My BB parents, who just entered retirement, are doing exactly this. Five years ago, they were buying a property a year with no intention of ever selling. Times change.
Effects of Recession on Property
My BB parents, who just entered retirement, are doing exactly this. Five years ago, they were buying a property a year with no intention of ever selling. Times change.
For me it's not about picking the bottom, but rather about picking a point where the market has obviously overshot, and from which I can hang on through potential future pain.
That said, I've NEVER actually done this, but will likely attempt to do so in several years time. I've said on more than one occasion here that I think property will stagnate for some years, and my plan is to buy some more when I think we're at or near the end of this stagnation.
Ultimately, the plan is just to buy 2 or 3 good quality IPs when the next boom starts up (could be as much as 10 years away), with a view to liquidating 2 or 3 IPs within 5 years of the boom starting in order to remove all remaining investment debt, so I can hold however many IPs I end up with debt free.
So now is a great time to buy... 6 months into 5 years (probably longer this time round) of zero to negative growth. Yeah right.
You are probably holding a Melbourne-centric POV there. Sydney is in a differnt part of the cycle having been flat for 2003 - 2008.
But you really missed the whole point of my post, which was that most people cannot pick the right time to buy (or sell). But trying to pick an entry point is not an issue if you have a long term view of holding an asset.
Really? So as long as you hold an asset long term it doesn't matter what the initial price was?
I think you're trying to read more into it than I've really said here.
What I'm saying is that even if you buy at the peak of a boom i.e say in Sydney in 2003:
1. No-one knew that was going to be the peak (it was only declared as such in hindsight)
2. If you held onto that property it would have been some 5 years later in 2008/9 before it came back to what you'd paid for it but now it has gone on well past that price.
All's I'm saying is, that property is a very forgiving investment if held long term.
G'day All
i am looking into buying an investment property for the first time and being a complete novice to all the in's and out's of property investment and economics i have been wondering what the likely effects of another recession could have on the property market.
i would be interested to know what effects recession’s of the past have had on:
- interest rates
- property values/sales prices
- rental returns
- trends in people buying vs renting
- property for sale / for rent demand
- trends in what types of property are in demand and those that may be vacant for long periods.
my personal circumstances are:
25yo, single with a secure well paid job, so im not too worried if there is another recession.
looking to buy in either perth, fremantle or mandura areas at around the $550k mark, for a long term investment.
basically i am trying to find out when the best time to buy is, and what type of property may get the best results (of course that is what everyone wants to know
any advise is appreciated
The nature of every recession is different.
Check out the US recession for comparison
- interest rates - falls to 0
- property values/sales prices - falls to 0
- rental returns - increases to 10% yield
- trends in people buying vs renting - they can't afford to buy nor afford to rent
- property for sale / for rent demand - many are foreclosed, there's no demand to rent because people are jobless and living on the street
- trends in what types of property are in demand and those that may be vacant for long periods. - crappy areas will be vacant for a long time
In short, you seem to not entirely understand what a recession is. It isn't just some market event where prices and interest rates move around a bit. Real families lose jobs, people jump off buildings and companies close down over night. That's what a recession is... good luck having a well-paid job in a recession. Your well paid job might not be there in a recession, nor the company you work for.
By the way what's well paid for 25? Hope you're not trying to amuse us
Maybe the smart ones have already sold and joined the Winnebago cheap wine set and hit the highway with all the money in fixe-term,i was out at the Tara Camel Races on the weekend and there was a line over 2 klm's long by about 1 klm's wide full of Winnabagos most B-B'S and cashed up too the max,just think about it, i think a lot of high-end Government people do not understand the mindset about the over 50''s in Australia..
Some one did have a pretty good idea:
I am now official Guru of Real Estate and will place the letters GoRE after my name.
I can't wait
Seriously DH, most of us are aware that we've had a period of extended growth so we simply brought forward future growth, and this is the reason we now have an extended period with little growth.
But growth will come, its a matter of time and those of us who structure our portfolio correctly with the right assets in the right areas will benefit the most.
Those who sit on their a## doing nothing and complaining about how unfair the world is, they can complain all they want but the rewards will not be coming their way.
DH - in case you don't understand what an average means, it is adding together a set group of things over a set period of time, and then dividing by either the group or time to get an average.
No one has ever said that property doubles EVERY 7-10. Property doubles ON AVERAGE every 7-10 years.
Might mean one cycle was 13 years from peak to peak, and then the next cycle might be 5 years.
I cannot be bothered looking up the timeline stats for property over the last 100 years because they have been posted again and again on this forum - feel free to look for them yourself.
No one has ever said that property doubles EVERY 7-10. Property doubles ON AVERAGE every 7-10 years.
Might mean one cycle was 13 years from peak to peak, and then the next cycle might be 5 years.
I cannot be bothered looking up the timeline stats for property over the last 100 years because they have been posted again and again on this forum - feel free to look for them yourself.
does that graph take into effect wage growth as well?
because that graph looks a lot like wage growth above CPI as well....
because that graph looks a lot like wage growth above CPI as well....
It's real growth so yes it should take in to account the proxy for wage growth which is CPI.
Unlikely the growth takes into account wages (assume it's just indexed to the CPI figure).
Since 1972 the CPI inflation index rose a multiple of almost 9x, whereas wages increased by around 19x. So you do raise a valid point.
I am just saying that we might need to wait longer for a doubling this time. Lizzie suggests 5 years/13 years. Although there are a great deal of 'what if' factors we could also see it take 20 years for them to double from here (and even then the chance of them doubling in REAL terms from here is extremely unlikely).
Personally I would prefer to stick with investments and strategies that work for me now.
i only bring it up because obviously growth in house prices follows wage growth as much as it does available credit.
so if wages hold and credit does not, then any price fall may be only half of what it appears to be projected at - to simplify the calculation.
but yes, i too feel that stagflation is here to stay for a while yet.
so if wages hold and credit does not, then any price fall may be only half of what it appears to be projected at - to simplify the calculation.
but yes, i too feel that stagflation is here to stay for a while yet.
That image is pretty out of date. New one:
Couldn't let this go!
That's a bold statement Aaron. IMO, i'll gear as high as the bank lets me. If i wasn't confident in what i was doing, i wouldn't be investing in the first place!!
that's great.
but that doesn't pertain to the initial investor's concerns, especially considering it's a first-time deal and we all know the mistakes we make early on.
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