3 years ago I was here warning that there would be 30% falls in Sydney & melbourne…..I was laughed out of town.
In todays paper there was an article showing how one Sydney property bought for $450k in 2003 just sold for $250k……..a 43% fall
By comparison, the all ords index, which I was hilighting at the time…….went from 3000 to over 5000…….a 66% increase
http://www.posigear.8k.com
Positive Geared Share InvestingWith that one sale in Sydney . Was that a loss or a gain? I think it was a gain for one person, yet a loss for another. It just highlights there is good money to be made. Property is the same as shares you can make more money in a bear market if you are savvy.
Bankruptcy occurs everyday . It is a shame for one family and a great buy for the next.
Could you explain to me how the ASX100 and ALL ORD yield is calculated?
From a managed fund i had , i sold AMP shares in about late 1997 for $15 rounded, they are no where near that figure now . Please correct me if i am wrong.It was handy , it paid for my wedding at the time.
Just because one property dropped by 43% doesn’t mean the property market has dropped.
You do not know the background to this property. It could have had a granny flat demolished, bikies move in next door or anything similar. The original price could have been inflated, they could have stacked the contract, it could have been transferred between family members etc. From memory, this was also a mortgagee in possession sale at auction, so it may have just been an unlucky day for the vendor too.
Just tonight on the news they were saying Sydney prices were rising still.
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Originally posted by crashy:3 years ago I was here warning that there would be 30% falls in Sydney & melbourne…..I was laughed out of town.
In todays paper there was an article showing how one Sydney property bought for $450k in 2003 just sold for $250k……..a 43% fall
By comparison, the all ords index, which I was hilighting at the time…….went from 3000 to over 5000…….a 66% increase
http://www.posigear.8k.com
Positive Geared Share InvestingHi Crashy,
That comment is about as valid as me using OneTel as a reason why the share market is a bad place to invest.
ABS stats have identified that the yes indeed the Sydney market did fall in the last twelve months (I know it doesn’t include your representative sample) but wait for it – it fell by 0.5% over twelve months.
Up 1.4% in last quarter – but of course that is before the ‘crash’
Derek
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Skype – derekjones2113Totally agree with Terryw here. One hyped up media story does not depict the overall market.
You also have to look where is it and under what scenario they buyer paid the price and was it fair value. Plenty of buyers were paying well over valuation to get what they wanted or simply get into the market in hope the market would keep rising.
I would also suggest this sold well below the median price in St Clair given it was a morgagee in posession sale.
ABS released stats today stating the overall market in Sydney was up 1.4% in the June qtr. We will slowly edge our way back to where we were and pass that mark where again people will question “how far can it go”
Cycles come and go with both shares and property, and if you invest in both at the right times you will get the best of both worlds. I suspect the next swing will be from shares into property. Still a lot of unrealised profits sitting in the share market. I’ve taken my seat
Cheers
Simon CIsn’t everything we read in the media the truth?
Show me the professionally analysed data from Residex and then I will believe what you’re saying.
Todd Burns
http://www.freepropertyhelp.com.auHey Crashy
wonder what percentage increase the new owner will sell it for…with allowance for CPI of course!
wonder what the final profit will be if the new owner is a positively geared ‘hold’ investor…
…don’t mind me, I’m still sulking I missed out on a profit with shares 3 years ago (boring story!)…those of us with long memories seem to have better patience with property than shares!
Of course I’m also hopeful that negatively geared investors have long enough memories that they may panic sell in an anticipation of interest rates returning to >15%smiles, Kerri
[happy][buz2][build]Originally posted by crusher:professionally analysed data from Residex
Is this not a contradiction in terms? Refer to their ‘analysis’ of house prices vs interest rates if you need a good belly-laugh.
F.[cowboy2]
Hi crashy,
when people do not want to hear, they won’t. I understand your frustration.
To satisfy people here let say that they property market will go up 10% every year for the next 10 years
Clones
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The net result is not so much lies, damn lies and statistics but rather vendor dreaming, buyer wishing and agent glossing.3 years ago I was here warning that there would be 30% falls in Sydney & melbourne…..I was laughed out of town.What I can’t understand for the life of me, is the amount of people who need or want glorification based on some prediction of what may happen based on their obvious and considerable knowledge.
Whether people warn / predict / analyse / guess ?? / have a gut feel or were told by their rich uncle about some great event or non-event, what does it matter ??
I suppose in the end the people are simply looking for respect / attention.
The other thing I don’t understand, is if someone feels that strongly about something and are sure it (whatever it is) is going to happen, how they never seem to put that “knowledge” to it’s best use and profit from it.
The amount of people I come across who are absolute wizz’s on data and stats and what happened when and who said what and what legislation and the “rules” say can and can’t be done……and yet at the end of the day when all of the dust settles, they haven’t done a single jot when it comes to investing large sums of their own money – put it at risk and come up trumps based on that prediction / knowledge.
They simply stand there with their hands on their hips and say “See, I told you so….”. I cannot see where the benefit is in any of that ??
My brother-in-law is a classic case of this. He can quote dates / rules / laws / what Minister said what / who did what to who and when, and knows more about the property market than I could ever know……..yet……he controls and owns about 7% of what we do.
My sister started to get frustrated with all his knowledge, yet inaction, a couple of weeks back when we last spoke. After a spiel lasting more than 10 minutes (seemed a lot longer sitting through it all) I asked him how he can put his strong opinions to best use and expose his money to risk, such that it will grow based on his underlying philosophies……all of his gusto melted away and it was clear he had no intention whatsoever of following through with any action whatsoever.
If the wife and I fall and stumble with what we are doing, he’ll be the first to jump up and say “I warned you all”. He’s had to bite his tongue now for 12 years, and with good management it might be a few more years yet……
On the other hand, my only prediction is in about 10 years, after he has gathered alot more knowledge and “I told you so” comments on us, he shall own less than 1% of what we do.
People, stop worrying about what people say / predict……and get busy doing !!!!!!!!!!
Hi crashy ,
still waiting on that calculation , or dont you understand it ??? ASX 100 and ALL ORDS ??? Keep searching ….
If you wish to draw comparisons perhaps you should know how the figures are assessed . Dont just read numbers crashy and think you are an expert! Learn what they mean by how they are calculated.
I am eagerly awaiting my enlightenment…
Originally posted by tony wpb:Hi crashy ,
still waiting on that calculation , or dont you understand it ??? ASX 100 and ALL ORDS ??? Keep searching ….
I like the price/dividend ratio myself, by price/earnings (PE) is commonly accepted. Your point being?
F.[cowboy2]
Note: I do not advocate buying into shares willy-nilly at the current point in the cycle.
Originally posted by Dazzling:I suppose in the end the people are simply looking for respect / attention.
[/b][/size=2][/navy]
Funny coming from someone who always has to reply in BOLD to get some attention??
I think Dazzling just replies in bold because of the new “wishy washy” backgrounds ?
PS- Is wishy washy a word?
“Money is a currency, like electricity and it requires momentum to make it Effective”
Online Positive Cashflow and Renovating CalculatorsThanks for that blogs, I fear your comment added little to the subject being discussed.
If you must know, since the format on this forum changed, I’ve had quite alot of feedback (especially from elderly folk who’s eyesight isn’t what it used to be) saying they can clearly determine the words against the forum’s background, and the {navy / bold / font 2} combination seems to suit perfectly.
Not all of us are spring chickens.
Anyway….back to the topic….
I try to take all type of info onboard from many sources and it all helps me determine how to invest (or not to invest). Anecdotal information is important because it may have more currency to it! We can find statistics that show evidence of property prices falling but we can also see evidence and stories that the market is not dropping. Take some money into the property market and make some offers. I was recently very surprised at how cheaply I got an inner city property recently. Makes me wonder!
ten years from now what will they be saying about the price of property???
Renee rivken said “buy in gloom sell in boom”
The only people we are hearing about are the people that bought in “boom” and each have a storey or reason for their loss.
As we get older we get smarter – when you are young you don’t want to listen because you know it all – “information + education = webucation.
In the telling and retelling of the story about that 42% drop on that Sydney property, people are forgetting that the original story stated that the place needed $40K of ‘essential repairs’. Can you picture it? We’d be talking carpets beyond cleaning, walls and doors with holes in them, kitchen beyond repair etc etc. That property had been well and truly trashed. It’s naive to hold it up as being representative of the market. The media do this sort of thing, but we should be a bit more clever.
All big markets have huge differences across them. My Sydney PPOR has gone us 18% on bank valuations – same bank – during the slump. My Sydney IP went down, but is now back where it was before the slump.
And in Perth, I’m sure there are some areas where properties have gone up more than others in the same period.
ScottTax Depreciation Schedules
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http://www.depreciator.com.auOriginally posted by depreciator:In the telling and retelling of the story about that 42% drop on that Sydney property, people are forgetting that the original story stated that the place needed $40K of ‘essential repairs’.
You’re implying that this is an isolated case! Not so.
Here’s more from Louis Christopher, the from the company who produce the official figures used by ABS/RBA etc.
Sydney Edition 24 August 2006When is a crash… a crash?
An interesting story came out earlier this week, which was published in The Sydney Morning Herald regarding the state of the Sydney housing market. The main focus was a number of examples where property owners have lost as much as 42% based on a purchase in 2003 and a subsequent sale this year. Please click here to read the story.
A number of the sales were forced repossessions and highlighted the extent to which how much red ink some mortgagees are in. No doubt, given the most recent rate rises, this number will surely rise.
However I think it is only fair that we point out this is not occurring in the majority of transactions and to think the Sydney market has “crashed†as per the titled headline is probably taking the point too far.
Yes certainly the market has fallen, and in some areas fallen considerably. Yes there are examples of where home owners have lost everything. However we have found that the majority of Sydney repeat-house sales over the period 2003 to July 2006 have actually been in the positive. Please see the table results below.
Percentage of Resales
Price decline 31.8%
0 to 2% increase 13.3%
4 to 8.5% increase 13.9%
8.5 to 20% increase 21.7%
Greater than 20% increase 19.4%
NOTE: Based on properties selling between 2003 and July 2006 for data reported to APM prior to 24/7/2006. A total sample of 4526 properties were used.
That said, when one assumes average buying and selling transaction costs of 8.5% of a property’s value, we note that over 59% of repeat sales have been in the red in terms of estimated net losses for the owner.
If we were also able to take into account the cost of renovations and the cost of borrowing money I would suggest that the percentage of people who have lost money purchasing Sydney residential property during 2003 would be far, far higher.
What we also haven’t had a chance to do is provide the results for the unit market, which one would have assumed to be even more revealing.
But even so, the market in my opinion hasn’t actually crashed. Though, it is up for debate what is defined as a crash. In the stock market a crash is the generally accepted term to use when stock price indexes fall by 20% or more, as was the case in 1987 and 1929.
So translating this to the property market, our Sydney wide composition adjusted house price index has fallen 10% from the peak, which was recorded at the end of 2003.
That’s a significant downturn and in my opinion a hard landing. Though, you won’t be hearing from our organisation that it’s a crash.
We will be saving those headlines for the appropriate time.
Louis Christopher
For emphasis?
32% of resales have sold for less (gross) than they were bought!
59% of resales have sold at a net loss!
Factoring in interest costs & renovations, these figures “would be far, far higher”.So over 3 years, interest costs alone would have come to 23%. This shows that well over 80% of this large sample of properties have been resold at a loss! Perhaps close to 100% once stamp duty, agents fees, mortgage insurance etc are included!
F.[cowboy2]
Hmmm. Sure, factor in interest, renos, stamp duty etc and lots of properties in lots of markets are sold at a loss – especially if the sale is forced. But I can’t find anything there that tells me the 42% drop in sale price on that property is not an isolated case? Would there have been others? Of course. But that 42% is not the average. It’s one end of the spectrum.
Tax Depreciation Schedules
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