Exile

Good point. Property price growth is distorted by outside money flowing in. Apart from the mining industry, it's not local wages that are driving growth, that's for sure.

thebears

On my wife and my income we have been offered well over A$1.5 million by our bank but think it ludicrous to be investing at this stage in the market. We have more than that in equity in buy to let property both in the UK and NZ/OZ.

Paul and Chloe

Yes it is ludicrous and dangerous also, plus lendors are very willing to lend with 0 deposit and in some cases 105% mortgages. The critical point is servicability not what they will lend, and with % of income spent on mortgage rising to the 50% level (or higher) in some cases it brings enourmous pressure on families etc

Australia Bound

Same here. Although the job situation in Adelaide isn't quite so buoyant as other states, which is a bit of a worry.

BadgeIsBack

sounds about right, but cash-rich inflow of people are causing the effect, no doubt. Maybe some people will head back home when they realise that the aussie dollar when earning does not buy what they bought back home.

Thousands of migrants - where are they putting them all!

Paul and Chloe

Plus the mining/oil/gas companies often bring people in from overseas for a set contract period, particularly the specialists and senior staff (hence high earners) and I guess that when these people leave at the end of their contract things will slow down a bit. Does not mean boom will end but sometimes these people support a specific stage of a business cycle...

steve99

I can second that, I have a number of contractors that ive placed that are earning between AUD1000-1250/day.
And not fly in fly out work, generally fairly high end IT skills, some are mining related and do involve the odd visit to mine sites but nothing major.

steve99

Its a crap yield, has got slightly better but rental increases havent kept pace with the increase in the property so the gap is pretty bad if your looking at something for investement purposes now, and to make it worse you seem to get things come on the market for sale with a tennant (who must of been a friend or something) where theyve locked in a rent that way under market rate. Yet other investors still see the potential capital gain as being big enough to outway the short term rental shortfall.
I always used to try and work on what ever its costs in thousands of dollars look for the same in hundreds of dollars per week, so $300K property to get a $300 weekly rent. the gap wasnt then to bad by the time negative gearing came into it. (your probably down a couple of hundred a month)
The gaps shifted now to more like $300K-$350K property getting around $200 -$220 weekly rent.

Paul and Chloe

Wow, did'nt know you had moved into recruitment Steve, can you find me one of those jobs please! Where are you working anyway?

Paul and Chloe

We pay $450 a week for a property worth over $1.2 million so the returns there must be very poor!

NKSK version 2

I can beat that....$350 for $1.4mill

renth

$420 for $1.2mil

movetoperth

But isn't it the case with many of these mill+ homes that the current owners didn't pay anywhere near that when they bought it?

Lynn

steve99

I think so, they probably have been rentals for a number of years and probably cost a third to half of what they are worth now, so when your sitting on $500K plus in capital growth all you want is a good reliable tennant. for the sake of a few hundred bucks its not worth it.
There probably still not far off break even point on any mortgage they might have anyway.

Paul and Chloe

Wow, where is that? We live in Mosman PArk and the agent said the land value was $1.2 million but the house is quite old, although it is reasonably large (5 bedrooms).