澳洲Australia property A Revisit of Sash's May 2010 Pro


在澳大利亚 The pool at of an IP needs to be resurfaced (or so the pool doctor says), the cost was estimated to be $10K ($10,000), after recoverying from my impresssion of a cat coughing up a fur ball, it just seems far too much. Its just a standard poo I need some advice regarding a property purchase. Property - semi-detached house Bedrooms - 2 Condition - average needs internal reno to modernise Street - one of the best in suburb Location - excellent Close to schools - yes Transport - 50m


I thought I would dig up my forecast from earlier this year to see what portion of it has come true......

Here it is:

http://www.somersoft.com/forums/showthread.php?p=666564#post666564

My comments are:

1. We are not at the end of the interest cycle yet....I am of the view that there is another 0.5% to 0.75% in increases. This means that rates have will have rised between 50%-60% by the end of 2010. This will hurt because it is more than the rise from 6.8% to 9% in percentage terms, where is increased about 33%. Rates have increased by about 0.35-0.5%...and possibly more to come

2. The recent attempts by China to cool growth and the risk of this being overdone and the recent tax increases on Mining companies are potential risks to one of the key areas of the Australian economy. Some evidence of China tightening credit but no impact on mining yet

3. Credit will get tighter....as I suspect what is happening with the PIIGS (Portugal, Ireland, Iceland, Greece, and Spain) will reverberate through the financial markets. Watch this space...Greece is going to be minor impact compared to what will happen if Spain does not sort their economy out. Well Iceland, Greece and Ireland done like dinner....Portugal probably next but the elephant in the room is Spain which is Europe's 4th or 5th largest Economy

4. Being an election year....and politicians being predictable will make immgration and issue and rein this in from the current 300k to 150-180k. This will have an impact on housing. This has been done on the quite via tightening of the skills criteria and 457 visas....but the real impact maybe due to the stronger dollar which has made Aussie property more expensive

5. The building approvals are increasingly rapidly....though Qld and NSW will continue to experience supply constrainsts even if immigration is reduced. Building back down overall....but NSW has has more building but Qld has definitely slowed due to reduced interstate migration

6. Some FHB are realising their first home dream is starting to become a nightmare....who would have predicted?? Yep....already NSW paper articles are stating this

So what does this mean?:

1. Interest rates will top at somewhere between 7.8% and 8.5% late in 2010. Given the level of indebtness of people, this will not stay at these levels for long....and by May 2011 we will see a downward movement as things really cool in real estate. Std variable is already 7.8%....maybe it might be the top if current GDP figures are a precursor

2. The riskiest markets will be Vic (Melbourne) as it has boomed a lot followed by Brisbane and Perth due their exposure to the Mining sector. Sydney/NSW can also be risky....but due to the shortfall there maybe a floor there. The real dark horse is what will happen with immigration and if it becomes an election issue? Vic auctions have slowed considerably...the Qld and Perth markets are basket cases. For that matter even SA is down. Will need further data to confirm the direction of Canberra and Sydney markets though early indications are these markets are slowing also

3. The tightening of credit will also rein in the market and even more so if the PIIG issues affects the financing side of things. Should China waver....it buckle up! Don't I know it ....banks want your first born..will it change shortly is the question....

What will I be doing?

1. I have decided to hold off on purchases...as I suspect there will be some opportunities which will present when the FHB sell up as they realise mortgages can be bummer...and sales due to bankruptcies are another possibility. Some evidence of this already...should see more in Jan to May period as IR increases bite

2. If the supply side is constrained I will pushing rents up possibly 10-20% per annum. The potential for this exists mostly in Qld and NSW. I can increase rents in SA and NSW...Vic is okay but Qld rents are stable or going backwards

3. Will continue to identify areas around Australia which will be unaffected by any of this. Still working on this. Some areas due to Mortgage stress or Infrastructure upgrades are looking promising

4. I seem to be in a solid position from a borrowing perspective as I have up to $2m to spend. Though I don't like the thought of putting down a 10% deposit! Well...if I can get over the hurdles the lenders are putting down...then I am sweet.....also early indications some 95-97% lends are back

Would love to hear commentary on my thoughts above??:D  

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Sounds like you have been pretty spot on Sash.

Seems like the market has certainly cooled in NSW. Lots more properties listed.

I am doing as you have done - taking this time to consolidate. And going to take a bit of a well earned holiday!!  

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sash said: ↑
6. Some FHB are realising their first home dream is starting to become a nightmare....who would have predicted?? Yep....already NSW paper articles are stating thisClick to expand...


newspaper articles are always mumouring this depending on what angle/ agenda they are pushing or if the writer cant afford to buy a place where they want :rolleyes:  

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Ha ha how true about journos. Always looking at the housing market from their point of view, ie why aren't I able to afford to be living next to a macquarie bank director, must be overextended first home buyers pushing the market up. No offence to the exceptions to the rule but journos have an inflated sense of self!!  

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I love journos....particularly their editors as people like reading about how things are so hard.....high food, petrol, energy, etc. costs.

I use this type of reporting as a barometer as to when to get into the market. At the moment it is a good time to be looking as the hard luck stories about property is the theme.:D


sports fan said: ↑
newspaper articles are always mumouring this depending on what angle/ agenda they are pushing or if the writer cant afford to buy a place where they want :rolleyes:Click to expand...
Marty McDonald said: ↑
Ha ha how true about journos. Always looking at the housing market from their point of view, ie why aren't I able to afford to be living next to a macquarie bank director, must be overextended first home buyers pushing the market up. No offence to the exceptions to the rule but journos have an inflated sense of self!!Click to expand...
 

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Challenge

Hi Sash

Looks like you have predicted stuff quite accurately; care to take up where you left off and project the impact on property?

1) Which market will lift, stay stable, decrease?

2) Based on 1) , by how much percentage?


Now, there's a challenge for you, i say!

Mind you, at the end of the day, they are still your predictions:)  

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got 2 out of 6 of your predictions right-ish (#4 and #6) and they were pretty vague to start with.

good on you for having a go, but i'll just muddle along and leave the predicting alone.:D a market can be hot one week, and cold the next ... interest rates can rise quickly and plunge even faster ... 6 months is a long time to be predicting in this current climate.

i'd rather predict the very short term (damn, that's a good buy i'll grab it) and long term (i predict that in 10 years time my ip's will have gone up in value by more than 50%) ... and somewhere in the middle (3 years is a good time to fix - april 09 - because historically interest rates go in 3-ish year cycles from bottom to bottom)  

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hahaha @ 'perth' + 'basket case' in the same sentence.

very very easy to move new product here, and rent new product. if you're holding older stock or saturated stock (3x2s in Armadale for example) you'll be hurting for a while, though.

'mixed bag' would have been more an appropriate term.  

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Actually I beg to differ.....unlikely someone can hold for 10 years unless they also have a strategy or vision to manage the short term.

In my view IR are the main game to success in property....if you get this wrong you might not be able to hold your portfolio.

Will be interesting to see how fellow SSers cope over the next 6-12 months....the last time this happened (late 2007 to early 2008) a few SSers had to liquidate parts of their portfolios.

lizzie said: ↑
got 2 out of 6 of your predictions right-ish (#4 and #6) and they were pretty vague to start with.

good on you for having a go, but i'll just muddle along and leave the predicting alone.:D a market can be hot one week, and cold the next ... interest rates can rise quickly and plunge even faster ... 6 months is a long time to be predicting in this current climate.

i'd rather predict the very short term (damn, that's a good buy i'll grab it) and long term (i predict that in 10 years time my ip's will have gone up in value by more than 50%) ... and somewhere in the middle (3 years is a good time to fix - april 09 - because historically interest rates go in 3-ish year cycles from bottom to bottom)Click to expand...
 

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i had to consolidate, but am hopefully leaner and stronger for the experience. portfolio should be more robust going forward  

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Hi Ausprop

I thought you consolidated during the GFC because of the lack of a market for your developments? Have I got this right or am I thinking of someone else?

From memory you hold mostly in the mining towns of WA which should be oding quite well now?



Ausprop said: ↑
i had to consolidate, but am hopefully leaner and stronger for the experience. portfolio should be more robust going forwardClick to expand...
 

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no several reasons... a perfect storm of unfortunate outcomes really. A few supreme court actions running (each a novel in itself), a collapse of up to 40% in most of my property holdings, a bad business investment, a new family, a development I couldnt fund and another that finished at the peak of the GFC - oh also a cash offer on a property just before the GFC that I couldnt settle,a bad call on an OTP purchase. Iam not surprised my blood pressure is high! my mining town investments have carried me that's for sure - and some very good business partners to whom I am very grateful  

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oh and lets not forget those horrendous macquarie cap gtd products - OMG what a dead loss that i am still paying for and will be for years  

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