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Our house is up for auction tomorrow!; Anyone want to guess how the market has performed in the last 5 years?
Topic Started: 26 Aug 2011, 12:44 PM (18,704 Views)
Shadow
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Mc_Gusto
30 Aug 2011, 09:02 AM
My conclusion is your analogy is non-sensical! You would have a solid 6% return in the bank on one hand and no return on the other? Unless I am mistaken your house is not worth anything (financially) until you sell and to sell you need to meet a market which you perceive undervalues your house? So until that happens you have not made anything! In fact you have only spent - initial purchase, renovation, interest. 6% term deposit is looking ok to me?!
6% Term Deposit after tax would be more like 4%

Then you still have to pay rent, at maybe 5%, using after tax income.

And of course you would be living under a landlord, your life revolving around his every whim.

The TD would put you behind compared to owning, financially and from a lifestyle perspective.
Edited by Shadow, 30 Aug 2011, 09:12 AM.
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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hoofarted
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"...your life revolving around his every whim."

Sorry mate... This is total bullsh!t. The alternative is to get yourself deep in debt and have your life revolve around the whim of the banking system profit margins? I am glad you feel that your tenants' lives revolve around your "every whim" but I can assure you, they are the one's enjoying a much more stress free life and that you are very much mistaken.

Also, quite an arsehole comment. Strange that I would not expect this from you.
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Shadow
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hoofarted
30 Aug 2011, 09:31 AM
"...your life revolving around his every whim."

Sorry mate... This is total bullsh!t. The alternative is to get yourself deep in debt and have your life revolve around the whim of the banking system profit margins? I am glad you feel that your tenants' lives revolve around your "every whim" but I can assure you, they are the one's enjoying a much more stress free life and that you are very much mistaken.

Also, quite an arsehole comment. Strange that I would not expect this from you.
LOL, it was a bit tongue-in-cheek, but it certainly seems to have hit a nerve with you! :laugh:

However, it is true that tenants have much less freedom than homeowners. They aren't free to hang pictures, repaint the house, change the carpet, renovate or extend the house etc etc, and there is is little security of tenure - they must move at the end of their lease if the landlord says so, and they must allow the landlord to inspect the home several times a year.

Owners have almost total freedom to do what they like with their own house, and before you say they don't have as much freedom to move - yes they do. They can move very quickly at any time simply by putting their owned home on the rental market, and renting a place elsewhere themselves.

I was a tenant for much of my life (longer than I have been a homeowner), and I can tell you homeowners have far more freedom and security.
Edited by Shadow, 30 Aug 2011, 09:44 AM.
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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davel
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Well the one thing that noones pointed out yet is that Trojan is actually in a better position if prices (continue to) fall.

Obviously as an upgrader, the likelihood is that the place he aspires to buy will fall in value at least as much in % terms as his own place (based on the fact that in downturns, this level of the market tends to get hit hardest, and we are already seeing that in the $1M+ market which is upgrader territory here).

The problem will actually come if the market picks up. Then its likely the target house will increase as quickly or more, and this difference could be material such as an extra $50k, 75k, or 100k that he needs to find.

Obviously the best scenario of all is to sell at the top and buy near the bottom, but thats a tough call as you could be waiting a while even if you are able to pick the top. Not great with a young family.


So standing pat is not a bad strategy IMO, even if it wasn't a deliberate decision :D

I'm interested to see if any Bulls think the market in Sydney is NOT falling. All the anecdotal evidence I can see says its off 10% or so since the peak a year ago (what I mean here, is if you are buying/selling right now). The indices wont reflect that of course, just as they dont always accurately reflect the gains.
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Shadow
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davel
30 Aug 2011, 11:18 AM
I'm interested to see if any Bulls think the market in Sydney is NOT falling. All the anecdotal evidence I can see says its off 10% or so since the peak a year ago (what I mean here, is if you are buying/selling right now). The indices wont reflect that of course, just as they dont always accurately reflect the gains.
There have been falls at the top end and gains at the lower end, but overall the Sydney market is pretty much where it was a year ago. I think we'll see overall gains during Q3 and Q4, bringing the total 2011 Sydney median growth figure to approx. 6%.

Posted Image
Edited by Shadow, 30 Aug 2011, 11:31 AM.
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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zaph
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davel
30 Aug 2011, 11:18 AM
Well the one thing that noones pointed out yet is that Trojan is actually in a better position if prices (continue to) fall.

Obviously as an upgrader, the likelihood is that the place he aspires to buy will fall in value at least as much in % terms as his own place (based on the fact that in downturns, this level of the market tends to get hit hardest, and we are already seeing that in the $1M+ market which is upgrader territory here).

The problem will actually come if the market picks up. Then its likely the target house will increase as quickly or more, and this difference could be material such as an extra $50k, 75k, or 100k that he needs to find.

Obviously the best scenario of all is to sell at the top and buy near the bottom, but thats a tough call as you could be waiting a while even if you are able to pick the top. Not great with a young family.


So standing pat is not a bad strategy IMO, even if it wasn't a deliberate decision :D

I'm interested to see if any Bulls think the market in Sydney is NOT falling. All the anecdotal evidence I can see says its off 10% or so since the peak a year ago (what I mean here, is if you are buying/selling right now). The indices wont reflect that of course, just as they dont always accurately reflect the gains.
you need to reread the thread. Trojan has already bought the new place, which he intends to demolish and re build. in a general sense you are correct, but in Trojan's case falls could mean he is unable to build the new place (or find it more difficult).
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davel
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zaph
30 Aug 2011, 11:30 AM
davel
30 Aug 2011, 11:18 AM
Well the one thing that noones pointed out yet is that Trojan is actually in a better position if prices (continue to) fall.

Obviously as an upgrader, the likelihood is that the place he aspires to buy will fall in value at least as much in % terms as his own place (based on the fact that in downturns, this level of the market tends to get hit hardest, and we are already seeing that in the $1M+ market which is upgrader territory here).

The problem will actually come if the market picks up. Then its likely the target house will increase as quickly or more, and this difference could be material such as an extra $50k, 75k, or 100k that he needs to find.

Obviously the best scenario of all is to sell at the top and buy near the bottom, but thats a tough call as you could be waiting a while even if you are able to pick the top. Not great with a young family.


So standing pat is not a bad strategy IMO, even if it wasn't a deliberate decision :D

I'm interested to see if any Bulls think the market in Sydney is NOT falling. All the anecdotal evidence I can see says its off 10% or so since the peak a year ago (what I mean here, is if you are buying/selling right now). The indices wont reflect that of course, just as they dont always accurately reflect the gains.
you need to reread the thread. Trojan has already bought the new place, which he intends to demolish and re build. in a general sense you are correct, but in Trojan's case falls could mean he is unable to build the new place (or find it more difficult).
Oops how the hell did I miss that?

That does change things. That is a lot more risky of a situation. Good luck, Trojan!
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BubbleTrouble
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davel
30 Aug 2011, 11:18 AM
Well the one thing that noones pointed out yet is that Trojan is actually in a better position if prices (continue to) fall.

Obviously as an upgrader, the likelihood is that the place he aspires to buy will fall in value at least as much in % terms as his own place (based on the fact that in downturns, this level of the market tends to get hit hardest, and we are already seeing that in the $1M+ market which is upgrader territory here).

The problem will actually come if the market picks up. Then its likely the target house will increase as quickly or more, and this difference could be material such as an extra $50k, 75k, or 100k that he needs to find.

Obviously the best scenario of all is to sell at the top and buy near the bottom, but thats a tough call as you could be waiting a while even if you are able to pick the top. Not great with a young family.


So standing pat is not a bad strategy IMO, even if it wasn't a deliberate decision :D

I'm interested to see if any Bulls think the market in Sydney is NOT falling. All the anecdotal evidence I can see says its off 10% or so since the peak a year ago (what I mean here, is if you are buying/selling right now). The indices wont reflect that of course, just as they dont always accurately reflect the gains.
Trojan has already bought the upgrade property, which means his position worsens if prices fall from what he was offered on the weekend. But had he not bought, yes he would be in a better position in a falling market. Trojan's buy/sell strategy seems to be premised on a flat or rising market. Time will tell whether that works out for him and in my view it could go either way in the near future.
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davel
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Shadow
30 Aug 2011, 11:28 AM
davel
30 Aug 2011, 11:18 AM
I'm interested to see if any Bulls think the market in Sydney is NOT falling. All the anecdotal evidence I can see says its off 10% or so since the peak a year ago (what I mean here, is if you are buying/selling right now). The indices wont reflect that of course, just as they dont always accurately reflect the gains.
There have been falls at the top end and gains at the lower end, but overall the Sydney market is pretty much where it was a year ago. I think we'll see overall gains during Q3 and Q4, bringing the total 2011 Sydney median growth figure to approx. 6%.

Posted Image
Depends what you mean by "lower-end". My intel regarding Northbridge and Mosman suggests entry-level prices there have fallen. These are in the 600-1M bracket. Obviously just a straw poll, but this intel is from bullish sources.

Agree on the higher-end.

I will be shocked if there is a +6% result for Sydney this year, that will need a very quick turnaround as momentum seems the other way at present? Would need some sort of stimulus, at least 0.5% IR cut IMO. Even that might not do it.
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zaph
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davel
30 Aug 2011, 11:37 AM
Depends what you mean by "lower-end". My intel regarding Northbridge and Mosman suggests entry-level prices there have fallen. These are in the 600-1M bracket. Obviously just a straw poll, but this intel is from bullish sources.

Agree on the higher-end.

I will be shocked if there is a +6% result for Sydney this year, that will need a very quick turnaround as momentum seems the other way at present? Would need some sort of stimulus, at least 0.5% IR cut IMO. Even that might not do it.
RPD report -1.3% SA for the first six months, and 0.1% non SA. so yes it's going to be tough to get a +6% for the year.
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