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It amazes me how people who bought a home for $40K 20 years ago talk about making a loss if they sell the home for $500K rather than their asking price of $540K! How does that work!
Someone earlier in this post mentioned that economists cant seem to come up with any decent predictions and I would add are often wrong. This is very true as someone else pointed out there are just too many variables and the relationship by which each affectes the others is constantly changing. This makes predicting in the field of economics one of the most difficult jobs.
To read about an interesting alternative to conventional economic thinking and financial market prediction try reading http://www.elliottwave.com/education/welcome/1.htm
While there is such a surplus of work and a shortage of tradies, the situation wont change. When building approvals drop down to normal levels or below when there is a general economic slowdown, then tradies will have to bother about reputation and referrals. Unfortunately, at the moment one has to treat them like children and use what means possible to get them to do the job and do it to a minimum standard (except the odd few who take pride in what they do).
Yorker
5 acres sounds rural-ish. Check with the local council/shire what the minimum lot size for the area is. You may find that right now 5 acres is the minimum lot size. This however doesn’t mean you cant subdivide but does complicate the process as the council will have to amend their planning scheme for the area etc. This is where the real killer in this process is – time.Another obstacle can be the advertising/response process. If there are some well connected neighbours who don’t like the idea of smaller lots in the area, then they may object and lobby powerful support etc etc.
Cost will vary from one area to the next and depend on availability professionals, the type of subdivision that you have in mind etc. I suspect that cost wont be a big factor in the viability of the exercise. Speak to a surveyor in the area and get their thoughts and also a rough estimate. Using a surveyor will help no end with the paperwork and bureaucracy.
Good luck.
Monopoly
I totally agree.
Both the major parties are useless and until the majority of people feel strongly enough (to vote for any other party) we are stuck with the situation as it is and only very slight improvements in our society and our lives will ever come about. I am so sick of hearing the statement that “if I vote for a minor party I am wasting my vote”. By voting for a minor party at least I am trying to change the way things are and not so apathetic that I don’t believe my vote will make any difference or that I vote will be wasted.Wake up and vote for Ethics! Which means not for ALP or Liberal/National.
Dave
One of the reasons the land is so cheap there is obviously because it is an island and at present only serviced by ferries which makes commuting to the mainland and city quite inconvenient. The locals have been talking about the state govt building a bridge for ages (why wouldn’t they!) and if that does go ahead I expect the prices will skyrocket. However I personally expect this not to happen in the foreseeable future unless the population on the island explodes. So if you are prepared to gamble $30K it may just provide you with a good return. If the bridge doesn’t go ahead you may still make a small return over the longer term if you can bare the holding costs – may be worth it either way?? I dont know what the rental market is like on the island – anyone out there know (except REA’s).I had an alarm system in one IP and the tenants continually broke the system. It ended up costing me a fortune in technician repair bills and eventually I removed it. The same thing is currently happening with a dishwasher I have in another IP. Has broken down 6 times in last 12 months. This all has taught me that an IP should have a little electronic equipment installed as possible. You just don’t need the headaches!
Well said Westan.
For once we agree on something!I once looked at buying a fibro cottage and spoke to a builder about options in terms of cladding. The builder suggested that I put weatherboards over the top of the fibro as this would be cheaper to do (no disposal of fibro) etc. This then got me thinking about the motivation for recladding. Basically there are two main motivators. Firstly to improve the aesthetics of the house and secondly because of the potential minor health issues if disturbed. I didn’t perceive either of these two reasons to warrant the expense of recladding. The increased aesthetics of weatherboard over fibro is minor in my opinion and the health risks if the fibro is disturbed is virtually non-existent. So in summary we decided that the recladding was an unnecessary expense that would not be warranted in our case. It just so happened that due to us doing all this research and investigation (taking time) we lost the house to another buyer who was not concerned about fibro in the least and just bought it on the spot. My advice, buy the place if you can rent it out easily and leave it as it is.
Westan
I agree with Jenman and in fact I think that even regional towns of 20000 pop. may have problems in the next 5 years if rates rise and econ. growth slows. I think this will actually affect NZ regional and small towns even more than Aus.You are entitled to your opinion on Jenman but I support what he says 100% in that article at least. I say this in the hope that people will see that there is support for what he is saying not just blatant attacks against him like yours.
Nothing in the world of investing is guaranteed but capital cities in Aus are a whole lot safer than regional towns in Aus or NZ, IMHO!
Kay
50000 people per year into Sydney is about 1% increase of the population (very roughly) and that is not very much at all. It certainly is not enough to move a market up or down as much as you would like it to.
There are such gardens of Eden but the yields are only 2-3%!
I think PI’s are expecting too much from IP’s. They want a 4-5% rental yield and a CG of 20%pa. It used to be acceptable that the overall return from property (rental yield + CG) could be 7-10%pa (similar to the long term trend in shares) but greed has prevailed in the existing market.I agree with Westan that interest rates will not rise and may even decline as the govt prepares for an election.
On the matter of rents increasing. Practically the only thing that changes rents is supply and demand. At the moment one has to admit that there is an oversupply of almost everything. Certainly inner city units in almost all capitals. There have also been more houses built in the last 3 years than ever before in history. So I expect rents to actually decline a bit and then level out until the oversupply is eaten away. This should take a few years at the least as immigration is not large enough to affect the whole picture domestically. In other words I think that immigration is overstated by too many RE agents and others in the industry with investors just blindly accepting and believing all the immigration hogwash. “Total immigartion” is about 1/2% of total population!
I expect property prices to continue downward until equilibrium (where incomes match house prices).
Looks a bit different to a financial planner if your read it properly!
I like the bit about redirecting the mortgage broker commission back to you!
150-200m is hardly the same as 10m away and I think that 150m should be fairly safe. When there is solid proof of harm (sometime in the future), the Electricty Commission will be forced to move these lines underground. This will increase the value of the property if and when it happens, but dont hold your breath. Negotiate the price really low, get a good tenant and hang in for the long run!
I am sure there are quite a few young guns on this forum that are in negative equity positions right now. Like someone said in another post, “when the guy shining your shoes claims to be an expert on the stock market it is time to run”. Maybe on this forum the slogan should read, “when the kids still at school claim to be experts on the property market it is time to run”!
Of course it would be baffling to a left-winger!
So I guess you are saying that it would be the right-wingers that are into consumerism? Or maybe it is all those in-between and neither the left nor the right are?This was the quote of the whole article
“CLIVE HAMILTON: The whole debate about the aspirational classes is out there saying to them, “You should aspire. You have a right to aspire. It’s proper to aspire to an ever-more-wealthy lifestyle. It’s your right to do so.” And therefore, the whole political process is corrupted, I would argue, towards that end. So we
have political parties engaging in tax-cutting wars. We have political parties promising and giving middle-class welfare because the middle classes, even though they’re doing very well, are feeling aggrieved. And so there’s this bizarre situation that even though we’re wealthier than we’ve ever been, we actually feel more materially dissatisfied than ever before.”I say blame parents who cannot say no to their children. These are the leftwing people who have brought about the laws that prevent a parent from giving a child a hiding. Because of these people there is a generation of people who are not prepared to wait and work for things and believe it is their right to have anything they want whenever they want – hence the huge debt.
I guess one way to work out how far prices should drop is to work out how far they overshot the mean by during the peak of the boom and now. To work out the mean, one would need to look at stats over a decent amount of time and plot these stats, then put the long term trend line through these plotted stats to show where the prices should be!
Anyone done this?
Well it is official, prices are pretty much in decline across the board, no question. What is of interest though is how far people feel it will decline?
So what are your predictions on further price drops, in units, houses and per capital city?
