The future of Australian property prices

[UBIQUITOUS]

Just an update from my area of investment, the Northern Beaches in Sydney. We decided to rent out our 80 sqm unit. The agent had the unit open for inspection for 15 Minutes. By the end of the day we had an application in and the tenants moved in last Saturday. I got a 6 Month lease and $420 per week rental. There are no shortage of tenants wanting to rent property in my area.

Just recently they sold a weatherboard 3 br house up here for over $1.4 Million. There is no more vacant land left around this area and this can only mean one thing, that prices will be going up. More people and less supply. Here is a link to some recent activity in my area.

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"Doyle Spillane also sold a classic weatherboard home at 177Ocean St, and only 50m from the beach, recently for a sum believed to be considerably more than $1.4million."

Full story here: http://manly-daily.whereilive.com.a...ne-wants-to-get-in-on-the-ocean-st-narrabeen/

Oh dear....anecdotal evidence? YAWN!!!

Okay, lets level the playing field on this debate:

I bought some $400k worth of BCC stock @ 4cents in September, only to sell in November for 16cents. My 2months profit was $1.2million @ 300%

Property bulls...should I have invested in real estate? Did I do wrong? Well did I? Should I have tried to make a loss so I could write it off against my tax?

 

[robots]

hello,

no you didnt do wrong Ubi, you did what you wanted and if you made a motza then well done, great effort man you cleaned up

similarly, well done to any property owners who have cleaned up, well done

thankyou
robots

 

[Airfireman]

Well done UBIQUITOUS on a 400% profit in shares... please let me know what your next investment will be

They say that real estate prices double in 6 or 7 years...so if you bought your first home and never moved into another house until you died (say 60 years) then you would have 1000% increase for your investment,,plus a roof over your head

Tim

 

[Bill M]

I bought some $400k worth of BCC stock @ 4cents in September, only to sell in November for 16cents. My 2months profit was $1.2million @ 300%

Property bulls...should I have invested in real estate? Did I do wrong? Well did I? Should I have tried to make a loss so I could write it off against my tax?

BCC, what and who is that? I have never heard of it so I looked it up. It is an oil exploration company based in Houston. It does not pay any dividends and has only been around 2 years or so. You could have just as easily blown your 400K in a failed company. I am not into that sort of risk taking thank you. I am retired and currently live in a nice little house and collect weekly income from a safe investment that will be around for many many years to come. As inflation goes up so will my rental income. You did very well with your profits and I wish you heaps more success but for me I will stick with the investments that have already given me retirement and a relatively safe income, good luck.

 

[UBIQUITOUS]

Guys, thanks, but I must apologise. I forgot to mention that I was making it all up to make a point.

People talk about particular suburbs or particular types of residence performing well, and then using this as evidence that the whole RE sector is performing admirably and worth investing in. 2006 - "Look at Perth boom, RE is the place to be". 2009 "Look at Melbourne boom, RE is the place to be".

So whats so different with extrapolating individual stocks or sectors and applying this to the market as a whole?

In my opinion the stock market will ALWAYS provide greater wealth for the learned than the RE sector will. Afterall, in Australia, without certain booming sectors in the stock market, there would be no house price appreciation.

 

[kincella]

melb house prices up 20% year not down 40%

most of my fellow property investors have moved on,they no longer post here...I dont blame them, all those debates about how prices would fall, all those 'pigs might fly' scenarios the bears were forecasting.....

we all spent so much time, in our attempts to guide them in the right direction.....but all to no avail...
we did not predict a 20%+ rise in a year....but we did suggest modest rises and gave detailed reasoning to support our claims...
so there you go...a vindication....

I came across this from Alan Greenspan, in his book, (this has been my own theory for many years, and I have mentioned it on this forum many times )....

"the wealthiest investors are best at gauging shifts in human psychology, rather than forecasting earnings from Exxonmobile"

hint...so some studies in psychology may be more advantageous in your quest for wealth, and you should become more sceptical of the MSM, if using that media for your research alone.....

extract only.........

What $525,000 can buy you in Melbourne
MARIKA DOBBIN
December 19, 2009
A MELBOURNE house costs at least $100,000 more than it did a year ago.

The population boom and housing shortage pushed the median price to $525,000 in October, compared with $415,000 last October. The median is the middle value when all sale prices are listed from lowest to highest.

Apartment and unit prices grew more slowly, with a $429,250 median in October, up from $361,000 the previous October.

Price growth for houses- as well as units and apartments - has been greatest in Melbourne's middle band of suburbs 10-20 kilometres from the CBD.

And the Real Estate Institute of Victoria predicts the November median will be up to 10 per cent higher again once the remaining private sales are calculated.

Property adviser Monique Wakelin says the $525,000 median would have bought a modest house in the inner suburbs just two years ago but not any more, except for a few rare cases in the inner west.

''If you did manage to find a house for that money in the inner city, odds are that it will need major structural work and a lot of extra capital spent on it,'' she said. ''You are really looking at an apartment on that budget.''

http://www.theage.com.au/business/property/what-525000-can-buy-you-in-melbourne-20091218-l5vi.html

note to ubiquitous...
your example....with BCC, is an outright gamble...it is not investing, you could have lost the lost....
as Warren Buffett has stated...his favourite holding period is forever....

there is absolutely no comparison between an investment in property,with an investment in a spec stock.......
that type of comparison lies within the 'pigs might fly' basket.....
you will need a gigantic amount of good luck with your theory to make it work....but the odds are against you by about 2 million to one...
cheers

 

[nunthewiser]

most of my fellow property investors have moved on,they no longer post here...I dont blame them, all those debates about how prices would fall, all those 'pigs might fly' scenarios the bears were forecasting.....

Blah blah blah ........... You keep whinging at how bad this joint is and whinging about how everyone not posting on this thread but yet you continue to post here ...............

Porquoi ?

No offence intended of course , just intrested in the nuts and bolts of it all.......

 

[satanoperca]

Hi Kincella,

Good to see that you have stated posting again.

The Age article while headline grabbing does not provide any credible sources of its statistics.

Just checking the REIV and RPdata sites and they have medians around $480K a little bit short of the $525 quoted.

REIV reports Jun qty 2008 $450,000 to October qty 2009 $480,000 - 6.7% increase, not bad by any standards, just cannot see where the $100K increase is. Investors don't need to be worried about detail, The Age told them so.

As for shares giving a greater return lets just have a look at a few that are not spec's and their returns this year if you could have picked the bottom.

JB Hifi 300%
David Jones 400%
WestFarmers 200%
BHP 200%
RIO 300%

Just to pick a few. The difference with shares over property is there cannot be any blurring and manipulation of figures.

Cheers and have a good weekend

 

[satanoperca]

And further to add all it not what it seems and property can be just as speculative as shares.

http://www.smh.com.au/national/tenants-are-being-made-homeless-as-investors-default-on-mortgages-20091207-kffj.html

Ms Maund said she recently sold some mortgagee in possession apartments. ''They paid $700,000 or $800,000 for them, and then they sold for $500,000,'' she said.

The general manager of O'Meara Property, Daniel O'Meara, said properties that people had paid $950,000 to buy were now on the market for $350,000.

Wow that is a hair cut.

 

[joeyr46]

Kincella you are right property has had a run recently (in line with increasing liquidity as always)
And you are probably sick of hearing 40% loss stories
Question? Has the bell been rung at the top
News story on TV last week (Main headline news not hidden on property page so to speak) about ten minutes interviewing buyers, prospective buyers and renters.
I know usual junk but everytime I have seen these stories take over as headline news the top is either in or about to be called. Time will tell.
No it doesn't mean 40% fall may just be a resting place for a few years.
However with debt at the moment falls could be greater than anytime in recent history.
As for that shortage have yet to see figures to demonstrate just rhetoric to say we need to build so many houses a year and were not acheiving it by a long shot. Same story back in 1990 only to find a huge surplus in 91/92 coupled with a dramatic 45% price drop in outer areas (I'm talking about Brisbane here) even though inner city stayed flat or even moved slightly hire.
Debt higher this time so we will wait and see but these are definitely exciting times to be in the marketplace

 

[overule]

Guys, thanks, but I must apologise. I forgot to mention that I was making it all up to make a point.

...
...
...

In my opinion the stock market will ALWAYS provide greater wealth for the learned than the RE sector will. Afterall, in Australia, without certain booming sectors in the stock market, there would be no house price appreciation.

Well, i thought you risked $400K to invest in Shares.
If you have done so, i would solute you for your courage.

if you ALWAYS pick the right shares. Share markets give you greater returns. Please tell us the secret if you know how or done so!!!

 

[overule]

melb house prices up 20% year not down 40%

most of my fellow property investors have moved on,they no longer post here...I dont blame them, all those debates about how prices would fall, all those 'pigs might fly' scenarios the bears were forecasting.....

I don't get your point. Those that said property going to crash are properly not property investors.

 

[robots]

Guys, thanks, but I must apologise. I forgot to mention that I was making it all up to make a point.

People talk about particular suburbs or particular types of residence performing well, and then using this as evidence that the whole RE sector is performing admirably and worth investing in. 2006 - "Look at Perth boom, RE is the place to be". 2009 "Look at Melbourne boom, RE is the place to be".

So whats so different with extrapolating individual stocks or sectors and applying this to the market as a whole?

In my opinion the stock market will ALWAYS provide greater wealth for the learned than the RE sector will. Afterall, in Australia, without certain booming sectors in the stock market, there would be no house price appreciation.

hello,

good afternoon brothers,

I like this one, why did all the Storm people get squashed then, they were in the share market, on the ride to GREATER wealth apparently

if its so easy why didnt they just ride it out, oops, thats rights the banks only loan 60-70% LVR's because of RISK

RISK of the great unknown, management, boards, regulations, governments, competition, people stealing money

oh yeah, great day

thankyou
robots

 

[robots]

hello,

oh yeah, fantastic end to the year with another weekend with 83% clearance rate

http://www.reiv.com.au/home/inside.asp?ID=162&nav1=652&nav2=162

just amazing, unbelievable, awesome, well done brothers, walk tall

thankyou
robots

 

[condog]

:horse: This debate is like flogging a dead horse...

Both property and shares are great and or poor investments at different points in time....each out performs at differnet times and that depends entirely on which property and which shares are selected....and a multitude of other micro and macro economic factors.....

Clearly some people in here have either pre-concieved ideas or experiences that lead them to believe one is better then the other, and thats their perogative....but, you are wasting your time trying to change other peoples beliefs or convictions....

I suggest put your money where your mouth is and invest in the one you believe in rather then trying to convince others one is better then the other...its a fruitless exercise, achieves nothing and to me at least displays a level of niavity......

Perhaps start discussing exactly which property markets are currently set for exceptional or poor growth and why, exactly which shares are set to under or out perform and discuss reasons why, rather then trying to change each others beliefs or convictions..............that way we all stand to gain from intelligent discussion and debate...

 

[Bill M]

Perhaps start discussing exactly which property markets are currently set for exceptional or poor growth and why, exactly which shares are set to under or out perform and discuss reasons why, rather then trying to change each others beliefs or convictions..............that way we all stand to gain from intelligent discussion and debate...

That is exactly what all the property commentators have been doing all along. With all due respect, people like Robots, Kincella, many others including myself only quote from own experiences. What somebody could have, might have or did on the sharemarket is really of little relevance to this topic, well noted thank you.

Now back to some real experiences. In 1996 I went and looked at a 2 br unit on the Northern beaches in Sydney, it was 160K then. Exactly 6 years later (in 2002) that unit went up for auction and I attended and it sold for 320K. That unit today would be around 400K. The future of Australian property prices is clear, they will head up as they have throughout the history of our nation.

 

[singlefished]

Blah blah blah ........... You keep whinging at how bad this joint is and whinging about how everyone not posting on this thread but yet you continue to post here ...............

Porquoi ?

No offence intended of course , just intrested in the nuts and bolts of it all.......

It's just a pity Nun that these self professed property experts rely so much on the fabrication of the media and the views of those with vested interest rather than basing their argument on fact...

Victorian home prices overstated

AVERAGE house prices have been overstated by up to 18 per cent by the real estate industry, official statistics show.

http://www.heraldsun.com.au/news/victoria/victorian-home-prices-overstated/story-e6frf7kx-1225811878623

$480K - REIV 3rd qtr median
$413K - Valuer-General 3rd qtr median

hmmmm....

 

[robots]

hello,

fantastic data singlefished,

so, through the GREATEST financial event since 1929 the world has ever seen the median dropped just over 5%, and is now back over the previous figure prior to GREATEST financial event since 1929

and the all ords?

great post Bill M

thankyou
robots

 

[kincella]

Satanopera
couple of points....my post was distinctly Melbourne...not Australia, Timbuktoo, or Barnawatha....
...Newcastle is a long way from Melb and a whole lot different...
population of less than 500,000...or 10% of the size, compared to Melb of almost 5 million...its also a working class area...it has its problems with infrastructure....and other problems, relative to the mining industry..
I looked up Nelson Bay as an exercise...
median price for the suburb is 382,000 and for the region its 325,000...
so there appears to have been some 'fun and games' going on, with selling units for 900,000....believe there is more to that story than the article provides...
they were not locals but investors...so a 'pig might fly' in there somewhere..
in relation to the fancy prices...
I dont have the time nor the inclination to research Newcastle....but I recall they are having some large problems....with bottlenecks at the ports, damns, and of course they have the nsw labor party to contend with, and related union problems..
http://www.domain.com.au/Public/SuburbProfile.aspx?mode=buy&suburb=NELSON BAY&postcode=2315

singlefished...and others...
we do not rely on the media...we look around to the neighbour's houses being sold next to ours, and note the increases for ourselves.....far more research goes into our decisions, note improvements and changes to the suburb as a whole etc...
one suburb I invest in, has seen the central CBD expanding at a rapid growth, and the CBD is moving even closer to my houses...
facilities and services are closer, more convenient, which increase the value of my properties...the closer to the city centre, the more expensive the property value.....
however if I were to post my own research and findings on here....you would most likely scotch the idea....hence the reference to media reports....

and selective articles to suit your agenda...REIV stated......
"Their median price is always lower than ours for the very simple reason that they get every single property sale in Victoria and we don't," he said.

almost no one would make reference to the valuer generals list of house prices....which covers every tiny hamlet , in every corner of the state...to arrive at that figure....
only Melbourne was used in my post....not Bendigo, Ballarat or any other regional city or town...
I could show you houses in vic for prices of 60-70,000, but you may not be interested in living, or investing there...

Interesting , all the while you spend here debating and suggesting figures are fudged, ponzi schemes abound etc etc etc....the market is rolling along and getting further away from you.
I saw an article this week...WA has gone gang busters, they are getting $3000pw for a 2 br fibro shack..in one of the mining towns...
some lucky PI over there....
some of you need to up the ante ...if you really want to truly debate the housing market....
and like any other market, not everyone is a winner, and some treat it as a gamble...but that is more of an attitude, an affliction...
the majority just look for a suitable roof over their heads to match their lifestyle

 

[Macquack]

and selective articles to suit your agenda...REIV stated......
"Their median price is always lower than ours for the very simple reason that they get every single property sale in Victoria and we don't," he said.

Kincella, the Valuer-General (Victoria) figures are not selective, the REIV figures are selective.

The figures in the article refer to the whole state of Victoria, so the question is not about regional Victoria dragging down the average/median house prices but rather the inaccuracy of the REIV figures.

Is it an "agenda" to want to know the truth?