Hi,
We sold our home in Sydney two months ago and planned to buy a bigger place in the same market. We have owned it forever and now have a substantial amount of equity to re-invest in a new home. But, stock is tight in our area which is making it hard to find the right place. Given the negative sentiment around at present we are considering whether we’d be better off renting for a bit. The chances of the market running away from us appears slim and the 5-6% on a term deposit is appealing compared to the recent growth in prices. Interested in your thoughts.
Probably not a bad option if stock is tight. Perhaps look at getting a periodic lease so as you have more flexibility if you do find a new PPOR and need to break the lease.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
no real need to get a periodic lease – the 2010 tenancy act in NSW allows you to break that lease with minimal cost – 6 weeks rent if you are less than 1/2 way through the lease, otherwise 4 weeks.
You might also consider renting out of the area but close-by to see if the grass is greener in the next suburb.
Cheers, I didn’t know about the changes to the tenancy act. Renting sounds like a good option because the head winds seem to be pointing to a downturn, rather than an upturn.
Stay in cash and term deposits. The global scene is just getting warmed up. You’ve seen nothing yet compared to what’s coming. Watch China. It’s our Achilles heel. Growth in China is slowing as global growth slows. 2012 is predicted to see growth (China) around 7% and some see growth dropping to 3-5% from 2013 onwards.
Sydney is a service centre centric economy. It will be hammered in any financial slowdown.
Our banks hold huge amounts of debt linked to property. Their assets are not being market to market therefore their balance sheets are much weaker than they and Govt would have you believe. Some are predicting a US style toxic debt scenario here with our banks. As mortgagees transition into negative equity in greater numbers banks will increasingly come under pressure as delinquencies rise.
Australia may actually find itself in the perfect financial storm due to it being one of the last economies to falter. There’ll be no one to save us.
The time to buy will be in 3-5yrs. It’ll be cheap but don’t expect property growth rates like in the past. After the 30’s depression it took something like 19yrs for property to regain its pre-depression levels
Jack
Hi roadrunner, I guess you have made up your mind on renting a home rather than buying. But have you tried to ask about the rent to own houses? this might also be a good option for you.
Road Runner wrote:Cheers, I didn't know about the changes to the tenancy act. Renting sounds like a good option because the head winds seem to be pointing to a downturn, rather than an upturn.Depends who you are listening too. I wouldn't bank on it though. There are lots saying Sydney anbd Brisbane are the cities to target at the moment.
What area are you looking at? There are areas of Sydney that are still overpriced but many that have great buying opportunities.If you want to live in an area that has a low yield have you considered buying an investment property in an area that has good purchase price and good yield? That way you can keep up with the market and not be out of pocket.
JackFlash wrote:. Some are predicting a US style toxic debt scenario here with our banks.Our banking system is VERY different to the US. I don't think it's feasible to make comparisons.
Catalyst wrote:Our banking system is VERY different to the US. I don't think it's feasible to make comparisons.I’m not comparing banking systems. The comment I made reflects sentiment in some areas that poor lending policy by banks IE lending at 100% in some cases, is similar to the US toxic mortage scam.
PI’s here still don’t understand (in many cases) how our banks operate and the risks they present. The ratio of mortage money sourced from local deposits vs international money markets varies from time to time however over all Aus property is substantially funded by short term international money market borrowings. We may see interest rates decline in the short term but given that money market liquidity is seizing up and the price of money increasing it is far more likely we will see interest rates rise in the medium term.
This presents the potential for a similar scenario like the US toxic mortgage scam as property holders see falling prices/values as interest rates rise pushing more into negative equity coupled with higher repayment costs.
Jack
You must be logged in to reply to this topic. If you don't have an account, you can register here.
