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What is a property really worth?  With respect to  a market valuation, it depends on how much you want a property and how motivated the vendor is for a sale. Please don’t confuse a market valuation with a mortgage valuations; we will look at the differences below.

The correct definition of a property’s value would be the price at which a willing, informed seller would freely dispose of the property and the price at which a willing, informed buyer would freely pay for the property.  If those two parties were to agree then that would be a genuine measure of a property’s worth.

Unfortunately it is very difficult to accurately predict what that figure is.  By comparison it is very easy to value shares.  One AMP share is identical to another AMP share, is priced identically and the prices the buyers and sellers agree on are openly published.  With property no two properties are exactly alike.  Even identical units standing side by side will be different.  They may have a different facing, one may be closer to a noisy road than the other, one may be facing the pool and the other not. They are never exactly alike so it is difficult to do a direct price comparison.

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In life there are indisputable laws that we have to contend with.

There are laws of chemistry and physics, laws of nature and there are also financial laws.

If you fight the laws of physics you will lose every time. Have you ever tried to fight the law of gravity? It’s painful when you land with a thud! Gravity wins every time. NB: While the law of aerodynamics supersedes the law of gravity… it does not do away with it!

Did you ever try to grow a plant that was totally unsuited to the local climate? No doubt, you didn’t have much success! How silly would it be to mix two explosive chemicals together… and no reaction?

People drown fighting rips… but anyone can swim with the tide.

LAWS GOVERNING THE FINANCIAL WORLD:

As there are laws governing most things about us… so too it is with the financial world. Two obvious laws that I want to consider here are (1) Time and (2) Inflation. In my experience, most people fight these financial laws like the swimmer in the rip. They drown financially… but it does not have to be that way!

Once we accept that there are laws governing time & inflation, we can learn how to harness them to our advantage; it’s that simple! It can be like having the wind at your back, rather than running into a headwind.

Therefore, my strong suggestion is: “Quit fighting natural laws; rather learn how they work… and how to use them to your advantage”.

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“THE majority of Australians end up retiring and trying to survive on less than the average wage,” booms the self-described longest-running wealth education advertisement on television.

“Imagine that. Life without the money to do even the little things you love wouldn’t be good.”

John Fitzgerald’s Untold Wealth infomercials which offer buyers of an investment education package the prospect of making millions “from scratch” have been running on Australian television for over five years.

But what infomercial viewers are not told is that Fitzgerald, a Queensland property developer, uses that education package to attract investors to his associated “investment seminars”.

Seminar attendees are encouraged to buy Fitzgerald’s own often poorly located — and often lower-quality — property developments. Independent property valuers have warned that those investors who have bought poorly located properties through Untold Wealth — rather than investing in better locations — could have cost themselves hundreds of thousands of dollars in potential gains. Here’s the rub. Viewers are spruiked the $299 education package with “all profits” going to the Toogoolawah school for disadvantaged children.

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• Up to half of people aged 48-61 will rely on pension
• Bottom 25pc of boomers have saved just $300,000

As many as half of Australia’s baby boomers will run out of money in retirement, an expert says.

Professor Sol Encel, in Adelaide to address the Australian Association of Gerontology’s national conference on ageing, said that between a quarter and a half of people now aged 48-61 will be reliant on the old-age pension.

Professor Encel said latest figures from the Centre for Economic Modelling in Canberra showed that the top 25 per cent of baby boomer savers had put away about $1 million each, but that the bottom 25 per cent averaged savings of only $300,000.

“Finance experts will tell you (this amount) isn’t going to last 25 years, which is the expected lifespan for 60-year-olds,” Professor Encel said.
He said that boomers have already been defined by class, income and education and that these differences would be sharpened by loss of income and large differences in superannuation benefits.

“There are enormous variations in income, education, occupation, health and housing in the boomer population,” he said.

“They are as diverse as any previous generation, as they age, their social situation will be dominated by class differences; it’s absurd to lump boomers together as some homogenous block.”

Source: News.com.au

In the 1st half of last year I said that by the end of 2006 our market would begin to take off and the West Australian market would ‘come off the boil’.

I don’t think anybody would argue that 2007 has seen the East Coast property market begin to soar while property in the the West has levelled off. When it comes to investing for your future, you will have to contend with the many competing voices and conflicting opinions. But it’s not that hard to ‘block out’ those voices and opinions when you understand that:

RESIDENTIAL real estate (unlike any other form of investment) is dominated by home owners (i.e. not investors) and everybody has to have a roof over their head.

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