Author Topic: Property in Australia  (Read 66607 times)

Anatidae V

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Re: Property in Australia
« Reply #350 on: February 19, 2018, 04:58:18 AM »
We just jumped into property... We bought our first family home and get the keys in a couple of weeks. The market in Perth really has worked in our favour to let us save a deposit much faster than the stagnant prices moved, no matter how many awkward articles my FIL sent us saying "buy now!!". FWIW we saw a lot of homes in very crap condition, and many where they'd been extremely superficially renovated so you couldn't see how crap their condition was. Finally settled on a solid 90's brick house that has barely been upgraded, because it was looked after. Looking forward to all the little surprises I'm sure we didn't know to look for and the stuff that breaks as soon as you move in :D

stashgrower

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Re: Property in Australia
« Reply #351 on: February 19, 2018, 05:28:51 AM »
Congratulations!!

nnls

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Re: Property in Australia
« Reply #352 on: February 19, 2018, 02:32:48 PM »
We just jumped into property... We bought our first family home and get the keys in a couple of weeks. The market in Perth really has worked in our favour to let us save a deposit much faster than the stagnant prices moved, no matter how many awkward articles my FIL sent us saying "buy now!!". FWIW we saw a lot of homes in very crap condition, and many where they'd been extremely superficially renovated so you couldn't see how crap their condition was. Finally settled on a solid 90's brick house that has barely been upgraded, because it was looked after. Looking forward to all the little surprises I'm sure we didn't know to look for and the stuff that breaks as soon as you move in :D

Congratulations!

Hopefully no surprises in there

alsoknownasDean

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Re: Property in Australia
« Reply #353 on: July 03, 2018, 07:39:33 AM »
So both Melbourne and Sydney have had quarter on quarter declines. Auction clearance rates in the 50s.

Temporary blip or a sign of more to come?
« Last Edit: July 03, 2018, 07:42:00 AM by alsoknownasDean »

itchyfeet

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Re: Property in Australia
« Reply #354 on: July 03, 2018, 11:27:58 AM »
More to come

GT

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Re: Property in Australia
« Reply #355 on: July 03, 2018, 04:55:45 PM »
More to come

That'd be nice, my wife keeps ignoring our decision to rent for the rest of our lives and keeps sending me links to property and I don't want to look at them, because if they're any good I'll have to go back to work to afford to buy them.

BattlaP

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Re: Property in Australia
« Reply #356 on: July 03, 2018, 06:01:44 PM »
More to come

That'd be nice, my wife keeps ignoring our decision to rent for the rest of our lives and keeps sending me links to property and I don't want to look at them, because if they're any good I'll have to go back to work to afford to buy them.

Are you me?

limeandpepper

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Re: Property in Australia
« Reply #357 on: July 03, 2018, 06:17:17 PM »
From what I understand the banks are stricter on lending now so people can't pay ridiculous amounts of money for property they probably can't afford anymore, accounting for the decline? Plus the introduction of some restrictions on property investments etc.

I've noticed that not only are auction clearance rates down, but also the number of properties on the market / up for auction are much fewer than last year. So this indicates to me that prices are going down, but also a bunch of people will just not sell if they can't get a good price for it.

itchyfeet

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Re: Property in Australia
« Reply #358 on: July 04, 2018, 11:51:40 AM »
Houses in Sydney and Melbourne are crazy expensive. They have to go down.

When interest rates finally climb a little, whenever that might be, prices will suffer a little.

In Sydney prices have dropped 5-7%. Iíd expect the same again, taking around 15% off the market from the peak. It could even end up being 20%. There is plenty of room for values to drop.

nath

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Re: Property in Australia
« Reply #359 on: July 05, 2018, 07:01:04 AM »
Looks like Aussie mortgage lending will get tighter and tighter with the royal commission continuing.
The general living expenses calculations have been very low for a long time, giving people access to more credit than was sensible.
Now though many people people will not be able to get another mortgage again, and apparently up to 50% of mortgages are declined. Kinda not surprising considering how indebted and over committed some have become, they are dreaming spending so much on housing.
$1million mortgage on your own home is not for normal income families, hello!
Many will get a shock if they plan to sell off investments to quit while they are ahead too, as in the future they may not be able to buy again..

For the markets though the headline news does not tell much of the true story (as usual).  There is many many variances and many markets within each big city.  For instance if Toorak or Point Piper prices dropped 10-20% do you think the owners actually need to sell? No way. They just hold out for a few years until the price is right. More than 50% of prestige property owners have no mortgage at all.

But cheap house and land packages are built for the masses, most of those are mortgaged at 70-90% and it will effect their overall equity if the market drops but once again are they interested in selling if prices drop? Probably not either.  So you end up with a lot less stock on the market and then you will see stupid news articles pointing to all the negative stats as usual. However with a lot less stock the market is hardly dropping and 5 or 10% is not much anyway compared to year after year of double digit growth we have experienced.
In the end it all evens out and prices continue to climb over the long term as anybody with basic economics understanding will tell. There is inflation, federal monetary policy, population growth, jobs growth all playing a factor here.

Iíll keep my investments forever and when I do my spreadsheet projections all I would expect is 5% growth on apartments and maybe 7-8% on houses but history shows the market usually performs much better than that.

itchyfeet

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Re: Property in Australia
« Reply #360 on: July 05, 2018, 10:27:58 AM »
I am willing to be the moron that says this time is different.

There is absolutely no reason for an apartment to go up in price 8% year on year. An apartment creates the same value in real terms every year - it is a roof over peoples heads. That is all. It makes more sense that apartments go up in value in line with wages,

House prices have grown like crazy because households are now generally forced to be double income, which was not the case a generation ago (or maybe 2 now as Iím getting old) and because interest rates are at all time lows. Foreign investors and wealthy baby boomers feeding on a diet of tax favouritism has also played its part.

Households can only spend a certain percentage of their income on housing and polygamy is not likely to become mainstream soon.

Small upward movements in interest rates will really curtail any possible upward movement in house prices.

Well, this is theory A anyway. Theory B is Sydney becomes Hong Kong and house ownership climbs out of the reach of most families, unless you are happy to live with your kids or n a 50 Sqm studio.
« Last Edit: September 30, 2018, 12:02:25 PM by itchyfeet »

LonerMatt

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Re: Property in Australia
« Reply #361 on: July 05, 2018, 02:11:31 PM »
What would it take for house prices to return to something more affordable?

Saying, the median house price somewhere around 4-5x the median salary?

Even if you have a dual income household, median salary is ~$78k, so $150k x4 = $600k

The median house price in Melbourne and Sydney is well north of that.

alsoknownasDean

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Re: Property in Australia
« Reply #362 on: July 05, 2018, 10:07:14 PM »
What would it take for house prices to return to something more affordable?

A recession? Look how average prices in Perth have fared since the end of the mining boom. Rising unemployment or lower income would cause more forced sales and fewer purchases, and a weaker economy would result in lower net migration, easing pressure on prices.

A recession would of course have all sorts of unpleasant side effects. However, we've had 27-28 years since the last recession, it's folly to assume that there'll never be another one.

marty998

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Re: Property in Australia
« Reply #363 on: July 06, 2018, 02:12:56 AM »
What would it take for house prices to return to something more affordable?

A recession? Look how average prices in Perth have fared since the end of the mining boom. Rising unemployment or lower income would cause more forced sales and fewer purchases, and a weaker economy would result in lower net migration, easing pressure on prices.

A recession would of course have all sorts of unpleasant side effects. However, we've had 27-28 years since the last recession, it's folly to assume that there'll never be another one.

Chicken and egg - Housing price falls may cause a recession, because construction is such a large part of the economy.

I am suddenly mad keen to buy another property, but my head says prices still have a long way to fall in Sydney and then stabilise for a number of years.

Tried out a lending calc yesterday. The Bank's cal cut the maximum loan at such a point where I still had $20,000(!) excess income available. Even at P&I and 7.5% interest rate.

$20,000 excess income could normally service at least $300,000 of debt, which means everyone's borrowing capacity has been reduced by that much due to APRA and ASIC regulations.

So someone looking to buy a $1.5m property would now only be able to get a loan for a $1.2m property....

So yes, prices will come down. Just how much is the million dollar question.

itchyfeet

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Re: Property in Australia
« Reply #364 on: July 14, 2018, 12:23:08 PM »
Auction Clearance rates in Sydney are now at or below 50% and interest rates havenít even started climbing yet. This correction is going to pretty big I think. The air has been sucked right out of the market.

I donít think it is time to buy yet. Maybe next year.

LonerMatt

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Re: Property in Australia
« Reply #365 on: July 20, 2018, 05:49:42 PM »
drop, prices, drop

gf and I are holding cash, this is goooood for us if there's a massive correction.

GT

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Re: Property in Australia
« Reply #366 on: September 17, 2018, 04:04:51 PM »
For those of you that are landlords, and renting it out through a rental manager, what is the percentage cut of the rent?  And is anyone offering a gardening service with their rental, if so at what increase to the rent?

nnls

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Re: Property in Australia
« Reply #367 on: September 17, 2018, 05:07:29 PM »
For those of you that are landlords, and renting it out through a rental manager, what is the percentage cut of the rent?  And is anyone offering a gardening service with their rental, if so at what increase to the rent?

My property manager takes 10% and there are no other fees associated with that.

I dont offer gardening services

nath

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Re: Property in Australia
« Reply #368 on: September 18, 2018, 06:39:10 AM »
The Market rate for property managers is between 5 - 8% + gst. 
If you have multiple properties or high rental value properties with the same agent they will charge you less overall.

Howís everyoneís mortgage / refinance applications going lately?
It appears to be getting extremely tight from what I have been seeing and hearing.

Iím still keen to buy another investment though if the time is right for me. Iím more worried about cash flow to cover expenses than a major sell off on the markets now, as the prices will always recover over an infinite holding period like mine. :).
Ideally I would want an old house on largish decent land thatís something I can build a nice house on in the future.

itchyfeet

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Re: Property in Australia
« Reply #369 on: September 18, 2018, 11:17:18 AM »
Agents commissions vary dramatically depending where you own property. On an expensive property in Sydney we pay 5%. On a cheaper place in Brissy we pay 7.5%.

Eileen63

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Re: Property in Australia
« Reply #370 on: September 20, 2018, 07:21:38 PM »
I had this suggested to me.

"2. I hope you took care to obtain a valuation of the place you lived in for 14 years before renting it out. As you plan to sell it you need to think about future capital gains taxes, and protect yourself."

I asked my real estate agent, if they could recommend a company to do the valuation. They came back and asked me if it was a valuation or an appraisal I was after.

And, I do not know.

Could anyone advise me.

Thank you for your time.

happy

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Re: Property in Australia
« Reply #371 on: September 20, 2018, 10:06:51 PM »
A trained valuer will do a valuation. An appraisal is done by a real estate agent usually associated with some intention to sell. You need a valuation.

Eileen63

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Re: Property in Australia
« Reply #372 on: September 23, 2018, 07:56:11 PM »
Thanks Happy. Much appreciated.

marty998

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Re: Property in Australia
« Reply #373 on: September 24, 2018, 05:14:32 AM »
I pay 5.5% + a small re-let fee once a year. For a new tenant it is 1 week's rent. Not bad all things considered.

I have a feeling anything over $1.5 million is going to drop quite sharply, on the scale of 20-30%. Your average person simply cannot get the deposit or mortgage to pay $2m for a shack + stamp duty.

This time is different - every time is different. People simply haven't experienced a correction on the scale of hundreds of thousands in their lifetime here - and it will hurt.

Apartments in my area are already down 10%, and the developers simply haven't gotten the message and are sitting on unsold OTP stock that won't be selling anytime soon.

potm

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Re: Property in Australia
« Reply #374 on: September 24, 2018, 06:17:46 AM »
What do you do in this situation marty? Just hold on? Are your properties holding up in value?

alsoknownasDean

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Re: Property in Australia
« Reply #375 on: September 30, 2018, 07:19:18 AM »
Iím expecting a larger drop in newly built apartments and possibly in houses >150% of median, but a smaller drop (if any) on houses in the outer suburbs.

Although, Iím ready to buy a place and a bargain is always appealing :)

itchyfeet

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Re: Property in Australia
« Reply #376 on: September 30, 2018, 12:08:04 PM »
Iím expecting a larger drop in newly built apartments and possibly in houses >150% of median, but a smaller drop (if any) on houses in the outer suburbs.

Although, Iím ready to buy a place and a bargain is always appealing :)

I am going to go the other way. Housing in the burbs will drop by at least as much as inner city housing.

The very top end properties, which are not being paid for by people on wages, will not necessarily move with the masses. I am not talking 150% of median here, but more like 500% plus.

I am talking Sydney here. I donít know Melbourne.

marty998

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Re: Property in Australia
« Reply #377 on: October 01, 2018, 01:28:44 AM »
What do you do in this situation marty? Just hold on? Are your properties holding up in value?

@potm - holding for now. I live in one, and the other is still under a fixed rate loan for another year. They are holding up quite well actually, mine never "boomed" the way most of inner, north and western Sydney did, but still went up a reasonable amount.

4 years ago I took out a fixed rate loan to stop me from doing anything stupid like selling up early. They've done well, I've got about 750k equity between them at present, and leave them for another 10-12 years I can easily see them both being fully paid off worth a million each. After tax the IP costs about $1500 a year to hold, don't really want to eat break-fees, sales agent fees, CGT and then stamp duty again when buying in again.

If a good one comes along that ticks all the boxes and can be had for a well below market price I will try and jump all over it. My problem will be financing, not equity - it's too hard to get credit on a single income beyond the debt I currently have.

Eileen63

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Re: Property in Australia
« Reply #378 on: October 17, 2018, 11:16:50 PM »
Does anyone else watch Martin North's "Digital Finance Analytics" on utube? [The site is called Walk The World].

alsoknownasDean

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Re: Property in Australia
« Reply #379 on: October 20, 2018, 06:24:05 AM »
Clearance rates this weekend are in the forties in Melbourne/Sydney/Brisbane.

Seems the market has well and truly gone cold.

pancakes

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Re: Property in Australia
« Reply #380 on: October 20, 2018, 06:32:00 AM »
Clearance rates this weekend are in the forties in Melbourne/Sydney/Brisbane.

Seems the market has well and truly gone cold.
Weíve been looking for a house 12 months in Brisbane and while yay prices havenít really gone anywhere in that time, the quality of listings at the moment is woeful.

A few people I know who are also looking have commented the same.

Timodeus

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Re: Property in Australia
« Reply #381 on: October 21, 2018, 08:26:26 PM »
Does anyone else watch Martin North's "Digital Finance Analytics" on utube? [The site is called Walk The World].

I've been watching him for 6 months now, very interesting analysis of your property market and news. I admit I am a bit of a voyeur to your housing woes, probably because they remind me of our own 10 years ago. Best of luck down there.

While I don't think in this cycle we are as irrationally exuberant about our housing market as you all this time around (and a far cry from the mid-2000's), we are starting to see many of the signs of a housing market hitting its top (sluggish sales and rising rates) but so far have not had outright price declines (at least not nationally).
« Last Edit: October 21, 2018, 08:28:42 PM by Timodeus »

marty998

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Re: Property in Australia
« Reply #382 on: November 05, 2018, 11:41:15 PM »
Got talking to an agent on Saturday. She's retelling several stories she knows of couples in the 50s and 60s trying to downsize who have bought OTP units a year or so ago and were relying on the sale of their own house to fund the purchase plus their retirement.

Their houses are no longer worth as much as the unit they've committed to buy, and the banks won't lend for the difference because of their plans to retire.

Going to be an interesting 12-18 months ahead.... a lot of people are simply stuck with no real good options.

Little Aussie Battler

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Re: Property in Australia
« Reply #383 on: November 06, 2018, 02:36:01 AM »
Such a high-risk strategy.

Why wouldn't you sell at the same time that you commit to the OTP purchase and rent for the construction period? In some cases they probably could have rented their own place back from the purchaser!

itchyfeet

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Re: Property in Australia
« Reply #384 on: November 06, 2018, 07:45:54 AM »
Such a high-risk strategy.

Why wouldn't you sell at the same time that you commit to the OTP purchase and rent for the construction period? In some cases they probably could have rented their own place back from the purchaser!

I agree with everything you say, but the wisdom of hindsight is a wonderful thing.

I can imagine the driving force behind the actions was  the desire to move house just one time. I take your point that maybe they could have rented their sold house, but thatís really a maybe (dependent on suburb, likely buyers etc).

They took a big risk and it didnít pay off. Bad time of life to be taking such risks.

Still, I hope their home wasnít too big a percentage of their NW and (given house prices have dropped <10%) they can still retire as they will have planned for so long.

nath

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Re: Property in Australia
« Reply #385 on: November 27, 2018, 04:23:45 AM »
Melbourne Clearance rates are continuing to drop, around 40% now.
Not sure why people are still auctioning their properties, the agents must be sweet talking them into an advertising campaign just to get their name out there.
In my area (inner Bayside VIC), properties are still selling for similar money to last year, just a lot less transactions going through.  I noticed one older couple selling their house in my street, it passed in and then they just took the board down and took it off the internet. I think people (buyers and sellers) are all waiting to see what happens like dear in the headlights.
If I was cashed up ready to buy another house there is currently the opportunities of a lifetime out there. I am sure there will be a few desperate sellers around as some properties are sittting on the market for months.
I havent applied for a mortgage for a few years but everyone sure seems to think itís hard to get approved.
It could be the best of times or the worst of times depending on your situation and plans.
I think itís best to ignore the noise and continue on with my own investment plan to acquire and keep for life quality rentable property.

LonerMatt

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Re: Property in Australia
« Reply #386 on: November 27, 2018, 04:58:23 PM »
That's just it.

Myself and my gf and many of our friends have a >20% deposit waiting and some of us are hoping to time the market, etc. My philosophy is buy what's affordable that's also what we want and the time that suits us. It's a place to live in the long term, so if we try to move too quickly or conform to people's commentary of what's going on then we're likely to expose ourselves to short term thinking.

Our hope is to buy a place in Canberra late 2020.

MrThatsDifferent

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Re: Property in Australia
« Reply #387 on: December 04, 2018, 11:18:07 AM »
More to come

That'd be nice, my wife keeps ignoring our decision to rent for the rest of our lives and keeps sending me links to property and I don't want to look at them, because if they're any good I'll have to go back to work to afford to buy them.

This is my dilemma: rent forever or buy something. Sydney to me is a perfect city nd it would be great to have an apartment here that I could live in while Iím here, rent out when I travel around the world for 10 years and then move back to when I return. Do I roll the dice in a year and buy something cheap but in an area that I want, if itís jsut me as a single guy? I could get a mortgage for what Iím paying in rent, if not less. Is it worth it if I donít have to put a lot down to get it? Iíve already extended my FIRE plans by 2 years so it wonít affect that. So confused!!!

itchyfeet

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Re: Property in Australia
« Reply #388 on: December 05, 2018, 07:19:59 AM »
Owning property/ not owning property. On these forums itís a debate more dangerous to wade into than religion or politics.

Itís a personal choice. For me personally, I like the idea of owning my home even though I am renting at the moment. There is a sense of security knowing you wonít be kicked out and have to move, and arenít exposed to bad landlords, and can make any changes you want to the place.

Itís quite likely we will continue to rent for some time as we donít know where we want to FIRE to. We have a house in Sydney (that was our home prior to taking a job o.s), but itís too expensive for our FIRE plans. We also like Sydney, so could sell our house and buy an apartment in the same neighborhood or try somewhere else. We were prob going to sell our place in Sydney around 2022 so plenty of time for more market excitement.

Property forecasts are like bum holes (everybody has one), but I am expecting prices to level off in the 2nd half of next year, unless interest rates start rising in which case prices will keep falling. I donít see any major recovery in the foreseeable future as prices are still very high, but I donít see prices dropping much more than 20% unless there is a sharp hike in interest rates.

MikeBT

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Re: Property in Australia
« Reply #389 on: December 09, 2018, 01:44:22 AM »
In response to the person who asked, my property manager charges 5.5% + GST.

I am a big proponent of property investment. To me it gives me a sense of security knowing that tenants are generating passive income which I will eventually retire off. The negative gearing thingo is just the cherry on top (though its use has now been severely curtailed since you can't claim depreciation on existing plant any more, meaning you can't now generate ridiculous depreciation claims to drop your wage income, which was the main point of NG).

I've got one property paid off and am paying off the other, and looking to buy my third within a few years. When I bought my second property a little while ago I managed to get my bank manager to do a few sneaky favours - I won't mention them here (they did not relate to serviceability) - but I don't think you can do that any more in the wake of the Royal Commission. Shame. I think the main effect of the RC is to make everyone's mortgage a little smaller, which will no doubt flow on to property prices, though I think the effect will be modest, and mainly felt around the margins.

I think we are seeing a shift in society from one where most families can afford a house to one where some can afford to pay and some can only afford to rent. That probably explains why property prices have detached from median incomes - because the median family is now perhaps renting rather than buying. So, while I think there is not much room for real property growth (beyond the rest of the market) in future, I don't see it shifting down in real terms either, after this current correction which is mostly produced by structural reforms. I guess I could be wrong though - if they make taxation of IPs more and more punitive that will damage house prices and I might have to look at other ways of generating passive income instead.

I would advocate property (under the existing rules - caveat) as a good conservative investment though - tenants will always need a roof over their heads. Buy in good areas and vet your tenants carefully.