The future of Australian property prices
- Thread starter Joe Blow
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tech/a
No Ordinary Duck
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Yikes... that is cheap.
Last time I did the exercise it was around 1K sqm for good quality and 1.5K for top draw. I was thinking that was well out of date now! but maybe it is still doable.
I would be very happy with sub 1K for what I have in mind.
Cheers
Z
Certainly common rule of thumb.
But when your developing you dont
want rule of thumb.
Have a look at the
biggest project builder in your area
and I'm sure you'll be suprised at the quality and the price
(For an IP). Be interested to know what you find.
I did that exercise the other day on some advertised prices... came up with around $650 m2. I thought that I was missing something, must be some on costs there I said! Have not looked further yet, it was just out of curiosity.
I want to build something that is a bit different in construction terms so I can't go 'off the rack' but I figured that I could get some rough idea from their prices even though I know I will not come close to them in terms of cost. This is not a development it will be a keeper so I would like to get it spot on.
Cheers
Z
I want to build something that is a bit different in construction terms so I can't go 'off the rack' but I figured that I could get some rough idea from their prices even though I know I will not come close to them in terms of cost. This is not a development it will be a keeper so I would like to get it spot on.
Cheers
Z
tech/a
No Ordinary Duck
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Just built my own Ponderosa.
Came in at $1900/squ mtr but has Undercroft parking/Lift/Other luxuries so IPs a PPRs are different.
hello,
oh yeah coming to you live from chapel st brothers,
http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162
fantastic result 70% today, just amazing
great day, joint was pumping, city packed
thankyou
professor robots
oh yeah coming to you live from chapel st brothers,
http://www.reiv.com.au/home/inside.asp?ID=162&nav1=1226&nav2=162
fantastic result 70% today, just amazing
great day, joint was pumping, city packed
thankyou
professor robots
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Yeah,
That's great robots but was does it really mean ?
Does the clearance rebound just mean that the sellers are hitting the buyers before the spring surge, are sellers lowering their expectations ?
tech/a
No Ordinary Duck
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It simply means 70% of properties were sold above their reserve.
Clearance rates at best "indicate" some supply and demand.
Why isn't Australian property subject to market cycles like other markets?
Sure there was a brief reprieve during the GFC but things seem to be steaming along. I think we have a 3 geared economy, housing, mining and the rest.
When you take into account house prices are increasing faster than wages and salaries, and the percentage of money invested in houses compared to business (going by the big 4 banks loan books), business must be receiving less and less investment as servicing a huge loan compared to your salary prevents spending and servicing a PPOR loan is not as productive as shares, and most IPs are negatively geared, surely something's got to give?
Immigration may partially be keeping things going but diminishing business investment relative to housing investment isn't going to create enough jobs and that's not a good scenario.
Sure there was a brief reprieve during the GFC but things seem to be steaming along. I think we have a 3 geared economy, housing, mining and the rest.
When you take into account house prices are increasing faster than wages and salaries, and the percentage of money invested in houses compared to business (going by the big 4 banks loan books), business must be receiving less and less investment as servicing a huge loan compared to your salary prevents spending and servicing a PPOR loan is not as productive as shares, and most IPs are negatively geared, surely something's got to give?
Immigration may partially be keeping things going but diminishing business investment relative to housing investment isn't going to create enough jobs and that's not a good scenario.
tech/a
No Ordinary Duck
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Not as productive as shares???
Most IPs are negatively geared??
Business receiving less and less??
Scarcity of supply in areas of demand is the issue and what is keeping property buoyant.Where supply is fine and demand is = or< supply price can move down and or stay stagnant.
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this article in 2006 is worthy of a good read..
Abstract
Housing-bubble discussions generally rely on indirect barometers such as rapidly increasing prices, unrealistic expectations of future price increases, and rising ratios of housing price indexes to household income indexes. These indirect measures cannot answer the key question of whether housing prices are justified by the anticipated cash flow. We show how to estimate the fundamental value of a house and use unique rent and price data for matched single-family homes in ten metropolitan areas to illustrate this approach. These data indicate that the current housing bubble is not, in fact, a bubble in most of these cities in that, under a variety of plausible
assumptions, buying a house at current market prices still appears to be an attractive long-term investment. Our results also demonstrate the flaw in models that gauge bubbles by comparing movements in housing price indexes to movements in other indexes or to values predicted by regression models.
anyways,, we all know what a bubble is.. its just what type of spin you want to put on it really..
Abstract
Housing-bubble discussions generally rely on indirect barometers such as rapidly increasing prices, unrealistic expectations of future price increases, and rising ratios of housing price indexes to household income indexes. These indirect measures cannot answer the key question of whether housing prices are justified by the anticipated cash flow. We show how to estimate the fundamental value of a house and use unique rent and price data for matched single-family homes in ten metropolitan areas to illustrate this approach. These data indicate that the current housing bubble is not, in fact, a bubble in most of these cities in that, under a variety of plausible
assumptions, buying a house at current market prices still appears to be an attractive long-term investment. Our results also demonstrate the flaw in models that gauge bubbles by comparing movements in housing price indexes to movements in other indexes or to values predicted by regression models.
anyways,, we all know what a bubble is.. its just what type of spin you want to put on it really..
tech/a
No Ordinary Duck
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This demand/supply argument has been used in every property bubble in history. When pricing fundamentals become irrational, demand and supply makes no difference.
tech/a
No Ordinary Duck
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Are you telling me that fundamental irrationality WONT alter supply and or demand?
Not as productive as shares.
Speaking for myself I have used funds to both generate employment and as a consumer neither of which would have been at the level it is had it not been for property.
Would be interested in seeing the IP gearing figures. I will be suprised if investors were nett negative.
Business being squeezed by home loans?
Your kidding me Ive not had a bank say sorry we dont have the funds to lend you in your business!
Unless you dont meet their criteria.
prawn_86
Mod: Call me Dendrobranchiata
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Ok to all those who say now is usually always the best time to purchase:
WHy should i borrow a large amount and put it into property? Why not borrow and put it into stocks?
Top 5 reasons for investng in property over stocks please (and vice versa for the bears if they want)
WHy should i borrow a large amount and put it into property? Why not borrow and put it into stocks?
Top 5 reasons for investng in property over stocks please (and vice versa for the bears if they want)
tech/a
No Ordinary Duck
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Why one or the other?
Stocks have many advantages.
Why not both?
Stocks have many advantages.
Why not both?
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(and vice versa for the bears if they want)
As an investment property sucks because,
1. Property is not optionable,
2. Yield on property is unfranked,
3. Property transaction and maintenance costs are extreme,
4. Property is unhedgeable,
5. Property is boring.
Can't even get consistant numbers, here the clearance is a lot lower http://www.news.com.au/money/proper...e-air/story-e6frfmd0-1225920033724?area=money
Ok to all those who say now is usually always the best time to purchase:
WHy should i borrow a large amount and put it into property? Why not borrow and put it into stocks?
Top 5 reasons for investng in property over stocks please (and vice versa for the bears if they want)
You've got buckleys and none of getting a bank to lend you $300k to buy shares with
IMO this is where tech is wrong too - there are very few bank lenders who will lend small businesses money without property to back it up - I've tried, albeit not very hard, but they all want with houses or commercial property to secure the loan.Australian financial system is VERY focussed on housing and if the bubble does burst or even deflate a little (5-10%), I reckon there'll be some nervous CEOs around - see CBA is doing a global fly around trying to shore up support from international lenders.
Depends on your financial situation. Not everyone can afford to service a mortgage (or two if your an owner occupier) as well as a decent share portfolio.
prawn_86
Mod: Call me Dendrobranchiata
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Because at this stage of our life we have circa 30k saved already and if we want to buy into property it means putting that whole amount down (and more) for a deposit.
I would love to have both, but cant do at the moment, perhaps in 5 or so yrs time
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What kind of coin do you think can be made from shares? Will your 30k invested in shares be equivalent to property? Is the property positively geared? If it is negatively geared ... by how much? What are your tax deductibilities? Is it to be your PPOR or an IP? Will the bank lend you 300k into shares? When you sell your shares or property how are you set up for taxability? If it is to be a IP where is it and how much rent as well as capital gain are you expecting to receive?
PROPERTY HAS THE SAME PRINCIPLES AS SHARES !! Do The research !
Too many questions !
cutz wrote "5. Property is boring." hahahahha aa ,,,,,,, good one !
Quick question prawn_86. If you have 30k saved is it in shares or cash in the bank?
