House prices to keep rising for years

Bill M · 17 February 2009

numbercruncher said:
Precisely ......

Your average NSW 500k IP needs circa 10pc growth just to break even .... big ask .... and after a few years of 3 to 4pc yield and 6pc + interest rates even ghastlier .....

Huh? I bought my unit 6 years ago and paid cash. Rentals have sky-rocketed since then, my unit would fetch $400 per week. 6 years of not paying $400 per week rent is a staggering $124,800 rent money saved, not a bad effort. Even if I didn't have any capital gains I am saving bucket loads by not frittering it away on rent. The best part is that I can rent it at the drop of the hat and the Mrs and I could go overseas for a year if we wanted and the rent would pay for part of our holiday.

kincella · 17 February 2009

Bill, I agree with you....and would think most in this forum would be in a similar range.....
most of my IP's are in the regional areas, so the bracket drops down further...300 - 400 range
I have friends who may have paid less than 200k for the toorak props back in the 90's, and those props were selling for 800k in 2007
I did see some bargains here selling for 400 which a year earlier were min 500 for a 2bdr...actually they were listed in that range and sold very quickly...then with the dec rate predicated to drop again..another prop was advertised at 450, but sold at auction for 600k....it was very nice, much nicer than the 500k prices of a year earlier
Toorak has its share of high flyers, so I expected some drops with forced selling due to margin calls and the financial crisis....nothing here seems to stay for sale for very long at all...its snapped up very quickly.....
like you I am not interested in the million dollar props....although I did notice Eddy Mcguire paid 11 million for a Toorak prop in Nov....

Beej · 17 February 2009

Bill M said:
Huh? I bought my unit 6 years ago and paid cash. Rentals have sky-rocketed since then, my unit would fetch $400 per week. 6 years of not paying $400 per week rent is a staggering $124,800 rent money saved, not a bad effort. Even if I didn't have any capital gains I am saving bucket loads by not frittering it away on rent. The best part is that I can rent it at the drop of the hat and the Mrs and I could go overseas for a year if we wanted and the rent would pay for part of our holiday.

What's more is that $124800 saved is money you would have otherwise had to earn AFTER TAX - which means if you are in the 40% (+1.5% medicare) marginal tax bracket, that you saved $213k BEFORE TAX that otherwise would have been blown in rent.

Cheers,

Beej

theasxgorilla · 17 February 2009

Bill M said:
Huh? I bought my unit 6 years ago and paid cash. Rentals have sky-rocketed since then, my unit would fetch $400 per week. 6 years of not paying $400 per week rent is a staggering $124,800 rent money saved, not a bad effort. Even if I didn't have any capital gains I am saving bucket loads by not frittering it away on rent. The best part is that I can rent it at the drop of the hat and the Mrs and I could go overseas for a year if we wanted and the rent would pay for part of our holiday.

Then of course you need to evaluate your investment as a ROI, preferably annualised. I'd be willing to bet you've done extremely well without even seeing those figures. Property has done extremely well during the past 6 years. I don't even know where your unit is...I could throw a dart at the continent and hit a spot where that is likely to hold true.

Robert25 · 18 February 2009

This is an example of some of the manipulation that has gone on in the media:

The Australian ran a story last week about "Mum ready to go shopping for second home", with all the usual pro-property ranting. Anyway it turns out that this "mum" was Kirsten Friedli, who works in marketing for the local real estate agent and was clearly being dishonest and deceptive.

Is there any way that The Australian could not have known that they were dealing with a real estate agent?

Original story: http://www.theaustralian.news.com.au/story/0,25197,25005486-25658,00.html
A Blog post about it: http://www.whocrashedtheeconomy.com/?p=350

nomore4s · 18 February 2009

Robert25 said:
This is an example of some of the manipulation that has gone on in the media:

The Australian ran a story last week about "Mum ready to go shopping for second home", with all the usual pro-property ranting. Anyway it turns out that this "mum" was Kirsten Friedli, who works in marketing for the local real estate agent and was clearly being dishonest and deceptive.

rotflmao, at least she was doing her job as marketing manager.

What is just as worrying as the misleading articles, is what will happen when Real Estate agents stop buying houses? It appears they are the only ones keeping the market afloat.

I love this quote from the blog - gold

robots · 18 February 2009

hello,

another great day on the cards, anyone know how the DOW went last session?

just more real estate bashing by those from the poverty pack, the poor vs the rich, the great divide, those who do the hard yards vs those with the handout from the socialist crew

isnt renting the way to go, such enormous interest in other people's lives

fabulous,

thankyou
robots

kincella · 18 February 2009

robots....you are sharp this morning....

the dow finished down about 3%...it was down 4% at one stage.....but recovered !

oh and the RBA report out yesterday showed housing Australia wide lost 3% last year.....we know how that works, the good houses were up, and the rubbish was down....but overall not a bad result for the worst year ever.

Lets not discuss the stock market...some stocks down 99% and the overall market down 50% ?? or some awful figure.

Safe haven required....cannot see much improvement in the stock market this year...what with all the newbies in government....and learning as they go.

gfresh · 18 February 2009

sigh.. the stock market is *the* leading indicator for the economy.. and all the market is telling us is that the economy globally is still going to continue getting worse, and that INCLUDES factors that influence housing!! The two are not separated

Expectations of economic "recovery" for late 09 will be pushed back to early 2010, and then late 2010 at this rate.. that's a long time for little to no growth in house prices for those that care about these things. For investors, their money would be just as well off in the bank earning close to 0% interest compared to property that is not going up anytime fast.

When you see the stock market recover then you can relax in the knowledge that property may also start making capital gains once again. Until then... keep waiting.

kincella · 18 February 2009

gfresh....its not as simple as that...IMO.....stock market is just another form of gambling...whereas houses provide a roof over your head....and stops the landlord from being tight, bossy etc
some of us investors will never go back into the stock market....ever again...

I posted this on another site today..........................

anyone checked out the stockmarket lately ???? down another 76 points today....finish another !% in the red
ppt gone from 60 to 25 in a year a loss of about 60%
...profits down 84% and they were some of the gurus of that market.....
hohohoho
and the prop market lost 3% of an average 450k property in the same period.....

lose 60% of your investment in a year on one of the best performing stocks...
or lose 3% on a solid bricks and mortar asset....
can anyone see why we like the props over all other investments ??

--------------------------------------------------------------------------------
.
Ever met a wealthy person who complains and moans about everything ?

*** The best way to become a millionaire is to borrow a million dollars and have your renters pay it off.
Jack Miller

**** My posts are for experienced property investors only. They are not for the inexperienced or first home buyer. I make no recommendations to buy or sell

nomore4s · 18 February 2009

kincella said:
gfresh....its not as simple as that...IMO.....stock market is just another form of gambling...whereas houses provide a roof over your head....and stops the landlord from being tight, bossy etc
some of us investors will never go back into the stock market....ever again...

I posted this on another site today..........................

anyone checked out the stockmarket lately ???? down another 76 points today....finish another !% in the red
ppt gone from 60 to 25 in a year a loss of about 60%
...profits down 84% and they were some of the gurus of that market.....
hohohoho
and the prop market lost 3% of an average 450k property in the same period.....

lose 60% of your investment in a year on one of the best performing stocks...
or lose 3% on a solid bricks and mortar asset....
can anyone see why we like the props over all other investments ??

So let me get this straight - you will never invest in the stock market again? The market has gone down 60% but you aren't seeing that as an eventual buying opp? IMO this crash will eventually provide a amazing investment opportunity to set up a long term portfolio that will provide an income stream for years to come.
I'm not sure how you can compare property vs shares in such a basic way - they both have pros and cons and if managed in the right way and with correct risk management procedures can be very profitable.

This post to me highlights why you like property over all other investments - because property has boomed in recent times and you've made easy money by virtually sitting back and doing nothing but other investments that actually require good risk and money management are all too hard, lol what a joke.
Well I hope for your sake you are correct and property doesn't tank so you can continue to sit back and tell everyone how good you are and how stupid everyone else is for investing in the stockmarket. If property does tank don't cry when the bears start rubbing your face in it because you don't seem to mind rubbing other peoples faces in the stockmarket crash.

There is money to be made in both the stockmarket and property markets imo, and at the moment in my view the stockmarket is approaching value but the property market is still overvalued. This doesn't mean it will crash it just means the risks are higher than normal for property.

lose 60% of your investment in a year on one of the best performing stocks...

Only if you were stupid enough to hold all the way down. People with good risk & money management have lost nowhere near that in fact some of them have actually made money

Junior · 18 February 2009

kincella said:
gfresh....its not as simple as that...IMO.....stock market is just another form of gambling...whereas houses provide a roof over your head....and stops the landlord from being tight, bossy etc
some of us investors will never go back into the stock market....ever again...

I posted this on another site today..........................

anyone checked out the stockmarket lately ???? down another 76 points today....finish another !% in the red
ppt gone from 60 to 25 in a year a loss of about 60%
...profits down 84% and they were some of the gurus of that market.....
hohohoho
and the prop market lost 3% of an average 450k property in the same period.....

lose 60% of your investment in a year on one of the best performing stocks...
or lose 3% on a solid bricks and mortar asset....
can anyone see why we like the props over all other investments ??

--------------------------------------------------------------------------------
.
Ever met a wealthy person who complains and moans about everything ?

*** The best way to become a millionaire is to borrow a million dollars and have your renters pay it off.
Jack Miller

**** My posts are for experienced property investors only. They are not for the inexperienced or first home buyer. I make no recommendations to buy or sell

If you suddenly needed some cash and went to sell your property:

a) Would it sell for 3% less than it would have 12 months ago?
b) How long would it take to find a buyer who is willing to pay what you are aiming to sell it for?
c) How much would it cost you to sell?

It's not as simple as saying 'the property market only dropped 3% last year'. Most of the drop was at the end of the year, there is bugger-all liquidity in the market and in all likelihood the market will continue to fall for at least 12-18 months. Obviously the sharemarket has experienced a far more devastating fall, but at least there's high liquidity, low brokerage and you know the exact value of your shareholdings at any given point in time.

UBIQUITOUS · 18 February 2009

kincella said:
gfresh....its not as simple as that...IMO.....stock market is just another form of gambling

You cannot be an expert on the merits of investing in one asset class if you do not have the slightest idea about the merits of investing in other asset classes.

You're about to learn a VERY expensive lesson.

kincella · 18 February 2009

been in the property market for over 20 years....and the stock market for 10 years....have enough cash to cover me for about 4 years.....
never lost on property...but lost on the stocks....
go back into stocks.??? why ...I dont trust anyone to manage anything on my behalf...
let alone my money
oh and as for the properties....it can be a lot of hard work to get them to where they are now.....its not a buy and sit back forever ...
in fact the income and hard work from property is like having a second job....
now they are set up....its provided some early retirement funding

and the interest rate cuts have taken about 18,000 off the running costs...thats like having another income...but am expecting to get cuts up to 30,000 pa by the time its done.....thats like half a small wage in itself
cheers

UBIQUITOUS · 18 February 2009

kincella said:
been in the property market for over 20 years....and the stock market for 10 years....have enough cash to cover me for about 4 years.....
never lost on property...but lost on the stocks....
go back into stocks.??? why ...I dont trust anyone to manage anything on my behalf...
let alone my money

..and nor should you!! It would be the same as allowing someone to make the decision to buy and sell properties on your behalf, because 'house prices always go up'. Its ludicrous isn't it?

However, if you had the same skills in choosing stocks as you do with property, then you would find that your stocks portfolio would outperform your property portfolio.

kincella · 18 February 2009

oh dear...heading into a recession...and this group picked the last 3 since the 70's.....that may give some a clue as to where stocks will head for the next few years....
and sitting on property is getting a whole lot cheaper....with interest rates heading down to 3% or less
...............................................................................................
westpac melbourne institute,,,predicting a recession
and rate cut down to 2%....
supposedly this index has predicted the past 3 down turns since 1970
extract again from westpac......

"We expect it to further reduce rates with the overnight cash rate eventually moving to 2 per cent by mid-2009.''

http://www.news.com.au/business/story/0,27753,25072365-462,00.html

--------------------------------------------------------------------------------
.
Ever met a wealthy person who complains and moans about everything ?

*** The best way to become a millionaire is to borrow a million dollars and have your renters pay it off.
Jack Miller

**** My posts are for experienced property investors only. They are not for the inexperienced or first home buyer. I make no recommendations to buy or sell to the inexperienced.

Taltan · 18 February 2009

Kincella I think you need to be less arrogant towards those that have lost on the stock market and remember the following:-
- I doubt property has only fallen 3% as volumes have decreased and I imagine if you tried to sell your property you would find yourslef down a lot more than 3% after transaction costs. Remember property is highly illiquid which puts a stop on rapid falls (and rises)
- Buying shares in Westfield or Mirvac is an investment in property. Whilst you lose control its fair to say Mr Lowy has a better understanding and access to economies of scale than most of us
- Comparing the average price of shares with average house prices is not a fair comparision. The figures for house prices are distorted because when people renovate their house they spend time and money improving their asset. The 3% drop is probably a 10% rise in renovated properties and a 5% loss in standing properties.
- The stellar performance f property over the last 10 years is largely due to a mix of govt subsidies and ineptitude. In 1999 the govt halved CGT, in 2000 it introduced the FHOG and in 2008 it increased it. All this whilst state govts put red tape all over land releases and stopped spending on infrastructure thus limiting most of us to live around 5 main CBD's. As the budget goes into the red its hard to see why these subsidies would be increased.
- The stock market is the best forecaster of the future state of the economy so I am confident in saying that as unemployment rises property will fall a lot further.

kincella · 18 February 2009

Taltan....but I am on a property thread/forum...not a stock thread....so thats why we talk about houses......I have lost a lot of money on the stockmarket....like most people.....so comparing a prop investment with the likes of a top 50 company like PPT....is fair in my opinion...
the house price charts have risen from about $12,000 in 1970 to over $300,000 today...thats 40 years....house prices did not suddenly go up.....its been a steady rise over that period....
as for arrogance....have a look at the replies to my post....

Trevor_S · 18 February 2009

kincella said:
oh dear...heading into a recession...and this group picked the last 3 since the 70's.....that may give some a clue as to where stocks will head for the next few years....
and sitting on property is getting a whole lot cheaper....with interest rates heading down to 3% or less

Correct me if I am wrong, you seem to be inferring that the stockmarket will be down for years, interest rates are are low and will go lower, you expect any lowering to be passed onto you thus resulting in "more savings" for you, as an in-debt "property investor", that recession and the rest of the economy is in the toilet and is a done deal but property is good to go ?

Is the above synopsis how you are looking at things ?

If so, in affect you are saying for your property outlook to be correct, property prices and rental returns will decouple from the rest of the economy and still produce excellent rents and CG regardless of what the rest of the economy is doing ?

kincella · 18 February 2009

as an example...the tech wreck crash of early 2000, so I took what I had left in the market and looked for something safer.....I found some very cheap properties...started buying Jun 2000...finished with the last big one..a commercial prop in jun 2002....no one else was interested...

they had taken money from property and put it into the market and the tech wreck...

it was not until about 03/04 when everyone else started getting into property, that I sold a couple of mine....I had intended holding for 10 years but when the prices tripled it was too much of a temptation.....still holding some of them...but I bought when prices were low, no one was interested...got all the flack at the time........similar debates to now!

in a nutshell.... a lot of people manage their own affairs...so at the time property was not hot...and neither were stocks...so they go looking for something safer.....property looked cheap, and safer than stocks

I am seeing the same thing today....they need to park their money somewhere..and the property market has come down from the highs of 2004..
term deposit rates are not looking good either.....which leaves property...
I dont mind debating the question....I could just go about it all quietly like I did in 2000....picking up some bargains....waiting for the rest to follow a couple of years later....

after living through the turmoils since the 1970's...there will be a recovery at some stage in the future....and I will be ready for it again...
here are the house price graphs....notice the peak on the left graph in 2004...then flat again for 2 years...another peak in 07 but not as high as 04
and I bought in 2000
http://www.globalpropertyguide.com/real-estate-house-prices/A

House prices to keep rising for years

Bill M

Self Funded Retiree

kincella

Beej

theasxgorilla

Problem solved... next bubble.

Robert25

nomore4s

Commonsense isn't that common

robots

hello

kincella

gfresh

kincella

nomore4s

Commonsense isn't that common

Junior

UBIQUITOUS

kincella

UBIQUITOUS

kincella

Taltan

kincella

Trevor_S

kincella

Similar threads

House prices to keep rising for years

Self Funded Retiree

Problem solved... next bubble.

Commonsense isn't that common

hello

Commonsense isn't that common

Similar threads

Privacy & Transparency

Privacy & Transparency