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Ozzie Houses versus Ozzie Shares - MASSIVE WIN FOR HOUSES; Consistently over 10, 15, 20, 25 years
Topic Started: 20 May 2012, 02:50 PM (3,334 Views)
pinozi
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The numbers certainly done lie. Stock markets have been a terrible place for most individual investors since the GFC in 2008. You really have to be a good individual stock picker or good trader to make money in stocks now.

That being said, I think it will be the same in the property market too. Unless you can add real value or strike a good deal you will probably lose money as I don't think you can count on rising prices for easy gains for the next few years
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stinkbug
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Aussiehouseprices
20 May 2012, 07:20 PM
Property, once build, just sits there (and deteriorates).

Why would entrepreneurs waste their blood, sweat and tears on starting and running business when they could just buy a few houses and relax - and make even more more money?

These are good points, but they don't tell the whole story.

Property is a bit like shares in that you can't just buy some random thing and expect to do well, you need to do careful research and think about things. If you buy property in the right location, over time it becomes better located relative to the whole local/regional market, and this adds value without requiring you to do anything. A byproduct of this is steadily increasing rent, in real terms. Buying at a good price sweetens the deal, and having clear upgrade paths (ie, reno, redevelopment, etc) makes a big difference too.

Starting a business and buying an asset are very different things. Most people who start a business fail, and their money and efforts are wasted. On the other hand, property represents (for most people) a large committment of money but not much in time and effort. Property takes much longer than a business to realise real, large gains, but it is much lower risk IF you've chosen wisely.
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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Count du Monet
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Strindberg
20 May 2012, 02:50 PM
This thread is prompted by a mistaken myth posted as fact by zaph here:




Appropriate data is the ASX all ords and the ABS 8 cap city index (new and old series) for March in 1987, 1992, 1997, 2002 and 2012. This will give us the 10, 15, 20 and 25 year returns.

There's String-bean yet again distributing deliberate falsehoods.

$1000 invested in the ASX accumulation fund in 1979 were dividends are used to buy more shares......gets you $31,391.84 today according to S&P.

http://www.standardandpoors.com/indices/sp-asx-200/en/au/?indexId=spausta200audff--p-au----&ffFix=yes##

That's an average 11% p.a. over 33 years!!!
The next trick of our glorious banks will be to charge us a fee for using net bank!!!
You are no longer customer, you are property!!!

Don't be SAUCY with me Bernaisse
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muzza
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Count du Monet
20 May 2012, 08:07 PM
There's String-bean yet again distributing deliberate falsehoods.

Chill Count,
They're shills
Just doin' their job
:D
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Wisebear
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Strindberg
20 May 2012, 02:50 PM
The difference in performance over 25, 20 15 and 10 years is huge.
House prices have massively outperformed the ASX all ords over all 4 periods.
Congratulation - you've found yet more evidence of the Great Australian Property Bubble.

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BubbleBoy
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Strindberg
20 May 2012, 07:21 PM
On reflection, I agree with you. XAO dividend yields are similar to rental yields but the indecent taxes and charges on property would close the gap, perhaps completely.
Yes, that's half the equation - and as mentioned, imputation credits are the other half.

I'm sure you realise, but for the sake of others who might not - in after tax terms, $1 of a fully franked dividend is the same as (1/0.7 = 1.43) $1.43 of rent. So dollar for dollar a franked dividend is worth 43% more than a dollar of rent.
Edited by BubbleBoy, 20 May 2012, 11:13 PM.
My name is based on a Seinfeld character, not on a belief of a housing bubble.
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justin007
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stinkbug
20 May 2012, 07:48 PM
These are good points, but they don't tell the whole story.

Property is a bit like shares in that you can't just buy some random thing and expect to do well, you need to do careful research and think about things. If you buy property in the right location, over time it becomes better located relative to the whole local/regional market, and this adds value without requiring you to do anything. A byproduct of this is steadily increasing rent, in real terms. Buying at a good price sweetens the deal, and having clear upgrade paths (ie, reno, redevelopment, etc) makes a big difference too.

Starting a business and buying an asset are very different things. Most people who start a business fail, and their money and efforts are wasted. On the other hand, property represents (for most people) a large committment of money but not much in time and effort. Property takes much longer than a business to realise real, large gains, but it is much lower risk IF you've chosen wisely.
Well said.

Most new business's do fail. This is a well documented fact. Weigh your risk carefully, especially in a fast moving world economy.

Also, certain property followers would benefit from understanding that even when 95% of buyers are losing money there does exist a small group swooping in on deals that are sound and undervalued in times of a buyers market.

A similar scenario exists with shares. A small percentage of well versed professionals may make good money while the masses are getting creamed.

It is all about research and commitment.
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newjez
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How many houses do you own Stringberg?

The comparison is just plain silly. Property rarely fails - except possibly for flood zones etc.

Whereas you get good and bad companies, (or companies which are hot and cold). If you cherry pick shares - I think you will find that shares far outway houses. Try putting up some well managed funds rather than just quoting the whole index.
Edited by newjez, 21 May 2012, 01:14 AM.
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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earthsta
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Strindberg
20 May 2012, 02:50 PM
blah blah blah
How fortuitous for you that Zaph picked those particular dates.

Why dont you try the 20 years from November 1987 to November 2007?

That would give you 9.4%pa

And thats without factoring in dividend re-investment
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stinkbug
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newjez
21 May 2012, 01:11 AM
The comparison is just plain silly. Property rarely fails - except possibly for flood zones etc.

Whereas you get good and bad companies, (or companies which are hot and cold). If you cherry pick shares - I think you will find that shares far outway houses. Try putting up some well managed funds rather than just quoting the whole index.
This is a good point. How many instances do we have where property is GENUINELY worth nothing? It happens, but it's very unusual. Shares, on the other hand, can be worth zero.
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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