House prices tipped to slide

[Propertunity]

One could suggest that this market is being propped up by the FHOG boosts/bonuses.

One could indeed suggest this Steve. However, from my own first-hand experience I can report that whereas 3 - 4 months ago all the OFI's I attended were virtually awash with FHBs, this is not the case now. I still see FHBs, but there are many, many more investors at OFIs now. My suspicions are that once FHB levels return to 'normal' that the investor wave will keep the market propped up, if it isn't doing so right now.

Only time will tell

Agreed.

 

[Philip Thomas]

Go fellow bloggers!!!!

Love your beliefs!!!!

Read into this headline what you will & then make up your own mind.

Philip

 

[evand]

On what basis do you think investors are out in numbers high enough to prop up the market? Obviously (imo) the fundamentals are not there to support this.

I think it could be the possible thinking that the market had bottomed. Always a dangerous assumption to base long term property investing on. Especially with yields nothing to write home about.

I dont buy it. I think the stimulus and FHBG is holding the market's head above water for now.

O I still see FHBs, but there are many, many more investors at OFIs now. My suspicions are that once FHB levels return to 'normal' that the investor wave will keep the market propped up, if it isn't doing so right now.

 

[Big Tone]

If thats the case why doesn't James packer buy an IP per week?

More of and quicker cash in casinos!

 

[Big Tone]

couldn't agree more Bludger & Propertunity

I also concur

 

[Piston Broke]

More of and quicker cash in casinos!

Considering his burn rate for the last few years, I'd say not for him.
Unlce Kez may have been pompous & loud, but he sure new where the money was.
Jamie must be very generous as he's seems intent on giving it all back.

 

[Big Tone]

Casinos

Pardon my play on words here but..............

casinos, where the House always wins!

Big Tone

 

[Big Tone]

Considering his burn rate for the last few years, I'd say not for him.
Unlce Kez may have been pompous & loud, but he sure new where the money was.
Jamie must be very generous as he's seems intent on giving it all back.

Tru Dat!............

 

[evand]

Well i didn't mean James Packer specifically, even tho i used his name.

I was sort of referring to the often touted line on the forum (mostly by newbies) to buy property whenever you can and hold forever.

My point is, if thats a winning strategy, what do people do that can always buy? Like, say, any high net worth individual or even James Packer. And why don't they?

More of and quicker cash in casinos!

 

[Propertunity]

On what basis do you think investors are out in numbers high enough to prop up the market?

Only on my (limited to the areas we cover) experiences on the ground, in the marketplaces (where I go). Can't speak for other places.

I think it could be the possible thinking that the market had bottomed.

Possibly and possibly because even if they have not picked the exact bottom, it does not matter as holding costs are virtually zero.

Always a dangerous assumption to base long term property investing on.

huh? You always have to make some assumptions when investing. I can't see how buying with zero holding costs could be dangerous?

Especially with yields nothing to write home about.

Gee - I have not seen yields this good since before the second last boom. We're buying places with gross yields of 6 - 7%. Money costs 5%. Holding costs 1.5%. Equals zero costs to hold. Rents still increasing. What kind of yields did you want before you get back in?

 

[evand]

Firstly, if you think investors are holding the market up in only the areas you cover. Then what is holding prices up in the areas you don't cover? (pretty much the rest of Australia, even very low yielding areas)

Please don't run the old 'immigration' line. That doesn't hold much water anymore, at least outside of Sydney.

7% gross yields? I'm sceptical. I think you'd be lucky to see over 5%. Even in bottom of the barrel places like Gorokan, Mt Druitt etc

And its pretty much 2% expenses above interest rates.

 

[Propertunity]

Firstly, if you think investors are holding the market up in only the areas you cover.

I didn't say that. I did say that I think investors are holding up prices in the areas I cover NOT only the areas I cover.

Then what is holding prices up in the areas you don't cover? (pretty much the rest of Australia, even very low yielding areas)

I don't know from personal experience, only by what I read. I said: "Can't speak for other places."

Please don't run the old 'immigration' line. That doesn't hold much water anymore, at least outside of Sydney.

But that is exactly the area I'm talking about.

7% gross yields? I'm sceptical. I think you'd be lucky to see over 5%. Even in bottom of the barrel places like Gorokan, Mt Druitt etc

Maybe you should get out more and see what is happening in real life. Small 3brm brick places in bottom-of-the-barrel, (as you call it), places that sell for $200K and rent for $240pw are 6.24% gross yield and there are better.

And its pretty much 2% expenses above interest rates.

Semantics!

 

[evand]

Apologies, i misintrepreted your statement. But, surely you get my point. Investors aren't out there buying everywhere, holding the market up.

And what have you read?

 

[willfong]

http://business.theage.com.au/business/house-prices-not-tipped-to-slide-20090603-bv6p.html?page=-1

House prices NOT tipped to slide.
Different models, different assumptions, totally different results.

 

[Propertunity]

But, surely you get my point. Investors aren't out there buying everywhere, holding the market up.

I dunno what is happening everywhere else I can only tell what's happening in my part of the world.

Here's one with a 7.2% gross yield we found while looking for a client. They're out there, you just have to look hard
http://www.realestate.com.au/cgi-bi...t=&header=&cc=&c=99934156&s=nsw&tm=1244008321

 

[topcropper]

http://business.theage.com.au/business/house-prices-not-tipped-to-slide-20090603-bv6p.html?page=-1

House prices NOT tipped to slide.
Different models, different assumptions, totally different results.

Gee there are some poor points in that article. I've never liked Michael Pascoe, and this just reminds me why.

Why are there all these so called experts coming out now and claiming house prices didn't drop in the last two recessions when they know full well it's crap? House prices in the 90's recession did actually increase by a smidgeon in most places, and in some places like the Gold Coast they really did drop. However, interest rates in 1990 were 17%. You could get 12% in a term deposit. If your house increased in value by 3% under these conditions, they dropped. The real prices of houses did drop for a couple of years.

Pascoe is making out that the JPMorgan article is irresponsible for predicting prices will drop. Well Pascoe is irresponsible for saying house prices didn't drop, because he knows full well that in real terms they did.

He claims Australia's housing boom topped out in 2003. What rot! It topped out in some places like Sydney, and in others it only started in 2003, in rural NSW at least. Perth and Darwin would be two more examples of places where the real boom started post 03. Gee's, you'd think the whole of Australia started at Bondi and ended at Penrith

See ya's.

 

[Propertunity]

Gee's, you'd think the whole of Australia started at Bondi and ended at Penrith

Only the important bits .....so you're saying the Earth isn't flat?

 

[Somerville]

Evand, if you can't find a property in this current market that is at least cashflow neutral then I think that this game might not be for you.

Propertunity, like most of your posts, I completly agree with you. From going to inspections every week, I can see that there are more and more investors coming out of the wookwork. We look at pretty similar areas too and that's the area that I'm referring to. I think that there are plenty more investors waiting for the FHO's grant to end for them to start buying which will keep this market propped up quite well.

 

[evand]

Thats funny. I bought my first property in 1988 in Leichhardt. Sydney and have done very well. But i might reconsider because maybe this game is not for me.

I could probably find cashflow neutral if i wanted to but i certainly wouldn't buy in the area i could find one. I expect a bit more from my property investing, i'm not into just buying houses for the sake of it.

Evand, if you can't find a property in this current market that is at least cashflow neutral then I think that this game might not be for you.

 

[ColonialBoy]

Try quoting my post in it's entirity in future and then re-read what I posted.
You would have no idea what I read and don't read and quite honestly I take offense to your reply.

So would I. Having joined this forum recently there is an enormous variation in the quality of posts.