This timely warning applies to Kiwi investors too. – Olly
AMERICAN WARNING
A deadly trap for Aussie investors.
by Neil JenmanHere’s a confident prediction: Hundreds (probably thousands) of Australian investors are going to lose millions of dollars in the American property market.
Right now, it seems to be all the rage, the latest fad. Buy real estate in the United States. It’s easy. Prices for American homes are so low and our dollar is so high that an investment in ‘the home of the brave and the land of the free’ seems like a really good idea.
Unfortunately, it’s not a good idea. For the average mum-and-dad Australian investor, buying real estate in America is a very bad idea. Never mind what the Aussie spruikers tell you, never mind how good it sounds, it really is too good to be true.
These days, a number of Australian spruikers have set up companies and are selling real estate in America to Aussies. Some of the men ‘behind’ these companies are the same villains who were once ripping off investors with over-priced property deals in Australia. As any police officer will tell you, once a crook, always a crook.
Yes, I know it sounds wonderful. The numbers are enticing. You’ll be told that you can buy a house for as little as $50,000 and rent it out for about $200 a week. That’s a twenty per cent return. It seems like a no-brainer. In reality, it’s an investment for people who don’t have the brains to spot a scam. And while I don’t mean to be rude, I do mean to protect you from getting stung.
If you really want to check out the American real estate market, do it properly. Buy a ticket to the United States and check out the market for yourself. Under no circumstances should you buy property on the advice of an Australian company alone. Do the real research. …
Read the full article at Jenman.com.au.
Olly Newland’s Column, November 2010
Olly will be part of Empower Education's MARKET UPDATE evening, Auckland 7th December (click photo for details)
A FEW DAYS AGO Quotable Value (QV) came out with its monthly report and the headlines that followed were totally predictable:
“Property prices sliding” or “House values slip again” etc.
What a lot of rot.
Government-owned valuer Quotable Value (QV) has reported house values continued falling in October and are now down 1.6% from March.
QV said prices rose 2.8% between October 2009 and March 2010, but have since fallen. However, they remain 1.1% above October a year ago.
“The low level of sales activity we have seen all year continued through October, with sales well below both last year and the long term average,” said QV.co.nz Research Director, Jonno Ingerson.
“There is no sign of the traditional spring surge in sales, and we don’t expect any significant increase in sales before the New Year,” he said. Full QV stats and commentary here.
If you read that carefully, the part that really matters is buried three 3 lines down, and that is that prices are actually 1.1.% higher than they were a year ago.
The error made by many is to look at monthly sales figures and grab the the most catchy headline … never mind the facts.
When analysing big ticket items such as house prices (which react very slowly one way or the other) it is the annual trend that must be watched, not the the day-to-day or monthly statistical wobbles. Look at this:
Monthly housing index chart here from interest.co.nz.
So looking back over the last twelve months we see that prices were steady with a UPWARD bias. (If anything.)
Exacerbating the whole matter is the fact that sales volumes are at a very low level. As prices are still staying relatively firm it proves what I have always known that 95% or people might want to sell or buy do not have to buy or sell … so they stay put instead.
So we have no stampede of property onto the market, and forced sales remain mainly in the poorer areas where investors got tucked into buying slums by the now defunct “gee whiz” spruikers who pushed them into them.
So much for the doomsayers who predicted a 30% crash in property prices, together with the collapse of civilisation as we know it. (Sorry to keep bringing it up, boys.)
It hasn’t happened. And it won’t happen, for several irrefutable reasons:
