What constantly amazes me is the constant remarks that all the investors on here have this blind belief that property will always go up year to year with little or no risk. To those investors that believe this YOU ARE IDIOTS. But my beef is i know of very few if any that think like this. I am sure the vast majority know that it is almost a 100% certainty that after a boom there is a correction or slump. And many agree that a larger boom runs the risk of a larger slump. This became evident to me very early on as investors with time in the trade behind them quickly told anyone who would listen. This was constantly spread on these and other forums.The only time people stated that you would most likely not loose is when they stated OVER THE LONG TERM. This has not changed.
So now things are correcting or crashing( Depending what camp you are from). Is this really that unexpected. No it is not. This is what many warned us about and the very expierianced stated clearly that while the sun shines you should prepare for the gloomy times. I have done this. Im sure many others have. This is part of property investing. This is part of the CYCLE we all here so much about. What will happen next i dont know. These are uncharted waters we are sailing in now. Does this mean jump ship. No it does not. Every boom ending event befor this came with a long list of reasons why property was dead and it would not recover. Yet here we are time and time again.
So what do we do now. I can not speak for everyone but i myself will continue to believe in property investing for LONG TERM wealth creation. I will continue to protect myself as best i can without running to the hills.Yes there will be blood in the streets for those who overextended.I feel for the people who bought at the absolut peak with 100% loans. But this is not the majority. Many are in alot better position and can handle some down time in the short to medium term.
These are the times we have all been warned about. Not the death of property investing. Only the inevitable down part that comes with such a long run great returns.Like so many warned us about when investing PREPARE FOR THE DOWN TIMES. Why should we now only concentrate on the gloom instead of PREPARING FOR THE NEXT UPTURN.
A slump is not new news. It is not the end of investing. I may be wrong but i think its a safe bet im not.
Thats my rant.
Scamp wrote:harb wrote:For that to happen we'd have to be in a property bubble which we aren'tHarb, you're still in the 'denial' phase my friend ? Most of your colleagues have already passed that phase and are now in the 'angry' phase.
And why would they be 'angry' ? Angry for interest rates falling ? Angry because the government who doubled the grant ? Oh I know, they must be angry because they had to put up rents when IR was going up and now they've become CF +ve and lost the NG.
Quote:You mean to say that 10 to 12 times wages is not a property bubble ?It sure is, that's why Mosman is unaffordable to the average person.
Anyone on low incomes can start up in Lithgow at 3-4 times wages and work their way towards Harbour Bridge, or they can rent and wait for the crash that will make Mosman affordable to all the 4M+ people living in Sydney.Hi Harb, no matter what logic you use, Scamp will cling to his 50% drop.
Your point about the cost of materials is the most telling. Add to that 10% GST and we can see why the basic cost base of a house cannot fall below a certain level and that level is double or more what it was 10 years ago.
Further, add stuff like there's only one Doublebay, Harbourbridge and Point Piper [hope I got the last correct, I'm not familiar with Sydney]. Further, houses of the past were built with different labour costs, skill and materials. Bluestone is well nigh impossible to find now. An old house was demolished to subdivide and guess what? The old bluestone sold for tens of thousands of dollars.
Many federation style or return verandah/ bullnose or some with small red bricks [used to be master builders' houses] can NOT be replicated. Many have decaying or oldfashioned plumbing & internal wiring etc that costs HEAPS to renovate. Therefore, after the old houses have been given the new lease of life, they're going to cost antique value. Anyone hoping for a 50% drop is wishing for the impossible.
If prices do tumble, I'll go shopping for one of them old solid brick master built houses that have been rewired and replumbed and loved by whoever did it.
KY
If my house dropped 50% that would mean after you take out the building cost of a similar house today the land would be worth NEGATIVE $25,000. It will not happen. It may in some areas but a 50% drop Australia wide is just a sensationalist comment thrown out to get maximun effect.
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