Property prices? Recession looming? [Archive] - Somersoft Property Investment Forums

GoAnna!

07-03-2001, 07:11 PM

Reply: 1 
From: GoAnna !

Hi Peter

I am speaking from the perspective of Melbourne only and after experiencing the last cycle only. Others of course have far more experience (and a fuller economic understanding?).

In the last boom a lot of money was moved from shares into property after the big crash. So properties moved a lot in a short time.

When the bubble burst due to businesses and jobs disappearing under the pressure of high interest rates and share losses some properties lost a lot of value almost immediately (usually higher priced bought at the end of the bubble)while others remained almost steady. A number of property investors left the property market (often due to poor advice - I know because I was advised to sell and am so glad i didn't - I should have been buying). Due to the shortage of rental properties rents rose.

This time some things are different. Interest rates are low (not around 17%). The Victorian economy is in good shape (a long way from the rust belt). I am sure that there will be some good deals to be had but there are probably opportunities now that can be locked in with low interest rates as well. Buy now? Save your pennies? All depends on the deal. The numbers should tell you.

In general in a recession there is a shortage of money. Lots of things are discounted so if you are in a position to pick up some discounted growth properties you would then be wonderfully positioned for the next growth period.

I look forward to some healthy debate!!

Anna

WebBoard

07-03-2001, 07:40 PM

Reply: 1.1 
From: Gee Cee Cee

Hi Anna
I have been saying virtually the same for a short while now.

Although areas are at different times in the boom bust cycle.

It is impossible to know every area.

But if you know your area and perhaps another area and study it constantly you have a lot better chance of being successful.
Be Careful not to get in with the crowd & follow the sheep.

In 1 to 3 yrs when the boom is over there will always be bargains around. Although if you look back at property not much happened between 1991 and 1999.

So you may have to hold LONG TERM and wait for the next upward cycle.

As well as stories of IF ONLY I HAD.

Gee Cee

Just me ranting raving again.
(That's Raving NOT RAGING) !!!

WebBoard

07-03-2001, 08:20 PM

Reply: 1.2 
From: Pete N

hi pete

recession or no recession, people will always need somewhere to live. so theoritically, if people stop buying, then there wil be an increase in rental demand. demand is the main factor that increases property prices so in the recesion of the early 90's houses in suburbs such as new farm performed well because of the demand for that location. anyway, what looming recession? negative sentiment is a major contribution to the poor performab\nce of an economy im told.

cheers

pete

WebBoard

07-03-2001, 10:14 PM

Reply: 2 
From: Marshall Brentnall

Hi Peter

Peter N has a very valid point, people will always need a home - and regardless of the economic climate there are always opportunities.

As the saying goes when the going gets tough the tough get rich.....:)

Marshall

WebBoard

09-03-2001, 09:49 AM

Reply: 2.1 
From: Jeanette .

I'm a bit worried about the announcement this morning that the FHOG is going to be increased to 14K. I'm worried that there will be a lot of people now able to move out of rental accommodation into buying their homes. I am relying on rent to pay my loans and worried about possible vacancies out of this news. What do others think?

GoAnna!

09-03-2001, 10:48 AM

Reply: 2.1.1 
From: GoAnna !

Do you have more information? Where was it announced?

Anna

PS Each coin has a flip side. Other people will be worried about the talk of a recession. They may put off buying due to concern about the stability of their employment.

Rolf, can you get a home loan if you have 14k grant and no other savings?

Owen

09-03-2001, 11:25 AM

Reply: 2.1.1.1 
From: Owen .

Check the front page of the Sydney Morning Herald

<a target=_new href="http://www.smh.com.au/news/0103/09/pageone/pageone2.html">http://www.smh.com.au/news/0103/09/pageone/pageone2.html</a>

WebBoard

09-03-2001, 12:15 PM

Reply: 2.1.1.1.1 
From: Gee Cee Cee

I do not know where you are but the only time I have seen property easier to rent was back in the mid 80's.
That was when the Govt dropped Neg Gearing.

At present I have had old tenants drive out &
the new tenants drive in.
Gee Cee

WebBoard

09-03-2001, 07:56 PM

Reply: 2.1.2 
From: Terry Avery

Hi Jeanette,

Yes the increase in FHOG is worrying in that SOME tenants will be able to
buy their own home. However, if they are like my son, most young people are
living at home, saving for a deposit, and not renting anyway so I don't see
huge numbers of tenants vacating. The government is trying to apply a
jumpstart to a comatose building industry. They are in the emergency ward
yelling CLEAR trying to revive one of the main drivers of the economy,
housing. The increase is only a short term measure, I haven't read the full
details yet but even if a number of people qualify for the FHOG they still
have to meet bank lending requirements.

Don't panic, take a deep breath and try to analyse what type of tenants do
you have? Do they like your IP so much they want to stay and buy it from
you? Are they in a financial position to buy a house? Think it through first
and don't react to every piece of news, we are not day trading shares here.

yuch.

09-03-2001, 11:13 PM

Reply: 2.1.2.1 
From: Yuch .

Guys,

Don't panic and read carefully!!

My understanding is FHOG still remains $7000 but for those first home owners who wish to build their own home, the grant is $14,000.

Regards
yuchun

GoAnna!

10-03-2001, 11:00 AM

Reply: 2.1.2.1.1 
From: GoAnna !

People rent for many reasons. Inability to save for a deposit is only one. Over the years most of my tenants have been able to afford to buy their own homes. None chose to. One wanted to put his money into his business. One wanted to buy an IP. One liked the freedom of renting. The reasons are endless. Will renters in inner suburbs leave their rented apartments to move to a new house in the outer suburbs? Very few.

Keep in mind that the 7K grant has been in place since 1 July 2000 and the takeup has been less than the government hoped for. This is probably why they have enough money in the kitty to double it to 14k for new homes.

And let us not forget that so much of our recent discussions have been about people lacking the courage to go out and buy that first (or 2nd or 3rd) IP. What makes you think that first home buyers wouldn't be just as scared. Just because you have the finance doesn't mean you are emotionally ready to buy.

WebBoard

04-03-2002, 11:08 PM

Reply: 2.1.1.2 
From: Justin Odgers

my opinion people are scared of commitment and see renting as a monthly proposal, not a long term project. people who were going to buy maybe forced to take advantage of grant and buy sooner but plenty of people will still be prepared to rent for (lifestyle) choices, my advice don't panic wait until tenant vacates give agent a chance to re-let and assess when needed.but try to hold the gains are too great.

Sim

05-03-2002, 07:19 AM

Reply: 3 
From: Sim' Hampel

Umm... what makes you think a recession is looming ?

<IMG SRC="http://users.bigpond.net.au/sim/personal/images/sim.gif" ALT="Sim'">

Waverlybay

05-03-2002, 12:29 PM

Reply: 3.1 
From: Waverly Bay

Huh !? What a recession "looming"?

Where?

How?

Now?

<a target=_new href="http://afr.com/australia/2002/03/05/FFXPYR0LEYC.html">http://afr.com/australia/2002/03/05/FFXPYR0LEYC.html</a>

Lets see the numbers on thursday's national accounts. I bet ya its gonna be another biggie - prediction is for an annualised 3.7% GDP growth.

khurram

14-06-2002, 04:31 PM

Reply: 3.1.1 
From: Khurram Saeed

i dont think there is gong to be any recesssion...money is the cheapest it has been for years....more and more people are buying houses, auction results are going through the roof...and that is with interest going up 50 basis points...i reckon keep an eye on the auction results (Demand side) and when they start coming down to th 60% level...then you know we are about to get some nice and juicy deals...

I think the people who feel the brunt of interest rates will be firstly the first home owners, who have just squeezed in with the $14K grant...and $100-150/month extra might hurt them...and the second group is those who are buying overprices properties at rdicoulus 1-2% rental return...i know people who bought in Docklands...(i personally would never buy there), who cant get anyone to rent their place, and the ppl who are renting only are getting 2% rental return....how long can they afford to keep these properties...not for long...

Funny thing is the same people who were saying recession is coming about a year ago, will be saying it a year from now...so dont get into the herd mentality...go back to basics....if you can get 5-6% rental...buy as many as your bank lets u.
Khurram
P.S) I am only saying what i am doing, it doesnt mean i am right.

Michael Yardney

14-06-2002, 05:35 PM

Reply: 3.1.1.1 
From: Michael Yardney

Yes Peter I have been through it before, and in the Melbourne eastern Suburbs like you.
I've invested and traded through 3 property cycles.
You are wise to ask for the opinion of someone who has been through it as most of the investors I see have not owned an investment property through a 7 to 10 year cycle.
Just like so many novice investors got burned in the share market crashes, by believing that prices always go up, many clever investors lost money and even their houses in the real estate slumps of the early 90's, middle 80's and early 70's.
Sorry my memory and experience doesn't go back further, but my reading of history does.
Every time the crowd says the cycle won’t sop….that’s about when it does.
All the signs are there again and the professionals have been out of the market for a while. Just like they will be back in again before the crowd and push the prices up before the crowd knows it.
So what’s in store?
I give my opinion in our newsletter, which went out this afternoon to subscribers (see meeting point for free subscription details), but in short:
Some areas of the market will perform very poorly in Melbourne over the next few years. Apartments and houses in the outer suburbs.
Apartments because too many investors have bought off the plan on deposit bonds and can’t settle. My evidence of this is private communication form some very nervous mortgage brokers.
In the outer suburbs, the market has hit its affordability barrier, with young families not able to afford more and they won’t push up the prices.
There are opportunities still in the inner suburban home market where affordibility hasn’t pushed the limits yet.
So I see flat prices with minimal growth for a few years, with the resumption of price increases following that.
Do house prices drop- yes they do. Ask anyone who owned property 10 years ago.
DO house prices remain stagnant for years? Yes they do look at the graphs of capital growth in the early 90’s and early 80’s.
Is property still a great investment YES it is, as long as you know what you are doing.
Michael Yardney
Metropole Properties

always_learning

14-06-2002, 06:06 PM

Reply: 3.1.1.1.1 
From: Always Learning

Michael you say:
"Every time the crowd says the cycle won't stop ... that's about when it does."

What about this quote from PK property buyers in Sydney


<table valign="center" width="70%" border="0" cellspacing="0" cellpadding="1" bgcolor="lightgrey">
<tr>
<td>
<h4>Interest rate rise did not slow market</h4>


The reserve bank interest rate rise of .25 % has had little affect on the booming real estate market. The main problem has been a lack of good stock in the marketplace, which has created a huge backlog of buyers. With little stock out there and huge demand from buyers, the market has a lot more growth in it yet.
The government shouldn't be looking at rising interest rates dramatically, because it's the housing market that is keeping this economy’s head above water at present.
There are a lot of people out there that are not reliant upon the building industry for their income and believe me, they are not jumping for joy at how their businesses are traveling at present.
I have been in real estate when interest rates were 19% and the market was still strong. So even if interest rates go up 1% in the next twelve months it will only be putting a strain on the first home buyers rather than the over $750,000 buyer’s.
There are so many people out there that have missed out over the past twelve months that they are now determined to buy no matter what. So it's this strength in buyers that will keep the market strong, accompanied by a short supply of good property on the market.

<h4>"Handy Tip!"</h4>
Hot Tip: The market is still moving and it has a long way to go yet, so if you see something buy it

</tr>
</td>
</table>

Does that quote " so if you see something buy it" fit with your observation about the end of the cycle being soon?

Michael Yardney

14-06-2002, 07:31 PM

Reply: 3.1.1.1.1.1 
From: Michael Yardney

Always learning
Thanks for the question.
Firstly I was heavily invested when interest rates were 19% as the quote says and the market was not strong.
People were not buying and if you look at capital growth which is what many investors were after, it was often negative after inflation of 8 -10%. What this means is that even if properties went up 7% per annum you were behind, because the cost of everything else was going up by more.
I'm not suggesting this will happen this time, I'm suggesting price growth will moderate.
I also think you should look at who is writing the comment. I also look at PK's web site to see their comments. they are buyers agents with a vested interest. How many investment properties do they own?
How many did they buy in the last slump?
I did not get where I am in the property industry (we have 24 development projects on the go at present) by being pessimistic.
I survived the last 30 years by being realistic.
I'm not trying to talk down the market, or discourage investors. I'm just saying a large part of successful property investment is knowing history.
I just had an agent tell me how great the market is and how prices are going to rise further this year. (he was trying to sell me a site) It was fascinating to now that he was an ex developer who went broke in the last cycle and still hasn't learned the lessons.
Michael Yardney
Metropole Properties

always_learning

14-06-2002, 09:15 PM

Reply: 3.1.1.1.1.1.1 
From: Always Learning

Michael,



Thanks for your reply, whilst I am old enough to remember the last boom (uni student), I was however lucky enough to enter the market when things in Melb were at bottom (end '91 then again '96), so I have been more than happy with the capital gains made.



As an expat, not living in Australia, to be honest I was very surprised at my last trip about current market sentiment, it was like property buyers where taking "careless happy" pills. This raised my memories of 12 years ago at the peak of the market when property buyers seemed to be taking the very same pills.



So anyway I have a few questions:

<ol>

<li>

What differences do you see (apart from the interest rates and inflation rates) between this cycle and the last cycle? What if anything does this mean for the IP investors strategy?

<li>Will you be recommending to your clients any change of strategy? I remember late last year (correct me if I am wrong) your recommended a "wait and see" policy due to inflated prices and general market uncertainty.

<li>If the forecast is for lower capital gains and lower prices in some market segments then have you shifted downward your estimates of final valuations and thus viability levels upcoming projects? Will you wont pay as much now for a prospective site as you would have last year?

<li>"If" there is a panic in the OTP deposit bond "HK" believers/investors, at what price point would you say some of these high rise developments make good long term investment sense (if my plan is to live off rental returns in 10 years)?

<li> You suggest that inner city housing has not reached it affordability limits. This is a very interesting statement to me, I currently believe that such things are driven by pure supply and demand economics. I agree with you that the bulk of outer suburb first home owners/young families have a basic limit or "wall" of affordability and simply cannot afford to pay more. Whereas in the chic inner city market, there is a much broader range of incomes and equity levels; as such given any desirable property a buyer who's income is only 100K is pushed out at auction by someone on 200K/year, who is pushed out by the stock broker on 1M/year who is pushed out by the dermatologist etc. ie. there is no "wall" just various people who can either pay more (ante up) for that chic inner city pad or fold and look for something cheaper maybe in a location not as desirable. How do you view the inner city market?

</ol>

Ross Sondergeld

15-06-2002, 09:55 AM

Reply: 3.1.1.1.2 
From: Ross Sondergeld

Hi Michael,

Subject: Property prices? Recession looming?

Thanks Michael... I appreciate your honesty about the melbourne market.

Lemmings follow each other... it's normally a stampede. Then WOOOOOO... they
fall off the cliff... (or so i'm told... ;-)

Personally, I always tell people to find a "unique" feature or point of
difference... or "unusual" situation.

Play the real estate game... but know the basic rules.

Why? Because when you loss a few $$$$$. (I'm told it hurts !!!)

Ross Sondergeld ~ Buyer Agent

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
" Imagine buying real estate the easy way...
...with a Buyer Agent on your side!!! "

Buyerside Real Estate Mobile 0412 289 464
Office 9b, 34 Glenferrie Drive Office (07) 5562 1555
East Quay Corporate Park Fax (07) 5562 1248
Robina QLD 4226, Gold Coast Buyerside@hotmail.com
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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Ross Sondergeld

15-06-2002, 10:05 AM

Reply: 3.1.1.1.1.2 
From: Ross Sondergeld

Hi Always,

Subject: Property prices? Recession looming?

You quoted PK In Syd (buyer agents)... "Hot Tip: The market is still moving
and it has a long way to go yet, so if you see something buy it!"

Then you said, "Does that quote "...so if you see something buy it", fit
with your observation about the end of the cycle being soon?"

You should always remember, that each city has multiple market cycles at the
same time in the same city... and each city of Australia will move at
different times for various reasons. Therefore... do your homework... and
buy according to your objectives.

Ross Sondergeld ~ Buyer Agent

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
" Imagine buying real estate the easy way...
...with a Buyer Agent on your side!!! "

Buyerside Real Estate Mobile 0412 289 464
Office 9b, 34 Glenferrie Drive Office (07) 5562 1555
East Quay Corporate Park Fax (07) 5562 1248
Robina QLD 4226, Gold Coast Buyerside@hotmail.com
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

_________________________________________________________________
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Ross Sondergeld

15-06-2002, 10:11 AM

Reply: 3.1.1.1.1.1.2 
From: Ross Sondergeld

Hi Michael,

Subject: Property prices? Recession looming?

You said, "I just had an agent tell me how great the market is and how
prices are going to rise further this year. (He was trying to sell me a
site) It was fascinating to now that he was an ex developer who went broke
in the last cycle and still hasn't learned the lessons. - Michael Yardney,
Metropole Properties"

Once again, thank you for your comments.

I love to hear from a profitable long term developer....

And maybe a few melbourne investors, should listen to the "grasshopper".

;-)

Ross Sondergeld ~ Buyer Agent

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
" Imagine buying real estate the easy way...
...with a Buyer Agent on your side!!! "

Buyerside Real Estate Mobile 0412 289 464
Office 9b, 34 Glenferrie Drive Office (07) 5562 1555
East Quay Corporate Park Fax (07) 5562 1248
Robina QLD 4226, Gold Coast Buyerside@hotmail.com
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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Michael Yardney

15-06-2002, 02:42 PM

Reply: 3.1.1.1.1.1.1.1 
From: Michael Yardney

Always Learning
to answer some of your questions, and I am really talking about the Melbourne market which I know, because each state is at a different stage of their cycles,:-
>What differences do you see
>(apart from the interest rates
>and inflation rates) between
>this cycle and the last cycle?

A: last time we were in a recession, this time the Australian and major world economies (other than Japan) are strong. Last time we had strong inflation, this time round inflation will be controlled by the Reserve Bank's interest rate policies. Last time there was alot of unemployment, not so evident this time round.
>What if anything does this
>mean for the IP investors
>strategy?
I don't think we will have as long a slump or as severe a market downturn. It is likely that property prices will hold up well in most areas and we could have some moderate price growth
>Will you be recommending to
>your clients any change of
>strategy? I remember late last
>year (correct me if I am
>wrong) your recommended a
>"wait and see" policy due to
>inflated prices and general
>market uncertainty.
YES I will
>If the forecast is for lower
>capital gains and lower prices
>in some market segments then
>have you shifted downward your
>estimates of final valuations
>and thus viability levels
>upcoming projects? Will you
>wont pay as much now for a
>prospective site as you would
>have last year?
When commencing projects we have never taken into account price inflation over the life of the project as it was an unknown, this was just a nice bonus. You are right, we are more cautious about prices we are paying for sites.
>"If" there is a panic in the
>OTP deposit bond "HK"
>believers/investors, at what
>price point would you say some
>of these high rise
>developments make good long
>term investment sense (if my
>plan is to live off rental
>returns in 10 years)?
Of course at some price many of these inner city apartments make a good investment. Your question is a good one -at what price?
>You suggest that inner city
>housing has not reached it
>affordability limits. This is
>a very interesting statement
>to me, I currently believe
>that such things are driven by
>pure supply and demand
>economics. I agree with you
>that the bulk of outer suburb
>first home owners/young
>families have a basic limit or
>"wall" of affordability and
>simply cannot afford to pay
>more. Whereas in the chic
>inner city market, there is a
>much broader range of incomes
>and equity levels; as such
>given any desirable property a
>buyer who's income is only
>100K is pushed out at auction
>by someone on 200K/year, who
>is pushed out by the stock
>broker on 1M/year who is
>pushed out by the
>dermatologist etc. ie. there
>is no "wall" just various
>people who can either pay more
>(ante up) for that chic inner
>city pad or fold and look for
>something cheaper maybe in a
>location not as desirable. How
>do you view the inner city
>market?
>
Your assessment is correct, prices have not hit the "affordibility wall" in inner suburban areas where the income levels are higher and there is more disposable income. I'm still looking at the market with some caution, but there are always opportunities around and you have to keep looking for them to find them. I guess you also have to recognise them when you find them.

Michael Yardney
Metropole Properties

always_learning

16-06-2002, 01:04 AM

Reply: 3.1.1.1.1.1.1.1.1 
From: Always Learning

Dear Michael, and Ross

Thank you for your comments, it is always good to listen to the ideas of the professionals.

Human nature is very interesting, naturally I would like to analyze and think logically like Star Trek's Mr Spock, but I am human, so I must accept that I will color my thinking with my emotions.

If I look at the interest rate for borrowing in Japan ( 3 years fixed 1%, then 2.46%) homes/apartments are quite affordable by the average salary-man, however only one of the 6 Japanese staff I work with owns property, when I asked them why not, "too expensive" (same $ as renting, but with excellent tax incentives), "don't want debt" ( debt is bad? but a plan to rent all your life without other investment plan is good?), "risky" (so the "spend all my money shopping" plan is better?) is the answers I get.

The significant difference is market sentiment, Japan everyone is thinking the worst, Sydney and Melbourne too many are thinking over optimistically.

WebBoard

20-06-2002, 12:50 AM

Reply: 3.1.1.1.1.3 
From: Stephen Burman

You know it always amazes me when they ask people who have an obvious interest in the market are consulted as experts when it's really pretty obvious they are pushing their own barrow. When was the last time you ever heard an agent telling you it was not a good time to buy (that's selling or buying agent). It just doesn't happen, they needs to keep the market turning over to make a living.

My impression reading between the line of what's coming out of the Reserve Bank is that they think Housing Prices are increasing way to fast (and hence may impact inflation), hence statements like this are almost forcing them to raise interest rates further. I believe they will keep raising interest rates until Housing price increases stall (not decrease but just don't really increase either) and then you may get some more balanced comments.

However it's not a pure science this. To reach this state on average will almost certainly cause some parts of the market to hurt a lot more than others. And given so much of the market now is driven by other than good investment rationale, i.e. emotion, this emotion can disappear pretty quickly. Anyone who had any involvement in the tech stock boom would tell you the 'emotion' changed very quickly. Possibly faster that the Reserve Bank could react.

My belief is that this means prices could come off by say 5-10% from current but this may well translate to 20-25% in areas. There are a number of scenario's obviously but any look at booms in any market will tell you they don't usually just slowly stop, so I believe some degree of drop is almost inevitable. And I'll be one of those waiting for the opportunities!

Steve B

Lissy

20-06-2002, 09:31 AM

Reply: 3.1.1.1.1.3.1 
From: Felicity W.

I've been watching prices in a few select areas of Melbourne's outer east, and I have to say I disagree.
I'm looking in the lower end, and I've been surprised how long some of these properties are staying on the market - weeks, not days, and most of the time the property price drops at least $5k and sometimes $10k before it sells.
So personally I don't see any evidence of a continuing meteoric rise in my little target market.
Keep smiling
Felicity 8-)

WebBoard

20-06-2002, 10:02 AM

Reply: 4 
From: Choon NG

Hi,
I have been through 2 cycles (property + shares) in the last 12 years, and am not really a serious investor (compare with most of the forumites who share their valuable opinions/facts)by any measure.

My basic understanding of the market cycles (stock/real estate) driven by motion/greed/fear, correction will be certain (that is the nature of a market, given enough time ), and usually signal by a sharp movement (over a short period of time), followed by gradual movement over a period of time. Anyone still holding tech shares ???

I am not sure that we have seen the reversal in prices (at least in the middle eastern suburb of Melbourne that I am watching) yet. In the limited number of scenarios I can think of, I favour the one where the market will ignore the intention of the reserve bank until it is too late (maybe another 1 - 2 % increase), which will lead to the expected price reversal. Maybe things will be "clearer" by the spring selling season !

Recession ?? Might not be certain as if the real estate market does slow down (asap) with most people taking the "hint" from the reserve bank, then interest rate should continue to encourage business/government investment, and carry us through in the next few years.

Just another view from bystander.

choon

Tibor

20-06-2002, 10:10 AM

Reply: 3.1.1.1.1.3.1.1 
From: Tibor Bode

Steve you just stated the same as I feel about the subject. The only problem is that the interest rate increase does not effect everyone on the same way. What I mean that in real struggle street .5% is sufficient to stop any further increases, and 1% starts to show some reasonable drops in price, in better off coo coo land 1% does not really make a big hit, albeit it might just start to cool prices. I know of people who will be in BIG trouble if the Reserve increases the rate by 1.5% and most likely they will have to sell, but also know others who just will take this as an opportunity and be able to buy more.
Felicity, also do not forget that Melbourne had a fabulous run and cycles in different cities (and within cities) are in different phases. In Brissy, prices still going up, albeit in several areas from a very low base.

Tibor

Robert

20-06-2002, 10:32 AM

Reply: 3.1.1.1.1.3.1.1.1 
From: Robert Forward

I to am starting to see houses sit on the market "for Sale" for longer periods of time in my area. Vendors are also not getting their prices at auctions anymore either.

Is this the start of the slow down????

Cheers,
Robert

Get your Property Inspection Reports @
<a target=_new href="http://www.CreativeFinance.com.au">http://www.CreativeFinance.com.au</a>

WebBoard

20-06-2002, 11:37 AM

Reply: 3.1.1.1.1.3.1.2 
From: Andrew S

I fully agree with you Felicity. I live in outer east Melbourne (Narre Warren), and have been accustomed to houses selling within days of the boards going up - some even before they get a board. The last few months however have seen that change. For Sale signs are remaining for much longer as places are taking longer to sell.

Can I ask which areas particular areas you were referring to?

Regards,

Andrew

- "Don't look at things and ask why, look at things and ask why not!"

Ross Sondergeld

20-06-2002, 11:40 AM

Reply: 3.1.1.1.1.3.2 
From: Ross Sondergeld

Hi Stephen,

Subject: Property prices? Recession looming?

You said, "You know it always amazes me when they ask people who have an
obvious interest in the market are consulted as experts when it's really
pretty obvious they are pushing their own barrow. When was the last time you
ever heard an agent telling you it was not a good time to buy (that's
selling or buying agent). It just doesn't happen, they need to keep the
market turning over to make a living."

Hey... "buying agents" are GOOD, HONEST people. (Although we're extremely
rare in Australia! ;-)

In response to your above statement... i told all my friends NOT to sell...
in 2001 on the Gold Coast. (And i was a buying agent!)

But hey... when i bought for people... we bought before the local market
moved. And i freely tell people all the time... NOT TO BUY. But i make sure
i explain why? And redirect their focus if appropriate!

P.S. I do agree that "agents" normally their own self interests.

P.P.S. I would like to say that people do need to be careful. In Australia,
their are very few "real" buying agents... At present, many organisations
seem to be jumping on the buyer agent bandwagon. (i.e buying agents as
fronts for marketeering organisations etc.)

Ross Sondergeld ~ Buyer Agent

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
" Imagine buying real estate the easy way...
...with a Buyer Agent on your side!!! "

Buyerside Real Estate Mobile 0412 289 464
Office 9b, 34 Glenferrie Drive Office (07) 5562 1555
East Quay Corporate Park Fax (07) 5562 1248
Robina QLD 4226, Gold Coast Buyerside@hotmail.com
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Lissy

20-06-2002, 12:18 PM

Reply: 3.1.1.1.1.3.1.2.1 
From: Felicity W.

Hi Andrew
I'd call Narre Warren south east!!
By east I meant Mooroolbark, Boronia, Bayswater, that sort of area.
Keep smiling
Felicity 8-)

WebBoard

20-06-2002, 04:59 PM

Reply: 3.1.1.1.1.3.1.2.1.1 
From: Andrew S

Yes Felicity you are right. Us males were never meant to be good with directions!!
I imagine the effect however is similar in all of the outer suburbs.

Regards,

Andrew

- "Don't look at things and ask why, look at things and ask why not!"

WebBoard

29-06-2002, 06:29 PM

Reply: 3.1.1.1.1.3.2.1 
From: Stephen Burman

I wasn't questioning anyone's honesty I was questioning their ability to give an unbiased opinion.

Anyone who has lived through boom times anywhere knows that there are lot's of people who honestly believe the story and I have no doubt that most of those real estate agents who are saying that the market will keep on booming honestly believe it. It's a natural human phenomenon to seek to find explanations that support your beliefs.

However, that does not believe that if you want to really make money out of any market you should not attempt to think a little differently. If we look back at the tech stock market it's pretty obvious that people lost the power of rational thought but how many people saw it at the time.

If I look at the current property market I see many of the same hallmarks and the fact that there are a number of people out there who just can't see a setback as even possible (you know who you are out there) probably is one of the strongest signs that we are due for a bit of deflation. I don't see a recession but in any market where people take an extreme view and the market takes the other view there will be plenty of opportunities!

Steve B