Did The Property Market Turn A Corner Today?
Have you been watching the property market news today?
On the back of early Greek Presidential Election results – markets seem to be moving back from “safe-havens” like Gold into other market sectors. Currency markets have rallied!
Although I’m not rushing out for a celebratory souvlaki just yet (extra garlic sauce please), it’s another step towards a more positive property outlook – with uncertainty starting to be shored up, and finance potentially set to flow more freely.
Meanwhile, RP Data recently reported drops in house prices in Australian capital cities. A house in Melbourne worth $500,000 a year ago may be on the market for just $460,000 now. (Ouch!) That is a real pain.
This news makes me think of the investing mantra: “Buy Straw Hats In The Winter”.
In other words, invest when property market prices are low – and profit as prices rise.
Are you nervous or jittery? Or do you consider yourself “in the smart money” – taking advantage of downturns, instead of getting caught up in market hysteria.
Have your say here.
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Never nervous when you invest for cashflow….
As it dosnt matter to much what the markets do…
But some more optimism in the market can only be a good thing.
Although it does seem that one week its the end of the world, and the next week all will be ok…
Have the greeeks just changed the captain on the titanic????
Micah
Good news which may help stabilise the markets
Some better consumer sentiment can never go astray. Good news and some temporary interest rate lows should help ease a bit of the jitters. Better go get me some more straw hats!
D
Have seen a gradual unending decline in pricing in my market here in rural northern fringe in Brisbane (Samford) since the GFC round 1… We missed completely the Melbourne/Perth 25% lift, and have seen nothing but an uninterrupted 6 year softening of prices that makes the $500 to $460 look like good news. I have a 3 bed cottage on 6 acres for sale for $565K, yet I sold the vacant block right next door 15 months ago for $510K… 3 phase power, driveway, septic treatment, water…oh and 130meters of building… Would love to know where the bottom of this is…??? In Sydney, equivalent product is $2 mil+…
Maybe I should buy in Greece? For $500K I’d live like a King!!! Endless supply of plates to smash…
Have bought 2 up in sunny Brisbane in the first part of the year and now with this better news filtering through, am looking for a third. With yields over the 7.5% mark, don't think we'll go wrong and I'm sure the capital growth will come in the next 5 – 7 years.
Honestly, who really knows for sure where the market is headed in the short term? Most people are taken by surprise whether there is an upswing or a downswing in the market. It's a case of 'Yer pays yer money, and yer takes yer chances.'
I've done precisely that…decisions made on information that was current at that time. After that, it's all wait and see.
People who buy on scarcity and location will probably do well.
Reading the Fin Review yesterday on US Markets and funds trying to buy up residential real estate in bulk are having trouble getting stock. Phoenix Market reported as picking up. Canadian Lady I work with ("Snow Birds" to Phoenix they call them) said that real estate agents she knows are boasting about deals they bought.
Anyone else got any US news?
Confidence that housing can beat the odds forever and that ever increasing debt to fund ever more expensive houses is slowly leaving the market.
It takes years for a critical mass of market confidence to evaporate after decades of debt and government subsidy fuelled housing price increases. It begins with a few fringe naysayers and then slowly goes mainstream as the penny belatedly drops for the masses. The eventual failure of the no-risk property bet with ‘guaranteed’ price doubling every 7 to 10 years will take time to permeate the strong Australian property psyche, as denial will prevail until reality belately bites.
The Boomers have over 70% of their assets tied up in property, with the vast majority only having that in their family home. Once they finally concede that the equity in their houses in no longer growing and is going backwards, the lack of confidence in property will accelerate; this is their main nest egg and they need to cash-out at a high price to the next generation and downsize.
This downturn unfortunately has a very long and painful way to go before we see anything that looks like a market bottom.
Buy straw hats in winter for sure – the trick will be picking the right winter of the right year.
Hi Cherry
Great news about those yields.
Can i please ask if they were on Purchased price or complete costs.
Or percentage down purchases.
Regards
Everyone talks about taking advantage of the current market. But what about existing negative geared properties already bought – it's hard to keep your nerve while property prices are dropping
I have come back into the market with my first pos cash flow property since the GFC, more deals around now, easier to negotiate with vendors as the hype and hysteria is gone,i find people who are motivated to sell in this market are seriously wanting out. Interest rates are good. Rents are rising in Nth Qld, no one has been serious about building new houses for about four years now, so housing shortage is going to happen. Large scale mining and construction projects from Gladstone north will impact housing all the way up the east coast as people will travel to where they work not just live in or around the area where they work.
If things were to take a turn for the worst even less housing will be built therefore more pressure being put on existing housing, leading to increased rents .Positive cashflow properties are out there, the trick is finding them they’re not usually in a realestate window.
Would be good to hear what others are doing , anyone buying in Nth Qld?
The Australian consumer is being cautious. Why wouldn't you be with all the negative activity in the world markets? Greece, Spain, Italy (really bad, the country most likely to detonate the Euro). America still treading water, UK sinking slowly and Australia suffering from the two speed economy and demise of some important industries. Yes the carbon tax as well (maybe a basket case together with the planned budget surplus?). I suppose we could postpone these policy/targets as a means of quantative easing? Plus the other lever….dropping interest rates?
There is good news "the sooner things get bad the sooner they get better" If you were looking for a ray of sunshine it may come in the return of confidence to the domestic consumer. Maybe we will all wake up and relalise that good old Oz has beaten the odds. As an economy we are well placed to "move forward" when all the other countries are in alignment, debt at lower levels, consumer demand up, unemployment levels down…..you know…all the good things that we need to create growth. I suppose the good thing for us is the bad things will be mostly borne by all the other countires worldwide, for the time being
What concerns me is the fact that the debt levels of Europe, America are looking like it will take years to stabilise and even longer to pay down. I have only just understood the bond market and the way that works. If countries try selling their debt in 5 or 10 yeas bonds where is the critical time span, you would have to say 5 or 10 years from GFC1 (great financial cock-up?) We are in GFC2 and moving forward. When the bonds are due to be paid, I don't think these debts will have been reduced, plus the impost of having to pay 7 or 8% (God knows how much this will be with other countries reaching bail out phase) and we have the perfect storm. The increase in world growth to offset this debt burden in the critical timeset quite frankly is not going to happen. So GFC2 is with us.
What does this mean, Speaking for ourselves it is to rationalise our portfolio leaving us with 3 properties, one to live in and two giving cash flow. We are about to retire and pehaps being in that phase of life are a bit risk averse? However it would put us in a position to buy. If I were to put myself in the average position I would have to say if the global problems persist and there is a default in the Eurozone, then it would be hard to ignore the impact it will have on this country. If you are highly geared with doubt about your income/job security, then liquidate. If you cannot be positive about job security, continued cash flow, then you are not going to grow your portfolio, defense is the option now. If sentiment doesn't improve we are in for a protracted period of little or no capital gain. We may not see a huge decline in asset values but the risk of unemployment could well be the key factor for the individual
The other serious outcome is that we all trundle off into the future dragging our debts behind us, layers of quantative easing, and a worldwide Ponzi scheme in the making.
I feel a chill wind….been there done that with the Maggie Thatcher era in the UK……things are not looking rosy.
Hi Michaeltw,
You have totally hit the nail on the head ! !
It's hard to ignore the funeral dirge the media keeps playing. I wonder if Australians knew nothing of what was happening in the rest of the world, what would happen then? It's an interesting thought. And where does all this constant information leave us as investors?
When the rate cut happened I didn't even have to watch the news, my Facebook feed was full up of people wanting to talk about it. I'm curious about how much the information age (overload) is creating this technical recession.
The problems with Australia – reliance on being a one trick pony. Lack of new country wide infrastructure such as high speed rail leaves us with only one income stream as a country. (No Labor the NBN doesn't count, you should have done it 10 years ago if you wanted it to) Successive governments have slaughtered manufacturing, in an effort to compete on price, not compete on other terms such as quality or uniqueness.
Successive governments have assumed that farmers will just keep farming. Not if they can't make ends meet, they won't. So while the worldwide market is now coming to a point where food prices will be at a premium, and a country that can claim food that is free from nuclear exposure, disease free produce and the highest quality product would be sitting at the top of the export market, we as a country are turning our back on a huge amount of money we could be making. Instead farmers are selling their land to countries more switched on to rising food needs and costs. Luckily we have a few years left to try and rectify this.
Advantages Australia has over the rest of the world – being a young country. While our population is aging, our country as a whole is only 200ish years old. Other countries such as China, Greece, Spain, Britain have been around for 1000's of years. They have been superpowers in their day and have peaked and trough, in China's case, peaking again. We should be only just starting to enter a period of time where Australia begins to be powerful country in it's own right. There is plenty of land available to us, and while some of that is desert, we still have way more space to create industry, farm, have fish farms, mining, housing, than many countries have. Compare us to Germany, or Japan for instance.
What am I getting at with this essay? It's how you look at the whole situation. If you are close to retirement, it's different outlook to how you look at investing as a 20 year old, and different again at 32. I'm trying to see the big picture as much as possible.
Cheers
D
Does anyone recommend for buying good reliable cash flow positive in Greece any company that anyone knows about working and providing kind of a buyers agent service
Where would you buy now in the US – with local loans from the US or ?
Thanks
Danny
I don’t know if the property market has tanked. I only see house prices going up around me.
@ Synch1
Good luck getting a loan in the US as a foreign investor. We are recovering from a recession nobody is loaning money other than hard money lenders.
I think if people buy or sell properties or shares becasue the "news" say we are drowning or the econmy is getting better based on figures etc then you might as well go to crown and bet on red becasue the last 5 spins it landed on red or you might want to bet on black becasue the man sitting near you said black is good.
I think what allot of people dont relise is that the market moves very quickly and people are more influnced by negative news then postive.
When i mean the market moves it moves very quickly not by years any more but somes time months.
[quote=Jpcashflow]I think if people buy or sell properties or shares becasue the "news" say we are drowning or the econmy is getting better based on figures etc then you might as well go to crown and bet on red becasue the last 5 spins it landed on red or you might want to bet on black becasue the man sitting near you said black is good.
I think what allot of people dont relise is that the market moves very quickly and people are more influnced by negative news then postive.
When i mean the market moves it moves very quickly not by years any more but somes time months.[/quote]
Agreed.
Confidence returning is a good sign. Fingers crossed moving forward and keep this great Aus market moving.
I've certainly noticed rents go up by a large increment in my investing area of choice… so I'm happy! If that leads to a capital growth jump too, I'll be twice as happy!