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"We had to get a home" - desperate homebuyers camp out for three days to buy in Sydney; The only way to secure a property as Sydney house prices continue their inexorable rise
Topic Started: 4 Sep 2014, 08:26 AM (9,947 Views)
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Bardon
7 Sep 2014, 01:15 PM
Don't get that you buy a house with debt on lets say an infinity loan (IO), the value of the debt and repayments are eroded by inflation, the value of the house and the rent are increased by inflation, the equity therefore must grow and then there is capital growth on top of that.
That's what this bull clown thought too.

And yet the dope is still throwing good money after bad.

Property investment, for idiots who don't know how to really invest their money.

Live the delusion shown below.


http://somersoft.com/forums/showthread.php?s=331439b0e04adf622ea823e17527f35d&t=94648
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Shadow
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JimBob
7 Sep 2014, 04:48 PM
400k+ on renovations/ extensions to an existing house? Utter madness.
Many people spend $400K on luxury cars and boats. Those are guaranteed to decline in value. If you're wealthy enough to spend $400K, then spending it renovating your a home makes far more sense, since it adds to the value of the home, gives the spender many years of enjoyment, and most likely the home will rise in value over time anyway.

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When the SHTF a lot of the 400k+ added "value" will be gone like a fart in the wind
A Lurker said he bought in 2007 and renovated in 2008. Sydney house prices are already up by more than 50% since then, and still rising fast. Eventually prices will fall back a bit when this boom ends, but you're dreaming if you think they're ever going back to 2007 levels. A Lurker doesn't have much to worry about when 'the SHTF'.
Edited by Shadow, 7 Sep 2014, 05:08 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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A Lurker
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JimBob
7 Sep 2014, 04:48 PM
A Lurker - The 400k+ you spent on renovations... When the SHTF a lot of the 400k+ added "value" will be gone like a fart in the wind, unfortunately. Effectively what you've done is paid for the convenience of not having to lift a finger, in the form of employing a horrendously expensive Sydney builder and paying through the teeth for all the shiny materials and consumers good they installed.

400k+ on renovations/ extensions to an existing house? Utter madness.
Took it from a 3 bedder to a 4 plus better layout. Much more saleable so I'd suggest not just flushed the $400k regardless of market conditions.
Edited by A Lurker, 7 Sep 2014, 05:27 PM.
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JimBob
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A Lurker
7 Sep 2014, 05:26 PM
Took it from a 3 bedder to a 4 plus better layout. Much more saleable so I'd suggest not just flushed the $400k regardless of market conditions.
LOL 400k+

I bet the "+" is not a couple of thousand, it's in the tens of thousands right? 410, 420, 430??

I identify quite strongly with John Frum and was in agreeance with a lot of the reasoning in this thread for why Frum should get on with it and buy... Your timeline all looks pretty reasonable until you go 400k+ further into the hole by "renovating". And what did you get almost half a million big ones? An extra bedroom and a better layout. Holy moly, enjoy the sparkly surfaces and appliances- you've paid for em!

My wife and I are within a few months of paying off our place at the age of 31. In the 12 months since we bought it (our second PPOR), we've carried out a minor cosmetic renovation under our own steam on weekends. Our materials bill comes to <$18,000. Sure, we've expended several hundred hours of our own labour, but it was time we'd otherwise be at the beach, reading, watching TV, shopping etc. In hindight, we're glad we didn't take the renovation spend up to 50k+ by doing the kitchen and bathroom. They're perfectly functional but outdated, and we know we'd be unlikely to recover the outlay.

The 6+ star eco-house we're planning to build on an acreage in a few years will be approximately $350,000. That you spent 400k+ on renovations is mind boggling. You must have an incredible household income, an this is coming from someone who's combined household income has been at least double (and maybe triple) the national median since the age of about 25.

Good luck with that...




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JimBob
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Shadow
7 Sep 2014, 05:04 PM
Many people spend $400K on luxury cars and boats. Those are guaranteed to decline in value. If you're wealthy enough to spend $400K, then spending it renovating your a home makes far more sense, since it adds to the value of the home, gives the spender many years of enjoyment, and most likely the home will rise in value over time anyway.


A Lurker said he bought in 2007 and renovated in 2008. Sydney house prices are already up by more than 50% since then, and still rising fast. Eventually prices will fall back a bit when this boom ends, but you're dreaming if you think they're ever going back to 2007 levels. A Lurker doesn't have much to worry about when 'the SHTF'.
IIRC Lurker borrowed the 400k for the renovations. It wasn't 'wealth' that was spent on the renovations (in place of the "luxury cars and boats"). It was debt.

So shadow your justification for Lurker spending 400k+ on renovations (albeit in 2008) is that it makes more sense than luxury cars and boats? Great defence, not!
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Bardon
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JimBob
7 Sep 2014, 04:48 PM
400k+ on renovations/ extensions to an existing house? Utter madness.
Not really.

I am spending $600k+ on a renovation here at Palazio Bardonici, nothing mad about it.
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skamy
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John Frum
7 Sep 2014, 08:36 AM
I pay less than a full days pay of my salary for a four bedroom family home in a nice area of sydney half an hours commute from the CBD. I can save a day and a half's full pay a week. A similar place bought with 80% leverage would double my weekly housing costs, most of which will initially be 'dead money' paid to the bank as interest.

Tell me skamy, if prices stagnate for a decade and interest rates start to rise, which situation will be best for us, assuming a purely financial play (i.e I'm willing to forgo the freedom to home renovate for 10 years) ?
If you want to bet your whole future financial security on silly claims that house prices will suddenly stagnate for decades more fool you.

The odds of this happening in a growing city like Sydney is minuscule.

Some people prefer to waste money on renting a home that they could not afford to buy as they want the lifestyle that offers, but there is a price to be paid for that, I have seen it over and over.

Renters get stuck trying to stay within a community that they find increasingly unaffordable as rents rise and rise, their ability to save gets less and less. They get stuck as they cannot move kids from schools etc etc and they can end up paying huge portions of their wages trying to keep up with the rent. They end up approaching retirement with nothing.
Whereas their peers who bought scrappy old places in unfashionable suburbs did them up and watched their suburbs improve. They were able to save as their wages rose and their mortgages dropped and move up the property ladder to own property in the best suburbs and end up having loads of savings as again they get time when their mortgage costs are low relative to wages.

It is not rocket science, your rent money is dead the moment it leaves your pocket, the money paid in a mortgages works for you from day one.

Edited by skamy, 8 Sep 2014, 09:26 AM.
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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Bardon
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A Lurker
7 Sep 2014, 05:26 PM
Took it from a 3 bedder to a 4 plus better layout. Much more saleable so I'd suggest not just flushed the $400k regardless of market conditions.
Good on you Lurker, sounds like you are pretty happy about it all.
Guest
7 Sep 2014, 04:59 PM
That's what this bull clown thought too.

What makes you jump to that conclusion.
Edited by Bardon, 7 Sep 2014, 06:33 PM.
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Jimbo
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skamy
7 Sep 2014, 06:21 PM
It is not rocket science, your rent money is dead the moment it leaves your pocket, the money paid in a mortgages works for you from day one.
Sometimes true, sometimes not.

I am renting at the moment and my capital is invested in relatively safe instruments. All in all, in just over eight weeks, my capital has returned just over 20k net after deducting my rental costs. This includes a paper loss of $15 an ounce on some Gold I bought.

If my capital was tied up in property, I would not have seen any gain at all. Paying rent allows me to put my capital somewhere more productive.

So at the moment, I am better off renting.

It just depends on what the local property market is doing and at the moment it is not doing anything.

There is no such thing as a sure bet and that includes property.

Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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Shadow
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JimBob
7 Sep 2014, 06:11 PM
It wasn't 'wealth' that was spent on the renovations (in place of the "luxury cars and boats"). It was debt.
Lurker's wealth and income gave him the ability to fund renovations - whether or not he chose to borrow to do so is irrelevant. Without sufficient income, borrowing is impossible in the first place. Lenders won't lend unless you have the income to service the loan.

Quote:
 
So shadow your justification for Lurker spending 400k+ on renovations (albeit in 2008) is that it makes more sense than luxury cars and boats?
It doesn't need any justification. People can spend their money however they want. I have spent more than $400K renovating and extending my own home, and I plan to spend the same again in the future to add another floor. I have probably over-capitalised, but I don't care, since I don't intend to ever sell. I expect to live in the house until I die. I could afford to do it, and that's what I wanted to spend the money on. Other people might choose to spend it on boats and cars, but those things don't interest me.
Edited by Shadow, 7 Sep 2014, 06:46 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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