House prices to stagnate for 'years'

[Sean K]

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]

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.

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]

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]

Well excuse me while I go get my rattle and ABC blocks.

 

[wayneL]

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]

Interesting to read the first post from September 2005.....As the share market falls house prices will continue to rise...

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.

 

[tech/a]

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]

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]

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.

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.

The Property Council of Australia said state governments needed to release more land, cut back on developer taxes and reduce red tape.

"Australia's dismal performance highlights the need to reverse the policies that created today's artificially inflated house prices", council chief executive Peter Verwer said.

"The survey backs the property council's view that the affordability crisis is caused by land rationing, excessive development charges and dysfunctional development assessment.

"The response of some state governments shows the message is getting through, however, the survey results show more urgent action is required.

"The new Rudd government has demonstrated much needed leadership in committing to five major programs aimed at improving housing affordability."

"The survey tells us there are plenty of affordable cities in the world, it's just that none of them are in Australia", Mr Verwer said.

"On average, Australian families are forced to spend 6.1 times their entire household income to buy a typical home compared with 3.1 times in Canada and 3.6 times in the US, and that's before interest charges."

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]

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]

Hello Robots

You sound grumpy today.

Im thinking maybe the property crash has started for you too eh?

Thankyou.

 

[Freeballinginawetsuit]

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,


thankyou

robots

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]

Hello Robots

You sound grumpy today.

Im thinking maybe the property crash has started for you too eh?

Thankyou.

How does it go?

Denial ==> Anger ==> Grief ==> Acceptance.... or something like that?

 

[chops_a_must]

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]

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]

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

Your continued direct comparison between RE & SM says something about your level of knowledge.

 

[Judd]

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

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]

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.

Serious question.

How has the exchange rate effected you in the recent move?

 

[wayneL]

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]

Same study I linked a while ago, now Oz media picking up on it ...

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


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.

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.

The Property Council of Australia said state governments needed to release more land, cut back on developer taxes and reduce red tape.

"Australia's dismal performance highlights the need to reverse the policies that created today's artificially inflated house prices", council chief executive Peter Verwer said.

"The survey backs the property council's view that the affordability crisis is caused by land rationing, excessive development charges and dysfunctional development assessment.

"The response of some state governments shows the message is getting through, however, the survey results show more urgent action is required.

"The new Rudd government has demonstrated much needed leadership in committing to five major programs aimed at improving housing affordability."

"The survey tells us there are plenty of affordable cities in the world, it's just that none of them are in Australia", Mr Verwer said.

"On average, Australian families are forced to spend 6.1 times their entire household income to buy a typical home compared with 3.1 times in Canada and 3.6 times in the US, and that's before interest charges."