Forum Replies Created
- seank wrote:blogs wrote:seank wrote:
Scamp have been spending too much time in those Holland cafes? Did you read the article properly?
This relates to Public trustee houses, which can't be rented out and have nothing to do with the rental shortage.
Ahhh Seank sure you read the article yourself? It isnt JUST about public trustee houses, it is also about properties that are vacant for other reasons. That asside you would also realise the article is saying "Every year about 1200 vacant houses fall into the hands of the Public Trustee" but due to red tape they cant get onto the market instantly. Also that "The number of unoccupied residential dwellings in Sydney counted by census workers in 2006 was 122,211, with the highest number found in the inner city" -not all of these were due to Trustee issues as you incorrectly pointed out. Read the article again in full maybe…
I think you have missed the original arguement point which was -there is a shortage of RENTAL and SELLABLE properties which is driving up demand., and rentals. Scamp replied with the above article, which indicates YES there are vacant houses for various reasons, however they can't be rented or sold, so in reality these numbers mean nothing in relation to supply……
If you found the proper data on rental vancanies I'm sure it would paint a different picture….The article also makes reference to houses held by developers waiting for the right time.
Also I have observed more vacant property awaiting sale than ever before, think this is a current phenom
blogs wrote:vicgirl wrote:Again another article in the paper on the weekend stating already properties at the top end of town are selling for $100k less than they were just 12 months ago-and we arnt even in 'financiall hardship' yet,
Client unloaded a property at Palm Beach for 6.25M end of last year, best estimate for it now is 4.5M
(Very unique property Olsens stayed there a while ago)
Palm Beach is proably the pinacle of the top end discrectionary investment.
Scamp wrote:and will soon become more than clear to a lot of households when their
lowest-ever 5-year-fixed mortgages will go up from 6% to 10% interest rates this september 2008.
This huge increase results in average monthly mortgage repayments increasing from 850$ to 2650$.In september 2008 :
And that is the big question. So many of the equity investors locked in 2003 and 2004 when the market noticeably paused
and if they have not taken the time to fix up there personal balance sheets they will be facing very different lenders than the bend over backwards “lend money to a homeless drunk’ bank of 2005. What they do will set the stage for the next tweak to the market.Hands in pocket until then.
Scamp I am with you except for 1929, painful yes but think 91 will be worse ( I hope)
APerry wrote:[why do you think rents are rising in most markets?I think part of the factor is the new wave investor is passing on interest rate rises. In the past most property investors were not so highly leveraged and wanted 52 weeks of rental income with minimal letting costs. Rents often only rose when the place went vacant.
These days the investor raises it and hopes the significant costs and inconvienence of a move will lock his tennant in.
When many of these speculators get pushed pass their tipping point and the resetting of rates that will happen to many this year and next will push a substantial amount of property onto the market to be sold at “market”
I am keeping my hand in my pockets till then
Have most of my property investors looking like they are living on lemons right now, not a happy bunch, some life changing stories there.
APerry wrote:There will be relatively few forced sales in established suburbs.
Regards
AlistairSydney
Kellyville drops from 850 to 550 wipes out builders as completed houses are now cheaper than house & landAdjoining suburbs Castle Hill and Cherrybrook drop from 850 to 720
Pennant Hills drops down and so it rolls.
Why buy a townhouse in Baulkham Hills from a builder for 480 when you can buy a three bedroom house with Db garage in same suburb for 450,
just rolls inwards in concentric circles
phana007 wrote:No ones walking through the door at the moment" MYAGENT realty said.
Do you believe some realestates are artificially inflating the prices?
You always need at least one over priced house on your books.
It scares people when thay look in the window, and then you sell the cheaper stuff off it…
straight selling tool
TheBish wrote:Bottom line is I think we may look back on this year and say – "I wish we'd bought more property back then"Cheers
Sort of agree, but from history I think we will look back and say wish I had bought property in 2010 – why buy when going down, always try to buy when it picks up, between now and then cash will be king.
As an example I am locked in on rates that are less than what my super fund (cash) is earning. Very strange feeling first time in my life the bank has been paying me more than I pay it,
Scamp wrote:>Your market is just like any other market,should possibly have gone without government help ( tax incentives etc ),
it a fear/greed market.
Well done.
Should leave this alone but I can’t.
Yep this was a govt lead boom.
After the building boom of late 90s when everyone tried to build before GST, we had the post GST building slump. To avoid the backlash from buidlers and the inevitable downturn to follow, they had the first home owner grant, not to help home buyers but to prop up profits of builders, this combined with the rise of the unregulated spruiker (I’m an accountant and by law cannot advise on investments, but for a while real estate agaents were setting up more super funds than we were) the deregulation of banks and the proliferation of fake and lo doc loans, etc together with the media (who use press relases by the REI as news…..hello it is spin not news) and yep we had a greed fear boom, that risks screwing the economy and changing the egalataian society for ever.
We have just experienced the biggest wealth effect (imaginary not real) boom OZ has ever seen.
Helestelle wrote:I like the fact that its a one stop shop –
and that they research the market and build in areas that will see capital growth
the question is – its your money, and you are relying on info provided by someone with a vested interest in you parting with it.
for this and anything else in life where the person you are relying on has a conflict of interest, do your homework, taking the easy route of the one stop shop has proven to be extremely painful for many investors.
That said I know very little of Custodian, but the principal remains the same regardless.
Scamp, there are specific dynamics here, but I worry when people here say “our market is different”.
Without getting into the debate, we are totally out of whack with a “proper economic market”. Maybe we will stay that way, and we will write our own chapter in economic and social theory, or maybe we will shift back to the norm.
Scamp welcome, and personally not going to argue with your advice, you may very well have saved someones future,
quite a few have been quietly prognosticating about the inevitable cycle for sometime, and we may now may up a sizeable chunck of the board,
unlike the bank Johnies taking a big breath and starting to get excited again, because the US did not explode, I think we are a long way from the end.
Again welcome, to the Bears side of the forum…..”go you Bears”
Great timing, as credit card rates are climbing and may climb even more.
well done.
James62 wrote:/>I am still amazed by stories of investors who manage to grow a portfolio of more than a few quality inv properties using negative gearing methods due to inevitable cash flow shortfalls.James
James don’t feel too bad, this a forum board, like most others and the inevitable pissing contest develops between the “boys” (and girls). Most people in your situation are not that honest – with others or themselves.
Got to agree with others you need to organise an exit strategy, and write it off to a steep learning curve.
A lot of us here would be much better off financially if we only had the financial knowelge we do now, when we were much younger.
Good luck, and sounds dumb but it is only money and there is a lot more to life than that.
Seriously guys – have you guys ever met or are you just the one guy under different names ?
More prior posts would add creditablity,
Steve should charge for advertising
simple wrote:. Economy cycle up and down every 7-10 years.Cycle crunches from memory 73, 83, 91, 2008 +
shortest was around 8 years longest is 17 and climbing cause we have not seen bottom yet.Know the 7-10 years has become “fact” but would not bet on it.
We have very lazy media in Australia who run press releases from the REI and developer lobbies as news, without any analysis.
Very scepitical of positive news in RE.
In US Merryl Linch sacked 4,000, Citi Group 6,000, mortgage stress in OZuilding, UK govt bailing out banks. yep Sydney will turn any day, BUY NOW !!!!!!
On a sidenote just did a cap gain calc for a client who bought Mosman in 2003 at $1,175,000 and is selling at $1,850,000 cap gain is around $20,000 as the raw stats don't show the $400,000 +++++ in a reno, and do not reflect the $100,000 in maintenance claimed during the reno.
Raw facts can be very deceiving..
Not here yet but getting closer.
Yesterday afternoon over three hours I personally saw
– girl in lift (whiile leaving for a meeting) just made redundant, employee of largish loan provider 250sq metrs, 5 car spaces, – they can’t sourse funds
– at meeting client mentioned a large consolidator (a centra wanna be) in unrealted industry had made unsolicited contact to my client, who is a product provider, to open a relationship. Client rang round and got the word, that if the caller was not yet technically financially dead, they soon will be.
– but the best was last, a solicitor mentioned a big end of town boy was having trouble getting his 2 mill loan rolled over, property was 12M, 1st mortg 6M 2nd was 2m.
Eventually got it covered by a non bank lender at…drum roll please….4%….what a deal …but the catch is ….per mth, but the good part is if not met, after 7 days the default rate kicks in at 8% per mth. They are counting on his inabilty to turn the business around (they always dream they can) and are probably picking out the furnishing for their new house right now….Not here yet but soon…say another 6 mths to a year..
80% will never know anything has happened
10% will have some level of hurt
5% will have a life changing experience
5% for them it will be excruciating.I agree with Blogs, and when someone writes this up after the final washup, we will see a convergence of factors never seen before.
Not just the halving of rates and the speculation referred to but the deregulating of the market meant any homelss drunk could get not only 100%+ finance but a cheque for many thousands on top, a whole industry of people , brokers, spruikers, bankers, agents and not to be left out TV, with the Block, Hot Property location location, all created an unreal world, where assessment of investment, rate of return, became meaningless.
Back in 2004/2005 the biggest profession setting up self managed super funds were not accountants, solicitors or financial planners but real estate agents.
I am an accountant and when people would tell us what they were buying we would ask what is the rent and calc net rate of return, which sometimes was as low as less than 2%. When we would advise them of this we were always comforted by the client's confidence that the capital gain would make that return immaterial. Could not loose, can't fail….
Once on this board someone chided foundation on his negativism, explaining to him that property had to double because interest rates halved………..wonder what he will tell the people who bought in recent years as rates have ow gone up over 58%.
(9.36 -5.9 = 3.46 = 58.6%).We have several clients who have haemorrhaged their retirement plans, not looking forward to the next conversation..
Hmmmm wasn’t the market around 2200 before Oct 87.
How does a trend line from 87 pre crash until today compare
A couple of years ago when the issue of the economics of this boom were discussed on this board a member stated that a slump/correction would not happen until we had a trigger, and went through the last couple of slumps as examples.
We now may see the trigger in the distance. The current maket has been driven by unprecedented demand. For the first time property investment needed no capital as shown by posts on this board by people relying on centrelink who started on their portfolio.
This segment has relied on the 100% + loans.
If the powers that make such decisions perceive that the greater risk in the market means that debts could be reduced to 90% even then we could see some adjustment. If that figure drops lowers than 90%, it could suck out enough buyers to slow the growth. Actually I think less than 85% would make very interesting viewing.
The typical refinace strategies relied upong by many will fail, as they will have finally maxed their card (house equity)
Many property investors who have relied on increased equity to cover their neg gearing will be faced with unloading or finding some temporary cash shortfall ( expensive) and hope the loans will loossen up before even more equity disappears.
Too many of the above, could push enough to sell property to ease demand, and also to change the perception that the market will run forever.
The debt issue will have some fallout in big business as many of these equity buyouts from recent years are coming under pressure. ( I myself have benefited as my biggest client was prepping for a 20mil + sale this June that has now evaporated – propably will now keep the S6 after all)
Enough of the above may encourage enough consumers to pull in the belt, and that could trigger a negative wealth effect and public perception on property as seen in all prior booms.
I know that China and India still have steam , but not sure if our economy could whether a cooling in consumption
From the look of the banks now trying to cover their margins I have to wonder about Wizard etc and how much margin they now have left.
The stock market is driven by a bunch of kids who don't know how to make money other than in a Bull market and we seem to oscilate between 6300 -6700. Maybe the bull run is finished there too. And I know that China etc has steam, but the brokers have factored all of that current growth and more into the current prices.
This was the year that the crunch was predicted by the long term forecasters back in around 2000. Be interesting to see how it plays out
