Forum Replies Created
- realestateedu.com.au wrote:Yes FW I think that buying in old established areas is very intelligent for many reasons, firstly land size, then transport and schools and then either a knock down rebuild or renovation.
Additionally, if I had to bet, transport and amenities in already-established outer suburbs can only get better in the future. As people buy into suburbs even further out, amenities have to follow and there might be a ripple effect into the suburbs that are next to it. The trick is betting or guessing on which suburb is likely to become more 'central' in the future and become a mini-CBD or hub. If anyone catches onto these they'd be in for a fair bit of money long-term (ie. at least 10 year plan).
duckster wrote:If you could get someone to put some animals on it for agistment you may be able to earn an income on it.That's a good idea actually, never thought of that. Plus, that would mean fertile soils and good grasses rather than weeds on that land come time to actually build. And you wouldn't need to worry about mowing the lawn or people dumping junk on your land. I heard that some time ago, at least in Singapore, it was possible to take possession of a plot of land (without cost, except legal fees) if you dumped your junk (or any other property) there and left it long enough and the actual owner didn't respond to it.
I see your point. Question is, if you borrow to buy land, there's no income whatsoever. Can you stomach the repayments on that loan over the next 10 years on the basis of numbers that you saw in the newspaper? If indeed the valuation is accurate then that would be awesome, but what if its not?
Also, if you buy an average $400-500K house today and another in a couple of years (and don't buy anymore for the remaining 8 years after that), you would probably have assets amounting to $2 million in 10 years time anyway, assuming the trend of doubling every 7.2 years continues. Plus you have income.
I've never bought land before, so hopefully others will have input on that.
wealth4life.com wrote:land sizes in new estates have shrunk to 350 m/2 – 450 m/2 gone is the old quarter acre block … billions of dollars to be spent in medical which is going to increase taxes …If the GST hits 15% many businesses will go broke … what else folks ???
I wonder what the implications of smaller land sizes in new estates would be. Naturally I'd guess that our classic suburban house on a big block will turn into an 'old favourite'. Newcomers to the market might like brand new home and land packages, but perhaps when they tire of that, they'll trickle into old suburbs, buy up these big blocks and start to build their McMansions.
This is a good thing of course, for those of us who own average 3 bedroom houses on family-sized blocks. Either that, or it'd just become the norm to have 350sqm of land. Having said that, I can't help but drool over property listings featuring big plots of land. I mean, there's nothing quite like sitting on your deck and gazing out into a backyard that doesn't appear to end, or to walk out the front door and admire a beautifully planted large frontyard that's big enough for a picnic with friends and two cars still parked in the driveway.
If GST hits 15%, we'd all have whinge and whine about it for 3 weeks. And then we'll all get on with it. As it is I thought 10% was quite a blast, but we've pretty much all accepted it by now.
DWolfe wrote:Anyone wanna put a bet on whether this policy is his downfall in the next election? Most Aussies are pretty emotional when it comes to land, house, affordability.D
I get the feeling it will all blow over and Rudd will be spared from the damage. There isn't any info that I know of that would describe what sort of properties the foreign investors are actually buying. If it's primarily expensive properties above $2 million or so, then there's plenty of demand here even to take that up. There will be no downwards price movement and things may continue as normal.
Some folk out there are seriously loaded. For those who know where Donvale, Victoria is, my parents' friend's daughter just bought her SECOND house there, and she's only 25.
If however,overseas investment is primarily the thing that's holding up the lower segment of the market, then I'd be looking for a drop to occur. However I think this is an unlikely scenario…overseas investors would put their money in a blue ribbon suburb, or at least in the $700K-1mil range, not some first home buyer shack.
Nobody here is likely to complain I guess, because they are not the ones affected by the rules. But when this fails to stabilise prices, or if it does cause prices to crash (terribly unlikely), then Rudd will cop the krudd.
DWolfe wrote:By the way FWord the Herald Sun = lowest common denominator.D
ROFL Someone told me that's the case for most newspapers! Indeed, the papers rely on sensationalised material to sell 'news' and it works because of human nature.
god_of_money wrote:We need to compare the property price vs. Singapore vs. HongKong vs. Shanghai
infact property in Sydney is still very CHEAP.I couldn't agree more with this statement. Having come from Singapore myself this is a very real thing I could testify to. This is why I feel that an average outer suburban house on a family-sized block in an area with amenities and infrastructure could hit the million-dollar mark without much issue. Friends and family coming from Singapore would be astounded with a standard $400K home, which would probably fetch more than a few million in Singapore.
Also, I saw red when reading the Herald Sun's version of the article on this issue. For them to label Asians as 'raiders' and foreign investors as 'cheats' is absolutely uncalled for. It gives us a bad name because some locals would automatically assume all of us to be the same, even if we're PRs and they are TRs.
Furthermore, without turning this into an even more complex thread, I am embarrassed to even be associated with these TRs and I do not agree with their mannerisms or the way in which they conduct themselves in public. It is enough to know from this that not all 'Asians' are going to be alike. Some of us are hard-working, struggling PRs under the same govt as everyone else, paying their dues and taxes and trying to get ahead.
Well I just wish they'd reveal the said tax reforms (ie. the stuff they think is going to control property prices) now instead of firing blanks at us. The 'threats' are becoming very tiring on the eyes and ears.
Looking at your thread I recalled reading an article back in March in the Herald Sun where they quizzed a number of 'experts' in the property field regarding their thoughts on where the property market was headed, and what the interest rate trend was going to be. Knowing now how the market actually fared following the March quarter one might be tempted to think that even the 'experts' know diddly squat because all of them were nearly completely wrong. And arguably, it's unreasonable too, to expect anybody to know where things are headed.
Ultimately I think that this is a case of 'yer pays yer money, and yer takes yer chances'. In any given scenario, 30% of the people will be correct, 60% of them will be wrong, and 10% decline to make statements of any real value (or otherwise make statements so broad as to be inconclusive).
Personally I think it's simple enough to assume that as interest rates go higher the price growth is going to slow. The number of people actually buying a PPOR is going to slow because of firstly, interest rates, and secondly, just being exhausted and worn out from the search and being outbid at everything week after week. So that's where I think the market is headed in the middle to lower range, while the upper range is going to see steady growth regardless. Obviously properties in the most desirable of suburbs may see large price jumps and stock levels that are very thin on the ground.
Unless some major things happen in terms of change of regulations, or unless crap hits the fan with a major economy going underwater, or a sudden reduction in public confidence, I think the above is what we're likely to see in coming months.
On the other hand it sometimes appear that 'herd mentality' can be wrong, or at least, by going against the 'instincts' of everyone, you actually stand a better chance of getting ahead. So when it's all doom and gloom, that's the best time to buy, not stand there and make water in our pants.
Unfortunately almost everyone follows herd instinct. I did, and missed out on the massive run up of property prices following the march quarter! But of course, who would have guessed the darn thing would reverse overnight without any hint the economy was actually recovering? Again, I refer to above. When enough people start pumping money in, the economy automatically improves because it provides the impetus for things to start moving, a kick start as it were.
Didn't the GFC arise because some time down the track people decided things didn't quite add up and then started selling out?
Matt_Arnold wrote:Yep… the economy (the share market is one of the best examples) is predominately driven by emotion.Cases in point would be a) how the economy seemingly rebounded overnight last year after all the talk that we were in for the worst ride of our lives, and b) the recent dip in the sharemarket caused by some big shot opening his gap to say that something will be done to cool the market.
In either case nothing had actually changed and yet the economy and share market (over)reacted. This leads me to believe that the run of the mill people are the ones who decide on when the market booms and when it crashes. Yes, run of the mill people like your mates at the bar-b. When everyone thinks the economy is recovering they pour money into the market which occurs as retail sales, increased investment into shares, property etc. When everyone thinks the economy is going to the dogs they panic and pull money out. Supply and demand. When nobody spends, nobody buys, prices fall. That causes the economy to change.
One of the books I read made an interesting comment. One of the ways to ascertain what stage the property market was in would be to see what opinions were on the minds of others.
Things are the pits when nobody is talking about property anymore. And when a good number of them say it's a 'bubble', they only think it is. But it's this thinking and frame of mind, that when taken upon by enough of the population, causes a real 'bubble' to actually occur. Effectively, things that are perceived by the majority of people do become self-fulfilling prophecies. Looking at it this way, it's great to see articles in the newspaper preaching of the boom of the RE market. If everyone keeps this up, the boom will continue.
Best way to create a crash IMHO, is abolish negative gearing.
However, that crash will be accompanied by riots and a war, so in essence, it's just not going to happen. Really, do the seat warmers up there really care who can and who cannot afford property? I don't think that's their biggest priority.
To be brutally honest, I'd be humoured to see what 400K and under would buy. One of the things I was looking at in that price range was actually St Kilda apartments, but as with anything there's always the issue of supply and demand. Gut feel tells me there's a lot of apartments floating around there and vacancy rates are probably a little higher than the outer east areas.
Fundamentally however, their location is generally sound, amongst great infrastructure, shops, close to entertainment, transport, eateries, the beach, and less than 7kms from the CBD, in what looks like a rather charming environment. Honestly, I would consider moving there, because I could come home everyday, grab a drink from my fridge and just head out and laze on the beach in the evenings.
Ringwood has gone up a good deal in recent months. DWolfe mentioned Croydon, which is incidentally where I live in what is currently my first home. People have differing opinions about Croydon. Some say it's nicely treed, leafy, quiet, the border between city and country (especially in the northern part, IMO). But some others will tell you its full of bogans. Don't let that stop you however, especially if you're looking to buy rental properties. Vacancy rates are low, if you check SQM Research, so my guess is that if you pick up something in a decent spot it should rent easily.
Now 'decent' is a subjective term, because one of my friends personally likes the area north of Maroondah Highway, and while my agent agrees, he also states the area near main street is an excellent location (coincidentally the area that the said friend told me to avoid). Either way, you'd probably be looking at a nice house on a smaller block, a house that needs more work but on a full sized block 800-1000sqm, or a unit. Recent activity has pushed prices up.
Another colleague at work personally likes Berwick and Lyndhurst, and is also now looking at Hampton Park and Narre Warren, but I couldn't tell you much about these places. And, yet another colleague of mine lives in Frankston and recently sold his IP in Bentleigh East. He thinks Frankston is going to grow a lot more in the coming years. I used to look at the listings of Seaford although never been there personally. Heard its kinda rough, but again someone else here might highly recommend it.
These could be 'growth' areas which might interest you. I don't know if Croydon classifies as a 'growth' area, because strictly, there appears to be a lack of new land for sale. This could be a good thing since new houses springing up everywhere don't bode too well for older houses in the same area. I also think Croydon looks undervalued alongside Ringwood and to a certain extent maybe Boronia. But take my opinion with a few huge grains of salt, will ya?
Well I'm no expert and can't advise on the intricacies. But looking at that info, if you're having trouble making repayments, I'd be switching to an interest only loan attached to a 100% offset account, and then save every single cent and rent into this offset account. There's obviously no point in trying to fix now because the fixed rates are going to be unaffordable (as they are usually higher than current variable rates), and at least based on my mortgage, it may not be possible to have an offset account.
100% offset accounts are great. It's like a savings account with the money freely accessible at all times, but the money within earns interest at the same rate as that of your mortgage rate. So if you keep $20K in the offset account it effectively reduces your outstanding loan to $260K and you only pay interest on this amount.
And as and when you want to negatively gear your property to the max, draw all money out of that offset account and you're left with $280K deductible debt. This is assuming you are on an interest only loan.
If you are already up to your eyeballs in debt trying to service the mortgage of just this property, I don't think it'd be a great idea to get another rental property unless of course you find something that is positively geared.
House within 7kms of the CBD and 1km from the beach!
Well I've said this many times before but I'd say it again:
Bring on the crash. I'm WAITING!!
Heheh…I was reading the first post of this old thread and thought to myself that hindsight is a wonderful thing. If I had bought anything, ANYTHING at all during Mar/ April last year instead of sitting on the fence waiting for property to collapse, I would have made lots of money by now. During that time however I indulged in dinner conversation about the potential crash of the property market considering the abysmal share market conditions around the same period, a mistake indeed.
I wound up buying something in August, under the fiery heat of incredible competition, probably overpaying in the process just to get my first home…now perhaps THAT was actually the wrong time to buy because interest rates started to go on the up and up soon after settlement.
Yes, hindsight is a wonderful thing.
DWolfe wrote:My one question for this is,Do foreign investors bring their own money over or do they buy with funds borrowed from Australian banks?
Well I couldn't answer that with any degree of certainty. But based on what I've read at least, I'd be betting that foreign investors are indeed bringing over their own money, or otherwise getting 'cheap credit', as it is so often referred to in the newspapers, to buy property.
This is partly why I feel that it is uncalled for to be raising interest rates for the sake of controlling property prices. They could raise it to 12% and nice properties will still sell. Why? Because firstly, quality property is always quality property. Overseas investors know how to buy in desirable areas, not mortgage belts. Secondly, there will always be some foreign investor out there looking at property here and considering it to be cheap compared to where they're from. Thirdly, 'cheap credit'. Interest rates elsewhere are low compared to that here, which in fact looks sky-high.
I've seen this in Singapore: a crappy little two-storey side terrace (mostly 99 year lease) on 250sqm of land goes for somewhere between $1.2-1.5mil. A government subsidised apartment with only a 99 year lease (aka run of the mill 'shoebox') goes for around $200K. Here, $1.5mil will get you THREE substantial freehold 3BR/1bath houses on 700-800sqm of land (possibly development potential) and maybe still have cash left over. In comparison, doesn't Australia then look cheap to someone coming from a place like that?
wealth4life.com wrote:The latest Westpac Melbourne Institute survey found a fall in the number of people believing that ''now is a good time to buy a dwelling''. The proportion agreeing slid from 62 per cent in December to 42 per cent in March. Those believing the wisest use for savings was ''paying down debt'' climbed to 27 per cent.
I think we've all read the comment along the lines of, 'Herd instinct is wrong'. If that's the case, is it actually becoming a better time to buy now because the proportion of people who think this way is actually diminishing? Case in point. Interest rates. When interest rates were high, a higher proportion of people were choosing to fix. And at their all time lows, the proportion of people choosing to fix was also similarly very low.
Or, let's look at the share market. When every Tom, Dick and Harry and their aunts and uncles were sinking cash down to their pennies into the market, that was actually the best time to get out. It was pre-GFC.
One thing is for sure. When the market does stabilize or even crash, I'll see plenty of opportunities out there for the picking. There would be many others with a similar frame of mind I suspect, just waiting on the sidelines and waiting to pounce at the right moment, pick of the weaklings and have a fantastic feast.
sonyasal wrote:this would be helped even more if the governments and big business put a bit more thought and effort into decentralising some businesses. With technology today, emails, video teleconferencing etc. you do not have to have businesses set up in the middle of the city to be profitable and/or successful.Moving to outer suburbs or even rural areas would also be cheaper as far as rent or purchase costs for commercial property is concerned. Travel time for staff would be shorter, therefore they may be more productive, have a better quality of life and be able to afford the type of home that they want.
This would probably be the fairest way to deal with (or fix) the issue of ever-rising property prices. Quite simply, working people would prefer to stay nearer to their workplace, and have schools and shops, transport etc around their area so they don't have to drive for ages to fetch their kids to school, the pool, or to music classes. Working class people are very time poor, so the shops and eating places also need to be within easy reach.
This, I think, is the key issue that drives the 'want it all' mentality. Most of us these days are just time-poor and can hardly even manage our own garden.
The issue with decentralising jobs however, is that the government would take at least a decade (if not two) to actually get this plan into action. After all, it took a massive shortage of water before discussions were made about building a desalination plant! The other thing that should be improved is public transport and the power grid. Provide excellent and affordable public transport, together with a grid that ensures we don't have brownouts (or complete blackouts) during the heat of summer would also encourage people to live further from the city.
