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Property set to become worst investment

Discussion in 'Property Market Economics' started by TMNT, 20th Oct, 2016.

  1. TMNT

    TMNT Well-Known Member

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  2. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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  3. Perthguy

    Perthguy Well-Known Member

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    There are worse investments. With property investing, markets change and we need to adapt. People need to start thinking about how to make money in a downturn.
     
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  4. Johnny Cashflow

    Johnny Cashflow Well-Known Member

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    Property will always be profitable in the long term.

    I don't think we will see big booms for a long time though. Banks will start tightening their lending slowing everything up.
     
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  5. WattleIdo

    WattleIdo renovating Premium Member

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    Time to jack up the rent?
     
  6. Fargo

    Fargo Well-Known Member

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    Only 16000 apartments to be built over the next 2 years doesn't seem enough to me, with 200,000 migrants expected in Melboune over that time probably requiring about 70,000 dwellings.
     
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  7. Aaron Sice

    Aaron Sice Well-Known Member

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    Buy right, hold tight.
     
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  8. Magoo

    Magoo Well-Known Member

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    A fundamental principal that always seems to be overlooked is that population growth requires roofs over heads.
    In the mean " as per usual " I expect the tide will go out, then the tide will come back in again.

    Some refer to this event as a property cycle. ;)
     
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  9. Luka

    Luka Well-Known Member

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    Last edited: 1st Nov, 2016
  10. Luka

    Luka Well-Known Member

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  11. investnow

    investnow Member

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  12. MTR

    MTR Well-Known Member Premium Member

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    Manage debt, investing 101, if and when the market turns at least you have your arse covered.

    We are seeing continued blue sky for Syd and Melb, but from my experience when markets stop booming it pretty much happens over night.
    Some experts are calling a softening of the above markets in mid 2017? What do I know I already pulled the pin, I am a chicken, so perhaps I am the loser as its continuing to rise:D
     
  13. Perthguy

    Perthguy Well-Known Member

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    You won't go broke taking a profit.
     
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  14. Ross Forrester

    Ross Forrester Well-Known Member Business Member

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    The reference to "worst investment" is a relative one compared to other investments. It is also in a general context and not related to a particular property.

    It is fair to say that property values and rents cannot increase in value long term faster than wages will rise or we will all go bankrupt. The next step is to observe a market that has increased markedly, and to then indicate that long term averages have to eventually prevail.

    Stephen Keen made the call in 2009: Delloitte are making the call now. It is fair to say that eventually long term averages must prevail.

    What is relevant is that everybody has a diversified portfolio with a lot of contingencies in place for when things do not go according to plan.

    And history repeats itself. So if property becomes the worst performing investment for this decade it will probably become the best performing next decade.
     
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  15. Angel

    Angel Well-Known Member

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  16. Goreng Ming

    Goreng Ming Well-Known Member

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    I think it needs to compared to other investments where there is an injection of your own cash to purchase the investment (plus the leverage to enter into the investment), plus the various tax deductions, any income associated with the investment, and the overall CG of the investment product over a specific period of time.

    For example; an amount of say; $100k - in a Bank, or a parcel of shares, a business purchase, an IP, a painting by a reknowned artist.

    An IP, shares, a painting, or a business can be purchased using no actual cash (equity in another asset) - but the leverage aspect is quite different.
     
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  17. Aaron Sice

    Aaron Sice Well-Known Member

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    here we go again.
     
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  18. radson

    radson Well-Known Member

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    I'm starting to become a bit sceptical of this claim. For example if a city becomes desirable internationally then a lot of demand is global thus reducing the effect of local wages. Also dual incomes, equity release, yielding and/or growth assets income. All these variable seem to dilute the effect of wages on certain markets house prices.
     
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  19. Ross Forrester

    Ross Forrester Well-Known Member Business Member

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    If rents (or rent like costs such as housing interest) increase faster than household income long term we will all starve.

    You can have an effect on household income like the dual working effect or a structural decline in the cost of interest. That is why it is important to look at household income and I cannot predict future trends. For example in the future the household might be 3 generations living in one home and paying it off (you never know). If that happened household prices could increase very quickly - but household income in that case is increasing.

    And population is not a factor by itself in determining house prices long term. There are a lot of overcrowded cities with a poor population. That means that house prices in those cities are lower.
    So at the end of the day the household income levels will determine house prices. Food is important.
     
  20. radson

    radson Well-Known Member

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    yes difference between income and wages. Wages used to be 66% of GDP and now fallen to 50%. Money is coming from other sources.