real estate ad from 1977

[nomadic]

i found a few pages of the property section in a set of draws i got at a garage sale on the Gold Coast. Its from The Age in Melbourne and its dated Saturday, May 28th, 1977. I hope the writing is not too small to read because it has some interesting info about the history.
2 identical house, one has been renovated and is for sale at $75,000 and the other is divided into 2 units and they want $65,000 for it. Although Barkers Rd is busy i reckon they'd have to be worth about $800k+ in Kew if they were still standing (although i could be way out).

 

[nomadic]

3 units in Cranbourne for sale ranging from $35,850 to $36,000

 

[nomadic]

land for sale

 

[nomadic]

development sites

 

[nomadic]

Brighton land

 

[oasis1frog]

Those were the days !

 

[nomadic]

houses for sale

 

[McBrain]

Thanks for that Nomadic.

It's great to see how things were 30 years ago. I wonder what the housing market will be like in 30 years time?

I recently renovated a house and found some old newspapers that were lining the floor from 1948/1950. It's great to see all the old ads for the 'latest' vacuum cleaners, etc and to read what was going on in Melbourne at that time.

Cheers.

 

[pieman]

Ahh a block just down the road from me.
let me see 28k then, probably $250 sqft now, so 4000ish*250=$1m'ish

thats a bit more than the 10% per year i think
pieman

 

[Bill.L]

Hi all,

A quick look at the Cranbourne units for sale at $36,000 in 1977 gives a clue to property prices.

Units today in that area are around the $200,000 mark, but most of them are a lot newer than 30 years old.

The growth of the units if purchased in 1977? A little less than 6% per annum, or about the rate of inflation.

An average property, in an average area, where there is no shortage of land. The expectation would be for price to be a little less than the replacement cost of a new one, as seems to be the case. Rent return about $180 pw gross (well the one 4 doors down the road is)

http://www.realestate.com.au/cgi-bi...r=&cc=&c=49805517&s=vic&snf=rbs&tm=1203980668

Question, under what circumstances would this property or type of property been a good investment if purchased in 1977?

bye

 

[wylie]

Question, under what circumstances would this property or type of property been a good investment if purchased in 1977?

I know that for me buying my first property at under 20 years of age that even though the very first one didn't actually make a gain because my brother pulled out of the partnership to get married, and I could not pick up the slack myself, that on paper I did not make anything.

However, in reality, if I had not had to make the mortgage payments, I probably would have done what a lot of my friends were doing, buying a new flash car every couple of years and drinking my money away, or spending up big on flash clothes and shoes.

Even now, if we didn't have a huge mortgage, we would direct most of the mortgage money to some other growth vehicle, but I know that the temptation would be there, and certainly pressure would be on from my sons to spend, spend, spend.

So, even if a property has done no better than, say, putting the money under the mattress, in my mind, it is better to have bought something, than squander the equivalent of the mortgage. Different, of course, if a property has gone backwards, but holding long term in good positions, losing money over the long term is not much of a risk IMHO.

This is how I think, but curious if I am missing something?

 

[wylie]

Question, under what circumstances would this property or type of property been a good investment if purchased in 1977?

I know that for me buying my first property at under 20 years of age that even though the very first one didn't make a huge capital gain because my brother pulled out of the partnership to get married, and I could not pick up the slack myself, that on paper I did not make anything.

However, in reality, if I had not had to make the mortgage payments, I probably would have done what a lot of my friends were doing, buying a new flash car every couple of years and drinking my money away, or spending up big on flash clothes and shoes.

Even now, if we didn't have a huge mortgage, we would direct most of the mortgage money to some other growth vehicle, but I know that the temptation would be there, and certainly pressure would be on from my sons to spend, spend, spend.

So, even if a property has done no better than, say, putting the money under the mattress, in my mind, it is better to have bought something, than squander the equivalent of the mortgage. Different, of course, if a property has gone backwards, but holding long term in good positions, losing money over the long term is not much of a risk IMHO.

This is how I think, but curious if I am missing something?

 

[BayView]

Hi all,

Question, under what circumstances would this property or type of property been a good investment if purchased in 1977?

bye

The thing to remember about Cranbourne in 1977 is that it was about 1 hour drive past civilisation, and there were about 200 farms, 4 houses and 3 dogs there; at the end of a dirt road.

I remember dropping a mate out to his girlfriend's house on Scoresby rd in Scoresby in 1981 one day, and I remember thinking; "where the hell is this place?"

Cranny was another 15 minute or so further out into the sticks.

Until it started to go through a development around the mid eighties, say, 1985, there would have been bugger-all growth at all from '77-'85.

I think Cranbourne was not the best example to use for the thread.

 

[VYBerlinaV8]

If I can buy an IP with yield that covers (after tax) the holding costs (using a P&I loan), or comes close and then covers cost in the short term, then over the long term I will have acquired an asset that generates cash and grows at least in line with inflation at effectively no cost.

So, if I am able to acquire said assets at no cost, and then repeat the process several times over, then in the longer term I will have built a large asset base that can be leveraged for other things. This is how I see property investment working for me. So as long as the rate of growth at least equals inflation (and if we buy carefully it's not that hard to beat this figure), then my method works. And I get wealthy.

Based on the ad images in this thread, I would expect (hope?) that property increases in value by another order of magnitude over the next 20-30 years.

 

[Aimjoy]

Here here VYBerlinaV8!

And to add a quote from John Paul Getty III:

"When the economy is bad and property values are falling, and everyone wants to be a seller, buy well-located real estate and hold onto it. Don't sell, whatever the critics, the cynics and losers might say. That way you will end up very wealthy."

Cheers,
Aimjoy

 

[casper007]

Here here VYBerlinaV8!

And to add a quote from John Paul Getty III:

"When the economy is bad and property values are falling, and everyone wants to be a seller, buy well-located real estate and hold onto it. Don't sell, whatever the critics, the cynics and losers might say. That way you will end up very wealthy."

There was a similar story ... I think it was Bob Hope who used to turn up wherever he was shooting a film ... drive to the outskirts of the town and buy as much land as he could afford ...

Not a bad strategy as much of his filming was in California and Vegas.

And here I was thinking he was just a good actor ...

 

[Peter Parker]

Question, under what circumstances would this property or type of property been a good investment if purchased in 1977?

There would no doubt have been better investments, but it could still have worked out very well, despite the ordinary capital growth.

* Assuming you need about $9k for deposit and buying costs and got a P&I loan you'd now have a fully paid for asset worth more than 20 times that. And that's during a period where CPI has risen by (maybe) 5 or 6 times.

* If interest rates were about 10% and inflation was about 10% (which it was in 1977) then that's 0% real interest. This is very rare historically; you'd have been silly not to borrow if you were able to. The political & economic uncertainty of that decade (especially 1974-5) probably made that less fashionable than the more capitalist 1980s - 2000s.

* If the yield back then (being a country property) was about 10% then the shortfall would be quite small - the property would have been paying 70% of its costs from day 1 (and that's before tax deductions). And with 10% inflation each year, rents would likely have risen so before long it would be CF neutral. So even if the growth was ordinary, you'd have no net holding costs and could have gone out and bought more in a few years.

* Marginal tax rates were higher then (there were 60 & 46% rates) so your deductions could have been higher if you were well-paid.

* 1979-1981 were generally boom years for property so you wouldn't have to wait long for some capital growth. It's not as if you had bought in 1989 at 17% interest and had to wait until 1997 for real growth, for example.

Sure looking at hindsight there's been better investments.

But the results obtainable from such an 'ordinary' conservatively leveraged house that's close to +ve CF from the start and only grows by CPI is still nothing to be sneezed at and probably beats most fund managers hands down.

Peter

 

[Xenia]

Thanks for sharing, that's the era that my parents started investing in property and they found so many hurdles regarding servicability, finance, affordability etc... same as what investors are finding now

In 2039 someone will be posting todays newspaper articles here and saying how cheap they were back then

 

[wylie]

I joined Comm Bank in 1976 and was in Brisbane head office housing loans department by about 1977 or 1978. From memory (hazy I must admit) you pretty much had to go cap in hand and beg for a loan. You HAD to have a savings history over several years and I think you had to have 20% deposit.

VERY different today, and so much easier to get a loan, but of course, the trade off is that people can get in too deep, and get burned.

 

[our obsession]

Wylie:

I know that for me buying my first property at under 20 years of age that even though the very first one didn't actually make a gain because my brother pulled out of the partnership to get married, and I could not pick up the slack myself, that on paper I did not make anything.

However, in reality, if I had not had to make the mortgage payments, I probably would have done what a lot of my friends were doing, buying a new flash car every couple of years and drinking my money away, or spending up big on flash clothes and shoes.

Even now, if we didn't have a huge mortgage, we would direct most of the mortgage money to some other growth vehicle, but I know that the temptation would be there, and certainly pressure would be on from my sons to spend, spend, spend.

Wylie, how come you did this? meaning thought to do this? (if it's not too sticky beaking to ask)...you are a teenager and you just decided to buy some property? or your new line of work (at the Bank) prompted the wheels to start turning? Or folks maybe?

Where you close to not doing it? or it was going to happen hell or high water?

Was there a turning point or you had the slow plan for a while?

I'm just really curious that the desire to invest in one so young...and the trigger(s) for it?

Not too many q's I hope.

Thanks.