Wealth paradox

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Originally Posted by Utemad

I am too young to remember when housing prices didn't go up thousands per month (I'm 28) but a guy in our club mentioned he owned a rental house (years ago but don't know when) and it didn't go up in value at all in the years he owned it. Ended up selling it at a loss just to get out of it. However the people he sold it to made a killing in a short period of time.

Our townhouse has more than doubled in value in 6 years since 2002.

So when did property begin to be so attractive as an investment?

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It can be all about timing.
Although some people here would prefer to describe that as making the right decision at the right time.

The example I like to quite about how timing can be everthing and that a decision which is a good one this year could be a bad on last year or next year is the experience of my father.
He bought half the blocks in our street just after the war. He owned 5 blocks on one side and 4 on the other. He sold one to Mum's parents and two to a couple of his uncles. He built house on those blocks for them. Then just before the change to decimal currency, he sold the remaining blocks for 500 pounds ($1000) each. I remember him telling me that the increase in value just covered the rates he had paid over those 30 years. Less than two years later he could have got over $5000 each.
When he bought a double block just out of Camden, he sold one half of the block just a few years later for about twice what he had paid for the two.
So was he a wise investor or not?
Sometimes you get the timing right; sometimes you get it wrong.

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Originally Posted by stevo68

Property appreciates, always has, it isn't that hard to understand is it?Regards

Stevo

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So why did a work colleague have to wait well over 5 years before his house in the ACT got back up to the price he paid for it?
I know that as a long term investment it is pretty reliable, but people whose employment moves them all over the state or country don't always have the luxury of deciding when to buy and sell.

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Originally Posted by stevo68

When I was in my 20's, I couldn't afford a house back then, whats the difference now? Back then I was earning maybe $20-24k, same job nowdays is paying $40k, we forget that incomes increase as well.

Regards

Stevo

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I can't type fast enough to have the time to check your profile to see when you were 20, but the fact is that about 40 years ago the median price of house was something like twice average weekly wages. Now it is about 7 or 9 time average weejkly wages (I have forgotten the exact figure).
Yes, wages have gone up, but houses have gone up about 3 or 4 times faster.

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It can be all about timing.
Although some people here would prefer to describe that as making the right decision at the right time.

The example I like to quite about how timing can be everthing and that a decision which is a good one this year could be a bad on last year or next year is the experience of my father.
He bought half the blocks in our street just after the war. He owned 5 blocks on one side and 4 on the other. He sold one to Mum's parents and two to a couple of his uncles. He built house on those blocks for them. Then just before the change to decimal currency, he sold the remaining blocks for 500 pounds ($1000) each. I remember him telling me that the increase in value just covered the rates he had paid over those 30 years. Less than two years later he could have got over $5000 each.
When he bought a double block just out of Camden, he sold one half of the block just a few years later for about twice what he had paid for the two.
So was he a wise investor or not?
Sometimes you get the timing right; sometimes you get it wrong.

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Look I think a lot of where you are coming from can be summed up with " That's life". Can also be being on the ball, following the market, getting the expertise and so forth.

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So why did a work colleague have to wait well over 5 years before his house in the ACT got back up to the price he paid for it?
I know that as a long term investment it is pretty reliable, but people whose employment moves them all over the state or country don't always have the luxury of deciding when to buy and sell.

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Again falls into "Thats Life" and "Who Care's", ultimately we are responsible for where we are in life. One faces hurdles and overcomes them or succumbs to them.

Regards

Stevo

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I can't type fast enough to have the time to check your profile to see when you were 20, but the fact is that about 40 years ago the median price of house was something like twice average weekly wages. Now it is about 7 or 9 time average weejkly wages (I have forgotten the exact figure).
Yes, wages have gone up, but houses have gone up about 3 or 4 times faster.

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www.realestate.com.au today, 200+ properties in QLD under $300k. 5% deposit on max $300k is $15k + expenses/ s.d/LMI lets say $30k in total. One person over 4 yrs is looking at saving $144 p.w, a couple, $70p.w or $10.00 a day. Again if someone really wants something they will knuckle down and get it. Housing crisis my bum cheeks :angel:, more like a "I can't be fagged sacrificing a few things type crisis"

Regards

Stevo

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Originally Posted by olbod

vnx205, Thats not right.
People that are negative gearing do not drive prices up.
Cheers.

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Which bit wasn't right?
I think I can see the logic of what you are saying makes a good investment property, even if it doesn't accord with what some others have described as the sort of property that investors buy up.
I hadn't intended to confine my argument to negative gearing. I was trying to be a bit more general.

How about this for an alternative way of asking the question?

Do the factors that make property such a good investment in this country have to share any of the blame for the fact that even though my generation paid not much more than a year's wages, today's first home buyers have to pay about 7 (or is it 9) times their year's pay?

Would houses be more affordable if property was not such a good investment?

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Would houses be more affordable if property was not such a good investment?

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That's a silly question, as the answer is obvious.

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Do the factors that make property such a good investment in this country have to share any of the blame for the fact that even though my generation paid not much more than a year's wages, today's first home buyers have to pay about 70 (or is it 9) times their year's pay?

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Well, couldn't you apply that to most things, cars, travel, food, cost of living over the years has increased, worldwide. Its the nature of the beast, hence why if it appreciates........own it..........if it depreciates.........finance it........guess who is in finance :D

Regards

Stevo

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Originally Posted by vnx205

, today's first home buyers have to pay about 70 (or is it 9) times their year's pay?

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I was a first home buyer 18 months ago. I paid roughly 4.5 times my annual wage for a house (not our household income, mine alone). My house is ex housing comission, required painting, with an undeveloped garden. I consider that I bought it "wholesale".

I am entirely with Stevo on this one. Many people won't do what it takes to move forwards and that is no ones fault but their own.

I drive a 20 year old car because I won't buy a new one on finance.
I will buy an investment property on finance because A: it will go up in value and B: someone else will pay for it (rent).

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Originally Posted by stevo68

Look I think a lot of where you are coming from can be summed up with " That's life". Can also be being on the ball, following the market, getting the expertise and so forth.

Again falls into "Thats Life" and "Who Care's", ultimately we are responsible for where we are in life. One faces hurdles and overcomes them or succumbs to them.

Regards

Stevo

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..and sometimes you get lucky.

I am a great believer in people accepting responsibilty for their own actions and decisions.
But when someone whose grandmother dies and leaves them a home in Sydney which they use as the start of their real estate empire tries to pretend that they succeeded by the sweat of their brow and they talk as if they are more financially savvy than someone whose parents and grandparents are alive and well, I think they are kidding themselves.
Of course people who work hard and make the right decisions are likely to do well. But unless the person who inherited grandma's house in Sydney actually bumped her off, how much credit do they deserve for the start they have got?
Just because we generally get what we deserve shouldn't blind us to the fact that there are some people who deserve a better hand than fate deals them and sometimes a situation that benefits most people can be harmful to others.

Can we not go over the jealousy/envy thing again. We've been there and done that.

A lot of good arguments here but there is always the greed element - i know someone who has 9 investment properties and yet his wife still struggles to buy nappies for their 2 kids each week . There are still new homes to be had in the new areas for under $300k for those that are desperate - if you like living in a sh#t hole but then beggars cant be choosers.