The future of Australian property prices

againsthegrain said:

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I could troll through alot more posts that you posted as tysonboss1 but why waste my time its obvious

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I can asure you that wasn't me, any way that guy said he started at 12, so he had a 2 year jump on me. There are thousands of people in the army, and a lot of them are into property.

Everybody:
Let's stick to the topic please and leave personal accusations out of the debate.
There is no indication that tyson and VC have ever shared an IP address.

Value Collector said:

Well, i am sorry you see things that way, it must be debilitating, when all you can focus on is the bad.

I look at Australia and see.

- A country full of natural resources that can be exploited, offering investment opportunities, high paying jobs and services contracts, and government royalties and taxes.

- A country full of great tourist destinations, bringing in foreign income, offering more investment opportunities, jobs, service contracts and government taxes.

- A country with a clean and green food production record, with strong bulk food commodity exports, but massive room for growth in value added exports, eg wines, beer and spirits, processed and branded meats, diary products, seafood, honey, cereals and other packaged foods.

- A country with many home grown international enterprises that do business around the world, and repatriate earnings to Australia.

These are just some of the export industries, but they are complimented by all the local industries also, and the benefits flow right through the economy.

As i said i see opportunity everywhere, i have no trouble finding great investments.

I know there is a whole sub culture of people that want to sit in their basement clinging to gold bars, writing blogs about how the world is going down, but i just don't see it, every where i look in the economy i find people wanting goods and services, and people willing to work, and people looking to improve there situations by doing more business. Capitalism works.

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I agree with everything Value Collector says. I am currently holidaying and posting from Thailand. Whilst I like being here and love the weather, food and the attractions I do not believe it would be a place I would like to invest in.

Australia has everything, most of all a democratically elected government. It is a safe haven for investment, we have rules and regulations with little corruption. It isn't perfect but it sure comes close to being perfect. I see Australia growing and becoming better and better in the future. We need to concentrate on what we can offer to others, not what we can not offer.

People have been complaining about house prices for as long as I can remember, all the same things were said in the 70's, 80's, 90's, 2000's and now. There were people calling a housing crash on this forum 7 years ago, 5 years, 2 years ago and also right now.

I had my IP valued 2 years ago, right now it is worth 100K more than what is was then, it keeps going up because it is in a top notch area of Sydney where there is little or no supply. I have it on the market now for sale, it will sell soon. If I had listened to the people who were calling crashes then I would not be in the position I am in now, that is, making that 100K in 2 years. Will it go on? I don't know, I buy, I wait, I sell when the time is right for me.

With the proceeds of my IP I intend to buy a better more expensive Principle Place of Residence. It needs to be fairly new and again in a top location. Yes I am selling but only to trade up into a better place so my wife and I can live in comfort for the rest of our lives.

Am I concerned about what I am going to pay for the new place? Yes of course, I would like to buy it as cheap as possible but the market is hot right now and if we want to live somewhere decent we will have to pay for it at current market rates. I certainly won’t be renting, hoping and wishing prices will come down.

There is and always will be ways to make money in the real estate game. You just need to pick the right locations, know the prices and move fast when a good one comes along and seal the deal. As the Principle Place of Residence is still the only investment or asset (and yes your own home is an asset) that is still capital gains tax free I intend to work within our laws and maximize my returns from this.

One day when my wife and I are too old and our super runs out we will draw on the equity of our house, that is our plan, if the rules change then so might our plan. The Principle Place of Residence is one of the best assets/investments you can possibly buy and hold. It gives you piece of mind of not been forced to live on the streets or having to pay ever increasing rents. It is peace of mind living in your own home and knowing that it generally keeps going up in value and if you ever do need to sell in the future there (at present) is no capital gains tax either.

pixel said:

Everybody:
Let's stick to the topic please .

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I am a bit guilty there and my apologies.
VC: well done business wise, but believe me it depends on the sector you work in and probably even more on the type of customers you deal with (mega corporate for me), note I diversify!

Let's go back to RE; I do have PPOR, and own some IP (inc commercial) to keep a balance.
RE will probably go higher as the economy slows, jobless rate increases causing interest rate to go even lower which may lead to a bubble burst instead of a slow down, but as we all know, the government in place(whoever it is in our duopoly) will prefer to bankrupt the whole country before letting house price (and 4 banks) collapse.
In the short to medium term, the can will be pushed, and RE will go up;that is my view
but are you ready to invest in RE for a medium term? with the risk of a bust anytime?
depends on your situation
Back to the thread

qldfrog said:

the government in place(whoever it is in our duopoly) will prefer to bankrupt the whole country before letting house price (and 4 banks) collapse.

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Housing and the big 4 banks are very much in the "too big to fail" category. Indeed they're a lot bigger than that. If the big banks did go bust then they'll take practically every other business down with them.

Very few small businesses could survive long if consumers don't have money and the business doesn't have banking facilities. Even with large businesses, with the possible exception of the big miners with plenty of capital and no real reliance on the local economy, most of them would fail or at least very seriously struggle too.

So it's a horror scenario that no government, be it Labor, Coalition, Green, PUP or anything else, is going to willingly have such a situation arise. At most, if they did decide that property prices needed to come down, they'd seek an orderly transition over many years that didn't involve too many people going broke.

Back to the thread as such, there's really two issues here. The price of property as such, and the broader social and economic effects of those prices.

Housing is both an investment and a consumer necessity. Everyone needs a place to live, so a rise in the price of housing does have social and broader economic implications. It's not like saying that the price of shares in BHP have gone up since nobody actually needs to own BHP shares in order to live their life, a decision to invest is purely a financial one. But they do need a home, be it rented or owned, in order to live.

The same applies to non-housing things as well. If the price of oil doubles then that has broad social and economic implications certainly. But there's also the investment opportunity via owning shares in oil companies or speculating on the commodity itself. Just because someone owns oil stocks, doesn't mean they necessarily want the price to rise as such. They'd be just as happy with stable oil prices and investing in something else. But if they do expect the price to rise, then investing accordingly is a logical thing to do from a personal perspective.

So there's two issues really. One is investment, the other is the broader implications of a rise in the price of a necessity. I see no conflict between owning property, oil or whatever whilst also being aware of those broader issues.

Smurf1976 said:

So there's two issues really. One is investment, the other is the broader implications of a rise in the price of a necessity. I see no conflict between owning property, oil or whatever whilst also being aware of those broader issues.

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same here so my disclaimer that I own properties even if I do believe RE is overpriced in Oz and has a very negative factor on the country

Here is a 15 minute video that's just come out a few hours ago. It's about the housing market in Australia and talks about the economy as well. It's an interesting discussion and may be of benefit to some of our readers.

http://www.businessspectator.com.au/article/2014/9/9/australian-news/dangers-wildly-imbalanced-housing-market

Foreign buyers of Australian residential property using US Dollars to fund purchases will have more AUD equivalent to spend if AUD / USD Exchange Rate keeps dropping over the next 12 months.

Foreign investment in Australian housing continues to ramp up but it may be that "we ain't seen nothin' yet".

Liberal MP flags tougher foreign buyer rules

Speaking at a Bloomberg economic summit in Sydney, the chair of the House of Representatives Economics Standing Committee Kelly O'Dwyer says there has been worrying evidence of foreign investment restrictions not being enforced.

Ms O'Dwyer says the Foreign Investment Review Board (FIRB) has not mounted a prosecution or made a divestment order for breaches of the rules since 2006.

Ms O'Dwyer says the committee is also looking at introducing penalties for people who aid and abet foreign buyers in contravening the rules, such as real estate agents or conveyancers.

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http://www.abc.net.au/news/2014-09-...oreign-real-estate-penalties-and-enfo/5747072

definitely got to be some suffering perth landlords

Smurf1976 said:

So it's a horror scenario that no government, be it Labor, Coalition, Green, PUP or anything else, is going to willingly have such a situation arise. At most, if they did decide that property prices needed to come down, they'd seek an orderly transition over many years that didn't involve too many people going broke.

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Unfortunately politicians only have a myopic view of the future, out to about the next election - if there's any real reform to be done to the abysmal property sector and associated rorts it won't be done on their shift - so it never get's done.

When property finally crashes it's going to take us all down with it - not doubt at all - and the politicians won't be able to do a thing about it!

qldfrog said:

same here so my disclaimer that I own properties even if I do believe RE is overpriced in Oz and has a very negative factor on the country

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True. If it wasn't for housing we'd all have better lifestyles, not just the baby boomers who have made the rules.....

It's ridiculous that we have to aquire so much money and spend so much time simply allowing for the cost of a basic neccesity - housing!

Uncle Festivus said:

It's ridiculous that we have to aquire so much money and spend so much time simply allowing for the cost of a basic neccesity - housing!

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This is the most profound statement for a very long time on this thread.

If only it could be understood by the masses.

Cheers

Uncle Festivus said:

It's ridiculous that we have to aquire so much money and spend so much time simply allowing for the cost of a basic neccesity - housing!

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Location location location. If one has affordability issues then the bush and bark huts are still optional.

Wysiwyg said:

Location location location. If one has affordability issues then the bush and bark huts are still optional.

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Rent/share house/house sit/move to a third world country and bum around.
There are plenty of choices
Owning a Home or a Mc Mansion is just one.

tech/a said:

Rent/share house/house sit/move to a third world country and bum around.
There are plenty of choices
Owning a Home or a Mc Mansion is just one.

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The issue seems to be more about, where can I buy a house, that will make me money.

Rather than where can I afford to buy a house.

I agree with your sentiments tech/a.

Also I don't think it will be many years, before your above sugestions, become the norm.

sptrawler said:

The issue seems to be more about, where can I buy a house, that will make me money.

Rather than where can I afford to buy a house.

I agree with your sentiments tech/a.

Also I don't think it will be many years, before your above sugestions, become the norm.

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If your going to do this (Make money from buying established houses) You are up against it due to Stamp duty.
You must live in it otherwise capital gains tax will kill you. On the other side you cant claim for improvements.

Unfortunately if you want to make money from property now you need to be able to develop
The old money makes money.
Will be a while before Joe average sees gains in middle or lower domestic housing.

tech/a said:

Unfortunately if you want to make money from property now you need to be able to develop
The old money makes money.

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No point developing it. Just buy the land get a few approvals rezoning etc and flick it to a Chinese developer for 50% more than you paid for it.

Uncle Festivus said:

When property finally crashes it's going to take us all down with it - not doubt at all - and the politicians won't be able to do a thing about it!

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I don't think property will crash until we go through a final stage of irrational exuberance, as occurs in the share market. Unfortunately, I am starting to think that we are heading into this stage despite the warnings from various groups such as the Reserve Bank and the IMF.

My take is that Chinese, Singapore and Australian investors will force up the prices substantially over the next 2 years and everyone not in property will feel they are missing out.

Honestly I caught a taxi last week and the taxi driver was telling me about his housing development. The single Mum at cubs was telling me about her property portfolio that she is building up from nothing 2 years ago. It's like the shoeshine boy asking for stock tips just before the Great Depression. It scares me.

McLovin said:

No point developing it. Just buy the land get a few approvals rezoning etc and flick it to a Chinese developer for 50% more than you paid for it.

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Wow wish it was that easy.

The Chinese are already looking at potentials just as we are they're not that dumb---regardless of folk law.

tech/a said:

Wow wish it was that easy.

The Chinese are already looking at potentials just as we are they're not that dumb---regardless of folk law.

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It ain't folklore. I'm not talking about buying a couple of blocks in some backwater, these were prime sites within 10km of Sydney CBD and I'm talking about deals north of $50m. They're happy to take much lower returns than the average Australian developer.