House prices to keep rising for years

[robots]

hello,

i pay zip tax on my home,

and even with the interest rate rises, rates, bc fee's my outgoings are below what the property would rent for, awesome stuff

it has taken 7 yrs to get to that position with the gap getting closer each year

and with rents heading up and up the equation is looking even better

thankyou

robots

 

[Judd]

Hmmmm, bot. Trouble is your home does not generate any income and you incur costs to hold. Therefore it is technically a liability as opposed to an asset.

And don't try and start arguing from the "imputation of rent" proposition as that is a load of crock and only one obscure country somewhere in Europe attempted to raise tax on that basis, ie the UK.

If you wish to discuss rental/investment property OK just don't mix it up with the concept of home ownership.

 

[robots]

hello,

thanks for the opinion piece will keep it in mind

thankyou

robots

 

[theasxgorilla]

If you wish to discuss rental/investment property OK just don't mix it up with the concept of home ownership.

Can't one buy a house, see it appreciate, sell it for a tax-free cap gain and move to another house, repeat process...thereby achieving home ownership and the benefit of canny investment? This "house costs money therefore it's a liability" thinking is nice and all, but I prefer to see it as burying you living costs. We all have to pay to put a roof over our heads...if you can 'make of thy dwelling a profitable investment...', well then.

And if you didn't/couldn't sell it, wouldn't it be important to know if you could rent out said property for an amount sufficient to cover the outgoings?

I thought robots was commenting on how long it took him to get to a position where his property could be rented without it costing him money?

Can an investment strategy exist where one buys a property and lives in it until it reaches a cashflow goal? eg. becomes at least cashflow neutral. And then perhaps you do the same again, and again, and again? I would say yes. IMHO you can mix and match ideas and get creative as necessary. All that really matters is how it contributes to the plan.

I would have thought that a better approach would be to say, "that's interesting robots, what's your plan?"

 

[wayneL]

IIRC, somebody wanted evidence of price falls in Londinium.

Voila!

Straight from the VI's mouth.

http://www.londonstockexchange.com/...e=basic&WBCMODE=presentati?ArticleID=18553683

SNIP:

Mark Anderson of Hamptons said that he perceives that prices in the capital have already slumped by 15 per cent, having hit "unsustainable levels" at its peak during last summer.

 

[Tysonboss1]

Hmmmm, bot. Trouble is your home does not generate any income and you incur costs to hold. Therefore it is technically a liability as opposed to an asset.

And don't try and start arguing from the "imputation of rent" proposition as that is a load of crock and only one obscure country somewhere in Europe attempted to raise tax on that basis, ie the UK.

If you wish to discuss rental/investment property OK just don't mix it up with the concept of home ownership.

The cost of home ownership may be a liability,.... But so is the rent you would have to pay,...

owning your own home offsets rent especially as the years go by and the cost of ownship decreases and the costs of renting increases.

 

[Tysonboss1]

All investment strategies can be compared. The advantage of fixed interest, is that you're investing your own money, not renting somebody else's. You don't need to worry about it until it matures. And there's no repair bills, stamp duty, council rates, legal fees or agent commissions. I pay little tax on the interest I earn.

Property in vesting is a longterm stratergy,.... No one should invest in property for the short term.

If you are looking for a 1-2 year investment then cash wins, But if you are looking for a 10 year investment then property wins.

If thre were 2 people each with $250,000 to invest and one went for cash and one went for property then the peron investingin property woudbe better of after 10 years,

The person who invested in cash would only get 8% interest, which they have to pay income tax on every year and their capital will be eroded by inflation,...

The person who invested in property may only get a 4% (after maintenance and rates) but this income should rise year by year with inflation,... and their capital (being the value of the property) has a great chance of rising with inflation too therefore protecting the value of the capital, they also get a 50% discount on this capital gain meaning half the gain is tax free,.... secondly they don't have to pay the tax on the gain till they sell which means there gain is compounded year by year before it is finally taxed,...

Secondly, apart from the inflation related growth of return and capital,... if you have invested in an area of a city that has a good chance growing over the years, demand or your property will increase and you should see your property return and capital growth grow faster than inflation which will generate wealth for you.

 

[gfresh]

Interest rates in cash/term deposits won't be 8% forever either..

Cash is only compelling during periods of uncertainty. That time is probably now, but it won't be too long before that passes, and cash will be flooding back into sharemarkets and property alike as the rates drop. If anything it will be nirvana for those that thought "well I survived a couple of years at 9.5%, 6.5% yehaw.. load me up".. and we'll get a bigger credit crisis next time.

Even if property prices did decrease for a couple of years, any losses would more than likely be reversed in the upswing after that. I don't know why people are so worried to be honest if they are really in it for a long term investment.

The amount of "forsale signs" in my beachside area suggests they're only in it for the quick flick. Looking at what the houses are going for, and their value even 2 years ago, big profits have already been made. People are just taking their profit off the table. Even if prices did drop 25% in my area, these people are still going to be laughing.

 

[robots]

hello,

in melbourne we can contact the State Revenue Office or other private companies to find past sale prices of houses/units,

it is very hard to find an example of a single home/unit within a 12mth period, you may get one as you get closer to three or five years ownership,

thankyou

robots

 

[theasxgorilla]

Property in vesting is a longterm stratergy,.... No one should invest in property for the short term.

If you are looking for a 1-2 year investment then cash wins, But if you are looking for a 10 year investment then property wins.

I beg to differ. Sounds like I know something, or know how to do something that you don't.

 

[Tysonboss1]

I beg to differ. Sounds like I know something, or know how to do something that you don't.

what do you mean,...

 

[wayneL]

I beg to differ. Sounds like I know something, or know how to do something that you don't.

I know what you mean... and it can work like a bloody beauty. Just gotta stay smart and watch the cycles. I've seen some crash and burn by getting cocky at the wrong time, after making squillions.

FWIW

 

[theasxgorilla]

what do you mean,...

Have you been living under a rock for the last decade?

Surely you've known of occasions where people have bought property and sold it a couple of years later for a profit that can't compare with cash.

 

[gfresh]

Here is an example for the bulls..

http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=83290999&s=qld&tm=1208421423

Initially this property near me was on the market for $1.6M .. I thought they must be suffering hard to drop it back to $1.275M. I think I mentioned that on here.. Little did I know..

Jump across to http://www.onthehouse.com.au/sold_info/ (useful btw for free NSW & QLD reports)

14 LORD ST $748,000 19-09-2005 491 DWELLING

Suffering? hardly! $500k profit in 2.5years for the owner.. even if they get a "measly" $1m they're well in the bank..

 

[wayneL]

Here is an example for the bulls..

http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=83290999&s=qld&tm=1208421423

Initially this property near me was on the market for $1.6M .. I thought they must be suffering hard to drop it back to $1.275M. I think I mentioned that on here.. Little did I know..

Jump across to http://www.onthehouse.com.au/sold_info/ (useful btw for free NSW & QLD reports)

14 LORD ST $748,000 19-09-2005 491 DWELLING

Suffering? hardly! $500k profit in 2.5years for the owner.. even if they get a "measly" $1m they're well in the bank..

On the face of it that looks good, and they could be quids in. But there are sometimes a number of non-transparent factors.

* transaction and holding costs above rental value.
* renovations and repairs
* MEW on bling and other nonsense

etc.

Even so, 60 odd % gross profit is not too shabby... if they get it.

 

[theasxgorilla]

Initially this property near me was on the market for $1.6M .. I thought they must be suffering hard to drop it back to $1.275M. I think I mentioned that on here.. Little did I know..

An all too common misconception by property bears, "oh they must be in pain, the value of their house has dropped x%, boo hoo". The Swedes have a good term for it, skadaglad...meaning, "wound happy"...people who find glee in other peoples injury.

Little do they know...house price went down, but bank account still went up...how is it so???

 

[Tysonboss1]

Surely you've known of occasions where people have bought property and sold it a couple of years later for a profit that can't compare with cash.

Yes, but my example was based a bare minimum of capital growth based on inflation,

I was stating that even if property only increased by inflation then it would still beat cash overe time, ofcourse during a boom any fool can make money buying and selling but these ae the peope often caught with there pants down.

Yes it is possible to make money flipping properties,... But the average mum and dad investor that aren't really skilled in property buying a trophey property in flat or slow market will have to hold onto the property for the long term to gain the benefit, because of the high entry and exit cost.

I wouldn't recomend any novice enter the property market with the idea of buying a property and holding it for a few months and hoping to sell it at a profit, yes it can happn but it's not the way to do it unless you really know what you are doing.

 

[wayneL]

An all too common misconception by property bears, "oh they must be in pain, the value of their house has dropped x%, boo hoo". The Swedes have a good term for it, skadaglad...meaning, "wound happy"...people who find glee in other peoples injury.

Little do they know...house price went down, but bank account still went up...how is it so???

"Schadenfreude" is the English word for it..... ummmm, well the one we borrowed anyway.

 

[theasxgorilla]

"Schadenfreude" is the English word for it..... ummmm, well the one we borrowed anyway.

Present company discluded, I have found the word sadly appropriate these last couple of years, in many countries. Property has been able to create such extreme changes in wealth levels between people who were previously comparible in wealth and potential.

 

[wayneL]

An all too common misconception by property bears, "oh they must be in pain, the value of their house has dropped x%, boo hoo". The Swedes have a good term for it, skadaglad...meaning, "wound happy"...people who find glee in other peoples injury.

Little do they know...house price went down, but bank account still went up...how is it so???

I don't know that it's skadaglad or schadenfreude all the time. Certainly not in a blanket categorization of "property bears".

There are cases i hear about every day here where folks have made heaps on property in gross dollars, but the property slump still gets them (read some of them)

e.g. There was the case of a couple in Birmingham recently on TV; they bought their ex council terrace for £30,000 odd. Peak valuation was £170,000 last year.

But guess what? They MEWed to the point where their debt was ~£150,000... renos, new kitchen, bathroom etc, cars.

Husband loses his job and fell into arrears. No worries, we'll sell and get the equity remaining and start again once employment situation sorted....

Valuation is now £140,000 and they can't even sell it at that.... got repossessed and lost everything.

Now you may think they were incredibly stupid, and they were, but there are lots of people who've done this with full encouragement from the banks/ mortgage providers. Even "smart" people.

There are a few malcontented misanthropes who enjoy seeing this, but most bears have been cautioning about this sort of situation for a while, while suffering derision from certain property bulls.

The cognitively biased breed we are, view derision from bulls as OK but view anecdotes from bears as doom-mongering, schadenfreude, heretical etc.