Just a question that has been starting to annoy me for the last few months. DO i get into property or dont i ?

At the moment I live at home with my parents who insist that I stay with them so that i can help them around the place. I have enough saved up to get into the property market right away without taking out too much of a mortagage. But this would mean selling out of my shares.

Friends, peers, parents the bloke down the road all think that I should get into the markets now as we are about to expereince another property boom. I am not so sure as yet, I know the rates are starting to go down but I dont think we have bottomed out in the property market as yet. Yields are increasing but are we about to experience another boom ?

would be interested at everyones thoughts

You could diversify your portfolio by buying an investment property. You get to stay at home and help your parents, and can keep some or all of your shares. You might pay less tax because of the negative gearing of the investment property.

As to whether property is going up/down - I find there are always vocal people on each side, especially on internet forums. My personal opinion is urban city property is expensive in Australia compared to historical prices, but cheap compared to many other cities overseas. Sure you can talk about the different social dynamics, work habits, cultural differences, etc, but for long term I think property is a safe bet if you buy a good asset.

Mu, In life I have always striven to take actions that I FELT COMFORTABLE WITH . when I was younger I have not literally followed always that rule and many times I have had to pay a certain "price" .
I found that when I did actions to the contrary I mentally suffered though from other aspects they seemed the right ones .

MyI eldest son lived with us until he was 28 . He was not happy to live with us and could not wait for leaving home . Eventually he bit the bullet . He bought a unit with a large 25 years mortgage , lived there for a year and decided that the mortgage payments were really choking him . He decided to lease the unit out and moved to a less expensive unit . Fortunately the unit is situated in a suburb of Sydney that has appreciated the property values considerably ( Balmain ) since his purchase of the unit .

He is not active in the share market . He is very confortable with his decisions .
Wishing U all the best whatever U choose to decide ...cheers eGilmore

To try and help answer the original question I don't think you should be looking for the next "boom" but a strong reliable asset just like you would in a blue chip share.

The property market is off it's highs and in some parts of the country now it is a very good market for a buyer to be in (ie: you can drive a hard bargain to get the right price for yourself). At the moment estate agents need the commission (income) badly in some places and will put any offer to the seller on your behalf.

Buy the right place in the right area and you won't regret it med/long term, especially being a first home buyer.

I keep hearing and reading that our National growth/migration will far outpace current residential construction. With this in mind people have to live somewhere and pent up demand combined with lower interest rates (just starting) will keep property kicking along nicely.

All sensible comments, from the posts.

Ultimately, do yo want to live in it - then go for it asap as a thirty year mortgage can either be from 25 to 55 or from 35 to 65 years old. Just make sure you can service the repayments - including income protection insurance.

As an investment, for the last few years it has only been feasible with the tax advantages (which have probably contributed to the bubble). When interest rates change, positive gearing can quickly become negative gearing.

As a 'feels like the right thing to do' trying to pick the bottom of the cycle, then there are worrying signals. For near-total pessimism, the aptly named "pain Report" attached may help dissuade you from pre-emptory action. (remember he - Jonathon Pain - is an economist affiliated with a funds management business that hedges )

regards

B.

I don't personally think this is a good time to sell out of the share market as I think it will rebound considerably by this time next year, and I don't think there is any rush to get into property. The next serious boom could be years away.

If you are buying property for potential growth, then buy something with as much land per unit house as you can. An old house on a large block as close to a city centre as possible would be my choice.

Land goes up in value, usually faster than inflation. Building costs go up roughly with inflation although existing buildings deteriorate in value over time. Most buildings 40 to 50 years old need replacement or at least major upgrading.

In our street the value of the blocks of land have gone up at least twenty times over the twenty five years that we have lived here. An off the cuff estimate is that building costs have gone up about five times. I judge this because it is costing me about five times the amount to extend my house than it cost to build the original house in 1981. The extension is a bit less in floor area than the original house but is a much more complex building project.

Carpets, incidently have gone up about twice. Our carpets were top wool berber and cost $110 a metre in 1982, similar carpet would be at most about twice that now. (Moral of this is don't buy a house just because you like the carpet.)


Cheers

LJ

Anyone else think that the government's latest cash splash for first home buyers will spark a mini-boom in real estate? I think it will, especially in new home construction ($21k grant), but only at the lower end of the market. Consequences on the sharemarket? Consequences on rents?

I think the government should increase land available for building, and also change the zoning in suburbs closer to the city to encourage higher density living to stabilise or bring property prices down. Happy for people to argue my logic...

imani77
- are you from Nigeria?
or - Surplus to requirements (K Marx)?

or - as you provide the link "broker"?

sorry Ben,

had to get rid off imani77 and all of his/hers/its posts so your post above is looking a bit orphaned.

cheers

admin

Foreign buyers inflating market
MARIKA DOBBIN
March 27, 2010
RESERVE Bank governor Glenn Stevens says foreign buyers are a factor in rising house prices.
Mr Stevens said the bank was monitoring how much the federal government's decision last March to relax its rules on foreigners owning property had contributed to surging prices for housing.
He said the role of foreign purchases was ''an important one and it's one we're giving some attention to''.
The bank has raised official interest rates four times in five meetings, with rising house prices helping to tip its hand at its meeting this month.
The Age has reported on a trend of overseas investors buying Melbourne real estate to safeguard wealth and advance hopes of migration...

To date the Chinese seem to be leading the race among foreigners to invest in Australian property, both commercial and residential. As the sovereign debt concerns in Europe and other parts of the globe deepen I wonder if more investors in those places will see Australian property as a relatively safer haven to invest than their own countries. If so, affordable housing for locals could get even tougher than at present.



Cheers
Catron

Foreign investors under scrutiny to help first home buyers April 24, 2010 - 5:06PM
Vote
The federal government has admitted its new crackdown on foreign investors is an acknowledgment that Australian first-home buyers are being priced out of the market.

The tightening of foreign investment rules require temporary residents to be screened and get permission from the Foreign Investment Review Board to buy a property, sell their property when they leave Australia and build on vacant land within 24 months or sell.

Just more talk or will we see some real action by the government ? Senator Sherry does not seem to be as convinced as his boss on this issue.

Cheers,
Catron

a couple of graphs from ANZ & relevant to property

First up:
If you have population growth coupled with undersupply, then market forces being what they are: prices go through the insulation and up to the roof

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and on the second slide, a couple more graphs:

Occupancy rates falling - looks like a trend for 3 decades, but arrested recently (and likely to go up according to their forecast - which makes sense if and as affordability is so stretched).
-- Same number of people ---> need more dwellings.
-- More people -----> need even more dwellings
-- a contributor to housing stress ?

and the second one. Total value of housing finance approvals over last 15 years

-- all 3 (Investor, Upgrader and 1st home buyer) showing upward trend
-- Upgrader is in the ascendency
-- interesting spike for 1st homebuyers in 08-09 (hmmm)
-- from $50Bill to $250Bill annually in 15 years (aggregate for all 3) and if margins maintained then Banks should be (and have been) doing OK

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