House prices to stagnate for 'years'

[Realist]

Property outperformed shares 2000-2003 without question...

Shame I do not have a time machine isn't it?...

The past is so easy for everyone to analyse. Unfortunately I can only live in the present and look forward though.

Property in Sydney has gone down about 15% (25% inflation indexed) in the past 3 years in Sydney. Shares have gone up 100%.

Should I have bought a house, or rented and bought shares 3 years ago?

I rent and buy shares. And I'm proud of it!!

 

[Realist]

I too am interested in both your asset portfolio value and your performances of late Realist. For two reasons,

1. I am 22 and would like to see where I'm at myself

and

2. You sometimes post about your BHP/RIO stocks etc going up/down $4 in a day... doesnt exactly get my blood pumping

looking forward to a reply

In relation to the topic of the thread, I hope to purchase a residential property in Sydney in the next 12 months, somewhere near the Norwest Business Park before construction is completed.

At 22 years of age I had no money infact owed money from a student loan.

I was basically bankrupt in 2000 - working in IT and having IT shares was not helpful in the biggest crash of our lifetimes. I've seen bad times. Never been given any money by parents or inheritance. I've done it myself through tough times.

If you wanna ask someone who is rich how to make money send Paris Hilton an email.

If you can buy a house in Sydney over the next year you are doing very very well, especially considering how young you are!

At your age I'd recommend travel, money is one thing, your life is the most important thing. Mortgaging yourself to the hilt at a young age limits your options.

I've made reasonable money off BHP and RIO recently - bugger all really. Hoping for more though, BHP's earnings are announced on Wednesday, and I am hoping for a share price spike and a bonus dividend!

 

[Realist]

a lovely partner and a number of healthy happy kids. That's all you need really. The rest is just icing.

:

I totally agree.

But of course, one should be concerned with what they do with their money, you have a partner and kids to look after.

 

[nizar]

Oh u own BHP - good man, that will give u much better return than FGL!!...

 

[Realist]

Any smart young guy should own a property.I must admit I'm of a different opinion to Realist and certainly don't jump to his assumptions.

Actually Realist, I'm 26 years old, have my own Business, www.contractaquaticservices.com.au, employ 12 people, own 3 properties and trade large parcels of short term shares.
I am a single dad who cares for his son, week about with my ex. Having my own home, business allows me to do this and afford my young bloke the security of a home and quality parenting with me.
I sincerely hope you aren't a worker bee,that dosent ever own his own home,answers to the boss and trades all his spare cash on RIN shares (500 shares at a time).

Well maybe you are richer than me, maybe not though.

Owning your own business has pros and cons. You may be surprised at how much I earn, you may earn alot more than me. If things turn bad I get a new job, or move overseas, I am safe from any downturn.

Buying only 500 RIN shares is all I can afford at the moment, but I diversify widely, try not to sell, do not borrow, have money in the bank, and yes I can afford a house. I'm too smart for that though. Trading has pros and cons too, you can make or lose quick money - I prefer not to trade. Wise investing has few cons if any.

 

[Realist]

Oh u own BHP - good man, that will give u much better return than FGL!!...

FGL is a great company. Don't dis it!!

And think longterm, very longterm, people worldwide will be buying FGL alcohol in 30 years time, if I have the discipline I'll still be holding then.

 

[nizar]

but I diversify widely,

Make sure u dont diworseify though...

You should know this; but Warren Buffet and George Soros DO NOT diversify

They find a good company and put a considerable amount of money behind it

Whether considerable is 100millon or 10Gs its all relative

But in any case, Its much easier to find 3 winners than it is to find 10...

 

[Freeballinginawetsuit]

Well maybe you are richer than me, maybe not though.

You really aren't open to any views from others are you Realist, and always have to get one up.

 

[Realist]

You should know this; but Warren Buffet and George Soros DO NOT diversify

They find a good company and put a considerable amount of money behind it

Whether considerable is 100millon or 10Gs its all relative

But in any case, Its much easier to find 3 winners than it is to find 10...

Warren Buffett and George Soros are far better investors than I am.

It is far easier for me to find 3 losers out of 3 shares, than 10 out of 10...

 

[Realist]

You really aren't open to any views from others are you Realist, and always have to get one up.

With all due respect, you telling me that you own your own business and own 3 properties is not advice, it seems like you are skiiting.

What was your point? I should give up my job and sell all my shares and set up a pool maintenance company and buy 3 houses so I can be like you?

We lead different lives, where I live is exhorbetantly expensive, stressfull and competitive, I've travelled, I have a career not suitable to set up my own business, yet I earn a good salary and lead a good life. Should I try and be more like you?

 

[Freeballinginawetsuit]

My point was,

You don't have to answer a question with a comeback/bigger and better.

 

[Realist]

My point was,

You don't have to answer a question with a comeback/bigger and better.

You are right, I don't have to.

Had you said "Realist, there are advantages in owning your own business, tax advantages, the ability to expand and grow and make big profits, have you considered this"

Then I would have agreed. And said yes I have considered it, but after weighing up all the options and possibilities I have decided against it. Where I am now I will continue to earn a very good salary, and I have the freedom to move and change jobs and locations at will. If I started a business there is a good chance I will lose money based on the stats of how new businesses do. Where I live is expensive - I do not have the freedom to take such risks, I'm not prepared to work exhorbetant hours, or do manual labour, I know the difficulties in employing staff, wages are higher here as are expenses, and I am not prepared to change because I am heading toward more than financial security as it is.

 

[Realist]

The beauty of working for someone else is you are free!

All care, no responsibility.

If I do not like my job, I change. If I wanna go overseas, I move.

The same can be said of renting. If I have **** neighbours - I move! If I get offered a great job the other side of the city - I move!

I am free to do what I like!

This derogatory theory of working for a boss and paying a landlord is bollocks - if they don't look after me I move.

When interest rates go up, or a new company doing what you do sets up next door and discounts heavily - you are stuck!!

 

[Freeballinginawetsuit]

You are right, I don't have to.

In considering options why not consider anothers advice rather than quoting statistics or half baked facts.

1. I am aggreeing with you that the topic of this thread is correct, real estate prices may stagnate in the short term even decrease. Accept that this is insignificant to their appreciation over the past years. I thank my lucky stars my accountant led me in the Real Estate direction early. Don't purport to know all about finances, that why anyone in the know pays financial advisors to diddle the system. I am sure when you research your stocks you check out analysts recommendations, or do you know more than them?

In this thread & others you have been quick to right off my input.

2. In regards to business, you sound like someone who has strong opinions and drive, you would probably make a good business owner.
I don't actually own a 'pool maintenance business', I provide managers,lifeguards gym instructors etc to Liesure Facilities.I also have a concrete based construction business, sure we build pools we also do civil works at mines as well.

3. Accept when people are right, without your'e quick judgements. I added my advice on RIN to you previously. You wrote that off broadly.I do work for DOW & get products of RIN.As a business person I said DOW was solid and good for a quick 10% rebound. Dow has done that and I made a quick 10% off them. How much have you made off RIN?

 

[tech/a]

FBW--he (realist) does that.

Its something I find common with enthusiastic "L" platers.

Experts in everything----experience in Theory.
I personally thought you were commenting from a "Smart" younger persons veiw point,qualifying and quantifying perhaps "Smart"
As with anyone who discusses assets or net worth,even in example there will always be someone who wishes to pull you down a peg.
Pity as some great posters have been lost.

As for Reply arguements Realist you do argue to suit your veiw.
Frankly your freedom to move from employer to employer is as laughable as employers explaining an advantage of self employment is moving from employee to employee. Or being able to dodge downturns by moving from city to even another country to alter employment.

Frankly taking the time to hone your skills in negotiation and employee value,finding a career that sets your talents alight and excites all those around you,including your boss which could well be yourself---will serve you far better than any of the arguement Ive seen presented here.

FBW in my veiw is right,your skill in discussion is limited to one up manship,a dead givaway to those who have actually "walked the walk".

 

[krisbarry]

I reckon "Realist" is looking at it from a gen X/Y point of view, nothing wrong with that its just a product/side effect of our times.

The one job for life/one house for life approach just aint working anymore.

Now days its....The renter, the transient traveler, the free-floating employee.

What I can pick up in the posts is the generation gap

 

[nizar]

The beauty of working for someone else is you are free!

You have to do what they tell u to do
You have to work the hours they tell u to work
You get paid how much they tell u you will get paid

Sounds like Freedom to me

 

[tech/a]

I reckon "Realist" is looking at it from a gen X/Y point of view, nothing wrong with that its just a product/side effect of our times.

The one job for life/one house for life approach just aint working anymore.

Now days its....The renter, the transient traveler, the free-floating employee.

What I can pick up in the posts is the generation gap

Yeh when I was 20 we had a cavern it was the time of Flower power sex drugs and rock and roll. Dont tell me we didnt have a gap then and dont tell me we had the buy one house/keep one job phylosophy them.
God the last think we wanted to do was work---house what was that??? All we wanted was a KOMBI.


There will always be a gap and there will ALWAYS be the SAME tried and proven ways to financial security.
Like it or not Housing is head of the list (More so really land value) and will remain there.
Has since Roman legions went off aquiring land for the Roman Empire and will work the same for You or anyone else who owns land until someone takes it from you.

Gap?

 

[chansw]

From: The Sydney Morning Herald

http://www.smh.com.au/articles/2006/08/20/1156012414995.html

Housing crash puts sellers in debt crisis

Jonathan Chancellor Property Editor
August 21, 2006

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."

 

[Freeballinginawetsuit]

Have you considered that this may possably be a buyers market. Compare the prices with a comparable market price a few years back, maybe this a good opportunity for the first home buyer to jump in.

I must say that if I was a first home buyer the current real estate prices in Sydney are starting to look tempting.

This is bricks and mortar guys, not shares. The SP of a home in Australia biggest City isn't going to tank to prices in the 1980's.

In my opinion and thats all I'm offering.