All Topics / General Property / Property Market heading downwards?

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  • Profile photo of AllanFCAllanFC
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    @allanfc
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    Hi,

    I am interested in engaging in small residential/commercial developments in Queensland. My question is in regards to the current propery cycle. Is the property market in Australia heading towards the down cycle?

    I believe that realestate is a cyclical business. I also think there are monies to be made by investing against the cycle provided the finance structure works to the investors advantage.

    Is the market currently on hypersupply or soon heading down to depression stage? If that is the case, it would probably be better if I string out all development plans for now and just focus on managing my existing properties.

    In the US, due to lots of creative financing, easy money etc, the market is currently on hypersupply mode. Most regional markets are on the bubble. Is it very similar in Australia?

    Thanks.

    Allan

    Profile photo of DazzlingDazzling
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    Allan,

    Good post but I don’t see how anyone could possibly answer such a general question as ;

    “What do you think of the Australian property market at the moment.”

    It’s such a broad and varied beast you couldn’t possibly give a specific answer.

    I’d try and respond by saying the Sydney residential market is probably down or patchy after a massive run, the WA broadacre farming market is up and healthy, the Melbourne commercial market is so-so, the Perth CBD office market is warming up nicely, the Darwin hotel/motel market is bumping along and the Adelaide industrial market is pretty good at present.

    I fail to see how any of the above actually relates to your specific concern ?? Indeed, I don’t believe anyone is large enough to actually be in a position to make use of asking how the “Australian property market” is fairing.

    You’ve pinpointed smallish res/comm in Brisbane – why not concentrate on that small market and perform thorough DD research on that ??

    Cheers,

    Dazzling

    “No point having a cake if you can’t eat it.”

    Profile photo of SeeChangeSeeChange
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    @seechange
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    this is the closest you’ll come to an overall summary

    http://www.htw.com.au/pages/info_centre/review/MR%20Jun%202005.pdf

    See Change

    Profile photo of bardon_2bardon_2
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    Allan,

    I have been studying the US market for the last 12 months and disagree that regional areas are on the bubble.

    Sure the East and West coast major centers such as California, Boston, NYC, LAs Vegas some parts of Florida are over valued and fall within the bubble defintion. But most regional areas have either being growing steadily within the national average of 7% per annum or have been lagging with very very small growth in the last 15 years. So no evidence to suggest a bubble in regional America.

    Profile photo of wealth4life.comwealth4life.com
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    Allan i don’t mean to be rude but, who cares.

    If the stock market is dropping does that mean you stop buying stocks.

    If there is a sale in a supermarket does that mean you don’t buy the discounted stock.

    IMHO i focus in property what is the flavour of the month. I read sooooooooo many doom and gloom stories, and “the sky is falling” timid no hopers that it makes me sick.

    I bought a property in 1994 that every body told me i was an idiot and today i am rubbing it in their faces because of the profit i have made.

    The point in any market is to MAKE MONEY over time and not get rich over night. There is a group on this forum that only post stories relating to falling markets and doom and gloom.

    If you focus on gloom you will attract it, however if you develop a mind set of focusing on opportunities to build solid wealth over time, backed with proper research YOU WILL SUCCEED other wise go stamp collecting.

    Yes markets correct them selves, Yes interest rates will go up, Yes you will have challenges in your life, Yes times will be good and bad, Yes you will lose money in some deals, yes properties will go up again, yes yes yes.

    So now give me and the other great people on this forum some hope and guidence into what you believe will make money, you only have one life and 25% of it you will be RETIRED, so what r u doing in your working years to have a dignified retirement.

    resiwealth.com

    Profile photo of SeeChangeSeeChange
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    @seechange
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    Originally posted by resiwealth:

    IMHO i focus in property what is the flavour of the month. I read sooooooooo many doom and gloom stories, and “the sky is falling” timid no hopers that it makes me sick.

    I bought a property in 1994 that every body told me i was an idiot and today i am rubbing it in their faces because of the profit i have made.

    The point in any market is to MAKE MONEY over time and not get rich over night. There is a group on this forum that only post stories relating to falling markets and doom and gloom.

    resiwealth.com

    Resi

    It really depends on your view point and time frame. One persons ” doom and gloomer” is another persons “Timing the Market ” and both time in the market and timing the market are valid approcahes.

    I tired of anyone who posts a link, article or post which in anway puts a negative spin on the market as being a Doom and Gloomer.

    Personally I want to hear all of the views I can , and then I’ll make up my own mind on what I’m going to do. The more info I hear the better.

    :)

    See Change

    Profile photo of Jerzy BalowskiJerzy Balowski
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    Spot On Resi !

    100% spot On.

    Profile photo of GoldCoastGirlGoldCoastGirl
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    More specific questions following the original one:

    * What’s your opinion on the residential property market in South East Queensland ?

    * What’s your opinion on the residential property market on the Gold Coast in particular… esp. Central Gold Coast ?

    I want to hear ALL opinions – incl. the ones that refer to themselves as “Realists” (not doom and gloomers, just being realisitic as such) as well as those who think like attracts like… :)

    Wishing everyone radiant health!
    Vanessa


    4 out of 5 Taste Buds Surveyed Preferred > http://url123.com/wa2ev
    For Australians Only > http://got.to/liveafunlife

    Profile photo of DerekDerek
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    Hi GCG,

    In his most recent property report Michael Matusik has some interesting Brisbane figures at hand; namely property is currently undersupplied by the equivalent of thre emonths supply, the job creation rate continues to be steady (and highish), population growth continues to be one of the highest in percentage terms (and almost in raw terms) of all capital cities in Australia and the vacancy rate in all properties is 2.7%.

    While these are figures for Brisbane I would be surprised if the Gold Coast figures are not similar.

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

    Profile photo of AllanFCAllanFC
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    Hi Resiwealth,

    I never claimed to know it all when it comes to investing or money. It was just a simple question and I dont understand why you are making such a big deal out if it. You dont have to insult me for what I believe. I am entitled to my own personal opionion.

    In regards to what I am doing in my working years to have a dignified retirement.Well, I am currently in the process of forming a private REIT in the US, I hope to form an opportunity fund that will be used to buy distressed properties during the downturn. I hold several properties in different states in the US. I utilize both short and long term realestate strategies to increase my net worth.

    I was only asking a question about development because I am looking to form strategic alliance with developers if there is an opportunity.

    I did state that you can make money even during the downturn but I believe that you have to modify your approach. This is just my belief ok. If you dont agree then that is fine.

    Thanks for all your comments.

    Kindest regards,
    Al

    Profile photo of dmichiedmichie
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    I bought a property in 1994 that every body told me i was an idiot

    So you bought 5 years after the peak and before the boom. You’re a genius! What about the poor buggers who were still in school/univesity in 1994? They’ve been waiting >10 years for sensible prices to return.

    today i am rubbing it in their faces because of the profit i have made.

    Really? You much be great company at dinner parties.

    BTW, I bought my first property in 1993, but unlike you I actually feel some guilt and shame about the amount of money I made out of it. It was thoroughly undeserved.

    Profile photo of wealth4life.comwealth4life.com
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    Dimichie i love the way u think (not).

    2 ways to make money, good luck and good timing, IMHO, and yes i am a bucket load of fun at the dinner party.

    If u feel guilty about making profits then that explains a lot to me about the way you post topics, if u want to give it away i will give u my account details and i will double it for u in 12mts.

    Unfortunately every generation has a chip on their shoulders about the generation in front of them, how do younger people see u Dimichie, are u an inspiration to them and what will u pass on to your children.

    I don’t know what 2morrow will bring, any thing can happen to blow all the experts out of the water, recession, interest rates, wars, death, tidal waves, drought, politicians. I made a career change when i was 25 and since then got anther 3 diplomas, we were hit with 19.33% interest rates on 5mill and believe me that builds character, i hope u don’t go through it.

    I am opionated because i believe that i have done the hard yards, not theory the real stuff, and all not good.

    The only problem i have is that i don’t have a better choice other than to be positive and keep forging on, my kids are relying on me to give them a better life than i was given a start in. Yes i read all the negatives out there but i also spend a great deal of my time working out ways of how to make profits, i have to enspire my staff and biz collegues.

    Dimichie i do value your posts and replys however you only seem to focus on negatives, i may be wrong, so tell me what is your theory to making profits, Have you read the little green book by Wallace deWattles

    resiwealth

    Profile photo of ian_from_brisbaneian_from_brisbane
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    [quoteI actually feel some guilt and shame about the amount of money I made out of it. It was thoroughly undeserved.
    [/quote]

    If you feel guilty about making money from it, then why didn’t you sell it for the same price you bought it for and not make that money?

    Profile photo of dmichiedmichie
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    @dmichie
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    resiwealth,

    My main problem with the way Australia operates (and the kind of thinking that I find at this forum) is that we’ve become convinced as a nation that the one sure way to prosperity is not to work hard and save, but to borrow and invest in property. The obvious flaw in this thinking is that if all Australians did this we would rapidly become bankrupt, and (judging by the current account deficit numbers) this is already happening.

    What is little understood about the CAD is that most of it is an income deficit (i.e. interest on debts owed to other countries) not a trade deficit (the difference between imports and exports). And why have our interest payments blown out? Because the banks (on our behalf) have borrowed heavily from overseas to fund a humungous real estate bubble. Unfortunately, when the bubble deflates Australia will learn to its detriment that our debt is real but our house prices are illusory.

    At some point Australia has to reform its tax system to encourage people to work hard, save for their retirement, and create productive enterprises that earn export income to pay off our debts. At the moment we have a tax system that punishes you for saving (super, interest etc) and rewards you for borrowing (negative gearing). This is madness! You cannot have an economy where everyone has five investment properties and a mountain of debt. We can’t all be property investors, someone in Australia has to do some actual work!

    Ross Gittins explains the relationship between the housing boom, household savings and consumption and our external debt here:
    http://smh.com.au/news/Business/Welcome-to-life-after-the-housing-boom/2005/06/05/1117910186727.html

    So to get back to the point. I feel a great sense of pride when I see my software sold and used around the world, but I am not particularly proud of having the luck to buy a property in 1993 and see it triple in value in 9 years. Its not clever, its not smart, its just pure luck.

    Profile photo of AUSPROPAUSPROP
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    hey dmichie we have our disagreements at times but I must say good on you for your export efforts. I have ambitions to export one day and effectively give back to this great country. I just disagree that thumping the property industry is the way to achieve higher exports.



    http://www.megainvestments.com.au

    John Carroll

    Profile photo of dmichiedmichie
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    I just disagree that thumping the property industry is the way to achieve higher exports.

    I’m not “thumping” the property industry. There is a place in any economy for property investment and development. I’m simply making the point that the property industry in Australia has grown out of all proportions and sucked in resources from other sectors of the economy.

    I read a stat recently that 3 out of 4 jobs in Australia are somehow related to the property industry. That’s horrifying! We desperately need to diversify and rebalance our economy if we are to get out external debt under control.

    Profile photo of wealth4life.comwealth4life.com
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    Hi Dimichie, u r a drop in the ocean trying to change the world … good luck … this is what happened to Neil Jenman, problem is where do u stop.

    As i have said to u any times, you have a point BUT … what r u doing about creating WEALTH for your future … give us some suggestions.

    Its great to have an opinion but not great to be opinionated, one needs to have a life as well.

    I think that what u will find is that the building industry is the building block of all other wealth because it creates jobs and hence income which people spend. People need to get off their butt and make an effort to move forward.

    What programs do you sell, i am about to sell a series of stuff myself.

    If u r against property what r u investing in, some one owns the roof u r sleeping under which is rising in value over time, does that bother you.

    I am trying to picture your physic, do you see your self standing in front of an agents window waiting for prices to drop, or more important how much is the right price for you in your opinion.

    20 years from now where will u be and what about all the experts opinions of today, can we reread them then and have a chuckle. I wonder who will be the new experts.

    The defination of an expert is some one that reads the past??

    resiwealth

    Profile photo of dmichiedmichie
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    @dmichie
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    what r u doing about creating WEALTH for your future

    I’m developing software and selling it to the world and fighting a losing battle to reduce our foreign debt. Someone has to!

    As for investing I have no plans to invest in real estate for the next 3-5 years at least, apart from my PPOR. (I’m between houses ATM)

    As for other investment opportunities, at some point in the future the AUD will have to fall 20-30% to correct our CAD, and when that happens our beaten-up exporters will benefit.

    I may be a drop in the ocean, but Australia must change. Our current debt-fuelled housing binge is clearly unsustainable.

    Profile photo of ilearnerilearner
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    Dimichie,

    I found you are very funny person. It seems you are the PM. It seems only you are worrying the sky will clapse. From your “sound” economic knowledge, it makes me feel your knowledge may be extremely polarsied. You probably did a double degree in your Uni. You do not understand that the Building industry is one mayor part of economy … it brings in the demand of every industry.

    Profile photo of dmichiedmichie
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    @dmichie
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    Amused, people like you make me despair of this country. The great economic success stories of the past 60 years (Germany, Japan and now China) were not created by building houses, they were created with exports. You cannot create wealth by buying and selling houses, real wealth is created by selling something to the rest of the world.

    I’ll leave you with this letter to the Economist magazine this week:

    LETTERS TO THE EDITOR
    The Economist
    Publication Date: June 2, 2005

    Sir–You waxed lyrical about Australia’s 15 years of continuous economic growth. However, you gloss over the fact that Australia’s external imbalances have never been larger, even at a time when international commodity prices are booming and China is expanding rapidly. You also failed to note that Australia’s housing bubble and consumer over-indebtedness make the United States look like a paragon of frugality. A more balanced view might have asked what happens to Australia when commodity prices ebb and when China’s investment bubble bursts?

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