- I think David is being worn down and moving to the ‘Force’. Forget the ‘Dark Side’!!!
Not at all. Colebatch makes a compelling case that Sydney is in a serious slump, and our absurd house prices are a major cause of this. Colebatch concludes that a ‘painful correction’ is a long way off, because NSW investors are still borrowing like crazy. My view is that NSW investors are getting out faster than Colebatch realises (he quotes March quarter data) and the recent tax cuts make negative geared investment properties with a 3% yield and negative capital growth even less attractive than they were before.
Did you miss this???
Originally posted by The Mortgage Adviser:Hey David et ors…
You guys might like to check out the thread:
https://www.propertyinvesting.com/forum/topic/17299.htmlI am getting hammered due to my lack of economic knowledge (‘using the word ‘the’ instead of ‘a’) which you guys might like to get involved in. Some of your opinions would also be interesting (hundreds of links are NOT needed).
Robert Bou-Hamdan
Mortgage AdviserRobert Bou-Hamdan
Mortgage AdviserDid you miss this???No. My advice: let it go.
I thought you might enjoy having a dig at my apparent economic knowledge handicap. I was wrong!
Robert Bou-Hamdan
Mortgage AdviserI thought you might enjoy having a dig at my apparent economic knowledge handicap.I have no interest in putting people down, or making them look like idiots.
The Australian sharemarket is a few hundred points off its March record, but over the past 10 years investors have reaped higher returns than their compatriots in any other asset class.
The Australian Stock Exchange’s annual Investment Report, produced this year by the Russell Investment Group, revealed a dramatic turnaround from last year, when property topped returns for the first time in the study’s 12-year history.
“In a sense we have gone back more to the historical norm,” said AMP Capital’s chief investment officer, Shane Oliver.
The study measures the returns, before and after costs and taxes, of shares, residential investment properties, listed property trusts and fixed-interest and cash accounts over rolling 10 and 20-year periods.
Shares generated slightly higher returns over both periods regardless of which tax bracket an investor fell into. “Real returns have been particularly strong for listed property, Australian shares and residential investment property over this period,” the report said.
AdvertisementAdvertisementAt the lower marginal tax rate listed property returned 12.3 per cent annually after tax for the 10 years to December 31 last year. Australian shares returned 11.6 per cent, residential investment property 10.6 per cent, fixed interest 6.7 per cent and cash 3.8 per cent – all well above the average annual rate of inflation of 2.6 per cent.
The news was good for those on the top marginal tax rate, with all asset classes except cash returning more than inflation.
The ASX’s deputy chief executive, Colin Scully, said the study was a useful tool for retail investors. “This report illustrates that diversification and perseverance are necessary for riding out the inevitable rises and falls of the market,” he said.
Intech Investment Consultants senior consultant Andrew Korbel agreed. He said it was important for investors to take a long-term view, to smooth out fluctuations.
Mr Oliver said the sharemarket’s resurgence was driven by booming corporate profits. Over 30 years, he said, shares and property generate similar returns, “but you can often go for periods of five years when one is better than the other.”
Mr Oliver predicted that, with the Reserve Bank maintaining its bias towards raising rates and house prices still overpriced by as much as 20 per cent, the property market would not mount a serious challenge to the sharemarket’s ranking within the next couple of years.
The sharemarket’s volatility this year has seen the number of margin calls increased, but the report found that those willing to borrow to invest have benefited from historically low interest rates over the last 10 years.
“The use of leverage over the past 10 years has increased both the after-tax return of Australian shares and residential investment property,” the report said. The strategy added about 3 per cent to returns.
To say market is booming ! or starting to boom becasue banks are lending money to people more than before has nothing to do or very little to fact that market indeed is booming or recovering.
To give you abit of indsight
Sydney is falt with only few pockets increasing in price.
Qld is flat as it can be.
Sa i firmly holding and few areas are showing increasing growth
Perth is slowly picking up.
YOUR GRETEST ASSET IS THE INFORMATION IN YOUR HEAD AND THE AGE OF THAT INFORMATION!
[biggrin]
Michael,
You say Sydney and Qld are flat, but is anything actually falling? My (Sydney) suburb was down 15% YOY between 2003 and 2004, and I reckon its fallen further in 2005.
Flat prices in real terms still means prices are falling slowly. Whats more telling is the volume of sales, the real indicator of an illiquid market such as property.
nominal terms you mean?
if you put $100 in the bank and 1 year later you have $100, it has fallen in real terms. But it is still $100 and hopefully you have $5 interest to kick in. same as property, except we are talking about rent. so a property that achieves rent in line with inflation rates is not going backwards in value.
gearing is the next consideration of course… but that is the decision of the individual.
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
Speculation boom in south-east: report
By Cameron Houston
May 25, 2005
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*Jones Lang LaSalle’s James Kaufman says Melbourne investors are prepared to accept lower yields in order to unlock opportunities.
Jones Lang LaSalle’s James Kaufman says Melbourne investors are prepared to accept lower yields in order to unlock opportunities.
Photo: Mayu KanamoriDandenong leads the way, with 75,000 sq m under construction.
Melbourne’s thriving industrial market in the south-eastern suburbs has led to a sharp increase in speculative development, according to Colliers International research, with more than 160,000 square metres of new supply in the pipeline.
The research found that in Dandenong alone more than 75,000 sq m of industrial premises were under construction, with 36,681 sq m pre-committed and 40 per cent of the remaining 38,500 sq m already sold off the plan.
Strong tenant demand had also placed upward pressure on capital values and prime rentals, according to the report.
Dandenong rents increased by up to 10 per cent over the past 12 months, with land prices rising from $120-$150 to $150-$170 per sq m.
Further west, in Springvale and Keysborough, land was fetching between $180 and $200 per sq m, up from $150-$170 a year ago, while rents were about $70-75 per sq m.
Colliers International industrial executive Kosta Filinis said the key drivers of the south-eastern market were cheaper base rents, a shortage of available stock and the area’s proximity to major freeways.
AdvertisementAdvertisement“Demand in Dandenong is seriously outstripping supply of buildings and land and this is putting real pressure on rents and land prices,” Mr Filinis said.
He said the boom in construction reflected a growing recognition by developers that demand would sustain speculative development, despite higher land and building costs.
Commercial property agents Jones Lang LaSalle also conducted a review of the south-eastern industrial sector, but arrived at a very different conclusion about the direction of prime rents.
While Colliers claimed rents had risen by 15 to 20 per cent over the past year, JL LaSalle research found industrial rents had remained relatively constant.
JL LaSalle industrial director James Kaufman said rising capital values and a compression of yields had not translated into higher rents.
“Prices are booming because nobody is selling.
“Of the 200,000 sq m absorbed over the first quarter of 2004, 110,000 sq m was in precommitments and not one of these properties was offered for sale as developers and institutions hold onto their assets,” Mr Kaufman said.
Data from CPM Research supported the view that little stock was on the market. Its data revealed the national industrial market had recorded the lowest quarterly turnover since 2001.
The sales figures represented the third consecutive quarterly fall above 30 per cent and resulted in an annualised decline of 20 per cent for the sector.
Mr Kaufman said secondary yields had firmed in the south-east by 50 basis points over the first quarter of 2005, marking a fall of 75 basis points over the past year.
“At the same time, prime yields firmed by about 25 basis points, when most industry analysts believed they had stabilised,” Mr Kaufman said.
While Sydney industrial property was more expensive in dollar terms, Melbourne investors were prepared to accept lower yields in order to unlock opportunities, he said.
Up here in Cairns its still booming, not enough trades available past 2 years and short supply of good land, much of which is selling off plan. This region showing no signs of abatement in new homes but new units over supply. Vacancy rentals for houses under 2.5%.
Some new ones here…
http://www.cairnshomes.infoYesterday the Syd Fin Review, had on its front page, “Property Developers are dumping developments sites “.
Guess they don’t think the dead cat will bounce.
Yesterday the Syd Fin Review, had on its front page, “Property Developers are dumping developments sites”Really? I must pick that up…
Wednesday’s Fin ran this story:
http://afr.com/premium/articles/2005/05/24/1116700707338.htmlWorld property prices on a knife-edge
“World property prices on a knife-edge” reports Corinne Lim. “The private sector is polarised about the global real-estate juggernaut. Bubble or no bubble? Gentle descent or crash? Safe bet or ticking bomb? Most economists have steered clear of disaster scenarios. But the froth in many markets refuses to subside despite the best efforts of policymakers, and some observers are rightly sweaty-palmed about a recent flare-up in speculative activity.”Here’s chart I scanned from the printed version:
http://203.26.51.178/cracker/56061_1.jpg
The LHS of the Australian chart looks very similar to the LHS of the Japanese chart circa 1990.
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