Hi folks,
Something to gather your opinion
I did a few dozens of financial projection for properties range from 80K to 350K(which is my target range). The big assumptions that I have are the capital gain would be around 5% per year for the next 10 years. CPI shall remain average at 2.5%. Interest shall increase slowly from 6% to 9% over next 10 years. My rental vancancy rate shall be less than 10% at any time.
Based on the above, I can only conclude the best investment I have is the house that I own.
Am I too conservative on my projection?
What would be your prediction on the above factors?
Justification?Hiu.
Hi Hiu
If the world was this steady then you would never get ahead.
My experience with property is that it increases explosively with a massive increase in value happening in a very short time (say 2years). Then for the next 6 – 8 years nothing much happens capital gain wise.
This investemnt cycle repeats as per the investment clock.
In my view if the cycle is over the top (this is always hard to know) then buying now means you are holding a property that is going to remain flat for some 5+ years.
You can counter this situation with other strategies to increase either the value of the property or the rent or both. If you don’t and you buy at market then the result could be a very flat situation as you outlined or worse a real negative return.
In the end you will always need to buy well and if you buy well (below market) then you will make better than the gains you mentioned.
hth
Gotta listen to ZIZ Hui as he really knows his stuff. Many years in the market mkaes for sage advice. Thanks for reminding me of the cycle ZIZ. Now about the Wave effect……..
Enjoy
AD [:0)]“A successful person is one who can lay a firm foundation with the bricks that others throw at him.”
-David BrinkAD
are you saying the Elliott waves occur in the property market too ??
Mmm is this a dumb question??
the Bruce [
]While not a strong believer in Mr Elliot’s wave….. or mr Gann for that matter….. I think there is a wave effect in property prices when a boom occurs…there is usually a common focal point as a learned friend once explained to me that always seems to be the starting point for the next boom. In sydney some feel it is the Eastern Suburbs. They are the first to see the rise. In Brisbane I would hazard a guess that it would eminate out of the inner City suburbs….haven’t really researched that one yet though. I figure I have another 5 yrears or so till the next signs may emerge and thats plenty of time for research….he he he.
Enjoy
AD [:0)]“A successful person is one who can lay a firm foundation with the bricks that others throw at him.”
-David BrinkThe clock is in time the wave (or ripple effect), “grasshopper”, is the knock on that happens from suburb to suburb. As property increases in one suburb the bargain hunters move on to the adjoining suburb with similar amenities and so on. This result in an increase in prices suburb by suburb until suddenly a mania takes hold and the rush is on everywhere.
Have a look at this site which has a further discription re the clock
http://www.hpc.co.nz/property_clock.php
or the huntley investor site which also has one that is more discriptive.
Generally speaking it doees get out of wack with government inteference, terrorist etc but still it does tend to repeat itself.
By the way who is this elliott I knew a guy ones who liked to ride around in his car waving to everybody!!!!!
Cheers
elliot is a esotric mathematician. He believed that the stock market prices flowed like waves. I however believe is method is a form of prediction and for this reason don’t follow this methodology. To me the stock market is about probable events and not prediction. Anticipating or predicting someting leads to disappointment when some does not happen which was anticipated. I think this is why traders have such a hard time making money.
quote:
Have a look at this site which has a further discription re the clock
http://www.hpc.co.nz/property_clock.php
I would be wary of using “The Auckland Property Clock” to gauge the market in Australia. (I’m a Kiwi, BTW). My parents have just bought a place in Chch, and we were discussing property booms, etc. They haven’t had one the same as we have here. The situation is completely different – no FHOG, no stamp duty, no massive growth spurt like we’ve just seen.I’m not disagreeing with the “ripple effect”, just the thought that someone might use a NZ clock to justify something in Oz.
Hi Louise
Its the principal of the clock not the actual clock that matters.
What the clock actually illustrates is the economic cycle and the types of environments that follow on from other environments.
The clock is not an absolute but just an indicator for the type of environments that you need to be aware of.
For example when the stock market booms start getting into property as any money leaving the stock market will go to property etc.
Cheers
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