Is Anywhere Currently Good Value?

What is your definition of good value, op? Its cheap by some metric? It hasnt gone up recently? It will go up in the short, medium, long term? It seems cheap (meaning what?) Some level of cashflow? Is it good value if it goes up next year?

was sydney houses in 2017 good value?

how many years have you been looking for good value properties to buy and have you bought any?

 

Ok, well the question was.......Is there anywhere currently good value?

The answer, of course is YES!

At any given point in time, of course there's somewhere of good value. It may not be in your street, suburb, or even closeby, but there will be SOMEWHERE that has good value.

The challenge then, is for you to firstly determine what 'good value' is, and secondly find it.

Over to you.

 

If seeking for $1.8m to $2.2m I doubt the land of that size can be available at $1.6m & if the land is available at that price then usually in that pocket then the individual houses may not be sold at that price point.

Care to share which suburb in Melbourne you believe your numbers can be achieved?

 

If they have gone from 150k to 600k+ that's a 200% increase or around 15% pa, I think its unrealistic to expect that to continue anywhere near that rate long term

 

didnt think it was realistic for syd and mel houses to go up 40-50% in the last couple of years either, yet here we are.

thing is, what will you lose, or miss out on, if the market continues to be ‘unrealistic’ (according to you?)

if you couldnt predict the recent movements, are you so sure it cant continue for another 50 years?

 

Seen it happen multiple times in the Ashburton and surrounding areas. Old 1940s home on 600m2+, preferably a corner block. Demolish, sub-divide, build 2 townhouses on it and sell. After costs (looking at about $1.2m) you'd have some nice profit there.

 

Costs pegged at about $1.2m for both. $3.6m revenue, minus $1.6m for the land and $1.2m for build costs and $0.4m for other costs leaves $400k profit plus GST.

 

i dont disagree that to expect 15% pa to continue indefinitely or even a lot longer is unrealistic, but my observation is that they will continue to perform very well.

my point is for those that are waiting for the huge crash of 40% bloodbath (im guilty of this), better to get in sooner than later, that being said its pretty hard mentally to get in when there are 20 bidders at every auction

admittedly, ive only bought in non hot markets due to circumstances

 

Anything can happen short term, long term is a different story.

Not sure if you know how compound returns work but if it did continue for 50 years a $1 million house would be worth over $1 Billion.

 

How have your predictions and investment performance been long term?

would be happy with 5% compound growth a year long term.

what other options do you have?

 

Long term to me is 15+ years so I don't have a long enough time period yet. I am confident that they will be better than your 15% P.A for 50 years prediction

 

The impact of compound interest is amazing and almost unbelievable.

For every ten persons that brought at $150k and now holding a property at $600k there is another person who has a portfolio at $15m now worth $60m. ...$100m here I come

All achieved the same way ....."compound interest".

 

Nah. July was leading into the blow off top for melbourne and Sydney. Real economy and financial economy have peaked. That being said BABA @ 50% off ($155) seems like a good buy if you think china isn't the next financial crisis (it is, expect fire sales).

 

Its come off the back of lower interest rates and ever increasing relative debt. Compound interest is returning less and less.

 

Not looking at the cause of the change .

Just commenting on the law of compounding interest .

The numbers can become almost unbelievable !

 

What people forget is back in 1970s the norm was $30k homes. Back in 1990s the norm was $200k homes. In 2000s the norm was $500k homes, 2010s was $750k homes and now 2020s are $1M+ homes. etc etc.....you know what I mean.

In 2030s the norm may very well be $2M+ homes (for basic 3/1/1s in Sydney) and 2050s the norm is $5M+ homes. You need to adjust your mind that the normality level of house pricing will rise naturally with inflation and the devaluing of our cash.

So evaluating your criteria on what was "Normal" or a "Good buy" back in 2010 does not make sense now. Yes currently you "think" 15% rises each year is unsustainable but when the value of money is peanuts and assets like Real Estate is engrained in each and every single persons life and forms a major fundamental base of our economy this is going to continue.

I can see in the future home ownership will be the privilege of the wealthy and not a right for anyone. I can see this unfolding now. Yes its going to make many ppl angry and upset but this is what will eventually happen.

90% of ppl will rent for life and 10% of the top will be the land/property owners.

 

Home ownership was never anyone's 'right'.

Never will be.

 

Exactly.

I think it is fair to say housing is a right. However, ownership isn't. Ownership is a privilege.

When people complain about obscene housing prices now, they need to remember rent isn't much higher than before in a lot of places. So housing itself is not much more expensive - just owning one is.

No different to cars really. Ferraris are great but a toyota gets you from A to B. Is everyone entitled to a Ferrari?

 

Agree. Well said.

 

The issue in housing these days is you pay the price of a ferrari and get a used toyota. As for privilege, it comes down to choice. Govt policy has clearly privileged home owners/ investors/bankers etc over the past 25 years. This is not some natural law playing out, its deliberate favouring of one sector of society over another. People are right to be ****** about that. And we as a society are in trouble when non productive activities are incentivised over productivity. We can't all get rich passively from real estate. Its largely a zero sum game.