[devo76Member@devo76Join Date: 2007Post Count: 542]

June 10, 2011 - 6:09 am

i have a property with tennants in both the house and granny flat.
I am building an  additional house to the back plus some extension work and new garage on the existing house.
I lowered the rent a little but at the time it was not really needed.
But right now i have the house tennants moving out right as the extension is being made( think dismantled walls and crap everywhere).yes it is effecting my ability to find tennants. I am now dropping the rent a bit more during the construction phase. 1month max. granny flat tennant is happy.

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April 29, 2011 - 1:40 pm

Culburra ???

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April 14, 2011 - 1:16 am

ummester wrote:

ALF1 wrote:

Australia currently has a housing shortfall

Surely increasing stock levels in every state disprove this. If there truly is a shortfall, how can stock increase without a similar increase in homelessness?

Surely you would agree that sonner or later stock must increase. It cant keep dropping endlessly until the last house in Australia has 21 million people bidding on it.( geez id like to be the owner if that happened).
Stock levels may increase significantly from here and still be in shortage.

Kind of like  the unemployment rates.
they drop .They drop more. Sooner or later it will level or rise. Does that mean unemployment has gone through the roof. No.

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April 12, 2011 - 8:21 am

Building the average four bed two bathroom house with all the finishes would cost over $200,000 in many areas( just house no land). So even if you where given a block of dirt you would run close to going over the 4x ratio.
Now find a desirable block of dirt and the ratio will climb quickly.
Unless we see a major drop in new housing costs or free land. We will not see a 4x ratio(single income) . More likely a flattening or slight correction coupled with climbing waged will improve things but 4x may just be a distant memory. 6x + may be the new 4x.
Cheers

ummester wrote:

Your dog chasing it's tail analogy is interesting and reasonable fword – both sides of the affordable housing debate end up doing this, as you say. Trouble is, looking away from our own tails, we still see them in the big picture.

I'd say – Australia stands alone in the world as not having a housing correction.

You'd say – Australia is different.

I'd say – No it isn't.

And we'd start chasing our tails again.

Yes, I think a 200k house is well within average affordability limits for wages in this country. No, I don't think the bottom of the market represents proof of affordable housing.

Av full time wages are approx 65k and av overall incomes are approx 55k, therefore av housing should be 60k x 4 (perhaps 5 in higher income cities) making them 240-300k. That is average housing.
 
Other housing still needs to exist for the lower income brackets in the range of 150k (approx). Wether or not all this housing has to be close to major cities is debatable, wether or not it has to be close to a source of income is not.

Now, look at Sydney, ACT or Darwin and find me anything advertised less than 300k. Some may be selling for less now, meaning vendor expectations are unrealistic but none are advertised as such.

As for impressing ideas on the government – that is exactly what getup campaigns are about locally and IMF repoprts are about externally. These types of things add to global (and a little local) realisation that Australian housing is a high risk purchase.

As to you and me debating this, we each come from the POV of our own tails. Niether of us seem to be in positions where we are sufferring because of house prices. We both just have an opinion on them. I wont buy something that I consider a rip off, that being my opinion and choice. You think the said item isn't a rip off and have brought, that being your opinion and choice. We are both entitiled to them and it does make for interesting debate, as you say.

I do feel badly for those on lower incomes then myself who are struggling with rent or mortgages (depending on their choices) but ultimately there is nothing I can do.

But the topic at hand is IRs. As they rise, the economy is slowing, on that we both agree. I still stand by the argument thay are not high, which you also seem to agree with for the most part.

Do you also agree that the primary reason the Austrlain dollar is climbing so high is because our IRs are higher than the rest of the developed world?

If so – let's look at this another way. If houses were cheaper, IRs could increase and not slow the economy – correct?

What is better for the country overall? High IRs or high house prices?

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April 9, 2011 - 9:01 am

I thinks it’s obvious that rates do not have to go as high to slow things down as they have in the past. 10%+ rates will not happen for any significant time. I think the rates peak will drop slightly with each cycle.
What happens when we hit peaks of 1% leaving us no room to stimulate ????
I don’t know. It will not be good but it’s still several cycles away yet.
50+ years judging by my crystal ball.

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April 4, 2011 - 7:33 am

Property would have dropped if The government didn’t step in………. Do we really think they won’t do the same this time??? Of coarse they will. They may be a little more careful not to overstimulate but stimulate they will. To think they won’t is falling into the same trap.

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April 4, 2011 - 4:38 am

I was actually counting on a slight drop in prices to help with my next purchase. problem being is the cash i was going to use was profit( equity) created in my current development. The development should have been completed by now but will probably take until later in the year now. Luckily even with a 20% drop i will still have equity to release for bargains. much below that and i will start to get a little  p##ed.  Still profit there just that im greedy and want 40% profit. So for me prices stay up thats good. If they drop thats good too.

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March 31, 2011 - 11:03 pm

ummester wrote:

devo76 wrote:

First of all. 56% blah blah. That would place many properties across Australia at below their replacement cost.

Secondly why must there be a crash from here. I agree that values are way high. But i also believe that a few years of flat growth will sort this out. yes we are pricey compared to many countries. many of these countries are in the toilet so not really a fair comparison.What about when these countries recover. Do we honestly expect there values to stay where they are.

Yes values are high. yes a correction is probable. But a nationwide crash of 40-50% unlikely.

Hey devo,

Don't really disagree with anything you posted here but am interested to know why you now find a correction probable?

If I remember correctly, in 2009/2010 you thought it was unlikely.

Also, not sure that home values now are signifigantly more than they were (nation wide) in 2007.  2008 took some value of most places in most markets, don't forget and the 2009 FHB boost only took them a little above the 2007 peaks (5% or so) and the median has continued to rise since by upgraders endowed with the extra lvr from 2009.

It's kind of a classic double peak – which is bad in stocks.

I can’t recall all my posts but I have always felt that a correction would happen but not a crash. My last purchase in 2009 was with the expectation of minimal gains in the short term. Turns out it went up thanks to the double peak you mentioned.
To me a correction of 10% or so is to be expected after a good run.I just don’t buy into the crash . My backyard is still relatively affordable having had minimal growth since 2003( you could say a long slow hiss instead of a pop).and where you invest is where it matters.
Actually I would be quite happy with a slight correction as I am far from my borrowing limit and want more properties for my portfolio.
I know cycles have ups and downs and a knew that the down side may come into play with my 2009 purchase. I have 20 years minimum before I cash in so it was and still is well within my risk profile.
So in a nutshell a correction of 10% or so is calculated and allowed for.
A crash is unlikely but also survivable.
But with cashflow, a buffer and time on my side. I see nothing ahead that is out of the ordinary within the bigger picture.

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March 30, 2011 - 7:13 am

First of all. 56% blah blah. That would place many properties across Australia at below their replacement cost.

Secondly why must there be a crash from here. I agree that values are way high. But i also believe that a few years of flat growth will sort this out. yes we are pricey compared to many countries. many of these countries are in the toilet so not really a fair comparison.What about when these countries recover. Do we honestly expect there values to stay where they are.

Yes values are high. yes a correction is probable. But a nationwide crash of 40-50% unlikely.

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March 30, 2011 - 7:03 am

Vocal minority having a cry. Thats all.
 The much larger quiter group( every home owner) will have a lot to say when/if things look like being effected by their boohoos.
You rarely hear from the happy. Just the unhappy.
 When was the last time you visited a website to let everyone know things are just rosey.

My point being this response is not suprising with house values where they are. In time values will level out and so will the bad press.

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February 3, 2011 - 10:17 am

Wynyard wrote:

Bumping for new leads

Shoalhaven.
Fast growing area.
coastal
2 hours from Sydney and Canberra
Cheap houses( nowra area)
great for families
I live there so thats a big plus

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January 7, 2011 - 5:47 am

I think will be hard to get people on the side of Nowra here. Nowra would be relatively unknown. Where would I buy. Well Nowra for Starters because I live here. It’s not a little country town as some suggest and it has much going for it now and into the future.
It’s affordable and has an average rent return approaching 6%.

You could do a lot worse. But compared to Sydney it’s hard to pick. Massive market compared to a smaller one.

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December 4, 2010 - 7:56 am

Complying developments are generally the big housing estates on the outskirts. Sometimes you have to go through a bit of crap to come out ahead

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December 3, 2010 - 10:44 pm

Tom
my agent has 500 rentals on there books. None available NONE. Newspaper shows families struggling to find anything. Workers moving to town living at there work. People paying rent a year in advance just to secure a place.

Sure there are estates on the outskirtsthat have room to expand at the developers whim. But the developers stop for a reason. There costs plus there margin = a block they can’t sell.

So your point is pointless.
Things will change eventually and how fast or big that change will happen is negotiable.

But people saying there is no shortage…. Open your eyes. Denial does not change the facts.

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November 16, 2010 - 10:21 pm

I agree thommo. A soft or flat market for a while would be great. I actually believe this is what’s happening. Some interpret this as an impending crash. Time will tell. Looking long term but ,the game hasn’t changed at all.

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November 16, 2010 - 9:48 am

Nice post . Nice FIRST POST. Can I just ask why you bother on a property forum.
You know what. I hate golf but you will not find me on a golf course telling people.
So why are you here I’m honestly interested.
Do you want to save us …. Not likely.
Do you want to start crap…. maybe.
Are you angry about house values and feel that by pushing negative articals you might play a small part in inducing a property crash that you can proudly come back and lay claim to…. That’s the one I think.

Good luck with your predictions. Thanks for the heads up.

TKline wrote:

Excellent article about the Australian Property Bubble

This does pours cold water on most spruiker claims about  how it's supposedly different here — reading this article shows how much Australia has similar to every other bubble, and they've all burst, all but one! Tick tock tick tock…….

Will the 'greater fools' listen or ignore the advice? Public sentiment is turning. As more people see the wisdom behind these theories, it's a matter of time, that's all!

Quote:

Are Australian House Prices Overvalued?

The question of whether Australian house prices are overvalued has been an extremely polarising issue for some time. Many observers believe property values in Australia are severely overpriced relative to other countries, relative to historic trends, relative to incomes, and relative to rental yields. Such observations have led some people to believe that a speculative housing bubble may be growing in Australia…….

Australian Property Bubble

All the best,

Tom Kline.

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October 24, 2010 - 9:52 am

I live near power lines. Not the big boys but probably 1.5 times a norman street line The road in our estate runs parallel to them but my couldersac runs away. Not the greatest thing to see as you drive in but on the flip side it opens the estate up to views of the mountain.It has effected sales a small amount. For every 1 person that does not like them 10 would not care. Rents are great and sale prices are some of the best in the area. But like i said this is not the big boy ones on metal towers.
It would really come down to each individual situation.

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October 15, 2010 - 12:42 am

if they bought 2 years ago and lost money I would believe it. That is “in the last ten years ” also.
Honestly mate you did imply a ten year timeframe

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October 12, 2010 - 9:24 am

I have an example.
Buy any house in 2000.
DON’T INSURE IT
then burn it to the ground.
That’s one way to lose money
………..actually…………..
The land value alone would probably put you in front so scratch this example.

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September 29, 2010 - 5:02 am

All my properties bought in the last 10 years including PPOR. Im doing fine.
Total out of pocket expenses across all including costs is under $300 pw.

I have friends who bought their first place recently. Also doing fine.
Work mates doing fine
Neigbours doing fine.

Sorry i dont see the blood. Im sure its there but it is not the majority of cases thats for sure.

As i touched on in another post. One of my mates was going to give investing a miss but decided to buy a little over a year ago when everyone said run for the hills. Today he is sitting on a good chunk of equity and a neutrally geared property.
no blood there either.