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Like some of the "property" based listed companies in australia which went belly up during the GFC. I guess some things don't add up.
The future of Australian property prices
- Thread starter Joe Blow
- Start date
Like some of the "property" based listed companies in australia which went belly up during the GFC. I guess some things don't add up.
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I thought he was talking about Sydney!
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But wasn't it you who was singing the praises of WESTFIELD and Frank Lowy, and the other owners of "property" based listed companies on the stock exchange?
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Nope ..... that was me to point out the Number one person on the BRW is Frank Lowy who claims he had earned it (the right to be there) as well as paying himself millions of dollars for the privelige. Just so happens to be a property mogul with Westfield.
explod
explod
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Yep, Confessor Robots was the one and turns with the breeze. Trouble is the breeze's gone from lilacs to smelly stuff a bit lately.
Selective investments in all catigories are the go as has been pointed out in some good posts over the last few days.
Have been in a property trust for 12 years which is to be sold as it matures at the end of this financial year. Has been paying an annual dividend of 10%on original investment of $1 per unit. Sale and wind up expected to return unitholders nearly $4 per unit. Top retail property inner Sydney.
No one can say what is best, you can only go your own way on putting the ruler over it many times.
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I know it was you who started it, but he jumped on the bandwagon as well. Plus a quick scroll can let me see that he has said it in previous posts as well. Took a bit of finding though!
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I enjoy Dr Robots posts.
But he knows that i know that we have seen the top of the market for now and the cycle is due for a backpeddle.
Thats fine by me .....i own property and happyto continue(i have also sold properties within the last 2 years), probably will buy more at a later date also.
Great stuff is real estate.
Do feel concerned for our young and overextended tho but i doubt that will stop me nailing some poor sucker to the wall come negotiation time for the next ones
But he knows that i know that we have seen the top of the market for now and the cycle is due for a backpeddle.
Thats fine by me .....i own property and happyto continue(i have also sold properties within the last 2 years), probably will buy more at a later date also.
Great stuff is real estate.
Do feel concerned for our young and overextended tho but i doubt that will stop me nailing some poor sucker to the wall come negotiation time for the next ones
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I enjoy Dr Robots posts.
But he knows that i know that we have seen the top of the market for now and the cycle is due for a backpeddle.
Thats fine by me .....i own property and happyto continue(i have also sold properties within the last 2 years), probably will buy more at a later date also.
Great stuff is real estate.
Do feel concerned for our young and overextended tho but i doubt that will stop me nailing some poor sucker to the wall come negotiation time for the next ones
You hit the nail on the head.
A pullback is due, and as long as you are not overcommitted with a recent purchase spurred by the governments ill timed and conceived bailout of realestate, then you are a winner no doubt.
We have to correct, as the world has seen that we are overvalued, the banks will no doubt look to limit their exposure as well.
Like you, I am looking forward to any bargains which pop up, but I don't expect any real return on housing for quite some time.
hello,
why they all out to get me Nun, every corner i turn someone is having a go
i notice the Doom spruikers are still claiming prices should be 3.4-4x average wage, shame they cant operate realestate.com.au
so the "boss" of Westfield at top of the list, how are the shareholders travelling
i am just a guy trying to help out others on their path, robotism, paradise, a euphoria that lasts all day long
as high as high can be
thankyou
professor robots
why they all out to get me Nun, every corner i turn someone is having a go
i notice the Doom spruikers are still claiming prices should be 3.4-4x average wage, shame they cant operate realestate.com.au
so the "boss" of Westfield at top of the list, how are the shareholders travelling
i am just a guy trying to help out others on their path, robotism, paradise, a euphoria that lasts all day long
as high as high can be
thankyou
professor robots
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Dunno Dr R,
seems a few maybe jealous of your title as being a legend in ASF as the dude that got it right for at least 5/6 years in a row?
Dunno , got me beat actually.
Perhaps you should visit your local nunnery and share the love
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OK i guess,
Just going through a period of consolidation after the rebound, could be touch and go from here.
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Hey Guys first time writer long time reader,
I have an economic and law background and have been doing a bit of research into this particular area and have concrete views. I am not sure if this theory has been discussed but it is quite simple and impossible to argue against.
Anyone that understands economics knows that wages rise with CPI and inflation which is currently around 3% (2-3% target), which is restricting affordability.
However history shows that property prices are increasing by 7-10% p.a. and due to compounding this difference is magnified.
The average wage in Australia is $60K, therefore with a 3% increase compounded per year for 50 years, the average wage would become $260,000, wow quite an increase.
But when you realise that on 7% growth of property prices the average property price of a house in australia will go from $400k to $12 million and on 10% growth will achieve a median of almost $50 million, you realise that the increase of the median wage is far outmatched by the increase in property values.
Sustainable. . . .clearly not. Affordability is at its lowest EVER in australian history and a correction in the property market. Honestly, if anyone has a ACCURATE explaination for why this isnt the case, please explain because i have nothing.
Thanks guys really appreciate the feedback
I have an economic and law background and have been doing a bit of research into this particular area and have concrete views. I am not sure if this theory has been discussed but it is quite simple and impossible to argue against.
Anyone that understands economics knows that wages rise with CPI and inflation which is currently around 3% (2-3% target), which is restricting affordability.
However history shows that property prices are increasing by 7-10% p.a. and due to compounding this difference is magnified.
The average wage in Australia is $60K, therefore with a 3% increase compounded per year for 50 years, the average wage would become $260,000, wow quite an increase.
But when you realise that on 7% growth of property prices the average property price of a house in australia will go from $400k to $12 million and on 10% growth will achieve a median of almost $50 million, you realise that the increase of the median wage is far outmatched by the increase in property values.
Sustainable. . . .clearly not. Affordability is at its lowest EVER in australian history and a correction in the property market. Honestly, if anyone has a ACCURATE explaination for why this isnt the case, please explain because i have nothing.
Thanks guys really appreciate the feedback
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I believe a correction of 20% within the next 2-3 years followed by a consistent long term plateau. The banking sector is too regulated to allow "100 year mortgage" as in korea so a correction is inevitable.
hello,
good day Gordon, great posts man
it surely is a strange occurrence, just keep in mind you have to be in it to win it
nothing scary about 100yr loans, just a product the banks may introduce to their customers
try not to get caught in "numbers" and averages etc as they are figures which the Doom Spruikers continually put up and after seeing there leader Dr S.Keen fail dramatically i am surprised many more havent dropped of the radar like GHPC
although looks as though a guy from Crikey is doing his best
thankyou
professor robots
good day Gordon, great posts man
it surely is a strange occurrence, just keep in mind you have to be in it to win it
nothing scary about 100yr loans, just a product the banks may introduce to their customers
try not to get caught in "numbers" and averages etc as they are figures which the Doom Spruikers continually put up and after seeing there leader Dr S.Keen fail dramatically i am surprised many more havent dropped of the radar like GHPC
although looks as though a guy from Crikey is doing his best
thankyou
professor robots
Im 100% with you here, Im not in the office but I will post a link to a research done recently talking about the above tomorrow.
I would say a min of 20% correction is required..
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Thanks professor,
i just find it hard not to look at the progressions of the prices vs wages. even if demand is through the roof with great infrastructure, transport opportunities. . .bla bla bla, all the growth "factors", but at the end of the day something is only worth what someone is willing to and able to pay for it. the perfect property everyone might LOVE and do anything for, but at $50mil a pop, no one will be able to afford.
I doubt 100 year loans will eventuate in this country, banking sector is far too regulated to accommodate the change, fiscal and monetary policy will intervene before this happens.
i just find it hard not to look at the progressions of the prices vs wages. even if demand is through the roof with great infrastructure, transport opportunities. . .bla bla bla, all the growth "factors", but at the end of the day something is only worth what someone is willing to and able to pay for it. the perfect property everyone might LOVE and do anything for, but at $50mil a pop, no one will be able to afford.
I doubt 100 year loans will eventuate in this country, banking sector is far too regulated to accommodate the change, fiscal and monetary policy will intervene before this happens.
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Cheer up old mate, the bears are just a little hungry and no food for the last six years of your reign as ASF Investor of the Year has made them a little feisty.
Property in the long run will always come up trumps, I think that has been well and truly established, the question is what is the future of property prices in 1 yr, 2yr, 5yrs etc.
Maybe they are just a little touchy you are claiming this year as another win before it is over.
I have my beliefs as to what will happen so I am taking every opportunity to short the Banks who I believe are most exposed if property sees a correction or change in trend.
I wonder if I gamble as much as a median house on shorts on the banks whether my return in the next year will be as great as the return this year on property. Hmmm 20%, seems possible, ANZ $22 to $11, 50% return. WBC $23 to $14 40%.
And for those that wonder, I will be NG my shorting investment and the only question will be can I hold the shorts for more than a year for my CG deduction.
Cheers
Got to love L.
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If you hang on a little longer you can short the real deal.
Still waiting for this proposed product to come online http://www.smh.com.au/business/betting-on-the-house-20090513-b3cs.html , seems to be taking longer than expected.
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Let me start by saying I agree that property (atleast the market I study) is properly due for some stagnation or possible down ward pressure. but who knows what will i happen short term, I certainly don't.
However, I don't fully agree with your idea that it is impossible for property to grow faster than the rate of inflation longterm.
Over time land uses and population densities change and this gives rise to price increases that are out of wack with with normal affordabilty calculations.
For example, what was considered an average family home in the 60's and was affordable to someone of average means may now sell for upwards of $2M and be way out of reach of someone of average means, Does this mean that the property in over valued and will some how fall in value to better reflect the rate of inflation. probally not.
The property could attain a $2M price tag because over the past 50 years density may been increasing and developers will buy this property and put 10 apartments on it and sell or rent the apartments to those of average means, or high income earners that don't want to live in apartments will bid up the prices of the areas that aren't being developed.
you can see examples of this all over sydney, I have seen a house sold in my suburb that was in an unlivable condition for $2.3M, along with the 2 houses either side it was turned into an apartment building, While on the other side of the suburb houses that aren't in the correct zoning to be developed still sell for over $2M because there are high income earners willing to pay that much not to live in an apartment but still live close to the city.
