Timo, the property investors have as much right to buy the houses as owner occupiers, we are not a communist country you know. The investors have been happy to pay ever higher prices because they believe rental incomes will cover the huge costs, hence they have fought each other and bid against each other in many cases for the right to own the homes.
This I disagree with. If there's one thing property investors don't do it's bid the market up. As an investor, I will always pay bottom dollar for a property, or simply walk away from the deal. Every propeerty I've ever bought has bought for bottom dollar. How do I do this? By moving very quickly on properties that fit the numbers when they come onto the market. Where other buyers wait for open days, look several times, um and ah, talk to their banks, etc, I don't. I get the agent to open the property early, have a look then make the offer while still at the property and ask the agent to calll the owner on the spot. You'd be amazed how well it works.
The last thing any investor wants to do is pay over tthe odds. Whhy? Because they don't have to.
This I disagree with. If there's one thing property investors don't do it's bid the market up. As an investor, I will always pay bottom dollar for a property, or simply walk away from the deal. Every propeerty I've ever bought has bought for bottom dollar. How do I do this? By moving very quickly on properties that fit the numbers when they come onto the market. Where other buyers wait for open days, look several times, um and ah, talk to their banks, etc, I don't. I get the agent to open the property early, have a look then make the offer while still at the property and ask the agent to calll the owner on the spot. You'd be amazed how well it works.
The last thing any investor wants to do is pay over tthe odds. Whhy? Because they don't have to.
I get what you mean - investors are more likely to be rational in their financial decision making, compared to home buyers or speculators. But anyone who presents as a demand for property (investment or otherwise), is likely to exert upward pressure on price. Even if it was "bottom dollar", consider no other buyer was willing to pay the price you were willing to, hence you would have marginally increase the price it would otherwise be traded as.
I get what you mean - investors are more likely to be rational in their financial decision making, compared to home buyers or speculators. But anyone who presents as a demand for property (investment or otherwise), is likely to exert upward pressure on price. Even if it was "bottom dollar", consider no other buyer was willing to pay the price you were willing to, hence you would have marginally increase the price it would otherwise be traded as.
+1 i get where Stinkbug was going with this but just drew same conclusion you did very quickly.
APF - a place where serious people don't take themselves too seriously. There's nothing else like it.
+1 i get where Stinkbug was going with this but just drew same conclusion you did very quickly.
It's a fair point, but the reality is that there are generally more PPOR buyers than investors for a given property. Can we draw a conclusion from this?
I get what you mean - investors are more likely to be rational in their financial decision making, compared to home buyers or speculators. But anyone who presents as a demand for property (investment or otherwise), is likely to exert upward pressure on price. Even if it was "bottom dollar", consider no other buyer was willing to pay the price you were willing to, hence you would have marginally increase the price it would otherwise be traded as.
That's it in a nutshell kenny. Supply and demand, that governs price. If hunderds of thousands of home owners re-enter the market for an ip they are competing with the people who are there for their first house. They cannot help but push the prices up. Sure a savey one may walk from a sale in 2005 because they percieve the price is too high for that house in 2005, but someone bought it at the higher price, the market went up accordingly and in 2006 all the houses there in that suburb have risen. If the investor returns in 2006 to get a bargin he may well do so, but a 2006 bargin, which will be up 15% or whatever it is on the 2005 bargin house.
As I stated in another thread, most property investors are not represented here, most are working couples, mums and dads, single or married that have a home paid off or nearly so and buy the house across the street. I asked a couple why? "So we can keep an eye on our investment" Crazy but true. They don't care what it costs because in 10 years it will be worth twice that anyway. Its a fear based purchase, get in now or.miss out.
stinkbug
8 Oct 2012, 07:49 PM
It's a fair point, but the reality is that there are generally more PPOR buyers than investors for a given property. Can we draw a conclusion from this?
Actually there have.been as many investors buying properties as owner occupiers in the last ten years, what does that say? The investors are willing to pay more, bid the price up.
Negative gearing is a form of leveraged speculation in which a speculator borrows money to buy an asset, but the income generated by that asset does not cover the interest on the loan
A negative gearing strategy can only make a profit if the asset rises so much in price that the capital gain is more than the sum of the ongoing losses over the life of the speculation. http://en.wikipedia.org/wiki/Negative_gearing
I get what you mean - investors are more likely to be rational in their financial decision making, compared to home buyers or speculators. But anyone who presents as a demand for property (investment or otherwise), is likely to exert upward pressure on price. Even if it was "bottom dollar", consider no other buyer was willing to pay the price you were willing to, hence you would have marginally increase the price it would otherwise be traded as.
This is true. If a property investor gets a bargain, then someone else is going to have to go buy something that is not a bargain. This will have some impact on the market. However, in support of Stinkbug's thesis: a) Investors often tend to be interested in stuff that is not that hot on the buying market. b) An investor is far less likely to decide s/he just has to have a property. It is much more enter the numbers in a spreadsheet, work out how much it is actually worth to you and then offer x% below that. If the offer is not accepted then there are plenty of other properties on the market. If there are not plenty of other properties on the market, that's the cue for the smart investor to get out of the market. Obviously when things get into a bubble this may break down, (property flipping may become attractive for some) but in general it is true. c) PIs just don't represent a big enough percentage of transactions to have the impact that gets blamed on them. By far the biggest percentage of transactions (well over half) is existing owners upgrading. These people have the financial werewithal and the emotional attachment to get into bidding wars, and they do. d) When prices go up fast, yields almost always go down. This prices PIs out of the market in general.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
It's a fair point, but the reality is that there are generally more PPOR buyers than investors for a given property. Can we draw a conclusion from this?
I was thinking in terms of reduced supply. If the number of PPOR buyers stays constant but there is less stock on the market the price will be driven higher.
Then again the number of people who require shelter stays the same regardless of who buys the existing house. It's got me fucked amigo - im honestly not that bright
I get what you mean - investors are more likely to be rational in their financial decision making, compared to home buyers or speculators. But anyone who presents as a demand for property (investment or otherwise), is likely to exert upward pressure on price. Even if it was "bottom dollar", consider no other buyer was willing to pay the price you were willing to, hence you would have marginally increase the price it would otherwise be traded as.
This is true. If a property investor gets a bargain, then someone else is going to have to go buy something that is not a bargain. This will have some impact on the market. However, in support of Stinkbug's thesis: a) Investors often tend to be interested in stuff that is not that hot on the buying market. b) An investor is far less likely to decide s/he just has to have a property. It is much more enter the numbers in a spreadsheet, work out how much it is actually worth to you and then offer x% below that. If the offer is not accepted then there are plenty of other properties on the market. If there are not plenty of other properties on the market, that's the cue for the smart investor to get out of the market. Obviously when things get into a bubble this may break down, (property flipping may become attractive for some) but in general it is true. c) PIs just don't represent a big enough percentage of transactions to have the impact that gets blamed on them. By far the biggest percentage of transactions (well over half) is existing owners upgrading. These people have the financial werewithal and the emotional attachment to get into bidding wars, and they do. d) When prices go up fast, yields almost always go down. This prices PIs out of the market in general.
Amend Above Post There have not been as many investors in the market as OO but 40% is a fair figure. Here is some recent data, and now I'm out of here for the night.
Negative gearing is a form of leveraged speculation in which a speculator borrows money to buy an asset, but the income generated by that asset does not cover the interest on the loan
A negative gearing strategy can only make a profit if the asset rises so much in price that the capital gain is more than the sum of the ongoing losses over the life of the speculation. http://en.wikipedia.org/wiki/Negative_gearing
Neither am I. It's an interesting idea to kick around though.
It could be that market prices are unaffected by who ever buys the house with the only thing changing being the number of renters vs owner occupiers (but i doubt it). The only way to know for certain is to find a time machine and implement different policies then compare the results. My 8 ball gets things wrong 70% of the time
Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.
Forum Rules:
The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.
Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.
Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.
This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.
Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ
Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy