House prices to keep rising for years

[Julia]

As much as these 2 renters did not want to move they did and the left the area and got a better deal in another suburb. There was a bit of renting slump soon after they moved and I walked past this unit for 5 Months and it was vacant all that time. Now if I was the owner of this unit I would have much rather have kept these blue chip tenants than let them walk and get no rent for 5 Months.

You could have used this as a prime example in the "Greed" thread, Bill!
Serves him right.

 

[SM Junkie]

I've really enjoyed reading this thread, finding it quite informative and realising that I have a lot to learn about property investments. However I have found it a little intimidating posting because everyone seems to have such an enormous wealth of knowledge around property and a lot of what I read tends to go straight over my head. But I am learning from you all.

So for some of my thoughts (that I'd welcome your opinions on providing you don't call me a moron):

Firstly not all landlords are out there to screw every cent out of their tenants. It is really unfortunate that in order to keep a property, some investors need to put up the rents. My tenants are still on a good wicket and are paying $70pw below market value, I was just very fortunate to have a fixed loan in place before any of the rate rises. Most of us have been a tenant ourselves at some point and know how difficult it is to deal with landlords and to keep a roof over your head at a reasonable price. So we are not all heartless money grabbers. By the way if you think rents are bad in the Eastern States, here in the Pilbara WA, houses are reaching up to $1,600 pw, totally incredible

Secondly I don't have the same negative opinions on the current market, it seems to me that some areas are growing in value, some stagnant and some decreasing, guess 'location' is more important than a bargain buy. So far my locations have remained stagnant, which is ok with me because I've already done extremely well as a result of the property boom in Perth, so I'm happy to let it sit.

But I've not pulled back and although many of you would disagree in the current environment, I'm still purchasing. I think there are some great opportunities out there to be had. I managed to pick up a triplex block, 5 mins to beach, walking distance to station and many many other things going for it's location. It was fortunate timing with the developer looking to get rid of the last remaining blocks and reduced the price by $50k. As a long term buy I'm confident it will do well, I'll ride through the cycles to come.

Overall I don't think the stock market is fairing any better than property at the moment. I like the fact of security in bricks and mortar and therefore like to have a foot in both camps. If not for my properties, I probably would not have started down the path of financial education.

My last point is on the unaffordability of housing. Isn't the high entry costs relative to the lifestyle we lead. Sure it costs more, but we have more luxuries, more disposable income, higher wages and obviously people were willing to pay these infated prices, otherwise there would have been no need to put the breaks on the economy.

Its interesting to reflect that my parents could not afford their first house until their mid 40's, renting in their generation was very common and one generation later and their children all have several properties each, it shows you just how far we have come.'

Thanks

 

[theasxgorilla]

My last point is on the unaffordability of housing. Isn't the high entry costs relative to the lifestyle we lead. Sure it costs more, but we have more luxuries, more disposable income, higher wages and obviously people were willing to pay these infated prices, otherwise there would have been no need to put the breaks on the economy.

Its interesting to reflect that my parents could not afford their first house until their mid 40's, renting in their generation was very common and one generation later and their children all have several properties each, it shows you just how far we have come.

Thanks SM, that was a great post. I enjoyed all of it as a matter of fact, something to think about over a late Saturday morning breakfast here...keep it up!

I like the insight from these last couple of paragraphs. To build on the idea of affordability a cynical step further, I have found that almost everyone has an affordability self-concept. Where that self-concept is low to moderate, today's big house price numbers have these people declare: "no, we can't afford it". For some, it doesn't seem to matter how much money they have or earn, they can't redefine their affordability self-concept. In a way, I think that is nice. We shouldn't feel like we need to go out and upgrade to a mini-castle or become moguls just because we're so much wealthier. But on the other hand, if the people in question deserve better (I don't know what you call it, but I'm of those people who think we all deserve better, no-one should settle for less than 'better'), it's a shame that they see big numbers as an excuse for 'affordability'.

When the economic cycle turns these won't be the people who take advantage of lower prices...instead, they'll be saving for a rainy day, in case they lose their jobs during the down turn. It doesn't matter what happens, they can't win...you can't help them win.

ASX.G

 

[theasxgorilla]

If you see a contravention of the code of conduct, you can report it via the button at the top. That way, we are alerted quickly. (It's the triangular icon to the right of the post number)

Thanks for the heads up Robots. As Wayne has pointed out, click the 'report post' button. A notification will be sent directly to our respective email accounts. ASF has 'follow- the-sun' moderation. Wayne and I are in the UK/Europe, Kennas is in the Americas and the mods in Australia are all in different local timezones. Many reported posts are taken care of before the rest of you wake up

Keep in mind though, we're here to discuss too. We'd rather do that than play umpire.

ASX.G

 

[tech/a]

When the economic cycle turns these won't be the people who take advantage of lower prices...instead, they'll be saving for a rainy day, in case they lose their jobs during the down turn. It doesn't matter what happens, they can't win...you can't help them win.

On a Sunday Morning ---Amen

 

[robots]

hello,

good morning,

auction clearance rate at 72% for melb yesterday,

plenty of fun and games out there at the moment, low bids etc

definitely not as many bidders at the auctions I visited but all in all a healthy result,

the RBA will be well excited by this figure,

thankyou

robots

 

[IFocus]

I've really enjoyed reading this thread, finding it quite informative and realising that I have a lot to learn about property investments. However I have found it a little intimidating posting because everyone seems to have such an enormous wealth of knowledge around property and a lot of what I read tends to go straight over my head. But I am learning from you all.

So for some of my thoughts (that I'd welcome your opinions on providing you don't call me a moron):

Firstly not all landlords are out there to screw every cent out of their tenants. It is really unfortunate that in order to keep a property, some investors need to put up the rents. My tenants are still on a good wicket and are paying $70pw below market value, I was just very fortunate to have a fixed loan in place before any of the rate rises. Most of us have been a tenant ourselves at some point and know how difficult it is to deal with landlords and to keep a roof over your head at a reasonable price. So we are not all heartless money grabbers. By the way if you think rents are bad in the Eastern States, here in the Pilbara WA, houses are reaching up to $1,600 pw, totally incredible

Secondly I don't have the same negative opinions on the current market, it seems to me that some areas are growing in value, some stagnant and some decreasing, guess 'location' is more important than a bargain buy. So far my locations have remained stagnant, which is ok with me because I've already done extremely well as a result of the property boom in Perth, so I'm happy to let it sit.

But I've not pulled back and although many of you would disagree in the current environment, I'm still purchasing. I think there are some great opportunities out there to be had. I managed to pick up a triplex block, 5 mins to beach, walking distance to station and many many other things going for it's location. It was fortunate timing with the developer looking to get rid of the last remaining blocks and reduced the price by $50k. As a long term buy I'm confident it will do well, I'll ride through the cycles to come.

Overall I don't think the stock market is fairing any better than property at the moment. I like the fact of security in bricks and mortar and therefore like to have a foot in both camps. If not for my properties, I probably would not have started down the path of financial education.

My last point is on the unaffordability of housing. Isn't the high entry costs relative to the lifestyle we lead. Sure it costs more, but we have more luxuries, more disposable income, higher wages and obviously people were willing to pay these infated prices, otherwise there would have been no need to put the breaks on the economy.

Its interesting to reflect that my parents could not afford their first house until their mid 40's, renting in their generation was very common and one generation later and their children all have several properties each, it shows you just how far we have come.'

Thanks

Hi SM

I think here in the west its currently another world compared to the rest of Oz. The current expansion is just off the dial no matter which measure you use.

The coming Gorgon gas project numbers off their web site

The estimated economic benefits for the nation, the state and the region that would flow from the development of the Gorgon Project include:

* $11 billion initial investment
* $17 billion in taxes and royalties
* Additional export income of $2.5 billion a year
* 6000 direct and indirect new jobs, 1700 of which will be in Western Australia
* Expansion of existing services and industries, and attraction of new ones
* Underpinning the development of new technologies and skills, such as CO2 sequestration and subsea technology, creating regional capacity for future growth.

I saw the average wage in the NW of $125K quoted earlier the cleaners will most likely start some where above that on the project, image the cash sloshing around from this project alone that flows back feeding property.


All this underpins property, where it ends I how no concept but do notice that currently the $1mil to $2mil levels seem to be booming.

 

[communique]

Its interesting to reflect that my parents could not afford their first house until their mid 40's, renting in their generation was very common and one generation later and their children all have several properties each, it shows you just how far we have come.'

Thanks

It should be noted that it probably only took your parents 5 years to pay off their house at that time. The wages to loan ratio at that time was 2 : 1 now it is 5 : 1. There was a very interesting documentary on 4 Corners not so long ago looking at issues of the sub prime fallout. They gave an example of house prices in Amsterdam over a 500 year period. The reality was that prices had not increased over this period subject to wages. There were peaks and troughs and as for all investment the key is when to buy and when to sell to take advantage of this. When you refer to their children all having several properties, are we talking about owning debt as opposed to owning property?

 

[IFocus]

Perth has 22 suburbs with $1m values

http://www.news.com.au/perthnow/story/0,21598,23302781-2761,00.html


SM pass the $100 bills so I can light my cigar......


Then this

Perth property boom: metro market still strong

http://www.news.com.au/perthnow/story/0,21598,23302708-2761,00.html

 

[numbercruncher]

Bit more pain coming next week for those renting money

INTEREST rates are set to rise by up to 0.4 percentage points within weeks of the Reserve Bank board meeting on Tuesday.

The Reserve Bank is almost certain to lift rates by 0.25 percentage points, which would flow on to mortgages by the end of the week. But a big jump in rates in the money market, where banks source about half their funds for lending, has meant they are likely to load the official rise with another 0.1 or 0.15percentage points, possibly at the same time or within weeks.

http://www.smh.com.au/news/national/ratehike-pain-passed-on-to-borrowers/2008/03/01/1204227048589.html

 

[SM Junkie]

It should be noted that it probably only took your parents 5 years to pay off their house at that time.

This is not the case, my parents were at the time middle class workers who brought their first home just prior to the recession and were then hit with the big interest rate rises. They struggled through and I guess tought their children some valuable lessons as a result. I certainly remember what a big deal it was to get their first loan, how hard it was to get credit even with a deposit. They tried several banks before they got an approval. The banks have certainly relaxed their criteria since this time.

When you refer to their children all having several properties, are we talking about owning debt as opposed to owning property

Both, we all own at least 1-2 properties that have paid for themselves and are therefore positively geared. So we keep buying more to offset our taxes. Initially I really do think it was part luck and being in the right place at the right time with the Perth boom. But in saying that we also all uprooted our families and moved to the NW because this is where the opportunities were, so sometimes you have to take the necessary steps to create your own success.

 

[xoa]

Perth has 22 suburbs with $1m values

http://www.news.com.au/perthnow/story/0,21598,23302781-2761,00.html

Read your article again. It says that Perth property prices have been falling for months. If there are 22 suburbs with average house prices above $1m, it just goes to show how far the market could slump. Who are buying these properties? Even a cashed up geologist or mining engineer would struggle.

If you want to speculate in this environment, go ahead. Personally, if I wanted to spend more than a million dollars on a house, I'd buy somewhere that isn't dependent on speculation and a short lived resources boom - Hong Kong or New York or Shanghai.

 

[numbercruncher]

The massive losses of some Sydney suburbs being exposed by the daily telegraph.

HOMEOWNERS in Sydney's outer suburbs have been losing as much as $450 a week every week since early 2004 on the value of their properties as the real story of mortgage belt misery begins to emerge.

With the Reserve Bank likely to announce yet another interest rate hike tomorrow, a Daily Telegraph investigation reveals hundreds of streets in Sydney's outer suburbs now have houses that have been bought and sold at a loss - in rare cases more than 40 per cent in value.

http://www.news.com.au/business/story/0,23636,23309209-5013951,00.html


Wouldnt be much fun paying $500 a week interest and having your " investment " tank another 450p/w on top !

 

[ROE]

The richest investment man in the world has this to say in his annual address to his share holders

"Buffett said in the letter that Berkshire plans to still focus mainly on US investments, despite the country's "many imperfections and unrelenting problems." That includes housing, where Buffett ladled blame on lenders who weakened their underwriting standards in the false belief that housing prices would go up and keep going up."

"Today, our country is experiencing widespread pain because of that erroneous belief. As house prices fall, a huge amount of financial folly is being exposed. You only learn who has been swimming naked when the tide goes out -- and what we are witnessing at some of our largest financial institutions is an ugly sight."

 

[IFocus]

Read your article again. It says that Perth property prices have been falling for months.

Ah confused as I couldn't find that bit but found this

And even for those who bought in the past year, when the market flattened, only six Perth suburbs slumped in value, with Guildford being the worst.

And if people research investing in property this will be no surprise

Experts predict further slow growth and up to a 15 per cent decline in values in some of Perth's outer suburbs.

If you want to speculate in this environment, go ahead.

No thanks I got in 5 to 6 years ago and don't understand the current pricing however the beach and riverside areas quoted have always been mainly occupied by the money in this town I don't think that end is so much speculation.

 

[Kimosabi]

Read your article again. It says that Perth property prices have been falling for months.

Once prices start falling, it starts feeding on itself, because the next question is, how far will prices fall, because no-one wants to be hit with negative equity as soon as they're bought a house...

 

[KIWIKARLOS]

The massive losses of some Sydney suburbs being exposed by the daily telegraph.



http://www.news.com.au/business/story/0,23636,23309209-5013951,00.html


Wouldnt be much fun paying $500 a week interest and having your " investment " tank another 450p/w on top !

Such a load of cr@p from the tele. That was one street in a dodgy area. They also showed the five worst affected suburbs showing over all about 5-6 % decreases but the five best performing had increases over 20% PA. There is alwys going to be dodgy places where propoerties can't hold their value.
From the photo in the paper that suburb looked to be almost farming land with very little density at all and fibro houses trying to sell for 400K +

Tell em their dreamin :

I would say that most north shore suburbs of sydney and most inner west suburbs have increased. It's the areas with lowr household incomes that will take a pounding on the back of rates. Thing is these areas also happen to be the favourites of small time property investors because they are relatively cheap. I mean how many people buy investment properties in Mosman compared to Bankstown

 

[wayneL]

Tell em they're dreamin :

I gotta try and get The Castle on the Beeb over here, if only so we don't get blank stares when we say that.

 

[IFocus]

Read your article again. It says that Perth property prices have been falling for months. If there are 22 suburbs with average house prices above $1m, it just goes to show how far the market could slump. Who are buying these properties? Even a cashed up geologist or mining engineer would struggle.

If you want to speculate in this environment, go ahead. Personally, if I wanted to spend more than a million dollars on a house, I'd buy somewhere that isn't dependent on speculation and a short lived resources boom - Hong Kong or New York or Shanghai.

This is a year or so old I think but do you think it might impact on WA property a state with 2 million people.....the bottom end will suffer if left out of the boom / bubble / balloon.

WA continues to lead the way as Australia's number one resources investment destination with about $100 billion worth of projects either committed, under construction or under consideration in the State over the next few years.

Link here http://www.cciwa.com/reps/WA_Resource_Development_Services_Directory.aspx#12914

 

[numbercruncher]

Such a load of cr@p from the tele.

The article was a compilation of Data / opinions from various sources such as Australian Property Monitors , MVS Valuers , John Symonds , RP Data , maybe they are all full of cr@p .....

You should read the article its quite interesting.

Cheers.