NSW Windale (Newcastle)

How about that...I would never have know that. I guess that's what sigma can do to a suburb.

 

I spent about two hours talking to a few neighbours of a couple of of houses I was looking at. Lovely people, poor and down to earth, they will come help you if you need help. They understand life. I always liked the good people in the worst suburbs, they were real. Hearts of gold. I was going to buy and live in until another investing time appears, can't loose your capital in Windale. And because buying property now is plain crazy.

There is a investors maxim all should remember :

buy cheap sell high and don't loan money to do it or else you can't afford it.

Property investors on the other hand continually repeat the following maxim:

Buy expensive, because the price is always going up, people have to live somewhere and loans are not too expensive. If you don't buy the price will run away from you.

Well with property it made sense to buy with median double incomes where for 2 X or 3 X annual salary you bought a median house for maximum $400000.

By median house intelligent people not only mean median price but median value and quality house. So buying a miners cottage in a suburb that's now expensive but before was nearly a slum, at the top range of the suburb price when a newer 4 bedroom sold for that price a couple months earlier and is used by a real estate agent as evidence of sales, is just plain stupid.

But hey I have learnt that it is the right of people to remain stupid and it is particularly cherished.

This is why I have completely pulled out of buying a property, as usual I will go look at interesting properties but will scale back to one or two a week.

Now is not the time to buy in Newcastle and it's crazy to do so.

Adamstown heights has gone up $120k in one year. Kahiba has gone up $80k in one year. New lambton heights $200k in one year. Hamilton south $300k in one year the same for Merewether.

This is crazy time and I never got rich by dancing with the clowns.

This will end in tears just like many suburbs in Perth and Gladstone. It will end in tears just like it did for all the people on this forum that went crazy, it will end in tears like it will for the domino pizza boy.

 

Thank you Professor Keen.

Just FYI, property goes up in strong bursts for a few years followed by periods of not very much happening followed by strong growth again for a few more years. There is nothing unusual about this cycle - same ole same ole.

If you pay cash for a house - fine. You'll generally do better overall by applying the right amount of leverage & by borrowing at low rates. It's made lots (6 figures) for me............and I did not have to live in low socioeconomic areas to do it. But each to his own.

 

Hey Andrew, how you going? Bought a PPOR? Or IP? Or both?

 

Well the situation you have described, Alan, could you please tell it to the forum members from Gladstone and Karratha and Port Hedland and certain suburbs of Perth.

I am a amazed that you do not recognise that property prices do fall.
In fact in Australia property prices have halved before, let me find the graph.

 

Is Excessive Private Debt Something to Worry About? | Trade the Tape

There you can see a chart property prices halved in Australia between 1930 and 1950

 

Didnt they have a big war?

 

And a depression.

 

I have posted many times about the dangers of buying in mining towns - most people cannot time their entry and exit points accurately enough - this is not investing IMO but speculating. I should have put that caveat on my latest post for clarity.

Property prices both can and do fall - mostly by only 5-10% for median priced property that is not a 1 industry or a mining town. I'm OK with that if prices have risen 30-40% already as gains far outweigh the losses.

If war or a great depression (as in the dates you have noted) breaks out, and prices fall, I think we'll all have other far more important things to think about than what our IP's are doing.

 

Worth a watch, When the Japanese subs turned up in Sydney harbour. This woman went and bought homes off all the residents fleeing . She ended up with over 100 homes in the inner city, she donated them all to her charity When she died. "Houses - Who’s Been Sleeping in My House? - ABC TV

 

Newcastle and Perth are 1 horse street cities. The difference is Perth is much bigger and has a huge economy to support its jobs. What jobs does Newcastle have in jobs in comparison, apart from some coal mines, that granted are suddenly on the rise? Both are mining towns but prices in Newcastle for the same travel distance to CBD are the same or actually more expensive? It's a credit driven bubble.