No,
Please show me anything that guarantees that house prices increase in line with inflation every year.
In fact, if it did we would not have the bubble we have now.
So in fact, a house growing at $20000 as in the example above, which through inference you support, the $20000 increase is chewed up by inflation, exactly the same as interest on the cash.
Because the VALUE of the house is maintained by capital gain (as is the value of the cash by interest on earnings), but the purchasing power of a house worth
$470000 after year 1 ($20000 capital growth on $450000)
is exactly the same as
$470000 in cash after year 1.
What you are obviously saying is that house prices will always outperform inflation, which is clearly wrong.
I know it is impossible for you to believe that cash can outperform property, but perhaps you were not alive during the last time it did, but as with other generation y and younger, you will see it one day, perhaps within the next couple of years ( or if you live in Brisbane or Hobart, perhaps last year)
just plenty of people who cant afford to buy a property because they spend there money on hookers, ipods, g, iphones, nitrous, cars etc
No,
Please show me anything that guarantees that house prices increase in line with inflation every year.
In fact, if it did we would not have the bubble we have now.
So in fact, a house growing at $20000 as in the example above, which through inference you support, the $20000 increase is chewed up by inflation, exactly the same as interest on the cash.
Because the VALUE of the house is maintained by capital gain (as is the value of the cash by interest on earnings), but the purchasing power of a house worth
$470000 after year 1 ($20000 capital growth on $450000)
is exactly the same as
$470000 in cash after year 1.
What you are obviously saying is that house prices will always outperform inflation, which is clearly wrong.
I know it is impossible for you to believe that cash can outperform property, but perhaps you were not alive during the last time it did, but as with other generation y and younger, you will see it one day, perhaps within the next couple of years ( or if you live in Brisbane or Hobart, perhaps last year)
Don't forget most of those items are purchased on credit, and the trend is only increasing with the current generation. So who you going to offload your wooden castle onto when most people are spending on hookers?
hello,
what the g dealer got an eftpos machine? amazing
thankyou
professor robots
However if you held the $300K as cash, the $300K capital will be steadily going down in value, and after tax you will only enough interest to keep pace with inflation.
So with the cash investment you would have to reinvest all earnings just to tread water, But with the property you can spend the rent left after rates and maintaince and still have your capital keep pace with inflation.
Don't forget most of those items are purchased on credit, and the trend is only increasing with the current generation. So who you going to offload your wooden castle onto when most people are spending on hookers?
I am also sorry you did not read my posts, because can you see anywhere where I said rent was to be included in our argument, the points I made, were in regards to capital growth in property vs interest on cash.
You fail to take history into account at your own peril.
I will make a fortune during the bust, just as I did last time.
If you don't want to include rent in your calculations then you should not be including interest.
Fair enough there would be $350 in rent per week coming in, but there are also insurances, other outgoings, maintenence etc.
I explained why I was not including rent.
If you do not want to read the content of my posts, then do not respond to them.
You just make yourself look foolish.
The above is the only reasoning I saw on why you were not including rent and that reason is a complete laugh.
The costs you mentioned are less than 15% of the total rent collected, so you still have 85% of the rental return in which to include in your calculations.
It's quite simple, if you don't include rent then don't include interest, I am sorry but it is your calculations that look foolish.
This stuff has been done to death in the thread before, and even though on historical returns, property outperforms cash, at the moment there is a clear case for arguments that short to medium term, even cash can be competitive with or outperform housing.
It's quite simple, if you don't include rent then don't include interest, I am sorry but it is your calculations that look foolish.
just plenty of people who cant afford to buy a property because they spend there money on hookers, ipods, g, iphones, nitrous, cars etc
oh well
thankyou
professor robots
1, No, I was actually also referring to this.
2, But clearly, as I explained, the interest on cash is more than the capital return that the op suggested.
Hold on, the example that is being discussed, is the property paid out in full or currently being paid off while rented out?
Paying interest back to the bank on a property which would definately be negatively geared if purchased in the last 1 - 2 years would be another factor to take into account.
hello,
and thats what many have been saying MW, property is just rolling along as it does, no bubble
just plenty of people who cant afford to buy a property because they spend there money on hookers, ipods, g, iphones, nitrous, cars etc
oh well
thankyou
professor robots
The way I look at Property investing is as if it is an inflation hedged bond. Meaning you can put say $300K into a property investment and over time the $300K will be protected from inflation, because any resulting inflation will put upward pressure on the price I can sell the house for and also inflation will increase the amount I can charge in rent.
However if you held the $300K as cash, the $300K capital will be steadily going down in value, and after tax you will only enough interest to keep pace with inflation.
So with the cash investment you would have to reinvest all earnings just to tread water, But with the property you can spend the rent left after rates and maintaince and still have your capital keep pace with inflation.
If you are happy to assume that prices are guaranteed to rise with inflation, that makes perfect sense. The argument would be no different with blue chip shares and spending the dividends, but are you happy to assume that share prices will always go up with inflation?.
interesting that the top executives of the nation can see what everyone sees, a bubble, make recommendations to try and stem its impact, yet you cant see it robots..
any reason why?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?