House prices to keep rising for years

[wayneL]

Who mentioned that its not?
In my case of postings I have suggested and STILL suggest that there are opportunities still out there which Joe Average can take advantage of.

New Homes by Pioneer for $260 a week.
Elizabeth and surrounding areas here in Adelaide for Continued growth for a number of reasons including the new Northern Expressway.

"Investors" will survive well as they will be geared to weather whatever is thrown at them.
Its speculators who will have to show caution.

No one said its easy and no one said people wont get burnt.

There will be some cases where R/E will rise over the next 5 yrs and as Ive stated at 20% down and as close as positively geared as you can get---and its STILL possible---a 3% a year rise is 15% return on your money---now compound that 5 yrs.Let alone add increased rentals over that time at say Inflation and you'll have capital appreciation and passive income.

Ill bet 95% of those in the Stock market wont come close.

All that is contingent upon the economy staying out of recession. There are a stack of assumptions in your argument.

If you hold that view, fine, go invest in those.

But you have to have a macro view. If that view is different, or if a different opportunity is perceived as better, those Adelaide investments might not seem such good idea. Only with the benefit of hindsight can that be judged with total accuracy.

But I'll repeat the point that I was trying to get at. When arguing points, let's declare the playing field, so we don't get these silly discussions where apple are compared against oranges.

As for "who mentioned it's not"? Now you're really taking the piss. Read some of the bulls comments on this thread. Sheesh!

 

[tech/a]

Just the dividends alone from BHP (20% down and the rest borrowed) would do better than you outline here by 300%. And that is not counting the equity growth.

Good idea.
Thought we are talking Property?

 

[chops_a_must]

But you have to have a macro view. If that view is different, or if a different opportunity is perceived as better, those Adelaide investments might not seem such good idea. Only with the benefit of hindsight can that be judged with total accuracy.

I've asked this a few times... and have never got an adequate response. I do genuinely want one.

What has Adelaide and South Australia got going for it, in terms of property?

From an outsider's perspective, long term it is a dud and stuffed. Reducing manufacturing base, reducing jobs, fleeing youth, fleeing education base, rapidly deteriorating environment and water supplies. All points to a lowering of average incomes, vis a vis lower house prices and lower rents available.

The only thing I can see in its future is it aiming for the Florida approach. But, even then, there are heaps of better places in Oz for that, so relatively that's not smart either.

Discuss.

 

[explod]

Good idea.
Thought we are talking Property?

We were but there does not seem to be enough in it. We need to pull all sorts of irrelevant arguments in to try and ramp the thread.

Maybe as some one suggested here last week we need a name change.

 

[wayneL]

I've asked this a few times... and have never got an adequate response. I do genuinely want one.

What has Adelaide and South Australia got going for it, in terms of property?

From an outsider's perspective, long term it is a dud and stuffed. Reducing manufacturing base, reducing jobs, fleeing youth, fleeing education base, rapidly deteriorating environment and water supplies. All points to a lowering of average incomes, vis a vis lower house prices and lower rents available.

The only thing I can see in its future is it aiming for the Florida approach. But, even then, there are heaps of better places in Oz for that, so relatively that's not smart either.

Discuss.

Indeed.

I can pick up 3 bed terraces just over the border around the outskirts of Cardiff with 8 -10% yields. Not a helluva lot going for it either, but at least you get yield... and the tenant pays the rates as well.

 

[xoa]

There will be some cases where R/E will rise over the next 5 yrs and as Ive stated at 20% down and as close as positively geared as you can get---and its STILL possible---a 3% a year rise is 15% return on your money---now compound that 5 yrs.

???

That's some interesting mathematics. You must have gone to the Enron school of property investment.

If a 3% rise equals a 15% return on investment, then by the same logic your annual loss to interest is 45%. Compound that for 5 yrs.

Margin loans (mortgages) amplify both gains and losses.

 

[Kimosabi]

Oops, more facts, I really need to stop doing this...

 

[Kimosabi]

Only allowed six images a post...

It's a real pity these graphs don't include property's on the market...

 

[pepperoni]

Phone call today from a mosman real estate agent begging me to buy the bluest of blue chip properties for a 1990s price. In his words "if there was ever a time to buy a property its now".

The other house I said started in the 1.8s is many weeks later still on the market at 1.7m and offers (1.6s are looking best case scenario). Any market that still sees prices going up is a backwater that is yet to hear about the moon landing

Why would I buy a depreciating low return property when I can buy shares in a bank with a 7% FRANKED dividend yeild and the prospect of almost 100% capital gains back to the 52 week high in the medium term? And then rent a nice fully maintained house for about 3% tops?

And re egents are not a step up from car sales people ... I expect they have about the same education but care salesmen dont pretend the car you are buying will go up in price each year.

 

[pepperoni]

Pepperoni,Numbers,Kris.

Do you really think we give a rats if prices fall 50%?

Probably not ... good luck following the market back down

Personally Ive been in the market forever (for nice shelter not get rich quick schemes) and out for 2 years on a common sense basis earning 7% on average.

 

[Kimosabi]

Phone call today from a mosman real estate agent begging me to buy the bluest of blue chip properties for a 1990s price. In his words "if there was ever a time to buy a property its now".

Another thing I thought about a while ago, is that when the full time real estate agents really start suffering because of lack of sales, they will start advising clients to lower prices just so they can put food on their Louis Vuitton Plates and Fuel in their BMW's...

 

[wayneL]

Another thing I thought about a while ago, is that when the full time real estate agents really start suffering because of lack of sales, they will start advising clients to lower prices just so they can put food on their Louis Vuitton Plates and Fuel in their BMW's...

That's what's happening here.

 

[tech/a]

???

That's some interesting mathematics. You must have gone to the Enron school of property investment.

If a 3% rise equals a 15% return on investment, then by the same logic your annual loss to interest is 45%. Compound that for 5 yrs.

Margin loans (mortgages) amplify both gains and losses.

Rent covers interest. Not to mention that its tax deductable.

$100,000 with 20% down = $20000

3% gain = $3000.

3000/20000 = 15%

Any other areas youd like a hand in?

Probably not ... good luck following the market back down

With remaining properties Freehold or geared max 36% passive income is the achieved goal.With rents rising any down turn is like holding your BHP long term and recieving dividend.

 

[KIWIKARLOS]

Average days on market is 12-14 in sydney and asking to sale price average -5% geez im doin it tough. Who doesn't inflate their expected value at least 5% for the price they will sell.

If you can't find a property in sydney which isn't making a capital gain albiet a smaller one than the last ten years you haven't done your research and shouldn't be buying. : Round my area about 5 kms east of parramatta we have had some record prices in the last two months.

Median house price means NOTHING its not indicative of anything. I would argue that you can't do a broad brush assumption of a deteriorating market untill you understand the demographics and future development plans of an area. Sure some areas are going down and thats because they were going to high to start with and really had nothing to offer. Areas with good services with the right demographics will continue to rise.

 

[xoa]

Rent covers interest.

Maybe before the bubble. Not any more. The average gross rental yield (before costs) is half of the interest rate. Net rental yields (after costs) is less than a third of the interest rate. You're still looking at a ~25% pa loss using your own mathematics. You'll need an imaginative lawyer.

 

[moses]

Real Estate Institute of Victoria chief executive Enzo Raimondo says the string of interest rate rises since last last year and other pressures on household budgets have taken their toll on consumer confidence when it comes to purchasing a home.

"Bidders are very cautious about committing themselves at this point in time. It's a totally different marketplace to this time last year - or any time last year. Buyers are spooked a bit.

"I think this year will be a much more subdued market," Raimondo adds. "Properties that went to market last year exceeded vendor expectations, but this year it will be different. You will find fewer bidders and fewer people committing themselves, and that means prices won't go up as much as people thought."

But that doesn't mean buyers can start looking forward to a fire sale any time soon. "It certainly doesn't mean prices will go backwards, certainly not in the sought-after areas, as the real driver of inner-city suburbs is scarcity of land and that won't change.People will pay a premium for those sorts of properties. It just means prices won't go up every couple of weeks like last year."

Peter Simmons agrees that Melbourne's more prestigious suburbs should be able to weather the oncoming storm so long as the economy remains robust. "Unemployment in these areas is minimal and until middle management starts to be affected in large companies you will find that people are in pretty good situations there."

Elsewhere, prices will reduce but not collapse.

"Everybody wants to buy a bargain, but it's not going to happen," Simmons says.

CommSec chief equities economist Craig James says the strong dynamics of the Australian economy, coupled with demand-and-supply forces, will put a floor under property prices.

"Demand by owner-occupiers is still strong and that's because the job market is still strong, wages are rising, and the population is growing strongly, particularly from skilled migration," he says. "Supply (of housing) is not keeping up, and a key reason is that investors are staying away from the market."

His prognosis? "It's unlikely we will see too much easing of the tight conditions (and that) will keep upward pressure on prices, and upward pressure on rents as well."

 

[moses]

The bottom line for housing prices seems to be:-

a) sentiment has changed, creating downward pressure

b) fundamentals have not changed, maintaining upward pressure

So what happens next? Who wins?

 

[numbercruncher]

Availability and affordability of credit becomes the trump card

 

[numbercruncher]

On that often forgotten subject of credit being the ultimate fundamental, this pops up in todays news ....

THE Commonwealth Bank yesterday suspended its $400 million share buyback to preserve capital and avoid the need to ration lending to customers in the face of the worsening global credit crunch.

With its rival ANZ having warned that the liquidity crisis meant that rationing credit - either through pricing or by amounts lent - was now a real possibility, the Commonwealth called a halt to its buyback to keep the lines of credit open.

http://business.smh.com.au/cba-forced-to-dump-buyback/20080310-1yhs.html

 

[KIWIKARLOS]

http://news.ninemsn.com.au/article.aspx?id=59380

Demand for home loans grew in January