Just wanted to get your feedback on the rash of articles coming out about investing in property.
The latest one on news.com.au – http://www.news.com.au/business/money/story/0,28323,25970467-5013951,00.html
From my point of view there are always going to be buying opportunities – but do you think there is a boom around the corner?
Just interested in experienced investors point of views.
Thanks,
John
No.
Yes, no and of course maybe. Bottom end of the market ie FHBG is coming to an end and may cause demand, which has been artificially brought forward thorugh countless govt incentives, will drop. 2nd/later homebuyers (upgrading) will bubble along. Top end properties, although there is a current lack of OS companies sending execs, credit crunch etc this segment will represent good buying for quite a while, you may have to take a big hit on rental yield for 2-3 years though. Will the void created by diminution of FHBG be filled by investors? Not likely if rental yields are starting to drop/credit remains tight etc.
John,
Economics is a social science and no one can predict to a certainty of what is going to happen in 3 months time let alone 12 months.
It will be difficult to predict at this point in time, as there are several factors in play.
1, FHO Boost – will reduce/removed by the end of the year, reducing artificial demand
2, Demand of resource export – keeping unemployment rate low
3, Unemployment rate stablised – RBA will be unlikely to keep interest rate low -reducing affordibility
4, Housing affordability low – making the market risky
5, Net immigration/ Population growth – continue to remain high with demand of housing remains strong (both rent and buy)
6, Interest rate increase – potential for higher mortgage default esp with recent first home buyers.
7, Global GFC – if US goes into hyperinflation and economy crashes, this will form a ripple effect to the rest of the world.
Amongst many many other factors like tightening of credits, rental yield, etc)I don’t think there’s any doubt first home buyer will reduce by the start of next year (no 1 & 6), and there will be an increase of supply of houses (no 6). The question is if the demand from investors and the immigration/population growth be strong enough to fill the void. This will be dependent on the investment yield (Rental return, interest rate and affordability).
I personally don’t think there’s a boom coming until a couple of years (2011), nor will there be a crash in the foreseeable future (with the assumption of retail mortgage rate to peak around 7%-8% at the end of next year). I suspect property prices in major cities will continue with normal growth in line with inflation and house price index – as there will always be sufficient demand in major cities like Melb, Syd and BrisSo simply put, I agree with Jaffasoft – No, there will be no BOOM just around the corner.
(even though Melbourne has continuously shown over 80% of clearance rate, which is a technical boom, it is merely artificial. . It may be perceived as a boom by the public due to sensationalized media, but that will be short lived.)
Agreed that there are always buyer’s opportunity in every phase of the business cycle, just need to know where to look.Happy to discuss further.
KennyHow about ASX… 40% increase from the bottom low in march?
Do you call it as a "boom"?
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