Summary of the news I read here

Agree with this... nothing worse than seeing an excellent buy but not having the capacity to buy it....

 

Yes, property didn't work for me the last 10 years. I don't call 5% a year - good performance, you can get more with a bank deposit.

 

You think so? Most of the brains out here never saw a crash in their whole investment lives. Only a few people who invested in mining towns understand what I'm talking about. Leverage doesn't mean a lot when the prices are down 50-70%.
Do you think it's easy to pick the bottom? Try it, it's easy to find an instrument for training.

 

Is your 5% return based on yield or growth? Because you can get both 5% yield and growth) in property if you play your cards right. Plus if you borrow your 80% or so of funds.... very very powerful stuff. Your 5% growth will become 25%. Eg. 500k property. You put in 100k. 5% growth = 25k. Tenants pays rent so that covers loan repayments.

I know property has significant costs involved, that's why you need to invest with a longish timeframe. And sometimes places grow a lot more than 5%... eg. Lots of Sydney grew 50-70% or so between 2013 - now. Eg. Epping's gone from about 900k in 2013 to ~1.7m now. That's just massive... it could fall back but I can't see it going back to 2013 levels.

 

It's based on growth, yield doesn't interest me. I never borrow, all my properties were 100% cash purchases. I don't rent out, because I had negative experience with some of my tenants and I'm not going back into that river again.
100% gain a year is massive, what happened in Sydney is just moderate growth on the back of a long stagnation and it'll rock back not only to 2013 levels but a lot less than that. It just takes time.

 

I disagree... over thr long term, big city property keeps going up and if Sydney and Melbourne fall in a hole, all of Australia will be completely in the bin. (Ps. I'd love to buy somebody's $mega millions home for a song....) saw the 24 Lang Park Centennial Park property today... very impressive...

And just because you had negative experiences with tenants doesn't make it all bad....

 

Watch closely what happens in Perth. That is the future of our real estate. A big property is good, but cleaning it is a lot of effort.

No Negative experience isn't all bad, but I don't want to repeat it, so enough is enough.
There are a lot of different ways to invest. Some of them are easier, cheaper and give substantially bigger gains in a shorter amount of time than property, so why bother.

 

They said it cannot happen to :

• Mining Towns...It did
• Mining Cities....It did
  
• Mining States...It did
• Mining Countries....

Just takes time.

 

Without leverage, property investing doesn't make a lot of sense.. you're better off with shares

 

Leverage is a just a multiplier, works both ways.
High LVRs will be equally effective on the way down.

 

and it's ticking already.

 

Nope, shares are also not that good.

 

Without leverage , without tenants ...

gee if that's what 30 years of experience taught you ....

You definitely need to get out of property . I can see why it didn't work for you .

Personally I've been happy to use the banks money to buy properties and my tenants rent to pay the mortgage

Cliff

 

90% of people on the Aussie rich list made their dosh from property.

Im sure most of them set things in motion in a depresed market.

 

When was the last depressed market? Early 90s? if it was early 90s now, I would have been heavily investing in property, which I did by the way.

 

Depends which market.

For Perth (where I am) it went all the way to 2003.

 

Perth can revisit 2003. It just takes time.

 

Going back to my original questions:


What does market downturn look like? I.e., what are the indicators (apart from auction clearance)
What will be the tipping point? (Sydney apartment price fall/ interest rate hike?)
How was it the last time around? When was it?
Another question- what will make you run for the hills?

Thanks.

 

Downturn - longer days on market figures, higher discounting, lower clearance rates. Higher stock on market.

Tipping point - not enough buyers for the number of sellers. Prices will start to fall. This time around I think interest rates will have little to do with it. More like mass unemployment, bad economy, little immigration. Excessive new apartments for demand - Sydney doesn't have this problem too badly because what I read we have a housing shortage in Sydney. But it's probably a big factor in Melbourne CBD apartments and for Brisbane. I think it has the potential to drag down Brisbane. Brisbanes been dicey for a while after the floods... It is recovering but it's a more fragile economy and market than Melbourne and Sydney. Jobs and economy are dragging down Perth and Darwin. When they were booming, they were really booming. But in the downturn... It's a hard landing.

How and when was last time - In Sydney the last peak was in 2004. Prices stopped rising, prices started to lose some of their gains (note, some areas only), lots of properties on the market in some areas with few buyers. But each city is a bit different.

What would make me run for the hills - * I know a building that had a $25k special levy on it. If I couldn't cover that then I'd look to sell up. But it would make buyers weary of future special levies too. Also high strata rates - I don't own in any stratas of over 4 figures per quarter.
* Holding costs that I couldn't manage
* I'd also prefer to buy when the market is going through the early stages of an upturn - having held 3 years in a flat Sydney market with somewhat high interest rates was not too much fun at the time. When the market is showing signs of growth, that's probably the best time to buy, once it's risen in value you can pull out equity and go again, subject to finance . Try to buy something you can add value to too.
When the market isn't doing anything and you have no equity to extract, you will go nowhere for a while. So look for the growth.

 

Market downturn - higher unemployment, falling population figures (negative migration), fall in rents, as a result fall in prices.
Indicators - low interest rates (cannot go any lower, so no more cheaper credit, heavy restriction on foreign buyers, excessive stock of new build.
Tipping point - fall in rents.
The last time it happened here (major crash) was probably 50+ years ago, so no idea. Overseas - I have seen and felt up to 70% fall in house prices less than in a year. 1998 Moscow market. Similar falls - Ireland, parts of USA, Japan, parts of Spain and Italy.
I'm already in the hills and feeling good. 10 years ago I have understood that property has reached its limits, and started to prepare myself for different investment abilities.