Landlords shouldn't bet house on capital gains
- Thread starter L Bernham
- Start date
B
brains
Guest
Its the age old debate, does the media make the news or just report it - bit of both maybe. But as Acey has previously stated, true investors should not be influenced by what the media says.
I think the impact of the media is minimal when it comes to property prices.
I think the impact of the media is minimal when it comes to property prices.
There is a hell of a lot of assumptions with these supply and demand of housing debates. Remember ppl just throw in a ceteris paribis for good measure and you'll be able to justify anything. (Hey it works for those economists)
On the media issue MHO is that the media has a hell of a lot more impact than Id like....most ppl seem to think if its in the media its gospel and I feel thats dangerous for the general public.
On the media issue MHO is that the media has a hell of a lot more impact than Id like....most ppl seem to think if its in the media its gospel and I feel thats dangerous for the general public.
I think the media is only a small contributing factor to influencing the market.
What seems to happen in all booms that end is people look for someone to blame - higher interest rates, expected increased interest rates, panic selling, media doomsayers, forum doomsayers, lower birthrate, whatever.
It makes no difference. If you look at any bubbles bursting in history in any asset class you will find one glaring similarity.
That is increased number of investors, investing with more expectation of capital growth rather than the income that the asset generates. In other words the asset was just overpriced and it would have come down anyway.
When renters can pay rent amounting to less than 5% of the cost of what they are renting, its not going to take too long for investors to realise they are being taken for a ride.
LB
What seems to happen in all booms that end is people look for someone to blame - higher interest rates, expected increased interest rates, panic selling, media doomsayers, forum doomsayers, lower birthrate, whatever.
It makes no difference. If you look at any bubbles bursting in history in any asset class you will find one glaring similarity.
That is increased number of investors, investing with more expectation of capital growth rather than the income that the asset generates. In other words the asset was just overpriced and it would have come down anyway.
When renters can pay rent amounting to less than 5% of the cost of what they are renting, its not going to take too long for investors to realise they are being taken for a ride.
LB
If the media didn't have a significant influence on peoples' behaviour then advertisers wouldn't.
Look at the amount of media each week dedicated to property over the last two years - particularly in prime time on TV.
I have spoken to people in the reno supplies market who have had their best year on record. And RE sales speak for themselves.
So the media has little effect? When was the last time you heard someone talking about investing in property - ask them where they got the idea from
Cheers,
Aceyducey
Look at the amount of media each week dedicated to property over the last two years - particularly in prime time on TV.
I have spoken to people in the reno supplies market who have had their best year on record. And RE sales speak for themselves.
So the media has little effect? When was the last time you heard someone talking about investing in property - ask them where they got the idea from
Cheers,
Aceyducey
The media doesn't 'help'anyone.
And yes they have begun the hosing process. But this doesn't mean that the situation will change from 20% gains to 35% drops in prices, that's not rational
And keeping up with your swinging 'opinions' is very hard L Bernham.
Your previous post stated 'the media is only a small contributing factor to influencing the market'.Now you're attributing them a much larger role.
Cheers,
Aceyducey
And yes they have begun the hosing process. But this doesn't mean that the situation will change from 20% gains to 35% drops in prices, that's not rational
Not rational? HAve a look at how often when asset price bubbles burst they were preceeded by 20% gains.
Besides what you says implies they will drop by 35% in the same time frame as the 20% gains. ie a year.
I think it will take a few for the 35% drop to be realised
LB
Not rational? HAve a look at how often when asset price bubbles burst they were preceeded by 20% gains.
Besides what you says implies they will drop by 35% in the same time frame as the 20% gains. ie a year.
I think it will take a few for the 35% drop to be realised
LB
Media have only reacted to what is happening otherwise. They have contributed- but there had to be a pretty good groundswell before they had grounds for getting good ratings by running property shows. They've got those ratings, and so have supplied more.
(Some) newspapers talk doom, because that sells. TV lifestyle shows are definitely not.
L Bernham,
And how often does this happen for property across the board (for every property in every market in every state across the country0?
It often (but not always) happens in equity markets - but they behave differently to property, like apples vs hunks of coal - they're not even both fruit! And even in the worst stock market bust you can pick the right shares & make money - that's what professional investors do!
Firstly, as Bill says, there is a good argument for us not being in a property bubble anyway. Secondly even if we are, that does not mean that by default there must be a following bust. Thirdly, even if there was to be a decline in property prices it would not be across the board - there are still plenty of places to buy fantastic property in Australian (and if you read this board thoroughly you'll see a lot of them being discussed.
Finally, there are plenty of other countries around the world ripe for property investment, if you're prepared to step really far out of your comfort zone.
L Bernham - I still don't understand why you hang around a property forum - It's clear you expect property to be a lousy investment for some time...what is your goal in being here?
It is certainly not to learn more - you do not contribute to the forums discussing how to maximise returns from investments, finance investments or locate good investments - you simply tar all property with the same brush, tell everyone on the forum how stupid we are to hold properrty & get offended when your opinions are challenged.
So why are you here????? (and if you say to 'learn more' - tell us what you are aiming to learn)
Cheers,
Aceyducey
B
brains
Guest
Acey,
What makes you believe the media arent just reporting a national renovating trend rather than creating it?
Sometimes i think you argue for the sake of argument, or just to win one. You might have some issues in that area that need to be addressed.
LB has just as much right to be on this forum as anyone else regardless of his views on property. Are you implying that all posters on this forum speak only positively of the property market and if they dont, then they dont belong here?
Stop acting like its YOUR forum and carrying on like a kid trying to win an argument.
Bill L,
If you think we are not in a property bubble, you have a more skewed view of reality than i thought previously from reading your posts on stock selection. Not to mention your constant ravings about one single house in an average non - descript Melbourne suburb.
What makes you believe the media arent just reporting a national renovating trend rather than creating it?
Sometimes i think you argue for the sake of argument, or just to win one. You might have some issues in that area that need to be addressed.
LB has just as much right to be on this forum as anyone else regardless of his views on property. Are you implying that all posters on this forum speak only positively of the property market and if they dont, then they dont belong here?
Stop acting like its YOUR forum and carrying on like a kid trying to win an argument.
Bill L,
If you think we are not in a property bubble, you have a more skewed view of reality than i thought previously from reading your posts on stock selection. Not to mention your constant ravings about one single house in an average non - descript Melbourne suburb.
Originally posted by Aceyducey
If the media didn't have a significant influence on peoples' behaviour then advertisers wouldn't.
Look at the amount of media each week dedicated to property over the last two years - particularly in prime time on TV.
I have spoken to people in the reno supplies market who have had their best year on record. And RE sales speak for themselves.
So the media has little effect? When was the last time you heard someone talking about investing in property - ask them where they got the idea from
Cheers,
Aceyducey
Thanks for the counselling Brains
I did actually think of the concept that the media is playing catch-up, but having been educated in Marketing & having seen a lot of internal corporate figures on advertising effectiveness, I do strongly believe that the media has a much greater effect - over time - then most people believe. And there's an entire industry supported by this effectiveness that's kind of hard to ignore - the advertising industry
Brains, I'm implying nothing - anything YOU read into the posts on this forum has to do with your viewpoint, not the intention of the posters - considered counselling for yourself? It's good fun!
I am simply asking what is in my mind - if L Bernham doesn't want to invest in property right now & believes there is an imminent bust, why is he here? It simply doesn't make sense to me at all! And I like to know WHY - it's a constant interest to me (as you should know)
Being as open & fun-loving as kids can be is something I constantly strive for - thanks for the compliment!
Cheers,
Aceyducey
Accy,
Ive been ignoring the troll so far.
But even as a seasoned fisherman I almost took the bait on that one also.
Those swinging opinions are merely bait, just laugh and let it go.
Ive been ignoring the troll so far.
But even as a seasoned fisherman I almost took the bait on that one also.
Those swinging opinions are merely bait, just laugh and let it go.
Originally posted by Aceyducey
The media doesn't 'help'anyone.
And yes they have begun the hosing process. But this doesn't mean that the situation will change from 20% gains to 35% drops in prices, that's not rational
And keeping up with your swinging 'opinions' is very hard L Bernham.
Your previous post stated 'the media is only a small contributing factor to influencing the market'.Now you're attributing them a much larger role.
Cheers,
Aceyducey
CBA/HIA index of housing affordability fell to the lowest level in thirteen years in QII 2003.
They also commented about the cause of this was increased house prices......really ? Here I was thinking it must of been the lower wages and higher interest rates.
They also commented about the cause of this was increased house prices......really ? Here I was thinking it must of been the lower wages and higher interest rates.
Originally posted by Bill.L
Hi all,
LB, you keep talking of a bubble bursting, What bubble?? We're not in one yet, because property is much more affordable than it was 13 years ago!
Perhaps you have been listening to the media too much.
bye
Well Brains
I'm not that sure we are in a property bubble. Isn't it possible that the housing sector had a lot of catching up to do and now are really at prices they should have been?? A correction up as it were!?? And I think Bill goes on about the one house BECAUSE it is in a non-discript suburb and thats exactly what proves the point he has been trying to get across.
As for what you said to Acey, you are kidding yourself! You spit the dummy more than anyone when someone won't follow your line of thinking.
I'm not that sure we are in a property bubble. Isn't it possible that the housing sector had a lot of catching up to do and now are really at prices they should have been?? A correction up as it were!?? And I think Bill goes on about the one house BECAUSE it is in a non-discript suburb and thats exactly what proves the point he has been trying to get across.
As for what you said to Acey, you are kidding yourself! You spit the dummy more than anyone when someone won't follow your line of thinking.
Why am I here Acey?
1) Because I am interested in property investing and would love like anyone else to find a bargain.
I dont like to compare shares to property as the two are so different one must be careful comparing them but the point you make about apples and hunks of coal was a relevant one.
They may be different but consider the two co's. If apples were returning earnings of 4% and coal was returning 6% investors would tend to go for the coal (ignoring co specific risk) so that eventually it would even out.
I see the same in the property market. All these independant properties are very dependant on each other to determine their value. Because average yields are so low when someone sees a property with a higher than "average" yield they see it as good value. However its only good value relative to other properties in the market and thats provided these values are sustained.
I know that I talk about the property market as a whole but how else are we going to do it. If you read my other posts you will see that I've said on numerous occasions that not EVERY property will be affected in a bust. However the number that wont are nowhere near the number of property investors out there now.
Unfortunately 100% of investors consider that they are smarter than the other 95% and thats not possible. Australians "seem" to have this trait more than others (hence the amount of money we spend on gambling as a nation).
we all think we can beat the average punter because we're smarter than them. Guess what. only half the population is smarter than the average. If you buy well you will get good returns. Well I will get good returns then because of course I will buy well.
2. Every investment has risk. But for many getting into the market these risks arent adequately considered or even realised. Nearly every person a new investor meets in the buying process is making money from the transaction and they arent deemed to be giving financial advice anyway so arent going to mention these risks.
Property is currently one of the most riskiest investments around. (ie high levered, very illiquid, high transaction costs, risk of no income, high ongoing expenses, undiversifiable (unless you have $millions), historically overpriced etc).
Yet when you ask (as I have done) some investors why they dont consider these risks, their face goes blank, they stare ahead and quote in monotone"only way to financial freedom, must get out of rent trap, can't be slave to job, buy now or miss out forever, location,location,location". ASk them what about their net rental yield and their face goes even blanker. "Whats that again? How do you work that out? Is it really important?"
So I am hopefully helping out with one of the stages of evaluating an investment and that is assessing risk.
Does that give me the right to post on your forum now?
LB
1) Because I am interested in property investing and would love like anyone else to find a bargain.
I dont like to compare shares to property as the two are so different one must be careful comparing them but the point you make about apples and hunks of coal was a relevant one.
They may be different but consider the two co's. If apples were returning earnings of 4% and coal was returning 6% investors would tend to go for the coal (ignoring co specific risk) so that eventually it would even out.
I see the same in the property market. All these independant properties are very dependant on each other to determine their value. Because average yields are so low when someone sees a property with a higher than "average" yield they see it as good value. However its only good value relative to other properties in the market and thats provided these values are sustained.
I know that I talk about the property market as a whole but how else are we going to do it. If you read my other posts you will see that I've said on numerous occasions that not EVERY property will be affected in a bust. However the number that wont are nowhere near the number of property investors out there now.
Unfortunately 100% of investors consider that they are smarter than the other 95% and thats not possible. Australians "seem" to have this trait more than others (hence the amount of money we spend on gambling as a nation).
we all think we can beat the average punter because we're smarter than them. Guess what. only half the population is smarter than the average. If you buy well you will get good returns. Well I will get good returns then because of course I will buy well.
2. Every investment has risk. But for many getting into the market these risks arent adequately considered or even realised. Nearly every person a new investor meets in the buying process is making money from the transaction and they arent deemed to be giving financial advice anyway so arent going to mention these risks.
Property is currently one of the most riskiest investments around. (ie high levered, very illiquid, high transaction costs, risk of no income, high ongoing expenses, undiversifiable (unless you have $millions), historically overpriced etc).
Yet when you ask (as I have done) some investors why they dont consider these risks, their face goes blank, they stare ahead and quote in monotone"only way to financial freedom, must get out of rent trap, can't be slave to job, buy now or miss out forever, location,location,location". ASk them what about their net rental yield and their face goes even blanker. "Whats that again? How do you work that out? Is it really important?"
So I am hopefully helping out with one of the stages of evaluating an investment and that is assessing risk.
Does that give me the right to post on your forum now?
LB
Hi LB
I must congratulate you on such a clear, straight to the point post. I agree with almost all you said. I also believe you may help some people with their risk assessment. The above post can be extremely helpful to quote in previous posts where your comments sparked some mostly constructive criticism and also for future posts of yours. You are on a good mission but somehow failed to bring the message across till the last post above.
I am absolutely serious and I wasn’t sarcastic at all.
M.
I must congratulate you on such a clear, straight to the point post. I agree with almost all you said. I also believe you may help some people with their risk assessment. The above post can be extremely helpful to quote in previous posts where your comments sparked some mostly constructive criticism and also for future posts of yours. You are on a good mission but somehow failed to bring the message across till the last post above.
I am absolutely serious and I wasn’t sarcastic at all.
M.
Acey accused
"you simply tar all property with the same brush, tell everyone on the forum how stupid we are to hold properrty & get offended when your opinions are challenged.
I have said now many times - not all properties are overpriced. The average property is. This means that in a bust,many more properties will lose value than gain value and as such it could be better to steer clear esp if you are in it for easy riches.
Please dont say I tell people how stupid they are. Never have I, or would I. If anything (and I havent said this anyway) SOME may be misinformed, misguided and have unrealistic expectations but thats not stupid. We all have at one point or another and generally had to learn the hard way.
Finally, I don't mind when my opinions are challenged. Thats partly what discussion forums are for. It would be pretty pointless if we all sat around agreeing with what everyone else said regardless of whether it was write or wrong.
I'm not that big a fan of false accusations though.
LB
"you simply tar all property with the same brush, tell everyone on the forum how stupid we are to hold properrty & get offended when your opinions are challenged.
I have said now many times - not all properties are overpriced. The average property is. This means that in a bust,many more properties will lose value than gain value and as such it could be better to steer clear esp if you are in it for easy riches.
Please dont say I tell people how stupid they are. Never have I, or would I. If anything (and I havent said this anyway) SOME may be misinformed, misguided and have unrealistic expectations but thats not stupid. We all have at one point or another and generally had to learn the hard way.
Finally, I don't mind when my opinions are challenged. Thats partly what discussion forums are for. It would be pretty pointless if we all sat around agreeing with what everyone else said regardless of whether it was write or wrong.
I'm not that big a fan of false accusations though.
LB
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