Are you watching the news, listening to radio and reading newspapers and wondering whats going on with the global economy, how does it effect you and is it a good time or not to buy property?
The Australian Government has provided many stimulus packages recently to boost the Australian economy. Globally, Australia is in a stronger position economically compared to most countries, so how does this effect you?
If you are currently renting, like many Australians are at the moment, rents are continually increasing and its harder and harder to find rental properties. The vacancy rates of Australian rental property are now below 3% and in most capital cities, its far below 1.5%.
Due to this fact, we see rental prices increase rapidly over the last twelve months and experts predict this pattern will continue for the next year to two years. The Australian average rental price in 2007 was $290 per week, however, realistically today, families are paying well over $380 per week.
The Australian population is rapidly growing, over 21,700,000 people. The current building and construction industry has had its major restrictions now as banks put further pressure and limitations to their funding. The numbers of new housing to be produced currently and in the near future are far below the number of demand we have in Australia. Currently we have a housing shortage of over 200,000 a year.
The Government has provided a First Home Owners grant and bonus recently and this has helped put a major injection back into the economy with over 35,000 people taking this grant over recent months.
Interest rates in Australia are by far one of the lowest since 30 years, at 3.00 cash basis points. This means that banks and lending institutions are offering rates around 5% and even some as low as 3.99% introductory rates. Home ownership is far more comfortable now than three years ago. Many property investors may have been struggling to maintain their investment loans previously, now find themselves either neutrally geared or positively geared.
Prices of current properties on the market are far more affordable as to this time last year. There isn't any major property crash in prices in compared to the Stock Market, however, we find many more affordable prices now. A number of developers and home owners are either dropping there prices or offering amazing incentives. This is definitely not a seller's market but profoundly a buyers market.
So what does this all mean? We find the property market in a very interesting period that we have not seen for many years, possibly in a lifetime. Rents are high, vacancy levels are scarcely low, interest rates are low, population is rapidly growing and a major shortage in new houses. Even in a current global crisis, Australian property market is in a very strong position. We find that this opens a window of opportunity for either first home owners or property investors. This window may only be open for the next year or so, as more than likely interest rates will rise again in the mid to long term, and consumers confidence in the property market shall return and property prices will start to increase once more.
If you are thinking to buy property and wondering if it was a good time to buy now or not, I hope this will assist you. Good luck, best wishes and may you be able to reap the benefits in a volatile market. Remember, where there's crisis, also lies opportunity.
As Warren Buffett mentions, "when people are greedy, you should be afraid, when people are afraid is when you should be greedy."
Author –
Eric Trieu
DirectorInternational Empire
Hi eric,
I was just this minute saying to my wife. " I feel the property environment is similar to the mid 80's in Los Angeles". At that time properties were cheap, interest rates low and rents high.
One thing about real estate is we all need a place to live and always will.
For the financial markets to find a balance after the shake up seems to involve property doing a new cycle. I mean, by this, that now property is at an all time low ebb it can only cycle in one direction, upwards. Bottom is bottom. Therefore the real estate investing band wagon is the only one in town I think. It is a little strange that all the major countries have cycled to the bottom at the same time though.
This just shows how the world grows smaller and smaller every day. Fast communications helps I am sure.
The three rules of property purchase have never really changed no matter what the time is.
(1) Location
(2) Location
(3) LocationWhat this actually means is if the property you are looking at purchasing is in a so called " Bad area", you can still buy it if it is located well. It would have to be the worst one in the best street say at a great price. So location is actually rather confusing.
So for my answer to the post is 'YES.' Now is always the best time to buy property.
Cheers
who is this guy and what is he selling? I refuse to click on the link to find out.
Robert Allen
Thanks for your prompt response!
I really love what you've shared and totally agree about the fundamentals of property. Yes, so interesting about the global property market, I feel like a child in a candy store…. so many yummie lollies to buy!
You seem like you have doen well in your property investments?
Good on you champ!
Best regards,
Eric
S Hales,
Thank you for asking about who I am.
My family came from Vietnam 30 years ago with absolutely nothing. I have grown up in Australia learning that life is seriously tough.
I have been investing in property since I was 18 years of age. I also owned and operated my first business with First National Real Estate since I was 21 years of age.
I am an active property investor with 18 properties at the moment.
I am on of the Co-Founders for International Empire with offices in Melbourne, Sydney, Brisbane and Adelaide.
My recent workshop was in Melbourne last Weekend.
I love property and wish to only share information for positive discussions, which I welcome.
May I ask who you are and how may I learn from you?
Best Wishes,
Eric
PS> You may also look my profile or International Empire's profile on google, Linkedin, Ecademy, Facebook, MySpace & Twitter.
I would say that the first home owner's grant has made a lot of people greedy. And the market hasn't fallen much here yet. I don't think we're near the bottom yet.
Jay,
Thank you for your response. I agree with you that a number of people are doing what they can to take advantage of the FHOG, however, many others would not be able to afford to get into the property market otherwise.
Obviously, the FHOG will be ending this 30th June anyway. The Government needed to boost the economy and it did exactly that.
As to property prices and picking the so called "Bottom" well thats up to everyone to work out. Everyone seems to have their own thoughts to when the markets at its lowest, but when has anyone ever mentioned when is the best time to buy?
If not now, then when?
Eitherway, first home owner or not, property fundamentals are very strong for Australia, more in certain states and others. I believe the REIA qouted that residential house medians for Melbourne in
1980 was $43,000,
1987 was $90,900
2000 was $170,000
2007 was $402,000and now anyone in Melbourne can tell you what an average home would be worth, but it sure isn't $0 !!!!!
I'm not sharing my opiion here, these are facts.
By the way, do you have any property investments ?
Thanks for your thoughts, I did read your blog. I acknoledge your concerns about the FHOG. Not everyone should buy based on their finances or affordability.
Best Regards,
Eric
Hi Eric,
I'm just a cranky mother. When I see such a smiley, glowing post from such a new poster, and such a happy little chat going on between two new posters, I just have to wonder if you've created two accounts and are talking to yourself. I'm a sceptic. I haven't suggested that you could learn anything from me. I'm a little tired of people trying to sell to us on this forum, and the assumption that seems to be out there that property investors are an easy target. I apologise if I have you wrong.
SEric
Would you like to have a small wager on this Obviously, the FHOG will be ending this 30th June anyway.
Richard Taylor | Australia's leading private lender
S Hales,
Thanks for your reply, thats really ok, I do apreciate your response. Please know that all Im out there is to share information and news as I love property and investments. I've met many people who can do it, only they are either not well informed by facts, dont have any contacts that are successful i doing so, or too afraid to.
Its a good thing to be cautious, you are only protecting yourself and your family. This is natural, you must be a great mother.
Anyways, glad to have met you. Have a great day!
Eric
Richard,
The basic first home owners grant of $7,000 will remain, what I meant is that the extra bonus of a further $7,000 and $14,000 for new constructed homes, will most likely not go ahead.
Of course the FHOG has been excellent for Australia's economy, and everyone hopes it will continue, I do too, however certain experts are sharing that the bonuses will not continue.
Your thoughts please?
Eric
Richard,
You may or may not be aware of the NEWS HEADLINE just minuets ago…..
"PRIME MINISTER KEVIN RUDD CONFIRMS FIRST HOME OWNERS GRANT WILL END 30 JUNE 2009…."
Read here:
http://www.news.com.au/business/money/story/0,28323,25373584-5013951,00.html
Eric
Eric
Yes read it. Stand to be corrected.
Think it is the best thing since sliced bread.
With 45 IP's i dont think any of my tenants will be going anywhere in a hurry and the investor business should really start to boom again.
Richard Taylor | Australia's leading private lender
Hi
I do hope that the PM keeps his word and ends the FHOG Boost. Heard on the ABC that the lower-end of the market is really boiling over, with many FHBs borrowing up to their ears in loans to buy a home. Now the fear is a wave of mortgagee sales by 2010 – 2011 when interest rates go back up, coupled with rising unemployment.
Regards
Daniel LeeDaniel,
You are correct, a number of people may have borrowed up to their ears, however all banks have been requested that FHB but a deposit of 10% recently, so at least there equity in the properties. Banks are not giving easy loans away as they were 4 to 5 years ago.
If your comments are correct about mortgagee sales in 2010-2011, then it'll be an excellent opportunity for investors.
Eric
Richard,
Teh grant was only for a limited time, the Government can't really afford to cover more grants/boosts. All good things do need to come to and end.
For sure, excellent time for investors, and I'm sure the new cycle has now started!
In the long term, you can not go wrong with property investments, I just read the recent Australian Property Investor Magazine, Jan Somers together with a number of other experienced property investors share that this is a great time to buy, with low interest rates, low vacacies, fair market prices and good wages. They also shared to be confident in this market, do not listen to negative news, people with no investments, also look at the positibve of employement rates are over 95% rather than 5% unemployed.
I know who to listen to.
You have obviously done well with 45 IP's ! good on you, very rare for to meet a financial planner who also invests in property! Would love to meet you one day!
Cheers,
Eric
YAY!! Finally, the FHOG is to end! YAY!
Now we'll see what happens….If only it wasn't for that pesky 12 months grace on home loans from the big 4.
I'm with you, Richard, fhog ending – best thing since sliced bread.
Can't say I agree with those people who reckon now's a good time to buy. I'll transfer more $ into RE when it looks like it might outperform our other investments, which is a point in time I look forward to, cause i like RE, it's fun.
SI'm glad the FHOG is being reduced too. If only they took it away completely. If you can't save a deposit, then how are you going to pay off a $400k loan? The intention of the FHOG may have been good, but the effect is not. That is going to become clearer over the next couple of years.
Jay,
Thanks for your thoughts. All banks do require purchasersto place a minimum of 10% deposit themselves, on top of the FHOG (if they qualify).
Grant or no grant, anyone who does buy a property should look at their financial capacity of course.
Cheers,
Eric
I attended Eric's seminar at the weekend in Melbourne and just placed a deposit on a property that one of his agents is selling on behalf of his company. I have set up a wrap deal on the property, where I have already got the eventual purchaser lined up and they have been able to select their own personalised inclusions in the house and land package.
I would have to say that his sales agent, Shanti has done an exceptional job with a complex transaction and I couldn't be happier with the service I have received from her and have been very impressed with how well she has treated my wrap client.
I did find however that in his seminar presentation, Eric's expectations of how fast the property market is likely to grow over the next 7-14 years (doubling every 7 years) were very optimistic. I had to talk down my client's expectations of future growth following the seminar, so he didn't walk away from the seminar with unrealistic ideas.
Cheers,
Matt
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