The future of Australian property prices

[billv]

Do you think capital appreciation will be effected by living on a busy road - say, I might only get 100% over the next 5 years instead of 200%?

Busy roads usually mean a slower sale when buying and less buyer interest when you're trying to sell.
If buyers are falling over themselves to buy properties as they're doing today then it's not a big issue but situations do change.

Don't pay too much.
I remember the mad panic of 2002/2003 in Sydney when people in certain suburbs paid too much and then saw little growth in the next decade as prices were adjusting down to normal levels.

Now regarding growth, 200%?, 100%? or 0%?
This year IMO we've been lucky the whole world is in trouble so expats and overseas people want to come and live here
otherwise we'd be giving property away

Nevertheless, strong growth is unsustainable.
It would be nice if it kept going but it can't so we should forget price doubling for a while.
My guess is for price pull back and then slow growth till wages and rents have caught up.

 

[jbocker]

Thanks for the insightful response professor robots. Good to see you doing your bit for the investment community. Question about picking which house to buy for you. If there is a house I can get for like $700k which is pretty sweet 3 bed 6kms from the city - but then you can go just to the next street and get the same thing for like $600k but it is on a main road and has a big double story next door that blocks sunlight - how do you identify which one is a better buy? Do you think capital appreciation will be effected by living on a busy road - say, I might only get 100% over the next 5 years instead of 200%?

Oh yeah, and I got a mate bought a house in Craigiburn. And another mate in Kensington. And another mate in Dromana. Which one do you reckon will fare best??

Sorry Fleeta and Robots for chipping in, if I may. Fleeta there is a reason already 1 is $700K as opposed to $600K. It is the old adage Location Location...
Your mates in the 3 locations, which one will fare best is based on a lot of factors. (I dont know the areas specifically) Firstly your mate who buys with the best price discount will start off well, the one who has access to good infrastructure (particularly if built after the purchase) can also do very well. The mate who can improve the property for a gain with least outlay will do well too. The mate who can do all three regardless of location is the smart cookie.

 

[kincella]

Robots, you are in good company with the likes of the BRW top 200 richest people...Frank Lowry on top, and Triguboff at top fifth (they are property people for those who do not know)
.... of the top 200, property accounted for 59, mining 25, and other investors at 23.....
almost 30% made their money in property...
and some think property people are stupid.......

http://www.theage.com.au/executive-...ining-magnates-in-the-dust-20100526-we91.html

 

[UBIQUITOUS]

Robots, you are in good company with the likes of the BRW top 200 richest people...Frank Lowry on top, and Triguboff at top fifth (they are property people for those who do not know)
.... of the top 200, property accounted for 59, mining 25, and other investors at 23.....
almost 30% made their money in property...
and some think property people are stupid.......

http://www.theage.com.au/executive-...ining-magnates-in-the-dust-20100526-we91.html

Hey Kincy, this appears as one of the headlines. How come you missed it when cherrypicking your link?

http://www.theage.com.au/business/higher-interest-rates-ahead-oecd-20100526-we7s.html

AUSTRALIANS are being told to brace themselves for much higher interest rates, with the Organisation for Economic Co-operation and Development predicting at least four more increases in the year ahead and most likely five.

The report describes the increase in Australian real estate prices as ''marked'' and says it leaves Australia with the highest house prices relative to income of any member other than New Zealand.

Property investors stupid? Nahhhh....just damn gamblers. Not surprising in a nation of pokies and tabs.

 

[Mofra]

Property investors stupid? Nahhhh....just damn gamblers. Not surprising in a nation of pokies and tabs.

Fairly ignorant comment to label all property investors as gamblers.

What about equities? Gambling as well? I expect cash would be, considering it is a depreciating asset and we can't accurately predict inflation.

 

[trainspotter]

WESTFIELD property tycoon Frank Lowy has defended his wealth after topping BRW magazine's latest Rich 200 list, saying "I don't work for nothing".

Mr Lowy's fortune rose by $840 million to $5.04 billion, taking him to the top of the BRW Rich 200 list for the first time after several years at number two.

But the chairman and founder of Westfield Group told shareholders at its AGM today he's deserving of his pay.

"I don't work for nothing ... I'm entitled to get paid," he said.

Nope ...... no money in property. Put the lot on black 13 IMO you bunch of gamblers !

 

[robots]

hello,

great post trainspotter, well done Frank great effort,

yes you work you get rewarded, bum and you get nothing

fairest system going around, then its up to the individual to spend, save, invest however they like

and that may involve bidding up or paying the asking price for something someone else owns, easy

thankyou
professor robots

 

[Tysonboss1]

.Frank Lowry on top,

http://www.theage.com.au/executive-...ining-magnates-in-the-dust-20100526-we91.html

Lowy,

He's name is lowy, not Lowry.

 

[cutz]

Hate to break it to you boys but those guys are in a different league, i.e. they don't gear up to the max and hope for the best on rentals hoping the little ball doesn't land on red.

They buy up big blocks of land and put skyscrapers/shopping centres on them, then lease them out, value adding as such, different ball game.

 

[medicowallet]

Hate to break it to you boys but those guys are in a different league, i.e. they don't gear up to the max and hope for the best on rentals hoping the little ball doesn't land on red.

They buy up big blocks of land and put skyscrapers/shopping centres on them, then lease them out, value adding as such, different ball game.

A bit like comparing Warren Buffet to, well, um, me.

 

[trainspotter]

Hate to break it to you boys but those guys are in a different league, i.e. they don't gear up to the max and hope for the best on rentals hoping the little ball doesn't land on red.

They buy up big blocks of land and put skyscrapers/shopping centres on them, then lease them out, value adding as such, different ball game.

Yeah ! Same ideals and ethos. He started somewhere ..... guess what ... it is all property.... mogul. Buy residential real estate and leverage against it and go again just like PROFESSOR robots. You have to start somewhere. OH OH ..... Is that the smell of money ?

They still have to rent their floor space to make it commercially viable BEFORE they "buy up big blocks of land and put skyscrapers/shopping centres on them, then lease them out," ...... oh well ..... no money in real estate. Frank Lowy did not "build it and they will come" Field of Dreams style ...... like he says .... he EARNED it !

 

[jbocker]

Hate to break it to you boys but those guys are in a different league, i.e. they don't gear up to the max and hope for the best on rentals hoping the little ball doesn't land on red.

They buy up big blocks of land and put skyscrapers/shopping centres on them, then lease them out, value adding as such, different ball game.

Hi Cutz do you think he simply bought a big block and put a sky scraper on it and alas became THE richest person in the land?? What didnt he gear up at some point? He and others geared up their heart and soul and became a league of their own. He took a gamble, but he his darn best not to take casino odds Red or Black. He and others took a gamble, they geared up, they just never gave up
Many (and I mean many) others have failed probably more because they gave up, or couldnt get another chance.
I bet deep down Cutz you overcame something significant to you where others had given up. That to a large degree IS the difference (the different ball game).
Lowy and a few others are inspirational. Have a read (dated but still relevant)..
Cheers.


Rags To Riches – The Australian Story
by Avinash Lakhan, BFA/LLB. C.A. - #60

There are many people in this world who have achieved and accumulated a fortune starting from very humble beginnings. One way to achieve inspiration is to follow the characteristics of these people.

It has been said that Australia is a land of opportunities and everyone is entitled to a “fair go”. This has been demonstrated by the many migrants who have arrived in Australia with virtually nothing and now are millionaires or even billionaires.

Frank Lowy is one of them. Born in Czechoslovakia in 1930 and surviving the Holocaust, Frank Lowy moved to Australia in 1952. Frank Lowy now is the second richest person in Australia, second only to James Packer. Forbes magazine estimates his current wealth to be in the vicinity of the $US4 billion mark.

Frank Lowy started from very humble beginnings by working in a delicatessen. In 1959 Frank Lowy with his then partner John Saunders who was also a migrant, and is now deceased, opened their first Westfield shopping store in Blacktown. Back then the move of opening shopping centres in the suburbs was a risky concept. But this gamble paid off handsomely.

In 1959 the majority of the immensely popular stores in Sydney were located in the CBD. Stores such as Anthony Horderns, Farmers, Snow, Winns, Buckinghams, Bebarfalds, David Jones, Grace Bros, Waltons, John Martin, Buckley and Nunn, Gowings, Mantons, Cox Bros, and Allan and Stark were all based in the Sydney CBD.

However, such was the popularity of the Westfields concept that the majority of the abovementioned big stores that failed to embrace the shift in consumer sentiment have subsequently perished. The consumers embraced the concept of mega shopping centres, and the rest is history. Frank Lowy recognised the needs of mass consumers and his calculated gamble has been rewarded handsomely.

Success is not limited to migrants. There are also many Australian born entrepreneurs who have battled hardship and are now very successful. Gerry Harvey the well known Chairman of Harvey Norman comes to mind. Gerry Harvey has a motto of never give up and has famously been quoted as saying:

“I went to the brink many times. A couple of times I thought I'm gone; this is it. But then you would just keep working. I think if you're close to the brink and just make sure that you work twice as hard and put twice as much effort into everything and the people around you and everything, you should come through.”

The persistence and the determination of Gerry Harvey have paid off. Today there are over 200 Harvey Norman stores worldwide. Gerry Harvey commenced business by selling goods door to door in the 1960’s with a friend Ian Norman and by 1982 they had 42 stores. In that year these stores were purchased by a consortium led by Alan Bond. Gerry and Ian started again with a single store in Auburn.

Although he is now 67 years of age he recently said that, the last thing he wanted to do was to end up being a "boring bastard in a retirement home". Instead of looking at retirement he has embarked upon a plan to challenge the big retailers in the U.K market, recently stating that "We're that far behind them they mightn't even
notice us coming. Now what a challenge in life, when you take on the giants like that, in the UK market, and in 10 or 15 years from now … they'll say 'Harvey Norman, they crept in'."

Another Australian success story is Aussie John Symonds. John Symonds grew up working at his parent’s fruit shop and learnt at an early age that customer satisfaction was the key to success. Hard times came upon John Symonds when a joint venture with a subsidiary of the Bank of South Australia failed. The lesson John Symonds learnt from this experience was to ‘when you are knocked down, learn from the experience and have the guts to get up and keep going'. John Symonds got back from this setback and now has totally revolutionised the home lending market.

With all due respect to Frank Lowy, Gerry Harvey and John Symonds, their intellectual capability in the normal literary sense would not entitle them to be the brightest students in their school. However these people have set high goals for themselves. They have created their own opportunities in life. They have not been afraid to go that extra mile and to do the dirty work. Many times in their life they were in a situation where a lesser man with a higher intellectual capacity may have given up. Hard times were overcome through hard work, persistence and a belief in themselves.

They embraced challenges and surrounded themselves with the right people. They have put their heart into achieving their goals and objectives and have achieved what another person would have thought to be impossible.

So have the opinion ‘nothing is hard – it is merely hard work’. Never give up. Try hard, work hard and give it your best shot. If you encounter failure try harder. Go again! Learn from your mistakes. Treat failure as merely a detour to success and Go For It. Remember Champions are losers who never give up.

 

[explod]

Hate to break it to you boys but those guys are in a different league, i.e. they don't gear up to the max and hope for the best on rentals hoping the little ball doesn't land on red.

They buy up big blocks of land and put skyscrapers/shopping centres on them, then lease them out, value adding as such, different ball game.

And of course they float companies out of their shopping centres etc., on the stock market and due to their inside idea of what is going on they can leverage into those at statiegic times so that at the eend of the day they have multiple streams of income across many different types of investing alternatives. Bullet proof.

 

[UBIQUITOUS]

And of course they float companies out of their shopping centres etc., on the stock market and due to their inside idea of what is going on they can leverage into those at statiegic times so that at the eend of the day they have multiple streams of income across many different types of investing alternatives. Bullet proof.

Muppet property speculators and billionaires like Lowy are like chalk and cheese.
For starters, I bet he has always tried to make a profit, unlike the negative gearers out there who are happy to make income losses and hope for a capital gain.

 

[kincella]

Lowy would be claiming the same losses on a massive scale...
you dont get rich by paying more tax than is necessary...same rules open to larger taxpayers as smaller players...
his capital gains would be whoppers....
its a smart game...and been played very successfully for the past 50 more years..

 

[Tysonboss1]

Muppet property speculators and billionaires like Lowy are like chalk and cheese.
For starters, I bet he has always tried to make a profit, unlike the negative gearers out there who are happy to make income losses and hope for a capital gain.

The thing is that most property investors are not "muppet peoperty speculaters".

The Against crowd on here seem to have an idea in their head that the average peoperty investor is an over leveraged sterotype property speculater who has bought properites on 100% finance interest only loans.

They then use this sterotyped clinche over leveraged investment model to make judments on whether the underlying asset class has merit. this is simple flawed thinking.

Here's the thing Property investment does not generate a negative cashflow, it generates a positive cash flow, it's only when you layer debt on it that it can become negative cashflow, But that is true with all investments.

 

[robots]

hello,

good afternoon, CHECK THIS:

http://www.theage.com.au/business/w...rged-with-defrauding-stars-20100528-wi5j.html

just thought i would post this up so people could see how a Ponzi Scheme operates,

often used to describe the property market by the doomers of society

thankyou
professor robots

 

[explod]

hello,

good afternoon, CHECK THIS:

http://www.theage.com.au/business/w...rged-with-defrauding-stars-20100528-wi5j.html

just thought i would post this up so people could see how a Ponzi Scheme operates,

often used to describe the property market by the doomers of society

thankyou
professor robots

Yep there are all different types of Ponzie schemes. I do think that the talk up of property say six months back with the FHBG to people buying well beyond their means was also a Ponzie but the best Ponzie to study is the great one from 1929 posted up by Uncle Festivus earlier in the day. This I think exposes the fact that we are now again well into the greatest ponzie of all time where money will mean absolutely nothing, we will be hungry but not able to buy food and property. In particular where Herbert Hoover refused to allow any more lending. But the coralation with what is occuring today is scary stuff

In my humble opinion, as always.

the link: http://www.nowandfutures.com/great_depression.html

 

[cutz]

Hi boys,

I don’t deny that there is money to be made in property, many do it. On a small scale developers buy blocks or old houses in the inner burbs, demolish, build several townhouses or sometimes multi story apartments (AKA flats) then flog them off to the negative geared set, apparently there’s good money in it (from the developer’s perspective).

On a larger scale and I touched on it previously you have the big boys, shopping centres and skyscrapers.

The point I was trying to make is you can’t compare investment rentals to what the developers are doing, after all they are flogging off their offering to property investors.

As for being in the company of the likes of Lowy, forget about it.

 

[robots]

hello,

classic, must thank developers for being around, just awesome

they help the plod along crew enormously, developers also hold many of the places they build

look at Trig from Meriton, has enormous private holdings, many developers will hold 5-10% of build stock

once again you assume everyone who buys property is negatively geared,why? many who buy kick in dollars and are neutral or positive, pay down and go again

anyway, whats the problem with negative gearing? you dont run a campaign on NG which is used on any income producing asset (businesses, shares etc,etc)

telling you its all about kickin the true holders of wealth

thankyou
S.Keen