This Housing Downturn is Over

And what are the consequences of being wrong? Are you willing to live with those consequences?

Still remember those articles in the 90s about gen x not buying houses.

Not saying property cant fall, but not holding property because you think its expensive is a risky position. One because if it rises you miss out. Two because if youve never thought the present is a good time to buy (saying you wouldve bought 10 years ago, in retrospect, doesnt count), when it falls you think it will get cheaper. So you never buy. In which case you only win if the market never recovers.

 

I don't follow? The weekly chart to August 8?

 

Yep the weekly chart in your other post, it is just daily data recorded at end of week from Corelogic. They're fairly transparent and show their daily readings too. Last week data was slow where it barely moved day to day.

Today's data inputs have Sydney & Melbourne up a fair bit for the month. I assume its just re-recording things or fixing data errors that lead to big daily data movements.

Nonetheless, these are early signs are actual house price growth are now accelerating.

 

I'm neither a bull or a bear. But I covered this in my post. Finance starts still near all time lows even in up to date data. Investors in particular. Smart money is being cautious, basically.

Plenty of decent buys out there though if you have the means. Personally I think if you buy for the land and for long term you'll come out on top.

Probably not a great time to buy an off the plan special though

 

Yeah, melb syd up month on month, qoq. but week ending aug 08 was down. Overall trend is aggressively up. But week to Aug 08 still worth noting.

 

Yeah, my grandfather told me that when I was 17.

Way back in 1973!!!!!!!!

 

Nobody is saying don't invest. We're just saying don't invest in things that look very overvalued by historical measures. Let's say you had $125k to invest at the start of 2011. By historical measures Sydney house prices looked very overvalued, the AUD looked massively overvalued and the S&P 500 looked undervalued.

Option 1 - Buy an investment property for ~500k (assuming you don't want to go crazy risky so just want LVR of 80% after you've paid stamp duty, etc) in Sydney. On your standard interest only loan of $400k you're running at a loss (yay negative gearing). But that's fine if you sold it now your $500k property is worth a bit under $800k so you've turned your $125k in 2011 into ~$375k now. Not bad. All the history boffins who said houses were over-valued were wrong and instead they benefited from an epic housing boom.

Option 2 - Buy an S&P index fund and reinvest the returns. Your $125k USD (AUD was at almost exactly parity) has turned in to $342k USD. You were right about the S&P 500 being undervalued. But you were also right about the AUD being overvalued so actually you've turned your $125k into $495k AUD now.

That's with no leverage (so far less risk), no carry cost, no time spent on management, etc. So yeah the property bear was horrendously wrong about property prices. But if they used basic investing principles and kept things simple they should've done better than the housing investor anyway.

 

I like how people like to go back in time and punch some numbers in....how x investment would have returned x dollars today.

 

Yep, the magic of hindsight .

I use the other form of magic called compounding .

 

Almost like it's a good way to compare former investment strategies.

Not entirely hindsight. I did put $10k into the S&P early 2011 based on those reasons and did well (sold out mid 2018 so I've missed out on ~12% since then). But I was wrong on housing. It wasn't really an option being at uni with little income but if possible it would've been a better bet to lever up to the eyeballs into the Sydney property market and sell in 2017. For what it's worth I think putting AUD into the US stock market now given the level of the S&P and the exchange rate would be utter insanity (probably worse than investing in Sydney real estate right now and I'm pretty bearish on that).

 

It's very easy to say do X, Y and Z and you "would of" gotten X returns.

The key ingredient that's missing is the psychological factor. You have no idea what you would have gotten because you got no skin in the game. No psychological stress. Once you're invested with actual money on the line, people often behave very differently.

Talk is cheap. Action and results is all that matters.

 

That is not an argument against the current market being overpriced. Unless you're saying the property market is not capable of being overpriced?

Which of course you're not, which begs the question, what would an overpriced property market look like if not the current discrepancy between median wage (with no growth prospects) and median house price.

 

The analysis I'd really like one of the experts to do is when the vacancy rates in the major cities are tipped to go below 1-1.5%. That's when things will get interesting for (existing) investors.

 

The property market is always overpriced and every property I bought was overpriced .

I belong to the same school as Hannibal (the Carthaginian general who fought the Roman Republic in the Second Punic War) who once said:

“We will find a way or we will make one”​

As I posted above, when I was 17, my grandfather said to me that I would not be able to afford to buy a property .

He was right. I couldn’t afford to buy one but I found a way to buy many .

I did what Hannibal said, not my grandfather.

 

I can't tell you how many times I've heard the term "the property market".

There is no property market. There are thousands of property markets.

 

Just from the sidelines for inner Southside Brisbane ,I have several letters from different real estate companies this week turn up in the po--box and front mail box all much the same 2 buyers one looking for home on above 900sqms blocks.
buyer 2 local developer looking for 900 sqms and above ..
quote
Our clients are in a position to buy,with finance approved..It would mean massive savings to the owner by not paying marketing fees ..

quote..
We are working on behalf of a couple of buyers who are looking to purchase sites x homes in premier positions on allotments above 900sqms..

So in between sticking pins into wax dolls ,i rang one well known agent on the inner southside and asked the question as they made the mistake of putting my name on the letter head as opposed to the home owner..

From what this gentleman said they can't get enough listing's ,it's been several years now when inner Brisbane boomed and this may be the start of the next cycle ,or a lot of new agent starting out ..

 

I got a couple of sites in the area and sale prices seem to be quite strong for smaller, new contemporary builds. There is a large range of prices though. Best streets, aspects and builds fetch the most.

 

You greedy, evil capitalist. Leave some homes for the masses to have a chance at!

 

So should we start another thread? How much will property go up this cycle?

 

Isn't everyone invested one way or the other though? Once you have any money you decide where to store it and are making a bet. Everyone has skin in the game.