House prices to keep rising for years

[kincella]

Hi Robots...I see a bit of scoffing at the numbers sold...but the kids dont realise this is a long weekend, half the population takes a holiday....skiing etc and partying....
hey I thought houses over a million bucks were not selling....but there you go..it must be all the Chinese with the big bucks....and then look how cheap the bargains houses are....afraid Broady is just a bit too feral for me....but they have to start somewhere
cheers

TOP 5 HOUSES
1. 117 Alfred Crescent, Fitzroy North $1,410,000
2. 89 Esplanade , Altona $1,265,000
3. 27 Faussett Street, Albert Park $1,230,000
4. 21 Male Street, Brighton $1,203,000
5. 28 Fuller Avenue, Glen Iris $1,182,000

TOP 5 BARGAIN HOUSES
1. 5 Garner Parade, Broadmeadows $190,000
2. 16 Norma Street, Melton $226,000
3. 269 Gap Road, Sunbury $252,000
4. 20 Fairbairn Road, Sunshine West $261,000
5. 6 Livingston Street, Deer Park $272,000

 

[kincella]

This is what some of us have been advising....this magnificent window of opportunity, but the protractors have been going on about the FHB propping up the market, but they only represent 25% of the activity...the upgraders at 75% have been taking advantage of the Lowest interest rates in 50 years...and thats ......well thats the secret

Have to pop down to Chapel St today...see a man about a dog....I get the dog washed at Prahran Market...buy the dog a little treat at KFC...then back home to catch up on work...boring but necessary
cheers
ps only extract here...read the full article

Recession should not be wasted
Jan McCallum June 7, 2009 Page 1 of 2 Single page view

Canny operators are sowing the seeds of wealth and security, reports Jan McCallum.

INVESTORS are buying property and businesses increasing their advertising. Sound wrong? Not for investors and business owners who are determined not to waste the recession.

Many are setting themselves up for future prosperity by looking to buy under-priced assets or, in the case of business, identifying and moving into areas where competitors are weak.

It takes nerve to expand when the country teeters on the edge of recession and business and consumer sentiment is plummeting, but the pay-off from a successful strategy will be evident in a few years when the economy has recovered.

National Australia Bank's general manager of private wealth, Angela Mentis, has no doubt this crisis will forge a new generation of wealthy people who will feature on rich lists in 20 years' time.

Ms Mentis said high-net-worth individuals, usually people with over $10 million to invest, were starting to look at high-end residential property which had been heavily discounted as well as commercial property and opportunities to invest in private businesses.

http://business.theage.com.au/business/recession-should-not-be-wasted-20090606-bz6o.html

 

[overlap]

Never believe a banker telling you their primary motivation is building your future wealth.

http://www.news.com.au/heraldsun/story/0,21985,25594181-664,00.html

Now, this doesn't deny there are opportunities for those in a position to take advantage of the times and survive the tide going out - as it must do sometime (but how far?)

It does spell trouble for those getting on the wave of banker largess in bark canoe.

 

[Beej]

TOP 5 HOUSES
1. 117 Alfred Crescent, Fitzroy North $1,410,000
2. 89 Esplanade , Altona $1,265,000
3. 27 Faussett Street, Albert Park $1,230,000
4. 21 Male Street, Brighton $1,203,000
5. 28 Fuller Avenue, Glen Iris $1,182,000

TOP 5 BARGAIN HOUSES
1. 5 Garner Parade, Broadmeadows $190,000
2. 16 Norma Street, Melton $226,000
3. 269 Gap Road, Sunbury $252,000
4. 20 Fairbairn Road, Sunshine West $261,000
5. 6 Livingston Street, Deer Park $272,000

Hah! Kincella that aint nothin!! From the North Shore Times (local Cumberland rag for Sydney upper/mid north shore) - top 10 sales in the past week (includes PT and Auction):

1. 19 Coolawin Rd, Northbridge, 5 bed house, $5M
2. 51 Warrangi St, Turrumurra, 5 bed house, $2.65M
3. 18 Tindale Rd, Artarmon, 4 bed house, $2.125M
4. 68 Nicholson St, Chatswood, 5 bed house, $2.1M
5. 667 Pacific Hwy, Killara, land, $2.05M (probably bought for development?)
6. 2A Bruce Ave, Killara, land, $2.05M (Same as above I think)
7. 17 Flamont Ave, Riverview, 4 bed house, $2.045M
8. 28 Brisbane Ave, East Lindfield, 5 bed house, $2.0M
9. 50a Arabella St, Longueville, 3 bed house, $1.975M
10. 17 Burgoyne St, Gordon, 5 bed house, $1.79M

So no matter what many might think here, those who actually have the money seem to be back buying top end property on the north shore now - that's one of the better weekly top 10 sales lists for a while.

Yesterdays auction clearance rate was 72% in Sydney, but as noted it was a long weekend so volume was only in the mid-100s and not too many in the top end (you don't sell top end property on a long weekend!).

Cheers,

Beej

 

[kincella]

Beej, thank you for that info....hahahaha to you too....well done...
gee for a moment I felt we were like the poor cousins.....but I am sure there was a reason for that, probably no million dollar houses listed for auction....they are being sold privately...have to wait for Morrell and Koren's next reports....
I guess Sydney keeps its spot as the leader in the direction of where housing is going.....
we did have one here sold about 2 weeks ago at auction for $5 million...Ma*****a Rd Toorak.....a basket case...huge refurbishment or redevopelment required there, so guess they will need to spend another few million on it....
Anyway, I believe Sydney and Melbourne are the top 2 cities...the others just follow, then some go way off course....

Anyway..news coming out is just confirming exactly what a small group of us property people have been saying for ages.....
I assume the Asians and foreigners are spending big in all Capital Cities now...
and Sydney may get more than a fair share of interest from those buyers....

so we have had a few 'I told you so' moments in the last couple of months
cheers

 

[ROE]

Gear it up borrow a bit more, buy a few more properties.
I'm sure banks wont mind lending you when you are LVR at 80%

You are the customers bank want, always pay your mortgage on time
and when you down to that 70% gear up again to 80% and get some more properties.
and make sure you borrow from the big 4 just to make your life easier ..

Safe as house they said even banks know it

 

[Beej]

Gear it up borrow a bit more, buy a few more properties.
I'm sure banks wont mind lending you when you are LVR at 80%

You are the customers bank want, always pay your mortgage on time
and when you down to that 70% gear up again to 80% and get some more properties.
and make sure you borrow from the big 4 just to make your life easier ..

Safe as house they said even banks know it

ROE do you think the buyers of those top ten north shore sales I listed are borrowing at 80% LVRs???? It's far more likely many of them are paying cash! And the rest on very low LVRs. Many probably cashing in on the recent global equity markets rallies, and moving some money out of the markets and into upgraded PPORs....

Beej

 

[Soft Dough]

It is really interesting, the corner that we are all painting ourselves into, and the glee that some people have, and the spin that they can put on their figures.


Still no figures on the 12 month returns in these markets?

It still amazes me that people think interest rates drive house prices, employment rates, and hence income drives house prices.

 

[Beej]

It still amazes me that people think interest rates drive house prices, employment rates, and hence income drives house prices.

Soft Dough - what evidence/data can you show to prove this assertion? All the data I look at suggests the opposite? Ie interest rates plus disposable household income are the key factors. Unemployment/employment rate doesn't show any correlation one way or the other - at least not at the levels we have seen at any time in the past 60 or 70 years.....

Cheers,

Beej

 

[kincella]

I am just a small fry in the game... income from property $115,000 less interest expense $35,000= 80,000....and piddling amounts for the rates and insurance...
the interest expense bill has dropped 20,000 from the highs of the past 18 months
geared to under 40% over all props

unemployment is 5% and employment is 95%....
you might be reading to many media stories...its quite different out in the real world
cheers

 

[Soft Dough]

Soft Dough - what evidence/data can you show to prove this assertion? All the data I look at suggests the opposite? Ie interest rates plus disposable household income are the key factors. Unemployment/employment rate doesn't show any correlation one way or the other - at least not at the levels we have seen at any time in the past 60 or 70 years.....

Cheers,

Beej

It all has to do with gearing. You need income to gear, and it is the increase in incomes that have driven overgearing during the mining boom. As unemployment rises, people will not be able to gear and hence house prices fall.

It doesn't matter what interest rates are if people are experiencing real income growth.

 

[kincella]

geez Soft Dough...
huh....... very scattered pieces in your last post
...most of you are yet to buy a first home, now your talking about gearing....higher earnings....and you say forget the interest rates.....
what folly...
I would suggest its all probably more theory on your part at this stage

 

[Beej]

As unemployment rises, people will not be able to gear and hence house prices fall.

So if unemployment rises from 5.4% to 9%, the incomes of only 3.6% of the work-force are significantly changed right? Assuming of course they become LONG term unemployed and don't find a find a new job in a few months! So how does this effect the ability of the remaining 96.4% to gear exactly as the might have otherwise? (Not they necessarily want to or need to! And dependent primarily on prevailing interest rates of course....). I just don't see how your argument here pans out?

You should read this article by Chris Joye on the topic of unemployment rate and house price growth correlation: http://www.businessspectator.com.au...ousing-pd20090520-S7VRU?OpenDocument&src=srch

Also see the attached graph which shows all the major house price indexes through the late 89 -> early 90s when unemployment rose to 11%. Note that the dips in prices correlate to interest rates hitting 17%, and the rises correlate to the lowering of interest rates, all the while with rising unemployment.

Cheers,

Beej

 

[ROE]

ROE do you think the buyers of those top ten north shore sales I listed are borrowing at 80% LVRs???? It's far more likely many of them are paying cash! And the rest on very low LVRs. Many probably cashing in on the recent global equity markets rallies, and moving some money out of the markets and into upgraded PPORs....

Beej

oh ok I got it.. share rally 20% - 30% let cash out and buy some multi-million dollars home.. and assume they got in spot on and buy at the very bottom.

Have you meet many millionaire like that? .. ask Tech/A or Bill M who are retire and I assume very rich here and see if they fit the above bill

Most millionaire I know don't do things like that .. In fact most live in an average mum and dad suburbs and live well below their mean but has income producing assets like business and large stock holding...without debt by the way

 

[Soft Dough]

geez Soft Dough...
huh....... very scattered pieces in your last post
...most of you are yet to buy a first home, now your talking about gearing....higher earnings....and you say forget the interest rates.....
what folly...
I would suggest its all probably more theory on your part at this stage

1. A huge percentage of first homebuyers gear, and gear heavily. Perhaps you fail to see that borrowing to buy as an owner occupier is gearing?
2. Banks set gearing ratios due to risk of defaulting, which is affected by the unemployment rate - we are seeing that happen.
3. Rising unemployment is accompanied by lower wage growth.
4. Unemployment from 5.5% to 9% has a more significant effect than 3.5% of the "market" as the decrease in money spreads through the economy affecting profits etc, so it also causes problems for people like you and me.
5. Increasing unemployment causes people to unload houses that they have, and or they cannot afford to pay high rents.

 

[Bill M]

Have you meet many millionaire like that? .. ask Tech/A or Bill M who are retire and I assume very rich here and see if they fit the above bill

You assume too much, you don't need to be a millionaire or very rich to be retired.

 

[Bill M]

The market here on the Northern Beaches is still doing very well. Units are sold very quickly and supply is still not enough. Prices seem to be going upwards.

-----

AN investor fought off five other buyers to purchase a Manly semi last weekend, and according to the agent more investors will be out and about with the new superannuation rules.

“It is early days yet but I think the superannuation restrictions may prompt people to buy property, especially with interest rates so low,” he said.

FULL STORY HERE

 

[kincella]

I know of a few people who will put the extra into property, with the new restrictions on superfunds....they are the ones that are now ploughing / fast tracking surplus funds into super for retirement....the mortgage on the family home is minimal....

 

[kincella]

to expand a bit on Bill's post on Manly property.....

its the changes coming from left of field that can have unintended consequences....or become another of those 'windows of opportunity' for the astute.....
back in the 90's the compulsory super was in its early days....and the boomers were not so interested in retirement.....we were still partying then...
however, today its a whole different ball game..... if anyone thinks the changes to super will not have an impact on the property market....do so at your risk...

“This is different from the previous flat market in the 1990s, then, we had interest rates of around 16 per cent, whereas now they are very low,” he said.
we , well some of us have been banging on about the low rates....
love this guys name......

James Economides, of Elders Manly, said the new superannuation restrictions announced in this month’s Federal Budget - halving the limit on super contributions that come from before rather than after-tax income - would mean that some people will look again at property.

“It is early days yet but I think the superannuation restrictions may prompt people to buy property, especially with interest rates so low,” he said.

People aged 50 or less will only be able to salary-sacrifice up to $25,000 per year and those over 50 only $50,000 per year.

This means there may be more money around to invest.

“This is different from the previous flat market in the 1990s, then, we had interest rates of around 16 per cent, whereas now they are very low,” he said.

http://manly-daily.whereilive.com.au/real-estate/story/investing-in-quality-property/

 

[Beej]

oh ok I got it.. share rally 20% - 30% let cash out and buy some multi-million dollars home.. and assume they got in spot on and buy at the very bottom.

Have you meet many millionaire like that? .. ask Tech/A or Bill M who are retire and I assume very rich here and see if they fit the above bill

Most millionaire I know don't do things like that .. In fact most live in an average mum and dad suburbs and live well below their mean but has income producing assets like business and large stock holding...without debt by the way

Yes as Bill M says you do assume a lot ROE! For a start I know personally at least one person that did time the current market quite well - exiting in early 08 at around XAO 6000 level (all capital into 12 month fixed term cash @ 8%), and re-entering in March this year at the ~3200 level - and this was with a SIGNIFICANT amount of capital - they have done very well, I'm sure they are not alone. (PS: I wish I had taken that persons advice at that time!).

On your second point, what do you REALLY know of any other posters financial position here? Including my own?? What do you know of who I know? And how wealthy (or not) they might be? I won't turn this into a pissing contest by revealing anything further on these fronts, however I will say that you make some very broad assumptions above that are pure generalisations, (ie they might apply in some cases but absolutely not all), and as such are irrelevant to the original points I made, which still stand. I mean really, do you think someone buying a $5M house is borrowing $4M or more of that???? Seriously?

Cheers,

Beej