notpom

It is time to buy.

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    Couple of words about how Australian property market works.

     

    It is pretty much like sunrise occurs on the East and sunset on the West.

     

    Australian property on average grows 9% a year, meaning property doubles in price in about 8 years.

     

    In reality growth is cyclic, and the lengths of the property cycle is abut 11 years. That is property cycle is not interfered with, like RBA did for the last two property cycles, keeping interest rates artificially high. Economy does not like these games, and sooner or later it starts to die out, which forces RBA to go for record low interest rates. Like now.

     

    RBA games led to the situation that from one side we have got unprecedented shortage of property, and on te other - huge pent up demand from people who were waiting for the myth of "Australian property crash" to materialise.

     

    Property cycle is different in different parts of Australia. In Sydney and Melbourne it is usually boom followed by flat price growth.

    In QLD and WA it is usually constantly depressed market, with some splashes made when property boom is close to its peak.

     

    Adelaide is different from them all. Because of abundance of land it is pretty much boom-bust cycle.

     

    Boom usually starts as a ripple effect of a Sydney boom - two years after the beginning of a boom in Sydney. It is mild, but reaches its peak about one year after Sydney's market peaked. Then property slowly loses its value.

     

    This article states the obvious:

    http://news.domain.com.au/domain/real-estate-news/2014-is-sydneys-biggest-auction-year-on-record-20141219-12aztk.html

     

    Sydney enters its third year of a property boom, and it is of a record proportions. Which means that property boom in Adelaide does what?

    Unfortunately, it has already started few months ago, but because it is slow - there is still the best time to buy a property.

     

    Those who would have bought now are going to be winners, but only if you stick to simple basic rules:

     

    1. Do not buy love nest. Home is your biggest investment, look at your purchase as if you are buying money making machine

     

    2. Remember that when buying a house, in consists of two components. Building always depreciates. The fastest depreciating are new homes. Land - it depends. If you buy a land that is in short supply - it will appreciate. Otherwise it will lose all gains during the bust time of the cycle. In reality it means three things:

    a. The only land in short supply in Adelaide is waterfront and land with waterviews. Buying anything else - waste of money.

    b. Stay away from flats, units, townhouses - anything that is not on a Torrents title

    c. Stay away from new estates. In new estates you overpay - inevitably. GST on new land, GST on new building, builder's margins.

     

    And of course - this is not a good time to rent. If in other times you can weigh your options - whether to rent or buy - at this time the answer is written on the wall. Do not waste money on renting.

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    All well and good however unless you have some form of recognised standing in the property or investment field then these, regardless of whether they are or are not correct, are your own viewpoints and may not necessarily represent the true ebb and flow of the market.

     

    Most people here buy a house to live in and not purely to make money. As such the "right time" is anytime and I would argue that renting may sometimes be the correct thing to do, especially if the alternative is to buy somewhere that turns out to be unsuitable for whatever reason just to get "on the ladder".

     

    Each to their own.

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    If one has to "Stay away from flats, units, town-houses" what else they can buy ? Can someone throw some light on short supply lands or houses and where to contact ?

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    Guest Guest75

    As Sidestep says - most on here are buying a place to live in.

    I am sure most do not want to rush into a purchase when they are fairly new to this country.

     

    It might be wise to go onto a property investment group and preach this stuff @notpom, your "talents" are fairly wasted in this forum...........

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    All well and good however unless you have some form of recognised standing in the property or investment field then these, regardless of whether they are or are not correct, are your own viewpoints and may not necessarily represent the true ebb and flow of the market.

     

    Most people here buy a house to live in and not purely to make money. As such the "right time" is anytime and I would argue that renting may sometimes be the correct thing to do, especially if the alternative is to buy somewhere that turns out to be unsuitable for whatever reason just to get "on the ladder".

     

    Each to their own.

     

    In my 20 years in real estate game I have seen many people who bought houses to live in. On a Christmas Party in 2001 I spoke to two friends who were about to buy a place to live.

     

    One have listened and have bought a house on the Esplanade in Port Noarlunga for merely $350K. The other one listened to I do not know whom and bought the house in the new estate in Reynella (with the nice views on Southern Expressway and the noise, and "roof touching the roof" situation where you can hear all the noises neighbours make in the toilet) paying $330 K.

     

    House in Reynella was sold in 2012 for $298K. Fair enough - it lost all its shine, cheap and nasty finishes shown through - "once new" became old and tired. House in Port Noarlunga was demolished, land subdivided and sold in 3 lots $350K each.

     

    Once again - in capitals so you can see. Even if you buy house to live in, IT IS BIGGEST INVESTMENT IN YOUR LIFE. And unless you are financial masochist, you have to follow the basic rules to end up with a nice profit instead of miserable loss.

     

    House bought right can be earning more than you do at your days job.

    Edited by Blossom
    Breaking forum rules

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    If one has to "Stay away from flats, units, town-houses" what else they can buy ? Can someone throw some light on short supply lands or houses and where to contact ?

     

    "Else" is houses and land. In a nutshell, there are three types of titles in Australia:

    1. Torrens title (land is yours)

    2. Community title land (land is yours, but some of that is shared with neighbours)

    3. Community strata (yours is airspace)

     

    Torrens title is always OK, community lots may be OK depending on what is shared and how. Strata is a plague. Besides, the culture of living in flats is practically inexistent in Adelaide.

     

    To find the right property you need a map and Google maps. Coastal strip well served with transport and shopping. With the extension of a railway and introduction of express services and opening of Southern Expressway in both directions Southern suburbs now are by far the best value comparing with the rest.

     

    Then check suburbs you selected on realestate.com.au, and use Google maps to see what the street is like. Then do drive bys and visit open houses.

    Use the simple old 1:100 rule. To buy 1 house - see 100 houses first. This way ensures you understand the market and do not overpay.

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    So you are saying that people who heed your writings have brains and anyone who does not have none? You sir, seem to have an incredibly poor attitude. Who are you to address the members of this forum in such a supercilious manner?

     

    All we have seen from you are words, nothing more. No proof of your business skills or financial acumen exist that we have been made aware of and I put it to you that given the tone of your previous posts, no-one would now be particularly interested in following your advice even if proofs were supplied.

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    I don't care why you think I should, I do not want to live near the sea. Not everyone does you know.

     

    Unfortunately your statement does not have anything common with the truth.

     

    You make your statement with the cortex - this part of the brain is responsible for "conscious mind". This part is the youngest (evolutionary) part of the brain, therefore the least reliable and robust. Even if you look at the brain's anatomy you would see that the mother nature (or God) put the cortex in the skull in the way the blonde puts an extra bikini in a suitcase - creased and jammed. Not really meant to be there.

     

    The bulk of the brain humans inherited from reptiles and amphibians. This part is responsible for so-called subconscious or subliminal mind. I know that 99.9% of people seriously think that they make conscious and only conscious decisions - but this is not what science says. Most of your behaviour is determined by subconscious mind, and your conscious mind even is not aware of that.

     

    Amphibian brain of ALL people draws them to water. All the civilisations started near the water. Look at the Australian map. 99% of population live near the water.

     

    It is nothing new that people would deny they do not want to live near the water. Where you live determines your position in the hierarchy of human herd. The close to water means that you are more successful. The kind of denial you engaged in was depicted by Aesop around 600 BC in his famous fable "Fox and the grapes". Known as "sour grapes attitude".

     

    But most importantly - I do not know how to make it clear enough. HOUSE IS THE BIGGEST INVESTMENT OF YOUR LIFE.

    This means - your tastes and dislikes do not matter when we are talking about hundreds of thousands of dollars. You MUST put your personal tastes aside and follow what MARKET (other people) like.

     

    God forbid, you might get hit by the bus or fall ill at the time of the market downturn. I have seen hundreds of mortgagee sales. It is very sorry sight when people in a predicament get their house sold for a half they paid for it and left still owing money to the bank.

     

    HOUSE IS THE BIGGEST INVESTMENT OF YOUR LIFE. Please treat it as a business.

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    Ha ha! That's hilarious! I'm indeed thinking with my brain. I have seen what the salt air does to houses, and cars here. You inevitably end up with a small block with hardly any garden as they have all been subdivided. Not that you need a garden anyway as you can't grow much that close to the sea. And then there is the wind, and the fact that in summer you struggle to get near your house because of all the people. All logical reasons using my brain.

    Insulting people will not make your ideas any more valid than someone else's. Don't you find it surprising that NOBODY agrees with you? I suppose WE are all the stupid ones?

     

    It's all well and good treating your house as an investment, if you want an investment. Personally I'd rather have my ideal home, away from the sea, with a nice amount of land, no neighbours and never move. If I never move and die happy in that house, I don't give a fig what it's worth.

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    Unfortunately your statement does not have anything common with the truth.

     

    You make your statement with the cortex - this part of the brain is responsible for "conscious mind". This part is the youngest (evolutionary) part of the brain, therefore the least reliable and robust. Even if you look at the brain's anatomy you would see that the mother nature (or God) put the cortex in the skull in the way the blonde puts an extra bikini in a suitcase - creased and jammed. Not really meant to be there.

     

    The bulk of the brain humans inherited from reptiles and amphibians. This part is responsible for so-called subconscious or subliminal mind. I know that 99.9% of people seriously think that they make conscious and only conscious decisions - but this is not what science says. Most of your behaviour is determined by subconscious mind, and your conscious mind even is not aware of that.

     

    Amphibian brain of ALL people draws them to water. All the civilisations started near the water. Look at the Australian map. 99% of population live near the water.

     

    It is nothing new that people would deny they do not want to live near the water. Where you live determines your position in the hierarchy of human herd. The close to water means that you are more successful. The kind of denial you engaged in was depicted by Aesop around 600 BC in his famous fable "Fox and the grapes". Known as "sour grapes attitude".

     

    But most importantly - I do not know how to make it clear enough. HOUSE IS THE BIGGEST INVESTMENT OF YOUR LIFE.

    This means - your tastes and dislikes do not matter when we are talking about hundreds of thousands of dollars. You MUST put your personal tastes aside and follow what MARKET (other people) like.

     

    God forbid, you might get hit by the bus or fall ill at the time of the market downturn. I have seen hundreds of mortgagee sales. It is very sorry sight when people in a predicament get their house sold for a half they paid for it and left still owing money to the bank.

     

    HOUSE IS THE BIGGEST INVESTMENT OF YOUR LIFE. Please treat it as a business.

     

    What a load of absolute rubbish. And insulting to boot. Not everyone wants to live near water and your pseudo science does nothing to pursuade me otherwise. Your 90% of the population do not live right on the waters edge. Large amounts of the population live 3km or further from the beach. I live 20km from the sea, but I'm part of your 90% living near the water.

     

    I find it a bit sad when people purchase a home purely from the point of view of making money. The place you live in is more than an investment it is also your home. To me it is far more important to live in an area you like in a house that works for you than living in a place simply because it might make you some money. You are investing far more than just money when you purchase a home. As long as you only spend what you can afford the rest is about being happy with where you are. There are more important things in life than money.

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    Guest Guest75

     

    HOUSE IS THE BIGGEST INVESTMENT OF YOUR LIFE. Please treat it as a business.

     

     

    I ACTUALLY do invest in property with a modest portfolio.

     

    Speaking from ACTUAL "industry" experience - as many people know me on this forum - you are spouting claptrap.

     

    I've often been asked what is my "secret" <sic> ..........................Time, pay off your mortgage as and when you can. Capital and interest mortgages are wonderful - we cut 13 years off one mortgage by keeping up the same payment when the rates went down.

     

    Also - pay your mortgage every two weeks or in some cases weekly - it can knock 7 + years off your average mortgage.

     

     

    There - shared a bit, common sense and not insulted the forum members.

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    Back to the subject of the thread - I agree that the value is all in the land and not in the builiding. In sought after streets, almost derelict houses still sell for a lot of money, because the land is worth a lot. Well maintained houses don't sell for much more than the knock-downs. I wouldn't buy a new house on half a block, as in 20 years time the house will look dated and scruffy (many Australians don't maintain their houses) and is it only a small plot of land. I predict that today's modern shiny courtyard homes will be tomorrow's slums. Lots have been built cheap, rented out, not looked after and are already looking scruffy.

     

    As for waterfront being highly desirable, yes and no. Waterfront properties in Port Adelaide haven't done very well (the views of and dust from the cement factory probably don't help). In North Haven you can still get relatively cheap houses with sea views - we considered moving there but it seemed just too far away from everywhere, too much time spent driving to decent shops or decent schools (also maybe too close to some disadvantaged areas as well) - so factoring in the time and the petrol costs the advantages were outweighed by the disadvantages.

     

    There are other factors apart from waterfront one major one being proximity to good schools (although which schools are considered good can change over time), transport links, shops, jobs etc.

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    Don't buy by the sea, buy in the hills .............. come climate change D Day they will ALL be waterfront homes :wink:

     

     

    Don't buy ..... RENT ........... no emergency services levy, rates, water rates, maintenance costs etc etc blah blah blah

    Edited by snifter
    Removed line of text

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    OK, done the mod thing and removed a few posts, bits of text and replies to the now removed posts. Think I got everything.

     

    Would like to take this opportunity to once again remind people that if there is a thread posted that you feel is potentially contentious you can do one of two things

     

    a) Reply to the topic being discussed in a topical adult manner that is within the forum rules

     

    or

     

    b) Don't reply.

     

    In either case you are welcome to report a thread or post that you feel is a concern or has contravened forum rules. But please keep personal comments, judgements and the like off the forum. Calling someone a troll, no go also. If you feel there is someone trolling, simply report said posts and let mods deal. It helps nothing to keep posting replies along any of those lines. Think about it, if you don't post a thread, chances are it drops down and off the forum and out of sight soon enough. The more you keep posting the come backs or non topical replies, the more you draw attention to those things and detract from any hope of a topic being discussed (or not, should people decide to not reply). Contentious topics can be discussed without resorting to personal comments or derailing the thread. Really, it can happen. Or else people don't reply and the thread fades away.

     

    Now, moving on.

     

    No further warnings will be posted in this thread. Any further comments that are not on topic, are considered a personal attack will be removed and infractions issued. Its Christmas (well, it was and I am still feeling rather seasonal so), try to get along or just pass it by. Thanks.

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    Surely the money was to be made by having a run down shack in Christies Beach and then when the council changed its building rules allowing multiple homes knocking it down and building 3 replacement. thats where you could make a killing? Who was to know that though?

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