The future of Australian property prices

[kincella]

sm junkie...you are spot on with your investments....no fool at all...
am sure I posted something here recently....they are short of 150,000 workers for the Gorgon project...they stated they will need to build cities to cater for it....20 plus years for the project...

I saw houses over your way, that were worth about 100,000 10 years ago, now they sell for over a million dollars....only the people who sold early are unhappy...

we are looking at a similar growth for regional nsw...with coalworks and the black coal project....at Urana....land there for between 11000-40,000 a block now...some nearby towns are popping already....small towns with not much stock available
have a read of this report.....its copyright so no copies...
..I use a capital growth figure of 10% pa for my portfolio, over here on the East....guess what Residex shows, its even better growth
try looking at the capital cities results...

** wow look at Hedland growth units 267% in 4 years.......houses over 100%
no wonder the others are frightened by those figures

Melb 10% growth last 10 years, 16% last year, 2.85 last quarter and 1.54 the last month....all growth there

Sydney only 6.6 growth x 10 years, 13.2 last year 2.63 last qtr
Adelaide its fine
Brissy and Perth the fastest growing, one took a 2% drop one added a 2% rise for the last qtr...a tiny less than 1% drop for the last month...
australia wide for the last qtr was a rise of 1.42%, indicates growth of 5.68 for the year
use the qtr figures, melb is in line for another 11.4 growth this year...2.85 x 4

conclusion....Melb and Vic country will grow the usual 10% pa.....Sydney a fraction less....I have no interest in the others...but it should be similar to the 10 year trend..
and in light of the housing shortage....only ever pre election promises over here on the east....nothing actually happens....and the immigration increases...the growth could be higher than the past...

http://www.residex.com.au/newsletter/source2010_03aMC.html

now have a look at the growth on this site for Hedland....massive and the renters 61%

http://www.myrp.com.au/viewFreeRepo...ir=&postcode=6721&email=&fsrName=&widget=true

 

[Dowdy]

Sorry you are wrong on that point.

Savings do not help grow the economy as much as you would think.

If you took all the debt out of the economy we would suffer a depression larger than the great depression.

If all the debt was repayed in Australia our money supply would shrink to about 1% of what it currently is. and it would result in a shrinking economy.

That's due to the fractional reserve banking system which is a flawed system.

“Paper money eventually returns to its intrinsic value ---- zero.” - Voltaire (1694-1778)


You do need some debt for investment (ie starting a business) but if we keep running up these high leveraged housing mortgages then we will have a depression

A growing economy isn't necessarily a productive one, epically if it involves government schemes - housing scheme, insulation scheme and now the school rebuilding scheme is starting to find holes in it

 

[SM Junkie]

Atleast for the life of the mining projects and other sources of high paying jobs..

So most mines have predictions of 30 years plus on their current leasings. There is a lot of area still being explored. The vast diversity of minerals that come from this area is impressive - iron ore, copper, manganese, molybdenum, gold, just off the top of my head. Then there are other developments such as gas being explored off the NW shelf. I'll be watching Carnarvon Petroleum with interest as their lease is 150km north of Port Hedland. So gas may come through this Port in the future.

[/QUOTE] The main risk I can see is the supply demand risk. If part of these new "cities" you say they are planning includes construction of alot of new modern dwellings in the form of apartments with all the mod cons, then you may find downward rental pressure on the older style houses, and if you over paid thinking the ultra high rents were guranteed for life you may find that positively geared buffer shrink along with the asset price..[/QUOTE]

This is where you need to be aware, so yes buying the newer properties will give you better tenants and higher rents. The prices will remain high as families all try to live in Port Hedland rather than South Hedland. It is also likely that your tenants will be companies housing their staff. Some take on leases for 5-10 years with options.

If you do buy an older property then it is better to look at it's development opportunity.

 

[Go Nuke]

That's fair enough, it's your decision but one thing I should point out.

An economy grows by savings and then using that savings to buy assets. Did you leverage up to the max to buy your home. If you did, as with many other first home buyers do then it isn't helping the long term economy.

Thats true I guess.
We wont be helping the economy from a reatil point of view, because we wont have the money to spend.

Really its not much different to right now!
We are so busy saving for our deposit, that my attitude is that everyone else can get stuffed...they aren't getting my hard earned dollars in their shops because I rather the banks earn as little interest as possible out of me.

I hate banks! (yes, yes...even though without them I wouldn't get a loan...blah, blah, blah) The profit they make and salaries they earn are obscene imo.

An economy grows by savings and then using that savings to buy assets

We all know how well Australians are at saving Most I know almost live from week to week these days with the rising costs of living.

 

[Go Nuke]

....they are short of 150,000 workers for the Gorgon project...

Really??

Wow..well If they want to fly me to and from QLD for work...I'll take it!
But I grew up in Tom Price so I'm not that keen to live in the North West again.

Rather they employ me than use those bloody 457 visa

 

[MR.]

I'm a boilermaker, on $53K/year

My wages certainly haven't kept up with the cost of living.

53K a year IMO isn't that bad. Down here on the Gold Coast similar trades appear to be getting 42 - 45k per year.

I have a few friends (with no carpentry/building skills whatsoever) who did much the same and still came out well on top. So it's definitely the choices mate, all about choice.

and "timing".

I'm happy to be called a fool. But given properties are achieving $2,500 pw and are positively geared it's sitting good at the moment.

As for dropping, no chance in hell. I've watched this market for 10 years and it has never been so stable and secure.

Council are increasing zoning density to try and cope with demand for housing. Rationalisation Plan has identified possible areas where land could be released in Port Hedland, which is finite.

The only thing I'm really noticing is that those that are trying to get into these towns are having a hard time with the banks, lots of finance falling through.

Long term I think this ticks all the boxes for an investor. So this fool is more than happy to put it's money into the Pilbara property market.

Hell, everyones watched all property markets being stable and secure over the past 10 years! This convinces so many more to sign up to property. As you have pointed out a few concerns above, you are not blind.

sm junkie...you are spot on with your investments....no fool at all...

You'd have to wonder why BHP is leveraged only 15% and state that higher leverage is too risky for them in these current times. Just 15% leverage.

Should all properties owners in mining towns reduce their leverage to just 15%?

I saw houses over your way, that were worth about 100,000 10 years ago, now they sell for over a million dollars....only the people who sold early are unhappy...

No doubt, ......... but do you really think the above is a good investment now? Obviously you do!
and obviously I don't.

I feel I was left behind like so many others over the last years. I still do not buy IP's. "You have to be in it to win it" but it still looks like a bubble to me. It ain't easy not following the herd.

In Go nukes position as a FHB I don't know what i'd do. It's all seems so close!

This is now the top.

The only thing that I can see is going to save the property market is lower interest rates not higher.

 

[MR.]

I rather the banks earn as little interest as possible out of me.

I hate banks! (yes, yes...even though without them I wouldn't get a loan...blah, blah, blah) The profit they make and salaries they earn are obscene imo.

I'd rather the banks didn't have any of my savings. But they do. I didn't know two years ago that banks could lend out so much more than deposits! Because of this so many FHB's etc. Are forced to pay such high prices.

Can't wait to see the day that the majority of my savings are removed from the bank.

 

[WaveSurfer]

....and "timing"...

It helps, but it's not necessary. I still find bargains all the time, even in highly sought after areas such as Byron, the Gold Coast and the Sunny Coast.

SEEK AND YE SHALL FIND.

Problem with most is that they have a set of blinkers attached to their noggin. They have an ideal stuck in their head and can't look past it.

Believe me I know, I'm married to one of the above. LOL (Still love her to death)

 

[MACCA350]

This will be an excellent test of the markets resilience.

Anything less than 75% will in my eyes be considered bearish, above the drive for higher prices will continue for a little while longer.

Cheers

I doubt it will drop below 75%, in fact I'd say it won't drop below 80% over the next 2 weeks...........too many international buyers.

Since October last year it's only dropped below 80% once(28/11/09, 997 Auctions, 78% clearance) two weeks later there were 1008 Auctions with an 81% clearance rate..........though I missed two weeks in Feb data I don't recall a drop below 80% (if anyone has the REIV data for the 13th & 20th of Feb, let me know)

I'd agree though that a drop below 75% will be a major break from the current trend.

REIV 835 auctions, 87%

cheers

 

[Go Nuke]

It helps, but it's not necessary. I still find bargains all the time, even in highly sought after areas such as Byron, the Gold Coast and the Sunny Coast.

SEEK AND YE SHALL FIND.

Problem with most is that they have a set of blinkers attached to their noggin. They have an ideal stuck in their head and can't look past it.

Believe me I know, I'm married to one of the above. LOL (Still love her to death)

I did think to myself Wavesurfer after reading about your success that it was good timing and being a builder that helped you reach your goal.

Anyone that practicaly bought anything BEFORE the property boom would have done ok. Some better than others depending on where the property is located.
And of course being a builder can help source good help and perhaps discounts on materials to renovate with. Something most of us couldn't source.

53K a year IMO isn't that bad. Down here on the Gold Coast similar trades appear to be getting 42 - 45k per year

Wow really...that sounds like a council job. They have pathetic pay on offer for tradespeople.
53K won't get you much of a morgage I can tell you that! Certainly not to service a loan these days...unless you buy a unit or something and once again depending on location.
Oh and I live in QLD where to government is in the process of raping us through higher taxes, higher tolls, scrapping the fuel subsity etc etc.

Check this article out..

http://www.couriermail.com.au/money...-mortgage-stress/story-e6freqoo-1225843130252

"In Melbourne, a 5 per cent deposit would mean a lump sum of about $27,000 for the median house plus insurance costs, plus other buying costs and stamp duty."

Thats a pretty big amount to save whilst paying increasing rents.
I know my friends would laugh if I asked them if they had 27K saved.

Have a good weekend all

 

[Go Nuke]

835 auctions, 87%

Yeah look at Brisbanes...

Clearance rate of 42.5%
31 sold prior to auction
37 sold at auction
5 Vendor Bid
9 Highest Bid
89 Passed in
10 Withdrawn

I always feel that properties get passed in because the seller wants more than the buyers are willing to pay, or because they are asking much more than its worth.

There's a place just around the corner from me.

http://www.realestate.com.au/property-house-qld-chermside-106107257?tm=1269077541&c=47525909&t=res

From memory about....4 months ago they were asking for about $515K.
Obviously they missed the boat of stupidity when people would pay anything to get into RE.
Units and townhouses were selling for $485+....so guess that makes this house look cheap?

 

[Wysiwyg]

Everything has a price??

I am neutral on the good or bad front with Chinese owning stakes in Aus. mines because once the resource is depleted that will be the end of the deal.

However selling big chunks of Australia feels a bit not right.

Teenager Scott Dodd seals Hope Island deal with Hui-Dong Pty Ltd, thanks to rainbows

A TEENAGER has clinched one of the Gold Coast's biggest property deals of the year with the help of the Chinese buyer's feng shui master, the timely appearance of two rainbows and a well-placed fig tree.

Scott Dodd, the entrepreneurial 17-year-old son of Consolidated Properties project partner Mike Dodd, has negotiated the $23 million sale.

It is Hui-Dong's first investment in a property development in Australia and it plans to market and sell the homes to Chinese buyers.

http://www.couriermail.com.au/prope...hui-dong-pty-ltd/story-e6frequ6-1225842554159

 

[drsmith]

I'm happy to be called a fool. But given properties are achieving $2,500 pw and are positively geared it's sitting good at the moment.

As for dropping, no chance in hell. I've watched this market for 10 years and it has never been so stable and secure. There is a hell of a lot of money flowing in through the States Royalties for Regions scheme and from the mining companies.

Then there is the current plans to turn Pilbara towns into cities. Currently Port Hedland has plans for a new town centre, new marina, new hotels a new hospital is currently being built. BHP has funded rapid expansion 6. Port Authority is expanding the number of berths (obviously hightly sought after, see Atlas Iron and Aurox merge). Council are increasing zoning density to try and cope with demand for housing. Rationalisation Plan has identified possible areas where land could be released in Port Hedland, which is finite.

The financial crisis has basically paused this market and any drop in rents or prices has since corrected back to to pre crisis levels. The only thing I'm really noticing is that those that are trying to get into these towns are having a hard time with the banks, lots of finance falling through.

Long term I think this ticks all the boxes for an investor. So this fool is more than happy to put it's money into the Pilbara property market.

Everyone thought the Titanic ticked all the boxes as a cruise ship before............

When demand for commodities stumbles the fallout will be very ugly in that market. It's impossible to pick the top but when you hear the bell it will be too late.

Consider investor psychology and hit the exit before the herd do. That way someone else will be the fool.

 

[SM Junkie]

Everyone thought the Titanic ticked all the boxes as a cruise ship before............

When demand for commodities stumbles the fallout will be very ugly in that market. It's impossible to pick the top but when you hear the bell it will be too late.

Consider investor psychology and hit the exit before the herd do. That way someone else will be the fool.

Hasn't that already happened?

Very minimal impact on prices. Long term leases will get me through any stumble and keep the lifeboat afloat.

If I believed all the doubt and fear spread on these threads, I'd be a poor little pup to frightened to take a chance.

Remind me of that well know guy who sold his property because the boat was about to sink and thought the property market was doomed??
Or those that said the stockmarket crash was the next big depression and would take years to recover?

Are we not all here to take a certain element of risk? I'll take my chance of the ship sinking and keep my finger on the wheel.

 

[WaveSurfer]

I did think to myself Wavesurfer after reading about your success that it was good timing and being a builder that helped you reach your goal.

Anyone that practicaly bought anything BEFORE the property boom would have done ok. Some better than others depending on where the property is located.
And of course being a builder can help source good help and perhaps discounts on materials to renovate with. Something most of us couldn't source.

Alright, I'm half cut on the p1ss so this may come back to haunt me

Na mate, being a builder has its pros and cons. You know you can do anything and everything, so it becomes difficult to not overcapitalise. One place we reno'ed, I was that close to knocking down in the end because it was getting very close to going ballistic in costs and being cheaper to knock down and start again. Friends have made just as much as I did (even more) by paying for a new kitchen (installed), bagging the outside and slapping some paint on. Viola, near new house.

I also did it outside of my local area (couldn't afford it where I was from). So I couldn't get trade price on most of the materials. If you stick with one hardware/supplier, they'll eventually get to know and look after you.

Timing had absolutely nothing to do with it (except that I started young). My money was made because I hunted and I hunted like a dog. Willing to sacrifice whatever I had to (I sacrificed the coast - my surfing, hardest thing I've ever had to do). The main boom was after we bought this place we're in now. I plan to retire here so I don't give a hoot what happens in the next 30-40 odd years. Places around us are going for nearly 2-3 times what we paid. Someone could offer me 10 times what we paid and I still wouldn't sell. On the other hand, price could drop below what we paid for it and I still wouldn't care. I can afford to do this though.

I'm done with my buy, renovate and sell (all new from here on). I don't want to be breaking my back before I hit 40. When I'm that age, I'll pay someone else to do it, build new that is, not renovate. This is partially why I'm here. I want to know how to invest my cash myself when the time comes (when I'm getting a bit old and mouldy). Until then, I don't intend to make millions from a few grand tiddly winking with the markets. I'm a student of the markets and will be for the next 10-15 years.

This BTW is directed at no-one in particular. Just a little history on myself.

I once started as a whiner. I remember saying to my old man, "Ahhh I have missed the boat. All these properties you buggers bought on the beach front under 10k, sub-divide and sell each for a cool mill or two are long gone. How are we going to get ahead when all of those opportunities are gone?".

His almost exact words were "You little f'n pr**k, if you're gonna whinge all your life, you're going to be a "gonna" man and become one of the 95 percent'ers. If you on the other hand are a do'er, you'll own your own house outright by the time you're 25. Pay the price and the rewards will come in good time. If you fail, get up and try again until you do succeed.

You little pr**cks just want it all, and want it now. You can buy your nice beach house and work for the bank, living paycheck to paycheck for most of your life. Or you can spend 5-10 years doing it tough, pay the price and own your beach house outright with the money you make.

What's it gonna be boy? CHOICE is yours.".

His "pay the price" calls were not monetary, the price could be time, sacrifice, labour (living in dust with no services LOL).

I still to this day remember that conversation as clear as day. Because it was those words that completely changed my tune.


You hear all this doom and gloom prices are gonna drop like a rock, yadda, yadda, yadda. Funny I heard the same thing 13 years ago. And where are we now? Population in Oz is on the increase and will be for a long, long time. Sure we'll see a correction in prices, but nothing like many are predicting. Demand will always be there. It's the high flyers that get caught in their mortgaged million $ homes. Maxed-out gold credit cards, the spankin new SS also owned by the bank. These are the ones that will suffer most.

Sure it's a hard game to play, I never said it was easy. Everyone is scared of buying at the top. But where is the top??

Whiskey time. I can't even remember why I started this rant LMAO. Guess I'll find out lateron.

 

[drsmith]

The top is just before you realise you are about to taste the whiskey a second time.

After that it's too late.

 

[So_Cynical]

Everyone thought the Titanic ticked all the boxes as a cruise ship before............

When demand for commodities stumbles the fallout will be very ugly in that market. It's impossible to pick the top but when you hear the bell it will be too late.

Consider investor psychology and hit the exit before the herd do. That way someone else will be the fool.

Slightly off topic but.

So true about the Titanic...however we are in a minerals super cycle and its got at least 10 years to run, maybe 15 :dunno: not to say there wont be stumbles along the way.

 

[MR.]

Bought my first home for 81k. Spent 20k on reno's. Sold it for 260k.

Did it again 3 times and bought a 600k home outright. I'm only 31 too.

Timing had absolutely nothing to do with it (except that I started young).

You hear all this doom and gloom prices are gonna drop like a rock, yadda, yadda, yadda. Funny I heard the same thing 13 years ago.

13 years ago "1997" looked better than now for property.

Yadda yadda yadda..... what happened to stocks after many said stocks were at their peek.

Who knows what is going to happen to property prices.

All the best.

 

[WaveSurfer]

13 years ago "1997" looked better than now for property.

Yadda yadda yadda..... what happened to stocks after many said stocks were at their peek.

Who knows what is going to happen to property prices.

All the best.

Who's to say that in 2023, people won't be saying that 2010 looked better Only time can answer that one.

Yes, people love picking tops and bottoms. Many of them get stinky fingers too :headshake

Agreed on who knows what's next. I'm not going to procrastinate about it either.

I'm still buying the golden nuggets I find. I do have a soft landing if it crashes on me, which enables me to take more risk. I did however pay the price to be able to do this. Could easily start from the bottom again. I know the pathway, so it would be easier. Travelling blind is always scary.

I think some people can't look past the square they live in. All of Australia's property does not boom at the same time. Sydney's boom and crash happened well before it exploded up this way.

A friend said to me about 6 months back.. I'm waiting for the property bubble to burst so I can buy a waterfront home in Noosa for a bargain. I said so are about a million others

 

[WaveSurfer]

Let me clarify what I said above about still buying property...

I know we're in uncertain times. With the U.S. on the brink of collapse and China's resource demand keeping us afloat, I agree the Risk is much greater now than it was 10 years ago. I'm not doing anything ludicrously stupid risking my gains and then some. I'll only buy when I see potential. Call it R:R. Ironically, the potential is still there, just not in many of my (or my wife's) "ideal" areas. Much the same situation when I first bought years ago.