Forum Replies Created
So what you are saying is there is no causal relationship between interest rates and changes in house prices. Intuitively, a reduction in interest rates, all other things being equal, would cause prices to rise. That is Economics 101
You set the bar higher with your first two myth busters Foundation, unfortunately this seems to be more semantics as Monopoly says.
I am sure there have been some statistical studies on house price movements and the factors that influnce them. Maybe that is the next challenge?
Superman,
I didn’t intend to use the reference to spark a shares v property debate. Foundation’s intention was to try and debunk the myth of residential property doubling every 7-10 years and castigating those making similar statements.
Yes, I understand that the numbers are for 10 & 20 years respectively and they don’t include the 2004 runup in the sharemarket.
My maths isn’t that great and I am sure if I am in error, I will be quickly corrected but based on those figures, if you take…
10 years return: At 12.7% increase, this would see a doubling of prices in the 7th year.
20 years return: At 15.1% increase, this would mean a doubling of prices in the 6th year….
As an aside, I am not here to spruik for the perpetuation of any myth, just the facts…let the truth set you free…
http://www.asx.com.au/about/pdf/TowersPerrin2003.pdf
Next edition of death by web reference!
So whose figures are right? Don’t ask me I have no idea…[confused2]
Have you quantified what that potential is?
Interesting to note how upset the permabulls become over this…real zealot type stuffWayneL, don’t confuse passionate debating with your interesting description.
I would also take significant issue with any that I have said being categorised as ‘property zealot’ speak
Oh, and regarding adding ‘value’, I may simply be lazy, but I would rather buy at a reduced price than put in a whole lot of effortF, fair enough, you are not the only one then….So what reduction you are waiting for?
If you don’t think many average folk believe that ‘immigration is destroying house affordability’, and ‘we have 2 IPs in Sydney which can’t grow any more because of the green wedges, so they will go up in price because everybody wants to live in Sydney!” then I don’t think you’ve been spending enough time around the water cooler!Maybe I don’t hand around average folk as you describe them…That is not my experience from my circle of friends/peers.
So what if people think that, were you not debating what the true ie factual state of play is?
BTW, i don’t want to live in Sydney. Melbourne’s a far better place to live!![wink]
Nowork, everyone’s magic bullet is different. Are you not convinced because you don’t understand?
There are many strategies that you could pursue, in fact some of them are listed on this site
https://www.propertyinvesting.com/strategies.You have to decide what your comfortable in doing & what time you have to pursue these
F, you make the proposition that some of the myths being presented in the media, this and other forums. You are endeavouring to misrepresent and take out of context comments made to different questions and piece them together to make your case.
One of those is that population growth has fuelled the house price boom. Actually I don’t think that has been anyone’s claims!! To represent otherwise is misleading. It is has been used, as per all your quotes, as one factor which underpins demand, which is in fact what your ABS reference confirms.
Regarding the supply of apartments, well for those who have been on these forums for some time now, there is general acceptance of that there are areas where this exists.
You also fail to mention a major caveat on your assertion that rentals have not kept up with inflation. Your reference also states To the extent housing quality has increased, actual rents for all rental dwellings on average may have grown more strongly than the underlying rent index series, which measures rents for constant quality accommodation.
As for your methodology, I also have an issue in comparing different figures from different reports and drawing conclusions from those, moreover representing your opinions as facts. Different time periods, different data sources, different methodologies (?)
I guess, the real question is, given the state of the property market, how do you create value? Now that, is what I believe is more pertinent today. This is a value add conversation and would be interested to hear your thoughts on this…
F, so what are/have you investing/invested in?
OK. An explanation from the moderators would have been far more professional than simply deleting the threads…
Foundation, so what are your credentials to give out advice??
The improvements you mention irrespective of when you do them, as long as it the property is for investment, is claimable though depreciation only not as a direct expense.
You would commission a quantity surevyor to undertake a depreciation schedule for your property, and this would confirm the amounts you can claim over the depreciable asset life…Some items may fall under the low value pool, which will allow you to claim the full amount however the QS will confirm this in their report.
One Q, would that count as a capital loss, that we could offset against future gains?My understanding is (others will confirm/contradict), is that you would need to settle ie own the asset and then sell, with the difference (if selling price is less) being able to be claimed as an offset against capital gains or future capital gains.
As you stand today, you don’t actually own the property. The transfer of title only happens at settlement so walking away ATM, the $50k that you have deposited would be lost!
If that is correct, then that makes the valuation critical….Let us know how you go….
Do we then take the same view with car dealers or individuals trying to sell their vehicles with the following statements –
Must sell this weekend
Owner going overseas!!They are trying to sell and market it in a way which gets people interested. We all have a BS meter…..probably worth using it…..
Andy,
There is one who frequents this site that has a wealth of knowledge and contributions to many disucssions on this site – Depreciator
I have also used Washington Brown in Melbourne (although they are national) who were quite good as well.
1) Correct
2) Correct
3) Pay vendor tax on $120k… tax is calculated as per wording on dutiable value of the property at the date of sale
http://www.osr.nsw.gov.au/portal/page?_pageid=33,193927&_dad=portal&_schema=OSRPTLT
Woodsman,
While I am not overly familiar with Sydney either, I can’t imagine the situation would be fundamentally different to Melbourne where new build apartments are being valued (by qualified valuers) at 30%+ below purchase price.You raise a good point which actually hasn’t been made explicit (or maybe I have been a bit slow to pick it up!)
If for example, the valuation is $400k and you can only borrow $380k (95%), then you would need to come up with another $70k plus costs (if I am right in assuming you have paid a $50k deposit on $500k). That then might pose a significant issue (?)There seems to be two significant elements to the argument regarding the intro of the exit tax then…
Philiosophical/cultural belief that Australians should have the opportunity to own their own home and economic.
I don’t think taxes are the answer to the first point. There would be far more equitable and efficient ways in achieving this.
If from an economic viewpoint, the exit tax does have an effect to subdue housing activity, then a state based approach to a broad economic and social issue is not going to give national solution…If it hads merit, then why would not have all the other state governments (who are all the same political persuasion) followed suit. I suspect this had as much as a budgetary consideration as those expressed by the NSW State Government.
Foundation, I would agree that any over investment and associated creation of a pricing bubble in any asset class is destablising, I am sure those who held their ‘Tech stocks’ would also agree.
Andy,
Just some thoughts
By walking away, you crystallise your $50k loss, at least with keeping the property, whilst you may start behing the 8-ball, it will rise eventually.
Although not knowing Sydney prices (being from Melbourne), $10k per sqm does seem very expensive.
This response is not finance related….however, to alay your fears you can do as foundation suggests and get the view of a valuer, however that would cost a few hundred dollars. I am sure there would be comparable sales available if not in Randwick, then nearby? Real estate agnets could help you there…This will give you some guidance of a valuation today.
Furthermore, there are some reports from Residex (and there are other property information services companies) which I have used from time to time that can provide their best assessment on different suburb forecasts…..
Brad1m can you add value to these properties through reno’s or sub-division…A more proactive approach is needed today to add value in a more balanced market…
