Hi Rixter,
I am waiting patiently for your pearls.
MC
I am waiting patiently for your pearls.
MC
What % of investors are buying Brisbane
- Thread starter Jaffasoft
- Start date
Maybe I dont like pearls
Not even a week's gone by - Keep thinking.
But I'll give you a tiny wincy hint - check out population growth and new construction levels!
For.
Demographics. People must still be leaving the southern states in droves. Selling their cold, grey $500k dog box and buying a $300k sunny warmer one. Hey were rich!
Pent up local demand from those who missed the last property run a few years back. So a perception of scarcity and 'missing the boat'.
$A 18 months ago 63c, now at 84c so doodads are/will be cheaper. That might be giving consumers a boost, making them think they are getting somewhere. Consumer confidence is up, but that usually results in doodad purchases not property buys.
Mineral boom and stable economy.
Record low unemployment.
No change of Govt. at state level.
Economic clock. Profits leaving booming share market (small ticket) and entering property (big ticket).
Against.
Interest rates static but have been small rises and with more to come. US markets jittery about their rates.
We're at war. And in Afghanistan, Solomons, East Timor.
Change of Nat Govt. on horizon.
Lousy yields and although there's rental growth, it's not keeping up with cap. growth
Affordability at all time low and getting worse.
Land releases and subdivision = no real scarcity
Peak oil
Global warming
Infrastructure issues
Economic clock. There's another part of the cycle to go through yet. We need capital flight from shares to property. Usually after an interest rate climb.
It's Queensland
On balance it doesn't look like a sustained boom. A mini boom perhaps, aka a flash in the pan?
MC
Demographics. People must still be leaving the southern states in droves. Selling their cold, grey $500k dog box and buying a $300k sunny warmer one. Hey were rich!
Pent up local demand from those who missed the last property run a few years back. So a perception of scarcity and 'missing the boat'.
$A 18 months ago 63c, now at 84c so doodads are/will be cheaper. That might be giving consumers a boost, making them think they are getting somewhere. Consumer confidence is up, but that usually results in doodad purchases not property buys.
Mineral boom and stable economy.
Record low unemployment.
No change of Govt. at state level.
Economic clock. Profits leaving booming share market (small ticket) and entering property (big ticket).
Against.
Interest rates static but have been small rises and with more to come. US markets jittery about their rates.
We're at war. And in Afghanistan, Solomons, East Timor.
Change of Nat Govt. on horizon.
Lousy yields and although there's rental growth, it's not keeping up with cap. growth
Affordability at all time low and getting worse.
Land releases and subdivision = no real scarcity
Peak oil
Global warming
Infrastructure issues
Economic clock. There's another part of the cycle to go through yet. We need capital flight from shares to property. Usually after an interest rate climb.
It's Queensland
On balance it doesn't look like a sustained boom. A mini boom perhaps, aka a flash in the pan?
MC
Interesting thing is comparing similar areas in Brisbane and Sydney .
Historically Mt Druitt holds an edge in terms of price compared with logan.
Last time I checked on the suburb where I work ( Lethbridge park ) the actual sales were occuring at around 170-180.
At the peak there were lots of sales in the mid to high 200's with the bottom of the market really around 240.
At that stage Logan was around 170-180 . now ?? 260 .
I'm not complaining as we still have 3 houses in logan bought for 65-78 K but you have to wonder about how long this can go on.
Cliff
Historically Mt Druitt holds an edge in terms of price compared with logan.
Last time I checked on the suburb where I work ( Lethbridge park ) the actual sales were occuring at around 170-180.
At the peak there were lots of sales in the mid to high 200's with the bottom of the market really around 240.
At that stage Logan was around 170-180 . now ?? 260 .
I'm not complaining as we still have 3 houses in logan bought for 65-78 K
but you have to wonder about how long this can go on. Cliff
I just don't buy the population growth explanation.Maybe I dont like pearls
Not even a week's gone by - Keep thinking.
But I'll give you a tiny wincy hint - check out population growth and new construction levels!
If you look at YOY % increases for Brisbane it's really completely underwhelming compared to the amount of physical space we have. The high side growth projections don't even have SEQ doubling in 25 years which is a very small % CAGR. http://www.oum.qld.gov.au/?id=466
I see it as mainly supply side driven, for whatever reason the cost of bringing on new stock is expensive and getting more so, not sure where the buck should stop there. And the government seem to think that pumping the demand side will somehow help with the 'housing crisis', makes me shake my head based on the way I understand how markets work, but also makes me pretty happy as a property investor in SEQ.
The new construction levels are obviously fairly important as there does appear to be a short term imbalance for some reason.
I think MC was spot on with a few of his suggestions... In particular..
Pent up local demand from those who missed the last property run a few years back. So a perception of scarcity and 'missing the boat'.
I have a few anecdotal stories that seem to indicate there is something going on here as some (all that I'm aware of!) buying in my area has been done by PPOR people and they have been paying a premium just to get into the market... before it gets out of reach forever being the sentiment. They have been saving a deposit for several years now.
Against:
Land releases and subdivision = no real scarcity (Well ultimately I think this is true... which gives you pause for thought as a prop investor in SEQ)
Peak oil (I bought <200m from a train station particulary with this in mind, the alternative of more house on more land in outer McSuburbia didn't appeal, gas guzzling transport is at or very near it's peak I think)
Economic clock. There's another part of the cycle to go through yet. We need capital flight from shares to property. Usually after an interest rate climb. (I'm dreaming of this.. please please please come true... Isn't this a positive though??)
It's Queensland
QLD born and bred, but have to agree with this sentiment... But things are getting better slowly I think. And.. aren't you MC from Canberra?? I'm presently running some calcs about the viability of selling some properties in SEQ, to lower my LVR, keep the best property and raise some cash for alternate investments... Boy I will get kicked off this forum soon!
Inflation figures out for the last quarter running at 1.6%. If this holds, we will get another rate rise before the years out. My guess is 0.5% this time, but maybe not due to the federal election, the RBA not wanting to be too aggressive at that time. Then again we have the tax cuts and pork barrelling to go through, so maybe the RBA will act strongly.
A half a percent before years end will sort a few out. Prices up and interest rates up = affordability down even more. Not fire sale territory, but a bucket of water for sure.
Andrew, the clock is working, it's just running a little slow. It's quite hard to see at times because of all the static around the signals. China's holding itself together for the Olympics, but I reckon after that there will be a rocky period. Perhaps the floating of the Yuan? Then we will see a shake up.
Canberra was home for many years, but not now and not always. Sydney was home for a bit, as was Adelaide and OS. Currently living in rural southern NSW.
MC
A half a percent before years end will sort a few out. Prices up and interest rates up = affordability down even more. Not fire sale territory, but a bucket of water for sure.
Andrew, the clock is working, it's just running a little slow. It's quite hard to see at times because of all the static around the signals. China's holding itself together for the Olympics, but I reckon after that there will be a rocky period. Perhaps the floating of the Yuan? Then we will see a shake up.
Canberra was home for many years, but not now and not always. Sydney was home for a bit, as was Adelaide and OS. Currently living in rural southern NSW.
MC
G'day Michael,
It's good to see you back here again, mate.
So right - particularly in parts of Logan. My PPOR cost $45k in 84, worth $95k in 89, then $75k in 92. Stayed in the doldrums until 2002.
By the end of the boom (early 2004 in this area) it was worth $200k and would rent for ~$230pw. Good enough, I thought - won't be much more growth in this place for the next several years..... (7% CG over 20 years)
WRONG !!! Kingston has gone crazy yet again, and I'm dumb-founded. Beggar all houses with 3bdr available today under $260k - and most everything is "Under Contract" when checking re.com.au
I know Bne is enjoying +ve population growth, and was under-supplied with houses, but hey - today, Kingston properties (25Km from CBD) are pushing to values that are getting close to Bayside suburbs, or 15Km properties. I can't see it lasting (but then, I also didn't see it coming either). I'm concerned this might end up as a repeat of 92 (dropping back to $200k or thereabouts this time). A false boom perhaps? But then, maybe it'll hit $300k then settle back to $240k while the rest of Bne goes nuts !!! Who's really to know?
Regards,
My IP is in Kingston and although I purchased in 2004, its gone up heaps, and shows no signs of stopping....I know why too....if you ask nicely I will tell you...
The house we settled this week was bought from 3 brothers/sisters. So perhaps this isn't far from the truth?
Brisbane rent prices are a bit insane IMHO (I rent myself). We have 2 IP's.I understand that at $200k in 2004 there was room to move, particularly when compared to the other capitals, it was cheap. Even the RR at 5.25% was above the national average. But a run now, starting at 260-280k? And I bet the rents haven't moved by the same %. Got me beat - for the moment
IP1 Blacktown area of Sydney - $320k - well kept 3BR. Rent is $225/wk but rising (slightly lagging the market but we have good tenants, could be $250-$270?)
IP2 Birkdale area of Brisbane - $330k - equivalent 3BR but needs a lot of TLC. About to go on the rental market for $320/wk as is.
We've also moved into 3 different rental's over the last 13 months (Yerongpilly, Wellington Point and Sinnomon Park). After all those inspections of houses from Indooropilly to Wellington Point and south to Inala / Rochdale, most of the houses we find for rent I wouldn't put animals in (the things I've seen recently, the stories I could tell
). And yet they are being snatched up in less than a week for $250+/wk. The demand is still there that's for sure.5 years ago, for me to work in Brisbane (instead of Sydney) would mean a pay cut of $10-20k or more. Now I'm earning the same if not more in Brisbane than I'd expect in Sydney. And this is in the IT industry not resources.It's Queensland
It's all a bit anecdotal, but I doubt I'm unique. If jobs in Brisbane pay well, and the quality of living if high, it seems fair to assume people will continue to pay as much for a house in Brisbane as in Sydney?
And to quote a very unreliable source (a real estate agent), she recently had a Sydney investor up looking at houses in the Wellington Point area because 'house prices were just to cheap'. (Okay, so that adds nothing to the topic, but it was an interesting comment at the time
)With affordability being at an all time low, what does this mean for property investors?
What has happened in the past when affordability has been so low?
If so many cant afford to buy homes does the market then stay flat?
If so many cant afford to buy homes then l am sure this would push up rental yeilds.
If interest rates rise again this year which is highly likely, will we see a sudden halt if not a falling market in the "hot" areas of Melbourne and Brisbane?
Apreciate any thoughts on the issue.
cheers yadreamin
Yes, maybe a mini boom Michael Croft.
Michael Yardney has said that historically the 'flat phase' of the property cycle only lasts on average for 2 years, before a progression to a moderate growth phase.
Michael Croft, does your experience through 5 cycles validate this, or not?
I found that in Melbourne, if 2004 was the 'end' of the boom (not sure what the consensus on this is though), then 2005 and 2006 were 2 flat years, and now in 2007 we are entering the moderate growth phase.
Thanks,
GSJ
We can always find stats to back up our pet theory. Perth and Tas have had periods of 8 to 10 years of zero growth, and when inflation is taken into account, they fell in real terms.
So if a 'flat' 5 years has a 15% growth spike in the middle, that lasts a year, what is that called? Due to the slow moving nature of property transactions, the 'spike' appears to be a boom in the making. But if that 'boomlet' fades and prices remain static for another two years, what is it?
Averaged out in a hypothetical city a property price may look something like this (figures plucked out of the air);
2002 /3 peak price $500,000
2004 slight correction for over shoot $475,000
2005 about the same $485,000
2006 up a bit $510,000
2007 $560,000
2008 $560,000
2009 $570,000
So from 04 to 07 made $85k (17.9% over 2 years), but 03 to 08 made 12% over 6 years. I don't have my financial calculator to hand, but that's about 1.5% compound pa. I think this is what we are witnessing at the moment, but I'm happy to be wrong.
In Melb. I would take those properties that have had a 15% climb this year, and check what they would have sold for at the peak of the last boom and at the bottom of the correction. They may well be a bit like the above hypothetical, or maybe not. There will always be exceptions, so I check the 'averages' against the individual to see if it fits.
The last boom was the longest and most sustained I have played in. The breather/ recovery should be as long/ sustained ie. until the pendulum swings back to the averages (with corresponding overshoot). Perhaps Melb. has had it's correction, maybe not, it's all in the numbers.
MC
So if a 'flat' 5 years has a 15% growth spike in the middle, that lasts a year, what is that called? Due to the slow moving nature of property transactions, the 'spike' appears to be a boom in the making. But if that 'boomlet' fades and prices remain static for another two years, what is it?
Averaged out in a hypothetical city a property price may look something like this (figures plucked out of the air);
2002 /3 peak price $500,000
2004 slight correction for over shoot $475,000
2005 about the same $485,000
2006 up a bit $510,000
2007 $560,000
2008 $560,000
2009 $570,000
So from 04 to 07 made $85k (17.9% over 2 years), but 03 to 08 made 12% over 6 years. I don't have my financial calculator to hand, but that's about 1.5% compound pa. I think this is what we are witnessing at the moment, but I'm happy to be wrong.
In Melb. I would take those properties that have had a 15% climb this year, and check what they would have sold for at the peak of the last boom and at the bottom of the correction. They may well be a bit like the above hypothetical, or maybe not. There will always be exceptions, so I check the 'averages' against the individual to see if it fits.
The last boom was the longest and most sustained I have played in. The breather/ recovery should be as long/ sustained ie. until the pendulum swings back to the averages (with corresponding overshoot). Perhaps Melb. has had it's correction, maybe not, it's all in the numbers.
MC
"There was movement at the station for the word had past around. A mob of Investors had filled up there saddle bags and headed to Brisbane".
Sorry a bit of poetry in my head this morning! Thanks for all the comments in this thread it is great to read.
I'm still wandering if a percentage of investors buying at different stages can be seen as indicators. Is there somewhere that has percentage of buyers (investors) compared to normal home buyers in the market at the different stages of cycles? I should even put a third category in this because it's probably the quiet developers opening paddocks and land sub-divisions that creates a bit of movement.
So it would be -
Developers (which are really investors)
Investors
Home Buyers
Any others that make up the mover and the shakers?
Sorry a bit of poetry in my head this morning! Thanks for all the comments in this thread it is great to read.
I'm still wandering if a percentage of investors buying at different stages can be seen as indicators. Is there somewhere that has percentage of buyers (investors) compared to normal home buyers in the market at the different stages of cycles? I should even put a third category in this because it's probably the quiet developers opening paddocks and land sub-divisions that creates a bit of movement.
So it would be -
Developers (which are really investors)
Investors
Home Buyers
Any others that make up the mover and the shakers?
That's interesting, I didn't realise it could be flat for so long, wonder if the cashed up Perth investors know this?!
I'll have look at some figures in more depth.
Thanks,
GSJ
CashflowPlus,If everyones so worried about the prices going up in brisbane/logan then why not look to buy out ipswich. Prices still quite cheap (personally I haven't seen this kind of price increases there). If the price rises in brisbane are a boom then the ripple effect will eventually hit ipswich. But if increases are a bubble and it bursts then price falls wouldn't really affect ipswich much coz they did not experience this frenzy.
Just a risk management plan and my 2 1/2 cents
Wife and I settled our 2 property purchases on Friday (8th June). One in Goodna, the other RB Plains, .... so both in the Ipswich shire. They have gone up in value $15,000 - $20,000 each since we signed the contract 6 weeks ago.... even the agent rang me out of the blue and said "you are so lucky, you would have to pay $20,000 more for your property now"
I guess, the ripple effect is moving out towards Ipswich ... it won't be long before very close suburbs to Ipswich start to feel the effects if they haven't already.
martin
HI there
just in relation to your comments about the ripple effect - was speaking with a real estate agent in Toowoomba whilst attending an open house - and things are starting to move out this way too - the comment was nothing was happening a couple of months back but now we are starting to get a lot of inquiry.
thanks
just in relation to your comments about the ripple effect - was speaking with a real estate agent in Toowoomba whilst attending an open house - and things are starting to move out this way too - the comment was nothing was happening a couple of months back but now we are starting to get a lot of inquiry.
thanks
Similar threads
