But then he would say that, wouldn' he!

[tonyc00]

As reported today (19 July on Ninemsn),

"AMP Henderson chief economist Shane Oliver says residential property was now the least attractive form of property investment.

"On a six to 12 month view, equities offer a higher return potential than all property asset classes as they undergo a cyclical recovery," he said.

Did he not make the same statement on 19 July 2000, 2001, 2002 as well as 2003.

Eventually, just maybe, he may be right but I expect him to be making the same statement in 2004 (and still be wrong).

(cynical) Tony.

 

[INVESTRON]

what all these people seem to forget is that it is very hard to borrow to buy shares, you usually need real property to mortgage to get sufficient funds to invest in shares.

 

[Simon]

A margin lend on shares is actually quite easy to get and is secured againstr the shares or against property. Many margin lenders don't require financials as it is just a straight asset lend.

Interest rates are higher than for residential property and the LVRs offered are lower. Usually 60-70%.

Cheers,

 

[RightValue]

You don't get a margin call on a property if the market dives, so long as you meet your interest payments.

Property is a geared investment that allows a greater level of gearing than any other financial asset I know of.

 

[hwd007]

Yes I aggree when combined with rent, depreciation and tax effects, seems to me it looks hard to beat.

 

[Terryw]

Banks do make margin calls on property loans. Just ask some farmers about it-and it is still happening today.

Terryw

 

[Aceyducey]

Originally posted by tonyc00
"AMP Henderson chief economist Shane Oliver says residential property was now the least attractive form of property investment.

So why are so many people still buying investment properties then?

Least attractive my foot!

Least profitable...well it depends on how smart you are and whether you do your research

Cheers,

Aceyducey

 

[bundy1964]

And if you bought AMP shares at $20 on listing you would have a nice return on your capital of -75% Just think of the people who paid $60 for them

Makes IP's sound pretty good to me

bundy

 

[sanchez]

Whenever somebody says that "shares are better than property", it begs the question .... Which Shares? and Which Property?

If they are talking about an All Ordinaries fund, then I would like to see a comparison with 50k in such a fund over 20 years, with management fees etc accounted for, compared to 50k on a 300k property in a capital city.

Sanchez

 

[sanchez]

Or for that matter, even 50k with a maximum margin lend.

Not that I don't think shares have their place, but I think it is very naive or lazy to directly compare the two and make such a broad statement.

 

[tonyc00]

Hi

I think we all share the same sentiment towards Shane Oliver remarks. (which is why the title of the thread was "But then he would say that, wouldn't he!".

I guess that Shane Oliver, like Greenspan, is just a guy in a suit trying to hold on to his job (and in that respect anything they say is suspect).

I certainly don't remember Oliver ever saying in 2000, 2001, 2002 or 2003 that "investing in australian and international equities was now the least attractive form of investment".

Personally I would find his stupid remark (about residential property) amusing except I remember that not everyone is as astute as the people in this forum.

I'm sure that there are many people (eg retirees, students, low-income employees) who are now suffering financially because they thought he knew something that they didn't, and therefore followed his misplaced opinions.


Tony

 

[Pele]

gearing shares

Gday

If you are confident and in a position to take big risks and you have equity in a property then you can gear your chops off to buy shares. Just take a line of credit out against your equity and use that cash to get a margin loan. Bit of a hero or zero strategy but im sure plenty of people do it.

Pele.