House prices to stagnate for 'years'

[toothfairy]

When do you all reckon those house prices are going to stagnate again?

Dave

Well, your guess is as good as mine, I can tell you many people on this thread will tell you "TOMORROW".
One thing I know though, I am sitting on huge profit from the Carlton (Vic) property I bought in 2005, roughly when this thread was started.
Of course the bears always say it will vaporize soon. Well, they can say that to anything but nothing. Same for shares & cash! I am happy.
Cheers.

 

[numbercruncher]

Look realestate bulls, you might be able to fool some of the people some of the time but youll never be able to fool all the people all of the time.

You all coming here quoting price gains of individual suburbs and hoping to fool us that they are representive of the over all market are cracking me up, its like me coming here and Quoting some stock thats increased 200pc and thinking people will see that as a refelection of the overall sharemarket.

Lets explore an example, young Robotic here likes to quote lines from his bible, the REIV.

According to the REIV website metropolitan house prices in Melbourne between 2002 and 2007 have increased from 336k to 420k representing a 25pc gain for the 5 year period - Adjusted for Inflation, Less stamp duty and Realestate fees when selling this represents an absoloute MASSIVE LOSS.

If the Sheeple that you guys have sucked into the "realestate boom" had invested there money in an outstanding Australian company such as BHP back in 02 they would now be retired millionaires, Instead they sit there bleeding to financial death waiting for this house price boom that you folks convinced them was coming.

Happy realestate investing dudes.


http://http://realestateview.com.au/median/median-prices-metro-melbourne.html

 

[Judd]

Hmmm, $336 to $420 over 5 years is compound annual growth rate of 4.56% Nothing much to write home about......but then they're only numbers.

 

[numbercruncher]

Hmmm, $336 to $420 over 5 years is compound annual growth rate of 4.56% Nothing much to write home about......but then they're only numbers.

Thats isnt even the half of it (because of the misleading way everything is accounted for nowadays) as i mentioned prior .....

the purchase price is actually 336 + 16 (stampduty) = 352

The sell price is actually 420 - 10 (RE fee) = 410

so a 58 profit over 5 years is like 15pc or 3pc p/a

BUT thats before we start on other nastys, the purchaser probably borrowed 300k, and lets say they where smart enough to lock in at 5pc interest, thats 75k interest over 5 years, for the hell of it lets add in rates, insurance, maintenance, conveyancing = 15k, now for a true measure lets also take into account inflation @4pc p/a on the original purchase price of 352 = 70k.

So for the true cost .....

352 + 75 (interest) + 15 (rates etc) + 70 (inflation loss) = 512 (true cost)

512 cost less 410 sale price = 102k min loss over 5 years, you could of rented the house for that money !

Now lets explore alternative investment in BHP back in 02 of 352k worth (what the house originally cost) .....

35200 @10 each in 02 is now 35200 @ 38.30 each = 1.34m plus about 50k in taxpaid divs (less say 100k in interest and 50k to rent an apartment over the 5 years.)


Net result property buyer still in debt , still losing money. But still beleiving the RE boom will happen again.

Share buyer, rich, retired and laughing about how many Realestate shows used to be on TV.

 

[Kathmandu]

And I'm sure it would be easy for some here to show RE examples that could do as well if not better.

Where did you get the money for the shares?

What did you use as collateral?

What % of val would they lend ?

If renting, would most use the difference to invest, or would they just piss it up against the wall and buy new Cars and Holidays ( note I didnt say Ipod's, I know how it upsets some)

Dave

 

[numbercruncher]

And I'm sure it would be easy for some here to show RE examples that could do as well if not better.

Where did you get the money for the shares?

What did you use as collateral?

What % of val would they lend ?

If renting, would most use the difference to invest, or would they just piss it up against the wall and buy new Cars and Holidays ( note I didnt say Ipod's, I know how it upsets some)

Dave

Forget about the borrowing part, add it all again using cash buyer if you like, or most banks will do a 70pc LVR anyways for the shares.


Lets do it on this fishing shack that your selling for 600k and see what the sheeple will need to sell if for in 5 years to break even ....

600 - purchase
20 - stamp duty
240 - Interest @ 8pc
120 - Inflation loss @ 4pc
20 - Rates/insurance/maintenance
20 - cost to sell

So in 5 years they need 1.02m to break even, fantastic! They could probably rent in that area for 4 or 500 a week huh ?

Wonder what 600k of BHP will be worth in 5 years ? The dividends will be juicy in 5 years to boot at this rate !

 

[juw177]

What number cruncher says is true and I am not much of a property bull myself. But there are other factors to take into account when owning a property:

If it is your residence, the sense of comfort having a place to live cannot be measured in dollar value.

If it is a rental property, there is rental income.

And then there is taxation: if it is your residence, you pay no capital gains tax when selling. If it is a rental property, the income tax you pay to the ATO will instead go towards paying off your property.

 

[happytrader]

Firstly, I can only talk about where I live. Secondly anyone up here in North Qld who has an interest in real estate will tell you the same thing. The real estate up here over the last 6 months is getting bought at ask, revalued and sold again within weeks and months at +20% profits. Obviously lots of knowing and unknowing real estate millionaires in this town.

Cheers
Happytrader

 

[Kathmandu]

Forget about the borrowing part, add it all again using cash buyer if you like, or most banks will do a 70pc LVR anyways for the shares.


Lets do it on this fishing shack that your selling for 600k and see what the sheeple will need to sell if for in 5 years to break even ....

600 - purchase
20 - stamp duty
240 - Interest @ 8pc
120 - Inflation loss @ 4pc
20 - Rates/insurance/maintenance
20 - cost to sell

So in 5 years they need 1.02m to break even, fantastic! They could probably rent in that area for 4 or 500 a week huh ?

Wonder what 600k of BHP will be worth in 5 years ? The dividends will be juicy in 5 years to boot at this rate !

Well gee, if things go pear shaped with the resources boom , they'll probably not be worth much.

Just as well we dont have 5 year loan's, and just as well that I aint buying (or selling) $600k Houses

As a matter of interest, one of those houses just had a contract signed for $575k, so market looking fine thanks.

Dave

 

[Kathmandu]

Firstly, I can only talk about where I live. Secondly anyone up here in North Qld who has an interest in real estate will tell you the same thing. The real estate up here over the last 6 months is getting bought at ask, revalued and sold again within weeks and months at +20% profits. Obviously lots of knowing and unknowing real estate millionaires in this town.

Cheers
Happytrader

Come on mate, Numbercruncher would have us all believe that theres no money in it.

Dave

 

[robots]

hello,

thats the thing with the rent & invest brigade, its all hypothetical

not one example on this forum

thankyou

robots

 

[numbercruncher]

Come on mate, Numbercruncher would have us all believe that theres no money in it.

Dave

Stop manipulating what ive said Davo, there is money to be made in Realestate in select markets subject to many factors including demand.

If its any consolation to you realestate perma-bulls I do have a little invested in a land development in WA (only because of an invite to a family trust investment)

But back to your fishing shack investment, personally I would rather live in the local Hilton Hotel for the next five years, which would incidentally cost less than the required 400k gain the purchaser needs to break even on that joint of yours and investing the cash in the resource boom

Oh and BTW if it all goes pear shaped with the resource boom, its going to go a hell of alot more pearshaped with this so called "realestate boom"

Happy realestating though champ.

 

[toothfairy]

NC,
posting message in BOLD is rude and lacks netiquette. With people like you around I am going to retire from this thread. I will just keep all my profits and ideas to myself. Suits me fine. Millions may listen to you, I am not interested.
Goodbye.
Just two last tips for people interested. Negative gear it to the max and buy near CBD.

 

[numbercruncher]

NC,
posting message in BOLD is rude and lacks netiquette. With people like you around I am going to retire from this thread. I will just keep all my profits and ideas to myself. Suits me fine. Millions may listen to you, I am not interested.
Goodbye.
Just two last tips for people interested. Negative gear it to the max and buy near CBD.

As you wish Toothfairy, and as i said before you deserve your return as your a buy and hold investor, whos held throughout the cycle. But as ive demostrated RE on average is the most appalling of investments over the last 5 years for the average owner occupier.

Your tips serves my strategy perfect, rent from Negative gearers at half the price of buying, its a perfect relationship, cant you see we need each other .... Baby Guess the biggest loser in the Equation is the Government whos picking up the Tax deductions to the tune of Billions a year. Maybe its why we have broken Health and Education systems ?

 

[Flying Fish]

Also when buying your shafted with council rates water rates, insurance, maintenance.... the list goes on and on

 

[happytrader]

As you wish Toothfairy, and as i said before you deserve your return as your a buy and hold investor, whos held throughout the cycle. But as ive demostrated RE on average is the most appalling of investments over the last 5 years for the average owner occupier.

Your tips serves my strategy perfect, rent from Negative gearers at half the price of buying, its a perfect relationship, cant you see we need each other .... Baby Guess the biggest loser in the Equation is the Government whos picking up the Tax deductions to the tune of Billions a year. Maybe its why we have broken Health and Education systems ?

Numbercruncher

Out of interest and with a view to getting a bargain, where specifically are these hard done by owner occupiers located?

With thanks

Cheers
Happytrader

 

[robots]

hello,

things going really well for property at the moment

record prices, its been amazing the price increases that have occurred over the last 12months

thanks for the compliment NC,

in relation to the rent/invest vs buy arguement I just couldnt work out how the rent option was better after 7 or 8 years when rent started to equate to total outgoings as an owner of an equivalent property

when that time hits, that rent equals the same as owning the owner excels,

thankyou

robots

 

[numbercruncher]

Numbercruncher

Out of interest and with a view to getting a bargain, where specifically are these hard done by owner occupiers located?

With thanks

Cheers
Happytrader

Hi Happytrader

Are you asking me where is there stressed selling by owner occupiers ? So you can potentially grab a bargain from there misfortune and bad investment choices/money management etc??

Im not sure that even a small percentage of these owner occupiers realise how bad there homes are performing from a purely financial standpoint.

Its actually big business in the US atm, agents specialising in RE in various stages of distressed selling.

Im not in the business but i would suggest contacting your local estate agent as a reasonble place to start.

Hope this helps.

 

[robots]

hello,

http://www.theaustralian.news.com.au/story/0,25197,22397402-25658,00.html


seems the dwellings being built is short, although I believe the cost of materials and labor is having a greater impact than many believe

have a nice day

thankyou

robots

 

[numbercruncher]

Hello,


Yes i read that earlier that residental construction is pretty much in recession.


Shouldnt come as any surprise though 200k + for a block 200k + for the house and average folks earning like 40 to 50k p/a and interest rates rising.

Youve heard of Peak Oil, well Australia is quickly approaching peak debt.

It needs radical Government intervention asap. Obviously as the figures show population is rising so they must be living somewhere, staying at home longer ? Shared living arrangements ? Camper homes ? Overseas Holidays ? Park benches ? Who knows, but it doesnt look very good.