The future of Australian property prices

[skcots]

Big Flaw,

You failed to use the rent on the property in your calcs, but you used the dividend on the stock

I only added $50 per week out of my own pocket for the first threee years, Not the minimum payment on a $188,000 loan you calculated, because the rent covers the bulk of the paymnet

I thought it didn't makes sense. I recalculated and ended up with a 2010 dividend of $6500 + franking ($8450) and a value of $162,500.

Considering I already had the number on the screen I was curious to know what would happen if I used the $225,000 as capital and did not reinvest any of the dividends. Lets assume like the rent they are paying off the loan. I know this may not replicate the real world but as I said its just to satisfy my curiosity.

The worth in 2010 is $741,000 and a dividend of $29661 + franking ($38500).

Still doesn't want make me want to rush out and buy property.

 

[explod]

I think sometimes its good to go back to pure basics. In 1970 my first house cost $10,000, a fairly humble place, average home then probably about $13,000 Stand to be corrected but that type of home, outer suburbs would be about $350,000 today, so a rise of about 27 times in 40 years.

On the US dropping the gold standard it was allowed to float from 1970 when it was $35 per ounce, today it is around $1200 per ounce which equals a rise of about 34 times.

In spite of what governments or the banking system say or try to do about it, gold is a base currency, but what it really reflects is the overall inflation of tangible value ie. paper money losing value. So we think we may have done very well over the years with the rising value of our home or investment property when in fact all we are doing is preserving our wealth at a flat rate against what money can buy.

The real winers in this world are the bankers or those taking good commissions or running a business in a niche provision of needs and/or large scale developers and/or creators of things. Property like gold merely preserves what we have, no more and no less. Of course if you can trade the highs and lows of cycles that is a whole new ball game but it seems few on this thread approach it this way.

 

[Tysonboss1]

Still doesn't want make me want to rush out and buy property.

For me it is not Property vs Shares thing.

I don't invest in property because I believe it will out perform the best performing shares when i look back in 10 years. I invest in property because I want a stable safe income stream inside my portfolio.

I also have a large share portfolio and I own a successful business. But having a weekly income stream from a property portfolio really helps balance out the fluctuations of share prices and risk of directors cutting dividends.

If I can retire owning my own home with passive income from another couple of debt free properties as well as having dividends and growth from shares I think I will have a much better 'All weather' portfolio than some one who focuses on one or the other.

 

[medicowallet]

For me it is not Property vs Shares thing.

I don't invest in property because I believe it will out perform the best performing shares when i look back in 10 years. I invest in property because I want a stable safe income stream inside my portfolio.

I also have a large share portfolio and I own a successful business. But having a weekly income stream from a property portfolio really helps balance out the fluctuations of share prices and risk of directors cutting dividends.

If I can retire owning my own home with passive income from another couple of debt free properties as well as having dividends and growth from shares I think I will have a much better 'All weather' portfolio than some one who focuses on one or the other.

An excellent post

Something which commission based financial planners forgot (eg storm) and something which, as one transitions into different stages in their life requires only minor tweaking (ie you can structure trusts, companies etc around this from an early age)

I agree wholeheartedly that one should diversify, sure you are guaranteed to pick the loser each year, but you also get the winner, and the protection of your capital is almost guaranteed.

 

[skcots]

...
I also have a large share portfolio and I own a successful business. But having a weekly income stream from a property portfolio really helps balance out the fluctuations of share prices and risk of directors cutting dividends....

Sounds like a winning formula.

 

[So_Cynical]

The question is no longer, "what happens to those who bought at the top". (re: negative equity)

The question now is: what happens to the loan books of companies like CBA and WBC if property values decline even 6%?

Add to this the need of the big 4 Banks to roll over 100+ billion in 3, 4 and 5 year loans over the next 18 months and its not to hard to see some foreign lenders being a little reluctant to take the risk that the Aussie housing market wont keep falling.

 

[robots]

hello,

good day brothers, robots here

yes thats my plan to TysonBoss1, trying to secure a comfortable retirement with seachange and treechange options in the cruisier times of life

and dont want to bludge of the taxpayer in later years when i have had every chance to earn money and support myself like people should, easy

and thats where too many people are focused on property or shares, instead brothers focus on your income as the $$ coming in from weekly pay or business are the easiest of them all, risk free normally

thankyou
professor robots

 

[robots]

hello,

oh well, looks as though another myth has been busted regarding property ownership and investment,

negative gearing is available to ALL ASSETS and has been for many many many years

and we all know the Federal Government introduced the FHOG because of the cruel stamp duty state governments imposed

so something going on

skcots, still cant understand why Storm investors went to the wall, werent they on the money being invested heavily in shares, oh well i guess some things in life just dont add up

thankyou
professor robots

 

[UBIQUITOUS]

Robots, any guesses what Enzo is going to decide on for this coming weekend's clearance rate? I reckon he will decide on 71% for this weekend and 70% for the weekend after.

 

[robots]

Robots, any guesses what Enzo is going to decide on for this coming weekend's clearance rate? I reckon he will decide on 71% for this weekend and 70% for the weekend after.

hello,

no sorry Ubiquitous, just do what i do every weekend and wait for the official results to come out on saturday evening around 7-7.30pm

Enzo does a great job collating all the data, good operator

thankyou
professor robots

 

[nunthewiser]

Perth's real estate recovery has stalled, with the western suburbs falling hardest and some sellers offering six-figure reductions to offload their homes.

Research by consultancy RP Data-Rismark shows the value of homes fell 0.9 per cent across the metropolitan area in April, and by 0.6 per cent in the first quarter.

The western suburbs were most affected in the downturn, with prices falling 2.3 per cent in April after a 3.5 per cent slide in March.

But real estate classifieds show price reductions of up to 20 per cent for some homes, with a Dalkeith property in Watkins Road reduced by $900,000 to $3.25 million in recent weeks

http://au.news.yahoo.com/thewest/a/-/newshome/7324471/big-price-cuts-to-perth-real-estate/

Sweet as bro.

 

[MACCA350]

hello,

no sorry Ubiquitous, just do what i do every weekend and wait for the official results to come out on saturday evening around 7-7.30pm

Enzo does a great job collating all the data, good operator

Now that's interesting.

23/5/10
RP Data: 756 Auctions = 69.4% clearance rate
REIV (revised): 756 Auctions = 74% clearance rate

One note, they both calculate the rate in the same way. The differences were in the reported sales.

Yep, great job indeed

Cheers

 

[satanoperca]

skcots, still cant understand why Storm investors went to the wall, werent they on the money being invested heavily in shares, oh well i guess some things in life just dont add up

I'll give you a hint, it starts with L and lots of it.

Cheers

 

[UBIQUITOUS]

I'll give you a hint, it starts with L and lots of it.

Cheers

Lollipops!

 

[Mofra]

There have been a few complaining about the tax treatment of residential property on this thread; interesting artcile pops up today:

http://www.news.com.au/money/shares-ahead-of-property-in-tax-treatment/story-e6frfmdr-1225874372015

Shares ahead of property in tax treatment

IN discussions about residential property the talk often turns to how generous the government is with tax breaks and other incentives for this asset class and how this has helped fuel property prices in Australia.

But we often forget shares' generous tax treatment, especially compared with other countries, The Australian reported.

 

[Dowdy]

Lollipops!

Don't forget the sunshine

 

[sydneysider]

http://au.news.yahoo.com/thewest/a/-/newshome/7324471/big-price-cuts-to-perth-real-estate/

Sweet as bro.

I spent ten years in Sydney real estate working as an attorney mostly on inner Sydney office building conversions such as Broughton House and a host of other buildings and lots of auction sales of harborside properties. I recall that you could buy a shotgun house in the inner West for $20,000. Now live in Atlanta. You can buy near new 2,000 sq foot home with 3 bedrooms, 2 bathrooms, good quality carpets and fittings, two car garage, fully AC for both summer and winter, fully insulated with double glass windows in Gwinnett County which (was)is in the middle of one of the fastest growing metro areas in the USA for $120-150,000. No stamp duty and mortgage interest is fully tax deductible to the owner/occupier. Rents for about $1,100 per month. That gives a gross return of about 9% on a 10% vacancy factor.

Australian real estate does not make any sense as it seems to be very high priced and the quality is not there (bathrooms with cheap/small fittings, front doors with no imsulation etc). Many developments are so small that it is very difficult to manouver a decent sized car around garages and into narrow streets. Trying to get around Sydney now makes me car sick as most of the old neighborhoods have many roundabouts and speed bumps. Old neighborhoods like Burwood and Strathfield have been pillaged of their beautiful homes that were built before WW1. It is a damn shame. I know that a lot of the "overprice" is due to kooky zoning and building regulations. I recall trying to renovate some huge mansions across the other side of Parramatta Road from Sydney University. They remained in trashy condition because the owner was supposed to make part of the property available for the poor folk in the area if you wanted to upgrade. At the end of the day I took off for the U.S. In Roswell (three U.S. Presidents lived here at one time) you can buy a 5,000 sq foot home with five bedrooms, three full bathrooms, several dining and entertaining areas, two car garage, movie theatre that seats 16 people with its own fully equipped bar, on a decent sized lake 30 feet deep for swimming and multiple decks off the house in a golf course community and still have a little change out of $500,000.

 

[robots]

hello,

should of kept yourself at least 100k man for an uzi, grenade launcher, ak47, armoured Hummvee, kevlar bullet proof vest, 3030, night goggles, 2 dobermans, 24hr security guard

man you in trouble, why do people have to keep comparing Aus with US?, the joint is a hole

its like Alan Kohler who keeps pulling up graphs from Debtwatch highlighting our prices to US, the place is finished

thankyou
professor robots

 

[wayneL]

hello,

should of kept yourself at least 100k man for an uzi, grenade launcher, ak47, armoured Hummvee, kevlar bullet proof vest, 3030, night goggles, 2 dobermans, 24hr security guard

man you in trouble, why do people have to keep comparing Aus with US?, the joint is a hole

its like Alan Kohler who keeps pulling up graphs from Debtwatch highlighting our prices to US, the place is finished

thankyou
professor robots

Wrong neighbourhood 'bot.

 

[tech/a]

Australian real estate does not make any sense

Perhaps
Sydney real estate (in your opinion) does not make any sense-----would make more sense to the rest of Australia.