So which camp was right the doomsayers or the property faithfull?

[evand]

the article talks about the rest of Australia as well. This is the beginning of a flat/most likely falling trend. Can someone point out to me what (if anything) is going to reverse the trend.

btw: It will be made worse with the increasing commodities boom raising interest rates.

Look, in my opinion, Perth is is a different part of the RE cycle. A few years back its median price exceeded that of Sydney for the very first time. That was clearly unsustainable (to me at least) & a good indication that the Perth market had overshot. Now it is just correcting over there.

 

[Propertunity]

This is the beginning of a flat/most likely falling trend.

I have not seen one single trend apply nation-wide. What I have seen nation-wide is some places falling, some stagnating and still others rising, in different areas, and all at the same time.

 

[hobo-jo]

Australia overall +5.51%.
......and you were predicting -5% nationwide. Gimme a break

Investors certainly picked up the slack in the first few months of the year (after the drop off in first home buyers). Not something I was expecting, I mean who would have though they’d be happy with 4% gross yields when paying 6%+ interest rates? Perhaps it will be those same investors that bought in early 2010 that will be some of the first to bail, I mean assuming a high LVR on purchase a majority would be heavily negatively geared and if prices drop further… we could be seeing the start of a rush for the exit.

RPData mentions that the national median peaked in May and still currently sits lower, so calling the peak/tipping point and being 2 months out is not bad in my opinion. So no, I didn’t get my -5% predicted, but I do think a negative growth figure for the national median is likely this year. That is unless the government steps in with another large stimulus package to prop up the market (which is perhaps less likely now given the unexpected costs of flooding).

 

[evand]

That might be true but we can't put 7000 graphs on the forum. But, you're just being pedantic now. Overall the trend is flat to falling. You cant deny that.

I have not seen one single trend apply nation-wide. What I have seen nation-wide is some places falling, some stagnating and still others rising, in different areas, and all at the same time.

 

[evand]

It could be -5% an i wouldn't be surprised at all if it is.

Statistics vary and have margins of error. Especially with the self interest of all the industries feeding off the property market and with an interest in the market continuing to increase in price are involved.

Investors certainly picked up the slack in the first few months of the year (after the drop off in first home buyers). Not something I was expecting, I mean who would have though they’d be happy with 4% gross yields when paying 6%+ interest rates? Perhaps it will be those same investors that bought in early 2010 that will be some of the first to bail, I mean assuming a high LVR on purchase a majority would be heavily negatively geared and if prices drop further… we could be seeing the start of a rush for the exit.

RPData mentions that the national median peaked in May and still currently sits lower, so calling the peak/tipping point and being 2 months out is not bad in my opinion. So no, I didn’t get my -5% predicted, but I do think a negative growth figure for the national median is likely this year. That is unless the government steps in with another large stimulus package to prop up the market (which is perhaps less likely now given the unexpected costs of flooding).

 

[Propertunity]

Overall the trend is flat to falling. You cant deny that.

I do not think that you can take one broad brush and tar the whole RE market in the nation with a single "trend". It does not work like that.

Just like last year in 2010, the "trend" Australia-wide was up +5.5% but how did that apply to Brisbane which was off -2.9%? You can't buy an "Australia-wide" house. You can only buy a house in Brisbane, or Perth, or Sydney for example.

I suppose you could buy a few around the country and averaged out they would support your view of an overall trend.

 

[VYBerlinaV8]

Don't be so smug dude. You wont be later, its just the beginning of the trend.

http://www.perthnow.com.au/business...ling-home-values/story-e6frg2ru-1225997345057

Think of it as effective risk management rather than smug.

This includes:
1) Buying at times and places where the market appeared to represent good value
2) Targeting properties with good yields
3) Targeting places where there is high employment, with high pay
4) Targeting properties that are below the suburb median, but in 'aspirational' suburbs.

In taking these risk control measures, I have no doubt reduced the amount of capital growth I COULD have had. But if the market where I invest dropped 25% tomorrow, I would still be ahead, and my rents would still be covering my holding costs (after tax).

I am planning for a long period of stagnation, which I took into account when purchasing the properties. Where I have bought stagnation is far, far more likely than a crash, because there is too much demand from people with secure, well paying jobs.

I'll concede my original comment was a bit flippant, though.

 

[Dazz]

For year ended 2010, according to Residex:
ACT +8.93%
Adelaide +3.13%
SA Country +2.57%
Brisbane -2.90%
Qld Country -1.43%
Darwin +2.15%
NT +4.15%
Hobart +4.99%
TAS Country +2.9%
Melbourne +9.21%
VIC Country +9.26%
Perth +0.41%
WA Country -7.84%
Sydney +6.51%
NSW Country +4.78%
Australia overall +5.51%.

Excellent post Alan,

Unfortunately, you are spoiling the show a bit, cos you are in the real world trying to make money from the property decisions you make.

Their sole objective is to be "right" on the national trend, which doesn't create one dime.

 

[Dazz]

I do not think that you can take one broad brush and tar the whole RE market in the nation with a single "trend". It does not work like that.

Just like last year in 2010, the "trend" Australia-wide was up +5.5% but how did that apply to Brisbane which was off -2.9%? You can't buy an "Australia-wide" house. You can only buy a house in Brisbane, or Perth, or Sydney for example.

Spoken like a true property professional. You must have owned a significant amount of property for a significant amount of time.

In my eyes, your opinion carries far more weight on the subject than these trend folk.

 

[DEC]

Don't be so smug dude. You wont be later, its just the beginning of the trend.

How about now?
Can he be smug now?

http://www.abs.gov.au/ausstats/[email protected]/mf/6416.0?OpenDocument

 

[MichaelW]

Spoken like a true property professional. You must have owned a significant amount of property for a significant amount of time.

In my eyes, your opinion carries far more weight on the subject than these trend folk.

Following on from my post in your thread on opinions, it appears we're of a similar mind...

And, Prop, there's markets within markets. Brisbane may be off a few points, but the suburbs I'm interested in have all kept showing gains through that same period. Toowong and Bardon for example I think are both positive. I haven't got access to any fancy KPI reports, but from watching these suburbs and talking to agents and buyers alike in these areas I think the consensus is they just kept moving along slowly in the right direction despite the Brisbane overall small pullback.

Cheers,
Michael

 

[VYBerlinaV8]

There will always be suburbs that pull ahead when everything else is doing nothing or going backwards (although they won't be the same suburbs all the time). Being able to spot these trends is, I think, one of the major skills that a property investor needs to develop. Being able to spot situations where suburbs are not moving up, despite surrounding suburbs doing so, and there being no reason for this is one of the most useful ways to be able to pick short-medium term growth areas.

 

[devo76]

With these types of discussion. there will rarely be a clear winner. Slight movement in either direction has both camps claiming victory. I guess it keeps the forum ticking over.
The only real winners are the quiet investors sitting in the background having the odd chuckly at the goings on around here.
All the time sticking to there long term plan knowing the final laugh will be theirs.
New players( myself included) tend to get excited by this stuff and drop our two cents in. Many of these people will become succesfull in this game( Many not) and will become less vocal on these subjects. Only dropping in from time to time to offer some genuine valuable advice.

The trick is to sort the "wheat" from the chaff so to speak.

 

[hobo-jo]

Unfortunately, you are spoiling the show a bit, cos you are in the real world trying to make money from the property decisions you make.

Their sole objective is to be "right" on the national trend, which doesn't create one dime.

It just so happens there is those that don't currently hold property, but are also trying to make money from the decisions they make. For the time being that may simply be avoiding property while the opportunities are far and few between and best left to those that can allocate fulltime hours to finding the best deals. There are opportunities in other asset classes that may provide a better short term option for some investors.

Further to this it’s somewhat amusing to see you dismiss those posting about topics that may not be making a buck when many of your previous posts consist of antagonising/patronising residential property investors… how many dimes do those posts make you?

 

[Propertunity]

And, Prop, there's markets within markets. Brisbane may be off a few points, but the suburbs I'm interested in have all kept showing gains through that same period.

EXACTLY! There is no one Brisbane market either. (should made that point clearer too )

 

[tcocaro]

Unfortunately I am cynical by nature so I can’t help but feel this post seems more to do with an attempted pat on the back or a desperate attempt at a “told you so” post.

Let’s be honest for a moment. What did your post actually say? That the market fell by 3%? And?

You predicted 5% drop whereas I predicted -5 to +5% i.e. a flat market and the result was 3% from the peak? Meaning we were both right (both equally wrong).

Pretty sure 90% of those on this forum would have predicted an uneventful year. The only thing I believe can be taken away from your post is that its further proof of how moronic predictions of 40% falls are and conversely how misguided claims of a boom around the corner is.

You asked when I think prices might rise? (5+%) Later half of 2011 however I believe rises of 10%+ will be the rarity rather than the norm over the next few years as affordability provides a roof and the shortage provides a base.

Well what do ya know, here we are 12 months on

Not a bad effort if you ask me although I didn't get the -5% I was expecting nationwide, but we did see YOY drops in two capital cities.

http://www.rpdata.com/images/storie...es/rpdata_rismark_home_value_index_jan_31.pdf

There is more to come in my opinion and with higher rates, less stimulus, more properties on the market, less volume & prices already dropping it's looking likely that 2011 will see negative YOY growth for the weighted national index. Likely most, if not all capital cities over 2011 will see negative growth. How much will likely depend on whether we have further rate rises over the year...


tcocaro, when does this 'up' cycle start?


Well, you were right, the Adelaide median rose for around 3 months after I sold, but then fell and stagnated. 12 months on I doubt I would have sold the house for anymore (suburb = St Marys), so given we have saved a bundle by renting I am still pleased with the decision.


Well I'd already started moving capital into Gold back in late 2008, however yes I was still buying Gold equities in 2010 and some proceeds from the sale went into these. I doubled my net worth in 2010 with Gold/Silver based investments using very little leverage. I'm sure that comment was funny to you at the time


My rent increased the equivalent of around $10 per week mid last year with renewal again in June... how much have interest rates increased over the same period?


Well we saw +3.6% for the year in Adelaide according to RPData. I suspect that gain will be wiped out (and maybe then some) in 2011. Hope you weren't counting on that growth!

 

[Aaron Sice]

i smell jet fuel.

is that smoke in the cabin?

 

[Intrinsic_Value]

Spoken like a true property professional. You must have owned a significant amount of property for a significant amount of time.

In my eyes, your opinion carries far more weight on the subject than these trend folk.

Ah dazz, its very rare, that you appear hypocritical on this forum (hey here is a new label to add to your collection).

But there is a very big difference between someone structuring a deal that will present a 10%+ cash flow opportunity, and one that is praying that property prices will act in accordance with their recent historical price movements to justify their investment.