myoung, even if my propeties go sidewards for 3 years i have still made significant gains, i have locked in for 15 ytrs at 7.4 % I am in for the long haul.
Real $ is not made over night. unless at the casino’s. but property willcontinue to give great growth and security. Boom Bust who cares lonfg term growth will continue… everyone needs a home. and at eastern states pricing more and m,ore will be rented…[gossip]. I live in Wa and it is one of the “untouched” area, better beaches than sydney and property at 1/4 of the price. Opinoin rather than fact possibly???????????[argue) anyway I wish to encourage investors…property will always be “expensive”.
It seems that most people form their opinions about things economic;
1/ based on the near past…say last 10 years, or
2/ based on what they hope will happen
For instance the comment “property willcontinue to give great growth and security” in the absense of any rationale, seems to be based upon either 1/ or 2/, or both.
It is “possible” that this may not be the case, as has been pointed out by several economists.
Cheers
I’ve got to agree with Wayne.
I agree that history is one of the best predictors of the future, but it is by no means gauranteed that property will continue the upward spiral that we have witnessed over the post war decades. That growth was triggered by the industrial revolution, followed by the IT revolution and funded by growing global economies and free trade. These fundamentals are by no means gauranteed to continue.
What happens now when the Baby Boomer generation that kicked all this growth off retires and dump their hefty property portfolios to fund consumption in their retirement?
What happens when we run out of fossil fuels and the grease of the industrial revolution dries up?
What happens when the world stops propping up the greenback and OPEC peg to the Euro?
What happens whem China dumps its greenbacks?
What about global warming, el nenio and the impact of massive environmental change and the hit this will deliver to global economies?
All in all, there are a lot of “not gauranteed” about the property market in Australia and globally. I’m not saying that a massive, previously unparalleled, correction is gauranteed to occur. Just that it is definately not completely off the cards given all the new aspects to the global economy that are in play today.
To think otherwise is to put your head in the sand…
Cheers,
Michael.MichaelW,
All very good questions… A good post… But in addition I would like to say that even if we are aware of all the potential dangers facing us in the future (near or far) we must also acknowledge that history provides us with a great many people who have probably known that their future held many unsettling uncertainties and yet still invested in property and did very nicely thank you.
I think what I am trying to say is to anyone considering their first IP that they should not be discouraged by potential future problems.
Does any of this post make sense? [blink]
Cheers, Nobleone. [biggrin]
“Making mistakes is just another another tool for learning.”
Forget all that stuff.
As long as Johnny Howard encourages a net migration into Australia property prices will continue in an upward trend.
For the average person you cant beat living in Australia.
As long as demand exceeds suppply we should be ok.
I believe the upward spiral in prices is not a post WWII phenomena and that it actually goes back pretty much to the beginning of record keeping.
I may get hit by a bus tomorrow, yet I continue to invest in the hope I do not
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
Originally posted by AUSPROP:I believe the upward spiral in prices is not a post WWII phenomena and that it actually goes back pretty much to the beginning of record keeping.
Wayne,
Thanks for that! And it shows house prices as flat from 1926 to 1946, only turning north after WWII. Its been a nice period in history with some pretty exciting advancements for humankind, but it is only a very small period of history when all is considered. To think that what we’ve lived through will continue indefinately does not consider enough of the macro factors I think. Even if it will continue, it still shows current house prices well above trend. The last time this happened we had a flat period for a decade or so.
It also shows rental yields having dropped below share dividends now. All the macro economic factors are indicating a prolonged period of house price flattening. Maybe up to a decade or so worst case.
There’s probably still opportunities out there but I wouldn’t bank on any CG in any of your IRR calcs before you buy. And, if you’re looking at rental yield only then its not such a good investment. The market, by necessity will need to right this imbalance before people start buying again. Its simple investment 101 stuff.
Cheers,
Michael.is a pity these records can’t go back further. UK housing records also provide interesting reading.
it is interesting the different conclusions you can reach. I would have concluded that over time capital gains are pretty consistent and whilst these adjusted figures indicate a little higher than the long term trend, that property is still a very safe investment vehicle – particularly in light of the alternatives. It would seem that except in the worst of years, there is some growth even though it may not be as high as the long term trend. Picking the top and bottom of a market is very very difficult – not many people manage to do it. The peak has been called many times over the last few years by many experts, so I think there is more to it than basic Investment 101. Hence the previous mantra that it is all about time in the market, not timing the market. I would suggest investors buy well in todays market and leave the guess work to chat rooms.
Macro factors to consider: increasing immigration rates, stable/declining interest rates, increasing interest rates, booming resources sector, prolonged economic growth, collapse of US dollar, surge in the USD, war in Iraq, Chinese economic growth, domestic politics, the push for tax cuts
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
Aus prop i am with u.
I do not understand the fixation with the short term crystal ball gazing????[argue]. I do not see trading eg(buy and do up sell 1 year later) as investing it is gambling, at least with roulette you can work out the odds.If you buy and hold and use equity to buy more and hold never sell until perhaps retyrement to clear the debt and live off the rental income of the 15 other properties(hypathetically) happily ever after. Maybe I just have a warped Idea? or maybe enough time left to make gearing+capital growth work?[dead2]
Lukis P,
I’m with you on this. I’m a buy and hold guy too. I guess I’m just saying that to hold for 10 years and see no growth would be a real bugger. If we are in as bad shape as a lot of people think, then this may be the timeframe we’re talking about. I’ll wait until I see the market bottom and turn before buying on a neutral / -ve gearing philosophy.
Cheers,
Michael.Originally posted by lukis p:myoung, even if my propeties go sidewards for 3 years i have still made significant gains, i have locked in for 15 ytrs at 7.4 % I am in for the long haul.
Lukisp, that is the point i was trying to make(obviously didn’t do it very well). All I’m saying is that if you aquire more property THIS YEAR IMHO you will be waiting a while to make money if you go -ve geared for capital growth and I believe now more than ever is the time for +ve cashflow to ride out the possible lull or storm.
We are at a point where something has to give IMHO. Either rental yields will increase to drive further price growth, prices will contract somewhat or a combination of the two meeting in the middle.
Spent the week on hols(reason for delayed response), looked at some houses in the areas and they are going for sale prices that deliver 2% gross yields!!!!!!!
I think what most of us property bears are trying to say is this:
Buy property when it is reasonable value.
At the moment, residential property represents the poorest value since the mid 1920’s and is likely the regress to the mean value…perhaps, hopefully, overshooting it.
There are some clever people creating value out of situations, even today.
But for most of us who just want to buy a freakin’ property or 20, and watch them make us rich, now is not a good time.
Cheers
If you agree with the proposition that property at least in this current cycle has completed its growth spurt and in the presence of the sharemarket having shot up approx. 25% last year, do we all do nothing?
Even in a bear market, some companies share value increase and of course, the converse is also true. Telstra’s share price didn’t appreciate in line with the All Ords in 2004. (Sorry T2 investors[grrr])
Whilst I enjoy reading the divergent views on where we are heading, as we are all arm-chair experts[biggrin], surely more importantly today, is how we best identify and create value to our property investments, if that is, we choose to invest in property. We won’t be getting the free kicks that the property market has provided to most of us who have held property over the past 5-7 years.
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