Interest rates up property prices to fall further

I think WAHOO, more houses for me.
The rental yeild may be harder to chase tho.

CATA
Asset Protection Specialist
[email protected]

Hmm rents are increasing also though never enough to catch up to consecutive interest rate increases.
If I took a simplistic view then I would say that the rise would cause a drop in prices however I feel that even if it was a .5% rise this time that the price never really drops but doesn’t keep pace with inflation and other economic factors like the average wage.
I read a post on this forum from an investor who claimed he had some properties drop by 20% in value about 7 years ago?

Not knowing much about trends I wonder if the housing market does ever take such a dip overall or if he had an issue with a particular area. I know all the talk about “being safe as houses” and the value increasing every 7-10 years (strongly debated by foundation in another post that I am struggling to digest) but does the market ever really take a fall?

Cheers,
McDeyess

always learning

So it may be time to take a step back from buying and settle on watching the market for a while, and planning your next investment. If you are worried about the market dropping by 20% wouldn’t it make sense to watch the market untill it has droped, then buy…..

Just my 0.02 (got that from GR)

CATA
Asset Protection Specialist
[email protected]

Gross I hear that mantra here all the time.

Two years ago it was the “property doubles every 7 years”

Now its ” if rates rise it gives the investor lots of opportunities”

Any chance some of our gurus have come up with either of these.

I’m an investor and I am looking. Have my areas penciled in and doing research. BUT in the Sydney market I can’t see myself buying for maybe three to four years. I will wait till I see some sign the market can move forward. Oh yeah in the rest of Australia, well I am sure there are opportunities but think you can do better than Australian property for a while.

Oh yeah my favourite from the 90s was Carla Zamparti, who paid 3.6m for a property and sold it for 2.6m. about two years later.

Thats gotta hurt

hi all
let me answer a couple of things one by one i think this is the best way
let start with this one first
Gross I hear that mantra here all the time.

Two years ago it was the “property doubles every 7 years”
and usually it does especially in sydney

Now its ” if rates rise it gives the investor lots of opportunities”
and there are from where I sit again in sydney

Any chance some of our gurus have come up with either of these.
not a guru so not my area

I’m an investor and I am looking. Have my areas penciled in and doing research. BUT in the Sydney market I can’t see myself buying for maybe three to four years you wait that long and you will be the same as people that wished thay had bought 3 to 4 years ago. I will wait till I see some sign the market can move forward you wait that long and by the time you get the sign its to late you need to maker your choice not wait for signs. Oh yeah in the rest of Australia, well I am sure there are opportunities but think you can do better than Australian property for a while not sure what country you are looking at.

Oh yeah my favourite from the 90s was Carla Zamparti, who paid 3.6m for a property and sold it for 2.6m. about two years later.

Thats gotta hurt not sure maybe she need to write off 1 mil off her bottom line
and now the next

as for the general public being worried about interest rate rise for me thats good, as it
Gives me less competion.
this is correct buyer with jitters gives you chances to purchases

Origionally posted by Grossrealisation

Gross i am concerned you posted this statement, because for a big time developer like you i would be most concerned with how the general public feel about interest rate rises and investing. If you are developing a project you need to be cautious and sensitave to how the market is investing as this will effect your bottom line profits
this statement is incorrect there is a very big difference about general public views and investing most of the general public don’t invest and beacuse there view is subdued does not mean that the general investing view is the same and for some one to think that is wrong a general person looking at investing in a ppor is not the same as a investor and if you think it is you need to go back and do a bit of home work they are very different mind sets.

Your previous post of”welcome to my world” is not consistant to your post psychology IMHO – big builders and banks require superior market sales stratagies to be able to sell project investments and it all comes back to confidence in the market place.
again this also is wrong builder and bankers look at a development on three levels, cost ,risk and exit strategy non of these are market confidence market confidence has not nor would it be a consideration for the welcombe to my world the exit strategy for this project has nothing to do with market confidence and for me never has.

It’s ok to pick up a bargin especially from some one who is hurting, however as experienced investors know all too well, grossrealisation is achieved when we sell, thats what profits are all about.
again sorry to say you are wrong againthe most amount of profit is not when you sell max profit is when you hold refinance and keep refinancing using the growth of the item thois we can argue and it depends which side of the fence you are on but for me if you late out sell cost legals and cost to refinance give you a lot more profit untaxed and in your hand so for me you are wrong on this point.

I believe it’s the same in the stock market, if a stock falls out of favor or the market changes then its value decreases, it is just that simple. You can argue that if you buy at the bottom of the market you will reap the rewards when the market comes back … the two problems there are 1. Can you hold on that long if you are a small to medium investor and 2. what are your holding costs to hold on for that period of time.not sure your rational with this part

Its all well and good to get people excited with profits but it is important to make people aware of the down sides when some thing goes wrong – which they can this depends with your mind set of rules and as yet I can’t say as I haven’t been wrong I have adjusted but not wrong.

GMH has some sound opinions which i must agree with, i love property I hope you invest moreand now more than the last few years requires better research to pick the winners not really you need to use your mindset rules and if they work then you will be successfull.

D
Told you so … where are the experts now?

Read the articles lately (today) all the experts that said property was about to bounce back are hiding under ground getting ready to put another twist on their previous statements.

OK for all those people that say rents will increase lets have your vote have a look at the sydney its running at about 15% increase, because i think that the rental market could get worse as it did in 91/94 … lets see shall we.try telling that to the real estates in sydney

mu .002

here to help
If you want to get involved in some of the projects I’m involved in email to [email protected]

Hello All, I am new here. Was reading thru forum and have some observations to share.
In Brisbane the rent for townhouses went up about 10% in last 24 months. From what I see it still slowly going up. But a resale value of the townhouse dropped in last 3 years from say 290K to 240K or about.

With the interest rate movements, I think now is a great time to sit tight, try to get over loans you have quick and have money ready when market will hit the bottom.
There are rumours about situation to repeat 1990’s interest spike. If it will and you are ready – there is money to be made on realestate.
Just my 0.2c

Hello D,
My bad – I needed to indicate suburb (I was referring to Manly and nearby area).
I would agree with you that realestate market needs to looked as the complex system rather than simple (interest up – wait/ interest down – buy). There are always some “deals” and opportunities. However I would think that for an average person on the street it to complex to understand. Most people will see it only from (interest charged to the loan) point of view.
The big question is, if you are live borrowing the money from the bank how much interest rise can you afford?
To support “complex system” statement, it is interesting how much units build around Brisbane area. This should have one of those complex effects to the market of housing by reducing the price of the unit and making stand alone homes go up in demand…..
If you know what you are doing, some money can be made here as well, despite general price drop in Brisbane on houses.
Any thoughts?

I think great , ( I now have low debt)
I saw this coming 12 months ago and have lived through the 1992 recession we had to have !
The impeding property crash will be buying opportunity but remember that high petrol and interest rates take time 12 – 18 months to really affect the economy . I think we will see lots of morgagee sales in about two years time. If interest rates rise you have to wait for the fixed interest rate terms to run out and then a sudden 4 per cent increase on a home loan will crush home owners overnight.

Yup. OCR will hit 7.5% in around 18-24 months (retail around 9.5%). It will again be around that level again in about 4-5 years. In between there will be at least one sharp upward movement, then downward movement. And a bit of wobbling.
But I could be well wrong if major political, military, health, natural or man-made disasters intervene.[blink]

F.[cowboy2]