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The future of Australian property prices

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Boggo said:
Recently I have noticed that I am getting a lot more emails promoting existing apartment sales and new developments etc leading me to think that that market may be feeling the pressure.
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Those new developments can be catch, on occassions they take deposits and then nothing. I have seen it time and time again, the builders go broke, sometimes into liquidation and the deposits are frozen. Sometimes council has a dummy spit and forces the builders to come up with new plans. I saw a project draw out over 10 years before it got built!! Others I've seen sit idle for 7 years because a builder went broke.

To all people thinking of buying off the plan, ask this question to the agent.

What happens if the project doesn't go ahead or the builder goes into liquidation? Get the reply in writing and make your decisions accordingly. If there are no guarantees then keep in mind the risk you are taking on. You could blow the lot.:dunno:
 

I personally wouldn't touch the off the plan projects for the reasons you say and in addition I know of a case where the developer reduced the size of each apartment so he could add two while blaming the council even though all they did was approve the variation.

In this link is the current advertising focus of the Adelaide CBD developers telling anyone who will listen how much they are saving.
https://www.revenuesa.sa.gov.au/taxes-and-duties/stamp-duties/off-the-plan-concesson

SA has the highest combined Stamp Duty and fees of any state in Aust., no surprises really when you look at the current incompetent state mob that are wrecking the place.

and state by state stamp duty and fees comparison link
http://www.realestate.com.au/calculators/stamp-duty-calculator/
 
HI Guys,

New to this forum and a complete newbie when it comes to trading. My background has been in property investment and property development over the last 8 or so years. This forum has an amazing amount of knowledge and I look forward to reading the stories and wisdom over the next few months and will try to contribute my 2 cents when it comes to real estate.

Cheers
NT
 
What is everybody's thoughts on the future of property prices specifically in Melbourne? I've been on the sidelines last 3 or 4 years waiting for a good time to buy. In hindsight 2012 would have been great. In the upcoming May budget I very much doubt we will get much reform in terms of reducing the capital gains tax discount as has been proposed. Much more likely in my opinion will be an significant increase in the First Home Buyers Grant to tackle "Housing Affordability" which has really lost all meaning. All this does is exacerbate the problem even further and brings future demand forward. I feel Australia is on the brink of a recession but the government will do anything to keep house prices steady as they don't want an economic collapse under their watch. I currently rent a great place for a fraction of the cost of buying so don't really want to bite the bullet until there is at least a small retraction. Would be great to hear peoples thoughts.
 

My perspective. Start with property education. I pretty much ignore alot of the macro stuff, ignore 99% of what people say and understand Supply and Demand of different property markets in Australia of which there are thousands. Often people talk about 'A property market' but there is a huge problem with that understanding becasue there is no ONE property market but a vast number which offer all kinds of opportunities ALL THE TIME.

I don't have much to go off from your post but this is what I would want to focus on from my perspective, and believe me I know its not easy, nothing worthwhile is ever easy.

1. Change your mindset/philosophical outlook. My suspicion is that it has caused you (and most others in society to sit on the sidelines of some massive bull markets in the last 5 years.
2. Property education: Books, youtube, networking with others. There is definitely a body of knowledge investors need to lean in order to 1. Avoid the common mistakes most 'property investors' make and 2, understand how to build your property business from the floor up, with a very strong foundation.
3. Determine what your goals are and what is your risk profile
4. When ready take action.

Really it all starts from one's philosophical outlook. I have noticed something time and time and time again from very successful investors: If they believe the world is exploding and there is no money to make then they will make no money. If they believe there are endless opportunities no matter what then they tend to find the opportunities and do very well.

Good luck
 
rryall said:
I currently rent a great place for a fraction of the cost of buying so don't really want to bite the bullet until there is at least a small retraction. Would be great to hear peoples thoughts.
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I bought first home 4 years ago and consider the 52 k that has gone from rent into my own asset is a pleasing event. On top of that, interest rates have dropped over 1.56% ...

Start mortgage rate = 07 NOV 2012 5.550% P.A.
Present mortgage rate (most recent adjustment) = 01 SEP 2016 3.990% P.A.

which leads me to why I posted. I don't know when interest rates will rise but we are at the lowest in history. You could wait for rates to rise and you could have a house price fall as less people come into the market. I don't know if that is how it works. Anyway I have a couple of screenshots to point out what a 2% increase means for interest rates and then you have to consider loan serviceability at higher repayments. I presently repay 2700/month and I can handle about 7% interest rates. Also houses cost money to maintain although I bought a year 2010 house so not much yet, the rates and water cost 3k per year, home insurance 1k per year and yard upkeep I do myself. The freedom of own home is worth it. Like I put earlier the rent that goes into my own future owned asset is all worth it.

Anyway the two examples ... one of 4% over 25 years and 6% over 25 years.

 

I want to start investing in property soon (as in the next 12 months - 24 months). Are there any particular resources you would recommend? Any particular books to get started? If property is anything like trading, there is a lot of crap out there.
 
Valued said:
I want to start investing in property soon (as in the next 12 months - 24 months). Are there any particular resources you would recommend? Any particular books to get started? If property is anything like trading, there is a lot of crap out there.
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There's a decent podcast on YMYC. It's not bad to get some ideas on where to invest. For me, it's price, location, and yield preservation, in a nut shell.
 
Valued said:
I want to start investing in property soon (as in the next 12 months - 24 months). Are there any particular resources you would recommend? Any particular books to get started? If property is anything like trading, there is a lot of crap out there.
Click to expand...

There are some good books by Michael Yardney, Lomaz and Helen Kogteves. There is no Holy Grail, its a good idea to read a few and to get an overall perspective of approaches, strategies etc and then choose a strategy that suits your 1. Goals and 2. Risk profile. It really all comes down to 3 things.

1. Your goals and timeframe to achieve it
2. Your mindset, attitude, discipline, effort put in (this needs to match the goals you've set. The lower the goals the more mediocre mindset/discipline is acceptable. The loftier the goals the more sophisticated you'll need to be in mindset and approach.
3. Income/serviceability. In the world of property you wil get no where if you don't have an income from a job and serviceability to be able to buy assets. Its much different from stocks in this regard because anyone can buy stocks and trade but not anyone can buy a property asset. It takes serious commitment, sacrificing and dedication. But its not rocket science to make money in real estate. The body of knowledge is relatively simple and not as copious as stock trading seems to be.
4. Acquiring the foundational knowledge so you know what to do, what to avoid, the different strategies, how to mitigate risk, negotiations, finance etc etc. The nitty gritty of learning the trade.

Mindset is key imo for success in wealth creation in general.


In my 14 years of investing, the biggest error in judgement I see from all kinds of investors is they want to achieve great things in short periods of time with a very mediocre mindset. Rarely do they ever succeed with that formula.
 
NewbieTrader1982 said:
In my 14 years of investing, the biggest error in judgement I see from all kinds of investors is they want to achieve great things in short periods of time with a very mediocre mindset. Rarely do they ever succeed with that formula.
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A good point and it applies to pretty much everything.

Investing (in anything), getting fit, careers, relationships and just about everything else.

If you're going to succeed then effort and time is required to acquire knowledge and to put it into practice.

Become a millionaire by the end of this year, lose 50kg in a month and other such notions won't succeed under normal circumstances but real knowledge combined with consistent application has a much greater likelihood of success.
 
Just a quick update on the Sydney and outer suburbs on the Central Coast market. There are plenty of buyers still around and not enough stock to go around. I recently bought an apartment, there was so much competition that I had to pay more than the asking price to secure the place for ourselves. Then last week we put our house on the market, we are downsizing. Within 1 week we had 15 groups through, plus email and SMS enquiries. Offers are being submitted this week. We have already had an offer we could accept but we will wait for the agent to do his work and come up with a good final price.

I read recent commentary that there are 100,000 extra people pouring into the Sydney area every year. At that rate Sydney's population is expected to double in around 25 years. The slow rate that they are building decent supply to meet this demand IMO won't be enough. Plenty of new apartment blocks are planned to go ahead but very few have actually started. By the time they are done 10 years might have passed by, we are getting older by the year, can't wait that long and that's why we didn't buy a new place.

What an awful situation for those wanting to buy a place. They come up with some stupid ideas sometimes. The other night they were talking about affordable housing for teachers, Police and hospital staff, so they could be near their workplace. They mentioned cheaper loans. First thing my wife and I said was WHAT ABOUT EVERYONE ELSE? Then they talked about accessing Super Savings for first home buyers, another silly idea. What they need is more supply at a fair price for everyone. Come on Guvnuts stop coming up with these band aid one line solutions.
 
Having more supply would definitely help. However I think the low interest rate environment globally has had been the biggest driver on property prices. Looking at how property prices have gone up in the last 12 months I think it was a mistake of the RBA to have cut rates twice last year. Now they are stuck between the proverbial rock and hard place. With the Fed looking to move a few times this year I think this is going to be a wake up call to other reserve banks around the world, that leaving interest rates so low for so long has created a lot of dangerous market distortions.
 

If he doesn't like the current housing affordability crisis, he can change it. So of course he's smiling. Probably was thinking of his many houses too.

I'm no Treasurer but how would removing negative gearing drive rent through the roof?

We all agree that NG does drive up property prices right?

That put a lot of people out of the property market. i.e. higher demand for rental.

With higher costs of property, investor would want a decent rental yield... that decent yield on a high property price mean higher rent.

High yield plus high demand equal rents going through the roof.

If we reverse that... more people could afford a house to live in, i.e. less demand for rental properties. Lower costs of property mean investors can live with a lower rental price as it would be the equivalent yield, or higher, depends.

So wtf? Do we need some economic degree and big title to become stupid?
 
Negative gearing removal will drive up rents at the moment. Its a supply issue in NSW.
 
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