Excellent post but some points to clear up and agree with:
As the article suggests, never listen to real estate agents, they lie.
As I said in my earlier post for Sydney it will be later for the next move, probably be mid to late 2007 before the triggers appear and then 12 months after that before prices really move. The current rental returns are terrible.
The physical difference in today’s houses vs yesterday’s houses is pretty big so a large part of house prices is the fact that they are grander homes.
But houses are not what go up in value. Houses actually go down in value that’s why the ATO gives us a depreciation allowance for houses.
It is LAND that goes up in value. That’s why (for a given area) the larger the land component the greater the capital gain. Apartments have a smaller land component so generally do not grow in value as much.
Where the land is, must be considered. ie are you one street back from the beach or three, are you five minutes walk from the train station or fifteen minutes.
Over the past 100 years the AUSTRALIAN average compounding growth of residential property has been 11%. The Sydney average has been about 12% and Melbourne has been about 13.5%
Sydney gets the glory because of harbour prices but city-wide average Melbourne has had the best growth up until now.
At the moment, Melbourne’s intake of immigrants exceeds Sydney’s. It is also seeing a net interstate growth, don’t know why.
Melbourne’s urban growth boundary has limited the supply of new land so it is set for excellent capital growth over the next decade.
The fact is that the doctor is probably right that profits are exaggerated in real terms but if you don't invest in property it will cost you a lot more in opportunity.
If you look at how much of your own money goes in (like I said earlier, $50 - $150 per week) and how much it increases your net worth then the figures are excellent.
