Property Boom is Over, what's in store for 2016

In Sydney most g/flats are not approved, seems not to be an issue, different demogrphica

 

There are quite a few unapproved down the South Coast too, some councils are stricter on them than others.
I would probably avoid buying unless they were approved. Could be a bargain though.

 

in melbourne you can't separately leased them. They have to be leased by one person or co-tenancy or be part of the family. there is also rules of removal of these g/flats depending if they have a kitchen or no-kitchen to the flat as the rules push more for single family occupany both the main house and g/flat.

 

this is useful info for investors who do not live in the area like gold coast and brisbane. being on the floor going to auctions seeing the vibe and who are the real buyers. which goes to my point, it doesn't mean with airasia have flights to gold coast there will be an inevitable boom, coz of the chinese. Secondly, how does anyone know who is chinese, korean, vietnames, phillipino, malaysian, singaporean or indonesian as they do look alike unless you understand the lingo.

More tourist will help the state economy which may affect the businesses locally but if they only there as tourist without buying any property? it makes little impact. If you go to france - as in the pic below, this is in the suburb of champs elysee paris. One could mistaken this to be a suburb in beijing but is not. IT doesn't mean there is some sort of boom in property. Correlating events like these seem irrelevant. This happens everywhere worldwide.

 

Re read the article gives an accurate account on what happened in 2015 and what markets have softened including Syd...and in 2016 what fundamentals which will drive certain markets

He is not bullish on Brisbane and mentioned reasons why

Perth, Darwin downturn market which is correct

I reckon his pretty much spot on, we are already in mid. 2016 no surprises so far.

MTR

 

What do you mean?

 

Well it's less measured.

So if you sense a lot of enthusiasm especially by new investors who have bought 1 or 2 or 3 places, and rave about trying to buy more because it'll always go up due to immigration, then it's probably selling time around the corner.

In the old forum, the last time the forum had all these extremely negative new comers, I bought 4 places in the space of 18 months. The worst performing one doubled.

 

It's like the movie, 'The Big Short'.
When the dude speaks to the stripper who's giving him a private lap dance he asks "So how many do you own?"

Stripper: "I've got 5 properties"

Dude gets on phone: "Ok buy the shorts. This is going down big time"

Well something along the lines of that...

 

I think it's been selling time for the last 12 months

 

Ok so what do you do with your money in the mean time?

Eg my wife and I have about $10k free cash flow per month after we pay PPOR, expenses, investment property mortgages (actually they make a colelctive $1100 loss per month after rent but you know what I mean) after travel, toys, bills etc....we have $10k per month.

Where would you like me to put this?

Into equities with 17-21x forward earnings?
Into TD's @2% pa?
Into muni bonds etc?
Into gold?

All of this cash has to go somewhere and this along with fear of collapse in China etc is sending it to Sydney.

People in Sydney say there is a collapse coming any day now.....but I don't see the taps being turned off with alternative investments OR massive unemployment.

so tell me.....where would you like me to put this?

 

Personally i think the luxury market bottomed a while back in some respects, as in the one off hugely discounted deals are not as common and there is increased activity at some areas of rhe top end. Eg luxury penthouses are still struggling but priced above their lows of last year.

Luxury near new blue chip properties are still well below replacement but turning over fairly regularly and not for as cheap as a year or 2 ago. In some areas, eg mt pleasant, good blocks with rhe right orientation, size, location and a rentable house are in decent demand with them selling reasonably quickly and with a bit of interest. Finished product also has some interest as buyers with that kind of money are realising the outstanding value out there. Eg you could buy a house now for $4m that might have cost nearly $4m just in construction cost, let alone the $3m in land value at the time of construction.

 

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Eg this one, chris ellisons old home. Its certainly not to my taste but he paid 6.8m for it and spent a pretty large sum on it, i know the landscaping etc alone was around 400/500k and more spent elsewhere so final cost would have been just under 8m.

It sold a year or 2 ago for arouns low 4ms from memory but someone who can be bothered looking can check.

That sort of crazy drops at the top end i believe are not as easy to find now but there is still excellent value.

Ric stowe's property mentioned at the top of the article was also incredible value. Once valued at 70m or so it sold for 21m aftee the receivers had it on the market for quite a while.

 

I read a lot of these things and they all seem to talk about booms and quick wins.

It makes me wonder, how many of you are in this for a quick win? With property being considered a longer term investment, is the quick win idea just to be able to revalue and draw equity?

If drawing equity instantly is not mission critical then do these stories have less importance?

 

I think anyone who is investing will need to do his or her own DD. It's fine with hype and lots of "promo" on an area because they could turn out to be true but doing own DD. Those who bought into hype will realise eventually whether they bought them right.

 

Quick wins and equity make great blog posts. I get the feeling that most people (excluding SS/PC members) don't understand equity and confuse it with being able to service a loan.

 

Timing of investments and their returns are always important because most people only have finite resources, in particular capital and time.

If buying something that takes 10 years to go anywhere means not being able to take part in another more lucrative investment elsewhere (in or out of resi property) then ive shot myself in the foot. Or if i simply buy whenever i can afford it may mean not having cash to take advantage of dips kn the market where quick gains can often be made.

Lets say i had 600k to spend 2 years ago and chose an old house on development block in Belmont, perth instead of something in sydney and you did the opposite, we both put 20% deposits down.

Today i would have a property worth between 450-480k with a 480k loan against it and id be completrly stuck with nothing to do apart from pray for growth or save for another deposit.

You on the other hand might have a property worth 800k and a 480k loam against it. That 1 simple decision has a 350k nett effect in 2 years of passive investing.


Im nowhere near rich or lucky enough to ignore market trends and just buy without considering them

 

Quick wins put cash in your pocket. Look at some of the leaps and bounds over last couple of years that a few sydney based PC members have taken. Now, compare that growth in net worth with someone investing in anothrr state who had a similar starting position equity wise.


It cannot be ignored imo.

 

Some good points, thanks .

 

very true - not only talking about statewise, choosing wrong suburbs within the state itself would make a difference in the CG as well.

 

.
Many markets have been booming in Australia since 2013, did you play in the Australian property market during this period?
We are now entering a different phase where many markets are in a downward trend or peaking, boom markets have an expiry date and that is why I have taken some money off the table.

MTR