Hello greebly24, I wanted to quote your whole post but people don't like you doing that. Anyhow thanks for a well balance post and opinion. Just thought I would add that when I borrowed for my first mortgage in 1979 my interest rate was 11% then. Rates hit 17.5% at one stage many years later. I still made money on my properties regardless of that. It has never been easy to invest in and make money in property but one thing for sure prices just keep climbing. Yes you have some flat or slightly negative years but nothing like the share market crashes of 87 and 2009 where people lost half their money. Your post is good reading for anyone wishing to buy, everything you wrote should be considered, cheers and thanks.
No, Gorokan on the Central Coast is an older suburb that most oldies retired to back in the 60's and 70's, hence there is lot of fibro, timber or clad cottages. It is also an old tourist town just up from Toukley. There is some housing commission in the area but it's not overloaded. To be honest if one was hard up for cash and had to retire with limited funds you could buy a place for around 210K to 250K not far from the lake and club and just take it easy. Of course the commute to Sydney if you had to work could be a drag but what I was trying to point out was that there are cheap houses around, cheers.
I am asking:
1) Is property the best tool for hedging inflation and;
2) If so, which is better - property financed with cash or credit?
Still awaiting you expert opinion on this Tyson...
In the early 70's My Grandfather died, and My grandmother sold his IP and banked the cash a bit over $3500 Because she could earn more interest on the cash than the rent provided. That $3500 produced enough interest to maintain her home and supplement her small pension, and she could live quite well.
Fast forward 30 years and the $3500 which she still has, earns about $200 a year, which is nothing, if you kept the house it would be paying over $14,000 per year and she would have a lump some of $350,000 in capital value.
So is the property market crashing yet? I am waiting for this crash that means I can buy a house.
I have seen my grandmother lose her entire net worth to inflation, this is why I recommend if people are going to rely on income from their assets they have to hold their wealth in somthing that produces income (that will feed them), while this income also increase with inflation, Property is a worry free investment that achieves this.
In the early 70's My Grandfather died, and My grandmother sold his IP and banked the cash a bit over $3500 Because she could earn more interest on the cash than the rent provided. That $3500 produced enough interest to maintain her home and supplement her small pension, and she could live quite well.
Fast forward 30 years and the $3500 which she still has, earns about $200 a year, which is nothing, if you kept the house it would be paying over $14,000 per year and she would have a lump some of $350,000 in capital value.
I enjoy your contributions Tysons and your arguments make a lot of sense (Doesn't mean I completely agree though). It is not like you can't maintain your capital and take an income from a savings account. I am earning 6.5% in a Ubank account, I can put enough back and still take a small income.
Tyson
I make your grand mother around 125!!!
. You can guarantee cheap oil will be gone, you can guarantee cheap fossil fuels will be gone, will we be spending the same percentage of income on the same house when energy costs will command a greater share?
just came across this
updated article from steve keen at debtwatch
"So get used to it: mortgage debt drives house prices, and growth in mortgage debt is now ending. The recent falls in house prices are just the beginning."
It's been said hundreds of times - Credit is the ONLY fundamental.
I am not about to start speculating on the big macro stuff 20years into the future, Because the future is unknowable.
However if what you are saying about energy plays out, It would probably mean people would no longer be willing to make big commutes each day, and would pay a premium for living spaces close to the city, density would be on the increase and land prices in these areas would sky rocket.
But as i said who knows, we could just as easily avoid any such energy crisis and letting the worry of it affect your investments my well turn out badly for you.
just came across this
updated article from steve keen at debtwatch
"So get used to it: mortgage debt drives house prices, and growth in mortgage debt is now ending. The recent falls in house prices are just the beginning."
1, How would you achieve this now and what is low debt?
2, The REIV now reports that the median house price in Melbourne for the Dec quarter was $600,000! Therefore, 80% leverage requires a $120,000 deposit at the median price. How long would it take the average wage earner to save $120k?
3, Is 80% low debt/leverage?
4, The property bubble is a debt bubble where many are living paycheck to paycheck to stay in their PPOR let alone buy an IP - a precariously balanced situation.
5, My sister bought a home right on the water in Hawaii (sure thing) and paid much less than the median at the time. Now it's worth 50% of what they paid (debt bubble + GFC) and they are essentially bankrupt in their fifties.
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