House prices to keep rising for years

[kincella]

my 2 cents worth...when interest rates drop...if you keep paying the instalments at the old higher rate, you will pay down your capital balance much faster ...its too easy....and if that is what you want to do...especially if its your principal residence and the interest is not tax deductible....

I am waiting and praying the loan interest will go as low as 3%..but I may lock in at 4%....
I am talking investment properties....so if by may or june 09 the rates are that low...I may buy another property at a depressed price... there is less reason to reduce the capital balance when rates are low for an investor...and more reason to borrow...depending on your circumstances...

I am a property bull.....and very much aware of the media making every bit of news as if it were the absolute worst.
Funny thing...australians spending 38 billion this xmas.....obviously they are not aware of the recession.....or do they not believe the media and think they will come out of it all ok ??


read this article for an example.....the real facts are small differences and compared to last year which was an all time high etc
http://business.theage.com.au/business/world-business/us-housing-prices-collapse-20081224-74g8.html

 

[gfresh]

What on earth makes you think the banks will offer you a long-term loan at 3-4% ? The US now has 0% central bank rates, and the lowest long-term rates are still around 5%. Rates are getting closer to the bottom than the average punter thinks. Any lower rates are going to benefit one group only - the banks, and keep them in profitability as other avenues dry up.

Australians will spend and spend, right up until debt collectors come knocking at the door to take things away from them. Having known people in this situation, that's pretty much the way it goes too, until there is absolutely no way they can spend, they will keep spending. Then when they can't the true (psychological) depression sets in, yes they stuffed up and it's a very long way out.

A lot of debt is a very nasty problem when one loses a job, and those minimum payments which are now "pft" will seem like a mountain. Many won't even know they will be there until part-way through next year. Who knows, I could be there myself, hard to say for sure how 2009 will play out... but I'm sure as hell not spending like there is no tomorrow at this point in time.

If I am lucky and do manage to hold my job through 2009, then maybe then I will look at buying somewhere. But it'll be the same position for everybody else out there as well.

 

[kincella]

What on earth makes you think the banks will offer you a long-term loan at 3-4% ? The US now has 0% central bank rates, and the lowest long-term rates are still around 5%. Rates are getting closer to the bottom than the average punter thinks. Any lower rates are going to benefit one group only - the banks, and keep them in profitability as other avenues dry up.

A = Because before the dec rate cuts banks were offereing 3.99 fixed...then the 1% cut in December....and I expect another in Jan 09...I will benefit enormously from another rate cut....just refinanced some loans and saving over 16.000 pa in interest alone.....

If I am lucky and do manage to hold my job through 2009, then maybe then I will look at buying somewhere. But it'll be the same position for everybody else out there as well.

You may need to be more specific about your circumstances...are you a first home buyer ??? as for everybody else out there...well in my case I am self employed....and I do have several properties...with an average gearing around 40%......I have a stack of equity .....so am in a good position to pick up another bargain when I find one....
plus I believe a lot of people will get sick of the low deposit interest, and the lousy stockmarket...and they will head off into property
cheers

 

[robots]

You may need to be more specific about your circumstances...are you a first home buyer ??? as for everybody else out there...well in my case I am self employed....and I do have several properties...with an average gearing around 40%......I have a stack of equity .....so am in a good position to pick up another bargain when I find one....
plus I believe a lot of people will get sick of the low deposit interest, and the lousy stockmarket...and they will head off into property
cheers

hello,

top effort man,

plenty of the money box brigade, specuvestor renter's, handout crew, affordability whinners, low income earners around here brother

anything you say or do has to run through the "opinion" police kincella

enjoy your rewards bro

thankyou
robots

 

[Glen48]

Speculators in QLD with rentals are in for a good time after June both parties have to give 2 months notice.
I wonder how many home owners had looked at returns on RE over a long term say 30 yrs and found out they are lucky to get 3%PA if lucky.
House prices have only gone up about 3% for the past 10 yrs and about to take a dive.

 

[chops_a_must]

I believe a lot of people will get sick of the low deposit interest, and the lousy stockmarket...and they will head off into property
cheers

Until it gives a positive return, why would they?

 

[tech/a]

House prices have only gone up about 3% for the past 10 yrs and about to take a dive.

Evidently they have been taking a dive for around 4 yrs now.
If you flick to the back of "Property Investor" mag and look up SA.
You'll find that Seaford/Rise,Port Noarlunga and Christies Beach and Moana have caned your 3% a year.
10 yrs ago I bought a 4 bedder in Seaford Rise for $92,000 now $345,000
Worst deal has been 2 Esplanade Apartments for $180,000 now $450,000 ea.

Have a 4 apartment development on the books for next year.
Ready to submit to council just need 1600m2 at the right price,on a corner.
Considering 3---now we have time. Builders are falling over themselves to secure the contract.Negotiation on Price is continuous.Start and finish times have never been quicker.(Those offered).

You guys really aren't creative are you?
You think like losers.(From what Ive seen here).
Would you actually recognise a great deal if it landed in front of you?

Stop whinging and start identifying opportunity.
I'll bet in 5 yrs time when its slipped past you AGAIN youll all still be here telling us all it cant be done!

Chops.
Positive return can be found if you have enough capital.
But if an IP you'd be suprised how what looks negative after a good accountant has played with it is and can become positive.(geared).

 

[chops_a_must]

Chops.
Positive return can be found if you have enough capital.
But if an IP you'd be suprised how what looks negative after a good accountant has played with it is and can become positive.(geared).

Yah, but at my age, I would not even be close.

I would expect within a couple of years to be able to buy some things in Perth that were affordable to me. But that is certainly not at current levels. Apartments between 120-150 inner city, is what I would be expecting. Otherwise, wont bother. The supply is going to be ridiculous here over the next few years. So unless the prices drop, I'll keep telling them they're dreaming.

 

[gfresh]

You may need to be more specific about your circumstances...are you a first home buyer ??? as for everybody else out there...well in my case I am self employed....and I do have several properties...with an average gearing around 40%......I have a stack of equity .....so am in a good position to pick up another bargain when I find one....
plus I believe a lot of people will get sick of the low deposit interest, and the lousy stockmarket...and they will head off into property
cheers

Looking to buy first owner occupier, to live for the first 12 months at least, then rent it out and go back to renting. To be honest don't expect to make any good capital gains for 3 years, but at least I will benefit if it happens. Was renting out the family home for a couple of years, but we sold at the start of this year due to things looking nasty.

Other than teaser short-term rates (and that 4.99 for 3 from westpac which disappeared pretty quickly), best presently seems to be 6.19% for 5 years.. a long way from under 5%. Not holding my breath for anything too much lower.

If you're a professional investor, probably less need to care about the job market, but for the majority out there that will be the concern in 09.

To be honest, I think the sharemarket offers the best opportunities for a very long time, and can't have property rising without the other being successful also .

If investors believed property really is going to launch, would have thought that buying into stocks such as Mirvac, Stockland, the Banks, etc would be putting their money where their mouth is.

 

[Lancelot]

House prices have only gone up about 3% for the past 10 yrs and about to take a dive.

LMAO

Here are ones my parents purchased, all QLD

1974 Brassal (Ipswich) $21k + 33 years @ 8% compounding= $267,000

1982 Redcliffe $28k + 24 years @11% compounding = $343,000

1985 Redcliffe $38k + 21 years @11% compounding = $340,000

3% ha

 

[kincella]

hmm.....there is a big difference to buying home building stocks and managing your own portfolio...its about management and what lies beneath the surface.... I manage my properties...I am the boss...I know all the ins and outs of the business...however much as I like and expect boral and others to recover....I do not know the extent of their borrowings....if they have margin loans attached to management shares....if the shares are being shorted.....or really what else is going on in that building business.....
as a rule I do have some shares in other property companies.....I like what they are doing and where they are going.....but suffer massive paper losses atm.....
plenty of time later when I see recovery taking place....in the meantime I prefer to trust myself versus all the others
cheers

 

[kincella]

I love how people use the 3% as a return on property investments.....only because the readers do not understand there is a difference between 3% earning on a term deposit or internet account...to which they compare the property return to...
the term deposit can never grow by itself.....nothing you can do while its sitting in the bank to make it any different.....except lose it until the bank guarantee came in.

however if you invest the same amount in a property whether it is your own home or as an investment....in most cases it will grow...due to house prices and voila capital growth....
they should refer the property growth figure as a capital growth rate....in commercial property they use the CAP RATE.....
which means usually if the interest on deposit rates are say 5%...then you would expect to earn at least 4% as a cap rate on the property....
the cap rate is calculated as the income divided by the rate....eg 15000 divided by 3% = market value of 500,000......it allows for future capital growth
when interest rates come down cap rates come down...= higher market value....and the opposite occurs..when interest rates go up so does the cap rate....eg 15000/10% =150,0000
but in australia they only use the cap rate for commercial property, whereas they seem to use it on resi in the US....as well as commercial
if I apply the cap rate to one small residential property earning 15000 pa and use the 5% rate I come up with 300,000 sounds about right to me....
however when bank rates drop again I may need to use a figure of 4.5 which shows about 333.000 (not using calculating) or 4% - mv 375000
difference between an asset growth compared to no growth.....sure some may laugh this off now.....but hey you say houses prices are coming down and you are calculating increased prices......
well I do that for when the price recovers I will know far better than any resi agent as to what my property is worth....
ps you ignore the cost of borrowing or interest cost in this exercise

 

[pilots]

Speculators in QLD with rentals are in for a good time after June both parties have to give 2 months notice.
I wonder how many home owners had looked at returns on RE over a long term say 30 yrs and found out they are lucky to get 3%PA if lucky.
House prices have only gone up about 3% for the past 10 yrs and about to take a dive.

Glen48, we bought in Karrinup 14-6-2000, we paid $90k, last year it was valued at $800k, last week one two doors away sold for $700k. we are up around $600k in that short time, it give us $250 a week in rent.

 

[Macquack]

Chops.
Positive return can be found if you have enough capital.
But if an IP you'd be suprised how what looks negative after a good accountant has played with it is and can become positive.(geared).

I dont get this.

A "good" accountant (your term) may be able to turn a "positively" geared property into a "negatively" geared property and maximise the tax saving by "fudging" some expenses upwards.

However, I cant see how "any" accountant could reduce expenses below their actual real cost to produce a "positively" geared outcome from a previously "negative" geared property.

 

[Glen48]

10 yrs ago I bought a 4 bedder in Seaford Rise for $92,000 now $345,000
Worst deal has been 2 Esplanade Apartments for $180,000 now $450,000 ea

When did you sell it, how long did it take to sell?
If you haven't sold it it is not worth any thing until you have the money in the bank.
What will you think in a few yrs time when its worth a lot less and going no where for a long time?
I have lawn mover worth 10 K all I need is a buyer.
House prices over a long say 30- 50 yrs average 3%.

 

[Glen48]

This has been a once in 100 yrs chance to make money out of RE. not that RE has gone up, the only reason RE has gone up is due to the credit bubble nothing to do with houses.
Just the same as buying a Vase at a garage sale and finding out it priceless in the right place at the right time.
If you have sold and sitting back waiting for the fall you will win.

 

[Lancelot]

I have lawn mover worth 10 K all I need is a buyer.

Thanks for that laugh, its about the most desperate display I've seen for a while.

House prices over a long say 30- 50 yrs average 3%.

HAHAHAHAhahahaha

Thats the way glen, change the rules when you realise you got it wrong

Quote:
Originally Posted by Glen48 View Post
House prices have only gone up about 3% for the past 10 yrs and about to take a dive.

FAIL

 

[theasxgorilla]

House prices over a long say 30- 50 yrs average 3%.

It barely warrants a response but for what it's worth (not much) this is a poorly backed and unsophisticated argument, if you even have one.

Take a gander around high-demand areas with a scarcity factor and you'll see property prices that have very little chance of achieving the 3% target you're fabricating. Beach-side and inner-city spring to mind.

 

[chops_a_must]

Take a gander around high-demand areas with a scarcity factor and you'll see property prices that have very little chance of achieving the 3% target you're fabricating. Beach-side and inner-city spring to mind.

It also supposes that all those in the property market have access to buying in those areas.

Which is a clearly fallacious argument, as you have to have people on either side of the average to make the average.

 

[theasxgorilla]

It also supposes that all those in the property market have access to buying in those areas.

Which is a clearly fallacious argument, as you have to have people on either side of the average to make the average.

Let's first remember it's a free country. You, they, them, whoever, does have access to these areas.

This concept that real estate investing is about averages doesn't work for me. I don't look for average situations or statistics...I look for exceptional opportunities.

I'm starting to see some in Sweden, Holland and Australia. But my deflationary expectations suggest there could be more and better when some of what we've seen in equity and money markets hits the real economy in 2009. Of course if I'm wrong about that I'm ready to move quickly either way, if it comes to that. Are ye?