House prices to stagnate for 'years'

[moses]

Some doe-brain was on the radio today saying that she expects a boom in Adelaide house prices over the next 5ish years. She still believes they are way under-valued!

When U mining gets serious, then South Oz has the leap on the rest. That may be good enough reason to think Adelaide has more to go. Even if it doesn't need to boom fundamentally, the Perth experience and the investor lemmings may make it happen anyway.

 

[krisbarry]

Its just not possible for Adelaide house prices to rise by another 150% or more.

Even under a mining boom or a defence force boom, both of which are promised in SA under current government.

I think 150% rise over the last 5 years is more than enough to lock out the below average wage earners, the middle class wage earners and many above average wage earners.

With the baby boomers retiring in their millions, selling up their investment properties etc all I can see is a wild ride down in the property market right around Australia, not to mention another rate rise or two!

 

[Julia]

Its just not possible for Adelaide house prices to rise by another 150% or more.

Even under a mining boom or a defence force boom, both of which are promised in SA under current government.

I think 150% rise over the last 5 years is more than enough to lock out the below average wage earners, the middle class wage earners and many above average wage earners.

With the baby boomers retiring in their millions, selling up their investment properties etc all I can see is a wild ride down in the property market right around Australia, not to mention another rate rise or two!

Why would the baby boomers want to sell their IP's? They are going to need a retirement income. Surely by retirement age all the mortgages will be paid off and the income can form part of their super income?

Julia

 

[YChromozome]

Why would the baby boomers want to sell their IP's?
Julia

Costello's new super laws look good? Better tax advantages.

 

[wayneL]

Misery quotient
Just how much are borrowers with option ARMs going to suffer?
By Gail Liberman and Alan Lavine
Last Update: 7:28 PM ET Sep 18, 2006

PALM BEACH GARDENS, Fla. (MarketWatch) -- Are you at risk with your adjustable-rate mortgage? More borrowers than originally thought may soon find themselves suffering payment shock. The great fear: Rising interest rates and falling home values.
Most concern stems from mortgages with adjustable rates and more than one payment option, or "option ARMs."................

More - http://www.marketwatch.com/news/story/Story.aspx?guid={88CCCA7E-AE84-4043-8E24-8110F3516FC9}&siteid=

 

[dj_420]

i agree, for those who have variable loans i feel that is slightly crazy.

when the interest rate was around 6.5% i would have locked in a fixed rate. to think that the interest rate in the future will drop below 5% is oportunistic and hopefull.

i personally would have locked in a fixed interest rate, remember when interest rates were well over 10%, what if economic conditions were to lead to that.

So the ones who have chosen variable rates whilst they got the loan when the rate was 6% they will be the ones to suffer.


few points of my own on the housing comments
i think that given the right area property/land is still a great investment, you have to look at few things first JUST like shares you wouldnt buy before doing some research:

- demographics (for region, growth rate etc)
- industries that exist in region
- macroeconomic influences, eg mining boom
- areas with future growth potential

im sure the people who bought 3-4 years ago in areas affected by mining boom would not be stating that their housing prices have stagnated.
it just depends how hard you are willing to look; the more you look ad research the more likely you are to find a bargain that will grow.

if you are willing to throw your money onto a hot tip, then you are risking buying into an underperforming area/region

 

[tech/a]

when the interest rate was around 6.5% i would have locked in a fixed rate. to think that the interest rate in the future will drop below 5% is oportunistic and hopefull.

i personally would have locked in a fixed interest rate,

Ah the interest rate illusion.

(1) Maximum term is 7-10 yrs most people fix for 3-5yrs as fixing longer brings the interest rate up dramatically.So short periods of fixing most used.

(2) Interest premium charged for say a 3 yr term--Depending on market volatility--say1%

(3) So to be better off interest rates would have to move up 1.25% immediately on taking out the fixed loan.

(4) If rates remain the same for a year rates have to then rise in the 2nd year 1.75% to be better off than your variable loan.


THINK ABOUT IT!
1

 

[tech/a]

You can play with the calculator here.

http://www.yourmortgage.com.au/calculators/fixed_variable/

Have a look at this example here where I have had interest rates rise .025% 8 times over the period of the fixed loan.5 yrs

 

[brisvegas]

at the bottom of the interest rate cycle you could get fixed rates at or cheaper than variable . i talked a friend into getting 5 year fixed at 6.5% . he thinks im a guru now but he was reluctant at the time . presently he is 1.25% interest in front and with his loan that is substansial saving of over 50 bucks a week


................ bris

 

[tech/a]

at the bottom of the interest rate cycle you could get fixed rates at or cheaper than variable

Rarer than the 30 yr low in the cycle I would suggest.

For all other times---99% of it-------------see above.

 

[tech/a]

- demographics (for region, growth rate etc)
- industries that exist in region
- macroeconomic influences, eg mining boom
- areas with future growth potential

And ofcourse as Les alluded to in an earlier post.
Following behind any boom in housing comes the important factor of "Infrastructure".

Right now COMMERCIAL property and developement are following in the footprint of the domestic boom.

A whole new important topic.(If your serious about property opportunities).

 

[Jay-684]

And ofcourse as Les alluded to in an earlier post.
Following behind any boom in housing comes the important factor of "Infrastructure".

Right now COMMERCIAL property and developement are following in the footprint of the domestic boom.

A whole new important topic.(If your serious about property opportunities).

Am interested on your thoughts on Commercial property as the next performing asset class Tech/A.

Recent Property Council of Australia seminars I have been to have sugested this exact same view.

PM me if you dont want to post it up here.

 

[Realist]

Some doe-brain was on the radio today saying that she expects a boom in Adelaide house prices over the next 5ish years. She still believes they are way under-valued!

Who is this lady?

I would like to know because when all her mortgagee sales start happening I can profit off her complete incompetence!

 

[YELNATS]

Why would the baby boomers want to sell their IP's? They are going to need a retirement income. Surely by retirement age all the mortgages will be paid off and the income can form part of their super income?

Julia

That's right. Rather than the baby boomers selling off their IP's, they'll be selling off their own larger homes and down-sizing into smaller dwellings, eg. units & townhouses. And they'll be putting the difference in the prices into their SMSF or into their self-funded pension annuity. As a b-b myself I am already observing this in my neighbourhood. This could mean the market for larger houses becomes depressed, but the market for more compact retirement-sized homes could benefit.

Regards. YN.

 

[Realist]

That's right. Rather than the baby boomers selling off their IP's, they'll be selling off their own larger homes and down-sizing into smaller dwellings, eg. units & townhouses. And they'll be putting the difference in the prices into their SMSF or into their self-funded pension annuity. As a b-b myself I am already observing this in my neighbourhood. This could mean the market for larger houses becomes depressed, but the market for more compact retirement-sized homes could benefit.

Regards. YN.

But do Baby boomers have compact retirement-sized homes in retirement style locations (beach towns) as investment properties?

I doubt it?

They probably have apartments in Sydney and Melbourne as IP's...

 

[tech/a]

Some doe-brain was on the radio today saying that she expects a boom in Adelaide house prices over the next 5ish years. She still believes they are way under-valued!

I really love the comments from you 2.
Neither of you have ever been involved in property,have zippo experience but know more about property than any person on earth.

I have no idea if she will be proven correct.
However last year I had some property valued by a valuer for some more $$s to buy some property.
Property A was valued at $275K
Property B was at $230K

Ive just been through the same exercise again and was more than suprised when the valuation 12 mths later and supposedly during a period of negative growth to find a now $350 and B $280.

Am interested on your thoughts on Commercial property as the next performing asset class Tech/A.

Recent Property Council of Australia seminars I have been to have suggested this exact same view.

Jay.
Will have to put up with the un informed but Les and a few others may wish to comment.
Its pretty well known that Commercial property follows on from a Domestic boom within 5 yrs. (Realist would have known that and be well in front of us all,but perhaps he is looking for prices to fall---and waiting and waiting and waiting).

This occurs as demand has opened up new subdivisions and the infrastructure in those regions is placed under so much pressure that new Commercial developements are opened and demand for old estabilshed areas increases.Plenty of business opportunity due to the influx of population (Housing,Rental,Units---doesnt matter),but no where to operate from.

So where is the opportunity.
Firstly in the established areas as they will be closest to the action.Plus in most cases there wont be any more land released---this is when prices climb fast.
I have 2 currently,I bought both in 2002.
one 1 acre and the other 1.25 acres.At the time residential was going in the same vacinity for $145K for 750 squ meters.
I paid $115K and 137K respectively,the last 2 un established blocks in the industrial area.Seemed like an opportunity to me as I wanted one for the Business and the other---well was cheap I thought.

I'm now established on the acre and have been offered $390K on the other.
(But I think I'll hold it a little longer then develope).

Sorry back to opportunity.
Councils in their wisdom only release limited commercial developement---Bless them!!
You can make great money 3 ways.
(1) Buy hold and sell
(2) Buy subdivide and sell (Selected blocks,corners best)
(3) Buy Develope and sell

You'll notice I like to sell.
Well Ive learnt from past experience that it is likely that the opportunity will last for around 7 yrs,then it will expire as an opportunity,around 4 yrs to go I feel.

I can go into the way I select a developement and evaluate it if you wish.

 

[dj_420]

there was a member on ASF who was talking about buying property no money down, can anyone remember who it was??

just wanted to ask them some advice

 

[Jay-684]

thanks for that tech/a! very much appreciated!

the reasoning for my curiosity is two fold. Firstly I am currently in my final semester of a Bachelor of Business (Property) degree at Western Sydney University. Obviously firstly I will need experience so I plan to go into property management and asset portfolio management (or gaining a job with Mirvac, Sotcklands etc) for the first part of my career. Secondly, once I feel I have an in-depth knowledge of commercial and indistrial property I plan on becoming a property developer/investor mainly due to the benefits of being self employed and the higher returns (to all the risk averse prople, I know the risk is higher as well).

I am interested in any knowledge you wish to send my way, however it may not be appropriate for this thread (not that half of the posts here are anyway)

 

[Jay-684]

there was a member on ASF who was talking about buying property no money down, can anyone remember who it was??

just wanted to ask them some advice

Tech/A has mentioned it in a previous thread I think.

PM him or he will reply to this thread.

 

[dubiousinfo]

Tech,

Are the 2 blocks industrial or commercial? You said commercal blocks but then said they are located in an industrial area. I know nothing of Adelaide & its prices, however, the prices you mentioned seem to indicate they are industrial blocks.