Forum Replies Created
I dont think they are that interesting. I foresee a very dull period of the market (overall) moving sideways, which means it will require greater skill by the investor to make a deal work for them.
As has been mentioned before – talk of a ‘property market’ suggests that property is a homogenised product, which couldn’t be further from the truth. So if you can’t make a deal work in a particular market, maybe you nedd to look at the next house, street, suburb, state (or country, though I wouldn’t personally rush into that one).
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
what would 53% of the median house price in 1989 work out to be? you must be looking for about an 80% fall within 5 years? however I take the point that you weren’t originally endorsing it.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
it would have been interesting to hear the Commsec presentation that went with those slides… what on earth was that random prediction from 1989 thrown in there? he sure got it wrong!
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
not sure what you mean? everyone is panicking about interest rates going to double digits, yet it’s looking like the economy can’t withstand it and even the latest is questionable. If this is it for rate rises Iwould say that is good news.
talk of a property collapse – I believe – is fanciful. But always expect the unexpected!
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
those hoping for an interest rate induced property collpase may be disappointed:
Economy hits wall as RBA raises rates
Mar 02 11:52
Feedback Jim ParkerThe Australian economy has eased to its slowest pace in four years, eclipsing already gloomy market forecasts and raising the question of whether the Reserve Bank’s anticipated interest rate rise on Wednesday would be the last.
Gross domestic product – a measure of the economy’s total output – rose by 0.1 per cent in the December quarter, well below consensus forecasts of 0.5 per cent and the slowest pace of economic growth since the post-GST bust of late 2000.
The annual pace of growth slowed by nearly half to 1.5 per cent, again well below forecasts of 2.0 per cent and partly reflecting a downward revision of the originally reported September quarter growth rate to 0.2 per cent from 0.3 per cent.
The quarterly national accounts, released by the Australian Bureau of Statistics on Wednesday, provided a dramatic contrast to the upbeat statement from the Reserve Bank just two hours earlier announcing its first rate rise in 15 months.
“This release must make uncomfortable reading for the RBA after its 25 basis point hike this morning, regardless of its assessment that the slowdown does not reflect the real ‘facts on the ground’ in the economy,” said RBC Capital Markets senior economist Michael Every..
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While the RBA acknowledged that output growth, as measured by GDP, had slowed, it said this had not reflected any deficiency in domestic or global demand.
“Domestic spending has been growing strongly for some time and the global economy last year grew at its fastest pace in more than a decade,” the bank said, while noting that conditions were still conducive to spending growth.
The bank’s main concern, as it had argued beforehand, was that after a record 14-year expansion, the economy was running out of productive capacity and this was threatening higher wage and price inflation.
On the expenditure side of the national accounts, the increase in GDP was driven by growth in total private business investment (+0.8 percentage points), and total final consumption expenditure (+0.5 percentage points).
These were offset by negative contributions from net exports (-0.6 percentage points), changes in inventories (-0.6 percentage points) and private gross fixed capital formation on dwellings (-0.2%).
On the production side, there were small positive contributions from a number of industries. However, three industries – construction, retail trade and property and business services – detracted from growth.
The release of the weaker-than-expected growth data sent the Australian dollar down by a quarter of a cent to around US78.4¢ and triggered a rally in interest rate futures.
The implied yield on the June bill futures contract – a measure of where the market sees official interest rates headed – fell 3 basis points to 5.84 per cent, still suggesting investors expect the RBA to raise rates once more by mid-year.
The central bank has argued that Australians will have to get used to economic growth rates closer to 2 per cent than the 4 per cent-plus rates of recent years, if the nation is to avoid the sort of imbalances that have derailed past expansions.
Those imbalances were evident this week in data showing the current account deficit hit record highs in the December quarter at more than 7 per cent of GDP, eclipsing the levels it was at in 1986 when then Treasurer Paul Keating warned that the nation was in danger of becoming a banana republic.
However, the RBA’s confidence in hiking rates in the face of what appears to be a sharp economic slowdown has raised more than a few eyebrows.
“Although these data are backward looking, and the RBA forward, the bank appear to have started out on a bold course in terms of rates – and it is not yet 100 per centcertain that the economy has gone along with them,” said RBC’s Mr Every.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
if you want to gauge the market, pretend to be a tenant and go look at some of the rentals on offer – from what I have heard it is very ordinary out there
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
mini – care to expand on your construction method? I have an interest in this. We have looked at standard double brick, tilt concrete, new ideas for walling (fillable foam), steel frame etc
The reality in the market I am in is double brick is the cheapest material (due to economies from the big manufactures) and also the most highly prized by the retail market. Buyers will pay for tilt though it is not really much of a saving to use.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
I think it is the true test of someones commitment to an argument. If you really think house prices are set to fall there is no reason to own the house you live in.
People have been bantering on for over 5 years now about house prices falling. If I had completely sold up I would be completley gutted. I have friends who tried this strategy and have now been caught with their pants down. The little equity they did have has been squandered on worthless gadgets and cars. One friend told me last year, that at age 34 and afer having owned a couple of houses etc, that he was worth a grand sum of nil. I couldn’t believe it. Interesting when I compare to other friends that studied the same degree etc that are now worth millions. Property is always the key that has set them apart.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
Originally posted by foundation:I can only imagine the falling demand would have the opposite effect to what the rising demand had… ie. very little whatsoever!
Quote:Surely if an increased supply of properties was soaked up by an increased demand for rentals (thus creating balance of supply and no price change), then when suplly falls – along with continuing increasing demand for rentals – then prices can only go up. I certainly can’t envisage demand for rentals falling just because demand for investment property falls – assuming that the demand does indeed fall which is arguable in itself.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
I see it as just another input into the economy, like steel or gas. As the price goes up the economy responds. Interesting that he is buying land in the sticks and losing sleep about oil prices… if he really thought oil was going to go crazy I would think he would do better sticking closer to the CBD
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
F are you saying demand for rental properties is inelastic? If not, the increased supply of rental property that has failed to move rents (tho this is presently changing) will surely see rents go up as that supply is wound back. Therefore I can’t see why you “fail to see how falling demand for investment properties… would push up rent”. What did rent do upon the abolition of negative gearing in the late 80’s out of interest? My guess is they went thru the roof?
there is something wrong with the logic there but it’s doing my head in… I think I meant to say fully elastic.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
the tech stocks were never good value though as their price was based on future expectation which was never going to materialise, plus you couldn’t house your family in one if it became worthless overnight. Tech stocks were fundamentally flawed from within, property is being affected by the external force of interest rates (well may do if they go up), just one force of many.
http://www.megainvestments.com.au
Extensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
allow 10% contingency for price increases by the time you get approval and sign on the dotted line. they seem to be coming in on avergae at about 1% per month
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
Originally posted by foundation:… and of course the power of leveraging works even more effectively in a falling market, which is why I have often suggested that continually ‘withdrawing equity’ in a rising market is a recipe for disaster. If you plan to ride out the inevitable fall, you’ll want to be at your lowest LVR level at the peak, not your highest!
Anyway, I think there’s some confusion here between inflation & gearing/ leveraging. Leveraging adds risk and potential return regardless of consumer price inflation. The reason CPI is good for PIs is that wages (and therefore rents) tend to rise roughly in parallel with CPI, eroding the relative cost of a mortgage and placing upward pressure on HPI.
Cheers, F.[cowboy2]
inevitable fall…… sounds like a good reason to sell the house and rent it back at a fraction of the cost. I can’t see many people doing that.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
here’s a tip… was fitting out a unit and got quotes for custom made slimlines. prices were about $1500. my crafty father went to Spotlight and bought a stack off the shelf for about $30 and cut them down to size, I saved about $1000. was a bit of mucking around but the result was excellent
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
I’ll take the bait then… isn’t it old news that interest rates are on the rise? I thought the negative sentiment from mums and dads was already factored into prices?
I read recently that building costs in WA are set to raise 10% a year for the next 4 years… we have a situation where replacement costs will be drastically higher than established house prices, with rents even more distorted. PMs are telling me rents are on the march and vacancy levels very low, so I think we can safely assume that at this stage in the cycle rents are set to go up. If interest rates kill the market the building industry will be in a huge slump – signs of which IMO are not happening.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
the owner can do it or a real estate agent can do it. make sure they know how to sell ‘off the plan’ as they all say they can and they all believe they are legends at it… talk to some of the developers in the area and see what they are doing. You don’t want to get to settlement after having locked a contract in for 18++ months only to find your water tight contract has sunk.
having said that, you need to help the REA by preparing proper preliminary strata forms, disclosure statements, unit entitlements etc, as your REA should be considered one of your key team members – not just some overpaid guy you will worry about later on – as lockign in your sale price is one of the biggest variables in the whole equation. the bank may insist on presales anyway if you do not have a track record in development.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
if you don’t think about interest rates, vacancies, potential bad tenants and so on, then I would suugest you are gambler more than an investor. Just like me buying shares at the moment – I openly admit I know nothing about them and it is purely gambling. I may as well play the chocolate wheel at the casino really.
I think Spanky’s comments were within the context of buying a reasonably researched investment property presumably around the current median price with due consideration for your circumstances and contingencies etc etc, I don’t think he meant just throw some money at any over priced piece of rubbish and expect a genie to appear
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
my tip: be wary of the predictions of disease, death and famine. many of the opinions that are floating around now about property being at ‘unsustainable levels’ ‘irrational exuberance’ etc etc were floating around before GST… just look at what has happened since then – anyone not in the property market has really lost out. I went with the herd, lost my nerve and tried to time the market a bit so sold a few IP’s hoping to buy back later – cost me hundreds of thousands when I think about some of them. Eventually something bad will happen and the naysayers will be vindicated. In the meantime, if the deal is right for you, go for it.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
land banking is for very rich individuals or cash rich companies. The Japanese have been sitting on St Andrews (a large coastal area where they will build a new city) just north of Perth for 20 years roughly and it is only just starting to get close to making a start.
By all means take a punt on a beach house or something tho – a bit like a painting – enjoy it and you never one day it may be worth a fortune. otherwise make sure you can earn a decent income from it somehow.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
