I read a sobering 'suburb profile' on Chadstone in the Herald Sun last week. Chadstone being a suburb of Melbourne about 15km s/e.
This is logic for those still bullish on property short-mid term.
A couple in there early 30's with 2 young kids bought an un-renovated house on an average 750sqm block 4 years ago in Chadstone and paid $370k.
They say after spending 15 grand on a few small updates the property is now worth $650k.
A gross profit of 280k, minus renovations and interest repayments. Still, a return of 70k per annum on an outlay of 28k.
I'm sorry but its just not that easy to make money. These are incredibly insane returns on outlay. The best businesses in the world struggle to make 20% return on equity yearly let alone 4 in a row. If you were lucky enough to get in and get out... Congratulations. For the rest, the party's over.
This market is about to go to sleep. For a long time.
I await the standard... "It's different" & "Cant compare stocks/property" reply. But really its just logic.
