Property bubble ready to pop

[MTR]

This suggests that you buy in a sellers market. A contrarian investor would take the opposite approach...

I buy when I see a market rising, but I also sell in a rising market. It's potentially a seller's market but I aim for the early stages of the rise.

Not all properties are equal, sometimes units will be rising in a particular area while houses are not moving. Also, not all areas/suburbs are peaking at the same time, there are markets within markets, which is what is currently happening in Perth, some areas have peaked IMO.

I am not looking at Syd at the moment, but I did purchase in West Syd 2 years ago as market started rising.
Perhaps today its similar to Perth scenario time to look at other pockets in Syd that are starting to move as West Syd close to peaking??

 

[MTR]

Supply and demand is good. But supply and demand + affordability based on the local area is better

Even better is buy in areas that are surrounded with properties with much higher median prices, close to city and where the land will be rezoned, pretty much guarantee growth. Still important to get the timing right.

 

[mrdobalina]

Mandurah 40% drops, only just starting to recover after 6 years.

Agree with Mandurah. However, there is SO MUCH on the market in Mandurah, from entry level to mansions on canals. Plus yields are still relatively subdued.

What would your selection criterias be for Mandurah MTR?

 

[impala67]

Gold Coast 40 % drops, only just starting to recover.
Mandurah 40% drops, only just starting to recover after 6 years.

Which of the two is ahead in terms of recovery in your opinion MTR? (I don't know much about either market).

If you had an example that you know of, doesn't have to be a link, just something to compare. Or if anyone has any figures.

Also, I did read once that Mandurah was somewhat overdeveloped much like Docklands precinct in Melbourne? Is this factual?

 

[Peter Parker]

Also, I did read once that Mandurah was somewhat overdeveloped much like Docklands precinct in Melbourne? Is this factual?

The difference is that in Mandurah you can readily avoid 'overdeveloped' areas by buying normal suburban houses rather than serviced apartments/retirement units/in big complexes etc.

You can differentiate to some extent in Docklands but it's still very likely going to be a high rise apartment.

 

[MTR]

Agree with Mandurah. However, there is SO MUCH on the market in Mandurah, from entry level to mansions on canals. Plus yields are still relatively subdued.

What would your selection criterias be for Mandurah MTR?

Hi mrd
I am not interested in Mandurah at the moment, I also believe it is price sensitive and there is still an over supply.

If I was jumping into this market I would consider a land and house package, lower end, perhaps area like Lakelands, where you have rail and perhaps cost around $360-370K all up and rents at around $450 pw?

Alternatively there is the option of buying development sites close to the city centre at around $500K, however from what I have been told you would need to be building multi units for the numbers to stack up. Too risky for me at the moment.

Cheers
MTR

 

[MTR]

Which of the two is ahead in terms of recovery in your opinion MTR? (I don't know much about either market).

If you had an example that you know of, doesn't have to be a link, just something to compare. Or if anyone has any figures.

Also, I did read once that Mandurah was somewhat overdeveloped much like Docklands precinct in Melbourne? Is this factual?

I would say the Gold Coast has more potential at the moment as the market is changing, there is lack of stock (HOUSES ONLY) and agents are constantly looking, a good sign. Units still over supply would not touch these.
There are many BA jumping in buying for their clients and many properties going to auction. My agent advised that Nathan Birch is buying up and there are others, in the main the lower end and once again as mentioned houses, don't touch units.

 

[investor2009]

Ohh yeah for sure. It's gonna pop any minute now

Just quietly I don't see the bubble.. Prices will rise qnd they will fall. Always been but if it makes you comfortable transferring your wealth with to a new owner then good for you

Show me a better place with lower risk to create wealth from any otger leveraged investment and I'll finance it

Wait a sec I still haven't heard a pop yet? (I'm listening)

Nuff said

 

[The Fence]

With China now opening up capital outflows of up to $5m a year Id say the "property bubble" is in the conception stage.

 

[TMNT]

Do prices really fall though? In 09 we saw the gfc but other then. High rise apartments , did we see a drop in the average prices for average properties and areas? My recollection is that growth simply stopped and all the overpriced properties fell like bricks

I jus can't see west Sydney actually falling in value, ie can buy in x months for less then we can today

 

[MTR]

Do prices really fall though? In 09 we saw the gfc but other then. High rise apartments , did we see a drop in the average prices for average properties and areas? My recollection is that growth simply stopped and all the overpriced properties fell like bricks

I jus can't see west Sydney actually falling in value, ie can buy in x months for less then we can today

Boom/Bust cycles exist and yes prices absolutely fall and rise depending on supply/demand. I have been buying/selling in 4 cycles now.

For example during GFC Melb was booming, started in inner city, however after approx. 18 months the property market went pear shaped and auction rates fell back. Properties also fell back in all areas, even blue chip. I sold 5 properties prior to the downturn, 12 months later most of these properties almost fell back to my original purchase price, around 25-30% drop.

It is a mistake to think that markets don't crash, they do, just check historical data on various markets around Australia. There are many examples of this.

I think the problem is many people get caught up and think the market will just keep rising, many will jump in when the market peaks, they don't jump into the market in the early stages because they are not convinced it is moving, when they see others making money and all the media hype they are finally convinced they need to jump in during the peak. Happens all the time.

 

[TMNT]

Boom/Bust cycles exist and yes prices absolutely fall and rise depending on supply/demand. I have been buying/selling in 4 cycles now.

For example during GFC Melb was booming, started in inner city, however after approx. 18 months the property market went pear shaped and auction rates fell back. Properties also fell back in all areas, even blue chip. I sold 5 properties prior to the downturn, 12 months later most of these properties almost fell back to my original purchase price, around 25-30% drop.

It is a mistake to think that markets don't crash, they do, just check historical data on various markets around Australia. There are many examples of this.

I think the problem is many people get caught up and think the market will just keep rising, many will jump in when the market peaks, they don't jump into the market in the early stages because they are not convinced it is moving, when they see others making money and all the media hype they are finally convinced they need to jump in during the peak. Happens all the time.

Interesting, i must admit, I haven't seen many prices fall, I've seen heaps plateau off, eg hunter valley in recent times,

I have multiple properties in different states and areas, and am wondering whether I should start thinking about selling even though they are neutral to positively geared

What I don't want is to sell because I don't have to and in five years think, ahhh nuts, I bought at 250k , sold at 300k, and it's worth 400k

 

[XMW]

Price do fall. Bought my previous PPOR in 2006 at 20% less than 2003 peak price in Western Sydney. Previous owner lost 100k + at least.

 

[mrdobalina]

What I don't want is to sell because I don't have to and in five years think, ahhh nuts, I bought at 250k , sold at 300k, and it's worth 400k

I've done that about 5 times. Ahhhh nuts

 

[twobobsworth]

Price do fall. Bought my previous PPOR in 2006 at 20% less than 2003 peak price in Western Sydney. Previous owner lost 100k + at least.

Try this one for size in the hills district.

15/12/2012 $1,085,000
07/07/2006 $1,260,000
09/08/2003 $2,000,000

 

[Scott No Mates]

Try this one for size in the hills district.

15/12/2012 $1,085,000
07/07/2006 $1,260,000
09/08/2003 $2,000,000

Great example but was the block sold in the same condition each time or was the first a development site and the latter a much smaller block post subdivision or development?

 

[sanj]

Boom/Bust cycles exist and yes prices absolutely fall and rise depending on supply/demand. I have been buying/selling in 4 cycles now.

For example during GFC Melb was booming, started in inner city, however after approx. 18 months the property market went pear shaped and auction rates fell back. Properties also fell back in all areas, even blue chip. I sold 5 properties prior to the downturn, 12 months later most of these properties almost fell back to my original purchase price, around 25-30% drop.

It is a mistake to think that markets don't crash, they do, just check historical data on various markets around Australia. There are many examples of this.

I think the problem is many people get caught up and think the market will just keep rising, many will jump in when the market peaks, they don't jump into the market in the early stages because they are not convinced it is moving, when they see others making money and all the media hype they are finally convinced they need to jump in during the peak. Happens all the time.

Kudos. Im amazed that after all this time some people still claim that we dont see property prices fall in this country.

 

[Player]

Interesting, i must admit, I haven't seen many prices fall, I've seen heaps plateau off, eg hunter valley in recent times,

I have multiple properties in different states and areas, and am wondering whether I should start thinking about selling even though they are neutral to positively geared

What I don't want is to sell because I don't have to and in five years think, ahhh nuts, I bought at 250k , sold at 300k, and it's worth 400k

Ask yourself if there are any other more optimal opportunities that you can invest in, by either selling down one or a few or revaluing and drawing equity?

Depending on your age, strategy and appetite for debt, selling down to reduce LVR's isn't a bad concept. It really depends on your circumstances and intent moving forward.

No one can forecast how much further markets can run before they take a breather or even soften somewhat depending on economic climate, unemployment or nasty global shocks, which may not be out of the question. My own crystal ball is a little foggy, however I am looking at the Melbourne market closely to probably sell off a very low yielding land rich (read high land tax impost) property this year, to free up funds for direct commercial and yield. Cashflow is more important for us right now.

I liked a question posed by Steve McKnight (when I heard him speak once) and that is:

Would you buy the asset back for the price that you sold it for?

If the answer is no, then maybe that is part way to solving your quandary.

 

[TMNT]

Ask yourself if there are any other more optimal opportunities that you can invest in, by either selling down one or a few or revaluing and drawing equity?

Depending on your age, strategy and appetite for debt, selling down to reduce LVR's isn't a bad concept. It really depends on your circumstances and intent moving forward.

No one can forecast how much further markets can run before they take a breather or even soften somewhat depending on economic climate, unemployment or nasty global shocks, which may not be out of the question. My own crystal ball is a little foggy, however I am looking at the Melbourne market closely to probably sell off a very low yielding land rich (read high land tax impost) property this year, to free up funds for direct commercial and yield. Cashflow is more important for us right now.

I liked a question posed by Steve McKnight (when I heard him speak once) and that is:

Would you buy the asset back for the price that you sold it for?

If the answer is no, then maybe that is part way to solving your quandary.

good points as usual player

Would I buy at those prices that I bought at: hell yes! the market has moved

Would I buy back in at the current prices: not likely, as the prices have moved, I feel I wont get the same amount of gain as I would have in teh past, PLUS many of them I have added value onto it, so I cant do it any more

if I sold would I put the funds to better use?: possibly, im not scraping cash togehter for the next deal at the moment anyway, however if I had more cash, I may look at larger projects, not sure as I havent really looked into larger projects

im currently on about 77% lvr or so and have refinaced half of the properties to get equity out, and im keen on buying more, so I guess im technically still accumulating

 

[twobobsworth]

Great example but was the block sold in the same condition each time or was the first a development site and the latter a much smaller block post subdivision or development?

32 Strathfillyan Way Kellyville. Same house, same land in each instance.