Forum Replies Created
Hi Ben, It's currently a buyers market so I would say now (to early next year) is a great time to buy! I bought a property in Varsity Lakes 2 years ago, it's gone up in value by $35k so far (bank valuations) and even if, as Scamp predicts, the market crashes on the Gold Coast, that won't affect me, because I'm not planning on selling for another 15+ years. Around 14 years ago my parents bought a house on the GC for $232k (Robina/Broadbeach area) that is now worth $800k plus – historically, property always increases in value (unless it's a shack in the middle of nowhere!) and a downturn in the cycle is the best time to buy.
I don't think the market will crash as the GC is the fastest-growing city in Australia at the moment – migration is high (popn of around 500,000+ with 18,000 more residents arriving each year), employment is strong – and no matter what the market is doing, people ALWAYS need somewhere to live. Even moreso if the economy tanks and people lose their homes and go bankrupt, etc, because there will be even more renters in need of a home. Property prices might decline (none of the leading property analysts and forecasters are predicting this, BTW – in fact they're all predicting growth of around 20% between now and 2010) but as long as you don't over-extend yourself financially and you're able to ride out any troughs in the cycle without being forced to sell, you'll be able to enjoy the benefits when prices eventually do go up.
It's confusing when you start out as an investor, especially when you come across so many conflicting opinions – comments such as Scamp's are useful in that they make you think about what a huge undertaking a property investment is (too many people jump in without doing proper research and end up in trouble..), but at the same time, try not to get bogged down by negative comments and follow your common sense. You're on the right track because you're looking at a realistic price range and a realistic deposit!!
My first unit cost me $150,000 and I almost didn't buy it due to fear of taking the plunge – I sold it two years later for $245,000 and it got me my start in property investing. If I didn't do that I wouldn't have the 3 properties I have now (even though I wish I'd held on to that property – it's now worth more than $300k – hindsight!!)
Hope this helps and doesn't confuse you more..
cheers
Hi atevans,
Are you looking to sell because it's costing you too much to hold? My opinion is, if you can hold it, don't sell – it's a buyers market and you will almost definitely not get the best price. If you wait 12 months the market will pick up and you'll be in a position to negotiate a much better price. Residex/RP Data/BIS Shrapnel are all forecasting price growth to accelerate next year and into 2010, so I would avoid selling now if you can. I read this just thismorning:
"BIS Shrapnel forecasts Brisbane, the Gold Coast, the Sunshine Coast and Darwin will show the strongest price growth through to 2011 due to significant pent-up demand in these markets and strong employment and wages growth, especially in Queensland… healthy underlying demand, together with strong wages growth and outperforming economic growth in Queensland have not only improved affordability for many, but also resulted in a return of confidence in the Brisbane market. BIS Shrapnel forecasts Brisbane’s median house price will reach $422,000 in June 2008, a rise of 15 per cent for the year. Over the three-year period to 2011, the median house price is forecast to rise by a total of 22 per cent."
Out of interest, have you got a depreciation schedule? We have one of our IP's depreciated and it allows us deductions of a further $7,500 approx per year, which definitely helps. There are capital gains implications when it comes time to sell but we are looking to grow our portfolio and hold long-term. (You could probably avoid any CGT implications anyway as your property was a PPOR originally, and you will likely be able invoke the 6-year CGT exemption rule for owner-occupiers.)
I have 3 IPs in total and all are negatively geared, costing us about $450 per week at the moment (before deductions and not including deprecation benefts, which we claim at EOFY for a nice lump refund). So our costs are around $23k per year, but we get roughly $9k back in deductions, depreciation, etc. For me, $14k net per year a small price to pay for 3 investment properties that have grown in value by about $80k combined since we bought them (late in 2006/early 2007), and that will continue to grow… our rents have also gone up by $70 across the three properties (one property by $40, the other two by $15 each), so as the rents go up, our expenses will go down. Positive gearing works for some people but I see property investment is just that, an investment, so I'm happy to wear the tax-deductible costs now to reap the strong capital growth benefits.
Anyway hope this helps, just a few thoughts to help you weigh up the decision!
cheers
