Sir lastnail wrote on Apr 16^th, 2011 at 2:41pm:


Nail,
I believe that many people on this forum owe you a big apology.
They rubbished you for more than one year when you said
that house prices would crash.
Where are all those doubting Thomas's now.
e.g. where's Longweekend?

Good post Nail - nothing has changed & people won't realise until
they arrive "home" one day & their furniture is on the street
& the locks are all changed with 2 burly security guards
standing by the front door.

Sir lastnail wrote on Apr 16^th, 2011 at 6:10pm:


The real problem is that this is no longer the real question. i.e.
What type of place should be be living in?
The answer is clear.
High rise housing estates next to all railway stations.
Allow building permits around all railway stations &
many people will have somewhere - close to transport - to live.
They won't need a car to congest the roads.

Instead Australia is all about getting your 1/4 acre or 1/8 acre area of land.
This is becoming unobtainable at today's prices.
The average cost of a house in Melbournes 60 top suburbs
is over $1 million.
The prices will go down as high rise estates
- just like overseas - in all big cities - mark the skyline because
councils & Govt will have to find places for our booming
population to live.

Quote:


Most of the world just went through a huge correction which put prices back into a realistic value.

We missed the correction which was a sign of our economic strength.

Just like it was in the early 1990's.

The reality at that time was that in order to remain competitive with the world economy we needed to have that correction - we had a PM who was stupid enough to state the obvious and has been remembered well for it.

While we look to be in good order this time we still would have benefited in some areas had our market been corrected to a realistic value.

In the 90’s their was not much option as the economy looked like it was going to stagnate till something happened.

The correction we eventually had at that time led to about 17 years of economic growth.

Sir lastnail wrote on Apr 18^th, 2011 at 12:18pm:


nail - the media under reports real estate downsides.
LOTS of their advertising income comes form the realestate sector.
If they painted the real estate as a bad investment at times, they'ld be foregoing advertising income.

At times, every investing sector must be a bad buy/time to sell

The good old days of making your fortune from buying and selling houses is over, so let's get the stupid Aussie's sucked into US real estate that isn't worth shite lol

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Australian investors sought to buy US real estate

AUSTRALIAN investors are being asked to pump millions of dollars into high-risk US houses, the same assets that triggered the global financial crisis.

In the first listed investment of its type, financial planner Dixon Advisory is seeking $80 million from mum-and-dad investors to purchase the heavily discounted homes.

House prices in the US have suffered a five-year slump and remain up to 60 per cent below their 2006 peak.

The collapse in US house values led to millions of people walking away from their homes, which under US law left the banks and other lenders with responsibility for their clients' debts.

It was this avalanche of mortgage defaults that started the world-wide collapse of the wholesale financial system and triggered the global crisis.

According to Dixon Advisory, it plans to buy up homes in the New York metropolitan area, particularly family homes in Hudson County and New Jersey.

Home loans, savings accounts and more

The pool of houses is expected to produce an annual return of more than 8 per cent, based on estimated rental income. However, the company has not detailed the forecast return it will pass through to investors or its fees.

Dixon Advisory's directors include high-profile financial advisers Daryl Dixon and Max Walsh. The plan will be marketed to individual investors and self-managed superannuation funds.

"Valuations for US property in certain areas, with strong fundamentals such as the New York metropolitan area, have become very attractive," Dixon managing director Alan Dixon said yesterday.

"At the same time, housing affordability measures in the US are at record highs and rents have been mostly stable throughout the period, resulting in very attractive yields to investors currently.

"This, coupled with the record high Australian dollar, provides a unique investment opportunity for investors to gain access to this highly attractive asset class."

The property fund plans to issue units at $1.60 each, compared with a net asset value of $1.57, with a minimum subscription per person of $2000.

Dale Gilham, analyst at fund manager Wealth Within, said there were benefits and risks associated with the US housing market. The benefits include potential capital gains, if prices recover, and higher than normal rental income.

The risks include currency exchange and growth forecasts that assume the US economy is improving.

Mr Gilham said he was wary, as the investment "has not been tried and tested over years".

Read more: http://www.news.com.au/money/investors-sought-to-buy-us-real-estate/story-e6frfmci-1226040754283#ixzz1Jug90zD7


Read more: http://www.news.com.au/money/investors-sought-to-buy-us-real-estate/story-e6frfmci-1226040754283#ixzz1JufBBG7w

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TIP No.1....The American economy is not about to improve any time soon.

Half-priced millionaires’ row

“Four years ago, before the global financial crisis hit, 199 Hedges Avenue fetched $17.5 million.  This month the four-bedroom, six bathroom, beachfront home [Ed note: marvellous water views?] in Mermaid Beach reportedly sold for almost $8 million.”

A quick bash of the Canon LS-100TS calculator tells us that’s a price drop of – [gulp] – 54%!

Amusingly, the articles states, “Mr Newlands [chairman of the Real Estate Institute of Queensland, Gold Coast] said property on Hedges Avenue would always remain popular and at the high end of the market.”

Obviously not popular enough for the seller who has taken a 54% bath.  That’s where the spruikers have made their fatal error: assuming higher prices are sustainable because an area is popular.

Then Money Morning reader Natalie dropped us this email saying:

“Did I hear David Airey from Real Estate Institute of Australia wrong?  The ABC read his statement as saying there is ‘no housing shortage in Australia.’”

Here’s a transcript of Airey’s comments:

“I don’t think there’s been a bubble, and I don’t think there’s any bubble to burst.  The indicators are that this has been a very slow softening but with the huge increase in the number of established homes for sale added to properties off the plan sales continuing to rise, we’ve just seen a lot of stock which isn’t moving.”

Property spruikers have to tread a fine line.  Using their own supply-and-demand theories for why property prices had to rise, they’ve backed themselves into a corner.

Because using the same supply-and-demand argument you would logically have to say prices will fall… Instead the spruikers have to keep running with the “there’s no bubble” argument.  Even if it means ditching the claim about a housing shortage.

That way they can claim prices didn’t really go up – even though they said they did – and therefore if prices didn’t really go up then they really can’t go down.

Even though the proof is evident in Queensland where prices have fallen by 50%, and even Melbourne where prices fell 6% in just one quarter!

For some reason, every time a spruiker talks we keep hearing circus clown music!

And finally, we find we’re in the strange position of agreeing with a banker.  Bank of America [NYSE: BAC] CEO, Brian Moynihan is quoted saying:

“It’s sobering to think, but some people shouldn’t be thinking of (their home) as an asset.  They should be thinking of it as a great place to live.”

We couldn’t agree more.  We’ve said it for years.  And mostly we’ve been ridiculed for saying it.  But that won’t stop us.  Owner-occupied housing isn’t an investment.  It’s an expensive consumption item.

Once you ditch the idea that a house is an investment you’ll realise it’s just not worth paying the current ridiculous Ponzi credit-fuelled prices that houses are selling for right now.

excerpts from moneymorning.com article