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The future of Australian property prices

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I dont like this "all property is a bad investment" attitude.

There are always opportunities, I have seen a few good things recently, good yields, good location and good price.
 
You are correct New Order was trying to save on typing.
I got out of OZ because I firmly believe it is heading for a crash just like USA and bailed just like thousands of others from all different countries are doing.
However you are entitled to your opinion the same as other have rights to theirs.
I do agree RE can be a good investment if you chose right.

May the best man win
 

Or the best woman, whichever the case may be

Thinking about this thread last night, it seems that perhaps my POV is from the inside looking out and yours is in the reverse. TBH I am not overly concerned with charts and other indicators when it comes to property as I have always bought well, with low LVR's and properties with some feature such as location or land size.

Sure the market is not fantastic but I still believe that people have to live somewhere so with the right property and low borrowings it is not dire.

I was already hammered earlier on in this thread because I firmly believe that both the Aust and Kiwi markets spend too much time and energy thinking the big cities *are* the property markets, therefore when the top end of the bigger cities start to faulter people freak out thinking every part of the market is a disaster. This POV has not changed, they are multi faceted markets and while some areas may be down, IME not all are.
Not all LL's and property owners are maxed out on credit and yes some areas are holding or even going up slightly.

As for your earlier question, if I did move back to one of my IP's it would halve my weekly outgoings so it is a reasonable plan B for me. Most of us have to have some cost of housing so why not move back to my own place? Even if the market completely crashed it would not bother me to keep paying down the mortgage for when the market upcycled. Thing is money is nowhere near the most important thing in life so I rent in an area I could not / would not currently buy in so I can be close to family.
 
"This weekend there have been 138 auctions reported with a clearance rate of 58 per cent.

The long weekend has resulted in a low volume of auctions.

A total of 80 homes were sold and 58 were passed in, of those 38 were passed in on a vendors bid.

This weekend last year saw 348 auctions and a clearance rate of 72 per cent.

Around 700 auctions are expected on each of the next two weekends.

Don't miss Melbourne Property TV Monday night on Ch31 at 8.30pm.

Enzo Raimondo
CEO REIV


--------------------------------------------------------------------------------
"

Well done Enzo, I could tell that there were around 25% less cars on the road this weekend compared to last year.


Great for the serenity.
Great for the planet.

MW
 
Mannnnnnnnnnnnnnn ....... we are in real trouble !! I just witnessed afternoon TV and the amount of home improvement infomercials and shows was incredible. The BLOCK has 8 couples on this year "THE FIRST TIME EVER" it screamed at me. There was that crappy home improvement program as well which almost made me upchuck and I am not talking about "Tim the Toolman" one either. I went to the websites of the major TV stations and all the advertising is house related or home improvement.

GAAAAAAAAAAAAAAAAAAAAWD have mercy on our souls.

I am sure I wrote this about 300 posts ago as to the state of play in the RE Industry.
 
Damn it I must be living in a property hotspot. Five of the eight houses I looked at today had already sold. The others were absolute overpriced crap. Investors are still snapping up the resonable properties fast. Honestly bring on the crash.
 
moXJO said:
Damn it I must be living in a property hotspot. Five of the eight houses I looked at today had already sold. The others were absolute overpriced crap. Investors are still snapping up the resonable properties fast. Honestly bring on the crash.
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A gold coin to that man. You have hit the nail on the head my friend. There are places that are doing well. There are palces that are holding their own. There are places in retreat. Nothing changes overall. Samma samma Dong. It is called Real Estate. Kinda like the share market really. Ya just gotta know WHEN AND WHERE to buy.
 

True, even in the USA, if you had top residential property in Manhattan, you wouldn't have lost coz "the rich are getting richer and the poor are getting the picture."
 

Speaking of The Block, there was a story on the weekend that the producers will be lucky to not lose money when the apartments are sold off given they bought them when them market was a lot better.
 
banco said:
Speaking of The Block, there was a story on the weekend that the producers will be lucky to not lose money when the apartments are sold off given they bought them when them market was a lot better.
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Big picture stuff dude, irrespective of what they paid the endorsements and the advertising dollars will cover the overheads comfortably.

Even during the boom times there was a ground floor apartment on THE BLOCK that sold for $25,000 less than what it cost to buy/renovate. NO BIGGY.

Not forgetting you have a captive audience to watch the program as well as the advertising extravaganza ie THE SHOW itself to self promote. Remember it is the contestants that get to keep the $$$ at the end of the day IF there is a profit.
 

"This weekend there have been 146 auctions reported with a clearance rate of 57 per cent.

The long weekend has resulted in a low volume of auctions.

A total of 83 homes were sold and 63 were passed in, of those 38 were passed in on a vendors bid.

This weekend last year saw 348 auctions and a clearance rate of 72 per cent.

Around 700 auctions are expected on each of the next two weekends.

Don't miss Melbourne Property TV Monday night on Ch31 at 8.30pm."


There were 8 auctions in Melbourne today.

Real estate agents must all be going to to the ski resorts with the hefty commissions.

MW
 
trainspotter said:
ERMmmmmmmm ....... just a coupla questions cynic.

1) How can you become positively geared in a declining property market?
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Yes I do admit that I conveniently neglected to mention the significance of declining interest rates in my recent tirade.

My share trading activities did not commence until the "noughties", so apologies if I gave the impression that I was trading shares during that time as my focus was primarily on real estate.

Much of the surplus income that arose due to positive cash flow and accommodation savings went into paying down the mortgage on my principal residence over those years. This provided much needed start up capital as the additional equity was then available for redraw. Again, I would concur that the decline in interest rates was a larger factor than the decline in prices. I would also concur that the increase in prices between 1999 and 2009 have made significant contributions to my bank balance due to capital gains on the two that I sold. Incidentally the capital gains from this time would appear to be significantly higher (95% gain in 2002 , 290% gain in 2009) than those which might be expected according to the reported statistics.

The decline in prices reduced properties sufficiently to enable the acquisition of positively gearable investments in the lower end of the real estate spectrum. The first property I purchased in April 1988 was never able to be positively geared against the outstanding debt even when rates dropped below 7%. All subsequent purchases in 1994,1996 and 1998 were positively geared at interest rates at and below 13%. Having said this I will readily admit that two of these positively geared properties would have turned negative had rates ascended beyond 13% during the period of ownership. Fortunately that did not occur.

The other thing about this process that was helpful was the fact that, unlike margin loans, the bank never asked me to top up the loan account with additional equity when prices were in decline. So in effect, each positively geared property I purchased, increased my borrowing capacity because it increased my disposable income from which I was able to do more borrowing! I did of course still have to save like crazy for each deposit, but had more money coming in with which to do so!. To the best of my recollection LVRs ranged between 80-85% at time of purchase, so I did on two occasions pay for mortgage insurance.

Significant declines in rents (if any) do not appear on any of my rental P & L statements during this time. Perhaps my former tenants are entitled to claim some refunds due to my excessive rents?

Interestingly enough, if the interest rates drop from say 13 to 6.5 percent, then surely rents would have to drop by approximately 50% to render a neutrally or positively geared property negative. House prices didn't drop nearly so dramatically, hence the rents remained comfortably above interest and other outgoings throughout this time.
trainspotter said:
2) If property declined during this period why did you not sell up this poor investment?
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The decline was somewhat gradual. It could be argued that the perceived capital decline, in such a leveraged investment, exceeded the net positive cashflow hence yielding a somewhat meagre rate of return on my deposit monies overall. However, my expectation at the time was that availability of tenants would continue and that both rents and prices could at that time be reasonably expected to lift in response to increased wages etc. In terms of net cash flow, three out of the four properties yielded net positive cash flow and/or accommodation savings that far exceeded available returns on the personal capital deployed (deposit, stamp duty conveyancing etc.).

Were these really poor investments?

The reason for retention of the property that consistently failed in the positive gearing stakes was more circumstantial than it was financial and ideally should be the subject of another thread under the heading of "Does GOD really know what SHE's talking about?". So if you want to start another thread I'll happily attempt to explain what I mean by this.
trainspotter said:
3) How much did it decline and where was your stop loss point?
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I'd have to go over my personal financial records dating back 20 years to give an accurate guesstimation. Furthermore I didn't retain suffiicient records of advertised prices (and I mean actual maximum price advertised, not price ranges or $XX+) throughout the years in question.

I can cite a couple of the examples that may give you a rough idea of what I'm talking about.

By 1993 the property that I'd bought in 1988, during the 1987 to 1989 boom (yes I do concur with the ABS statistics on this) was reevaluated at a mere 7.1% above my original purchase price. This would strongly suggest a decline from the 1989/90 peak as I know that there was nothing even close to the price I paid available then. I also know that I didn't pay too much for the property because I'd been searching the market for >6 months before swooping on it, and I did succeed in negotiating the vendors down to my first offer.

I made an offer of approximately 90% on a property that was advertised at $XK in 1994. It was sold later that week to another emptor at a price closer to the $XK originally advertised. In 1998 that same property was passed in at auction. The reserve price that it was passed in at was approximately 80% of the $XK price advertised in 1994.
Interestingly enough, I don't have a lot of time for the "stop profits" philosophy. I do believe in risk management which is why I often talk to God. She usually warns me when things are happening that are likely to threaten my survival. So the only "stop profit" in effect was the possibility of foreclosure, compulsory acquisition, meteorological phenomena, alien invasion etc.

BTW It might be just a little off topic but, did you know that in the Spring of 2006 GOD showed me that there was a future time coming when the SPI would drop from the 6000 range down to the 4000 range and that I would lose a six figure sum as a result? None of my friends or family believed me when I told them. They insisted that it would take an event of nuclear proportions to cause such a market movement. Regretfully, GOD refused to tell me the date, so when I saw it coming in December 2007 I decided to outsmart HER and shorted the SPI. I later discovered that SHE had also conveniently neglected to forewarn me of Ben's Bernantics and I almost Bernankrupted myself throughout that year thereby fulfilling HER prophecy.
SHE also neglected to tell me about Wally Buffoon's plans to buy a chunk of Golden Sux. Still, I'm sure SHE has HER reasons for withholding certain information. I suspect that SHE doesn't want me to have too much of an unfair advantage.
 
The cheapest prices I observed in plentiful supply appeared in the Spring of 1997. By Summertime there were few of them to be found. By the Winter of 1998 there was nothing available in my target range, hence I concluded that the Positive Gearers Property Purchase Party was over and that prices were then on the rise. Based on my experience I concluded that the bottom of the market occurred sometime between Spring 1997 and Autumn 1998. If the statistics claimed that prices commenced their ascent during the summer of 1997 I would not contest the point.

I may have been a little liberal in my use of the term "approximate decade". Can you find a period of 8 or 9 consecutive years in this data range that would support my assertion that there was a gradual decline in prices?

In respect to the actual land titles, based upon my direct experience they are not 100% accurate 100% of the time (and I do have evidence of this), but generally I've found them to be pretty reliable. To the best of my recollection it was a Surveyor General Report that included a "phantom sale" of one of my properties. My understanding is, that this entry had arisen subsequent to a failed attempt at identity theft.

As for statistics, my limited understanding is that there are a variety of statistical methodologies/practices that can result in dramatically different representations of the same data population. So are we talking about modes,medians, means, quartiles or other statistical concepts here?

Having said this, I must confess that my assertions were extrapolated from the lower end of the property spectrum in a few select locations. My infrequent visits to other states from time to time did not highlight any significant variances to my cursory observations.

The fact that you've taken care to consider the integrity of the data sources of published statistics and their susceptibility to influence prior to acceptance is highly commendable.

BTW I have in my various occupations worked for numerous industries including an ITS branch of one State Government Department that encompassed a Land Titles Office. I shall decline to overtly express an opinion of events that I've been witness to for reasons of propriety.

Suffice to say that I have decades of experiences that have justified my cynicism when it comes to trusting the infallibility of "transparent" reporting processes.
Media reporting of statistics combined with respected economic and scientific theories/discoveries are amongst the most powerful forms of the "white man's magic" that I've seen practiced to date. Never before have I witnessed such large populations of intelligent beings mesmerised to the point of being unable to recognise the tangible reality of their immediate surroundings.
trainspotter said:
You seem like a person of your word there cynic so no need for proof or otherwise.

P.S. Congratulations on your property portfolio, various trading and bank account balances.
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Thanks for that, I freely admit that I am capable of error, from time to time, and I thank you for recognising that I speak the truth as I understand it. I also thank you for challenging my assertions and highlighting the inconsistencies in my post.
 
If you think prices are going to rise: Buy a house
If you think prices are going to fall: Don't buy a house.

I don't talk about property with people, they get really pissy. Some guy recommended I get a property as an investment at work and when I said I'd rather wait and see if prices fall he got all defensive and went off on a long rant about how great they are. good, go ****ing buy one then!
 

It is getting easier to hit a nerve, as, at the moment, people are confronting the real possibility of their investment going backwards.

Nice buying opportunities for others though.
 
medicowallet said:
It is getting easier to hit a nerve, as, at the moment, people are confronting the real possibility of their investment going backwards.

Nice buying opportunities for others though.
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No the buying opportuities will not occur till we hit a bottom and that may well be three of four years away in my view.

As the old addage goes in share trading, "never try to catch a falling knife" unless of course you can short it.

There are of course exceptions, where one is perhaps buying a home in which to live for the long term.
 
I think once house prices are seen to be declining there will be a rush to get off the sinking ship after all they will see whats happening in USA and want out while there is still some equity left ..if they get out early.
 
Glen48 said:
I think once house prices are seen to be declining there will be a rush to get off the sinking ship after all they will see whats happening in USA and want out while there is still some equity left ..if they get out early.
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Yes, America and Europe are still looking very weak. China is looking a little suspect at the moment too.


Problem is, it is a revolving door system, and that could see prices go down relatively quickly before they stabilise.
 
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