The future of Australian property prices

[jbocker]

Gday all, been off air for a few months after selling house and eventually moving into our townhouse in Perth CBD, after short stay at the inlaws. Reading the posts I feel very lucky to have sold on our first home open for a price we wanted. The place looked a treat and was sad to leave after 28 years. I am in the midst of a complete reno .. lots of fun.
The market looks to be in a cooling mix, and I wonder what effects the disasters of late will have on the overall market.
Been trying to get tradies for various bits and pieces, and getting mixed responses busy and not busy albeit a bit difficult in the xmas and January break. Been speaking with 1 colleague and he is finding the block buy and build market easing considerably in outer NE Perth. But it is the post Xmas break, and he is 1 person.
Anyway glad to be back, and enjoying the reads.

 

[robots]

hello,

oh gidday, great update JB

i have moved up to Ballarat (and great performance on the median value up here by the way, howzat hey brothers)

just get down to st kilda on the weekend now which is just amazing, got a great project up here adding value over the next 5-10yrs, no board or management team to stuff things up

and at the same time a roof over by head

i reckon every dollar spent on value add i can make 3, what you reckon?

thankyou
professor robots

 

[Tysonboss1]

I thought it would be obvious,

Businesses close down and / or businesses with less profit to spend in the local economy = less buying power on housing, or less people competing to buy in the marketplace.

Shift in Wealth, from OZ to China.

The post has 100% relevance to the housing market.

Unless it is offset by other industries, We can all work in the mines or get government jobs funded by mining tax

 

[white_goodman]

hello,i reckon every dollar spent on value add i can make 3, what you reckon?

thankyou
professor robots

yes you will make exactly 3 for every 1....

is that number based on anything or just something that sounds nice?

 

[sinner]

critically, a lower
level (or even negative) of mortgage growth origination. This will have a
direct impact on CBAs bottom line."[/I]

This is the real issue at hand.

 

[medicowallet]

hello,

oh gidday, great update JB

i have moved up to Ballarat (and great performance on the median value up here by the way, howzat hey brothers)

thankyou
professor robots

So have you still got property in melbourne?

 

[Bill M]

I am thinking of buying another investment unit on the Northern Beaches of Sydney but the prices seem to be holding firm. I keep reading those free emails from a publishing company in Melbourne saying Australian housing is about to crash but it isn't happening. The doom and gloomers have been calling it for 4 years now, since the sub prime problems of 2007 in fact. So how much longer do we have to wait? And what percentage of a crash are we talking about?

 

[medicowallet]

I am thinking of buying another investment unit on the Northern Beaches of Sydney but the prices seem to be holding firm. I keep reading those free emails from a publishing company in Melbourne saying Australian housing is about to crash but it isn't happening. The doom and gloomers have been calling it for 4 years now, since the sub prime problems of 2007 in fact. So how much longer do we have to wait? And what percentage of a crash are we talking about?

You are asking the wrong question.

The question should be what is the ROI you will likely recieve in alternative investments over the next 5-10 years as opposed to property.

Investment returns, are all relative.

 

[adobee]

I am thinking of buying another investment unit on the Northern Beaches of Sydney but the prices seem to be holding firm. I keep reading those free emails from a publishing company in Melbourne saying Australian housing is about to crash but it isn't happening. The doom and gloomers have been calling it for 4 years now, since the sub prime problems of 2007 in fact. So how much longer do we have to wait? And what percentage of a crash are we talking about?

Northern beaches prices have been very stagnant in my opinion.. I think there is a real undersupply in demmand in this area and would suggest you can negotiate pretty hard.. I would steer clear of brand new units but you might be able to pick something up a year or two old at a bargain.. else I expect the much older 70s apartments will have substanially better rental returns renovated than the newer apartment complexes.. I would only buy northern beaches long term on the basis you are expecting a strong rebound in capital growth.. I would research where you choose as I am advised alot of recently overdeveloped centres have turned a bit getto ish with trouble and crime.. For capital growth I think you could have better chance with getting a really good deal on a luxurious home, if you think northern beaches will bounce back these have been slammed for last few years.. If the ecomony turns and having a million $$$ northern beaches / palm beach pad comes back into vogue there could be couple of hundred thousand $$ move on some of these homes pretty quick.. If you are looking for simple investment with good rental return I would suggest considering Sydney City fringe in short walk to CBD, say one bedroom in Surry Hills.. constant strong rental return.. or older one bedroom in Chippendale strong rents and going to move in prices as major new developements complete such as the fraser broadway site which will be asking x2 the price of and existing unit value.. (All IMO)

 

[robots]

So have you still got property in melbourne?

hello,

yes,

yeah i reckon for every $1 spent you can make $3 when adding value to a place, so if you spend 15k i reckon you can add 45k to the price, howzat hey brothers amazing

gardening, painting, door knobs, window hardware, simple stuff gotta be stylish though, timeless

thankyou
professor robots

 

[kincella]

cap gains is income too with the added advantage of tax advantages

some of us treat capital gains as a legitimate form of income...and it comes with tax advantages.....you know, specifically the capital gains tax regime.....where only half of the gain is taxable after a year.....
love it, and it converts easily into cash.....without even selling...want cash...take some equity out....


I know some posters totally dismiss capital gains as a form of regular income....and choose only a high dividend, or high interest rate...as a benchmark.....
especially when they comment on the annual rate of return, for a given asset....
after tax and inflation, their dollar value is losing pace, being devalued year in year out...

***funny how property bears promote the idea that almost anything has a better return than property.......as if.....
**the rubbish in equals rubbish out rule is so true.....
some of us really dont care where the return comes from, so long as it is a good return....and adds to the bottom line...
with my preferred asset class of property, I use the lower average capital return rate of 10% over a 10 year period....since it has worked well in the past....I expect it to work well in the future....
using the same dips and troughs that have impacted property for the past 30 years, it works well as a guide....for the conservative investor.....

I note Marcus Padley as one of the few stockbrokers I admire, with his views generally on investing....
he raises some very valid points.......regarding return on investments...in this article...

http://www.theage.com.au/business/i...-should-avoid-high-yields-20110211-1aqpf.html

ps Robots...I just know you will be enjoying all that fresh country air, and the changed lifestyle...cheers

 

[BigAl]

hello,

yes,

yeah i reckon for every $1 spent you can make $3 when adding value to a place, so if you spend 15k i reckon you can add 45k to the price, howzat hey brothers amazing

gardening, painting, door knobs, window hardware, simple stuff gotta be stylish though, timeless

thankyou
professor robots

Why stop at $15K, why not try borrowing $1M from the bank? Make $3M easy as pie and repay $1M to the bank. Easiest $2M you'll ever make, heck, maybe you organise a syndicate here, $100K each gets 20 people in. A Cool $2M, bank should lend us another $2M easy. $4M made in $12M.

Heck at this rate we can own all the worlds property in a few weeks.

What's this got to do with property? Fruit Tingles, Lollipops and a Strong Cafe Latte with a dash of Whiskey... there has to be some correlation in there.

 

[kincella]

Robots gives an example of adding value to the property........geez, and you have to ask what thats got to do with property.......
huh....hello...
stay away from property if you dont understand it

 

[nunthewiser]

yes i agree.

a lollipop in hand is worth 3 sitting in the sunshine.

 

[trainspotter]

38 Lollipop Drive, Wyndham Vale, Vic 3024

Must be something in this lollipop thing. House listed and sold WAAAAAAYYYY above median average of $277,000. Listed at $559,000 and settled not far from the mark.

http://www.realestate.com.au/property-house-vic-wyndham+vale-106788371

Two lollipops worth by the look of it ???

Still waiting for this horrendous property bubble to burst by the way .... HO HUM ...... back to counting my green titles I guess.

 

[Agentm]

hello,

yes,

yeah i reckon for every $1 spent you can make $3 when adding value to a place, so if you spend 15k i reckon you can add 45k to the price, howzat hey brothers amazing

gardening, painting, door knobs, window hardware, simple stuff gotta be stylish though, timeless

thankyou
professor robots

i disagree

if you do nothing at all, the property accrues value of $1,500 per week here in melbourne

melbourne prices rose 10.8% in 2010

why spend $1 ???

when a bubble is expanding spending is insane.. the continuing bubble will outdo any minor painting on a window sill

you need to buy buy buy... buy property, buy with your ears pinned back, and as many as you can and strech yourself to the hilt..

imho keep the pennies and buy a lollipop and enjoy the sunshine and be happy the bubble is going to give you far better returns than any dollar you spend on improvements..



At end of every bubble there comes an admission that the “undersupply” of housing was in fact a debt driven myth that only really existed because there was an oversupply of speculators. As the market collapses these people disappear and all of a sudden there are too many dwellings on the market and not enough buyers

 

[nunthewiser]

Still waiting for this horrendous property bubble to burst by the way .... HO HUM ...... back to counting my green titles I guess.

Might wanna have a look in ya own backyard then mate

Builders goin bust, building quotes getting cheaper by the month.

blocks sitting unsold in some major% in newerly built subdivisions

established house listings stagnant with new listings by the day but older ones still sitting from upto 3 years ago.

prices getting slashed in the ads on a daily basis throughout the listings.

rental prices dropping by the week just to get a bite.

that nun fella shaw picked that top a bewty i reckon.....

sunshine and lollipops till the fat lady sings they say




The above is based on the Midwest WA

thankyou

 

[explod]

Heck at this rate we can own all the worlds property in a few weeks.

What's this got to do with property? Fruit Tingles, Lollipops and a Strong Cafe Latte with a dash of Whiskey... there has to be some correlation in there.

Make it two or three dashes of whiskey BigAl and we will round up all the Great Property Spruikers (who come to a flash local Hall near you often) get them in on the deal and they will take over in a couple of days.

We will borrow the money tomorrow (4 mill), they can get in Tuesday for 8, we can pay the bank Wensdy and take 2 mill each and we would proly only be on the sixth boddle a whiskey.(each) Collateral, who cares, huh, we will just wave our hand from Brighton to Portsey. Some great bargains begging at Martha Cove which is half way round, so yep, no problems, could even shout $4 bottles of bubbly for the crowd.

 

[explod]

sunshine and lollipops till the fat lady sings they say

The above is based on the Midwest WA

thankyou

Yep agree,, was with you all the way Nun..

but do not apreciate being called a fat lady though. Old potbelly yes.

Real clearance rate this weekend, predict 46%

 

[FxTrader]

cap gains is income too with the added advantage of tax advantages

Certainly not ordinary income since you must sell an asset (income producing or not) to realize a gain or loss.

some of us treat capital gains as a legitimate form of income

And who here suggested it wasn't "legitimate" income?

and it comes with tax advantages.....you know, specifically the capital gains tax regime.....where only half of the gain is taxable after a year

This applies to any capital asset including shares and property.

love it, and it converts easily into cash.....without even selling...want cash...take some equity out

How amusing, just take out a loan to recover equity. Just that easy!

I know some posters totally dismiss capital gains as a form of regular income....and choose only a high dividend, or high interest rate...as a benchmark.....

Capital gains is not considered "regular income" by anyone including the ATO. Regular income would be rental return not property sales (unless you're an agent of course).

the rubbish in equals rubbish out rule is so true

Actually that rule applies to the property spruikers who teach people that property always goes up an average of 10%/yr since the beginning of time (in Australia only of course) and you should leverage yourself to the hilt in property, that golden goose that always lays golden eggs (but to qualify again, in Australia only since we dare not mention the U.S. or Irish experience.)

since it has worked well in the past....I expect it to work well in the future

Normalcy bias from a property bull once again here. What has happened in the past must surely continue into the future (only in Australia though), bet your life savings on it.

I must remember to tell my sister about your property growth expectations although I doubt she would receive it well since her house has devalued by 50% and she is just waiting for the eviction notice.

Interesting you chose that Padly article to review. When was the last time you made a 61,000% return on property in 10 years, I'm guessing closer to 100% if you chose well. Property returns never compare favorably with the returns available to savvy investors in the equity markets.

"Invest in high-yielding stocks and you will never catch a life-changing investment like Fortescue Metals or Paladin that have outperformed by 61,429 per cent and 12,475 per cent over the past 10 years"