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Australian Property Chart of Shame - The Epic Failure of the Oz Housing Bears is Complete
Topic Started: 28 Nov 2013, 10:33 PM (27,072 Views)
goldbug
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mel
29 Nov 2013, 07:14 AM
goldbug
29 Nov 2013, 07:03 AM
If I did a chart of gold (adjusted for inflation) over that period it would look better than your median price charting attempt.
You are forgetting the yield. If you put a 200K deposit on a cash neutral IP ten years ago, how would it measure up?

O come on... How many people put $200k up front on a rental? .001%? .0001%?

You are convieniently side-stepping the reality of the interest that must me paid on the vast majority of loans, which in today's property speculation environment is rarely covered by the yield. A lot the property speculators here in SEQ I have spoken to have confessed that fact. They have been paying out of pocket expenses for properties that have been falling in value for years and years and it is nearly impossible to raise their rents to cover the costs because of competition and all the unemployment and wage stagnation. That is why many are selling up. They just don't believe the hype anymore and instead see a dark future for the economy of the nation. One much better faced without a mountain of debt tied to their ppor.

That is what is happening in the real world. What happens here on the internet is is another story of course, but if you are'nt paying interest and are praying for wages and houses to double in price (instead of falling) then I guess you can have a positive outlook. At least until your prayers fail.



Bardon
29 Nov 2013, 07:07 AM
Did that gold chart resemble the collapse of the English batting order, which was the worst?
Typical blind as a bat response from you. In Australia gold has risen from $400 odd to $1360 over the past 12 years. That's more than a 200% gain. But since you see black as white and positive as negative then I suppose to your eyes it is a collapse :lol
Edited by goldbug, 30 Nov 2013, 08:15 AM.
Shadow was hopelessly wrong about the Gold Bull Market.
What else is he wrong about?
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Shadow
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goldbug
30 Nov 2013, 08:03 AM
And you are forgetting the interest on the loan, which in today's property speculation environment is rarely covered by the yield
Gold and property can both be purchased with or without borrowed money.

Interest on money borrowed to buy property is mostly covered by the rental income.

Interest on money borrowed to buy gold is not covered by any yield at all.

Or are you trying to compare a leveraged investment in property with an unleveraged investment in gold?

In which case you would need to multiply the capital gain on property by the leverage amount... say 5X.

Either way, property comes out miles in front.

The price of gold is back down to 2009 levels. You just wasted nearly five years... even worse in 'real' terms...

Posted Image
Edited by Shadow, 30 Nov 2013, 08:18 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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goldbug
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Shadow
30 Nov 2013, 08:13 AM
goldbug
30 Nov 2013, 08:03 AM
And you are forgetting the interest on the loan, which in today's property speculation environment is rarely covered by the yield
Gold and property can both be purchased with or without borrowed money.

Interest on money borrowed to buy property is mostly covered by the rental income.

Interest on money borrowed to buy gold is not covered by any yield at all.

Or are you trying to compare a leveraged investment in property with an unleveraged investment in gold?


No one I know has borrowed to buy gold shadow. I didn't, I didn't need to and I doubt banks would lend you a couple of hundred grand for such a purpose anyway. Gold doesn't need a yield, it rises with inflation as the last 12 years have conclusively proven.

And yes the cost of a property bought with an IO loan will be mostly covered by the yield but then you are just treading water and as I said, praying for wages and houses to double in the next 10 years. No chance of that now. You are one GFC away from the wall shadow, 4 interest rate rises from the poor house, but if you were debt free with a fat gold hedge on to of other assets you could sleep at night like us goldbugs do. :)
Edited by goldbug, 30 Nov 2013, 08:26 AM.
Shadow was hopelessly wrong about the Gold Bull Market.
What else is he wrong about?
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Shadow
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goldbug
30 Nov 2013, 08:24 AM
No one I know has borrowed to buy gold shadow. I didn't, I didn't need to and I doubt banks would lend you a couple of hundred grand for such a purpose anyway.
I know, you already told us your total gold holdings fit in a shoebox. You've got nothing really, maybe a few hundred grand at the most? I'm guessing much less.

Quote:
 
Gold doesn't need a yield, it rises with inflation
So you're saying it treads water while providing zero yield?

Quote:
 
you are just treading water
Except even if house prices only tread water, I also get a nice steady income stream at the same time.

But house prices are not treading water, are they? Sydney is up 40% (and accelerating of late) since I started buying in 2005.

And you can multiply that by whatever leverage you think I might have. You believe I'm leveraged to the hilt, right? Up to the eyeballs?

So maybe multiply my 40% capital growth by 5 or 6 times. How does that compare to gold now?
Edited by Shadow, 30 Nov 2013, 08:33 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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mel
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goldbug
30 Nov 2013, 08:03 AM
O come on... How many people put $200k up front on a rental? .001%? .0001%?

You are convieniently side-stepping the reality of the interest that must me paid on the vast majority of loans, which in today's property speculation environment is rarely covered by the yield.
I can find you a tidy 3 bedroom home that would be cash flow positive from day one with 50K down if you like?

Principle and interest loan.
APF - a place where serious people don't take themselves too seriously. There's nothing else like it.
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Bardon
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goldbug
30 Nov 2013, 08:03 AM

Typical blind as a bat response from you. In Australia gold has risen from $400 odd to $1360 over the past 12 years. That's more than a 200% gain. But since you see black as white and positive as negative then I suppose to your eyes it is a collapse :lol

And England used to have good batsmen as well, before they collapsed.

mel
30 Nov 2013, 08:40 AM
I can find you a tidy 3 bedroom home that would be cash flow positive from day one with 50K down if you like?

Principle and interest loan.

Hey you need a licence to Birddog, these days.

But what the hell send me the link.
Edited by Bardon, 30 Nov 2013, 09:01 AM.
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peter fraser
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mel
30 Nov 2013, 08:40 AM
I can find you a tidy 3 bedroom home that would be cash flow positive from day one with 50K down if you like?

Principle and interest loan.
Pretty much all of the investors that I deal with buy using an 80% LVR.

At current interest rates the property is pretty close to neutral.
Any expressed market opinion is my own and is not to be taken as financial advice
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mel
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peter fraser
30 Nov 2013, 09:04 AM
Pretty much all of the investors that I deal with buy using an 80% LVR.

At current interest rates the property is pretty close to neutral.
that's interesting to know Peter.

The place im thinking about is 190K with a long term lease @ 250 p.w.

The outside could use a freshen up but the inside is decent enough, especially for an IP.

I have driven down the street (and it is nice). The street is wide, the homes are set back perfectly and the council strip is full of elm trees. The eastern suburbs equivalent would easily be close to a million dollars. With an asking price of 190K the chances of things turning out badly would have to be low.
APF - a place where serious people don't take themselves too seriously. There's nothing else like it.
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Bardon
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Thanks Mel, you are onto something there alright, what a ripper!



Edited by Bardon, 30 Nov 2013, 10:07 AM.
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miw
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goldbug
30 Nov 2013, 08:03 AM
O come on... How many people put $200k up front on a rental? .001%? .0001%?
Except for my first purchase, which at the time was for PPOR (later it became a renter) I think I have put up $200K on every purchase I have made. I know I am special, but I doubt I am 1 in 100,0000 or 1 in a million.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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