House prices to stagnate for 'years'

[robots]

hello,

good point tysonBOSS, and these people can afford the holding cost required,

thankyou

robots

 

[Tysonboss1]

Where did you get that from? If rentals appreciate at a rate higher than inflation, won't most people will end up homeless eventually

YES, rental yeild does grow faster than inflation,... CPI is probally the minimum that rental yeilds grow by,... but then some years such as this year rental grows by as much as 10%

No they won't be homeless, they will pay the higher rent or scale down,... in cities such as NEW YORK rent control legislation has been enforced so that a certain areas and buildings can not be rented higher than certain levels

so back in the 60's most people lived on 1/4 acre blocks in 4 bedroom houses, slowly the block size shrinks, town houses become more common a great portion of people start living in higher density,

 

[professor_frink]

YES, rental yeild does grow faster than inflation,... CPI is probally the minimum that rental yeilds grow by,... but then some years such as this year rental grows by as much as 10%

No they won't be homeless, they will pay the higher rent or scale down,... in cities such as NEW YORK rent control legislation has been enforced so that a certain areas and buildings can not be rented higher than certain levels

so back in the 60's most people lived on 1/4 acre blocks in 4 bedroom houses, slowly the block size shrinks, town houses become more common a great portion of people start living in higher density,

Oh, I was hoping for an actual link to some facts, not just more speculation. Do you actually have data on this, or are you just assuming that we will be like New York in a few years time?

 

[Tysonboss1]

Oh, I was hoping for an actual link to some facts, not just more speculation. Do you actually have data on this, or are you just assuming that we will be like New York in a few years time?

well inflation has been around 2-3% in recent times but I know rental growth in the areas I have invested in has grown by more that 10%p/a, as a matter of fact most longterm leases have built in rental increases of cpi + a certain %,.... I myself have a rule that every time I renew a tenants lease it goes up by cpi + 1% then after 2 years or when the tenant moves out I readjust back to market rent which has normally increased at a faster rate than my cpi +1% increases.

I bought a rental property in 2002 that was rented for $250p/w, I have not done one piece of renovation work but today it is rented for $385, thats an increase of nearly 65% in 5 years thats a hell of alot more than inflation

I will see if I can get some data though,... I can't believe you think rent only goes up with inflation,

 

[Tysonboss1]

http://www.rta.qld.gov.au/zone_files/Median_Weekly_Rents_Sept_07/sa_3brm_houses.htm

here is a link to a page from the queensland tenancy authority showing rental growth of 3 bedroom houses over the last 3 years,.... you will see the increases easily out pace inflation and wages growth in pretty much every area,

some people on this site seem to find it very difficult to get there head around some of the basic fundamentals of property. If you guys class your selves as investors I think you guys need to skill up a bit on other asset classes other than stocks, maybe you should join a property forum.

 

[numbercruncher]

Checked it out ..... I see rents up a average of $20 p/w each of last three years, about 6 Interest rate rises to boot , so investor actually getting less each week ..... Pay rises last three years = Tons more than $20 per week.


I think we need more convincing, let us know when rents go up 100/200 per week at each yearly rent review and maybe we have a case

 

[Tysonboss1]

Checked it out ..... I see rents up a average of $20 p/w each of last three years, about 6 Interest rate rises to boot , so investor actually getting less each week ..... Pay rises last three years = Tons more than $20 per week.

I think we need more convincing, let us know when rents go up 100/200 per week at each yearly rent review and maybe we have a case

well they actually averaged closer to $40 in the last year which is about 10% more than the inflation rate.

The rents only have to average 1% higher than inflation and it means year by year they are decreasing affordability,

for example if over 20years your salary increases by 5% per year and your rent increases by 10% what do you think will happen,..... A growing % of your take home pay is used to pay the rent,.....

mean while a home owner is still paying his same repayment each week while his wages have been increasing so the amount of his take home pay used for his mortgatage is decreasing

interest rates are a completely differant subject over the 30years of your loan they will go up and down so it balances out,.... and interest rates cross over all asset classes any way, so if the renter had a leveraged share portfolio he would also feel the burn.

 

[Tysonboss1]

also the houses that I mentioned earlier that I bought in 2002 are now positive geared meaning the the weekly rent is enough to pay all the expences even with the rate rises. and I have just switched to 3 year fixed loans so I have nothing to be worried about if the interest rates continue to increase

 

[wayneL]

YES, rental yeild does grow faster than inflation,... CPI is probally the minimum that rental yeilds grow by,... but then some years such as this year rental grows by as much as 10%

Handy thing, Excel.

It will show that this cannot be possible over any reasonably lengthy period of time. In fact, in this country, rents are cheaper (adjusted for inflation) than they were ten years ago.

The inevitable conclusion is that rents may grow slower than inflation in some periods.

No concrete figures either, but could probably acquire them if pressed.

 

[theasxgorilla]

Checked it out ..... I see rents up a average of $20 p/w each of last three years, about 6 Interest rate rises to boot , so investor actually getting less each week ..... Pay rises last three years = Tons more than $20 per week.

And there in lies the insight...we analyse this that and the other about property and shares and economics and underpinning the lot down-under is the glarringly obvious fact that Australia is becoming an increasingly wealthy nation.

Every time we dig up whatever it is we have in the ground and sell it at record high commodity prices and buy our imports with a circa 90c US exchange rate we add to our equity. Who is the richest country in the world per capita (behind little Luxembourg)...it's Norway! Is it population growth? Yeah right. The weather? Pwft, please. Favourable tax laws encouraging multinats to setup shop a la Ireland...ho ho ho.

It's oil.

Look at where gold was at the turn of the century, then look where it is now (among other commodity prices that were in a so-called cyclical low circa 2000), and I'm sure you'll find as I have that it's not difficult to comprehend WHY property prices are not 'stagnating for years'.

Unfortunately we're not like Norway in our social, political and taxation policies so not everyone gets to live in a nice house, drive two late model cars, own a boat and a summer holiday cottage by a lake or fjord and take several overseas holidays every year.

 

[ithatheekret]

If you invested into retail or industrial properties , wouldn't you have the advantage of being able to link any increases to each annual CPI rate ?


.... and write it into the lease ........

 

[wayneL]

If you invested into retail or industrial properties , wouldn't you have the advantage of being able to link any increases to each annual CPI rate ?


.... and write it into the lease ........

I'd much prefer rent increases at the REAL inflation rate . CPI only would put you behind the eight ball after a while.

 

[WaySolid]

Thought there was some excellent property in Trondheim and other Norwegian places when I looked in 05 ASXGorilla, would like to retire them some day when the boring nature of the place wouldn't kill me Or one of those little islands as you approach Stockholm from the water, nice.

Stralians Increasingly wealthy, good point. I despair now and then when I think what we will do when the rocks are gone, but it's a trend that you wouldn't be betting against continuing at the moment.

 

[theasxgorilla]

Thought there was some excellent property in Trondheim and other Norwegian places when I looked in 05 ASXGorilla, would like to retire them some day when the boring nature of the place wouldn't kill me Or one of those little islands as you approach Stockholm from the water, nice.

Stralians Increasingly wealthy, good point. I despair now and then when I think what we will do when the rocks are gone, but it's a trend that you wouldn't be betting against continuing at the moment.

The fact that government debt is very low and compulsory super has been in place for what, 15 years? And has only become more attractive as in investment vehicle over those years, suggests to me that the boomer generation will manage very well. That we aren't using this increasing wealth to solve problems like proper motorway and rail infrastructure in our super cities (Syd and Melb) along with the water/irrigation issue and stupid political BS like Telstra crippling broadband for business & consumers, suggests that we are squandering a good deal of the opportunity to build efficiencies and a much better country.

Not to mention that the houses we've built and inflated the prices of are of such a low build quality compared with what is possible. We'll be forced to tear many of them down and build again in 30 years.

 

[wayneL]

The fact that government debt is very low and compulsory super has been in place for what, 15 years? And has only become more attractive as in investment vehicle over those years, suggests to me that the boomer generation will manage very well. That we aren't using this increasing wealth to solve problems like proper motorway and rail infrastructure in our super cities (Syd and Melb) along with the water/irrigation issue and stupid political BS like Telstra crippling broadband for business & consumers, suggests that we are squandering a good deal of the opportunity to build efficiencies and a much better country.

Not to mention that the houses we've built and inflated the prices of are of such a low build quality compared with what is possible. We'll be forced to tear many of them down and build again in 30 years.

Buy that man a beer! Spot on.

 

[professor_frink]

I will see if I can get some data though,... I can't believe you think rent only goes up with inflation,

Why wouldn't I? I have never seen any data that says rental increases above the rate of inflation is a long term trend. I would agree that it's most definitely been the case in Sydney from what I've seen over the past 2-3 years(I don't live there but have relatives that do), but does that mean it will continue indefinitely, or has been the case over the last 30 years? If it were the case, then surely this thread would have been littered with references to it from the various property bulls trying to make their case.

http://www.rta.qld.gov.au/zone_files/Median_Weekly_Rents_Sept_07/sa_3brm_houses.htm

here is a link to a page from the queensland tenancy authority showing rental growth of 3 bedroom houses over the last 3 years,.... you will see the increases easily out pace inflation and wages growth in pretty much every area,

thanks for that, but I'm still not convinced. 3 years doesn't equate to a long term trend IMO.

some people on this site seem to find it very difficult to get there head around some of the basic fundamentals of property. If you guys class your selves as investors I think you guys need to skill up a bit on other asset classes other than stocks, maybe you should join a property forum.

Don't worry, I don't classify myself as an investor. I haven't bought a stock in years

 

[Tysonboss1]

thanks for that, but I'm still not convinced. 3 years doesn't equate to a long term trend IMO.

http://www.rta.qld.gov.au/zone_files/Stats_September_2004/sa_3_brm_houses.htm

well here is the the 3 years before the last chart,... again the rental increase is faster than inflation,

House prices have always increased faster than inflation so it is only natural that rents will also increase faster than inflation,..

even if though there are years were the rent might not increase or increase on par with inflation the fact that the 7 year property cycle generally has about 5years where it increases at over twice the rate of inflation makes up for the down time.

 

[Tysonboss1]

If you invested into retail or industrial properties , wouldn't you have the advantage of being able to link any increases to each annual CPI rate ?


.... and write it into the lease ........

Yes,... and most generally say somthing along the lines of "cpi + 2%" or "5% rental increase or cpi which ever is larger"

 

[robots]

hello,

great reading

http://www.theage.com.au/news/national/housing-shortage-to-worsen/2007/11/27/1196036892774.html

some guy blames 50% CGT discount for housing afforability,

its name your price, all the out of work IT guys should get some paint brushes or overalls on and hit the building sites, might help ease the crisis,

thankyou

robots

 

[numbercruncher]

Hi Robots,

Your mates up in Brisbane have the solution ...

LANDLORDS are carving up houses in Brisbane's south to house up to a dozen international students who often share one kitchen and bathroom.

According to residents, one house had its kitchen removed and replaced with more sleeping quarters while students were given a barbecue to cook on.

Another had a portaloo put in the backyard.

MacGregor resident Alan Druery, said his residents' action group had given the council until the March elections to fix the student boarding house problem in Brisbane's south.

"Otherwise it will be reflected in the ballot boxes," Mr Druery said.

It is not an idle threat. Petitions have gathered more than 1300 signatures and Neighborhood Watch groups are spinning off their own action groups to protect neighbourhoods from overcrowding.

The Courier-Mail found one house on Kessels Rd that had been renovated into 10 separate rooms.

It has one kitchen and up to 12 students, mostly from India, who pay about $100 a week each for a house that would normally fetch about $300 a week.

It earns up to $40,000 a year in rent and is on the market for more than $500,000.

http://www.news.com.au/couriermail/story/0,23739,22839431-3102,00.html