What will happen to property prices / rents if interest rates increase?

[Bill.L]

Hi all,

LB, The reason why I asked about those sort of things, is that to have a strong opinion in one area, about the future, by itself is not logical unless the potential ramifications and results in other areas are factored in.

For example the current media speculation on interest rate rises given the rising value of the $A, tells me the arguments have not been logically thought out. There is also scant mention as to the effect on the stockmarket, which in the past has been negative.
I draw my own conclusions to the likely course of events and often have a chuckle at what is reported in the media.

I have agreed with you on the inner apartments, I think they are in for further falls, but when I consider IPs, I am looking at median priced houses in middle to outer suburbs on the 600 sqm block. They have a high percentage of owner/occupiers and are not what the media considers "investment properties".

I would like to show you how buying an IP NOW can be positive for the future, but I need the parameters to work with, thats why I was asking about your thoughts on the future.

bye

 

[Aceyducey]

Originally posted by L Bernham
Why do I need to say I made a mistake. Because I have a different opinion then you? Does that make mine automatically wrong.

Face facts L Bernham - you are wrong in your statement that there is an oversupply of rental properties in Australia. You are also wrong in your view that higher interest rates would necessarily push rental returns down.

Calling these your opinion is fine - your opinion is wrong. Not because it is different, not because your opinion is automatically wrong.

Simply because you have not looked at the facts and developed an opinion that matches reality.

I've yet to see you admit to having an incorrect opinion on this forum despite clear evidence demonstrating your views were wrong.

If you invest the same way you face facts, well.....

If you're a serious investor you simply have to admit when you make a mistake & correct it as fast as possible. Only fools cling to their beliefs in the face of overwhelming evidence to the contrary.

Are you open to the possibility that you have misjudged the market L Bernham? Are you open to the possibility that there are people on this forum with the experience and skills to make more accurate predictions than you? Are you open to changing your opinions?

Are you open to learning from this forum?

Or are you simply looking for a soapbox for doomsaying?

Cheers,

Aceyducey

 

[L Bernham]

Funny Acey
your post describes exactly what I see others doing.

I've yet to see you admit to having an incorrect opinion on this forum despite clear evidence demonstrating your views were wrong.

I've already done this. I did the noble thing and admitted I overestimated the size of the fall and adjusted it down to 35%. WAs that appreciated?
No, instead I get comments like "hey look at LB - he first predicts one thing and then downgrades it when he realises he is wrong"
Then on top of that I then get accused of not admitting when I'm wrong.
This LB bashing really has to stop.


Are you open to the possibility that you have misjudged the market L Bernham?

Always. as demonstrated. More importantly - are you Acey? Or are you never wrong.

Are you open to learning from this forum?

Without a doubt. I have already learnt a lot. I cant wait to invest in property again knowing what I now know. Unfortunately as more and more are finding, this is going to have to wait until prices come down to a reasonable level when an average property can be cash flow positive and negative gearing isnt the only way.
I must admit, I read the Economist so I probably dont have a clue.
cheers
LB

 

[Aceyducey]

L Bernham ,

You evaded the issue (as usual).

So are you prepared to admit that you are wrong in your statement that there is an oversupply of rental properties in Australia - with the ABS statistics proving an undersupply of residential property nationally?

Are you also prepared to admit that you are also wrong in your view that higher interest rates would necessarily push rental returns down?

Last chance to salvage any credibility with me L Bernham, and I've given you a LONG rope.

Cheers,

Aceyducey

 

[suggo]

Acey,
please don't give any more rope...I hate to see people hang themselves again and again.......and again and again......

As far as LB bashing goes, playing the "ohh poor little me being picked on" doesn't cut it LB. Maybe you need to look at the reasons why people aren't too forgiving when replying to you!!?? maybe?

 

[L Bernham]

Don't worry suggo. I know the reasons I get picked on. And I admit I ask for it.
Who wants to hear bad news. Its so much easier when everyone can get along and confirm one and others biases. Thats what its often all about.
My friend is a financial adviser and he tells me how so many people dont really care what you tell them they just want to hear that what they are doing is right.
I shold have listened to him when he said don't ever tell people where not to invest if thats what they want to do. All they will do is go and find someone who agrees with them.

So are you prepared to admit that you are wrong in your statement that there is an oversupply of rental properties in Australia - with the ABS statistics proving an undersupply of residential property nationally?

How can I admit I'm wrong when what I said was right. Please show me these statistics that show that there is an undersupply of rental properties.
In Brisbane there are 5 pages of small ads for rental properties available in the courier mail every weekend. Landlords are dropping rents.

Hmmm doesnt look like an undersupply to me.

And how about Victoria - 3.9% and rising according to REIV.
Maybe their figures are faulty.
http://www.reiv.com.au/media/pg_media_releases_1aug03.html

Who has Sydneys figures? Last I saw they were well up there as well.

Why did I need to admit I was wrong again?

 

[suggo]

Originally posted by L Bernham
Don't worry suggo. I know the reasons I get picked on. And I admit I ask for it.
Who wants to hear bad news. Its so much easier when everyone can get along and confirm one and others biases. Thats what its often all about.
My friend is a financial adviser and he tells me how so many people dont really care what you tell them they just want to hear that what they are doing is right.
I shold have listened to him when he said don't ever tell people where not to invest if thats what they want to do. All they will do is go and find someone who agrees with them.

OMG, if you actually think that this is the reason that people are against you then your kidding yourself. I think the only one around here who doesn't like hearing bad news is yourself.
I actually think you get "picked on" because you are treating people on these forums, alot quite to very successful, as though they are dills and "dont really care what you tell them they just want to hear that what they are doing is right."
Another reason I can see is the fact that you come out with statements and facts that are the either proven wrong or questioned and you reply with statements such as above.

But hey LB, I doubt very much that this will make any difference to what you say or how you think because you seem to me to be the type of person who thinks they are always right and you will always find some angle(as above) to fool yourself into continuing to think this way! *shrugs*

Good luck.....you'll need it!

 

[suggo]

Oh yes one other thing!
I have just rented out a house in Salisbury, yes that is in Brisbane, for $20 more rent than it was renting before, and we have had 23 calls in two days from one ad. Gee that oversupply must be in all the other suburbs eh!!??

 

[abcdiamond]

Suggo,

I think that the oversupply must be in units, and probably in the city.

I am really grateful to this forum, it releases so much information.

Before I found the forum, I was actually thinking about investing in a unit in the CBD, I did have gut feeling reservations, but I will admit to being tempted.

This forum did convince me of the foolishness of my thoughts

Houses with land, 700sm +, and as near as possible to the water, and not in one of the main overpriced capitals, is my choice of position. Price range currently around $250-300k so that they are rentable to the average tenants in such an area.

I have spoken to a few friends, in Sydney, who are worried about interest rises etc, and the consensus of opinion with them is that they would love to sell up in Sydney, and move up here to Brisbane area, and buy one of the lovely cheap properties up here.

I am sure that would stop any major price drops in this area, but, we will have to wait and see.
None of us can be totally sure about anything. Well, almost none of us.

 

[L Bernham]

Suggo says
"I actually think you get "picked on" because you are treating people on these forums, alot quite to very successful, as though they are dills and "dont really care what you tell them they just want to hear that what they are doing is right.""

I say
"funny that, because I have on numerous occasions mentioned how I have gained a lot of good information from the knowledgable people on this forum and I've had some good discussions which is mainly what I'm after. I would like to be sold back into property investment but I do have the habit of taking into account possible risks, something I thought was prudent financial management that has always worked for me in the past. must just have been lucky"

Acey asks
"So are you prepared to admit that you are wrong in your statement that there is an oversupply of rental properties in Australia - with the ABS statistics proving an undersupply of residential property nationally?"

and he was quite harsh with

"Simply because you have not looked at the facts and developed an opinion that matches reality.
I've yet to see you admit to having an incorrect opinion on this forum despite clear evidence demonstrating your views were wrong.
Only fools cling to their beliefs in the face of overwhelming evidence to the contrary."

So I replied with statistics from REI confirming my statements and opinions. Does Acey admit he was wrong? Or is this something he is incapable of and thats why he accuses me of it.

hmmmm...

 

[qaz]

With regards to LB, if all outer suburbs property was cashflow positive and had CG above inflation, then investing would have no risk and EVERYONE would be doing it. Im still tryna get my head around Rixter finding cashflow neutral b4 tax properties with 7% long term CG on 106% finance. to expect property to be highly cashflowed from day one and have a good long term CG is unrealistic as the norm. Maybe property is valued to its price at the moment.

 

[NormH]

Hi everyone, well here is my opinion on the subject "interest rates up what happens to rent" .

A long time ago, yep I am that old, 1984 when house prices in adelaide were going up at $1000/mth (according to the press) I purchased my first investment property. Now over the years and many ups and downs, there are several factors at play.

Generally as the share market drops, the money moves into property then as the cycle continues and property drops then money moves into the money market (interest rate rising )

Now as the interest rates move up, professional investers are moving into money markets forcing up interest rates and pushing down home prices, it is at this time "cash is king" fewer people can purchase homes, more stay in the rental market and this tends to push up rents, building etc continues but at a slower pace and things start to get really tight, I have seen things get down to 1/1.5% vacancy and that is when rents really start to climb. 2/2.3 seems to be about the vacancy that suppy/demand is in balance.

just my thoughts

Norman

 

[suggo]

Originally posted by L Bernham
Suggo says
"I actually think you get "picked on" because you are treating people on these forums, alot quite to very successful, as though they are dills and "dont really care what you tell them they just want to hear that what they are doing is right.""

I say
"funny that, because I have on numerous occasions mentioned how I have gained a lot of good information from the knowledgable people on this forum and I've had some good discussions which is mainly what I'm after. I would like to be sold back into property investment but I do have the habit of taking into account possible risks, something I thought was prudent financial management that has always worked for me in the past. must just have been lucky"

You miss the point LB, even with that statement you make above you are having a backhanded crack at people. I didn't think it would make a difference, you keep dodging LB, keep dodging!

 

[Lily House]

May I humbly suggest that a few people around this forum need to take a deep breath and just chill out a bit.

I love a good debate - even if I might disagree with what someone says, it can open my eyes to a new way of thinking.

But could we please keep out debates focused on the issues, and stop the personal attacks on people.
Does calling people 'wrong' or 'silly' or the like, really acheive anything?

Thankyou
Lily

 

[Aceyducey]

Lily House,

No heat here - I'm just sincerely concerned about the posting of inaccurate and misleading information and of the view that this needs to be soundly disproven so that less experienced people reading this forum don't go away with incorrect or dangerous information that could cause them to make poor investment decisions.

I'm all for a variety of views - but only where they have a basis in fact, where following them will not cause harm to the reader and where the person stating the views has some experience or expertise in the area.

I will continue to chase L Bernham on every post made that distorts facts, shows a failure to understand economics or other areas or is deliberately misleading. I will particularly jump on any backhanded snide attacks on other forumites.

L Bernham:

1) If you want to be sold into property investing, go talk to a marketing from some dodgy inner city overpriced unit developer. This forum is NOT about selling people anything, it's about an exchange of information and ideas around the topic of property investing and broader around investment in general, plus is a gathering place for investors where they can discuss topics with others experienced in the areas of property investing. if you want o invest in property, ask questions. If you don't want to invest, spend your time somewhere else - it will be more profitable for you.

2) Quoting REI figures for one city does not equal the situation across the country. Again you have evaded the question by providing fallacious information to 'prove' your point and again you are flat-out wrong & misleading others.

Look at ABS national stats, they thoroughly disprove your views. And no, I'm not going to post the figures - if you are unable to go find them, you shouldn't be here anyway.

As I have stated before, you seem highly focused on inner city Melbourne & Sydney apartments & seem totally unaware that there is a bigger picture & many other markets for property in Australia. - do you believe Brenda Irvine owns any property at all - seeing as she has been successful by NOT buying in inner city Sydney or Melbourne?

3) Note that this is said entirely without heat or passion - simply as fact

Read back over my 1300+ posts & you'll see I have always admitted fault when it exists. I am here both to learn & contribute.

I haven't seen anything in the way of actual contribution by you, or any sign that you actually are open to discussions - you simply make your statements & then defend them with personal attacks on people who point out the flaws in those statements or who ask for proof that your claims are true.

From reading all of your posts I have, sadly, reached the conclusion that you are an inexperienced, highly risk-adverse and highly negative individual with a strong sense of your own investment prowess despite much evidence to the contrary & who thinks they have a sense of humour but derives it mostly from distorting the views of & hurting others.

If this is not truly what you are like demonstrate it through your posting. Many people on this forum could be very helpful or supportive in your future investing attempts, however you do not do yourself any favours through your attitude or style.

I call a spade a spade, and right now L Bernham you are acting like a black hole. Please realise that you only hurt yourself through your choices.

Why not attend some investor meetings & meet some of the other investors - I'm sure that you could make a better impression in person.

Cheers,

Aceyducey

 

[Olly]

I'm with Lily on this one - enough already

It's clear that some of you don't agree with LB's statements and/or how he says things and you want him to apologise and admit he's wrong. It's also clear he's not going to!!

If he's seen and heard things that make him form an opinon - right or wrong - that he won't budge from - so be it - let him go.

It's been said that part of the fear is that new investors or readers to the forum may be swayed by his comments. Well anyone who blindly follows LB's or Acey's or anyone elses advice is asking for trouble - they need to research things for themselves then form their own opinion, which is why due diligence, due diligence, due diligence is touted here so often.

My fear is that this thread will scare them into not posting at all or scare them away completely!

I don't think newbies are silly - just uninformed - which is why they come here, therefore I think enough has been said for them to realise that there are conflicting opinions and they need to do their own research and reach their own conclusions.

Just as an aside - y'know when you are watching something that should be about a particular thing but something else is there that detracts from you focussing on it (Paulini's outfit on Australian Idol for example - I didn't agree with her outfit and ended up focussing on that instead of her voice/song), well while reading this thread I'm thinking - it must be a man thing - someone has to be right or wrong - there always has to be a winner and a loser - and they'll argue till the cows come home till they achieve it - must be an ego thing - and me & Lily are both women (I'm assuming that Lily is), who want it to stop, and Kristine has also adopted a sort of "get on wth it" post and so on - so I'm not REALLY absorbing what is being said here because a totally different thing is coming across.

Maybe it's happening to others as well and the real information in this thread is starting to get lost in the personal attacks, and me and Lily (and possibly others) are finding it hard going to sift it out so can we let it go please.

Just my thoughts.

Cheers
Olly

 

[Aceyducey]

Hi Olly,

If my comments have been interpreted as a personal attack I apologise. That is not my intention, nor my desire.

I do not believe new people entering this forum are in any way silly - or necessarily inexperienced or uninformed. However the most experienced investor can fall victim to false or distorted information when it is presented as fact.

I feel the strength of this forum is the active discussion and the presentation of accurate information. This forum helps people distinquish what is accurate from what is inaccurate - discussing whether this or that is correct and in which circumstances is the core of most discussions on this forum.

If the presentation of inaccurate information occurs on this forum without an active discussion, how much value remains?

So respectfully I disagree with some of your views.

I continue to feel it is important to confront issues when they occur rather than simply saying 'whatever' and leaving it to new people to try to filter the accurate from the inaccurate.

Otherwise these valuable participants may simply leave or not participate as the forum is not providing this value.

And I am willing to put myself in the firing line when standing up for my views. I don't mirror this onto others, but it is one of the ways I see myself adding value to this forum.

With my ego firmly in my pocket - cheers,

Aceyducey

PS: I'm not really flattered that you feel that people may blindly follow me And if anyone were doing that I'd stop them really quickly!

My viewpoint is entirely that people should not blindly follow - but they should have access to accurate information so they can make the decisions that are right for them.

 

[L Bernham]

Yes that would be excellent if we could save the personal attacks.

I dont understand it.
On many threads there are people posting on how good the market is an a certain area or suburb and quoting one or two examples they've experienced as if that makes the whole market.

But when I say a simple thing like in Victoria rental vacancy is 3.9% I get blasted for "providing fallacious information to 'prove' your point and again you are flat-out wrong & misleading others. "
I didnt say Victoria has high vacancies and therefore the rest of the country must also have, nor did I imply it. I said Victoria.

All I do is post my observations like everyone does. Where I can, I post statistics that may confirm them. They may not match others observations but that what forums are about. I do wonder sometimes whether some are subconciously filtering out certain evidence to only hear what they want to.

I thought this forum is here for people to learn. Why am I told that if I cant find ABS statistics I "shouldnt be here anyway". How does that aid in creating a helping and learning environment.

Ive never said that I'm only focussed on inner city CBD apartments but for some reason thats what I've been accused of.

All I want is to be able to post my opinions. I dont want to dissuade anyone from investing but I would like for newbies to be aware of the risks. Every investment has some risks attached and to ignore these is foolish. I see all too many people jumping in with dollar signs in their eyes assuming that they have a fool proof and guaranteed path to financial freedom through IP's. Attitudes like that have cost people dearly in the past and I'm sorry, but yes I do see it happening again.

Would like it if people could let me post without these attacks on my personaility and opinions. I'll do the same.

cheers LB

 

[suggo]

If anyone here sees any of my posts as personal attacks I would rather you look at them as personal defending. I don't come on to this forum to be belittled by others and will not stand for it in any way. Some of the statements LB makes come across that way and I'm sure I'm not the only one to feel this way.

 

[XBenX]

Wow, another thread with loads of bait.

I personally dont think LB's supply/demand model took into account enough variables but the responses have already covered that...(BillL)

There are some very defensive posts in here, a lot of ppl taking things personally (imho)