If interest rates start to fall, will this boost purchasing of new homes? Will this drive prices up or will they continue to fall?
IMO – .25% isn't going to increase buying at all. Needs a full percent or so to bring a mortgages in line with rental costs on a property of a similar size. Either that or a decrease in the sale price of residential property.
But I wish I was smarter too:)
IMO people want to see a trend of drops before they really start to believe it enough to go out and buy a home / houses – the next 12 mths are a great time to go shopping for property – in 2013 you'll look back and say "good job I went shopping"!!!
Chris
Good question mate. IMO as was mentioned .25 will make no diffrence its like 60 per month on a 300k morgage, $15 per week. So do the sums 1 % may start to make things move a bit. Dont forget bank shares are very low can they afford to lower home loan rates just because the reserve bank says they should, IMO no. People have too much debt and not inflashion at 5-6% people are hurting, try doing the shopping just to see it for your self. Its great fro RE agents " rates are dropping so you best buy now before prices go up" lol. It will have a phycological (spelt wrong, I wish I was smarter) affect on some and they will start to buy again.
A few key point to remember are:
Inflation is still high ( can people afford to go and borrow not that house prices are already bloody too high).
The banks are not run buy the reserve Bank.
Imigration still is high.
Property prices is most areas are not proforming like they have in the past ( see Domain, sundays age)
Rental property forget it, why would anyone perchase a rental even for cash, you still looses money every week, because the price of the property is too high.
At the end of the day we can only speculate, no one knows. Do your own reaserch and stick with it. Long tern the trend has been up so invest for the long term not the short.Just my opinions and as always Im open to hear others. One thing for sure Aust. is no longer the lucky country or the land of milk & honey. Good luck Chris.
T……………..kathlynv wrote:IMO people want to see a trend of drops before they really start to believe it enough to go out and buy a home / houses – the next 12 mths are a great time to go shopping for property – in 2013 you'll look back and say "good job I went shopping"!!!I agree with this in the September 2008 "Your Investment Property" magazine the cover story article headline was "Bracing for the mother of all housing boom". In essence the article said that the market will increase in 2009, 2010 and 2011 being the peak.
Paul Braddick, head of financial systems analysis, ANZ who featured in the article expects the first signs of strong growth to come as early as 2009 through 2010, with momentum continuing into 20011, underpinned by rising rents and improving credit conditions. "By the end of 2009 and into 2010, we're going to see significant cut in interest rates and that's what we think will be the trigger for things to turn up again." he says.
Braddick says investors will drive the next upturn. "over the next six to 12 months, prices won't move much. But with rents rising 15-20% over the past 12 months, you're going to see yields increase quite significantly. When this is combined with the expected fall in interest rates, it should be enough to trigger investor interest back into the market, because there's very little risk in investing in the residential property market compared to other classes, like equities, at the moment."
I think it is going to be exciting times! An believe the next 12 months could be a great time to buy.
Unfortunately mags like "Your Investment Property" are not independant commentators on the market and where it's headed. Like real estate agents, they will always be the ones talking the market up.
Bank commentators are also not independant – falling numbers of people taking out loans means they, too, are under pressure to encourage investors back into the market.
As a previous post said, just do your sums ….and most times you'll see that properties are still badly overpriced for the returns you can expect.
cheers,
CarlinAdam & kathlynv
kathlynv wrote:IMO people want to see a trend of drops before they really start to believe it enough to go out and buy a home / houses – the next 12 mths are a great time to go shopping for property – in 2013 you'll look back and say "good job I went shopping"!!!
Hysight is a great thing, I think most people look back (inc. myself) and say I should have brought then. I also think we can agree that real estate has had a positve trend over a long term. So speculating when it will go up or down on a micro scale is very dificult. The property mags. are OK for general info but you can get the same opinions down the pub, mentioned everyone as there own agender. Ive listen to all types of people on the matter and all have confliction opinions. Up , down, flat, buy shares.
Intrest rates are only part of it a new word has entred the conversation " Unemployment" Inflation was getting a bit stail. If we look at what drives prices up IMO they are
Ability to borrow ( low rates)
Ability to service that loan ( employment)
Avalability of stock (land) supply
Demand ( new badies & imigration)
Opertunity costs ( better returns in other investments)So lets think about it !!!!
Seems pretty sure rates are on the way down. (some of the highest in the world, pressure to get inflation down)
Unemployment ???? not to sure about this one, IMO still just OK. Comes down to how you spend what you earn and your savings skills. 2 wages or 1. So I dont think we need to head to centre Link just yet.
Supply & Demand, Im convinced there seems to be limited stock out there. If its there its over priced. Ive made several cash, unconditional offers and no go the vender will hang out for a few more 1000.
Imigration is still high from OS and interstate, most people are still looking for a place to live. Vacancy rates are low.
Opertunity costs, well if you like to sleep at night shares may not be the answer, see there proformance of late. Open a business consumer confidenc is too low, imports too cheap. Many small Business are closing (hence the Unemployment )
After all that IMO propery may not be great but all considered it may be safer more liquid and in demand than other investments. Dont expect to get rich, your a bit late for that, long term, long term slow growth.Lets know what you think & good luck to all.
T………..
Anyone who believes there will be any kind of boom within the next few years are delusional and don't understand ecconomics, or are full of BS
If you look at all the facts you will see we are probably heading towards another 1929
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