Certainty ? ...... There is no certainty

Discussion in 'Property Market Economics' started by See Change, 22nd Oct, 2015.

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  1. Tenex

    Tenex Well-Known Member

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    The main factor impacting the economy in Australia won't be interest rates. Not by a long shot.

    The main factores will be the price of iron ore ( to some degree other raw products ) and employment numbers.

    U.S. Economy Is showing good signs and whether it has an impact on Australia or not is yet to be seen.

    Having said that I would probably stay away from Brisbane. It is to expensive and doesn't have a local economy to warrant the strong property prices.

    Conversely Perth could be a slightly better market because prices are falling. I hope I am wrong but if the economy does not improve, once the interest rates go up Brisbane will be the second Perth. Unwarranted high prices based on a seasonal economy.
     
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  2. Gockie

    Gockie Life is good ☺️ Premium Member

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    Hi @Tenex,
    I reckon some reasons for the Brisbane boost are:
    Brisbane buyers have only gotten over the depression/fear brought on by the flooding in 2011, and people are willing to buy back there now after a few poor years when few people were game to buy there. This lead to price drops as sellers outnumbered buyers.

    Secondly, people from Sydney see its so much cheaper than Sydney, and from which investors have been able to extract heaps of equity from their existing properties. They have the equity to spend. Since Sydney investors won't invest in Sydney right now, (the prices are simply extremely high), these investors have had to look elsewhere to keep investing. Brisbane looks really appealing from that viewpoint, given proximity to Sydney and, well, you realise the weather's very nice there after going through a cold winter! :)

    Now I don't quite understand why you are promoting Perth, given the mining slowdown? I mean, Darwin's also slumping?
    Care to share why you think it will perform? Why would people want to buy in Perth or Darwin in the near future? I'm really interest to know if there are any reasons for these cities to pick up in the near future.

    Ps. Yes, its possible Brisbane could drop again, esp. if a massive flood event was to happen. But the feeling that it was all too cheap for too long I believe means that I feel its worth a shot to buy there.

    Same with Adelaide to be honest. There is the thought that employment will be hit hard when car manufacturing leaves Adelaide, but I think that's a factor that has been priced in already, and anyway... good old Centrelink.... property prices are very cheap in the lower socioeconomic areas, the rents are affordable for anybody. Tenanting something that is well located (eg. Close to transport) should not be a problem. I think it's worth a gamble with good yields.

    And, its still a capital city. It should have some demand. I'd rather throw $220k into house located there rather than for a regional town. For example, the cheaper Wagga suburbs. They have too many properties available for rent for the number of quality tenants. (My sister has one IP there and her property has seen negligible capital growth over the past 4 years or so and recently it was vacant for 2 months....)
    I am sure the SA Government won't want to see Adelaide fail so it will do its best to attract business to Adelaide.
     
    Last edited: 23rd Oct, 2015
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  3. Blacky

    Blacky Well-Known Member

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    Interesting POV.

    I agree with you on the IR. They are but one of many factors, and at this point a pretty minor one.

    However, why do you think Iron Ore price will be so influential. While I agree it will impact some markets more than others overall I think this too is a drop in the ocean. It impacts a few major players, but thats about the extent of it.
    I agree the capital invested in Ore is a significant factor especially in some of the perth areas, but same goes for oil prices and oil capital projects. Its often forgotten these are two very different beasts.

    Personally I think you are a bit early for Perth - give it another 12months.

    Blacky
     
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  4. meme plecko

    meme plecko Well-Known Member

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    I found this comment very helpful, if really experienced guys are still feeling like this after every purchase, nothing wrong with me feeling this way then.

    @sash, I think you keep talking about these pills of all colours and flavours for the same reason, to help you sleep at night?
     
  5. radson

    radson Well-Known Member

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    On certainty....

    One of the painful things about our time is that those who feel certainty are stupid, and those with any imagination and understanding are filled with doubt and indecision.

    - Paraphrase of Bertand Russell.
     
  6. HUGH72

    HUGH72 Well-Known Member

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    Interesting assessment, are you suggesting buying in a clearly falling market with contracting rents?
    Over building of units in parts of Brisbane is a worry for sure so I would look to stay away from these pockets or units generally.
    I can't see on what metric you would call Brisbane expensive relative to the other capitals presently expect maybe Adelaide.
    While prices in some suburbs have moved by 20% in the last 18 months-2 years many are only slightly above 07-08 levels when a strong argument could be made in hindsight that prices had over shot.
    If we use Sydney as a measure at one point Perth's median came close to Sydney's and Brisbane's median has, at times been much closer than it presently is.
    Every city has its day.
     
  7. See Change

    See Change Well-Known Member

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    Not every purchase ... But we've bought a few recently and then had the APRA changes come in which will have some impact . We were originally planning on buying a few more , but at this stage we're looking at making offers on two more that we've seen , then having a break . Then will watch them market for a while . I expect we will buy more , but I'd want to see Brisbane making more solid gains before that .

    We will keep an eye on certain markets and if we saw something special we might buy it . Bangaroo 1 bedder with a garage for 500 would get the check book out :cool:

    Cliff
     
  8. Gockie

    Gockie Life is good ☺️ Premium Member

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    Nice thought but I doubt you'd be able to snag one for 500k though...
     
    Last edited: 23rd Oct, 2015
  9. See Change

    See Change Well-Known Member

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    Don't think so too , but if I did ... Elbows at ten paces ..


    Cliff
     
  10. Tonibell

    Tonibell Well-Known Member

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    At what point do you think it becomes "excessive acquisition" when you should really be working on "risk minimisation" ? @keithj had a post on this a while ago.

    It definitely made me stop and assess how much I needed to be exposed to property.

    I remember saluting when the boxer Danny Green retired a few years ago giving the reason that he had taken enough risks in the ring and was getting out with all his faculties intact. Unfortunately I see he has now made a comeback.

    I think investing can be like that - take a risk, make enough and then get out.
     
    Last edited: 23rd Oct, 2015
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  11. Gockie

    Gockie Life is good ☺️ Premium Member

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    You'd be fighting me and many thousands of others to buy at that price.
    I just figure if the s#it hits the fan I'd sell 1 IP and that would keep me good for a while. Easy 100k there. Or I could sell the PPOR and net half a mill cash from that. That'll keep me going... if the s#it really hit the fan I could move to a low cost country for a while... or I could run 4 Airbnb's and do an income replacement that way. Many backup options...
     
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  12. MTR

    MTR Well-Known Member

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    Good thread Seech

    Its times like this that I just like to sit and watch and just manage what I have.

    I have been planning my exit strategy for some time now and have pulled the trigger, sold 4 properties prior to the downturn in Perth. Currently we are seeing 10% losses in this market, this equates to $250,000 drop in end values if I was selling today, sobering.

    "If it looks like a duck, it walks like a duck then its probably a duck"

    Good time to review debt it aint getting cheaper.

    MTR:)
     
    Last edited: 23rd Oct, 2015
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  13. willair

    willair Well-Known Member Premium Member

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    It's always the experimental aspect of research that can sometimes tell you what may happen down the track,and there are no fast-buck plans to success plus what happened yesterday is not that important,myself once the media start to play the interest rise card with a 50%probability up or down..
    felix qui po tuit cognosere causas..
     
  14. sash

    sash Well-Known Member

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    Plenty more remorse from newbies...NAB just put it up...ANZ next??.....followed by others??? Its beeeewdiful......maayyyteee......
     
  15. 2FAST4U

    2FAST4U Well-Known Member

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    I’m not expecting a crash but it is possible for property to go through a slight trough. I think the only way property could collapse is if the Government undertook some radical policies. The recent ABS data shows that a similar proportion of people still own/ are buying houses compared to people renting, and that trend has stayed fairly consistent over the past 40 years. I.e. there’s no solid reason for the Government to intervene. Unless people start rioting on the streets and serious social issues start arising (increased homelessness) the Government is more than happy to turn a blind eye and keep business rolling as usual.
     
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  16. meme plecko

    meme plecko Well-Known Member

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    Now I'm seriously concerned... 5 haloperidol + 5 temazepam and a couple of days rest for you young man ;)
     
  17. ross100

    ross100 Well-Known Member

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    will be interesting when RBA puts there interest rate down and US increase there...
     
  18. sash

    sash Well-Known Member

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    I am not old...not as old as Skates and the Doc.....but old sonny boy. ;)
     
  19. Blacky

    Blacky Well-Known Member

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    It will be interesting to see how much the banks will move their rates when the RBA drops again in Nov/Dec (if anything at all).

    Blacky
     
  20. skater

    skater Well-Known Member

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    Oi! Who you calling old?

    Just look at me! I'm young, svelte & beautiful, in the prime of my life! Much better looking & youthful than you, you soggy old rasta!:D
     
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