The great house price crash 2005

[Kennethkohsg]

Property prices are no longer rising in Perth, will only cool further as rate rises bite.

I have no intention of buying as I believe prices will cool even further - happy to pass on details if anyone is interested.

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Dear Odaat,

1. I find your comments about the Perth property market so "amusing" as you seem to enjoy telling yourself and the others who want to believe you about your own fears or/and views about the Perth property market so that you can talk yourself out of investing in this property market.

2. As an overseas investor from Singapore, I wish to share that my 2 own properties in Perth were recently re-valued by the bank-appointed valuers. Both the 2 house prices have each further gone up by A$20,000 over the last 3 months since December 2004. Presently, I am further building 2 more new houses in the Anchorage Estate in Rockingham suburb.

3. Even after the last interest rate increase, I was told that over the last weekend, some 200 potential buyers have pre-registered themselves to purchase the 34 newly released vacant land lots at the Anchorage Estate in Rockingham.

4. As I further understand that the median house price in Perth is still on the increase, having already gone past $255,000 which was last reported in December 2004.

5. While I can agree with you in general that the Perth property market has already peaked, however there are still some suburbs in Perth where there are good investment opportunities existing within the Perth property market if you really search hard enough in the right areas for them

6. May I suggest here that perhaps, you are not looking at the "right suburb" or/and closely enough into the Perth property market, to look for the right property to invest into.

7. Engage a local professional buyer agent like Hegney Buyers Bureau, to help you source for the right property in the Perth property market and I am confident that with their assistance, you will soon change your own prevailing views about the Perth property market and its investment opportunities if you are indeed serious about wanting to invest in the Perth property market.

8. Please do not just take my words for it. Perhaps, you may want to refer to the write up on the Rockingham suburb which was well featured in this month's Australian Property Investors (API) magazine (March 2005 Issue).

9. For your kind considerations,please.

10. Thank you.

regards,
Kenneth KOH

 

[Punchy]

A few ppl are getting antsy. Perhaps it's time moderators locked down this thread? Bulls get cranky when Bears come a knocking

 

[quiggles]

While it's happening politely let it go - some got tired and emotional late at night but there were kiss and make up noises thereafter. Debate with reasons, facts, names and places should be allowed to proceed

 

[odaat]

kenkohsg,
I am pleased to be of service in amusing you.

Glad to read the bank values your property investment as 20K more than 3 months ago. The bank valued my Perth property in a similar way, then again my LTV is 25% - not much risk to the bank.

As you know valuations can go up as well as down, all depends on the economic climate. The key is can you service the debt for the long term ?.

"Hearsay" on block/property selling by r/a agents is dangerous - since when did salesmen talk themselves out of selling their product ?

Like you I am overseas.
Thank goodness for somersoft to keep me "on the Oz pulse".

You may be correct - I may not be looking in the "right areas".

You may be correct - I am averse to investing in Perth at the mo.

You are correct I want feedback from forum members explaining why investing right now in Perth is right.

Unlike you - I do not see the sense in paying Hegney $5 - 7K in fees for pointing out suburbs to buy into, especially when the info is fee.

BTW the Hegney report on Perth property investing 2006 is $50 dollars AUS, I will send you a copy for free if you want it. I have discovered more about median property prices in Perth from scouring the Cracker classifieds !

My PM / estate agent provides the same service as Hegney for free !
happy to share info if you are interested.

1. I believe investors make best return's by buying BMV.
2. Ignoring yield is a recipe for disaster.
3. Capital Gain is not priority in a cooling market.
4. Everybody made money in property in the last 5 years - it is going to be a different story in the next five years. As you rightly point out, prices have peaked.
5. Interest rates up = house prices down.
6. What is the rush ?.

The thread was to show what is happening overseas, especially in countries where economic markets are as boyant as Oz.

Many in UK see no sense in paying market value for investment property - they are whinging to the fact that yield is below 6% AND NOBODY IS MAKING CASHFLOW INCOME !, BTW the interest rate in UK is 4.75% !!

What would happen if the uk interest rate hit 7.25% - 7.5% ? the "pundits and uk property guru's" are already talking a 20% price drop over a three year period.

"offers" well below uk market asking price have become the norm already.
see www.haart.co.uk/ , estate agents actively selling property that is clearly reduced as a marketing ploy.

I have time on my hands, money accumulating for higher deposit / loan ratio. As long as the media and joe public remain worried about interest rates - my theory is that prices will cool in Perth in a similar fashion to the rest of Oz.

I am watching both markets, paying off the last of a mortgage on the PPOR in Perth, I have purchased in UK and plan to purchase more this year.

Looking to purchase again in Perth when :-
1. House prices fall.
2. Median price under 200K.
3. Ozzie dollar collapses.
4. Hoover up investment property with my strong pound / Euro.

odaat.

 

[Punchy]

odaat. You forgot wage inflation. If wages triple then the market will start up again.

 

[Kennethkohsg]

A few ppl are getting antsy. Perhaps it's time moderators locked down this thread? Bulls get cranky when Bears come a knocking

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Dear Punchy,

1. I'm not familiar about the UK property market. Thus, I've no comments to make with respect to the UK property market, which the great house price crash 2005 for this thread is in fact, referring to.

2. However, with respect to the Perth property market, being an actual investor on the ground and familiar with the current market situation, what I am really concerned with is the truth of the actual market situation there.

3. Just because many people are fearing the worst for the UK property market and the general price correction in the Australian property markets in general, does not entitled them to spread the gloomy picture about the Perth property market as there are new novice investors reading our posts and educating themselves from our posting. To me, it is a issue of personal integrity and being self-responsible as well as being socially responsible to the wider forum audience who are reading our posts and trying to learn to understand the current true nature of various Australian property markets.

4. To me, it is not being an issue of "Bulls get cranky when Bears come a knocking" which you have suggested in your post.

5. To me, discussion about and differing views about a particular property market are healthy and good for the forum members in general so that we get to really and truly learn from one another provided we are all frank and honest about our views and be responsible for our own postings here, in terms of the accuracy and reliability of that particular property markets, as we genuinely perceive them as they are.

6. It's another thing to simply generalise and spread one's fear and gloom from one market to another through our postings, without being responisble for the accuracy of our own postings, though.

7. Having spoken to a number of Australians from both the Western and Eastern states, I know that many Australians in the Eastern states do not generally think highly of the growth in Western Australia though I know a few of the gurus there like John FritzGerald, has openly advocated in his seminars that the Perth property market is something to watch for the next 3-5 years whereby its median house price is expected to catch up with its lagging gap with the median house price in the Eastern states.

8. I, myself have met with Steve Narva at one of his seminars last year in 2004 and we know and agree to disagree with one another about our own views about the Perth property market and about investing in the Sdyney, Melbourne, Brisbane and Perth property markets and let time to confirm the accuracy about our own views when the various property market will eventually unfold itself over the next 3-5 years time frame.

9. So, I won't be as quick as you to ask the moderators to lock up this thread.

10. For your kind consdierations,please.

11. Thank you.

regards,
Kenneth KOH
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[Kennethkohsg]

kenkohsg,
I am pleased to be of service in amusing you.

Glad to read the bank values your property investment as 20K more than 3 months ago. The bank valued my Perth property in a similar way, then again my LTV is 25% - not much risk to the bank.

As you know valuations can go up as well as down, all depends on the economic climate. The key is can you service the debt for the long term ?.

"Hearsay" on block/property selling by r/a agents is dangerous - since when did salesmen talk themselves out of selling their product ?

Like you I am overseas.
Thank goodness for somersoft to keep me "on the Oz pulse".

You may be correct - I may not be looking in the "right areas".

You may be correct - I am averse to investing in Perth at the mo.

You are correct I want feedback from forum members explaining why investing right now in Perth is right.

Unlike you - I do not see the sense in paying Hegney $5 - 7K in fees for pointing out suburbs to buy into, especially when the info is fee.

BTW the Hegney report on Perth property investing 2006 is $50 dollars AUS, I will send you a copy for free if you want it. I have discovered more about median property prices in Perth from scouring the Cracker classifieds !

My PM / estate agent provides the same service as Hegney for free !
happy to share info if you are interested.

1. I believe investors make best return's by buying BMV.
2. Ignoring yield is a recipe for disaster.
3. Capital Gain is not priority in a cooling market.
4. Everybody made money in property in the last 5 years - it is going to be a different story in the next five years. As you rightly point out, prices have peaked.
5. Interest rates up = house prices down.
6. What is the rush ?.

The thread was to show what is happening overseas, especially in countries where economic markets are as boyant as Oz.

Many in UK see no sense in paying market value for investment property - they are whinging to the fact that yield is below 6% AND NOBODY IS MAKING CASHFLOW INCOME !, BTW the interest rate in UK is 4.75% !!

What would happen if the uk interest rate hit 7.25% - 7.5% ? the "pundits and uk property guru's" are already talking a 20% price drop over a three year period.

"offers" well below uk market asking price have become the norm already.
see www.haart.co.uk/ , estate agents actively selling property that is clearly reduced as a marketing ploy.

I have time on my hands, money accumulating for higher deposit / loan ratio. As long as the media and joe public remain worried about interest rates - my theory is that prices will cool in Perth in a similar fashion to the rest of Oz.

I am watching both markets, paying off the last of a mortgage on the PPOR in Perth, I have purchased in UK and plan to purchase more this year.

Looking to purchase again in Perth when :-
1. House prices fall.
2. Median price under 200K.
3. Ozzie dollar collapses.
4. Hoover up investment property with my strong pound / Euro.

odaat.

*********************************************************
Dear Odaat,

1. Thank you for your honest views, even though we may differ in our own views.

2. I certainly can learn from you as from your post, I know that you are in fact investing based on the different stage of the property cycles.

3. Like I said before eslewhere, I am presently not familiar with the UK property market except also observed that there was once a recent prolonged market slump in the 1990s? (or 1980s? perhaps). Therefore I make no comments about this property market.

4. However, as part of my own learning process about property cycle and the worldwide property market in general, I am still trying to learn when and why should the Australian and UK property markets not suffer the heavy and prolonged price correction as this is now ongoing and prolonged in many Asian property markets like those in Singapore, Hong Kong and Japan... One thing that I can intuitively clear about at this point in time is that the Australian property market and our Singapore property market are fundamentally different; though i remianed muchunconvinced by the other reasons which were offered in this forum by some members a couple of year back.

5. I am glad to know that you do not really need the services from the Hegney Buyers' Bureau as I can see that in fact you are able to do your own research from afar in UK and that you have probably set a very high standard for your own due diligence. Good. Keep up the Good work!

6. All I can say is that while physically in New Zealand presently, one useful concept that I learn from the Entreprueuers Success Centre in New Zealand is investing in this pre-tax Positive Cashflow Properties, which you have referred in your post.

7. Yet when the supposedly good property deals in New Zealand were emailed to me, I find that most of them are in fact only "After-Tax Positive Cashflow" and not really "Pre-Tax" Cashflow Positive properties, at this stage of the end of BoomPhase/Beginning of the Slump Phase property cycle stage in the New Zealand property market. On closer examination, if we exclude the paper expense/loss through the building and depreciation costs as well as the accrued tax benefits, these supposedly "Positive Cashflow" Properties are in fact negatively cashflow or/and neatively geared to a certain extent.

8. So, I do not truly know for sure in real life whether there is in fact truly such things known as a "Pre-Tax Positive Cashflow" Properties which will yield both high capital growth together with high rental yields and hopefully with quick immediate house equity.

9. Kieran from the Hybrid Group, who is one of the locally well- respected gurus in New Zealand, uses the "SAFE" guidelines for his property investments irrespective of the different stages of the property cycle.

10. Of course, I know that you are honestly waiting and sincerely beleive that the median house price in the Perth property market to drop below the A$200,000, before you will seriously consider investing in the Perth property market. I respect your views and assessment.

11. However, I personally believe that you can keep on waiting and monitoring the Perth property market from afar and for as long as you like. In the meantime, because of my own differing views and personal assessment about the Perth property market, I shall continue to invest there, while still studying the Melbourne and Sydney property markets so as to re-position myself for their next Property Cycle and its Recovery Phase stage, some- time during 2006/2008 period there.

12. Thus, we hereby amiacably to "agree to disagree" about our own views regarding the Perth Property market.

13. Thank you.

regards,
Kenneth KOH

 

[Redhaven]

Why why why do people keep quoting the entire metre-long posts from previously? It makes reading very tiresome!

 

[plumtree]

Thanks Redhaven! Quote not needed.

 

[Punchy]

Why why why do people keep quoting the entire metre-long posts from previously? It makes reading very tiresome!

It would make life easier for those of us on 14.4k modems

 

[Kennethkohsg]

"Hearsay" on block/property selling by r/a agents is dangerous - since when did salesmen talk themselves out of selling their product ?

odaat.

**************************************************

Dear Odaat,

Agree but not if the person is my own investing partner on the ground in Perth... If I do not trust my own ground people there, why then bother to have a team to help us invest in the first place?

Incidentally, the person whom you referred to, is not a real estate agent but a full-time professional property investor. We've done some deals successfully together before.

Thank you.

Regards,
Kenneth KOH

 

[Kennethkohsg]

kenkohsg,

Unlike you - I do not see the sense in paying Hegney $5 - 7K in fees for pointing out suburbs to buy into, especially when the info is fee.

BTW the Hegney report on Perth property investing 2006 is $50 dollars AUS, I will send you a copy for free if you want it. I have discovered more about median property prices in Perth from scouring the Cracker classifieds !

My PM / estate agent provides the same service as Hegney for free !
happy to share info if you are interested.

odaat.

*********************************************************
Dear Odaat,

1. Again we differ here, with respect to using the Hegney Buyer Bureau Services.

2. For that fee (which I consider not very significant via-a-vis against the outcome arising from investment decision which I have to make), I have access to the "inside" information and the latest real time market analysis done for that particular suburb through its sister organisation, organisation, namely the Hegney Property Valuation Group which is directly responsible for carrying out more than 50% of all the property valuations carried out in Perth.

3. This will serve to help verify and to confirm/disconfirm my own market research and market assessment in the immediate short-medium term so that I can buy well effectively and profit immediately and immensely from my own property investment.

4. In general, I do not trust nor accept the information provided by the real estate agents at face value as they generally have a different (undeclared) agenda from us as the property investors, as much as they will try to project their sincerity and altruism in providng these information to us and want us to believe them. I only regard their information as raw data for part of my own field research work which I have to really analyse and sieve through in order to know the actual facts from the market noises, through the data provided by these real estate agents.

5. Thank you for your willingness to share your "data". I think I already have more than enough information to anaylse and sieve through and to keep myself busy, monitoring the various property markets.


Cheers,
Kenneth KOH

 

[Kennethkohsg]

kenkohsg,
1. I believe investors make best return's by buying BMV.
2. Ignoring yield is a recipe for disaster.
3. Capital Gain is not priority in a cooling market.
4. Everybody made money in property in the last 5 years - it is going to be a different story in the next five years. As you rightly point out, prices have peaked.
5. Interest rates up = house prices down.
6. What is the rush ?.

odaat.

***************************************
Dear Odaat,

1. What is "BMV"? "Below Market Value?"

2. How do you actually operationalise the concept in real life? How do you really know that you are "actually buying below the market value" for a partcular property?

3. Richmastery Academy NZ also talks about buying below 15%-20& below sworn market valuation during the Booming Phase and 20%-30% below market price during the Slump Phase. I think we are all talking about buying from "highly motivated vendors" or/and "highly undervalued" properties.

4. I have yet to get such a "fantastic deal" from Richmastery Academy NZ as yet, having physically now been in New Zealand since 1st March 2005.

5. I fully agree with you that we should NOT ignore the rental yield. In general, the present rental yield in Perth property market is still higher than those in the Sydney and Melbourne property markets, which makes me "bit uncomfortable" investing there for the time being.

6. In theory, I can agree with you that "capital gain is not a priority in a cooling market". However, in real life if we can achieve reasonable rental yields, with immediate significant house equity and high capital growth, through buying well, why not when we can both be safe and yet be profitable in our property investment at the same time?

7. While the house prices in the Perth property market have generally "peaked", it does not therefore, automiatically mean that we are going to lose monies or that we cannot make any more monies through our property investment in the Perth property market. Like I say before, Kieran Trass talks about investing through every stage of the property cycle, using the "S.A.F.E" investing guidelines.

8. I am personally confident that I am going to make much more monies investing in the Australian residential properties over the next 5 years than what I have made in the past 5 years. I will make this as my personal challenge and part of my own investing goals, with immediate effect

9. Your statement, "Interest Rate up = House price down". Sound logical in general. However, despite the last interest rate increase, the median house price in the Perth Property market is still going up. Thus, actual market realities in the Perth property market does not seem to support your assessment at this point in time. So what do you say then?

10. You ask, "What is the rush?" . As far as I am concerned , there is actually no "rush" or "pressure" investing in the Perth Property market at all. Heard this saying, "TIME is money". If we can safely create more wealth through property investing NOW, why wait and not invest now? Why waste the precious "5 years worth of the many money-making opportunities" in the Perth property market?... unless we choose not to believe/see them, I suppose?

11. Over to you now... and I look forward to learning from you further.

12. Thank you.

regards,
Kenneth KOH

 

[Aceyducey]

1. I believe investors make best return's by buying BMV.

Investors make their best returns by buying well in areas with strong long-term growth. Buy a dog below market value and you still have a dog. Buy a good performing asset in a strong market AT market value & you'll be much better.

3. Capital Gain is not priority in a cooling market.

Capital gain is ALWAYS the priority.

Cooling markets don't last forever...and if you average out any sequential twenty year period, the capital gain is much more important than the cashflow for wealth creation.

5. Interest rates up = house prices down

Mantras this simplistic will have you missing what's actually going on in the market.

LISTEN to the market don't TALK to it!!!!!

Cheers,

Aceyducey

 

[odaat]

Listening to my favourite site all the time, always something new to learn

Then again, it is worth reminding each other that we are on a site with a one eyed dimension - building wealth through property investing.

Some buy into the property investing wealth plan via the educational route, some by following property guru speel , some via advisors. In my case , it's rental income stream, financial freedom and childrens inheritance plan.

The formula is hardly rocket science :-
1. Raise deposit.
2. Buy prop.
3. gear up to the eyeballs
4. hold, pray and hope land and property rise year on year.
5. occupational hazards - interest rate rises, taxes, fees, repairs, bad tenant costs, falling rental, negative equity debt.

Listening to objective bodies within the property industry is not always as interesting or as passionate in SELF belief as some on the site who gear up to the eyeballs :-

Worth listening to in any case :-

"New property coming onto the market has risen to the highest level since May 2003, according to the latest housing market monthly survey from the Royal Institution of Chartered Surveyors (Rics).

It looks suspiciously like sellers panicking as they see house prices on the slide. 'Buyer activity is still limited,’ said Rics, 'while the number of sellers continues to increase moderately, resulting in a significant increase of property on surveyors' books, which is up 32% over the past year.'

February saw a small increase in the number of agreed sales, although completed sales slipped slightly. Sales are down 33% on the same month of last year. The number of new queries from potential buyers is unchanged. Concerns over another increase in interest rates are holding back demand, the report says, despite the generally strong economy and labour market.

The ratio of completed sales to the numbers of property on estate agents books fell to 27%, its lowest level since 1996, before the current boom got under way. The long-term average is 37%. In other words, buyers are holding back expecting prices to go lower, and properties are sticking.

'More people are waiting on the sidelines as a result of renewed uncertainty over interest rates,' said Ian Perry of Rics. 'With the influx of property on the market, they are now spoilt for choice and can afford to be noncommittal, signifying a turnaround from the days when it was a seller's market.'

The uncertainty is likely to continue for some months, as the Bank of England is unlikely to raise interest rates before the expected May election. And much depends on the price of oil. If this continues to stick at over $50 a barrel, it will inevitably bring rising costs for any business which has a product to distribute, and inflation will be the inevitable result. This could mean still more interest rate increases, in addition to the expected 0.25% in mid-May.

The Rics survey reports house prices continuing to fall, although they eased to the lowest pace in five months, with 32% of chartered surveyors reporting a fall in house prices, down 4% from last month. With the growing choice of available property for potential buyers, prices are likely to remain restrained, with surveyors anticipating modest price falls over the next few months.

 

[Ausprop]

far out... I wanted to go for a drink this afternoon and my phone didn't stop ringing all day from eastern states investors wanting to buy in Perth... some people almost sound desperate and I feel sorry for them and happy to help them with some honest advice to get onto the property ladder. Perth property is definitely set for a rise. Yes I sell Perth property - do I want it to escalate out of control.... no way. When it gets too expensive I won't be able to sell it. I do wish things would settle a bit but I am sorry to say this market is still on a one way course. Are things really so different in Perth from the doom and gloom over east? With little knowledge of the eastern states I can only assume it must be very expensive over there to be driving so many people away. No doubt this vendor tax is having a big effect as well.

 

[BV]

far out... I wanted to go for a drink this afternoon and my phone didn't stop ringing all day from eastern states investors wanting to buy in Perth... some people almost sound desperate and I feel sorry for them and happy to help them with some honest advice to get onto the property ladder. Perth property is definitely set for a rise. Yes I sell Perth property - do I want it to escalate out of control.... no way. When it gets too expensive I won't be able to sell it. I do wish things would settle a bit but I am sorry to say this market is still on a one way course. Are things really so different in Perth from the doom and gloom over east? With little knowledge of the eastern states I can only assume it must be very expensive over there to be driving so many people away. No doubt this vendor tax is having a big effect as well.

Ausprop

Do I sense a bit of bias here?
People know that this is not a good time to invest.
Most markets are on a 1 way course alright. flat or going down.
Areas where there is a lot of available land could see large price corrections.

I would be carefull of areas where prices only went up in the last couple of
years or where prices were pushed up by demand from interstate investors.

If a couple of years ago you could get a block of land for $50K there must be
a very good reason for it. And the reason is plenty of available land.
So buying the same land for $150K today could be too much and quite a dangerous move.

The risk is that you could buy it for $150K today and find that in 6 months
time its worth $100K or even $75K and that it won't go up until the middle of the
next boom in another 10years.

So why would someone be desperate to invest now?

cheers

 

[Ausprop]

well I was trying to suggest I am not biased as I would be happy for just steady typical growth - I can't keep up with enquiries so I don't care with it continues to boom or eases. people forget that booming markets aren't good markets... rising construction costs, unrealistic vendors, no land available. I can't wait for things to slow down as per most of my industry colleagues.

"People know that it is not a good time to invest" - what are you on about? surely you can find something to do with your money?

why is someone desperate to invest? I am hoping someone over that side can fill me in on that - I can only guess there are a lot of people who want to own property that can only afford $200 to $250k and that rules them out of Sydney. Does that sound fair? Maybe the economy just continues to power on and its a status thing??

 

[BV]

Ausprop,
If the phone doesn't stop ringing and they are desperate
then ofcourse you will feel sorry for them and have no choice
but to sell them something...
cheers

 

[Ausprop]

good one BV

we are not a retail focussed organisation and generally avoid selling to the
public, but am willing to help damsels in distress!