my takeaway from this is that supply does indeed follow demand but obviously at a significant lag (permits/building etc.) so therefore lack of short term supply helps support prices.

The article is a bit schizpphrenic.  It say on one hand that supply has nothing to do with price and then the article author goes on to say that thank goodness we didn't have plenty of supply like the US otherwise prices would have fallen – thereby saying that lack of supply does indeed support prices…

I'm confused.

my experience in Geelong at the moment is that everyone is at 100% in the lead up to Christmas.  hopefully will ease off in the new year.

thommo

Without getting too depressing, I agree with casanovawa to the extent that there is obviously a limit of human population.  Thinking back to my biology, there is a pretty strong model of species population growth that shows definite charactersitics of a bubble…

Human population will, in the end, be self-regulating and will prob come down with a mssive crash of population numbers.  Probably in my opinion from a lack of water (cue world wide wars etc.)

However before the doomsday scenario happens, I think good old prime realestate will be high on the list of purchases for people

Of course in the next 5 years anything could happen to prices…

I grew up in the UK in a regional town called Colchester, just over an hours commute from London, actually scarily similar to Geelong, where I live now.  About the same size, commute in to the city, strong but lower house prices (than london/melbourne) etc.

Just yesterday I wa schecking house prices in Colchester and comparing 3 bed houses in similar suburbs to places in Geelong, actually house prices were pretty similar.  If you use the current exchange rate then they look cheaper but that is a reflection of the weak pound/strong dollar at the moment, which will change.

If I look at my earning power in London compared to Melbourne and then at the house prices actually they seem about the same as here.  I'm in IT by the way, not mining

I guess what I'm trying to say is that, yes the UK has had a price crash, and perhaps was therefore subject to a bubble prior, but in my simple comparo really prices have just come down to where we are now in Geelong at the current time.

for what it's worth,

thommo

I think what IP Freely is saying applies to comparing investments.  Work out whether the investment is a good one or not (and compare to others) first and then work out whether it works for you personally regarding holding costs and cash flow.

For example a large propoerty in South Hedland may return 10% ROI and is therefore a good investment but if you haven't got the money to buy it or have to borrow so much that it wipes out the rental then maybe things change. 

However that doesn't mean the property is a bad investment.

I'm a newbie though so could be way off the mark here…

thommo

mate, I'm sure wiser heads than mine will be able to offer some good advice but I just wanted to say well done for saving that kind of money – I wish I had done that at your age.  Sounds like you're in the right place mentally and I'm sure you'll do fine.

thommo

The first couple of posters are so transparent with their real motives that I actually laughed out loud when I read them, good stuff fellas.

However, I suppose that doesn't by default make them wrong, they may have it right, even if only by accident.  I personally would like to see a soft or even a flat period for a while.  I think that would help to stabilise the market, and allow savings/income for first homers to catch up a bit. 

And in the interests of full disclosure, I'm currently in the process of a 3 lot subdivisiion and build.

thommo

Hi aferns,

I don't know the answers but I can maybe point you to some more questions…

1.  Talk to your bank straight away and determine your borrowing capacity
2.  Talk directly to the council or a qualified town planner or licenced surveyor in the area to determine what you can actually fit on the block.  I don't mean get a survey at the moment but there will be planning guidelines.  i.e. in area A you might only need 300m2 per dwelling.  In area B you may well need to allocate more.  I would have thought in a regional town it might be higher than you were thinking. 
3.  Again, talk to an experienced surveyor about typical subdivision costs, you should get a ballpark figure hopefully.
4.  Be very careful about taking the construction price from a project builder website, it is more likely to be higher than this in reality, again especially in a regional town. 

These thing do vary with location so best to get on the phone to local professionals and glean as much as you can.  Talk to the council.

Good Luck!

thommo

From my persepctive (as a beginner also) there's basically four stages:

1.  Somehow get the money together to fund your first property (prob as PPOR but maybe IP)

2.  Wait (hope) the value goes up in a rising market (various strategies to manufacture equitty can be used as well i.e. reno or subdivision)

3.  Use the equity gained either as a re-draw/remortgage or as security to buy another property as an IP.  The main aim here is probably for capital gain so might be negatively geared.  You will need to be able to service this loan out of your 9-5 job unless the rent will cover costs.

4.  Repeat steps 2 and 3.  In a rising market this works fine of course, maybe not so good at other times.  However even in a flat market I would have thought there was still proft to be had in the right subdivision/development..

thommo

coretex – what's the 'all monies clause' mate?