The future of Australian property prices

[farmerge]

I agree. 5 obviously stretched him thin. It's an interesting argument to cry poor while you bought 5 houses. He obviously had to demontsrate some ability to service the loans. I don't have any pitty.

A sad case of perhaps greed overtaking.

 

[TimeISmoney]

I agree. 5 obviously stretched him thin. It's an interesting argument to cry poor while you bought 5 houses. He obviously had to demontsrate some ability to service the loans. I don't have any pitty.

So everyone should gear themselves to go on the pension and become a strain on the system?

 

[mullokintyre]

So everyone should gear themselves to go on the pension and become a strain on the system?

Well, he obviously geared himself up big time, and to my way of thinking, was overgeared.
It makes little sense to have all your investment eggs in one basket, particularly if you want a really big basket.

Mick

 

[Warr87]

So everyone should gear themselves to go on the pension and become a strain on the system?

In what way is that the conclusion you drew from my point about someone over-extending themselves and crying poor? You can invest without over leveraging.

 

[TimeISmoney]

In what way is that the conclusion you drew from my point about someone over-extending themselves and crying poor? You can invest without over leveraging.

I don't know the guy's financial position but I doubt he would make enough to retire even with 2 rentals. The problem in Australia is that they keep on changing the goalposts which affects people who have set themselves up for their retirement stage. Even if that guy owned 2 rentals outright, he would still be better off with a part pension and retirement fund payments.

 

[Value Collector]

I don't know the guy's financial position but I doubt he would make enough to retire even with 2 rentals. The problem in Australia is that they keep on changing the goalposts which affects people who have set themselves up for their retirement stage. Even if that guy owned 2 rentals outright, he would still be better off with a part pension and retirement fund payments.

If you have two debt free properties, that’s worth about $1.4 Million and will probably be throwing off about $56,000 of income per year, that should be plenty to live off for 30 years of retirement, provided you can draw down your capital.

The thing is in retirement you are supposed to start drawing down capital to supplement your income, it’s hard to do with a property though.

So having all your retirement assets in direct property is not a great plan. If instead you had $1.4 M of shares it’s much easier to sell a few shares each year to add to the dividends, and then if you draw your capital down below the threshold the pension eventually kicks in.

 

[TimeISmoney]

If you have two debt free properties, that’s worth about $1.4 Million and will probably be throwing off about $56,000 of income per year, that should be plenty to live off for 30 years of retirement, provided you can draw down your capital.

The thing is in retirement you are supposed to start drawing down capital to supplement your income, it’s hard to do with a property though.

So having all your retirement assets in direct property is not a great plan. If instead you had $1.4 M of shares it’s much easier to sell a few shares each year to add to the dividends, and then if you draw your capital down below the threshold the pension eventually kicks in.

That's if they're rented all year without any issues and I know on average you wouldn't end up with not much over 20k/year with an 800K property in the best of times.

Rentals cost a lot of money to run these days, land tax, rates, managing fees, price of services and repairs, and insurance are climbing every year. Never seen a house that doesn't need a ton of money poured into it after it is 10 years old, especially when it has been a rental. Keep in mind that the retirement free tax threshold is moved up so you can't really claim many deductions either.

I'd pick good shares over any rental any day of the week or if you had enough money to have both and you could keep on flipping the house every few years before it needed a ton of money spent on it. You watch all the problems happen once the building industry catches up with the supply, people with have 1000's dollars of running costs while they have vacancies for up to 3 months.

 

[Value Collector]

That's if they're rented all year without any issues and I know on average you wouldn't end up with not much over 20k/year with an 800K property in the best of times.

Rentals cost a lot of money to run these days, land tax, rates, managing fees, price of services and repairs, and insurance are climbing every year. Never seen a house that doesn't need a ton of money poured into it after it is 10 years old, especially when it has been a rental. Keep in mind that the retirement free tax threshold is moved up so you can't really claim many deductions either.

I'd pick good shares over any rental any day of the week or if you had enough money to have both and you could keep on flipping the house every few years before it needed a ton of money spent on it. You watch all the problems happen once the building industry catches up with the supply, people with have 1000's dollars of running costs while they have vacancies for up to 3 months.

Yeah, I am landlord I understand all the costs, without debt payments, you get to keep about 75% of the rent you collect, so as I said $1.4 M of property should net you about $56,000 of walking around money.

But yes I agree shares are better, especially because as I said you can sell of a small portion of shares each year to boost the income, but you can’t do that with property.

 

[basilio]

A perspective on the relentless rise in housing costs in Australia in graphs

Just four years ago were the ‘good old days’ for housing affordability – here’s why | Grogonomics

But those days of 2020 are good only relative to now, and that’s a rather horrific thought

www.theguardian.com

 

[sptrawler]

A perspective on the relentless rise in housing costs in Australia in graphs

View attachment 172741

View attachment 172742

Just four years ago were the ‘good old days’ for housing affordability – here’s why | Grogonomics

But those days of 2020 are good only relative to now, and that’s a rather horrific thought

www.theguardian.com

It all boils back to what people are paying for a house.
The FOMO is strong at the moment, because the Government isn't scaring the market, everyone feels comfortable that no matter what they pay, they will make money.

 

[Belli]

But yes I agree shares are better, especially because as I said you can sell of a small portion of shares each year to boost the income,

Or, if you have sufficient wherewithal, buy a few more income producing shares/ETFs.

I know, I know. It's applying that outdated principle of spending less than your income and investing the remainder.

OK, OK, the Government is coming after your assets in your old age so when in a position to do so spend it. Go Business class instead of Economy. Get that latest gadget/camera/guitar/car you've always wanted and/or start giving it away to your kids or preferred charity. Get four or five credits cards with $50k or more limits and max them out if possible. Think of the delightful look on your beneficiaries when they find out you end up having $500k of debt and $250k of assets. Just saying.

 

[qldfrog]

Or, if you have sufficient wherewithal, buy a few more income producing shares/ETFs.

I know, I know. It's applying that outdated principle of spending less than your income and investing the remainder.

OK, OK, the Government is coming after your assets in your old age so when in a position to do so spend it. Go Business class instead of Economy. Get that latest gadget/camera/guitar/car you've always wanted and/or start giving it away to your kids or preferred charity. Get four or five credits cards with $50k or more limits and max them out if possible. Think of the delightful look on your beneficiaries when they find out you end up having $500k of debt and $250k of assets. Just saying.

Well 500k of debt and 250k of assets means you have cost a bank 250k so good on you, unless mistaken debt is not transferred from parents to children, I think this is restricted to Pakistan or Afghanistan mali..or are we already there?

 

[Value Collector]

Or, if you have sufficient wherewithal, buy a few more income producing shares/ETFs.

I know, I know. It's applying that outdated principle of spending less than your income and investing the remainder.

OK, OK, the Government is coming after your assets in your old age so when in a position to do so spend it. Go Business class instead of Economy. Get that latest gadget/camera/guitar/car you've always wanted and/or start giving it away to your kids or preferred charity. Get four or five credits cards with $50k or more limits and max them out if possible. Think of the delightful look on your beneficiaries when they find out you end up having $500k of debt and $250k of assets. Just saying.

Yeah, I agree there is a time for spending less than you earn and building capital, but there is also a time for drawing down capital as you get older and there are ways to spend a bit more to help you live your best life.

There is not much point being in your 70's and refusing to spend any of the $1M+ capital you sit on, while you fret about how many minutes you run the heater in winter, or you say no to getting you wife some KFC chips. (I literally have people in my life in this situation, which is sad because they could never really run out of money, the pension is there if their assets ever drop below a certain level)

 

[Belli]

Yeah, I agree there is a time for spending less than you earn and building capital, but there is also a time for drawing down capital as you get older and there are ways to spend a bit more to help you live your best life.

There is not much point being in your 70's and refusing to spend any of the $1M+ capital you sit on, while you fret about how many minutes you run the heater in winter, or you say no to getting you wife some KFC chips. (I literally have people in my life in this situation, which is sad because they could never really run out of money, the pension is there if their assets ever drop below a certain level)

I've been trying to spend but the income just won't stop. I've got WHF and SOL to report in May I think as well as two further distributions each from the ETFs I hold.

Then it bloody starts again.

 

[Value Collector]

I've been trying to spend but the income just won't stop. I've got WHF and SOL to report in May I think as well as two further distributions each from the ETFs I hold.

Then it bloody starts again.

It’s a good problem to have isn’t it.

i think that the main thing is not just spending irrationally, but just making sure you aren’t irrationally limiting yourself.

 

[TimeISmoney]

Or, if you have sufficient wherewithal, buy a few more income producing shares/ETFs.

I know, I know. It's applying that outdated principle of spending less than your income and investing the remainder.

OK, OK, the Government is coming after your assets in your old age so when in a position to do so spend it. Go Business class instead of Economy. Get that latest gadget/camera/guitar/car you've always wanted and/or start giving it away to your kids or preferred charity. Get four or five credits cards with $50k or more limits and max them out if possible. Think of the delightful look on your beneficiaries when they find out you end up having $500k of debt and $250k of assets. Just saying.

True story this one, a relative of mine cleared out their bank accounts before they passed on. After they were they were buried, the family went in search of this money and was unable to find it. They searched under mattresses, and looked in the car, looked high and low and not a thing in sight. After a while, it dawned on them why he wanted to get buried with two of his favourite cushions.

 

[Value Collector]

True story this one, a relative of mine cleared out their bank accounts before they passed on. After they were they were buried, the family went in search of this money and was unable to find it. They searched under mattresses, and looked in the car, looked high and low and not a thing in sight. After a while, it dawned on them why he wanted to get buried with two of his favourite cushions.

They may need this form then.

Application to exhume

or for NSW

Application to Exhume a body in NSW

 

[TimeISmoney]

They may need this form then.

Application to exhume

or for NSW

Application to Exhume a body in NSW

I think they did exhume the body in the end, this happened sometime in the eighties.

 

[sptrawler]

There seems to be a lot more violent crime related articles happening on the East Coast recently, maybe just coincidence, or is it increased stress levels?
Any ASF posters have a more feet on the ground feeling about it, the media can tend to overdo the issues.
Not living over there it is hard to gauge, but reading how high rents and property prices are, it must be hard if not impossible for people who have average paying jobs to survive.

 

[TimeISmoney]

There seems to be a lot more violent crime related articles happening on the East Coast recently, maybe just coincidence, or is it increased stress levels?
Any ASF posters have a more feet on the ground feeling about it, the media can tend to overdo the issues.
Not living over there it is hard to gauge, but reading how high rents and property prices are, it must be hard if not impossible for people who have average paying jobs to survive.

I think it's the media's sensational reporting, it's pretty constant in the same high crime rate areas.