House Prices doubling every 7 to 10 years

[lowell]

Even when deposit interest rates drop and inflation increases?

Dave

Yep have a number of TD's locked in for 1 year and 6 months at 6.8% & 7.5%
respectively.

Heard the news today that inflation dropped the most in six years.
http://business.theage.com.au/business/big-rate-cut-looms-as-inflation-cools-20081201-6o3n.html

All going good will be nicely set to pick up some bargains mid to late next year from the fools that bought late last year and have to sell

Good Times

 

[DavidMc]

I think our structural points are near identical. Massive consumer debt run up - many people buying housing assets as a gambling chip rather than a home. We'll see - I think the trend down will continue until sensible prices return.

How far away do you think this is now YM?

I remember on an old thread you said if the interest rates match the yield then the market is in balance and can support the prices.

We'd have to be close to that soon?

 

[chilliaa]

Hey YLD Matters, hows the academic work going.
I purchased 5 apartments early 2007 on the basis of postive cash flow when interest rates were 2% higher than what they are now.
Rents have gone up 10% since then, a bank valuation done in July 08 had revalued them upwards by $500k.
With the latest interest rate deductions, given that i was cash flow positive in 2007, i should be swiming in cash now (havent done exact calculations now, but 60% was fixed at 7.18% for 10yrs the 40% balance on variable is now around around $570k).

 

[Token Funder]

Hey YLD Matters, hows the academic work going.
I purchased 5 apartments early 2007 on the basis of postive cash flow when interest rates were 2% higher than what they are now.
Rents have gone up 10% since then, a bank valuation done in July 08 had revalued them upwards by $500k.
With the latest interest rate deductions, given that i was cash flow positive in 2007, i should be swiming in cash now (havent done exact calculations now, but 60% was fixed at 7.18% for 10yrs the 40% balance on variable is now around around $570k).

Chilaa,

Sounds like you got a good deal when CF+ were pretty hard to find.

Care to share the numbers/details?

 

[chilliaa]

Chilaa,

Sounds like you got a good deal when CF+ were pretty hard to find.

Care to share the numbers/details?

i mentioned it in another thread mid year on this forum.
Basically i was buying melbourne cbd apartments in Melbourne. High rise apartments can be a risky investment because you are sharing the land with a number of other owners, there was also overbuilding of apartments between 2000-2003 resulting in oversupply.
As a result apartment prices entered a downturn, especially as a result of those investors (suckers) who bought off the plan on inflated prices.
By 2007 vacancy ylds were less than 1%, rents were rising rapidly (around 20-25% rent rises from 2006 to 2008), yet many owners who were trying to sell in 2003-2006 were very happy to get out in 2007, even though the market dynamics were changing.
Once prices moved, they moved very quickly (around 50% in two years) and have now reached stabalisation. (Which gives credence to those experienced property investors who state that property often lurches up and then settles, rather than a straight upwards climb).

The point of this, is that by looking at macro-economic statistics or media sensation, you can miss opportunities on the micro level.

 

[boomtown]

I bought a mortgagee sale house as an investment property at 40% less than the bank valuation earlier this year (give or take - $65k vs $90k - the council val is $110k), I think this fact alone allows me to both moderate on GPHC *and* post over here

Yes but it didnt have a kitchen floor?!

 

[RumpledElf]

Had a big hole burnt in the kitchen floor. We replaced it (the floor not the hole).

The bank valuation was after we'd gutted the entire house, the valuers were very iffy about the lack of kitchen sink, no kitchen ceiling and wires dangling all over the place, which is why the bank valuation was so much lower than the council valuation. I had plumbers there yesterday to connect the water, I'm not sure I want to know what they did - he was looking at one of the walls mumbling and he had a VERY big concrete saw when I left.

Cheap houses are fun

Now if someone would please to be reducing the price of the big houses in the same town from $300k+ down to something I afford, kthxbai.

 

[Frank_A]

If population and household sizes remain constant then house prices will, on average, rise in line with wages. However, with population increasing and household sizes decreasing it is logical that prices will rise more than wages. Wages increase by about 4% p.a. If prices increase by 3% above wages then prices will double every 10 years. Is 3% above wages realistic? That's the question.