Property prospects.

[Former]

I have a couple of acquaintances in the Brisbane market who are now scaling back their activities. At the moment the prices for renovated and unrenovated properties are so close as to be meaningless. New inner-city apartments are going up at a frightening pace.

When a high-set renovated house sells at auction for only $20k more than a similar low-set unrenovated house on the same street you know someone is losing money.

They say the profits of even 8 months ago are no longer there. These are people who would buy houses and sell them on at 10%-30% profit just days or even hours after the original purchase settled.

Right now we are looking at flats outside the 8 to 10k radius, near a Uni or hospital. Even then the return is pretty small.

The Sunshine Coast out through to Maleny is looking like a good spot too.

What's going on in your city?

 

[Steve76]

sydney

Hard to find anything here that isn't ridiculously overpriced - unless you want to live in the sticks and commute 2-3 hrs each day to work !!!

Having said that, with the new Chatswood/Parra rail link being developed, the north ryde/macquarie area is prob a bit of value compared to what it will be when the rail link is finished - i think 5yrs to go though. Still expensive though....


I always feel when you start paying $500K + for units in suburbia that are otherwise unremarkable.....its a lot of cash for the air between the walls !! There are a lot of people in Sydney who are mortgaged to the hilt to "buy the Australian dream" or the "surefire, can't lose investment" - a bout of unemployment/rate rises will leave some people very exposed. And they wonder why the birth rate slows and people don't have kids till they are 40 here - hardly anyone ever leaves work once they have kids, the mortgage costs force them back to work.

 

[Westy_Boy]

Originally posted by Groves
What's going on in your city?

Vacancy rate in the CBD and surrounding suburbs: 8.7%

Typical yield: 1.5%, and will continue to fall.

New apartments/units on the horizon: 15,000+

Expected returns on capital: Low to negative.

People who've leveraged to the hilt, sometimes on two, three, four properties: '000s


In other words - never looked better!

 

[Steve76]

I often shake my head at work at people who are always going on about their investment properties and how they are "guaranteed" to make money.

They all by the lies that current affairs programs and the lifestylke shows feed us that you just "have" to get into the property market.

 

[Former]

You SHOULD get into the property market at some stage, but buying on the word of Ray Martin is a sure sign you are in at the wrong end

 

[Steve76]

Agreed - you should prob get into a whole range of markets - but always when the entry price is reasonable or relatively cheap

 

[Docker_Brat]

Originally posted by Steve76
I often shake my head at work at people who are always going on about their investment properties and how they are "guaranteed" to make money.

They all by the lies that current affairs programs and the lifestylke shows feed us that you just "have" to get into the property market.

I honestly beleive that those shows are feeding the real estate boom. Call me a cynic but those two clowns who run around doing renovations and telling people how to make money could be a bit of a worry. If you're on a sure fire winner of making money, why tell everyone? It only shrinks the market for yourself.

Reminds me of the get rich schemes you have to pay for, you get rich selling get rich schemes.

I wouldn't be totally surprised if these blokes had a heap of property and are merely ramping up prices to make themselves profits.

If it is true that the price between renovated and unrenovated properties are negligable, then the aforementioned and home improvement shows are right behind that. Why sell an unrenovated home for a low price when you know that people can do it themselves anyway?

As for Perth, the property market went nuts but I think it is starting to plateau, I bought 2 and a half years ago and was worried at the time whether I was making a mistake by not totally investing in shares instead, so I did that as well but didn't buy as many shares as originally planned. Well in that short time, I have literally ended up with 10 times the equity in my property and the shares have done bugger all.

I'd hate to be looking for a property now, first homebuyers are now all but out of the game.

 

[Falchoon]

I can't see property prices rising any time soon particularly those at the bottom of the market. It is just too unaffordable for first home buyers.

I feel sorry for my younger brothers mates looking now, I bought 7 years ago for a $10000 deposit and rent money and made a killing. Now you'd need $30000 and more than rent money just to get in to that first home buyer group.

If it was all about money, I'd sell up now, invest in shares and rent in the docklands.

 

[Asgardian]

By the sheer nature of the beasts, buying in on investments need to be regarded, and then realised in the long term.

Very, very few opportunities such as Poseidon in the 1970's ( I hope I'm recalling the correct shares, and time frame ) occur.

An old collegue of mine had as his investment philosphy to vary his exposures --
He'd have some shares
He'd have some superannuation
He'd have some bricks and mortar
He'd have some dirt (farming land)

His attitude was that when he got around to retiring, at least one of the classes of investment would be on a crest, he'd cash in that portfolio, leaving the others until they too were flying profit wise

 

[FIGJAM]

Originally posted by Falchoon
If it was all about money, I'd sell up now, invest in shares and rent in the docklands.

Why?

Unless you're gambling, house prices have significantly outstripped share prices for well over 30 years and will continue to do so!

------------------

Here's my Melbourne industrial market overview (property ain't just houses and flats you know):

Extremely strong demand for high quality warehouse accommodation (20,000 - 80,000 sqm), with national tenants and good exposure to the freeway network. Boom areas include Altona and Laverton North, due primarily to the introduction of the Western Ring Road.

To the east, Keysborough and Dandenong South are benefiting from their close exposure to the Monash Freeway and the introduction of CityLink.

Net rentals for such properties are hovering around the $55 - 65 per square metre level, with capital values ranging between $450 - 800 per square metre.

Yields for such investments range between 9 & 11%, with the majority of larger strongly tenanted properties, being purchased by syndicates or Listed Property Trusts.

 

[TheBloods]

Originally posted by FIGJAM
Unless you're gambling, house prices have significantly outstripped share prices for well over 30 years and will continue to do so!

I don't think that's correct.

 

[FIGJAM]

Originally posted by NMWBloods
I don't think that's correct.

It is.

My former boss, who's a valuer, and has a stack of money mostly in the stock market, reckons his biggest regret in investment, was liquidating his residential portfolio of houses (including a row of 10 single storey Victorian Terrace houses in Albert Park!) and using it to invest in the stock market in the mid-late 70s.

His philosophy is that you can simply get a map of Melbourne, throw a dart at it and if you hit a house, buy it. So long as it's a house (ie buy the dirt). There are numerous examples where there was capital growth of 25-30 times the initial value, in 30 years! Staggering, but true.

It's a misconception that the stock market outperforms the housing market. It hasn't in the past and it won't in the long term.

 

[TheBloods]

The stats I have seen show that the stock market has outperformed the general property market over most longer time periods. Certainly individual property areas might outperform over shorter periods, but I doubt if the broad property index would outperform the broad market index over a longer time period. I seem to recall looking at this for a research paper a couple of years ago.

 

[FIGJAM]

I'm referring specifically to the housing market.

Commercial property is a different kettle of fish. I'd agree that the stock market would be a better option than offices and most certainly industrial.

Retail on the other hand, would probably have outstripped (pardon the pun) the stock market.

If it was all thrown into one big property classification, it might be that stocks are better.

But again, I was referring to Falch's example of preferring stocks over a house. I stand by my original statement that houses are better investments than the stock market in the long term.

 

[TheBloods]

Originally posted by FIGJAM
I'm referring specifically to the housing market.

Sorry - I was too. By broad, I meant all suburbs, not just some of the better performers. If you are clever enough to pick the right suburbs at the right time, then I agree that housing will outperform.

But again, I was referring to Falch's example of preferring stocks over a house. I stand by my original statement that houses are better investments than the stock market in the long term.

I'm still not sure, although the huge advantage for property are the tax benefits.

 

[Former]

Originally posted by Falchoon
I feel sorry for my younger brothers mates looking now, I bought 7 years ago for a $10000 deposit and rent money and made a killing. Now you'd need $30000 and more than rent money just to get in to that first home buyer group.

A couple of mates of mine have a house in Buderim paying for itself out of rent. It's still possible.

 

[Falchoon]

Originally posted by FIGJAM


But again, I was referring to Falch's example of preferring stocks over a house. I stand by my original statement that houses are better investments than the stock market in the long term.

Define long term.

I'd back shares over the next 3-5 years.

Then back in to property

 

[FIGJAM]

Originally posted by Falchoon
Define long term.

I'd back shares over the next 3-5 years.

Then back in to property

In property, 3-5 years is short term. Medium term at a stretch!

Long term to me, in terms of comparison, is 10 years. Comparing returns against the RBA 10 year bond yield, is the best means. Housing could be viewed as being longer!

The housing market has hit a plateau, but in 3 years it will move again. Think about the cost it takes to get in and out of property and I'd consider that your best bet would be to stay put; financially anyway!

It's OK to pick cycles in different areas, but housing in terms of liquidity (obviously) makes quick decisions unviable.

It's feasible to consider mentally "betting your house" on a potentially better short-medium term market, but in reality, it'd be riddiculous.

Just my opinion. I wish I owned a house!

 

[Zeke]

Tasmania

I've got a rental property that I bought just on 2 years ago for $58K. The latest conservative valuation was $105K, and the rent I recieve for it pays for the mortgage, rates, insurance, maintenance - plus it pays the rates on my own residential property.

Laughing.

Quite seriously, if you can pickup property in Hobart or surrounding suburbs, you've got a good chance of reaping a decent return. It won't last much longer, though - we already have consortuims of people coming over from VIC/NSW buying up 10-20 properties and leaving.

Still great pickups if you know what to look for, though.

Bought my first place (described above) with just $2K deposit, plus I got the $7K first home buyers grant.

 

[Bee]

Re: Tasmania

Originally posted by Zeke




Quite seriously, if you can pickup property in Hobart or surrounding suburbs, you've got a good chance of reaping a decent return. It won't last much longer, though - we already have consortuims of people coming over from VIC/NSW buying up 10-20 properties and leaving.

Ain't that the truth! I moved here 12 months ago and ever since then everyone I meet seems to be from the mainland and just moved to Tassie.
When I moved here you could get the same sort of house you would get in Melbourne for less than half the price. But now the real estate prices here are going through the roof, simply because the state is being over run by mainlanders who have either decided to buy investment or holiday places here, or have decided to move here!
I still have a house in Melbourne and needed to move the furniture from that house to Hobart. It was almost impossible to hire a removalist firm because they were all booked in advance with people who were moving down to Tassie!

We bought our house a few months ago at Seven Mile Beach which is about a 25 minute drive from Hobart. I live less than 50 metres from the beach and can lay in bed of a morning and watch the surf. Superb! We paid $340,000 for the house, but I hate to think what I would have to pay for a property like that in either Melbourne or Sydney.

I am thinking about selling the house in Melbourne and investing what I get from that into a holiday house at Bicheno on the Tasmanian East Coast and maybe letting it out to holidaymakers for a couple of years. It should pay for itself in no time.

 

[Rooboy 34]

Originally posted by FIGJAM
Why?

Unless you're gambling, house prices have significantly outstripped share prices for well over 30 years and will continue to do so!

I don't know about that either. Sure if you want to pick specific areas and then compare them to the overall stock market, you will be right, but if you compare either the overall stock market to the overall property market, or specific shares to specific areas, then the stock market would be well ahead...

 

[Former]

Re: Re: Tasmania

Originally posted by Bee
We bought our house a few months ago at Seven Mile Beach which is about a 25 minute drive from Hobart. I live less than 50 metres from the beach and can lay in bed of a morning and watch the surf. Superb!

A beach isn't much good if you get hypothermia whenever you swim there!

 

[Bee]

Re: Re: Re: Tasmania

Originally posted by Groves
A beach isn't much good if you get hypothermia whenever you swim there!

It's not that cold, Brisbane boy. Except of course in the winter when it is supposed to be cold. You need to experience the real world outside of Queensland, Apples.

 

[Former]

Anything below 25 degrees is unnaturally cold and I want nothing to do with it. That's a lot of the reason I didn't stay in London. Too cold and miserable.

 

[Bee]

Originally posted by Groves
Anything below 25 degrees is unnaturally cold and I want nothing to do with it. That's a lot of the reason I didn't stay in London. Too cold and miserable.

But it is normal to have four seasons in a year. Not summer all year round.
Besides, think about what you are missing out on with a roaring log fire, a glass of wine and how romantic it all is.