BowserParticipant@bowserJoin Date: 2003Post Count: 3
Calling adelaide investors! I am from Adelaide and new to the Positive cash flow game, and I am inerested in knowing how people have gone with it in the South Australian market.
Any stories,adivice or comments would be great!
Bowen LockwoodBEAR1964Participant@bear1964Join Date: 2003Post Count: 702
I live in the salisbury area, and so far bought my houses interstate. Some parts of country SA are ok.
Regards BearXylicMember@xylicJoin Date: 2004Post Count: 6
I’m in Richmond just starting out… Love to talk to people about there plansScottybeMember@scottybeJoin Date: 2004Post Count: 58
I’m in the Barossa, but alas am also green around the gill’s.
But check out Pt Pirie HTSA revamp. May have flooded rental market though.[cigar]
I’m in Enfield, also just starting out. I am trying to find areas that are under transition, new infrastructure et., I didn’t find much in the way of positive cash properties on the net. I think the best thing to do is to go and look for yourself in the local agents etc..
I think Mt barker and murray bridge area might be the next big areas.. what do you guysgals think ?
SMHellmre30982Member@ellmre30982Join Date: 2004Post Count: 12
I think Mt barker has gone , in terms of finding something easily, there has been an incredible amount of developement over the last few years, but I was looking myself at Murray Brdge seems to be a lot of potential there, relatively cheap prices, less than an hour from town on the freeway,of course you would need to do some reasearch to check out the best part of town etc
TomlearningtoinvestMember@learningtoinvestJoin Date: 2005Post Count: 9
I’m also from SA, just starting out and have been looking for IPs about a month now. I reckon in today’s market, you will never find a CF +ve property…that time has past. You now have to be creative and look for other potentials to make your next purchase work for you.
From what I learned so far….the new trend is to buy problem properties, find a solution to that problem and voila…you made money!
Sounds easy huh? I wish I could do it. [blush2]Jan McMember@jan-mcJoin Date: 2004Post Count: 1
My first post ! [blush2] It does appear that +ve c/f in the Adelaide metropolitan area is difficult if not impossible to find, so it’s down to ‘manufacturing’ it. Sure challenges the creative juices!
Good hunting all
JanSonjaMember@sonjaJoin Date: 2004Post Count: 338
I think you are right about mt barker, it was probably a great place about 3-4 years ago, before the tunnel was there. I went for a drive to mt barker today. Lots of property for sale, nothing that even looked like +ve cf. I will have to look into murray bridge soon. I still think that there is going to be a lot more development in mt barker over the next few years though.
I am interested to know if any one has recently purchased any properties in SA country ?
learningtoinvest – I was wondering what kinds of problems, with properties you would be prepared to take on, you could become a reno king..hey
Although I think this is not a part-time job as it would take up a great deal of time out of work hours..
SMHPropertyAngelMember@propertyangelJoin Date: 2005Post Count: 27
I live in the O’sullivan Beach area, yes im still starting out. Currently have 3 IP’s which I guess after expenses are not CF+. Getting a property to be cash flow positive would definately be a challenge for anyones imagination! But it can be done! I have a few idea but they may not be suited to all.
good to see SA investors alive and well!
No Such thing as CAN’T!
I am interested to talk to any like minded Adelaide investors going to the Property Profits Power Workshop (PPPW) in Melbourne in June, as I am going and think it would be great to catch up and bounce ideas of each other.
SMHpete rMember@pete-rJoin Date: 2004Post Count: 80
I have been looking in SA over some months and am going to the PPPW in Melbourne in June. Be happy to catch up with you.
prXeniaMember@xeniaJoin Date: 2002Post Count: 1,231
in terms of +CF properties that meet the 11 second solution straight off the bat, they were available 5 years ago around the Salisbury area but are now very difficult to find. Adelaide has not experienced an extreme property boom like Sydney and Melbourne so may only be due to a minor correction in the future, I really cant see Adelaide prices dropping more than 10%, and I think prices in Adelaide will remain stable in the future. However, that is based on theory and anything can happen. There are alot of great investors doing great things and making lots of money in Adelaide. Amongst them are developments and renovations. Some of us get together every month to discuss strategies and network. If you are interested in meeting Adelaide property investors, please email me at
bricksnscience at optusnet.com.au
and I will give you details of the next meeting’
XeniafoundationMember@foundationJoin Date: 2005Post Count: 1,153you will never find a CF +ve property…that time has past.
1) Never is a long time.
2) I disagree.Adelaide has not experienced an extreme property boom like Sydney and Melbourne so may only be due to a minor correction in the future, I really cant see Adelaide prices dropping more than 10%
1) The graph in this report illustrates that house prices have more than doubled since 1998 in SA. Pretty extreme if you ask me.
2) I disagree.
Cheers, F.[cowboy2]ellmre30982Member@ellmre30982Join Date: 2004Post Count: 12
Given that property generally doubles in price every 7-10 years it looks like your graph only confirms that growth. I certainly wouldn’t class it as extreme growth just the expected growth every property investor’s strategy seems to be based around.
TomfoundationMember@foundationJoin Date: 2005Post Count: 1,153Given that property generally doubles in price every 7-10 years it looks like your graph only confirms that growth. I certainly wouldn’t class it as extreme growth just the expected growth every property investor’s strategy seems to be based around*.
Oh dear, here we go again. Apologies to those who’ve already called me a broken record.
Your statement is:
b) alarming (if this* is true)
When looking at investment returns, nominal values are interesting, but not all that useful. Yes, during most 10 year periods in most parts of Australia over the last 3 decades you will see nominal house prices doubling or better. Unfortunately, this ignores the important factor called inflation. What’s the good of having an investment double in value if the cost of living has also doubled?
I would strongly advise that you look at real (inflation adjusted) returns rather than just expecting that because nominal prices of houses have doubled every decade for 30 years that this ‘rule’ will be repeated ad infinitum.
So what has been the state of inflation in Australia over the last 30 years? Graph 7 from the ABS shows annual % changes since 1986. As you can see, 10% and above is not uncommon, in fact compared to the early 70s, it is rather tame. Historical CPI data from the RBA Under such high levels of inflation it is fundamentally normal for house prices to double every ten years because other prices are also doubling as are wages and rental returns.
The real (inflation adjusted) return from residential real estate investment over the last 30 years is less than 2% per annum. That includes the spectacular gains of the last 7 years or so which are neither sustainable nor based on fundamental changes. If this period is excluded and we look just at say, 1970 to 1995, the average is a little better than 1% pa above inflation.
Professor Peter Abelson of Macquarie University has this to say:There were significant housing price booms from 1971 to 1974, from 1979 to 1981, from 1987 to 1989, and from 1996 through to 2003. After each of the first three booms, real prices tended to fall.
However, in the long run real price rises outstripped falls. Consequently, real house prices rose by about 180 per cent between 1970 and 2003. Allowing for hous ing improvements, real prices rose by more like about 100 per cent over this period. However, both estimates give an exaggerated view of real price increases if, as we expect, there is a real house price downturn post 2003.
(The emphasis is mine)
HOUSING PRICES IN AUSTRALIA:1970 TO 2003
The entire research paper can be found here:
If we look at the long-term, say 1900-1995, returns are less again. The graph here on page 13 shows that median house prices fluctuated around a trend of roughly 4.5 times average income (which rises generally in line with inflation) for over 80 years.
For whatever the reason (baby boomers nesting? increased women in the workforce? deregulation of the banking system? something much more disturbing#?) house prices did not correct to the historical norm at the end of the last boom in the late 80s. They largely stagnated in nominal terms (with minor falls in real terms) throughout the best part of the 1990s then as we are all aware, the current boom took off. See figure 1 here This boom has left house prices at record levels compared to rental returns, wages, historic trends and inflation.
I believe that we are in the process of (or perhaps in WA soon to be) seeing house prices return to more normal levels. This adjustment may manifest itself as a full blown house price crash of 30 to 40% falls across the country over a couple of years, or it may simply stagnate prices and let inflation erode the real value as investments. At current inflation rates this would take about a decade. If inflation rises, the nominal falls will be smaller or the duration of stagnation shorter, but interest rates (and therefore loan repayments) will also rise.
Bear in mind that this scenarion relies on a rational public, however it is much more likely that sentiment will turn entirely against real estate as an investment in either scenario and the market will over-correct. That is where the real money is to be made.
Don’t blow your hard-earned now. Make sure your wealth plan is sound and does not rely on dubious rules. Print out this picture and stick it above your desk, wait, watch and save to make the most of the coming opportunities.
Here endeth the sermon. All statements are in my humble opinion and should not be taken as specific investment advice.
A graph of household debt as a percentage of annual household disposable income can be found here under 01/12/04 Household debt in perspective 161KB
House prices broke their strong historical relationship to income in the mid to late 80s. Until this time household indebtedness was at relatively low levels. From the early 90s, the indebtedness statistics also broke trend and at a casual glance appear to be accelerating at similarly unsustainable levels:
30% of annual income in the 60s
40% in the 70s following inflation in the high teens
45% in the 80s
90% by the end of the 90s
and now at a whopping 140%!!!
One interesting result of this is that an interest rate rise now packs 3 times the punch of the early 90s:thanks to the rise in debt levels, moves in interest rates are three times as potent as they were in the early 1990s.DDMember@ddJoin Date: 2004Post Count: 508
Wow, good post foundation, nice to see the positive coming out.
Yeah debt is also relative. When I was making $35k a year a debt of $100k was daunting. Now over $2mil in debt and very cumfy with that.
Depends where you are at mentally too.
If you think you can or think you cant, you are right!!!!
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!XeniaMember@xeniaJoin Date: 2002Post Count: 1,231
I agree, NEVER is a long time but they ARE difficult to find. if not please show me where to sign
Yes, property prices have doubled in Adelaide in some places, does this mean that now they are going to drop by 50%????
UNLIKELY, but if they do, we can all stop wishing that we have bought more years ago.carlinParticipant@carlinJoin Date: 2005Post Count: 211
An article in API mag a few months ago quoted an economist saying that developers in SA had been building something like 2.5 houses for every person (don’t quote me, but it was a figure like that), and that “this madness will eventually end in tears”, or words to that effect.
The latest house-building figures show that SA recorded the greatest drop. So perhaps the market is on the turn, but it’s a VERY slow turn.
Unless Adelaide has a sudden major influx of new residents (unlikely), it’s not hard to see that we’re heading towards the renters’ dream market. Certainly, friends looking to rent say they’re spoilt for choice and feel in a position to negotiate terms. In this kind of market, you can obviously say good-bye to high yields.
IMHO the only way Adelaide’s house prices are going to drop is with a significant rise in interest rates, not just another piddling .5% rise.
People may be overstretched to the max interstate, but I can’t see many being forced to sell here unless interest rates really head north (more than 10%).
Adelaide had a lot of catching up to do in terms of house prices, hence the doubling of prices over the last 5 years. But it’s still cheaper to buy here and will remain forever so, with correspondingly cheaper rents, lower yields etc etc.