All Topics / Help Needed! / Best advice : Don’t invest into property : The australian market is CRASHING.

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  • Profile photo of yarposyarpos
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    Scamp wrote:
    Jon Chown wrote:
    Scamp says.
    These are interesting times, especially when you think a lot of property investors have 20 (!!) properties or more, all NEGATIVELY geared of barely above 0

    According to the ABS of the approx 2million Investment properties in Australia, 90% are owned by people who have only one investment property and less than 1% of investors own in excess of 10 properties.

    20.000 people with more than 10 properties. That's quite a lot if you ask me, especially if they get into financial trouble. And remember : 1000 houses collectively selling for 50% of the houseprices can bring down your houseprice to 50% also. All you need for the market to crash is a lack of buyers. Well.. if you look at todays market, there's not a lot of buyers out there. No more free equity due to the new ABS figures means that the freebooter investors are out of the game. That's 30% of the market. Then there's the pensionists who are in deep trouble also , that's another 10%. There's the average families with credit cards with deep financial trouble and extremely high oil prices, that's another 30%. Then there's the FHB's who can't get a 105% loan anymore from banks, that's the last 30%.

    Where, if you would be so kind to tell us, will you get buyers from ?
    No buyers = no sales = lower houseprices = still no sales = 30% houseprice crash = still no sales = 60% houseprice crash = yes.. the FHB's can buy again.

    Sydney houseprices have already dropped 35%, please give any good reason why other cities won't follow ?
    ( brisbane is down 20% btw.. I see you're in brisbane, you should know this ? )

       where do you get 20,000 people with more than 10 properties?    the 1% was 1% of investors not 1% of 2M properties

    weve told you a million times, stop exagerating…….at least for 35% of the time unless your a pensionist with credit cards

    Profile photo of gmh454gmh454
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    All you need is one apartment unsold at a low price and every apartment in the block drops.

    At the end of the street where I work (in sunny Parramatta) there exists a brand new luxury tower (yes luxury and Parramatta in the same sentence,) don't blame me it comes from the developers literarture. This I beleive was part of the Fincorp fiasco. They were seliing off the plan for high threes and others (Mirvac towers nearly identical but in a real crappy back street ) were selling for over 400K. Now they start from 299K as the liquidator picks over the leftover s.

    Now if the developer is selling new shiny non scratched chrome, fresh carpets and paint for 299K what chance has the off the plan investor got of unloading at cost of say 385K for marginally better view (this is Parramatta) on a higher floor ??

    All you need is one unsold unit or house in the street, or street next to yours etc for your asking price to become very high.

    Remember an associate in the early – mid 90s living in an apartment in Pyrmont. Used to take a 6 mths lease, and every time it finished he would  auction his tenancy to every investor with a vacancy take the lowest, get out the trolley and he and his mates would have a Sat arvo moving party, knock over a slab, and drop his rent every time.

    Among my clients I have a string of  "I'm holding out for the market to bounce back" and many have knocked back offers years ago that are probably 5-10% over what they can now realise all the while bleeding big time. Makes my job easy, taxable income Nil, tax planning easy.

    Oh yeah Jon this is the Newington development as I said I only offer examples of facts.

    Bought around 320K (Fin planner probably got 30K commission – they later made the Fin Review front page) about 10 years ago, client wanted 440K in 2005, knocked back 400k in 2006 and may get 375K if lucky.

    Profile photo of gmh454gmh454
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    Have a client, quite a smart guy who over 20 years has built a portfolio of industrial units. He was once a tennant so stuck to what he knew. They have only had moderate cap gains but give a gross of 12% in a good year.

    He was telling me of a neighbour bragging about 'his" investment strategy which was buy 10 investment properties in western sydney etc, and borrow on his capital each year to make up the short fall in cash and that was his retirement strategy. If he was in neg two years ago on 90% + LVRs, he must be about due to cough up a lung, must ask Des if his is still bragging.

    Those guys are not just a myth

    Profile photo of ItalianDragonItalianDragon
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    The most annoyning thing is that REALESTATE agents are the number 1 people who inflate prices and they keep trying to pump and pump despite the market is collpasing.

    I thing realestate agents should NOT be paid in % but  on a fixed income.

    Then you`ll see less hyping strategies.

    Profile photo of Skip101Skip101
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    Too much negativity and not much common sense/fact in a lot of this thread, personal opinions, often from people who have no idea of the Australian market, in some cases not even residing in the country, hence no first hand knowledge.

    ItalianDragon wrote:
    The most annoyning thing is that REALESTATE agents are the number 1 people who inflate prices and they keep trying to pump and pump despite the market is collpasing.

    The market (Buyers) determine the actual sale price, not the real estate agent.

    Quote:

    I thing realestate agents should NOT be paid in % but  on a fixed income.

    If you were selling, you would think differently, you would want the agent striving to maximise the sale price on your behalf, the % commission is an incentive.

    Profile photo of ItalianDragonItalianDragon
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    Skip101 wrote:
    Too much negativity and not much common sense/fact in a lot of this thread, personal opinions, often from people who have no idea of the Australian market, in some cases not even residing in the country, hence no first hand knowledge.

    ItalianDragon wrote:
    The most annoyning thing is that REALESTATE agents are the number 1 people who inflate prices and they keep trying to pump and pump despite the market is collpasing.

    The market (Buyers) determine the actual sale price, not the real estate agent.

    Quote:

    I thing realestate agents should NOT be paid in % but  on a fixed income.

    If you were selling, you would think differently, you would want the agent striving to maximise the sale price on your behalf, the % commission is an incentive.

    I disagree, I have been dealing with lots of agents and everytime there is an open inspection they claim there is already an offer on the house, sometimes even 2 !!

    Then 2 months later the house is till there unsold and at a cheaper price!

    And this is just one of their multi-lies-strategies.

    Profile photo of Skip101Skip101
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    Quote:
    I disagree, I have been dealing with lots of agents and everytime there is an open inspection they claim there is already an offer on the house, sometimes even 2 !!

    Then 2 months later the house is till there unsold and at a cheaper price!

    This confirms what I said, ultimately it is the market (buyers) who determine the sales price of a property. The real estate agent can put any price on it (generally upwards pressure is put on the agent by the vendor) but supply/demand & market conditions will dictate eventual price movement.

    Profile photo of ItalianDragonItalianDragon
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    Skip101 wrote:
    Quote:
    I disagree, I have been dealing with lots of agents and everytime there is an open inspection they claim there is already an offer on the house, sometimes even 2 !!

    Then 2 months later the house is till there unsold and at a cheaper price!

    This confirms what I said, ultimately it is the market (buyers) who determine the sales price of a property. The real estate agent can put any price on it (generally upwards pressure is put on the agent by the vendor) but supply/demand & market conditions will dictate eventual price movement.

    well, how about "shill bidding" at some auctions?

    Friends of the seller or of the realestate agent who offer fake bids just to show more interest in properties?

    I should search a news about this, it was found to be popular in Sydney.

    Profile photo of Skip101Skip101
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    Quote:

    well, how about "shill bidding" at some auctions?

    Friends of the seller or of the realestate agent who offer fake bids just to show more interest in properties?

    I should search a news about this, it was found to be popular in Sydney.

    Clearly you have a dislike for real estate agents, that's fine, however by carefully building working relationships with Selected Agents, you can profit.
    Dummy bidding no doubt occurs at some auctions, although steps have been taken to rid it some states.

    Real Estate investing is not that different from a lot of areas of investment.
    You have to Speculate to Accumulate.  There is risk involved, you have to do your homework, set your limits (price/return/capital growth) and act accordingly.

    If you are bidding at an auction, and the price goes higher than you believe the property is worth, its not hard to make the right decision, and stop bidding, regardless of whether your competitors in the auction are genuine or not.

    Whilst I don't agree with a lot of the negative comments earlier in this post, there has obviously been a slow down in the market, and that presents a major opportunity.

    In a nutshell, investors need to research and buy wisely. Or, you could leave the money in the bank for 3 to 4 years at minimal return, but chances are in 3-4 years you'll wish you had bought when the value/prices were much better. How many properties do you wish in hindsight you had bought 5 years ago?

    It's not rocket science.

    Profile photo of bardonbardon
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    TENANTS will be slugged with rent increases as council rates, high property demand, and interest rates take a hold on the industry, analysts say.

    The Brisbane City Council's Budget imposed a rate increase of 8.76 per cent and extra tax for luxury innercity apartments, will sting renters already under pressure from a 55 per cent rise over the past five years.

    Tenants Union of Queensland co-ordinator Penny Carr said the low availability of housing was the biggest contributor to rental pressure.

    ‘‘It’s getting harder for people to pay when they’re already paying huge amounts, there’s people who will price out and others who will get into difficulty, such as people on single or fixed incomes.

    ‘‘Over five years rents are up 55 per cent and 23 per cent in the last two years.’’

    Residential Tenancy Authority figures show a two-bedroom unit in Brisbane has increased by $60 a week in the past two years, a one-bedroom by $45 and three-bedroom by $75.

    Profile photo of ScampScamp
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    Skip101 wrote:
    Too much negativity and not much common sense/fact in a lot of this thread, personal opinions, often from people who have no idea of the Australian market, in some cases not even residing in the country, hence no first hand knowledge.

    ItalianDragon wrote:
    The most annoyning thing is that REALESTATE agents are the number 1 people who inflate prices and they keep trying to pump and pump despite the market is collpasing.

    The market (Buyers) determine the actual sale price, not the real estate agent.

    Quote:

    I thing realestate agents should NOT be paid in % but  on a fixed income.

    If you were selling, you would think differently, you would want the agent striving to maximise the sale price on your behalf, the % commission is an incentive.

    How long do you think it will take for Real Estate agents to find out they can earn more money by driving prices DOWN than up ? The updriving has worked for a while. It was a perfect time for them. Now, that has come to a halt, RE agents aren't selling houses anymore , therefor not getting commisions, therefor not getting any MONEY. Soon, believe me, they will drive prices down just to drive sales up.

    Why would a RE agent try to sell 10 estates at 1 million each ( not selling ) when he can sell them for 500.000 and earn 10*500.000*<insert commission here, let's assume 1.5%> = 75.000 $
    instead of 10*0*<doesn't matter> = 0 $

    If you were a RE agent, what would you do ? .. aaah ok , you'd sell them for 500.000 each ? Me too.

    Now, as far as the rents going up thing :
    When people can't sell their homes, what would you do ? … oooh ok , you'd rent it out in order to make a few bucks while you try and sell it ? What do you think this will do to the rents ? It will drive them down.
    The MASSIVE influx of rental homes that will soon flood the rental market will drive down rentals beyond anyone's belief. That will get more investors ( who were doing ok before renting out ) in problems since they won't find any tenants.

    Put off your rose-colored glasses please.

    Profile photo of Skip101Skip101
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    Scamp wrote:
    How long do you think it will take for Real Estate agents to find out they can earn more money by driving prices DOWN than up ? The updriving has worked for a while. It was a perfect time for them. Now, that has come to a halt, RE agents aren't selling houses anymore , therefor not getting commisions, therefor not getting any MONEY. Soon, believe me, they will drive prices down just to drive sales up.

    Why would a RE agent try to sell 10 estates at 1 million each ( not selling ) when he can sell them for 500.000 and earn 10*500.000*<insert commission here, let's assume 1.5%> = 75.000 $
    instead of 10*0*<doesn't matter> = 0 $

    If you were a RE agent, what would you do ? .. aaah ok , you'd sell them for 500.000 each ? Me too.

    Now, as far as the rents going up thing :
    When people can't sell their homes, what would you do ? … oooh ok , you'd rent it out in order to make a few bucks while you try and sell it ? What do you think this will do to the rents ? It will drive them down.
    The MASSIVE influx of rental homes that will soon flood the rental market will drive down rentals beyond anyone's belief. That will get more investors ( who were doing ok before renting out ) in problems since they won't find any tenants.

    Put off your rose-colored glasses please.

    1 million dollar properties selling for $500,000? I think you may be losing some credibility here.

    Profile photo of ScampScamp
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    Skip101 wrote:
    1 million dollar properties selling for $500,000? I think you may be losing some credibility here.

    I never had any credibility, nor do I want credibility. This actually was my first post ever, so I don't expect anyone to trust what I write. It's my own personal opinion that houses that sold for 1.000.000 in the highest time in the bubble, will sell for 500.000 in the downside of the bubble. People will have lost 500.000 dollars.

    Yes, I believe that, and it is already happening in US. Ireland and UK are well on their ways, followed closely by New Zealand and Australia.  Who cares about credibility when the truth is already out there , plain to see for anyone but the blind people on investment forums ? The whole idea of my post is to warn people from paying 1 million, when 2-3 years later they can get the same property for 500.000.

    And I think that's a pretty good investment strategy : earn 500.000 dollars in 2-3 years ?
    Sounds much healthier to me than the risky investments suggested on here. And on top of that, while you wait you EARN money on your current money, and take absolutely NO RISKS whatsoever, except the risk of missing out on something that you didn't have in the first place. You will never lose more than you invested, which is totally different with if you invest now.. you will most certainly lose more than you get back.

    Profile photo of ItalianDragonItalianDragon
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    Skip101 wrote:

    Quote:

    well, how about "shill bidding" at some auctions?

    Friends of the seller or of the realestate agent who offer fake bids just to show more interest in properties?

    I should search a news about this, it was found to be popular in Sydney.

    Clearly you have a dislike for real estate agents, that's fine, however by carefully building working relationships with Selected Agents, you can profit.
    Dummy bidding no doubt occurs at some auctions, although steps have been taken to rid it some states.

    Real Estate investing is not that different from a lot of areas of investment.
    You have to Speculate to Accumulate.  There is risk involved, you have to do your homework, set your limits (price/return/capital growth) and act accordingly.

    If you are bidding at an auction, and the price goes higher than you believe the property is worth, its not hard to make the right decision, and stop bidding, regardless of whether your competitors in the auction are genuine or not.

    Whilst I don't agree with a lot of the negative comments earlier in this post, there has obviously been a slow down in the market, and that presents a major opportunity.

    In a nutshell, investors need to research and buy wisely. Or, you could leave the money in the bank for 3 to 4 years at minimal return, but chances are in 3-4 years you'll wish you had bought when the value/prices were much better. How many properties do you wish in hindsight you had bought 5 years ago?

    It's not rocket science.

    You know, I`m a very open minded person so I accept your view but there are many "bad apples" in the Real Estate industry unfortunately.

    Have a look at this recent news from New Zealand:

    http://tvnz.co.nz/view/page/411749/1843300

    Now, how would you describe that?

    Profile photo of Peak OilPeak Oil
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    Skip101 wrote:
    Scamp wrote:
    How long do you think it will take for Real Estate agents to find out they can earn more money by driving prices DOWN than up ? The updriving has worked for a while. It was a perfect time for them. Now, that has come to a halt, RE agents aren't selling houses anymore , therefor not getting commisions, therefor not getting any MONEY. Soon, believe me, they will drive prices down just to drive sales up.

    Why would a RE agent try to sell 10 estates at 1 million each ( not selling ) when he can sell them for 500.000 and earn 10*500.000*<insert commission here, let's assume 1.5%> = 75.000 $
    instead of 10*0*<doesn't matter> = 0 $

    If you were a RE agent, what would you do ? .. aaah ok , you'd sell them for 500.000 each ? Me too.

    Now, as far as the rents going up thing :
    When people can't sell their homes, what would you do ? … oooh ok , you'd rent it out in order to make a few bucks while you try and sell it ? What do you think this will do to the rents ? It will drive them down.
    The MASSIVE influx of rental homes that will soon flood the rental market will drive down rentals beyond anyone's belief. That will get more investors ( who were doing ok before renting out ) in problems since they won't find any tenants.

    Put off your rose-colored glasses please.

    1 million dollar properties selling for $500,000? I think you may be losing some credibility here.

    Mc Graths Hill comes to mind…………….

    Profile photo of Skip101Skip101
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    ItalianDragon wrote:
    Have a look at this recent news from New Zealand:

    http://tvnz.co.nz/view/page/411749/1843300

    Now, how would you describe that?

    Real Estate Institutes exist to provide positive spin for their members, so I'm not that surprised, any more than I doubt the spin pushed by the REI here in Australia.

    Profile photo of gmh454gmh454
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    In Sydney we have already seen 850K homes (asking price pre slump) sell for under 500K, Kellyville, the divorce capital of Australia.

    Palm Beach $6.25M to $4.5M in under a year, both ends of the market.

    Wonder how many of the bulls here are taking there own advice and swooping in to prop up there portfolio before the market jumps again ????

    Profile photo of Skip101Skip101
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    gmh454 wrote:
    In Sydney we have already seen 850K homes (asking price pre slump) sell for under 500K, Kellyville, the divorce capital of Australia.

    Palm Beach $6.25M to $4.5M in under a year, both ends of the market.

    Wonder how many of the bulls here are taking there own advice and swooping in to prop up there portfolio before the market jumps again ????

    what is more relevant to property investors on this board is that properties ideally suited for rentals throughout Australia in the $180,000 to $300,000 range have only experienced minimal downwards pressure on price, in other words drops of 20 to 30 percent are not happening unless the property is grossly overpriced to start off with.

    Profile photo of ItalianDragonItalianDragon
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    Skip101 wrote:
    gmh454 wrote:
    In Sydney we have already seen 850K homes (asking price pre slump) sell for under 500K, Kellyville, the divorce capital of Australia.

    Palm Beach $6.25M to $4.5M in under a year, both ends of the market.

    Wonder how many of the bulls here are taking there own advice and swooping in to prop up there portfolio before the market jumps again ????

    what is more relevant to property investors on this board is that properties ideally suited for rentals throughout Australia in the $180,000 to $300,000 range have only experienced minimal downwards pressure on price, in other words drops of 20 to 30 percent are not happening unless the property is grossly overpriced to start off with.

    Every property in Australia is OVERPRICED.

    Profile photo of Skip101Skip101
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    ormeau wrote:
    Skip101 wrote:
    Scamp wrote:

    Put off your rose-colored glasses please.

    1 million dollar properties selling for $500,000? I think you may be losing some credibility here.

    Mc Graths Hill comes to mind…………….

    Sorry, a quick scan of properties on the market and also properties sold at McGraths Hill is not showing price reductions of 50 percent.

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