House prices to keep rising for years

[kincella]

Buckaroo, I would take the opposite approach and stay put...the article is written as a warning, not to jump in.....
as for asbestos....fine if you know where it is, so as not to touch or move it, or do anything else with it....but how many of us know where it is, in the first place....???
sure I will have a better idea now, after that news about the underlay has broken....so now some really serious research to find out where it is in my houses.......

did some calculations on a couple of my houses today....one has returned capital growth of 9% pa for 8 years....then 8% in the last year.....thats not bad...its not worth shouting about....just good steady growth year in year out,
the other one I measured started from a higher cost base, and its showing 9%
all years for the past 5 years....
so I am using the 9% as the basis for the estimated growth for the next 5 years on all properties....
its nothing like the higher estimated returns from superfunds or the stockmarket, but it should cover my retirement years.....on a conservative basis

 

[Buckeroo]

Buckaroo, I would take the opposite approach and stay put...the article is written as a warning, not to jump in.....
as for asbestos....fine if you know where it is, so as not to touch or move it, or do anything else with it....but how many of us know where it is, in the first place....???

did some calculations on a couple of my houses today....one has returned capital growth of 9% pa for 8 years....then 8% in the last year.....thats not bad...its not worth shouting about....just good steady growth year in year out,
the other one I measured started from a higher cost base, and its showing 9%
all years for the past 5 years....
so I am using the 9% as the basis for the estimated growth for the next 5 years on all properties....
its nothing like the higher estimated returns from superfunds or the stockmarket, but it should cover my retirement years.....on a conservative basis

I've been involved in heavy industry for years and back in 1999 I remember getting a survey conducted to identify asbestos around a plant. There are a number of companies that do this - not sure on the cost though these days.

And believe it or not, I have been a property investor off & on since the early 1980's. But like the stock market there are periods that housing just isn't a good bet. And my gauge for this is based on average household income compared to house prices.

I believe the reason for the housing boom from 2000 on, is because of the majority of families now having 2 income earners. This boosted the household income to be able to afford more expensive housing & because of this, the banks were more comfortable with high levels of lending to the point of being reckless.

Now, we have again reached saturation point as we did in the early 90's. So unless we can get our kids out to work or our average household income rises sharply, I can't see house prices rising.

And couple this with massive tax hikes including carbon tax, housing as an investment will probably get a right ol pizzling

Cheers

 

[mythos]

If you are worried about asbestos. Don't renovate a new house either. All Fibro sold today from James Hardie contains Crystalline Silica. All the sheets have a big warning printed on them that inhaling the dust may have serious long term health effects.

Reading the JH Material Safety Data Sheet at http://jh.hardiebase.com/products/download/file/MSDS+20+07+2009+Issue+19.pdf

Says that breathing dust from their new Fibro products may give you lung cancer.

Not sure why JH use Silica in their Fibro, as the Fibro sold in Europe that is mainly made in Germany doesn't contain any Silica in it.

 

[Buckeroo]

Not sure why JH use Silica in their Fibro, as the Fibro sold in Europe that is mainly made in Germany doesn't contain any Silica in it.

They may be getting paid to seal up a waste product?

Cheers

 

[Mc Gusto]

Hi guys

I have come across a forum for the aussie residential house market.

Not sure if we can post links to other forums but i have found it a good additional resource for my research into australian property.

let me know if i can post it / alternatively pm me if you'd like the link.


thanks

Gusto

 

[satanoperca]

Hi Kincella,

Those are excellent returns on your investment especially if you hold for 10 years, essential your investment should double in that time.

so I am using the 9% as the basis for the estimated growth for the next 5 years on all properties....

You must believe in the saying, property doubles every 7 years, as 9% growth takes 8 years for your investment to double, I hope in this case that past performance is a basis for future performance, but with this growth rate is not sustainable unless we see a massive growth in wages.

Cheers

 

[kincella]

pretty certain the latest figures that came out on wages showed a 6.5% growth for the quarter......and housing was under 3%..less than half

have you consider that the double wages (two income family) is the normal for the average family now....so why the emphasis on wages growth...
both seem to rise in line with inflation

the last time I did the projected figures on my housing I used different scenarios...5% 7.5% 10% pa.....and was very happy with the expected goals, then within about 2 years, the houses were selling for triple the cost,
so it was one of the few times I followed the herd, and sold half my portfolio....
of course I dont really want or need that scenario again, ie the temptation to sell at huge profits.....
I want to build my portfolio up again, acquire more houses at the bottom of the cycle....
apart from a short period July to Oct last year, when I did see some real bargains, I do not believe I could have purchased any of my properties or similar ones cheaper than what they sold for.....
I will remind you I have 30 + years of retirement, that I need to fund, so I am more into adding houses to fund retirement....rather than selling for a short term gain....
they are currently positively geared, on a cash flow basis, so its all sweet
cheers

 

[satanoperca]

have you consider that the double wages (two income family) is the normal for the average family now....so why the emphasis on wages growth...
both seem to rise in line with inflation

This is the norm now, so how is household income growth going to increase, cannot see wages increasing a huge amount over the next coming years.

Unless we start sending our kids out young to earn a wage and thus increase household income.

Cheers

 

[Mofra]

AWOTE has been increasing at approximately double the underlying inflation rate for years now - remembering even inflation-matched returns combined with inflation-reduced debt will increase equity without taking into account rental growth, the figures in strong areas still appear to be making sense.

 

[kincella]

actually the two income families started during world war 2, they enticed the women into the workforce to run the factories and do everything while their men were away at war......so thats been the norm for (war 1939-1945)
roughly 70 years.......
there is a recent trend, some women are unhappy with all the responsiblities of career and family, and are opting for either one or the other , but not combining both....

 

[trainspotter]

Resource towns back on the investment radar

Recent deals in the resources sector have once again shone the spotlight on the investment potential of mining town property markets.

Investors flocked into mining towns during the mining boom, but in recent times investors have shied away from these resource driven investments. The GFC caused demand for Australian resources to abate and commodity prices fell significantly during 2008.

Investing in resource driven markets has always held a higher level of risk than conventional metropolitan property investments. Timing is crucial – buying into a resource driven market early is the key to strong capital gains. Getting out at the right time is also critical.

Perhaps the most pertinent example of mining town risk became evident in the Western Australian town of Ravensthorpe where the BHP operated nickel mine was mothballed and 6,000 jobs were shed. The shutdown virtually eliminated the local economy and only three properties have recorded a sale so far in 2009.

But for those investors who get it right there are some spectacular gains to be had by investing in resource driven areas. Over the five years to the end of 2009 property prices on the Central Pilbara Coast have risen by 230% and rental yields are generally above 9%.

Recently Australia’s largest ever trade deal was struck between the West Australian Gorgon liquefied natural gas (LNG) project and PetroChina. The deal was worth $50b over twenty years – or around $83b if you include the previous deal with PetroChina which was signed in 2007. A week earlier Gorgon signed India up for $20b over 20 years.

These latest agreements may be the sparks that reignite investor interest in Australia’s resource driven property markets. The Gorgon project alone is likely to cost $50b to build and create jobs for 6,000 workers during the peak construction phase of the project.

Thank you RP DATA for the info. Sunshine and Lollipops to rain down from the heavens again.

 

[Buckeroo]

actually the two income families started during world war 2, they enticed the women into the workforce to run the factories and do everything while their men were away at war......so thats been the norm for (war 1939-1945)
roughly 70 years.......
there is a recent trend, some women are unhappy with all the responsiblities of career and family, and are opting for either one or the other , but not combining both....

Interesting point Kincella - I've seen this somewhere as well. I wonder though for the average woman, is this an option with the financial commitments couples now have? I think many may want to give up their career, but can't.

I think we may have to wait for the next generation before a more tradition family appears if it ever does. And with a single income, they will be able to afford very little in terms of an abode

Cheers

 

[kincella]

Buckaroo said...."I think we may have to wait for the next generation before a more tradition family appears if it ever does. And with a single income, they will be able to afford very little in terms of an abode"

you meant 'traditional' family appears....
what ...you dont think after 70 years, that 70 years is not normal or now traditional ?
give me a break....the next generation is not suddenly going to learn to live on one income, after being raised as spoilt kids with everything at their disposal........

the women who are now giving up careers, can afford to....not everyone is a basket case....

all I say is get over it....western society is not going to revert to a single income family....just because some say house prices are too high...
there are houses for sale at prices that a one income family can afford, but those houses are in areas that lack jobs and other services and facilities, that most of us take for granted....
everyone has choices and options in life....they should just do what they have to, stop complaining, and get on with their life

 

[satanoperca]

the women who are now giving up careers, can afford to....not everyone is a basket case....

That's a big statement, do you have any evidence to support such a claim and why the defamatory comment "basket case".

I have a young family and many of my friends do, those mothers/fathers that have chosen to stay home and look after their children have done so not due to a financial decision but from a nurturing perspective and also with two children you need to have a decent income to pay for child care.

This notion that both parents should work full time is not beneficial to rearing of children.

Kincella, while I agree that double income families may have started after WW11 it was not the case in the 70's when I was growing up. It was a rarity for a family to have to full time incomes.

I do not believe that it is possible to ever revert back to a single income family however has is the next boom in property prices going to be supported.

Credit cannot get any cheaper
Households are already on dual incomes

This leaves only wage growth and population increase.

 

[kincella]

most families work due to financial reasons, not by choice, especially when the children are young....so it was interesting to see these 'career' women, in high powered jobs, opt out of their careers to stay home with their young children...on a tv segment, some were having a go at germain greer, they said it was impossible to juggle all their tasks required....with working, career and raising a family....others opted not to have children, a career was more important.....
I used the word basket case because thats what most women are, forced into the workforce for money reasons...to support their families....
the majority cannot afford the choice to stay at home....the women earn less pay then the men, and usually can only work part time whilst children at school or day care
on the other hand there are reasonably wealthy young women who can afford to stay at home, give up careers...
just google it, seen several articles in the past 6 months or so...
oh and I too have friends with young children, with some a stay at home parent, and others juggling the spouse working nights.....its all about choices
at the back of my mind is the notion put forward by many, that house prices will have to come down to meet their targets......lifestyles incomes etc....
well apart from a few minor blips on the charts....house prices have been rising for 70 odd years....whats going to change now ????? and why should it

 

[satanoperca]

To clarify, I am not questioning whether house prices will rise over the long term but rather at what rate they will rise over the next decade and whether this will be the same rate as the past decade.

 

[kincella]

geez, almost gobsmacked...I (hate that ugly word) but just sifted through some blogs following Chris Joyce's response to the CFD trader on business spectator...the debate rages on...the pro's and con's brigade...but some seriously good blogs in there...even an ABS demographer....
just interesting to read blogs from different sites...must have something to do with good moderation imo.....

and I see we have even another property forum site....I am deliberately not adding the link here....
since this site and its sister site are the best available.....
but I would like to encourage some of those bloggers over to these two sites...
unless there is another here who has a bit more time availabe than I

for satanopera.... a history of house prices from 1986 to 2006...two decades and you still have questions ? what don't you believe about those prices, what is going to change those figures for the next 2 decades..... those graphs cover enough political and financial crisis to cover most events.....
oh and barely a blip after this GFC.....
and I have posted that article many times before...surely you read it

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

 

[Buckeroo]

for satanopera.... a history of house prices from 1986 to 2006...two decades and you still have questions ? what don't you believe about those prices, what is going to change those figures for the next 2 decades..... those graphs cover enough political and financial crisis to cover most events.....
oh and barely a blip after this GFC.....
and I have posted that article many times before...surely you read it

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

Gosh Kincella, there is always more than one point of view and history usually proves who is right, so in the end its a waiting game. But the best part of a dinner party with friends is the cut & thrust of 2 opposing arguments.

Now with house prices, bubbles do form & they do burst. Sometimes house prices plummet (as in the US) & sometimes they stagnate for years (as it did here in the 90's) after the bubble bursts.

In my opinion only, which is similar to satanoperca, is that because a lot of people in this country are leveraged in debt, its going to make it ever harder to afford higher priced housing unless they can secure additional income. Remember too, this will also be on the back of increasing interested rates & rising taxes.

If someone could provide me with a viable answer to this enigma (which I can't easily tear down), I would then move to the affirmative side.

and I see we have even another property forum site....I am deliberately not adding the link here....
since this site and its sister site are the best available.....
but I would like to encourage some of those bloggers over to these two sites...
unless there is another here who has a bit more time availabe than I

More brainwashing - I'll leave that to the Government

Cheers

 

[knocker]

To clarify, I am not questioning whether house prices will rise over the long term but rather at what rate they will rise over the next decade and whether this will be the same rate as the past decade.

They will not rise in line with inflation. Full stop. So don't listen to the BS spun by robots et al.

 

[bowseruni]

looking at a house going to auction this wednesday but worried the FHBG fuelled bubble is about to hemorrhage.

happy renting at the moment, but really like this house, unlike the many other polished turds people are trying to offload at the moment.

jump in or save and wait another 6 months?