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Foxbats new prediction; House prices and all assets to come under pressure
Topic Started: 25 Nov 2015, 06:17 PM (59,373 Views)
Tropical Boy
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foxbat
4 Feb 2016, 02:42 PM
Well Skamy,
Interesting perspective.
House prices could double in Perth and still be down in real terms.

Again I ask, please state your yield on these "Assets".

After landtax, water rates, Shire rates, strata fees, management fees, insurance, cost of capital at say2%, your time and then income tax.

So triple net yield after tax.

Please Skamy answer this question in numbers not words.

Truth not rhetoric.

Peter

It will be so painful for you to actually do it and not create a fantasy world answer, I predict you will never answer the question.

Prove me wrong Skamy :D

Oh and the village idiot can have a go to, but he will never understand the question, let alone the answer.
Hey Peter,

Considering all these holding costs, and plus the mortgage cost (for example for an investor that wants to build a property portfolio with the positive gearing strategy), what would be a required deposit on a median Perth property with a median rental yield in order to positively gear the same?

Maybe 50% deposit?

Cheers!
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newjez
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skamy
4 Feb 2016, 12:10 PM
Elastic you missed the point.

There are two pertinent things going on

1. There has been a significant increase in new leases to 1700. This cannot be explained by Veritas claiming it is people rewriting cheaper leases as we do not do rental leases over a year long as a rule. So there should have been the same number of new leases for that purpose as last year,ie 1387. If this continues and it is likely that it will - as a lot of regional workers move to Perth for the infrastructure spend projects, retail construction etc and improved retail opportunities, then it does not take a lot to move to a rental shortage in this town. It has happened over and over again.

2. Reiwa will always overshoot or undershoot on vacancy rate estimation. Why? because a few years ago people never even had to advertise a vacancy as the tenant would likely tell a friend as the market was so tight. So for many vacancies they would not even end up advertised on Reiwa. Now properties are advertised 3-4 weeks before the tenant vacates as the market is now a renters market. So one rental vacancy that may not have appeared at all now can show up over several weeks. Veritas is making the rookie mistake that 10,000 adverts is directly equivalent to 10,000 vacant rentals which is just silly.

Maybe actually reading my posts is not wasting your time Elastic - you should do it instead of arrogantly dismissing this old codgers wisdom.

The Perth bears are too greedy Elastic and they will get their fingers burned there is nothing surer. I am confident that older wiser members of their own families are telling them the cold hard facts too.
I find it worrying that someone who is so invested in the real estate market has such a poor understanding of how that market works.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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Jimbo
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skamy
4 Feb 2016, 12:10 PM
There has been a significant increase in new leases to 1700.
You silly fool.

The number of available rentals has increased since last week.

So if 1700 new people rented 1700 properties, there must have been more than 1700 new properties come onto the rental market over the last week.

Over the last year, every week has seen higher numbers of "Properties Rented This Week" (as REIWA labels them).

Just about every week has also seen an increase in the number of "Properties Available For Rent" (as REIWA labels them).

There are 58% more properties available for rent than a year ago (3700 more places to rent).

BTW, do you have any evidence to back your claim that landlords are advertising earlier than usual (accounting for the high vacancy rate)?

Thought not.



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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Foxy
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Zero is coming...

lukazi
4 Feb 2016, 04:26 PM
Hey Peter,

Considering all these holding costs, and plus the mortgage cost (for example for an investor that wants to build a property portfolio with the positive gearing strategy), what would be a required deposit on a median Perth property with a median rental yield in order to positively gear the same?

Maybe 50% deposit?

Cheers!
Ok,
But you could simply put the money into a bank account, there it would get say 2% interest.

So if your house is worth say $1m then there is $20,000 in opportunity costs right there.

Even if you have all the cash to buy.

Peter

Elastic
4 Feb 2016, 12:17 PM
You may be old but you are definitely not wise.
Double that 10,000 to allow for all the stock rented and available privately.

Peter
No numbers from Skamy :oo:

That was easy :D :D :D
Edited by Foxy, 4 Feb 2016, 08:30 PM.
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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skamy
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Elastic
4 Feb 2016, 12:30 PM
Why has the vacancy rate continued to rise strongly over the past year despite the number of new leases being so high each week?

No idea?
No one is saying they did not rise - what we are saying is that the rise is not as dramatic as the bears think. None of our Perth IP owners have had much difficulty - I took a haircut on one place but it still pays the whole mortgage.

The number of leases a week was about 1200 throughout last year ---- last week it was 1700 and that my friend should send some warning signals to the Perth bears.

There is a lot of work in Perth and people are moving in from the regions who used to do FIFO. Perth bears are seriously crazy if they ignore all these indicators. It is impossible to deny that the poor performance of last year has ended and may not return.

I have nothing to win or lose - my property is let and I have no intention to sell anything for 10 years. Perth bears have a lot to lose, do they really want to end up bitter and twisted like the Sydney and Melbourne bears?

foxbat
4 Feb 2016, 02:42 PM
Well Skamy,
Interesting perspective.
House prices could double in Perth and still be down in real terms.

Again I ask, please state your yield on these "Assets".

After landtax, water rates, Shire rates, strata fees, management fees, insurance, cost of capital at say2%, your time and then income tax.

So triple net yield after tax.

Please Skamy answer this question in numbers not words.

Truth not rhetoric.

Peter

It will be so painful for you to actually do it and not create a fantasy world answer, I predict you will never answer the question.

Prove me wrong Skamy :D

Oh and the village idiot can have a go to, but he will never understand the question, let alone the answer.
Foxbat I am on a 10 year financial plan - over that time I will make a lot of money on my property - I am confident I have bought well and that the future of this city is bright. I am lucky to have been able to buy at these deflated and stagnant prices and I will do all my sums for you in 10 years time and I know I would find it difficult to find better investments.

You are unhappy about low yields in Perth - check out Sydney and Melbourne yields they are even worse.

Do you seriously think you know something that we don't know Peter? We all do our tax every year and the last couple of years I have owed tax - I am not negatively geared, I might be this year though. But who cares over the long term.

Don't chase the fast buck and lose out on the long term wealth my friend.
Jimbo
4 Feb 2016, 05:48 PM
You silly fool.

The number of available rentals has increased since last week.

So if 1700 new people rented 1700 properties, there must have been more than 1700 new properties come onto the rental market over the last week.

Over the last year, every week has seen higher numbers of "Properties Rented This Week" (as REIWA labels them).

Just about every week has also seen an increase in the number of "Properties Available For Rent" (as REIWA labels them).

There are 58% more properties available for rent than a year ago (3700 more places to rent).

BTW, do you have any evidence to back your claim that landlords are advertising earlier than usual (accounting for the high vacancy rate)?

Thought not.


You are the one with the money on the line Jimbo not me - if you want to ignore facts that is your own business.

It is always a dangerous play to have no skin in the housing game, markets increase in value far more often than they fall.

It is not important that you get all your predictions right - don't lose all those currency gains you tell us about by hanging onto a crash dream too long.

Edited by skamy, 4 Feb 2016, 09:03 PM.
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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Tropical Boy
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foxbat
4 Feb 2016, 08:28 PM
Ok,
But you could simply put the money into a bank account, there it would get say 2% interest.

So if your house is worth say $1m then there is $20,000 in opportunity costs right there.

Even if you have all the cash to buy.

Peter


Double that 10,000 to allow for all the stock rented and available privately.

Peter
No numbers from Skamy :oo:

That was easy :D :D :D
Thanks Peter. I'm just throwing some numbers on a piece of paper. The strategy of investing by positively gearing your properties seems very appealing to me. However, it's not as easy as I originally thought.

It looks like in order to positively gear your property you need to have a lot of cash to begin with. My calculation was based on a 20 year loan. Assumption for rental yield is 5% (which is only apartments close to cbd nowadays?). It turns out that the amount of cash required is 60-70% of the property value.
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Foxy
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Zero is coming...

Skamy, I do think people are starting to nibble.
With the reduced prices.
Peter
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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Foxy
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Zero is coming...

http://www.zerohedge.com/news/2016-02-04/credit-suisse-plunges-25-year-lows-after-posting-enormous-58-billion-q4-loss
lukazi
4 Feb 2016, 09:44 PM
Thanks Peter. I'm just throwing some numbers on a piece of paper. The strategy of investing by positively gearing your properties seems very appealing to me. However, it's not as easy as I originally thought.

It looks like in order to positively gear your property you need to have a lot of cash to begin with. My calculation was based on a 20 year loan. Assumption for rental yield is 5% (which is only apartments close to cbd nowadays?). It turns out that the amount of cash required is 60-70% of the property value.
So you got to work a long time to be able to rent your house to someone else.
Why would any sane person buy a house for a total stranger to live in??

Peter
Edited by Foxy, 5 Feb 2016, 12:15 AM.
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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Jimbo
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skamy
4 Feb 2016, 08:50 PM
It is not important that you get all your predictions right - don't lose all those currency gains you tell us about by hanging onto a crash dream too long.
So basically a pile of waffle and not an answer to a simple question.

How is that 1700 properties were leased last week and yet the number of available properties climbed?

Did more than 1700 new properties hit the rental market?

Or did 1700 people simply re-negotiate a lease for a lower rent?

Just a simple look at the individual listings will tell you that it is a bloodbath out there at the moment. Free weeks, dogs allowed, reduced rents.
skamy
4 Feb 2016, 08:50 PM
There is a lot of work in Perth and people are moving in from the regions who used to do FIFO.
Bullshit.

List these projects that are going to employ a lot of people who used to live in the regions and do FIFO.

What a pile of made up crap.
Edited by Jimbo, 5 Feb 2016, 05:22 AM.
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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newjez
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Jimbo
5 Feb 2016, 05:20 AM
So basically a pile of waffle and not an answer to a simple question.

How is that 1700 properties were leased last week and yet the number of available properties climbed?

Did more than 1700 new properties hit the rental market?

Or did 1700 people simply re-negotiate a lease for a lower rent?

Just a simple look at the individual listings will tell you that it is a bloodbath out there at the moment. Free weeks, dogs allowed, reduced rents.

Bullshit.

List these projects that are going to employ a lot of people who used to live in the regions and do FIFO.

What a pile of made up crap.
I do get the impression that there are a lot of redundant fifo workers who will retire and live off investment property, many newly aquired.

But you can't make a fortune selling shovels after the gold rush.

I think a lot of people are missing the point. Skamy is aiming in the wrong direction.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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