Who saw this coming?

[Sunfish]

This is the opening passage of a Bloomberg article:

"Melbourne, where home prices have fallen more than in any other major Australian city........." [I trust that is close to correct]

I'm not suggesting that nobody predicted it but I winced as poster after poster here extolled the virtues of and gains to be made in Melbourne. I felt the same eight years ago when the pros in Sydney laughed at those of us in the provinces.

The cap gains in gold have dwarfed those of property since then. And there is nothing wrong with a REAL gain, even if unleveraged when compared with the patchy profits in property and shares.

 

[redwing]

The circle of life?

No historical boom has gone on forever

 

[dryath]

A+ response redwing, would read again! ahahaha

 

[Jake Milne]

"Melbourne, where home prices have fallen more than in any other major Australian city........." [I trust that is close to correct]

What about Hobart? (or is that not major enough?)

 

[Sunfish]

What about Hobart?

I don't know. What IS happening in Hobart?

 

[dog]

It's only a matter of time untill the rest of the world knew what our markets are doing, particularly when our economy has been a safe haven for foreign investors for so long.

My personal opinions regarding this downturn (one which many investors have picked a mile away) is that there are exceptional opportunities available and now is the time to build your portfolio. I just wish I had more power to service further loans!!!

As I mentioned, it is my own personal opinion and in no way do I suggest that it be taken as advice. However, I feel that under the current curcumstances that there are relative bargains around comparative to earlier points in the cycle, and in particular, development opportunities due to developers shying away from holding too much debt in a down market.

I might add that I am only looking to purchase development opportunities to "build" my own equity in this current market, however, buy and hold is a long term strategy as we are all told time and time again.


Just my 2c worth...

 

[Dazz]

I just wish I had more power to service further loans!!!

Perhaps therein lies the nugget of truth for this thread.

 

[Peter 14.7]

My thoughts on Melbourne slowing.

As a local...lish the Rudd led push in housing to avoid the GFC was more pronounced in Melbourne than Syd. The western suburbs, where a lot of the housing went, is blue collar and affordable at around $250k so when they offered bonus of up to $30k to by a first home then many tradies and factory workers got in. Buy a home 20 minutes form mum and dad....why not.

In 2012 these are the persons most losing or at risk of losing their jobs in the "recession we would be having if not for mining". Industrial Melbourne is awash with empty factories or job losses think Ford, Aloca, Parts Manufacturers for Auto, Atlas the only Stainless Steel making plant in Aus gone. These are th big ones, there are many many little ones.....

We bought IPs in West Mel in 2007 before the boom and it stuffed up the fundamentals significantly. From a shortage you now have an excess of housing for rent. Homes that would have been built now were built in 2009 and 2010 drawing forward demand leaving none for now...... In 2007 to 2010 you could have made 25% CG. Since 2010 to 2012 you have lost say 10%. Rents the same.

Where in Sydney you have had the reverse.

A necrotic and dysfunctional State Government had three years to run when GFC hit in 2008, also a FHO level at $350k not $250k and a fundamental preference for Apartment for the young DINK professionals which take years to get up, approved and built. Add the previous vendor tax, the in and out of stamp duty, and a white collar consumer mindset of live life now and drive a nice car and rent a new apartment instead of buy in Kellyville and you have the perfect storm. Sydney has gone a CG on 30% and held and growing with rents probably 40% increase 2007 to 2012.

Sydney is has CG growth to come IM) and rents high and getting higher. Melbourne is stagnant and drifting lower. Thinking of selling one or two in Mel.

Peter

 

[Jake Milne]

It's foolish to look at any capital city in Australia and judge it as a whole.

It's the same as looking at the share market as a whole and deciding that there isn't any good investment in a given industry.

The overall property market is made up of many micro markets. You just have to know where to look in Melbourne and where to avoid...

 

[oracle]

My thoughts on Melbourne slowing.

As a local...lish the Rudd led push in housing to avoid the GFC was more pronounced in Melbourne than Syd.

Correct me if I am wrong. But didn't Melbourne also experience a very huge population growth during that period? Don't remember the statistics but I do remember reading about it somewhere.

Which means you had the good incentives (Government grants as well as low interest rates) coupled with strong population growth which produced the boom in prices.

Cheers,
Oracle.

 

[Ausprop]

the Melbourne boom defied all logic, the rest of the country was in freefall yet melb house prices were going off. situations such as this make the catch up all the more dramatic and painful

 

[knightm]

There was discussion in a few threads on here a year or so ago. Here are several. Michael Yardney was pressed for his views which he provided quite well and in the other Steve McKnight is mentioned. Probably still too late in the cycle for some but it wasn't actually a hard one to see coming. Several years of double digit cg and low yeilds and big supply by developers and price overshoot compared to all the other cities it was never going to end well.

1 http://somersoft.com/forums/showthread.php?t=75024&highlight=melbourne

2 http://somersoft.com/forums/showthread.php?t=74939&highlight=melbourne

 

[willair]

And there is nothing wrong with a REAL gain, even if unleveraged when compared with the patchy profits in property and shares.

Maybe just the way people think these days most want quick results,and holding any type of Gold also comes with risk or you learn to become very
patient..

 

[Ed Barton]

"Melbourne, where home prices have fallen more than in any other major Australian city........." [I trust that is close to correct]

It's not correct.

Melbourne has fallen 8.3% from it's peak, while Brisbane has fallen 11.9% from it's peak, and Perth 8.8%.

 

[MTR]

Perhaps there is a lesson in all this and that is "take some money off the table".
I was fortunate enough to offload all my Melb properties prior to the downturn.

Wish I had offloaded some of my Perth properties during the boom but my mindset then was just to accumulate property with no end plan.... Lesson learnt...

MTR

 

[oracle]

It's not correct.

Melbourne has fallen 8.3% from it's peak, while Brisbane has fallen 11.9% from it's peak, and Perth 8.8%.

That can't be right.

Don't you know Gold is down 14% from it's peak of $1960 oz to $1691 oz. How could Gold underperform property...even if it is only for the short term?

Cheers,
Oracle.

 

[Melbournian]

Perhaps there is a lesson in all this and that is "take some money off the table".
I was fortunate enough to offload all my Melb properties prior to the downturn.

Wish I had offloaded some of my Perth properties during the boom but my mindset then was just to accumulate property with no end plan.... Lesson learnt...

MTR

very true....holding a large asset base can be risky however accumulation of properties for cash flow could be the justification for this.

 

[BayView]

That can't be right.

Don't you know Gold is down 14% from it's peak of $1960 oz to $1691 oz. How could Gold underperform property...even if it is only for the short term?

Cheers,
Oracle.

It's because the pundits always lump all the high-end speculative properties which are the first to tank - and by the most percentage - into the whole mix with all those other lower end places which almost never go down.

Hell; half the time, unless it is in a leafy suburb address, they don't get a mention in the bloody medias' reckoning.

 

[JennD]

I don't know. What IS happening in Hobart?

I tend to find Hobart movements are largely based on what's happening with gvt stimulus, developments etc. As it's so small, things can change quite quickly. But not enough drivers for any significant growth really :S

 

[JennD]

Perhaps there is a lesson in all this and that is "take some money off the table".
I was fortunate enough to offload all my Melb properties prior to the downturn.

Wish I had offloaded some of my Perth properties during the boom but my mindset then was just to accumulate property with no end plan.... Lesson learnt...

MTR

Lots of people this way sold their IPs in Melb out when we started seeing development after development being announced in and around the CBD. They're still coming through now. Whenever I ask about number of investors and even owner occupiers purchasing in some of these new devs etc it's fairly sketchy stuff I get back!