AFR article - long term decline In home sales

The property downturn is over
The property downturn is over

This is a great article and mirrors what is happening in expensive large cities around the World

As prices & populations rise, turnover simply reduces due to transaction costs. Houses become illiquid, Multigenerational, inflation-hedged stores of wealth.

The days of easy profits for speculators, huge stamp duty for govt and real estate fees are limited.

Buying a “landed property” in any large Asian city is a trophy acquisition and the resale market is thin. Most people get their foot in the door through off the plan apartments sold direct through marketers employed by developers...

Long term it is great for price stability of Inner city properties and those houses with unique owner occupier appeal will keep rising. But repair costs, land tax, pathetic yields, a reduced PAYG tax rate all make it a questionable strategy on a pure leveraged investment basis imo.

My focus now is income generating commercial properties and private equity investments ... with just a handful of quality resi holdings for lifestyle or to dabble in the odd development.

 

Aussie cities are still young in the global scheme of things so I see plenty of arbitrage opportunities over the decades to come.

 

Yeah, skeptical.

 

I think the easy capital gain over the last 15 years is over, it going to be a hard slow road from here on likes the 80s

 

Slow gains in Brisbane for last 12 years .

Boom is just around the corner .

 

that what people been telling us for the last 5 years, if it not around the corner this year it will be next year

 

Commercial property is far more dangerous as physical retail is shrinking and logistics are becoming efficient and thus requiring less space. Unless you are investing in an automated warehouse armed with latest shelf picking robots, almost every single commercial property acquisition will be far less desirable and income generating in 5-10 years timeframe.

 

I hope there is a corner and it’s not just a big circle we keep going around

 

Agree with you and pessimism/risk mitigation is the sign of a sophisticated Investor.

I think food and essential services like health are still fairly safe bets. anything with land value can be repositioned. And yes I am buying things with an ROE of 12-15% fully accepted a 50% cut in my income over the long term. Still beats resi for me

 

Yes the same as my trips in the car as a kid..

Me- “We there yet”
Parent- “Just over the next rise”

repeat,repeat...

 

I would rather be me and be wrong by saying that property is going North

THAN

be (Martin) North and be wrong by saying that property is going South .

 

I really like this assessment of resi landed properties in major cities around the world. There is a lot of credibility to this outlook. I know that is a scary concept for some, but for me it is motivational to seek out deals that are much more cash-flow/yield based versus capital growth based.

There are plenty of great cash flow deals to be had in tier 2 and tier 3 cities and large regional towns, in this country and many others. And many of these deals are MUCH cheaper buy-in prices compared to 'major' cities. This means great yield from day #1 and due to lower debt/mortgage being taken on from the outset (due to cheaper purchase price), one can pay off these bad boys a lot quicker and edge more rapidly towards a position of debt paid off with high yield annual passive income coming in.

 

hmmm, the record says otherwise, price tripled during that period.

year Syd Mel Bris
1980 68,850 39,500 35,475
1981 78,900 44,000 45,325
1982 79,425 46,750 55,125
1983 81,425 52,500 55,525
1984 85,900 65,000 58,950
1985 88,350 75,200 61,550
1986 98,325 82,000 63,000
1987 120,025 89,500 63,500
1988 141,000 109,000 71,000
1989 170,850 132,000 96,000
1990 194,000 131,000 113,000

 

I remembered 80s and 90s was slow slog and hard yaka and most people got out before the boom