Where do you think Logan is on the property clock?

There's nothing linear about the property cycle . It booms and then goes sideways for a number of years , then gradually starts picking up and then booms again .

If you know what to look for , it's easy to pick when the market is starting to pick up . The timing of the boom will vary , but once you've had a boom in Sydney , and start to see a steady pick up in Brisbane , then further growth in Brisbane is probably one of the most predictable investment cycles I've seen .

If you try to apply that to remote mining towns you're asking for trouble . I really only look at capital cities , and major , diversified regionals with " good fundamentals " - yes I do look at that , but why buy in a fundamentally sound city at the wrong time of the cycle and watch it go sideways for seven years ( I've done that in Sydney .. in a place with very good fundamentals ....)

Cliff

 

um . fundamentals include timing/cycles,

 

for all those people who are very keen on getting into the area

have a look at this one
33 Leichhardt Street Logan Central Qld 4114 - House for Sale #122219458 - realestate.com.au

depending on the price you can get for it, however the block is sub 600sqm

 

the interesting thing is, im no expert but in terms of cycle we are at anywhere between 8 and 12pm so there may or may not be any or much growth left,

BUT

in terms of peak prices, the area has just hit or surpassed or reached the peak prices of 09ish,

I dont know if using the previous peak as an indicator of where the next peak will be a good indicator

what do more experienced investors think?

lets say fundamentals point to the peak right now, but yet the price is the same as the previous peak, would you guys be confident that it will surpass the peak creating another one

 

I'm not aware of any " fundamentals " that can point to a certain level / price that an area will reach but it depends on what you call a fundamental ...... It really comes down to supply / demand .

You could make a case for yield giving a guideline to prices . Now days a yield of 6 % is considered cash flow neutral , maybe with 20 % deposit and all purchase costs paid for cash it might be , but if you're borrowing everything , it isn't , but a 6 % yield is generally considered good . Once the market starts moving yields will obviously drop down and you can use what yield people were prepared to buy at as a guide to what price people are prepared to go to.

Typically when you have a boom prices will move a certain percentage above the previous peak . eg lethbridge park in Mt Druitt , peaked at 238500 in 2004 , it went down to 204 two years later and stayed there for two years before starting to move up . In 2012 it was still around 235 before starting to move up strongly and last year , 2015 reached 450 k . No figures through for this year , but expectations are it will be on its way down . That's around a 90 % increase from the previous cycle

Most of the Brisbane cheapies reach high 200's to 300 around 2009. If you applied the same percentage increase that occured in Mt Druitt you'd get up to mid high 500's which sounds crazy , but in the last cycle brisbane did peak five years after Sydney . I think that price is unlikely , but a target of similar prices to current Mt Druitt prices in around five years isn't unreasonable , BUT, rents in Mt Druitt are higher , so those sorts of prices should really only be reached if rents go up and interest rates stay low , which would have been the key to Mt Druitt reaching those prices .

Sometimes prices will pause at a previous peak . There is a logic behind this and it's one of the underlying premises behind technical analysis . There would have been people who would bought at or close to that price and subsequentally seen their investment fall in price . They're frustrated , they have come to believe that property investing is foolish and no one makes money doing it and all they want is their money back .

When they see that opportunity they grab it with glee .

Once all of those people have sold the remaining potential vendors have different expectations and more likely to stand on the sidelines . New potential buyers are seeing prices go up , dwindling supply and once that previous peak is broken price movement tends to keep on going until some sort of circuit breaker occured to make people think twice .

In my experience there is usually some external trigger , eg the APRA changes acted as that in Sydney . My recollection is that in 2004 state based tax changes caused the market to stop and in Brisbane and elsewhere in 2009 the GFC was the trigger .

At the moment the economy seems to be starting to improve ( except in Bayview land ...) , Brisbane is doing ok so I think we will see continued growth .

Cliff

 

Nice post cliff

That being said lets take adelaide elizabeth for an example.
Certain properties that were selling at the prak in 09ish for say 220 were selling for about 150 recentlt.

The rents havent changed muchmaybe gone from 230 to 250 for an example.

Your point about people trying to get out at the price they purchased at is a good one and a psychological consideration too

So the yields have gone from 5.5% to 7%
Obviiusly yields are higher in this area but once it goes above or below the average
Then the market should move

So why were people buying at the peak when the yields were at their lowest market rates?

 

If they're investors , its because their idiots and don't' know any better

Cliff

 

I was once that idiot I'm a different kind now
It was a big learning experience! Wouldn't recommend it

 

We bought our first property in logan for 65 K in the early 00's . The agent who we bought it off was puzzled why all those southerners where buying in an area that never went up .

A few years later when we were looking to sell and take our profit , i had a conversation with the same agent . He told me that he was convinced that Logan was going to keep going up and he had just bought his first investment property . He didn't buy at the peak of the market and we didn't sell at the peak of the market , but he missed out on the well over 100 % growth we'd seen since we had bought , and he was a " professional " working in the industry .

Cliff

 

In 12 months time, it will be Melbourne people we need to worry about.

I crunched some investor activities in Logan. Yes there is higher % from Sydney compare to Melbourne. A big difference. its like 30% versus 3 % That's because Sydney boomed and are all cashed up. They will eventually dry up, and me thinks Melbourne buyers will take over.