I have an opion on rising property prices and why they will continue to grow at rapid rates for a long time to come. Although I would like to say your right foundation and I have been waiting for a crash for 3 years fingers crossed it comes soon.
One word SUPERANNUATION 600 million dollars a week that has to be invested into something property , shares , gold , oil whatever this money has to go some were . I cant write a thesis on the way I work this out it would take me a week to write it but in a nut shell the only reason I can see that the market has not already crashed is super it is a form of saving.
However this will not last they can not keep going the way they are going we are headed for a ecconomy disaster but will it be in 5 10 20 30 50 years I dont know seems the world is geting smarter at robing peter to pay paul but crunch time has to come.
Wish I was faster on the computer would be able to explain in detail.
Kind regards Rick
PS foundation that was a fantastic read
We buy properties cash fast settlements no fees no fuss. contact me on 0408 355568
[email protected]Originally posted by lifeX:I retracted some of my last post as I was disrespectfully rambling on , and had way too many wineroonies, at the time.
You needn’t have! We have a variety of opinions here, and a variety of ways of expressing them. I found your’s amusing – I can and do take the peas out of myself regularly, so you’re really just saving me the hassle! [grin]
Originally posted by elkam:
[br}I am also very interested in the answer to Dazzlings question a few posts back.
[
“What’s the next step chief ?? Where exactly does one plonk one’s hard earned ?? “Thanks again [smiling]
ElkaHi Elka,
Here’s where I tread carefully. Every investment carries some risk, and I’d hate to ever find I’d encouraged even a sole person to lose money on a poor investment. I can only speak of my own plans, and urge others to do their own research. Just make sure this research is not based on the false assurances of others, and do not underprice risk.So as you mentioned, I’m planning to sell my beach-house, my current PPOR. It’s done well by me over the last couple of years, via land appreciation, and with the little house I had built it should nett me around $100k. I know, peanuts to many, but this represents about 2.5 years of post-tax earnings to me, and frees up my original capital to the tune of another 3 years. Effectively, I can invest this at inflation rates, and retire 5.5 years early, with the only sacrifice being a lifestyle one – the loss of my holiday house. But I think I can do better than that.
I still have a few bits & pieces to finish – fences, gardens and painting mainly, so the plan is to have it ready for sale over the summer holidays when the population trebles.
So where to park the loot? Well, I’ll have to set aside $5,000 as escrow for my bet with Mr. Yardney that median house prices in Melbourne will not be above $736,000 in 2013. I’ll also be backing my bet that higher interest rates are coming by keeping a chunk of cash in a high-interest savings account. Imagine if I could get 8% gross or 6% nett in a couple of years… I’ll back my bet that the RBA will lean towards higher inflation (trying to clandestinely inflate away our debt problem without crashing assets) by purchasing a pile of extra gold sovereigns and maple-leafs. I’ll keep an eye on the numbers out of the RBA / ABS, the gold price (particularly over the next 4-5 months) and the AU/US exchange to judge the effectiveness of this strategy and decide what level of additional exposure to take. I’ll buy a few select share parcels (‘buying the market’ or even a blue-chip basket definitely look like poor plays at present).
I’ll waste a bit. I’ll need to build a new shed/workshop at the other house. Maybe a scooter (fine, laugh, whatever, I’m not a proud man!) for cheap commuting around town, and it looks like an O/S holiday is on the cards next year.
But here’s the credibility-destroyingly-funny bit; I recently stumbled across the most amazing block of vacant land – a real ‘one of a kind’ for a rock-bottom price. More than this I will not say, as I’m already fairly paranoid that I’ll lose it if another party shows interest (although I have my eye on another almost as good). But yep, I may well be buying a bit more dirt.
Oh dear. That should bring out some confused faces…
F.[cowboy2]
Hello Foundation
No, no confused face here. [smiling] I also have a love affair with property that I find hard to resist, logic not withstanding.
Even though some of these questions are more suited to the frolic section, I will put my head on the block and ask anyway.
Why gold? I mean when we (the world) are off the gold standard right, so why is gold still a hedge against a devaluing currency. Put another way, I guess, what infuences the price of gold and why.
What are maple leaves? Canadian curency? Ok, Ok, laugh. It’s healthy. [upsidedown]
An even more basic question I have is how do governments decide how much money they can print/mint now. In the old days under the gold standard it seems to have been easy. More gold in the depository = more money on the street. But now?
I don’t understand the attraction of getting 6% net interest if it goes hand in hand with higher inflation. Surely that defeats the point. What am I missing. [blush2]
Ok that’s enough amusement for now.
More stupid questions will follow.Told you economics was not my strong point. [smiling]
Thanks
ElkaOriginally posted by lifeX:[eh][freak][mad][lmao][thumbsupanim]
TONY WJB, may i cal you wazza. I read your posts and thought “GEE , this guy seems down to earth.”
Then, I found out you were a sparky…. you lazy SOB!”
I’m an electrician too…. and hence disregarded everything you spat out your gab. You are over paid.[mad]
[
][thumbsupanim][smash]
Live, Learn and GrowLifexperience
Hi lifex ,
lol with the comments as i finish off my 2nd bottle of red for the night. Warramate Yarra Valley Cab Merlot 2003 …good grape.
Foundation,
i am interested in your theory particularly are intigued by your thoughts on the maples (gold leafs). The transfer back to gold is a security blanket that has occured through history to protect money in a volatile market. My semi pi..ed state encourages my argumentative voice.
We are now in the 21st century , plastic cards , instant gratification. Do you think that any of this will change your vision? Also comparing the Aussie market to offshore , USA, UK and Asia , i believe we are so far from a major blow out in pricing. Comparative to Hong Kong, London , NY , Singapore , Austaralia is cheap and a far more beautiful place(bias opinion).
Also Rikky made a great point in regards to super money , this country is flush with money . It has become such an issue. This is the exact reason yields are so low. Comercial properties selling for 3-5% is crazy. Many super funds now have the cross hairs focused on residential property . Babcock Brown,SAITeys etc are about to launch “products ” to absorb resi property, this will only drive up the property market again , (with false growth ~ dangerous). But is gold the answer??????[grad]
Wholesale Property Brokers
http://www.wpb.com.au
Australia*Hong Kong*Singapore*India*MalaysiaOriginally posted by elkam:Why gold?
[blush2]
Primarily because I am a gold-bug. Around 4 years ago, I started reading Austrian economic theory, and found that many commentators who held Austrian beliefs were also gold-bugs. Some were predicting an imminent boom in the gold price. Pleased to be able to combine my gold-lust with investing, I bought a small(ish) collection of coins to test the waters…I guess I’ve always been fascinated by gold. The romance of gold and gold-rush, which remains one of Australia’s largest sources of post European settlement history. Victoria’s National Parks and State forests are full of mines, artifacts, trade-routes (the Wonnangatta trail is brilliant) etc. Then there’s the physical attraction – sparkly and ever-shiny, heavy beyond belief. Anyhoo…
Gold will be a small (10-15%) proportion of my reallocation of capital…
I mean when we (the world) are off the gold standard right, so why is gold still a hedge against a devaluing currency. Put another way, I guess, what infuences the price of gold and why.Supply & demand. The devaluation of the currency results from expansion of money. An expanding money supply versus relatively stable demand for a fixed-quantity asset (gold), means more dollars demanding gold assets = higher gold price (in dollars). If people see the dollar value of gold rising, demand increases. If people also see the value of their dollars declining, gold demand tends to increase. Of course there is nothing to stop a bubble developing in the gold price, but I think we’re a long way from there.
What are maple leaves?Widely accepted and traded high-quality gold ‘coins’ minted in Canada. They are available relatively close to the spot price. And pretty. Not as nice as some of the Mongolian bullion coins though.
An even more basic question I have is how do governments decide how much money they can print/mint now.Darned if I know. But actual physical money creation is a minute proportion of broad money creation, which occurs primarily through debt.
I don’t understand the attraction of getting 6% net interest if it goes hand in hand with higher inflation.You’re right, it’s not necessarily making money, just treading water. But compared with another option that may decline initially then inflate at well-below 6% per annum (my expectations for the beach-house), it’s fairly attractive! And I can ignore the inflation & taxation and tell people that my investment is doubling in value every 9 years! Maybe even write a book or hold seminars on how I did it… [biggrin]
Told you economics was not my strong point. [smiling]Well you lied! It’s all relative. I’m out of my depth with most anyone who’s had an economics education, even as part of an MBA. But a huge majority of the population have such a limited understanding that they can’t even comprehend that the value of money is relative to prices… I think you’re at a great advantage!
Originally posted by tony wpb:We are now in the 21st century , plastic cards , instant gratification. Do you think that any of this will change your vision?
It’s certainly enabled & encouraged us to spend more and save less, but I don’t think that any amount of lax or creative lending will stop an eventual crunch. Debts will have to be repaid.
Something that worries me is that with our current negative savings level, we as a country are spending some 3% more than we earn per year. Doesn’t sound like much, but even lowering the level of spending to match our earnings is likely to be a large enough drop in spending to precipitate recession. Repayment of debt will be worse.Also comparing the Aussie market to offshore , USA, UK and Asia , i believe we are so far from a major blow out in pricing. Comparative to Hong Kong, London , NY , Singapore , Austaralia is cheapDo you not think there is a some degree of danger in comparing prices between Aus and other countries who are equally involved in rapid accumulation of debt / devaluation of currency?
Especially if they have shown recent price instability, such as rapid real-estate inflation in excess of general price inflation? Does this demonstrated instability increase or decrease the potential for downside-risks (eg rapid nominal deflation or sustained real deflation in prices)?Do you think there is some merit in using a yield/purchase price comparison such as Demographia rather than absolute values? Yes, London is expensive, but yields >6% are still available in some parts. City wages are also sky-high, compared to here. The other areas you mention… well, I imagine you know them far better than I!
… and a far more beautiful place(bias opinion).No arguments here!
Also Rikky made a great point in regards to super money , this country is flush with money . It has become such an issue. This is the exact reason yields are so low.Part of the reason. Compulsory super contributions are contributing around 35 billion dollars per annum (as a guess) to various assets and investments. Private debt is contributing around 100 billion dollars per annum. Another part of the reason is the willingness of foreign countries to lend money to us at such low yields.
super funds now have the cross hairs focused on residential property . Babcock Brown,SAITeys etc are about to launch “products ” to absorb resi property, this will only drive up the property market again , (with false growth ~ dangerous).I have no idea about this. Are they able to gear, or are they governed by the same rules as SMSFs? Surely with cash yielding around 6%, this would limit the attractiveness of residential investment at lower yields? It’s certainly an interesting consideration though.
But is gold the answer??????Maybe, maybe not. But it sure makes pretty trinkets. Plus the ATO don’t seem to chase CGT when its bought and sold on ebay…[ohno][whistle]
F.[cowboy2]
Thanks F for enunciating your practical plans (theory was fantastic but the translation into practical investing actions is always the tricky bit.
Good luck with your practical choices in investing.
I think I’ll stick with the “property doubles every 7 years” camp, which I know you disagree with vehemently.
Trouble is, over here in Perth that camp has been doing backflips every 3 years, not 7…..and really when you are up to your eyeballs in debt, it only takes 3 years for the mire to be down at shin level again.
Jumping into mire back up to your eyeballs in deeper waters seemed like a good thing to do, as I wrote 2 years ago, glad I did.
F the superannuation companys will invest in property they look at the big picture if they get 4-5% yeild but also think they will get say 10% growth they are still in a win win situation. Super companys can just create there own market , buy propertys with your money today 30 years later buy the same property off little johny down the road at constent strong growth , they will eventyally own everthing , Its the fastest saving machine in the world , they can drive there own prices up causeing a false return , like I said before the world is getting smarter at robbing peter to pay paul. Crunch time will come but when???????
We buy properties cash fast settlements no fees no fuss. contact me on 0408 355568
[email protected]
][thumbsupanim]
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