DadOfSam said:
I would continue to do so if they hadn't banned me.
Sorry, but you haven't...or if you have, it is still debatable, not that I'm going to debate it with you anymore of course.
Will Australia's next property boom be the greatest boom we've ever seen?
- Thread starter Shadow
- Start date
I would continue to do so if they hadn't banned me.
Sorry, but you haven't...or if you have, it is still debatable, not that I'm going to debate it with you anymore of course.
Although, I guess in the short term Sydney isn't benefiting from the resources boom to the extent other cities are:
http://www.news.com.au/story/0,23599,22988823-421,00.html
I guess this may change if commodity prices nose dive.
I think the optimism over the medium term needs to be tempered. Even if we assume the US doesn't go in to recession and stop buying stuff from China who, in turn, ease off buying stuff from Oz it seems to me that:
*the property boom of the last decade has been fueled by credit availiability and low credit costs, not income growth (I'll exclude Perth from this but in part)
*for the disconnect to continue and property price growth to be maintained ad infinitum, easy money needs to remain or continue to get easier.
*increased credit availability has been a function of (a) increased competition driven largely by the non-bank sector, (b) increasing LVRs and (c) decreasing serviceability benchmarks.
*the non-Banks can't loss lead anymore
*credit is retightening
*the mortgage insurers are getting nervous so the banks can't as easily offload the risk
*interest rates are going up due to liquidity issues and the driver of same (sub-prime crisis) is far from over.
*today's move by the NAB will be the first of several over the next few weeks.
If the future buyer of your property can't borrow (in relative terms) as much as you could when you bought the thing, what happens?
*the property boom of the last decade has been fueled by credit availiability and low credit costs, not income growth (I'll exclude Perth from this but in part)
*for the disconnect to continue and property price growth to be maintained ad infinitum, easy money needs to remain or continue to get easier.
*increased credit availability has been a function of (a) increased competition driven largely by the non-bank sector, (b) increasing LVRs and (c) decreasing serviceability benchmarks.
*the non-Banks can't loss lead anymore
*credit is retightening
*the mortgage insurers are getting nervous so the banks can't as easily offload the risk
*interest rates are going up due to liquidity issues and the driver of same (sub-prime crisis) is far from over.
*today's move by the NAB will be the first of several over the next few weeks.
If the future buyer of your property can't borrow (in relative terms) as much as you could when you bought the thing, what happens?
My hot tip for Sydney investors...
Newport, Sydney's Northern Beaches
http://en.wikipedia.org/wiki/Newport,_New_South_Wales
http://images.google.com/images?gbv=2&svnum=10&hl=en&q=newport+sydney&btnG=Search+Images
Why?
- Low median price compared to other Northern Beaches suburbs
- Residex forecasting 10%+ per annum growth over the next 5 years
- Narrow stretch of land bordered by Ocean and Pittwater (very geographically constrained)
- New Coles supermarket and apartment complex currently under construction
- Woolies also planning to build a new supermarket shortly
- Newport village Masterplan: Local council spending millions on streetscaping, new community centre, and village redevelopment.
http://www.pittwater.nsw.gov.au/bui...ing_for_the_Future/newport_village_masterplan
You can thank me later
And did you seriously know at that time (99-01) the extent of the boom that was to follow and that it was just around the corner...or were you just lucky to be buying at that time when yields were what they were?
Hi Token
Household income growth has increased, thanks mainly to higher levels of employment, ie. more households have dual incomes than they use to due to more housewives willing to go back to work, and more employment opportunities. Increased surplus cashflow allows households to take on more debt. Combine this with greater ease of obtaining credit at lower interest rates and you do get a debt boom.
But this isn't a one way street, household income can drop, while wages keep going up, if employment rates fall. This may result in less credit growth for a period, and less money available to purchase assets and positional items.
All yet to be proven when this may occur, but business cycles suggest it will happen one day.
Interestingly there was a substantial surge in property values in Melbourne in 2007. Yields have recently started moving strongly since due to the demand for rental properties. (Interest rates have also risen, but this is inconsequential to investors who have locked in previously held loans on comparatively low rates.)
The real estate industry and many property commentators expected the uplift in property prices to occur in Melbourne around 2008-2009. They occured early. So it may not always be easy to 'predict' when prices are going to move. Even the experts did not get this right.
Prices may stagnate or drop over the next few years. Yields may rise or fall. (Although there is every indication that yields will continue to rise in Melbourne due to the shortage of available rental properties). It really is difficult to know for sure.
I hope that whatever you choose to invest in between now and 2010 works out well for you FHB. Shares are not exactly the investment of choice at the moment. Perhaps commodities (gold) may be the way to go??
Regards Jason.
JIT you will learn a lot by reading keith's interview... he has used his approach in property AND shares successfully.. i dont know many people who bought prop in 99/00 and then shares in 03 based on this common-sense logical approach. As they say common sense isnt very common ...
This seemingly simple approach was truely contrarian investing with remarkable foresight.. it may seem easy but its execution is very difficult.. good stuff keithj
This seemingly simple approach was truely contrarian investing with remarkable foresight.. it may seem easy but its execution is very difficult.. good stuff keithj
l really can't see how there could possibly be the biggest boom ever yet to come . No disrespect to Michael intended but !
l mean has anyone checked our house prices compared to the rest of the world ?
From what l know [ not much ] they are rediculous !
l mean 3-4-500k for a 3bm w/b in the subburbs - come on . How the hell can that be justified or it going up 10% a yr from there they are high enough now to last the next 15-20yrs if you ask me . lt's surreal , the suburbs aint Tuscany it's madness.
But l do believe that madness might carry over into 08 and maybe further, just the result of 11 and 1/2 yrs of lib brainwashing and money mentality .
After that though there has to be a hell of allot of sorry sods around that have paid rediculous prices for property or unfortunately a family home just like in Sydney now.
Logically 500k x 10% pr yr for 10 yrs . What a million and a 1/2 bucks for a weather board in some shitty suburb !
l feel there'll be allot of silly rabbits around over the next yr or two paying amazing dollars but after that - allot of very sore ones.
lnvesting , wish l knew , seems there's still enough stupidity around to make lots of dollars over the next yr or two though if you've got the eye and the bucks l'd say that's a pretty safe bet wouldn't you guys ? Eying of Gympie myself due to the prices the rabbits on the Sunny coast are paying these days they've gotta come to their senses and head of to the nearest cheaper pasture surely , if anyone has some imput on that one.
cheers
Blaster
l mean has anyone checked our house prices compared to the rest of the world ?
From what l know [ not much ] they are rediculous !
l mean 3-4-500k for a 3bm w/b in the subburbs - come on . How the hell can that be justified or it going up 10% a yr from there they are high enough now to last the next 15-20yrs if you ask me . lt's surreal , the suburbs aint Tuscany it's madness.
But l do believe that madness might carry over into 08 and maybe further, just the result of 11 and 1/2 yrs of lib brainwashing and money mentality .
After that though there has to be a hell of allot of sorry sods around that have paid rediculous prices for property or unfortunately a family home just like in Sydney now.
Logically 500k x 10% pr yr for 10 yrs . What a million and a 1/2 bucks for a weather board in some shitty suburb !
l feel there'll be allot of silly rabbits around over the next yr or two paying amazing dollars but after that - allot of very sore ones.
lnvesting , wish l knew , seems there's still enough stupidity around to make lots of dollars over the next yr or two though if you've got the eye and the bucks l'd say that's a pretty safe bet wouldn't you guys ? Eying of Gympie myself due to the prices the rabbits on the Sunny coast are paying these days they've gotta come to their senses and head of to the nearest cheaper pasture surely , if anyone has some imput on that one.
cheers
Blaster
Last edited:
Thanks Jingo,
Economists are a bit like weathermen, they are good at telling you what just happened, not so good at accurately telling what will happen (I think the saying goes something like that?). Anyway, no one knows what will happen, but we can weigh up probabilities.
I'm a bit confused about what to go for this year, cash is looking good. I'm trying to buy a PPOR anyway, so I need to keep a certain amount available. If I can minimise my borrowings when I do, it should put me in a good position to access equity to invest when things become clearer.
On the previous AMP chart I posted, here is a crude version that shows what may happen if the 1970s boom repeats.
Perhaps we could see a few more years of growth before this thing fizzles out....
Hi Blaster, welcome to Somersoft.
Actually no Australian city even makes it into the top 20 most expensive cities in the world.
In fact, Australian house prices are quite undervalued.
You can find more details here...
http://www.somersoft.com/forums/showthread.php?t=34374
Cheers,
Shadow.
You do misunderstand..... I rarely use cash to buy property - only other peoples.
You've caught me out JIT..... I apologise for using the phase 'less negatively geared' instead of 'very close to costing me nothing to hold and paying for itself'.... I'll be more careful next time
.I'm happy for those who have invested in Bris & Adelaide using their strategies. I'm afraid my crystal ball can't tell me when a boom is about to happen, so there's plenty of booms that I miss. I call them the 'wrong type of boom' because they don't start from a low risk base. The type of booms that I aim to catch (although don't claim to be able to foresee) are those that start with good value assets that are very close to costing me nothing to hold. I hope that clarifies....
No... I had no idea, but I did know that it was a low risk opportunity that would cost me nothing to hold, rents weren't likely to fall, so even if prices fell it wasn't going to affect me in the slightest as I had no intention of selling.JIT said:
Exactly (I wasn't talking about you), first home buyers (eg. 'FHB'), either owner-occupiers or investors, usually DO need a cash deposit.
keithj said:
Depends on what you consider 'good value', I could be watching very closely for inner city or bayside properties to become 'good value' the way you see it, though I suspect I'd be waiting a LONG time...
You're relying (on top of various 'fundamentals') largely on the yield (neutrally/positively geared) as your buy trigger, but I would argue that for the good, or let's say the 'best value' (ie. best potential for CG, which is why you'd invest in residential property of course) properties...this is very difficult to begin with.
I'd probably call your 'good value' properties 'average', and wouldn't want to tie up borrowed funds (or my 'equity' or cash if you're a first property buyer) in something that had lower growth prospects, even if it was neutral/positive at the start. Of course, you could always put a bigger cash deposit in and make it neutral/positive that way, but that doesn't make the investment any better in quality.
Difference of opinion really, or risk profiles.
Interestingly, in inner Melbourne, those who spotted 'good value' by different measures 2-3 years ago, have had enormous capital growth AND rental growth virtually at the same time, so previously negatively geared properties have become close to neutrally geared in the space of a few years, along with the creation of enormous equity.
keithj said:
Fair enough, that's what I thought.
Last edited:
You and your mate must be related..willair..
Thanks Shadow and thanks for the link looking forward to taking a look. Had a horse called shadow once - no pun intended, very nice horse actually.
l have seen some stuff but l look at it like this . They say our repayments now and in the future are far too much of our wage compared to other countries like the US which that's how it looks to me to .Really l think the place has gone abit nuts to be honest for what we get for the buck now and l actually saw , spose everyone did , properties in my area go up 4-500% within a year or two , somem's gotta give there surely.
Allot of US prices to which in a way l reckon Australia sort of relates to more than other places , seem to be talking 40 - 60 , 70k for the same stuff we're expected to pay 500k for now don't you think.
Allot of those even seem to be twice the house we're getting now for our 500 to in allot of cases , never been there though or actually seen the towns or whatever so .
Cheers
Blaster
I've called you on this nonsense so many times .... that top 20 list has nothing to do with house prices yet you choose to make the connection because it suits you.
