October 09 Property Crash Begins

Is it actually possible to make money out of a PPOR? We could draw on the equity but be left with a bigger loan. I've always had the simplistic assumption that to actually get ahead in the property market, an investor needs at least two properties, one being the PPOR, and the other being the investment property to play around with. Otherwise with just the PPOR, effectively all you're doing is riding on the wave, hence the philosophy I might have read somewhere that the PPOR is not an investment, it's just a roof over your head. Unless your area booms and records gains way ahead of other suburbs, you're just stuck. Correct me if I'm wrong.

Therefore, assuming someone bought a $600K property and it doubles in value to $1.2mil in the next 10 years, and another person could only afford a $300K property, doubling in value to $600K…it doesn't take a rocket scientist to figure out that the person who could only afford cheap in the beginning will always be stuck at 'cheap'. They could of course downgrade and move impossibly far from the CBD (or their workplace) and pocket some of the cash as profit, but it wouldn't make sense.

Read this article with interest this afternoon while having lunch. While I'm not surprised it's possible to lose money in property (or course, where there's money to be made, there's money to be lost), I think it would be strange for prices today to be lower than they were during the past 5 years. Those who lose money might be the ones who bought at the peak of a boom and then sold at the nadir of a bust…just like buying shares pre-GFC crisis and then selling in early 2009. That's just bad luck!

Any minute a bunch of people will get on the 'interest rates are rising therefore the sky is falling bandwagon'! I don't know about anyone else on here but the areas I am looking anything that has remotely breathable air on it is going for a ridiculous price. They are auctioning any blocks for subdivision because every one and their dog are building units!  THERE IS NO CRASH! We are in the first part of the biggest boom going in Victoria so hold on to your properties and get on board the money express.

Has any one found under valued suburbs? There is no longer value in the Melbourne property market, it looks like the middle of boxing day sales here! Any minute there is going to be a punch on with two women fighting over a letterbox!

No more talk of crash please Steve Keen and disciples as you will all have to eat your hats! Especially in Melb.

D

Good on you Dwolfe I agree, there will be some hat eating in Sydney too lol

Hi Sonia,

I did see the article too. I think it was actually Steve McKnight who said that we may adopt the European norm of renting for life.

The way I see it, the middle class population will shrink, and in 20 years we will have a very defined group of "have's" and "have not's".

With respect to D's comments, I totally agree that property prices have gone nuts – What I will say though is that there is no way we can continue growing at the same rates we have in the last 6 months for the next 3 years… By the end of next year the cash rate will probably be more like 5.5% which will make a big difference to affordability. There is definitely strong demand, but as the govt opens up more land to increase supply, whilist mortgages become more expensive, there will be a flattening, and maybe even a slight decrease in property prices. 

A one hr commute to London is considered the norm.

I used to drive 1 hr to work and 1 hr home as that was the only job I could get and I was thankful for it!

Perth has had the right idea for a while. Build up the inner suburbs as there is no real infrastructure further out. Then as people have to move further out then build infrastructure.

 I was about 18-19 when I was at a party and a German exchange student said to me…..why don't Australian's build on all of this land (meaning back yards). In Germany we would build on this. To which I the very young thing said noway why would we? There is plenty of land in Oz. I like the birds on my back verandah and a big backyard.

10 yrs later…….

D

The government were talking about decentralising businesses, i have no idea whether they have done this, but i would think that it would make sense to reduce the number of vehicles that need to travel to the city. With many businesses such as telstra and water and electricity companies operating via call centres they don't need to be located in CBDs of major cities. Also i would imagine that rents or commercial property prices would be cheaper in the outer suburbs.

cheers

Sonya

If and when they start to do this, it'd benefit some for sure. Suddenly their property becomes 'close to a small CBD' and values of these sleepy outer suburbs would probably soar.

May the next CBD be Ringwood. Haha!

Okay, I know this has been discussed many times before so I beg your pardon. I'm desperately saving in the hope of getting another property before the end of this year. One of the places I was looking at was Frankston South (if I could still afford a detached house then). I was even considering a cheapie unit in Mt Eliza…but is there much potential growth for units in Mt Eliza?

'Mt Eliza…that's the Toorak of the Mornington Peninsula, isn't it?'

That's the remark my friend made in disbelief when I told him I was considering to buy there.

Residex reports, I could lay my hands on. Not sure about the crystal ball or the evil henchmen!

Anyway, I'm much too new in the world of property to be speculating. At this time I'm simple minded: wow, that's a nice-looking suburb with quaint houses…can I afford it? In a pinch, yes. Speculation is a funny thing too. When enough people jump on the bandwagon it's invariably self-fulfilling prophecy. I'll post a speculation thread on Mt Eliza after I secure my cheapie unit.

In favour of Frankston South, is that I might still be able to pick up mediocre landed property instead of getting a unit with basically no land in Mt Eliza. Either way, the property will be negatively-geared. I haven't gotten the knack of getting the cashflow +ve stuff yet.