Did they really... they all but shut down? Are you sure about that? Wow, you must have a woeful credit record - did you forget to pay your phone bill? I've had no issues with credit. Seems all those FHBs buying up big didn't either...
Better late than never: House Price Indexes: Eight Capital Cities, Dec 2008
- Thread starter manderson
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Did they really... they all but shut down? Are you sure about that? Wow, you must have a woeful credit record - did you forget to pay your phone bill? I've had no issues with credit. Seems all those FHBs buying up big didn't either...
Sure it did... compared to the ASX!
Hahaha! Keep wriggling.
Sure it did... compared to the ASX!
Good thing my money was in neither then.
Your IPs are cash flow positive (when did you buy the second one in 2008)? How does that happen? You buy properties with a land component in the Northern Beaches. The yields on those kinds of properties were extraordinarily low when you bought them - they are neither units nor Western Sydney houses. I doubt you're being truthful here, but I'm sure that the yields on those properties will be above the cash rate as of today, mostly because of capital loss. However because you 'locked in' the peak price I doubt you'll see any cash flow.
Sydney property was meant to turn around into a boom in 2008. What happened?
Oh, you bought a house in January ? Congratulations, by the end of this year I'm sure you'll be able to see clearly that you've made the right decision and bought at the right time. We had our correction in the last quarter and anyone waiting for price falls like they had in US and UK is dreaming, although even there in the majority of cities price falls have been greatly exaggerated.
.....
Sorry, but I'm not buying the 'but I can afford it" bit. (maybe if Packer said it I would ) I doubt anyone in his right mind would buy a $500 pair of shoes today if they were going to be able to get them for 40% less tomorrow let alone someone buy a $500,000+ house now if they thought they could get it for 40% off later. But nice try.
Thanks, its a good feeling to finally get what I was looking for, and for a good price. I paid $575k, and an effective mortgage of $50k after offset. Trust me I can afford it, I have enough in shares to pay it out now, but I'll use the mortgage to fall back on if/when I lose my job, and to buy stuff. Its cheap money at the moment.
To clarify, I'm not expecting houses to be 40% cheaper tomorrow, if they do fall that far it will take years. I have been putting in offers on houses for the past 3 years (this was our 7th go), so I have been willing to buy at anytime during the peak, because I don't mind losing money on something I want, just as I do with a TV, holiday or new car.
I've generally expected prices to remain flat for a long period, so my strategy has been to get ahead while they do, not to wait for them to get cheaper. On average prices have been flat (+5%) in Brisbane since 2005. 2008 evened out 2007's growth.
Lately with the global economy getting worse than I expected, I've been giving even weighting to up to 40% falls from peak. I'm not 100% sure that will happen, so to wait would be a gamble for me, particularly as my circumstances have changed, we will be losing an income, paying more rent for a bigger place, and my return on cash is falling. I'll be going from saving $9k per month to less than $3k per month. The advantage of waiting is diminished, the cost of buying is small for my personal circumstances ($65pw, plus lost income on my cash).
On top of this I bought a house that would have sold in the peak at $700k-$750k, for $575k. The median may have only fallen 3%, but individual houses have done better or worse than this. Prices in the $600k - $1m range are down on peak prices in the parts of Brisbane I've been watching.
So those $500 shoes are only costing me $415, they may fall as far as $300 in the future, it could take 5 or 10 years. In the mean time I have to rent my shoes from a 'shoe-lord' who is likely to sell up as times get tougher, and get very little return on my very large shoe deposit. I've got $370 in the bank, I'll just buy them now and avoid the risks.
He's an evil specufestor, probably only noticed his IR cuts and his rent returns going up and missed all the bad stuff happening on ASX.
Now that you mention I did notice the NoDoc disappearing and LowDoc lending criteria tightening in the last half of 2008. I suspect with IR falling they didn't want a repeat of the US subprime happening here so they closed the loophole. The problem they have in US now was started by renters finding out that buying was cheaper then renting (at least for the introductory period) and then taking NoDoc/LowDoc loans with little or no deposit to buy/build houses they could never afford to rent let alone buy and had very little incentive to keep once the the introductory period was over. Its one of the reasons why it really is different over here.
Cheerio,
Yorke, I admire your stoicism, but I am surprised you are so bullish. WA has fallen 6% in a year where unemployment sat at around 2-3%. I hope you are not highly leveraged with any properties you own in WA.
On page 3 price index
Sydney 2003: 100
Sydney 2008: 98.9
So 5 years, no growth.. still going down big.... I want my "price double in every 7 years"!
Let's make the time frame even longer! Using this index number, 1989-1990's index for Sydney is 37.6. So 37.6 to 98.9, that is a 2.6 times increase in 19 years!! Annual return 5% only. And there is the biggest boom in the middle.. and there is the coming bust.. 5% annual return , 20 years of long term "vision".. hardly anything to celebrate in terms of "investment" (maintanance fees and etc. not included)
(If you are a "pure speculator" who bought in 1990s and sold in 2003, good speculation!! If you are a long term property "investor" hoping that "long term" will give you some sort of good return, you are in for a bit of shock and regret.)
Sydney 2003: 100
Sydney 2008: 98.9
So 5 years, no growth.. still going down big.... I want my "price double in every 7 years"!
Let's make the time frame even longer! Using this index number, 1989-1990's index for Sydney is 37.6. So 37.6 to 98.9, that is a 2.6 times increase in 19 years!! Annual return 5% only. And there is the biggest boom in the middle.. and there is the coming bust.. 5% annual return , 20 years of long term "vision".. hardly anything to celebrate in terms of "investment" (maintanance fees and etc. not included)
(If you are a "pure speculator" who bought in 1990s and sold in 2003, good speculation!! If you are a long term property "investor" hoping that "long term" will give you some sort of good return, you are in for a bit of shock and regret.)
Nice post FHB, well done!
Now to get the IP's
Rgds, Chris
Thanks,
IPs will need to get alot cheaper for me to get interested, but I do have to keep focused on building wealth. I found rising house prices when I didn't have one was a good motivator. I need to make sure I don't get complacent now that I've achieved that goal.
Source: Eureka Report
Biggest annual fall since ABS created their series.
Biggest annual fall since ABS created their series.
The market rent would be about $600pw, it would cost me about $900pw to hold on 100%LVR on current IRs plus maintenance, rates, etc. I'm also a bit worried that rents could fall back a bit as conditions worsen, getting tenants with a job could become harder.
So if I could buy this house for $300k, and still get rent of $550pw, I might start to get interested.
How does it happen? By buying at a good price in an area with good rental yield. In my case I've bought nice family sized IPs right beside a school. Excellent demand from tenants.
When did I buy? Second IP was bought in January 08, and the first IP in mid 2007, and my PPOR in early 2005. I've been pretty happy with the growth in my property values since 2005... see chart below. Northern Beaches capital growth per annum since 2005 has been +3%, +3%, +9%, +9%.
You may not be aware of this, but the yield will depend on how much one pays for the house, and on the rental return. Yield can be improved by buying at a good price in a good location. I also get a 0.9% discount on the SVR which helps. Even if rates drop by only 1% today, then I'll be on 5.01% interest rate.
You're a dirty big liar too.
If I locked in the 'peak price' then give me more peaks (see chart above). No capital losses so far, in fact I just recently got all my properties revalued to extract some more equity, as I'm planning to buy again. They are all still going up in value. I'm planning to buy in the top end, where prices are down about 20% so far (top end only represents 5% of the overall market, so that's why those top end falls have little impact on the median, or the value of my properties (which are all priced around the median).
Was it? Who said that?
I'm not expecting Sydney to boom again until around 2013. We should see some strong growth around 2011, but until then growth will be moderate.
Cheers,
Shadow.
I dont know, that 40 to 0 in 06 looks worse than the 18 to -5 (or whatever the number actually is) we have now
Almost 50% difference by the looks
Dave
That's a very weak response from you. You can normally do better than that...
Residex are pretty good. In fact I once compared Residex's figures with the ABS figures over a ten year period, and while their capital growth figures differed from one year to another, over the ten year period the cumulative result was remarkably similar. Here are the results... the chart below shows the Residex vs ABS capital growth figures for Sydney for the past ten years...
Whose stats do you prefer to use, and why do you think they are superior. Can you give me a brief summary of the methodology used by your preferred statistics provider (and why you think that methodology is better than Residex)?
Also, it would be great if you could show me your regional breakdown for Sydney based on your preferred stats, for comparison with Residex? It would be good to see how they compare. I saw an article a few days which I think showed APM saying that the Northern Beaches only grew by +1.5% last year (can't find the article now), which is much lower than Residex's +9% figure, so I do recognise that different analysts see different growth figures each year, depending on the methodology they use and the data they sample. However they do all tend to converge on a similar cumulative result over an extended period of time.
Cheers,
Shadow.
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So those $500 shoes are only costing me $415, they may fall as far as $300 in the future, it could take 5 or 10 years. In the mean time I have to rent my shoes from a 'shoe-lord' who is likely to sell up as times get tougher, and get very little return on my very large shoe deposit. I've got $370 in the bank, I'll just buy them now and avoid the risks.
Make sense and sounds like you got yourself a good buy, with the falling AUD the price of leather can only go up. Add to that the shoemaker's wage increase, higher energy bills caused by winter climate changes and these shoes could end up costing you twice as much as they did. Or you could paid the same amount in a few months time but instead of a quality pair of shoes end up with an inferior Kmart product from imitation leather made in China.
Have you had a chance to ask Consa or any of the boys on your site about the alleged massive price crash in UK and his area ? I would have asked him myself only for reasons you well know I can't do that. Since you've linked this thread I was expecting that by now we'd be flooded with graphs showing a massive price crash in one of the worst affected countries. It seems that when it comes to a charting price crashes West Sussex is not as popular as Detroit or Tokyo. I did some research myself but for some strange reason all I could find for West Sussex was a -11.8% fall in prices. I also found that despite the "crash" it seems that prices do double every 10 years or so after all . http://www1.landregistry.gov.uk/houseprices/housepriceindex/report/default.asp?step=4&locationType=0&area=West+Sussex&reporttype=1&datetype=2&showmonth=12&image2.x=23&image2.y=12
Looking at the chart below I'd call that more of a correction then a property crash and wish my super was doing so super.
The reason I'm so interested in UK is because according to some of your guys UK had one of the biggest crashes after US. So I'm thinking that if -10% is as bad as they got hit in UK and are now turning the corner then we with our -3.3% fall and a much better position to weather the storm are probably at the bottom already.
Not sure if you've seen this yet, http://business.smh.com.au/business/record-number-of-poms-moving-to-australia-20090203-7vzb.html but its probably another reason you'll be glad you've got in before the cashed up buyers arrive in Brisbane and cause a pent-up demand.
With QLD becoming so popular with migrants now its probably a good time to look at buying a few IPs as well.
cheers,
Thanks, don't understand why the surprise. After so many years of 30%+ growth a -6% fall is quite insignificant and as long as overall the prices still double every 7-10 years, which they do, everything is peachy.
It’s impossible to buy the index and it really is pretty easy for property investors to beat the index.
Equally, I've been driving around Sydney trying to find the Median House without success.
Can't say I've ever understood the fascination for investors with the movement is large markets given you can't buy the market.
If you're exposed to thousands of property spread all around the country, it's reasonable to watch macro movements with a degree of interest. That's why we lenders care.
If you own less than thousands of properties, you would do better to watch how the local school is faring and ensuring bikies don't move in next door.
I actually don't think property and shares are that different. They are both assets. If you buy a company you have firm specific risk. If you buy a property you have property specific risk. On that overlay is a macro or MARKET risk. If you buy an individual stock or individual property in a boom, then the probabilities maybe more favourable and less so in a downturn. Like shooting fish in a barrel. Will this mitigate all risk, no. But neither does doing a lot of homework and thinking it is all firm specific
The much quoted all property is specific and "a market within markets" is a meaningless aphorism and endlessly misused. I don't know if these people even know what they are saying. At the end of the day it is all about the specific firm or company or property you bought and the price, as this determines your profit, but what determines price is not all firm specific. People who ignore general market trends and macro factors because they own a specific property are foolish, because obviously the macro factors have a firm specific effect. Very crudely Total risk = (firm specific risk+market risk)*leverage
With respect to the indices, you can buy property derivatives for commercial and residential in the US and UK since 2007. In Australia property derivatives should be available for trading in the next year, ie forward contract, swap or inbedded/note structure
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