Australia Real Estate Bubble Talk (Part I)
- Thread starter Cinvalo
- Start date
The house price is only one number. What most home buyers want to know, how much their minimum repayment to income ratio is. Half interest rate double house prices, double interest rate half house prices. Repayment to income ratio is still shows nearly the same home affordability.
Cinvalo
Member
Thank you for reading my post.
I definitely agree with what you say. Minimum repayment to income is an interesting figure to look at.
How much of an average Australian's salary goes to mortgage repayment. Home owners or investors can answer that well.
Personally, i am pessimistic about the future of employment. With robots and AI on the rise, it is becoming redundant for businesses to employ workers. Middle class's earning will be down in the foreseeable future, which means renters' income will be down. I think this will happen rather quickly.
There are too many people competing for too few jobs. This trend will only get worse.
Imagine if you have a portfolio of properties and renters fails to pay rent because no jobs can be found, you will have to reduce the rent.
Even at 1.5% interest rate, a lot of my friends are struggling because the price of the property is too high. The mortgages represent a large part of their income.
Back to the Sydney Real Estate Market, these are the six pillars I can think of, that are supporting the elevated price.
Source: http://www.corruptionofrealmoney.com/displayfullarticles.php?id=55#.WKuJOVzScx_
I will elaborated them on my future posts.
Rise and falls of each pillars, which weighted differently, and some reinforcing one another, are dictating the home price.
I definitely agree with what you say. Minimum repayment to income is an interesting figure to look at.
How much of an average Australian's salary goes to mortgage repayment. Home owners or investors can answer that well.
Personally, i am pessimistic about the future of employment. With robots and AI on the rise, it is becoming redundant for businesses to employ workers. Middle class's earning will be down in the foreseeable future, which means renters' income will be down. I think this will happen rather quickly.
There are too many people competing for too few jobs. This trend will only get worse.
Imagine if you have a portfolio of properties and renters fails to pay rent because no jobs can be found, you will have to reduce the rent.
Even at 1.5% interest rate, a lot of my friends are struggling because the price of the property is too high. The mortgages represent a large part of their income.
Back to the Sydney Real Estate Market, these are the six pillars I can think of, that are supporting the elevated price.
Source: http://www.corruptionofrealmoney.com/displayfullarticles.php?id=55#.WKuJOVzScx_
I will elaborated them on my future posts.
Rise and falls of each pillars, which weighted differently, and some reinforcing one another, are dictating the home price.
Any ideas where to buy (not bubbly yet) 
Also very interesting number of auctions
Melbourne had 900
Sydney had 600
What are your interpretations on those auction numbers
Both cities have about the same population melbourne is about 250K more but I have no idea about no of houses or no houses for sale or available to for sale in both cities/states
Also very interesting number of auctions
Melbourne had 900
Sydney had 600
What are your interpretations on those auction numbers
Both cities have about the same population melbourne is about 250K more but I have no idea about no of houses or no houses for sale or available to for sale in both cities/states
Sorry Sydney is 250K more compared to Melbourne...
Cinvalo
Member
"Population" is what the real estate investor uses. It makes a lot of sense as areas with increasing population always go higher.
However, if you boil everything down to the essence, it is not "population" that causes property price to elevate, but "credit growth".
Credit growth drives housing, which in turns drives economic growth.
Regarding to bubble, except in hindsight, it is not easy for people to spot when the bull, bear, or sideways begin and end, and there is no universal agreement on the magnitude and duration.
But, in my opinion because it is a bubble, that is why it has a lot of opportunities.
A friend of mine just profited $1m, by putting in $1m into a $1.8m property and sold it for $2.8m, without paying capital gain tax.
Fast and quick money are usually made like this. We are buying to flip and make cash, as long as there is another person who is going to take the risk and pay more.
That is why we will see high auction numbers.
And if you look at the cashflow of the properties, many of them are negative cashflow. (Some of them are quite huge)
Do you think the Chinese people buys property to loss money? We are expecting it to go up because Sydney price will always going to go higher. There is always going to be another fool who is willing to accept more losses.
The Sydney housing bubble might, or might not, go a lot higher. I will explain why in my future posts.
However, if you boil everything down to the essence, it is not "population" that causes property price to elevate, but "credit growth".
Credit growth drives housing, which in turns drives economic growth.
Regarding to bubble, except in hindsight, it is not easy for people to spot when the bull, bear, or sideways begin and end, and there is no universal agreement on the magnitude and duration.
But, in my opinion because it is a bubble, that is why it has a lot of opportunities.
A friend of mine just profited $1m, by putting in $1m into a $1.8m property and sold it for $2.8m, without paying capital gain tax.
Fast and quick money are usually made like this. We are buying to flip and make cash, as long as there is another person who is going to take the risk and pay more.
That is why we will see high auction numbers.
And if you look at the cashflow of the properties, many of them are negative cashflow. (Some of them are quite huge)
Do you think the Chinese people buys property to loss money? We are expecting it to go up because Sydney price will always going to go higher. There is always going to be another fool who is willing to accept more losses.
The Sydney housing bubble might, or might not, go a lot higher. I will explain why in my future posts.
H
House
Guest
$1.8m+$1m= $2.8m. Where's the profit?!Cinvalo said:
Cinvalo said:
That scenario is a long way away. Like in the agri industry age, people simply transitioned to new or different roles. Humans will not be usurped by robots to any mass extent
What are your friends earning and repayment figures? Disposable income?
We reached peak prices in Syd about 90 years ago!!!
H
House
Guest
Ah OPM. Misread it as it was her own money! Big risk = big reward. Good on her
Cinvalo
Member
Great assumption. How do you know i am not doing it. lol
It is not so much of a secret. 99% of the people will just sit in their office to earn a paycheque anyway.
Even my post is talking about Australia Real Estate Bubble, i never say the opportunities are no more. You need to just "do it". Take actions.
In fact, if you know what you are doing, you can make money whether the market is up or down.
I challenge you to do a small exercise, print 2000 flyers tonight, saying you want to BUY property and you are not real estate agent.
In the flyer you should specifically say you are looking for people are going through a divorce, a financial mess, or anything that want to settle quick. Don't worry about whether you can buy it or not. Just go out there and put theses flyers into as many mail box as you can tonight in your neighbourhood.
Let us know if you receive any calls tomorrow
It is not so much of a secret. 99% of the people will just sit in their office to earn a paycheque anyway.
Even my post is talking about Australia Real Estate Bubble, i never say the opportunities are no more. You need to just "do it". Take actions.
In fact, if you know what you are doing, you can make money whether the market is up or down.
I challenge you to do a small exercise, print 2000 flyers tonight, saying you want to BUY property and you are not real estate agent.
In the flyer you should specifically say you are looking for people are going through a divorce, a financial mess, or anything that want to settle quick. Don't worry about whether you can buy it or not. Just go out there and put theses flyers into as many mail box as you can tonight in your neighbourhood.
Let us know if you receive any calls tomorrow
Cinvalo said:Great assumption. How do you know i am not doing it. lol
It is not so much of a secret. 99% of the people will just sit in their office to earn a paycheque anyway.
Even my post is talking about Australia Real Estate Bubble, i never say the opportunities are no more. You need to just "do it". Take actions.
In fact, if you know what you are doing, you can make money whether the market is up or down.
I challenge you to do a small exercise, print 2000 flyers tonight, saying you want to BUY property and you are not real estate agent.
In the flyer you should specifically say you are looking for people are going through a divorce, a financial mess, or anything that want to settle quick. Don't worry about whether you can buy it or not. Just go out there and put theses flyers into as many mail box as you can tonight in your neighbourhood.
Let us know if you receive any calls tomorrow
Hi Cincalo, I dont need you to tell me the sellers outnumber buyers right now and your saying you have a way of making a profit in real estate in a falling market - good luck.