Elsewhere Wrappack brought up the subject of fundamental factors.
We actually have at least a couple of fundamental factors at work right now i.e. the 2.25% NSW tax
and the Hart case decision.I have learned enough from my share trading to know that one doesn’t second guess the market.
Anyone who buys because he or she t-h-i-n-k-s we have reached a bottom is gambling.
One can guess a bottom a dozen times and be a dozen times wrong.
O.K. let us hear it as I know that there will be plenty of people disagreeing with the above sentiment as far as it concerns the residential housing market.
And, whilst you are at it, responding to this post, please also give us an idea how far (i.e. what percentage) YOU think the (residential housing) market will drop before a bottom occurs or a plateau is reached ?
It would also be nice to hear your reasons why you think so.
Pisces
Fundamentals, Pisces. But then again…
Well, with me, price is always a factor. But I know a price drop whn I see it, because I study particular markets closely. For the property I bought, I had followed it for 4 years. That’s diligent. My fundamentals are price, location (including population), tenancy factors, age of building, future development etc. Taxes have nothing to do with it for me- they come and go- like sands in the hourglass…
Put DA FUN [clown] back in MENTALS [mad]
How far will the market drop? Dunno. That is also not a fundamental for me. I’d like to buy every year, if I can- any market conditions will be ideal for me, if I buy well. If the market drops, then I can afford more properties… if the market lifts, then I achieve CG. Win/win for me/me!
kay henry
Kay,
That is called dollar cost averaging I believe!
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Yeah, what Simon says [hat]
)kay henry
In light of 2 x 0.25% interest rate increases, NSW exit taxes, the effect on the property market over the last 3-6 months has been, IMHO, disproportionate. (And not forgetting that most states have now 1st home buyers stamp duty concessions of some sort).
If you believe the figures, Melbourne has dropped in the vicnity of 13%, because interest rates have increased only 0.5%!!…….For a $300k P&I loan @7.07%, this is $100 extra per month..Not sure how logically that this $100 can precipitate such a fall. This in the context of lower taxes, relatively healthy economy etc..
I would say the evidence is there which points to the fact that most people are influenced by non-economic factors…….Call it gut feeling if you like. Ultimately though, it does becomes a self-fulfilling prophecy….
If the probablity for interest rate increase is eliminated in the short term (12 months), I think that will give a floor to the softening market…How much…I think in Melbourne at least, there is some very small downside still, based on interest rates as they are.
James
I act on Both.
For Fundamentals – I look for time in the market (Jan Somers) so I fix my loans for 5 yrs so I know I can retain the property. I also look for areas with growth close to home that I beleive are undervalued ie. gut feeling.
As for the future. Not sure how much lower things will go – but I believe properties are overvalued compared to averages wages. So for every interest rate increase I see property slowing or going down a bit and for every wage rise I hear about I cheer as this is what supports property prices.
Fundamental and Gut feeling should go hand in hand. First, you do your fundamental analysis, if it’s all ok then your gut feeling take over.
Kind regards
Jet Dollars
[Retire Young, Retire Rich] [strum]Hi Pisces,
I kinda agree with Jet.
If you call gut feeling a decision made after studying fundamental and technical indicators then fine.
A gut feeling made on an emotional decision is russian roulette and will lead to failure more often then not.
The market areas i am looking at are down 10-20% from peek. I think they have another 10 -20% to go IMO. But the best bet is we wont know till after the election (and probable rate rise).
Logic should dictate after answering this question… Is it more or less probable for a rate rise sometime this yr or early next?
Once you answer that (i answered more probable)
I then ask myself …So if the interest rate rises what decrease in property prices will people view as FAIR value and what can they also afford (also trying to factor in the emotional effects of the market at that time. (THAT GETS SCAREY especially since we have only had .5% rate rise so far ….oops i might have been a bit conservative in my prediction
Hi Kay ….your view confuses me on what is fundamental and what isnt [confused2]
What you said your plan is with property is essentially the game I play with Options (but I use as much technical and fundamental researchAs i can find [biggrin]
Cheers,
Ted
What’s confusing you there, Ted?
) I said Taxes are not fundamentals to me- god, I’d be a basketcase if i just freaked out every time a new tax came in. I don’t get joy when a tax break comes in and have a breakdown whenever a tax decision might go against investors. (In fact, I think we should pay taxes- I know- wierd huh?) Soi taxes have little to do with decisions I make. In fact, let’s look at the exit duty in nsw. What it meant was that the market chilled a bit in nsw, but i also have a place in Qld- so perhaps the nsw duty was advantageous to me in some way, becaudse some nsw investors took their purchasing power there. But looking at nsw, the market cools a bit due to a tax, so now property becomes more affordable, so I can buy in nsw. Not only that, but I can buy in the middle of sydney! What the tax meant to me is that now I have a firm buy and hold strategy, so I bought this property with that in mind. So perhaps the new fundamental (based on the tax (not a fundamental) is that the place I buy has to not fall down over the next however many years But that would be a fundamental to me anyway.Ted, I put in my list of fundamentals, future development. I know there is a great deal of development happening in the place where I bought. The nature of the development will mean that it will be good for my property when it occurs.
Each property can have a distinct set of things to consider really, but an urban property has a set tha stand out. Probably the same set would really apply for my investing anyway.
What do people consider “fundamentals” to be?
kay henry
Kay I am not being critical…i was trying to be light hearted ( i mustve failed sorry)
Taxs are fundamentals I beleive.
Additionally taxs are more likely to come and stay..then to come and go.
Taxs are fundamentals because they are involved in all logical property decisions. With CG, tax minimisation through depreciation etc etc.They also have a determining effect for you because they affect the price (your fundamental) at which you pay..as in NSW.
But if tax isnt a fundamental for you then i can live with that..cause that is what makes the place interesting, it would be a boring place if we all thought the same way.[biggrin]
Cheers ,
TedHi Pisces,
i believe money, can be made in any market, but i honestly dont like to caculate on fundametals…
… just like the share market… either it be a bull or bear market, money can still be made…
… its what strategy you use… the entry and exit plan, you devisage before entering and structuring the deal.
Cheers,
sisTed, put away your [glum2] as I was just giving you an explanation of my fundamentals, and hoping, as you did, that you (or others) might give an idea on your own notions of fundamentals :o)
I think there is a difference between what I consider “fundamentals” (usually demographic information) and “considerations” (taxes, state of the market etc).
Oh, in reference to the state of the market now, Pisces… and how much it might fall etc… Well, I’d probably go on Ian McFarlane’s estimate that it has “some way” to fall further. I’d also go the “soft landing” (if you consider 20% a “soft landing”! I don’t really) Some months ago on here, people were referring to reports about RE dropping 20% value, and others were howling them down. Well, in some markets- this HAS occurred. Really, it is no big deal- investors can sit back and enjoy the nature of the market. Works both ways for us
And hat say *you* Mr Pisces? You ask us this controversial question – hehe, get us all fired up, and then disappear? What’s your idea on this?
kay henry
Well Kay, the fundamentals tell me that the trend is down.
As there is no way of telling when the bottom is reached until some time after the event.
Even then it may be just a flash in the pan and the trend may well re-assert itself after one has bought.
Nevertheless I’ll use my gutfeeling (how illogical isn’t it after what I said in my first post) and buy when ‘it feels good’.
I owuld like to think that I have processed
the fundamentals on a subconscious level.My one advantage is that I will be buying wholesale so even a further fall would hopefully still produce a profit.
Pisces
)
) I said Taxes are not fundamentals to me- god, I’d be a basketcase if i just freaked out every time a new tax came in. I don’t get joy when a tax break comes in and have a breakdown whenever a tax decision might go against investors. (In fact, I think we should pay taxes- I know- wierd huh?) Soi taxes have little to do with decisions I make. In fact, let’s look at the exit duty in nsw. What it meant was that the market chilled a bit in nsw, but i also have a place in Qld- so perhaps the nsw duty was advantageous to me in some way, becaudse some nsw investors took their purchasing power there. But looking at nsw, the market cools a bit due to a tax, so now property becomes more affordable, so I can buy in nsw. Not only that, but I can buy in the middle of sydney! What the tax meant to me is that now I have a firm buy and hold strategy, so I bought this property with that in mind. So perhaps the new fundamental (based on the tax (not a fundamental) is that the place I buy has to not fall down over the next however many years 
You must be logged in to reply to this topic. If you don't have an account, you can register here.
