House prices in freefall

[suggo]

LB, I have decided there is not much point in trying to discuss any sort of facts contrary to your position. I have found, from past experiences, that you would either pick out only part of my post to reply to or ignore the post alltogether. So my approach now is one of light heartedness, so keep dancing LB I find it quite amusing in a sad sort of way. Of course you can always put me on ignore!

 

[L Bernham]

Trouble is suggo, if I reply to yours or others questions I get told that I'm a stuck record or dancing or something.
Its not like all of a sudden I'm going to change from my so called "negative" opinion to a "postive" one.

I think people have to realise that negativeity depends what side of the fence one is on. There are millions out there who want property prices to fall. I'm sure that includes people on this forum who would love to buy at prices within a decent proximity to a city that give good income streams.
Some believe that this (decent yields) was just a phenomenon that only occured throughout the last century and that we are now stuck with near zero net yields for this century.
I personally believe that yields will once again get back to the same as what we had last century, and in line with other countries, but thats because I dont see the same land shortage here that other countries have. We're not having to reclaim our land back from the ocean as in the Netherlands but even they manage to give higher rental yields than in Australia.
I dont see that rents can go up fast enough to justify these prices, it would mean rents would have to more than double in Brisbane for example.
If anyone believes that we are stuck with these low yields indefinitely then I would suggest to buy all you want.
If you beleive these 100 year low yields arent justified at the moment then I would suggest you wait and see what happens.
Simple as that. I dont mind either way.

I'll put the call out again. If anyone can give me good reasons to buy at the moment I'd love to hear as I'm cashed up and ready. I'll try not to be too hard but if there is something in there that I might not agree with - yes, I will say so and I'll try to put my point forward as to why I disagree. Its called a discussion I think.

LB

 

[Aceyducey]

However, I would like to hear some negative opinons about the market as well as their arguments.

The key point is as well as their arguments. Backed by figures supporting the view from a variety of sources.

Claims of 'the market is going down, it's self-evident!' or 'there are more ads in a real estate site this week - this means there must be less buyers' are false and misleading. More sellers does not mean less buyers...it simply means more sellers And the location and type of sales is also important - there may be more unit sales in Brisbane...because more units have been built, but less ads for houses in Perth. The units may still be worth buying...and may all be sold by next week to be followed by the listing of an even larger new development, so ads seem to go up again. Generalisations don't provide any kind of supportable figures.

I'm happy to hear every view on the market - positive, negative & in-between. But I will only listen to the views that have support.

BTW - ToGetProperty, your perception of this forum differs significantly from mine, I don't see the forum getting too positive, the forum in my view is generally cautious & cautioning new investors to be highly careful & selective - while also acknowledging that the market has flatten, but there are very few signs of a bust on the horizon or runaway interest rates. Many of the top contributors have publicly acknowledged they have stopped buying & are even selectively selling in some cases - but are, as in any market conditions, prepared to buy good opportunities when they arrise.

How you get more positive out of that I don't understand

But do bear in mind that when interest rates were at 18% there were still people investing in property and doing quite well out of it! There's a thread in the forum talking about this that you can refer to. High interest rates does not necessarily reflect a poor investment market - indeed there were some very interesting opportunities about

Cheers,

Aceyducey

 

[ToGetProperty]

BTW - ToGetProperty, your perception of this forum differs significantly from mine, I don't see the forum getting too positive, the forum in my view is generally cautious & cautioning new investors to be highly careful & selective - while also acknowledging that the market has flatten, but there are very few signs of a bust on the horizon or runaway interest rates. Many of the top contributors have publicly acknowledged they have stopped buying & are even selectively selling in some cases - but are, as in any market conditions, prepared to buy good opportunities when they arrise.

So, Aceyducey, you have agreed with LB's view about the market in certain degree, don't you?

 

[see_change]

and the as suggo puts

LB:

However, I would like to hear some negative opinons about the market as well as their arguments.

TGP

Ok ToGetProperty

How about this little comment from myself in the Debt = Wealth Post

http://www.somersoft.com/forums/showthread.php?t=14580&page=2&pp=15

There are very few Genuine experienced long term property investors on this forum . I can count the ones I know on one hand and at least two of those have been decreasing their exposure to the market over the last year or two , because they have concerns.

There are very few Genuine experienced long term property investors on this forum . I can count the ones I know on one hand and at least two of those have been decreasing their exposure to the market over the last year or two , because they have concerns.

Most of the people who I know who are doing very well have basically made their money in the current cycle , and havn't experienced the actual reality of a down turn. There are some members of this forum who may well be in for a nasty shock in the next few years.

I have met several people over the last few years who went bankrupt in the previous property cycle by over exposure.



my opinion re LB's posts are not related to his actually conclusions , but to the Total lack of supporting evidence he provides for his opinions

and as suggo puts it

I have decided there is not much point in trying to discuss any sort of facts contrary to your position. I have found, from past experiences, that you would either pick out only part of my post to reply to or ignore the post all together

See Change

 

[ToGetProperty]

Ok ToGetProperty

How about this little comment from myself in the Debt = Wealth Post

http://www.somersoft.com/forums/showthread.php?t=14580&page=2&pp=15

There are very few Genuine experienced long term property investors on this forum . I can count the ones I know on one hand and at least two of those have been decreasing their exposure to the market over the last year or two , because they have concerns.

There are very few Genuine experienced long term property investors on this forum . I can count the ones I know on one hand and at least two of those have been decreasing their exposure to the market over the last year or two , because they have concerns.

Most of the people who I know who are doing very well have basically made their money in the current cycle , and havn't experienced the actual reality of a down turn. There are some members of this forum who may well be in for a nasty shock in the next few years.

I have met several people over the last few years who went bankrupt in the previous property cycle by over exposure.



my opinion re LB's posts are not related to his actually conclusions , but to the Total lack of supporting evidence he provides for his opinions

and as suggo puts it

I have decided there is not much point in trying to discuss any sort of facts contrary to your position. I have found, from past experiences, that you would either pick out only part of my post to reply to or ignore the post all together

See Change

See Change, nothing I can argue with your points. I bought a house at Doonside at A$230K one year ago from an investor who was bankrupt in the last cycle. I know a little bit about last cycle from him and I believe he is not an excellent investor because of selling. He sold all of his houses one year ago and rent back the house he sold to me.

On another hand, I really can't figure out how most normal people, like myself and not few RE professionals, can make money at 18% interest rate as suggested by ACE.

However, I know some RE professionals, the RE agent owners, who are buying now.

Last week, I pick up a deal for my friend for a house at A$270K around Blacktown areas. This is at least 20% below the peak value when no Blacktown houses was under A$360K during October/November 2003. And most interest thing is that after signing a contract, then went to do a pest report and building report. The building report is saying that this bedroom has a problem and another bedroom has another problem which is very familiar to my all other houses. My friend said to the agent that he does not want to go ahead with the deal because of the very bad building report. The vendor drops A$5000 straight away.

Again, I trust my view and I can very confidently view the market within next few months in the areas I know very well - Eastern Sydney, Inner City and Western Sydney. However, I really don't know, don't want to know and don't believe any prediction about next year and beyond.

Most importantly, I can survive and properous no matter who is correct or which way the market is going.

I fundamantly believe in Jan Somer's strategy - It is time in the market that counts. And re-read her books again recently.

Cheers

TGP

 

[see_change]

TPG

It's is post like yours that the forum wants to hear. You obviously know what you are doing , know you areas well and are able to give specific examples.

Would be interested in your thoughts on Lalor Park. It's a little pocket that seems underdeveloped / ocompared to some surrounding areas. It's within two mins of the current end of the M2 and Baulkham hills.

I havn't looked at it closely from the buying point of view ( as I 'm not convinced now is the time to buy in sydney - I think good timing can speed up one's progress http://www.somersoft.com/forums/showthread.php?t=14045 ) , but even on Lucas / Sackville road ( I drive along it every day ) , have noticed several houses being renovated, and there is also that small development near the shops.

See Change

 

[Aceyducey]

On another hand, I really can't figure out how most normal people, like myself and not few RE professionals, can make money at 18% interest rate as suggested by ACE.

ToGetProperty,

This is a common problem people have - they treat interest rates as absolute rather than relative.

I'm happy to pay 18% interest for cash if by using it I can make 10% return over & above the interest I'm paying.

Look for the ROI not the cost of the money.

BTW: As a practical current day example, 18% interest is what many people pay on their credit cards....are people choosing to forego the convenience despite no return whatsoever?

Think different

Cheers,

Aceyducey

 

[ToGetProperty]

Would be interested in your thoughts on Lalor Park. It's a little pocket that seems underdeveloped / ocompared to some surrounding areas. It's within two mins of the current end of the M2 and Baulkham hills.

Lalor Park is always 10% cheaper than Seven Hills even though they are in the same post code. However, I always treat all areas as Blacktown areas because if one area of them is up, all other areas will be up in a similar percentage. Magic number: most of suburbs in Sydney has 9 to 11% annual capital growth from 1993 according to "2004 Sydney Property Guild" by SunHeral.

If I want to buy, I will come down to a particular deal, such as price, street location and house struture, to make a decision which area I will buy into. For example, if I can find a deal which is 20% cheaper than market value or more than 5% rental return ( very often with glanny flat), I will buy into it no matter it is Blacktown or Seven Hills or Lalor part. I will say I buy into Blacktown areas. More interest thing is the rental is the same in those areas. I have a house worth more than A$400K in a very good street (Olive St) Seven Hills. Its rental is A$210/week while my one Blowntown house (about A$350K) has A$320/Week as it has a granny flat.

See Change, because a large company has a lot of resources for their research, it is good to know their advices.

I received a Feb 2004 News Letter from Residex. It said "Despite supply issues in Melbourne, in the medium to longer term, it seems to be presenting lower levels of risk than exist in the Brisbane market. Sydney has become the lowest-risk investment market simply because of land shortage issues.". I believe it is directly from John Edwards because his piture is in the letter.

Also, as to the question of "the buying time in Sydney", it should come to individual issue. For myself, it is not the right time because of my quite big portforlio of IPs. What I want to do now is to find some ways to increast cash flow and make my cash flow neutral. For many of my friends who is paying good taxes plus no mortgage at their home and no IPs as well, then no other time is better than current time to buy into Sydney market subject to careful buying.

Regards

TGP

 

[suggo]

Trouble is suggo, if I reply to yours or others questions I get told that I'm a stuck record or dancing or something.
Its not like all of a sudden I'm going to change from my so called "negative" opinion to a "postive" one.

I think people have to realise that negativeity depends what side of the fence one is on. There are millions out there who want property prices to fall. I'm sure that includes people on this forum who would love to buy at prices within a decent proximity to a city that give good income streams.
Some believe that this (decent yields) was just a phenomenon that only occured throughout the last century and that we are now stuck with near zero net yields for this century.
I personally believe that yields will once again get back to the same as what we had last century, and in line with other countries, but thats because I dont see the same land shortage here that other countries have. We're not having to reclaim our land back from the ocean as in the Netherlands but even they manage to give higher rental yields than in Australia.
I dont see that rents can go up fast enough to justify these prices, it would mean rents would have to more than double in Brisbane for example.
If anyone believes that we are stuck with these low yields indefinitely then I would suggest to buy all you want.
If you beleive these 100 year low yields arent justified at the moment then I would suggest you wait and see what happens.
Simple as that. I dont mind either way.

I'll put the call out again. If anyone can give me good reasons to buy at the moment I'd love to hear as I'm cashed up and ready. I'll try not to be too hard but if there is something in there that I might not agree with - yes, I will say so and I'll try to put my point forward as to why I disagree. Its called a discussion I think.

LB

Discussion - consideration of a question in open and usually informal debate
Is that what you do?

Who ever said you have to be positive or negitive? Why don't you try just taking in the facts and don't let this 'negitive/positive' outlook you seem to have bias you in your response. I don't believe I am, 'positive' or 'negitive', in my thought processes. I like to think I am a 'percentage' thinker if we must catorgise ourselves. I will take on board both positive and negitive comments on the state of the market, I will also make positive or negitive comments on different parts of the market as I see them. I am not binded to one 'view'!

I believe that rental yeilds will return to the levels they were as well, sometime in the future. However this does not mean that housing prices must drop for this to be achieved! Wages will rise, rents will rise (don't tell me you haven't noticed rents in Brisbane rising because they certainly are.) house prices will more than likely stay put or a slight drop in prices may be seen(nothing near where your suggesting). This is what has happened time and time again in the housing sector over many many years. People can say that you can not count on history but when it has been as consistant as the housing sector I think it the best indicator there is.
For those who say that the market and economy is different now than ever before, well, the market and economy was different quite a number of times in the past yet we still see the house prices form a 'step' like graph.
Once again (and I just know you'll love this LB ) the housing market differs to the stock market in that corrections downward are sticky in nature whereas the stock market isn't, so we don't see sudden drops the size you are suggesting in house prices.

Dance on!!

(Waits for the I'm soooo insulted that you think I don't know the difference between the stockmarket and house market reply)