Great topic, its great to hear other peoples stories. When I was in NZ recently I picked up a book by Phil Jones composed of anecdotal stories from peoples experiences, not sure if it has hit the shelves here yet. I recommend it.

I am 32 and don’t own any property, I’ve spent the last 10 years at uni and building a career, now I’m paying for it! but luckily I have the income to borrow a decent amount of money. Not having bought any IP’s as yet, I’m finding it interesting going through the process of dealing with lawyers, REA’s, banks etc. I’m finding it hard to stick to my guns and go by the numbers/instinct alone, but I’m determined to make it work!

Chris

I think Perth would probably be the worst place to look for easy CF+ property at the moment. It takes time for rents to increase after a rise in prices to improve yields.

On a good point I’ve noticed in Melbourne that after reaching the lowest yield levels in 10 years, rents are on the increase while prices have dropped further. I guess the same might be the case for most eastern states.

Chris

Theres a number of worthwhile considerations which haven’t been made which would affect the outcome of the scenarios. Unfortunately, a lot of them are unpredictable and hard to enumerate. Such as:

1. Population growth – Australias population will continue to grow. This means demand for more housing. Also, if more people are of working age and earn the average wage, the amount of money available to spend will increase. There are both positive and negative impacts of this on house prices.

2. Living trends – people may prefer to live in smaller dwellings with less people per dwelling. This creates an impact on property.

3. Global Money market – As long as interest rates in parts of Asia are around 0.5-1.0% banks will want to lend money to Australians who will pay 7%

4. Generational changes – Some say Gen X’ers are quite greedy and Gen Y’s are more determined to delay gratification to save money to buy a house, or not spend as much generally.

While a lot of these can’t be quantified, thats what makes analysing the property market so interesting. If we all knew what was going to happen, there would be no opportunities. If I were you I’d spend less time worrying about that and more time finding them. Or don’t, all the more for everyone else. [aacool]

Chris

You don’t need to live in the property for 6 months within the first 12 months. You simply need to COMMENCE occupancy within the first 12 months of ownership. That is how I interpret the clause below from the govt. website anyway:

“Will at least one applicant be occupying the home as his or her principal place of residence for a continuous period of at least 6 months commencing within 12 months of either settlement or completion of construction?”

So in theory you could move in on the last day of the 12th month following settlement and still fit the criteria for eligibility.

Cheers,

Chris

Interesting stats. Does that make you think there is an adjustment to be made over the coming 6 months – 1 year back to 5-6%?

Chris

1. Interest rate raise << rates are still low compared to the last 10-20 years
2. Petrol prices << I’ll give you that one
3. Lack of job security with the new IR laws << I never believed in unionism anyway, and unemployment is the lowest it has been for the last 10 years, almost too low some would say
4. Inflation << again, still lower than those of the last 10-20 years

The media hypes up interest rate rises, most informed parties, i.e. banks who lend most of the money and investment houses who invest in a lot of property, say that an economic downturn is a combination of factors, not the interest rate alone. So you have to put everything in context. What about the US economy, the trade deficit/surplus and exchange rate trends?