Australian (ASX) Stock Market Forum

House prices to stagnate for 'years'

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wayneL said:
A few years ago I was looking at a flat in Basingstoke UK on which the asking price was £30,000. The achievable rent at the time was £325 per month. That's a gross yield of 13%.

That was cash flow positive even with principle and interest loan, maintenance, insurance, the whole bowl of wax. It was an absolute no-brainer. (My mate bought it and I bought some larger, less yielding properties, but beside the point) Even without rampant HPI it was a great little investment.

Today that flat would sell for £140,000 and achievable rent £500 per month. That's about 4.3% gross yield; not even enough to cover interest.

Wages in the area have not moved that much in the interceding time.

Today that flat is a crap investment.
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Your 4.3% yeild today is not a true indication though, as the purchase price was in fact 30,000 not 140,000.

Look's even better if only 20% deposit was paid, 6000 ,and an interest only loan used.

Your 500 per mth would well and trully cover the 162/mth interest payment at 7.5% and the 140,000 look's like a good return on the initial 6000 investment.

Dave
 
MyNameIsEarl said:
300K house but 240K loan- I wouldn't buy until I had 20%. I got the loan on 47K gross income plus around 1.5-2K investment income from shares (still under 50K per year). I have had someone in some of the time, but got the loan on the assumption there was no rental income. Any bank at that time would give me a loan for that amount- I was approved very quickly. This was 2 years ago and I am on a higher income now so things are easier at the present r.e. lifestyle, but the point is I still lived on that income paying the mortgage (even in times when I didn't have a boarder). Not on dog food either- just don't have the plasma, the leather lounge, the car loan etc.
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Good on ya mate, who need's a leather lounge and plasma.

When are you getting the next one???

Dave
 
theasxgorilla said:
So don't buy there if your take on it suggests it's no good. It's hardly a representative sample. LOCATION MATTERS! Country, city, region, suburb, which side of the highway, which street, which.
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Agreed with your argument that location etc matters.

But Sydney isn't representative of the market for a typical Aussie investor? That's like arguing that a Commodore or Falcon isn't representative of a typical car. There's more people in Sydney than anywhere else in Australia. I threw in Hobart just to make the point that much the same situation has also occurred at the other end of the scale.
 
Your perception, your reality Smurf.

While Sydney siders were moaning about negative equity not so long ago and even more recently than that I had work colleagues telling me to look at today's Herald Sun article so I could find out how much my suburb had gone down...I was making money in bayside Melbourne. You've heard the saying about the baby and the bath water?
 
Kathmandu said:
Your 4.3% yeild today is not a true indication though, as the purchase price was in fact 30,000 not 140,000.

Look's even better if only 20% deposit was paid, 6000 ,and an interest only loan used.

Your 500 per mth would well and trully cover the 162/mth interest payment at 7.5% and the 140,000 look's like a good return on the initial 6000 investment.

Dave
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Kat,

To buy today it's a piece of crap.

Way under the bar for what I want and in the current risk riddled environment.

Don't forget that is GROSS yield, net is substantially lower.

If you like this sort of investment, good on you.

Not this little black duck. ;)
 
wayneL said:
If you like this sort of investment, good on you.
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I've actually also noticed that here there are places that less than a year ago made sense to buy in but just don't anymore.

I saw some buy-fixup-sell people buy a house for 3 million kronor and put the same property back on the market for 5.5 million just a few months later with one of the most insulting renovation jobs I've ever seen. Now we're forced to rethink our strategy a little bit. Look at other arrangements in other areas catering to other types of buyers.
 
theasxgorilla said:
...buy a house for 3 million kronor and put the same property back on the market for 5.5 million...
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Phew! I was under the misapprehension that 1 AUD was roughly 1.4 SEK.

Looked it up when you started talking telephone numbers for fixer uppers. (~5.79 in case anyone was wondering)

ASX, They weren't Poms were they.:cautious:
 
wayneL said:
ASX, They weren't Poms were they.:cautious:
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I have a feeling they might have been. Or at least one of them ie. Swedish g/f, Brit b/f...or Swedes who'd been working in London for a while. I was told today there are about 5 'renovate-or-simply-just-rip-someone-off-and-make-millions' property shows on TV there at the moment.

I'm almost certain there is a connection.
 
theasxgorilla said:
I have a feeling they might have been. Or at least one of them ie. Swedish g/f, Brit b/f...or Swedes who'd been working in London for a while. I was told today there are about 5 'renovate-or-simply-just-rip-someone-off-and-make-millions' property shows on TV there at the moment.

I'm almost certain there is a connection.
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Figures.

Yes, without "property pr0n" as they call it, British TV would scarcely have anything to show.

Very popular in no small part to the lady with the big, errr..... eyes. :eek:

libp3041.jpg

Sarah Beeney, presenter of "Property Ladder"
 
Mmmm, in Sweden we have lovely Isabelle for all your interior decorating needs...I mean, ideas and advice.

85C661D6-ECF4-4965-838C-2ABAA0E3F5DF.jpg


As you see, I'm not here by accident ;)
 
Well this is nicer than bickering about property prices! LOL

2004lamb.jpg

Amanda Lamb, presenter of "A Place in the Sun" :D
 
Oh My!!! :D:D

Brianna Meighan, Host of Hot Properties Panama TV
brianna_presenter.jpg
 
wayneL said:
Oh My!!! :D:D

Brianna Meighan, Host of Hot Properties Panama TV
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Wow...yep she gets my GOD award (Girl Of the Day).

It'll be a sad day when prices really do stagnate, not that I think she'll struggle with finding a new job or anything :)
 
wayneL said:
Kat,

To buy today it's a piece of crap.

Way under the bar for what I want and in the current risk riddled environment.

Don't forget that is GROSS yield, net is substantially lower.

If you like this sort of investment, good on you.

Not this little black duck. ;)
Click to expand...

Totally agree, if buying today at 140.

Dave
 
I just thought I'd let you all know; I'm no longer interested in house prices and am moving to Panama. :D
 
The fallout from the worst US housing bubble in history has much further to run, investor Jim Rogers has warned.

Mr Rogers, a former partner of George Soros who retired at the age of 37, told Bloomberg: "This is only time in world history when people were able to buy houses with no money down and in fact, in some cases, the builders gave them money for a down payment.''

The debris from the steepest slump in US housing for almost 20 years has contributed to the turmoil in credit and equity markets.
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http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/03/bcnrog203.xml&CMP=ILC-mostviewedbox


SO how long till it spreads global i wonder ....... :rolleyes:
 
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