Shares or Property?

[haledceb]

I'm a great supporter of property.

BUT

I really believe timing is everything
I started in 1996 and now have 4 of my original 11
Held free hold.
In 96-02 you could instantly buy a home without deposit
If you had equity and be positively geared.

Housing rose exponentially

Not so now.
Tenants think you owe them something
Most prices stagnant.

Interest will rise.
Don't forget capital gains tax.

Can't see a lot in housing prices rising . Not for many years.
Everything has reverted to the mean
I think the best opportunity is when housing is BELOW the
Mean swinging to way above it.

The opportunity in my view is in developement and
Quick turnover 12-18 mths.

Not any time soon?
Sydney house prices rose 14% last year, that's on the back of 15% the prior year. Who wouldn't want to be the beneficiary of this gain with a 1 million dollar property?
Property is a simplistic investment which boils down to supply and demand. Property bought in an inner city area WILL never lose demand, however business conditions dictate whether this demand will translate into price growth.

 

[qldfrog]

Property bought in an inner city area WILL never lose demand,

But offer is variable, I sold my IP in Brisbane (valley/springhill) settling this month not as I was scared by absence of demand per se but new RNA developments are bringing thousands of units within 1km radius..demand is not that elastic and too much offer will collapse a market
inner city or not, youi can always build higher and higher...
Unless of course you invest in a freehold house within an inner city, then yes demand will always be there

 

[Bill M]

I haven't read the whole thread but right now I would go shares rather than property. Both are getting a bit pricey but 5 to 6% gross returns from shares via dividends seems to be a bit better than 3 to 4% from rentals at the moment.

Having said that I'm holding more cash than what I should be, perhaps waiting for that reversal from either side? That would be nice

 

[tech/a]

But offer is variable, I sold my IP in Brisbane (valley/springhill) settling this month not as I was scared by absence of demand per se but new RNA developments are bringing thousands of units within 1km radius..demand is not that elastic and too much offer will collapse a market
inner city or not, youi can always build higher and higher...
Unless of course you invest in a freehold house within an inner city, then yes demand will always be there

Snap

Settled on one apartment today!
Looking to sell the other next door ASAP.
(Adelaide).
Don't like apartments. No land.

 

[haledceb]

But offer is variable, I sold my IP in Brisbane (valley/springhill) settling this month not as I was scared by absence of demand per se but new RNA developments are bringing thousands of units within 1km radius..demand is not that elastic and too much offer will collapse a market
inner city or not, youi can always build higher and higher...
Unless of course you invest in a freehold house within an inner city, then yes demand will always be there

As far as units go in Brisbane CBD I agree, not so the same story when it comes to land.

 

[qldfrog]

As far as units go in Brisbane CBD I agree, not so the same story when it comes to land.

fully agree: that was the point of my last line:
with house you purchase a limited supply: land, with unit only a fraction of that and unless considering block of only a few units which could always be bulldozed, land value is destroyed once a unit is on.

 

[Mofra]

I haven't read the whole thread but right now I would go shares rather than property. Both are getting a bit pricey but 5 to 6% gross returns from shares via dividends seems to be a bit better than 3 to 4% from rentals at the moment.

Having said that I'm holding more cash than what I should be, perhaps waiting for that reversal from either side? That would be nice

Dollar for dollar I prefer shares however property has a huge gearing advantage over equities, both in terms of LVR and interest rates.

I'm paying 4.24% on my IPs (purchased last year a resi ppty with 5.4% gross yield!) yet I pay 7.38% if I draw down on the Margin Loan, > 3% pa difference adds up in the long term.

 

[Obi wan kanobi]

Totally agree that as a vehicle for investing property is better than shares because of the high loan to value ratio achievable (usually 80%) and the lower interest rates charged (currently around 4.3%). Finance drives the attractiveness of property. If I could get a similar LVR and interest rates for a margin loan then I'd buy up shares big time.

 

[Wysiwyg]

Having said that I'm holding more cash than what I should be, perhaps waiting for that reversal from either side? That would be nice

Nice one Bill you cunning ol' bugger. Share prices have/are reversing so a greater number of shares can be bought for a higher yield per share assuming dividends hold or increase on the stock of choice.

 

[sinner]

The main downside of property investing as I see it, would have to be the reduced ability for compounding. You can really only compound if you sell a property, which is a capital gains event.

Meanwhile, most other financial assets compound at a much faster rate, with stock and bond funds that provide quarterly disbursements and cash savings accounts that compound on your daily balance.

 

[Bill M]

Nice one Bill you cunning ol' bugger. Share prices have/are reversing so a greater number of shares can be bought for a higher yield per share assuming dividends hold or increase on the stock of choice.

What a difference a week makes, now the XJO sits on that all important 5684 resistance line. If anything positive happens overseas overnight we will most likely see the XJO head towards 6000. Unfortunately I wasn't on the ball and I didn't buy anything at better prices, so for now I'm still sitting on that cash.

 

[The Falcon]

The main downside of property investing as I see it, would have to be the reduced ability for compounding. You can really only compound if you sell a property, which is a capital gains event.

Meanwhile, most other financial assets compound at a much faster rate, with stock and bond funds that provide quarterly disbursements and cash savings accounts that compound on your daily balance.

This is true to an extent, and I have given it some thought. The savvy property investor though will regularly have their portfolio holdings revalued, so they can take advantage of capital growth by drawing down growth equity on a perhaps annual basis for redeployment.

 

[sinner]

This is true to an extent, and I have given it some thought. The savvy property investor though will regularly have their portfolio holdings revalued, so they can take advantage of capital growth by drawing down growth equity on a perhaps annual basis for redeployment.

But what options do you have for redeployment? Certainly not into more houses...this actually highlights another issue of property, and that is "granularity of investment".

You can buy one investment property, or two, but not 1.5, and that mucks with your exposure levels and (as per above) ability to compound effectively.

Especially if house prices are moving during the "waiting between compounding" periods, and you have no way to hedge those movements.

 

[The Falcon]

But what options do you have for redeployment? Certainly not into more houses...this actually highlights another issue of property, and that is "granularity of investment".

You can buy one investment property, or two, but not 1.5, and that mucks with your exposure levels and (as per above) ability to compound effectively.

Especially if house prices are moving during the "waiting between compounding" periods, and you have no way to hedge those movements.

Ah, yes you do. The equity drawdowns provide deposits for additional property. It's not exacting, but in a rising market, this has worked for many property investors.

 

[sinner]

Ah, yes you do. The equity drawdowns provide deposits for additional property. It's not exacting, but in a rising market, this has worked for many property investors.

While it may have worked for some, during a specific time period, it's not really a valid investment strategy, what you are describing is levered bets on capital gains.

I actually know lots of people that got burned playing the property market prior in Aus to 2008, so to me it isn't the "sure thing" everyone seems to treat it as.

 

[The Falcon]

While it may have worked for some, during a specific time period, it's not really a valid investment strategy, what you are describing is levered bets on capital gains.

I actually know lots of people that got burned playing the property market prior in Aus to 2008, so to me it isn't the "sure thing" everyone seems to treat it as.

Your point is a separate matter altogether I was just showing how aggressive property investors compound.

 

[goponcho]

While it may have worked for some, during a specific time period, it's not really a valid investment strategy, what you are describing is levered bets on capital gains.

I actually know lots of people that got burned playing the property market prior in Aus to 2008, so to me it isn't the "sure thing" everyone seems to treat it as.

Why is this not a valid investment strategy? As in, this strategy needs to have steady capital gains over time?

 

[GwenRowen]

I think investing in stocks is a better option for the long run.

 

[GDRV614]

I think investing in stocks is a better option for the long run.

I read from some articles that they are about the same in Australia.

 

[Glen48]

House on the Gold Coast beach purchased for $8,500 in 1953 is expect to bring 3 Million,,, the house will have to be knocked down,,Some one wants to work the return??