[biggrin] That is great!! I suppose that is 40,000$ they beleived they had.
Hmmm, I am thinking of getting into IP in Perth. Maybe I should wait and see. I have been saying to myself that property prices has gone up way too much in the last 2 – 3 years but finally I thought I should joint the “crowd” and get an IP. Maybe more wait might pay this time. Talking about 15% drop, well I like to see that happen where I live because I like to move to a bigger property in the same suburb but it’s just so expensive now. I would imagine that when it drops the land portion is the one that will drop the most and less on the building component which makes moving into a property with larger land costs less. Am I being logical to think this way?
Also I think the stamp duty is a complete rip off.Originally posted by zen:I have been saying to myself that property prices has gone up way too much in the last 2 – 3 years but finally I thought I should joint the “crowd” and get an IP.
Did someone say HERD? Zen, that is not a very good reason to make decisions that could cost you dearly.
cheers
rOriginally posted by HousesOnly:It amazes me how people who bought a home for $40K 20 years ago talk about making a loss if they sell the home for $500K rather than their asking price of $540K! How does that work!
There is also replacement cost. No point selling your 20yo PPOR if all you can afford is something you perceive to be of lesser value.
We seem to be mainly discussing the Melbourne market. Is it fair to say that even Brisbane will continue to have decreased prices ? In saying that people are still commenting that over 1,000 people relocate per week to Sunny QLD.
Look forward to comments on the Brisbane market.
Amanda E.
The reason why I am thinking about joining the crowd (Herd) is because I have been wrong the last 3 years and am I going to be wrong again in the next 3 years by waiting? But looks like it’s running out of steam (still I could be wrong). The last 3 years the herd was right and I was wrong. It’s time to admit it.
I love all the market discussion, there is so many different ways to look at it.
I read somewhere a description of market prices:
The market is unpredictable, on some days the market gets excited and thinks its goods are worth more than they are[
]. On other days the market is pessimistic and thinks that the goods aren’t worth as much as they are[cry]. But if you buy something based on it’s actual value, then you need not be worried by the unpredictable emotions of the marketYeah I know it’s a bit simplistic and that a growing portfolio is given a big help by valuations above purchase value which depend on the market.
I am personally excited that we are entering a buyers market where sellers have to be open to different sales scenarios and negotiation.
I know the recent boom may look to burst in the face of history,,,,, but when in the past has the underlying finance companies (which make the purchase of properties so affordable) ever been so competitive and offer so many different options.
Of course there is all the baby boomers looking to retire by selling their homes to fund retirement (but I read somewhere that the average retiree dies shortly after retiring)… so suddenly the deceased estate distributes more deposit money to the benefactors of the will and the boom takes off again.
And what about the governments problem of dealing with so many people on centrelink handouts, the ratio will soon be 1 working person to 3 or four people on handouts (as opposed to 40 workers per pensioner back in the industrial boom days),……….unless they send our retirees off to Iraq to fight they are going to have to find a whole lot more workers(China?).. so these people will need homes too.
So many things can happen to sway the markets moods.
I am just trying to buy properties that are priced well for their worth, not so much determined by what the future market is doing.
Rental yields and areas with increasing housing demand are the keys.[
]May all your dreams come true. (except for those evil dreams and maybe that dream where you had no pants on in school, oh, and that other dream with the invading martians and the……………)
Lifexperience
In this case there are no capital gains to be had.They said at the end of the show that after 5 months (I think),the property was still unsold,and the price had been dropped by $60,000.I think the auction reserve was $415000 to break even,so he and his partner will have a significant capital loss.
Tools
Buying a negatively geared property for capital gains is speculation. You are speculating that the market will go up. (otherwise, only emotional buyers should apply! Luckily there are always loads of them, because although investors (in their utter arrogance, bless their hearts) think they’re driving the market, it’s actually HOME OWNERS that are the vast majority of home-buyers.
I bet most people here have more equity or money in their own home than in their investments. And that the people in the opposite situation are in the minority.
If you can afford to speculate, and you know the risks, go for it.
If you realise that it’s a stupid idea to speculate on a negatively geared investment for capital gain in the current market, then go and talk some sense into people trying to buy negatively geared ‘investments’.
I don’t feel the same about +ve CF properties in the current market, they can still be great buying.
joy to the world
>>pick up deals “at bargain basement” prices,<<
Serious? A tad off ridiculously overpriced isn’t bargain basement.
Even Aussies 30% still won’t be bargain basement.
Reasonable value maybe, but not bargain.
I agree Wayne, they have to come back quite a bit more… and I’m confident they will… a 30% drop is a price reduction of $400k to $280k… places in some of the suburbs I’ve been keeping an eye on have already dropped from around $420 to mid 300s… it’s not outrageous to think they’ll come back more.
(by the way I’m surprised this thread hasn’t generated more of a response… just how closely are people watching things in their respective areas? I would have thought serious investors would have their finger on the pulse… oh well)
cheers
rOriginally posted by wayneL:Serious? A tad off ridiculously overpriced isn’t bargain basement.
Even Aussies 30% still won’t be bargain basement.
Reasonable value maybe, but not bargain.
Okay, what in your opinion is “bargain basement”???
How LOW would you go???
But I take your point, prices were over inflated, so the “correction” is bringing property back to more realistic (depending on who is doing the interpreting here) figures. However, let’s assume that a house over blown to 400K, now selling for what you and I as investors would like to see as the starting point of 280K….(oh yeah hang on, that isn’t good value right?) ok let’s pay 200K…50% red spot special??) and then in 10 years when property approx doubles it will go back to being worth 400K. So in 10 years we have come full circle (but on a more “realistic” note)….are YOU serious???
I am an investor Wayne, not a joker!!!
I am not so naive as to think that I will be able to pick up a property, which or may not have experienced an over inflated value price, for the same market value that it was achieving 10-15 years ago….such an expectation, albeit would be absolute paradise….is not within the realms of possiblity/reality, and is IMO nonsensical to say the least!!!
But hey, if you can do it…I take my hat off to you!!! [specool]
Cheers,
Jo
Cases where property prices fall by as much as 60% has hapenned in few places like HongKong and Singapore(30-40%). They were over inflated to start with and had very bad economic condition for many years. I think if the economy remain bouyant and interest rate remain stable we might not even see a further drop than current prices. But I still think the prices will be flat the next couple of years. You need a recession and high interest rate for median prices to drop 30%. Basically as long as people have money ie good economy and low interest rate they won’t be desperate to sell. To drop 30% of your asking price is desperate.
peope love these discussions (including myself) – they are very exciting…boom, bust etc. To say negative gearing is just crazy speculation is a total dismissal of decades of data. If I had the cashflow to fund it I would quite happily buy in a prime beach side suburb (in Perth anyway… I have no knowledge of the other markets). If you truly don’t believe in neg gearing and cap growth then you should rent your own home and not own it (as it costs you money on a cash basis and there is no garauntee it will increase in value).
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
All these comparisons with Singapore and Hong Kong…
You need to keep it in perspective. They had massive speculative buying, resulting in huge bubbles, which burst resulting in price corrections. They are gambler by nature..Talk of US property, where you could buy for 10c in the dollar after the savings and loan crisis in the 80s’,or Japan property…yet to recover from their bubble.
None of it relevant to Australia’s market.
We are our own unique market.Zen, you mentioned buying in Perth…and were cautioned against it.
You can’t lump Perth in with the situation occuring on the eastern seaboard.
For starters, it did not have the same gains that, for example Sydney had, thus no over correction is due.
In fact I would suggest the opposite is occuring….there is still moderate growth taking place.
This is not an endorsement to go ahead and buy in Perth, but from my perspective, there is always a niche to be had in any market…where you can make a reasonable gain in the shorter term, without relying on the market to save you, by giving you capital growth, and this is especially the case now, in the current market.To back up this view, I am still buying…its better to do so at the momemt…there are less buyers around..less competition.
KP
Monopoly,
Here is my line of thinking. My capital is gainfully employed in my business earning attractive rates of return by anyones measure.
So any investment I make must measure up directly against that.
Now, historically rental rates of return on housing has been 5%-7% in the area in which I live (Perth Hills)
I flogged my previous PPOR for a reasonable stack of cash late last year, and have decided to rent for….well, the original plan was 2 years, but I can see that being longer now.
So, to use this house I am renting as a fairly middle of the road example, and pretty well representitive of the overall market:
The rent is $260/week and the house would easily sell for around $350k in todays market…a return of 3.85% gross…and personally, I can not see an aweful lot of scope for rising rents at this stage…and certainly not a lot of scope for CG
But… valueing this house at 5-7% gross return, which is reasonable value IMO… brings it in at at between $193k and $270k…clearly a ludicrous proposition as things stand currently.
Thats how far out of wack I see the fundamentals as being. Houses TOO expensive and rents TOO cheap.
As a PPOR I would think around 280-290 as an abslolute bargain and would buy with my ears pinned back. But as an investment….hmmm, my capital is still better placed at the moment.
But maybe 30% would be bargain basement as that would leave over 40% CG just to get back to where we are…worth putting up with abysmal returns for.
Cheers
WayneL,
You’re right. I’ve put my money,at the moment, into share trading.
Because I’ve purchased my dual occ.three years ago, my rental returns are 6.9%.
To buy a rental today,for todays returns,would be heart breaking.
I sold all my other rentals two years ago. Just when everyone started to whinge about property being too expensive. Prices have too drop,doom and gloom etc.
Bloody newspaper talk and current affairs type shows(Richmond)put the boot in.They’re to blame.[baaa]MiniMogul,
What’s the matter,poor Mini.Are you feeling poorly?[sick3] Love life not going well?
I’ve being trying to get under your skin for years. Without success.Now out of the “blue” you vent your spleen. You hate people who buy neg. geared,capital gains property.
Well,I am one of those”types of people”.
When I bought at North Curl Curl,in Quirk street, all the houses were average single story homes.
Most were wetherboard in fair condition.
My place cost $790K, and one of the few dual occs.
in the street.
Today ninety percent of these houses have been
bulldozed,being rebuilt as two story, brand new well over the million dollar properties.
As you can see sweet Mini, capital growth works for me.
When I first looked at buying property,you being just a twinkle in your daddy’s eye,
I thought the last place on earth you would buy property, would be in mining towns.All mines run dry eventually!!!
Next worst place would be in small country towns.Where the land costs two bob(twenty cents) an square mile.The locals wet themselves laughing at these dopes buying at over inflated prices.
Mini, isn’t this you?
Regards, hope you’re better now.bruham.[withstupid]
Originally posted by zen:Cases where property prices fall by as much as 60% has hapenned in few places like HongKong and Singapore(30-40%). They were over inflated to start with and had very bad economic condition for many years. I think if the economy remain bouyant and interest rate remain stable we might not even see a further drop than current prices. But I still think the prices will be flat the next couple of years. You need a recession and high interest rate for median prices to drop 30%. Basically as long as people have money ie good economy and low interest rate they won’t be desperate to sell. To drop 30% of your asking price is desperate.
Bruham
I don’t work in current affairs, but to blame newspapers and the likes of TT and ACA for a softening market is a tad simplistic. We don’t do those sort of stories in the 6pm news… if interest rates go up, we report it, if clearance rates are down we report it etc etc. We don’t offer comment or try and add fuel to any so-called fire.
cheers
rG’day Richmond,
Sorry super sensitive Richmond. I didn’t realize you’re now a news man.But.You have to admit to the hype of those current affair shows.”You”lot trying to out do the other”mob”.If I’m home in time for these type programmes(compulsory viewing),I watch the best story on what ever programme going.I flick all the time.This way I see only what I want to see.
As for the news.It’s usually channel nine that is watched.bruham.[withstupid]
]. On other days the market is pessimistic and thinks that the goods aren’t worth as much as they are[cry]. But if you buy something based on it’s actual value, then you need not be worried by the unpredictable emotions of the market
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