What comes next?

Discussion in 'Property Market Economics' started by mues, 21st Oct, 2018.

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  1. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    you said

    I thought you were implying its OK to buy at peak if you are in for a long run,
    I was questioning how long is long?

    did I interpret it wrongly?
     
    Last edited: 22nd Oct, 2018
  2. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    Just curious, what made it overpriced?
     
  3. Perthguy

    Perthguy Well-Known Member

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    Is that when either the Sydney market or Melbourne markets peaked?

    My post was not about buying at the peak. It was about buying before the peak.

    > I was questioning how long is long?

    20 years. But I still would not advocate people buy at a peak.
     
  4. Perthguy

    Perthguy Well-Known Member

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    The mining boom made it overpriced. Or do you mean how could I tell it was overpriced?

    Take a property and compare to a similar property in a similar location in Sydney or Melbourne.

    I followed the market for a few years before I was ready to invest. Properties I had looked at previously were significantly higher in 2007. Like high 5's to low 6's for run down properties in bad areas. I looked in Melbourne for comparable properties in similar locations and they were selling in the 3's. Besides not seeing value in Perth, that was enough to convince me to invest in Melbourne. There was just a lot better value in Melbourne.

    Incidentally, in 2007 the median house price in Perth was briefly higher than the median house price in Sydney, so I was not wrong that it was overpriced.
     
  5. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    Determining Peak is luxury one can afford only in hindsight, the matrix which made housing overvalued at peak in late 17 would have been shouting overvalued even in 2016.
     
  6. Perthguy

    Perthguy Well-Known Member

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    I don't agree. I have picked the Perth peak of 2007 in 2007 and the lesser peak of 2015 in December 2015. If you are active on the ground and participating in.a market then I don't think its hard to pick a peak.

    It's hard to pick the peak of a market you are not participating in though. I agree with that.
     
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  7. KinG3o0o

    KinG3o0o Well-Known Member

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    i am about to settle in melbourne next month so that makes 2 of us..

    i have no problem with that.. bought in peak sold in peak thats ok... i bought this property because its "special" rather than its "value" if it makes sense.

    its a marathon no doubt. but in 20 years time other assets maybe have or have not gone up, there is opportunity cost to consider, only time will tell tho.. no one really knows.. historically stock market has won.. but nsw from 2007 - 2018. has been good.
     
  8. Perthguy

    Perthguy Well-Known Member

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    It makes sense to me.

    Historically, the stock market has slightly out performed residential property. Not really by any significant margin though.

    In 2007 the All Ordinaries Index was 6,873. Today it is 6,007. That doesn't mean it was bad to invest in the stock market over that time.

    In March 2007 the median house price in Sydney was $480,000. In March 2017 it was $945,000. But that doesn't mean you should only invest in Sydney.

    It depends what your goals are and why you are investing. I would suggest people invest in whatever interests them more. Shares, property or both. I'm invested in both.
     
  9. icic

    icic Well-Known Member

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    For an average person, stock might have won if leverage wasn't taken into consideration, otherwise I would say "No way, Jose!" :D
     
  10. AlexV_Sydney

    AlexV_Sydney Well-Known Member

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    it depends...
    even without leverage it's possible to make 30-50% per year with shares if you know where to invest to. Eg. Apple, Nvidia - their shares grew 10 times within relatively short time, Google's shares grew 5 times. So it's not bad compared to leveraged property investment with high transaction / maintenance costs.

    same as it's possible to find a property which can grow when overall market is falling / correcting
     
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  11. mues

    mues Well-Known Member

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    As a note. I am very active in Melbourne currently. For a PPOR. I have been finding stale houses and trying to press the agent.

    My experience is they are not confident in getting a good price, but not panicked yet. I can lower the price some but agents know the vendor expectations and fear hasn’t set in. If they post a range, generally it’s hard to take them right to the bottom before reaching heavy resistance. This might change soon.

    Not sure if others are finding the same?
     
  12. Triton

    Triton Well-Known Member

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    If u can make 30% gains year in year out, you would be the best investor in the world. Even Berkshire Hathaway returns over long term are less than
    20% pa
     
  13. TAJ

    TAJ Well-Known Member

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    I would imagine that at times people do make substantial gains buying a boom stock...... possibly doubling their initial investment, but to think this could be repeated year on year is foolhardy.
     
  14. mues

    mues Well-Known Member

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    I personally invest in stocks more. But timing the market is way harder. I basically consider it impossible. So I just dollar cost average.
     
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  15. AlexV_Sydney

    AlexV_Sydney Well-Known Member

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    if you know what you're doing and you know the company very well, it's possible
     
  16. icic

    icic Well-Known Member

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    Don't do it, Insider trading is illegal. I did say for an average person, not a privileged one didn't I? :p lol
     
  17. AlexV_Sydney

    AlexV_Sydney Well-Known Member

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    True, but I wasn't talking about insider trading...if you know the company's internals, their product in detail, if you have indirect evidence of current and future performance (from public sources and legal ways to get the source data) and you have exceptional reasearch / analytic skills, it's quite easy to have very good returns, much higher than average investor or well known large investors have. I strongly believe that investor should invest only to the well known markets, in which they're like experts.

    If you buy something only because someone suggested or because of good past performance, it's like to play in casino.

    For example, you can analyse the mobile traffic from the newest Apple devices, compare it to the same past period when new devices were released, and make a prediction about future quarter sales report, comparing it with market expectations. This is just one of the hundreds ways to get some data for your analysis.

    Same is for property market. You find some suburbs, which have 60-70% chances for rapid growth, buy a few properties in those suburbs, and in total you'll have good returns, even if some properties have flat growth or minor decline.

    You can find and buy some small profitable businesses (often you just need to pay 2-4 times the annual profit), bring / implement new ideas and make them more profitable or just keep them running with same output.

    Lots of opportunities... and most people don't see it. But if you prefer just passive investments, you can't get good returns, unless you're lucky and bought when everything grew.
     
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  18. mues

    mues Well-Known Member

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    Interesting enough. I basically believe the opposite of everything in this post.

    My brother was an analyst at one of the biggest and most powerful investment firms. He spent all his time doing this for years. He thinks that it’s still basically a guessing game and invests in index funds.
     
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  19. AlexV_Sydney

    AlexV_Sydney Well-Known Member

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    I think that if an analyst is good enough, they won't work for someone. Same as many talent programmers establish own businesses rather than work for someone

    Are you saying that there are no investors who bought Apple shares in 2009-2010 and still hold? They basically made huge $$$. I didn't hold that stock for all 8-9 years of that rapid growth but I used that opportunity. Same for many other tech stocks.
     
  20. hieund85

    hieund85 Well-Known Member

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    I bought an IP in Melbourne in August 2015. No holding cost since it is CF+ from day 1. Sold it two months ago. After all selling cost, CGT, stamp duty at purchase, etc. I have been left with 25% profit (based on the original purchase price) or 200% profit based on the initial investment amount. And this is the worst IP in my portfolio, that's why I sold it. Not sure if I can get the same level of return if I invest in stock (I am an amateur in stock investment).
     
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