Matt,
Great that you attended my Workshop last weekend, good to see you have taken action. I wasnt aware that it was a wrap deal, but anything is possible in this market.
Please do not misunderstand what I shared in the workshop, the past 50 years in Australia residential property have been proven to double every 7 to 10 years, majority of people with properties in this itme would have seen the growth themselve. However, that means homes increase on average 10% per annum, but this is an average over a number of years, in reality some years may be 5% growth, others 28% growth.
The fact are in 1980 average median home in Melb was $43,000, and in 1987 it was $90,000 (DOUBLED). In 1997 it was $170,000 and then in 2007 it was $402,000 (DOUBLED).
So as mentioned no one can garantee captial growth of how much or how fast, but based on history shows, property does increase in value over time. The key is to get in the market and hold on to it for long term growth.
Jan Somers has been a ver strong investor for over 30 years. She has seen a number of recessions and tough times, however she has aways believed in buying wiht 4 major fators present:
1. Property value
2. Rent
3. Interest Rate
4. Your WageIm glad to hear you are very happy with Shanti's service, we do pride ourselves in our quality of conduct, service and expertise.
Best wishes Matt! I'm sure you'll do very well in any market!
Regards,
Eric
Just to keep the debate going…
FHOG Boost: Staying or going?
http://www.theage.com.au/national/doubt-over-boosted-first-home-buyer-grants-20090423-agt1.html
Let the struggle begin!
Just an extreme case of someone who should not be buying a PPOR at this time, especially if they need the Boost to buy.
http://www.theage.com.au/national/with-one-call-the-pressure-goes-on-20090423-agtg.html
Regards
DanielThanks Eric,
At the moment in Australia the house price to household income ratio is very poor. If I earn $80k today and stretch to get into a $500k home now, who is going to buy it off me in 7-10 years for $1 million, and what will they be earning for the equivalent job? In 7-10 years after that, who will buy it off them for $2 million and what will they be earning?
We need to be very careful looking at "historical data". To me the past 30 years isn't a long enough timeframe to anticipate what may happen in the next 14 years.
At your presentation you said that there was historical data stating that London prices had doubled every 7-10 years for the past 700 years. This is factually incorrect and it is easy to prove it.
Let's say you could have bought your average family home in London for only 2 pounds 700 years ago. Based on only doubling every 10 years, that is 70 periods of 10 years.
The equation is 2^70 = 1,180,591,620,717,410,000,000 pounds. i.e. 1,180 billion billion pounds. There isn't this much money on earth today, to buy that one house.
The easy credit availability of the past 30 years is not going to continue after the current crisis. Unless US money printing, trying to get them out of this mess creates very high inflation rates, it is hard to see prices doubling every 7-10 years any more.
I still see real estate as a good and worthwhile investment, but I don't think the expectations you are setting in your seminars are realistic.
Cheers,
MattMatt,
How long have you invested in property?
Eric
[/quote]
Daniel,
The FHOG most likely go back to $7,000. For the new homes, I believe they will continue that, our economy needs it to sustain housing demand and inject money back into the economy.
Eric
Hi Eric,
I bought my first investment property at 23 in 1999.
Cheers,
MattMatt,
That great, do you still own it?
If so how much is it worth today? Have you made your money?
Eric
Hi Eric,
Purchase 1999 for $135k, positively geared, sold 2005 for $235k. Worth a similar amount now as it was in 2005.
Cheers,
MattMatt,
So you made money in 6 years!
If it was a brand new property.
If it was new, good qoulity and design, either a 2 bedroom apartment or 4 bedroom home, good location, close to schools and shopping centres, public transport, Im sure it would have been ahigher price to buy, yet also worth more as well.
Look at Port Melbourne, Docklands, Toorak etc. Higher pirce growths, vs Craigeburn or Melton etc… lower prices.
Everything is relative, the closer to the city, the more demand hence greater chance of faster growth.
What if you didn't sell? what if you used our strategy and leveraged to buy other property? how many would you own today?
Eiterhway, buy and hold long term is the way to go and prosper!
Eric
I can't imagine what is going to happen…. mini boom during the recession which will certainly follow by buble burst of the property price….
Will be a new chapter in the economics text book.
I would like to speculate that more foreclosure will happen… Plenty of $$$$ is still sitting in the TD…waiting for the moment of truth..
Over the past 50 years in Australia, there have been a number of recesions (state or nationwide) and the property market NEVER CRASHED, it was proven to either hold it value and went sideways for few years, but never dropping to $100,000 or $0!
LONG TERM you cannot go wrong with property.
Eric
Hi Eric!
Super great to hear from you. I bet you are a really super guys who's really great. Great! Love all your ideas – great, super, AMAZING. You must be a really good guy, and great as well . And I bet you'd be great at anything you do. Super.I'm sorry Eric but have you been lobotomised and had the bit removed replaced with a super Tony Robinson happy chip of some kind? Being +ve is one thing, but it sounds a bit fake mate. "I bet you are a great mother" good grief!
Badgers_R_Us wrote:Hi Eric! Super great to hear from you. I bet you are a really super guys who's really great. Great! Love all your ideas – great, super, AMAZING. You must be a really good guy, and great as well . And I bet you'd be great at anything you do. Super.I'm sorry Eric but have you been lobotomised and had the bit removed replaced with a super Tony Robinson happy chip of some kind? Being +ve is one thing, but it sounds a bit fake mate. "I bet you are a great mother" good grief!
Yeah, I rolled my eyes at that one and I'm the great mother. Flattery will get you nowhere….
The first half of your post, Badger, had me checking to see how many posts you had made and wether you might be another screen name of the same person. I'm starting to feel like this thread belongs on Hi Five. Actually, I'm also being reminded of that movie "The Castle", where despite all the very ordinary circumstances, that family was insanely happy. Good on them. Felt like bashing someone the whole length of the movie….This is the GREATEST EVER GLOBAL FINANCIAL CRISIS in history (new chapter in the textbook)….. even worse than GREAT DEPRESSION….
Keen to see the property price being tested again….. as there is no historical data to compareHi new to this forum
I agree with God_of_money..
"This is the GREATEST EVER GLOBAL FINANCIAL CRISIS in history (new chapter in the textbook)….. even worse than GREAT DEPRESSION…."
No historic data is relevant to this current situation.
Dave
with regard to the talk about falling property prices,
to get back to basics, what is the driving force in falling prices?. We hear people saying they will fall 30 %. Where is the nuts and bolts calculations to show this prediction is anything more than a wild guess. While rates are low and there is at least some demand for housing in our capital cities what will be the real cause of a price drop?. Are there really going to be enough property owners in such a desperate situation where they will have to sell at below cost to survive. Obviously some are in this position (myself included with a recent development). Many in the development business are in this basket but is that enough to cause a collapse in existing house prices. Prices in discretionary areas such as holiday spots and high end stock have copped it but do these make up enough of the sale turnover to effect the bulk of the market?Im not saying things are not tough at the moment, but there seems to be alot of extreme predictions being thrown around im just after a little bit of old fashioned maths to back it up. I know the figures aren’t everything, fear and sentiment are a major problem at the moment but i feel this will reduce over the next six months.
The availability of credit will be the key consideration.
What happens if banks only lend 3 times your income as has been the case historically and require you to have saved a 20% deposit and actually prove your income to repay it? How much can people then afford to pay for a property with the new criteria? What would that do to house prices?
We are already seeing moves in that direction from the banks.
Westpac have announced that they are looking for $2 in deposits for every $1 lent out, to significantly lower their reliance on international funds . This means that to give me a $300,000 home loan (my current borrowing capacity is well over twice this amount), they need to have a number of other people deposit $600,000. Staff targets are being set in accordance with this strategy in mind. When the major lenders don't want to lend to everyone, and only the select few that are the very best credit risks, we will see tighter and tighter conditions on lending.
I am discussing with a couple to get them into a wrap loan at the moment. They have a combined income in excess of $150k and stable jobs, are eligible for a $26k new home grant and want to buy a house for around $380k, only 2.5 times their income. None of the banks will loan to them as they can't come up with their own saved deposit while paying off a $10k personal loan and a small car loan. They are easily able to service the costs of the mortgage.
Personally I am looking for property prices to be flat over the next few years given my investment strategy, but there are no guarantees in the current environment.
It has already bitten the commercial properties across the Australia… the major property fund i.e. GPT/Wesfield/Stockland have been bitten by global financial crisis…. It will haunt the residential properties…. I guess that Rudd Bank will be able to clear the mess…. with total liability of 200 billion and increasing….
Badgers_R_Us wrote:Hi Eric! Super great to hear from you. I bet you are a really super guys who's really great. Great! Love all your ideas – great, super, AMAZING. You must be a really good guy, and great as well . And I bet you'd be great at anything you do. Super.I'm sorry Eric but have you been lobotomised and had the bit removed replaced with a super Tony Robinson happy chip of some kind? Being +ve is one thing, but it sounds a bit fake mate. "I bet you are a great mother" good grief!
hahahhaha funny shit its a bit excessive
anyway i hope that property prices continue to climb steadily.. i would be happy with a 4-5% increase per year on average for the next 7 years. my main concern with property right now is the argument someone else made on this post regarding the average income vs median house price. how long can people realistically affortd to buy property if the growth rate of property is at hugely rapid rate which they can’t support with their income which grows at a lower level? to me this is the biggest issue.
the other fundamental ideas make sense – the high levels of immigration comparative to the limited supply should boost prices and people always need a place to live. also, either rents will go up, or there will be capital appreciation.
The more articles we see like this where the government is legislating banks must assist those that can't afford payments, the tighter lending criteria will get.
I doubt the government has any idea that they are actually limiting who the banks can now lend to further. Cashflow is king at the moment and legislation like this kills cashflow for the banks.
http://www.smh.com.au/national/overhaul-brings-relief-for-mortgage-holders-20090427-ajl3.html
An overhaul of consumer credit rules to be announced today will make it easier for people who lose their job to envoke a "hardship" clause to seek relief from demands to meet mortgage and other loan replayments.
As the Treasurer, Wayne Swan, warned that unemployment "will certainly go up", the Federal Government is moving to ease the stress on home buyers who find themselves unable to meet mortgage repayments.
The Minister for Corporate Law, Nick Sherry, will announce an increase in the threshold for people to qualify for financial hardship from $312,400 to $500,000.
Senator Sherry said the change was aimed at helping people to keep their home even if they lost their job.
People will be able to apply to their bank or financial institution to negotiate a way to cope. It might include extending the term of the loan to lower repayments or a repayment holiday.
"If homeowners find themselves in financial hardship they will be able to request help," Senator Sherry said.
"Front and centre of our national consumer credit protection regime will be a deramatic increase in the monetary thresholds under which consumers can get help if they are struggling with a mortgage."
"Many families may be missing out on the help these hardship provisions can provide – help that may keep people in their homes during challenging economic times."
The hardship scheme also applies to people who become ill and covers credit cards and personal loans.
The four main banks have signed up to the scheme.
The National Consumer Protection Act is expected to begin on November 1 and will also set down rules for the disclosure of fees and charges for financial products and streamline rules for credit cards and payday lending.
Banks and other lenders will be required to sign up to responsible lending provisions.
Super great to hear from you. I bet you are a really super guys who's really great. Great! Love all your ideas – great, super, AMAZING. You must be a really good guy, and great as well 
. And I bet you'd be great at anything you do. Super.
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