House prices to stagnate for 'years'

[theasxgorilla]

PPOR might be a different story, dependinhg on circumstances.

I think so, you have to live somewhere and I think it's fair to say you are burying your living expenses in a PPOR. So a PPOR can be a better investment, not least because of the tax concessions, but also because you were going to have to pay some form of outgoings to put a roof over your head. I've never owned a property in Aust as a buy-to-let as I reckon it's a mugs game. Hope has always been too large of a factor, and I don't fancy having to hold for 10 years if I timed things poorly. But maybe one day, like bottom of the next cycle, I might go and by a handful of buy-to-letters and hatch a plan to hold them to 15-20. For now, buy-fix-sell, buy-fix-sell etc.

ASX.G

 

[numbercruncher]

Is there still money to be made in buy-fix-sell ? Im thinking only just and thats if you do all the work yourself on top of your regular employment, its actually marginally cheaper to build a new house where I reside than second hand. But I guess the profit is in the price you pay not as much the price you sell.

And some new legislation in the pipes will make it cheaper again.

Industry groups have applauded a proposal to put a lid on council infrastructure charges that could wipe up to $40,000 off the cost of a new home in Brisbane.

http://www.brisbanetimes.com.au/news/queensland/save-40000-off-your-new-home/2008/02/01/1201801011652.html

 

[robots]

hello,

in 1998 when i purchased my first unit,

I bought for 159k and rent was 180/wk, which works at 5.9% gross

today the 2-bedders are going for around 350/wk to rent, with one coming up for auction I expect it to go around 400k, now thats 4.6% gross,

now thats a 1.3% difference in this block, with the current rents only recently (past 12mths) increasing quite well,

so are things really that out of wak?

thankyou

robots

 

[numbercruncher]

Is your unit you bought in 98 a 2 bedder ?


In 1998 the RBA rate was 4.75, its now increased by 50pc to 7pc and almost guaranteed to go higher. So in 98 your rental return was 30pc higher (on PP) and Interest rates were 30pc+ cheaper.

Nice try

 

[robots]

hello,

yes 2-bedder,

but the retail rate is what I get and the "profit margin" has decreased over this time so I think in 98 i was on around 6.75% now on 8.49% (which includes the latest rise)

so not much difference

thankyou

robots

 

[numbercruncher]

CBA is actually 8.97.

Anyway its a solid 2pc or 8k p/a on 400k or 160 p/w minus that from the 350 p/w and the new buyer/investor? is making 10 p/w more than you did in 98 when you got 180pw rent, and I bet thats eaten by higher council rates and we havnt even talked Inflation yet.

so yes HUGE difference from 98!

 

[theasxgorilla]

Is there still money to be made in buy-fix-sell ? Im thinking only just and thats if you do all the work yourself on top of your regular employment, its actually marginally cheaper to build a new house where I reside than second hand. But I guess the profit is in the price you pay not as much the price you sell.

As you touch on, it's very dependent upon the area and the type of property. Renovate a box without any character or charm and you sacrifice the potential synergy from renovating something that has architectural appeal. Renovate a place in a homogenous area and you will only ever get so much for it, the other like properties selling nearby will anchor your property.

Pay a labourer to do the work and you pay his tax. Not to mention his margins on materials.

Buy a place that is too low priced and your point of over-capitalisation is too close. Some areas just don't work with buy-fix-sell for this very reason. A 30k reno on a 200k house just doesn't work. Use the same materials in a 400k place and you might have something. If the house is too big, your material and labour costs go up...so reno'ing a 4br house on a 1/4 acre in a middle class suburb probably won't work.

Some areas don't work because the people living there could not care less about style or design and won't pay a premium for it in a renovation.

Then of course you have the timing of the market. Buying during a flat spot or a dip and selling just prior to, at, or after a peak is best. Where are we at just now...lets just say I'm keen to get back into Aust but am waiting for a flat spot or a dip.


ASX.G

 

[robots]

CBA is actually 8.97.

Anyway its a solid 2pc or 8k p/a on 400k or 160 p/w minus that from the 350 p/w and the new buyer/investor? is making 10 p/w more than you did in 98 when you got 180pw rent, and I bet thats eaten by higher council rates and we havnt even talked Inflation yet.

so yes HUGE difference from 98!

hello,

you should look at the CBA website a little closer and you will see the Base Economiser Rate

can we talk cap growth?

roll on 08, another year will pass and not much will change for the handout crew,

thankyou

robots

 

[wayneL]

As you touch on, it's very dependent upon the area and the type of property. Renovate a box without any character or charm and you sacrifice the potential synergy from renovating something that has architectural appeal. Renovate a place in a homogenous area and you will only ever get so much for it, the other like properties selling nearby will anchor your property.

Pay a labourer to do the work and you pay his tax. Not to mention his margins on materials.

Buy a place that is too low priced and your point of over-capitalisation is too close. Some areas just don't work with buy-fix-sell for this very reason. A 30k reno on a 200k house just doesn't work. Use the same materials in a 400k place and you might have something. If the house is too big, your material and labour costs go up...so reno'ing a 4br house on a 1/4 acre in a middle class suburb probably won't work.

Some areas don't work because the people living there could not care less about style or design and won't pay a premium for it in a renovation.

Then of course you have the timing of the market. Buying during a flat spot or a dip and selling just prior to, at, or after a peak is best. Where are we at just now...lets just say I'm keen to get back into Aust but am waiting for a flat spot or a dip.


ASX.G

Great comments and agree. I'm waiting for renoing to go a bit out of favour so I can get fixer uppers at enough of a discount. You almost pay a premium for sh!tboxes because of the competition from renovators over here.

AS ever, the numbers have to add up, plus the factors you mention.

It's not yet though, even with the slump thus far.

 

[xoa]

hello,

yes sparkling cap growth is where it is at and has occurred in Bris for big Tyson The BOSS,

superb 20% for brissy,

so lets see you get your nice little deposit and put it into a term deposit and get a great 7.2% on the deposit,

Tyson The BOSS gets his deposit and put's it into his prop and gets to control a nice place (350k or whatever) and gets some nice 20% on his ASSET he is controlling

robots

You don't understand the cardinal rule of speculation - previous results do not guarantee future results. If you do want to speculate on capital growth (in anything from stocks to property), you're supposed to buy low, not at record highs.

A person who makes a new investment in Brisbane is very likely to start encountering Perth rates of capital growth - 0.6% pa. Or even a capital loss, given how much prices have inflated in recent years, and how low rental returns are.

 

[Tysonboss1]

A person who makes a new investment in Brisbane is very likely to start encountering Perth rates of capital growth - 0.6% pa. Or even a capital loss, given how much prices have inflated in recent years, and how low rental returns are.

Not likly,.... I am pretty confident my markets will be achieving atleast 10% this year.

 

[robots]

hello,

heard it all before xao,

sept 05 many were claiming "property to stagnate for years" but many have seen spectacular returns,

ASXGman hit on it before that quite simply getting a PPOR is an investment in itself for many and an extremely passive one at that,

"supposed to buy low" maybe that day will never occur, what then?

goodluck

thankyou

robots

 

[xoa]

hello,

heard it all before xao,

Did you hear it in 1987 too? If you think that 20% pa returns are going to continue forever, or are guaranteed to even last another year, then you are deluded.

You're essentially rolling a die and betting on an even number. You might get lucky, but you're just as likely not to.

 

[robots]

hello,

even the latest ANZ property outlook spoke about the time in 87 and commented that for that year as an average property grew 0.6%,

and that is the time when it was supposed to have crashed, it didnt drop 10%, 20% or 40%,

i know tech has eluded to this in many of his posts,

I think many are playing a serious game by not being involved in property, even just by having a PPOR,

it is still widely recognised that for many this is their only form of investment,

thankyou

robots

 

[xoa]

hello,

even the latest ANZ property outlook spoke about the time in 87 and commented that for that year as an average property grew 0.6%

robots

The banks won't tell you that it "grew" at about that rate for the next decade. Anything less than inflation is a real loss.

Lenders have a vested interest in trying to lend people money, you know.

 

[robots]

hello,

man, people need to get over inflation, real terms, this and that

it is just like the sun comes up and goes down every day, it is a non-event

thankyou

robots

 

[Bill M]

Some figures out today. Seems like property hasn't stagnated at all.

Source here

 

[Tysonboss1]

Did you hear it in 1987 too? If you think that 20% pa returns are going to continue forever, or are guaranteed to even last another year, then you are deluded.

You're essentially rolling a die and betting on an even number. You might get lucky, but you're just as likely not to.

I don't expect 20% returns to last forever,.... I expect that on average the markets I have invested in to average above 10%pa return.

offcoase some years will have growth alot higher than that at 20-30%pa,...
So offcoarse some years will be less than 10% or perhaps slightly negative, but on average 10% is achieveable.

But what your saying about brisbane going backwards this year is not right, I am saying is that this year 2008 brisbane will grow by atleast 10%.

Remember Brisbane is the 2nd cheapest capital city in australia but has the best market fundamentals at the moment.

 

[Mofra]

man, people need to get over inflation, real terms, this and that

it is just like the sun comes up and goes down every day, it is a non-event

Inflation & real terms non events?
As I splutter on my water here, do you honestly, seriously believe that?

 

[Judd]

Inflation & real terms non events?
As I splutter on my water here, do you honestly, seriously believe that?

Nah, cause he/she doesn't. If bot did then he'd be able to prove it by buying the 9 Feb 2008 Weekend Australian for $0.80c when it's sale price is marked at $2.20.