All Topics / General Property / No Housing Bubble in Australia…is there?

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  • Profile photo of Not Fooled by Property Spruikers HypeNot Fooled by Property Spruikers Hype
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    Devo76 are you serious when faced with what you believe to be a stagnent property market for the next 5  years all you can do is sit in the market like a rabbit in the headlights waiting for the market to turn around. No wonder our property prices are as crazy as they are……FYI property is at a all time peak sell out now & buy back later you dont even have to put your money into shares the Bank would do 5 years fixed deposits are paying 5%+ = $107K in lost earnings on  $500K (Median house price) deposited into a bank…You have to be winding me up….

    Profile photo of devo76devo76
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    Not Fooled by Property Spruikers Hype wrote:
    Devo76 are you serious when faced with what you believe to be a stagnent property market for the next 5  years all you can do is sit in the market like a rabbit in the headlights waiting for the market to turn around. No wonder our property prices are as crazy as they are……FYI property is at a all time peak sell out now & buy back later you dont even have to put your money into shares the Bank would do 5 years fixed deposits are paying 5%+ = $107K in lost earnings on  $500K (Median house price) deposited into a bank…You have to be winding me up….

    You sure your not over on somersoft under another name……

    Anyway like i said. Property growth is very rarely even each year.It can be stagnant,loose ground or move at a trickle. Then when the time is right you get your big growth. One year nothing. Then 20% in 6 months 20% the next.Nothing new about this and many a wealthy investor would agree. You say sell then buy back. That aint cheap buddy. Then what if they dont go down or only drop a little.

    You say buy back when they are lower. With blood in the streets are banks going to finance you ?. Will you have the balls to buy in then. Sorry i am quite happy to tread the proven path of buy and hold quality properties.

    I have properties that have seen 40% in a year so a little bit of a stop is not unexpected. My recent properties have seen 15% and are pos geared. Why the hell would i sell.

    Profile photo of DWolfeDWolfe
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    Hehehe, Get into him Devo.

    Have to say, the only reason to sell is if you can make more money somewhere else. So at this point in time do you think there is more money to be made in the stock market? Analysts are talking about a bear market for a long term trend. There are these delightful adds on tv tracking both property and shares through lit up blocks. The property market shows a steady long term growth and the share market shows a highly volatile trend upwards. The add also omits the last year (funny that) in which many many people lost alotta moola. Funny how most houses don't collapse the way some business' do.

    Personally I think property is great. I have gone away from buy and hold as a personal strategy but that is only because now I can manufacture profits through development. Not every property investor is sitting on dud property that will not see growth long term. Most of those people are not even called investors.  

    D

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    Profile photo of devo76devo76
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    DWolfe wrote:
    Hehehe, Get into him Devo.

    Have to say, the only reason to sell is if you can make more money somewhere else. So at this point in time do you think there is more money to be made in the stock market? Analysts are talking about a bear market for a long term trend. There are these delightful adds on tv tracking both property and shares through lit up blocks. The property market shows a steady long term growth and the share market shows a highly volatile trend upwards. The add also omits the last year (funny that) in which many many people lost alotta moola. Funny how most houses don't collapse the way some business' do.

    Personally I think property is great. I have gone away from buy and hold as a personal strategy but that is only because now I can manufacture profits through development. Not every property investor is sitting on dud property that will not see growth long term. Most of those people are not even called investors.  

    D

    Same D. Im looking outside the buy and hold. My current buy and hold has a dual income and i have  DA in with council to build and sub.
    My neg geared property is getting rezoned to allow higher density. Instant value add right there.

    Cheers

    Profile photo of DWolfeDWolfe
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    That's awesome Devo! Gotta love a rezoning. Then you get it revalued then you get more of everything. I don't see anyone getting their shares revalued?! Or subdividing them to add value…..

    D

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    Profile photo of sonyasalsonyasal
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    NFBP.

    You neglect to realise that most peopl do not pay $500k for a $500k property. They only pay a ten or twenty % deposit. So your figures of losing $107K on a $500k property is inherently flawed. personally i would not be putting money into the stockmarket. it is way to unstable and i don't have the knowledge or time to be watching the market trying to determine whether i should be buying or selling. if you aren't interested in investing in property then why the heck are you on a property investing website. Feel free to leave this site and the buying of property to those of us who are interested  in property investing.

    SS

    Profile photo of harbharb
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    sonyasal wrote:
    NFBP.

    You neglect to realise that most peopl do not pay $500k for a $500k property. They only pay a ten or twenty % deposit. So your figures of losing $107K on a $500k property is inherently flawed.

    As is the assumption that rents will stay flat for the next 5-10 years. That 5% yield will soon turn into a 10% +ve geared property and any capital gains the icing on the cake.   

    Profile photo of harbharb
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    wealth4life.com wrote:

    Wait till the end of August when we see the effects of the mortgage resets to comment further here.

    You're still hoping the mortgage resets will cause a property crash ? That's so 2007.  

    Profile photo of ckmurrayckmurray
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    I’m a property investor in Brisbane but have made moves to get out of the property market. Sold a couple of places and paid off most debt. There are plenty of reasons to be confident that Australian housing is in a bubble, even if prices in many parts of the country have apparently been stagnant for seven years.

    But if any readers are interested in analysis of some of the property promoters claims – such as a housing shortage, population growth and urbanisation as a driver of prices – I have written some detailed articles at my blog.

    http://ckmurray.blogspot.com/2010/07/effect-of-dwelling-composition-in.html
    http://ckmurray.blogspot.com/2010/01/population-growth-and-residential.html
    http://ckmurray.blogspot.com/2010/02/housing-investment-is-not-productive.html

    I have been taking my own advice and getting out of property into fixed income investments. Can we really get away from the GFC completely unscathed? Is Australia really that lucky?

    I also note the thread started with a comment that Australian debt is low compared to incomes. Not sure how that comparison was made.

    All comments on the articles are appreciated.

    Profile photo of ummesterummester
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    harb wrote:
    wealth4life.com wrote:

    Wait till the end of August when we see the effects of the mortgage resets to comment further here.

    You're still hoping the mortgage resets will cause a property crash ? That's so 2007.  

    Haven't noticed you around for a while Harb, seeing you back warms my subcockels.

    Lest we forget, property started to seriously downturn in 2008. Even Mr McKnight from this forum was preaching pay down your debt and sell bad IPs by the end of that year.

    'Twas only the Ruddsters doubling and tripling of the FHB that stopped the correction then. Now, he is ousted. Seems the mining union still has as much pull as the builder's union in this country, doesn't it? Will his ginger replacement further indebt the country to stop the inevitable downturn when its starts in earnest again? Or will she be voted out before she has to deal with it? Who knows.

    2007 was just drawn out till 2009. 2010 is the new 2008.

    As for me, I actually have healthy savings and purchasing plans now, which I am comfortable with if either the market falls or stagnates. My plans won't be put into effect in less than 4 years anyway, so it is more than enough time for me to know which way it is going to go. And belive it or not, some of your advise from this very forum was incorporated into these plans.

    Profile photo of devo76devo76
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    People with a grip on how the real world operates knew the government would get involved in the event of a decline. They even said they would do it again if required. Why would anyone think they would not do the same this time. Sounds like some players are falling for the same trap. I predict posts in a couple of years saying how property would have collapsed in 2010 if this didn’t happen or the government didn’t do that. Assuming we have a decline in the first place that is. I feel the only difference this time around will be that any stimulas will target new properties more heavily and they will try to cap price growth. How succesful they are will be the question but.

    Profile photo of WJ HookerWJ Hooker
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    It doesn't pay to say something negative about property investing on this site  – you get shot down in flames.

    Problem is property investing has such a wide range of people with different amounts of debt and different wages etc.

    I still am of the opinion that housing is going down big time over the next few years.

    But, I still have kept my properties because of my situation ( own most properties outright and purchased years ago ), so I rely on rent rather than capital gains.

    If I was high on debt then I would sell now before negative equity takes a hold over the next few years..

    But that's my position and even though I noted others are saying property will be stable and advising others not to sell, they are not in the buy and hold class, they are developing etc.

    In conclusion. I think every case needs to be judged on the individual circumstances, we cannot give broad advise to others without knowing all their circumstances. But everyone is intitled to a veiw based on their knowledge..that's good.

    Profile photo of ummesterummester
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    devo76 wrote:
    People with a grip on how the real world operates knew the government would get involved in the event of a decline. They even said they would do it again if required. Why would anyone think they would not do the same this time. Sounds like some players are falling for the same trap. I predict posts in a couple of years saying how property would have collapsed in 2010 if this didn't happen or the government didn't do that. Assuming we have a decline in the first place that is. I feel the only difference this time around will be that any stimulas will target new properties more heavily and they will try to cap price growth. How succesful they are will be the question but.

    This is pretty much the crux. Will the govt and RBA come to the rescue with stimulus and lowerring IRs a second time? And, if they do, will the same amount have the same effect? If not, can they afford more? And, even if the RBA slashes rates, will the big 4 follow suit, given the current cost of OS funding?

    I see the Australian economy (especially the housing market) as a a vehicle that is travelling too fast and has the speed woobles. The powers that be are trying to steer that vehicle out of the wobbles but these kind of vehicles can crash, run off the road and occassionally pull straight again. Impossible to judge accurately until all the factors have played out.

    WJ Hooker,

    What you say is alo true. Bearish positions aren't treated well here, by most but not all. I have always found that a little narrow minded.

    Profile photo of devo76devo76
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    For what it’s worth guys I too believe values are heading down. I expect flat growth for atleast 5 years. But to me this is not a reason to sell. Each individuals cashflow, risk and future plans are what they must base there choices on.

    Although my ip portfolio is far from perfect. My lvr is close to 60% on current valuations and I’m only neg by about $75 pw give or take. Add to that a 20 year investing window and you see why in my situation. Holding is a managable risk. Sure if prices drop the mythical 40% then my gamble to hold was the wrong one. But in 20 years it will not matter.

    So yeah each individual must make a choice on their own situation

    Profile photo of DWolfeDWolfe
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    Well I'll weigh back in then.

    WJ, I NEVER said "Don't sell"! I said the only reason to sell is when you can do something better with the money! So if you can do better, whether it is in shares or in managed funds or silver or developing or whatever then you should always be looking to do better!

    I have 2 properties on the market. I am freeing up cash for the next development. In property! I can do something better with the money! I wouldn't sell just because some one got on a forum and started saying that property was a bad investment or that they had a bearish out look for the property market in the future. That is one persons opinion just as my own comments are my opinion.

    By all means have a bearish outlook on your portfolio. My portfolio is looking pretty fine. I think as long as an investor has mitigated as much risk as they can, then if they are happy with the risk and return of whatever asset class then let them be.

    Opinions and talk are free.

    D

    DWolfe | www.homestagers.com.au
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    Profile photo of hschmidhschmid
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    I’m in the – 40% camp!

    Then stagnate for 5 to 10 years.

    Like Japan, but it is now nearly 20 years stagnation.

    Profile photo of DWolfeDWolfe
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    Here you go two cents again.

    Japan population 127 odd Million people. There is a gap of 100 million people between Australia and Japan.

    "Japan's population density has helped promote extremely high land prices. Between 1955 and 1989, land prices in the six largest cities increased 15,456 percent. Urban land prices generally increased 40 percent from 1980 to 1987; in the six largest cities, the price of land doubled over that period. For many families, this trend put housing in central cities out of reach. The result was lengthy commutes for many workers; daily commutes of up to two hours each way are not uncommon in the Tokyo area. Despite the large amount of forested land in Japan, parks in cities are smaller and scarcer than in major European or United States cities, which average ten times the amount of parkland per inhabitant. However, despite the high cost of urban housing, more people are likely to move back into central city areas, especially as the price of transportation and commuting time increases. National and regional governments devote resources to making regional cities and rural areas more attractive by developing transportation networks, social services, industry, and education institutions in attempts to decentralize settlement and improve the quality of life. Nevertheless, major cities, especially Tokyo, remain attractive to young people seeking education and jobs."

    http://countrystudies.us/japan/51.htm

     143619 square miles Japan and 7 692 024 km2 for Australia, please do your own conversion! You can see a picture here http://www.ga.gov.au/education/geoscience-basics/dimensions/aus-size-compared.jsp

    This excerpt tells of an increase in land prices of 40% over 7 years. We have had nothing like this. If we do then maybe we will be in trouble. I think time will show Australia to become the "safe bet" of international and Australian investors in property and in business. Nothing says park your money here like a country that has never had a civil war, coup (no I don't count yours Julia!) or political assassination etc, etc, etc. We have a relatively stable currency and compared to many other nations we have small debt.

    I won't keep going, I think I made my point.

    D

    DWolfe | www.homestagers.com.au
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    Profile photo of hschmidhschmid
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    DWolfe, please tell me your not in the “property doubles every 7 years” camp

    or, you can’t ever lose on property.

    Profile photo of DWolfeDWolfe
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    Hehe.I would not class myself in any camp other than the "Can I make money from this?" camp. It's a good camp to be in :)

    I actually have had one of my properties double in 4 years, And at this stage am selling a property I have held for only a year which still looks as if I'll at least see my money back after all buy in and sell out costs.The opportunity cost of that property was too high. We would be held back from making more money elsewhere. So I have a hard time arguing against these two points.

    Tell me hschmid, just for curiosity why are you on a PI site and a broker if you think values will drop that dramatically? Won't that wipe out most of your business?

    D

    DWolfe | www.homestagers.com.au
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    Profile photo of hschmidhschmid
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    DWolfe, people will still need money albeit maybe the amounts will change (as in -40%).

    I value the thoughts of forum members and am keen to give up my bear and inherit a bull.

    I hope it doesn’t crash for the sake of many who will hurt badly.

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