The deal of the decade comes along every week in property. You may have to sort through hundreds/thousands of properties, but now more than ever they will start to appear.
Now is bargain hunting time.
What is a recession? Merely a transfer of wealth
Interest rates of 9% aren't extreme compared with the early nineties where people were falling over everywhere.In all seriousness, the old chestnut that Australian property values will double every 7-8 years is an assumption. Historically this has happened but when you see how far house prices have increased compared to the average salary, then a slow down must be expected. There is only so much the market can pay.
However, each suburb is a microcosm of the market. The top end of the market (for example harbour side residences in Sydney for the uber rich will always be very expensive and due to the lack of supply and high demand will likely continue to appreciate. There will always be uber rich. There will always be middle classes and there will always be poor bastards that want to blame society for their problems and not take control of their own destiny. The bottom end of the market is surprisingly stable. The middle market that may be overpriced is where the suffering will be. Each suburb/area is different and needs to be considered on it's own merit. Supply and demand will always determine price and you cannot make sweeping statements across the entire market of Australia. Some areas will suck and some will go well……….and so add infinitum. Adelaide is having their boom whilst some markets are haemorrhaging.
Buying for appreciation is a mistake. Your profit should be made when you buy (ie haggle it down, find undervalued properties eg foreclosures, reduced for quick sale houses such as divorce settlements). There will always be bargains. There will always be risk. Everybody makes mistakes. If you don't have a crack, you will never have a win.
The bear market gives the buyer the opportunity to make a good investment. Two years ago in WA you had to sign the contract withing 5 minutes of seeing the house or it was gone within the hour. There was no room for negotiation. Now it's the buyer with the power. Now it's paybackCHIS :
All sounds very good. But why would you buy now and go through the whole mess of sifting through 1000 properties just to find 1 to haggle the price down on, when in 1 year all 1000 properties will be going for haggle prices ?
The whole meaning of this post is to tell people : Don't buy now, the housing market is crashing. Never buy in a crashing market, always buy when the market starts to go up. It doesn't matter if you missed the absolute bottom point, as long as you invest on the climb, and not on the downhill side of the graph.
Investing now means you invest at the top of a very big downhill run for properties. Either it will take 10 to 15 years to recover slowly, or unemployment, high oil prices and high debt will make it a fast and very painful experience for some, but whatever happens, prices will go down. They are unsustainable ( just look at the amount of mortgage arrears climbing alarmingly ).
The best tactic is to rent a home for 100-200 per week out of the expensive rental area's and buy a cheap car, maybe a bicycle, and get a job in a government position somewhere , or in education. Then you'll ride the recession easily, and you'll save a lot of money which you can spend in 2 years buying a nice home with a low mortgage and a large deposit of your savings.CHIS wrote:The deal of the decade comes along every week in property. You may have to sort through hundreds/thousands of properties, but now more than ever they will start to appear.
Now is bargain hunting time.
What is a recession? Merely a transfer of wealth
Interest rates of 9% aren't extreme compared with the early nineties where people were falling over everywhere.And what is a permanent depression? We will all find out within the decade I can assure you…….. Oh look, yet another story of the upcoming collapse tonight!
"Oil could hit $US200 next yr: Caltex chief" http://www.abc.net.au/news/stories/2008/06/23/2283441.htm
The world has entered some interesting times and there does seem to be some tough times ahead. I'm not convinced it will be a wipeout but I do tend to agree that prices may come down a bit. Due to people feeling mortgage stress and wishing to sell their homes fast presents an opportunity to negotiate hard. You might be able to get significant reductions if you are brazen enough to ask and stand frim. You might have to do it 20 times or 100 times but a bargain you can find.
The reason homes will not spiral down is that in my opinion, they cannot depreciate much further than it costs to build them. There will always be a demand for housing. People don't like sleeping in the gutter as a general rule. It is certainly possible for a correction of 10-15% however. If they come down more than that I'll be buying a shitloadCHIS : You realize that in UK the houses have falled by up to 70% in the recent few months don't you ?
It's been in the news. And UK is a lot less problematic than Australia. I expect Australia to be much worse off than UK , the only difference is that Australia is lagging about 12-18 months behind.Scamp,
I am surprised about the 70% falls as I follow the Uk market and it certainly is diving but I have not seen falls like this myself. Can you give some examples of location and over what timeframe the drops are.
Also it is important to understand that the UK market cycle does have large dips and the fluctutaions historically have been larger than the ozzie cycle.
I am selling my PPOR in the UK at the moment to head on home. Like Australia there are many different aspects to the UK market – one example is the extremely high range London market artificially propped up by a flood of wealthy Russians.
In my area prices have dropped around 15% in the last 9 months and will continue heading south.
Fuel costs are driving inflation but the Bank of England is reluctant to raise rates due to concerns over the housing market and the threat of a recession. This dilema is lkely to be repeated in countries around the world but I feel inflation will win and rates will rise.
The UK's obsession with credit dwarfs that of Australia. When I arranged my mortgage there were over 14,000 deals on the market. Everyone provides financial products over here. You can get a mobile phone, travel insurance and a mortgage from the same people you buy your groceries from.This will heighten the effect of the crash as massive debt levels (both secured and unsecured) are commonplace.
The resources boom in Australia for me is the main factor that separates us from other countries but I dont know how that will play out.
Bottom line is that I need to sell but I will sell fast. I am happy to take it on the chin and come on home.
Won't do me any harm if the Oz market tanks. Actually, I'm counting on it.Wise words Mclean todays low price in a falling market is tomorrows high price catch a falling knife and all that. Good luck with the sale, hope you dont take to much of a hit on selling but I do know that there are some big haircuts right now in the UK.
Yes the UK total debt is not mucg differnt form the US excpet there is a lot less people in the UK, wonder if any other major banks or building society will need govt intervention.
With respect to the sale can I ask where, what and how much ?
I have not heard of any 70% losses on residential property in the UK to date, have you ?
Hi All,
It's been a while since I've been on the site, this topic has definatly got some attention, it's fair to say that the market is hitting rock buttom, but isn't this the best time to find great bargains, we all know it won't be staying like this for long.
My sister is living in the uk (Edinborough). She bought a loft apartment a few years ago and now she wants to come home and wants to sell.And yes she may lose some money but no 70%. What crap. Im sure there are many places thet may expieriance drops close to that but if you were to look at the details im sure the majority of people will spot were they went wrong. bad location,overpriced etc etc. If you buy well you will be ok over the long term. Infact my sister told me of some examples of prices still moving up due to the owner purchasing well.In any market there will be someone who overpaid and someone who got a bargain. These should not be used as averages.
devo76 wrote:My sister is living in the uk (Edinborough). She bought a loft apartment a few years ago and now she wants to come home and wants to sell.And yes she may lose some money but no 70%. What crap. Im sure there are many places thet may expieriance drops close to that but if you were to look at the details im sure the majority of people will spot were they went wrong. bad location,overpriced etc etc. If you buy well you will be ok over the long term. Infact my sister told me of some examples of prices still moving up due to the owner purchasing well.In any market there will be someone who overpaid and someone who got a bargain. These should not be used as averages.Thanks for offering something first hand……the forces of darkness here often throw out these statements or present them as factoids. Not to many bear up to objective scrutiny and strangely if you offer a sourced alternate point of view it goes quiet. Somebody may have lost 70% on a deal in Lower Barkingwhistle on Avon and that will get extrapolated to "the UK". Same in Oz , people are bleeding in western Sydney and making money elsewhere. Dont take it too seriously……
There you go. It was Leeds by the way, not too small a town.
Don't be fooled, these are not 'unrealistically high asking prices' as we see in Australia, these are what people actually PAID for it, 1 or 2 years ago.
In Australia, people ask 50% more on top of the asking price just to try and make a profit. A crash implies that we ( read : you , aka australia ) goes back to pre-1990 houseprices.This topic is quite old by the way, I created it in an utterly bullish time ( a few months ago ) when noone could see any way of house prices going south. Even though I was right about the houseprices dropping, my feeling is that they will drop even lower, to pre-1990 houseprices. Remember, Australia lags behind UK and USA about 18 months. There's trouble ahead when banks stop lending money to potential buyers.
Remember that in the last 5 years houseprices in some area's have gone up by 200%.
It's just a matter of time before they crash by 50% again.Northern cities like Leeds and Manchester were the focal points of the 'buy-to-let' bubble as property investment is known as over here. These cities have the worst of it now as they were the scene of hundreds of new developments with people buying off-plan. The CBD has a massive over supply with not a tennent in sight and people were losing plenty on these deals when the market in general was still rising.
Many of these are deemed unsellable now and I wouldnt be surprised if a few desperate souls are being taken to the cleaners.
There will be a few cash-rich lads up north licking their lips right now and picking off the weak one by one.
These will give the spectacular headlines, the real story is not so dramatic but still pretty grim. It will be a couple of years i think before this market turns aroundSpot on. Just another bad situation that some people try to use as a example of the Australian wide market.
"Remember, Australia lags behind UK and USA about 18 months. There's trouble ahead when banks stop lending money to potential buyers."
have there been previous crashes that Australia has followed in about 18 months?
Yarpos : Yes ofcourse. Where do you think the expression "USA sneezes and Australia catches a cold" comes from ?
Just look at the events of what happened in USA. Then extrapolate to Australia. 18 months difference, everything else is the same.About the rental crisis : There is no rental crisis. People who say that are blind.
Soon it will all become clear to everyone, when rents will be dropping.
Until then, it's good news for the bears, since rising rents are a form of inflation, and we all know what happens is inflation rises, right ? ( think RBA ) On top of that, government will take measures to drop the rental prices, where there is no rental crisis in the first place, this will contribute to the problem even more.People using the rental price increase excuse really are blind to the obvious.
I guess that people who bought the property 1-2 years ago (who thought that was a good bargain) will express their optimistic views and deny about crashing etc…
People who are waiting to buy will always talk down about the property market.. i.e. property market will or in the process of crashing..
Conflicting views by the so-called expert economists, financial expert, guru of property market… No one will be able to predict
Only GOD will know. This reflects that we are all human beings.. The jury is out there…. Only time will tell.Would be nice to revisit this forum again in the next 12-18 months.
I know, and I'm not god. It's no secret, just use your brains. It's there for everyone to see. Only the bulls close their eyes.
Oh, the recent rental vacancies in Sydney here btw :
……………………2-May..30-May…6-Jun..13-Jun..20-Jun..27-Jun..Chg Week..Chg Total
Canterbury/Bankstown…..424…..431…..461…..500…..511…..527…..3.13%…..24.29%
Eastern Suburbs………1968….2247….2299….2332….2406….2415…..0.37%…..22.71%
Hills………………..305…..324…..302…..293…..323…..361….11.76%…..18.36%
Inner West…………..1134….1264….1281….1393….1377….1439…..4.50%…..26.90%
Liverpool / Fairfield….331…..396…..378…..375…..382…..366….-4.19%…..10.57%
Macarthur/Camden………325…..392…..352…..333…..308…..311…..0.97%…..-4.31%
North Shore – Lower…..1129….1285….1289….1356….1328….1330…..0.15%…..17.80%
North Shore – Upper……529…..584…..578…..603…..667…..640….-4.05%…..20.98%
Northern Beaches………555…..592…..630…..645…..641…..644…..0.47%…..16.04%
Northern Suburbs………355…..393…..399…..394…..406…..412…..1.48%…..16.06%
Parramatta……………696…..677…..666…..733…..716…..785…..9.64%…..12.79%
St George…………….372…..401…..387…..418…..434…..415….-4.38%…..11.56%
Sutherland……………358…..429…..440…..479…..464…..421….-9.27%…..17.60%
Sydney City…………..761…..875…..836…..893…..920…..901….-2.07%…..18.40%
Western Sydney………..623…..651…..605…..640…..649…..680…..4.78%……9.15%
……………………9865…10941…10903…11387…11532…11647…..1.00%…..18.06%
……………………4.18%..2.07%…1.28%…2.98%..-0.35%…4.44%…1.27%Conclusion : 18% ( !! ) extra vacant rentals up just this month may. And that number will only go up in months to come, as less people are able to sell their IP's , they will rent them out, pushing rental prices down.
Like I told you weeks ago already : Rental prices will go down, not up. The futile try by investors and banks and government to push up rental prices was easily and preductably beaten by the supply and demand market.
God has nothing to do with this, just like he won't save the investors who put themselves into debt beyond their capacity. ( although the tax payers might be screwed in the first few months, this will also not have any effect longterm on the crash ).Hei Scamp
Where did you get the figure from… interesting!!!!
reference please
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