Interesting piece by Joye in the AFR

strange that any chart of any sort can convince people of the reality that surrounds them - seems the answer is not to question the data but to ignore the evidence

typical cheap villa in typical sort of suburb such as midland:

http://www.realestate.com.au/property-unit-wa-midland-115351159

worth pretty much what it was 8 years ago, yet apparently we are in the mother of all booms, median price heading for pluto and we are due for a crash. OMG how can we sustain these multiples!?! (has actually FALLEN dramatically on this property in real and nominal terms)
I've not said that we are in the mother of all booms. I would put it that prices have been oscillating cyclically near a peak for a number of years (in real measures such as inflation adjusted or relative to incomes/GDP). So there is a greater risk that property under performs rather than a repeat of the last 15-30 years.

I suspected we'd see a cyclical 20% rise in Perth prices from mid 2012, we are almost there and I think prices will probably top out later this year, before the next price downturn.

Past sales in that unit complex suggest a 20-25% rise over the last 2 years.

Not all cities are in exactly the same cycle, so you are right that a national measure doesn't always reflect the specific situation in each city (just as a city wide median doesn't reflect the situation in every suburb).
 
I suspected we'd see a cyclical 20% rise in Perth prices from mid 2012, we are almost there and I think prices will probably top out later this year, before the next price downturn.

Past sales in that unit complex suggest a 20-25% rise over the last 2 years.

Perth wouldn't have grown 20% in 8 years, break even perhaps, some areas doing better. doubt bris, adl or anywhere else much has either (in nominal reality terms I am talking).

" I would put it that prices have been oscillating cyclically near a peak for a number of years" - are you saying prices have been flat for years? in which case I agree, however I would go further to say they have been falling in such terms
 
At the end of the day, in the long-term, we would all benefit from owning at least a few residential properties.

One to live in today (CGT-free), one to flip and help pay off your PPOR, one to downsize to later in life, and one for each of your kids when they grow up.

So at least 4, or more depending on how many kids you have.

And maybe a beach house on top of that if you are that way inclined.

So I would just focus on gradually accumulating a few residential properties over time and when you personally can afford it, with a long-term perspective, and not be too fussed about inflation, interest rates, booms, busts or flat-lining prices.
 
Perth wouldn't have grown 20% in 8 years, break even perhaps, some areas doing better. doubt bris, adl or anywhere else much has either (in nominal reality terms I am talking).

" I would put it that prices have been oscillating cyclically near a peak for a number of years" - are you saying prices have been flat for years? in which case I agree, however I would go further to say they have been falling in such terms
I didn't say 20% since the peak, I said 20% from mid 2012.

http://www.bullionbaron.com/2012/08/perth-property-on-cusp-of-price-growth.html

Based on Residex data the top of Perth (house) market came in March 2008, $521k. By June 2012 it had dropped to $467k (wrote above post shortly after). As of February this year they are $538k, so 3% above the last peak & 15% above mid 2012 prices. Could outperform my expectation within the year.

As I said the real measure of prices has been oscillating at a high level (for around the last decade) which is what the price to income chart shows:

dc9fce44-bb75-11e3-a9d3-f477f7972aaf_house2646x369.png
 
At the end of the day, in the long-term, we would all benefit from owning at least a few residential properties.

One to live in today (CGT-free), one to flip and help pay off your PPOR, one to downsize to later in life, and one for each of your kids when they grow up.

So at least 4, or more depending on how many kids you have.

And maybe a beach house on top of that if you are that way inclined.

So I would just focus on gradually accumulating a few residential properties over time and when you personally can afford it, with a long-term perspective, and not be too fussed about inflation, interest rates, booms, busts or flat-lining prices.

Why can't you kids buy there own house:confused:

Oh...thats right..they can't afford to!! I know what will help, housing pricing rising above inflation!

Interesting that taxpayer funded pension costs are going to blast into the stratosphere (well above inflation) over the next ten years and it's a an economic time bomb, but no one here wants to say rising house prices rising in value above inflation is a problem? Whats the difference :confused:
 
Why can't you kids buy there own house:confused:

Oh...thats right..they can't afford to!! I know what will help, housing pricing rising above inflation!

Interesting that taxpayer funded pension costs are going to blast into the stratosphere (well above inflation) over the next ten years and it's a an economic time bomb, but no one here wants to say rising house prices rising in value above inflation is a problem? Whats the difference :confused:

I'm not saying the properties bought should be for them to necessarily live in, it maybe a way to help fund an early inheritance, a secondary, tertiary or post-graduate education, start a business, for philanthropic causes etc.

I don't see why they can't or shouldn't be able to buy their own properties on their own feet in the long-term in affordable areas relative to their own incomes.
 
What data source is reliable? Your anecdotal 'doomers and gloomers' indicator?

So how about the charts from AFR & Christopher Joye (or are they also tainted)?
http://www.afr.com/p/business/property/house_prices_flash_red_record_debt_MPI3fve6eztNMyT62R4P1J

Is there any data that would make you believe that prices are too high or can't continue to rise as they have in the past or would it literally take the alien invasion you mention?

It is telling sign when the primary response from some users in the thread are ad hominem attacks. No interest in backing up the argument that prices can continue to outpace inflation or incomes forever? Oh...

While I concede the point that prices that can't outprice inflation indefinitly , I'd consider this a moot debating point and of no practical application when it comes to the day to day process of investing in property which is the reason why most people are on this forum . ( rather than investing in debating points which seems to be your target , though I apologize in advance if I'm wrong about that )

The reality is that statistics, when studied in relation to economics , is a mathematical analysis of the behavior of peoples actions . By it's very nature it is a trailing indicator , telling us what has happened , rather than what is going to happen . Obviously , given the tendency for the masses to react in fairly predictable ways , analysis of statistics can give us a good way of predicting what is likely to happen.

As someone who has an interest in Bullion you would be aware that this can be useful , though at times a frustrating area of study. Myself along with many other people on this planet have spent way too much time analyzing statistics applied to the share market........

I have found that basic share techniques are very useful when applied to the property market and over the last ten years I have seen more and more information become readily available.

What I've also noticed over this period of time is that this forum is a very good way of finding out what is going to happen in the short term in the property market. Before people take action , they talk about it and discuss it with their friends. .

Where do property investors talk about property and discuss it with their friends ?

Here . Somersoft.

That's why I'm here. To listen and learn . I do get sometimes involved in somewhat meaningless debates which have no practical application to my property investing , but sometimes those meaningless debates result in a degree of clarification of certain aspects of property investing . ( in this situation the bits highlighted in bold ) .

Every market consists of a wide range of participants who bring their wide range of opinions and different levels of commitments to the table. If there wasn't that divergence things would be much more organised and predictable , which they obviously aren't.

Thank you Hobo for bringing your opinion and commitment to the table .

Looking back over the last cycle I can recall discussions with experts in every market I invested who questioned the decisions of forumites to invest in those markets.

Most people who invested in Rocky will recall a local REA who was a gold buff but didn't see the gold he was walking on .... " Rocky prices don't go up , Why would you buy here .... " .

We need Doubters ( certainly at the moment , at this early part of the cycle :cool: ) . When everyone is fully committed to the market and there are no doubters left and no new participants coming on board , then , that is the time to be careful . So the fact we have high profile doubters in abundance only gives me more confidence that the market has a way to go. As the market continues to move , people who have listened to them will start panicking about missing out and rush to get in at a time when it have become obvious what has happened. The smart people on this forum are already fully committed and waiting on the sidelines watching their profits grow.

If you are here to actually learn about property investing , rather than earning debating points , you would be foolish to glibly ignore anecdotal evidence. It is a leading indicator and the results of it's analysis don't appear on any graphs that I know of.

Cliff
 
Last edited:
I was considering a more detailed response to your post, until I saw that you are yet just another mud slinger with no interest in a mature discussion:

http://somersoft.com/forums/showpost.php?p=1150984&postcount=11

Money can be made in property at anytime, just as is the case with all other asset classes. I was making the point in this thread that buy & hold is not going to perform in the future as it has in the past (because property has boomed to a level where it's unlikely to outpace incomes & inflation as it has over the last 15-30 years), that doesn't mean there will be no opportunity, but it does mean that opportunities will be limited & overall market growth will not be as high.

I am here to listen & learn too see_change, I read far more than I post.
 
Mud slinging ... :eek:

That was a little poke .... ;)

Considering you had plenty of time to respond to this post prior to that other comment you refer too . I'm disappointed . Yes , you did have time . You saw the post and didn't reply here until after I made that comment.

Considering that I conceded a point to you ( which rarely happens on the Internet ) and then you now duck a substantive reply because of ... well ... what I'd consider a fairly lame excuse.

I thought you had a thicker hide than that .

Maybe if you took others on the forum more seriously and listened people might give you more credit than you get at the moment .

At the moment of me , you just another self appointed , self opinionated doomer and gloomer who is ducking for cover when someone raises points that they can't adequately dismiss or something that challenges their pre conceived judgement. Please feel free to prove me wrong , but a lack of a substantive reply is just firming up my preconceptions of you .

I would love to hear your considered reply to my previous post . Maybe we might both learn something . That's why I'm here .

Cliff
 
When everyone is fully committed to the market and there are no doubters left and no new participants coming on board , then , that is the time to be careful .
There will always be doubters. My anecdotal observations contradict yours (which is why I am hesitant about validating anecdotal observations as an accurate tool, I do agree they are worth considering, but they are usually not objective & don't show the whole picture). Apart from Joye who has recently been in the media with a bearish twist, there are plenty of bulls trying to shoot him down. Even long time bear 'Houses and Holes' from MacroBusiness is now calling for a continued upswing in house prices!

http://www.macrobusiness.com.au/2014/03/enter-glenn-greenspan/

Maybe it's just me but this looks like a fully committed market (or very close):

ScreenHunter_1622-Mar.-12-11.53.jpg
 
Maybe it's just me but this looks like a fully committed market (or very close):

ScreenHunter_1622-Mar.-12-11.53.jpg

it sure does :eek:

it's just a shame that graphs don't tell the on-the-ground story for the full picture.

it's like trading stocks based on graphs - okay for a day trader but if you were buying for 20 years you'd probably want to look a little deeper.
 
There will always be doubters. My anecdotal observations contradict yours, apart from Joye who has recently been in the media with a bearish twist, there are plenty of bulls trying to shoot him down. Even long time bear 'Houses and Holes' from MacroBusiness is now calling for a continued upswing in house prices!

http://www.macrobusiness.com.au/2014/03/enter-glenn-greenspan/

Maybe it's just me but this looks like a fully committed market (or very close):

ScreenHunter_1622-Mar.-12-11.53.jpg


Agree ,there will always be bears.

I'm curious what anecdotal evidence you rely on . I'm always interested about hearing new thoughts.

Re the chart . I'm assuming that's not adjusted , hence I'd be interested in a long term chart with a log scale . Given the property market is at an all time high I'd expect an all time high reading there ( and after all linear vs log is what started our initial misunderstanding , and we wouldn't want to go down that path again would we .....:cool:)

Second point , it's referring to investors . While investors can get carried away at time ,they tend not to over react to the same extent as owner occupiers . There has been commentary about how investors have been driving the market so far . It will be interesting to see if we start to see a greater proportion of OO' s and even FHO's getting worried about missing out and starting to buy in . We have seen a few people in the FHO group coming in and asking advice here recently . I'm not sure on the answer to how big an impact they will have but as the market gains momentum ( IMHO that's just starting ) we might have a bigger boom than many around here are anticipating .i'm not saying that will happen , just that it's a possibility .

Third point . I love the scaling of the chart , showing a peak right at the top of the vertical scale . Imagine how less dramatic if the vertical scale was a factor of 10 smaller and just showed a small line with a peak 1/10 up from the bottom ....:confused: they are making you draw the conclusion that they want you to draw .

I'd call that creative scaling or again , lies , damn lies and statistics ..

Maybe another take home message , and freeee...

Cliff
 
Last edited:
Re the chart . I'm assuming that's not adjusted , hence I'd be interested in a long term chart with a log scale . Given the property market is at an all time high I'd expect an all time high reading there ( and after all linear vs log is what started our initial misunderstanding , and we wouldn't want to go down that path again would we .....:cool:)
This is a fair point, I think the best measure would be something like finance commitments relative to the value of market turnover (fewer transactions today than a decade ago, but at a higher value), rather than log scale.

Another fair measure is investor finance as % of all finance commitments, it shows Sydney is almost back at levels when they put in the 2003 peak.

Most of the other states have elevated investor involvement, but not with an increasing amount, although Vic is turning higher.

BdQYPZMCMAAOSBn.jpg:large


Typically investor involvement in the market (as a % of activity) has been at an elevated level during price booms resulting in a major top (i.e. Sydney in 2003, Perth in 2006, SA in 2007).

Second point , it's referring to investors . While investors can get carried away at time ,they tend not to over react to the same extent as owner occupiers . There has been commentary about how investors have been driving the market so far . It will be interesting to see if we start to see a greater proportion of OO' s and even FHO's getting worried about missing out and starting to buy in . We have seen a few people in the FHO group coming in and asking advice here recently . I'm not sure on the answer to how big an impact they will have but as the market gains momentum ( IMHO that's just starting ) we might have a bigger boom than many around here are anticipating .i'm not saying that will happen , just that it's a possibility .
With negative gearing in place and removal of the FHOG for established dwellings, it doesn't leave first home buyers in a very good position to bid against investors. Although I've read a few anecdotal articles recently suggesting more first home buyers are buying an investment property to get their foot in the market (due lower cost with tenant).
 
With negative gearing in place and removal of the FHOG for established dwellings, it doesn't leave first home buyers in a very good position to bid against investors. Although I've read a few anecdotal articles recently suggesting more first home buyers are buying an investment property to get their foot in the market (due lower cost with tenant).

And that anecdotal evidence is stacking up seriously around the parts Im interested in, namely Central Coast NSW.

Lower to mid bracket homes are selling within days if not on the day they are listed.

And prices are creeping ever so slowly upwards.

In some cases extremely up like this one !
Sold day 1.
http://www.realestate.com.au/property-house-nsw-tumbi+umbi-116377727

We have a IP just a few doors down and I thought this was a typo at $485k.
I'd have thought $385k would be reasonable...???
But then the place next door to us went same day it listed at $349+ and sold for $370k...!

Something about Pelican St...?

These 2 eg's are most likely not FHB but many around the place are and they are going quick.
 
).


With negative gearing in place and removal of the FHOG for established dwellings, it doesn't leave first home buyers in a very good position to bid against investors. Although I've read a few anecdotal articles recently suggesting more first home buyers are buying an investment property to get their foot in the market (due lower cost with tenant).

That's what my daughter is doing and what my middle son is looking at doing once he finishes Uni.

Cliff
 
Back
Top