I attended 6 auctions in S.E Melbourne suburbs this weekend.
3 Houses (3 & 4 BR's on good sized land)
1 New 3 BR Townhouse
2 Small, Older 2 BR Units in need of a lot of work4 of the 6 properties sold within $30k of their advertised price (the first 4), and the average number of attendees was around 20-30.
The 2 small townhouses went WAYYY over their listed range and both had around 200 people in attendance.
The extremely high demand can only be explained by the first home owners trying deperately to get into the market before the FHOG is reduced and eventually wiped out. The demand I witnessed on the weekend has become a lot more severe over the last 2 months in particular.
Surely we will see a reduction in prices once the first home owners trail off. I would guess this will be around around 6-9 months after the grant is reduced as those who put in significant effort in researching and motivating themselves to buy will most likely still purchase something.
As for the 2nd home buyers, this market appears fairly strong, but at fair market value. I expect the FHOG end of the market to come back to the field by mid next year, so hopefully the rental yields in this area will improve a bit also!
YI
ajadee73,
you are of course free to have your opinion; say what you like, however I disagree with your property prognosis. There is nothing wrong with 5-10% swing in median house prices over a given period. Property investing has proven itself to be an excellent long term growth vehicle.
Speculators both make and lose money when shifting property in the short term; I can only assume that you tried a get quick rich method in property and got burnt. Most, and I say most property investors who invest wisely and with a long view in my mind do very well.
As for what will happen in September? As I said before good property in the right areas will always do well, and I expect that property investors will come back to the market in the hope of snaring the odd bargain.
I should add over the long term (and I have used this example elsewhere) property will drop and rise and yes even double…
Real life scenario – 3-4 bedroom house in Vermont South VIC
The figures below of course leave out real wages vs inflation etc., and assuming it doubles every 10 years. I think we can all see that it did much better than double.
Bought 1973 $11,000
1983 $22,000
1993 $44,000
2003 $88,000
2013 $172,000Sold in 2009 for $450,000… ah well.
Basics tell me that all other things being equal, if you :
Add stimulus – something is stimulated.
Remove stimulus – something slows down.Assuming nothing is happening fast in our slow moving economy and this continues throughout the rest of 2009, then the most significant and predictable event will be the halving of the FHOG. So if all the other market forces like unemployment rate, interest rate, consumer confidence, business investment etc are sluggish, then the outcome is a fast slowdown in the area which was stimulated by the FHOG.
Outside of that, I think the times are very peculiar and difficult to predict, even with the extensive research facilities of companies like BIS Shrapnel.That tells me to avoid niche markets and buy old faithfuls.
Cheers
thecrestCheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
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Hi Crest I tend to agree with you,
I talk every single day to real estate agents and finance companies especially in my job.
Property management companies appear to be doing fine but in outer locations the commercial vacancies are increasing and in particular one well branded name I deal with has a 48% vacancy rate on their current book. This tells me that business is struggling to survive in many but not all sectors.
The fact is we are becoming a poorer nation 1, because our governments arounfd the world are spending tax dollars in an unintelligent way that our future young people will be paying off for the rest of our lives.
I am concerned that the RUDD government is considering applying a tax on homes over the value of $2 million dollars. You cannot keep stealing from the rich, it's the rich people who employ people and have the are the builders of our societies. This tells me that they are struggling to get money in because the ATO is not collecting as much this year because the financial positions of business has changed and companies can't afford to pay provisional tax.
Domani and many other news sectors are saying that interest rates will not rise sharply HELLO CBA and ANZ are already up .6 and my broker is giving me the new sheet tomorrow of all the rate rises across the board.
The big problem is stock availibility – lots of small builders have been unable to invest in spec building because of the credit crises and lack of funds from the banks, over 70% of FHO loans are rejected so that in itself is an opportunity to find a way to finance the 70% who FAILED to qualify for a loan.
As a sophisticated investor I have to look at all the facts, I personally don't like country towns but I do like low cost housing and knock down and rebuilds in upper areas.
I'm currently paying 5.29% rates and am considering fixing at 5.99% for one year – I don't know why but my gut feeling is not good and I would love some feed back on this from my finance friends here.
D
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