House prices to keep rising for years

[tech/a]

Mooorrrning.

No hangover (I don't drink but so tiered need to get to bed!).

Some thoughts for 2009.
After recession and in worst cases depression there always follows---inflation and in some cases hyperinflation.

If you don't have property then---you'll likely never have it.
You'll all get your wish and rent for the rest of your lives as will your kids and their kids.
Cash will mean nothing as it is eroded by inflation.
That $300,000 home will become impossible to own as it will race away in price as your deposit becomes less and less in value.

You must have at least 1 home to keep in touch with inflationary trends.

Interest rates wont sit at 30 yr lows for another 30 yrs.
Those that have "ridiculous" loans will be laughing as they(The loans) diminish into in significance as inflation races away.

Ridiculous?
I give it 3 yrs TOPS.

There is opportunity arriving in a very short time---DONT MISS IT!

Chops
Everyone can develop even those without a home of their own.
Even with very little capital base.
All you need is holding and preliminary cost capital.
This can be found with JV partners if you have a good development with excellent numbers.

 

[numbercruncher]

Not for all of them it wasnt, some did very well thanks

Dont believe everything you read in the paper NC, ever heard of confirmation bias?

Yes some of the people win some of the time but never all of the people all of the time .....

 

[numbercruncher]

Originally Posted by tech/a
If you don't have property then---you'll likely never have it.
You'll all get your wish and rent for the rest of your lives as will your kids and their kids.

Hilarious .....

Does it only last 3 generations or is it a eternal thing ?

We have links to back this fact up dont we ? ....... oh we dont ?

Maybe Weimar Germany was your case study, can people still no longer afford property there ? who owns it all I wonder ? they must be old and wrinkly by now huh ?

 

[gfresh]

After recession and in worst cases depression there always follows---inflation and in some cases hyperinflation.

^^^ agreed, gold chart is interesting at the moment.

The tail-end of that 1994 article is interesting .. 1989 (2007?) into 1994 (2012?) saw 5 years where effectively there was zero growth, even negative return for late 89 investors. If we're at a similar economic period to then, then plenty of time to get set for the profitable part of the cycle.

 

[tech/a]

We have links to back this fact up dont we ? ....... oh we dont ?

In the UK many never own their own home---never will.
Even more only when their parents pass on and they inherit property.

Those who are above the "average" wage will find ways through their own entrepenurship.

Joe Average will unfortunatley reside on these threads with no way of getting ahead.

Hilarious .....

In years to come you'll look back at this statement and without a smile on your face.

 

[theasxgorilla]

FWIW, anyone thinking of buying the line of "look what I did with property during the last 30 years" IMO should ask themselves, can it be different this time?

The answer is, no-one knows. So therefore it's best of hedge any positions taken and/or wait for confirmation.

How does one hedge residential direct property exactly?

 

[finnsk]

Mooorrrning.

No hangover (I don't drink but so tiered need to get to bed!).

Some thoughts for 2009.
After recession and in worst cases depression there always follows---inflation and in some cases hyperinflation.

If you don't have property then---you'll likely never have it.
You'll all get your wish and rent for the rest of your lives as will your kids and their kids.
Cash will mean nothing as it is eroded by inflation.
That $300,000 home will become impossible to own as it will race away in price as your deposit becomes less and less in value.

You must have at least 1 home to keep in touch with inflationary trends.

Interest rates wont sit at 30 yr lows for another 30 yrs.
Those that have "ridiculous" loans will be laughing as they(The loans) diminish into in significance as inflation races away.

Ridiculous?
I give it 3 yrs TOPS.

There is opportunity arriving in a very short time---DONT MISS IT!

Know we are getting somewhere with an interesting view of the future, will admit that I dont understand 100% what you mean but will learn as time go on, still believe that prices will come down in 2009 before they will go up again

 

[Lancelot]

Yes some of the people win some of the time but never all of the people all of the time .....

Thats life, and its different to previous generations how ?

 

[numbercruncher]

In the UK many never own their own home---never will.
Even more only when their parents pass on and they inherit property.

Those who are above the "average" wage will find ways through their own entrepenurship.





.

Thanks for clarifying your position, at first i thought you were implying that people who dont own property once inflation started will be out along with their offspring for 3 generations or more ....

But only a spruiker would write such drivvle so obviously those words were a mirage .....

 

[robots]

hello,

thanks Number for confirming we still up there with 7x income to price, fantastic information

i thought it has crashed? shouldnt it be 4x or 5x, Keen says its imploded everywhere

oh, the great divide

thankyou
robots

 

[tech/a]

How does one hedge residential direct property exactly?

By owning it.

EVEN when your making a loss compared to rent.


(1) You wont know inflation is biting before its too late.
You will find it even more difficult to get money when it does start to bite---best be in front.
(2) You generally wont be in the position to buy property when its on the rise because by the time you notice it a year or so has taken a good portion of the profit AND you'll need more deposit---your chasing.
(3) Even now and surely through 2009 you'll be able to get money easier at rates you wont see again in a very longtime. When it does turn for most it will be forget it!

Example. Simplistic but making a point.

You buy a home now at $200/ week premium to rent.
For 3 yrs you lose $30K on your $300,000 property.
Inflation takes off for 3 yrs and your $60,000 deposit has now cost you $90,000.
Housing rises 10% a year for those 3 yrs so your property is now worth $399,000.

If you hadent bought you would have to now find $80K (20% of $400K)
and you'll be paying say 9% on your $310,000. (see equity below.)
If you havent locked down then youd will be paying 9% on $240,000.If you purchased now.
If you locked down for 5 or more years that could be 6-7%.

Your infront and in the position to upgrade.Buy more.
You have $150,000 equity,buyer 2 has his $80,000 deposit.

Now do the figures on 15% compounding price rise on your property.
AND say 12% Interest rates.

Hilarious????

 

[Judd]

Each to their own on whether house prices (owner occupied or rental or whatever tag you wish to place against the dog kennel) will or will not rise/fall/remain static.

Just posting as I have found this fella humourous. Like his style.

http://mysite.verizon.net/vodkajim/housingbubble/

On a more serious note (as if anything published by the Australian Federal Government is serious)

http://www.aph.gov.au/library/pubs/rn/2006-07/07rn07.htm

 

[Nyden]

Example. Simplistic but making a point.

You buy a home now at $200/ week premium to rent.
For 3 yrs you lose $30K on your $300,000 property.
Inflation takes off for 3 yrs and your $60,000 deposit has now cost you $90,000.
Housing rises 10% a year for those 3 yrs so your property is now worth $399,000.

If you hadent bought you would have to now find $80K (20% of $400K)
and you'll be paying say 9% on your $310,000. (see equity below.)
If you havent locked down then youd will be paying 9% on $240,000.If you purchased now.
If you locked down for 5 or more years that could be 6-7%.

Your infront and in the position to upgrade.Buy more.
You have $150,000 equity,buyer 2 has his $80,000 deposit.

Now do the figures on 15% compounding price rise on your property.
AND say 12% Interest rates.

Hilarious????

Tech, isn't this assuming that all the stars align? What if we experience deflation, as opposed to inflation for a while? What if a recession takes hold in Australia, and you lose your job - and many others do as well; would this not lower the price of the home, leaving you with a pile of debt with nothing to back it should you need to sell?

I keep questioning as to what people believe makes Australia so "special". I hate to break it, but Australia is a pretty ordinary country - A lot of people would even suggest there are better places to be, and even have intent on leaving once finishing their studies! The shock

So, again - what makes Australia so great, that it will avoid the housing slump the rest of the world has faced? Are Australian consumers not riddled with debt? Is our economy not slowing? Have house prices not soared above average levels in the last decade?

Let's see what we've got here,

• Immigration to be cut
• Slowing economy
• Rise in unemployment
• Commodity boom in tatters
• Already unaffordable prices

Aside from interest rate cuts that are perhaps too late to actually really help the economy, I honestly cannot see anything that will hold prices up?

Assuming history will always repeat can be rather dangerous, things always shift. One must always be open to the (however remote) possibility that it will not.

Sorry, but your post just seems a little "buy now, or miss out forever!" for me.

 

[tech/a]

Nice clip Judd---how true that is!

Saw this publication in Dymocks and has some great topics (Haven't read it yet but had a good browse).

"How to Survive and Prosper in a falling Property market"
Peter Aranyi
ISBN 978-0-9582307-5-9

and its an AUSTRALIAN publication!! (Well New Zealand!)

 

[kincella]

Bill M, now there is a devoted property watcher...and thank you for saving that information....***interesting synergy....did anyone note the drop in prices from 1989 ? on Bill's chart.....it was Sydney median prices....made me stop and think....I keep a report with Australian house prices...and there was no dropping of the prices ever since 1986...see the link below....
so again it was the high flying Sydney people that pushed it up and then down again.....
at the same time 1989 was the peak in house prices after the stock market crash...however at the same time the US was heading into a recession ...the US feds had dropped rates 23 times between July 89 and July 92 before it was over....I could be wrong...memory not so good today...but I doubt we had rates dropping.here ..in fact they were rising until Howard came in in 1996 and sent them down again....

The Sydney house market is not indicative of the whole Australian wide market....prices were Aust wide 1989 . 138,600 and gradually crept up each year until 1994 at 148,100.....so do not get too excited about the drops in Sydney ... it was much higher to begin with 62,000 higher and went lower in the following years...but still higher than the aust wide average, in the end at 68,000 higher in 1994 ...sydney prices have always been higher than melb....and doubt if it was worth counting the other cities...in those years they would have been so low as to distort the figures.....of course it is different today...Perth and Brisbane have finally grown up

here is the 20 year chart....and note the disposable income figures...that is the amount a family has available to spend on housing and everything else...staggering

http://www.aph.gov.au/library/pubs/RN/2006-07/07rn07.pdf

 

[nomore4s]

Not everyone gets to own a house, it was never a requirment in previous generations, why do you feel it is now?

Where did I say I thought it was a requirement that everyone can/should own thier own home?

Perhaps people should get off their a55 instead of complaining. Do you think everyone with investment properties where born with a silver spoon in their mouth? The argument about housing affordability has been going on for decades and will continue. Most of the people I know with investment properties have taken risks and made sacrifices to get to where they are. Likewise most of the people I see complaining earn the same amount of money but choose a different lifestyle that affects their capacity to purchase.

We all have choices to make in life. I was one who never thought I would own an investment property. I didn't suddenly come into money or get a massive pay rise. I simply worked my butt off to get what I wanted and listened to the advise given to me by others. Perhaps it would serve you well to listen to the advise offered by others in this forum.

Again more assumptions, just because I'm currently bearish on property doesn't mean I'm a total nuf nuf. Why do property bulls think they are the only people who are successful and if you are bearish about property you can't afford it or are whinging about not having had the same chances as others who have done well?

I've owned property before and I will own property again when I find something that is within my criteria, but for me atm it makes better sense to rent.
This doesn't mean I'm not working as hard as I can to be in a position to take advantage of any opportunities when they do present themselves.

And I'm not sure it's a wise move to take advice off someone who can't spell it:

 

[numbercruncher]

Seen as australias 22m inhabitants are quickly running out of room and apparently atleast the next 3 generations wont be able to afford to purchase a property ..... just maybe we should round these pesky heathen non-home owners up and send them off to .........


http://invadenewzealand.com/

 

[xoa]

If you don't have property then---you'll likely never have it.
You'll all get your wish and rent for the rest of your lives as will your kids and their kids.

There is opportunity arriving in a very short time---DONT MISS IT!

"Buy now, or be priced out FOREVER!"
Maximus Speculatus, 240BC
Roman real estate agent​

 

[theasxgorilla]

Now do the figures on 15% compounding price rise on your property.
AND say 12% Interest rates.

Hilarious????

Not at all tech/a.

I've run it in Excel and I understand the mechanics of how the bull market works. But what if I buy now and my property starts going down in value and I'm running it at a loss (negative cashflow) with the intention of making capital gains?

Can I hedge this? I'm not joking when I say that in Sweden you can (or at least you could pre-financial-crisis...as with mortgage insurance in Australia I'm not sure how well it works when we're all running for the same little exit).

 

[IFocus]

Tech, isn't this assuming that all the stars align? What if we experience deflation, as opposed to inflation for a while? What if a recession takes hold in Australia, and you lose your job - and many others do as well; would this not lower the price of the home, leaving you with a pile of debt with nothing to back it should you need to sell?

I keep questioning as to what people believe makes Australia so "special". I hate to break it, but Australia is a pretty ordinary country - A lot of people would even suggest there are better places to be, and even have intent on leaving once finishing their studies! The shock

So, again - what makes Australia so great, that it will avoid the housing slump the rest of the world has faced? Are Australian consumers not riddled with debt? Is our economy not slowing? Have house prices not soared above average levels in the last decade?

Let's see what we've got here,

• Immigration to be cut
• Slowing economy
• Rise in unemployment
• Commodity boom in tatters
• Already unaffordable prices

Aside from interest rate cuts that are perhaps too late to actually really help the economy, I honestly cannot see anything that will hold prices up?

Assuming history will always repeat can be rather dangerous, things always shift. One must always be open to the (however remote) possibility that it will not.

Sorry, but your post just seems a little "buy now, or miss out forever!" for me.

I agree Nyden

I hold investment properties currently that I bought 6 to 7 years ago and feel like an absolute guru from the gains but in reality have just been very lucky.

Its not the 1st time this has happened but at all times I used a lot research so I could deploy some sort of risk management for worst case scenarios very little of which I see here from the property bulls.

There is clearly plenty of bias based on personal circumstances from both sides of the argument.

There are any number of strategies in any investment and there will always be niches to make money in property but I find others urging new comers to buy IP,s now quite incredulous.

Like Nyden I don't think Oz is special and we will feel the heat from the biggest global financial / economic crisis ever in our generation and there will be losers.

This will affect jobs and income which in turn will create opportunities and in property if you have done your home work and research you will have plenty of time to enter the market you do not need to be the 1st to get in.

One last point is that there will be a rebalanced of property pricing not sure how this will happen but it will, to expect the same average returns as recent years without a return to the mean and even an over shoot to the down side is surprising.

PS I write this with a WA bias