Confidence in Australian Housing Market

[truong]

About negativity and risk

Got the feeling we are at a critical time where fortune could be made for the brave. While most people look at the problems and become negative, I believe there are remote signs that we may see a boom in a few years time, but to take action now you need to take calculated risks.

Some of the factors that will come into play in a year's time (or couple of years) include:
- very little construction happening now
- no end to very low vacancy rates
- household disposable income rising sharply
- huge savings now being accumulated needing to find better returns
- rebounding economies in Europe and US
- company profits now being accumulated looking for outlets
- India taking over from China while China still experiencing above 5% growth
- share market back to pre GFC levels, etc...

General negativity in the populace is a great time for moving ahead if you focus on the next stage of the cycle.

 

[wylie]

I'd like to add my congrats to Wylie's son, and you too, Wylie, for all your negotiating which no doubt will influence his next property purchase.

Thank you so much.

The negativity of some of the posters on this thread is astonishing. It's very obvious who in this world gets ahead on the smell of an oily rag and who just whines about the smell.

This last paragraph pretty much sums it up, in my opinion.

I don't want this thread to be about my son's purchase, but if a 21 year old can do it on such a small wage, what are people whining about?

 

[MichaelW]

Heny Ford got it right...

"Whether you think that you can, or that you can't, you are usually right"

Cheers,
Michael

 

[MichaelW]

Got the feeling we are at a critical time where fortune could be made for the brave. While most people look at the problems and become negative, I believe there are remote signs that we may see a boom in a few years time, but to take action now you need to take calculated risks.

General negativity in the populace is a great time for moving ahead if you focus on the next stage of the cycle.

Welcome to the party Truong. Its going to be a hell of a ride! I can't wait to finish my $3M Sydney development so I can grab some equity and go buy my new PPOR in Toowong Brisbane before that market takes off. I'll be buying up there in about 12 months for a touch under $1M.



Cheers,
Michael

 

[Giddyup]

i just pointed out 89 3 bedroom houses in an outer suburb for less than $300,000.

That cant be right. Isnt there a housing shortage?

 

[csc2]

He is not a "kid"

at 21 hes still wet behind the ears if his parents have to help him out....21 is still a kid in my eyes....at 21 most are still naive to what life has to offer...

not saying you are doing anything wrong but no doubt if it all turns to crap he can fall back on you which is comforting as many "kids" his age cant these days or wouldnt want to

 

[HomePage]

That cant be right. Isnt there a housing shortage?

Good one! I've been wondering where all these properties that have recently started flooding the market have come from too. There must have been some pent up supply

 

[.toe]

b.c every % of capital growth is a % debt of for someone else..

Beebop my PPOR has apparently gained 15% in capital growth in the last year, yet it has not created one cent of extra debt.

The most common valuation method (though not the only method) used by buyers, sellers, and RE professionals is comparative. For every house which has sold in the past six months (widest time frame used for comparatives) there might be 20 to 40 houses which are not on the market. Yet they all are valued based on the small number of homes that have sold.

So while new buyers may be taking on more debt than they would've a year ago, the majority of owners are not. Most people do not take on more RE debt than they can afford. If FHBs can't afford to live in the suburbs they grew up in then they can make the time honored choice of most past FHBs, to move further out, or start small.

 

[Player]

I know this article is a month old but here's the Gold Coast Bulletin's report on the Gold Coast property market.

Thanks for sharing that article Ben.

I do not see anywhere mention of a particular city or region, so do not believe it is referring to the Gold Coast at all.

The article alludes to a generic national market. Personally the only tight rental market in a general sense is Sydney I reckon.

Having just returned from Broadbeach and having been up there three times in as many months, the general market there is over-supplied, units worse than houses both in terms of rentals and, houses for sale versus actual (real) buyers.

It may have reached bottom or nearly there, however if you have any different sentiment to share, I would be glad to hear it. Personally I don't see recovery there any time soon.

 

[Propertunity]

That cant be right. Isnt there a housing shortage?

Very shallow assessment Giddyup.

Just because a house is for sale does not mean that it is 'surplus to requirements'. The sellers will still need to either buy another somewhere or rent another somewhere.

 

[Propertunity]

.....if a 21 year old can do it on such a small wage, what are people whining about?

Exactly!

I was listening to an interview in the car the other day on the radio, on my way to another purchase

The guy was saying that research revealed, in relation to your positive or negative outlook on life:
1. It is 50% genetic. i.e.If your parents, and their's, were positive people, then you tended to be too.
2. 10% is life experience. i.e. If life circumstances treated you well or badly.
3. 40% is as the result of YOUR OWN decisions.

 

[wylie]

at 21 hes still wet behind the ears if his parents have to help him out....21 is still a kid in my eyes....at 21 most are still naive to what life has to offer...

I don't care what he is in YOUR eyes, truly. I've met many 40 year olds who are still naive to what life has to offer.

not saying you are doing anything wrong but no doubt if it all turns to crap he can fall back on you which is comforting as many "kids" his age cant these days or wouldnt want to

You are cheery, aren't you. Again, I repeat, that my parents were always there for me should things "have turned to crap". That is what being a parent is. Perhaps you had a bad experience in that department? I don't know why you are so negative.

If things turn to crap for him, and we were not able to help him out, he would sell the unit, probably make a little profit, but even if not, at least he had a good go at it.

On ABC radio last night Paul Clitheroe took a call from a 42 year old man, with no assets except a car (with a car loan), a credit card debt of $10K and other loans. Sounds like someone who was too scared to take the first step to me. Forced savings into a housing loan is very good training.

I cannot see "crap" happening. His salary will rise in time, his room mate will pay more as time goes by in line with the market, his loan will stay the same. He will have to work to a budget, which is a good thing. Of course, if the sky falls in, then we are ALL in deep trouble, but I think if everyone plans for that scenario, nobody would buy anything.

We are not helping him except for signing a bit of paper guaranteeing a small part of his loan. If he had not been paying much more on his car loan we wouldn't need to do even that. Or are you suggesting that our moral and emotional support is somehow stunting him?

If he decides to return to uni, he can move back home or rent a room from a friend and rent the whole unit out. We have covered all likely scenarios and he'll be fine.

What I am particularly proud of is that this son is rather "aspirational" and I used to worry he would want everything to be "top quality". I have been pleased to see him graciously accept a second hand fridge, decide the carpet is good enough to stay, decide the kitchen doesn't have to be replaced just yet, even though it is a bit daggy and not to his taste. He is growing up .

You seem rather "glass half empty".

 

[lizzie]

but no doubt if it all turns to crap he can fall back on you which is comforting as many "kids" his age cant these days or wouldnt want to

ah - another excuse "not to".

 

[Beebop]

So a 21 year old on 38k borrowing 300k on interest only with a parental guarantee and promised support if things go wrong is the new definition of housing affordability. I've got to chuckle to myself about that one. Guys ? Really ?

 

[wylie]

So a 21 year old on 38k borrowing 300k on interest only with a parental guarantee and promised support if things go wrong is the new definition of housing affordability. I've got to chuckle to myself about that one. Guys ? Really ?

Promised support is not really right, is it? He does have the knowledge that should something drastic happen, loss of job being the obvious one, then we would not let the bank sell it from under him. Like my parents' backing, it is a "worst case scenario" comfort, if you can understand that. We are not handing him anything, giving him a hand up, or anything more than most parents would do...... being there.

If you lost your job and couldn't feed your children, would you accept money for groceries from your parents? This is the same. It will probably never be needed, but knowing someone "has your back" is nice. Perhaps you don't have that?

Have you borrowed to buy a house? Do you understand this at all?

Chuckle away Beebop. My son, meanwhile, is on the property ladder. I don't think he will ever regret buying at this age, budgeting now to get a roof over his head, his very own roof.

I am done trying to make you understand because it is clear you are very set in your views, just like me. We just have different opinions. I'm happy with mine, hope you are happy with yours.

 

[Beebop]

Promised support is not really right, is it? He does have the knowledge that should something drastic happen, loss of job being the obvious one, then we would not let the bank sell it from under him. Like my parents' backing, it is a "worst case scenario" comfort, if you can understand that. We are not handing him anything, giving him a hand up, or anything more than most parents would do...... being there.

If you lost your job and couldn't feed your children, would you accept money for groceries from your parents? This is the same. It will probably never be needed, but knowing someone "has your back" is nice. Perhaps you don't have that?

Have you borrowed to buy a house? Do you understand this at all?

Chuckle away Beebop. My son, meanwhile, is on the property ladder. I don't think he will ever regret buying at this age, budgeting now to get a roof over his head, his very own roof.

I am done trying to make you understand because it is clear you are very set in your views, just like me. We just have different opinions. I'm happy with mine, hope you are happy with yours.

If he were paying off principle I'd agree, but he is just paying interest, which is bafflying rampant speculation. If rates go up, prices could well go down, then he is up the creek.

 

[.toe]

RBA rates on hold.. what a disgrace.
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The last years have been absolutely stupid without comparison.
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What I am arguing against is the belief that a 10% average return per year is appropriate for housing.
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Aside from being morally reprehensible it is just unstustainable
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The average wage should be able to afford the average mortgage size in a cheap area.
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The % growth should be decreasing as house prices move high
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b.c every % of capital growth is a % debt of for someone else..
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So a 21 year old on 38k borrowing 300k on interest only with a parental guarantee and promised support if things go wrong is the new definition of housing affordability.
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If he were paying off principle I'd agree, but he is just paying interest, which is bafflying rampant speculation.

Beebop I think you place a lot of importance on the 'morality' of the market and of what other people are doing.

But you have to bear in mind that the market is not a person. It's not moral or immoral. It's amoral. And people aren't making moral judgements, they're just making decisions they hope will work for them. We do not control the market, we just hope to understand it.

Some of the investors here have had quite a bit of success at investing in property over many market cycles. If you want to understand how to survive you might have to stop telling them that it's impossible, and listen.

 

[Beebop]

Beebop I think you place a lot of importance on the 'morality' of the market and of what other people are doing.

But you have to bear in mind that the market is not a person. It's not moral or immoral. It's amoral. And people aren't making moral judgements, they're just making decisions they hope will work for them. We do not control the market, we just hope to understand it.

Some of the investors here have had quite a bit of success at investing in property over many market cycles. If you want to understand how to survive you might have to stop telling them that it's impossible, and listen.

Yeah, they *had* succcess in 1990 when a house was 3 times your income. Lets see how they'd go buying that same three bedder as a young person today.

I listen to other people in similar situations to myself not millionares who can't do basic math who got into the market 20 years ago.

I'm not even whinging. I'm just stating facts. I either save or earn more until I can afford a house. Right now, it is simply unaffordable. All your positivity doesn't change the numbers mate. You guys are just in a little bit of denial about the whole affordability issue, thats all.

 

[Luv2Travel]

Yeah, they *had* succcess in 1990 when a house was 3 times your income. Lets see how they'd go buying that same three bedder as a young person today.

Beebop, young people have been working out how to buy their first home for decades, and each one thinks it's tough at the time. You talk about 1990 being reasonable prices. I did my first one in 2000, ten years after you said it was last reasonable, and guess what? It was affordable to me on a low graduate wage. I wonder what the young generation in 2020 will be saying... that we had it easy in 2010 perhaps? If you want it, you'll work out a way to get it. It sounds like you do, as I remember another thread of yours where you are actively looking to purchase. So, just remember, it is possible (you may need to sacrifice) and goodluck.

 

[SuiCid3]

Yeah, they *had* succcess in 1990 when a house was 3 times your income. Lets see how they'd go buying that same three bedder as a young person today.

I listen to other people in similar situations to myself not millionares who can't do basic math who got into the market 20 years ago.

I'm not even whinging. I'm just stating facts. I either save or earn more until I can afford a house. Right now, it is simply unaffordable. All your positivity doesn't change the numbers mate. You guys are just in a little bit of denial about the whole affordability issue, thats all.

I don't think there are many here who would argue that housing affordability has risen rather high... but there are still plenty of areas that are still affordable. That just depends how much you're willing to compromise.