The great Oz property crash of 2005.

[whitegoodman]

I'm still not seeing a valid point here, care to expand? Simply highlighting the word 'Gross' only serves to ignore other aspects such as depreciation and negative gearing etc which to a certain extent negate any additional costs necessary to determine the 'Net'.

The point I alluded to was that in the hypothetical situation of a 50% crash the rental returns on new purchases would be providing significant buffer by way of increased yields, either gross, net or any other way you care to slice it. Particularly in anticipation of a likely return to CG.

You still havn't explained where your 3% yield from the previous post came from? As it would require pretty exceptional circumstances for a 6% gross yielding property to only net yield 3%, and seeing as the point was referring to a post crash scenario in which the gross yield was now 12% this makes it even more unlikely.

Always keen to hear constructive debate particularly on this theory, but from the tone of this reply as well as others in this thread it would appear you seem to be trying to take a position of authority on such matters without backing up your argument. Really keen to hear why you don't feel the rental returns in such a scenario are a valid consideration?

so are you arguing that a 50% property crash is a good thing for current owners cos their yield is now higher? 3% was a random number plucked out as a net yield but was under the current rate achieved at the bank.

If you have a net return can you negatively gear? eliminate capital gain expectation and is it a good investment? Im in the camp of the market being overdone but not crash worthy, more correction.

Balance of probabilities suggests downside or sideways atm (assuming no legislative or other form of govt intervention), so yield would be a driving factor for me, id prefer to sit and wait.

From general point of view it seems posters are either
a) older and have an established portfolio and have it in their interest to shun any negativity or
b) be younger, currently renting with a good amount of savings seeing no value in the market atm (me)

[insert argument: i bought in 1990, and look at me now, im awesome..]

 

[Deltaberry]

It is one thing to stay away from recommending property investing but to declare an upcoming bust is just irresponsible. I have spoken to several people who respected his opinion and it has cost them 100's of thousands of dollars.

Though it may seem like a cheap shot, I'm surprised someone would actually base their investment decision on a Herald Sun opinion piece (not that I would base it off any other newspaper, but the Herald Sun???).

 

[Deltaberry]

From general point of view it seems posters are either
a) older and have an established portfolio and have it in their interest to shun any negativity or
b) be younger, currently renting with a good amount of savings seeing no value in the market atm (me)

[insert argument: i bought in 1990, and look at me now, im awesome..]

Using yield as an indicator is helpful, but expecting mean reversion via price falls is probably over-simplicating things.

For a start, rent could move on its own, providing a degree of mean reversion. Also yield analysis ignores structural changes such as taxes; differences in servicing costs between two periods; change in social expectations on size/location; change in credit availability and change in household income.

By the way, what's a 'good' amount of savings?

 

[Bigtone]

not saying this is you but...

it always amazes me how people put down success to their own market expertise and superior knowledge blah blah without ever acknowledging the general market trend itself,

does a person that makes money buying in a market that proceeds to go up for 20 years in a straight line have anymore investment expertise then someone who is just starting out?

yes u can say u have more investment expertise then someone starting out.

over the last 20 years many many people have lost a fortune in property investment, just ask Token Funder, at the same time many have done extremely well.

If you consistently perform above the line in the market thats shows you have some expertise. If you just struggle to show any gains in a flying market perhaps not.

The last 20 years have been far from a flat line especially when broken down segment by segment however the overall trend has been very strong. Individual experience however would be so varied from one extreme to another.

Student accommodation, serviced apartments etc are considered "investments"
and typically perform well below the line. So investors who purchased these are unlikely to be gloating.

Simply investing is not enough it is how you do it and how you adapt to the market of the day.

I don't fit into either of your two category's.

Been investing since mid 2003.

My opinion is there is always opportunities in any market, I like a few markets around Australia at the moment with good upside. Living in Melbourne where I believe the market will be flat with some bargains around I think it is a great chance to upgrade PPOR and I will be bidding at some auctions in the upcoming weeks and will buy if they are giving the property away.

Good luck BT

 

[Melbournian]

From general point of view it seems posters are either
a) older and have an established portfolio and have it in their interest to shun any negativity or
b) be younger, currently renting with a good amount of savings seeing no value in the market atm (me)

[insert argument: i bought in 1990, and look at me now, im awesome..]

Unless someone bought the property in 1990 - how young are you? i was still in primary school at that time.

 

[Melbournian]

Simply investing is not enough it is how you do it and how you adapt to the market of the day.

I don't fit into either of your two category's.

Been investing since mid 2003.

My opinion is there is always opportunities in any market, I like a few markets around Australia at the moment with good upside. Living in Melbourne where I believe the market will be flat with some bargains around I think it is a great chance to upgrade PPOR and I will be bidding at some auctions in the upcoming weeks and will buy if they are giving the property away.

Good luck BT

Seems like a fair call traditional investing ain't going to cut it in these times.

 

[whitegoodman]

Unless someone bought the property in 1990 - how young are you? i was still in primary school at that time.

i was 2 years old

 

[Melbournian]

i guess keep waiting and saving then.

 

[whitegoodman]

i guess keep waiting and saving then.

im managing a grand a week savings, in no rush to jump into the ponsi

 

[Jen_PFR]

I think you'll find it's spelt 'ponzi'

 

[turk]

im managing a grand a week savings, in no rush to jump into the ponsi

Hi Whitegoodman

When will it cease being a ponzi scheme?

Perhaps when you buy?

Cheers

Pete

 

[whitegoodman]

Hi Whitegoodman

When will it cease being a ponzi scheme?

Perhaps when you buy?

Cheers

Pete

maby not in my lifetime, nature of the creation of money and the financial system

 

[turk]

maby not in my lifetime, nature of the creation of money and the financial system

As in your opinion the market is due for a correction
why are you considering entering after the correction,
as the nature of a ponzi scheme is that it has to crash.

Do you think you can time the crash?

Cheers

Pete

 

[whitegoodman]

As in your opinion the market is due for a correction
why are you considering entering after the correction,
as the nature of a ponzi scheme is that it has to crash.

Do you think you can time the crash?

Cheers

Pete

do you think you can?

ponzi scheme generally have to crash yes, i also said maby not in my lifetime..

i know i cant predict the future, I also know what I deem as value and what my comfort level is. I also dont base the future off the past

"history doesnt repeat, but it does rhyme"

my question to all the old battlers long past their prime, what makes you think gen Y will pay high prices when your off into retirement and are selling up?

 

[Bigtone]

do you think you can?

ponzi scheme generally have to crash yes, i also said maby not in my lifetime..

i know i cant predict the future, I also know what I deem as value and what my comfort level is. I also dont base the future off the past

"history doesnt repeat, but it does rhyme"

my question to all the old battlers long past their prime, what makes you think gen Y will pay high prices when your off into retirement and are selling up?

sell, who is going to sell? u can just keep paying the rent

whitey u seem very well balanced, a chip on both shoulders

 

[Bigtone]

Though it may seem like a cheap shot, I'm surprised someone would actually base their investment decision on a Herald Sun opinion piece (not that I would base it off any other newspaper, but the Herald Sun???).

He is also on radio, TV and the Web plus the HS.

He has quite a lot of followers. ( as you can tell from some of the posts on here)

Also don't forget the financial literacy of most Australians is woeful so they pay attention to Today Tonight, Current Affair, H/Sun and bloody talk back radio!!

Media figures have lots of responsibility because people who have no idea trust them as 'experts'. That's the whole point of this thread really, if you are in the media you should take some responsibility for what you advise not just try and get an attention grabbing headline (naive I know but it does actually impact people's lives).

 

[Wunderbar]

If people are stupid enough to believe it, then they are responsible for it. He never took a gun to their head and told them to stay away from real estate. We don't live in a nanny-state...yet.

 

[Bigtone]

We don't live in a nanny-state...yet.

Have you heard of the responsible lending laws?

 

[annie lumen]

Hardly. I'm tired of people spouting out useless dribble from people who don't even make any money except their fortnightly wage.

Magnanimous

If people are stupid enough to believe it, then they are responsible for it. He never took a gun to their head and told them to stay away from real estate. We don't live in a nanny-state...yet.

And you have robust opinions as well.

 

[intrigued]

"history doesnt repeat, but it does rhyme"

my question to all the old battlers long past their prime, what makes you think gen Y will pay high prices when your off into retirement and are selling up?

You could always rent.