1) & 2) Sure, these things will affect the distribution of prices, but at the aggregate level, nothing more. 3) These would be contributions to what I've called 'structural change'. Each of these things can only happen once. They are cause for a shift in prices (relative to wages), not a continuously compounding trend. We're running out of further…[Read more]

Phil_McRakin wrote:
a LOT of people have/are jumping into property investing without even doing the sums!!!

Not all though. Do study LA_Aussie's post on the first page. It shows that investors can make money at very low rates of capital growth.

DraconisV wrote:
Ok, so house prices won't fly with growth forever above income increases, Will house prices increases stay (sort of) level with income increases.

Who knows? Possibly. But by any rational measure (price v rent, price v wage, affordability etc), house prices are waaay to the high side of historic norms. If they return to…[Read more]

And just in case I haven't really bagged on about this whole thing too much already, here's some more charts:

Please point to the bits on the chart where house prices go up and rents go up the same amount?How on earth (with all the evidence available to all your senses) could you possibly think that was a closer relationship than this (which I provided earlier):Are you an investor? Which lender do you use (I really feel like I need to ensure my deposits…[Read more]

Scott No Mates wrote:
It may not be a direct correlation however it is closer than any relationship between wages, cpi and rent. That is, as an investor would you be happy that ROI is dropping? (regardless of whether you consider rent in isolation or as part of the combined capital & rental returns)

You can't be serious…Are you?

Scott No Mates wrote:
Foundation, it may not make sense, as you have put it, for prices to grow at a faster rate than wages however you fail to consider one aspect – profit/reward for risk.If I undertake work on a property, I am exposing myself to some degree of risk, the builder who carries out the work takes a risk (that he will be paid), bank…[Read more]

seank wrote:
Hi Foundation,I respect your privacy.My proposition is that house price movements are driven primarily by debtSo don't you think there are any other factors which influence prices eg.1. supply and demand

Yes, but it's market supply and demand that pushes and pulls prices. Supply (new dwellings) has exceeded underlying demand…[Read more]

Scott No Mates wrote:
Have I missed some basic prinicple here? Rent tracks wages. What happened to the arguments of ROI & yield ie rent reflected as a % of the property price – whose growth far outstrips CPI or wages growth. Sure there are dips in yield when property prices take off and rents are lagging however in times of a tight rental…[Read more]

duckster wrote:
rent is determined by supply and demand for rental properties. If investors were to suddenly buy a lot of investment properties and flood the market with available rental properties then the rental vacancy figure would increase which in turn would cause rent to decrease.

I think wages are pretty important too, plus there is…[Read more]

yarpos wrote:
the charts show interest vs rent, the question was rent vs inflation.

That's real (inflation adjusted) rent. A flat line indicates rents equalling inflation, rising indicates rents increasing faster than inflation, a falling line indicates rents increasing more slowly than inflation. I included the cost of mortgage interest…[Read more]

Boy in Blue wrote:
From my calculations, the article stating Darwin prices to hit $8.36M in 30 years, based on 8% growth and median price of $385,000 is WRONG.

Bingo! The fact that the maths are wrong and the prediction a whole order of magnitude to high should flash great warnings. But that's far from the only problem with the article and…[Read more]

hleung wrote:
Have a look at the latest Residex report on residex.com.au/newsletter/source2007-11bMC.html. In nearly every area in Australia whether it be capital cities or regional prices have gone up by close to or above 10% for the last 10 years.Don't say rubbish without looking at the facts.

Gosh, let's see… Nope, this is rubbish too.…[Read more]

Riddle me this:It takes an increase in mortgage debt of about 15% to achieve an increase in median house price of 8%.Assuming inflation of 3% and GDP growth of 4%, how much mortgage debt would we have after 30 years of 8%pa?Do Michael Yardney and Ed Chan cover this gear in their books?Cheers, F. [cowboy2]

Well, here's a 'for starters'. I'm not sure who is more disgraced by this article – Michael Yardney or the so-called journalist, Ben Langford.

Quote:
Darwin median house prices 'to reach $8m'By Ben LangfordMarch 22, 2007 07:46amArticle from: Northern Territory NewsTHE median house price in Darwin will be $8.36 million in less than 30 years, a…[Read more]

dreaming wrote:
for my technical advise I'll read books by well educated people like Ed Chan, Micheal Yardney and Steve for foresight into the future.

That's a real knee slapper! Oh wait, you're not serious about Ed Chan and Michael Yardney are you? If so, apologies; it might look as though I'm mocking you. I'm not, I really thought you were…[Read more]

Sorry, I hadn't read this question before answering it on another thread!https://www.propertyinvesting.com/forums/property-investing/help-needed/4322828Above figures are CPI inflation adjusted rent in 2007 dollars. The answer is "no it doesn't". Because of the close correlation of wages and inflation, and because rent is limited to wage growth,…[Read more]

Just a few more bits…

foundation wrote:
I might say to you:“Make no mistake about it Devo my boy, an unsustainable trend in debt is the driving force of our economy today and will be the most influential factor in our economic future over the next decade or so (either by its continuation or by its absence).”You might try to refute this sta…[Read more]

And rent has increased faster than inflation? Here's a chart I prepared earlier:Real (inflation adjusted) rent versus real (inflation adjusted) interest costs on the average house.As for the last 30 years of house price growth… well, let's say it aint gonna repeat over the next 30 years. Here's something I wrote a while back which began as a…[Read more]

Tysonboss1 wrote:
remember that the most capital cities have averaged close to or above 10% growth long term,…. and the rent generally increases faster than inflation,

Rubbish!