Steve
Some observations.
Obviously it's hard to make direct comparisons due to the different times that you've held the properties , however with some initial assumptions ( I hope these are correct , so correct me if I'm wrong ) I think it's worth making.
Assumptions
1 ) The first three properties would have been bought around the peak of the previous boom in Sydney , so it's unlikely you would have paid more if you had bought them around the same time as the properties in Castle Hill. So I assume that most of the capital gain would have occured during the current cycle rather than at the tail end of the preceeding cycle.
2) Your initial purchases in Brisbane would have been bought during the trough period of the current cycle so the current gains would roughly equal the gains during the current cycle as well. Obviously this is assuming that the current cycle in Brisbane has finished.
Observations
1)
You have four properties that have roughly ( I'm including 292 % as approx three) more than tripled their price during the time you have owned them. That includes three out of three of old properties that you bought. While you could point out that these are the properties that you have held the longest, given my previous assumptions, I think my observation is valid. Interstingly if you had bought in Brisbane in 1989 ( prior to the peak in the previous cycle in Brisbane) you probably would have done even better.
2) You bought two properties in Castle Hill at around the same time which are both worth about the same price. A 20K less purchase price for one results in the percentage increase changing from 252 % to 297 % . This emphysises to me the importance of trying to buy properties as cheaply as I can ( PS this has no bearing on the current discussion ...
)
3) While you comment on the decrease in value of the three old properties , you make no comment about decrease in values of the two properties bought in 1991 in Castle Hill. As some one who was looking at properties in Sydney from 1988 onwards, I find it hard to believe that these properties did not go down in value after the period that you bought them in particular when your properties in Edgecliff , Double Bay and Paddington ( which IMHO would be considered better suburbs than Castle Hill ) went down in that period.
4 ) Assuming that the properties in Castle Hill did go down in value, then one can only conclude that the first five properties you bought in Sydney went down in value for a period of years after you bought them .
Why is this so ? I'm sure you would state that they didn't fit rental reality , and given that you hadn't created rental reality at that stage that would be a correct assumption ( and in retrospect I'm sure wouldn't have fitted rental reality ) . My personal observation would be that the market had peaked in around 1989 ( after a period when the Sydney market doubled in a one year period ) and after a period of rapid growth such as occured then , and has recently occured, we were unlikely to see significant growth for a number of years.
I'm not saying I was any smarter at the time . From 1987 I lived in rented house which friends had bought recently for under 100K in Concord West. 18 Months later I bought our first house for 205 k , two streets away, significantly inferior. After 80 K and hundreds of hours work we sold that house in 1994 for 299 K so we could buy a PPOR in Pymble. Unfortunately our accountant didn't advise us that we could sell it into a trust to make repayments deductable , and somersoft wasn't around then .
Having seen prices go sideways for a period of six years , the lesson I personally learnt was the importance of timing the market. Obviously that house is worth significantly more now , but a buy 18 months earlier ( prior to a period of significant prices rises ) would have seen the percentage gain double. I note that from a similar experience , you have drawn a different conclusion and are recommending people buy properties after a period of significant capital growth ( obviously based on rental reality ).
Obviously in the long term properties, bought under the rental reality, will do well ( as does all ... well most .. property ). I understand that it is comes from your background in shares and that you preferred way of share trading is not that of the trend following approach , however my observations have been that trends in property are slower and more predictable than in shares.
While share trends can suffer a significant reversal within a matter of minutes , property trends appear to be slower moving ( months and years ) and someone watching the market on an even intermittent basis can quickly become in tune with what is happening. I certainly don't spend every minute watching the market but I do check around every month or so and I believe that I will be able to buy back into the market alot closer to the time when prices start moving in the next cycle and closer to where the next cycle will start moving ( Centre of Sydney ). I will be hunting for bargains in the next year or two
See Change
Some observations.
Obviously it's hard to make direct comparisons due to the different times that you've held the properties , however with some initial assumptions ( I hope these are correct , so correct me if I'm wrong ) I think it's worth making.
Assumptions
1 ) The first three properties would have been bought around the peak of the previous boom in Sydney , so it's unlikely you would have paid more if you had bought them around the same time as the properties in Castle Hill. So I assume that most of the capital gain would have occured during the current cycle rather than at the tail end of the preceeding cycle.
2) Your initial purchases in Brisbane would have been bought during the trough period of the current cycle so the current gains would roughly equal the gains during the current cycle as well. Obviously this is assuming that the current cycle in Brisbane has finished.
Observations
1)
You have four properties that have roughly ( I'm including 292 % as approx three) more than tripled their price during the time you have owned them. That includes three out of three of old properties that you bought. While you could point out that these are the properties that you have held the longest, given my previous assumptions, I think my observation is valid. Interstingly if you had bought in Brisbane in 1989 ( prior to the peak in the previous cycle in Brisbane) you probably would have done even better.
2) You bought two properties in Castle Hill at around the same time which are both worth about the same price. A 20K less purchase price for one results in the percentage increase changing from 252 % to 297 % . This emphysises to me the importance of trying to buy properties as cheaply as I can ( PS this has no bearing on the current discussion ...
)3) While you comment on the decrease in value of the three old properties , you make no comment about decrease in values of the two properties bought in 1991 in Castle Hill. As some one who was looking at properties in Sydney from 1988 onwards, I find it hard to believe that these properties did not go down in value after the period that you bought them in particular when your properties in Edgecliff , Double Bay and Paddington ( which IMHO would be considered better suburbs than Castle Hill ) went down in that period.
4 ) Assuming that the properties in Castle Hill did go down in value, then one can only conclude that the first five properties you bought in Sydney went down in value for a period of years after you bought them .
Why is this so ? I'm sure you would state that they didn't fit rental reality , and given that you hadn't created rental reality at that stage that would be a correct assumption ( and in retrospect I'm sure wouldn't have fitted rental reality ) . My personal observation would be that the market had peaked in around 1989 ( after a period when the Sydney market doubled in a one year period ) and after a period of rapid growth such as occured then , and has recently occured, we were unlikely to see significant growth for a number of years.
I'm not saying I was any smarter at the time
. From 1987 I lived in rented house which friends had bought recently for under 100K in Concord West. 18 Months later I bought our first house for 205 k , two streets away, significantly inferior. After 80 K and hundreds of hours work we sold that house in 1994 for 299 K so we could buy a PPOR in Pymble. Unfortunately our accountant didn't advise us that we could sell it into a trust to make repayments deductable , and somersoft wasn't around then . Having seen prices go sideways for a period of six years , the lesson I personally learnt was the importance of timing the market. Obviously that house is worth significantly more now , but a buy 18 months earlier ( prior to a period of significant prices rises ) would have seen the percentage gain double. I note that from a similar experience , you have drawn a different conclusion and are recommending people buy properties after a period of significant capital growth ( obviously based on rental reality ).
Obviously in the long term properties, bought under the rental reality, will do well ( as does all ... well most .. property ). I understand that it is comes from your background in shares and that you preferred way of share trading is not that of the trend following approach , however my observations have been that trends in property are slower and more predictable than in shares.
While share trends can suffer a significant reversal within a matter of minutes , property trends appear to be slower moving ( months and years ) and someone watching the market on an even intermittent basis can quickly become in tune with what is happening. I certainly don't spend every minute watching the market but I do check around every month or so and I believe that I will be able to buy back into the market alot closer to the time when prices start moving in the next cycle and closer to where the next cycle will start moving ( Centre of Sydney ). I will be hunting for bargains in the next year or two
See Change
