Word of caution for the newbies.

yieldmatters said:
I can't understand why your old place isn't still worth $170K - is the area or the house different in some way these days to justify more money?
Click to expand...

As far as I can tell, it's still the same - maybe painted again.

I'm sure the value of any house is a combo of buyer demand, plus the construction costs if it were to be replaced.

For example, I think from memory it was a 15 square house, and if it costs around $11k per sq to build these days (for a basic product) then this makes the house alone around $165k, plus the land (it was in Boronia, so not a real flash area).

Based on that, the value would be a bit low if you allow around $150k for the land.

At the end of the day, there's just no real hard and fast formula.
 
Hi all,

LAA, the examples of actual houses in different areas is what counts, as it is representative of what really happens. My brother bought an IP in Boronia near the height of the boom in 1990, a unit for $60k, he still has it.

YM, How can you possibly expect the property bought for $85k 23 years ago to be only worth double now (ie same real value). Interest rates were 15%? at the time, the infrastructure of the area has improved and the availability of land for building on there is diminished???

Just the interest rate difference alone, mean that it would be no more or less costly to hold now than in '85.

If current interest rates were to rise to 15% in a very short period of time, then yes the price would likely fall. Converesly if IR fall in the next year, then the property is probably a bargain.

bye
 
L.AAussie said:
I'm sure the value of any house is a combo of buyer demand, plus the construction costs if it were to be replaced.

For example, I think from memory it was a 15 square house, and if it costs around $11k per sq to build these days (for a basic product) then this makes the house alone around $165k, plus the land (it was in Boronia, so not a real flash area).
Click to expand...

Don't you think a new house should be worth more than an old one?
 
HG,

A new house in that area is worth more than the valuation LAA gave for the property in Boronia. It has already been factored in. What is your point??

bye
 
HiredGoon said:
Don't you think a new house should be worth more than an old one?
Click to expand...
That depends. I have a slight fetish for really old houses, I just like the big rooms and thick stone walls, but they tend to have awful kitchens/bathrooms and dubious plumbing and wiring. When they're renovated they can be much nicer than a generic 'new' house. But a generic 'new' house should be worth more than a 70s/80s or even newer generic 'new' house, since they took some serious shortcuts in that era (still do) and they don't last very well. Land under the house is a whole other kettle of fish ... the stuff ranges from cheap as chips out here to more than anyone should ever have to pay in Sydney.

I still want a castle. Thick walls, dungeon, but a modern kitchen :D
 
HiredGoon said:
Don't you think a new house should be worth more than an old one?
Click to expand...

Depends if it's a project home or not. Some of the FDB type homes they are pumping out at the moment surely won't last as long as those that were built 20 or 30 yrs ago.
But they look and smell nice and new. Emotional advantages eh.

Hardwood rules - but it's really expensive and heavy. :(
 
myla said:
hello rastus 2,

rubbish, people have plenty of room for rent increases,

look at a couple on 100k/yr paying $350/wk on a 2-bed apartment in say prahran or st kilda, they have massive room for increases,
Click to expand...

Rubbish Myla, just because someone has capacity doesn't mean they will accept a rent increase. Would you accept an increase in your mortgage payments or would you look for a better deal?
 
banahers said:
Rubbish Myla, just because someone has capacity doesn't mean they will accept a rent increase. Would you accept an increase in your mortgage payments or would you look for a better deal?
Click to expand...
This one made me smile.

I got offered a $5 muffin at my local coffee shop today, no way I was accepting that, so I went without. Anybody else noticed how these puppies are in a perilous bubble state? 600 SBUX stores closing in the US can only be a matter of a time before a cashed up Andrew revels in $2 Muffins again (or wait till close of business Saturday sometimes get you good deals.)

All comes back to your demand dunnit? If indeed there isn't much of it going around then land lords (rentier capitalists?) won't be increasing their prices that much I guess.

I pay attention to the rental markets I'm interested in, pretty healthy increases on the low quality stuff and not even much of that available, but I haven't check bublepedia admittedly so can't say how that will pan out.
 
Is there anybody with some knowledge to counter any of these claims?

Matusik on undersupply of housing stock in Brisneyland and SE QLD

This gives me confidence that betting against strongly rising rents in Brisbane is not something I want to be doing at the moment, though I admit that MM could well be talking his book.

Taking the devils advocate position I would wonder how quickly immigration trends can change to this country, I think they should be increased but they could be lowered as well.
 
banahers said:
Rubbish Myla, just because someone has capacity doesn't mean they will accept a rent increase. Would you accept an increase in your mortgage payments or would you look for a better deal?
Click to expand...

hello,

accept it, which is what most renters are doing as new bonds are down some 10%, great stuff

keep it on month by month

thankyou
myla
 
back on topic, I reckon newbies would do well to read broadly rather than take Alan Bond's, Brad Sugar's or Henry Kaye's (all wealthy men) about investing.

Here, Alan Kohler discusses differences between US and Aussie banking, and govt guaranteed mortgages.

Alan is widely regarded by Australia's business elite, can be heard on ABC TV at 7.15pm in the news m-f,and on Inside Business on sunday mornings.

Even wealthy people have to get information from somewhere.
 
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