Is Holding Resi Property attractive today?

Today in current climate I don't see resi property as an attractive option as a buy and hold, the returns are way too low, the other option buying resi in whoop whoop and if lucky making a return of $2000? pa and potentially no upside.

If investors missed the boat.. buying in recent boom markets in Australia then you could be waiting a long time for next upswing and still stuck servicing debt. Interest rates are historically low, but who knows how long we have???

Darwin has highest yield, but it is a very risky market as this market has been falling



Here are some stats/resi returns? (CoreLogic Jan 2016)

Softest conditions on record for capital city rental markets – no growth recorded over past 12 months.

Dwelling rental growth is now at its lowest level on record according to the January 2016 CoreLogic RP Data Rental Review released today. Currently the median rent rate is recorded at $443 across the combined capital cities.

Research analyst Cameron Kusher said, “CoreLogic has tracked annual rental changes since 1996 and over that time, rental growth conditions have never been weaker. At the same time last year rental rates had increased by 1.7% highlighting that the slowdown in rental conditions has been sharp over the year.”

“A combination of factors is affecting the national rental market. Among these is a higher level or rental stock resulting in greater options for renters, a slowdown in population growth, higher than normal investment activity and stagnant wage growth.

“More rental stock at a time when demand is easing due to slowing population growth, and little wage growth for renters, has resulted in flat rental growth conditions over the past year.

“For renters there is a lot more accommodation options in the market while simultaneously, landlords are now required to respond to a more competitive environment which, in many cases means keeping rents steady or in some areas reducing rents in order to keep a tenant,” Mr Kusher said.

CoreLogic analysis shows rents across the combined capitals rose by 0.2% in January 2016. The only capital cities to see a rise in rents over the month were Sydney, Melbourne, Adelaide, Hobart and Canberra, elsewhere rents dropped.

Rental Index results as at January 31, 2016


Across the individual capital cities, over the past year:

• Rents increased in Sydney (+1.4%), Melbourne (+2.1%), Hobart (+0.1%) and Canberra (+1.8%).
• Rental rates have fallen over the past year in Brisbane (-0.7%), Adelaide (-0.4%), Perth (-8.6%) and Darwin (-13.4%).
• Across every capital city except Canberra the rate of annual rental growth or decline is currently lower than it was a year ago indicating that the weaker rental market conditions are prevalent across most capital cities.

Rental Market Update:

• Weekly rents across the combined capital city measure increased 0.2% over the month of January however they were unchanged over the past 12 months.
• Currently, combined capital city rental rates are $487/week for houses and $465/week for units.

Mr Kusher said, “It is possible that over the coming months, rental rates could begin to fall on an annual basis due to additional new rental supply entering the market.”

 

Sydney, Melbourne and even Brisbane in parts has had a good run the last few years. I wouldn't be in a hurry to acquire a long term hold in at least Sydney and Melbourne for now that will be negatively geared for probably the next 5-10 years. Unless there is a specific reason for buying there like you are going to develop or know of something big coming up that will make values sky rocket in a specific area I would just sit back and wait for now.

 

Agree totally with you.

In terms of developing, I am now only looking at sites in Melb with plans and permits already approved.

It would save around 12 months in time and also if you get these at the right price and still plenty of fat in the deal why not.

 

We just landed on Old Kent Road, maybe sell some and pay some Income tax? Or do the dodge and end up in Jail? Will take a good decade to get back to Mayfair then pass go and collect $200.


Maybe some cashflow to be had along the way, you won second prize in a beauty contest...

 

Mayfair is actually one of the worst properties to own... It isn't always how much you spend will determine your success

 

I bathe in Mayfairs.

 

You are the all or nothing sort of guy, I prefer consistent results .

 

I love the Yellow properties (Piccadilly, Coventry Street, Leicester Square). Always make a motza from it.

 

They are nice properties but not my favourite set/s, they are my 3rd favourite

 

For some reason, I find that the orange and reds with houses/hotels always seem to do me in. Is it somehow more PROBABLE to land on these eg Trafalgar, Marlborough etc? Its supposed to be random damnit.

 

So in Brissy...
Logan = whitechapel
Narangba = euston Rd
Capalaba = whitehall
Chermside = vine st
MGE = strand
Grange = piccadilly
Ashgrove = bond st
Tennerriffe = mayfair

 

Yes, orange & red are the most likely properties to be visited. Specifically Trafalgar Square is statistically #1.

It has to do with the location of Jail and the fact that various Chance / Community Chest cards can send you there. It's less random because of those cards & the existence of Jail means you're more likely to be rolling & landing on orange/red properties than others.

 

Work out where 2x7 is from jail all adds up.

Hence why Mayfair is not the best property to buy...

It is so bad in my family that my wife, sister and brother in law will not play with me or if they do no one wants to trade with me. As I always win

 

I've never lost in monopoly, I'm a ruthless player. I end up with so much money, I pay someone to move my piece around, make me a soda, etc

 

I never lose in scrabble, does this count...

 

Looking back there have always been times/ reasons why holding ips didn't look attractive. People keep on finding ways to make money using resi property though. I know people who've made millions buying cf+ so not haemorrhaging their own money. It could still be attractive depending on what you buy, cost, own resources and end result. What's the alternative, all money in shares/commercial? Costs and risks with all these. As ever, keep reviewing your investments, get advice from those who've done it successfully, maybe look for other markets.

 

When I played that game, always bought anything and everything. They are all a good deal IMO

 

Nah....

if you do the maths....
1st year it's $2000
10th year it's $20,000
100th year it's $200,000


alright, you got me.

 

.nope...too simple, it's like saying properties double every 7 years and interest rates never rise and markets never fall...see what I mean, blanket hypotheticals are ok, but I won't be here in 100 years

 

I had the opposite strategy, I would focus on 1 or 2 colors while everyone else spent all their money on everything. Also if I had 2 colors of something and I needed the last one, I would always put the two cards behind eachother so others don't notice I have both. I'd also downplay how much money I have at the time I want to acquite the 3rd card from someone "man if I buy this from you i'll really be broke... gosh...o....right.. ill buy it" huffing and puffing.. . Two mins later I got 3 houses on each

I actually think you can tell a lot about a perron's business sense from monopoly. Should be a prerequisite to play before deciding on a JV partner