All Topics / General Property / Property to do well in 2005

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  • Profile photo of gmh454gmh454
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    Junkers, could not agree more.

    Profile photo of gmh454gmh454
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    Originally posted by gmh454:

    Quote:

    Saw in a RE window last week a weathboard in Parramatta for around 580K. Polished floorboards new kitchen, bathroom, light fittings, curtains, shrubs in the yard BUT with a house that is still way small for Sydney, single garage (shed) with a large yard. It reminded me of the old saying can’t polish a [email protected]#$d. As I looked at the freshly painted bowed weatherboard panels I thought they had spent time and money but this is still worth barely more than land value. Made me wonder why ????

    Hate to quote myself but something in this mornings Telegraph made me think our readership may be broader than we think.

    Basically it said if you want to Reno for a hobby go for it. If you want to Reno for a profit, you might have missed the boat. A RE agent was also quoted that some land values in their area have dropped 50+% . Good to know broad generalisations are not restricted to boom times.

    Profile photo of dmichiedmichie
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    I think I posted this in the wrong thread (my apologies).

    The most troubling thing about the Australian real estate market is huge gap between median house prices and median household incomes. By international standards the gap is huge. In Sydney for example it requires 8.8 years of median household income to purchase a median priced home, compared with 2.7 years in Houston, Texas.
    Source: http://www.demographia.com/dhi-data200502.htm

    Sydney is even less affordable when you consider that mortgage interest is tax deductible in the US, US interest rates are considerably lower, and US personal income tax rates are lower (meaning you have more after tax dollars to meet the mortgage repayments)

    Rental yields in Australia are also very low by international standards, and Australia has one of the highest rates of property investment in the world.

    Long term demographics are a worry as well. Baby boomers can’t keep selling properties to each other forever, eventually the market will have to meet what people in their 20s can afford (and that certainly isn’t the case now)

    None of this really matters in the short term. What really matters now is psychology, and now that expectations of ever increasing prices have evaporated I can’t see the market turning around in a hurry.

    I’ll leave you with this thought: 2004 was the 14th consectutive year of declining real estate prices in Tokyo.

    Profile photo of JunkersJunkers
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    The problem with taking anything a RE Agent says is that they have a vested interest in property, and whether they’re talking it up or down, they still make their money one way or another.
    When it’s booming and a seller’s market, they make their money pretty easily without having to do too much cause the market is swept away in a frenzy of greed and promises of making fortunes….in a buyers market they may have to work harder to make the sale, but they’re talking up how fantastic the bargains are now – just the other night on Today Tonight (always an honest and reliable source of information….NOT!) they were talking about the bargains where vendors had dropped up to $400K off the asking price of homes……I very much doubt they were bargains, just very overpriced in the first place. But, back to my original point of vested interest…..whether the papers or the re agents are talking the property market up or down, it’s all still good for them……agents still make their commissions, they still advertise in the papers, the papers make their money out of the advertisers, and the buyers still buy the papers to find the bargains. Booms can easily be created if you market something effectively, and no one would be any the wiser.

    I still believe as i said in my last post that you can renovate for profit in this market…..you just have to know what houses are selling for at the end price, and then buy really, really well at the beginning. No longer can you just buy and make a profit a week down the track………now you have to make your profits and be a lot smarter about your investments.
    I think there are a lot of people out there that are making very foolhardy investment decisions based on one book they may have read and the promises of making a fortune out of CF+ property…..you just have to read some of the posts from newbie investors to realise that..and that is kind of scary.

    Profile photo of 1Winner1Winner
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    Foundation, I thought I would get used to your comments but I can not go past your constant reference to “speculators” when referring to investors, your derogatory tone when referring to the level of commitment some investors have, and ridiculing with different innuendos the risk some people took, wisely or otherwise.

    You say: “Odds are they’ve left real jobs to pursue ‘ property developing’ full-time having had phenomenal success with a couple of minor renovations over the preceding years. “

    What is a “real job” for you? Chances are that it is not the same for others. Success is rarely achieved by people who stay year in year out in “real jobs”, rather it comes to the one that take chances.
    They had phenomenal success because they took a chance, quit their jobs and launched into a development adventure. Why do you ridicule this people’s efforts? Is it because you did not have the same determination?

    You say: “Incredibly they thought it was their $5000 facelift that caused the capital gain at the peak of the biggest speculative boom in history.”

    Here, besides calling the recent boom “speculative” ignoring all the fact and pushing your left wing antipathy towards capitalist success, you are proposing that a renovation well thought is worthless and that prices are paid just because of buyer’s stupidity. Fortunately renovations do work and do add value despite your remarks. I think you must have a thing with TV renovators and your dislike is boiling over here.

    Your say:”The scary thing is that some people still operating on the assumption that $5k and a bit of elbow grease bringing twenty times that in gains is normal.

    What is “normal” in your corner of the woods? Should we be like Cuba? Is profits a dirty word?

    I find it funny that some can be so taken aback by prices hike and falls as if it were the product of the collective “evil” mind of the “bad” investors (speculators) who meet at night time to screw the market for their own (sick) pleasure and ensure that the poor first home buyer and the poor tenant has a really bad time.

    Markets and economics are fortunately a bit further detached from your views, and frankly your constant hammering of this lefty concepts in a forum composed mostly of investors can be a bit tiring.

    http://www.chosen4u.com/?ace

    “What you want in your life occasionally shows up…
    what you must have… always does.”
    – Doug Firebaugh
    Marc

    Profile photo of foundationfoundation
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    1Winner,
    I cashed in my own property investments, paid out my PPOR, am paying out the last of my beach shack (as construction is completing) and had some left over for further speculative, though in practice lucrative (and not entirely uninformed), investments in shares, metals, art & collectables… Not exactly a practising anti-capitalist / leftie![blink]

    My previous comment on this thread referred specifically to the example illustrated by gmh454, in answer to the question:

    It reminded me of the old saying can’t polish a [email protected]#$d. As I looked at the freshly painted bowed weatherboard panels I thought they had spent time and money but this is still worth barely more than land value. Made me wonder why ????

    I don’t back away from calling the recent house price boom speculative. It was and is.

    Why do you ridicule this people’s efforts? Is it because you did not have the same determination?

    See above. And below.

    Your say:”The scary thing is that some people still operating on the assumption that $5k and a bit of elbow grease bringing twenty times that in gains is normal.
    What is “normal” in your corner of the woods? Should we be like Cuba? Is profits a dirty word?

    I thought my point was clear. $5k in renovations will not result in $100k profit in normal market conditions. That such examples have occurred recently reflects more the state of the market than the value-adding effect of a cheap reno.

    And finally, ‘What is a “real job” for you?’
    Phew, big question. I think it’s something to do with an exchange… perhaps of time or knowledge or a service… either for money or some other desired / required commodity. Probably important that there is a perception that all parties to the exchange benefit in some way… As I said it’s a big question. I’ll have to consider my answer more fully. One thing I know tho’ – it sure as hell isn’t buying a run-down old shack, doing a quick and dirty cosmetic job on it and whacking it back on the market for exhorbitantly more than it cost only to have it sit empty and decaying in parallel to my wallet.
    Regards, F.[cowboy2]

    Profile photo of AUSPROPAUSPROP
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    I can’t remember the topic but this post is starting to get interesting…



    http://www.megainvestments.com.au

    Extensive list of ‘Off The Plan’ property available for sale in Perth.

    John – 0419 198 856

    Profile photo of 1Winner1Winner
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    ‘What is a “real job” for you?’
    Phew, big question. I think it’s something to do with an exchange… perhaps of time or knowledge or a service… either for money or some other desired / required commodity. Probably important that there is a perception that all parties to the exchange benefit in some way… As I said it’s a big question. I’ll have to consider my answer more fully.

    Because of this paragraph in your response, I forgive your past sins [biggrin]. Best words spoken in a long time.
    Using those words, it is clear that a renovation, providing it is not a “dirty cosmetic rushed job” does add value, and both parties, the seller and the buyer will benefit. The price will be determined by the market as always, and take away the extremes, (too high or too low) there will be a fair exchange in value from both sides.
    I don’t think that it is fair to accuse the seller of cheating if someone buys at the end of a boom period only to find himself back on the other side of the slope.
    Also it is not fair to point fingers at the one that got in the market too late. After all the latecomers do so because of a massive amount of pressure created by books, media and bulletin boards like this one here.

    Friends?[cigar][biggrin]

    http://www.chosen4u.com/?ace

    “What you want in your life occasionally shows up…
    what you must have… always does.”
    – Doug Firebaugh

    Profile photo of aussierogueaussierogue
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    Good onya Foundation. 1Winner (aka Marc1) likes to label anyone whos not a right winger as a Che Guevara wanna be!!

    I agree with all your points. I too think the market has been specualtive and i too far from being a communist (although i believe in humanity) have redirected my investments into areas that make more sense in the current climate.

    A property investment forum needs balance, not sycophants – keep up the interesting postings!!

    Profile photo of Don NicolussiDon Nicolussi
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    savvy investors should do well in any market. Good to see some robust discussion on the issue though!

    Don Nicolussi | Mortgage Broker - Home Loan Warehouse
    http://homeloanwarehouse.com.au
    Email Me | Phone Me

    "I think of finance as a technology, a way of getting things done." Robert Shiller

    Profile photo of foundationfoundation
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    Also it is not fair to point fingers at the one that got in the market too late. After all the latecomers do so because of a massive amount of pressure created by books, media and bulletin boards like this one here.

    Which is exactly the reason why I continue to post what I see as rational views (although some appear to find them annoying and repetetive).
    Once they have reached <this> stage I really don’t have any advice to give.[ohno2] Somebody, please help this person!
    Regards, F.[cowboy2]

    Profile photo of ANUBISANUBIS
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    [
    Once they have reached <this> stage I really don’t have any advice to give.[ohno2] Somebody, please help this person!
    Regards, F.[cowboy2]

    I think we shall see many more of these stories in the coming months. I don’t think there is anything we can do to help them now. It’s a lesson well learnt, but expensive.

    Profile photo of gmh454gmh454
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    Yep and sentiment will shift as the stories become common.

    A large amount of these new apartments are coming off their Rental Guarantees this year. A broker has passed on some stories on some Darling Harbor apartments which had a rent drop from $800 per week down to under $500 when the retal support finished.Some investors who were steered into this avenue may have a very tough year coming up

    Profile photo of AUSPROPAUSPROP
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    presents opportunity for others. One stratgey: with rents set to heat up it would be a good strategy to sell the family home, lock in a 4 years lease on a shiny new apartment before the rents rise too much, then construct a new home when the building market slows down in say 2.5 years time.



    http://www.megainvestments.com.au

    Extensive list of ‘Off The Plan’ property available for sale in Perth.

    John – 0419 198 856

    Profile photo of DerekDerek
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    Hi all,

    There was some discussion about effect of migration on house prices within this thread (thought there was more – maybe confusing threads [exhappy])

    Caught this paragraph (or 2) in this morning’s Australian and thought it may be of interest.

    Simon Tennent, the Housing Industry Association’s chief economist, said demand for housing, driven by overseas migration and new household formation, usually rode out booms and busts alike.

    “Traditionally, we have an annual need for 160,000 new dwellings,” he said. “We’ve been building more than that – but only marginally – during the boom, but before that we’d been substantially below that figure.

    For link to the whole article;

    http://www.theaustralian.news.com.au/common/story_page/0,5744,12847021%255E25658,00.html

    Derek
    [email protected]
    http://www.pis.theinvestorsclub.com.au
    0409 882 958

    Profile photo of redwingredwing
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    Hi Ausprop

    A friend who is working for National Homes (WA) said that new housing sales have been starting to drop off (for them atleast)..whats your take on the sitaution?

    I believe costs are still rising at least 1% a month to build a new dwelling..

    “Money is a currency, like electricity and it requires momentum to make it Effective”
    Count The Currency With This Online Positive Cashflow Calculator

    Profile photo of AUSPROPAUSPROP
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    yes I know a guy who is with a leading WA builder and sales last month were well down for them. We also have noted a bit of change in attitude from a couple of builders so this could be the turn we have been looking for, although someone told me yesterday that if BGC stopped selling homes completely it would take them 2 years to get on top of the situation!

    yes costs are still rising and I personally don’t see any good news in this regard.



    http://www.megainvestments.com.au

    Extensive list of ‘Off The Plan’ property available for sale in Perth.

    John – 0419 198 856

    Profile photo of gmh454gmh454
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    Originally posted by AUSPROP:

    if BGC stopped selling homes completely it would take them 2 years to get on top of the situation!

    Sorry John can you elaborate on above.
    Thanks Terry

    Profile photo of DerekDerek
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    Not John but there were some building companies that have so many orders that they will take some time to clear the backlog.

    One display company (name escapes me) closed down or reduced their opening hours of their display homes to catch up.

    Derek
    [email protected]
    http://www.pis.theinvestorsclub.com.au
    0409 882 958

    Profile photo of roborobo
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    I think you will find a big increase in new home approvals in NSW over the next 10 weeks due to Basix regulations taking effect from 1/7.
    Builders are saying an extra 8-15k to build per house.
    http://www.basix.gov.au
    robo

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