What do people expect our prices can do in OZ now ?
l know soemone who paid 28,000 19 yrs ago and sold for 350 last yr , 12 times increase over 19 yrs .
Someone else payed 85,000 4yrs ago and sold for 320 a few mths ago , almost 4 times more .
My question is how does a now $350,000 dollar house go up 12 times in the next 20 yrs , it would be a 3 bd /wb in the suburbs costing 4.2 million bucks . lt’s impossible for it to go far at all surely because it’s already so over priced in OZ now wouldn’t you say ?
To me that could never happen again unless our house prices drop way down again would that be right ?
Cheers.
MkcWhy couldn’t it happen again.
I bought my first house for about $18K about 25 years ago. That house would be worth probably $450K now. I have been around for at least three price “booms”. (or property cycles). Each time, people are amazed at the price houses had reached.
I worked with a 20 year old who bought three IPs, each about $20K (25 years ago). He budgeted really tightly. Most thought he was mad (not me, I was doing similar, but only one at a time). He would be laughing now. I reckon he would be a millionaire several times over by now.
Each time prices go up, everyone says “how can that be”. It just is. Don’t forget wages are going up too. I certainly think my sons could afford a small house at the same age I bought my first one. I personally believe one of the problems is that he wouldn’t want to live in the same “small” house. He’d want everything NOW, while we’ve worked years and gone without, in order to afford some extras..
For what it is worth, I know prices have fallen slightly in my local area, and I think they will now stay flat for several years before again starting the slow rise. We have just bought again because we are “buy and hold” types and don’t care that prices will be flat for a long time as long as someone is helping us pay them off.
I remember quite clearly when I was about 17, my parents went for a ten week Europe trip. They advised some Scottish people they B&B’d with that they could sell their house and buy two houses in Brisbane for the same price. They had just sold a house for $29K. In the time they were away, the market had a steep rise and they could have sold it for $50K by the time they got back. They had to very quickly phone these people and tell them not to sell until we could get some up-to-date real estate magazines to them because prices had risen literally within that three month period.
So it has happened many times before, and I have no doubt it will happen again. I would not like to be buying my first house today, but then again, that is exactly what my parents said when I was buying my first house.
Just my thoughts, and I am sure there will be many differing opinions posted about this topic.
Wylie.
My girlfriend’s daughter & husband have just bought a house in Grenich(?) Village America and paid $US5M, which is evidently just entry level. They don’t ever expect to own the houses, just hand them on to their children. I guess that is the way we will go here given time.
Fern
Well located proeprties have doubled in value every 7 to 10 years for the last 45 years and there is little evidence to suggest this won’t continue.
The cover storey of December Australian Property Investor (to which I contributed) discusses this exact topic, with facts and figures
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.PropertyUpdate.com.auThanks Wylie .
That 20 yr old would be one happy boy now . Always wished l did that . Had the money then to .
l’m thinking though yes sure they will rise , they always will l guess in between ups and downs but it would surely be impossible to see that 5 or 10 times rise ever again . l can’t believe what people are paying now for a w/b in the suburbs of say Sydney or something , 6-700,000 bucks . Tell ya what l’d want alot more property than that for that money .
Gee Fernfurn , that must have been one hell of a house for 5 m , l was under the impression average house prices in US were very cheap . You see all these places for 40 -50 60 grand on the net .
Personally l think the over priced property in OZ will keep dropping for a few yrs , a good 20% further yet but the cheaper property will rise .
Have seen some l’ve been following , blocks and what have you that were $250 drop to $170 – $160 and some houses l’ve kept an eye on have dropped 30% and still aren’t selling .
Thanks for imput.
MkcJust a comment about US prices. We have just been to San Francisco and LA. Didn’t look at any real estate but took a guided tour of the sites of San Fran and the bus driver said the average price of houses there was $1.3m (that’s US dollars). I don’t know how accurate he was but it was food for thought.
Interestingly, we stopped at a beach and I asked how much the new looking houses right opposite the ocean would be worth. He said about $900K. I asked him why so cheap right on the ocean and said on the Gold Coast they would be worth millions. He said the fog rolls in every afternoon for most of the year. I suppose that is why beachfront in that spot was worth less than here.
He said in San Fran houses are painted about every three years because of the effect the fog has on the houses (and the famous bridge).
Now we are home I plan to have a look at the net for prices just for interest sake. We did pick up a real estate book which I have yet to have a decent look at because since we got back we have been renovating (busy, busy, busy). The real estate I did glance at in the book was pretty expensive though.
We happened on an open house in Santa Monica in a street leading to the famous beach. It was a beautiful ultra-modern brand new house and was on the market for just under $4m. Same house would sell on Hedges Avenue for more but in trendy parts of Brisbane for (I guess) between $1 and $2m. I’m glad I don’t have to buy a “nice” house in LA.
The other thing I was pleased to see was during a tour through a very upmarket area where the movie moguls live and each house had a little dinner plate size plaque in the lawn advertising the security firm who monitor their property. One of these houses was undergoing a renovation and had the whole front of the double story house covered in the thick plastic like we see in the movies (Lethal Weapon comes to mind) and which I have never seen in Brisbane. I used to wonder if that was just in the movies or whether the plastic really is used, and I have now seen it with my very own eyes. How interesting.
It was an tantalizing little snapshot which has piqued my interest. I love looking at other people’s houses.
Wylie.
Greenwich Village is the yuppyville of NYC between downtown CBD and midtown – Broadway, Times Square..etc.. I reckon Manhattan must be the most expensive piece of dirt anywhere in the world – and the river/harbour doesn’t even look that nice. Heres an extract I cut out re John Jacob Astor. I think he was worth $40M at his death in 1848, worlds richest man in America then:
…Before long Astor was operating on his own account and prospered at once. He began putting his profits into Manhattan real estate, investing nearly $7,000, a large sum of money in those days, between 1789 and 1791. Astor’s strategy was to buy, very cheaply, land that lay far beyond the developed area of the city and then to wait for the city’s rapid growth to reach his lots. In 1803, for instance, he paid $25,000 for seventy acres located more than an hour’s ride north of what were then the city’s physical limits. By the 1870s the land was worth $20 million to the Astor family. Today the area is known as Times Square.
From my calcs, that piece of dirt has doubled every 7 years. But
70 acres in Mid town – that is mind boggling. I don’t even want to work out how much that is some 130 years later. Puts the Trump and Rockefallas of the world to shame.Wylie… just out of curiousity, what was your wage when you bought your first house? CPI accounts for alot too…. $25k was probably more like $200k is for us now… wages were lower too…
20 years ago it was only 10c to go accross the harbour bridge…!Hi ecatt.
I started work at 16 on about $3,500 per annum. I don’t remember what I was being paid when I bought my first house (aged 23) but it was possibly around $14K pa. That would put my first very modest house at 3.5 times my salary. (My memory on all this is a bit hazy – I wish I had better records.)
Eventual ownership seemed a long, long way away. The thing I do remember well is that once those monthly payments commenced, I never had anything much left over for anything remotely luxurious.
Hope this helps, Wylie.
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