Guys, I think we have fundamentally two completely separate topics here.

First one raise by Freckle, that AU economy and RE are more than likely to be visited the recession of some severity.

Second is what 'sciencesurf" is talking about, that money to be made on RE.

In regards to recession, I would agree with Freckle, we will see it, we actually already see it in Australia. In jobs market (go and try scoring $200K/year job that was easy to get in 2006). RE, I just purchased 1M+ house with 30% discount compared to 2006 pricing. So high end is folding. Jobs: last time we employed was in 2006-2008. Been shedding people since then. Last payrise thru the factories was some years back, workers are still on the same money as in 2008. Talk to business owners, very few are positive about company's profitability next 12 months, most are happy to maintain the current levels and not to contract further.

Times are very though for wast majority.

About money been made, sure there are pockets and opportunities. You can make some handy profit in falling or raising market. You can make money while it stagnates as well. It's no been said that you should NOT play in RE market. It's just that you have to be BLOODY good as market is very patchy and you are more likely to loose than to make.There is no capital 'growth guaranty' that was there to help you in 2004 when you buy RE.

I know people that made several millions developing and selling in Brisbane in 2009-2011. Started from fairly conservative $900K. But they are exclusion, and to one of them there are 100s who are in the red now days.

Source: http://blog.residex.com.au/2011/10/19/regional-australia-7/

2007- 2011 prices are flat for greater Brisbane. 2011 – 2014, slight improvement evident over last 12 months:

Source: http://www.allenrealestate.com.au

So a summary would be we are in the flat market from 2007 till 2014. That is 6 years of no growth. Considering 3% CPI, than is worth of 18% loss of value due to inflation. So after all we did have 20% correction ?

Interesting to observe such a separation between action in prices in mid/low end of the market versus high end and luxury properties. They act almost totally independent to the eyes of the observer. 

Agree about the crash. What makes it a muddy waters is that some commentators pick pockets of the market and state 'strong activity', or observe transactions qty only. I was told by REMAX agent that last 8 weeks was 'flat-out'. Same agent sold me property with some large discount during the meeting. Does it mean that property market picking up?

Good advice by Freckle.

It's a mixed bag at the moment. We have property that is within 10km from CBD purchased for about $650K in 2009 still worth $650K according to sale next door in December. On the other hand, we got property under the contract few weeks back for $1.4M that was 1.95M In 2009.

So, in mine view high end is folding but is hot as far as number of transactions is high. Mid range is steady up/down 10% depending on the pocket in Brisbane and time of the year.

You can say that market confidence is good and people buy/sell houses, but values of the houses is another question altogether.

Is it a good time to invest? I don't know, depending on how good of investor you are!

P.S. Stop reading forums and internet looking for quality info. Most what you read is one-sided and opinioned. Get out, talk to agents, visit houses. Come back and do it all over again every weekend. In 6 months, you will be advising me on how good/bad particular areas are

G'day,

Nice to see that you been so active in investment so early, you will do well.

I like your strategy, about having paid out PPOR. Maybe because we are the same, it provides a fall back plan if something goes wrong.

One advice is to watch your cash flow!  Your returns are in the range of 6.5% meaning that you are running at the loss on your investments. Do not factor tax return in to the calculations, employment status can rapidly change and affect it, I worked it out the hard way over the years. What worked for us is to create a buffer in off-set account of the value of over 20% of all outstanding debt. This allow you to quickly come up with cash when there is opportunity on the market as well as critical buffer when starting a family.

Remember to check your financial state with stress test. I calculate my ability to meet the repayments at interest rate of 10-12%. If you can live with it for some 2-3 years, you are in the safe range.

As a side note, I have figured out that investing in myself pays better than investments in property. Meaning if you are young engineer for example, spend money on study first, work hard on experience and connections – second. Then spend even more money on creating your own business – third. This will later on buy you any qty of properties, cars or anything else you wish to spend the money on.

Property then becomes just an type of inflation adjusted savings account.

god_of_money,

I can, have few charts saved. But I do not consider them reliable as per se. Knowing how it is calculated and how the data sourced, I do not like to use them.

Instead I pick properties in areas I like and watch them over time. With few dozen properties on the my 'watch list' I get reasonable feel of how the area or segment is performing in Brisbane. 

So I have here my thoughts to see if others observe the same. I have no interest in discussing publicly available statistical data.

Another 6 months passed, recent observation:

A house (good area, 20 min from CBD) purchased in 2007 for 1.1Mil, valued at 2011 at 1.5Mill but did not sold in 2011. On the market again, trying to sell for 1.3Mil. No offers at this point in time. People are looking but noone willing to offer over 1Mil.

So from 2007 till 2013 no price increase.

Back to the Brisbane, I find that rents are becoming increasingly difficult to increase over last 12 months. Boarding houses are now been flat on rent for 24 months, top end property ($1000pw) are stagnant. Only middle priced housing still can go up some 2-3% this year (assuming that it was priced correctly in 2012).

There seem to be inflow of amateur investors on the market, of late. Came across few people making offers on properties at listed price. One couple made offer over listed (owner occupiers). In both cases they overpaid. ROI at the moment is not making sense, you better off with money in the bank. Or renting instead of purchasing PPoR.

On the other hand some properties spend over 6 months on the market with little action. Interestingly, many contracts fail on finance. I do not know if financial institutions become more difficult or buyers use it as the 'way out' option.

I would support Freckle view on Brisbane. Cannot see any major upwards pressure drivers. It's all a mixed bag at the best. In my view, short term we are flat and mid term we will go down some.

Let's sort.

Positives:

Pollution Growth

Inflation (mild)

Infrastructure projects completions

Negatives:

Unemployment on the rise (go and talk to employment agencies – not gov statistics)

Wages increases are miniscule (in manufacturing sector anyway)

Closing off immigration channels is on the cards

People's debt levels are at elevated levels

Cooling down of Australian Economy if a fact now that is gaining traction (see AUD/USD)

Heaps of cheap NRAS style apartments coming on the market (everywhere in CBD)

Mine are: Hope for the best, plan for the worst!

@ xdrew

I will add to the above that with some creativity and bargaining you can get positive cashflow in areas of reasonable/good CG. Even more so lately, many vendors are discounting and some are under pressure.

I am also big supporter of the idea of leaving some 'buffer' as XDREW mentioned. Our calculations of risk include loss of main income for periods of up to 2 years. If you can make 2 years without going broke, it's a good start. 

This is where cashflow positive properties really count!