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Originally Posted By: Go Native
In Australia, historically prices have always gone up even if there has been a period of stagnant or negative growth. The next peak has always been more than the previous one.


There is no denying, the price appreciation in real terms in australia since 1955 has been phenomenal (3% real p.a.). It is hard to see that changing any time soon with the immigration and all the other things in status quo, rates, employment, credit, etc.

Originally Posted By: Go Native

People should really understand though that the property market here is no longer the sole domain of the Aussies. As I said earlier most of the recent sales are to SE Asians who still seem to be extremely cashed up. Hanazono and Niseko Village have recently both been sold to large SE Asian companies. Australians had their little dabble in real estate here but now the big boys from Asia are really moving in.


It also looks to me like Niseko is past the point of being a "bubble" and is well on the way to becoming the International Ski resort of Japan.

However, I must point out that neither of the above is a certainty, which I think many people believe it to be. Expect the unexpected.
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Well I got in and out of the property market here fairly quickly with a good return. My only investment in Japan now is my house in Kutchan and I fully expect it to depreciate in value along with most other properties in Japan! lol

 

And my bar in Hakkodate isn't exactly going to let me retire any earlier!!

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Most of the comments here support what I believe.... that Aussie attitudes about property are different to the rest of the world. Of course, there are some unique factors behind that, including some of the largest private debt levels in the world and a govt that has spent billions of taxpayer money to prop up the market. It's all about debt, plain and simple.

 

The idea that property prices only go up is ludicrous at best, especially in the case of Japanese ski resorts (or Japanese property in general). Also, one of the key tenets of investing is that past performance is not indicative of future growth. Just because Aussie has never experienced falling property prices doesn't mean that it will never happen. And creating inflation to prevent prices falling is a recipe for disaster. Inflation is nobody's friend. Hence, the old man who lives in the manor who can't afford to get his roof fixed.

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Why do you care though? I mean so what? Whether or not you agree with the Aussie attitude towards property investing certainly means little to those who've made small and large fortunes from it over the last 15-20 years. And certainly very little to those who made a bucket load of cash over the last 6-7 years in Niseko on property. Like any investment property investing will come with risks and there are good and bad times to buy and sell.

There is no point at all in comparing the property market in Niseko to the rest of Japan because what happened here was never part of the Japanese market and I doubt ever will be.

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Originally Posted By: Go Native
Why do you care though? I mean so what? Whether or not you agree with the Aussie attitude towards property investing certainly means little to those who've made small and large fortunes from it over the last 15-20 years. And certainly very little to those who made a bucket load of cash over the last 6-7 years in Niseko on property. Like any investment property investing will come with risks and there are good and bad times to buy and sell.
There is no point at all in comparing the property market in Niseko to the rest of Japan because what happened here was never part of the Japanese market and I doubt ever will be.


Well I thought this was a "forum," so I'm just expressing what I think (with reasons and examples). If there were a property slump in Niseko, it wouldn't surprise me in the slightest. If people make stack loads of money out of property, I say all power to them. OTOH, you can argue that Niseko is different to rest of Japan. In fact, that's the same argument that they're using in Australia: that Australia is different to the rest of the world. All I'm saying is that I'm not convinced (in the case of Niseko or Australia) that it is.
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Originally Posted By: Go Native

There is no point at all in comparing the property market in Niseko to the rest of Japan because what happened here was never part of the Japanese market and I doubt ever will be.


That's just plain stupid. Niseko is in Japan. How can it not be part of the Japanese market? Foreigners are relatively recent on the scene so I think it's a bit early to be calling your own sovereign nation up there.
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Nothing stupid about it. The property market here has been purely driven by international interest and invesment. The buyers have been almost entirely international investors. Most of the financing for all developments here has been through international lenders. Quite simply the pricing and growth experienced here has nothing to do with what is happening in the domestic real estate market.

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Originally Posted By: tripitaka
Originally Posted By: Go Native

There is no point at all in comparing the property market in Niseko to the rest of Japan because what happened here was never part of the Japanese market and I doubt ever will be.


That's just plain stupid. Niseko is in Japan. How can it not be part of the Japanese market? Foreigners are relatively recent on the scene so I think it's a bit early to be calling your own sovereign nation up there.


Same reason my parents house in New Hampshire has kept value if not increased during the whole fiasco and my friends in California has dropped to nearly 1/3 of the value.

Everything about bubbles (believe me I have studied more than enough about bubbles to never want to hear the word again) is speculation. If large amounts of people speculate the ski industry will take a beating, then Niseko real estate will take a beating as compared to outside Tokyo.
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I really don't understand Trip.... how is the Aussie property market much different from the US Market, the Canadian Market, the UK Market, the NZ Market...and at east a few European markets?

 

We antipodeans are not on our own for buying our own home, and possibly and secondary (investment property).

 

As for Niseko - time will tell.

I have not bought there - although we have looked - but of course it will be influenced by the internal markets in some ways ... but it will also be effected by the external markets (international ski investors).

 

But I think it would be remiss to assume all investors are looking to get in and out in a short period of time with a profit of mammoth proportions. Those I have talked to have bought a modest property that forms part of the holiday rental pool that they can use and enjoy when they visit as a family. There are benefits other than capital gains upon a sale. Being able to offset the cost of your family vacation because you are 'checking up' on your property is a biggie. having Owners Storage is another. Not having to pay out extra for accommodation another (although you lose the rental income for that time period).

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Originally Posted By: Go Native
Nothing stupid about it. The property market here has been purely driven by international interest and invesment. The buyers have been almost entirely international investors. Most of the financing for all developments here has been through international lenders. Quite simply the pricing and growth experienced here has nothing to do with what is happening in the domestic real estate market.


So am I allowed to make any comparison with foreign REITs that are also reliant on foreign funding and investors? Or is Niseko different to those as well? Your argument is that Niseko exists in a bubble (excuse the pun) so we cannot compare it with anything else.
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Originally Posted By: Mamabear
I really don't understand Trip.... how is the Aussie property market much different from the US Market, the Canadian Market, the UK Market, the NZ Market...and at east a few European markets?



I don't actually think it is that different Mama, particularly when you think of its explosive growth due to a credit bubble.
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I certianly wouldn't compare it to real estate trends in other rural areas of Hokkaido. If you can show me any other town, city or resort in Japan with such a large international investment interest then lets compare it to them. I know large cities like Tokyo attract large amounts of foreign investors for big commercial properties but that isn't the case up here just yet. It's mostly been individual investors buying one apartment or house. It does appear to be changing a little now though with some of the big Asian companies coming in with big plans, like in Hanazono, building a whole village from scratch.

Or lets compare Niseko to other international ski areas that have gone through rapid growth.

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There definitely was ridiculous and unsustainable growth here - no where near as bad or damaging as what happened in the US - but the First Homeowners 100% loan arrangements certainly tripped a lot of people up when the GFC hit.

 

We emerged relatively unscathed - especially here in the West - but there were some casualties. Arguably people who could ill afford to actually buy a home in the first place, or those who has really over committed.

 

Happened to a relatives relative. They had a home and were sitting comfortably but they refinanced when their value artificially inflated and spent that cash on a swimming pool, new car, big TV and a holiday. Property market went back to where it should have been and then they owed 120% of the value, which they struggled to repay when interest rates started to rise. They sold the house and walked away with debt. A sad story but a product of silly behaviour. The majority of people weathered value fluctuations without too much of an issue.

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Originally Posted By: Go Native
I certianly wouldn't compare it to real estate trends in other rural areas of Hokkaido. If you can show me any other town, city or resort in Japan with such a large international investment interest then lets compare it to them. I know large cities like Tokyo attract large amounts of foreign investors for big commercial properties but that isn't the case up here just yet. It's mostly been individual investors buying one apartment or house. It does appear to be changing a little now though with some of the big Asian companies coming in with big plans, like in Hanazono, building a whole village from scratch.
Or lets compare Niseko to other international ski areas that have gone through rapid growth.


OK, as a Kiwi, I will say Wanaka and Queenstown, both of which rely on a significant of foreign investment, but relatively more local investment than Niseko receives from the Japanese (I cannot verify that though).
Queenstown is more developed than Niseko, but QT property is probably "less risky" because of its relatively greater through-traffic. Anyone with any knowledge of NZ property will realize that Central Otago is in serious bubble territory and prices have been incredibly volatile since the GFC.
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Originally Posted By: tripitaka
Originally Posted By: Mamabear
I really don't understand Trip.... how is the Aussie property market much different from the US Market, the Canadian Market, the UK Market, the NZ Market...and at east a few European markets?



I don't actually think it is that different Mama, particularly when you think of its explosive growth due to a credit bubble.


There are some differences for sure, mostly to do with taxes. The aussie "model" if you like, is to keep buying a bigger and more expensive house as you can afford it and then sell it when you retire and live off all those tax free capital gains. It's a good model from what I can see! As long as prices keep going up like they have. It does not really explain the investment property side of things, but I think that's a bit of a hangover from the first thing, or perhaps it really is tax effective as well (GN ?). The UK is similar, but the US has CGT on your own home, and if I am not mistaken, property tax for just living in it...

Transaction costs in aust are probably quite low too, compared to a lot of places.
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Originally Posted By: gurgle
Originally Posted By: tripitaka
Originally Posted By: Mamabear
I really don't understand Trip.... how is the Aussie property market much different from the US Market, the Canadian Market, the UK Market, the NZ Market...and at east a few European markets?



I don't actually think it is that different Mama, particularly when you think of its explosive growth due to a credit bubble.


There are some differences for sure, mostly to do with taxes. The aussie "model" if you like, is to keep buying a bigger and more expensive house as you can afford it and then sell it when you retire and live off all those tax free capital gains. It's a good model from what I can see! As long as prices keep going up like they have.


Well, there you have it. "As long as prices keep going up," so it's effectively a Ponzi scheme in the absence of higher incomes and productivity. But one of the problems is that private debt cannot keep increasing exponentially, which is why the Aussie govt is plugging the gap (with taxpayer money of course). Aussie has to borrow most of its capital offshore to continue the facade and the banks are reliant on ever-increasing prices. Eventually, someone will have to pay the piper.
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Prices here did rise stupidly quickly but the demand for property also rose at a ridiculous rate. I'm pretty sure that many Aussies jumped in with little consideration of the domestic economy, they saw an opportunity where house and land prices were booming (something similar to what has been happening in Aus) and jumped at the opportunity. The GFC has hit in many ways. First and foremost numbers last season were way down on expectations and although there has been a good resurgence this season there is a lot more property in the village than there was 2 years ago. This means rental returns for owners are still not great as it's just meant more people have been able to come in a shorter period. 2 years ago we had occupancy rates in March up over 50%. This year we'll get nothing like that.

I'd say there is enough rental property in Niseko now to cover most of the demand. Sure this Chinese New Year demand was far greater than the supply but that's only 1 week in the whole season. The challenge now is to get demand above supply again for a much longer period so that people are forced to come outside of the 10 or so weeks of peak season. And although there's been a huge investment in rental properties there's been little investment in commercial space and upgrading village facilities and services. There's also been little investment in upgrading lifts and services on the mountain.

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Originally Posted By: gurgle
Originally Posted By: tripitaka
Well, there you have it. "As long as prices keep going up," so it's effectively a Ponzi scheme


More like a tontine than a ponzi scheme I reckon.....


Yes, I guess ponzi has bad connotations, but where they're both similar is that you need a steady flow of punters to keep it going.
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Other than the people who made money quick by flipping properties when things first started picking up, what kind of returns have investors been getting? I've thought about investing in Niseko but over the years I've seen pricing increasing at rather unrealistic rates (properties, rentals and accommodation). Very interested to see where it's all going.

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BM, I think you're seeing the peak of the bubble right now. Wait one year and you should be able to pick up a bargain. From what I hear, people are realising now that they can't sell at a profit. From the ones who have to sell for whatever they can get, we'll find out how overheated it really got.

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There are always people who think they can beat the curve (and some that do) so there will always be bubbles. The people that jump on the bandwagon once it's going tend to be the ones who are more likely to lose out.

 

The next one is probably only a couple of more years in the making.

 

Niseko definitely looks like it's already started on the rollercoaster ride.

 

Hakuba was just starting to rise and was (mercifully some would say) cut off by the GEC.

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yeah Hakuba's a different dynamic from Niseko for sure. Niseko had an undersupply of properties to start with. Hakuba had an oversupply - Half of the properties that are left are empty and falling down.

 

Wadano and to a lesser extent Echoland are two places that have started to see renewal which is good to see.

 

Unless Hakuba goes sky high, Which it could if the mountains get together and offer an all mountain pass and start connecting resorts, speculation is probably not going to be an option.

 

Anything bought is either going to be a lifestyle buy or is going to have to have a solid way of making money off it, or else it's a non starter.

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