Forum Replies Created
It doesn't pay to say something negative about property investing on this site – you get shot down in flames.
Problem is property investing has such a wide range of people with different amounts of debt and different wages etc.
I still am of the opinion that housing is going down big time over the next few years.
But, I still have kept my properties because of my situation ( own most properties outright and purchased years ago ), so I rely on rent rather than capital gains.
If I was high on debt then I would sell now before negative equity takes a hold over the next few years..
But that's my position and even though I noted others are saying property will be stable and advising others not to sell, they are not in the buy and hold class, they are developing etc.
In conclusion. I think every case needs to be judged on the individual circumstances, we cannot give broad advise to others without knowing all their circumstances. But everyone is intitled to a veiw based on their knowledge..that's good.
fWord,
Good post, agree with it.
As you suggest supply is fairly finite, except if people start selling ( cannot afford repayments and will move back home etc ), this then increases supply, thus reducing housing costs ( people see more houses for sale, less hurry, prices drop etc).
Probably demand is related to the supply and as you say peoples perceptions of future prices and status of owning well located and high quality housing.But as to your question of how to make real estate more affordable, well the experts cannot really get that one.
It's easy for us to say less tax, less red tape, etc but we are looking at it too simplistically. There are lots of people with their hand in the till, waiting for their share ( like federal government, state governments, local governments, suppliers, retail, builders, etc ).
No chance of them all sitting down and having a pow wow, they all need the money..Sorry I have no real answers, and not being in the building game have no inside information. Maybe others can come up with some suggestions ??
DWolfe & reddahaydn,
Note I said flats, not townhouses or appartments. I was just trying to say "not cheap ugly flats ". I take your points about all new appartments ( this is sort of what I meant to say about modern small living areas ).
I own my own home, its 20 years old, only an average property, but is full of kids, so is energy efficient ( north facing, insulated, etc ).
Agree, that most people want to buy Mc Mansions that are close to transport, beach, city, everything, it's unfortunately the Aussie Dream. This is what I hope will change over time, thus reducing the demand for wasteful use of a finite amount of raw materials. But, as I say it's what I think Australia needs to do, we waste all our money on housing, which leads to more stress and less money for the kids and our own enjoyment. Also puts pressure on marrages, makes us work longer hours, etc….all just to meet the monthly repayments. I think I'm raving on here.. sorry.
People will always be vain… well maybe we all need to change our ways, isn't vain one of the sins of men?? sorry, raving on again.
I think I have said a few times over this blog why houses will fall, interest rates, state of the world economy, etc…we will have to just wait and see if I am wrong.. if so then good I make money if houses go up in value, but as long as people can pay the rent then I don't care too much if they go down, I own most of the houses outright…so no interest to pay.bye
Sorry,
Just had to post this.
http://www.moneymorning.com.au/20100608/house-prices-at-maximum-risk.html#more-3296
Always a good read is the moneymorning post.devo76
Canada is not in dire financial troubles, it is like Australia in many ways, both have high housing costs, both are reliant on mining, both have hots of space with nothing ( ours is hot desert, their's is cold desert ).
Oh OK you mean like America sorry. OK go along with that first bit.You now assume they will recover……..maybe in 20 years or 15 if they are lucky.
Your guess is reasonable and makes sense if all plays out as in the past, but I myself think Australian Properties will fall by 20 -30% over the next few years. But it's my guess so has no possibility of happening….L.O.L.
America etc prices will recover if the economies recover, but I think that the world will slowly start to realise that we do not need a Mc Mansion to live in and be happy, and we will ( Australia included ) start to buy smaller and more modern and environmentaly friendly housing, So will need less land and hopefully mean less housing costs, less money from wages so we have more money for living. You know less electricity, water, gas, pollution etc etc.. But hopefully, not more and more flats..
It's time we decided Mc Mansions are too expensive to build, to look after, and are wasting to many resources of which less and less are available to us…. You know peak oil, wars over clean water theats etc…DWolfe,
Hi again,
Superannuation, is a good thing. The main advantage being no tax after 60 or no tax in the drawdown time for SMSF etc.
Whilst I do have lots of houses that pay lots of rent, I do regret not having the knowledge ( this was a long time ago before SMSF etc ) to put all my houses into SMSF it would be so good not to pay thousand and thousands in tax up front every 3 months.Don't worry about my SUPER fund I invested back into growth at the low side of 2008 and put it back into cash after the 40% gain at the end of 2009. Currently in cash still.
Your assumptions of house price growth with 3 families in the Mc Mansion has some merit, but it does assume current rules apply, if the economy drops drastically, then all current rules go out the window ( think back to the great recession – back then landlords let people stay in rental property for free or very low rents to stop them being trashed,,,actually that's exactly what is happening in the US at the moment ).
Whilst I talk doom and gloom, I hope it doesn't happen, since I have investment properties, money in super ( cash ), but if all goes wrong it won't matter where your money is, it will be worth zip, unless you have gold coins in your safe at home…
bye
DWolfe,
Nice to hear from you.
regarding China will not stop buying our rocks.
http://www.businessday.com.au/business/markets/asian-stocks-drop-on-china-demand-concerns-20100604-xjjp.html
But that's just a taste of what's to come.
regarding Oct 09 downturn for all Australia. Well you are correct that Melbourne kept booming, but I still think all the country will eventually fall, but of course not all at once.
What.. no more Crudd, he is my hero… well maybe he is a ####. and lets hope he is gone soon.
Petrol demand is very much a sure thing – no real substitute in the short term, but long term will change if petrol prices rises continued.
House prices demand you say is like petrol – people do move back home or share etc so population can rise and demand can fall, its just a matter of peoples perceptions of where and in what they will live. The old Mc Mansion will come in handy for the three families that will live in them as time goes by…You have a strong opinion of house prices rising and rising ( which is fine ) , but I think you may have your dream shattered as the world collapses under its debts… How is you superannuation going lately ???
I won't go on in detail about going into cash at the right time… lets just say I haven't lost anything…bye.
June update.
Interest rates up 0.25% in May
Interest rates steady in June.Reddahaydn,
Congradulations you have made some gain. good on you. Now sell.
Has anyone been taking notice of the latest headlines about house prices??http://www.news.com.au/money/lenders-say-no-to-loans-as-buyers-knocked-back/story-e6frfmci-1225875970785
http://www.news.com.au/money/property/house-surge-leads-to-mortgage-stress/story-e6frfmd0-1225843130252
http://www.adelaidenow.com.au/property/news/up-front-deposit-for-a-home-loan/story-e6frefgc-1225843479977
http://www.news.com.au/money/property/house-prices-halted-as-confidence-slides/story-e6frfmd0-1225873850606
http://www.news.com.au/money/property/sydney-house-prices-worse-than-london-and-new-york/story-e6frfmd0-1225872983823These are just a few examples…
As I said Oct 09 was the beginning of the downward pressure, prices kept rising for the next few months or so, but watch them drop like a rock, especially when China stops importing our rocks.
It's the old Herd Mentality. Follow the other lemmings off the cliff.
Or keep buying shares they are always going up and you will make a motsa a la 1929.Eventually, the bubble burst – you just have to make sure you are not the one caught with the shares or property at 100% loan to equity ratio at the time…..Nothing wrong with having shares or housing as long as you don't get caught without enough equity to tie you over…
Dan42,
This is not the answer but gives a clue.
http://www.brisbanetimes.com.au/business/foreign-buyers-inflating-market-20100326-r378.htmlTwo month update:
March – Interest rates up 0.25% to 4% – March
Demand for new home loans dropped 8% in Jan – News.com
Fujitsu Consulting – 218,000 borrowers into severe mortgage stress last month.
March 29 – Glenn Stevens " I think it is a mistake to assume that a riskless, easy, graranteed way to prosperity is to be leveraged into property. It isn't going to be that easy"
April – Interest rates up 0.25% to 4.25%
RBA tackles back to the future scenerio ( housing back to 2007-8 debt levels and rising again after GFC saved us ). http://www.abc.net.au/news/stories...
Foreign men of property move in http://www.news.com.au/money/property….
Interest rates heading to 10percent, experts warn….www.news.com.au/money/
Loans slump may point to house price fall http://www.theage.com.au/business/property/loans…..Whilst latest auction results point to record levels….I think its the last hooray before the crash….not tomorrow but pressure is building up .. thus a bigger crash to come…
OK you can all shoot me down now…
Agree with all,
As stated its a matter of Horses for Courses.
If you are a go getter then go interest only and max out – hope that capital gains brings in the big bucks.
If you are cautious and like to sleep at night then go P + I and make some slow gains.There is no correct answer, its easy to be correct years down the track, but what if property crashed and you lost your wages, had an accident etc.
Snoopy 11
I have 3 properties in that area, one is coming up for new lease, but will be advising current tenant to leave, they are a pest. Asked agent about current demand and told still good demand in Bracken Ridge ( current tenant to leave ), will soon see how it goes ?Government still trying to keep the housing buble going by encouraging Chinese to buy expensive properties.
http://www.smh.com.au/business/property/australias-mortgage-debt-blowout-20100224-p1ex.html
Dan 42,
Thanks for being so keen to chase up my earlier blogs. It shows that I predicted house prices to fall earlier in the year 2009 but then interest rates were dropped keeping prices up together with first home owners grants etc.
Note my heading is Oct 09 the beginning of the house price falls not this is the point that house prices fall through the floor, it will take more than a month or two, more like a year or more before we get to the bottom of the market.I have no agenda as such, just trying to put my view across that house prices cannot keep rising at historic rates, we are in a housing bubble that will eventually burst, just trying to warn people of the facts.
On track for a price fall this year and into next, by how much ?? maybe 10 -20% .. It's only my guess, I'm sure you have a prediction of 10 – 20% growth, I'm happy for you to make a prediction. Problem is when we make predictions is the government or banks or some country defaults or bombs another country etc and throws your prediction out the window..
Feb Update:
Interest rates left on hold – despite 100% economist predictions ( and banks increasing rates more than reserve bank increases for Dec 09 ).
Wespac – Loans to require greater deposit 87% from 92% loan to value ratio.
Rental vacancies rising across Australia
New homes sales down 4.6% in Dec.Dan42 – OK so 10million dollar houses have gone up in value – big deal.
Still on track..
Ben,
Have been a property investor for over 20 years and yes have made good profits in the past.
Still own properties but with my current outlook I own them, do not have large debts on properties and enjoy the rentals as profits.
If I thought properties were going to go up at 7% a year I would buy another 10 of them and make millions. But that is not what I think is going to happen, its my fault if they go up and I miss my chance, but its not what I think will happen.
Good on you for having a theory and good luck if you go for it and make lots of money, I wish you the best.But I thought I'd put in an opinion for you so you may stop and think a bit more about what may happen in the current environment and probably future environment.
Ben,
Your whole theory revolves around borrowing cost being low, growth being high, legislation not changing, etc etc..Do your figures with higher interest ( this is a certainty ), try growth of 2% over the next 20 years, housing costs like rents, insurance, maintenance, repairs, etc etc outpacing rental growth into the future and suddenly you are broke..
Anyone can come up with a theory of how to make a lot of money by using history as a fact of what will happen in the future…
In that case why don't you go to the races and bet on no 1 winning race 1 because it did so in the past???I know I sound like I am mad, thanks, but what I am trying to say is that if the past was the same as the future ( which unfortunately is what many property investors are assuming ) then everyone would be rich.
I'm sure you can guess that I think house prices are just a giant ponsi scheme that is going to gradually collapse over the next few months or years, its just a matter of watching it happen slowly and then faster… We will see.
Jan update.
No Reserve Bank meeting this month.
First Home Owners – Existing House bonus reduced from $10,500 to $7,500
New House bonus reduced from $14,000 to $10,000
Headlines of Plunge in home loan approvals.See my post
October 09 Property Crash BeginsNote each month has another reason to sell now or miss out.
Lets have an update.
December rate up 0.25% plus bank increases….more to come.Home rates 'to hit 8.5%'
Author: Peter Martin, Economics Correspondant
Date: December 10, 2009
Publication: The Age (subscribe)Leading economists have forecast a rebound in Australia's economic growth rate that will force another series of interest rate rises, adding at least $300 a month to the cost of servicing an average home loan by 2011.
A week after the Reserve Bank imposed its third official rate rise in as many months, a survey of economists has predicted a lot more pain ahead for Australian borrowers.
The economists expect growth to rebound to 3.2 per cent next year and the Reserve Bank to respond by pushing up its cash rate from 3.75 per cent to 4.75 per cent, and then to 5.5 per cent in 2011.
