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An explanation is due for presenting evidence so shallow, jontapp

Presenting evidence for the market changing .. showing off a failiure for selling STUDIO apartments in Cairns … thats not even a guide to market conditions.

Lets start with the obvious on the property concerned. First its a 40sqm Hotel room (sold as studio, managed by hotel). As banks get twitchy at the 50sqm for lending anyway in GOOD times, in bad times (and at the moment almost NO lenders will deal with 49sqm or under) these properties are literally lemons.

Second, the Gold Coast is sour because the usual thing for most australians to do .. is have 1 house and 1 holiday hut in the Gold Coast. When times get tough .. people put the holiday hut on the market. Combine this with a glut in 1 million dollar plus apartments and the area will take a while to sort out. There is a lot of stock on the market at the moment. But thats not a standard market at any time. Ask any developer. What looks good outside the Gold Coast often doesnt sit well within the Gold Coast.

I'm still keen on some areas of Brisbane even now. With Kedron coming together with improved infrastructure and transportation, its on my Xmas list. I'm even listening to where the floods are taking place, there are people there that will sell out because of the  flooding and are prepared to accept less to exit the area.

The words market mean just that. Good, bad and ugly all exist when you take your property to market. But knowing what your property is or can be is the first step to making money in any market condition.

The papers have been doing doom and gloom since 2001. Its not a good guide. What i can say is a good guide is the ability for a tenant of a property to be able to pay the rent .. and the ability for a landlord to pay the existing loan. When either of these two situations change then the market will too. The leverage for property from banks has reverted back to a conservative platform of 80/20 again and some banks are even going to 70/30 if there is any degree of risk with the client. In other words .. the banking conditions are more rigorous, the current climate allows for both the rent to be affordable (steep but affordable) and the landlord(owner) can still pay his bills.

That doesnt point to a crisis yet. When people have stacked their properties onto the market and NO-ONE is buying .. thats when you'll see a downturn. When people cant afford to rent a property .. the rents will come back in price also affecting the overall property value. But none of this is the undercutting of the market that was done in the US. We have reasonable preventative measures designed to prevent rapid flipping of houses (stamp duty, capital gains) that make it harder to just flip a house for quick money. Thats keeping the market full of solid value in the houses. And that works for everyone.

If you want to see a downturn .. watch the bottom drop out of the student accomodation. The banks and institutions wont lend on them now and that means you need the FULL amount to buy them (inc stamp duty). That means there will be loads of duds that are just waiting for someone to sell and will reduce price to meet the market. To anyone thinking of investing in these now .. BEWARE.