Forum Replies Created
- ummester wrote:
Bear argument is something like – it is only the bottom of the market that is moving and that is a little up, without it the average would be even lower.
Bears would say that wouldn't they but how many of them really believe it ? Its like with the crash that was supposed to happen. The rates came down, the FHOG got increased and half the bears bought a house so they wouldn't miss out again. Quote:Thing is, the ABS gives a wieghted average – not a true mean but a mean that tries to spread the data evenly. From the ABS page http://www.abs.gov.au/AUSSTATS/[email protected]/Lookup/6416.0Explanatory%20Notes1Dec%202004?OpenDocumentQuote:In order to minimise the effects of compositional change on the measures of price change, the ABS stratifies the sales of established houses by geographic region. Each region is also assigned a weight to reflect the total value of dwellings (including land) in the base period. This methodology reduces from the measure of aggregate price change, changes attributable to variations in (say) the number of sales in high price relative to low price regions. In addition, within each geographical area, any properties with unusually low or high sale prices in the quarter are excluded. The overall movement of the index is calculated from a weighted average of the average price of each stratum.Translation = they make the numbers up using some magic formula and then revise them later when they get the real numbers from the VG. Also from ABS :
Quote:http://www.abs.gov.au/AUSSTATS/[email protected]/Lookup/6416.0Explanatory%20Notes1Mar%202009?OpenDocument
17 The delivery of VGs data relating to exchange date is delayed by the normal contract settlement and reporting processes. It is only possible to publish reliable house price movements based solely on VGs data after approximately six months.LIMITATIONS OF HOUSE PRICE INDEXES
18 The reliability of each index is largely dependent upon the availability of sufficient pricing information each quarter. While not a problem for project homes, difficulties are sometimes encountered when compiling the indexes for established houses as the number of price observations available depends on market activity in each quarter. This is most apparent in the established house price indexes for the smaller capital cities (Hobart, Darwin and Canberra).
Regardless of where the median prices are going to end up the reality is that prices in the low end of the market has moved up. Do you really care if the $15M market has crashed 40% in the past year if you find the $500K market unaffordable ? If this segment is going up at 10%+ p.a and your savings are only growing at 5% p.a – tax then that dream is getting further away from you.
blogs wrote:There are more negatives, actually I cant really think of any positive reason for property prices to increase.
…..Also the property market has been propped up by people 'scrambling' to get in before the grants finish. I agree though, there are competing forces, but IMHO the negatives are going to hand the positives their bottom on a platter
Lets see in 24 months I guess Blogs you probably said the same thing 24 months ago, And 24 months before that.
What happened last time the grants were "finished" ? If they cut it completely its because they are replacing it with something that will support property prices even better.
Can you think of any reasons why the government would want lower property prices ?Btw, what do you think of this http://www.abc.net.au/news/stories/2009/05/04/2560129.htm ?
ummester wrote:I had to log in again after watching that video Harb. Smart property buys in a recession – it's almost as comical as Kochie's Reject the Recession dancers. Thanks for making me smile:)
You're welcome, if you're still hanging around with the losers on the other site you could pass them the link so they too have a reason to smile. I hope you'll keep smiling after good old ABS catches up with the latest data.and the FHBs stop distorting the prices
The story was about the lucky suburbs with t he highest growth so not your average suburb growth. Would have been nice to buy in a suburb mentioned in that story but even the typical Western Sydney cheapie didn't do too bad if you bought in Aug-Sept last year. I recently sold my second dump there and after all expenses I ended up with $54K for 7 months of growth, the other one sold in March for a quick $38K profit and would have done better if I waited a bit longer but my tenant was itching to buy. While its no even close to the 75% mentioned in the story it was better then keeping the money in the bank. I hope you are proud of me for not being greedy and allowing a couple of FHBs to fulfill their dreams and provide them with affordable properties. LOLQuote:Hows that -10% PA in WA treating you?Taking in consideration everything that has happened over the past 6-12 months I'd say good but not as great as the top suburb in Perh http://reiwa.com/res/res-suburb-profile.cfm
Apparently my ppor had 0% growth last year which really sucks because it lowered the average growth for the past 10 years to just 15.4% P.A . Didn't bother with valuations on my oldest IP's since I have no plans to sell them but according to the data one had -4.9% (10 yrs +12.8 p.a ) while the other one a couple of streets away in the next suburb was up 6.1% (10yrs +12.5 p..a) so no -10% there either.
The only 10% I had to deal with in WA was the rental return, but that was +10%p.a so I can't complain.I could also get a +10% return on the dump I recently bought in Safety Bay, but I'm looking for 15%. Have to see what happens over the next 2-3 weeks and then I'll probably get rid of it soon. The PM thinks my tenant is looking at buying a place before the FHOG gets the chop so maybe I'll ask the PM to send him an incentive (in the form of a rent increase notice) then sell it to him. .
How are things in Canberra, still waiting for something priced right to come along ?
blogs wrote:"http://www.news.com.au/heraldsun/story/0,21985,25415874-2862,00.html"Melbourne's inner east hit hardest by house price plunge"
Have you seen the Home Price Crystal Ball video story ?
http://video.msn.com/?mkt=en-au&brand=ninemsn&tab=m164
If you haven't do so yet …Enjoy.
mrkueh80 wrote:the most curcial figure is umemployment rate, if the rates is keep going up, it surely not good for property and possibly property price will continue to fall….
Just think logically, if umemployment rate rise, ppl cant afford to pay mortgage, and will fire sale the house and move to cheaper surburb.
and tanent will start moving into cheaper area.
just like US market right now,So what I believe those 300k range will be safe, but not for those high end property, will continue to fall.
I sort of agree with you there however unemployment rates would have to go into double digits like back in early 80's to have a big effect on prices. In Perth the stamp duty, REA fees and other expenses makes downgrading from $600K-$300K a very expensive exercise that is almost not worth the effort. Then moving from say a $600K house in Melville to a $300K+ in Baldivis would add something like 10hrs and $100+ a week in traveling time and fuel expenses to get to work so the incentive to downgrade just isn't there.
As for Sydney's under $600K that shanematt mentioned they are the cheaper suburbs.
ummester wrote:Don't forget Harb, bear deposits are growing and property prices have kind of stopped recently. Means either bigger houses or less LVR for bears, so they don't really lose unless prices boom again and, if they do, i think Australia will have a mass exodus of people.Yes but except for the last 2 years (or 5 years for Sydney) the house prices were growing faster then the average earner could grow his deposit. Lets say the bear managed to save a $50K deposit over the last 2-3 years when the house prices didn't go up and is now in front. All it takes is a 10% jump in that $500K home and it wiped out his deposit.
Mass exodus where, Detroit ? Quote:Hey, you never answered my question about why only the housing industry gets a grant for new entrants and other industry doesn't, like automotive, small business etc? Houses special or something, are they?Sorry, must have missed it. The gov. has been giving money to the Automotive industry for decades to stop them closing their plants here as well as keeping the tariffs on import to make our industry more "competitive".
Lets say the gov. takes $50K in taxes from the house then returns $7K (and for a limited period $14K-$21K) as a grant, what's so special about that ? How about if they removed the grant but also removed all taxes for the FHB ? After all you get your rent GST free so why should the poor FHB pay tax on his PPOR so the government can subsidize you with cheap rental accommodation or rent assistance if you go into private rental ? Besides, the FHB creates jobs from which the gov. can grab even more taxes.Quote:And, you'll never convince me to be a PI – but you may convince me to buy one day:)Why buy ? Keep renting and support your local PIs.
ummester wrote:The Chinese are smart enough to wait for the good deals, that are still coming.
You mean like your buddies from the other forum who've been waiting for the good deals in the property market since the beginning of this decade ? I was looking for some laughs so I went there to read some of the posts from 2005, the good deals were just a few months away and a crash just around the corner. Four years on the good deals are still coming and the "smart buyers" who've been waiting for 4 years now would be happy to buy, if only there was a crash to bring the prices to what they were in 2005.
SHales wrote:Fair enough. And as discussed here somewhere before, a variety of ideas makes the debate more interesting, challenges our opinions and furthers our education.
And I can vouch for that. Trying to re-educate ummester and turn him into a property investor is very challenging but I haven't gave up on him yet.
ummester wrote:harb wrote:Is that so, then why didn't you get yourself a PPOR instead of complaining about properties being overpriced ? You shouldn't really care if you pay too much now, in the long run (10+years) your property should also be worth more.Only works when not tailing the biggest boom in Australia's house price history. if prices stagnate we have 10+ years of no growth. If they drop, then they will only start increasing again after they have bottommed.
You seem to considering only the 2 out of 3 options available. What about the third more plausible option – a smaller boom tailing the biggest boom ? Except for the unemployment rates which will increase slightly all the other ingredients for a mini boom are there.
Quote:I will get a mortgage that does not compromise my current standard of living even if interest rates go above 10%. Sure, I could use my deposit and get a mortgage at todays variable rates that would actually cost less then renting (not including rates, bills and maintainance on a house that is probably less comfortable to live in) but if interest rates go up and my wage doesn't then the standard of living goes down.The banks came up with the 10 & 15 years fixed rate for people that are to scared of the unknown to make a commitment.
Anyway, the return on 3 month fix deposits has been halved so it looks like the rates still have a bit more to fall. But lets say you are right and interest rates go up, if they do its because the inflation is picking up and if inflation is picking up your rent will go up to cover your LLs extra costs. Unless you're renting from your employer and the rent is pegged to your wage you still get shafted by higher rates. Not to mention that with higher inflation, higher rates and higher rental returns you get higher house prices so even if you change your mind and make the move then you'll get less house for your mortgage and at a higher repayment rate. Just something to think about.ummester wrote:What if you want to crusade against evil landlords from the comfort of a fairly priced home?Then you'll have to put your hand up and outbid them.
Btw, how did the auction go ? No, don't tell me…it went for more then you expected.ummester wrote:. It is a very good time for an owner of an entry level home to sell and upgrade at the moment.Upgrade like to a higher priced property in the mid range? In that case the increase in the grant is causing a ripple effect throughout the property pond and soon it will reach the high end properties.
Quote:And, I actually do believe that there will be less people on this planet then there is now in 20 odd years, for a whole variety of reasons, of which Boomer deaths are one. Another is increases in 3rd world mortallity rates.
What exactly does the 3rd world mortality rate has to do with the increase in Australia's population? If anything they will bring more in more refugees and increase the population.
Quote:Another is the potential of global conflict that always co-incide with depressions and prolonged recessions.Now I know you're hanging on to straws.
Quote:It will take 40 odd years for us to get to the end of this debate but if we are still posting about it we will see then:)
Well, this thread has been going on for almost 3 years now or about 7% of a 40 years period so 40 years is not a long time. I do hope that sometime before the next 40 years you come across a period when you think that it is a good time to buy and so have no reason to continue to be bearish.
Quote:I am going to check out an auction – see if it sells for more or less than I expect.Don't forget your cheque book or you could miss out on a bargain.
ummester wrote:PPOR mortgage holders shouldn't really care if their house is worth more or less than what they paid for it. In the long run (10+ years) it should always be worth more.
Is that so, then why didn't you get yourself a PPOR instead of complaining about properties being overpriced ? You shouldn't really care if you pay too much now, in the long run (10+years) your property should also be worth more.
ummester wrote:We have been over much of htis ground before:)Yes but its always fun to go back over it from time to time and see what's changed.
Quote:Tumbarumba is still a very cool name for a town.
Picking a dump under $50K and flogging it now for double that would also have been cool.
Quote:If the bottom keeps rising and the top, the middle stagnates and the top falls – what do think is going to be the end result? Every house, no matter how well made and how big the plot it's on, costing the same?I agree with you that you can't have every house and plot costing the same, location and quality of the building is what differentiate properties. If a new H&L package 50KM from the CBD has a minimum replacement cost of $250K then something 5KM from the CBD surely has to cost a lot more then that. $000K more, since you would save about $200 a week and about 10hrs (another $250) travel a week to work over the working life. So at $20K a year over 30 years you'd be looking at an extra $600K on top, not to mention the extra family time you get which is priceles. So a $850K 5Km from CBD would be a real bargain and not overpriced at all.
Since the bottom of the market is rising at a certain point the buyers will decide that its worth spending the extra money to get a better quality home in a better location. Once that happens the mid range market starts going up and the mid range buyers will start looking at the then undervalued top end market. The most important thing is that the bottom market which is the entry point for the first home buyers is going up, its only a matter of time before the rest of the market follows.Quote:Boomer retirements and future deaths far outwiegh population increase in developed and semi developed nations. We are not having children fast enough to support the hole they are going to leave and it is not possible to make up the lost ground before they die.Which is where migration comes in, or do you honestly believe that in 20 years time we will have a smaller population then we do now ?
If the ~10M increase in population we had in the past 40 years caused property prices to go up so much what do you think the 20M increase expected in the next 40 years will do ?ummester wrote:I expected governments and banks to deal with this credit crisis sensibly – silly me.Just how would allowing a property crash to happen be sensible ? Its not good for the banks, its not good for the government and its definitely not good for the majority of the population who already own a house. The only people that would benefit from a crash would be speculators who are waiting for a crash to swoop on some poor soul who lost his job or had some other misfortune which prevents him from keeping up with his mortgage repayments. Bloody vultures in bear skins.
ummester wrote:So what have you bought in the last 6 months? If you are so sure of the market, there are heaps of bargains out there compared to last year. Go grab yourself some. Safe as houses.
Couple of dumps in western Sydney and one here in Safety Bay but still kicking myself for not getting any in Tumbarumba as you probably do. None of them keepers but will do until the risk of hyperinflation is over. The big bargains were out there last August-Sept before the pesky FHBs started to move in withe their increased grant and the sellers were being squeezed by high interest rates and the prospect of them getting much higher hence more prepared to accept a lower offer. All you've got now are the leftovers and makeovers that were bought 6 months ago and resold now. Even for that you still have to compete with FHBs and reformed bears who've finally seen the light. If I was looking for bargains as a FHB I'd be looking to buy in the midrange where prices have not began to move yet or even something at $1M+ if the repayments were not a problem. For the later I'd move in for the first 6 months then rent it out for a few years and use the tax benefits to help pay it off, it sure beats complaining about the unaffordable prices in good locations.
Quote:I reckon you know that we either stagnate, deflate, stagflate or hyperinflate from here and you also know that hyperinflation is just as dangerous for investments as the others.Always the dreamer, you may want to go over your previous dreams since you started posting here and see how close to the mark they were.
Quote:I know it's a broad spectrum but things have gotten so volatile it's hard to know exactly which way it'll go. We are not going to have normal inflation in the short to mid term and I reckon you know that too. You are just spruiking your favourite investment.And what better place to do that then ….on a Property Investing forum. I could try spruiking stocks or even gold but I doubt the mods or most of the other posters in here would be too happy about that. (foundation & Scamp excepted )
.Quote:It is not a good time to buy.I agree, the good time to buy was 6 months ago when I told you.
Quote:True property bulls will buy again when the bull market first returns and bears will buy just before hand. We are not there yet.So the bears will buy before the true bulls ? If that's the case I hate to be the BEARer of bad news nut that train has left the station. Most of your bear buddies from the bearsRus forum who could afford to buy have already done so over the last few months and have either moved into their own properties or are in the process of doing so.
ummester wrote:Everyone who owns property should make (more or less) profit equal to the interest they pay on the loan over a long term loan period. This generally equals wage inflation over the same period and everyone, including the banks, remains comfortably in business.You buy a house in '95 for 150k and, by the time it's paid off in 2020, you have ended up paying the bank 450k for it but, by then, it is worth that much. That is balanced.
2020 – The next door house was sold in '95 for $150K but changed hands 5 times and each time the REA commission and tax "increased" its value so now the last owner has to sell for $600K to recover his costs based on your balanced formula. He puts it on the market for $600K and because of the housing shortage in the area he will not have a problem getting that. You also decide to sell, will you put yours on the market at $450K knowing very well that you can get $600K ?
Quote:If you buy a house with cash and sell it down the road, you make a clean profit. There is nothing wrong with that as you are not using the bank for a service. You either worked or saved hard, so good luck to you.
And I have said this before Harb, I don't mind paying extra for houses that have been genuinely improved with well made decking, pools, looked after grounds etc. This is not the kind of speculative value I'm talking about and you know it.Then its OK to buy from someone who bought during the top of the boom added a few extras and is now selling for what he paid for the property + improvements ? Or will you not buy from someone who bought his house at the top of the boom because he overpaid for the property ?.
Quote:We have just had 20 years of housing inflation squeezed into under 10 and anyone should be able to see it is not sustainable. Average wages can not afford last years house prices until (provided wage inflation is reasonably linear) 2020, so the prices either have to stagnate from now or drop and then rise again.How about the 10 years before that, did houses performed in line with inflation or below that ? I'm sure you can look at a smaller period and say that 6 years of inflation was squeezed into under 2 and be also correct. Sure prices could stagnate or drop and then start to rise but they could also just rise which you forgot to mention. Perhaps we are already seeing a combination of all 3 right now where the bottom end of the market is rising, the mid range is stagnating and the top end of the property market is falling .
Quote:Don't care if I go without for that balance to be restored and, as the Boomers die, it will be but it is the road from hear to that point that is uncertain. Bottom falls out now and boomers learn to live on dogfood. Prices stagnate and a lot of mortgaged gen X & Y get used to financial mediocrity. Either way, balance will be restored eventually.Great, houses will once again be affordable as the Boomers die and never mind that population is increasing at a much faster rate then the Boomers die. And why would they need to learn to live on dogfood ? Unless they sold their IPs to put the proceeds tax free into the super fund and lost it on the stock market they are still getting a regular and increasing rental return until they die. Once that happens their family would take over the title and become the new landlords or sell it at market price. Either way I can't see how the Boomers could affect property prices to any great extent by dying OR selling, short of them being conned into selling below market value by some con artist. Just look at the minimal impact that Costello's tax free deal for Boomers had on prices when a large number of them rushed to sell before the deadline.
Of course now that interest rates didn't reach the expected 15%+ , the mortgage resetting that was forecasted to cause the property crash didn't eventuate and the bottom of the property market has began to move upwards once again you need to believe that someone/something else will come along and miraculously bring things into balance. Its a shame that you are happily agnostic or could have prayed to your God for a price crash or at least for him to take away all the Boomers so property could become more affordable.
Its also a shame that you didn't follow my suggestion last year to buy a place in Tumbarumba while you could still get some under $50K or buy a few and sell them now for a nice profit.ummester wrote:We need to start thinking outside the box and de-centralising cities. There is no sustainable future in our current urban structure.
Its all nice to talk about we but who wants to go there first ? There are plenty of small towns that you could move to which would eventually grow into cities if enough people made the move. Problem is that someone has to make the first move and risk his dough by moving there to open a business or be prepared to take a lower paid job or become long term unemployed.
harb wrote:Enough to keep the roof over the head of the unemployed, and if they run out of it they can print some more.Hyperinflation – I'd love to owe money to the bank in that environment…. not.[/quote]
As long as you fixed your rate for 10 years what's the problem ? Ops, I forgot…You don't like to make a profit out of speculating. In that case you just wait for the hyperinflation to be over then borrow from the bank to buy your house from a speculator who didn't mind owing money to the bank during the hyperinflation period and who will now sell it to you for 3x what he paid for it a year earlier.
ummester wrote:harb wrote:Suppose that you took a loan and bought a house then 20 years later you decide to sell it. Is it wrong to sell if for more then you paid for it, eg. cost + interest paid over the 20 years+ rates ?No. Zero sum, balance is maintained.
Quote:Why not, you have not produced anything and speculated that the price would go up and/or that repayments will one day be lower then renting. Otherwise you would have just rented the place.
Besides, if you add the costs, rates and interest over some decades wouldn't that make most of the older properties underpriced ?harb wrote:Would you have bought this house if you expected to sell it for less then you paid for it or did you speculate that you could sell it for above what you paid for it ?
Should we think wrong of you if you did any of the above ?
And if I did the same but added a water tank and built a garden shed in the backyard then sold at a huge profit would it be wrong of you to think wrong of me ?Yes. Imbalance is created and correction is required.
So really what you are saying is that as long as you are the one who makes a profit everything is in balance even if you were not productive and speculated that prices will rise but if someone else tries to do that by improving the property and making it more efficient then a correction is required? So what happened to your comment a few post earlier , " It's OK to think wrong of those that make money in non productive or speculative means. It is wrong to think wrong of those that make money out of useful invention or productivity." Was that just a load of bull because you are in the market for a property ?
Bears would say that wouldn't they but how many of them really believe it ? Its like with the crash that was supposed to happen. The rates came down, the FHOG got increased and half the bears bought a house so they wouldn't miss out again. 
Lets see in 24 months I guess 
