- Originally posted by sifeq:Originally posted by zen:
I think if the economy remain bouyant and interest rate remain stable we might not even see a further drop than current prices. But I still think the prices will be flat the next couple of years. You need a recession and high interest rate for median prices to drop 30%. Basically as long as people have money ie good economy and low interest rate they won’t be desperate to sell. To drop 30% of your asking price is desperate.
This is very true. All previous property routs have had a trigger…usually rising interest rates.
The economy is humming along at present, but there certainly are some dangerous points of weakness that could cause a recession…or a depression…as discussed on these fora plenty of time before.
Whether it happens remains to be seen, but one advantage of financial markets is that one can hitch a ride with the bear as well as the bull…a decided advantage in the current circumstances IMO.
Once (if) the Bear has had his way with property, I will be out there[dead2] [devilish]
The trend, as Rogue originally pointed out, is definitely down. My guess is that it is more than a “price correction” and we will see prices drop considerably more. I also see a trend towards higher rents but these increases seem to be incrimental and will only really have an impact over a few years.
My guess is that we are starting to feel the surge of the baby boomer retirement episode. They may now be ‘cashing up’ and on the move towards their life style retirement dream.
The first baby boomers are timed to retire in 2006 but obviously there isn’t a time table and some will close up shop earlier.
There is money to be made in property but I think we need to think very, very differently.
Anybody agree?Regards Marsden
If your average wage is about $45000
After tax, your average income is about $32000
At affordability of 35% of your income towards housing, this allows about $11500 for rent ($220pw) for the average earner.
If you talk about yields of 5%-7% then your average houses are only worth $190000 or so (bare with me as i redo your calcs wayne)………..
Rents have dropped in melbournes eastern suburbs as a lot of people are buying their own brand new homes further out on no deposit deals Divine homes and a heap of others.
There are not many people at the moment that would say there is going to be increased demand for expensive houses that are 30+ years old in the next 2 – 5 years.
For these reasons I could see a lot more drop in the sales of houses in this melbourne ring.
The market will choose a fair middle ground for the average house which is worth $190000 based on rents and the $300000+ price tag currently based on a high demand (it is still closer to the CBD at the end of the day.
My guess……..a drop of maybe 10 – 15 % again for a short period more.
My two cents[biggrin]
Live, Learn and GrowLifexperience
bruham
I’ve always been a news man, never the alleged “current affairs”… only worthwhile shows that deserve that tag are 60 minutes (sometimes), Sunday, and a few on the ABC. Good to see you’re supporting Mr Packer and keeping the likes of me in a job by watching 9.
Cheers
rOn the other end of the scale in Sydney the upper end is flourishing, prestigue homes around the water front are getting record prices.
In some of my seminars i referred this to the (PP) princes and the porpers effect. In bad times the people who are most effected are the middle to lower class, also the highest taxed, while in general the richer sec went the other way and spent up … just an observation but it is interesting to observe.
When there is a sale in a super market people buy but when property prices drop people panic and sell ??? [blink]
I think I just discovered why I have not made good money in property, I don’t have the feel of the market. I live in Perth and I own my house but has not IP. I could have got into IPs few years back with no problem but I thought it would stop going up much much erlier. Now people say property is on the way down and I don’t see it. I even think about getting an IP, if they are on the way down I rather wait and wouldn’t want to get into an IP now. Maybe I should try other things[blush2]
You must be logged in to reply to this topic. If you don't have an account, you can register here.
