stats, medians, averages etc. are all BS IMHO.  Well, to the extent that they probably tell you as much about a given house in an area as the AAA rating from Moody's does these days.

But what about down-ramping?  For over two years this thread has been going and there have been countless references to the 'affordability crisis' this and the 'average/median/schmedian income' that.  Have you guys  considered for a moment that you might be doing the devils work?  That those who condone these articles and stats being published have a vested interest in keeping interest rates as low as possible for as long as possible?  How can a central bank raise rates without looking like the bad guys when housing affordability is already at crisis levels?


----------



## Julia (27 January 2008)

I've just done a quick calculation on what was paid for my house 14 years ago versus what it's worth now, and it averages 9% p.a.
There have been no mortgage payments but it would be necessary to deduct ongoing maintenance and improvements  which would probably bring it down to about 8.5% p.a.

And then there's the immeasurable benefit of never having to worry some landlord is going to throw you out and the further benefit of being able to whatever you want.


----------



## numbercruncher (27 January 2008)

I think the real question is , are these rates of gains possible going forward ?

If the average House 440k was to continue rising at 10pc p/a it will be worth 1.1m in 10 years.

Thats serious inflation guys and it needs to be viewed from dollar terms rather than percentage terms, the RBA is going to smash on the breaks before it got out of control like that.

The average 55k wage just to keep pace at 1/8th the property price would raise 10pc p/a and be 140kp/a in 10 years 

Remember property prices hardly budged through the 90s and if your stuck holding a 400k mortgage for a 10 year dormant property market you are way way behind the eight ball at the end of that period.

No one revoked the economic cycle , if our Inflation continues as it is, 9 . 10 .. 12 ... 15 pc Interest rates ? who knows!


----------



## Judd (28 January 2008)

robots said:


> hello,
> 
> the figures in this post, purchase cost 157k, loan for 120k so STC came up with 37K upfront
> 
> ...




I wish you good luck my friend.  Through completely ignoring the time value of money any of your "clients" will be living in a fools paradise.  Best of luck old chap.


----------



## wayneL (28 January 2008)

http://globaleconomicanalysis.blogspot.com/2008/01/real-estate-auctions-booming.html


----------



## theasxgorilla (28 January 2008)

wayneL said:


> http://globaleconomicanalysis.blogspot.com/2008/01/real-estate-auctions-booming.html




Them house prices ain't stagnating!


----------



## robots (28 January 2008)

Judd said:


> I wish you good luck my friend.  Through completely ignoring the time value of money any of your "clients" will be living in a fools paradise.  Best of luck old chap.




hello,

you like those figures judd, 

not many are paying the 157k, pretty good return for STC on his 37k down isnt it, 

21% compound over 10yrs and all TAX FREE, great stuff man, you might want to get on some gear to see the truth in the numbers

thankyou

robots


----------



## Mofra (28 January 2008)

Judd said:


> Well, STC, based on the following assumptions.
> 
> Purchase price ($150k) plus 5% is purchase cost = $157,500
> Loan of 80% of purchase price is $120,000
> ...



Judd,

Technically your calculations are corrrect; now please tell me where I could have borrowed to purchase cash/equities on the same terms as a residential property loan contract?

NC has nailed the argument - ease of credit. Not just in the macro sence, but also on an individual level; real estate is a tool to avail oneself of cheap credit, and provided that credit is used wisely it can be a brilliant tool for wealth creation.


----------



## Kimosabi (28 January 2008)

wayneL said:


> http://globaleconomicanalysis.blogspot.com/2008/01/real-estate-auctions-booming.html



But, but, but, housing prices never go down, do they?

I've seen similar price drops in West Virginia as well.

My entry into Real Estate will be when there's Real Estate spruiker's blood on the streets...


----------



## xoa (28 January 2008)

wayneL said:


> http://globaleconomicanalysis.blogspot.com/2008/01/real-estate-auctions-booming.html




Looks nice.

There's some real bargains in the USA (relative to Australia), and they might get even cheaper. I feel sorry for those people who borrowed to buy, just before prices went down the toilet.

Australia is probably where the USA was in 2005 - the calm before the storm.


----------



## numbercruncher (28 January 2008)

One of my Cousins whom is a Teacher has just moved to the US, getting married to a state trooper she met, but anyways, I forget the town she is in, apparently a nice place, she found a House she likes, freestanding for 40k! Its gone to the other extreme, people could pay off a house in 12 months easy!


----------



## robots (28 January 2008)

hello,

you just need to get down to walmart to pick-up a 9mm and a 303 to pop cap to stay alive,

probably best to join the lynch mob

thankyou

robots


----------



## MyNameIsEarl (28 January 2008)

This thread is what initially got me to sign up to ASF- constant source of infotainment!!

A few points I would like to add:

- People who talk of gen Y (as if an entire age group has similar tendencies) being the "me" generation, no savings, credit trapped etc. who do you think taught them this? I believe it has more to do with how you are raised vs. the era you are raised. Most of my peer group (mid-late twenties) are in the market and manage their finances well. The people I know who aren't are the ones whose parents have allowed them to stay at home board free whilst still working full time, tender to their every need etc. and still save nothing. How can you blame the kids? 

- I find it frustrating that people talk as if either owning a home or owning shares is a choice. I am choosing to own my home so that I can afford to invest in more shares. I bought about two years ago and already my payments are similar to what I would be paying to rent. I just bought what I could afford, which is a fair way below the average. 

- As a single guy paying off a house, I would love to be one of these "struggling" couples!!!!


----------



## wayneL (28 January 2008)

robots said:


> hello,
> 
> you just need to get down to walmart to pick-up a 9mm and a 303 to pop cap to stay alive,
> 
> ...



Total rubbish. 

I grew up in the states and never even saw a gun. Some areas are bad, but most middle class are as safe as.... errr, houses.


----------



## robots (28 January 2008)

hello,

that 40k bargain could well be in a bad area, you see plenty of action on "cops"

guys riding around on pushies with loaded in pocket, 

people waving guns in the air, school shooting after school shooting, 

no, no guns there

guess thats why it is 4x earnings or so

thankyou

robots


----------



## wayneL (28 January 2008)

robots said:


> hello,
> 
> that 40k bargain could well be in a bad area, you see plenty of action on "cops"
> 
> ...




Depends, 

Could be in a bad area of course, but we don't have that info. 

But I'm telling you that I grew up in LA, and I have rellies in North Carolina and Atlanta Georgia. WE never owned guns, nor ever saw anyone use a gun. Relatives alo do not own guns, nor have been threatened or shot or whatever.

I can buy a nice house in NC for about 120k in a safe area with excellent job prospects (technology triangle)... and won't have to own a gun.


----------



## numbercruncher (28 January 2008)

robots said:


> that 40k bargain could well be in a bad area, you see plenty of action on "cops"




I cant say with absolute conviction if the area is nice or not, I havnt visited, but im pretty sure they wouldnt live in a dodgy area, the husband to be is a state trooper so he can just tazer the dodgy neighbours or whatever it is you see everyone doing on "cops" ? 

I think its time for you to quit watching Bubblevision Robi, stick with the Internet


----------



## robots (28 January 2008)

hello,

was so disappointed when cops was taken off Ch10, hit the internet for more entertainment like Earl,

hope it is back on soon, always great entertainment seeing the streets of south central

thankyou

robots


----------



## IFocus (28 January 2008)

wayneL said:


> Total rubbish.
> 
> I grew up in the states and never even saw a gun. Some areas are bad, but most middle class are as safe as.... errr, houses.




Wayne serious question, given the legal hand gun ownership levels in the states who is it in your experience that has guns in the US .


----------



## Tysonboss1 (28 January 2008)

Julia said:


> I've just done a quick calculation on what was paid for my house 14 years ago versus what it's worth now, and it averages 9% p.a.
> There have been no mortgage payments but it would be necessary to deduct ongoing maintenance and improvements  which would probably bring it down to about 8.5% p.a.
> 
> And then there's the immeasurable benefit of never having to worry some landlord is going to throw you out and the further benefit of being able to whatever you want.




you should also take into account the rental return, Even though it is owner occupier you should take into consideration the rent saved by not having rental increases over the last 14 years.


----------



## numbercruncher (28 January 2008)

Bit more evidence for the Aussie property Bears ...




> Australian mortgage-backed bond sales fell to the lowest in three years as the fallout from the U.S. housing recession cut demand for the assets in the second half of the year.
> 
> Sales of bonds backed by Australian home loans plunged 87 percent in the last six months to A$5.9 billion ($5.2 billion), from a record high of A$44.4 billion in the first half of the year, according to Deutsche Bank AG. Issuance fell 12 percent this year to A$50.3 billion, the lowest since 2004.




http://www.bloomberg.com/apps/news?pid=20601087&sid=aBxM3WhR5tS4&refer=home



> It's a sad state of affairs when the number of home repossessions have almost doubled in the last year across the country
> 
> In the fall-out from 11 straight interest rate rises, nearly 80 people a week in New South Wales alone are given their marching orders after defaulting on their loans.
> 
> ...




http://au.todaytonight.yahoo.com/article/317870/consumer/sharks-tightening-mortgage-belt


----------



## wayneL (28 January 2008)

IFocus said:


> Wayne serious question, given the legal hand gun ownership levels in the states who is it in your experience that has guns in the US .



Hunters, people in inner cities, criminals. Don't get me wrong, lots of people have guns and there is certainly a gun problem in the US.

But in normal middle class areas where most of us would live, it is not an issue.


----------



## wayneL (28 January 2008)

FYI

http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article3260831.ece


----------



## theasxgorilla (28 January 2008)

Kimosabi said:


> But, but, but, housing prices never go down, do they?
> 
> I've seen similar price drops in West Virginia as well.
> 
> My entry into Real Estate will be when there's Real Estate spruiker's blood on the streets...




Yeah, you property bears would love that site.  All the evidence you need.

Remember, those are property bears prices...low-ball offers intended to do one thing and one thing only...pick up the mother of all bargains.  You could see similar activity (granted, not to the same extreme) during '04 right here in our very own cities.  Few can accept such low prices, so the reality will be that few properties sell for those initial offers.  20% discounts off realistic values would be a good deal, IMO.  Those valuations are also probably inflated to hell, so you'll notice I just said *realistic* valuations.  It's not unusual for real estate agents to be off 10% or more from reality with the tops of their ranges.

If you are going to get bargains, the coming months will be the time to do it.  Be realistic.  You won't pick up a palace for half-price.  This isn't some country with a completely defunc economic and social structure...it's the US.

ASX.G


----------



## wayneL (29 January 2008)

This property was sold at auction on 11th Dec 2007 for £115,000 (You can look up the auction results under that date on www.auction.co.uk ). The sale is too recent to appear on www.houseprices.co.uk. 

But have a look what was paid for this property only 18 months ago


----------



## robots (29 January 2008)

hello,

thats typical BTL wayne, any chance for some stats on a nice london place,

this why I say same thing happened here in Aus to the BTL in melb 03-04 (docklands etc), many prices dropped the "developer" profit,

but it is catch twenty two because "accommodation" needs to be built by somebody and it was developers at that time (02-04)

it is only now the "investor" is starting to catch up with capital gain,

this stuff still goes on and many people get hoodwinked by salesman

thankyou

robots


----------



## wayneL (29 January 2008)

robots said:


> hello,
> 
> thats typical BTL wayne, any chance for some stats on a nice london place,
> 
> ...



Will post as I come across them.


----------



## stock_man (29 January 2008)

Was just thinking of the possibilities if property prices came down.....

Using loan portability (transfering the loan from 1 security to the next), I could upgrade my house from out in the suburbs to a beach location!

True I wouldn't want to sell my house due to possible negative equity, but why not just increase the living value by changing location, house size/quality etc?

Sounds great to me.


----------



## Tysonboss1 (29 January 2008)

stock_man said:


> Was just thinking of the possibilities if property prices came down.....
> 
> Using loan portability (transfering the loan from 1 security to the next), I could upgrade my house from out in the suburbs to a beach location!
> 
> ...





Nice thought isn't it,.... bit of a pipe dream though.

I don't see property dropping that dramatically any time soon, and if it does it won't be down for long.


----------



## Kimosabi (29 January 2008)

Tysonboss1 said:


> Nice thought isn't it,.... bit of a pipe dream though.
> 
> I don't see property dropping that dramatically any time soon, and if it does it won't be down for long.



That's what everyone thought in the US 2 years ago.  Wait until the Credit Crunch hit's commodities.  Then we'll see Aussie House Prices come back to reality...

It's coming, I can smell it in the air, like I can smell the rancid oil from dead humanoids...


----------



## robots (29 January 2008)

hello,

anybody catch topgear last night?

great vision of the "united states of america", the greatest country on the earth where car salesmen carry pistol's on them at work and keep a rifle with scope in office for capping runners

and you get rocks thrown at you if have hilary for president on your car driving thru Alabama

no wonder they are on 2x average wage

thankyou

robots


----------



## Kimosabi (29 January 2008)

robots said:


> hello,
> 
> anybody catch topgear last night?
> 
> ...



The guns are now for Real Estate Spruikers...

Hilary used to be a Real Estate Spruiker....

In Australia, we'll just use Salty Water on our Real Estate Spruikers...

This is a sign of what will be coming to Australia soon, I sure wouldn't want to be a Real Estate Spruiker in the near future...


----------



## numbercruncher (29 January 2008)

Thats your excuse for US, whats the excuse for Canada ? To many Bears and Groundhogs perhaps ?


----------



## Kimosabi (29 January 2008)

numbercruncher said:


> Thats your excuse for US, whats the excuse for Canada ? To many Bears and Groundhogs perhaps ?



Oh, don't forget, the UK, Ireland or Spain....


----------



## robots (29 January 2008)

hello,

i saw Vancouver on an edition of Cops one nite and doesnt look much different,

ice pipes, 9mm's

crack head's pimping (it aint easy), trailer parks everywhere

thankyou

robots


----------



## Kimosabi (29 January 2008)

This is what Aussie Real Estate Spruikers have to look forward to in a few years...


----------



## robots (29 January 2008)

hello,

havent heard to much out of London lord, wayne is onto that place 

brother is currently in ireland and things are still looking good

now spain they seem to have a problem with terrorists

and thats why good ol' Australia is at the top, because we grab em and lock em, keep the streets clean of most

thankyou

robots


----------



## theasxgorilla (29 January 2008)

robots said:


> and thats why good ol' Australia is at the top, because we grab em and lock em, keep the streets clean of most




It ought to come as no surprise that a state originally founded as a penal colony has the greatest police state tendencies out of all the aforementioned...but don't get me started on that in any case.


----------



## wayneL (29 January 2008)

robots said:


> hello,
> 
> havent heard to much out of London lord, wayne is onto that place
> 
> brother is currently *in ireland and things are still looking goo*d



Ahahahahahahahhahahah!

Ohehehehehehehehehheehehehe!

Eheheheheheheheheheheheheh!

Ireland is off big time mate.

Find some Ireland forums and see.

ROTFLMAO


----------



## robots (29 January 2008)

hello,

no its not wayne, I have people on the ground over in Derry right now

I know i will find a similar forum to GHPC do doubt where all the moaners are

http://au.news.yahoo.com/080129/2/15o5k.html

another great article on the USA,

would prefer people in the big house than on the met with a bomb in the backpac spoiling the lives of others any day,

even it is the slightest whisper of evidence,

thankyou

robots


----------



## wayneL (29 January 2008)

robots said:


> hello,
> 
> no its not wayne, I have people on the ground over in Derry right now
> 
> I know i will find a similar forum to GHPC do doubt where all the moaners are



Bot,

It's even been in the news mate. Ireland's bubble is popping. Sorry.

PS I won't bother looking through archives, I'll just wait for a fresh report and post it.


----------



## numbercruncher (29 January 2008)

robots said:


> hello,
> 
> no its not wayne, I have people on the ground over in Derry right now





Do your people read the paper over there ? Just grabbed a copy of the Derry Journal and this is what they had to say on the matter .....




> LISBURN estate agent Tom McClelland has described the last few months of 2007 as 'extremely difficult' for Northern Ireland's housing market.
> 
> Eighty two per cent of chartered surveyors contributing to the index recorded a price decline with just 18 per cent finding no change in the cost of a home.




http://www.derryjournal.com/news/ESTATE-AGENT-DESCRIBES-END-OF.3695022.jp

But then again who would trust an estate agent, that Tom chap is probably making that up


----------



## wayneL (30 January 2008)

http://www.thisislondon.co.uk/news/...credit crunch, warns City watchdog/article.do

1 million could lose their homes.


----------



## Kimosabi (30 January 2008)

UK Home Prices To Drop 10% In 2008?

http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=510980&in_page_id=1770


----------



## numbercruncher (30 January 2008)

Relevant to this discussion, how do prices go up if people are pretty much maxed out ? There must be a ceiling on how much even the dumbest bankers will lend to the sheeple ? Inflation and loads of it can be the only way out im thinking ..... 




> PETER CAVE: An expert on personal debt is warning that Australian households are now in a worse financial position than during the Great Depression.
> 
> Dr Steve Keen from the University of Western Sydney is the author of a monthly chronicle called Debtwatch.
> 
> He says the levels of personal debt, as a proportion of the economy are now twice what they were during the 1930s.




http://www.abc.net.au/worldtoday/content/2007/s2055693.htm


----------



## explod (30 January 2008)

numbercruncher said:


> Relevant to this discussion, how do prices go up if people are pretty much maxed out ? There must be a ceiling on how much even the dumbest bankers will lend to the sheeple ? Inflation and loads of it can be the only way out im thinking .....
> 
> 
> 
> ...





Yep, as the global economic problems even out (as water) they wont.   We are approaching the classic societal divide of the 3 tier;, the rich, the average and the poor.

As a hedge many of us think gold, oil, food as investements.   The upper to very rich will include property, but only the good stuff.   I see it happening here where I live on the east to south side of Port Phillip Bay.   Suburbs such as Breighton, Sorrento and some parts of Mount Martha/Mornington, some inner city, Armadale and Toorak will never drop off a great deal and in times of inflation, as we are approaching it is a store of wealth also.

These areas and those near to them are the ones that real estate pundits hang their hats on to say property is booming.  Ok, it is/it has, is where we are at now IMHO.

Soon however due to costs of food, fuel, interest rates and a drop off in related employment the areas here outside of those I specifically mentioned will fall big time (in my view) and from where I sit it is happening now.


----------



## Temjin (30 January 2008)

numbercruncher said:


> Relevant to this discussion, how do prices go up if people are pretty much maxed out ? There must be a ceiling on how much even the dumbest bankers will lend to the sheeple ? Inflation and loads of it can be the only way out im thinking .....
> 
> 
> 
> ...




It's about time he speaks out in public. The mainstream public never knew he existed in the first place, nor believe in his view on debt and chant, I will laugh at those people saying properties will fall in price!


----------



## numbercruncher (30 January 2008)

Kimosabi said:


> UK Home Prices To Drop 10% In 2008?
> 
> http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=510980&in_page_id=1770





Further to that .....



> About 1.4 million mortgagees will see their fixed-rate loans mature this year, causing their repayments to rocket by an average of £210 a month.




http://business.timesonline.co.uk/tol/business/money/property_and_mortgages/article3273492.ece

Thats pretty huge, about 500 skippys a month, combined with falling prices, I see some keys being posted back to the bankers !


----------



## CamKawa (30 January 2008)

I've just taken a look at the REIV web site and found that in the last quarter of '07 much to my surprise a couple of leafy suburbs in Melbourne have fallen in price. Glen Iris is down -4.8% and Kew -6.6%. 

This is only one negative result from one quarter so there's no need to panic but if Kew were to fall again by say -3.4% that would make it -10% for the half year. Now you can't get much of a house in Kew for under a million bucks so if it dropped 10% that would cost the buyer 100 grand, and on top of that one may well be paying interest on a mortgage. Only a small drop in house prices costs big money. In the above scenario pain would be your friend.


----------



## numbercruncher (30 January 2008)

And Kew is a nice suburb, I lived there years ago in far Kew 

Its also one of Melbourne Realestates star performing subrubs, just the beginning is my punt.







Realestate only has to stagnate in current Interest rate enviroment for it to effectively be losing value. House in Kew loses 100k combined with the 100k you would get in bank interest on the purchase price less the 800 a week you could rent it for, adds to serious cash.


----------



## numbercruncher (30 January 2008)

Just to juice it up we could add in the 80k stamp duty and 35k RE fee should the person in Kew decide to sell 

So the average Kew buyer if they purchased Jun07 would probably be out to the tune of 250k+ should they bail today .....  Next quarter result will be Interesting, prices might show some action from the stock market rout eh ?


----------



## Kimosabi (30 January 2008)

And then I come across this little puppy today...



> *Economic shockwave hits China*
> 
> *THE rampant Chinese economy that Kevin Rudd and Wayne Swan are confident will help insulate Australia from the worst of the global financial meltdown is starting to falter, with Chinese leaders warning of a "most difficult" year ahead.*
> 
> ...




http://www.news.com.au/business/story/0,23636,23131118-462,00.html


----------



## wayneL (30 January 2008)

Kimosabi said:


> UK Home Prices To Drop 10% In 2008?
> 
> http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=510980&in_page_id=1770




That's it!! When The Mail says it, it's true !(for the seething masses of useless eaters)

Game on! The crash gets real in the UK!


----------



## robots (30 January 2008)

hello,

from article:

"The fall may be much worse in some parts of the country, warned the 47-year-old investment guru, with the* biggest losers the owners of new-build* *flats aimed at buy-to-let investors which he fears are "almost unsellable".*

any chance on getting an indication on a typical london house or flat and not the BTL stuff which appears to be the SOLE thing being affected

more predictions though really

thankyou

robots


----------



## wayneL (30 January 2008)

robots said:


> hello,
> 
> from article:
> 
> ...




I can tell you everything is being affected; even big detached houses. Proof to come as it comes online. (there is a delay of some months for land registry data to be recorded)


----------



## Kauri (30 January 2008)

not much to go on.. IG punters market for June London house...
Cheers
.........Kauri


----------



## BSD (30 January 2008)

Most people on these sites and in the investment community (myself included) have NO idea about people on average incomes despite the fact they (by definition) drive the majority of pricing in housing. 

Note the following analysis from the academic quoted earlier:


ASHLEY HALL: You talk about financial pressure. Is that the concern - the stress associated with it? Or what's the broader concern?

STEVE KEEN: This is where the trouble's coming from. People have got so many financial commitments, that they have, mainly mortgage, but then of course they go and get into credit card debt, which is where a large number of these bankruptcies are coming through. So they have an enormous financial pressure and they ultimately find they simply can't meet their living expenses and their outgoings, and then they are forced into liquidating assets, which is a large part of what's driving the ending of the property boom in western Sydney.

ASHLEY HALL: What's the main cause of that?

STEVE KEEN: Excessive borrowing for house, speculation on house prices. We've encourage people - certainly in the last 15 years in particular - to borrow money to go and buy an asset which then they expect to sell to somebody else for a higher price. But it's a merry-go-round. The only way you can keep on doing it is somebody else borrows yet more money than you've done and they've got to borrow money faster than they're earning in income. And ultimately we're getting towards to crunch point where that game no longer works.


How much of Australian property is in the hands of these types of people?

How many 'middle class' couples live 30kms from the city and have one partner working just to meet the mortgage? How motivated will they be when prices drop 10% or 30%?

The "western suburbs of Sydney" is now duplicated in Brisbane, Melbourne, Gold Coast, Perth etc...

A couple of other points:

1. Beware the 'Nouveau Rich' suburbs. 

Investment bankers, brokers, dealers, agents are not going to have a good year and this means 60% paycuts in many cases, coupled with a crippling debt load.

Properties that supported multiple other properties and leases will come on the market at massive discounts. 

Old money may be OK - but beware areas filled with 911s. 

2. Commercial is about to get chopped up - note JPMorgan's bank analyst on the DJ newswire today talking about the denial in commercial at the moment:

 "Commercial property values haven risen to the point where yields are at historic lows compared to interest rates, which suggests that either (i) the Australian 5 year swap rate is going to fall 300 basis points, (ii) rents are going to double, or (iii) commercial property prices are going to fall 50%,"

Lemme tell ya, rents aren't doubling in a bear market and rates aren't dropping 300bps with inflation above 3%


Many wealthy boomers are now sh!tting themselves about the sharemarket and will make the final 'mugs play' moving into property at historic low yields and high interest rates. We may see a final blip in prices - but as per the US, UK, Ireland, NZ, Japan, Spain experience, reality will catch up to Australia. 


At least in equities you can have the Chinese economy as your 'tenant'.


----------



## numbercruncher (30 January 2008)

Let me requote something for the Realestate perma-bulls



> *Lemme tell ya, rents aren't doubling in a bear market and rates aren't dropping 300bps with inflation above 3%*


----------



## ROE (30 January 2008)

Why are we even discussing property in a share market forum.
Let these property guru go off to their property forum and have it there.

I'm happy for them to buy these property asset that pay 3 or 4 % yield and capital gain will always be double digits.

Keep them coming I need these investors when I sell my house.


----------



## theasxgorilla (30 January 2008)

BSD said:


> "Commercial property values haven risen to the point where yields are at historic lows compared to interest rates, which suggests that either (i) the Australian 5 year swap rate is going to fall 300 basis points, (ii) rents are going to double, or (iii) commercial property prices are going to fall 50%,"




Hasn't anyone told this guy that the most extreme arguement types are also the weakest???  If only economics was this logical then most trained economists could GET IT RIGHT.  Alas it isn't and they can't/don't.

At least he got in the paper for his 15 minutes.  Sheeesh.

ASX.G


----------



## wayneL (30 January 2008)

ROE said:


> Why are we even discussing property in a share market forum.




Because this is the "General Chat" forum where you can talk about anything you like.


----------



## BSD (30 January 2008)

theasxgorilla said:


> Hasn't anyone told this guy that the most extreme arguement types are also the weakest???  If only economics was this logical then most trained economists could GET IT RIGHT.  Alas it isn't and they can't/don't.
> 
> At least he got in the paper for his 15 minutes.  Sheeesh.
> 
> ASX.G




So which one do you think is coming?

a. Rents doubling
b. Bonds dropping 3%
c. Values falling

Or are you betting on illogical outcomes?

Sheesh


----------



## robots (30 January 2008)

hello,

let me remind people of a couple of things:

isnt property still 7-8x average salary?

as that is what people are always telling me, which means guess what lads property is still as high as ever

thankyou

robots


----------



## numbercruncher (30 January 2008)

What are you saying Robots ?


----------



## robots (30 January 2008)

hello,

maybe none of those three will occur, most likely that would be the outcome

thankyou

robots


----------



## Flying Fish (30 January 2008)

numbercruncher said:


> What are you saying Robots ?




robots is alluding to inflation and more.

If my wage is insufficient to maintain my lifestyle then something must give. thankyou robots


----------



## theasxgorilla (30 January 2008)

BSD said:


> So which one do you think is coming?
> 
> a. Rents doubling
> b. Bonds dropping 3%
> ...




Why are they the only possibilities?  Why not a blend of each?  Much more likely in reality.  Rents probably will go up, as inflation kicks along.  Bond rates are not likely to drop in Australia in the short to medium term, IMO.  Values?  Refer to the title of the thread.  Having said that, commercial probably is more likely to drop than residential, from what I understand of that market (between very little and nothing).

ASX.G


----------



## Kimosabi (30 January 2008)

ROE said:


> Why are we even discussing property in a share market forum.




Because this is the most entertaining thread on the Forums...

It sure would be boring if we didn't have Roborampingbots....


----------



## robots (30 January 2008)

hello,

yes yes, thankyou

just doing my bit AGAIN for society,

making people laugh and enjoy discussion

have a wonderful day tomorrow

thankyou

robots


----------



## Kimosabi (30 January 2008)

robots said:


> hello,
> 
> yes yes, thankyou
> 
> ...



Uuuummmmm, I don't think ramping overpriced property is a service to society.

When making people laugh, I've found it's better to have people laugh with you instead of at you, and ramping over-priced property isn't really a laughing matter either...


----------



## Mofra (30 January 2008)

BSD said:


> 2. Commercial is about to get chopped up - note JPMorgan's bank analyst on the DJ newswire today talking about the denial in commercial at the moment:
> 
> "Commercial property values haven risen to the point where yields are at historic lows compared to interest rates, which suggests that either (i) the Australian 5 year swap rate is going to fall 300 basis points, (ii) rents are going to double, or (iii) commercial property prices are going to fall 50%,"
> 
> Lemme tell ya, rents aren't doubling in a bear market and rates aren't dropping 300bps with inflation above 3%



2008 is the reset year for the 19 year office-space supercycle; could be some fantastic opportunities arising in 09.


----------



## BSD (30 January 2008)

robots said:


> hello,
> 
> let me remind people of a couple of things:
> 
> ...




Sorry mate, but I would have thought for most people that the funding costs  of owning a new property under this multiple may actually highlight the bubble we now have. 

Assuming a post-tax average wage of $40,000 - I would assume the financing costs of owning a $350,000 home would almost exceed 80% of such a wage.

When the average person cannot afford the average home, something is about to change.


----------



## theasxgorilla (30 January 2008)

Kimosabi said:


> Uuuummmmm, I don't think ramping overpriced property is a service to society.
> 
> When making people laugh, I've found it's better to have people laugh with you instead of at you, and ramping over-priced property isn't really a laughing matter either...




When it comes to the roof over our head we're a passionate lot aren't we???

Price, remember, must always be coupled with a perception of value in order to determine if something is over or under or fairly priced.  If you had to pay more tomorrow for the same property, does it instantly become over-priced?

You can't blame a real estate agent or a property investor for trying to sell their stock.  They're reward (ie. their roof over their head) is aligned with that goal.  Buyers agents are the people it sounds like you need to find.

ASX.G


----------



## Kimosabi (30 January 2008)

theasxgorilla said:


> When it comes to the roof over our head we're a passionate lot aren't we???
> 
> Price, remember, must always be coupled with a perception of value in order to determine if something is over or under or fairly priced. If you had to pay more tomorrow for the same property, does it instantly become over-priced?
> 
> ...



I understand all of the above. What I don't like is the manipulation of people by the banks(easy credit) and agents(ramping) that drives the mania. The thing that disgusts me the most is when people come to the conclusion that unless they buy at rediculous prices they will never have the opportunity to own a house.

The Banks and the more experienced Agents know this, but continue encouraging people to commit during the suckers rally. When they run out of suckers, the rug gets pulled out from beneath the suckers and we start the whole process again.

Knowing all of this put's me in the position to become quite wealthy, but it doesn't mean I have to like the scam...


----------



## YChromozome (30 January 2008)

wayneL said:


> http://www.thisislondon.co.uk/news/...credit crunch, warns City watchdog/article.do
> 
> 1 million could lose their homes.






Kimosabi said:


> UK Home Prices To Drop 10% In 2008?
> 
> http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=510980&in_page_id=1770




Look on the bright side. The housing bubble popping in the UK makes for good TV. You never got anything like this in the US :



​


----------



## theasxgorilla (30 January 2008)

Kimosabi said:


> Knowing all of this put's me in the position to become quite wealthy, but it doesn't mean I have to like the scam...




Totally appreciate that sentiment.  And agree with it.  But I don't think we should beat up robots because he presents a side of the arguement we don't necessarily like hearing.  I don't think he lies, no more than statistics are lies.  And those on the other side are all using their lies (statistics) and 'bear' media propaganda to opposite effect.

I can see both sides and have chosen (ahhh, freedom) which side I want to be on.  The side buying the properties in his area.  Melbourne bayside = heaven on earth, IMHO.  Overpriced?  Hmmm, well, that depends now doesn't it.  Stagnating?  Not yet mate.

ASX.G


----------



## numbercruncher (30 January 2008)

Our Perth Cousins have got a good dose of stagnating (or worse) over 07.



> A new survey finds Perth house prices rose just 1.7 per cent in 2007, the weakest in the country.




http://blogs.thewest.com.au/news/news-blog-has-the-housing-bubble-finally-burst/


----------



## Kimosabi (31 January 2008)

numbercruncher said:


> Our Perth Cousins have got a good dose of stagnating (or worse) over 07.




What they don't tell you is that it's the premium property's that keep the median house prices artificially inflated, while the outer suburbs median prices start falling.

Looking at the debt loading of Aussies, our bust is going to make the Americans Bust look like a walk in the park...


----------



## KIWIKARLOS (31 January 2008)

Kimosabi said:


> What they don't tell you is that it's the premium property's that keep the median house prices artificially inflated, while the outer suburbs median prices start falling.
> 
> Looking at the debt loading of Aussies, our bust is going to make the Americans Bust look like a walk in the park...




I dont believe that for a second OZ is so fundamentally different to the US in housing and the economy that i doubt we will have a bust. Firstly the US is coupled to China only for its consumption where as we consumer and export. World food prices are skyrocketing and we are currently coming out of a bad drought and look to be making a big agricultural comeback for the next couple years. We have access to some of the cheapest electricity in the world. Our housing inventory in tiny compared to the 1 mill or 9 month supply they have in the US. 

If we do experience a slowdown wouldn't interest rates come down in OZ thereby relieving stress on home owners not to mention the almost given drop in oil prices we will have due to reduction of demand. 

The personal debt in oz is high but government debt is gooooone and we now have big surpluses, this gives the federal gov much more clout in combating any "bust"  Imagine how our personal savings would increase if they did take that union blokes advice and pump a large part of the surplus into super. 

In summary i think here in oz we are in a great position to come off this relatively unscathed compared to many many other economies. We are one of the few western countries that doesn't have an enormous trade gap. We export heaps of resources, agriculture and education and consume alot aswell.


----------



## KIWIKARLOS (31 January 2008)

one more thing more of a question.

If a person is facing economic hardship ie. about to loose their house isn't there a law stating that you can pull money out of your super to get you out of trouble?

Also i didn't think americans even had a super system so we must have much less debt than them because we by law have forced savings?


----------



## numbercruncher (31 January 2008)

KIWIKARLOS said:


> one more thing more of a question.
> 
> If a person is facing economic hardship ie. about to loose their house isn't there a law stating that you can pull money out of your super to get you out of trouble?
> 
> Also i didn't think americans even had a super system so we must have much less debt than them because we by law have forced savings?







> Superannuation fund trustees and RSA providers administer the release of benefits on the ground of severe financial hardship according to a simple objective test as well as a subjective test. That is, to be granted an early release you must:
> 
> be in receipt of a Commonwealth income support payment, and have been so, continuously, for the last 26 weeks; and
> satisfy the trustee/RSA provider that you are unable to meet reasonable and immediate family living expenses.
> ...




http://www.apra.gov.au/Superannuation/Early-Release-of-Superannuation-Benefits.cfm

Why would people cash out their retirement security to pay a depreciating asset anyways ? Throwing good money after bad, unless you had a huge amount of equity really not worth it.

Still very little news from the Australian Realestate Fraternity this year on bubblevision, usually bombarded by them, maybe the reversal has begun hey ?

Australia average pretax wage = 55k , average House 440k , thats over 10x post tax income = Does not compute.


----------



## numbercruncher (31 January 2008)

KIWIKARLOS said:


> If we do experience a slowdown wouldn't interest rates come down in OZ thereby relieving stress on home owners not to mention the almost given drop in oil prices we will have due to reduction of demand.




Quite possibly - but a slowdown would result in rising unemployment and pretty much a halt to wage Inflation.

As it stands Inflation is High and getting worse, the RBA must stand by its mandate and target Inflation in the band of 2 to 3pc, currently its 3.6pc.


----------



## explod (31 January 2008)

Today's Herald Sun at p20.

"The Adviser Edge investment research property review predicts that Melbourne property prices will jump another 15 percent in 2008, to push the medium price over $500,000 by the end of the year"

from property research head Louis Christopher.   

Interesting.   Still say the Herald Sun ar prop rampers.  well see


----------



## numbercruncher (31 January 2008)

All they do is base their predictions on past performance, they certainly dont consider ongoing Inter/national economic developments, pure uneducated ramping - I hope they are leveraged to the eye balls


----------



## theasxgorilla (31 January 2008)

explod said:


> Interesting.   Still say the Herald Sun ar prop rampers.  well see




You've got to be kidding me???  

Right before I sold my last property in Melbourne a colleague handed me a Herald Sun and told me I could take a look inside to see how far my house had gone down in price.  10% I think was the headline.  The HS wouldn't know the proverbial poo from clay.  The only relevance of this article is the effect it will have on group think.  The twit who handed me the paper that day really believed my house had gone down, thats what counts.

ASX.G


----------



## theasxgorilla (31 January 2008)

KIWIKARLOS said:


> Also i didn't think americans even had a super system so we must have much less debt than them because we by law have forced savings?




Exactly.  Not only that, but because many of us have been forced to think in terms of super now for 15 or more years we really do plan our own retirements which requires some degree of 'financial literacy'.  We're fiscally stupid is what I'm trying to say.

The US does have a retirement plan system called a 401k.  I believe it's tax advantaged, but not compulsory.  Don't quote me on this, cos I don't really know much about the details.


----------



## KIWIKARLOS (31 January 2008)

Average house price may be 425K or whatever but there is heaps of smaller townhouses and units which are mush less and there are plans for tens of thousands more. The places that will take a battering are houses in the west of sydney. Town houses etc and houses within 25 km of Sydney or near major metro centres such as chatswood and parramatta have no problems.

With rising fuel prices public transport will become more attractive and I believe in 5 + years housing near major public transport infrastructure will be going up in price as people look to move away from the burbs where they comute for 1 hour + a day by car. Its just not going to be economic to drive 50kms and pay multiple tolls alone the way, i think people will take the transport savings and put them into paying more for better location.

Thats why i bought my place about 5 mins walk from a railway


----------



## numbercruncher (31 January 2008)

Smart investing Kiwi ....


Yep urban consolidation will be big in coming years, everything smells like bad news for Mortgage belt realestate, West Sydney case in point.

Alot of boomers will downsize or sea/green change bringing loads of houses from the burbs to market, Gen yers simply arnt buying, so buyer and seller will have to meet somewhere.

Throw in rising Interest rates and Gen yers can afford even less!


----------



## robots (31 January 2008)

hello,

*Why would people cash out their retirement security to pay a depreciating asset anyways ? Throwing good money after bad, unless you had a huge amount of equity really not worth it.*

ha ha ha ha ha, with super having all its gains knocked out for 07 it will be interesting times ahead for it and SMSF's

*Still very little news from the Australian Realestate Fraternity this year on bubblevision, usually bombarded by them, maybe the reversal has begun hey ?*

ha ha ha ha ha, still out sunning thenselves NC, most not back to mid feb how you dream for that job

*Australia average pretax wage = 55k , average House 440k , thats over 10x post tax income = Does not compute.*QUOTE]

ha ha ha ha, guess what NC that tells me RE is as high as ever, so much for stagnation

thankyou very much

robots


----------



## numbercruncher (31 January 2008)

robots said:


> hello,
> 
> 
> ha ha ha ha ha, still out sunning thenselves NC, most not back to mid feb how you dream for that job





Im not sure thats true, I go into the realty office every two weeks and whack the super cheap rent on the CC for reward points (making it even cheaper rent ) and theres always a bunch of board looking salespeople standing around  

Sometimes I wonder how the people whom own this house I rent remain solvent, ahh the deductions, gotta love it, benefits us both at the expense of your hard earnt tax


----------



## robots (31 January 2008)

robots said:


> hello,
> 
> 
> 
> ...




hello

thankyou very much

robots


----------



## theasxgorilla (31 January 2008)

KIWIKARLOS said:


> With rising fuel prices public transport will become more attractive and I believe in 5 + years housing near major public transport infrastructure will be going up in price as people look to move away from the burbs where they comute for 1 hour + a day by car. Its just not going to be economic to drive 50kms and pay multiple tolls alone the way, i think people will take the transport savings and put them into paying more for better location.




I totally agree, and did the same thing.

There is a shift in living, away from the house in the 'burbs and a 2 hour commute by car every day to apartment and townhouse living walking distance to local shops and public transport and a short taxi ride away from entertainment centers.

It's not by everyone or for everyone, as many still think the dream is a 1/4 acre block...but as things like conjestion and fuel costs increase it will look more and more like a dream, IMO.


----------



## numbercruncher (31 January 2008)

So what do you reckon Robi, House prices upto 20x average Yearly earnings over next couple of years ? Buy now or youll live on a park bench ? Australia is running out of space for its 22m inhabitants ? Interest rates going up up up will make property jump in value ?

What about the 1.9pc Perth went up last year, is that a good investment as an owner occupier ?


----------



## robots (31 January 2008)

hello,

I think people would be very happy with 1.9% in Perth considering the ASX200 or the all "really" ordinary index has shed all its gains for 07,

the interesting thing with living inner as such is people re-examining the use of their time, and many are preferring the apartment or townhouse inner city than the new hous in outer city

albeit the costs are probably very similar but the inner feel is what gets people over the line,

yeah wages to average hous cost will get worse and money will get easier to get, its evident now that money is still readily available

thankyou

robi


----------



## numbercruncher (31 January 2008)

Hey looks like we are all starting to agree on something here, House prices doomed in favor of Inner ciity, is that what we are saying ? 

Empty nesters, DINKS , lifestylers , Retirees, Green changers, Defaulters, Sea changers, etc all bailing out of the burbs you reckon ?


----------



## stock_man (1 February 2008)

numbercruncher said:


> Im not sure thats true, I go into the realty office every two weeks and whack the super cheap rent on the CC for reward points (making it even cheaper rent ) and theres always a bunch of board looking salespeople standing around
> 
> Sometimes I wonder how the people whom own this house I rent remain solvent, ahh the deductions, gotta love it, benefits us both at the expense of your hard earnt tax




Possibly they purchased the house a good few years ago, and are now enjoying a positively geared investment?


----------



## numbercruncher (1 February 2008)

stock_man said:


> Possibly they purchased the house a good few years ago, and are now enjoying a positively geared investment?




Perhaps, the house is brand new, maybe they had the land for years.

Property is "worth" 350k - I pay 15k a year rent , 2k gos for rates and Realestate management fee. = 13k p/a, plus they get their depreciation.

This isn't isolated check out Realestate.com.au pretty much same for any area.

Alot of faith resting with capital gain in the market!


----------



## stock_man (1 February 2008)

Some controversy to the title of this thread from the ABS site:



> HOUSING (+1.1%)
> 
> Most categories of housing recorded price rises this quarter. Main contributors to the increases were increases in house purchase (+1.3%) and rents (+1.6%). This is the largest quarterly rise for house purchases since March quarter 2005.
> 
> ...




http://www.abs.gov.au/ausstats/abs@.nsf/mf/6401.0

I understand they are stats, but interesting none the less.


----------



## wayneL (2 February 2008)

robots responding to crashing HPs in Ireland said:


> hello,
> 
> no its not wayne, I have people on the ground over in Derry right now
> 
> ...



http://uk.reuters.com/article/propertyNews/idUKNOA14543820080201?rpc=401&



> DUBLIN (Reuters) - *House prices in Ireland fell for the tenth month in a row in December, bringing the total decline in 2007 to 7.3 percent*


----------



## robots (2 February 2008)

hello,

every house dropped by 7.3%, not quite

fair bit of BTL in that,

thankyou

robots


----------



## wayneL (2 February 2008)

robots said:


> hello,
> 
> every house dropped by 7.3%, not quite *Well Doh!!!
> *
> ...



What does BTL have to do with it? That's just a rationalization allowing you to deny the facts. 

Prices in Ireland are falling. 

As they are in the UK and much of western Europe... not to mention the US.


----------



## Bushman (2 February 2008)

This thread was started Sep 2005. If you had deferred your purchasing decision in Sep 2005, waiting for the 'inevitable' bust, you would have missed out on substantial capital gains in Melbourne, Perth, Hobart etc. 

I think that the Melbourne market will start to take a breather now that interest rates are high. However inner city 'pads' will continue to appreciate as the long term demographic trend of the abandonment of the quarter acre block for the sense of community of the 'bohemian' inner city continues. 

Proves two things -
1. get your timing right. No point being a pessimist to early; and
2. don't fight long term societal changes. 

Unlike shares, the housing market is illiquid and not prone to the emotional peaks and troughs that the equities market investor has to endure.


----------



## wayneL (2 February 2008)

Bushman said:


> This thread was started Sep 2005. If you had deferred your purchasing decision in Sep 2005, waiting for the 'inevitable' bust, you would have missed out on substantial capital gains in Melbourne, Perth, Hobart etc.
> 
> I think that the Melbourne market will start to take a breather now that interest rates are high. However inner city 'pads' will continue to appreciate as the long term demographic trend of the abandonment of the quarter acre block for the sense of community of the 'bohemian' inner city continues.
> 
> ...



That said, there are many here in this market who are having to sell at 2005 prices. Some at even less (and of course some have done alright as well). It is this illiquidity that says IF you want to sell, too early could be good.

I ain't selling my earlier purchases, but I'm chuffed I didn't buy anything in 2005... very chuffed.

The scary thing about distressed folk trying to hold on here, is that it's only just starting to get bad.

My £0.02


----------



## robots (2 February 2008)

wayneL said:


> What does BTL have to do with it? That's just a rationalization allowing *you to deny the facts.*
> 
> Prices in Ireland are falling.
> 
> As they are in the UK and much of western Europe... not to mention the US.




hello,

you have been in denial for over 2 years wayne, although i do remember one post where u admitted things were going not as you thought

"house prices to stagnate for years" 17/09/05 it started and the denial is still going on yet the indicator many here use: average house price to average income is still as high as ever

thankyou very much

robots


----------



## Bushman (2 February 2008)

wayneL said:


> That said, there are many here in this market who are having to sell at 2005 prices. Some at even less (and of course some have done alright as well). It is this illiquidity that says IF you want to sell, too early could be good.
> 
> I ain't selling my earlier purchases, but I'm chuffed I didn't buy anything in 2005... very chuffed.
> 
> ...




I take it you are living in the UK? Sorry my point was mainly about the Australian market.  I live in Fitzroy North and the market has never been stronger. Phenomenal really when you remember that Collingwood, Richmond, Northcote, Fairfield and the like were all working class suburbs even up to the mid 90's. Now the old Melbourne flood plains have become well to do suburbs with property prices to match. Amazing really.

When I was living in London a few years back, I could not believe how expensive housing in the UK was. The Irish Tiger also caused Dublin house prices to sky rocket. I remember a friend of mine used to rent a stairway cupboard for 350 euros a month. No windows, no lighting etc. It all seemed rather unsustainable back then. UK personal debt is also at record highs so I can imagine the sell off will be severe.


----------



## wayneL (2 February 2008)

robots said:


> hello,
> 
> you have been in denial for over 2 years wayne, although i do remember one post where u admitted things were going not as you thought
> 
> ...



I've readily admitted prices have risen, but have stuck to my macroeconomic view throughout, which is proving to be correct. It is only the perverse pseudo Keynesian nonsense which has propped it up all this time.

Denial? No. Early? Already admitted. 

But they are only playing the overture now. The main show is yet to come.


----------



## robots (2 February 2008)

wayneL said:


> Denial? No. Early? Already admitted.
> 
> *But they are only playing the overture now. The main show is yet to come.*




hello, 

who know's what will happen, i surely don't

thankyou

robots


----------



## wayneL (2 February 2008)

robots said:


> hello,
> 
> who know's what will happen, i surely don't
> 
> ...




click on the link in my sig. will give you a fair idea


----------



## BSD (3 February 2008)

Coming to the outer-suburbs near you...

http://www.smh.com.au/news/national...1201801094694.html?page=fullpage#contentSwap1

"_Kim Quick, senior valuer at property advisers Herron Todd White, said increasing numbers of people were stuck in a housing trap where their home was no longer worth what they paid for it because it was over-valued when they bought it.

"A few years ago people were desperate to get on the housing ladder and were convinced that property prices were just going to go up and up," she said.

"Now they can't afford to stay but they can't afford to go either."

Last year, the company presided over the repossession of five neighbouring houses in one street in Kellyville, all within months of each other._


----------



## numbercruncher (3 February 2008)

From the article ....



> UP TO 300,000 Australians risk losing their homes this year as rising interest rates and the credit crunch fuel severe debt.
> 
> As the Reserve Bank prepares to meet on Tuesday to consider another rate rise, analyst Martin North of Fujitsu Consulting predicted a dramatic escalation in defaults on home loans.
> 
> ...





So 7.5m Households in Australia .....

10pc in severe mortgage stress.

4pc of Mortgaged properties tipped to be in some level of default/repossession this year.

Mortgage rates will go up .5pc maybe 1pc throughout this year.

Maybe time to accumulate puts over the big four before mass exodus ?

Thing with the housing crash is its slow moving and well disguised by an obliging self serving media


----------



## numbercruncher (3 February 2008)

Churches join the war on Realestate ...



> Churches are planning to make city properties and land available for inexpensive housing to fight Victoria's home-affordability crisis.
> 
> Church-run charities say prime land worth hundreds of millions of dollars has been sitting untouched for more than 100 years.
> 
> ...




http://news.theage.com.au/churches-to-tackle-housing-crisis/20080203-1prd.html


----------



## numbercruncher (3 February 2008)

Brisbane Joins war on Realestate ...



> Council two weeks ago unanimously approved a 35 per cent discount on infrastructure charges, which took the median figure for new house lots down to about $22,000 from $34,000.
> 
> The changes, which were formulated after consultation with industry, took the maximum price for house lots down to about $61,000 from $94,000.
> 
> And the minimum infrastructure charge fell to $18,400 from $28,200.




http://www.brisbanetimes.com.au/news/queensland/rowell-plan-to-save-homebuyers-40000/2008/02/01/1201801011652.html?page=2

And on top of this new mayoral candidate plans more ......



> Industry groups have applauded a proposal to put a lid on council infrastructure charges that could wipe up to $40,000 off the cost of a new home in Brisbane.
> 
> Labor lord mayoral candidate Greg Rowell today unveiled a $39 million plan to cap infrastructure charges on all new homes at $20,000 per house lot and $14,000 per unit if he was elected on March 15.
> 
> ...




So if the cost of New properties is falling rapidly via Government intervention, so are used ones 



> Greg Rowell's 5-point plan
> 
> 1. Cap infrastructure charges and undertake review of charging system.
> 
> ...




Vote Rowell for Mayor!


----------



## Judd (3 February 2008)

It is very sad that people will lose their home or need to seek assistance in obtaining food.  You can debate the cause until the cows come home and agreement will never be reached.  A number were possibly greedy and a number were financially illiterate but the end result is the same in my opinion: most became committed to chasing a "lifestyle" and committed to more debt than they could possibly handle.  Probably thought they were doing the right thing because they were simply following the herd.

I remember about 4 years ago overhearing a conversation of one of my staff outside my office.  Not that I wished to hear it nor could I get up and close the door as that would have indicated to her that her conversation with the bank was no longer private causing both of us some embarrassment.

She was not on too bad a salary and hubby was also working.  Had this house in the suburbs but.....he became ill, could no longer work, they could no longer afford the mortgage and were about to lose the house plus they had credit card debt.  That was 4 years ago when things were relatively benign. Today the stress would have been just as bad but the debt would probably have been worse.

I'm afraid the financial system has a method of flushing out and disposing of these problems.  It causes a few more problems but that does not seem to be an issue to the system as it is presently structured.  The Americans had a good concept of 30-year fixed rate mortgages (I've never really come to grips with the credit score and points system.)  Possibly that is something this country should consider.  In reality (no pun intended) I don't have the answer.


----------



## numbercruncher (3 February 2008)

Housing Industry smells trouble and almost sounds like its begging.



> RBA urged to put rates rise on hold
> Posted 52 minutes ago
> 
> Queensland's housing industry is hoping the Reserve Bank board will go against market sentiment and keep interest rates on hold.
> ...




http://www.abc.net.au/news/stories/2008/02/03/2153051.htm?section=business


Sorry housing Industry but RBA's mandate is to protect my savings against the ravages of Inflation, not to protect over inflated asset prices.


----------



## YChromozome (3 February 2008)

numbercruncher said:


> From the article ....
> So 7.5m Households in Australia .....
> 
> 10pc in severe mortgage stress.
> ...




It's even worse if you consider that 35% of the households in Australia have a mortgage, so of the 7.5million households, you have 2.6million mortgage holders.

That means as many as 28% of households with a mortgage will have mortgage stress . .  11% will default.

And what happens if rents rise more than wages/inflation. That's probably just as many renters under stress.

And a lot of disposable income being stripped from the economy. Dare I say, if the predictions are true, we are stuffed. Sounds like recession time.


----------



## Tysonboss1 (3 February 2008)

numbercruncher said:


> Sorry housing Industry but RBA's mandate is to protect my savings against the ravages of Inflation, not to protect over inflated asset prices.




I Don't really think interest rate rises are an effective way to control inflation.

How is raising the interst rate going to keep inflation down.

I actually see raising the interest rates today as making the housing "rental afforabilty crisis" worse.

In cities where there is already massive shortage of rental properties, raising interest rates will just mean alot of development projects and subdivsions won't get done this year meaning less supply next year to qwell the increased demand. so interest rate rises today will increasre rents tomorrow, and thew cycle continues


----------



## numbercruncher (3 February 2008)

YChromozome said:


> It's even worse if you consider that 35% of the households in Australia have a mortgage, so of the 7.5million households, you have 2.6million mortgage holders.
> 
> That means as many as 28% of households with a mortgage will have mortgage stress . .  11% will default.
> 
> ...




Damn good point YChromozome, I didnt even consider when writing up that, Sunday AM wave of dumbness in guess  (does that 35pc include Investment properties with a mortgage?)

Yes and thats something people dont shed much thought for, all this money going into Housing simply strips it out of other areas of the economy. I mentioned it in this thread once before and got the usual response from the RE permabulls that people shouldnt be wasteing money anyway blah de blah ....

I think its already showing up in the bottom line, one example would be WOOLWORTHS LIMITED mediocre half year result that to me seems to not even beat food price inflation.


----------



## Flying Fish (3 February 2008)

Wonder what happens witha .5% rate rise ... ouch


----------



## numbercruncher (3 February 2008)

Tysonboss1 said:


> I Don't really think interest rate rises are an effective way to control inflation.
> 
> How is raising the interst rate going to keep inflation down.
> 
> ...




Well I can tell you the RBA and Government and Myself dissagree, Interest rates do help control Inflation.

Developers arnt going to moth ball their Businesses because of rising Interest rates, just like you arnt going to quit your job because of rising interest rates.

Read article above, Brisbane council slashing Infrastructure charges and new mayor hopeful plans to slash them even further.

This is the RE peak, next wave of land releases will be cheaper and developers will make atleast the profit they are now.(imho, according to the evidence)


----------



## numbercruncher (3 February 2008)

Flying Fish said:


> Wonder what happens witha .5% rate rise ... ouch




They are saying we could see upto a 1pc increase over the coming year.

350k mortgage, 1pc = 3500 or $70 a week.


----------



## Flying Fish (3 February 2008)

numbercruncher said:


> They are saying we could see upto a 1pc increase over the coming year.
> 
> 350k mortgage, 1pc = 3500 or $70 a week.




Ouch thats two slabs of VB lol. Might sit back and have a few for those wantbe property tycoons lol


----------



## Kimosabi (3 February 2008)

Tysonboss1 said:


> I Don't really think interest rate rises are an effective way to control inflation.
> 
> How is raising the interst rate going to keep inflation down.



Ok, lets get this straight, the Reserve Bank creates the inflation by creating more money out of "Thin Air"

They then try to control the Inflation they have created with Interest Rates.

Does anyone else see a problem here.

Why have we got an organisation that causes Inflation, attempting to control the Inflation it creates.

Hello, the sooner we F^ck off this bullsh1t system off and go back to Sound Money the better.


----------



## BSD (3 February 2008)

Increasing interest rates lowers disposable income for those with mortgages. It also lowers profits for equity holders through interest costs and lower disposable incomes. Renters suffer as much as owners as rents rise. 

Woolworths and other retailers will then find it harded to pass-on the rising cost of inputs.

Woolworths will post lower profits, reduing the income of shareholders. Suppliers will be squeezed, reducing the income of their shareholders. 

Easy money from property and sharemarket speculation is removed from the economy. 

While rate rises will always work better on demand pull inflation, they also assist with supply push. 

From the squealing in the press, it would appear the rate rises are (finally) starting to work. 

Now as long as fiscal spending is wound-in, inflation should be held in check.

First step - cut all non-means tested benefits to anyone earning above the minimum wage.


----------



## YChromozome (3 February 2008)

numbercruncher said:


> Yes and thats something people dont shed much thought for, all this money going into Housing simply strips it out of other areas of the economy.




The other thing to consider is the use of homes as ATMs. As house prices were rising homeowners took out home equity products to fund other discretionary spending. Many also spent the "capital gains" even though it wasn't relised. (You just have to look at company profits over the last couple of years)

As soon as the growth rate of houses start slowing, that is money being stripped from the economy. If houses don't go up 15% this year, that's effectively 15% of everyones house that is not being spent. (Slight exaggeration, but close) 

So to take the threads prediction, even if house prices stagnate for 'years' we are in big trouble in terms of consumer spending. And what happens if that consumer spending allows employers to keep and grow staff.


----------



## Flying Fish (3 February 2008)

Kimosabi said:


> Ok, lets get this straight, the Reserve Bank creates the inflation by creating more money out of "Thin Air"
> 
> They then try to control the Inflation they have created with Interest Rates.
> 
> ...




Um how is sound money going to work these days? 
Perhaps we should start exchanging seashells for important things like cans of beer and bottles of Jim beam. Thankyou.

Reality is always much clearer when totally pissed.


----------



## Kimosabi (3 February 2008)

Flying Fish said:


> Um how is sound money going to work these days?
> Perhaps we should start exchanging seashells for important things like cans of beer and bottles of Jim beam. Thankyou.
> 
> Reality is always much clearer when totally pissed.



The same way it worked in the past.

I don't have a mortgage or any debt.

I want my money backed by something more substantial than "Thin Air".  If the banks can make money out of "Thin Air", why can't I pay off a loan by giving them a bucket of air?


----------



## numbercruncher (3 February 2008)

Kimosabi said:


> Ok, lets get this straight, the Reserve Bank creates the inflation by creating more money out of "Thin Air"
> 
> They then try to control the Inflation they have created with Interest Rates.
> 
> ...




Worthwhile to note the effects of Globilisation on Inflation as well.

In the beginning Inflation was kept in check with China sending us cheaper than cheap goods that we could never produce at the same price.

As things change, China internal price pressures, US fed slashing rates adding massively to money supply etc etc etc we get to import inflation 

I agree with your sentiment on the System, theyll never willingly give it up though unless it implodes


----------



## BSD (3 February 2008)

Kimosabi said:


> The same way it worked in the past.
> 
> I don't have a mortgage or any debt.
> 
> I want my money backed by something more substantial than "Thin Air".  If the banks can make money out of "Thin Air", why can't I pay off a loan by giving them a bucket of air?




Of course, you would prefer your debt backed by a shiny rock with limited utility that comes out of the ground. 

If you actually believe in the debasement of our currency - you should borrow all you can carry.


----------



## Tysonboss1 (3 February 2008)

numbercruncher said:


> Developers arnt going to moth ball their Businesses because of rising Interest rates, just like you arnt going to quit your job because of rising interest rates.




Rising interest rates will affect both the number of develpers conducting developing activites, especially the small scale stuff suchas investors knocking down and building back duplexes,

 as well as reducucing the amount of developments the active developers are conducting,


----------



## Kimosabi (3 February 2008)

BSD said:


> Of course, you would prefer your debt backed by a shiny rock with limited utility that comes out of the ground.
> 
> If you actually believe in the debasement of our currency - you should borrow all you can carry.



Thats the whole point.  A limited amount of money stops Inflation which is really another form Taxation.

Ever wondered why nobody saves anymore.  There's no point because Inflation devalues the money you have saved.

Debt = Slavery, obviously the majority of people are either too stupid or ignorant to do some research to find out they are being f^cked up the Ass...


----------



## BSD (3 February 2008)

Kimosabi said:


> Thats the whole point.  A limited amount of money stops Inflation which is really another form Taxation.
> 
> Ever wondered why nobody saves anymore.  There's no point because Inflation devalues the money you have saved.
> 
> Debt = Slavery, obviously the majority of people are either too stupid or ignorant to do some research to find out they are being f^cked up the Ass...




Nonsense. 

And completely off topic.


----------



## Happy (3 February 2008)

> From ABC, 3 Feb. 08
> 
> 
> 300,000 FACING HOME LOAN DEFAULT: RESEARCH
> ...





Only question is if it is going to happen slowly and surplus homes are going to be absorbed, or this is going to spark sellers stampede and long awaited by some, severe drop in house prices.


----------



## Kimosabi (3 February 2008)

BSD said:


> Nonsense.
> 
> And completely off topic.




Do some research

Inflation Tax ==> http://en.wikipedia.org/wiki/Inflation_tax

Debt Bondage ==> http://en.wikipedia.org/wiki/Debt_bondage

This is completely on topic....


----------



## Mofra (3 February 2008)

YChromozome said:


> The other thing to consider is the use of homes as ATMs. As house prices were rising homeowners took out home equity products to fund other discretionary spending. Many also spent the "capital gains" even though it wasn't relised. (You just have to look at company profits over the last couple of years)



Incorrect. The majority of equity release credit flows into investments, not discretionary spending. The "glee" of equities bulls posting every negative sentiment-filled article on this thread tends to overlook the fact that credit & bull markets are intertwined, and residential property equity is perhaps the easiest bulk crediut available to the average consumer.

... And people wonder why federal & state governments don't crack down on the huge land banks being held by developers


----------



## Mofra (3 February 2008)

Kimosabi said:


> Debt = Slavery, obviously the majority of people are either too stupid or ignorant to do some research to find out they are being f^cked up the Ass...



Surely the debt held decreases proportionally to the equivalent reduction in spending power as a result of inflation on cash-held savings?

Cash = depreciating asset.


----------



## numbercruncher (3 February 2008)

Stock fall Hits Buyers!

Todays Sunday mail, cant find it online, dodgy dodgy .....


"The Gold Coats most exclusive residential strip is up for sale, atleast 16 properties along Hedges and Albatross ave have gone to market"

Agents say Buyers withdrew offers in the 1.5 to 6m during the week citing "issues with shares "


Bluechip Bluechip


----------



## Kimosabi (3 February 2008)

Mofra said:


> Surely the debt held decreases proportionally to the equivalent reduction in spending power as a result of inflation on cash-held savings?
> 
> Cash = depreciating asset.



This is correct, the current monetary system is based on debt, at some point like what is happening in the USA, a debt based monetary system is unsustainable and will eventually collapse.

Why do you think the whole system, including the Taxation System rewards people who have debt.

Could it be that the same people who run the RBA, also run the ATO?


----------



## numbercruncher (3 February 2008)

Rent is the New Buy - wtf these guys musta been reading my work 




> AS THE hopes and dreams of younger Australians are dashed by poor housing affordability, the time has come to reassess the long-standing national love affair with home ownership.
> 
> With a new international survey showing great swaths of Australia in the grip of a world-class affordability crisis, it's clear that the home-ownership dream has fast become a nightmare, and a lifetime of renting awaits those who can't catch the runaway real estate train no matter how hard they chase.
> 
> ...




http://www.news.com.au/couriermail/story/0,23739,23148424-5011140,00.html


----------



## BSD (3 February 2008)

Kimosabi said:


> Could it be that the same people who run the RBA, also run the ATO?




Oh please go on.

Got a wiki link for that?


----------



## Flying Fish (3 February 2008)

BSD said:


> Oh please go on.
> 
> Got a wiki link for that?




Aliens run this planet. we are all doomed


----------



## Kimosabi (3 February 2008)

Flying Fish said:


> Aliens run this planet. we are all doomed



No, the world is run by a crime syndicate of inbred families...


----------



## numbercruncher (3 February 2008)

Tysonboss1 said:


> Rising interest rates will affect both the number of develpers conducting developing activites, especially the small scale stuff suchas investors knocking down and building back duplexes,
> 
> as well as reducucing the amount of developments the active developers are conducting,





Why will a devolper care about Higher Interest rates or falling prices in the wider market if his business profits are protected by falling input costs such has which just been passed by the Brisbane council and possibly more from the mayor hopeful ?

Anyway i'd rather sell 100 cans of coke that cost me 50 cents ea for $1 ea than only 10 at $2 ea, wouldnt you ?

My debate in this thread has never been on demand, its been about Average Realestate being at minimum already fully priced to what the average buyer can bare. Demand is there at the right price.

I still maintain the Realestate Industry has been awfully quiet so far this year, dont hear the usual on bubblevision ....

another quote from todays  Suday Mail ....

" PRDnationwides Syd Walker said canal homes were worst hit with 40p/c fewer buyers making contact in the last two weeks"

further along ...

They are reporting a slower start than normal for this time of year "


----------



## YChromozome (3 February 2008)

Mofra said:


> Incorrect. The majority of equity release credit flows into investments, not discretionary spending.




Do you have some stats on this? Or are you calling Renos investments? I guess it adds value to the house.

The data I have seen (Which I must admit I can't find now) suggests the bulk of it goes into Renovations (Kitchens, Bathrooms, additions etc) and Debt Consolidation. Naturally consolidating the Credit Card debt and other personal loans generally leads to further spending. 

Other categories was Holidays, 4WD (O.k. any Vehicle inc Caravans), Education Expenses etc. I do remember other investments and investments in real estate, but they were under the reno & debt consolidation.

Possibly the data I have was a couple of years ago, and I would have no trouble believing after a couple of years of things only going up, the incentive would be there for people to bail into investments that well, you know, only go up.


----------



## Tysonboss1 (3 February 2008)

numbercruncher said:


> Why will a devolper care about Higher Interest rates or falling prices in the wider market if his business profits are protected by falling input costs such has which just been passed by the Brisbane council and possibly more from the mayor hopeful ?
> 
> QUOTE]
> 
> ...


----------



## xoa (3 February 2008)

robots said:


> *Australia average pretax wage = 55k , average House 440k , thats over 10x post tax income = Does not compute.*QUOTE]
> 
> ha ha ha ha, guess what NC that tells me RE is as high as ever, so much for stagnation
> 
> ...




So, do you think that real estate prices will remain at these high ratios for the long term?

For over a century, the ratio has hovered around 3.5x, except for the occasional boom and bust. Has this fundamental law of real estate suddenly changed?

Maybe the real estate spruikers are right. Maybe there'll always be a limited supply of real estate on our vast and sparsely populated continent.


----------



## robots (3 February 2008)

hello,

yes I do and I think they are set to worsen slightly,

but still plenty of affordable houses around,

kathmandu went over this again and again,

it is easily fixed by getting a better paying job but the socialists who run all the propaganda dont like you to say that, anyone heard of promotion

for instance a labourer in Vic on EBA rates is on around 60k a year with site allow, travel allow etc, and you also get portable sick leave, redunancy etc

now if you move from one of those low paying IT jobs into the labouring market presto,

thankyou

robots


----------



## numbercruncher (3 February 2008)

robots said:


> for instance a labourer in Vic on EBA rates is on around 60k a year with site allow, travel allow etc, and you also get portable sick leave, redunancy etc





Hello


Just checked jobsearch.gov.au under " melbourne Labourers, Factory and Machine Workers - Construction and Earthmoving Labourers - Multiple Occupations " 52 positions available .....

These people have 20 of them ...



> Location: VIC - MELBOURNE
> Emp Ref:  Labou- Ashphalt
> Salary: $20+ p/h
> Positions: 20
> ...




http://jobsearch.gov.au/SearchResults/Job.aspx?st=11&WHCode=0&rgn=7114vwst%2c7114vnwe%2c7114vnor%2c7114vest%2c7114vswe%2c7114viea%2c7114vsou%2c7114vpen%2c7114vsea&Occ=7111%2c9912%2c9924%2c9913&print=0&NumMJL=0&CommJobs=0&CurPage=1&TotalRec=21&JobPos=17&JobID=166470156&SortDir=0&SortField=0&

You telling little porkpies again Robots ? I noticed you didnt mention how many hours for 6ok Labourer jobs, maybe 10hrs a day 7 days a week ?  I have no Doubt some Labourers get 60k in Melbourne but certainly not all or even half.



robots said:


> but still plenty of affordable houses around,




Tell us more , examples, use average wages, average house prices, current and expected Interest rates, allow for cost of living etc, nice little project for you


----------



## robots (3 February 2008)

hello,

check out cfmeu vic site and you can download rates from them,

10% super, reduncancy, site allowance isnt on the page

the latest table is for 06, so proably been some increases from 06

happy reading NC

thankyou

robots


----------



## robots (3 February 2008)

hello,

here's one NC,

http://www.realestate.com.au/cgi-bi...r=&cc=&c=83553067&s=vic&snf=rbs&tm=1202023409

185k, 38km to GPO

pretty good deal, wow that was hard work

so a labourer on 60k doing it pretty easy NC

any moaners on this one

thankyou

robots


----------



## numbercruncher (3 February 2008)

Tysonboss1 said:


> numbercruncher said:
> 
> 
> > Why will a devolper care about Higher Interest rates or falling prices in the wider market if his business profits are protected by falling input costs such has which just been passed by the Brisbane council and possibly more from the mayor hopeful ?
> ...




Oh your talking about the small time Muppets ? The Flippers and wannabe property moguls, sure they are the first to be sqeezed out.

Big developers keep pumping out blocks etc as long as someone is waiting to buy, they dont go on holiday for a decade waiting for low interest rates etc.

Only going to be helped along by Governments/Councils etc, higer Interest rates but cheaper blocks etc because of Infrastructure charges being slashed.

Developers still make money no matter what, they pay less for the land and now less for other development costs, worse comes to worse they lower the profit margin, simple, the people who paid top dollar at the peak lose out.

The economy doesnt stop because of higher rates, in theory itll slow down though.


----------



## numbercruncher (3 February 2008)

robots said:


> hello,
> 
> here's one NC,
> 
> ...




Good example Robots one of the many Melb Suburbs beginning to Crash, yes it is affordable for anyone after a depreciating asset.


----------



## robots (3 February 2008)

hello,

is the house affordable though NC? yes good one

keep moaning

thankyou


----------



## numbercruncher (3 February 2008)

robots said:


> hello,
> 
> is the house affordable though NC? yes good one
> 
> ...




You tell me Robi,

Your Labourer mate earns 60k p/a incl super, 55k after super, 40k after tax or 800 p/w.

This trashy house in Melton would cost 400p/w over 20yrs in repayments plus another 50 for rates/Insurance/Maintenance.

Your Labourer mate would have to spend well over 50pc of his take home pay to service it, Mortgage stress is defined as 35pc or more of your income going on housing.

So is it affordable for your mate on above average wages Robi? In one of the Cheapest Suburbs in Melbourne 

There is a reason this property you link is "rented for $190 a week", because its a depreciating asset in a trashy area.

Thankyou.


----------



## numbercruncher (3 February 2008)

> A study conducted by Fujitsu Consulting and JP Morgan predicts that as many as 300,000 Australians could be forced to default on their home loans this year.
> 
> The study also found that increasing interest rates will mean that about 750,000 households will struggle to pay food and bills, and will be under mortgage related stress.
> 
> ...




http://www.skynews.com.au/news/article.aspx?id=215134

Isnt it high time the Realestate Industry was fully investigated?

Or do we, like the US, wait until after it blows up to start investigating?


----------



## wayneL (3 February 2008)

London:

http://www.telegraph.co.uk/money/ma...AVCBQWIV0?xml=/money/2008/02/03/cnland103.xml



> Property crunch hits British Land
> 
> By Jonathan Russell
> Last Updated: 11:25pm GMT 02/02/2008
> ...


----------



## Flying Fish (3 February 2008)

robots said:


> hello,
> 
> check out cfmeu vic site and you can download rates from them,
> 
> ...



hello

Robots youy are a trade  union thug. Just what we need
Thankyou


----------



## numbercruncher (3 February 2008)

Flying Fish said:


> hello
> 
> Robots youy are a trade  union thug. Just what we need
> Thankyou





Excellent!

Union thugs beating out pay rises and adding to inflation and Interest rates.

Game on


----------



## robots (3 February 2008)

hello,

just trying to help out the brothers FF,

so NC, our labourer just walks in with no cash down

thankyou

robots


----------



## robots (3 February 2008)

hello,

I think you were saying the other day all the public servants should get the wage rises NC, labourer not good enough?

thankyou

robots


----------



## numbercruncher (3 February 2008)

Yes everyone earning under 100k should get wage rises, thankyou.

Should and Will are two different things obviously, would need to raise your tax to facilitate this.


----------



## robots (3 February 2008)

hello,

no need to raise tax, 

just get rid of all the departments Australia  doesnt need

thankyou

robots


----------



## theasxgorilla (3 February 2008)

numbercruncher said:


> http://www.skynews.com.au/news/article.aspx?id=215134
> 
> *Isnt it high time the Realestate Industry was fully investigated?*
> 
> Or do we, like the US, wait until after it blows up to start investigating?




I do like how you selectively quote the article numptycruncher.  Of course this is just an article...the paper is not publicly available yet, is it?  So we can't see the exact wording of the report.  What we have here are interpretations by journalists (insert finger down throat emoticon here).  What about this bit right down at the bottom by the Mortgage Industry Association chief:

"Mr Naylor warned people against getting themselves into further debt after they secure a mortgage, claiming that anecdotally, *it is credit card debt acquired after a mortgage that is really hurting struggling borrowers.*"

Those nasty real estate agents bundling free credit cards with houses again I presume? 

Or perhaps you really meant to also include this one:

"Phil Naylor, the CEO of the Mortgage Industry Association has played down the research, and says that the figures are based a worst case scenario."

There is always at least two sides to any story, usually many more.

For mine, eventually, when it becomes widely acknowledged (but perhaps not proven a la tobacco and smoking and cancer) that debt expansion and contraction is behind every boom and bust we'll have to stick great big slogans on debt products eg. x Bank's NEW Credit Saver Card, WARNING: taking on excessive debt may harm your unborn babies chances of living in 3br 15 sq. home with a backyard in a nice neighbourhood.

ASX.G


----------



## wayneL (3 February 2008)

robots said:


> no need to raise tax,
> 
> just get rid of all the departments Australia  doesnt need
> 
> ...



Alas, something we can agree on.


----------



## numbercruncher (3 February 2008)

theasxgorilla said:


> I do like how you selectively quote the article numptycruncher.





Hello Gorilla

is it not ok to quote the bit of article I am concerned about ? 



> Compounding the problem is the fact that many properties are being over-valued at the time of purchase, meaning that even selling properties doesn't necessarily get the borrower out of debt.




Properties being over valued at time of purchase has what exactly to do with Credit Cards ?

Over valuing is Fraud in Australia, just like it was fraud in the US.

Thankyou.


----------



## theasxgorilla (3 February 2008)

numbercruncher said:


> Hello Gorilla
> 
> is it not ok to quote the bit of article I am concerned about ?




Go for your life.  But if the premise that the doom-and-gloom article is based on is shaky at best don't be surprise is eventually someone pulls you up on it.  



numbercruncher said:


> Properties being over valued at time of purchase has what exactly to do with Credit Cards ?
> 
> Over valuing is Fraud in Australia, just like it was fraud in the US.




Where did this "fact" come from?  The article, or the report?  Or is this a wise-guy journalist trying to join his own dots?  Seems like a pretty shaky article to go basing solid beliefs on.  Then again, it's from a 'real' news company, and there are two big names at the top of the report, so it ought to be real.  But isn't Fujitsu Consulting an IT consultancy company, last time I checked.  And I don't recall last time I saw JP Morgan selling residential mortgages in Australia.

Think for yourself.

ASX.G


----------



## robots (3 February 2008)

hello,

"A rally in property shares since the start of the year has seen British Land and the wider commercial property sector buck the general gloom of the market, rising by over 5 per cent. Its rivals, Liberty and Hammerson, are also due to report in February, but the market is split on its outlook for share movements."

now we get to the truth, people still buying those property shares by the looks of it, strange paragraph in the article

thankyou

robots


----------



## numbercruncher (3 February 2008)

Surely the onus isnt upon the Forum user to prove the accuracy of a reporters report 

More than one source saying it ...



> Kim Quick, senior valuer at property advisers Herron Todd White, said increasing numbers of people were stuck in a housing trap where their home was no longer worth what they paid for it because it was over-valued when they bought it.
> 
> "A few years ago people were desperate to get on the housing ladder and were convinced that property prices were just going to go up and up," she said.
> 
> ...




http://www.smh.com.au/news/national/bexclusiveb-mortgage-pain-for-750000-owners/2008/02/02/1201801094694.html

No I cant prove what this Lady says to be true or that the reporter didnt make errors in reporting it, I simply dont have the time.


----------



## numbercruncher (3 February 2008)

This is from the Housing Industry associations website, 2 rises since this data , another probably next week and probably more later during the year.







> Higher Rates Tip More Into Mortgage Stress
> Higher home mortgage rates have sent the number of households in mortgage stress soaring since the Census was taken in August last year, according to the Housing Industry Association.
> 
> 
> ...




http://hia.com.au/hia/news/article/MR/National/EC/Higher%20Rates%20Tip%20More%20Into%20Mortgage%20Stress.aspx


----------



## Tysonboss1 (3 February 2008)

numbercruncher said:


> Oh your talking about the small time Muppets ? The Flippers and wannabe property moguls, sure they are the first to be sqeezed out.
> 
> Big developers keep pumping out blocks etc as long as someone is waiting to buy, they dont go on holiday for a decade waiting for low interest rates etc.




All I am saying is that the higher the interest rate the less developments get to market, simply because they can't sell them as quickly.

the longer it takes to sell the developments then the longer it takes to get the next project rolling.

For example my uncle has just completed a 26 unit apartment building, 2 years ago he was selling the last units in his developments just as the paint were drying on the project.

At the moment he still has about 1/2 the units unsold, his next project is all lined up but he can't get the ball rolling till he sells another 6 apartments. so not only is his propfit on the whole project smaller because on the extended interest costs, the rate at which the projects are completed is much slower.

so yes interest rates do slow developments.


----------



## theasxgorilla (3 February 2008)

numbercruncher said:


> Surely the onus isnt upon the Forum user to prove the accuracy of a reporters report




Not at all.  But whereabouts do I find *your* insight into these articles you keep posting up for us?

Everyone is giving robots a hard time about alleged real-estate industry ramping, amongst other stuff....I rate his anecdotal stories 1000 times higher in value than this selectively quoted mainstream media garbage.



numbercruncher said:


> No I cant prove what this Lady says to be true or that the reporter didnt make errors in reporting it, I simply dont have the time.




So long as you know where you stand.  Good for you.

ASX.G


----------



## numbercruncher (4 February 2008)

Dear Property Bulls,


Does realestate go up on average 10p/c per annum , ie - Double every 7 years ?


----------



## Kauri (4 February 2008)

Just out...
House prices rose 3.2% in the December quarter, the same as the revised gain for September, to be 12.3% higher over the year, the strongest increase since March 2004.  Prices rose by more than 20% in Adelaide and Brisbane, with Sydney lagging with only an 8.0% gain, still the best in three years.  The house price boom might mean the hawks will be flying??
Cheers
..........Kauri


----------



## Tysonboss1 (4 February 2008)

numbercruncher said:


> Dear Property Bulls,
> 
> 
> Does realestate go up on average 10p/c per annum , ie - Double every 7 years ?




yes,... certain areas will achieve this growth rate


----------



## numbercruncher (4 February 2008)

Tysonboss1 said:


> yes,... certain areas will achieve this growth rate




That means Sydney is going to have one hell of a year, In 1890, the average Sydney home price was $1,446 (£723). If property really does double every seven years then, in 2009, the average Sydney home will be worth $189,530,112.00.


----------



## wayneL (4 February 2008)

numbercruncher said:


> That means Sydney is going to have one hell of a year, In 1890, the average Sydney home price was $1,446 (£723). If property really does double every seven years then, in 2009, the average Sydney home will be worth $189,530,112.00.



I love Excel


----------



## stock_man (4 February 2008)

numbercruncher said:


> That means Sydney is going to have one hell of a year, In 1890, the average Sydney home price was $1,446 (£723). If property really does double every seven years then, in 2009, the average Sydney home will be worth $189,530,112.00.





Interestingly enough, working that calculation to give Sydney's current average house price (~ $540K) comes in at 5.1% per annum coumpounded.
This means a doubling every 14 years over a 119 year sample.

Wonder wait the average inflation is over this same period?


----------



## moneymajix (4 February 2008)

*Cabinet approves first home owners' saving scheme *
4-February-08 by AAP


Latest News


Federal cabinet today approved a scheme offering an effective tax break for aspiring first home owners, giving them incentives to save a deposit.

Treasurer Wayne Swan said cabinet had agreed on the first home saver account, first flagged during the election campaign.



http://www.wabusinessnews.com.au/en-story/1/60415/Cabinet-approves-first-home-owners-saving-scheme


----------



## theasxgorilla (4 February 2008)

stock_man said:


> Interestingly enough, working that calculation to give Sydney's current average house price (~ $540K) comes in at 5.1% per annum coumpounded.
> This means a doubling every 14 years over a 119 year sample.
> 
> Wonder wait the average inflation is over this same period?




Impossible to measure.  You see how the CPI has been massaged in the last 20 years...but over 100+, forget about it.

Don't forget two periods of world war in there where price controls probably kept an artificial lid on things.

ASX.G


----------



## robots (4 February 2008)

hello,

just a quick one on Ruddie and government departments,

whats this 2020 talk fest, why do we need ministers and their staffers then if 1000 people are going to get together to discuss things

"oh we are going to cut spending" looks like they are spending up,

public servants, who needs them

thankyou

robots


----------



## theasxgorilla (4 February 2008)

numbercruncher said:


> You tell me Robi,
> 
> Your Labourer mate earns 60k p/a incl super, 55k after super, 40k after tax or 800 p/w.
> 
> ...




Numpty you are so full of the proverbial.

Who takes a 20 year mortgage again?  And when did a 60k job pay $800 a week?

10% deposit equates to $281 a week on a 30 yr mortgage (@ 8%).  With $911 a week clear in income that comes to 30.94%.  You, I, and anyone with half a brain reading this knows that %age can be brought down a number of ways.

Want a house in a less 'trashy' location and I think you'll find the missus will be heading off to work too.  Or you'll need more than 60k a year in income.  Or you'll need a bigger deposit.

ASX.G


----------



## Joe Blow (4 February 2008)

An interesting article from news.com.au today:



> House prices up by 20pc
> 
> By Mark Schliebs
> February 04, 2008 12:13pm
> ...




More here: http://www.news.com.au/business/story/0,23636,23155967-462,00.html

Good news for property owners in Adelaide and Brisbane.


----------



## robots (4 February 2008)

hello,

auction results for the weekend show clearance rate of 77%,

which is still pretty good with a small no. of auctions taking place,

many agents report buyers placing offers prior to auction with some vendors gladly accepting,

in Melb the aution season kicks of around the 23rd Feb with quite a few on that weekend, that and the following weekend will give bit of an indication of where it is at,

thankyou

robots


----------



## numbercruncher (4 February 2008)

theasxgorilla said:


> Numpty you are so full of the proverbial.
> 
> Who takes a 20 year mortgage again?  And when did a 60k job pay $800 a week?
> 
> ...




Borerilla,

I made an error, mortgage stress is defined as 30pc or more of your income. Seems your calculator says hes in mortgage stress in Melbournes cheapest suburb.


Did you include Stamp duty/Mortgage reg/Rates/Insurance/etc/etc - Didnt include his super as income did you ? Whos handing out 8pc mortgages atm ?


Personally I think our Labourer friend should rent, Invest his deposit, salary sacrifice some extra to super, perhaps even buy an investment property for the tax deductions etc if hes that keen on a residential property .....

Each to their own though!


----------



## numbercruncher (4 February 2008)

Joe Blow said:


> An interesting article from news.com.au today:
> 
> 
> 
> ...




Yes Stella Return for the Brisbanites!

Brisbane council has just slashed land development/Infrastructure fees, should temper things a little going forward one would summise!

The Benefit of hindsight is so wonderful, when I grabbed my first property back in 2000 there was still plenty of Houses and Units around G/coast Brissy under 100k, lend me your time machine comrade and ill go back and grab 10


----------



## robots (4 February 2008)

hello,

our labourer friend will also grab a handy 10k grant from the Gov's if first house, since everyone talking about FHBuyer's he is in,

should be enough to cover a few things, what if he had 50k as deposit, things also change

just to clear things up, around 60k for an EBA labourer is about right and excludes SUPER, PORTABLE SICK LEAVE, REDUNANCY, LONG SERVICE LEAVE which are added bonuses 

not a bad gig

thankyou

robots


----------



## numbercruncher (4 February 2008)

Yes Yes, I know he can afford the House, my point is he fits the offical designation of Mortgage stress, and its the cheapest Suburb in Melbourne.

I checked out these pay rates and your correct Robots, BUT you need to work Saturdays to obtain the 60k


----------



## robots (4 February 2008)

hello,

if you work saturaday NC you get well over 60k, I think it is $357 for a saturday,

but here is an example of someone to get out of lets say a 40k job into a 55k  with benefits way ahead of other jobs, (and the moaning starts)

FFS handout crew

who has portable sick leave? do you know what it is?

hangon, I just found that stat again from your higher authority the ABS, home owners some 5x wealthier than renters, so much for your strategy

thankyou

robots


----------



## Mofra (4 February 2008)

YChromozome said:


> Do you have some stats on this? Or are you calling Renos investments? I guess it adds value to the house.
> 
> The data I have seen (Which I must admit I can't find now) suggests the bulk of it goes into Renovations (Kitchens, Bathrooms, additions etc) and Debt Consolidation. Naturally consolidating the Credit Card debt and other personal loans generally leads to further spending.
> 
> ...



I have worked in the mortgage industry for a number of years so I my figures are based on what I'm approving, our own broad figures (reg. vs unreg. debt) and what the vast majority of our "can we do this?" enquiries are. If there are broader figures available _by loan volume _(not number of loans), I'd be very interested.

As much as newspaper articles (most of them show up here incidently) want to paint the majority of borrowers as unsophisticated toothless hicks who are slaves to the machinations of macro-economic forces of which they are unaware, a surprising number of people actively recycle their household debt effectively, use their property portfolio as a source of credit for further investments, and retire surplus debt when the investment outlook is not as positive.


----------



## robots (4 February 2008)

xoa said:


> A decade ago, a conversation like this would have been absurd. The fact that you're trying to argue that a 6-day-per-week tradesman can (barely) afford a **** house in a **** suburb speaks volumes about how unsustainable the current situation is.




hello,

ring the CFMEU tomorrow and get the rates for labourer's, it is not 6-day week, 

I forgot, no hard work in the socialist model because everything is spread equal, just sit back with the handout crew

gee no need to get upset, had a bad day then go for a walk,

as usual suburb not good enough, 

thankyou

robots


----------



## Mofra (4 February 2008)

numbercruncher said:


> Dear Property Bulls,
> 
> 
> Does realestate go up on average 10p/c per annum , ie - Double every 7 years ?




No NC... only during the duration of this thread :


----------



## numbercruncher (4 February 2008)

Thats a flawed stat Robots and you know it, on average " home Owners " are older and higher Incomes, Renters are younger, apprentices, students , etc etc etc. Ofcourse a 40 year old earning 100k p/a owning a home is going to have more assets that a 20 year old renter apprentice.

Please lets stop the Union Member Labourer thing its gone on for two pages now lol, yes seems they earn good cash, your not interested in the point I was making regarding affordability, but thats cool!

How much of an interest rate rise are you hoping for tomorrow ?


----------



## Tysonboss1 (4 February 2008)

numbercruncher said:


> That means Sydney is going to have one hell of a year, In 1890, the average Sydney home price was $1,446 (£723). If property really does double every seven years then, in 2009, the average Sydney home will be worth $189,530,112.00.




Think of where those houses would have been,... most likly sydney cbd.

As crazy as that number may sound, 

I know of a building that is valued at $650,000,000.00 in sydney cbd.

Infact a 1/4 arce block on the fringe of parramatta was probally worth $5.00... 130 years ago,... what would the growth rate on that be to todays level


----------



## numbercruncher (4 February 2008)

numbercruncher]Dear Property Bulls said:


> No NC... only during the duration of this thread :




 lol Mofra Great call


----------



## Tysonboss1 (4 February 2008)

numbercruncher said:


> Yes Yes, I know he can afford the House, my point is he fits the offical designation of Mortgage stress, and its the cheapest Suburb in Melbourne.
> 
> I checked out these pay rates and your correct Robots, BUT you need to work Saturdays to obtain the 60k





CBA classes 40% of wage as a manageable loan,....

while all the what if's are flying around did we mention thw labourers wife working part time. she will also help the mortage along.


----------



## robots (4 February 2008)

hello,

what if the union labourer had a 40k, 50k or 60k deposit NC?

that changes the affodability issue as well,

in relation to the stat, no I dont believe it is flawed at all, it is reality

I have many friends in the mid thirties who have rented for many years and the situation is exactly as the ABS describes it

thankyou

robots


----------



## numbercruncher (4 February 2008)

Tysonboss1 said:


> CBA classes 40% of wage as a manageable loan,....
> 
> while all the what if's are flying around did we mention thw labourers wife working part time. she will also help the mortage along.




So your average Income earner, Labourer or whatever, is clearing after tax $1000 per week, according to CBA website 200k Mortgage will be $391 per week or 39.1 p/c.

Wow seems anyone can buy in Melbournes cheapest suburb!

BUT you can rent this house for 180 p/w or Rent the Money for this house for 391 p/w, maybe we should allow for 1pc rise in rates this year as well ? Rates ? Insurance ? so say 450p/w vrs 180 ......

Anyway, you guys have proved your point, its affordable for anyone who wants a piece of Realestate pie.

Next on the agenda ... Housing Industry Association Report ....



> New home sales fell in the final month of 2007, the second consecutive decline, as higher interest rates and further pressure on house prices bit into the new home building industry.
> 
> HIA’s New Home Sales figures released today for December 2007 show a 1.3 per cent fall in the sale of new homes and units among Australia’s largest builders and developers. A 2.9 per cent drop in the sale of detached houses outweighed a 5.1 per cent rise in apartment sales.
> 
> *New home sales declined by a further 0.3 per cent in 2007, the fourth weak year in a row.*




http://hia.com.au/hia/news/article/MR/National/EC/Interest%20Rates%20Up%20Sales%20Down.aspx


If demand is so great, why is Home construction continually falling?

News Houses really arnt that expensive to build, 130k gets you a perfectly functional Family Home.


----------



## Tysonboss1 (4 February 2008)

numbercruncher said:


> http://hia.com.au/hia/news/article/MR/National/EC/Interest%20Rates%20Up%20Sales%20Down.aspx
> 
> If demand is so great, why is Home construction continually falling?
> 
> News Houses really arnt that expensive to build, 130k gets you a perfectly functional Family Home.




This is an example of the debate we were having earlier where I was saying less developments will get to market as interest rates increase.

But even though the short term demand drops back a bit, it won't stop the underlying fundamentals of population growth,.... I mean even though less house get to market every month more people get to the age where they will want to move away from home,... more planes land with migrants wanting to live in the lucky country and all this under lying demand just builds and puts more pressure on rents to rise.

And when the market hits that crux point new building explodes.


----------



## numbercruncher (4 February 2008)

I find that hard to digest especially seen as its the fourth year in a row.

Its roughly equivalent price wise to build new as buy second hand.

As the article states 5pc rise in apartment building, but offset by falling volume of Houses built, I would summise that there is already enough houses to meet demand and a swing towards apartment living happening.

I read our population is increasing 300k per year, HIA says 150k dwellings are being build per year, Government says there is a average 2.57 persons per household - it seems supply is keeping up with demand ! Crunching those numbers it appears plenty of stock being built, extra even.

I think unit demand will continue to grow as shown by the HIA, people downsizing or choosing not to have familys etc.


----------



## stock_man (5 February 2008)

numbercruncher said:


> If demand is so great, why is Home construction continually falling?
> 
> News Houses really arnt that expensive to build, 130k gets you a perfectly functional Family Home.




I agree that new houses arn't too expensive to build (compaired to buying an existing house in the same suburb), but $130K is a joke.

I have done this twice myself, and by the time you add on BASIX requirements (water tank etc), block levelling, bush fire protection, floor coverings, landscaping you are up at $175-$190K. And that is only very basic inclusions. No a/c, limited lighting etc.
Plus the interest payments made during the 40 weeks it takes to build.

But, back on the argument, doing this has allowed us to build and live in suburbs that we would not be willing to otherwise afford.


----------



## wayneL (5 February 2008)

This was on prime time TV (BBC1)here in The Old Dart

*Bursting the House Price Bubble*
Panorama exposes a sharp practice in the housing market keeping house prices artificially high and plunging some homeowners into negative equity. 

Click on the "Watch Now" button at this link.


----------



## numbercruncher (5 February 2008)

Property Bulls,

So retail variable mortgage rates will now get to 9pc, Your average 400k property renting for $400 a week, must surely by now be looking a little dicey, what happens at 10,11,12 p/c , just keep passing it onto the tenants until they become squatters ? What happens when we get to 12pc and your property sits vacant with 1000 pw interest bill ?


----------



## ROE (5 February 2008)

I hope people know there are laws that protect existing tenant.
IE you can increase a maximum of 15% on rental price on existing tenant 
but most people wont get the full 15% more like between 5%-10% if they lucky.


----------



## robots (5 February 2008)

hello,

any property bulls got a comment?

thankyou

robots


----------



## explod (5 February 2008)

numbercruncher said:


> Property Bulls,
> 
> So retail variable mortgage rates will now get to 9pc, Your average 400k property renting for $400 a week, must surely by now be looking a little dicey, what happens at 10,11,12 p/c , just keep passing it onto the tenants until they become squatters ? What happens when we get to 12pc and your property sits vacant with 1000 pw interest bill ?





The property value sinks and the renters who have been doing so deliberately start to buy back in.   Just follow the financial cycle wheel and no probs.  But I feel for those starting out.

As a kid in the early fifties some families lived with Grandparents.  Remember one of my school mates with fifteen in a three bedroom.  Back shed and lounge served many of them.    Go to Europe and you will still find 4 generations all pitched together.

We have been spoilt in Australia.  Welcome to sharing and reality.  And in that way we will survive.  Many people in the world eat 25% of what we do and they are lucky ones with sufficient.


----------



## robots (5 February 2008)

explod said:


> The property value sinks and the renters who have been doing so deliberately start to buy back in.   Just follow the financial cycle wheel and no probs.  But I feel for those starting out.
> 
> As a kid in the early fifties some families lived with Grandparents.  Remember one of my school mates with fifteen in a three bedroom.  Back shed and lounge served many of them.    *Go to Europe and you will still find 4 generations all pitched together.*
> 
> We have been spoilt in Australia.  Welcome to sharing and reality.  And in that way we will survive.  Many people in the world eat 25% of what we do and they are lucky ones with sufficient.




hello,

spot on explod,

all 4 gen's in an apartment too, 

thankyou

robots


----------



## numbercruncher (5 February 2008)

robots said:


> hello,
> 
> spot on explod,
> 
> ...





Youll need to arrange for 30 million or so immigrants to get that happening here  Still plenty of room to consolidate from the current 2.57 people per Australian Household


----------



## wayneL (5 February 2008)

robots said:


> hello,
> 
> spot on explod,
> 
> ...



Maybe Romanian sheep herders, but not in the UK at least.

According to the 2001 census, there are 2.4 persons per household, with the vast majority being single family/single person households.

http://www.statistics.gov.uk/census2001/profiles/uk.asp

Most of western Europe would be similar (without having the stats to back that up)

Interestingly, there are 840,000 empty household spaces in the UK, making a mockery of the undersupply theory.


----------



## robots (5 February 2008)

hello,

actually you only have to go to local jewish area, chinese area, vietnamese area in most countries to see the benefit of shared living,

thankyou

robots


----------



## numbercruncher (5 February 2008)

Interesting story on ACA tonight called " Interest Rate Gurus "

Usual suspects, at end of article they summarise with 5 major points, one of which is " Dont Lock into a Fixed Rate "

Same advice they where giving 10 interest rate rises ago, maybe theyll be right this time 

The media and the men that pay their wages are not your friend 

http://aca.ninemsn.com.au/


----------



## explod (5 February 2008)

robots said:


> hello,
> 
> actually you only have to go to local jewish area, chinese area, vietnamese area in most countries to see the benefit of shared living,
> 
> ...




Strewth Robo, I do not suggest that way as a benefit, just pointing out that we could stretch the other way a bit if required and do have more room perhaps than we need.   

As the crunch bites property prices will drop and life will keep going.  As Sir Les Patterson says, "noooo  worries paal"


----------



## wayneL (5 February 2008)

robots said:


> hello,
> 
> actually you only have to go to local jewish area, chinese area, vietnamese area in most countries to see the benefit of shared living,
> 
> ...




Agree, but we Anglo Saxons don't seem to thrive doing that. It's a fault in our culture for sure, but a fact nevertheless.


----------



## numbercruncher (5 February 2008)

wayneL said:


> Agree, but we Anglo Saxons don't seem to thrive doing that. It's a fault in our culture for sure, but a fact nevertheless.




I was just going to say that, coop us up and we'll invade every continent on the planet, oh hang on


----------



## theasxgorilla (5 February 2008)

robots said:


> any property bulls got a comment?




It's an extremist arguement, and therefore the weakest kind.  I don't see the point.  If people stepped out of the market in anticipation of some kind of crash, which is yet to manifest, it stands to reason that we can expect to see this kind of huffing and puffing from their corner.  They'll either get what they want or blow themselves out.

ASX.G


----------



## explod (5 February 2008)

theasxgorilla said:


> It's an extremist arguement, and therefore the weakest kind.  I don't see the point.  If people stepped out of the market in anticipation of some kind of crash, which is yet to manifest, it stands to reason that we can expect to see this kind of huffing and puffing from their corner.  They'll either get what they want or blow themselves out.
> 
> ASX.G




Other way round:;      with cost of living getting out of hand for many, the market becomes out of  reach (steps away from the people) which may induce a crash, and there is evidence that it is happening in some areas already.

A fair argument of supply and demand, not extremist, just a possible scenerio.


----------



## Mofra (5 February 2008)

Strange that the argument always seems to lead back to what the market as a whole is doing, yet even splitting the market into three tiers (inner city, median & outer suburban) often shows the "boom" in property prices was led by only one of those sectors.


----------



## Tysonboss1 (5 February 2008)

numbercruncher said:


> Property Bulls,
> 
> So retail variable mortgage rates will now get to 9pc, Your average 400k property renting for $400 a week, must surely by now be looking a little dicey, what happens at 10,11,12 p/c , just keep passing it onto the tenants until they become squatters ? What happens when we get to 12pc and your property sits vacant with 1000 pw interest bill ?




Interest rates will affect all asset classes,.... Interest rates really only affect you if you are leveraged investor, so a share investor who is leveraged to 80% will be affected to a similar extent as a property investor at 80%.

What to you think will happen to the share market with interest rates at 12%?


----------



## Tysonboss1 (5 February 2008)

ROE said:


> I hope people know there are laws that protect existing tenant.
> IE you can increase a maximum of 15% on rental price on existing tenant
> but most people wont get the full 15% more like between 5%-10% if they lucky.




you don't increase the rent just because interest rates go up anyway, you increase the rents partly due to inflation and partly due to supply and demand.


----------



## wayneL (5 February 2008)

Tysonboss1 said:


> Interest rates will affect all asset classes,.... Interest rates really only affect you if you are leveraged investor, so a share investor who is leveraged to 80% will be affected to a similar extent as a property investor at 80%.
> 
> *What to you think will happen to the share market with interest rates at 12%?*




Exactly what needs to happen.


----------



## Tysonboss1 (5 February 2008)

numbercruncher said:


> Interesting story on ACA tonight called " Interest Rate Gurus "
> 
> Usual suspects, at end of article they summarise with 5 major points, one of which is " Dont Lock into a Fixed Rate "
> 
> ...




I try not to listen to anyone that ACA or today tonight call a guru, often with all the editing and emotional angle the story is trying to pull you never here the full story or the real explanation behind peoples theories.

I think if you are an investor exposed to alot of debt you should have fixed atleast a portion of your debt long ago,...Some of my loans are fixed at 7.69% for 3 more years.

Even if the rate does drop in the future I think it is wise to hedge your rate by fixing.


----------



## numbercruncher (5 February 2008)

Is it just me or ? I cant stand that Aussie Home Loans guy, they make him out like some legendry friend of the people ?

"Some of my loans are fixed at 7.69% for 3 more years"

Good work Tyson, you have obviously been paying attention to your own research and not the media comptrollers 

Would take something big for you to lose out from that position im sure, retail variable rate now will be 9pc and rampant inflation, good work


----------



## robots (6 February 2008)

hello,

i am with you on John Symonds from Aussie Home Loans, have the same view on steven keen as well,

come and talk to you're lender so we can "push" sorry re-finance you this way and get some hefty fees for some simple paperwork,

thankyou

robots


----------



## KIWIKARLOS (6 February 2008)

Theres a story in the news today that once the price of Iron Ore and coal is increased Australias exports should increase from 42 Billion PA to around 70 Bill PA 

Tell me how can we have a crash in house prices when australias resource sector is about to start making a lot more money which will inevitabily lead to higher wages and more jobs. 

On top of that El nina is bringing drenching rains to farmers so food prices are going to go down and our agriculture exports going up.

Interest rates aren't enough to help cool our economy I believe Oz will continue to have a strong economy well into the future. House prices will keep rising. Even with rates goingg up and morgage stress increasing we have yet to see any real broad based decrease in prices in any state. 
As the oz dollar goes up the cost of imports comes down, when the US hits the wall oil could be $80 a barrel. I can only see inflationary pressures decreasing in the medium term while our profitability as a country goes up.


----------



## Tysonboss1 (6 February 2008)

stock_man said:


> Interestingly enough, working that calculation to give Sydney's current average house price (~ $540K) comes in at 5.1% per annum coumpounded.
> This means a doubling every 14 years over a 119 year sample.
> 
> Wonder wait the average inflation is over this same period?




Even if we take your very conservative figure of a 5.1% growth rate, we still get overall return of greater than 10%.

add a 5% rental return on to that 5.1% growth rate and you have a 10.1%p/a return,....


----------



## numbercruncher (6 February 2008)

Tysonboss1 said:


> Even if we take your very conservative figure of a 5.1% growth rate, we still get overall return of greater than 10%.
> 
> add a 5% rental return on to that 5.1% growth rate and you have a 10.1%p/a return,....





But we would'nt dare subtract the holding costs, bank Interest etc , now would we


----------



## explod (6 February 2008)

KIWIKARLOS said:


> Theres a story in the news today that once the price of Iron Ore and coal is increased Australias exports should increase from 42 Billion PA to around 70 Bill PA
> 
> Tell me how can we have a crash in house prices when australias resource sector is about to start making a lot more money which will inevitabily lead to higher wages and more jobs.
> 
> ...





If life were so simple, but things never work out as they seem.

Sure a few more jobs, but the trucks etc are getting bigger.  And where do the profits go, some royalties and taxes, the rest to shareholders, a lot of them overseas.

What we really should be looking at is refining the ores ourselves, even extruding rail tracks etc.   Our resources are large but finite and secondary industries should be growing from them.   Now that would be jobs.


----------



## numbercruncher (6 February 2008)

explod said:


> If life were so simple, but things never work out as they seem.
> 
> Sure a few more jobs, but the trucks etc are getting bigger.  And where do the profits go, some royalties and taxes, the rest to shareholders, a lot of them overseas.
> 
> What we really should be looking at is refining the ores ourselves, even extruding rail tracks etc.   Our resources are large but finite and secondary industries should be growing from them.   Now that would be jobs.





Spot on Explod, I fear we are blowing a golden opportunity, bigger profits for fewer people.


----------



## KIWIKARLOS (6 February 2008)

how is it profits for fewer people, anyone can buy shares in these companies its just that alot of people dont know about investing in shares let alone anything else. Also I guarentee most peoples super funds have some holdings in these mining companies.

I agree we could make more refining the product here or making steel but those industries cost heaps to set up and may not be built in time to make the best of the comoditiy bull market.


----------



## numbercruncher (6 February 2008)

Its certainly hows it working in the US , and seen as Howard/Costello worked dilligently to model us on them Im assuming we are not far off the following article.



> Income inequality grew significantly in 2005, with the top 1 percent of Americans ”” those with incomes that year of more than $348,000 ”” receiving their largest share of national income since 1928, analysis of newly released tax data shows.
> 
> While total reported income in the United States increased almost 9 percent in 2005, the most recent year for which such data is available, average incomes for those in the bottom 90 percent dipped slightly compared with the year before, dropping $172, or 0.6 percent.
> 
> The new data also shows that the top 300,000 Americans collectively enjoyed almost as much income as the bottom 150 million Americans. Per person, the top group received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980.




http://www.nytimes.com/2007/03/29/business/29tax.html?ex=1332820800&en=fb472e72466c34c8&ei=5088&partner=rssnyt&emc=rss

Im not saying Australia is exactly the same as this, but Im certain there is more than a passing resemblance.


----------



## Santob (6 February 2008)

numbercruncher said:


> Its certainly hows it working in the US , and seen as Howard/Costello worked dilligently to model us on them Im assuming we are not far off the following article.
> 
> 
> 
> ...




Howard and the Liberals were excellent at making the rich richer, and the poor more frightened of the immigrants who were terrorising their mortgages (or something like that)


----------



## Tysonboss1 (6 February 2008)

numbercruncher said:


> But we would'nt dare subtract the holding costs, bank Interest etc , now would we




No you wouldn't subtract the holding costs in the intial calculation because these holding costs will be differtrent for every single investor,... ie. some have 90%LVR others 20% LVR.

You would look at return on investment the same way as people work out the 5year share price return figure,.... being the capital growth + dividends translated to a p/a % return.

just like when it is published that woolworths has had a 5 year share price return of 22.5%,... this is simply capital growth + dividends, property should be treated the same.

as I pointed out in my earlier thread the properites that were worth $1000 in 1890 would be worth far more than sydneys median house price today, so the actual capital growth would be far more than 5.1%,.... but even at 5.1% its a decent 10.1% when rents are included.


----------



## Tysonboss1 (6 February 2008)

explod said:


> What we really should be looking at is refining the ores ourselves, even extruding rail tracks etc.   Our resources are large but finite and secondary industries should be growing from them.   Now that would be jobs.




Good idea,..

Let me know when you have released the prospectus on this new company and i will take a look,... good luck on the capital raising.


----------



## RustyK (6 February 2008)

Tysonboss1 said:


> No you wouldn't subtract the holding costs in the intial calculation because these holding costs will be differtrent for every single investor,... ie. some have 90%LVR others 20% LVR.
> 
> You would look at return on investment the same way as people work out the 5year share price return figure,.... being the capital growth + dividends translated to a p/a % return.
> 
> ...





I think you need to still account for some holding costs but I do see your point with respect to interest.  However Rates, Insurance, Repairs and Maintenace, Agents Fees, an allowance for capital refurbs etc need to be included as they are real costs that will affect your return regardless of how much you have or have not borrowed.  

Tax is also something needs to be considered as after tax return is important and there are no franking credits.

A 5% net income return on investment in todays market is probably a little optomistic in my opinion.

Cheers

RustyK


----------



## Tysonboss1 (6 February 2008)

RustyK said:


> I think you need to still account for some holding costs but I do see your point with respect to interest.  However Rates, Insurance, Repairs and Maintenace, Agents Fees, an allowance for capital refurbs etc need to be included as they are real costs that will affect your return regardless of how much you have or have not borrowed.
> 
> Tax is also something needs to be considered as after tax return is important and there are no franking credits.
> 
> ...




Rates, maintaince and insurance are all quite small costs compared to the rent collected and really should be taken out of the rental return so you could calculate it as a 4.8% rental return after costs as oppossed to a 5%return.

a 5% return is easily achieve if you know what you are doing, infact I don't invest unless I can get 5.2% return immeadiatly with a good chance increaseing it fairly rapidly,... and I have managed to maintain inexcess of 5.2% across my entire portfolio as a whole even at todays valuations, which when combined with brisbanes capital growth has ment I have quite happy with property investing.


----------



## numbercruncher (6 February 2008)

Thats good for you but look at it now for new Investors.

House 400k, rent $400 p/w at best, Interest 9pc + rates/Ins/Maint/dutys etc - plus your deposit isnt free it could earn a good return elsewhere if not used in the Investment property.

I live in a 350k House (rented) for 300p/w. How does the Investment market attract new players with this equation ?


----------



## Tysonboss1 (6 February 2008)

numbercruncher said:


> Thats good for you but look at it now for new Investors.
> 
> House 400k, rent $400 p/w at best, Interest 9pc + rates/Ins/Maint/dutys etc - plus your deposit isnt free it could earn a good return elsewhere if not used in the Investment property.
> 
> I live in a 350k House (rented) for 300p/w. How does the Investment market attract new players with this equation?




If you look you will find properties with a good return, I could easily find properties in both brisbane, sydney and melbourne with rents higher than 5%.

Real property investors wll be able to find good investments even in the current market, remember it's not supposed to be easy, 

it's not as simple as walking into a real estate agents office and asking an agent to sell you an investment, if you do this you will end up with a $400,000 property returning a 3.8% return.

Real estate investing is much like stock investing,... some people buy mediocre managed funds with average returns and some people spend time reserching and identifying key performing stocks and do well,...


----------



## wayneL (6 February 2008)

Tysonboss1 said:


> If you look you will find properties with a good return, I could easily find properties in both brisbane, sydney and melbourne with rents higher than 5%.



But those types of properties (making a presumption on the types of properties) should contain a hefty risk premium. At say 6% return, that's a risk discount and you rely very much on cap gain for a profit. Nice if you can get it, but a dangerous game as recession approaches.

These are properties that probably yield 9-11% in normal, non-bubble times.


----------



## Kimosabi (6 February 2008)

Tysonboss1 said:


> If you look you will find properties with a good return, I could easily find properties in both brisbane, sydney and melbourne with rents higher than 5%.
> 
> Real property investors wll be able to find good investments even in the current market, remember it's not supposed to be easy,
> 
> ...



Buying a Bargain in a Boom isn't a Bargain in a Bust.

Buying a Bargain in the Bust is a real Bargain....

There were many "Real Property Investors" in the US who believed their own bullsh1t, who have now been wiped out...

I heard the latest boom in the US is Tents


----------



## tech/a (7 February 2008)

Industrial and Commercial rents far exceed 5.2% in my areas.

Think outside the square.



> There were many "Real Property Investors" in the US who believed their own bullsh1t, who have now been wiped out...




There are many more who will never retire without a pension who *believed their own Bullsh1t.*


----------



## wayneL (7 February 2008)

More risk in commercial, especially as recession approaches.

It's getting slammed here.

http://www.ft.com/cms/s/0/e67e1352-d027-11dc-9309-0000779fd2ac.html

Yields should be minimum 10% IMO.


----------



## tech/a (7 February 2008)

> Lenders are afraid that borrowers may find it's worth the hit to their credit scores, if they can drastically reduce their housing expenses. Someone with good credit and a $600,000 home in a town with cratering real estate prices could buy a similar house nearby for $450,000, and then let the other $600,000 mortgage go into foreclosure.




From the US.
Simply creative thinking by burrowers.



> To head off more defaults, Countywide sent out letters to 122,000 homeowners last week informing them that their home equity credit lines were shut down since their estimated home values had dropped below their loan amounts.




A good thing,as many simply ammortise their debt.


----------



## Tysonboss1 (7 February 2008)

wayneL said:


> But those types of properties (making a presumption on the types of properties) should contain a hefty risk premium. At say 6% return, that's a risk discount and you rely very much on cap gain for a profit. Nice if you can get it, but a dangerous game as recession approaches.




I would actually say the opposite,... they are far less risky,.

take for example one I bought last year,... It's a duplex where I secured both units for $257,000. It's in a good outer suburb of brisbane achieveing capital growth and is at the lower end of the market.

It is less risk because the return is so much higher because I have 2 rent streams from it and it is actually positve geared,.... even if I loss a tenant I still have the other tenant paying rent.

If recession hits,... it's the properties at the top end that will suffer as renters try to down size to cheaper accomadation which actually increases demand for my favourite sectors the low to medium income housing.


----------



## Tysonboss1 (7 February 2008)

Kimosabi said:


> Buying a Bargain in a Boom isn't a Bargain in a Bust.
> 
> Buying a Bargain in the Bust is a real Bargain....
> 
> ...




I am not a Property trader, The properties I buy I am expecting to hold well into the future, (unless I wrap them).

I buy properties where I can achieve good rental returns that I can bring to positive cashflow in a few years, In areas I believe will have good capital appreciation over the next 10 years,...

Even with 11 consecutive rate rises I have never been in a better finacel position than I am in today.

Even if there were a large scale price drop of 40%, that would just make the buying better for me.


----------



## tech/a (7 February 2008)

> Even with 11 consecutive rate rises I have never been in a better finacel position than I am in today.
> 
> Even if there were a large scale price drop of 40%, that would just make the buying better for me.




Its just a case of doing business.Tysons business is as he has stated.

I could add that there are a few here that coiuld say the same with their share trading.



> Even with a 20% drop in the share market I have never been in a better financial position as I am today.
> 
> Even if there were a large scale price drop of 40%, that would just make the buying better for me.




Personally I and a few I know liquidated all long term positions held through the bull run in July.
This is where many of us are right now.

*To many are "Reactive" in my view.
They have longterm views with short term stratagies.*
Its just business.


----------



## lioness (7 February 2008)

Tysonboss1 said:


> I am not a Property trader, The properties I buy I am expecting to hold well into the future, (unless I wrap them).
> 
> I buy properties where I can achieve good rental returns that I can bring to positive cashflow in a few years, In areas I believe will have good capital appreciation over the next 10 years,...
> 
> ...




Tyson, can you tell me what suburbs you have bought into please and their original costs versus what they are worth now and their rental returns.


----------



## wayneL (7 February 2008)

Tysonboss1 said:


> I would actually say the opposite,... they are far less risky,.
> 
> take for example one I bought last year,... It's a duplex where I secured both units for $257,000. It's in a good outer suburb of brisbane achieveing capital growth and is at the lower end of the market.
> 
> ...




Question: Why do you think the returns are traditionally higher in low end properties?


----------



## Tysonboss1 (7 February 2008)

wayneL said:


> Question: Why do you think the returns are traditionally higher in low end properties?




Hard to explain because there are alot of factors but I will try,.. the price of the top end properties is higher becuase ,.. 

1, the cost of building a larger home on a larger block with more features is obviously higher,.... but even though the cost of the dwelling is alot higher the extra rent you can charge is not in proportion to the extra cost,... eg. it might cost you 80% more for a top end property but you can only charge 50% more rent.

2, there is obviously more demand from buyers for properties in the medium to high sector because most property buyers even alot of mum + Dad investors want to own a 'NICE" with nothing to do property that they can drive past and show there friends how "nice" their investment property is,..   so they pay a premium for this nice property and accept a lower rent yeild,... 

for example a nice three bed home in brisbane might cost $425,000 and rent for $360.00, but the three bed unit in my duplex is renting for $240 and the whole complex only cost me $257,000.

I can use two of the properties that I own to prove this point,.... the first property I ever bought is a really nice 4 bedroom has in a nice area. It's worth about $450,000 and is getting $385/ week rent,.... I bought it for $218,000 and only hold $160,000 debt on it so it is positive cashflow

but compared to my duplex which I talked about which I bought for $257,000 which gets well over $400/ week rent. rent return is not as good.


----------



## theasxgorilla (8 February 2008)

tech/a said:


> *To many are "Reactive" in my view.
> They have longterm views with short term stratagies.*
> Its just business.




It's business,  but it's also life.  I think this is why it's important to have hobbies and other sources of income.  You can't force many types of investment in the same way that you can work harder and more often to get more money.  Investment value often increases as a function of time, among other things.  With trading for example, there is usually nothing you can do to force the money to come.  You just gotta wait.  Waiting can be fun with hobbies and other ways to enjoy the fruits of sound investing.

ASX.G


----------



## numbercruncher (8 February 2008)

Bit of useless Information for ya'll.


The last time Interest rates were over 9pc in Oz was 1996.

In 1996 the average wage was 30k and the average property was 120k.

Just thought Id share that


----------



## theasxgorilla (8 February 2008)

numbercruncher said:


> The last time Interest rates were over 9pc in Oz was 1996.
> 
> In 1996 the average wage was 30k and the average property was 120k.
> 
> Just thought Id share that




And we were about to embark on THE largest property boom in recorded Australian history


----------



## theasxgorilla (8 February 2008)

wayneL said:


> Question: Why do you think the returns are traditionally higher in low end properties?




I agree, and I'll give it a shot.  Lower-end properties are usually the last to receive benefit from capital gains during a boom.  If the boom isn't sufficient then they might not even benefit at all.  So this end of the market becomes a different kind of game.  Plus, I expect that way back when banks actually used to have lending standards many of the inhabitants of the areas where you find these properties would not have qualified for loans.  So you end up with a plentiful renter class.

ASX.G


----------



## wayneL (8 February 2008)

G, Ty,

So you don't think it has anything to do with risk premium?


----------



## theasxgorilla (8 February 2008)

wayneL said:


> G, Ty,
> 
> So you don't think it has anything to do with risk premium?




Yes, totally.  That's the exact terminology to sum it up.  Can you cast a blanket across these areas with such terminology?  Declare them unfit for useful investment?  No, I don't think so.  Do you take a greater risk if you step into these markets as an investor?  Yeah, probably, but no-one has been hurt yet.  The boom kicked on long enough for everyone to become mini-moguls, and did I mention, nobody has been hurt (yet)?


----------



## Tysonboss1 (8 February 2008)

theasxgorilla said:


> Yes, totally.  That's the exact terminology to sum it up.  Can you cast a blanket across these areas with such terminology?  Declare them unfit for useful investment?  No, I don't think so.  Do you take a greater risk if you step into these markets as an investor?  Yeah, probably, but no-one has been hurt yet.  The boom kicked on long enough for everyone to become mini-moguls, and did I mention, nobody has been hurt (yet)?




I don't think the properties I am talking about are any riskier than other residential property.

How could they be,...

I have always found them easier to tenant than my properties in more expensive areas, you achieve a higher return, And I don't feel that they are any less likly to experiance capital growth,


----------



## wayneL (8 February 2008)

Tysonboss1 said:


> I don't think the properties I am talking about are any riskier than other residential property.
> 
> How could they be,...
> 
> I have always found them easier to tenant than my properties in more expensive areas, you achieve a higher return, And I don't feel that they are any less likly to experiance capital growth,



These are the properties that suffer more rent defaults. Maybe not atm, but on a down cycle, lower end properties most certainly do.

Hence the risk premium.

Now no non sequiturs please. You may never experience this, but the risk is higher.


----------



## Tysonboss1 (8 February 2008)

wayneL said:


> These are the properties that suffer more rent defaults. Maybe not atm, but on a down cycle, lower end properties most certainly do.
> 
> Hence the risk premium.
> 
> Now no non sequiturs please. You may never experience this, but the risk is higher.




Sorry to say but this is not the case,...

The most risky property in a down turn is the topend of the market, 

During a down turn luxary apartments and houses will suffer the highest vacancy rates and have the rent the can charge slashed just to maintain tenants,.... do  owners of luxary apartments get an increased rent for this risk,... No luxary apartsment and house run on some of the lowest rental yeilds.

Secondly lower income housing would be far more sort after during a recession so vacancy rates would decrease in this sector, and it is easily affordable even if you were on welfare so I can't see why rent defaults would increase.

Thirdly because of people down sizing and high vacancy rates the top end is at the highest risk of price drops during a down turn, so the % drop will be more extreme in the top end.

So no I don't believe lower income housing is riskier.


----------



## numbercruncher (8 February 2008)

Top end might be more risky, but the low end suffers _more_ rent defaults, only commone sense, there is a ton more low end properties than top end. And Wayne has clearly said rent defaults, didnt mention anything about vacancy rates.




> Rate rise will spark debt carnage: economist
> 
> While almost every economist was betting that the Reserve Bank will hike interest rates for the 11th consecutive time today, there have been a few voices warning it could be a disastrous error of judgement.
> 
> ...




http://www.abc.net.au/news/stories/2008/02/05/2154919.htm


----------



## Tysonboss1 (8 February 2008)

numbercruncher said:


> Top end might be more risky, but the low end suffers _more_ rent defaults, only commone sense, there is a ton more low end properties than top end. And Wayne has clearly said rent defaults, didnt mention anything about vacancy rates.
> 
> 
> 
> ...




How is it common sense that the lower end will suffer rent defaults,...

Lower end property is the most affordable housing why would people default,.. even if they are on welfare they can still pay there rent.

the article you quoted was talking about mortgates by the way,.... completely different subject to people renting lower income housing.


----------



## robots (8 February 2008)

hello,

not much happening in US, no wonder its 3x average income and ours is 7x average income,

http://www.news.com.au/heraldsun/story/0,21985,23180388-663,00.html

next week will be no surprise over there

thankyou

robots


----------



## numbercruncher (8 February 2008)

robots said:


> hello,
> 
> not much happening in US, no wonder its 3x average income and ours is 7x average income,
> 
> ...





Make that 3x average Income with half the Interest rates we have, so we are like 4 or 5x dearer for average mortgaged housing 

You better hope China is going to Increase domestic consumption to cover USAs shortfall, Average Chinese income is 2pc of average Americans so you better hope they start handing out the pay rises as well


----------



## xoa (8 February 2008)

In my bayside suburb of Brisbane, the typical low-end workers cottage (1950s era) costs $300-$350k. A prime example rents for $300pw. Unfortunately, loan interest would be around $520pw. Then there's agent's fees, rates, repairs. Looks like a negative return on investment to me, unless a person's speculating on further asset inflation.


----------



## robots (8 February 2008)

xoa said:


> In my bayside suburb of Brisbane, the typical low-end workers cottage (1950s era) *costs $300-$350k.* A prime example rents for $300pw. Unfortunately, loan interest *would be around $520pw.* Then there's agent's fees, rates, repairs. Looks like a negative return on investment to me, *unless a person's speculating on further asset inflation*.




hello,

yes, but what is the return on money put down? 

exactly, people should be getting asset inflation for putting up with what goes on,

ruddie wont change a thing, has he started a massive public housing project to help, no

things will roll on

thankyou

robots


----------



## numbercruncher (8 February 2008)

Tysonboss1 said:


> ,.... completely different subject to people renting lower income housing.





Yes I know , couldnt be bothered stating a fresh post for the article.




> Most economists forecast underlying inflation could creep higher to an annual rate of 4 per cent by the end of year, which would mean higher interest rates.




http://www.news.com.au/business/money/story/0,25479,23168789-14327,00.html

Last reading was 3.6


----------



## theasxgorilla (8 February 2008)

Tysonboss1 said:


> So no I don't believe lower income housing is riskier.




As I said in my earlier post, I don't think it's possible throw a blanket statement like this across that kind of housing.  This is what the banks did up until about the turn of the millenium, and it created a massive opportunity for wrappers.  Steve McKnight earned his reputation going into these areas and offering finance where banks would not.  And lets not forget the mortgage broker industry, who also made their small fortunes showing mums & dads and budding property investors how to fill in the forms correctly (omitting unimportant information like how many credit cards, how drawdown they were) to qualify for loans by circumventing the bank's lending standards.

In the above example with Steve McKnight, I am talking about lower socio-economic zones within generally depressed areas.  Long forgotten country towns.  In this boom, these areas seem to have been the last to be affected, and in my opinion the first areas to be hit if things go bad.  Alternatively, it's possible that these areas have used this boom to build up their own economies, in which case they might weather softer economic times differently.  IMO it can ALWAY be different this time.

Tyson, you might be talking about the outer-rim of suburbs in a capital city.   This is quite different IMO.  Depending on which capital city, and which set of outer suburbs.  Capital cities tend to have affluent sides, and not so affluent sides.  And some capital cities seem to struggle more than others during softer economic times.  Adelaide and Hobart spring to mind (debate this if you wish, I love Adelaide BTW and would happily live, I'm just stating what I see to be an obvious...maybe things have changed from 10 years ago??  I've never been to Hobart).  

If you are on the affluent side of a good capital city then it would be reasonable to expect that any kind of recession would need to be pretty deep for you to knocked out of business by it.

If fact, I would go as far as to say that the outer-rim of suburbs on the affluent side of a 'blue-chip' capital city is probably one of the best long term investment zones, for the reasons you describe.  The moderate cost of the house, and the reasonable rent, coupled with tax benefits and depreciation (*used to*...like a few years ago) make these properties essentially cash-flow neutral for a middle-to-high income earner.  You could hold a handful of these in your portfolio for 20 years and when you retire the aged pension and super would be like cream on top.

I say used to because right now is NOT the time to buy-to- let.  Prices are too high.  Which takes us back to the article which started it all...'House prices to stagnate for YEARS'...ho ho ho, didn't happen, Merry Christmas.

ASX.G


----------



## theasxgorilla (8 February 2008)

numbercruncher said:


> Last reading was 3.6




It's an interesting juncture for the Aust economy.  By rights the RBA ought to keep winding on the rate rises.  They've been far more moderate in this space than the schizo yanks for as long as I can remember.  I think they'll have the balls to stare down the big '10'% and go there if they need to.

ASX.G


----------



## xoa (8 February 2008)

robots said:


> hello,
> 
> yes, but what is the return on money put down?




Less than 4% probably, barely above inflation. You can get 8% in a mainstream term deposit.


----------



## wayneL (8 February 2008)

robots said:


> hello,
> 
> *yes, but what is the return on money put down*?
> 
> exactly, people should be getting asset inflation for putting up with what goes on,



I'm a bit worried about your maths their 'bots.

Unless you get a sparkling cap gain, your return is *negative* (presuming the standard 10-20% deposit.

"Things" may roll on, but then again they might not.


----------



## theasxgorilla (8 February 2008)

wayneL said:


> I'm a bit worried about your maths their 'bots.
> 
> Unless you get a sparkling cap gain, your return is *negative* (presuming the standard 10-20% deposit.
> 
> "Things" may roll on, but then again they might not.




Is this not possible?  The less time you hold, the less exposure you have to the negative cash flow situation.

ASX.G


----------



## robots (8 February 2008)

xoa said:


> Less than 4% probably, barely above inflation. You can get 8% in a mainstream term deposit.




hello,

yes sparkling cap growth is where it is at and has occurred in Bris for big Tyson The BOSS, 

superb 20% for brissy, 

so lets see you get your nice little deposit and put it into a term deposit and get a great 7.2% on the deposit,

Tyson The BOSS gets his deposit and put's it into his prop and gets to control a nice place (350k or whatever) and gets some nice 20% on his ASSET he is controlling

thankyou

robots


----------



## theasxgorilla (8 February 2008)

robots said:


> yes sparkling cap growth is where it is at and has occurred in Bris for big Tyson The BOSS




ROTFLMAO!  Go Bossman!


----------



## wayneL (8 February 2008)

theasxgorilla said:


> Is this not possible?
> ASX.G




Of course it is! That's not the point. In times of huge credit expansion it is almost assured. The point is that we are at the end of the credit expansion cycle.

These properties were obviously fantastic investments at points in the the last decade or so. But as we stare down the barrel of the contraction phase, are these a good investment now? Is the cap gain still available?

Well, if you buy now, it better be, because you are recieving no risk premium from the yield (substantial discount in fact). I wouldn't be a seller if I bought some and holding on to some good gains, ut I definitely wouldn't be a buyer as an investment </generalization>.

PPOR might be a different story, dependinhg on circumstances.


----------



## theasxgorilla (8 February 2008)

wayneL said:


> PPOR might be a different story, dependinhg on circumstances.




I think so, you have to live somewhere and I think it's fair to say you are burying your living expenses in a PPOR.  So a PPOR can be a better investment, not least because of the tax concessions, but also because you were going to have to pay some form of outgoings to put a roof over your head.  I've never owned a property in Aust as a buy-to-let as I reckon it's a mugs game.     Hope has always been too large of a factor, and I don't fancy having to hold for 10 years if I timed things poorly.  But maybe one day, like bottom of the next cycle, I might go and by a handful of buy-to-letters and hatch a plan to hold them to 15-20.  For now, buy-fix-sell, buy-fix-sell etc.

ASX.G


----------



## numbercruncher (8 February 2008)

Is there still money to be made in buy-fix-sell ? Im thinking only just and thats if you do all the work yourself on top of your regular employment, its actually marginally cheaper to build a new house where I reside than second hand. But I guess the profit is in the price you pay not as much the price you sell.

And some new legislation in the pipes will make it cheaper again.



> Industry groups have applauded a proposal to put a lid on council infrastructure charges that could wipe up to $40,000 off the cost of a new home in Brisbane.




http://www.brisbanetimes.com.au/news/queensland/save-40000-off-your-new-home/2008/02/01/1201801011652.html


----------



## robots (8 February 2008)

hello,

in 1998 when i purchased my first unit,

I bought for 159k and rent was 180/wk, which works at *5.9%* gross

today the 2-bedders are going for around 350/wk to rent, with one coming up for auction I expect it to go around 400k, now thats *4.6%* gross,

now thats a 1.3% difference in this block, with the current rents only recently (past 12mths) increasing quite well,

so are things really that out of wak?

thankyou

robots


----------



## numbercruncher (8 February 2008)

Is your unit you bought in 98 a 2 bedder ?


In 1998 the RBA rate was 4.75, its now increased by 50pc to 7pc and almost guaranteed to go higher. So in 98 your rental return was 30pc higher (on PP) and Interest rates were 30pc+ cheaper.

Nice try


----------



## robots (8 February 2008)

hello,

yes 2-bedder,

but the retail rate is what I get and the "profit margin" has decreased over this time so I think in 98 i was on around 6.75% now on 8.49% (which includes the latest rise)

so not much difference

thankyou

robots


----------



## numbercruncher (8 February 2008)

CBA is actually 8.97.

Anyway its a solid 2pc or 8k p/a on 400k or 160 p/w minus that from the 350 p/w and the new buyer/investor? is making 10 p/w more than you did in 98 when you got 180pw rent, and I bet thats eaten by higher council rates and we havnt even talked Inflation yet.

so yes HUGE difference from 98!


----------



## theasxgorilla (8 February 2008)

numbercruncher said:


> Is there still money to be made in buy-fix-sell ? Im thinking only just and thats if you do all the work yourself on top of your regular employment, its actually marginally cheaper to build a new house where I reside than second hand. But I guess the profit is in the price you pay not as much the price you sell.




As you touch on, it's very dependent upon the area and the type of property.  Renovate a box without any character or charm and you sacrifice the potential synergy from renovating something that has architectural appeal.  Renovate a place in a homogenous area and you will only ever get so much for it, the other like properties selling nearby will anchor your property.

Pay a labourer to do the work and you pay his tax.  Not to mention his margins on materials.  

Buy a place that is too low priced and your point of over-capitalisation is too close.  Some areas just don't work with buy-fix-sell for this very reason. A 30k reno on a 200k house just doesn't work.  Use the same materials in a 400k place and you might have something.  If the house is too big, your material and labour costs go up...so reno'ing a 4br house on a 1/4 acre in a middle class suburb probably won't work.

Some areas don't work because the people living there could not care less about style or design and won't pay a premium for it in a renovation.

Then of course you have the timing of the market.  Buying during a flat spot or a dip and selling just prior to, at, or after a peak is best.  Where are we at just now...lets just say I'm keen to get back into Aust but am waiting for a flat spot or a dip.


ASX.G


----------



## robots (9 February 2008)

numbercruncher said:


> CBA is actually 8.97.
> 
> Anyway its a solid 2pc or 8k p/a on 400k or 160 p/w minus that from the 350 p/w and the new buyer/investor? is making 10 p/w more than you did in 98 when you got 180pw rent, and I bet thats eaten by higher council rates and we havnt even talked Inflation yet.
> 
> so yes HUGE difference from 98!




hello,

you should look at the CBA website a little closer and you will see the Base Economiser Rate

can we talk cap growth? 

roll on 08, another year will pass and not much will change for the handout crew,

thankyou

robots


----------



## wayneL (9 February 2008)

theasxgorilla said:


> As you touch on, it's very dependent upon the area and the type of property.  Renovate a box without any character or charm and you sacrifice the potential synergy from renovating something that has architectural appeal.  Renovate a place in a homogenous area and you will only ever get so much for it, the other like properties selling nearby will anchor your property.
> 
> Pay a labourer to do the work and you pay his tax.  Not to mention his margins on materials.
> 
> ...



Great comments and agree. I'm waiting for renoing to go a bit out of favour so I can get fixer uppers at enough of a discount. You almost pay a premium for sh!tboxes because of the competition from renovators over here.

AS ever, the numbers have to add up, plus the factors you mention.

It's not yet though, even with the slump thus far.


----------



## xoa (9 February 2008)

robots said:


> hello,
> 
> yes sparkling cap growth is where it is at and has occurred in Bris for big Tyson The BOSS,
> 
> ...




You don't understand the cardinal rule of speculation - previous results do not guarantee future results. If you do want to speculate on capital growth (in anything from stocks to property), you're supposed to buy low, not at record highs.

A person who makes a new investment in Brisbane is very likely to start encountering Perth rates of capital growth - 0.6% pa. Or even a capital loss, given how much prices have inflated in recent years, and how low rental returns are.


----------



## Tysonboss1 (9 February 2008)

xoa said:


> A person who makes a new investment in Brisbane is very likely to start encountering Perth rates of capital growth - 0.6% pa. Or even a capital loss, given how much prices have inflated in recent years, and how low rental returns are.





Not likly,.... I am pretty confident my markets will be achieving atleast 10% this year.


----------



## robots (9 February 2008)

hello,

heard it all before xao, 

sept 05 many were claiming "property to stagnate for years" but many have seen spectacular returns,

ASXGman hit on it before that quite simply getting a PPOR is an investment in itself for many and an extremely passive one at that,

"supposed to buy low" maybe that day will never occur, what then?

goodluck

thankyou

robots


----------



## xoa (9 February 2008)

robots said:


> hello,
> 
> heard it all before xao,




Did you hear it in 1987 too? If you think that 20% pa returns are going to continue forever, or are guaranteed to even last another year, then you are deluded.

You're essentially rolling a die and betting on an even number. You might get lucky, but you're just as likely not to.


----------



## robots (9 February 2008)

hello,

even the latest ANZ property outlook spoke about the time in 87 and commented that for that year as an average property grew 0.6%,

and that is the time when it was supposed to have crashed, it didnt drop 10%, 20% or 40%,

i know tech has eluded to this in many of his posts,

I think many are playing a serious game by not being involved in property, even just by having a PPOR,

it is still widely recognised that for many this is their only form of investment,

thankyou

robots


----------



## xoa (9 February 2008)

robots said:


> hello,
> 
> even the latest ANZ property outlook spoke about the time in 87 and commented that for that year as an average property grew 0.6%
> 
> robots




The banks won't tell you that it "grew" at about that rate for the next decade. Anything less than inflation is a real loss.

Lenders have a vested interest in trying to lend people money, you know.


----------



## robots (9 February 2008)

hello,

man, people need to get over inflation, real terms, this and that

it is just like the sun comes up and goes down every day, it is a non-event

thankyou

robots


----------



## Bill M (9 February 2008)

Some figures out today. Seems like property hasn't stagnated at all.

Source here


----------



## Tysonboss1 (9 February 2008)

xoa said:


> Did you hear it in 1987 too? If you think that 20% pa returns are going to continue forever, or are guaranteed to even last another year, then you are deluded.
> 
> You're essentially rolling a die and betting on an even number. You might get lucky, but you're just as likely not to.




I don't expect 20% returns to last forever,.... I expect that on average the markets I have invested in to average above 10%pa return.

offcoase some years will have growth alot higher than that at 20-30%pa,...
So offcoarse some years will be less than 10% or perhaps slightly negative, but on average 10% is achieveable.

But what your saying about brisbane going backwards this year is not right, I am saying is that this year 2008 brisbane will grow by atleast 10%.

Remember Brisbane is the 2nd cheapest capital city in australia but has the best market fundamentals at the moment.


----------



## Mofra (9 February 2008)

robots said:


> man, people need to get over inflation, real terms, this and that
> 
> it is just like the sun comes up and goes down every day, it is a non-event



Inflation & real terms non events?
As I splutter on my water here, do you honestly, seriously believe that?


----------



## Judd (9 February 2008)

Mofra said:


> Inflation & real terms non events?
> As I splutter on my water here, do you honestly, seriously believe that?




Nah, cause he/she doesn't.  If bot did then he'd be able to prove it by buying the 9 Feb 2008 Weekend Australian for $0.80c when it's sale price is marked at $2.20.


----------



## xoa (9 February 2008)

Tysonboss1 said:


> So offcoarse some years will be less than 10% or perhaps slightly negative, but on average 10% is achieveable.




Long term returns of 10% pa are impossible, unless: (a) you have an uncanny knack of buying the best investment properties, (b) credit is infinitely accessible, or (c) the income of home buyers grows at a similar pace. 

Constant 10% gains across the entire market would cause mortgage repayments to exceed the median income within 20 years, which is clearly not going to happen.


----------



## numbercruncher (9 February 2008)

If an average 440k house rose at 10pc p/a for the next 20 years it will be 3m in 20 years.

If the average 55k wage grew at a very robust 5pc it would be 150k in 20 years.

Average house prices in Australia will NEVER get to this price to income multiple.

Itll eventually average out, If not a realestate correction like the rest of the world, then I suspect wages will continue to creep up along with Interest rates eventually bringing the price to earnings muliple back to historical averages.


----------



## robots (9 February 2008)

hello,

yes i seriously believe that,

it is a non-event for most, 

for many who plod along on life's journey saving their hard earned (?), inflation is entirely irrelevant

thankyou

robots


----------



## Judd (9 February 2008)

robots said:


> for many who plod along on life's journey saving their hard earned (?), inflation is entirely irrelevant




In other words, 80+% of the Australian population are utter and total financial morons.

Thank you for confirming that.


----------



## numbercruncher (9 February 2008)

ANZ calling house prices to fall in NZ !




> ANZ picks house prices, retail spending to drop
> 
> House prices are set to fall 5 per cent and maybe more, a national spending binge will slow to a trickle and the economy will move down a gear to a "benign" patch of soft growth, according to ANZ Bank.
> 
> ...





http://www.stuff.co.nz/4390549a13.html

We arnt far behind  If we arnt there already


----------



## robots (9 February 2008)

hello,

dont know how you get that, 80% of the pop dont save anything,

thankyou

robots


----------



## robots (9 February 2008)

hello,

are you ready NC, been down to see the bank manager, checked out where you are going to buy, or you buying with cold hard

spoken to any agents to get yourself known as ready to pick up all those bargains

thankyou

robots


----------



## Tysonboss1 (9 February 2008)

numbercruncher said:


> If an average 440k house rose at 10pc p/a for the next 20 years it will be 3m in 20 years.
> 
> If the average 55k wage grew at a very robust 5pc it would be 150k in 20 years.
> 
> ...




In my neighbor hood there is already un inhabitable leaking 3 bed homes selling for over $2m,.... 

In 20years the median home will be much higher density than it will be today,...

take the example that you used earlier of houses that sold for under $2000 over 100 years ago.

when you work out the 10% growth it seems unachieveable compared to todays median values but when you look at where those homes would have been and the value of that land today is worth a 100 times more then the median home, especially if you include the rental return in on the calculation they have easliy maintained growth of greater than 10%.


----------



## Tysonboss1 (9 February 2008)

xoa said:


> Constant 10% gains across the entire market would cause mortgage repayments to exceed the median income within 20 years, which is clearly not going to happen.




your wrong with this,...

your are making the mistake of simplifing your calculations,...and leaving out a major sourse of return,.. the rental return

You are not allowing for increased density,... for example your calcultion might say that a 1/4 acre block valued at $3m is not affordable so there fore is not possible,..

but if you put 10 units on it then it becomes afforadable,... 

over time the true median home will change, there would have been a time when a 4bed house on a 1/4 acre block was cinsidered the median home. this is not the case anymore.


----------



## BSD (9 February 2008)

Sorry, but property prices cannot indefinitely rise by 10% per annum without wages following the same path. 

in Australia, price growth has outstripped wages growth for such a period now that the % of disposable income required to fund rent/mortgages has reached new highs. 

By definition, this cannot go on forever. 

This is why from time-to-time property prices stagnate for years. Wages simply need to catch-up sometimes to fund reasonable rental returns and/or the financing expense. 

See 1989-1999 Brisbane for an example.


----------



## nioka (9 February 2008)

It is no good talking averages when it comes to property. There is a finite supply of top positions. Those that own them now will get a greater return than those less favoured locations. Those on a lower income will not be able to afford them. The old law of supply and demand. Lower income people will have to settle for less by going smaller or further out. Those homes will be cheaper but that wont affect the continuous price rise of the established areas. The only thing that will reduce the price rise is a reduction in the population and that wont happen for a long time. The old Agents warcry "position, position, position." 
Averages, they don't mean a thing when it comes to property.


----------



## BSD (9 February 2008)

nioka said:


> It is no good talking averages when it comes to property. There is a finite supply of top positions. Those that own them now will get a greater return than those less favoured locations.
> 
> The only thing that will reduce the price rise is a reduction in the population and that wont happen for a long time. The old Agents warcry "position, position, position."
> 
> Averages, they don't mean a thing when it comes to property.




I totally agree regarding averages being BS. New homes and renovated homes go into the 'average prices of sales' and people think their existing non-renovated place has gone up by the same value. 

However regarding your other points - The USA and UK are not seeing population decline; but they are sure seeing price declines in property values. 

As for location we sort of agree. Blue chip property will out-do property for poor people in poor locations - simply because the incomes of rich people grow faster than those of poor people over the long term (see last post) and therefore the property they buy can go up at a faster pace over the long term. 

That said, buying in a good location at or near the top of a property bubble is not going to stop you losing money in the short-medium term. 

There are plently of waterfront condos in Florida selling or 30% discounts to their price of a couple of years ago.


----------



## xoa (9 February 2008)

Tysonboss1 said:


> your wrong with this,...
> 
> your are making the mistake of simplifing your calculations,...and leaving out a major sourse of return,.. the rental return
> 
> ...




All that is possible, but very unlikely for Australia as a whole. It might work, if you were investing in land near the Sydney or Melbourne CBD. Unless it's a good position, people aren't going to take out a 30 year loan to live in 90sqm.. 

If you want a good chance at long term 10% pa returns, invest in a major Chinese city. At least their incomes will rise fast enough to accommodate those returns.


----------



## numbercruncher (9 February 2008)

robots said:


> for many who plod along on life's journey saving their hard earned (?), inflation is entirely irrelevant





You live in a strange World Robots,

This may be true for the wealthy,  but the RBA is literally declaring war on Inflation and rising prices, I fully expect another rate rise next month, and more this year, a senior Minister said he was thunderstruck by the strength of the banks language. Inflation is already at a 16 year high, and the RBA expects it to be higher by the end of the year !

IMHO retail interest rates at 10pc is very likely by years end, Fiscal policy by the Ruddmeister looks like it will have little effect slowing Inflation.



> Inflation has now risen sharply and home owners have been warned that more rate rises are on the way after the RBA declared the economy needed to *slow dramatically to curb price rises*.




http://www.news.com.au/business/story/0,23636,23168789-14327,00.html?from=mostpop

RBA has declared war and they are letting you know in advance, good sports arnt they 

Average household income is 90k ! subtract some tax, you have perhaps 70k , the average mortgage is 300k , at 9pc and guaranteed to rise rates, you do the numbers.


----------



## theasxgorilla (9 February 2008)

numbercruncher said:


> Average household income is 90k ! subtract some tax, you have perhaps 70k , the average mortgage is 300k , at 9pc and guaranteed to rise rates, you do the numbers.




Have you slipped a fact there numpty that you'd rather not have acknowledged knowing?

Perhaps you'll include 90 kilodollars as the basis for all future affordability calculations?  Makes a difference, you do the numbers.

ASX.G


----------



## Mofra (9 February 2008)

robots said:


> hello,
> 
> yes i seriously believe that,
> 
> ...



The majority of pensioners I know are only too aware of the reduction in spending power of the dollar. In fact, most people I know understand that matching inflation (with no tax burden) is really a 0% return.

Nothing personal, however it is scary to know that an "agent" who has such a lack of financial understanding will be "assisting" clients to make some of the largest financial transactions in their life


----------



## theasxgorilla (9 February 2008)

wayneL said:


> Great comments and agree. I'm waiting for renoing to go a bit out of favour so I can get fixer uppers at enough of a discount. You almost pay a premium for sh!tboxes because of the competition from renovators over here.
> 
> AS ever, the numbers have to add up, plus the factors you mention.
> 
> It's not yet though, even with the slump thus far.




Totally agree.  In fact, scouting around the UK and Swedish r/e websites I'd say that the game is up for quite some time.  At least with regards to the low hanging fruit ie. the small places that people can afford and aren't afraid to DIY.

The not so low hanging fruit will hopefully always be around.  Found a horse farm over here on .85 of a hectare, with an almost finished stable (4 places) and plans/permits for a house.  Nice setting, in amongst leafy and pine forest.

I don't know exactly what went wrong with their project, but they'll most likely have to take a discount for the project being half finished.  Strangely though, the market hasn't really tightened up here yet.  The economy is still expansive and the labour market continues to be tight.  It's more likely that the owners found a better place down the road and didn't care that they'd lose money on this one.

WayneL, is .85 really too small for a horse farm?  The missus says yes.


----------



## nioka (9 February 2008)

BSD said:


> There are plently of waterfront condos in Florida selling or 30% discounts to their price of a couple of years ago.




Another reason why averages dont count. Global warming, cyclones, rising sea levels etc. Wrong position, wrong position, wrong position.


----------



## numbercruncher (9 February 2008)

theasxgorilla said:


> Have you slipped a fact there numpty that you'd rather not have acknowledged knowing?
> 
> Perhaps you'll include 90 kilodollars as the basis for all future affordability calculations?  Makes a difference, you do the numbers.
> 
> ASX.G







Gorilla Ill use any statistic that tickles your pickle, as long as its fact.

No point in using 90k as reference for owner occupied housing, but certainly useful for measuring investment property affordability, Australian average household income after tax is 70kish.

Australian median house price 420kish.

Retail interest rates 9pcish and probably rising.

Obviously you take issue with what I post, can you atleast counter argue with your own research ? I assume you believe average Australian realestate fits well with in the affordabilty threshold, could you demonstrate with some offical numbers, personal opinion etc ?

Also would you please kindly refrain from calling me numpty, I find it offensive, I know your a moderator but I would assume that holding such position doesnt give you free rein to intentionally antagonise other forum users in such a belittling fashion.

Thankyou.


----------



## Tysonboss1 (9 February 2008)

BSD said:


> Sorry, but property prices cannot indefinitely rise by 10% per annum without wages following the same path.
> 
> .





What I said was that a return of 10% pa is possible long term,..... which means if rental yeild is 5% you only have to have capital growth of 5%,...

or if you have rental return of 8% you only have to have a capital growth of 2%p/a.

there are multiple unlisted property trusts that hold office blocks in sydney melbourne and brisbane the have rental yeilds of over 8% and i am pretty sure they will have greater than 2% capital growth.


----------



## Tysonboss1 (9 February 2008)

BSD said:


> in Australia, price growth has outstripped wages growth for such a period now that the % of disposable income required to fund rent/mortgages has reached new highs.
> 
> .




which says to me that around the capital cities we have to increase the density we expect to live in,....

obviously as the population grows not every one can live in houses,... and if we try,.. then the price will just increase.

there is absoulutly no reason why houses around sydney can't grow in value to the point where the average person can't afford to buy them,... as I said earlier there is no way I could afford to by a house and pay it off myself in the suburb I live,... you need a $400,000 deposit just to get one that is not even water proof.


----------



## Tysonboss1 (9 February 2008)

BSD said:


> See 1989-1999 Brisbane for an example.




I think you will find that since 1989 brisbane has has had a return of greater than 10%.


----------



## numbercruncher (9 February 2008)

Tysonboss1 said:


> which says to me that around the capital cities we have to increase the density we expect to live in,.....




And that is going to happen and in many cases already is, Urban consolidation is a given !



Tysonboss1 said:


> obviously as the population grows not every one can live in houses,... and if we try,.. then the price will just increase..




Obviously not, and with a rapidly aging population and with many people choosing unit living for many ranging factors as demonstrated in the figures for unit construction I dont see this being a huge problem in the future, Id certainly prefer a unit as a 70 year old than a 1/4 acre time/money sink.



Tysonboss1 said:


> there is absoulutly no reason why houses around sydney can't grow in value to the point where the average person can't afford to buy them,... as I said earlier there is no way I could afford to by a house and pay it off myself in the suburb I live,... you need a $400,000 deposit just to get one that is not even water proof.




With all due respect, thats obvious because its already true by a massive margin. Its probably true for every major city in the country . By "around" Im assuming you mean like 10ks or so ?


----------



## Tysonboss1 (10 February 2008)

numbercruncher said:


> With all due respect, thats obvious because its already true by a massive margin. Its probably true for every major city in the country . By "around" Im assuming you mean like 10ks or so ?





yep 10K's, probally 20Ks in sydney... pushing out to around 30k's or 35k's over the next 20 years.


----------



## Tysonboss1 (10 February 2008)

numbercruncher said:


> Obviously not, and with a rapidly aging population and with many people choosing unit living for many ranging factors as demonstrated in the figures for unit construction I dont see this being a huge problem in the future, Id certainly prefer a unit as a 70 year old than a 1/4 acre time/money sink.
> 
> 
> 
> ?




many aging people continue to live in their houses,.... infact most of the house's that I said were worth over $2m are owned by people over 70,..

What I can see happening in my area is that as these homes slowly come on the market as the person dies or moves to a nursing home the house's are knocked down and 3 story apartment building built back,.... or on some nicer streets the homes are restored into luxury homes or knocked down and luxury homes built back.

If you look at a city like sydney there is simply no land left, so sydney will just continue to get denser and denser and putting presure on the price of land.


----------



## numbercruncher (10 February 2008)

Tysonboss1 said:


> yep 10K's,... pushing out to around 30k's over the next 20 years.




Itll be true as it is now for House prices, will never be for unit prices.

And your prediction simply isnt supported by population growth figures to push this out to 30k;s - Unless there is a massive population explosion - Baby boomers are retireing now in massive numbers and statistically those retiring now will be dead in 20 years. (remember Peter Costello kept talking about "the demographic time bomb that's going to hit us within 20 years")

I mean what evidence do you have that supports that an average house will be unaffordable to average people in 20 years time within 30klms of any major Australian city ?

I suggest you read this 2005 article to get the gist of our Demographic situation.



> The population of working age - those aged 15 to 64 - grew by 1.4 per cent. But get this: within that, the population of pre-retirement age - 55 to 64 - grew by 4.6 per cent to 2.1 million.
> 
> Costello's own budget this year contained two clear indications that the first noticeable effects of ageing are almost upon us. The first was a prediction that the rate of participation in the labour force - the proportion of people of working age who either have a job or are looking for one - will reach its zenith next financial year, 2006-07.
> 
> The second was the decision to cut the nation's projected potential rate of economic growth from 3.5 per cent a year to 3.25 per cent from 2008-09 onwards, which is just three years away.




http://www.theage.com.au/news/ross-gittins/australias-demographic-time-bomb/2005/09/20/1126982063986.html


----------



## wayneL (10 February 2008)

theasxgorilla said:


> WayneL, is .85 really too small for a horse farm?  The missus says yes.




Hmm, that's a tougher question than it sounds. It all depends on the number, how you intend to manage the horses and how much hacking (places to ride out) is available nearby.... and of course the $$$$$$ available.

I've personally owned horse properties ranging from 1.8 ha right up to 95ha.

Had 18 hayburners on the 1.8 block and it was HEAPS of space for how we were managing it.

But a few other examples;

Most of the horse properties around Whooree in Geraldton are only 1 ha... and thats on crap soil and very low rainfall.

Here in England, many horse properties would only be that big, but with plenty of nearby hacking.

A place in Switzerland where missus did a lot of training was less than 1 ha, had 21 horses, house, indoor arena and outdoor arena plus a bit of green pick. Heaps of space for how it was run.

The place in Wimbledon (you know the one) is only about 500m2 and has 25 horses on it, but 3,700 acres just up the road.

But if you want to be able to turf your nags out in the paddock and nick off for a few days, that's a different matter. A couple of hectares would be better.

As a general observation, missus always wants more, while hubby always wants less.


----------



## robots (10 February 2008)

Mofra said:


> The majority of pensioners I know are only too aware of the reduction in spending power of the dollar. In fact, most people I know understand that matching inflation (with no tax burden) is really a 0% return.
> 
> Nothing personal, however it is scary to know that an "agent" who has such a lack of financial understanding will be "assisting" clients to make some of the largest financial transactions in their life




hello,

and pensioners arent rubbing their hands together when their creaming it with the old bhp or cba they have had for many many years,

i wonder if you could post the "requirements" to be able to receive the pension mofra,

or sitting on a nice workers cottage in Port Melbourne now valued at well over a mil

you are right it is a zero game, irrelevant, 

do you think along the way the pensioner in his port melbourne workers cottage would give two hoots about inflation,

thankyou

robots


----------



## YChromozome (10 February 2008)

The Sydney Morning Herald today has an article on "Struggle Street", or Seymour Way in Kellyville North-West of Sydney where 4 houses in a row of 6 have been repossessed within 10 months of each other :


No.,     Purchased:,      Sold:,           Seller:,			Loss:
No. 48,	950,000	Aug-05,	490,000	Jan-08,	First Mortgage Company,	48%
No. 42,	950,000	Sep-05,	490,000	Mar-07,	First Mortgage Company,	48%
No. 44,	780,000	Sep-03,	502,500	Apr-07,	Perpetual Limited,	36%
No. 52,	780,000	Sep-03, 532,000	Oct-07,	Rocks Building Society,	32%

And many happened last year, prior to the latest rate rises.


----------



## xoa (10 February 2008)

Auckland house prices plummeted 7.5% last month. The party has well and truly ended in NZ. Australia will be the next domino to fall.



http://www.tv3.co.nz/News/Story/tabid/209/articleID/45615/cat/41/Default.aspx


----------



## Tysonboss1 (10 February 2008)

numbercruncher said:


> Itll be true as it is now for House prices, will never be for unit prices.
> 
> 
> 
> ...




Unit prices are also subject to increased prices as an area increases in density,... this will happen more and more in the future.

a low level ( 3 story )walk up apartment buliding, that has been rezoned to allow a 20 story development to go ahead, will increase in value much the same as a house and land will,

remember land increases in value, but so does air space.

I wouldn't buy a unit in a 40 story apartment building, But i would buy an apartment in a 2 or 3 level apartment building.

my rule of thumb is to not buy a unit that needs a lift,....


----------



## Tysonboss1 (10 February 2008)

xoa said:


> Auckland house prices plummeted 7.5% last month. The party has well and truly ended in NZ. Australia will be the next domino to fall.
> 
> 
> 
> http://www.tv3.co.nz/News/Story/tabid/209/articleID/45615/cat/41/Default.aspx




If you have a few consective years of growth inexcess of 20% offcoarse you can expect to have a slight down turn ever few years,... nothing to worry about,... really you are just losing a bit of froth of the top.

as with most investments you can expect to have 1 or 2 negative years in 7.


----------



## xoa (10 February 2008)

Tysonboss1 said:


> If you have a few consective years of growth inexcess of 20% offcoarse you can expect to have a slight down turn ever few years,... nothing to worry about,... really you are just losing a bit of froth of the top.
> 
> as with most investments you can expect to have 1 or 2 negative years in 7.




Or it could turn out like 1987; a drop followed by a decade of stagnation which returns prices to realistic levels.

When the average house loses $45,000 worth of equity in a month, it devastates the confidence of speculators. Speculators have been the backbone of the market in recent years.


----------



## Tysonboss1 (10 February 2008)

numbercruncher said:


> I mean what evidence do you have that supports that an average house will be unaffordable to average people in 20 years time within 30klms of any major Australian city ?
> 
> I]




Common sense,...   you yourself keeps pointing it out to me,... in 20years there will be less houses in sydney than there are today,... but there will still be demand from high income earners for the  remaining homes,...

I can see it happing in my area already, the only houses that are surviving are the ones in the richer streets, where the houses are either being restored, or new luxuary homes being built back.

the houses in the cheaper streets are beening bulldozed and low level unit blocks built back.

the inner suburbs of sydney will be much diiferent in 20years,... it's happening already,

as far out as campbelltown about 40K's from the cbd,... they are building 6 and 7 story apartment buildings,.... liverpool , parramatta, hornsby, crunulla are all a long way from the cbd but the same thing is happening in the last 7 years these suburbs have changed massivly,...

20 years ago even a low income earner could by a house around these suburbs,.... not any more, over the next 20years it is going to be even worse.

I am not saying the average person won't beable to buy a home,... I am just saying that it won't be a traditional house and land.


----------



## Tysonboss1 (10 February 2008)

xoa said:


> Or it could turn out like 1987; a drop followed by a decade of stagnation which returns prices to realistic levels.
> 
> When the average house loses $45,000 worth of equity in a month, it devastates the confidence of speculators. Speculators have been the backbone of the market in recent years.




After years of stagnation comes a property boom returning the average property growth to above 10% as it has maintained over the last 100years through multiple booms, crashes, wars, recessions and interest rate spikes,


----------



## Tysonboss1 (10 February 2008)

Watch this link,... It shows what I was explaining how areas go through density transition.

http://www.propertyinvesting.com/go/228

I posted this link a while back but if you haven't watched it, it is really good.

It points out exactly what I am seeing happening in my area.


----------



## tech/a (10 February 2008)

*This debate can be put to bed with current statistics.*

Its JUST NOT HAPPENING it 
Its JUST NOT GOING TO HAPPEN.

There is massive demand and no satisfaction of that demand here in Australia in sight.







There is severe rental shortage and no decrease of demand in sight.






Rent rates are increasing and there is no abatement in these increases in sight.






Property leads/has lead and will continue to lead investment return for many many years to come.






These are FACTS not theory.

Every state is on the move again.
The dip or correction those here were looking for has been and now gone.
Those who still wait will be left once more waiting for something that *WONT* eventuate in *THIS* country.

Full and comprehensive details here.
http://www.anz.com/documents/economics/Property Outlook January 2008.pdf


----------



## wayneL (10 February 2008)

tech/a said:


> *This debate can be put to bed with current statistics.*
> 
> Its JUST NOT HAPPENING it
> Its JUST NOT GOING TO HAPPEN.
> ...




I was putting together a prospectus in about 1991 using the exact same arguments.


----------



## xoa (10 February 2008)

Tysonboss1 said:


> After years of stagnation comes a property boom returning the average property growth to above 10% as it has maintained over the last 100years through multiple booms, crashes, wars, recessions and interest rate spikes,




The trend has been much less than 10% pa. Residential property price growth has historically been coupled to wage growth. Which makes sense, because wage earners (rather than professional speculators) have historically been the primary consumers of this good. 

After accounting for rental returns, real estate has historically performed worse than the stock market, and marginally better than fixed interest (at the cost of greater volatility).


----------



## xoa (10 February 2008)

tech/a said:


> Those who still wait will be left once more waiting for something that *WONT* eventuate in *THIS* country.
> 
> Full and comprehensive details here.
> http://www.anz.com/documents/economics/Property Outlook January 2008.pdf




Money lenders used much the same selective statistics in the United States in 2005. And the UK in 2007. And NZ as recently as December last year. You know why? Because they have a vested interest in lending money, and they'll be upbeat as long as they can. When the crash comes, they'll be happy to foreclose on the people they mislead.


----------



## tech/a (10 February 2008)

> When the crash comes, they'll be happy to foreclose on the people they mislead.




I don't mind argument but when its just not supported with anything but emotional bias----???

Other parts of the world simply don't have the economic in balances we have and have in balances in areas which support your view.

Get some balance in argument if you wish to be taken seriously.



> You know why? Because they have a vested interest in lending money, and they'll be upbeat as long as they can.




Every business has a profit agenda so we disregard all expert advice unless it comes from a charitable institution!
Its a conspiracy I tell you!!!

Bah humbug!


----------



## xoa (10 February 2008)

In the history of the world, I don't think any bank or real estate agent has predicted a single real estate crash. They only concede this kind of event after the fact.

It's okay to consult the advice of commercial entities, so long as they're independent. That's where fee-for-service financial advisors play a role.

I don't think Australia is particularly different from those nations which have already entered a property bear market. Canada and the US and UK and NZ also get many immigrants. They all also have low unemployment rates. They also (with the exception of the US) have historically low rental vacancies. Heck, Japan has exhibited low vacancies since 1991, and that hasn't helped boost their prices one iota. And though Australia is shipping alot of rock to China, we're not setting any world records for economic expansion.


----------



## numbercruncher (10 February 2008)

tech/a said:


> *This debate can be put to bed with current statistics.*
> 
> Its JUST NOT HAPPENING it
> Its JUST NOT GOING TO HAPPEN.
> ...




I dont buy it -

June 06 to June 07 , there was a population increase of 315k (138k of these natural)

HIA says we are building 150k NEW dwellings a year, so last year roughly was one dwelling built per 2 people new people.

There is no shortage of rentals except for specific pockets, take a look at realestate.com.au, millions of places for rent, just to many people want to live in same area, which is fine, you just have to pay the premium.

Australia average household size is approx 2.6 and expected to decline!


----------



## robots (10 February 2008)

hello,

look at the risk adjusted return numpty, 

awesome stuff, stirs such emotion property I dont know why amazing

thankyou

robots


----------



## Mofra (10 February 2008)

robots said:


> hello,
> 
> and pensioners arent rubbing their hands together when their creaming it with the old bhp or cba they have had for many many years,
> 
> ...



Absolutely 100% would they care about inflation - you're assumption that pensioners are so stupid they don't understand a basic financial concept is contemptable. Many pensioners who have accumulated a reasonable pool of assets would employ the services of a financial adviser who would explain any concepts they don't understand anyway.

I doubt any pensioner would be happy drawing their super down at $600pw for life, considering in 20 years inflation will turn the spending power of that $600 into $332.21* in todays dollars

* Assuming an inflation rate of 3% pa


----------



## Mofra (10 February 2008)

xoa said:


> I don't think Australia is particularly different from those nations which have already entered a property bear market. Canada and the US and UK and NZ also get many immigrants. They all also have low unemployment rates. They also (with the exception of the US) have historically low rental vacancies. Heck, Japan has exhibited low vacancies since 1991, and that hasn't helped boost their prices one iota. And though Australia is shipping alot of rock to China, we're not setting any world records for economic expansion.



I believe there to be some significant differnces between Australia & the US markets:

a. Building approvals in the us for the 2006 full year were enough to house almost 50% of their then population
b. Australia has much more stringent lending criteria & a more conservative product market than US lenders (no NINJA loans, 30 yr loan terms etc)

If anything, I would expect (as the thread title suggests) a period of stagnation in real, after tax terms rather than a crash.


----------



## robots (10 February 2008)

Mofra said:


> Absolutely 100% would they care about inflation - you're assumption that pensioners *are so stupid they don't understand* a basic financial concept is contemptable. Many pensioners who have accumulated a reasonable pool of assets would employ the services of a financial adviser who would explain any concepts they don't understand anyway.
> 
> I doubt any pensioner would be happy drawing their super down at $600pw for life, considering in 20 years inflation will turn the spending power of that $600 into $332.21* in todays dollars
> 
> * Assuming an inflation rate of 3% pa




hello,

never said that,

thankyou

robots


----------



## wayneL (10 February 2008)

Mofra said:


> I believe there to be some significant differnces between Australia & the US markets:
> 
> a. Building approvals in the us for the 2006 full year were enough to house almost 50% of their then population
> b. Australia has much more stringent lending criteria & a more conservative product market than US lenders (no NINJA loans, 30 yr loan terms etc)
> ...




Looking down the road 5 years; that would make Oz real estate the most expensive in the world BY FAR (by valuation vectors).

Justified?


----------



## robots (10 February 2008)

hello,

yes

thankyou

robots


----------



## wayneL (10 February 2008)

robots said:


> hello,
> 
> yes
> 
> ...



hello

why?

thankyou


----------



## Mofra (10 February 2008)

wayneL said:


> Looking down the road 5 years; that would make Oz real estate the most expensive in the world BY FAR (by valuation vectors).
> 
> Justified?



That would be 5 years of 0% real returns.. which would effectively make it cheaper than it is now, given wages growth often exceeds the RBA inflation targets.


----------



## xoa (10 February 2008)

Mofra said:


> If anything, I would expect (as the thread title suggests) a period of stagnation in real, after tax terms rather than a crash.




I'm not going to discount the possibility of that (or even moderate 3%-4% growth over the medium term). I just think that a crash is more likely than a continuation of the boom, unless home buyers start using their kidneys as deposit. 

Australian property is said to be the most unaffordable in the world, which is absurd for such a sparcely populated continent. With the rest of the world correcting, I wouldn't bet on Australia getting even more unaffordable.


----------



## wayneL (10 February 2008)

Mofra said:


> That would be 5 years of 0% real returns.. which would effectively make it cheaper than it is now, given wages growth often exceeds the RBA inflation targets.



But if overseas markets continue to deflate at the rate they are now, Aus will be comparatively ludicrous. (Wage/house price ratios etc)

This I cannot justify.


----------



## robots (10 February 2008)

hello,

dont know just an opinion,

home buyers should start by saving money and 20-30% of the gross wage would be a good start

thankyou

robots


----------



## Mofra (10 February 2008)

wayneL said:


> But if overseas markets continue to deflate at the rate they are now, Aus will be comparatively ludicrous. (Wage/house price ratios etc)
> 
> This I cannot justify.



That is a very fair point, although the domestic residential market tends to be fairly insular in comparative valuations and there is nothing in the US to suggest wages wont decline rather than grow in the next couple of years considering Bush is now throwing money at people (over 90m!) hoping they _spend_ the money to stimulate the (consumer) economy rather than save it.


----------



## numbercruncher (10 February 2008)

robots said:


> hello,
> 
> look at the risk adjusted return numpty,
> 
> ...





no emotion drugbot,

just contributing to the debate.

thankyou.


----------



## Judd (10 February 2008)

robots said:


> do you think along the way the pensioner in his port melbourne workers [valued at $1M according to robots] cottage would give two hoots about inflation




I have this delightful vision of a pensioner now in the later stages of his life who, buying into Port Melbourne when it was a slum and no one wanted to live there (and I know as I was born in South Melbourne and it was even slummier), is now sitting in his magnificent palace worth $1m while trying to survive on $272 per week, thinking "Gee, ain't this grand.  After all these years I'm worth $1M."

Next will be the sales agent, be it real estate or bank, suggesting a reverse mortgage "To use that equity in your house" - which essentially means transfer ownership to the lender so the nice sales agent will take a useful commission.  And, surrounded by his also financially illiterate children, the pensioner will appear on ACA, saying "Gee, ain't this grand.  I no longer have a pension but I now have $200,000 and the bank now owns my home."  

Cut to smiling pensioner and similarly smiling children of same pensioner who "Agree that Dad (being totally uneducated else why would he be a pensioner?) has made a good decision."   Pan to loan originator and sales agent who have even bigger grins on their faces.


----------



## robots (10 February 2008)

hello,

and what does all that have to do with inflation?

and what about the other 600k in assets "pensioners" can have,

thankyou

robots


----------



## robots (10 February 2008)

numbercruncher said:


> no emotion drugbot,
> 
> just contributing to the debate.
> 
> thankyou.




hello, 

thanks numpty,

78% clearance rate on the weekend for melbourne, so still a pretty good weekend considering the turmoil, oh and the credit crunch

doesnt seem to be having much of an affect on RE the credit crunch as much as it is hitting those companies on the stock exchange

thankyou

robots


----------



## Judd (10 February 2008)

robots said:


> hello,
> 
> and what about the other 600k in assets "pensioners" can have,
> 
> ...




Excuse me, I worked in this area.  Less than 1% of the pensioner population had anywhere near such assets.  Stop believing your own propaganda.


----------



## robots (10 February 2008)

hello,

yeah right,

well you would know all the "worker's" cottages had exactly that in them, 

people who worked at the manufacturing in the area, and they saved and saved and saved,

sure plenty of them get around with the apron on in the front yard watering the concrete but they are down

thankyou

robots


----------



## Judd (10 February 2008)

robots said:


> hello,
> 
> yeah right,
> 
> ...




You are being totally incoherent.  There is no logic to your language or your sentence structure.  However, I'm relaxed with that as it seems to be your normal pattern.  Sure you don't have OCD?  You may wish to check it out just in case.


----------



## robots (10 February 2008)

hello,

yes, 

OCD, shcizophrenia, bi-polar all of them, 

the high's are high as and the low's are low as

thankyou

robots


----------



## numbercruncher (10 February 2008)

Judd said:


> Excuse me, I worked in this area.  Less than 1% of the pensioner population had anywhere near such assets.  Stop believing your own propaganda.




59pc of Queensland retirees rely on the Goverment Old age pension of some $200 odd a week, many will eventually get roped into reverse mortgages with skyrocketing inflation.


----------



## Tysonboss1 (10 February 2008)

xoa said:


> The trend has been much less than 10% pa. Residential property price growth has historically been coupled to wage growth. Which makes sense, because wage earners (rather than professional speculators) have historically been the primary consumers of this good.
> 
> After accounting for rental returns, real estate has historically performed worse than the stock market, and marginally better than fixed interest (at the cost of greater volatility).




Well again your wrong here,....

Capital growth historically been very close to 10% and over 10% once rental return is calculated.

And secondly this thread is about whether property is stagnating which it clearly isn't in certain markets.


----------



## numbercruncher (10 February 2008)

Judd said:


> You are being totally incoherent.  There is no logic to your language or your sentence structure.  However, I'm relaxed with that as it seems to be your normal pattern.  Sure you don't have OCD?  You may wish to check it out just in case.




Funnily enough he has quite a fan base here, read one recently who said he gives 1000x more credibility to robis posts than Information posted by major media outlets - strange world.

Maybe realestate is the new religion for Aussie investors, a pyramid scheme of epic proportions


----------



## Tysonboss1 (10 February 2008)

xoa said:


> which is absurd for such a sparcely populated continent..




Whats absurd is people using this fact an arguement,....

How is australians large tracks of desert going to lower demand in sydney?

Sydney may as well be an island,.... it is boxed in on all four sides,

east side - the ocean
west side - blue mountains
North side - national park
south side - national park and one of australias large military zones,....

Being the most sparsely populated countries means nothing if every one is trying to cram into 1hr of a capital city,...


----------



## Tysonboss1 (10 February 2008)

numbercruncher said:


> 59pc of Queensland retirees rely on the Goverment Old age pension of some $200 odd a week, many will eventually get roped into reverse mortgages with skyrocketing inflation.




Whats this got to do with property being viable as an investment?


----------



## Tysonboss1 (10 February 2008)

krisbarry said:


> Only a fool would be buying a property in this current market.
> 
> Not unless I was living in a car or a tent would I even consider the plunge!




People from Brisbane who listened to this post back in 2004 have turned out to be the fools,....


----------



## xoa (10 February 2008)

Tysonboss1 said:


> Well again your wrong here,....
> 
> Capital growth historically been very close to 10% and over 10% once rental return is calculated.
> 
> And secondly this thread is about whether property is stagnating which it clearly isn't in certain markets.




Let me give an example in Sydney, which has probably been the best performing market in recent Australian history. The average landed Sydney residential property cost $23,000 in 1970, and $523,000 in 2006.

That equates to a nominal return of about 9.5% pa.

But you need to consider that inflation averaged 10.4% pa in the 1970s, and 8.1% pa in the 1980s.

Accounting for inflation (which fell to 2.0% pa in the 1990s and 3.5% pa in 2000-2006), you get real capital gains of 2.85% pa, which is only slightly more than real wages growth.

Include rental returns, and it's clear that property has been a respectable earner. But it's not the free lunch that some people have made it out to be. It's underperformed the stock market, and requires a greater investment of time and effort.


----------



## robots (10 February 2008)

hello,

thats right tyson,

they could of been 2yrs into a residence, getting closer to expenses being similar to renters,

and also thats where i guess time in the market is ideal for many

thankyou

robots


----------



## robots (10 February 2008)

xoa said:


> Let me give an example in Sydney, which has probably been the best performing market in recent Australian history. The average landed Sydney residential property cost $23,000 in 1970, and $523,000 in 2006.
> 
> That equates to a nominal return of about 9.5% pa.
> 
> ...




hello,

care to give us a run down on the "genuine" return on investment,

or still skimming over that part

thankyou

robots


----------



## xoa (10 February 2008)

robots said:


> hello,
> 
> care to give us a run down on the "genuine" return on investment,
> 
> ...




What are you mumbling about? I just gave it: real capital gains of 2.85% pa in Sydney from 1970-2006, plus whatever you can rent it for (and obviously, minus the cost of maintenance, rates and taxes).

Before the recent boom, your real gains would have been more like 2.13% pa. It'll probably return to that level once the speculators give it a rest.


----------



## Tysonboss1 (10 February 2008)

xoa said:


> Let me give an example in Sydney, which has probably been the best performing market in recent Australian history. The average landed Sydney residential property cost $23,000 in 1970, and $523,000 in 2006.
> 
> That equates to a nominal return of about 9.5% pa.
> 
> ...




you don't include inflation because that is the same across all asset classes,..

Have I ever refered to property as a free lunch,... no all I have done is point out that it is an asset class that is worth having as part of a balanced portfoilio,... 

You can't ever say that either the stock market or shares are better than the other,..

each asset class has it's strenghs and weaknesses and when put togther in the right format the strengths in one offsets the weaknesses in the other...


----------



## robots (10 February 2008)

xoa said:


> What are you mumbling about? I just gave it: real returns of 2.85% pa in Sydney since 1970, plus whatever you can rent it for.




hello,

what you lay down?

thankyou

robots


----------



## numbercruncher (10 February 2008)

Tysonboss1 said:


> Whats this got to do with property being viable as an investment?




It was in response to a side discussion.

Dont believe ive said property isnt a viable investment, depending upon your income and tax level it can be very viable as an investment.

But currently as an owner occupier going forward it isnt a viable investment if prices dont increase by 10pc or more p/a.


----------



## tech/a (10 February 2008)

> But currently as an owner occupier going forward it isnt a viable investment if prices dont increase by 10pc or more p/a.




And in the future when prices stagnate or indeed come off a tad then that would be a more viable investment for an owner occupier?

What your missing is an owner occupier has at least a chance of keeping ahead of Capital gain well beyond bank interest on his savings.
( Your getting capital gain on the money borrowed)
AND
Inflation.

Do nothing and your falling behind further and further.
Just as all those who 2 years ago started this thread have done and will continue to do.

You could stick those Graphs on a 100 ft wide screen and people still wont see it.

"Nah its an illusion a contrived conspiracy--yep always will be."


----------



## numbercruncher (10 February 2008)

Tysonboss1 said:


> People from Brisbane who listened to this post back in 2004 have turned out to be the fools,....





You could paint anyone with the fool brush that didnt choose a certain asset at a certain time.

Now lets explore the truth.

2004 Brisbane median houseprice 350k.

2007 Brisbane median houseprice 420k.

20pc after 4 years or 5pc p/a , subtract 10k for duty and 10k for realty fee to sell, add in interest and ongoing holding costs, it looks crap to me.

Surely the offical definition of stagnation for this period ?





http://www.myrp.com.au/brisbane_house_prices.do


----------



## numbercruncher (10 February 2008)

Realestate permabulls are going to be calling for the sacking of the Vic Premier ? Seems hes turned property bear 




> MELBOURNE'S house price boom is unsustainable, Premier John Brumby warned yesterday, as he counselled buyers against borrowing too much and counting on ever-rising prices.




http://www.theage.com.au/news/national/brumby-warns-on-mortgages/2008/01/25/1201157673211.html


----------



## IFocus (10 February 2008)

xoa said:


> The trend has been much less than 10% pa. Residential property price growth has historically been coupled to wage growth. Which makes sense, because wage earners (rather than professional speculators) have historically been the primary consumers of this good.
> 
> After accounting for rental returns, real estate has historically performed worse than the stock market, and marginally better than fixed interest (at the cost of greater volatility).




Before this current boom / bubble I carried out research on suburbs around around Perth to see what the average growth rates were over the previous 30 years and how much they varied. No big deal as the data is easily available.

It became very clear where to invest and where not to based on that information alone. *There were many areas that averaged 10% PA and greater over that 30 year period* In WA that is quite a few boom and bust periods, over here we know how to cause banks to default.

There was plenty of other data available to see the trends that had been, were existing and relativity  easy to project out for at 2 to 3 years or more.

I also came across plenty of long term investors that had made fortunes out of investing in property over 30 years or more. When I say plenty I am talking 100 or more people. When trying to find traders of the same magnitude I found 3 or 4.

I don't know of any other asset class where is is so much data and history available as real estate.

Will house prices to stagnate for years? 

There will be areas that will certainly stagnate look at the historical data there always has been always will be except in booms which for some illogical reason some believe thats normal.

Like wise there will always be areas both locality and types that will continue to rise. 

Extraordinarily it requires some mentoring, miles of research, and plenty of time and effort to find and exploit. 

My advice to any would be investor is forget the stock market, solely concentrate on property based on probability your chance of success are far greater IMHO. 

I invested in property 5 to 6 years ago and made a basic mistake of continuing  to invest enormous amounts of time on trading markets instead of solely focusing on property. Although I make an income from trading my property investments is where my real wealth is made. 

Focus


----------



## explod (10 February 2008)

IFocus said:


> Before this current boom / bubble I carried out research on suburbs around around Perth to see what the average growth rates were over the previous 30 years and how much they varied. No big deal as the data is easily available.
> 
> It became very clear where to invest and where not to based on that information alone. *There were many areas that averaged 10% PA and greater over that 30 year period* In WA that is quite a few boom and bust periods, over here we know how to cause banks to default.
> 
> ...




You make some good points but to say forget the stock market is an error for the fundamental of diversity.   I brought my first property in 1968 and the journey has been very good.   In the last 5 years I have felt (wrong to some extent) that the big gains in property (like from 1970 to 76) are not there.

In the last few years I have averaged around 70% a year on the stockmarket with my effort being, good mid chip stocks for growth instead of yield.  Like you I do the trend research.  With the stock market changing conditions I find easier to detect and stocks can be disposed of at the click of a mouse compared with property, minimum a couple of months.

My last good property venture was two choice blocks of land with sea views, held them for a little more than 12 months and almost doubled my money.  That was in 02/03.  The same blocks have not moved in price since as they are a bit far from town and a few too many of them.

Good properties in the right place no worries but I will have the stock market at the moment by a mile.

Of course I am  talking copper (in global short supply) and gold (going up as a hedge against weakening currencies) with stocks like Oxiana, Incetec Pivot, Lihir Gold, Wannambool Cheese and Butter and I think Wollies for food will be kind with some dividends thrown in.


----------



## robots (10 February 2008)

xoa said:


> Which areas are these? *And is this 10%* adjusted for inflation? I seriously doubt it




hello,

i wonder if it is on the initial investment amount as well XAO?

thankyou

robots


----------



## xoa (10 February 2008)

IFocus said:


> Before this current boom / bubble I carried out research on suburbs around around Perth to see what the average growth rates were over the previous 30 years and how much they varied. No big deal as the data is easily available.
> 
> It became very clear where to invest and where not to based on that information alone. *There were many areas that averaged 10% PA and greater over that 30 year period* In WA that is quite a few boom and bust periods, over here we know how to cause banks to default.




Which areas are these? And is this 10% adjusted for inflation? I seriously doubt it.

Australians are indebted to the hilt. Our borrowing capacity is almost exhausted. The mortgage burden was bad in 2005, and it's at critical mass now. Short of selling their kidneys, I don't see how buyers can fund continued double-digit increases. 

I'm not saying all property is a bad investment. Internationally there are some good opportunities. Look at Asia - their incomes are rising quickly (15% pa in most of SE Asia), and they can afford to take on debt.


----------



## numbercruncher (10 February 2008)

xoa said:


> I'm not saying all property is a bad investment. Internationally there are some good opportunities. Look at Asia - their incomes are rising quickly, and they've been so busy lending money to us, they hardly know the meaning of debt themselves.





I wonder if it actually effects our skilled Immigration numbers, I mean someone thinking of moving here and sees that realestate is over double their home country and Interest rates also way higher could make them think twice ?

Asia isnt immune from personal Debt I understand that China has a pretty serious property bubble happening


----------



## xoa (10 February 2008)

numbercruncher said:


> I wonder if it actually effects our skilled Immigration numbers, I mean someone thinking of moving here and sees that realestate is over double their home country and Interest rates also way higher could make them think twice ?




It might.. I mean, if a guy from China has a choice between buying a loft in Manhattan, or some random townhouse in Melbourne with the same money, I think he'll choose the former.



numbercruncher said:


> Asia isnt immune from personal Debt I understand that China has a pretty serious property bubble happening




I'm not as worried about the situation in China. They save much more than us, it's a part of their culture. They're more eager to loan money to us, than spend it themselves.

Regular 10-20% pa gains in Shanghai or Beijing are more sustainable, because people's incomes are rising at about the same rate.


----------



## robots (10 February 2008)

hello,

also when he/she buys the manhattan loft he/she will get an uzi, ak47, 9mm, magnum, couple of rambo knives, humvee with bullet proof windows and machine gun on the back

thankyou

robots


----------



## Judd (10 February 2008)

xoa said:


> I'm not saying all property is a bad investment.




I find the proposition that your home is an investment rather intriguing (and xoa, I am not saying that is what you said or even implied.  Just using your quote as a reference point for my thoughts.)

Why should your home even be considered an investment?  You buy a house in order to make it your home.  If you wish to treat it as an investment then you need to take into account input costs, ie interest paid, rates, insurance, repairs and maintenance, and renovations, then discount that by inflation or the 10 year bond rate or how many nuts your monkey can gather in one hour.  Whatever.  But, unlike one infamous poster, you cannot just say "Here is how much I paid for it and here is how much I got got it" and just say "Wow, look at this CGT free profit."

Once you take that stance, you are classifying the property as an investment and need to take account of the reality (pun intended) that any "profit" has been devalued by time (inflation) and holding costs in order to quantify the actual real return.

Owning you own home is, in my view, one of the best feelings you can get.  You put the key in the door, walk inside, grab a beer, sit down and watch a DVD or listen to your favorite music and go "Jees, I'm home."  It's an intangible.  But it is not an investment akin to owning property for commercial purposes.

See you all next week.  Maybe.


----------



## xoa (10 February 2008)

robots said:


> hello,
> 
> also when he/she buys the manhattan loft he/she will get an uzi, ak47, 9mm, magnum, couple of rambo knives, humvee with bullet proof windows and machine gun on the back
> 
> ...




Manhattan is a very safe place to live. It's true that yuppies  and Wall Street analysts roam the streets, but I promise they're practically harmless.


----------



## xoa (10 February 2008)

Judd said:


> I find the proposition that your home is an investment rather intriguing (and xoa, I am not saying that is what you said or even implied.  Just using your quote as a reference point for my thoughts.)
> .




Most people here are talking about property in investment terms. But even prospective owner-occupiers are seriously questioning the financial sense of buying now. Why buy now, if your dream home could be $50,000 cheaper a year from now?


----------



## robots (10 February 2008)

Judd said:


> I find the proposition that your home is an investment rather intriguing (and xoa, I am not saying that is what you said or even implied.  Just using your quote as a reference point for my thoughts.)
> 
> Why should your home even be considered an investment?  You buy a house in order to make it your home.  If you wish to treat it as an investment then you need to take into account input costs, ie interest paid, rates, insurance, repairs and maintenance, and renovations, then discount that by inflation or the 10 year bond rate or how many nuts your monkey can gather in one hour.  Whatever.  *But, unlike one infamous poster, you cannot just say "Here is how much I paid for it and here is how much I got got it" and just say "Wow, look at this CGT free profit."*
> 
> *Once you take that stance, you are classifying the property as an investment and need to take account of the reality (pun intended) that any "profit" has been devalued by time (inflation) and holding costs in order to quantify the actual real return.*




hello,

but this is exactly what happens, CGT free, sensational

like I say, why would someone be concerned with inflation when living in their own home, it is a non-issue

it is more critical for a renter because after purchasing the owner will be miles ahead

thankyou

robots


----------



## robots (10 February 2008)

xoa said:


> Most people here are talking about property in investment terms. But even prospective owner-occupiers are seriously questioning the financial sense of buying now. Why buy now, *if* your dream home *could be* $50,000 cheaper a year from now?




hello,

thankyou

robots


----------



## explod (10 February 2008)

robots said:


> hello,
> 
> thankyou
> 
> robots




That is ok to highlight the "if" and the "could", but there is a very good truism that pays in the long run which goes "When in doubt get out"

The other matter is that ASF discussions are primarily about investment and its processes and by investors/speculators/traders and those wanting to learn it all.

The average person buying a property for a home, particularly a first home is probably not a typical ASF member.


----------



## theasxgorilla (10 February 2008)

numbercruncher said:


> You could paint anyone with the fool brush that didnt choose a certain asset at a certain time.
> 
> Now lets explore the truth.
> 
> ...




Fine, so property stagnated.  Inflation and interest rates have been compensated for by income tax cuts, wage increases and a strong dollar reducing the cost of imports.  Where is the affordability crisis that you've been harping on about for countless posts now?

ASX.G


----------



## robots (10 February 2008)

hello,

more so than ever it is about buying a home to live in and IMHO a home is a major investment for many and this is widely recognised in the financial industry

look at the benefits of home equity in then also leverging into equities

as you have mentioned previously in your case monies made in prop (as you rent now) allow you to trade the markets and thats great,

smurf and frinkster are one's to recently join the ranks of buying homes, 

i am hanging out to buy a new bicycle

thankyou

robots


----------



## Tysonboss1 (10 February 2008)

numbercruncher said:


> You could paint anyone with the fool brush that didnt choose a certain asset at a certain time.
> 
> Now lets explore the truth.
> 
> ...




the true median in brisbane in 2004 was below, $350,000.

If you bought a house in brisbane in 2004 it would now be costing you about the same to hold as it does to rent, and year by year will just get better and better,


----------



## BeterValue (10 February 2008)

xoa said:


> Manhattan is a very safe place to live. It's true that yuppies  and Wall Street analysts roam the streets, but I promise they're practically harmless.




Isn't that the same people that started this whole credit crunch fiasco?


----------



## Judd (10 February 2008)

robots said:


> look at the benefits of home equity in then also leverging into equities




Another crock of sh*t from the real estate and finance industries to entice suckers to put the very roof over their heads at risk and in doing so become more indebted.

I was off to do other work but I could not help but drop in and refute the absolute rubbish advice or inference that you promulgate.


----------



## robots (10 February 2008)

hello,

people dont have to take on debt,

if they can manage the numbers then go for it if comforable

gee you need to go for a walk judd, grab a beer calm down  

thankyou

robots


----------



## Tysonboss1 (10 February 2008)

Judd said:


> I find the proposition that your home is an investment rather intriguing (and xoa, I am not saying that is what you said or even implied.  Just using your quote as a reference point for my thoughts.)
> 
> Why should your home even be considered an investment?  You buy a house in order to make it your home.  If you wish to treat it as an investment then you need to take into account input costs, ie interest paid, rates, insurance, repairs and maintenance, and renovations, then discount that by inflation or the 10 year bond rate or how many nuts your monkey can gather in one hour.  Whatever.  But, unlike one infamous poster, you cannot just say "Here is how much I paid for it and here is how much I got got it" and just say "Wow, look at this CGT free profit."
> 
> ...




I don't believe owning your own home is an investment,... but it definatly can help increase your weath in several ways,...

1, It locks in your cost of accomadation,... meaning that although it is more expensive than renting, over the years the repayment decreases with inflation while the rent increases.

2, It gives you an equity bank inwhich to lend from for other investments, and will lower the interest you would have to pay for these investments.

3, In retirement you probally have finished repaying the home and there fore can live rent free, or sell the house and have a lump some inwhich to live off.


----------



## Tysonboss1 (10 February 2008)

xoa said:


> Most people here are talking about property in investment terms. But even prospective owner-occupiers are seriously questioning the financial sense of buying now. Why buy now, if your dream home could be $50,000 cheaper a year from now?




cool,... we will see I guess


----------



## numbercruncher (10 February 2008)

Tysonboss1 said:


> the true median in brisbane in 2004 was below, $350,000.
> 
> If you bought a house in brisbane in 2004 it would now be costing you about the same to hold as it does to rent, and year by year will just get better and better,




What was the Median price in Brisbane 2004 for a house ? I sold a very average GC house in 02 for not much less.

Even if the 2004 guy paid his mortgage down to 300k, hes now paying 9pc + outgoings but can still rent for only $400 (not to mention his unrealised equity would earn interest @ 7pc+). Still a big difference and hes still got prior years interest payments/ rental difference for catchup.


----------



## numbercruncher (10 February 2008)

theasxgorilla said:


> Fine, so property stagnated.  Inflation and interest rates have been compensated for by income tax cuts, wage increases and a strong dollar reducing the cost of imports.  Where is the affordability crisis that you've been harping on about for countless posts now?
> 
> ASX.G




Hello


Obviously you only selectively read my posts. But I may as well answer the same thing again, better being accused of harping than Ignoring people I guess.

Its the Media talking about affordability crisis, and many voters at the last election, Im here debating house prices stagnating for years or similar to that effect. But I do believe affordability is a huge issue going forward, why not have a crack at proving it isnt an issue ? Obviously I have been wrong (over the past 12mnths) looking at last years average RE price increases, assuming they arnt a little fudged.

Just to repeat ...

Median household after tax income 70k, Median Brisbane house price 420k, Interest rates 9pc, Inflation skyrocketing.

Something has to alter in this equation in my interpretation, Wages may surge, but that means so will Interest rates.

Owner occupied realestate is my major interest of this discussion, the numbers simply dont stack up from a purely financial view point.

Investor property, sure, if you must, deductability makes the absolute world of difference.

Perhaps we could end up a nation of Renters who all own an Investment property and effectively pay no tax ?  Yah sure that'd work with a shrinking Labor force


----------



## theasxgorilla (10 February 2008)

numbercruncher said:


> Its the *Media* talking about affordability crisis, and many voters at the last election, Im here debating house prices stagnating for years or similar to that effect.




As I have said before, so long as you know where you stand because I for the life of me can't figure it out.  It looks like you are more interested in taking the other side of an argument than actually 'exploring the truth'.



numbercruncher said:


> Median household after tax income 70k, Median Brisbane house price 420k, Interest rates 9pc, Inflation *skyrocketing*.
> 
> Something has to alter in this equation in my interpretation, Wages may *surge*, but that means so will Interest rates.




This is _Media_ speak.  These words are used evocatively by the Media because it gets people talking about their news so much more effectively than just saying inflation is much higher than it has been and higher than what the RBA is comfortable with, and the same can be said for wages, and this is why the RBA must keep increasing, sorry *HIKING* interest rates.

Believe me when I say that I agree with some of the things you point out.  But as I have said on other occasions...we're all quite capable of finding out own news stories to support different sides of this argument:

http://news.theage.com.au/swan-pours-cold-water-on-recession-talk/20080210-1rar.html

LOOK!  Labour will fix the inflation situation with tax cuts of it's own.

http://www.news.com.au/perthnow/story/0,21598,23180151-2761,00.html

LOOK! The rental market in Perth is still out of control...ought to keep those stagnating house prices up above Sydney median-house-price crushing levels!

Percentages and ratios don't mean much to me.  There are economies on earth that continue to function when the norm is 40%+ of wages towards paying the rent.  Yes, that's right, RENT, not mortgage repayments.  As people are continuously pointing out throughout this thread, the place you live is of utmost importance.  It's a philosophical discussion, but what is your wage for anyhow?  In neo-serfdom, you work in order to earn your keep on the allotted plot of your choosing*.  Does it matter to you or anyone else if that is 20% or 50% of what you earn in a month?  If you can afford all the other things that a 2008 household demands like broadband, an entertainment system, a barbecue, a car in the driveway and enough new socks and jocks for everyone, does it matter that the absolute dollar amount you paid for these 'necessities' is higher than it used to be?

If the US goes to **** like it is it will take the rest of the world with it in one form or another.  Expect to see some of the ugly affordability and inflation stats we keep seeing come back into line.  But IMO expecting a return to long term averages is folly.  What has happened to this country in the last fifteen years is far, far, far from average.  It's been to our country what oil was to Norway.  It has lifted us all up a step in living standards yet unfortunately that has been a little bit of a unevenly spread benefit.  Because once upon a time we all had a wife, 2.3 kids, a 3-bedroom house on a quarter acre block within a commutable distance of the city and an Aussie big-six in the driveway to look forward to.  Now what?  It's different isn't it?  It's changing.  There is no stereotypical description of what we have to look forward to now.  How do you apply stats to this?  Not easy.  I don't even bother trying.

* "allotted plot of your choosing" might sound like a contradiction.  But do you really think you have a "choice" when all of our capital cities are basked in the glory of suburban homogeneity?  Was it really a choice when your house is the same as the one three doors up, only you picked carpets where they instead chose the wooden overlay?

The people who really get to choose where they live are not from the neo-serf class.

ASX.G


----------



## numbercruncher (10 February 2008)

> LOOK! Labour will fix the inflation situation with tax cuts of it's own.




Is that what fixes Inflation ? ..

Glad you bought up Perth, Tightest rental market in the Country and prices slipped 0.4 per cent in the December quarter, hints at peak prices to me.

Funnily enough only place I currently have any re exposure


----------



## theasxgorilla (10 February 2008)

numbercruncher said:


> Is that what fixes Inflation ? ..
> 
> Glad you bought up Perth, Tightest rental market in the Country and prices slipped 0.4 per cent in the December quarter, hints at peak prices to me.
> 
> Funnily enough only place I currently have any re exposure




Chicken, egg, who knows?  The traditional view is that if you introduce more money into the system relative to the supply of goods and services you will generate inflation.  What this is doing is not creating money, but shifting it from one place to another.  Futhermore, the traditional view is that private utility of money is more efficient than government.  If we believe this then we can say that the amount of money stays the same, but what we receive as goods and services in exchange for that money will be greater.  Therefore, relatively speaking, you have increased the supply of goods and services relative to money.  Yes, that would be counter inflationary, if you believe all the aforementioned.  On one hand I do, and on the other I think economics is a bunch of manipulated hocus pocus.  I'd never reject the opportunity to get more of the money I earn under my own control, so it's a good thing either way.

Re: Perth peaking...a peak is a peak until it's not.  If you are competent at picking them you should consider trading the sharemarket too...you would have made a killing recently 

ASX.G


----------



## numbercruncher (11 February 2008)

So if ive interpreted you correctly, you are non committal to both rising or falling prices for reasons outlined.

But one thing you are confident of is a return to long term averages isnt going to happen.

I find that interesting, and a big call, and perhaps a much harder debate to win against the masses !

So many tidbits point to that being inevitable (all open to individual interpretation of coarse), not just at a historical level but looking at current world events, US and Canada for example Realestate runs at 3x earnings and much lower interest rates.

Might,imho, take a while to play out, but just look at our rapidly aging population as an example, bargaining power will become tremendous for workers wages short of massive Immigration. Whats to say skyrocketing wages doesnt pull it back to 4x from 8x. Also a counter argument would be whats to say skyrocketing wages doesnt double house prices, well Interest rate rises perhaps.

Supply, despite what the media says, seems to me to be keeping up with demand, Last year 150k dwellings built and 300k population growth.

I think history and my interpretation of it has shown Realestate at 8x multiples to be unsustainable, and preceded some of the greatest crashes, the only way this thread will choose who ideas are wrong and whos are right and who was in between is with the benefit of hindsight.

In the mean time its a good thread, I hope it remains that way, Im sure it will if we all play the ball


----------



## numbercruncher (11 February 2008)

theasxgorilla said:


> Re: Perth peaking...a peak is a peak until it's not.  If you are competent at picking them you should consider trading the sharemarket too...you would have made a killing recently




Picked it perfectly actually, didnt so much make a fortune as save a fortune, even managed to get super into the cash option 

Golds been my best hold this past year.

Just a shame i wasnt prudent enough to place short bets, still a pleasant result  , and as they say, the greedy become the needy, wether thats true in practice is another thing


----------



## theasxgorilla (11 February 2008)

numbercruncher said:


> So if ive interpreted you correctly, you are non committal to both rising or falling prices for reasons outlined.




I don't know what will happen, if that's what you mean.  I do know that in various neighbourhoods around the country that today you can't find a property for the same entry-level prices that you could 2 years ago.  That has made them unaffordable for some.  It also means that prices were absolutely not stagnating.  You get my drift, buddy?  It can't be both ways.  That's hindsight...we got it now, so we can use it to describe what has happened, in spite of the best analysis efforts of the experts who were quoted in the article that started this thread.

I can tell you what I want to happen.  US goes into recession (probably has already).  I don't wish it because I don't like Americans or think they deserve it.  I simply don't see an alternative.  China splutters.  Europe has to deal with some fallout (the Yanks will use it as an excuse to tell the Europeans they should be more like the Americans, like they always do).  Australia looks at all this 8x multiple, 10% interest rates, inflation above 4% and down the barrel of lower commodity prices and a rising dollar and goes, "****, stop buying, sell property".  And we get about 2-3 years where people don't know whether it really is the much talked about return-to-historical-averages or just a pause along the way to greater prosperity.  A plethora of bad news media articles backed by 'factual stats' will keep them guessing.  Providing it's the latter and not the former, within this period will lie buying opportunities.  This is what I'm looking for.

The US is in the habit of bankrupting and litigating  and regulating away it's mistakes.  Expect that process to take 2-3 years.  I have no evidence to back this up, just the strong hunch that the people at the helm will do everything in their power to engineer another post-911 soft landing.  If they succeed, what do we have to worry about again? Even if we agree that they're just covering up the rot, what can YOU or I do about it?  _Lassie fair_.

And China seems to have a lot of work (read potential) still left to do.  Expect them to wade back in when their market shocks are complete and commodity prices start looking like bargains compared to historical price highs.



numbercruncher said:


> But one thing you are confident of is a return to long term averages isnt going to happen.
> 
> I find that interesting, and a big call, and perhaps a much harder debate to win against the masses !




That's okay, I'm not here to convince the masses .  I find that medium-to-long term moving averages are much more effective at defining perceived value (the only important measure of value).  Grown-ups have such short memories.  We don't remember with that much detail what it was like back in 1998, let alone 1908.  Reference points of value are shifting daily.  Long term static averages are pathetically simplistic.  If human evolution was meant to track along with such a measure of consistence then so much of the 20th century ought never have happened.  Certain combinations of events can be´synergistic in benefit.  As they occur they smash static averages to pieces.

How do you model the benefit of the Internet and broadband into the cost of housing?  If businesses people used to have to rent office space, but now they can work from home, does the cost of housing go up in response to this shift?


----------



## xoa (11 February 2008)

A few interesting graphs, which put the recent spike in perspective. The savings/debt graphs reveal what's driven the boom. The American data doesn't reflect their recent crash.


----------



## professor_frink (11 February 2008)

xoa said:


> A few interesting graphs, which put the recent spike in perspective. The savings/debt graphs reveal what's driven the boom. The American data doesn't reflect their recent crash.




where did you find inflation and housing statistics going back that far xoa?


----------



## xoa (11 February 2008)

professor_frink said:


> where did you find inflation and housing statistics going back that far xoa?




http://www.library.unsw.edu.au/~the...ved/adt-NUN20071210.120652/public/02whole.pdf

Median capital city house prices 1880-2006, real and nominal, starts on page 64. Inflation data 1880-2006 starts on page 280.

It'd be interesting to chart the rental yields (page 73) too. Net rental yields had fallen to a dismal 1.10% in the last recorded year (2005). It'd be even worse now. Rents clearly aren't keeping pace with the asset bubble.


----------



## IFocus (11 February 2008)

explod said:


> You make some good points but to say forget the stock market is an error for the fundamental of diversity.   I brought my first property in 1968 and the journey has been very good.   In the last 5 years I have felt (wrong to some extent) that the big gains in property (like from 1970 to 76) are not there.
> 
> In the last few years I have averaged around 70% a year on the stockmarket with my effort being, good mid chip stocks for growth instead of yield.  Like you I do the trend research.  With the stock market changing conditions I find easier to detect and stocks can be disposed of at the click of a mouse compared with property, minimum a couple of months.
> 
> ...




Hi Explod you make a good point about returns from the stock market, good traders I find (personal experience and small sample) generally have excellent returns particularly during bull markets and not surprised by your own experience. 
The thing I found (again personal experience and small sample given the total scale) approximately 5 to 6 years ago I struggled to find a lot of long term successful market investors / traders that could match the returns of property investors. But I ran into plenty of people who had blown trading accounts big time.

As for successful property investors there was heaps more, think of any number in dollars and I dare say I know or could have found some one at the time who had the cash in the bank. Of course after the boom / bubble here you can times that by ten.

I hear all the time how the market out performs property yet I simply couldn't find hard evidence of that with the numbers of people on the ground who have actually done this. 



> XOA Which areas are these? And is this 10% adjusted for inflation? I seriously doubt it.




There were a reasonable number but remember looking at Mount Hawthorn and some of the adjoining suburbs that sat within 10K of Perth central as that was part of the criteria. I believe that this applied to most of Oz capital cities at the time. 

Adjusted for inflation? no 

Last point before I get sucked into this black hole and that is to state the obvious property investing strategies 5 or 6 years ago are not what is going to give the superior returns today bit like going long in a bear market.

OK beam me up Scotty


Focus


----------



## professor_frink (11 February 2008)

xoa said:


> http://www.library.unsw.edu.au/~the...ved/adt-NUN20071210.120652/public/02whole.pdf
> 
> Median capital city house prices 1880-2006, real and nominal, starts on page 64. Inflation data 1880-2006 starts on page 280.
> 
> It'd be interesting to chart the rental yields (page 73) too. Net rental yields had fallen to a dismal 1.10% in the last recorded year (2005). It'd be even worse now. Rents clearly aren't keeping pace with the asset bubble.




cheers xoa, appreciated


----------



## Tysonboss1 (11 February 2008)

xoa said:


> http://www.library.unsw.edu.au/~the...ved/adt-NUN20071210.120652/public/02whole.pdf
> 
> Median capital city house prices 1880-2006, real and nominal, starts on page 64. Inflation data 1880-2006 starts on page 280.
> 
> It'd be interesting to chart the rental yields (page 73) too. Net rental yields had fallen to a dismal 1.10% in the last recorded year (2005). It'd be even worse now. Rents clearly aren't keeping pace with the asset bubble.




where are the properites that are renting on yeilds of 1.1%.

I have never seen properites renting on these yeilds

I would like to see an example of an area where properties rent on yeilds this low,... It's just not happening,


----------



## numbercruncher (11 February 2008)

I see them all the time.

10m house here for 2k a week.

http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=403023081&f=50&p=10&t=ren&ty=&fmt=&header=&cc=&c=14677146&s=qld&tm=1202702376


But if you take into account a average 400k house @9pc renting at 400 p/w =


----------



## ROE (11 February 2008)

xoa said:


> A few interesting graphs, which put the recent spike in perspective. The savings/debt graphs reveal what's driven the boom. The American data doesn't reflect their recent crash.




Damn those graphs look scary..there wont be a crash but an nuclear bomb detonate when sh**t start to hit the fan  
there are no money in these assets...it just debt nothing but debt


----------



## Tysonboss1 (11 February 2008)

numbercruncher said:


> I see them all the time.
> 
> 10m house here for 2k a week.
> 
> ...





Yes, this is a good example on my I said lower end properties are better investments,...

But what I am saying is excluding luxary top end homes, show me an area where homes rent for 1%.


----------



## numbercruncher (11 February 2008)

Futures point to a 75pc chance of another rate hike on 5th of March.


----------



## robots (11 February 2008)

hello,

after 11 rises thats a whopping 2.50%

great, I hope the RBA lifts them because I will pass them straight on, 

more and more landlords are going to refuse to renew leases and run on a month by month basis allowing flexibility to screw tenants (lift rent, about time)

http://www.theaustralian.news.com.au/story/0,25197,23191513-25658,00.html

thankyou

robots


----------



## numbercruncher (11 February 2008)

Hello,

11 rises is 2.75, hope you do a better Job filling out property contracts.

Good luck with your plan.

I think its destined to fail.

Cheers.


----------



## robots (11 February 2008)

hello,

thankyou for the correction Number, 

just like property to stagnate hey Number,

wow a whopping 2.75% over two years,

any chance we can debate the real return on investment with RE or like Xao and others is it going to be washed over?

thankyou

robots


----------



## wayneL (11 February 2008)

Aussies like to call Oz "The Lucky Country".

Has anyone given consideration to how continued bubble prices... lets say a continuation of rises substantially above inflation will be sociologically damaging?

Will it be so lucky for our children with the prevailing attitude similar to that of Greedbot?

I'm all for capitalism, but when it becomes predatory it's time to have a good look in the mirror.


----------



## numbercruncher (11 February 2008)

I thought the Issue at hand is whats likely to happen going forward, returns of past no longer matter, even if they where fudged.

If you have any doubts as to what the RBA is telling us, this is it in plain english.



> Look forward to an economy slowing sharply. The good old days are over. Until the inflation tiger is back in the cage.




http://www.news.com.au/business/money/story/0,25479,23168186-5016110,00.html

This applys to everyone, it doesnt exclude property speculators.

Im still giggling about the " Mortgage Gurus " on aca from a few weeks ago, their top tips included , " Do not Lock in Your Rate " , yes theyve been saying that for a while, maybe two years, when they say the opposite its time to do the opposite


----------



## robots (11 February 2008)

hello,

what a cop out NC, 2 years in the past yes, but that is so convenient isnt it

FW

thankyou

robots


----------



## professor_frink (11 February 2008)

wayneL said:


> Aussies like to call Oz "The Lucky Country".
> 
> Has anyone given consideration to how continued bubble prices... lets say a continuation of rises substantially above inflation will be sociologically damaging?
> 
> ...




Considering that the trend in housing prices has been pretty well straight up since the end of the great depression, I'd be spending my time telling the kids that they don't have to own a house- there are plenty of other ways to get ahead- and slowly building a share portfolio can be a lot less stressful than buying a crappy house in a crappy suburb that they can't really afford anyway. As long as kids are taught how to manage their money from an early age, then they will be able to get ahead without owning a house. If they are told that owning a house is the only way to get ahead, and that they will more than likely sruggle to be able to get a decent one, then they will do exactly that, struggle.


----------



## robots (11 February 2008)

hello,

save, save and save

20-30% of gross wage, this same principle applies to the young today and those who choose to will do well

it is no different to what many people done before us,

look at an 18yr old who doesnt like school, can easily get a job on commercial builder site with EBA rates,

most likely still living at home for next 3 or so years, maybe even longer,

pays some board and still has "ample" left in hand to save/invest

many things in life are very much still achievable,

but hey, the guy on the street with the hand out wanting a $1 wont disappear thats a given

thankyou

robots


----------



## wayneL (11 February 2008)

professor_frink said:


> Considering that the trend in housing prices has been pretty well straight up since the end of the great depression, I'd be spending my time telling the kids that they don't have to own a house- there are plenty of other ways to get ahead- and slowly building a share portfolio can be a lot less stressful than buying a crappy house in a crappy suburb that they can't really afford anyway. As long as kids are taught how to manage their money from an early age, then they will be able to get ahead without owning a house. *If they are told that owning a house is the only way to get ahead,* and that they will more than likely sruggle to be able to get a decent one, then they will do exactly that, struggle.



Well this is a salient point. In the Anglo Saxon economies, home ownership is held out as "a dream", an investment, ladder of opportunity, blah blah. Young folks are hypnotized into thinking that they must buy at all costs, "to get a foot on the ladder".

Fine, if house prices are in line with fair value. But people are also led to believe that renters are losers, scroungers, bludgers, welfare cheats... second class citizens.

Strong psychology there.

So what happens if kids can't get a leg on the ladder with all that going into their head?

Depression!

Boy do I see that in this country.

Yet in much of Western Europe, most people rent and rent their entire lives. Well to do people too.

I have some friends in Munich who own a chain of taverns, well into their 50's, quite wealthy... they rent. Benny Hill famously never owned a house (back in the days when Britain was the same). It just isn't such a big issue.

I totally agree with what you say, but the group psychology will have to change first before kids are happy about that.


----------



## explod (11 February 2008)

robots said:


> hello,
> 
> save, save and save
> 
> ...




Pretty wild rationalisation there Robots.  Can you give some examples?

Most of the young ones around 18 that do not like school are in that boat because thier parents also have problems and niether are likely to be able to lift themselves, and that is a community social problem.  Caused in large part from a drop off in lower end education spending, rationalisation, deregulation and privatisation since the 70s.

The building site projects around here require lads to have some reasonable education and be commencing or heading towards an apprenticeship.   The old days of just dropping out and into a job are long gone.


----------



## professor_frink (11 February 2008)

wayneL said:


> Well this is a salient point. In the Anglo Saxon economies, home ownership is held out as "a dream", an investment, ladder of opportunity, blah blah. Young folks are hypnotized into thinking that they must buy at all costs, "to get a foot on the ladder".
> 
> Fine, if house prices are in line with fair value. But people are also led to believe that renters are losers, scroungers, bludgers, welfare cheats... second class citizens.
> 
> ...



Yes it most certainly will, and to a certain extent, is already beginning to happen IMO- I know quite a few people my age that have no intention to buy a house anytime soon, and most of them I would consider to be financially responsible. Give it another 10-15 years, and there could be a rather large shift in the thinking of younger people towards the western European attitude you've described above.

Not many of the people that I know that don't want to buy live in my area though- most people I know here wouldn't even consider not buying- when you can get a brick and tile home on a decent sized block for under 300K then it aint much of a contest


----------



## numbercruncher (11 February 2008)

wayneL said:


> Well this is a salient point. In the Anglo Saxon economies, home ownership is held out as "a dream", an investment, ladder of opportunity, blah blah. Young folks are hypnotized into thinking that they must buy at all costs, "to get a foot on the ladder".
> 
> Fine, if house prices are in line with fair value. But people are also led to believe that renters are losers, scroungers, bludgers, welfare cheats... second class citizens.
> 
> ...




I think a pretty big shift is happening in this regard, the Young besides the affordability factor couldnt care less, in a huge proportion of cases about home ownership, as can be demonstrated in the home ownership figures for them. I really think Gen-Y are out to have a good time, and good on them I say ! Asset bubbles wont persist if they arnt buying 

Its seems GenX are the ones that feel obliged to stack up on debt and societies perceived expectations, they are 27 pc of the population but 47 pc of the Debt! And interestingly this debt is roughly equivalent to what Baby Boomers have in bank deposits, managed investments and superannuation.

Ive read quite a few authors exploring this subject, and the following article I think is a great read, explores your question about this possibly being sociologically damaging and does a good job of crunching the numbers 




> Pain in the assets: generation Y's lost years
> 
> It's an integral part of being a parent: you make sacrifices to give your children the best chance to succeed in life. And there is an expectation that each succeeding generation will take those chances and be happier, better educated and better off.
> 
> ...




http://www.domain.com.au/Public/Article.aspx?id=1194329261430&index=NationalIndex&headline=Pain%20in%20the%20assets:%20generation%20Y++39;s%20lost%20years


----------



## theasxgorilla (11 February 2008)

wayneL said:


> Aussies like to call Oz "The Lucky Country".
> 
> Has anyone given consideration to how continued bubble prices... lets say a continuation of rises substantially above inflation will be sociologically damaging?
> 
> ...




What choice do we have?

The baby boomers have the watch.  We've inherited their decision-making.  We can only be responsible for what we do in response to that.

ASX.G


----------



## wayneL (12 February 2008)

theasxgorilla said:


> What choice do we have?
> 
> The baby boomers have the watch.  We've inherited their decision-making.  We can only be responsible for what we do in response to that.
> 
> ASX.G




Why couldn't we/don't we take all of that easy capital, and instead of malinvesting in an asset class that doesn't actually produce anything, invest in production. It's what the Chinese are doing - value adding.


----------



## Sean K (12 February 2008)

wayneL said:


> Why couldn't we/don't we take all of that easy capital, and instead of malinvesting in an asset class that doesn't actually produce anything, invest in production. It's what the Chinese are doing - value adding.



But Wayne, I _need _to own a home. It's the Australian dream! Plus, I _want _that extra plazma for the guests room above the 4 car garage...


----------



## Kimosabi (12 February 2008)

kennas said:


> But Wayne, I _need _to own a home. It's the Australian dream! Plus, I _want _that extra plazma for the guests room above the 4 car garage...



I'd love to know where this Great Australian Dream concept came from.

30 years of self imposed enslavement doesn't sound like much of a dream to me, sounds more like a nightmare, especially if the house is bought during a period of bubblenomics.

But if your a Bank, now this sounds like a Dream...


----------



## wayneL (12 February 2008)

Owning your own home is a reasonable aspiration. I just object to VI's trying to psych people into buying at any price and at all costs.

It may lock you into 30 years of payments, but it also locks in the cost of housing within reason and subject to interest rate fluctuations etc. If that cost is reasonable, then why the hell not?

But if the cost is unreasonable, as it is in most places... fuggetit. The laws of economics cannot be suspended indefinitely and value will eventually return.

As far as I'm concerned, renting is a bargain at the moment. Sometime in the future, the advantage will swing back to buying. There are plenty of measures of value that will signal that time.


----------



## Sean K (12 February 2008)

Kimosabi said:


> I'd love to know where this Great Australian Dream concept came from. ...



Psychologically I think it's an important thing based on being a good source of perceived security. That is probably where ownership of a 'space' comes from. The cave men would have put some sort of door on the front of their cave, and you should see little Nimo's protect their anenome - I've been bashed on the mask for getting too close many times...Today, this tranlsates into people wanting a 'home' that is their little 'nest'. Shame we have to put big fences around them and have a dog with a viscious bark...


----------



## robots (12 February 2008)

hello,

30yrs of hell, you got to be joking

in most cases after around 7-8 yrs the home owner gets into the same situation as a renter in cost, during the next 22yrs of "hell" the home owner kills it

it is still widely recognised home ownership is a great investment and still "very much affordable" 

how is that indicator going still up around 8x earnings? not much is changing, even at that level it is still very much affordable

yields were the same in 05, and hey presto plenty enjoyed growth

keep renting, and put those $100 bills into the cfd account you have a choice 

thankyou

robots


----------



## robots (12 February 2008)

hello,

and people like kimosabi are classic,

they get on here and spruik how the girlfriend has a 20k credit card debt,

and because people cant afford something it has to drop, it cant be so, its bubblevision etc

many should start looking at themselves first

thankyou

robots


----------



## explod (12 February 2008)

robots said:


> hello,
> 
> 30yrs of hell, you got to be joking
> 
> ...




Well I am now renting after being a home owner for 40 years, and its great, the place is spanking brand new, very small garden, no spouts to clean, no rates to pay, water usage only which is low.   It would have cost the owner $350,000 and I pay $1,200 a month.      My share portfolio earns 70% on the stock market.  My bullion holdings are up 30% since last October.  I feel that my landlord is probably struggling to make a gain at all.   And in this area of Mornington/Mount Martha agents a knocking back stock and For Sale signs are increasing by the day.

And by the way I am still waiting for a reply to my question to you at 09:52PM yesterday


----------



## wayneL (12 February 2008)

robots said:


> hello,
> 
> and people like kimosabi are classic,
> 
> ...



Non-sequitur.

You black-white world only exists in your imagination 'bot.


----------



## Sean K (12 February 2008)

robots said:


> many should start looking at themselves first
> 
> thankyou
> 
> robots



Yes, I agree.


----------



## chops_a_must (12 February 2008)

robots said:


> hello,
> 
> and people like kimosabi are classic,
> 
> ...




One of the greatest scams in economics is to purport that supply and demand is the only thing that matters. Demand makes no difference, it generally doesn't change; the ability to afford and pay for things however, does.

Demand for Ferraris doesn't change, one's ability to pay for one does. Just another reductio absurdum in the world of economics.


----------



## numbercruncher (12 February 2008)

Its really pretty simple, Australian owner occupied realestate has got to potentially be one of the worst investments on the planet currently, especially if your paying it off.

Person renting 350k from bank @ 9pc + rates/ins pays 3k a month.

Person renting 350k house from property speculator pays 1200 a month, investing 1800 diff (22k p/a) @ a very min of 7 p/c return.

After 5 years, renter saving difference has a min of 135k.

Person renting the 350k has made a small dent in mortgage principle and has paid out 180k already. approx 160k is interest.

After this 5 years property "owner" has a property that has cost him 510k, he will need to sell it for 645k just to break even with the renter. Make that 660k, to include realestate sharks commission - I havnt included Duty, loan app fees, conveyancing etc!

Big mistake property gamblers make is using percentages to calculate expected return, its no longer applicable because the numbers have got too large.

Your probably going to get rate rise after rate rise going forward, its only a matter of time until youve got people fleeing the property market if it keeps up. Gen-Y arnt buying this silly RE game, it sounds like the musics stopped but not too many have noticed, _yet_.


----------



## xoa (12 February 2008)

Tysonboss1 said:


> where are the properites that are renting on yeilds of 1.1%.
> 
> I have never seen properites renting on these yeilds
> 
> I would like to see an example of an area where properties rent on yeilds this low,... It's just not happening,




Net rental yield = Gross rental yield - Expenses.


----------



## Kimosabi (12 February 2008)

robots said:


> hello,
> 
> and people like kimosabi are classic,
> 
> ...




hahahahaha, nice try Bubblebots....

Number 1, the girlfriend has paid off her debt and number 2, it must be time for the Real Estate Rollercoaster....


----------



## Kimosabi (12 February 2008)

I found a video of Robots on Youtube...


----------



## xoa (12 February 2008)

Kimosabi said:


> hahahahaha, nice try Bubblebots....
> 
> Number 1, the girlfriend has paid off her debt and number 2, it must be time for the Real Estate Rollercoaster....




Take a look at the graph I attached a few pages back, and you'll see that the Australian bubble is even worse.


----------



## Kimosabi (12 February 2008)

xoa said:


> Take a look at the graph I attached a few pages back, and you'll see that the Australian bubble is even worse.



Yeah, I know, when you analyse Australia, we are even more exposed than America, if anything happens to our Resources Industry, we are going to make the US crash look like a Walk in the Park...


----------



## Temjin (12 February 2008)

Here is a recent interesting article to read.

*Will China slow down from 2009?*
http://cij.inspiriting.com/?p=379



> In Shanghai, an apartment that is located conveniently near the city can cost around 1 million yuan. A young Chinese couple with a modest combined salary of say, 120,000 yuan a year and a deposit of say, 300,000 yuan from their parents have to borrow around 700,000 yuan. From the anecdotal hearsay, it looks to us that like Australia, China is vulnerable to debt deflation too. Further hearsay tells us that the Chinese banking and financial system is relatively opaque and there are probably a lot of hushed up bad debts piling up. There are also widespread popular expectations that the Chinese economy will slow down after the Olympics.




Looks like the Chinese are getting into debt as much as we do, in relative term anyway. 

I have long given up on trying to "convince" the property investors/owners that there is a potential for a major crisis coming. It's impossible given their majority of the wealth is tied up in property and their own very financial survival is dependant on such asset class anyway. By making themselve to convince that their assets "maybe" in danger is essential getting themselve to admit they've made a mistake.

Human psychology dictates one tend not to admit their own mistake and will find "certain" reasons to justify their position (i.e. like following the herd) and ignore/dismiss all other evidences.

So yep, I've given up.

So it's back to trading for me, save up, build up my commodities portfolio, don't put on any debt and wait till all these are over. 

By betting on the residental property market to keep rising at this rate is to bet that Australia is COMPLETELY IMMUNE from any slowdown/hard landing from US and/or China/India growth engine. Not to mention we can continue to build up debt at an every increasing rate than our disposable income. (which is physically impossible anyway, unless someone hands free money to you)


----------



## Temjin (12 February 2008)

Another interesting quote too...

http://www.dailyreckoning.com.au/bush-sees-no-problem-with-waterboarding/2008/02/11/


> Capitalism is a moral system, we pointed out yesterday.
> 
> In the long run, it pays to save your money…make your investments carefully…work hard and avoid unnecessary spending. Capitalism will reward you. It is a ’system’ that rewards virtue…and punishes lapses of judgment. But there are times when it seems like lapses of judgment pay off. When prices run up – as they did in the housing bubble of ‘97-’07 – you begin to seem like a bit of a fool if you stay out of it. It is as if a wild party was going on down the block…you feel left out if you don’t go. And the people who are having the best time are the people who have let themselves go. They’re drinking hard…and dancing on the tables. They buy houses they can’t afford…and make money when prices rise. They buy subprime debt…and earn higher yields than more solid credits. They speculate on Chinese stocks…and they seem like geniuses.
> 
> ...




It sounds so true to some of us who stick to the principles. 



> Always and everywhere, you can do what seems convenient…or you can do what is right. Sometimes it is hard to tell which is which; often it is not.




This is the best part. Everyone do what seems convenient, follow the herd because if everyone say it is the best thing to do, then it must be right. A contrarian would have look at the whole thing objectively and get away from the crowd. Of course, we suffer from not "partying" while the whole ponzi scheme is in intact.


----------



## numbercruncher (12 February 2008)

What bubble ? Skys the limit


----------



## xoa (12 February 2008)

numbercruncher said:


> What bubble ? Skys the limit
> 
> 
> View attachment 18000




LOL! No way man. Australia is unique. The boom will last forever because of immigrants and stuff. BUY!, BUY!, BUY!, before it's too late.


----------



## numbercruncher (12 February 2008)

I notice squillions of houses coming to market over at realestate.com.au, take a squizz, stacks of them with the little (new) tag in the corner!

Heres an example ....



> Investment Plus - Owners want to rent back at $350/wk
> $360K
> 67A MURPHY RD ZILLMERE
> Features: Alarm, Flat Contour; Public Transport: Close by; Grounds: Good
> Are you looking for a safe and stress free investment? Are you looking to gain a strong rental return on your investment? Look no further, the current owners want to rent back at $350/wk for at least a 12 month period. This property features 3 Bedrooms, 1 bathroom, Modern kitchen, Lock up garage and Carport. Call Johnny Lin today before somone else buys your new imvestment!!!!




Something smells like fear .....

This guy is onto it though, RE permabull pays 360k, he rents back for half of what he will get in Bank Interest on sale proceeeds


----------



## professor_frink (12 February 2008)

numbercruncher said:


> Its really pretty simple, Australian owner occupied realestate has got to potentially be one of the worst investments on the planet currently, especially if your paying it off.
> 
> Person renting 350k from bank @ 9pc + rates/ins pays 3k a month.
> 
> ...




Fairly obvious that your not an accountant

Where did you get your username from? Not much in the way of number crunching going on there!


----------



## numbercruncher (12 February 2008)

professor_frink said:


> Fairly obvious that your not an accountant
> 
> Where did you get your username from? Not much in the way of number crunching going on there!




Obviously I havent worked it out exact, wheres the major error? The renter will have more because I only compounded annually?


----------



## robots (12 February 2008)

hello,

number I think you're investing stradegy is very sound (renting & investing difference) and have commented on this before,

and the stradegy of owning you're own home is very sound investing as well,

like you and that great stat about 7x earnings I keep getting that stat from the ABS popping into my mind about how home owners are some 6x wealthier than renters (ha ha ha ha), goodluck

explod, the crew I work with have two guys one 22 and one 23 both on 50k/yr doing basic building work and boss desperating wanting more,

thankyou

robots


----------



## theasxgorilla (12 February 2008)

Temjin said:


> This is the best part. Everyone do what seems convenient, follow the herd because if everyone say it is the best thing to do, then it must be right. A contrarian would have look at the whole thing objectively and get away from the crowd. Of course, we suffer from not "partying" while the whole ponzi scheme is in intact.




Thanks for bringing us to the heart of the issue.  Those on the bear side of this argument seemingly have a vested interest in being right, and prioritise that above being wealthy.  What many don't realise is that the doomsdayers who write this doom and gloom scripture like the bozos over at The Daily Reckoning, are probably already wealthy thanks to doing the wrong thing and getting away with it during a previous boom somewhere, sometime.  They can afford to sit back and preach about such things.  Can you??

ASX.G


----------



## Kimosabi (12 February 2008)

theasxgorilla said:


> Thanks for bringing us to the heart of the issue. Those on the bear side of this argument seemingly have a vested interest in being right, and prioritise that above being wealthy. What many don't realise is that the doomsdayers who write this doom and gloom scripture like the bozos over at The Daily Reckoning, are probably already wealthy thanks to doing the wrong thing and getting away with it during a previous boom somewhere, sometime. They can afford to sit back and preach about such things. Can you??
> 
> ASX.G



Maybe some of these people are more interested in contributing to the Greater Good, rather than their own selfish ambitions.

Don't you know that every FIAT monetary system throughout history has failed.  Our current system is even worse because a FIAT Monetary System based on Debt.

A funny thing with The Daily Reckoning, is all the stuff they have been warning about for years is actually happening, now, as I type this Post...


----------



## robots (12 February 2008)

hello,

the socialist crew at it,

how about YOU start sharing your money, go down to the local coles and give some bludger the hard earned you now have since paying of the credit card,

it is not the greater good that bludger's get given things, just like it is a disgrace the church charity organisations plan to build/develop affordable housing,

here, go buy smokes, cans, ice, hammer, maryjane and sit around thats okay I got a nice house for you to live in 

thankyou

robots


----------



## numbercruncher (12 February 2008)

lol Robots ,

You really are setting yourself up with all that bad Kharma 


Kimo might do just that, hes creaming it this month, 80pc on MAK I notice  He might flick some goldies to that guy you refer to that hangs around outside your place looking for handouts


----------



## Kimosabi (12 February 2008)

numbercruncher said:


> lol Robots ,
> 
> You really are setting yourself up with all that bad Kharma
> 
> ...



ha, I'll go one better and teach him how to sucker people into buying over priced property and turn him into a real bludger...


----------



## wayneL (12 February 2008)

theasxgorilla said:


> Thanks for bringing us to the heart of the issue.  *Those on the bear side of this argument seemingly have a vested interest in being right, and prioritise that above being wealthy.*  What many don't realise is that the doomsdayers who write this doom and gloom scripture like the bozos over at The Daily Reckoning, are probably already wealthy thanks to doing the wrong thing and getting away with it during a previous boom somewhere, sometime.  They can afford to sit back and preach about such things.  Can you??
> 
> ASX.G



Whoa there G, you've made some mighty assumptions there. 

Firstly, people who get wealthy overwhelmingly have a macroeconomic view. It may be bullish or it may be bearish, it may be wrong or a it may be right.

The investor/business person will live or die by being correct in this view. For instance, Bernard Baruch (or whatever hi name is) saved his fortune by (accidently or otherwise) changing his view at the right time, thanks to the shoe shine boy.

He might have been wrong, but he had a view  and worked his investments around that.

By all practical economic laws, such as those espoused by the true capitalist schools, recession follows periods of mal and over-investment. Anyone who doesn't believe we've just been through such a period is in faeryland.

Some may become pathologically in the expression of their thinking, but the fact remains that "investing" at the top of a cycle is not the ideal point to do so. If some bears have been innaccurate in this timing, doesn't take away the logic. Bulls can likewise buy too early in a bear cycle. In fact that could be occurring right now.

The presumption that only bulls can become wealthy and that bears may be right but not wealthy is an extremely long bow. Bears usually are bullish on such things as gold, oil, silver, debt managers etc. Not bad performers over the last couple of years.

And remember, a bear is not some misanthropic malcontent hoping for nothing short of the Apocalypse (well... not many anyway ). A bear is a bear so he can become a bull.

A bear is looking for value. Watch most of the the bears screw on those horns when the time is right.


----------



## professor_frink (12 February 2008)

numbercruncher said:


> Obviously I havent worked it out exact, wheres the major error? The renter will have more because I only compounded annually?




Ok see below- I put your original post in so people could follow along



> Its really pretty simple, Australian owner occupied realestate has got to potentially be one of the worst investments on the planet currently, especially if your paying it off.
> 
> Person renting 350k from bank @ 9pc + rates/ins pays 3k a month.
> 
> ...




here's where you started to lose me-



> Person renting the 350k has made a small dent in mortgage principle and has paid out 180k already. approx 160k is interest.
> 
> After this 5 years property "owner" has a property that has cost him 510k, he will need to sell it for 645k just to break even with the renter. Make that 660k, to include realestate sharks commission - I havnt included Duty, loan app fees, conveyancing etc!




Not even close to being true. You forgot to deduct the rent from this for starters

Then on top of that you have conveniently missed one of the main benefits of buying an IP- tax deductions.

From my quick and dirty calculations(remember I'm no accountant either) the property could have a negative cash flow of roughly $18K per year(31.5K in interest plus additional costs less 17.5K in rent). In some circumstances you can claim depreciation on the building and fixtures and fittings, which could potentially bring the total claimable loss up closer to 22K per year. Depending on what income the gambler is on, the taxman could potentially chip in 6.5K per year(based on being on an income of 70K), or up closer to 9K if they are on 100K.

Once you add that into the mix, then you are looking at the property costing $9K to 11.5K per year, depending on income(not 36 like you had originally stated), and it will be going down every year as their income rises, and the rental income increases. So it works out to be more like 45-55, not 180K.

To keep up with your intelligent renter, this gambler needs his dodgy property investment to be worth 540K after the 5 years to keep up with the renter, or about 9% per year, which is hardly a cracking rate of return. I know all of you property bears will be carrying on now that 9% isn't sustainable, etc, but the point I'll make before you do(saving me typing out another post!) is that the longer this comparison runs, the better it will look for the IP buyer- the one thing missing in this calculation for the renter is that the level of rent will be rising throughout the 5 year period, which will start to tilt the balance away from the renter and towards the gambler- the renter has his ability to save eroded by the rental increases, and these increases go straight into the pocket of the gambler. This can be offset by the renter by saving more as his income grows, but the IP buyer also gets the added bonus of earning more too. And the higher tax bill that goes with the additional income helps to pay for the IP with less and less of his income. Run the calculation out over 15 years, and the gambler is holding this property for less than 4% of his income. And that's assuming they haven't made any attempt to pay it off over that time.


----------



## Kimosabi (12 February 2008)

Well I'm a Bull in a Bears suit when it comes to Property.  But now that I understand the Scam that is called our Monetary System, I'm waiting for things to come back to their Intrinsic Value, which I thinks is already starting.

All I want is a system that is fair for "EVERYONE", not a system that is manipulated by a small handful of "Control Freaks" that have done a fantastic job of duping 99% of the Worlds Population.

This includes many of you puppies that went and did your Finance and Economics Degree's.

Who do you think some of the biggest University Funders are?

Has anyone sat down and thought about why the system rewards those that take out huge amounts of debt, could it be that we currently have a debt based monetary system, and has anyone wondered why our Taxation System rewards those that take out large amounts of debt?

After doing some research on the *US Federal Reserve*, you find out it is a *"PRIVATE INSTITUTION". *Reagan commisioned an investigation into where all the money went that was collected by the IRS, the investigation found that the money that was collected by the IRS was used to pay the *INTEREST* on the money lent to the United States by the Privately Owned Federal Reserve.

Considering Australia and the United States have similar Monetary and Taxation Systems, could it be that Private Institutions lend money to Australia and our Taxes pay the Interest on the money lent to us by these Private Institutions.

Now before some of you guys get on your high horses, explain to me why the RBA is charged with keeping Inflation at 2-3%, when M3 is currently running at 16% and it's the Reserve Bank that is creating/lending the money that's creating the Inflation.

Hello, is it just me that see's a problem with this Picture...


----------



## robots (12 February 2008)

hello,

another thing to blame on property,

but hell dont blame yourself or take any responsibility

we all play by the same rules

its great things going to intrinsic value, many suburbs in vic up 40% last year, 

thankyou

robots


----------



## Kimosabi (12 February 2008)

robots said:


> hello,
> 
> another thing to blame on property,
> 
> ...



What's your problem Bubblebots, not used to dealing with people who do their research, before jumping off a cliff.  For the record I accept full responsibility for NOT getting sucked into Property during the Current Credit Cycle.  I'll wait for the next one before jumping in.

Reality seems to be raising it's ugly head as I type this post.  I hope you've got enough stashed away for a Airfare out of the country Bubblebots, you might need it.

There are going to be plenty of p1ssed off home owners when they see 2/3rds of the value of their house getting wiped out.

That House Price Index will come back to 100 one day , you know that, don't you Bubblebots...


----------



## robots (12 February 2008)

Kimosabi said:


> Reality seems to be raising it's ugly head as I type this post.  I hope you've got enough stashed away for a Airfare out of the country Bubblebots, you might need it.




hello,

yeah wouldnt surprise with most running for the exits if things get tuff,

I will go down and see the church for a handout with all the ASF crew, i am sure the current crew will make me welcome

thankyou

robots


----------



## numbercruncher (12 February 2008)

professor_frink said:


> Ok see below- I put your original post in so people could follow along
> 
> 
> 
> ...




Why would we deduct this hypothetical rent from the owner ? It doesnt play a role, we are working out the raw cost of ownership vrs what is saved via the _difference_ in renting.

ie/ Owner pays 3k a month to mortgage - renter is divided 1200 to rent and the 1800 to the investment. The 1200 rent vaporises. They are *both* parting with 3k a month. Im working out roughly what the Property has cost after 5 years including Interest etc vrs what the renter has saved from his Investing, adding this to what the house has " cost " shows what property bulls needs to match. Owner only makes small dent to principle in 5 years, most is interest.


Im only using the renters 1800 p/m that he would otherwise pay on a mortgage.

Also we can throw in wildcards on both sides, either can get pay rises, rent rises, interest rates etc.

Ive been pretty lenient on the home owner, only giving the renter a 7pc return and compounded interest yearly, most these accounts pay interest on Interest calculated monthly. Sure deduct some tax each year. (even some Prop trusts paying franked 8pc etc)

What happens when mortgage rates are/could be 10pc at end of year and renters savings account earns more to boot? so many variables.

Things seem alot rosier for the owner when paying cash ( assuming you think prop will hold up)

One last thing, you say " Ive convieniently missed out the top point on IPs, that being tax deduction, well yes thats true because Im comparing Owner occupied vrs Renting as declared in the First line of my post.

But im used to the Prop Bull crowd swapping the debate from OO to IP, happens all day  ( funnily enough I can appreciate the virtually risk free nature of IPs provided you pay enough income tax to negatively gear the massive loss year in year out!)

Cheers.


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## explod (12 February 2008)

robots said:


> hello,
> 
> yeah wouldnt surprise with most running for the exits if things get tuff,
> 
> ...





Hello

You continue to rattle on but have still not addressed my question to you (and this is my second request) which I posted at 09:52pm on 11/2.

thank you.....    explod


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## theasxgorilla (12 February 2008)

numbercruncher said:


> Ive been pretty lenient on the home owner, only giving the renter a 7pc return and compounded interest yearly, most these accounts pay interest on Interest calculated monthly. *Sure deduct some tax each year.*




Love how you bury your nuggets of truth in amongst your bearish ranting.

Thats would be as compared with ZERO (thats right, the big Orbison) tax on the capital gain for the primary place of residence.  OMG, sounds like a tax haven in our own back yard.  No wonder so many people have been doing it.

ASX.G


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## numbercruncher (12 February 2008)

Plenty of tax paid investments paying 8pc.

Oh dont let the tax free PPoR secret out 


Thanks for your constructive input.


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## theasxgorilla (13 February 2008)

numbercruncher said:


> Plenty of tax paid investments paying 8pc.




Okay, and they are?

And they let you leverage at LVRs of up to 95% too I presume.  Please do list them.  Without leverage, and tax benefits, even the best laid investment plans executed during the greatest market booms can look comparitively ordinary.



numbercruncher said:


> Oh dont let the tax free PPoR secret out




Your sarcasm betrays the truth, again.  This fact is 1/3 of this entire equation.  Add 1/3 income tax deductions on investment properties, 1/3 record high commodity prices and you've got all the ingredients you need for a prolonged real estate boom.



numbercruncher said:


> Thanks for your constructive input



  Just keeping it real for the rest of us among all you chicken littles. 

ASX.G


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## robots (13 February 2008)

hello,

explod, look at the previous posts

we have two guys 22 and 23 who have been in the system for 3 yrs doing basic building work on 50k/yr

frinkster, NC and others are deniers of capital growth because they have missed out, simple as that

most likely a lot of them have sold and done the seachange thing and then wished they could turn back the tide only to be shocked at what has happened

most of them tell "us" how they are getting 70% or 80% returns but they forget to mention its on 1k, 2k or 10k 

whereas frinkster the property owners are getting it on 350k, 500k or 600k so I guess they need to justify there dismal performance and as usual property cops it,

40% returns for many in melb, I get that just for walking to the front door and sticking the key in the lock for the same cost as the renter next door

always remember the great one from Kimosabi " I looked at property", translate into I couldnt afford it so I want it to crash

thankyou

robots


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## Sean K (13 February 2008)

robots said:


> hello,
> 
> explod, look at the previous posts
> 
> ...



robots, I count 5 assumptions in there, 4 points announced as 'facts' which are unsupported, 1 'most likely', 1 'I guess', and at least 15 grammatical errors. Amusing, thank you. kennas 

Apologies that my only contribution is a piss take. 

:couch


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## professor_frink (13 February 2008)

numbercruncher said:


> But im used to the Prop Bull crowd swapping the debate from OO to IP, happens all day  ( funnily enough I can appreciate the virtually risk free nature of IPs provided you pay enough income tax to negatively gear the massive loss year in year out!)
> 
> Cheers.






> Its really pretty simple, Australian owner occupied realestate has got to potentially be one of the worst *investments* on the planet currently, especially if your paying it off.




Sorry, I saw you talking about making an investment in real estate and assumed you were talking about an IP, as it's the only way to invest in real estate.

Instead of your theoretical, I'll throw up the figures for the home I just bought for a bit of balance- it isn't always as bad as you make it out to be.

House price was 280K
agents estimation on rental return 290 per week(I had actually discussed the possibility of buying it as an IP with the agent when we bought it and then go and rent, but Mrs frink didn't like that idea considering we have pets).
loan amount 230K @8.27%(not sure what deal we got here- the Mrs works for the bank, so she was the one dealing with this)

We pay $1585 per month in interest compared with $1256 per month if we were to be renting it. Our interest bill will be lower than we would be spending in rent within a couple of years. Probably quicker if we decide to pay it off faster and rents take off with inflation.


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## numbercruncher (13 February 2008)

theasxgorilla said:


> Just keeping it real for the rest of us among all you chicken littles.





Ok those of us that cant see value in owner occupied RE are, in your opinion , chicken littles.

So whats your excuse, you by your own admission have no exposure to RE , surely with such strong opinions about how wrong the likes of myself are youd be digging into this RE mega boom you describe ? 


My GC property ive mentioned that I sold in 03 , I got 338k. After 5 years its " worth " 400k , this Guy should he sell today loses money, just add it all up , 338 + Duty + Interest + Rates/Ins + RE fee to sell , even now if hes managed to pay loan down to 250k @ 9pc interest rates hes getting further in the hole especially vrs renter/investor. Would be a different kettle of fish should he have had it as a IP.

Im not trying to change anyones mind, If you think property is the hottest bet, go for gold,  Just debating my opinion.


Cheers.


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## numbercruncher (13 February 2008)

NZ property crash looks to be getting Juicy

Whats the Reason for NZ Robot ? Guns , Drugs ?  Maybe the higher Interest rates ?



> Figures confirm property slump bedded in
> 5:00AM Wednesday February 13, 2008
> By Anne Gibson
> 
> ...




http://www.nzherald.co.nz/category/story.cfm?c_id=76&objectid=10492151



> Residential property became a "buyers' market" last month with low sales and a sharp increase in days to sell figures, the Real Estate Institute (REINZ) says.
> 
> The national median price dropped to $340,000 in January, from $345,000 in December and compared to a peak price of $352,000 in November.
> 
> The national median was 3.97 per cent up on the $327,000 figure in January 2007.




http://www.nzherald.co.nz/category/story.cfm?c_id=76&objectid=10492226

NZ retail variable rate is 10.69, seems around this mark is the straw that breaks the camels back, If the Gen-Ys keep buying ipods and going to rock concerts the Inflation they cause will get us their too ?


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## robots (13 February 2008)

hello,

hands up those who save/invest same as rent or more per month?

I know ABS has the results of that question but what about ASF members,

just concentrate on your income,

thankyou

robots


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## KIWIKARLOS (13 February 2008)

Agreed robots

Im 25 now in the elctrical industry making 130K after further education and heaps of my mates are electrical tradies the base they make is around 55-60K and thats without OT and includes a free phone and a car. Alot of young people are making good coin out there thesedays and savin a heap cause they stay at home for longer.

A few of the guys headed to WA and they get 120k+ with all accomo and food pretty much paid and thats just for having a trade an apprentice or labourer can make 50k+ easily.

New Zealand is a whole different economy workers over there get paid much less and the economy isn't that strong. Their labour laws are also dodgy for eg. OT is paid at normal hourly rate across the board not like the 2 times rate we get here. 

The biggest prob is oz isn't the wages its the people makin the dollars end up pi44in it against the wall for good times and consumer products. Heaps of young people live day byday with no thought of the future. 

They've been watchin their parents spending their inheritance the saved as kids and are getting jealous: want the perks without the hardwork.


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## robots (13 February 2008)

hello,

well done bro,

and i hope those making the coin continue to save, invest, save etc

thenakyou

robots


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## theasxgorilla (13 February 2008)

robots said:


> and i hope those making the coin continue to save, invest, save etc




Indeed...in a world (until recently) awash with capital, it's only fair we all accumulate a share of it 

ASX.G


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## trinity (14 February 2008)

hi,

there is something I do not understand, just having a browse at a Sydney suburb called meadowbank (just for example).  a new unit, same specs , 2 br, 1 bath, 1 garage sells for 499K,  whereas an old unit, 2br/1/1, sells for 315K.  More than 100K difference between them.

http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=104611204&f=0&p=10&t=res&ty=&fmt=&header=&cc=AUSTRALIA&c=65273588&s=nsw&snf=rbs&tm=1202983722


http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=104618190&f=0&p=10&t=res&ty=&fmt=&header=&cc=AUSTRALIA&c=65273588&s=nsw&snf=rbs&tm=1202983722

why is there such a big price difference for these 2 units?     i do not have actual stats but i feel that older properties are bigger than newer ones.  

Just want to hear other people's opinion on this.

Thanks.


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## KIWIKARLOS (15 February 2008)

The big difference is in the quality and size and location.
The cheaper ones are 20-30 years old quite small and located nearer to the station. The newer ones are located in a large development of 8 - 10 towers next to the water. They have underground car parks, building security modern living and larger rooms, plus they have only just been built. 

I have a mate who rents the newer ones, don't really like them though. I think the major cost is for the location water views and a ferry next door.


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## robots (17 February 2008)

hello,

73% clearance rate for Melb,

a lot of stock online and a heap more next week so will be interesting to see what happens,

I think people will start to take some pre-auction offers

thankyou

robots


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## numbercruncher (17 February 2008)

robots said:


> hello,
> 
> 73% clearance rate for Melb,
> 
> ...




Where do you get these clearance rates from so early each weekend ?

I google it each time you say it and never get the answer till like the following week and its usually greatly different to your claims, your always 70pc + ....

and google says (feb 4th article) ....



> Melbourne had a slower start with only 29 properties listed for auction compared with 55 at this time last year.
> 
> The clearance rate rose by 1 per cent to 50 per cent and out of 27 properties reported as auctioned, 14 were sold compared with 24 out of 49 properties reported as auctioned this time last year.




http://www.news.com.au/business/story/0,23636,23156097-14327,00.html?from=mostpop


I bet they are getting lower average prices already eh ?


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