Somehow I get the feeling that you're dutch Rob ? Anyway, what about the fundamentals of credit since the 70's ?
Hasn't that changed ? Didn't 'the world' create money out of thin air from the 70's onwards ? They created this 'wealth' which had to be paid back somewhere in the future. A concept known as a debt. The USA mainly have been getting themselves into debts bigger than they can possibly pay back. They pay back by printing more money. The result is that the taxpayer now has to pay for all the debt that has been created in the 70's and onwards. Some people got filthy rich by exploiting this ( either driving commodities up / house prices up ) and NOW the taxpayer is paying for those filthy rich people with printing presses.

Please explain to me why you think that this didn't change any fundamentals ?
How do you explain an average joe in Australia with an average job getting 1.000.000 AUD$ in property based on non-existant 'equity' and then calling himself bankrupt because he couldn't pay back his loans ? I don't recall this being possible in the 1970's, let alone before that time.

Please explain to me how the fundamentals of 10-year mortgages ( normal in 1920 – 1970 ) were replaced by 40-year, 50-year and in some extreme cases 100-year mortgages ?

You say the fundamentals didn't change : I completely disagree. Everything changed. People have found a way to steal money from the future generations and have done so greedily and hastily. Now is payback time, and guess who is to pay it all back ? The future generation ( also known as 'the tax payer' )

I'd be interested to hear your view on these matters.

Rudi,

– In september the first wave of 6% interest mortgages will reset to the ( by then ) 10% interest mortages.
That's 4% more interest , which equates to more or less 100% extra mortgage stress. ( you can do the maths if you want ). People cannot pay this. This will go on until July 2009 when most of the 6% fixed mortgages will have reset.

– Credit is not easily available anymore. It's also more expensive ( 10% rather than 6% ) while other factors have only gotten worse. People have less money, need to pay more for a house than 5 years ago, and money is more expensive than the last 12 years.

– You need a deposit now to buy a house. No more 100% loans. This means banks have lost trust in the financial system and need more deposits ( sometimes up to 20%… ). How many average people do you know can pay 80.000 cash, and then 4000$ per month ? The average Australian is heavily indebted, they have less money than 0. ( negative money ).

– immigrants aren't cashed up anymore, they have lost their money in UK / Spain / USA / shares / stocks / etc…

– Bank interest rates *will* go up. Whatever the RBA does ( they should really up the rates also, but it doesn't matter, even if they don't the banks will ). This makes money even more expensive.

– Recession is coming, Australia won't escape it. This is not the time to get yourself in debt.

There you got a few reasons why I told you houseprices will go down by AT LEAST 10% in the upcoming year.
Ofcourse.. I might be wrong….

If you have cash , and you're in love with a house, then by all means buy it. If you have money and you want to invest it, then you're better off with the extremely high savings account interest from the banks. Just put your money on the bank and get 16% in the next 2 years or more. It's better than flatlining or losing money, AND.. it doesn't take much of your time which you can much better spend with family or on the beach enjoying the safety of not having to worry about property / insurances / stock market / fuel prices etc.

360$ a week for a 350.000$ loan at 10% interest rates.

Please explain how you do that. Also , please explain how you will do that when you rent it out.

Also remember that if you subdivide you may have to take care of complex sewage, road frontage, trees , street lights, and if you want to do larger projects it could take years before you dry certain parts up , or you might need to build bridges etc. In any case, even a cheap battleaxe subdivision can be expensive.

Maybe you can think about strata subdivision

so you have good rents, but you can't pay your properties ?
What exactly went wrong, we need some numbers

why would you buy now ?
Rent, then when prices are lowest, buy.
It's really a nobrainer.

you know that leasing out a commercial real estate is completely different than residential real estate ?
I hope you got that in your calculations. I don't get positive cashflow here, especially since you will be paying high monthly service costs for the building that your shop is in. A patio company is a very high risk renter, especially in this climate.

– landbank it, use the negative gear as tax benefits
– can you build a cellar / -1 floor ?
– storage is a good idea, especially with shops nearby.
– boat shed
– car garage ( not carpark , but a garage to park the car in / annex storage space )
– windmill / solar panels

but probably it's some sort of protected area that won't allow anything else than what the council wants there ( shops ? ).

Rudi, by all means, stay out of real estate. Get 8.5% from the bank on your cash, and buy some toys for you and your kids. You will burn yourself if you play with matches. You will need a LOT of luck if you buy anything now, more than I can wish you.
One thing I can guarantee you is that your house will lose at LEAST 10% value in the next year. That, compared to 8.5% on the bank means you will lose 18.5% of your money if you invest in property now. That is reality, as opposed to your wishful thinking. Australia's crash is going to be worse than any other crash in the world's housing market, Australia just lags 18 months behind, like usual.

mpertile : It does help him, I just told him what noone else will tell him : Reality.
Whether he accepts it is another thing.

Set your minimum, don't set your limit. Houses are still overpriced at the moment, don't get suckered in to a falling market. There will be many better deals than this one. Like I said, offer 60% of what you think it's worth ( that might be a HUGE difference on what they WANT for it, tough luck for them ). If it's 'advertised' at 800.000, offer 250.000 if you think it's worth 400.000 : what it's worth. Remember, advertised prices mean NOTHING.
They are wishful thinking. I can advertise my 2 bedroom townhouse for 1.2 million but I will never get it. Don't feel like you're cheeky, you're one of the few ACTUAL buyers out there. Don't pay 600.000 for a house you can get for 250.000 in 1 year from now.