Forum Replies Created
I know I am a bit late coming in here re: perth property but I have to laugh at some of the theories as to why Perth is different to any other market in Australia.
In the last six months property listing have increased 300% (thats right 300%). In the last three months the average time to sell a property has increased to 65 days.
Some of the outlying suburbs of Perth have reported falls of over 10% in advertised to sale price.
Agents have stopped using the “expression of interest tag” when trying to sell a property. (Though there a still a few out there that have not faced a reality check yet).
There has been no less than an average of three main articles a week in the paper stating from the experts in the know that the property boom is over and the facts that support this.
Yes there are still agents writing articles refuting this. (Note: Agents do have a slight conflict of interest in in this area).
I believe that this does offer opportunities to those investors that are cashed up and are prepared to start offering ridiculous offers to nervous sellers.
It is quite interesting to note that in the last six months we have gone from buyers feeling nervous about missing out on a property to now sellers nervous about whether they will be able to sell their property.
Heaven forbid – There might just be something in that term called a “cycle”.
QLDs007, I agree with you, the answer to the question is a flat out NO, and I think I would caution the extent on some of the advice that is given here, especially if the Dip FP is not followed up by an authorised rep status and a CFP. Superannuation especially SMSF is a complicated area and appropriate professional advice should always be sought from a certified financial planner or CPA.
I think its great that you guys know your stuff, but communicating this kind of technical info always has the chance of causing someone to take action on it without proper regard to qualified advice.
Cheers
Well at last we have some serious intelligent conversation from various parties on this issue (the bigger issue), and by reading the comments I can see that like myself -you can take an objective view of the market and see the various economic factors that are affecting our great city of Perth. I hope people are taking note of what is being said here because speaking as a professional, this is the kind of advice that people do pay for. If you want advice that tells you what you want to hear then go speak to a
RE agent who has a degree in the art of selling and a PHD in knowledge of their own suburb.
If more people could understand these fundamentals and be educated then we wouldnt be in this situation of the fear and greed emotions which drive most people to buy or sell, and the so called professional RE persons who take advantage of this and whom consumers still seem to listen to for all their worldly investment advice.The whole reason for starting this topic was to get reactions from contributors like GMH and to show that the signs are the same in any cycle in any capital city. Yes granted, Perth has a few other factors – but all they are doing is delaying the inevitable.
For all those out there that wish to be successful investors – look outside the square and look at other locations far removed from sunny Perth. What you might find is different scenery but the same story, its just that our story (Perth) isnt finished yet. Once you have a wider appreciation for what goes on in the rest of the country and for that matter the world, taking advantage of investment opportunities becomes alot easier and less risky and what you will find is that you will have more to talk about over a sunday BBQ besides what your house is worth.
Anyone agree with me?
Hi GMH,
IT seems like a bit of dejavu for you.
Can I ask the reason for there being no words of wisdom or caution from other readers and contributors may be due to the fact that they are all agents or people who work in finance that make a buck out the property frenzy.
Because if thats the case – there really is no point in getting advice from the same people who are responsible for creating all the hype.
I am more than happy to stand corrected.
Hi Scokar,
No each loan would be separate and any rent you would more than likely use to pay the interest on the IP property.
The best way I can explain what security is – is that basically if you are unable to fund the interest repayments on your IP over a period of time then the bank or lending institution have the right to take possession of your house to sell and then use proceeds to meet the IP obligations – If this sounds scary – thats because it is, Thats why it is extremely important to ensure that you have the financial means to meet your debt obligations, because if you cant – then you could lose the lot.
You wont be able to transfer the security to the IP until the IP increases in value to meet the banks LVR.
Does that make sense? Happy to explain it further.
Cheers
Thanks for getting into the discussion Roodog. What you said in your last paragraph holds very true for alot of buyers (especially first time buyers) in that a property already has two offers and you are expected to make an offer higher than that so you dont miss out.
SO what are your choices – as you say you can hold out or you can join the frenzy and end up buying a PPOR that you may not be entirely happy with but bought because you were afraid to miss out.
By the way – I wll give everyone here a bit of inside info. It has been noted that a quite a few property owners (especially around the wealthier suburbs) are selling up and deciding to rent for the next 6-12 months, and the people that are doing this are definately not silly.
Maybe someone can care to explain this phenomenom?
I see that in the last two days there have been almost 200 reads but only a couple of replies – I would have thought that this subject might have stirred up some emotion in you guys over east and that you might have words of wisdom for us perthites. Any takers?
Sorry, basically LVR means Loan to Value ratio. eg if your loan was 80,000 and your property was worth $100,000 then your LVR would be 80%. It is this LVR that banks use to work out how much they are going to lend you.
Therefore if the property increases in time to say $200,000 and your loan is still at $80,000, then your LVR is now 40%. This means that you can now borrow this equity back to say 80% and use these funds to either invest (best way) or go on a holiday and buy a new car (worst way).
Hope this explains it
If you use the equity in your own home to purchase an IP your PPOR will need to be held as security. Once the IP increase in value and the LVR gets below 80% then this security can be taken away.
For most people equity in their home will be the most accessible way unless you have a spare amount of cash sitting around to put a deposit down on the IP.
Hope this helps
Thats very interesting gmh.
I must admit that I have been reading these forums for about two months before i decided to join in.
I had a look at all the archives from 2002 and I couldnt believ the activity of forums over east – absolutely amazing – everyone wanted to put there 2 cents in. Then all of a sudden there seemed to be a huge gap in the contributions and people over there obviously lost interest as making slow money over a long term is boring to alot of people that are looking for that quick buck. SO i supposes the secret for all those perth investors is to have a look at the posts and see how many of them are positive as opposed to cautionary. I know I seem to sound a bit negative at the moment – but it could not be further from the truth – i have been a successful investor for the last 10 years and practice what I preach. I am just getting upset by the amount of distress this is causing many people, and I am not happy that this is not being addressed in the current situation.
By the way gmh – if you read my first post about the mispricing – an agent who did this has now taken the advertised fixed price off after 2 days and replaced it by an EOI thereby suckering them in and enhancing the fear in the buyer. Great ethics eh?
Yep – it sounds familiar.
What I find amazing is that people in Perth believe that they are so removed from the rest of Australia that what happens over east wont affect us.
Yes we have resources, increased migration from cashed up places like south Africa, and yes Perth is the greatest place to live in the world (biased) but these are cycles not established fundamentals that go on forever.
That said, I would never advise anyone not to look at buying a property now – its just the expectation of 100% growth in three years that will be peoples downfalls. It will be this failed expectation to be another’s opportunity for long term gain.
I am interested to know what was the official or biggest sign in NSW that things were slowing down in 2003, and was this same sign reflected in what agents were saying?
I am also interested to know if there are any people out there that are confident that the Perth market is sustainable for another two to three years?
Cheers
its funny you say that gmh because from my persepctive in Perth the quality and choice (and price) of some of the properties in Sydney far outweigh that in Perth (especially some of the terrace houses in inner sydney).
I noticed that a couple of years ago here in Perth, people were busy renovating before they sold to increase value – now they dont bother.
What you find now is properties for sale that need alot of work and i dont think people are factoring that in. Investors over here are just thinking of capital growth without realising that the rent and income from an IP plays a crucial role in lean times.
At the moment everyman and his dog are making money, but i believe that true investors understand that there are both ups and downs, and its the ability to ride through both that make a successful investor.
Wouldnt you agree?
Thanks CRJ,
The difference is that in Perth, these prices are varying $100-$200,000. You also might have heard that agents now use an EOI (expressions of interest) which is basically an auction without having an auction.
Does anyone have a view on this?
I understand that as an investor the emotion is taken out (or should be taken out) but we are also all home owners as well.
Look fwd to a reply
Hi Shaun,
Well, I was close. I am sure things have changed a bit as you say.
But I am sure you will agree with me that a landlord can get a good deal by renting to a defence force person.
Cheers
I would strongly advise you to talk to a builder or developer that can help you with the numbers. A developer should also be able to discuss with you the pros and cons.
At the end of the day the figures have to add up for developers and you have to be able to make profit today as it is not wise to predict profit on what may happen to prices tommorow.One word of warning.
I know from personal experience that these development sites within 10km of Perth have all had 100% increases in value over the last 18 months, and if you dont intend to build straight away be mindful of the holding costs. At current prices I figure there may be quite a gap to fill with the interest on the loan presuming you borrow the full amount.
Good luck
Bought first at age 21, $150,000 10 years ago and neutrally geared.
Saved deposit.Took six and a half years to increase $1 in value (yes – thought about selling it a hundred times).
in mean time slowly grew a portfolio of shares with savings.
When Property increased in value (3 years ago), immediately geared against equity and bought cheapest four unit development site I could find within 10km of CBD.
Used income (fully franked income) from share portfolio grown over six years to then supplement income to help support loan on new property, (negatively geared).
Result – development site doubled in 18 months, other IP doubled in 10 years, share portfolio doubled in six years.
Intention now: selling down part of these invetsments to purchase and fully pay off my dream house and then start the process all over again as I am only 31.
I have only ever earnt an average wage, have not had any help from parents and also took two years off to travel the world in that time.
Any long term wealth goal should always be balanced with a quality of life and enjoyment whist we are young.
I hope the message here is not timing the market but time in the market, diversifying your investments and starting young.
Cheers
Having prevoiusly been in the navy for six years, I can safely say you may be on a winner renting to defence force person.
1. The navy may subsidise up to 100% of the weekly rental. (Hint find out what the subsidy is and you may find you can upp your rent considerably).
2. There would be major repurcussions if the navy member defaulted in any way, and you would have an easier time chasing up the government, than trying to track down a tenant that disappears.
3. The biggest advantage is that the navy member may be away for up to six months but would still like to keep the place and therefore pay the rent whist away. Therefore your place is in effect empty (no wear and tear) and still getting the rent in.
4. The cons would be the same as what any other type of tenant may represent.
5. Yes, they may have to vacate the property at short notice, but if you can upp the rent to account for this then it shouldnt be a concern.
Hope this helps
