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markrmau said:
Although sad, its good to see.
Finally the shoe is on the other foot so to speak.
What happens in Sydney now will spread Australia wide within 2-4 years
House prices to stagnate for 'years'
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Although sad, its good to see.
Finally the shoe is on the other foot so to speak.
What happens in Sydney now will spread Australia wide within 2-4 years
WaySolid
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Why quote that paragraph and ask Wayne for a reply? I don't see the connection between the two.
WA is/has? experienced a big boom, just like most things it appears they are a few years behind the east coast.
Just how much fair value has been overshot in the frenzy remains to be seen. I can't think of any smart investors who are saying anything but be very careful with property in WA presently, it's just the way the world works unfortunately that all parties have to end. I believe something very similar happened during the last commodities boom with WA RE.
WA is/has? experienced a big boom, just like most things it appears they are a few years behind the east coast.
Just how much fair value has been overshot in the frenzy remains to be seen. I can't think of any smart investors who are saying anything but be very careful with property in WA presently, it's just the way the world works unfortunately that all parties have to end. I believe something very similar happened during the last commodities boom with WA RE.
Maybee it is still the smart money buying all the property in WA at the moment but I doubt it. It would seem to me that the smart money is hapy to hold with caution but not willing to buy in ATM. Everyone who owns any property that I have spoken too thinks (or at least acts) like they are a guru.
I was talking to one associate who owns 4-5 houses and has done most of the boom. He has done very well for himself but I can't for the life of me grasp his optimism. I was asking if he was going to reduce his mortage level or diversify into anything else anytime in the future and he replied that he may one day but he is happy just holding property. I asked how he felt about the possibilty of a fall in prices (short to medium term that is) and he replied that he did not think it was possible. For someone to make a comment like that is just nuts.
Personally I have no clue where or when the BOom in WA will end but I think it more important calculating if you can afford to make the payments if property falls and if you can handle the loss in capital if property falls than trying to decide if the boom is over or starting.
I was talking to one associate who owns 4-5 houses and has done most of the boom. He has done very well for himself but I can't for the life of me grasp his optimism. I was asking if he was going to reduce his mortage level or diversify into anything else anytime in the future and he replied that he may one day but he is happy just holding property. I asked how he felt about the possibilty of a fall in prices (short to medium term that is) and he replied that he did not think it was possible. For someone to make a comment like that is just nuts.
Personally I have no clue where or when the BOom in WA will end but I think it more important calculating if you can afford to make the payments if property falls and if you can handle the loss in capital if property falls than trying to decide if the boom is over or starting.
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Re: The latest SMH article about 'battlers getting burnt'
The best investors either sold out or more likely transferred CG into the equity markets and have their LVR's under enough control so that they will be ready to go again for the next round with property. It's the naive investors and FHO's who will be hurt the most unfortunately.
Just the natural distribution mechanism of capatilism at work.
The best investors either sold out or more likely transferred CG into the equity markets and have their LVR's under enough control so that they will be ready to go again for the next round with property. It's the naive investors and FHO's who will be hurt the most unfortunately.
Just the natural distribution mechanism of capatilism at work.
Bronte
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Quote from last OctoberwayneL said:
Controversial comment Wayne.
Perth +34% in 12 months
WaySolid
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Interesting data, thanks for posting it.
One thought is that multiples of the house/salary ratio are higher now simply because they can be. Everything china produces and we consume is a fraction of the price/salary ratio it would have been 60 years ago which basically means a higher % of income is available to push inflation into assets and services in the economy.
One thought is that multiples of the house/salary ratio are higher now simply because they can be. Everything china produces and we consume is a fraction of the price/salary ratio it would have been 60 years ago which basically means a higher % of income is available to push inflation into assets and services in the economy.
clowboy said:
WaySolid
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Well yes thats probably true, haven't checked it though.wayneL said:
Probably similar issues apply to RE as to why investing in any asset class that appreciates doesn't eventually appreciate to the edge of the universe at some point in the future. I'm too tired to work out what they might be presently but I still believe that for very long stretches of human history property has compounded at a rate higher than inflation, and certainly for the extent of my time on this planet in Australia. Jan Somers book is still a very well researched piece of investing literature for RE.
One point that gives property a bit more breathing space in terms of compounding is the higher use feature. Your county will become farms, then smaller farms, castles, houses, smaller houses, flats, higher story flats, hi rises and so on.
Bronte
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Very true WaySolid. She was certainly our inspirationWaySolid said:
We bought one property per year, thanks to Jan Somers books.
Bronte
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Also check out "The Investors Club"Bronte said:Very true WaySolid. She was certainly our inspiration
We bought one property per year, thanks to Jan Somers books.
Realist
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Jan Somers is as useful as someone writing a "Buy tech shares cause they always go up" book in 1999.
One of her theories "continue to purchase property by refinancing so that your liabilities (your borrowings or debt) increase with your assets."
Is laughable.
As Ben Graham says "A investment company (house) is not a good investment if you pay too much for it"
People profit in good times, then write books as if they are experts.
Anyone who used Jan Somers theories in Sydney over the past 3 years will have lose alot of money and continue to do so.
Some punters here have taken a swipe at Ben Graham for going bankrupt in 1930. The fact he did means he has seen good times and the worst of times and his theories take this into account. He knows as well as anyone that investing can be dangerous.
Anyone read the book care to comment on what Jan Somers has to say about Sydney property prices falling and rental yields at an all time low, while shares are doubling? Does she recommend diversifying into shares? Shares of course outperform property, require little maintenance, have tax advanatges, low expenses, allow you to diversify easily, you can buy and sell easily. And require little time or involvement.
One of her theories "continue to purchase property by refinancing so that your liabilities (your borrowings or debt) increase with your assets."
Is laughable.
As Ben Graham says "A investment company (house) is not a good investment if you pay too much for it"
People profit in good times, then write books as if they are experts.
Anyone who used Jan Somers theories in Sydney over the past 3 years will have lose alot of money and continue to do so.
Some punters here have taken a swipe at Ben Graham for going bankrupt in 1930. The fact he did means he has seen good times and the worst of times and his theories take this into account. He knows as well as anyone that investing can be dangerous.
Anyone read the book care to comment on what Jan Somers has to say about Sydney property prices falling and rental yields at an all time low, while shares are doubling? Does she recommend diversifying into shares? Shares of course outperform property, require little maintenance, have tax advanatges, low expenses, allow you to diversify easily, you can buy and sell easily. And require little time or involvement.
Realist
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From the SMH this morning.
Perth residents take note!!!
A THREE-BEDROOM brick-veneer house in St Clair sold for just $260,000 at the weekend - down about 42 per cent from its last sale at $450,000 in 2003 in a further sign of the depressed state of the Sydney property market.
Only one person bid on the house in the city's west. The mortgagee sale was forced after the owners could not meet the interest payments on the $405,000 they borrowed to buy the house at the peak of the market.
Auction clearance rates are hovering around 48 per cent since the recent interest rate rise, but plummeting property prices have meant many vendors are confronting negative equity, where they owe more on the property than it is worth.
The Herald checked 16 properties in south-western and western suburbs listed at the weekend and found 60 per cent had prices or had attracted offers at a discount to their last sale price.
At the St Clair auction the buyer was an investor who will spend about $40,000 on essential repairs before leasing it at about $270 a week, said its L.J. Hooker St Marys selling agent, Michael Beatty.
Increasing petrol prices appear to be compounding the impact of repeated interest rate rises on properties in Sydney's outlying suburbs by driving prices down.
Lethbridge Park, near Penrith, recorded the second highest fall, when a townhouse that sold for $257,000 in 2003 was resold by mortgagees for $156,500, reflecting a roughly 40 per cent fall.
At Heckenberg, a four-bedroom house that sold for $330,000 in 2003 resold at $255,000 in another mortgagee sale. Four of the seven registered buyers put in bids before the Adaminaby Street house sold at an approximate 22 per cent discount to the property-boom price.
"There are some people around Liverpool who think that prices have further to fall, but I couldn't imagine this type of house will fetch less in six months' time," said its selling agent, Ray Dimarco.
At Parramatta, mortagees accepted $541,500 for an unrenovated house that fetched $736,000 in 2003 when it was sold as a deceased estate. The bank lent $580,000 on its 2003 sale.
Even the inner-suburban areas are showing signs of depressed prices. In Lilyfield a four-bedroom house on 607 square metres last sold at $1,355,000 unrenovated in boom-time 2003.
It attracted a $1,179,000 top bid after its recent renovation by its owner-builder. Two registered bidders competed at the on-site auction but the property was passed in well short of the owner's expectations. The freestanding house now has a $1.35 million asking price.
Given it has been 16 years since the last recession, long-time estate agents fear the fate of a generation of owners who had not experienced having a loan when times were tough.
Mr Beatty said: "There was a wave of people punting on the expectation of constant price rises until well into 2004, even after the three interest rate rises of late 2003. There has been significant price deflation and many now have negative equity in their homes.
"There are some sad stories. But we have to show the sellers the comparable sales and say honestly this is where the market is realistically at."
Perth residents take note!!!
A THREE-BEDROOM brick-veneer house in St Clair sold for just $260,000 at the weekend - down about 42 per cent from its last sale at $450,000 in 2003 in a further sign of the depressed state of the Sydney property market.
Only one person bid on the house in the city's west. The mortgagee sale was forced after the owners could not meet the interest payments on the $405,000 they borrowed to buy the house at the peak of the market.
Auction clearance rates are hovering around 48 per cent since the recent interest rate rise, but plummeting property prices have meant many vendors are confronting negative equity, where they owe more on the property than it is worth.
The Herald checked 16 properties in south-western and western suburbs listed at the weekend and found 60 per cent had prices or had attracted offers at a discount to their last sale price.
At the St Clair auction the buyer was an investor who will spend about $40,000 on essential repairs before leasing it at about $270 a week, said its L.J. Hooker St Marys selling agent, Michael Beatty.
Increasing petrol prices appear to be compounding the impact of repeated interest rate rises on properties in Sydney's outlying suburbs by driving prices down.
Lethbridge Park, near Penrith, recorded the second highest fall, when a townhouse that sold for $257,000 in 2003 was resold by mortgagees for $156,500, reflecting a roughly 40 per cent fall.
At Heckenberg, a four-bedroom house that sold for $330,000 in 2003 resold at $255,000 in another mortgagee sale. Four of the seven registered buyers put in bids before the Adaminaby Street house sold at an approximate 22 per cent discount to the property-boom price.
"There are some people around Liverpool who think that prices have further to fall, but I couldn't imagine this type of house will fetch less in six months' time," said its selling agent, Ray Dimarco.
At Parramatta, mortagees accepted $541,500 for an unrenovated house that fetched $736,000 in 2003 when it was sold as a deceased estate. The bank lent $580,000 on its 2003 sale.
Even the inner-suburban areas are showing signs of depressed prices. In Lilyfield a four-bedroom house on 607 square metres last sold at $1,355,000 unrenovated in boom-time 2003.
It attracted a $1,179,000 top bid after its recent renovation by its owner-builder. Two registered bidders competed at the on-site auction but the property was passed in well short of the owner's expectations. The freestanding house now has a $1.35 million asking price.
Given it has been 16 years since the last recession, long-time estate agents fear the fate of a generation of owners who had not experienced having a loan when times were tough.
Mr Beatty said: "There was a wave of people punting on the expectation of constant price rises until well into 2004, even after the three interest rate rises of late 2003. There has been significant price deflation and many now have negative equity in their homes.
"There are some sad stories. But we have to show the sellers the comparable sales and say honestly this is where the market is realistically at."
Bronte
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'BUILDING WEALTH in Changing Times' by Jan Somers 1994Bronte said:
We are very glad we listened to Jan Somers & The Investors Club.
Now thanks to you Realist & other members we are selling a couple.
Realist
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That is wise Bronte
They may go up a little more, but they'll sure as hell go down a lot more in years to come. When? no-one knows but it will happen, it is obvious.
Sydney is the past example to study.
They may go up a little more, but they'll sure as hell go down a lot more in years to come. When? no-one knows but it will happen, it is obvious.
Sydney is the past example to study.
Bronte
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Some of our property has tripled in value in a relatively short space of time.
We could handle a 42% retracement.....if we had to
We could handle a 42% retracement.....if we had to
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WaySolid said:
Exactly correct. Of course multiple property investors hold, stamp duty and capital gains would kill you if you sold. You purchase your property in your company name/trust, spend coin on maintenance and rent it for maximum return. You leverage against your property and in my case I trade stocks. The point is that you would have to have been nuts not to have gotten into investment property in W.A. over the last 2 years. The prices of real estate may go down 10%, but they have already gone up 40% in the last year.
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Bronte said:Some of our property has gone up close to 300% in a relatively short space of time.
We could handle a 42% retracement.....if we had to
Really?
Think again....
A $200,000 investment property costs say $225,000 to buy when you take into account stamp duties, mortgage fees, insurance, empty time, time spent looking etc.
Say you spend $10,000 on it for a few minor repairs and stuff over the next few years.
You then pay say $5,000 a year for 4 years in mortgage repayments less rent received. There' ll be times it's empty, you gotta pay agents fees etc. etc.
You claim half of that back in tax...
Okay to cut to the chase.
Your $200,000 investment cost you at least $260,000 over 4 years.
It is now gone up 300% to $600,000 You tell anyone who'll listen how smart you are!!
4 years later you've spent another $20,000 on stuff and it then drops 42%!!!
It is now worth $348,000. You paid $280,000 in that time. Over 8 years.
You've now had weeks with it empty, no rent at all, cause all the young people have gone to Sydney, the Resource boom is over and Perth has high unemployment. It is a problem city everyone wants out.
You have to sell.
You now pay tax on the tiny profits when you sell it. You pay agents fees to sell it (tough times remember no-one is buying)
You've made absolutely nothing when indexed to inflation!
Infact You've probably even made a loss when comparing it to a term deposit. And you're stressed out to the max, empty house, no rent, can't sell it.
Think again, if you think investment properties are great to hold.
And think again if you think a 300% gain less a 42% fall is still good. IT AINT! Do the maths!
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Realist said:Really?
Think again....
What a naive post. Most property investors are business owners who purchase property in their company/trust name.They negative gear, claim all the property maintenance watch the property appreciate in value and levarage the gains. I feel sorry for the young wage earners who earn 1k a week and are considering a martgage with a 20k deposit, at todays prices they are stuffed, a default waiting to happen. They simply cant afford a 10% decrease in property value.
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Freeballinginawetsuit said:
Naieve, hahaha. Where is your proof? Most property investors are Mums and Dads you know it and I know it, go on admit you are wrong.
Do you even know what "negative gear" means? you say it as if it is a good thing. IT AINT!!!!!!!
Quite simply it means they lose money and claim some of it back off tax.
Negative gearing is often a bad thing.
What gains?
They've gone down significantly in Sydney the last 3 years.
Agreed.
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Realist said:
Naieve, hahaha. Where is your proof? Most property investors are Mums and Dads you know it and I know it, go on admit you are wrong.
Do you even know what "negative gear" means? you say it as if it is a good thing. IT AINT!!!!!!!
Quite simply it means they lose money and claim some of it back off tax.
Negative gearing is often a bad thing.
What gains?
They've gone down significantly in Sydney the last 3 years.
Agreed.
I'm not a Mum or Dad, and my propertys have done quite well for me, very happy thus far. I simply don't aggree with you realist.
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