If you are renting a place for $435 a week that sold for $850K then thats a great deal. No way would I buy that place. The house I bought last year for $320K we rent out for $410 a week.
Its a risk buying the place but I figure there were not many other places close to the water with water views close to Sydney for under $500k so its worth the risk.
). An average price for a 3-bed home in town here is only about $240k, and from memory we also have the highest income per capita in the state., the housing market in these areas will remain inflated. Also, why would a battler sell his $1m home that he bought 25 years ago for $80k if he wasn't offered top dollar?
if petrol reaches $200 a barrel,the price of housing has to drop.
if the stockmarket were to crash,people would lose much of their savings,superannuation.
the price of food is influenced a great deal by the oil price.
food prices are already going through the roof [$55 a kilo for ginger at I.G.A] so if
price of oil continues to climb,pushing up price of food,where is the money going to
come from to buy overpriced housing?
some time back i said on this forum,buy gold or silver,especially silver.
was around $15 U.S an ounce then,now close to $39.
so sell your house asap,rent and then buy a property when in a couple of years they will be half the price they are now.
Petermac33 said "[$55 a kilo for ginger at I.G.A]" Is this another dig at the prime minister?
An old rule of thumb when buying residential rental property was:-
"A property is worth no more in 1,000s than what it fetches in 100s in rent per week."
This gives a gross return of 5.2% and when interest rates were low and before the local councils started gouging us with their huge rate increases (mine have doubled in 4 years), an acceptable nett return of 4-4.5% was achieved.
Moderate yield, moderate growth and low risk.
Commercial and industrial property generally returned 10-13% with the tenant paying outgoings but with the risk factor of lengthy vacancies which knocks the returns about badly. Returns of 8% seem to be the norm today.
Then over the last 10 or more years we have had "the property boom that would not die" fuelled by the "Renovation Rescue, The Block, Hot Property etc TV shows".
Factor in the effects of the resources boom with it's attendant high wages and the GFC and we find that the historical ratios seem to have got a bit out of whack.
In the longer to long term I think things eventually normalise as it seems to indicate on this combined graph.http://www.ibbotson.com.au/Assets/Files/IBB-4-002%20SBBI%20Chart_v7.pdf
The chart DOES refer to listed property though, not privately owned residential property.
It might be good to keep in mind the property investor who said to a property agent, "I am looking for a property investment."
Agent asks, "Would that be a long term investment?"
Investor asks, "Is there any other kind?"
A few well heeled people I know, among them a guy who bought a hotel for $5Mil and sold it to Coles for $17.5Mil two years later, have gotten out of property all together, except for their residences, and have invested in bank shares and cash.
For people with that kind of wealth it is probably the best strategy because these are the type of people who buy ailing businesses, fix them up and then sell them for large gains. That is all good if you have the knowlege, energy and balls for it.
For the less well heeled or financially savvy among us, I don't think it is a good time to be dropping your "property bundle".
Rents are at some all time highs and in most places there appears to be housing shortages, so I suggest it is a good time to maximise returns and weather the storm.
If one is overcommitted, selling one property might be a good idea. If you have only one property it might not be a good idea. Once you are out of the property market for a length of time it can be very hard to get back in.
Another rule of property investment is:- "Never sell unless you can replace with equivalent or better."
That is just my take on it but I am however "Dyed in the Wool, Real Estate".
Maybe this is of help in analysing where we are, some are saying we are at 7.15.
theinvestmentclock.com/
just recently before carbon tax mining tax and more wranger (woman ranger) taxes are added.
The Macster is right
if oil prices go up, people will have less cash.
People with less cash, tend to bid less at auctions.
If oil prices go up, fewer businesses are viable.
People working for businesses that they suspect are not viable, tend to bid less at auctions..
If stockmarkets crash, wouldn't we will see more houses getting put on the market, tipping the scale for supply/demand of houses? I guess how far it tips depends on the size and duration of the crash.
I still having trouble understanding how the price of manufacturing building stuff will go down if prices of materials and oil go up..
process of crude oil (hydrogen catalytic cracking). produces...
* Asphalt
* Diesel fuel
* Fuel oils
* Gasoline
* Jet fuel
* Kerosene
* Liquefied petroleum gas (LPG)
* Lubricating oils
* Paraffin wax
* Tar
* Petrochemicals
Any manufacturing production line using these fuels (mainly diesel)such as for transporting etc. will increase the consumer will pay.
There is no way that higher oil prices will mean cheaper goods.
Just have to look at the price of petrol to work that out.
^ What housing bubble?
The only proof people can offer, like the American property guy linked to above, is that the price of housing is "above average".
Averages change.
If it is the case that everything must always return to a statistical average then we must also expect a huge drop in living expenses such as electricity, petrol and groceries, and huge rises in the cost of cars and electrical goods ... or are they all statistical exception too? Which is it? You can't have your cake and eat it too.
