House prices to stagnate for 'years'

explod · 10 February 2008

IFocus said:
Before this current boom / bubble I carried out research on suburbs around around Perth to see what the average growth rates were over the previous 30 years and how much they varied. No big deal as the data is easily available.

It became very clear where to invest and where not to based on that information alone. There were many areas that averaged 10% PA and greater over that 30 year period In WA that is quite a few boom and bust periods, over here we know how to cause banks to default.

There was plenty of other data available to see the trends that had been, were existing and relativity easy to project out for at 2 to 3 years or more.

I also came across plenty of long term investors that had made fortunes out of investing in property over 30 years or more. When I say plenty I am talking 100 or more people. When trying to find traders of the same magnitude I found 3 or 4.

I don't know of any other asset class where is is so much data and history available as real estate.

Will house prices to stagnate for years?

There will be areas that will certainly stagnate look at the historical data there always has been always will be except in booms which for some illogical reason some believe thats normal.

Like wise there will always be areas both locality and types that will continue to rise.

Extraordinarily it requires some mentoring, miles of research, and plenty of time and effort.

My advice to any would be investor is forget the stock market, solely concentrate on property based on probability your change of success are far greater IMHO.

Focus

You make some good points but to say forget the stock market is an error for the fundamental of diversity. I brought my first property in 1968 and the journey has been very good. In the last 5 years I have felt (wrong to some extent) that the big gains in property (like from 1970 to 76) are not there.

In the last few years I have averaged around 70% a year on the stockmarket with my effort being, good mid chip stocks for growth instead of yield. Like you I do the trend research. With the stock market changing conditions I find easier to detect and stocks can be disposed of at the click of a mouse compared with property, minimum a couple of months.

My last good property venture was two choice blocks of land with sea views, held them for a little more than 12 months and almost doubled my money. That was in 02/03. The same blocks have not moved in price since as they are a bit far from town and a few too many of them.

Good properties in the right place no worries but I will have the stock market at the moment by a mile.

Of course I am talking copper (in global short supply) and gold (going up as a hedge against weakening currencies) with stocks like Oxiana, Incetec Pivot, Lihir Gold, Wannambool Cheese and Butter and I think Wollies for food will be kind with some dividends thrown in.

robots · 10 February 2008

xoa said:
Which areas are these? And is this 10% adjusted for inflation? I seriously doubt it

hello,

i wonder if it is on the initial investment amount as well XAO?

thankyou

robots

xoa · 10 February 2008

IFocus said:
Before this current boom / bubble I carried out research on suburbs around around Perth to see what the average growth rates were over the previous 30 years and how much they varied. No big deal as the data is easily available.

It became very clear where to invest and where not to based on that information alone. There were many areas that averaged 10% PA and greater over that 30 year period In WA that is quite a few boom and bust periods, over here we know how to cause banks to default.

Which areas are these? And is this 10% adjusted for inflation? I seriously doubt it.

Australians are indebted to the hilt. Our borrowing capacity is almost exhausted. The mortgage burden was bad in 2005, and it's at critical mass now. Short of selling their kidneys, I don't see how buyers can fund continued double-digit increases.

I'm not saying all property is a bad investment. Internationally there are some good opportunities. Look at Asia - their incomes are rising quickly (15% pa in most of SE Asia), and they can afford to take on debt.

numbercruncher · 10 February 2008

xoa said:
I'm not saying all property is a bad investment. Internationally there are some good opportunities. Look at Asia - their incomes are rising quickly, and they've been so busy lending money to us, they hardly know the meaning of debt themselves.

I wonder if it actually effects our skilled Immigration numbers, I mean someone thinking of moving here and sees that realestate is over double their home country and Interest rates also way higher could make them think twice ?

Asia isnt immune from personal Debt I understand that China has a pretty serious property bubble happening

xoa · 10 February 2008

numbercruncher said:
I wonder if it actually effects our skilled Immigration numbers, I mean someone thinking of moving here and sees that realestate is over double their home country and Interest rates also way higher could make them think twice ?

It might.. I mean, if a guy from China has a choice between buying a loft in Manhattan, or some random townhouse in Melbourne with the same money, I think he'll choose the former.

numbercruncher said:
Asia isnt immune from personal Debt I understand that China has a pretty serious property bubble happening

I'm not as worried about the situation in China. They save much more than us, it's a part of their culture. They're more eager to loan money to us, than spend it themselves.

Regular 10-20% pa gains in Shanghai or Beijing are more sustainable, because people's incomes are rising at about the same rate.

robots · 10 February 2008

hello,

also when he/she buys the manhattan loft he/she will get an uzi, ak47, 9mm, magnum, couple of rambo knives, humvee with bullet proof windows and machine gun on the back

thankyou

robots

Judd · 10 February 2008

xoa said:
I'm not saying all property is a bad investment.

I find the proposition that your home is an investment rather intriguing (and xoa, I am not saying that is what you said or even implied. Just using your quote as a reference point for my thoughts.)

Why should your home even be considered an investment? You buy a house in order to make it your home. If you wish to treat it as an investment then you need to take into account input costs, ie interest paid, rates, insurance, repairs and maintenance, and renovations, then discount that by inflation or the 10 year bond rate or how many nuts your monkey can gather in one hour. Whatever. But, unlike one infamous poster, you cannot just say "Here is how much I paid for it and here is how much I got got it" and just say "Wow, look at this CGT free profit."

Once you take that stance, you are classifying the property as an investment and need to take account of the reality (pun intended) that any "profit" has been devalued by time (inflation) and holding costs in order to quantify the actual real return.

Owning you own home is, in my view, one of the best feelings you can get. You put the key in the door, walk inside, grab a beer, sit down and watch a DVD or listen to your favorite music and go "Jees, I'm home." It's an intangible. But it is not an investment akin to owning property for commercial purposes.

See you all next week. Maybe.

xoa · 10 February 2008

robots said:
hello,

also when he/she buys the manhattan loft he/she will get an uzi, ak47, 9mm, magnum, couple of rambo knives, humvee with bullet proof windows and machine gun on the back

thankyou

robots

Manhattan is a very safe place to live. It's true that yuppies and Wall Street analysts roam the streets, but I promise they're practically harmless.

xoa · 10 February 2008

Judd said:
I find the proposition that your home is an investment rather intriguing (and xoa, I am not saying that is what you said or even implied. Just using your quote as a reference point for my thoughts.)
.

Most people here are talking about property in investment terms. But even prospective owner-occupiers are seriously questioning the financial sense of buying now. Why buy now, if your dream home could be $50,000 cheaper a year from now?

robots · 10 February 2008

Judd said:
I find the proposition that your home is an investment rather intriguing (and xoa, I am not saying that is what you said or even implied. Just using your quote as a reference point for my thoughts.)

Why should your home even be considered an investment? You buy a house in order to make it your home. If you wish to treat it as an investment then you need to take into account input costs, ie interest paid, rates, insurance, repairs and maintenance, and renovations, then discount that by inflation or the 10 year bond rate or how many nuts your monkey can gather in one hour. Whatever. But, unlike one infamous poster, you cannot just say "Here is how much I paid for it and here is how much I got got it" and just say "Wow, look at this CGT free profit."

Once you take that stance, you are classifying the property as an investment and need to take account of the reality (pun intended) that any "profit" has been devalued by time (inflation) and holding costs in order to quantify the actual real return.

hello,

but this is exactly what happens, CGT free, sensational

like I say, why would someone be concerned with inflation when living in their own home, it is a non-issue

it is more critical for a renter because after purchasing the owner will be miles ahead

thankyou

robots

robots · 10 February 2008

xoa said:
Most people here are talking about property in investment terms. But even prospective owner-occupiers are seriously questioning the financial sense of buying now. Why buy now, if your dream home could be $50,000 cheaper a year from now?

hello,

thankyou

robots

explod · 10 February 2008

robots said:
hello,

thankyou

robots

That is ok to highlight the "if" and the "could", but there is a very good truism that pays in the long run which goes "When in doubt get out"

The other matter is that ASF discussions are primarily about investment and its processes and by investors/speculators/traders and those wanting to learn it all.

The average person buying a property for a home, particularly a first home is probably not a typical ASF member.

theasxgorilla · 10 February 2008

numbercruncher said:
You could paint anyone with the fool brush that didnt choose a certain asset at a certain time.

Now lets explore the truth.

2004 Brisbane median houseprice 350k.

2007 Brisbane median houseprice 420k.

20pc after 4 years or 5pc p/a , subtract 10k for duty and 10k for realty fee to sell, add in interest and ongoing holding costs, it looks crap to me.

Surely the offical definition of stagnation for this period ?

Fine, so property stagnated. Inflation and interest rates have been compensated for by income tax cuts, wage increases and a strong dollar reducing the cost of imports. Where is the affordability crisis that you've been harping on about for countless posts now?

ASX.G

robots · 10 February 2008

hello,

more so than ever it is about buying a home to live in and IMHO a home is a major investment for many and this is widely recognised in the financial industry

look at the benefits of home equity in then also leverging into equities

as you have mentioned previously in your case monies made in prop (as you rent now) allow you to trade the markets and thats great,

smurf and frinkster are one's to recently join the ranks of buying homes,

i am hanging out to buy a new bicycle

thankyou

robots

Tysonboss1 · 10 February 2008

numbercruncher said:
You could paint anyone with the fool brush that didnt choose a certain asset at a certain time.

Now lets explore the truth.

2004 Brisbane median houseprice 350k.

2007 Brisbane median houseprice 420k.

20pc after 4 years or 5pc p/a , subtract 10k for duty and 10k for realty fee to sell, add in interest and ongoing holding costs, it looks crap to me.

Surely the offical definition of stagnation for this period ?

View attachment 17905

http://www.myrp.com.au/brisbane_house_prices.do

the true median in brisbane in 2004 was below, $350,000.

If you bought a house in brisbane in 2004 it would now be costing you about the same to hold as it does to rent, and year by year will just get better and better,

BeterValue · 10 February 2008

xoa said:
Manhattan is a very safe place to live. It's true that yuppies and Wall Street analysts roam the streets, but I promise they're practically harmless.

Isn't that the same people that started this whole credit crunch fiasco?

Judd · 10 February 2008

robots said:
look at the benefits of home equity in then also leverging into equities

Another crock of sh*t from the real estate and finance industries to entice suckers to put the very roof over their heads at risk and in doing so become more indebted.

I was off to do other work but I could not help but drop in and refute the absolute rubbish advice or inference that you promulgate.

robots · 10 February 2008

hello,

people dont have to take on debt,

if they can manage the numbers then go for it if comforable

gee you need to go for a walk judd, grab a beer calm down

thankyou

robots

Tysonboss1 · 10 February 2008

Judd said:
I find the proposition that your home is an investment rather intriguing (and xoa, I am not saying that is what you said or even implied. Just using your quote as a reference point for my thoughts.)

Why should your home even be considered an investment? You buy a house in order to make it your home. If you wish to treat it as an investment then you need to take into account input costs, ie interest paid, rates, insurance, repairs and maintenance, and renovations, then discount that by inflation or the 10 year bond rate or how many nuts your monkey can gather in one hour. Whatever. But, unlike one infamous poster, you cannot just say "Here is how much I paid for it and here is how much I got got it" and just say "Wow, look at this CGT free profit."

Once you take that stance, you are classifying the property as an investment and need to take account of the reality (pun intended) that any "profit" has been devalued by time (inflation) and holding costs in order to quantify the actual real return.

Owning you own home is, in my view, one of the best feelings you can get. You put the key in the door, walk inside, grab a beer, sit down and watch a DVD or listen to your favorite music and go "Jees, I'm home." It's an intangible. But it is not an investment akin to owning property for commercial purposes.

See you all next week. Maybe.

I don't believe owning your own home is an investment,... but it definatly can help increase your weath in several ways,...

1, It locks in your cost of accomadation,... meaning that although it is more expensive than renting, over the years the repayment decreases with inflation while the rent increases.

2, It gives you an equity bank inwhich to lend from for other investments, and will lower the interest you would have to pay for these investments.

3, In retirement you probally have finished repaying the home and there fore can live rent free, or sell the house and have a lump some inwhich to live off.

Tysonboss1 · 10 February 2008

xoa said:
Most people here are talking about property in investment terms. But even prospective owner-occupiers are seriously questioning the financial sense of buying now. Why buy now, if your dream home could be $50,000 cheaper a year from now?

cool,... we will see I guess

House prices to stagnate for 'years'

explod

explod

robots

hello

xoa

numbercruncher

Beware of Dropbears

xoa

robots

hello

Judd

xoa

xoa

robots

hello

robots

hello

explod

explod

theasxgorilla

Problem solved... next bubble.

robots

hello

Tysonboss1

BeterValue

Judd

robots

hello

Tysonboss1

Tysonboss1

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House prices to stagnate for 'years'

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