I think you are wrong there john taps,that's the problem with Median prices they don't cover the whole picture street by street in small pockets of R-E in most large cities,just one simple price that covers the area,not many people have a precise understanding of the way the system works,from what you have said about Perth,some people did exploit it,, not everyone ended up with 20 cents left in their back pocket do a search on a person named Dazz,he seems to have saw a market within a market and has done well..willair..
First home owner boom suburb that went bust. A case study.
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,and treat all RE'S as door-matts and walk right over themno inbetweens, ..
what do you mean by that?
Thanks for your posts - you seem to have stimulated some quite interesting discussion.
As for the comment above, yes I have bought into Canberra. In fact, I've been buying into Canberra (and immediate surrounds) for about the last 7 years. And yes, I've seen some nice capital gains.
But to be quite frank, I'm now at the point where I don't really care that much about capital value. Why? Because the rents achieved by my portfolio cover the interest on the loans (and then some), and I am gradually paying down these IPs. My main investing goal now is simply to double the rent being received over the next 12 to 14 years. And when that happens I'll be retiring comfortably, even if I don't buy any more IPs in the meantime.
There are many people who attack property investment on the basis of current value and current yields. I don't care much about these, because they don't accurately reflect my financial situation. Is the market toppy in Canberra? Probably. Does that automatically mean it will crash? No, it doesn't, and it also doesn't mean that there aren't still individual bargains to be found. There's more to the story.
I don't mind Kwinana.
It's low socio-economic and hasn't the greatest reputation. New house and land packages sold for $99k in the '90s when they were opening up Leda. It's got local shops but for the big stuff you go down to Rockingham.
If you're near one of the stations you can be in the city in 30 minutes. From around the Hub there's some good bus services to Fremantle & Rockingham. The freeway is not far either.
True not many people aspire to live there but low 200s for a house down there isn't bad value.
It's low socio-economic and hasn't the greatest reputation. New house and land packages sold for $99k in the '90s when they were opening up Leda. It's got local shops but for the big stuff you go down to Rockingham.
If you're near one of the stations you can be in the city in 30 minutes. From around the Hub there's some good bus services to Fremantle & Rockingham. The freeway is not far either.
True not many people aspire to live there but low 200s for a house down there isn't bad value.
If you watch RE cycles, as you no doubt have, then you'll know that RE is a long term investment of min 5-7 years and more like 10 years.
Yes people who purchased at the peak are locked in for a number of years as they may be sitting on negative equity. They can sit tight and ride it out or sell at a loss. This is not unique to Perth (Sydney had this for 6 years from 2003 - 2008). Neither is it unique to this cycle - it has happened in every other previous cycle too.
What is your point?
People care about other people and we've sorry for their situation. But people are responsible for their own investing decisions. No-one forced them to buy when they did or forced them to sign a mortgage document. If it all turns bad for them then there are safety nets, Centrelink etc.
Worst case scenarios do turn out to be everyone's corporate problem. But our taxes provide for that problem on a personal level.
On the other issue - is it my problem that the market peaked and then fell? No that is not my problem. It is just the way it is. Learn from it so it does not affect you next time, is all I can say.
Oh gimme a break
Do you want the goverment to step in when your shares fall in value too? Or limit sellers dumping shares onto the market and causing the price to fall?
That is one of the risks of investing. If you have one IP in there and a few spread around - then you are fine surely? It is called "diversification" and helps to mitigate the risk.
What is your point? You seem to present these long diatribes on what can go wrong in investing and then point out the bleeding obvious on what you can do if sitting on negative equity. Most people on here would know these risks.
You don't go buying in Perth & surrounds, even if it is your home town, when the median price exceeds that of Sydney (as it did for the first time ever) and not expect some falls or at least some volatility.
Now if you have something to share on a personal level that could help people, I'd be happy to listen.
I agree with everything said here - property is an investment, unfortunatly people have begun to believe that prices have to go up, its the right of the consumer, god forbid prices went down, oh the poor housing investors!!! WRONG! Its an investment, there is risk, do your homework to minimise it. If you loose at least you tried and had a go.
I agree with you Rolf & most of what Propertunity has said.
I was born & bred not far from Kwinana & Medina and still have alot of friends & family who live between there & Mandurah, so still travel through the area when visiting. Changes to the area took DECADES! Kwinana was perceived (and still has that social stigma in a way) as being the poor cousin from the rest of society & as such, even if you were from there, you were ostracised. My husband spent some of his primary school years there & gained some horrible memories. My M.I.L. still gets shivers at the thought she might have lived there forever.
It has taken a long time to go from being seen as a low socioeconomic group of welfare dwelling, drug laden gang plots to respectable properties where property owners (PPOR & IP) care for their homes (and themselves). New developments surrounding the area have definitely helped with a flow on affect to popularity. It has gone through some urban & social gentrification, hence the moving in of a more desirable resident.
The Kwinana Freeway & new train line now slide up past most of that area and with it being so much more & easily accessable to Perth & Mandurah, that for sure has helped the property prices increase. The train line was meant to be available the year I started highschool. It was opened the year I had my second child, some 17 years later.
Of course, everyone's different, everyone's investing needs are different so if the numbers crunch well for you, that's your choice. I'd be concerned about stagnant growth in the immediate future, but again it depends on your investing needs - growth, cashflow etc. It's still one of the cheaper suburbs of Perth.
what Propertunity has said.I was born & bred not far from Kwinana & Medina and still have alot of friends & family who live between there & Mandurah, so still travel through the area when visiting. Changes to the area took DECADES! Kwinana was perceived (and still has that social stigma in a way) as being the poor cousin from the rest of society & as such, even if you were from there, you were ostracised. My husband spent some of his primary school years there & gained some horrible memories. My M.I.L. still gets shivers at the thought she might have lived there forever.
It has taken a long time to go from being seen as a low socioeconomic group of welfare dwelling, drug laden gang plots to respectable properties where property owners (PPOR & IP) care for their homes (and themselves). New developments surrounding the area have definitely helped with a flow on affect to popularity. It has gone through some urban & social gentrification, hence the moving in of a more desirable resident.
The Kwinana Freeway & new train line now slide up past most of that area and with it being so much more & easily accessable to Perth & Mandurah, that for sure has helped the property prices increase. The train line was meant to be available the year I started highschool. It was opened the year I had my second child, some 17 years later.
Of course, everyone's different, everyone's investing needs are different so if the numbers crunch well for you, that's your choice. I'd be concerned about stagnant growth in the immediate future, but again it depends on your investing needs - growth, cashflow etc. It's still one of the cheaper suburbs of Perth.
So why isn't that added as a disclaimer to your, and all other bulls', posts?
The argument that disclaimers are not necessary on a "property" site would fail if tested in court.
Why August 2009, anything to do with the fact that was a low point in the median prices ? And why pick Medina ? You can count the monthly number of houses sold on one hand and the quality of properties varies between asbestos homes on subdivided blocks to double brick homes on large blocks so median prices can vary widely from month to month.
Just as well the home owner held on to his home then,
http://www.realestate.com.au/cgi-bin/rsearch?a=sp&s=wa&u=medina
Date____ Houses____Units
Jun-09, $222,500, $185,000
Jul-09 , $268,000 , $185,000
Aug-09, $288,000, $170,500
Sep-09, $237,500 , -
Oct-09 , $229,000, $217,500
Nov-09, $229,000, $216,250
Dec-09 , $232,500, $180,000
Jan-10 , $271,000, $215,000
I think you've cherry picked a suburb and time slot to try and make your point. What would have happened to your home owner if he bought his place 5 or 10 years ago ?
Growth Rates________ 1 Year 5 Years 10 Years
Medina_____________ -11.5% 13.2% 14.5%
Perth Metro Region _____ 3.0% 11.8% 11.5%
CPI__________________ 1.7% 3.5% 3.3%
Now what do YOU think ?
People don't own suburbs, regions or cities. They own individual addresses.
Citing medians is largely irrelevant given the volatility of individual assets.
Citing medians is largely irrelevant given the volatility of individual assets.
Medina was already peaked and overvalued in 2007. I bought my first property in that suburb in 1998 for $75,000. A double brick and tile with fibro roof on 980 block. I wish I'd held it but needed to release the funds and bought in Yangebup while it was still possible to get a 4x2 for under $200,00 (now valued at $510,000 with no improvements). The FHOG did help a lot of people get a foot on the ladder including myself.
Unfortunately, lenders have been too willing to let people get out of their depth and buyers desperate to get into their first home have not always got the sophistication to understand the risks. The sad thing is you only get one shot at FHOG making it harder to get back in the market if forced to sell with negative equity. The same is happening with refinancing, it's all very well having a 100% increase in value but if you only had a 20% increase in wages you should have a hard look at servicability and realistic movement in your suburb.
Unfortunately, lenders have been too willing to let people get out of their depth and buyers desperate to get into their first home have not always got the sophistication to understand the risks. The sad thing is you only get one shot at FHOG making it harder to get back in the market if forced to sell with negative equity. The same is happening with refinancing, it's all very well having a 100% increase in value but if you only had a 20% increase in wages you should have a hard look at servicability and realistic movement in your suburb.
