Property or stock market?

[$$wanted$$]

Hi, i have been a long time lurker and decided to join the party
I am 24 have about $25K in direct shares and a little in cash savings. I earn roughly 70k a year. I want to purchase a property at the end of this year in Brisbane however i am wondering what your thoughts are as property prices in Brisbane are currently high at the moment and the share market seems to be providing some bargins.
Am i better off saving dollars to buy the property or keep plugging along in the share market with the lower sp atm
all thoughts welcome
Thanks

 

[doogie_goes_off]

If you have no debt you can get 7.5% off the bank if you shop around and have these kind of $, you'll only just beat inflation after the tax man but Bris is overheated and the market is full of pessimism so patience is required in any instance. A bargain is in the eye of the beholder, however my opinion is free and so are the rest of the ASF contributors, welcome to the cheap seats, hope you invest well. Also note - risk is better spread over different investments, with shares you can get broad exposure eg: property developing companies may expose you to sensible property purchases but you are paying the managers.

 

[theasxgorilla]

Hi Wanted,

Where to begin?

You haven't told us about which shares you own, why you bought them, when you bought them, and how you determine if you should buy more or sell.

If your goal is to buy a place at the end of the year and I was you I would do the following:

1. Workout how much you need for the kind of place you want to buy
2. Workout how much you can save, realistically
3. Determine when you want to buy
4. Take today's portfolio value and include that as part of your deposit/closing costs
5. Count forward month by month and see if you can afford to buy what you plan to buy when you plan to buy it, including today's portfolio value.

Do you have more than you need, less then you need or enough to afford it?

If playing the markets jeapardises your plan to invest in property, and investing in property is your big goal, then you need to know at which point, numerically, that goal is at risk.

As for whether it is a good time to let positions in the stock market ride, or whether the end of the year will be a good time to buy property in Brisbane, that's difficult for any of us to know.

Some people think the ASX has further downside potential, and many people are prediciting the peak of property prices in Australia being either imminent or having occured already.

How much have you lost on you shares since their most recent peaks? And what do the price stats look like for the suburbs you are thinking of investing in? It's difficult to help you further without knowing these things.


ASX.G

 

[shogun]

Hi, i have been a long time lurker and decided to join the party
I am 24 have about $25K in direct shares and a little in cash savings. I earn roughly 70k a year. I want to purchase a property at the end of this year in Brisbane however i am wondering what your thoughts are as property prices in Brisbane are currently high at the moment and the share market seems to be providing some bargins.
Am i better off saving dollars to buy the property or keep plugging along in the share market with the lower sp atm
all thoughts welcome
Thanks

You could probably buy cheaper in a years time so I'd say wait. Debt is being rationed - it will have an enormous impact on property prices in my view.

Stocks on the other hand are starting to look cheap - some good buying opportunities.

 

[$$wanted$$]

hi,
thanks for the replie
Most of my share portfolio is made up of BHP prob 60% then the other part is made up of CQT, ADY and ANZ

I am currently in a position where saving about $800 per week is doable without too much stress.

Property prices just seem to be very high at them moment around Brisbane so i was thinking of just topping up on BHP & ANZ if they stay down a bit and waiting a year or 2 for the property purchase.

 

[hangseng]

hi,
thanks for the replie
Most of my share portfolio is made up of BHP prob 60% then the other part is made up of CQT, ADY and ANZ

I am currently in a position where saving about $800 per week is doable without too much stress.

Property prices just seem to be very high at them moment around Brisbane so i was thinking of just topping up on BHP & ANZ if they stay down a bit and waiting a year or 2 for the property purchase.

You must be living on about 12k a year if your 80k is gross earnings and you can save $800 p/w. Do you eat chips, walk to work and live under a tree? Or just living at home still?

Hang on to the shares it seems and placed all the extra into an on call account at around 7.5% and take advantage of any future market fall of significance (I think one more to come at least this year before Oct). Then look at buying property in about 12 months with a bigger deposit and possibly flat housing market.

I wouldn't wait longer than 1-2yrs to get back into property though. It is looking like a buyers market for now but that won't last.

Best of all go and get advice from a professional, the above isn't and shouldn't be taken as advice. It is my view only.

 

[agro]

stockmarket > property because of liquidity and has been shown to produce record % gains

 

[ceasar73]

stockmarket > property because of liquidity and has been shown to produce record % gains

'...because of liquidity..' this is a negative my friend!

what if everyone in your street started selling out b/c of the fear of more rate rises?

your property would be worth bugger all over night.

stockmarket > property only if you really really know what your doing...INHO

ceasar73.

 

[wayneL]

'...because of liquidity..' this is a negative my friend!

what if everyone in your street started selling out b/c of the fear of more rate rises?

your property would be worth bugger all over night.

stockmarket > property only if you really really know what your doing...INHO

ceasar73.

That's the first time I've seen liquidity stated as a negative.

Everyone on the street wanting to sell is not liquidity, it is the exact opposite. Why? No buyers.

Therefore no turnover - no liquidity.

 

[pepperoni]

My 24yo gf is saving 750 a week so I wouldnt get too excited ... in fact even double those savings wont be life changing anytime soon.

But no matter what put eveything in in property .... ive heard its gonna keep rising for years.

Ignore cash ... its only giving a guaranteed effort free 8.25% ... and any self educated fool can make 20% plus in shares or property

 

[intheblack]

any self educated fool can make 20% plus in shares or property

Make 20+% p.a. year after year and you'll be on the rich list very shortly, my friend

 

[MRC & Co]

Make 20+% p.a. year after year and you'll be on the rich list very shortly, my friend

Not quiet, but the idea is there.

As for the question, I wouldnt touch property with a 40 foot stick. Just personally.

Much higher potential % gains from the stockmarket, not to mention, its what I love!

 

[juw177]

I would choose cash for now

 

[CFD]

.... ive heard its gonna keep rising for years.

Must be right then.

 

[Andy_aus]

I think you can do well in both... just depends on how much knowledge you have

 

[wildkactus]

I like both, property and the Stockmarket. over the long term (15-20yrs) they both go up.

I use property as a sit and wait (passive Investment), and trade the swings of the stockmarket (active investment).

For both to be successfull do a lot of reaseach as you can lose in both if you don't buy right.
I find with property you make most of your money on the entry.

 

[wayneL]

You can't day trade the property market... or trade options on it (unless you're a develper)

I like both, but for long term investing, I like buying at value (by my definition) and there's not much of that in either market at the moment.

The stock (and commodities) markets always have something for traders though.

 

[ceasar73]

That's the first time I've seen liquidity stated as a negative.

Everyone on the street wanting to sell is not liquidity, it is the exact opposite. Why? No buyers.

Therefore no turnover - no liquidity.

Often investments in liquid markets such as the stock exchange or futures markets are considered to be more liquid than investments such as real estate, based on their ability to be converted quickly.

It is this ability to be converted quickly (supply>demand) in times of high fear that result's in the stock market going south. Much harder to liquidate with real estate.

wayne - I have been reading your posts with great interest for weeks, you are far more knowledgeable than the ceasar....so what am I missing here??

cheers,

ceasar73.

 

[wayneL]

Often investments in liquid markets such as the stock exchange or futures markets are considered to be more liquid than investments such as real estate, based on their ability to be converted quickly.

It is this ability to be converted quickly (supply>demand) in times of high fear that result's in the stock market going south. Much harder to liquidate with real estate.

wayne - I have been reading your posts with great interest for weeks, you are far more knowledgeable than the ceasar....so what am I missing here??

cheers,

ceasar73.

Well in my observation, there are completely different dynamics at play.

With shares etc, it is completely transparent. You can see buyer and sellers in the market. You can see off screen buyers and sellers coming in on the inside of the bid/ask.

You can't see that in the property market.

With property, there is an endowment effect at play on the sell side.

This is what is happening in the UK right now, HEAPS of property for sale, but very few buyers willing to pay the asking price or near offer, so turnover is extremely low. Estate agents are going broke all over the place.

Sellers cannot see the market depth so delude themselves that there is a buyer at "their" price out there when there just ain't.

Even as prices drop (and they are here) there is still little liquidity, so those who need to sell, can't, and end up being foreclosed. The "need to" sellers have to keep dropping prices to meet the buyers, yet turnover remains sluggish.

Hence, increased liquidity generally means more buyers in the property market and rising prices. Collapsing liquidity means lower prices.

 

[hissho]

It's interesting that the thread was titled "property or stock market" instead of "property and stock market"...

Read a couple of Peter Spann's books and been thinking if the same (or similar) approach would work today...i've heard some success stories before but obviously time has changed. not sure what Peter Spann is teaching now?