House prices to keep rising for years

Bill M · 11 February 2009

singlefished said:
he kept on buying all the way to the bottom last year and admitted he didn't even see it coming.... all the way down.... just like yourself if I remember correctly???

I'm still buying mate, how can I say no to rights issues at substantial discounts? But that has nothing to do with real estate.

2BAD4U · 11 February 2009

lioness said:
I just woke up to this a few years ago.

But only a month or 2 ago you were telling us how you were going to spend millions on property.

lioness said:
property up to 50% discounts coming

Ok so if we have property fall by 50% what happens to new homes??

Median house price of about $150k??? So either land is free, all the builders go bust or we buy the land and the government builds a house for us. If established homes are 50% cheaper then no one will build new houses because they will be more expensive than established. Do you seriously believe this will happen? And if you do believe it, what will happen when the massive shortage of housing becomes a problem.

People who say we are going to have falls of 50% are so full of crap or blinded by fear more than a kangaroo in a spot light.

Also, you can't compare Japan to Australia. Do some research on what they call a home, some people in Australia have bigger dog kennels.

And on the deflation front, what happens when all the cheap labour dries up in China? When the Chinese people start demanding higher wages and better quality of working life? It's already happening. No more cheap imported goods and suddenly these cheap imports that have been holding inflation back are gone.

Bill M, I'm with you. I'm still making money from property and have no intention of selling so what do I care what value all these alarmists put on my houses.

What about unemployment, what about negative equity, what about falling rents, what are your real returns, blah, blah, blah, blah. You bears are a bunch of sooks, stick to your shares which are much safer.

singlefished · 11 February 2009

Bill M said:
I'm still buying mate, how can I say no to rights issues at substantial discounts? But that has nothing to do with real estate.

Brave man!!!

CBA may be the first to cut their divvies I think I read earlier today...

Share market / Property market, 2 different beasts that cannot be comparitively compared in my opinion... but, they are certainly both related in-so-far-as they are both investments vessels subject to prevailing market conditions and sentiment.

Just note though, if Gerry is predicting property to stay alive combined with this "Mother of all BOOOMS" he's predicting, expect at least 60% falls in property values based on his track record so far

2BAD4U · 12 February 2009

singlefished said:
... but, they are certainly both related in-so-far-as they are both investments vessels...

Not so, shares are purely investment. A houses primary use is for shelter not investment. It is the emotion attached to owning home that a lot of people misunderestimate (to quote George W). Shares fall in value and people will panic and sell, this doesn't happen with housing to the same level. The situation has to be much more dire before someone hits the panic button on a house.

How many of you have sold shares because they were going down, but how many of you are still in your house?

Tysonboss1 · 12 February 2009

As most people who have read my posts here would know I own a decent amount of property, and believe property plays an important part in any long-term investment strategy.

I still believe property plays an important role when combined with stocks and business assets,.

However I have switched my strategy completely and am now leveraging 100% of my free cashflow into the stockmarket at 50% LVR. I am a longterm investor by nature and I think if you are looking for solid returns over the next 3 - 7 years then the share market is where it will be.

I am not selling any of my property because my portfolio is cash flow positive any way, but all fresh cash flow is heading straight into the market.

the only property investment I will consider in the next couple of years will be if I decide to buy my own home, or if I get the chance to buy my business premises, outside that I won't buy anything.

I don't think there will be a massive down turn, probably just stagnation and I think the share market will offer better yields and prospect for much better capital growth.

I have been wrong many times before though.

singlefished · 12 February 2009

2BAD4U said:
Not so, shares are purely investment. A houses primary use is for shelter not investment. It is the emotion attached to owning home that a lot of people misunderestimate (to quote George W).

Incorrect. Are you not aware that some people buy additional property other than their PPOR purely for investment purposes and have no intention of ever living in it? What about people who buy land with no intention of building and are hoping for long term capital appreciation....

Shares fall in value and people will panic and sell, this doesn't happen with housing to the same level. The situation has to be much more dire before someone hits the panic button on a house.

How many of you have sold shares because they were going down, but how many of you are still in your house?

Perhaps you misread my earlier posting. I noted that the two entities cannot be directly compared as you have so correctly pointed out.

2BAD4U · 12 February 2009

singlefished said:
Incorrect. Are you not aware that some people buy additional property other than their PPOR purely for investment purposes and have no intention of ever living in it? What about people who buy land with no intention of building and are hoping for long term capital appreciation....

I am one of those people, so obviously I don't disagree that property can be used for investment.

What I am saying is the PRIMARY purpose of shares is investment. The PRIMARY purpose of property is shelter. This is what I believe to be the most significant difference between the two. The emotion attached to each is very different which is why (as we agree ) they can't be compared to each other.

So_Cynical · 12 February 2009

2BAD4U said:
I am one of those people, so obviously I don't disagree that property can be used for investment.

What I am saying is the PRIMARY purpose of shares is investment. The PRIMARY purpose of property is shelter.

So if u own 2 houses the primary purpose of both is shelter. :bs:

Mate i used to own 2 houses and my primary reason for having
those houses was money...making it and locking it up.

2BAD4U · 12 February 2009

You miss the point. Most people only own one property and the primary purpose is shelter not investment.

singlefished · 12 February 2009

2BAD4U said:
I am one of those people, so obviously I don't disagree that property can be used for investment.

What I am saying is the PRIMARY purpose of shares is investment. The PRIMARY purpose of property is shelter. This is what I believe to be the most significant difference between the two. The emotion attached to each is very different which is why (as we agree ) they can't be compared to each other.

I think the primary USE of a property is to provide shelter.... you don't have to own it for it to provide that shelter.

Is not the primary purpose of a share to demonstrate that you own "x" amount of a particular company/business?

And is the primary purpose of owning the deeds to a property not to demonstrate that you own "x" amount of that particular property?

In both asset classes the reason to purchase is to gain ownership (or part ownership) of that particular entity for whatever reasons, and whether living in your asset is an option or not that is neither here nor there. They are both investments at the end of the day with both requiring an outlay of $$$$ to facilitate the purchase.

My unemotional anyway

lioness · 12 February 2009

Bill M said:
At the bottom of my message there is a link to a 4 Corners interview with Gerry Harvey, I like this guy.

Anyhow he challenges anyone to buy a house anywhere in AUSTRALIA and try and LOSE money in 10 years time, worth a look, here is the link and click on Gerry Harvey, it is 9.45 minutes into the interview where he makes that statement:

http://www.abc.net.au/4corners/special_eds/20090209/gfc/

How naive are you?? Gerry wants everyone to borrow to their eyeballs and put 24 months interest free furniture that he sells and home appliances he sells into their house to keep his business model going.

His company will falll off the cliff in the next 2 years when property collapses 50%.

Bill M · 12 February 2009

lioness said:
How naive are you??

His company will falll off the cliff in the next 2 years when property collapses 50%.

He said it not me. I've heard these 50% property collapse doomsday comments for decades and it's never happened, keep on dreaming.

baroosh · 12 February 2009

the uk can send over 500 thousand poles 500 thousand albainians 100 thousand slovaks 100.00 thousand bulgarians plus 100.000 mixed ethnics that will give your ecomomy a boost plus it will drain of a few million bucks of tax payers money

moses said:
Time to change subjects...

Reasons.

a) limited supply and increasing demand (immigration)

b) increasing building costs of new homes ripples through to all housing

c) increasing minimum expectations (McMansions)

d) increasing wealth trickling down from mining boom

e) increasing cost of capital (interest rates)

f) increasing wage pressure

The increased building costs are due to:-

1) skilled labour shortages (tradies)
2) increasing OHS requirements
3) increasing environmental standards
4) inflation based increases in building materials
5) increasing compliance requirements on builders

And thats before we start discussing land prices, let alone the dramatic wages currently available to ordinary people who are willing to work in unpleasant places for a while and save big deposits. Nor have I factored in a shift from the stock market back to housing (which I suspect will only be transient).

I can't see a lot of these things reversing all together. It seems to me that those who are hoping for a collapse in house prices are really up against it. It may well be that ownership of property will define the wealthy and the poor, and perhaps eventually require legislation to redistribute the wealth (like the UK did with its death duties to force heirs to sell the family castle etc). But that is a long time away; endless cheap land is the historic reason why every Australian expected his own backyard, but those days are disappearing fast and the owners of land are getting wealthier and wealthier.

And rents will go up up up up...

Thats my theory anyway...

Trevor_S · 12 February 2009

Bill M said:
You are right mate, lots of property on the market there right now. Honestly I'm thinking about getting out of Sydney, getting older and just want piece and quiet at much lower prices.

LOL.. I have been looking to Tasmania for similar reasons.

I have been buying shares again, started again in Nov/Dec. 2008, before that I had stopped buying in mid 2007 some time. I guess I believe my shares will be worth much more in 10 - 20 years time. I am only really interested in growing strong dividends over the years, sensible capital appreciation comes from that in my experience. Of course in these difficult times, who the hell knows, I could have got it completely wrong

and I am a terrible landlord even though I have made decent money on property over the years and have one IP left.

Bill M · 12 February 2009

Hello Trevor_S, I noticed a post of yours back earlier about your ideas on the sharemarket and I am in exactly the same boat as you. At the moment I am gradually accumulating good stocks that are paying good dividends. I am also accumulating 2 ASX index funds to get better diversification.

Anyhow getting back to real estate, your signature shows you are in Townsville? That's a bit radical going from a hot tropical climate to Tassie isn't it? You like the cold that much do you? Good luck anyway, it's nice to cash in on an expensive property and buy a cheaper and better one, cheers.

Trevor_S · 12 February 2009

singlefished said:
CBA may be the first to cut their divvies I think I read earlier today...

CBA poised to emerge market victor

Deposits have been surging, mortgage broker fees cut, non-bank lenders are falling away, smaller banks have been acquired, and those left are finding it tougher to compete on pricing.

Commonwealth has been one of the biggest gainers of the so-called flight to quality, growing its loans book at more than twice the amount of the market. Deposit growth has been running 1.5 times greater.

Flagging a potential dividend cut, Commonwealth has warned the banking environment is likely to get tougher before things start to improve. Profits will remain under pressure as bad debts pile up, funding costs squeeze margins, and an economy teetering on recession will cut the pace of earnings.

If you buy the above story, with mid - long term profitability assured... short term divvy cuts are a near certainty... but then fixed interest has PLUMENETED and rents appear t be coming down or are stable.

and tucked away in the article and more relevant to the topic

Signs of life remain in the mortgage market. Housing finance figures in December rose nearly 5 per cent, a material improvement on the average 25 per cent decline over the previous six months.

Me, I am a proponent of stagnating housing prices for 3 - 5 years, with small drops, maybe 10 - 15% in places and the odd standout that cycles up and down like a yo yo eg Gold Coast, and while anything can happen with housing, eg UK / USA etc I don't see it being repeated here... and I happen to think housing is still way overpiced.

Some people in hear seem to have forgotten what the Stock market is truly there for, to allow business to get capital to provide jobs for the majority. If owners like me (and other here) aren't topping up companies when they need it like eg Wesfarmers, then Bunnings, Coles, Officeworks goes bankrupt and closes, then 1000's of jobs go and what impact does that have on housing in particular and the economy in general ?

Bill M said:
that are paying good dividends. I am also accumulating 2 ASX index funds to get better diversification.

Similar here. I would be interested in what you are buying... though that's probably best reserved for another thread. I have been fairly staid, BHP, WOW, LEI, WBC. I also top up on a LIC (ARGO) for the same reasons you use an index fund, extra diversification, just not a big fan of unlisted funds, they always seem to suffer liquidity issues when people want to sell. We may be wrong, noting is for certain.

Bill M said:
You like the cold that much do you?

or more so sick of the heat and humidity... as long as I don't have to work in the cold, being semi retired and should be retired in about 12 months (at 43) that won't be an issue. I love NZ and Tassie, I had given serious thought to moving to NZ as well, Rotorua in particular.... I love the outdoors; hiking, mountain bike riding, kayaking, camping etc

Bill M said:
Good luck anyway, it's nice to cash in on an expensive property and buy a cheaper and better one, cheers.

I will keep up here and pay with cash down there for a PPOR, rent out up here... gives me an excuse to come back up annually, see friends and use the trip as a deduction. I hope to fly down for a few weeks in May, start looking seriously.

gfresh · 12 February 2009

I think Westpac (now Australia's largest bank) will compete hard against CBA coming out of this, and it's going to be a good battle up the top for borrowers. Not many would be aware westpac is the 9th largest bank in the world now? http://www.theaustralian.news.com.au/story/0,25197,24961870-643,00.html

I don't think that many believed CBA/other banks would keep paying 8-10% yields forever.. It just doesn't happen historically. A cut to 5-6% (or a "massive 37% fall in dividend!!" if you want the headline) still is returning many times more than they are in their deposit accounts.

I'm starting to buy back into shares also ...And I'm actually becoming more encouraged with the "it's going to get worse", "it will take years for the market to recover", even the major media now saying "this is the worst since the great depression" blah, blah in the media every single day - I'm starting to think it must be reaching the bottom soon.

Fear is playing nicely into your hands if you're looking to move out of the rental market also.. some thinking "what happens if it does get much worse", "what if I don't sell now, I'll never get a good price", "maybe, just maybe they are right, maybe property is overvalued", "maybe I should reduce my holdings somewhat and pay down debt". I'm seeing some nice houses listed at attractive prices that simply weren't listed there 12-24 months ago. That fear won't and can't last that much longer, people become blase' about it.

Lancelot · 12 February 2009

lioness said:
How naive are you??

I could ask you the same question with your one eyed perma bear speculation

His company will falll off the cliff in the next 2 years when property collapses 50%.

kincella · 12 February 2009

I was pretty sus about lionesse to begin with...came on here saying they would buy 5-6 houses, asking for our thoughts.....then next thing...selling the house..due to ..whatever...and now suddenly a bear...
or was he always a bear.....

robots · 12 February 2009

hello,

whats happened to the colonel from England, WayneL? havent heard from him for a while

hope all's well,

suit pressed in a day and LOE in about 14-20 days, again!

thankyou
robots

House prices to keep rising for years

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