Hey all, Been lurking for about 6 months to a year and at times have wanted to contribute but never made the jump. May as well start today right? I transitioned from being an owner occupier with 0 debt to being a renter in 2016. When I say "I", I'm referring to my wife and kids. It's been an interesting transition and one we made by choice, not out of hardship. We moved cities due to new work opportunities lining up for us. Financially I think it's been a great move for us however we've had to obviously sacrifice some of our security and autonomy. Still we are very happy with our choices and are looking to transition back to owners again in the next year hopefully. Since becoming renters we track the housing market in the suburbs around us daily and can see that prices have come down over 15%. I'd love to say we were smart but in my view investing is more like making educated guesses and luck plays pretty heavily into significant success. Interestingly we sold our PPOR for about 7% more than our purchase price, after holding it for over half a decade. Clearly the return wasn't great but we loved where we lived and just happened to buy and sell near peaks in prices. So that's enough from me for now. The next 12 months look to be very interesting for everyone here in OZ!
Welcome aboard! Yes its very interesting market at the moment and more to come... What area was your property that you sold?
Oh I should have also said thanks for the welcome mickyyyy. Historically my wife has favoured shares over real estate investment whereas I was the opposite. Not sure where we will end up regarding our next asset of choice it really feels like all assets could be in for a rough ride.
Welcome, but why such pessimism...nothing in life stays constant,, especially assets! Look for value as you mentioned assets will become over valued, return to norm than undervalued...hence why some of us play for long term, no one has a crystal ball! A family member of mine lives South BRI around 6 kms and I hold an IP in Carina (had 189% CG increase in value since year 2000) which I never plan to sell...that suburb keeps increasing since we built in year 2000 though. So it really depends how long you plan to own that asset of yours, wouldn't you agree? Carina - Property Sold Prices Also interesting is the median price values since 1970-2016 in some states (just look at the graph and see how values change - realize that... if fear stops you from investing ahead): What we can learn from Australia's median house prices from 1970-2016 - Homely
Hey MWI, thanks for the welcome! Hmm I wouldn't say I'm pessimistic, instead (for the time being) I feel more comfortable in a bucket labelled "bearish" than "bullish". Why? Well I'm no economist but I follow the AFR and a couple of other business news sites daily plus the AusFinance subreddit. To me there seems to be growing unease across many sectors about issues like private debt in Australian households, slowdown and debt in corporate China, trade wars, Brexit, and eurozone weakness. Fear is a powerful motivator and while I have some I'm not about to start "prepping", physically or financially. Instead I'm just looking to keep my ear to the ground and have a ballpark idea of how I can best react and capitalise if one of these issues did significantly impact us all locally. There are great opportunities to be found in the ups and the downs right? So I'm already invested in some ups, but I want to win in the downs too. Oh but you can't time the market they say, sure and so I've got some long term investments that I'll never sell. Still you can find profit in the short term if you use the right strategy at the right time. Plus any investment can be boosted or destroyed by luck of course. All it takes is an Opal tower, Bernie Madoff or Retail Food Group short to either help or hinder you. Anyway congrats on the growth in Carina! I have family nearby and they often talk of the amazing amount of development there. I don't really think it matters how long you hold an asset but really just how happy you are to sell on any given day. Are the profits or losses right now worth solidifying? Could you use those funds better somewhere else or are they doing their best where they are? Interesting chart from Homely that you shared. It looks like the Brisbane median price went up ~470X in 46 years. Which if it were to happen again would put the median in the year 2062 at $244,870,000. So a 10% deposit is 24 million. If I multiply an average wage of 80k by 470 then it would increase to 37.6 million. However when I try to figure out what pay rises you would need every year to hit that target it looks to be about 7.5% which (in today's climate) is pretty fanciful. So I guess debt will need to be cheaper or we need impressive pay rises to see this kind of growth again. There'll be some pretty big changes in that time though so who knows what our lives will be like!
Thanks for the long reply.... I suppose where we differ is perhaps in our investment strategy, I tend to buy or accumulate as long as I can afford regardless of the "noise" as I call it. Too hard for me to pick top and bottoms, what the economy all around the world will do, we had world events happen all over in the past too for the last 40 years or so, BUT some of those deals... buying against the trend mentality certainly did help. Most houses in QLD we own we never plan to sell, we keep renovating and maintaining for the next 20 years or so... perhaps redevelop down the track (would be huge CGT to pay). Why sell self sustaining now portfolio or as I like to call it a goose which lays the golden eggs... You know I read AFR many years ago after reading Jan Sommers book and understanding the investment property concept decided to listen to AFR economists instead, not to invest, since they kept saying low inflationary environment will not double the house prices any more...then few years had past and our PPOR in Sydney increased in value...so the lesson learned was not to listen to the so called 'experts' instead if we can afford we should just accumulate. The key lesson learned was not that I was such a guru and knew where and what to accumulate, but luckily we kept duplicating and grew our asset base. Then the time in the market I suppose did it's thing...? I agree this exponential or capital growth seems quite unbelievable looking forward ahead...but perhaps I still have few cycles left, who knows, just see some of the prices in NY, seems certain amount of people with wealth are willing to pay. Also, the older I get the less ambitious and more comfortable I become, learning from life that financial wealth is just one aspect of my life, certain other aspects become more important to me so my priorities change.
