By b_b's claim that rising prices->greater supply->lower rents Stop and think about that before you answer.
I stopped and thought about it the first time. I still don't see how you concluded that investors would want to pay more and rent for less.
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It is irrelevant, there is no OO market separate from the investor market. They all buy in the same market. Rising prices for OOs == rising prices for investors.
Which is why I questioned your point about investors wanting to pay more and rent for less.
The truth is they will try to pay as little as possible and charge as much as possible.
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Really??? Is that how investment works???? Where was your newsletter when those fools in Mackay QLD paid as much as possible to buy, and are now offering their 'investments' out at increasingly lower rents to find tenants???
Those investors would have payed as little as possible at the time, and would currently be charging as much rent as they can.
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Exactly, thank you for agreeing with me.
I haven't agreed with you.
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Or they could invest in SOMETHING ELSE. What a concept!!
People who invest in other things are irrelevant to this discussion - we're talking about property buyers.
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No, but that is what the RBA is doing by lowering rates. It just directs capital to houses that nobody needs because the price is rising. The RBA is burning down the economy, but nobody cares. Burning down the houses directly would cause an uproar, but the result is the same.
No. Building new houses creates supply. Burning down houses reduces supply. The effects are opposite, not the same.
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Why do we need to increase supply? We could also reduce the demand.
We need to increase supply because demand is increasing. We are not reducing demand (we 'could', but we are not), therefore we need to increase supply.
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When I lived in Hong Kong and Singapore there were plenty of homeless labourers who were very productive thank you very much.
Where did they sleep? I suspect they would have been more productive if they could get a proper nights sleep in a real dwelling. As would most people in any type of employment.
A bear is someone who thinks house prices will fall.
The fact that you hold three houses suggests that you don't think prices will fall significantly.
Either that or you don't care about preserving your wealth.
As a self styled 'sane' bear I reckon they are 25% overpriced maybe. (Suspect 'sane' bulls will tell you 15 to 20% ? ... Peter F? Stinkbug?)
Not worth changing position over given I'm 50% cash too - With no housing debt - And given my goal going into the GFC was to not get hurt more than 10% of my total assets* - And that I'm not into speculating on housing using debt.
* "my goal going into the GFC was to not get hurt more than 10% of my total assets" - Or maybe that was 20% ? I forget ... August 2008 is a good while back now ... Though I do recall doing my calcs in maybe Nov 2008 and factoring in what I reckoned was a worst case scenario (re my particular properties) of 30% and deciding to hold - Given I had no debt - And had cash of course.
I stopped and thought about it the first time. I still don't see how you concluded that investors would want to pay more and rent for less.
I didn't conclude that, b_b did. Looks like you didn't stop and think about it this time either. b_b's claim was that rising prices->greater supply->falling rents. Perhaps you can explain to me how that process works.
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Which is why I questioned your point about investors wanting to pay more and rent for less.
I've heard that Aspies don't understand sarcasm, I think that is what has happened here.
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The truth is they will try to pay as little as possible and charge as much as possible.
So if house prices are rising, and supply is increasing, and rents are falling, investors won't enter the market correct? Which leaves everyone else, for whom housing is a cost to minimise, not a revenue stream to maximise.
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Those investors would have payed as little as possible at the time, and would currently be charging as much rent as they can.
If they had waited another 2 years they could have paid even less and earned relatively more.Maybe if they hadn't listened to the bull investment property fantasy they could have made a more rational investment decision.
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People who invest in other things are irrelevant to this discussion - we're talking about property buyers.
I was talking about property investors, as distinct from property buyers. Property investors can also invest in other asset classes right? Or is that a sin in the property investment religion?
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No. Building new houses creates supply. Burning down houses reduces supply. The effects are opposite, not the same.
The multiplier effect is the same. You're original assertion was that building houses has a multiplier effect, no? The multiplier effect must work whether the the house is a new build or reconstruction of a burned down house.
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We need to increase supply because demand is increasing. We are not reducing demand (we 'could', but we are not), therefore we need to increase supply.
We can increase the supply of housing without increasing house prices. The government can sell crown land for any price it desires. We have crown and state land pretty much everywhere, including in cities. The government can sell that to developers for any price it likes, including zero if we want to increase supply. Likewise with density. It is easy to increase supply without increasing prices.
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Where did they sleep? I suspect they would have been more productive if they could get a proper nights sleep in a real dwelling. As would most people in any type of employment.
In public parks, under bridges and flyovers, sometimes in building alcoves. What makes you think they didn't get a proper night's sleep? The air is always warm, it almost never rains at night. Are you saying that they would be more productive if they spent their money on housing instead of food and clothing?
if house prices are rising, and supply is increasing, and rents are falling, investors won't enter the market correct?
Incorrect.
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If they had waited another 2 years they could have paid even less and earned relatively more
The future movements of rents and prices over the following two years would have been unknown.
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I was talking about property investors, as distinct from property buyers
The OP is not just about investors.
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The multiplier effect is the same
The impact to supply is not.
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We can increase the supply of housing without increasing house prices. The government can sell crown land for any price it desires. We have crown and state land pretty much everywhere, including in cities. The government can sell that to developers for any price it likes, including zero if we want to increase supply. Likewise with density. It is easy to increase supply without increasing prices.
Lots of things 'could' be done, but are not done.
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In public parks, under bridges and flyovers, sometimes in building alcoves. What makes you think they didn't get a proper night's sleep? The air is always warm, it almost never rains at night.
True - I've got a mill+ in equity in three debt free houses (my home; an IP in my name; an IP in the name of my SMSF) - I just think the bastards are overpriced - So I'm a bear - And I'm not too keen on committing any of my mill+ cash to more housing 'til I see what way the wind's gunna blow. (Though the housing I do have is a handy inflation hedge is my way of looking at it. At this time.)
Sounds sound to me. An old friend told me when this started back in 2008, if you start all this with a house and you end it all with a house, no problem. Just do not lose it in the middle. Peter from Perth
Some people (understandably) won't like what's about to happen but what else are we going to do? Are we ever going to be able to compete with the RMB? If there's a better solution im all ears.
As a self styled 'sane' bear I reckon they are 25% overpriced maybe. (Suspect 'sane' bulls will tell you 15 to 20% ? ... Peter F? Stinkbug?)
Not worth changing position over given I'm 50% cash too - With no housing debt - And given my goal going into the GFC was to not get hurt more than 10% of my total assets* - And that I'm not into speculating on housing using debt.
* "my goal going into the GFC was to not get hurt more than 10% of my total assets" - Or maybe that was 20% ? I forget ... August 2008 is a good while back now ... Though I do recall doing my calcs in maybe Nov 2008 and factoring in what I reckoned was a worst case scenario (re my particular properties) of 30% and deciding to hold - Given I had no debt - And had cash of course.
It's only abuse if it is not true. I am merely making an observation out loud, sorry if you weren't aware of this already.
My point is that the assertion that a house is productive is nonsense. A house certainly provides shelter, but it doesn't produce it. Builders produce shelter. It provides comfort, but it doesn't produce it. Designers and architects produce comfort. The production of houses is productive, but the houses themselves are not productive. There is nothing special about houses that the RBA would want them to rise in price such that more of them are produced. Does the RBA want food and clothing to rise in price so more food and clothing is produced? If the RBA's actions double the cost of petrol, will more petrol be produced? If petrol doubles in price, will people consume more of it or less of it? If the cost of petrol doubles in price, will consumers trade in their 3 door hatch for a 7 seater SUV, or the other way around?
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