Strong Growth in Brisbane

[yieldmatters]

And Sydney is Australia ?

Dave

Yeah. Not the be-all-and-end-all ... its just another study. What it says to me is if Australia doesn't sort out its crap I think Canada is a good option - Toronto and Montreal are very reasonable. Bloody cold though!

Even Hobart is in the top 25 - amazing.

http://www.demographia.com/dhi-ix2005q3.pdf

 

[alexlee]

Of course now that you have sucked that out of me I lose all credibility (if I ever had any before) ... because people will now think I am biased! I am either trying to vindicate my own decision OR talk the market down so I can buy back in and keep the cash! Maybe some truth in that - but same for the others on here that have positions the other way. Anyway - at the time of selling out I did the numbers and thought it to be a fairly solid gamble to try and short the market.

That's ok, I'm biased too. It's just that I have real money riding on it. I just wonder at your credibility because you're trying to use statistics and theory to argue against real, actual resuts.

I just don't think you're going to have much success talking the market down here, in a property forum, of all places.

I never do short term assessments of the property market. I just know that 20 years from now property will be more expensive than we can imagine. I plan to hold lots of it. Simple, not really supported by stats (and I'm an accountant.....) but it has worked for generations. Who am I to argue with it?

Actually you'll find that most people who own property and have for a while WANT a crash right now. Why? They have the equity and access to loans to buy even more property, and get even richer in the next boom. Right now it's very hard for me to make the numbers work on Brisbane property, for example. It'd be much easier for me to pull the trigger and buy more stuff if prices were 20% lower. Back in 2000 plenty of IPs got you neutral or even +ve CF in inner Brisbane.

Most people, obviously, didn't think property was a good buy back then. What were you doing back then, incidentally? If you'd bought property back then, I think you would have a different opinion right now.
Alex

 

[yieldmatters]

That's ok, I'm biased too. It's just that I have real money riding on it. I just wonder at your credibility because you're trying to use statistics and theory to argue against real, actual resuts.

I just don't think you're going to have much success talking the market down here, in a property forum, of all places.

I never do short term assessments of the property market. I just know that 20 years from now property will be more expensive than we can imagine. I plan to hold lots of it. Simple, not really supported by stats (and I'm an accountant.....) but it has worked for generations. Who am I to argue with it?

Actually you'll find that most people who own property and have for a while WANT a crash right now. Why? They have the equity and access to loans to buy even more property, and get even richer in the next boom. Right now it's very hard for me to make the numbers work on Brisbane property, for example. It'd be much easier for me to pull the trigger and buy more stuff if prices were 20% lower. Back in 2000 plenty of IPs got you neutral or even +ve CF in inner Brisbane.

Most people, obviously, didn't think property was a good buy back then. What were you doing back then, incidentally? If you'd bought property back then, I think you would have a different opinion right now.
Alex

In 2000 I was 24 - overseas, constantly smashed, wasting all my money plus some on nothing much. I don't regret it though - best time of my life.

I am an economist (of sorts - Masters degree - no PHD unfortunately) - hence the very long term macro view of everything - and the key point of difference is this ... "I just know that 20 years from now property will be more expensive than we can imagine" ... I can't accept that because I know the cash (or the wealth the cash has to represent) has to come from somewhere. But each to their own - I could be right / could be wrong - only time will tell.

Regarding this forum, my purpose isn't to talk property down necessarilly. I have actually learned a lot about property by hanging around various forums. Probably the most valuable thing I've learned is that the world is not always rational and people who just 'go with it' often do very well.

 

[BoatBoy]

Yeah. Not the be-all-and-end-all ... its just another study. What it says to me is if Australia doesn't sort out its crap I think Canada is a good option - Toronto and Montreal are very reasonable. Bloody cold though!

Even Hobart is in the top 25 - amazing.

http://www.demographia.com/dhi-ix2005q3.pdf

Plenty of Bears over there as well

Dave

 

[Andrew_A]

That supports what I am saying (which you didn't address).

Interesting because I thought it was refuting what you said.

I didn't respond till now because you hadn't answered my query about your property investing experience, I try not to waste time with opinionated watchers who have never actually done what they are so knowledgable about. So looks like I was wrong with that, you owned a unit which you have since sold, the people I have labelled as time wasters are never up front with that question when asked and BS their way past it.

The bid up in prices from 2001 to 2005 has never happened before.

Well I think it has, though I don't have the median data from the 1890's and suspect I would have to go that far back to prove it, it's an academic point I would make anyway. Granted it was a cracker 4 (or so) year burst, say around the range 2+ standard deviations of average 4 year gains based on my data.. It was a great time to be owing property, and haven't met anyone who said they owned enough during this time!

It was steeper and faster AND it was in a time of low inflation (so real prices are even higher). So the logic that a drop has never happened before doesn't hold much weight considering the price rise we've just seen hasn't happened before either.

Well sure, things always happen for a first time, my only point was how can you base an investing strategy around something that has never happened yet? Which would be what you are doing to consciously wait for Brisbane median prices to fall from 400+ to 350 (or lower) in your timeframe before buying.

I'm sorry - you haven't changed my mind! We will see - hope you are still posting this time next year!

I'm pretty sure I will be... Will bump this thread regardless or whether you are still around or not and will compare notes. In the meantime I will stay away from what I see as a very agressive position of 0% exposure to resi property in Brisbane and hold my IP's.

Quick afterthought (edit) --> If you are into time series analysis I'd suggest you overlay your chart with median household debt, median wages, and median contruction costs. It will become very obvious that the path we are on is not sustainable.

I could do that if I knew how to perhaps

You know nothing is sustainable if you go far enough into the future I suspect, perhaps some people will continue to make property wealth in the meantime though?

I have cluttered this thread enough, I really enjoy the real life feedback from people in this thread regarding what is actually happening in terms of actual deals and $$ in pockets rather than clipped opinion piece wisdom. Would be happy to continue and debate any considered viewpoints in another thread perhaps.

 

[Shadow]

Regarding London, New York etc I would encourage you to look at the "Demographia Housing Affordability Survey 2007". You can google it and its freely available. Sydney ranks as the 7th most unaffordable city with median house price at 8.5 times median income. London comes 9th at 8.3 times median income. New York comes in 18th place at 7.2 times median income. All the cities that were rated worse (edit: by worse I mean more unaffordable!) than Sydney except for Honolulu were in California and are now in freefall (hasn't happened before though! Not since the early 40s anyway).

Hi YieldMatters,

The major problem with the Demographia survey is that it conveniently ignores most of the world's expensive countries and cities. It only compares Australia, Canada, Ireland, NZ, UK and USA. It is quite misleading. A better survey is this one, where Sydney does not even rank in the top 20 most expensive world cities.

http://money.cnn.com/2007/06/15/pf/most_expensive_cities/index.htm

I think there is a lot of growth left in Australia before we become as expensive as...

1. Moscow
2. London
3. Seoul
4. Tokyo
5. Hong Kong
6. Copenhagen
7. Geneva
8. Osaka
9. Zurich
10. Oslo
11. Milan
12. St. Petersburg
13. Paris
14. Singapore
15. New York City
16. Dublin
17. Tel Aviv
18. Rome
19. Vienna
20. Beijing

Cheers,

Shadow.

 

[yieldmatters]

Hi YieldMatters,

The major problem with the Demographia survey is that it conveniently ignores most of the world's expensive countries and cities. It only compares Australia, Canada, Ireland, NZ, UK and USA. It is quite misleading. A better survey is this one, where Sydney does not even rank in the top 20 most expensive world cities.

Sorry Andrew to continue to hijack your thread ........ not sure how else to reply to this.

Thanks Shadow for sending through the link. The survey (Mercer HR Survey) was on the cost of living - (cost of housing, transportation, food, clothing, household goods and entertainment) - not house prices. And interestingly they use rent as a proxy for housing costs. I don't think Australia is overpriced for rent - just overpriced for housing. That is why the rental yields are so awful in Australia and it is also why Australian housing didn't push up our cost of living in the survey.

It also wasn't relative to wages so not all that useful. It relies in purchasing power parity which in reality simply doesn't hold.

 

[Shadow]

Thanks Shadow for sending through the link. The survey (Mercer HR Survey) was on the cost of living - (cost of housing, transportation, food, clothing, household goods and entertainment) - not house prices. And interestingly they use rent as a proxy for housing costs.

Still... my point is that the Demographia survey only looks at a handful of countries. If it compared all major world cities, Sydney would not rank so highly in the most expensive house price list. I still think relative house prices in the other cities mentioned above would be higher than in Australia.

Cheers, Shadow.

 

[Kennethkohsg]

I'm debating the logic of property always outstripping wages - it can't happen. You can pick areas though and do well as new money is coming to the area - no doubt about that - I think we agree there.

.

&&&&&&&&&&&&&&&&&&&&&
Dear YM,

1. You claimed that "it can't happen that property is always outstripping wages!"

2. Unfortunately, it has happened in real life and in many Australian States, at this point in time, isn't it? Do you not agree?

3. If you can agree, can you then "accept" this social-economic phenomenon at face value per se first.

4. Do you know the actual reasons why this is so, in the first place?

5. If so, do you care to further elaborate so that we can all learn from you further, please.

6. Thank you.

regards,
Kenneth KOH

 

[Kennethkohsg]

Even if there was a shortage (and I'm not sure there is) that only has a temporary impact on prices while the supply side catches up.

&&&&&&&&&&&&&&&&&&&
Dear YM,

1. I agree with you that there is presently no "land shortage" per se, in Australia.

2. The real issue about "housing shortage", is not the supply of land per se, it is the actual supply of housing in areas where people want to live in.

3. Not many Australians like to live in the desert area like Alice Spring;- so building more houses in Alice Spring is unlikely to solve the present housing shortage or/and the high housing prices related issues.

4. For your kind update and further comments/discussion, please.

5. Thank you.


regards,
Kenneth KOH

 

[Kennethkohsg]

Is there some fundamental reason why we can't supply more houses at a reasonable cost? Do we have inefficient construction? NO. Do we have a land shortage? Definetly NO - one of the lowest population densities in the world. Are our governments broke and can't provide infrustructure? NO.

So migration to SE QLD that doesn't sell me either on long term sustainable price rises.

&&&&&&&&&&&&&&&&&&&&&&&&&&&
Dear YM,

1. I think you have failed to appreciate the effects/impact of Govt policies, like the implementation of the GST, land zoning laws etc well as its recent newly Govt-imposed charges on land development/supply on the end consumers.

2. The Australian Coalition Govt at the Federal level and the ALP State Govts are still "blaming" one another for the housing crisis, as well as in the provision of the required public infrastructure development/support at the city fringes and regional areas.

3. For your kind update and further comments/discussion, please.

4. Thank you.

regards,
Kenneth KOH

 

[Kennethkohsg]

My only point which nobody wants to acknowledge is that eventually there is a limit on house price growth (at the aggregate level) that is constrained by wages. Debt can suplement wage growth for a while but it is not sustainable - eventually you hit a point where you can't take on any more debt. Next year this will make an impact - credit will be hard to come by.

&&&&&&&&&&&&&&&&&&&&&&
Dear YM,

1. What is the maxinum limit that housing price growth will be constrained by household wages?

2. Have the housing price growth in Australia reach this limit imposed by the average Australian household income? If so, why?

3. You says, that debt can supplement wage growth "for a while". How long are you referring here?

4. Why can't debt be used to sustain the house price growth in the long run?

5. Looking forward to your kind clairifications and learning further from you, please.

6. Thank you.

regards,
Kenneth KOH

 

[yieldmatters]

&&&&&&&&&&&&&&&&&&&&&&
Dear YM,

1. What is the maxinum limit that housing price growth will be constrained by household wages?

2. Have the housing price growth in Australia reach this limit imposed by the average Australian household income? If so, why?

3. You says, that debt can supplement wage growth "for a while". How long are you referring here?

4. Why can't debt be used to sustain the house price growth in the long run?

5. Looking forward to your kind clairifications and learning further from you, please.

6. Thank you.

regards,
Kenneth KOH

Hi Kenneth - I moved my answer to a new thread. We are off topic. Have a look for "limit to household debt" if you are interested. Thanks.

 

[Andrew_A]

Still strong

I'm getting some feedback presently from agents I'm phoning regarding investment units around Auchenflower, Toowong, Taringa.

Apparently there is some heat coming from FHO's and the prices I have heard are really surprising me. 2b/1br basic units going for 340k+ in some situations, I'm basically a bit confused about how to value property there at the moment.. Maybe might throw it back and the bank and get a reval as the last one I got was almost a year ago and the growth appears to be substantial.

All good news for people who own property there anyhow.

Anyone have any feedback on your vanilla type investment units at the moment?

 

[Andrew_A]

I should pay more attention

“For example, Manly has had growth of 25.7%, Mt Gravatt has had 20% growth over the last year, Ash Grove (24.1%), Greenslopes (20%), Kelvin Grove (20.4%) and Belmont (32%) and Auchenflower (29.7%). On the other hand there are many suburbs that have under performed with growth of 2%, 3% or 4% in the same time period.” - Michael Yardney

I have been so impressed with what's been happening in North Brisbane that I missed the strength in Auchenflower... 29.7% wow.. Still trying to confirm that with some comparitive sales in my area as I just can't believe it.

 

[WinstonWolfe]

“For example, Manly has had growth of 25.7%, Mt Gravatt has had 20% growth over the last year, Ash Grove (24.1%), Greenslopes (20%), Kelvin Grove (20.4%) and Belmont (32%) and Auchenflower (29.7%). On the other hand there are many suburbs that have under performed with growth of 2%, 3% or 4% in the same time period.” - Michael Yardney

I have been so impressed with what's been happening in North Brisbane that I missed the strength in Auchenflower... 29.7% wow.. Still trying to confirm that with some comparitive sales in my area as I just can't believe it.

just be sure you are clear about the time periods.

one of my top 10 from the beginning of the year has gone up 40% in the last 6 mths. bet MY and PS don't know it....

 

[urban cowboy]

bet MY and PS don't know it....

insert evil laugh here...

 

[Andrew_A]

The Residex house index data for Brisbane reached $411,500 this month, a monthly increase of 1.94%.

I'm looking for signs the market is slowing, can't see any yet.

Interest rate increases anyone?

 

[WinstonWolfe]

The Residex house index data for Brisbane reached $411,500 this month, a monthly increase of 1.94%.

I'm looking for signs the market is slowing, can't see any yet.

Interest rate increases anyone?

Definitely interest rate rises.....I'll say 2-3 in the next 2 years if Coalition get in, and 4-5 if Labor.

Lots of growth left in select markets in SE Qld. Poor planning and green/affordable housing/lower carbon emissions/recycled water obsessed LGAs are inadvertantly ensuring lots of rezoning on the way.

 

[Andrew_A]

Has Brisbane peaked?

Residex index data has Brisbane at $449,000 for houses now.

I'm noticing a flattening in my areas, though am yet to see any clear evidence of reduced prices for sales, though I'm not as tapped in as some others.

Any feedback about the Brisbane market at the moment?