You're right. Not only are the holding costs not very big - in many cases there are none - and in a few cases they actually make a profit (cf+ve)
Buy Big
- Thread starter Somersault
- Start date
What would you like to see before you dip in again?
I wouldn't even contemplate going in now with whats happening with the FHOG boost. I'd rather avoid any market being propped up with a subsidy. If it's finished, then we only have a few months to see what happens, but I've no doubt it will be reinstated or replaced with something similar.
I'd also like to see unemployment at least level out. Property has never seen rising real values in a time of rapidly increasing unemployment. Some would say though, that certain property is rising now, but I'll put that down to the FHOG boost.
See ya's.
Predictions............!!!!!??????
Wow, I wish I could see into the future,
what happened to........"the best time to buy property was yesterday, the next best time is today......." or "........buy property as often as you can afford to............".
Or have I got it all wrong?
Call me, I will predict the future of all events, lotto numbers, recessions, booms, and what suburbs will triple in value overnight!
1900 CRYSTAL BALL
Call costs only $1000/min with $50 flagfall/connection costs
Wow, I wish I could see into the future,
what happened to........"the best time to buy property was yesterday, the next best time is today......." or "........buy property as often as you can afford to............".
Or have I got it all wrong?
Call me, I will predict the future of all events, lotto numbers, recessions, booms, and what suburbs will triple in value overnight!
1900 CRYSTAL BALL
Call costs only $1000/min with $50 flagfall/connection costs
That is an interesting view TC. It seems to be directly at odds with the statement below by Andrew Hanlan, Senior Economist as published in the Westpac Market Insights Australia, G3 and New Zealand April 2009 newsletter.
(bolding mine)
TC is talking about real terms, Westpac is talking about nominal values - they can both be right.
From an investors POV, there's little point buying now if it'll be cheaper in real terms tomorrow.
From Westpacs POV, their investment is increasing in value faster than the mortgage (which is static).
That is almost laughable, considering westpac almost went under in the last recession. They should know what happened. Hmm. Maybe they have forgotten. That would explain the banks lending practices of late.
And yes, as keith says, I'm talking real house prices after inflation.
See ya's.
I bought a resi development block in 1993 in the early stages of the last RE flat spot locally.
From this experience I can assure you that if we have a recession (which is almost certain) there will be cheaper properties for quite a while.
I ended up doing the development but didn't sell till 2002, when things were getting better.Back in the early 90's , RE just went really quiet with volumes and prices flat to slipping.
As the interest rates dropped the values rose, but very slowly.
Once the confidence goes, investing gets tougher. (Thank you media)
Don't forget that when RE prices drop they do it in a different way to shares. It is hard to deny a share price is falling but we have all the lobbyists and spin doctors in the world working on convincing us that RE prices will go up short term.
RE prices fall in an almost imperceptable way to the casual observer.
Anyone buying right now would be wise to have a great long term plan and look at fixing as soon as things are favourable to fix I think.
And stick to lower to median stuff IMO.
From this experience I can assure you that if we have a recession (which is almost certain) there will be cheaper properties for quite a while.
I ended up doing the development but didn't sell till 2002, when things were getting better.Back in the early 90's , RE just went really quiet with volumes and prices flat to slipping.
As the interest rates dropped the values rose, but very slowly.
Once the confidence goes, investing gets tougher. (Thank you media)
Don't forget that when RE prices drop they do it in a different way to shares. It is hard to deny a share price is falling but we have all the lobbyists and spin doctors in the world working on convincing us that RE prices will go up short term.
RE prices fall in an almost imperceptable way to the casual observer.
Anyone buying right now would be wise to have a great long term plan and look at fixing as soon as things are favourable to fix I think.
And stick to lower to median stuff IMO.
I agree.
No-one can predict what will happen over the next few months let alone next year.
Buy whenever you can afford to, as long as it is not at the peak of the boom IMO, I might also add that I did in fact purchase my first property at that time because I didn't know any better, but luckily for me, this mistake actually paid off because the boom was sustained and just 'kept booming', proving again that no-one can predict what the market will do, even in the short term.
Thats why you should buy whenever you can afford to, and preferably yesterday.
Investors need to take a long term view of never, ever selling.
This strategy can always be changed later on, and it kills most risk.
No-one can predict what will happen over the next few months let alone next year.
Buy whenever you can afford to, as long as it is not at the peak of the boom IMO, I might also add that I did in fact purchase my first property at that time because I didn't know any better, but luckily for me, this mistake actually paid off because the boom was sustained and just 'kept booming', proving again that no-one can predict what the market will do, even in the short term.
Thats why you should buy whenever you can afford to, and preferably yesterday.
Investors need to take a long term view of never, ever selling.
This strategy can always be changed later on, and it kills most risk.
Even thought it's trending upwards, it's still very much in the normal range.
I think Yardney pointed out in his latest newsletter than in 2001 we had 7% unemployment and that was the 'lowest in 10 years!' (not exact on those specifics). That was the early stage of a boom.
All I know is the Melbourne market goes boom, years of flat, boom, years of flat. Since we just had a boom I think we're up for years of flat. How's that for scientific?
I think Yardney pointed out in his latest newsletter than in 2001 we had 7% unemployment and that was the 'lowest in 10 years!' (not exact on those specifics). That was the early stage of a boom.
All I know is the Melbourne market goes boom, years of flat, boom, years of flat. Since we just had a boom I think we're up for years of flat. How's that for scientific?
How do you know if it will be cheaper tomorrow?
Do you make an educated guess and then hope like hell it will be?
Do you say..........I like that property, the numbers are good but I will wait til tomorrow it will be $20 grand cheaper?
or wait til next year when its $50K cheaper but interest rates are now at 8% but you could have locked in 5% previously?
Dunno, too much "speculation" for me really!
Seems like the reality TV shows on renos are starting to make a comeback so if all the media hype decreases confidence can the reverse happen?
Big Tone
I'll start buying again after a 2-3 year period of flat (+/- 5%), or until things become CF+ (both of which should happen if rents keep going up, which I think they will). Right now renters are paying 21% of their income on rents, in 2001 it was 28% so there is room for rental growth.
Will be lowering my LVR in the meantime.
Will be lowering my LVR in the meantime.
That's about as scientific as you need to get for a long termer.
For a trader; well, you need pie graphs and medians and averages and trend lines and subscriptions to eveything to get all the opinions and software and residex reports etc.
And under what conditions do you sell big?
i'd disagree, i dont think its the best time to buy, i dont think things will fall much in the next few years but i dont think they will rise much either, probably for another 2 years at least. I think the low end of the market may fall back a little when the FHG boost reverts back to normal.
In metro melbourne, when looking for assets with decent land content, properties are still quite a bit cf- , yields not great, so i prefer to sit for the next year or 18months and re-assess.
i want to buy in just before it takes off again, to burn less cash flow i think this is probably 18-24 months away in melbourne anyway
But if you get in now you guarantee being in before it takes off again....wait 18-24 months you may find that the ship has already sailed!
Unfortunately, I dont have indepth insight to judge "timing the market"
Big Tone
Neither do i but with unemployment set to hit 8% and I think the next 18 months are safe, in the long term you do significantly better if you buy just before or quickly after the boom happens than holding a property for several years in a flat market before it picks up again.
So i reckon hold onto cash my job is not 100% you see
Neither do i but with unemployment set to hit 8% and I think the next 18 months are safe, in the long term you do significantly better if you buy just before or quickly after the boom happens than holding a property for several years in a flat market before it picks up again.
So i reckon hold onto cash my job is not 100% you see
Based on my own limted experience (9 years investing) - this is what a pre-boom looks like:
Year - 2001
Carrum Downs, Vic (~35kms SE of Melb)
Value - $137k
Rent - $210pw
Interest rate - 6% or so?
Yield - 7.9%
(these were the variables about 3 months before a boom hit that area).
This is what it looks like today:
Value - $275k
Rent - $265pw
Interest rate - 5% or so?
Yield - 5.0%
To get back to a yield of 7.9% the rent would have to be $417pw, the value would have to drop to $175k. Or, it could be something in between, like the place worth $225k and the rent $340pw.
Not saying the yield has to get back to 7.9%, but for the current scenario's figures to match the last pre-boom scenario that's what has to happen.
9 years of 5% growth will turn a $265pw rent into $411pw (or 5 years of 9.5% growth, or just over 3 of 15%).
Who knows. My spidey sense just says 'not now, David'. Maybe wait till things are CF+ again then it doesn't matter if I get any growth, at least I'll be getting some income. Buying a property that's negative $10k per year during year 1 of a 7 year flat (for example) will cost you big time before it's CF+ again.
Year - 2001
Carrum Downs, Vic (~35kms SE of Melb)
Value - $137k
Rent - $210pw
Interest rate - 6% or so?
Yield - 7.9%
(these were the variables about 3 months before a boom hit that area).
This is what it looks like today:
Value - $275k
Rent - $265pw
Interest rate - 5% or so?
Yield - 5.0%
To get back to a yield of 7.9% the rent would have to be $417pw, the value would have to drop to $175k. Or, it could be something in between, like the place worth $225k and the rent $340pw.
Not saying the yield has to get back to 7.9%, but for the current scenario's figures to match the last pre-boom scenario that's what has to happen.
9 years of 5% growth will turn a $265pw rent into $411pw (or 5 years of 9.5% growth, or just over 3 of 15%).
Who knows. My spidey sense just says 'not now, David'. Maybe wait till things are CF+ again then it doesn't matter if I get any growth, at least I'll be getting some income. Buying a property that's negative $10k per year during year 1 of a 7 year flat (for example) will cost you big time before it's CF+ again.
or what about sitting on the fence till the boom is on its way. Since booms don't hit every suburb at once and acts more like a ripple in a pond, you will be able to identify when a boom hits then target suburbs soon to be hit by the ripple that have not yet shown any substantial price increases.
