Why all the D&G on this forum now ?!

Can you link this? I don't recall having seen it.

I was asking the question myself. Sorry I missed the question mark.

I just figured there must surely be a previous discussion covering the fundamental core understanding of many on this forum.

Or is this understanding, as propertunity suggested, merely a ''belief''?

If thats the case, there probably isn't much to discuss.


The bulls will keep buying because they believe it will keep going up.

Everyone else can use traditional methods to value property and will most likely keep away.

I'm seeing a pretty slow downward grind happening for the next couple of years I'm afraid.

I also think people using the 7-10 year belief as a ''given'' should be very careful as its quite misleading and unfair to less experienced members who may be seeking advice on the real likelihood of future growth.
 
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I also wonder, if its been shown that the 7-10 doubling rule is a myth over the long run, what merits are there in the suggestion that property prices will double every 7-10 years in future when they appear currently so overpriced?

If using past data to predict future trends, wouldn't a regression to the mean growth rate be more likely? Or do most prefer to ignore that scenario as it would mean prices to fall.
 
No, but those who buy right now will likely be.

If you buy at the peak of the market (and I am not suggesting that we are at a peak right now) and you hold thru one full cycle, then you have no concerns about making a loss like my tradie mate. He just sells too early.
 
You know what I don't understand?

I don't understand why those that believe there will be massive corrections in prices don't just take their bat and ball and go home. Sell their property because "it's too risky" or "it'll lose money" or any one of a number of 'reasons' known only to themselves (and hey, that's fine if they do, it is a free world after all) and wait it out until they feel it's safe to jump back in the water.

Instead, they jump on here, and try to preach to those who are actively investing and try to convince us all of the error of our ways.

So......in saying that, I would like to ask all those that believe property is a losing battle just a couple of questions.

Firstly, have you sold your own propertie(s)? If not, why not?

Secondly, do you honestly believe you have a hope in hades of changing the mindsets of those that have amassed a large portfolio to actually listen to you? I'm talking about the people that you seem to be having trouble with. Your, so called "experts" that you feel need saving.:rolleyes:

Why do you feel the need to keep bringing up the same reasons/excuses all the time?

We've heard the "property won't always double in 7-10 years", "this is the biggest bubble of all time", "expect 40% drop in prices" etc dozens of times now, and you know what, we don't really care how many more times you want to say the same thing, you are really wasting your time because this is a PROPERTY INVESTING FORUM and it is where people come to discuss property related issues, not myths, because so far nothing you are saying is a proven fact, just your thoughts on where the market is/is not heading.

There are a few crucial things that you seem to be missing. For instance your argument about doubling every 7-10 years. I don't recall anyone saying it will double EVERY 7-10 years absolutely. This is an average estimate, as market forces are what ensures that property moves or stays static. It may double in seven years or it may double in fifteen years, depending on ecconimic matters.

There will never be a 40% drop in prices across the board as Australia is a whole set of markets within markets. Prices may be overvalued in Perth, but undervalued in Sydney at some point in time. Common sense would dictate that at that time prices might correct a bit in Perth but move upwards in Sydney. Just because prices are correcting themselves in Perth does not mean the sky is falling in.

Property moves in a cycle. It does not go up in a straight line. It moves upwards, then pulls back, stays stable for a while then moves upwards again. Rents will also do the same thing, but usually not at the same time as values. Both of them are dictated by supply and demand, yet the funny thing is, I don't think I can recall anyone ever saying that "rental prices are going to crash 40%".

The people that you are calling "perma bulls" are usually clued up investors that are not constantly buying in the one area to the exclusion of everything else. They might be the people who have a portfolio spread across this land, with a toe-hold in many different markets. These people are usually sitting on some decent equity too as they have been investing for a long time. Or they could be those who hold a decent sized cashflow positive portfolio, meaning that if the values of their properties do pull back it won't affect their income anyway. Or maybe they are waiting it out, growing their equity, for the next buying opportunity.

I guess what I'm really saying is that the "perma bulls" are experienced. They have seen the highs and the lows and no matter what some inexperienced doom & gloomer has to say, they are not in the least bit interested. Sell your property(s), sit in a corner and wait it out ten years, then come back and compare where you are, compared to where the rest of us are.
 
Skater

That was a nice long post there.
I think the majority of these D&G people would be looking at unafordable suburbs where 2nd and 3rd home buyers go
and think that prices are too expensive.

They would be expensive to them but not to everyone and certainly not expensive to those who sell their first home and have a big deposit to use towards the purchase of their 2nd home.

Unfortunately for the D&G people not many first home buyers can buy a property in the +million $ suburbs so they'll have to come to terms with reality and buy on the outskirts of their city just like we did when we were first starting out

cheers
 
I don't understand why those that believe there will be massive corrections in prices don't just take their bat and ball and go home. Sell their property because "it's too risky" or "it'll lose money" or any one of a number of 'reasons' known only to themselves (and hey, that's fine if they do, it is a free world after all) and wait it out until they feel it's safe to jump back in the water.

No one says we are selling up. I've been saying deleverage (pay down debt), to be able to absorb the shock. This does not require selling, as we'll have 1.5yrs to pay down debt. Yes, like yourselves, we'll some loose equity on a correction.

Anyway gents and ladies, we are not going to convince each other either way. Time will tell in 2011/2012 whether "experienced" bulls are correct, or whether property in fact behaves like ANY other asset (and "surprise", actually has times of price falls, and bigger corrections).

you are really wasting your time because this is a PROPERTY INVESTING FORUM and it is where people come to discuss property related issues, not myths

Sorry skater, I mistook this for an open forum, to discuss issues that potentially impact property ;-). But I get the distinct impression from the many replies, that only the "optimistist" property people are invited ;-). I get that on the "global warming" thing as well. I'm a "denier" there. The "experts" all say so, so bow down to their genius.
Will be so sweet to come back in 2011/2012 and check up on why the "experts" did not pick the coming trend. For now, I'll worship your "wisdom" :)).

Cheers
 
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As someone who has lived nearly a decade of my life overseas, most of that in recent years, I'm here out of morbid curiosity as to why Australia thinks they are any different to the rest of the world in regards to the unsustainability of house prices outgrowing household income for very much longer.

There are obviously many successful investors on this forum who have kept their property portfolios performing during the rough patches in the market and I like to read their views of how they would handle a future environment where CGs are more modest and yields that are currently very low become much more critical in investment performance.

As for my own circumstance, I have a PPOR but since I consider it as a home rather than an investment I therefore don't really care what dollar figure is associated with it.
 
As someone who has lived nearly a decade of my life overseas, most of that in recent years, I'm here out of morbid curiosity as to why Australia thinks they are any different to the rest of the world in regards to the unsustainability of house prices outgrowing household income for very much longer

Who said that prices will keep outgrowing houshold income?

There is a natural balance to everything so if prices go up too much they'll eventually correct to the norm by either falling or by staying stagnant for a long time
 
Anyway gents and ladies, we are not going to convince each other either way.
But we never invited anyone onto this forum to "convince" them to buy property. Unlike others who come to this forum with the sole purpose to "convince" us to sell up. :confused:

You are welcome to your beliefs, just don't try to force them on others. :p



Time will tell in 2011/2012 whether "experienced" bulls are correct, or whether property in fact behaves like ANY other asset (and "surprise", actually has times of price falls, and bigger corrections).


Now this is just silly too. Can you please point out where anyone here has said that there are not corrections. There are corrections, have always been corrections, and always will be corrections. :rolleyes:

Sorry skater, I mistook this for an open forum, to discuss issues that potentially impact property ;-).
I'll repeat myself here. It IS an open forum for discussions. I think the thing that annoys a lot of people here, however, is that you and others try to FORCE your opinions on others. Instead of a rational conversation, we get the old "you guys will see, we're right and you're wrong" rants. That does not serve any purpose whatsoever. Maybe if you guys took the time to listen you might just find that there is a lot you could learn from some of the "old timers" that have been around a while.

Will to so sweet to come back in 2011/2012 and check up on why the "experts" did not pick the coming trend. For now, I'll worship your "wisdom".

You just do that. Like I said, you are entirely allowed to have your beliefs. There are others that are sitting on the sidelines too, and that is their right to do so, but the difference there is that they state their case and their reasons for doing so, but don't jump up and down when others say that they don't agree with them. As a democracy you can do what you damn well like with your finances, just don't expect the world to jump on board with you.
 
Over the last 30 years I've invested in resi, commercial, shares, and owned businesses. This may not be as much experience as others here, but I have and always will try to learn from anyone I can.

Something I have noticed is that there are two main camps of property investors on this forum.
1) The ''experienced'' ones who try to accurately value property and do not think now is a good time to buy.
2) The ''experienced'' ones who rely on their own experience of price growth to extraploate into expected future growth
3) The inexperienced who are looking for advice

I believe I am in the first category.
It would have been foolish of me to assume this is the correct one so I have put the question out there to anyone in the second category in an attempt to find out how realistic the theory is.

What I have discovered is that those who believe prices will continue to rise just assume that ''Australia is different'' and ''its always a good time to buy property'' and even ''power of positive thinking'', rather than relying on any real historic trends.
This is fine. Each to their own as I know everyone makes up their own mind on these things.

I feel its wrong to offer advice to others, passing off some of these beliefs as facts, which I have unfortunately seen here.

I also find it interesting that those in the 2nd category take more offense to anyone questioning their beliefs than those in the first who are more willing to critically analyse and discuss theirs.
 
No one says we are selling up. I've been saying deleverage (pay down debt), to be able to absorb the shock. This does not require selling, as we'll have 1.5yrs to pay down debt. Yes, like yourselves, we'll some loose equity on a correction.

I would guess that many of the "experts" have worked out long ago that we need a buffer to "absorb the shock" :rolleyes:. Hardly "news" to most of us.

Anyway gents and ladies, we are not going to convince each other either way. Time will tell in 2011/2012 whether "experienced" bulls are correct, or whether property in fact behaves like ANY other asset (and "surprise", actually has times of price falls, and bigger corrections).

Most of us are not "surprised" either :rolleyes:. We've seen it all before. Skater.... what a fantastic post. So well explained, but they STILL will not understand that we factor in the falls, flat periods etc. They never will.

To the D&G brigade.... I, for one, would give your more credibility and respect if you could try to leave off the bwahahahaha and hahahaha comments, and the wait and see, na na nanana type rubbish ;). Pretty childish really. Classic example just below ....


Will be so sweet to come back in 2011/2012 and check up on why the "experts" did not pick the coming trend. For now, I'll worship your "wisdom" :)).

Cheers

Cheers to you too :D
 
Who said that prices will keep outgrowing houshold income?

Many here have, mostly by inference from believing that past performance, where growth has outpaced income, will continue including the 'property doubles every seven to 10 years' mantra. You pretty much say it yourself in your post above.

There is a natural balance to everything so if prices go up too much they'll eventually correct to the norm by either falling or by staying stagnant for a long time

It depends on what you define as the norm. At the one extreme, the optimistic will hold to the 'prices outgrowing income' model as the norm and at the other the hardcore D&G's 'prices will crash back to 3.5x income' model. I believe we'll end up somewhere in between where price rises will track in line with income increases.
 
I also find it interesting that those in the 2nd category take more offense to anyone questioning their beliefs than those in the first who are more willing to critically analyse and discuss theirs.

What many of us take offence to is your assumption that we don't understand that things can, and do, change quickly and that we will be really, really surprised when that happens.

I am not offended by your questioning of our reasons for what we do, but I do find it amusing when "you lot" put the hahaha on the end of the "let's see who suffers" type of comment. My 15 year old has more maturity than that.

We have already questioned our beliefs, and worked out ways to work with whatever type of market we are working in. For me, property has always been in the background and with time, we have enough of a buffer to ride out most things that hit. For others who have more skin in the game, I know many on here have buffers in place.

We have looked at the possible problems, worked out a strategy and keep one eye out for problems. We are not all just forging forward with no thought to the downsides.

This assumption is what really annoys me and many others.

I'm happy to read what you have to say. I don't agree with all of it, but none of it is "surprising" or "news".

And to an earlier post about what happens to all the people who have negatively geared (not sure who posted it?).... whenever we have bought, we have been negatively geared. At the time of purchase the bank has been happy to lend to us because we have other assets and income to more than cover the negative gearing.

If house prices stay flat for another several years after we buy the latest negatively geared property, as long as hubby didn't lose his job, we just hold on. Rents go up even when property prices don't rise. Sooner or later, property will rise again. We don't buy in the blind belief that property will always go up, but for the weekly rent that, sooner or later, will be more than the weekly interest.

For us the biggest risk is hubby losing his job and we cover that by paying for income replacement insurance. See.... we do plan ahead. We are not just rushing blindly into something.

At age 50 hubby has "retired". I have not worked for 19 years. We have managed that due to buying negatively geared properties (and not too many either).
 
Does this also apply to the bullish members of the forum?

Well, of course it is.

I may be entirely wrong, but I don't recall anyone here telling the rest of the world that "now is the time to buy, and if you don't follow my lead you are going to live a life of poverty".
 
...but I don't recall anyone here telling the rest of the world that "now is the time to buy, ....

I will put my hand up here and confess to having done that (or at least that part of your statement skater.) :eek:

I did so in June of 2009, when I was having a similar argument with investor888 (who by the way, did not have the decency to show up as we'd agreed, at the appointed time, to "see who was right". I guess because he was proved wrong by the market:rolleyes:)

I posted this comment: http://www.somersoft.com/forums/showpost.php?p=561094&postcount=38

At the time we were buying 2brm units in the Inner West for $420K. Those very same units have been selling for $520K for many months now. So, $100K CG for 12 months worth of holding, if my advice was acted on :)
 
I will put my hand up here and confess to having done that (or at least that part of your statement skater.) :eek:

I did so in June of 2009, when I was having a similar argument with investor888 (who by the way, did not have the decency to show up as we'd agreed, at the appointed time, to "see who was right". I guess because he was proved wrong by the market:rolleyes:)

I posted this comment: http://www.somersoft.com/forums/showpost.php?p=561094&postcount=38

At the time we were buying 2brm units in the Inner West for $420K. Those very same units have been selling for $520K for many months now. So, $100K CG for 12 months worth of holding, if my advice was acted on :)

OK, well, maybe I'm partly wrong here. :eek:

You still did not say to buy anything in any market, did you? It was a well researched specific area that, based on research, was already showing the signs that such a purchase was not a risky proposition rather than you just having a "guess" or a "gut feel" that it would be wise to purchase then. :D
 
OK, well, maybe I'm partly wrong here. :eek:
I quoted only half of your statement and that, out of context....sorry :eek:

You still did not say to buy anything in any market, did you? It was a well researched specific area that, based on research, was already showing the signs that such a purchase was not a risky proposition rather than you just having a "guess" or a "gut feel" that it would be wise to purchase then. :D
That's correct :)

So I have some 'runs on the board' and all the D&G people only have their "beliefs" going forward :rolleyes:
 
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