Post up your amazing result (or stupid price) of the week
- Thread starter rprodrive
- Start date
Soooo so true, yet so many fail to understand this factor....
That is if they are property investors. I would think most are first home buyers or downgraders (i.e. retirees, baby boomers with kids moving out).
Could also be cashed up property investors who lean significantly towards capital growth and who could blame them if these prices are anything to go by?
Melb market certainly hot, I'm not complaining.
Will Melb prices continue to rise, what do you all think?
My feeling is that the market may go sideways or may even drop back 10% due to IR increases and tighter financial policy making it harder for investors to finance deals. But I don't believe the Melb market has peaked and we are some way off yet.
MTR
Will Melb prices continue to rise, what do you all think?
My feeling is that the market may go sideways or may even drop back 10% due to IR increases and tighter financial policy making it harder for investors to finance deals. But I don't believe the Melb market has peaked and we are some way off yet.
MTR
Cheers DeeHwa, the price difference is about what I was thinking.
I would rate Byson somewhat better than Wattle Valley though (due to traffic on Wattle), personally I think it is the best st in Maling Rd area, would rate Scott second. Bryson is a fair way from Surrey Hills, which starts in the streets behind Highfield rd (Camberwell starts at Riversdale Rd to the south).
Definately, I think all those suburbs are up 30%-50% in a year, but going back a year they had fallen hard from late 2007 prices. The Burwood house looked like a reasonable buy to me.
There's talk about investors entering the market ahead of home owners and they are buying on the back of low yields, around 3%.
So I think one of two things will happen in the medium-term. Perhaps a combination of both.
1. Either prices stagnate and yield catches up. A small place with a bit of land in inner city Melbourne probably rents $500-$550 these days. Hefty component of average post-tax salary (which is around $900 per week). Wouldn't have thought rent will catch up that quickly without seeing a corresponding increase in net income.
2. Momentum continues to erode yields (to say 2%) and investing in property becomes predominantly driven by speculation on capital gains (because why else would you invest in something with 2% yield
). Investment is not driven by numbers but rather by anecdotes about housing shortgage, migration, relaxation of FIRB approval whose impact very few investors can actually quantify. Terms like "stronger for longer", "safe as houses" are coined. Some economic jolt unravels the mystery and the "house of cards" (I coined this one) unfolds.Market is heated and like all heated things, it needs to cool down. Driving it to go banannas purely on speculative capital gains (without the corresponding numbers to back it) is not good.
Reminds me of the stockmarket, when stocks were driven to heights on valuation multiples (cf low yields in houses). Even worse were those companies that were skyrocketing on the back of resources in the ground (ie not even certified reserves). Did they actually produce? Have they? And having 1 trillion coal in the ground doesn't make you can commercialise all of it...
So my view in general is caution. Ideally a combination of both scenarios unfold, ie prices simply dip back down 10% as in 2007 and there is time for yield to catch back up to justify the prices. Obviously all just in my opinion and being on a property forum, there are spruikers and people with enormous vested interests in this sector, so take it with a grain of pepper
I struggle to understand people buying units/apartments on yields in the low 3%s.
My view is that the high capital gains are driven by land values. In many locations land values are driven by development potential. That potential has already been realised for most units/apartments and split blocks. For them there is not dramatic upside the way there is for a development site.
My view is that the high capital gains are driven by land values. In many locations land values are driven by development potential. That potential has already been realised for most units/apartments and split blocks. For them there is not dramatic upside the way there is for a development site.
Hi all
For those interested, this is what Steve McKnight has to say:
"Unlike previous boom, this one is caused by a chronic shortage
of properties for sale. An agent friend of mine put it this way "for
every one seller there are ten buyers. Our problem isn't finding
interested buyers - it's finding houses to sell!"
This situation isn't going to be fixed any time soon, so the trend of
increasing property prices seems established for at least the
remainder of 2010".
Cheers, MTR
For those interested, this is what Steve McKnight has to say:
"Unlike previous boom, this one is caused by a chronic shortage
of properties for sale. An agent friend of mine put it this way "for
every one seller there are ten buyers. Our problem isn't finding
interested buyers - it's finding houses to sell!"
This situation isn't going to be fixed any time soon, so the trend of
increasing property prices seems established for at least the
remainder of 2010".
Cheers, MTR
Problem is every boom is 'unlike' the previous boom and people will keep coining terms to justify why it'll keep going up and just up this time, as I said in the previous post.
Not long ago Chip Goodyear coined the "stronger for longer" term. I think I bailed out of the sharemarket that year.
Not long ago Chip Goodyear coined the "stronger for longer" term. I think I bailed out of the sharemarket that year.
I think it was a record price for a house in Burwood so not sure how we can term it as "Reasonable"...
What you are struggling to understand is herd mentality and that some people are growth investors, some are yield investors, some have no idea why they are investing
Logically, yes that has a bearing. It is only ONE factor of many though. CG is driven by sales demand and rental demand as well.
Also, like any market, do not underestimate FEAR & GREED.
Yes, but based on this thinking there is no reason for units to go up in value. But clearly they do. So your underlying assumption must be flawed.
Development potential is just ONE factor that is a driver of value.
Hawthorn Is Booming
This also caught my eye, average hawthorn street.
http://www.jelliscraig.com.au/index.cfm?objectid=5CCCA6E0-DFD4-736C-3D0CFE43CFE86099&pid=5984
$2260000.
This also caught my eye, average hawthorn street.
http://www.jelliscraig.com.au/index.cfm?objectid=5CCCA6E0-DFD4-736C-3D0CFE43CFE86099&pid=5984
$2260000.
Everyone has a different strategy to suit their individual needs. I would take CG over yield any day of the week.
As for units, my townhouse went up 20% in 2 years. I know much of Melbourne did, but since I have no land I think that's a good result. Apartments in NYC have most certainly gone up and I think the mindset in Australia is slowly changing. Not everyone wants to deal with gardens and house maintenance. I know I don't!
