Thanks wealth, yep the 1980s “when you could have floated a school bus on the ASX” (quote GB Nathan merchant banker).
Photocopier salesmen driving New Ferraris and living in Mosman (went broke in around 1991) for a few brief years reality just went on hold.
and I agree around 2010-2015 the baby boomers contracting their expenditure as they face shortfalls in retrirement savings will have an effect. What effect is the big question.
And all of that it’s interesting that while on my last visit to QLD last week there is a drastic shortage of regrisrered land which is pushing prices up and they are talking a mini boom again in the sunny state up north … any body in a buying mood?
D
Don’t let doom & gloom get to you. We lived through 18.5% interest rates and bought 3 properties in one year during that time. (It wasn’t easy but we pulled through & have since nearly tripled our money).People are like sheep, if they are told about a suburb about to boom it will, because people go out and buy in the area and make it boom. You can also make something of an area by your wise buying. Do your homework through the internet, have a strategy in mind, pound the pavements and don’t be put off by negativity, prove them wrong. If you are cashed up you can make plenty of great deals in down times. Find out how long a place has been on the market and how much they paid for it, this gives you leverage. For people in the Illawarra, Canberra, Southern Highlands & Southern Tableland areas of NSW, a great website for free information of theis type is http://www.allhomes.com.au. Every investor has a different strategy, you may need to experiment to find out what suits you. Remember too that borrowing money to make money is not bad debt.[rolleyesanim]
KateOriginally posted by gmh454:Foundation may be able to help me here but there was a significant Russian economist in the early 1920s who came up with cycles within cycles and charted them not back to the 19th Cent but the early 18th Cent.
http://en.wikipedia.org/wiki/Kondratiev_waves
gmh is this what you’re referring to?
Yes it is, thank you.
Interest rates are to go up or that is the prediction, so assuming that they do this would mean that property prices will fall as people that are over committed will be forced to sell.
If these rates continue to increase towards the end of the year then the average mun and dad must be packing death, oh well why not put it on the credit card …
D
Hi to all
I attended a seminar recently for a prominent property developer/investorgroup and they offered us the following advice in regards to the property cycle and where we are at the present
Uptrend Brisbane,Melbourne
at peak West Australia , Darwin
Down trend Canberra,Adelaide
at the bottom Sydney
They beleive we can expect another property surge in late 2007/2008 and then we should not expect to see another growth phase for a substantial period.
As we well know the media is very good at being pesimistic with the market which means more options for the savy investorsPaul Meese
Onyx Finance
[email protected]
0412 850 820Yes Paul i agree,
On another note a very respected mentor of mine who has been in the game for many years (he is 65) believes in his opinion the we won’t see another boom in Australia for 10/15 years but rather steady growth cycles instead.
D
Originally posted by paulmeese:at the bottom Sydney
They beleive we can expect another property surge in late 2007/2008 and then we should not expect to see another growth phase for a substantial period.
As we well know the media is very good at being pesimistic with the market which means more options for the savy investorsSydney at the bottom ????? You are kidding right ??
Sydney has slumped while interest rates at sub 7% are at 30 yr market lows. Now they are on the move. 1/4 next week, 1/4 in Nov
and probaly 1/4 in Feb – Mar.That is .75% added to 1/2% already since the peak. Now that is 1 1/4% on 6% or a increase of 20% in total interest cost.
“That’s gotta hurt …as george would say..”
Still reckon there will be more to come.
Now I know a lot of us smuggly sit there on our 5 yr fixed rate.
the problem is a buyer next year cannot fix at our current rate, and will be the one hurting and prices will go down..
Sydney at the bottom ????? Don’t think so.
And as for a surge during rising interest rates in 2007/2008 on a market already giving uncommercial returns… I can’t wait…
I’m with GMH on this one,
Lets look at some of the problems,
Renos; this is a great strategy and is not new, however there must be a BUYER willing to pay what u want at the end of the project, so you must either purchase extreemly well or produce some amazing wow factor.
DIY developer; this is a favoutite strategy of Metropole however i hear through reading articles that many of their customers are have cash flow issues. I believe that Metropole do a great jub however this is the market when all the theories are put to the test.
If the mood in the MARKET is of fear then good luck, the people to prosper are the savy who have been through this cycle before and have experience. Credit card debt has hit a new high, petrol prices will go higher and interest rates will get to 8% very soon.
On the positive side if you have no credit card debt, a good job, no car leases, and eqiuty in assets then the bargins are coming for sure.. Perth is at its peak and QLD is softening and Sydney is challenging from many angles.
Peter Costello was very careful what he said last night on TV but the 4 concerning factors in the market is 1. credit card and interest free debt 2. petrol prices 3. 80% + borrowings on PPOR and 4. rising interest rates.
Go and buy the new book out 101 ways to get rich quicker – number 101 is “heed the roar of the distant drumbs” work it out for yourself, very interesting times ahead good and bad.
D
Originally posted by wealth4life.com:QLD is softening.
This is a very broad statement, as is any other statement on a whole state’s economy. Some of my IP’s are still booming while others have slowed. I have also had predictions of suburbs with an estimated 16%+ capital growth per annum over the next 5 years.
Remember that each city/town has it’s own market and different suburbs move differently also.
It’s not all doom and gloom, but if you are worried about it, then make your current situation better eg. reduce debt, restructure (you know the stuff).
CATA
Asset Protection Specialist
[email protected]I am only a beginner in the investment game.
However, I don’t think it is positive to just believe the bright side. That’s blind and dangerous. All investment can go up and down in a cycle. The only difference is time in and size of the cycle.
From history, the crowd and majority are usually wrong at the turning point in investment. That may explain why over 90% of people are losing.
Currently, many people refuse to believe that the market can crash, even inflation and interest rates are moving up. They choose to believe the market can only go flatten and that’s the worst. This actually remind me those disasters in the past. Moms and dads were crazy in and winning from stock market. I am not sure how crazy are moms and dads currently in property and share markets. But, I agree with Steve’s latest newsletter that we should get ourselves prepared for the worst to come.
In fact, I wish to the worst to come because the worst is the only sign for the end of current boom and beginning of next boom. Wealth is usually created most at the beginning of a cycle. That’s positive.
I hope I have not annoyed too many people. [tongue]
Regards,
FrancisHi All, been ahwile since ive posted.
Ok, so what if the interest rates rise and the property market softens or bursts.
1. Housing becomes cheaper
2. Rents riseWhich means the following for exisitng investors:
1. LVR increases
But this doesnt matter if you have a semi-secure income to manage the debt.
2. Yield increases
As more people decide to stay renting and investors pass on interest costs through rents.
3. More CF+ properties coming onto the market.
There is an upside and downside, yes, the growth will reduce, but the yield will improve.
After recent valuations, I’m cashed up ready for the bargains
Cheers,
Damon
In theory, there is no difference between practice and theory, in practice, there is….
Originally posted by kinkso0o0o:Ok, so what if the interest rates rise and the property market softens or bursts.
2. Rents rise
Damon
Damon I will ask you WHY.
Have asked that on this site before, without answer.
Why will rents rise in a slump, …
Building industry slides…
people stop spending…negative wealth effect
higher unemployment
uncertainty about jobsBUT rents rise
Your rationale please.
Originally posted by gmh454:Originally posted by kinkso0o0o:Ok, so what if the interest rates rise and the property market softens or bursts.
2. Rents rise
Damon
Damon I will ask you WHY.
Have asked that on this site before, without answer.
Why will rents rise in a slump, …
Building industry slides…
people stop spending…negative wealth effect
higher unemployment
uncertainty about jobsBUT rents rise
Your rationale please.
Supply and Demand.
If what you say actually happens then less people will want or be able to buy their own houses. This will increase the demand for more rental properties as more and more people decide not to buy their own home and rent instead, as its cheaper.
In addition to this, interest rates are increasing and some investors will be forced to pass on the extra expense to the tenant.
Maybe I should have said yield increases rather than rents, but all the same from my research both will happen.
Cheers,
Damon
In theory, there is no difference between practice and theory, in practice, there is….
Damon okay, if the rise does not lead to
increased unemployment
decreased consumptionthen you may be right
As to ….”investors have to pass on the increased cost” I thought supply and demand would make such a possiblity irrelevant.
What has a landlords problems got to do with renter A and B outbidding each other for house C.Damon have you seen this in practice yet …
Originally posted by gmh454:Damon okay, if the rise does not lead to
increased unemployment
decreased consumptionthen you may be right
As to ….”investors have to pass on the increased cost” I thought supply and demand would make such a possiblity irrelevant.
What has a landlords problems got to do with renter A and B outbidding each other for house C.Damon have you seen this in practice yet …
Yes, ive seen this in practice in my target areas, so im basing my view on what Ive seen in these areas over the last 23 months.
Less and less people have purchased in these areas due to property getting too expensive or out of reach combined with the media doom and gloom stories. The % of rental property available has reduced a massive amount and in turn I have seen rents increase 10-15%.
Yeild has increased due to property prices dropping and I have seen this across the board from my researched areas.
As for landlords passing on costs of ownership, this is just another factor on top of the supply/demand law which I believe will increase rents.
All this is based on my research in my target areas. tbh, I dont care what the national figures are, their impact doesnt alot when you invest in markets within markets, yes, they need to be considered however they are not the be all and end all.
If you want to be “right” on your POV, I can guarentee you will be in some areas, in others I believe you will be wrong. The challenge is the finding them.
I enjoy the conversation, as a young investor it keeps me re-evaluating and adjusting my plan as needed. Thanks.
Cheers,
Damon
In theory, there is no difference between practice and theory, in practice, there is….
Thanks for the reply Damon appreciate your time.
Interesting times ahead, more so I think with the economy rather than property.
Originally posted by gmh454:Thanks for the reply Damon appreciate your time.
Interesting times ahead, more so I think with the economy rather than property.
No problem gmh, its always good value to discuss these issues in an open forum where views can be challenged. It keeps us honest whether we like it or not
One thing I forgot to mention. I was talking to our PM the other day about rental stock and she mentioned she had 90 applications for a standard 3 bedroom house! :o .
Cheers
Damon
In theory, there is no difference between practice and theory, in practice, there is….
I like the way you think Damon.
I bought a property in a little West Australian town 2 and a half years ago because the price hadn’t moved for 13 years and I couldn’t see how prices could stay so low for much longer, given you could get a 10% grose rental return at the time.
When I picked up the local paper there were 3 rental properies avilable.
When I told the real estate agent that I expected prices to go up at 20% per year for 3 years he laughed at me.Now I’m selling because I can’t see that it can go much higher if rental return is 3% and building is going on at a hectic pace around it’s perimeter.
I don’t believe in cycles.
Things happen for a reason..
sometimes that reason is people folowing the heard and thinking that this growth or this downturn will last forever.
That’s not a good reason
I have no sympathy for people who mortgage themseves to the max in boom.
I did it once and it hurt like hell, but I learned so much it was worth it.
asabove
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