The AV Jennings release is particularly interesting. I often see the media accusing developers of land banking. It is the first time I have seen them defining this as a strategy. There is definitely something wrong with the model when a business strategy is based on having 5 YEARS of inventory!!!

In any other business in any industry, having a stockpile of 5 years of inventory would be a surefire way to go broke due to its cashflow implications. Certainly not a just-in-time inventory system and not a sustainable business model.

It is no wonder that land prices are very high, all the key players buy up all the available land in the areas which are being rezoned and limit the amount for sale. It is similar to how oil cartels worked in the 1970’s to force oil prices up by 300%+.

Just looking at Genworth’s financial position and exposure.

In 2008 their share price dropped from ~$35 to $1.12 due to their exposure to the US housing market. The scary thing is their exposure to the Australian market is far larger and any significant drop here would almost certainly cause insolvency.

Of their 3.8 million LMI policies internationally, 1.4 million are in Australia compared with 1 million in USA. Given the much higher house prices in Australia, the dollar value exposure would have to be at least twice that of USA.

Here is an article in which the chief economist at BNZ, fully owned by NAB advise that they recognised the NZ market was 30% overvalued in 2008 when the ratio of house price to wages were at a multiple of 6 in NZ.

In Australia they are much higher now, Sydney has a multiple of 9 and Melbourne 8. You have to wonder what NAB's economists are saying behind closed doors about how overvalued the Australian market is. If NZ was 30% overvalued at 6 times, Australia must be 30-50% overvalued by the same measure at around 8 times wages.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10705683

"The BNZ reckoned in early 2008 that house prices, then averaging about six times average disposable incomes, were overvalued by about 30 per cent. By now about half that overvaluation has been relieved, Ebert said, through declines in house prices and a "reasonable" increase in disposable incomes."

My research to date has put Texas cities at the top of the list, San Antonio and Houston. Both large cities with inexpensive real estate. They didn’t go through the boom bust cycle anywhere near as much in Texas and has always been good value. For the size of the cities, their median prices are fantastic.

I asked the same question in another forum, this was the response I received

Quote:
Originally Posted by mattnz
Just wondering if any locals can advise why Gladstone seems to be the only town in the region that didn’t flood. Does Gladstone ever flood?

Gladstone does flood and the closest it came with this past rain was the area of Boyne Island.

Lake Awonga’s spillway feeds into the Boyne River which goes out to sea via Boyne Island.

The Calliope river, and to a lesser extent Auckland creek, don’t have a great deal of housing around them.

Boyne Island would generally only flood through a combination of a big high tide and the feeding of the Boyne river from the Lake Awonga spillway.

Cheers

Rooster

I am about to increase the rent on my place from $360 to $420 per week. Fortunately I have a corporate tenant and it is fully furnished with everything they could need. There are very few fully furnished properties in Gladstone and strong demand.

If rents are going to eventually go sky high, then you need to keep up with the market. No point doing small increases once in a while, you will get left behind. If you want to sell at the peak of the boom, rental return will be a key driver of the value of the property.

I have noticed that while alot of stock just came onto the rental market, they are ridiculous rentals like $600 per week for a 2 bed unit. They are no competition for the existing stock.

Surprising to hear that the news coverage is actually less dramatic than the reality, its normally the other way around.

And compare it with this list of the cheapest cities to buy in.

http://www.statjump.com/lists/house-value-dp4c112tc.html

If you can find cities that have low vacancy rates and low prices, it could be a winner.

kong71286 wrote:

A big thanks to all those that have contributed to this thread and shared their experiences so that we can all learn from another

Being in my early 20s and having only commenced work this year after graduating from university, I have limited experiences in investing, and haven't made many mistakes yet

I'd say my biggest mistake so far is what you guys would refer to as 'analysis paralysis' and letting family/friends, who care about me and think they know what's best to influence me

After many months of watching the price of gold/silver rise, and analyzing the financial statements and portfolio of mining companies, I finally took action last month by purchasing shares in mining companies I have confidence in. The fundamentals and technical for Gold/Silver were all there, but what finally triggered me to take action was the announcement of 'Quantitative Ease 2', which is basically a fancy name for 'printing/digitizing currency'

I strongly believe that Silver is biggest investment of this decade. Not only has it been a monetary metal for thousands of years, but it is also an industrial metal used in all sorts of applications (http://www.silverinstitute.org/silver_uses.php).  I am so confident about Silver that I have invested all of my funds into Silver Bullion and Silver Equities, and with my portfolio increasing by 30% in the past month I am glad about my decision, and am excited to be able to participate in this great bull market

Good timing Kong, its those game changing events that you should be watching out for.

Also note that according to resource depletion charts I have seen, silver will be the first material to run out based on current consumption rates. Amazingly, known silver deposits will only last another 30 years!! It will run out before oil.

Sorry I should have added, Steve McKnight the owner of this site also does developments these days.