Prices going up again!!!

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From: Peter Davidson


All,

Not sure whether this is happening in your area, but the prices in inner city Melbourne are going up week by week. There seems to be little stock at the moment and once again, reserve prices are being smashed through the roof. It's incredible how prices have rocketed since Xmas. Oh well....

Is this boom ever going to end?
 
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Reply: 1
From: Michael Croft


Someone posted the following observation recently 'if it looks like a bubble, feels like a bubble and smells like a bubble; is it a bubble?'

What do you think? What's driving the market? Fear and Greed?

Michael Croft
 
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Reply: 1.1
From: Robert Forward


I think that everyone got scared of a market collapse pre Xmas as there were lots of scary stories out in the papers and media. This lead to people holding off from putting their properties on the market. This then lead to another short supply in properties which to me is now causing this bubble.

The question to me is, is this the last bubble before a correction or stabilization period? I have my thoughts but I'll keep them to myself for now.

Cheers
Robert

The Sydney "Freestylers" Group Leader.
 
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Reply: 1.1.1
From: Duncan M




> I have my thoughts but I'll keep them to myself for now.

Why?

Duncan.
 
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Reply: 1.1.1.1
From: Robert Forward


Cause I can. And want to.

Cheers
Robert

The Sydney "Freestylers" Group Leader.
 
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Sim

Administrator
Reply: 1.1.1.1.1
From: Sim' Hampel


So we can blame you when things went wrong because you didn't tell us ? :p

sim.gif
 
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Reply: 1.1.1.1.1.1
From: Alan Hill



"Prices going up again"

Isn't it WONDERFUL!!!

I don't know about you but this is exactly what I'm in this for.......I love picking up the papers and reading this sort of stuff.

We're a funny mob on this Forum at times aren't we......many are paranoid and fearful of "when the bubble bursts". Oh dear....quake...quake.

Of course it will burst and we have to ensure we purchased and set ourselves up to handle this time. But to me property cycles can be a bit like a roller coaster ride....there's the time when you need to construct the ride.....check all the mechanics and safety issues......start the ride and climb some of those steep sections of the track......go around some fast new bends into the unknown......but hey...for me....headlines like we've seeing now have me holding my hands in the air, racing down the roller coaster track with a huge smile on my face. Sure we'll probably come to a stop at the bottom........but then, buy another ticket and have another ride......

As long as I don't feel I HAVE to purchase right now, and I'm not in a situation where I have DRAMATICALLY over extended myself, I'm more than happy to see this go on for another 6-12 months. Increasing compounded equity is a wonderful thing!

This is the time that I'm happy to spend a bit of time tidying up my structure, looking at other interim investment options and hopefully reading headlines that say "Property Prices Continue to Rise!!".

My powder is staying relatively dry at the moment so that I can put it to better use in what will probably not be the too distant future.

Not saying there aren't opportunities out there to still make money, but from a personal point of view I think it's getting harder and riskier at the moment.

Someone like a Michael Croft will probably always pick up a Reno in any part of a cycle and make money out of it......others will not have those same skills.

Sure extend your boundaries with IP but it's times like this I think you also need to be realistic about what your particular areas of expertise are to make money in a market like this.

Hmmm.....I'm starting to sound like a "conservative old fart"......maybe I should move down to Gee Cee's part of the country?


:)
 
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Reply: 1.2
From: Peter Davidson


Michael,

I think you just hit the nail on the head. "Fear and Greed" is driving the market. Does this mean as long as we are fearful, prices will continue to rise? Maybe.

One other thing, has a boom ever lasted this long before a bust?
 
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Reply: 1.1.1.1.1.1.1
From: Gee Cee Clay


Catch Ya on the beach or at the snow!!
 
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Reply: 1.1.1.1.1.1.2
From: Paul Zagoridis


Here is the dilemma of booms.

Most investors are net property accumulators until their portfolio hits critical mass

Then they can cash out or live on the rent or whatever.

So booms are best for people who either have stopped accumulating or trade in and out of geographical areas.

Booms also reinforce people's sense of having done the right thing. This psychology of investing is very important.

But if your strategy is to buy additional property (continue accumulating) a boom leads to tremendous fear. You risk your known profits for unknown future returns.

I personally hate crazy markets, but my preferences don't really matter. The market is what it is.

Paul Zag
Dreamspinner
 
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Sim

Administrator
Reply: 1.1.1.1.1.1.2.1
From: Sim' Hampel


On 3/8/02 12:37:00 PM, Paul Zagoridis wrote:
>
>The market is what it is.

So if we want to talk philosophy (or even theology), answer me this... is the market perfect ? ie. does the market always represent the true value of property ?

sim.gif
 
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Reply: 1.1.1.1.1.1.2.1.1
From: Michael G


Hi,

Sim said "is the market perfect ? ie. does the market always represent the true value of property ?"

No, the price of property can be easily manipulated.

eg. a theoritical $100,000 3br/1ba home

scene 1: Vendor wants to move to a new area, for a change of pace, no pressure to move, Buyer wants to buy house, but no pressure to buy. House sells for $100,000.

scene 2: Vendor needs to move quickly, new job in another city requires they move quickly. Buyer agrees to "help" them out. House sells for $90,000.

scene 3: Vendor wants to sell house, buyer "loves" house, but has little money to buy, but can service debt. Vendor agrees to "help" buyer out. House sells for $120,000 with vendor finance arrangement.

scene 4: Vendor doesnt really want to move, but house sits on large block. Buyer asks Vendor sell sell "chunk" of land. Vendor gets some cash for a nice holiday or whatever, buyer gets land for build dream home. 50% of block sells for $60,000. Vendor's house is valued at $80,000.

etc, etc, etc...

Is the market perfect?, in my opinion no. Sale price can vary dramatically upon the needs of both the Vendor and Buyer.

Michael G
 
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Reply: 1.1.1.1.1.1.2.1.1.1
From: Michele B


On 3/8/02 4:29:00 PM, Michael G wrote:
>
>Sim said "is the market
>perfect ? ie. does the market
>always represent the true
>value of property ?"

Michael, it is in the global sense if 'value' is determined solely by the forces of supply and demand.

michele
 
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Reply: 1.1.1.1.1.1.2.1.1.1.1
From: Michael Croft


Ohh Sim', Paul was talking Zen and you are talking philosophy, cheese and chalk! There is no value attributed to "is".

Michael Croft
 
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Reply: 1.1.1.1.1.1.2.1.1.1.1.1
From: Michael Croft


And another thing, you can't argue philosophy with a Greek, they invented the rules!
Michael Croft
 
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Reply: 1.1.1.1.1.1.2.1.2
From: Waverly Bay


Sim - there is a Theological Perspective to Perfect Markets?

Wow.

Please explain !
 
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Sim

Administrator
Reply: 1.1.1.1.1.1.2.1.2.1
From: Sim' Hampel


Hehe... I'm sure you and I could have a wonderfully long discussion about the theology of the market some time wb ! (preferably late at night - that's when the best "meaning of life" discussions tend to take place)

If you are feeling argumentative, we could bring in someone else as well, who is sure to present a totally different point of view. But you really need to be in the mood for that !

If I was to commence a dissertation in the forum, it would probably take several posts (there IS a maximum length for posts... but I haven't found it yet !) ;-)

sim.gif
 
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Sim

Administrator
Reply: 1.1.1.1.1.1.2.1.1.1.1.1.1
From: Sim' Hampel


Good point Michael !

Also don't want to argue with PaulZag in general... you'd never get a word in ! ;-)

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Zen

Reply: 1.1.1.1.1.1.2.1.1.1.1.1.1.1
From: Paul Zagoridis


I've avoided replying until now because

1) It's a very Zen thing to do ;-)
2) It's true that I talk too much (character flaw I'm working on).
3) It's a very Zen thing to do

But my view is residential property markets are not efficient. It is our collective actions that help it become more efficient than it would otherwise be. We are willing to accept X% returns when the under bidder demands X+Y%.

Efficient markets offer better returns to economies of scale. Look at the new houses market for a more efficient market (not necessarily a more profitable business).

Transaction costs make Residential lumpy and inefficient. Hooray - that is were we find whatever each of us classifies as a good deal.

The problem appears when people delude themselves into believing they can safely predict the market 100%. This is unsustainable in the long run. People who attempt it encounter "gamblers ruin" (look it up ;-) ).

The next step is people say "the market should do this ...". Hence "The Market is". Stop dealing with what should be and deal with what is.


Paul Zag
Dreamspinner
The Oz Film Biz site is archived at...
http://wealthesteem.dyndns.org/
 
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Sim

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Zen

Reply: 1.1.1.1.1.1.2.1.1.1.1.1.1.1.1
From: Sim' Hampel


On 3/11/02 1:41:00 PM, Paul Zagoridis wrote:
>
>2) It's true that I talk too
>much (character flaw I'm
>working on).

Considering how much you do talk Paul, I still find that you have a talent for listening, which I consider to be very valuable !

>Stop dealing with what should
>be and deal with what is.

Maybe some Jedi wisdom is in order here...

YODA: "This one a long time have I watched... all his life has he, looked away... to the future, to the horizon... Never his mind on where he was! Hmm? What he was doing! Hmph!"

sim.gif
 
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