Haven’t posted for a while, as I’ve been pre-occupied. Been reading here and there from time to time, following a few threads and have been quite amused and entertained by some relative newcomers who are posting quite prolifically and with some humour. 
I have been reflecting, thinking and planning my next move forward. Following a move to warmer climes, we have been in the throes of selling our former home in Melbourne. Well, that market softened in the 1 Mill plus category. A little inconsistent also at around the time we had started our campaign. Renovated properties with bling and sizzle flying out the door and other better located properties not attracting any bids.
The buyers are well and truly in control in this segment and this has been much to our frustration for the past couple of months. Different thing to read about it and different altogether again, to live it. No one likes having vacant properties sitting idle, at risk and with the upkeep required of staging, pool maintenance ensuring gardens and so forth are presentable for the OFI’s and all from a distance.
We are trending sideways now after some softening since last year. Personally I smell 1991 in the air. I’ve been harping on about that for some time. Those old enough will remember those times. I am not intimating that we will see interest rates old enough to vote, however the sentiment and mood of property may follow that tune of the early and mid-1990’s. I'll hedge myself with the markets within markets caveat (and this most likely applies to mining regionals), however I reckon things will just bubble along......and watch this space if any more smoke and mirrors (investment banks) type fiscal collapses come out of the US, other sovereign mishaps or worse still any road bumps in China.
I am no economist and whilst I have lived through a few cycles since starting investing in 1985, I cannot but wonder how these play out in the scheme of a larger (perhaps super) cycle. We can only do the best we can with what is……and, right now, it is what it is. We need to also bear in mind a possible rethink on abolishing negative gearing. It is too simplistic to even my (non-economist mind) to dismiss this by way of rationalising that rents will explode. Even if they did, they would want to in recompense for the loss of equity/capital that will ensue as the market is flooded with panic sellers.
Upside down equity (a la USA) can also occur here. Perhaps that herd/penguin capitulation will be the opportunity to buy in cheap. Furthermore, an ensuing carbon tax will directly impact the property market in many ways, including pushing up the cost of building new dwellings and/or renovating aside from the other cost to increased living expenses, which people are already feeling through food and energy expenses and, all this with our strong dollar (or rather US weakness) Wait till interest rates rise, and they will. Maybe a curtailing to building starts will actually bolster our investments as the demand side of the equation escalates. At the very least, it may balance up the undersupply myth that is being bandied about. To my mind the only tight market is Sydney. There is no shortage of housing in Melbourne or Brisbane and it’s coasts. Not sure about Perth, Adelaide and the territories. I don’t follow those markets.
Personally, it will be nice to have options with cash in the bank me thinks. Whilst buying houses does not interest me anymore, I am likely to have a more commercial slant to my future acquisitions, I will entertain residential again but only in the form of blocks of units for yield and demographic demand. Perhaps the opportunities may lay here as the market sentiment continues to sour.
I am still significantly invested in Melbourne and for mine, I see yields in Melbourne as very low at present compared to Sydney and Brisbane. Sydney ostensibly still has legs IMO (it’s time in the sun will however also run out) and Brisbane missed the run that Melbourne had over the past two or so years and that Sydney is currently enjoying. Superimpose the unfortunate floods they had and I reckon, Brisbane will be like a wound up spring that will have rapid capital growth whenever it takes off.......prognosticating 2012-2013 or thereabouts.
Yields are pretty good in Brisbane and so cap growth will see those come down a bit to reach a circa 5 % equilibrium point. There should be decent equity gain IMO. This will be a market that I will explore and research more so when the fat lady has sung and we have CA$H in the bank. The old adage of time in the market rather than timing the market is wearing a little thin with me. There are ways to time the market and make faster growth/yield gains and as I accumulate more birthdays, am starting to respect this timing philosophy. It applies to property as equally as it does to shares/stocks, acknowledging the differing liquidity characteristics of each.
As property investors, I reckon we should be grateful for the media and the datasphere bleating the pessimistic tune. Herd behaviour will assist the masses to follow like rats to the pied piper’s tune. When capitulation is entrenched it will be time to enter again and ride the next speculative growth phase and milk the tide that rises all ships.
I am no property bear, however neither am I a super bull. I will close with a line that I heard some time ago from a regular and well respected poster from this forum………..short term pessimistic; long term optimistic.
It’s nice to be back
I have been reflecting, thinking and planning my next move forward. Following a move to warmer climes, we have been in the throes of selling our former home in Melbourne. Well, that market softened in the 1 Mill plus category. A little inconsistent also at around the time we had started our campaign. Renovated properties with bling and sizzle flying out the door and other better located properties not attracting any bids.
The buyers are well and truly in control in this segment and this has been much to our frustration for the past couple of months. Different thing to read about it and different altogether again, to live it. No one likes having vacant properties sitting idle, at risk and with the upkeep required of staging, pool maintenance ensuring gardens and so forth are presentable for the OFI’s and all from a distance.
We are trending sideways now after some softening since last year. Personally I smell 1991 in the air. I’ve been harping on about that for some time. Those old enough will remember those times. I am not intimating that we will see interest rates old enough to vote, however the sentiment and mood of property may follow that tune of the early and mid-1990’s. I'll hedge myself with the markets within markets caveat (and this most likely applies to mining regionals), however I reckon things will just bubble along......and watch this space if any more smoke and mirrors (investment banks) type fiscal collapses come out of the US, other sovereign mishaps or worse still any road bumps in China.
I am no economist and whilst I have lived through a few cycles since starting investing in 1985, I cannot but wonder how these play out in the scheme of a larger (perhaps super) cycle. We can only do the best we can with what is……and, right now, it is what it is. We need to also bear in mind a possible rethink on abolishing negative gearing. It is too simplistic to even my (non-economist mind) to dismiss this by way of rationalising that rents will explode. Even if they did, they would want to in recompense for the loss of equity/capital that will ensue as the market is flooded with panic sellers.
Upside down equity (a la USA) can also occur here. Perhaps that herd/penguin capitulation will be the opportunity to buy in cheap. Furthermore, an ensuing carbon tax will directly impact the property market in many ways, including pushing up the cost of building new dwellings and/or renovating aside from the other cost to increased living expenses, which people are already feeling through food and energy expenses and, all this with our strong dollar (or rather US weakness) Wait till interest rates rise, and they will. Maybe a curtailing to building starts will actually bolster our investments as the demand side of the equation escalates. At the very least, it may balance up the undersupply myth that is being bandied about. To my mind the only tight market is Sydney. There is no shortage of housing in Melbourne or Brisbane and it’s coasts. Not sure about Perth, Adelaide and the territories. I don’t follow those markets.
Personally, it will be nice to have options with cash in the bank me thinks. Whilst buying houses does not interest me anymore, I am likely to have a more commercial slant to my future acquisitions, I will entertain residential again but only in the form of blocks of units for yield and demographic demand. Perhaps the opportunities may lay here as the market sentiment continues to sour.
I am still significantly invested in Melbourne and for mine, I see yields in Melbourne as very low at present compared to Sydney and Brisbane. Sydney ostensibly still has legs IMO (it’s time in the sun will however also run out) and Brisbane missed the run that Melbourne had over the past two or so years and that Sydney is currently enjoying. Superimpose the unfortunate floods they had and I reckon, Brisbane will be like a wound up spring that will have rapid capital growth whenever it takes off.......prognosticating 2012-2013 or thereabouts.
Yields are pretty good in Brisbane and so cap growth will see those come down a bit to reach a circa 5 % equilibrium point. There should be decent equity gain IMO. This will be a market that I will explore and research more so when the fat lady has sung and we have CA$H in the bank. The old adage of time in the market rather than timing the market is wearing a little thin with me. There are ways to time the market and make faster growth/yield gains and as I accumulate more birthdays, am starting to respect this timing philosophy. It applies to property as equally as it does to shares/stocks, acknowledging the differing liquidity characteristics of each.
As property investors, I reckon we should be grateful for the media and the datasphere bleating the pessimistic tune. Herd behaviour will assist the masses to follow like rats to the pied piper’s tune. When capitulation is entrenched it will be time to enter again and ride the next speculative growth phase and milk the tide that rises all ships.
I am no property bear, however neither am I a super bull. I will close with a line that I heard some time ago from a regular and well respected poster from this forum………..short term pessimistic; long term optimistic.
It’s nice to be back
