House prices to keep rising for years

Happy · 29 February 2008

Best to buy property with few reserves.

Interest rates go up and go down, so good to be able to absorb 5% to 7% rates increase.
Another nice reserve would be to have enough cash to be able to continue repayments for 2 to 5 years after heaven falls in and no income.

Such a proposition is probably impossible to accept and will be ridiculed, but there are some good points in having capacity for unexpected events.

robots · 29 February 2008

hello,

great to hear from you happy,

spot on bro, just go with the flow, have bit up you're sleeve and life becomes very easy,

gets back to my number one financial tip and that is to save the $, 20-30% of gross income is a great start,

thankyou

robots

Snakey · 1 March 2008

My brother is loaded to the hilt with RE and he has made a lot of money (on paper) But when I told him I thought he should sell half his position and free carry half the remainder because I think there will be harder times near approaching and that now would be a good time to take profits, he said "Oh no Ill keep them for another two years then Ill sell on the top because the newspaper said it would go up for another two years.
People get very used to the good times and forget that things can get tough.
Once the newspapers say its all turning to crap, selling wont be easy.
The problem with the RE at the moment is there is to many investors in RE and I think it will become more volatile like the sharemarket. As soon as investors see its going down in price, they are all going to be running for the exit door. And dont worry it will go down in price at some stage (it has before and it will again, guaranteed).
My two bucks
I think a lot of toolbots will be burnt..... money + stupidity = losses
Greedy pigs will be slaughtered IMO.

Kimosabi · 1 March 2008

Snakey said:
My brother is loaded to the hilt with RE and he has made a lot of money (on paper) But when I told him I thought he should sell half his position and free carry half the remainder because I think there will be harder times near approaching and that now would be a good time to take profits, he said "Oh no Ill keep them for another two years then Ill sell on the top because the newspaper said it would go up for another two years.
People get very used to the good times and forget that things can get tough.
Once the newspapers say its all turning to crap, selling wont be easy.
The problem with the RE at the moment is there is to many investors in RE and I think it will become more volatile like the sharemarket. As soon as investors see its going down in price, they are all going to be running for the exit door. And dont worry it will go down in price at some stage (it has before and it will again, guaranteed).
My two bucks
I think a lot of toolbots will be burnt..... money + stupidity = losses
Greedy pigs will be slaughtered IMO.

Yep, the greatest trap is to start believing your own bullsh1t.

Analyse everything with the cold, hard spotlight of reality...

tech/a · 1 March 2008

Kimosabi said:
Yep, the greatest trap is to start believing your own bullsh1t.

Analyse everything with the cold, hard spotlight of reality...

Ok

In Snakeys post and replies to it.

What is a property speculator?
What is a property Investor.

The problem with the RE at the moment is there is to many investors in RE and I think it will become more volatile like the sharemarket.

I think you guys have a sad misconception of what BOTH a property Investor and a Sharemarket Investor look for and implement in their growth stratagies.

There are very few property investors V the total property holdings.
How many speculators are in the market do you think---more?
Dont forget those serious in Property investment bought $400k houses back when they were $150-200k.Their interest rate rises are relative to (In the worst cases) now 50% of their properties value.Their rents are rising more than enough to cover Interest Rate rises.

My brother is loaded to the hilt with RE and he has made a lot of money (on paper) But when I told him I thought he should sell half his position and free carry half the remainder because I think there will be harder times near approaching and that now would be a good time to take profits,

He could do that. But if he has more than 3 properties all he need do is keep an eye on his gearing and servicability.Selling half may not be required one or two may balance the portfolio just fine.

Taking this approach is more in line with this quote---

Analyse everything with the cold, hard spotlight of reality..

Speaking of which (Reality).
While in SOME areas of over pricing and depressed demand prices will fall,others wont fall or fall moderately.
The cost of building has already climbed 20% and will do that again this year.
Housing replacement costs increase pricing of established homes.

Inflation will only help to quell any depression in prices rather than exacerbate.
Rather than getting carried away in all this doom and gloom spewed out in copious amounts ---- is it not best to handle that which you are dealt with in your own situation rather than being one of the crowd manipulated by "Expert" news?

I think a lot of toolbots will be burnt..... money + stupidity = losses
Greedy pigs will be slaughtered IMO.

Hell is this Brother envy I see.
Those who get slaughtered WONT be the greedy(Whatever and whoever they are) it will be the badly informed and often these cases will be more tragic than euphoric.

Im actually interested in what makes in your or anyones veiw----

Greedy pigs

When does one who trades or Invests/Speculates in Property or runs a business become one of these?
I'm interested in the justification for such a label.
Personally I can only think of one case where this would apply (In my veiw of course) but will leave that till after any replies.

Snakey · 1 March 2008

Tech, look overseas, do you think Australia in going be immune from RE falls in price as is happening with other countries right now. If so why??? migration to AU??? America has heaps of that yet it still falls there.
Tech if you think RE is such a good investment to pour your money into right now, does this mean your still buying right now????
What is tech's thoughts on RE right now please pick one of the following;
Buy
Hold
sell
I want my brother to do well thats why I gave him my thoughts on the matter.
Rose coloured glasses syndrome is very common for people in paper profits. Is this you?
Greedy pig - "Oh I've made shyt loads of money from RE... Best I double my position now so I can make double a shyt load in the future".
In investing taking profits is as important as buying the investment.
Sure if you buy now in 50 years your sure to make a profit but RE has cycles and it can fall in price just like anything else.
My money stays in the bank until I can buy a house in a buyers market.
Sell in strength buy in weakness - very common successful investment strategy.
My call on RE is - its at the top now. (gold coast, melbourne, adelaide)Sydney top has been reached already.At least until the next RE bull when ever that is.
I hope im right because I look to enter in a couple of years though I have had a small position since 2000
My last post on the matter.
Good luck shooting bears Tech... I hope to prove you wrong again
Time will tell

tech/a · 1 March 2008

Snakey said:
Tech, look overseas, do you think Australia in going be immune from RE falls in price as is happening with other countries right now. If so why??? migration to AU??? America has heaps of that yet it still falls there.
Tech if you think RE is such a good investment to pour your money into right now, does this mean your still buying right now????

Not for investment but I am building my own Poderosa right now---infact footings are being poured next week.I have a fixed price contract at $1300/ square meter and if I wanted to sign a contract for the same quality home right now it would be $1600+
I wont be able to build cheaper than right now.

As for right now on investment I have written much on this.The answer personally is no purely as I am doing other things and havent got any irons in the fire---mind you opportunity is STILL out there in some isolated areas here in Adelaide.

What is tech's thoughts on RE right now please pick one of the following;
Buy
Hold
sell

If your geared sensibly and generate a pasive income---then hold
If your over your head then sell.
If you see opportunity and that means you are in the position to take advantage of it then buy.

I want my brother to do well thats why I gave him my thoughts on the matter.
Rose coloured glasses syndrome is very common for people in paper profits. Is this you?

I love this paper profit stuff---and paper losses for that matter.
Rest assured that "Paper Profit" is YOUR $$s as is that Paper loss.

Greedy pig - "Oh I've made shyt loads of money from RE... Best I double my position now so I can make double a shyt load in the future".
In investing taking profits is as important as buying the investment.
Sure if you buy now in 50 years your sure to make a profit but RE has cycles and it can fall in price just like anything else.
My money stays in the bank until I can buy a house in a buyers market.
Sell in strength buy in weakness - very common successful investment strategy.

There is much to comment on here and I dont have the time right now but will re visit.Money in the bank in times of Inflation is counter productive your actually losing money.

My call on RE is - its at the top now. (gold coast, melbourne, adelaide)Sydney top has been reached already.At least until the next RE bull when ever that is.
I hope im right because I look to enter in a couple of years though I have had a small position since 2000

Why do you keep your small position?

My last post on the matter.

Why you bring topics for discussion and opinion.

Good luck shooting bears Tech... I hope to prove you wrong again
Time will tell
P.s. Toolbot is an absolute tool of a robot

Why do you wish to do that.I hope you reach your financial goals regardless of how you play it.

numbercruncher · 1 March 2008

Another sign and one I pointed out earlier in the thread, Boomers whom are retiring (at the rate of over 100k a year) and cant take advantage of Neg Gearing much anymore are bailing.

Queensland's older property investors are benefiting less from negative-gearing tax benefits because of rising interest rates, instead choosing to sell up and cash in on capital gains, one real-estate agent believes.

Recent changes to superannuation had resulted in a "constant stream" of investors leaving Brisbane's inner-city market and being replaced by owner-occupiers, LJ Hooker principal Brett Greensill said.

The forecast for more rate rises later this year means many retiree investors might struggle to cover the increased costs, he said.

About 40 per cent of property in New Farm and Fortitude Valley was owned by investors a couple of years ago - that figure has now dropped to around 10 per cent.

......

North Queensland's market was experiencing a similar exodus of older investors, who had been watching economic conditions very closely, according to PRD Nationwide Cairns unit specialist Belinda Thaggard.

"They have seen the market highs and lows and lived through the market at its worst and are aware history could be repeating itself - the signs are there, they're not risking it," she said.

"Any sudden change such as multiple interest rate rises will affect the market and this could mean they lose money on their investment which many older investors rely on these funds to retire."

Many older investors had decided to sell now because of concerns the market had reached its peak, she said.

http://www.brisbanetimes.com.au/news/queensland/older-property-investors-bailing-out/2008/02/28/1203788532513.html

Seems the older ones whom have lived through market cycles are a little wiser

I can just imagine the mad rush out when bubblevision starts mentioning falling prices

RE bulls surely must know that the RBAs war on Inflation is war on inflated asset prices to ?

Modest 2.5pc fall in US stocks last night, bit more carnage for us on Monday, might play on buyers minds this W/End?

robots · 1 March 2008

Snakey said:
<deleted>

hello,

i hope the mods are dishing out the warnings appropriately, fair game

thankyou

robots

numbercruncher · 1 March 2008

Mornin' Robi

We havnt seen perma bull Davo in this thread for a long time, I wonder how he went with his no-doc flip deal that was being build for an expected 100pc profit ?

Whats Melb looking like this w/end, another record amount of property come to market ?

Listings continue to spike here in QLD, the reseting fixed rates also mentioned.

Fears property has hit peak

Nervous property investors are selling up over fears Brisbane's real estate market will deteriorate later this year, a local analyst believes.

Research released by RP Data last week showed the number of new listings in Brisbane had risen dramatically by 62 per cent - an addition of 1862 new properties for sale.

The figure represented either strong market sentiment among vendors or fear the market would decline in the near future, RP Data speculated.

Part of the surge could be blamed on a chance in the way new developments are marketed on the internet, analyst Michael Matusik from Matusik Property Insights said.

However the total number of listings in Brisbane, which increased by 29 per cent to 6339 properties for sale, still suggests local investors are fearful of what lies ahead, he said.

"Brisbane has attracted a lot of investors in recent years ... many purchased in the early 2000s and took our three- or five-year fixed loans," Mr Matusik said.

As these loans reach the end of their fixed periods, many investors are facing up to $1000 per month in interest payments for the same property, he said.

http://www.brisbanetimes.com.au/articles/2008/02/27/1203788411597.html

Well they sure wont be raising rents 1k a month or 250 p/w, so whaddaya do ?

robots · 1 March 2008

hello,

yes big weekend of auctions, already seen lots of flags up on the boards

the good stuff will sell well, I believe the clearance rate will be around the mark I have mentioned previously (70%)

thankyou

robots

wayneL · 1 March 2008

robots said:
hello,

i hope the mods are dishing out the warnings appropriately, fair game

thankyou

robots

'bot,

Mods can't be everywhere all at the same time. If you see a contravention of the code of conduct, you can report it via the button at the top. That way, we are alerted quickly. (It's the triangular icon to the right of the post number)

All,

Let's not turn this thread into an ad hominem sh!tfight.

A bit of respect for each other's view, even if we disagree, makes for much better discussion.

Cheers

xoa · 1 March 2008

Rents are determined by supply and demand, not landlords' costs. The horde of property "investors" are free to pass on their increased mortgage costs, but unfortunately they won't have tenants. Speculators can drive up property prices with their borrowed money, but they're almost powerless to influence rental returns. In fact, speculative activity can depress rents, by creating artificial housing demand. Rents won't increase just because people think "it's time" for renters to pay more.

If my landlord wants to ramp up my 160pw rent by too much, he can look forward to no rent. .

tech/a · 1 March 2008

xoa said:
Rents are determined by supply and demand, not landlords' costs. The horde of property "investors" are free to pass on their increased mortgage costs, but unfortunately they won't have tenants.

If there is demand then they will get it.
I have increased rents on mine by 40% over the last 3 years with the biggest rise passed on This Janurary.All tennents stayed on.They know that they are paying market value.

Speculators can drive up property prices with their borrowed money, but they're almost powerless to influence rental returns. In fact, speculative activity can depress rents, by creating artificial housing demand. Rents won't increase just because people think "it's time" for renters to pay more.

True but thats not whats happening.All seem to agree that affordability is an issue so demand for rentals is high and remains so while people see this as the only affordable way to get into a house.

If my landlord wants to ramp up my 160pw rent by too much, he can look forward to no rent. .

If your rents below market then youll get a rise sooner or later,if you choose--no Rent--- he will choose new tennent.You will then either settle for a lower quality rental,buy a tent,live back with mum and dad or pay the rent.

ROE · 1 March 2008

Anyone gone through the process of the tenant spit the dummy and not paying rent.. how hard is it to get them out ?

No I'm not in this boat but if rent go up too far would this be a problem?
They decided not to pay because they have to eat

xoa · 1 March 2008

tech/a said:
If your rents below market then youll get a rise sooner or later,if you choose--no Rent--- he will choose new tennent.You will then either settle for a lower quality rental,buy a tent,live back with mum and dad or pay the rent.

I'll just go to another landlord and rent an equivalent flat. There's plenty of <160pw properties in my suburb.

numbercruncher · 1 March 2008

Yes I understand its a long drawn out affair and the tenants have some pretty strong rights, I wouldnt want to be a highly geared investor in a recessionary enviroment faced with that

Lets explore a 300k mortgaged IP, rates go up 1pc, $60 pw, current rent would be 300p/w , are Investors really going to squeeze 60pw or 20pc extra on the rent ?

You need serious equity to survive continual rate rises, but then serious equity gets a better return in a bank account in the absense of capital growth as seems increasingly likely.

Im willing to bet prices have already started retreating, just a matter of time for it to show in the offical reports.

I have no doubt demand for rentals is there, but the ability to continually pump up rents and prices just isnt consistent with the current enviroment.

tech/a · 1 March 2008

xoa said:
I'll just go to another landlord and rent an equivalent flat. There's plenty of <160pw properties in my suburb.

That being the case then your paying market rate---all good.

No I'm not in this boat but if rent go up too far would this be a problem?

I presume your talking Sqatters. Yes they can be a problem and the landlord can also be the landlord from hell.Thats what tennency agreements are for.

Lets explore a 300k mortgaged IP, rates go up 1pc, $60 pw, current rent would be 300p/w , are Investors really going to squeeze 60pw or 20pc extra on the rent ?

Youve given an example very close to reality on one of mine.
Starting rent 4 yrs ago was $250/week today its $330.Not far short of your example.Agree at the higher end this is not possible $500k plus and yes there will be disasters for both tennents and landlords.

Bill M · 1 March 2008

numbercruncher said:
Lets explore a 300k mortgaged IP, rates go up 1pc, $60 pw, current rent would be 300p/w , are Investors really going to squeeze 60pw or 20pc extra on the rent ?

My neighbour has been next door to me for a year. He is paying $300 p/w for newish bedsitter in a very good location. He just got a 10% increase in rent which will bring him up to $330. The only problem is that when there is an open for renters inspection people turn up in droves wanting to rent the property, the demand is there but he is still considering moving.

In another case I had some friends about 6 years ago that were renting a 2 b/r unit, again in a centrally located area. They were very good tenants and had been living there about 5 years. Over the 5 years it went from $280 to $330 a week which is reasonable. Then one day the greedy landlord wanted to cash in on them and raised the rent from $330 to $400 p/w.

As much as these 2 renters did not want to move they did and the left the area and got a better deal in another suburb. There was a bit of renting slump soon after they moved and I walked past this unit for 5 Months and it was vacant all that time. Now if I was the owner of this unit I would have much rather have kept these blue chip tenants than let them walk and get no rent for 5 Months.

communique · 1 March 2008

House prices are set to fall. Worst affordability for 22 years. Increasing costs for rents, fruit/veges, electricity, petrol, water, health care causes wages to rise, causes inflation causes interest rates rises. I remember when they were 18%.
I find it strange that we live in a country similar to the size of the United States. Our population just over 20 million and theirs 300 million and we have the most expensive real estate in the world. You only have to drive west of where everybody is living on top of each other i.e. east coast of OZ to realise that our town planners could create major opportunities for huge development with the proper infrastructure in place. Yes, we have water challenges but that only 10 years ago it was illegal to have a home water tank in urban areas and now having a tank in your yard is now mandatory for some new developments (in Qld) We have to get creative about where we live and how we live and that doesn't mean living on top of each other in ever decreasing small lot development close to the current major urban centres.

House prices to keep rising for years

Happy

robots

hello

Snakey

Kimosabi

tech/a

No Ordinary Duck

Snakey

tech/a

No Ordinary Duck

numbercruncher

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robots

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numbercruncher

Beware of Dropbears

robots

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wayneL

VIVA LA LIBERTAD, CARAJO!

xoa

tech/a

No Ordinary Duck

ROE

xoa

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