House prices to stagnate for 'years'

[Bronte]

Thank you Realist.
We fixed all our loans at 6.47% interest only, long term
Reluctant to break our contract with the bank.
You are probably correct though.

 

[NettAssets]

We have lots of property in Perth
Do you think we should Sell ?

My
If you want capital gains out of the Perth market you would have to look closely at selling soon.
On the other hand rental incomes are likely to stay high in the current interest environment.
Housing is tight - office space is still relatively tight - The price of metro commercial space is still bouyant.
Horses for courses.

Only my view and Im not in the market and no expert in real estate.
John

 

[Bronte]

Thank you John.
Worth considering

 

[juddy]

I would imagine there would be a fair number of speculators in the Perth property market looking for short term gains. Once negative press begins eg front page of today's West, then they would probably look to lock in profits and move on to greener pastures eg cash. The problem comes when everyone gets this idea at the same time. Probably an exaggerated view, but might be worth considering.

 

[Realist]

I'd test the market first by putting a property for sale for some exhorbetant price and see what happens.

Some moron might just buy it.

 

[NettAssets]

Yeah I think you are right realist

But it doesn't have to be a Moron buying
Just someone with a different imperative.
With the current fuel prices if you have a place
next door to where someone is shifting to work
the house maybe worth $50.00 a week more to
them than the market value.
But yes in the current environment you are
setting your own market.
John

 

[Judd]

One of the generally unnoticed side effects of increased house prices is the impact on land valuations. In turn this results in rates (ie local government taxes) being increased. Ours have increased by 14.5% this year. Managable for this family but it is another after-tax hit to the hip pocket which, along with petrol, etc, etc could cause those home occupiers to go to the wall. I noticed from an article in the Age that for the first six months of this year, house reposessions were over 1,400 compared with 950 or so for the previous comparable period (and more than 95% of repossessions were owner occupiers.)

So on the face of it it does not appear that the majority of rental investors who will get hit but those who just want a home. Always sad to see that.

 

[Realist]

Well I hate to say it guys, but you guys who live in Perth had it far too easy for far too long.

I went to Perth about 3 years ago and was honestly stunned at how cheap your property was. I could not believe how easy you had it. $650,000 would have bought a bloody mansion, yet in Sydeny 3 years ago you'd get a crappy 2 bedroom apartment for that.

The fact is half of the recent rises have just been getting Perth back to where it should have been in the first place. It was undervalued.

It is now in my opinion overvalued though, so you do have some complaints to grieve - I agree.

 

[professor_frink]

Well I hate to say it guys, but you guys who live in Perth had it far too easy for far too long.

I went to Perth about 3 years ago and was honestly stunned at how cheap your property was. I could not believe how easy you had it. $650,000 would have bought a bloody mansion, yet in Sydeny 3 years ago you'd get a crappy 2 bedroom apartment for that.

The fact is half of the recent rises have just been getting Perth back to where it should have been in the first place. It was undervalued.

It is now in my opinion overvalued though, so you do have some complaints to grieve - I agree.

Righto then Mr value investor did you buy any?

 

[krisbarry]

I'd test the market first by putting a property for sale for some exhorbetant price and see what happens.

Some moron might just buy it.

Somewhat true, but the higher the prices go...the less morons will be ready to part with their cash

 

[Realist]

Righto then Mr value investor did you buy any?

Certainly not. What a particularily naieve and stupid attempt to attack me, you can do better than that Prof...

As you know I avoid brokerage and taxes.

I'd rather not pay stamp duty, and I would like the first home owners grant.

I'm about $37,000 better off buying and owning in Sydney than investing in Perth. I'm not a fan of negative gearing, I do not like to have to maintain, rennovate or fix anything. And I don't want to pay agent comissions, or capital gains taxes when I sell.

I still believe shares are a far better investment than property. Despite the recent boom in Perth.

But also I did not know just how much Perth properties would increase, it was obvious they'd go up but I did not see this boom coming that was for sure.

 

[professor_frink]

Certainly not. What a particularily naieve and stupid attempt to attack me, you can do better than that Prof...

As you know I avoid brokerage and taxes.

I'd rather not pay stamp duty, and I would like the first home owners grant.

I'm about $37,000 better off buying and owning in Sydney than investing in Perth. I'm not a fan of negative gearing, I do not like to have to maintain, rennovate or fix anything. And I don't want to pay agent comissions, or capital gains taxes when I sell.

I still believe shares are a far better investment than property. Despite the recent boom in Perth.

But also I did not know just how much Perth properties would increase, it was obvious they'd go up but I did not see this boom coming that was for sure.

Cheeky-yes. An attack on you Realist-not even close! If I attack, you'll know all about it, and it will probably get me banned

I'm not a fan of neg. gearing either, but if there is value there, it shouldn't be negatively geared for too long.

I'm curious as to how you came up with the $37,000 figure. Why would you have been better off not buying an IP when you thought the housing market was undervalued? The costs involved in buying an IP would be fairly small compared to the capital gain you'd be sitting on after a few years.

 

[Realist]

.

I'm curious as to how you came up with the $37,000 figure. Why would you have been better off not buying an IP when you thought the housing market was undervalued? The costs involved in buying an IP would be fairly small compared to the capital gain you'd be sitting on after a few years.

Well first of all, had I known how Perth properties would have boomed then yes I would have bought, I knew they were undervalued of course - I think everyone did, I did not see the boom coming though.

Now the question...

$20,000 is the stamp duty exemption for buying first home in NSW and living in it.
$7,000 is the first home owners grant if you live in it.

Other amount is real estate management fees, advertising to rent it out, Mortgage taxes, insurance, repairs, empty time, etc. etc.

I believe it is a fair guess of first year expenses setting up an IP.

Then the big one CAPITAL GAINS TAX - needs to be added as well of course.

 

[professor_frink]

Well first of all, had I known how Perth properties would have boomed then yes I would have bought, I knew they were undervalued of course - I think everyone did, I did not see the boom coming though.

Now the question...

$20,000 is the stamp duty exemption for buying first home in NSW and living in it.
$7,000 is the first home owners grant if you live in it.

Other amount is real estate management fees, advertising to rent it out, Mortgage taxes, insurance, repairs, empty time, etc. etc.

I believe it is a fair guess of first year expenses setting up an IP.

Then the big one CAPITAL GAINS TAX - needs to be added as well of course.

This all would have become a minor inconvenience to you had you bought when you saw the opportunity! Having the house double in 3 years would have left you with a nice lump sum to put into your share portfolio, or would have meant you could use it as a deposit for a house in Sydney.

Tax and expenses shouldn't be an issue when you see an opportunity to buy an investment that you believe to be excellent value. Obviously not knowing how big the gains were going to be might make you think about it a bit, but even modest growth on a house is going to make up for these kinds of expenses.

 

[Realist]

This all would have become a minor inconvenience to you had you bought when you saw the opportunity! Having the house double in 3 years would have left you with a nice lump sum to put into your share portfolio, or would have meant you could use it as a deposit for a house in Sydney.

Tax and expenses shouldn't be an issue when you see an opportunity to buy an investment that you believe to be excellent value. Obviously not knowing how big the gains were going to be might make you think about it a bit, but even modest growth on a house is going to make up for these kinds of expenses.

Oh god!!

Of course buying in Perth 3 years ago was wise!!

HOWEVER...

Shares doubled in that time as well, so it is not exactly like I missed the boat!!

Longterm Shares keep going up more and pay dividends and compound and cause less problems than property IMHO.

I have no regrets about not buying in Perth, I just wish I'd bought more shares 3 years ago actually.

I do not like investment properties!!!!!!

I do like shares!!!!!!!!!

Stop harassing me for not buying in Perth - did you buy an IP in Perth 3 years ago?

 

[doctorj]

I believe the craziness we're all seeing in Perth is a product of the fundamental difference between the mindset of citizens in Perth and Melbourne/Sydney.

I don't have any research to back this up beyond my own observation, but it seems apartment living is still seen as undesirable by the majority of the Western Australian population. By comparison, I imagine the percentage of people living in apartments in Melbourne and Sydney to be much higher and more acceptable.

I believe this comes about as a result of two key factors. First of all, there really isn't a great deal of apartment capacity in Perth and the inner suburbs, only now are more developments being advertised and made available. Secondly, the generation of people 35-50 years old have built most of their wealth in property and the idea that you need land in order to make money on your home has been deeply ingrained in the new generation of homebuyers by their parents.

According to the front page of the Western Australian today, mean home prices in WA have reached $455,000 - well ahead of Melbourne and not far off that of Sydney. I'd venture to say that the average salary of professionals in WA (ie. people likely to live in the metropolitan area) is much lower than both Sydney and Melbourne. Soon something has to break - either people need to adjust their values and more apartment capacity needs to come online (and thus hopefully reducing property prices) or salaries need to increase to make the price sustainable and not to mention affordable for young professionals looking to leave the nest.

 

[wayneL]

Well I hate to say it guys, but you guys who live in Perth had it far too easy for far too long.

I went to Perth about 3 years ago and was honestly stunned at how cheap your property was.

That was the ONLY attraction of Perth... and the easy going lifestyle. Now that those two are history, I can't think of one good reason to buy a house in Perth, over somewhere else.

I can buy in nice areas of France or Germany for MUCH less AND have decent beer, culture, and a lot of the stuff me and Mrs like in spades.

Germany has had a bad time economically in the last ten years because of re-unification, but are the best placed of the western economies going forward IMO.

The Krauts are good folk too.

 

[professor_frink]

Oh god!!

Of course buying in Perth 3 years ago was wise!!

HOWEVER...

Shares doubled in that time as well, so it is not exactly like I missed the boat!!

Longterm Shares keep going up more and pay dividends and compound and cause less problems than property IMHO.

I have no regrets about not buying in Perth, I just wish I'd bought more shares 3 years ago actually.

I do not like investment properties!!!!!!

I do like shares!!!!!!!!!

Stop harassing me for not buying in Perth - did you buy an IP in Perth 3 years ago?

Realist,

I'm not harassing you for not buying in Perth. I'm harassing you because you said it was undervalued and you didn't buy any! You spend your time on here telling everyone you will only buy property when it's undervalued, and then you admit you saw an opportunity and didn't act. If you had of said you don't like investment properties in your original statement, I wouldn't have said anything.

Did I buy in Perth? No. But then again I wasn't in Perth 3 years ago with an opinion of their property market. That's kind of a childish question to finish up with Realist!

 

[professor_frink]

Well first of all, had I known how Perth properties would have boomed then yes I would have bought, I knew they were undervalued of course - I think everyone did, I did not see the boom coming though.

I have no regrets about not buying in Perth, I just wish I'd bought more shares 3 years ago actually.

This discussion is giving me a headache. I'll withdraw myself now I think.

 

[Bronte]

Perth real estate is certainly not stagnant.
86 people a day are presently migrating to WA
This equates to 50/60 extra homes required per day.
We have been busy buying prime real estate since 1998

Quote #223 from 6th October 2005 01.00PM
We recognize opportunity and boy do we take it