Australian (ASX) Stock Market Forum

House prices to stagnate for 'years'

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hello,

great stat from the ABS, for those who love to idolise

average wealth of home owner 300k, average wealth of renter 50k, check it out

suburbs in melb just had 44% in one year, and probably 10% the previous year,

not everyone is on a pittance,

thankyou

robots
 
numbercruncher said:
I fully appreciate the benefits of home ownership, I merely think we are in Bubble territory and so far from fair value .......


Your parents a point in case, they can rent that house for 400 a week , pay no rates/ins/maint etc put the 450k in an online savings account getting 700 a week in Interest. Including the costs and excluding tax about 400 a week better off. If rates rise by 1pc this year thats another 100 a week or close to.

:2twocents

My debate isnt with home ownership, its with fair value, so many better Investment opportunities around imho.
Click to expand...

wheather house prices are a Bubble or not is yet to be seen,... Time will tell I guess.

Inregards to my Dad holding the funds as cash rather than as his own home,

If he held the funds in a cash account he would only get the interest which would be added to his income pay tax on, also his funds would not have any capital growth invested in cash, so would be slowly eroded by inflation, so it would begin that his rent is increasing year by year but his cash is decreasing with inflation.

But yes as he contiunes into retirement and depletes other sources of income such as his super and other investments then he can fall back onto his capitol locked up in his home to live off.
 
Tysonboss1 said:
wheather house prices are a Bubble or not is yet to be seen,... Time will tell I guess.

Inregards to my Dad holding the funds as cash rather than as his own home,

If he held the funds in a cash account he would only get the interest which would be added to his income pay tax on, also his funds would not have any capital growth invested in cash, so would be slowly eroded by inflation, so it would begin that his rent is increasing year by year but his cash is decreasing with inflation.

But yes as he contiunes into retirement and depletes other sources of income such as his super and other investments then he can fall back onto his capitol locked up in his home to live off.
Click to expand...

In my view the equity in houses are going to be also eroded by inflation. The same money put into Woolworth shares (with Coles needing a lot of fine tuning my Westfarmers) the next few years will see WOW (virtually a monopoly on essential such as food) pays a good dividend as well as equity growth.

Do the sums. And there are a number of other bullet proof stocks like that to give diversification. After the Wall Street plummet BHP will be a good one to pick off the floor too. India and China share 2 thirds of the world population, their expansion will drive BHP to heaven in a few years time.
 
robots said:
hello,

great stat from the ABS, for those who love to idolise

average wealth of home owner 300k, average wealth of renter 50k, check it out

suburbs in melb just had 44% in one year, and probably 10% the previous year,

not everyone is on a pittance,

thankyou

robots
Click to expand...


Which Suburbs went up 44pc in the last year ?
 
numbercruncher said:
A Friend years ago did exactly this, he and his Brother both purchased a House and rented them off each other, thats how bizarre the system is.
Click to expand...

I rent at the moment,... but I also own a fair few properties in brisbane,

I do this because I believe that brisbane has alot more growth than the area of sydney that I need to live in at the moment,...

it doesn't really matter if you rent as long as you have an Anchor in the market.
 
numbercruncher said:
Thats a rather bold assumption thinking average house prices will go up 12pc p/a , Thats hit the level where average House increases in value more than an entire average wage each year, you dont seriously think this can continue into perpetuity do you ?
Click to expand...

Saying that house prices can't go up into the future is like saying a share price can't continue to rise,...

Picture the price of land in sydney CBD,... it was affordable housing as 1/4 acre blocks 200 years ago, but valued at $50million a 1/4 acre block is defiantly not affordable there now,.... But if you build a 60storey apartment building then it does become affordable, so comparing the price of land to incomes doesn't give you a true value.

A 1/4 acre block might seem affordable in the 50's but over time as land becomes increasingly expensive it may be subdivided and two dwellings placed on it,.... then years later 4 town houses,... years later three storey apartment block,.... etc.etc.etc.

http://www.propertyinvesting.com/go/228

This link has a brief explanation of how an area transforms.
 
explod said:
In my view the equity in houses are going to be also eroded by inflation. The same money put into Woolworth shares (with Coles needing a lot of fine tuning my Westfarmers) the next few years will see WOW (virtually a monopoly on essential such as food) pays a good dividend as well as equity growth.

Do the sums. And there are a number of other bullet proof stocks like that to give diversification. After the Wall Street plummet BHP will be a good one to pick off the floor too. India and China share 2 thirds of the world population, their expansion will drive BHP to heaven in a few years time.
Click to expand...

There is no reason you can't invest in stocks and own your own home,..

Using the equity in your home for investing in stocks can mean over the years you can build a sizeable portfoilio.

As for my Dads equity decreasing with inflation I don't think this will happen in his suburb in brisbane.

Continuing my dads current position where he has over $400,000 in equity and no rent to pay,... imagine the portfoilo he could put together using his equity and servicing the loan with the rent he no longer has to pay.
 
The original article was posted in Sept. 2005, quite a lot of it stands true, particularly the petrol and energy costs rising and in some cases house prices stagnating.

I downsized from a larger nice property to a smaller unit with a view in Feb 2003, about 5 years ago. We bought our unit for the location and it's views and to date we still love it. It was a move I really wanted to do because I wanted to free up some capital for stockmarket investment as well.

Over the 5 years our new unit did not go up in price (Sydney). The reason is that my suburb has got several newish high rise units available for sale. This of course doesn't worry us because we have the location and the views we have always wanted. The other big plus is that to rent our unit it would cost us $320 a week. Over 5 years that would have cost us $83,200..... money down the drain I think. Although our unit didn't go up we lived in it rent free all those years and eventually when it does go up and if we do sell all will be capital gains tax free. In the end even with no capital gain, we can not get kicked out, we have good views and location, we are happy and most of all no on going rent.

With the money I had left over from 5 years ago I bought some good stocks and they fund our retirement. The stocks have done well and they are still returning good strong dividends.

In my opinion a house or unit for you to live in where you want and how you like is a great investment for your way of life. But to fund your retirement stocks that pay fully franked dividends are very hard to beat. To put it another way, I would rather put 500K into good stocks that pay 6% fully franked than put it into a 2 bedroom unit and get 6%, less water rates, less tenancy problems, less levy payments, less agents fees, less special levies, less council rates, less repair bills etc ect and then from what you have left YOU WILL PAY TAX, cheers.:eek:
 
Mate try to build a double brick house with hardwood floor boards in sydney now for the same price as a project home. The building price hasn't changed in real dollar terms but now instead of hardwood your using pine. Even structural grade pine pales in comparison to the life, toughness or quality or traditional hardwoods.

Now town houses and some houses have windows that extend all the way to the roof to avoid having to brick over window frames which is tricky and expensive. Aluminium window frames instead of wood and concrete slab construction.

How about copper houses today have much more expansive electrical networks the cost of copper is much much more these days than 20 years ago.

You say building materials are cheaper or the same price I say its because of diminshing quality and economic but inferior substitutes. Project homes are cheap to start with but you start adding things outside the basics and your paying heaps.

Last thing is labour tradies these days are getting paid heaps more for their services then they were 10 years ago I started in the electrical trade, as an apprentice I made $320 a week the same apprentices now make $440 + and thats 6 years.
 
hello,

not much happening on this thread,

have any ASF members bought or sold a place recently and have any experiences to share?

thankyou

robots
 
hello,

great stuff frinkster, hope you have many happy years there

I lived with my brothers (3) at the one house here in melbourne for 21 yrs from birth, great time, driveway cricket, pool, footy etc

thankyou

robots
 
robots said:
hello,

http://data1.reiv.com.au/trendchart/

plug a suburb in, wow, look at Malvern almost double

TAX FREE

thankyou

robots
Click to expand...


Hello, Checked it out, all those Suburbs you mentioned didnt go up 44pc or more in last year as you said, yes Malvern very nice, East St Kilda, Blue chip Blue chip, rich get richer is the nature of the beast.

So pretty much your post was ramping false Information with exception of those 2 suburbs. But thats exactly what I expect from you and is why I asked for link.

Thankyou.

Graph.png


Here is the graph from your site showing average return over 5 years.(barely beats Inflation so fits definition of stagnation to me)
 
numbercruncher said:
Hello, Checked it out, all those Suburbs you mentioned didnt go up 44pc or more in last year as you said, yes Malvern very nice, East St Kilda, Blue chip Blue chip, rich get richer is the nature of the beast.

So pretty much your post was ramping false Information with exception of those 2 suburbs. But thats exactly what I expect from you and is why I asked for link.
Click to expand...

hello,

you got it NC, keep going on your gold futures, and I will take the real estate

the theory hunters will be missing out again

thankyou

robots
 
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