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80's property boom



 
 
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  #1  
Old November 15th 03, 01:01 AM
stib
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Default 80's property boom

Hi, in the 80s I was in kindergarden so I don't know anything about property
markets..

can anyone tell me what happened to the 80's bloom ?
and why it had bursted ?

can someone also tell me what are the property prices like
before the 80's bloom, at the peak of the bloom,
and after the bloom ? and how long did the price stay down ?

thanks.




  #2  
Old November 15th 03, 10:06 AM
Whisper
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Default


"stib" wrote in message
...
Hi, in the 80s I was in kindergarden so I don't know anything about

property
markets..

can anyone tell me what happened to the 80's bloom ?
and why it had bursted ?

can someone also tell me what are the property prices like
before the 80's bloom, at the peak of the bloom,
and after the bloom ? and how long did the price stay down ?

thanks.



I bought my 1st house in Newcastle in '87 for 55K (brand new), & sold in '92
for 115k. I noticed the same house sold for 140k a yr ago. That means I
made 100% gain in 5 yrs, while the buyer made 20% over '10 yrs'. That means
I did 10 times better than he did.

Of course that suburb has also boomed now & had he sold this yr he mighta
gotten around 240K. From this eg you can see how timing is a huge factor.

I built my 2nd house in '93 for 145k (including land) - now worth about
380k.

From my experience prices boomed between '87 & '93, then stayed flat for 5
yrs. A house in my street sold for 200k in '94, & 201k in '98. Now it
would be worth 370k.

PS: What do you mean by 'bloom'?








  #3  
Old November 15th 03, 10:10 AM
Tim Josling
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Default

Whisper wrote:
"stib" wrote in message
...

Hi, in the 80s I was in kindergarden so I don't know anything about


property

markets..

can anyone tell me what happened to the 80's bloom ?
and why it had bursted ?

can someone also tell me what are the property prices like
before the 80's bloom, at the peak of the bloom,
and after the bloom ? and how long did the price stay down ?

thanks.




I bought my 1st house in Newcastle in '87 for 55K (brand new), & sold in '92
for 115k. I noticed the same house sold for 140k a yr ago. That means I
made 100% gain in 5 yrs, while the buyer made 20% over '10 yrs'. That means
I did 10 times better than he did.

Of course that suburb has also boomed now & had he sold this yr he mighta
gotten around 240K. From this eg you can see how timing is a huge factor.

I built my 2nd house in '93 for 145k (including land) - now worth about
380k.

From my experience prices boomed between '87 & '93, then stayed flat for 5
yrs. A house in my street sold for 200k in '94, & 201k in '98. Now it
would be worth 370k.

PS: What do you mean by 'bloom'?


The data I have on Melbourne show a boom from about 85-89 then a slump
bottoming out in 91, then a few years of stagnation, then a boom from 95
to the present time.

The timing does vary somewhat from place to place. In other countries,
more so.

What killed the 1989 boom was high interest rates. 18% or so.

Tim Josling

  #4  
Old November 15th 03, 10:31 AM
The Wog
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Default

"stib" wrote in message
...
Hi, in the 80s I was in kindergarden


What, the whole 80's?

so I don't know anything about property markets..


If you repeated kindergarten 9 times, I'm not surprised.

can anyone tell me what happened to the 80's bloom ?
and why it had bursted ?


I think it bursted in 1990. Caused by high unemployment and massive interest
rates. The property boom really kicked off after the 1987 stockmarket crash.
Speculators burnt by shares but wanting something equally risky to invest in
poured into property. Aided by the RBA wanting to avoid a repeat of the 1930
depression, cutting interest rates.

can someone also tell me what are the property prices like
before the 80's bloom, at the peak of the bloom,
and after the bloom ? and how long did the price stay down ?


Was weak for about 4 years from memory. But it's hard to generalise.

Wog


  #5  
Old November 15th 03, 04:38 PM
Travis Morien
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"stib" wrote in message ...

can anyone tell me what happened to the 80's bloom ?
and why it had bursted ?


("Boom", I think you mean).

Are you referring to the commercial property boom or the residential
property boom?

The interesting thing about comparing the booms of the late 80s with
the boom of the late 90s is that in the 1980s commercial property
became the object of the greatest amount of speculative buying and the
rental yields fell to stupidly low levels, whereas in the 1990s it was
residential property that had rental yields fall to stupid levels.

Residential property did very well in the late 1980s, but never
entered into something that could be recognised as a bubble, but the
classic bubble symptoms were all there in commercial property at the
time. And, yes, wise heads DID see this prior to the great crash in
commercial property in the early 1990s, in particular listed property
trusts fell hard even before the 80s finished, with the boom
continuing to unfold in unlisted property trusts and direct property.

The 1990s property bust saw major problems for commercial property,
including a number of over geared property trusts declaring
bankruptcy, banks taking huge losses on the properties they had to
take as mortgagee in possession and vacancy rates that persisted at
high levels for a number of years. It also saw the demise of many
high flying moguls who had built their empires on property
development.

Poor liquidity and internal gearing saw the near-demise of an entire
asset class, the unlisted property trust, though new trusts with
better risk controls and restrictions on redemption periods have made
a comeback in the years since.

Common features:

A conviction that capital gains were inevitable.
Rental yields falling well below historical levels.
New developments going on unchecked with enormous enthusiasm from many
investors who had not previously taken an interest in property buying
developments "off the plan".
Pundits arguing that "shortage of land" was the driving force behind
returns.

The income yield on commercial property is now only slightly below
historical average levels and vacancy rates are low, yields are, on
average, more than 3x residential property yields at the moment.

So in my opinion you should not be comparing the residential market of
today with the residential market of the 80s, or the commercial market
of today with the commercial market of the 80s, you should compare
them cross-ways.

Commercial property in the early 90s had large losses, residential
property mostly tracked sideways for a number of years while still
offering reasonable yields.

With listed property trusts now yielding in excess of 7% whereas many
estimates show the return after costs of residential property being
not much more than 2%.

There is a saying that history never repeats, but sometimes it does
rhyme.

Travis
www.travismorien.com
  #6  
Old November 15th 03, 04:45 PM
Trevor S
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Default

"stib" wrote in :

Hi, in the 80s I was in kindergarden


Fark, I feel old !

--
Trevor S


"Unthinking respect for authority is the greatest enemy of truth."
-Albert Einstein
  #7  
Old November 15th 03, 04:53 PM
Trevor S
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Default

"Whisper" wrote in
:

snip

I bought my 1st house in Newcastle in '87 for 55K (brand new), & sold
in '92 for 115k. I noticed the same house sold for 140k a yr ago.
That means I made 100% gain in 5 yrs, while the buyer made 20% over
'10 yrs'. That means I did 10 times better than he did.

Of course that suburb has also boomed now & had he sold this yr he
mighta gotten around 240K. From this eg you can see how timing is a
huge factor.

I built my 2nd house in '93 for 145k (including land) - now worth
about 380k.


Reading that it sounds like you should have saved yourself some trouble,
agents fees, stamp duties and simpily stayed in the first house.

55K -- 240K

vs

145K -- 380K

of course you can't live off an unrealised gain

--
Trevor S


"Unthinking respect for authority is the greatest enemy of truth."
-Albert Einstein
  #8  
Old November 15th 03, 09:55 PM
Whisper
external usenet poster
 
Posts: n/a
Default


"The Wog" [my org wrote in message
u...
"stib" wrote in message
...
Hi, in the 80s I was in kindergarden


What, the whole 80's?

so I don't know anything about property markets..


If you repeated kindergarten 9 times, I'm not surprised.

can anyone tell me what happened to the 80's bloom ?
and why it had bursted ?


I think it bursted in 1990. Caused by high unemployment and massive

interest
rates. The property boom really kicked off after the 1987 stockmarket

crash.
Speculators burnt by shares but wanting something equally risky to invest

in
poured into property. Aided by the RBA wanting to avoid a repeat of the

1930
depression, cutting interest rates.


Yes, that makes sense. Lucky I bought my 1st house in Sep '87 (stock market
crashed October).... : )




  #9  
Old November 15th 03, 10:03 PM
Whisper
external usenet poster
 
Posts: n/a
Default


"Trevor S" wrote in message
...
"Whisper" wrote in
:

snip

I bought my 1st house in Newcastle in '87 for 55K (brand new), & sold
in '92 for 115k. I noticed the same house sold for 140k a yr ago.
That means I made 100% gain in 5 yrs, while the buyer made 20% over
'10 yrs'. That means I did 10 times better than he did.

Of course that suburb has also boomed now & had he sold this yr he
mighta gotten around 240K. From this eg you can see how timing is a
huge factor.

I built my 2nd house in '93 for 145k (including land) - now worth
about 380k.


Reading that it sounds like you should have saved yourself some trouble,
agents fees, stamp duties and simpily stayed in the first house.

55K -- 240K

vs

145K -- 380K

of course you can't live off an unrealised gain



I considered that, but the 1st house was a small 3 bedder (10 sq?), & now I
have a 5 bed, 2 bath 25 sq.

Maybe shoulda kept the 1st as an investment, but I'd paid mortgage off by
'92 so limited tax deductions etc....

Overall I mighta been only marginally better off $$-wise to stay in old
house, but when you take into account lifestyle improvement I definitely did
the right thing....

Easy to say I just shoulda borrowed more for more investment properties, but
40k mortage when rates were 17% & average wage 25k means it was maybe as
hard as it is today....?



  #10  
Old November 15th 03, 10:37 PM
B J Foster
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Posts: n/a
Default



Travis Morien wrote:
"stib" wrote in message ...


can anyone tell me what happened to the 80's bloom ?
and why it had bursted ?



("Boom", I think you mean).


The Tulip bubble was praying on his mind when he wrote it


snip

 




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