how low can it go

[willair]

it's about buying and selling.

should i buy more property now (eg is it about to go up)?

should i sell my folio now (is it about to go down)?

where are rents heading?

It's not a very straightfoward question why not tell us your experience
in real estate, there has been several come and go over the years in this site that have thought resi property was going to drop over 40%,may well have happened somewhere in Australia but not everywhere, for you it would depend on location- your loans-and what insurance you have in place to cover shorterm unemployment and several other factors like what tenants are in your properties and the size of your"Folio",some inner city properties i watch have gone down 200k from 800k,some country properties have gone down 50k from 200k just depends where your money is invested..willair..

 

[Monopoly]

there seems to be a complete lack of discussion in these forums about dropping property prices.

There has been plenty of discussion, but I think the reason you're probably missing it (the point) is because none of what has been written is what you want to read? In other words, you are expecting people to comment on events, that are at this stage are speculative.

but theres been no recent postings on the possible decline

Maybe our crystal ba**s are not as fined tuned as yours, and so we're not seeing the decline as clearly as you, or maybe (and here's a thought) people are just not comfortable with commenting on the unknown.

Personally, I see that a good investment strategy is primarily about doing your homework, and working towards putting yourself in a position that will enable you to weather the good, the bad and the stagnate times in the market. That way, no matter which way the scales tip, you'll always be okay.

I think you'll find most seasoned investors will know when times ahead are going to be tough, but will have had the good sense to have prepared for these times well in advance.

 

[The_Bludger]

Well I thought property prices were going to rise with IR dropping further, but it seems that I was pretty much alone on that one. Was thinking of buying another IP this year last week. This week, I'm not too sure. Every day, there are real stories of businesses going bankrupt, thousands losing their jobs, budgets to go in deficits, low inflation, etc, etc. Not good and it's not overly comforting.

So who knows, they are now predicting up to 9% unemployment by the end of 2010, that's BAAAAAAAD.... I can tell you if that happens, all forms of property will most likely fall, top end and bottom end!

I try to avoid the negativity and think "long term", but it's just about impossible to avoid the signs and to not take any notice is probably being stupid.

http://business.theage.com.au/business/40b-budget-deficit-looms-20090127-7qmx.html

 

[zaph]

thanks for all the comments so far. please bring on more...

 

[Propertunity]

i see you have some exposure to perth which is obviously in freefall. hope you've done alright..

Perth in freefall? What the?

Houses in Perth in the period Jan 08 > Dec 08 had growth of -4.02%
Units in Perth for the same period had growth of -2.3%
(Residex)
....some free-fall

 

[Propertunity]

what are peoples thoughts about how low median prices can go and when?

Apologies for the formating but here's the growth figures for calendar year 2007 & 2008

Area Median 2007 2008
ACT $456,500 13.62% 0.85%
Adelaide $287,500 19.58% 7.23%
SA Country $217,000 6.24% 6.28%
Brisbane $346,500 15.19% 7.06%
QLD Country $338,000 6.08% 4.42%
Darwin $334,500 11.75% 11.83%
Northern Territory $313,500 11.01% 12.11%
Hobart $255,000 3.06% 7.53%
TAS Country $197,500 7.60% 3.93%
Melbourne $366,500 19.58% 3.07%
VIC Country $216,500 6.32% 4.35%
Perth $377,500 3.05% -2.30%
WA Country $309,500 9.94% 1.14%
Sydney $395,000 6.04% -2.36%
NSW Country $279,500 4.78% -2.18%
Australia $349,500 7.20% 3.50%
(Residex)

As you can see, there was only Perth, Sydney and NSW country that had negative growth. The max -ve growth figure being .....wait for it.......a HUGE 2.36%

Now doesn't that make you want to rush out and sell? der!

All the rest were in positive territory - now back to your Q - how low can they go? Can we wait till they stop going up 'till we answer the Q please?

 

[farmilor]

hi spanky

Surprised noone else picked this up yet

 

[LynnH]

Posted by someone who has a little too much time on his hands ??? LOL, anyway!

Cheers
LynnH

 

[atti]

only way price going to drop is unemployment rise / defaults on loans.

 

[Perp]

only way price going to drop is unemployment rise / defaults on loans.

Both of which are exceedingly likely, I would have thought!

 

[The Y-man]

Both of which are exceedingly likely, I would have thought!

The company I work for has just retrenched a swag of people - more to go tomorrow and next week....

The Y-man

 

[Player]

My take on things is that top shelf properties are likely to come off perhaps 10-15 % depending on suburbs and how exposed the OO's still are to equities and business uncertainty.

The middle shelf and this for simplicities sake would include suburbs where most properties are around the median price range (or slightly above) for the capital city in question, may soften slightly (I'll commit to 5 % or so) or track sideways.

I feel the lower end may rally due to affordability issues with FHOG as one component but also due to reducing interest rates, making that sector more affordable to its intended purchasers. I feel investors may also push the bottom end up with falling interest rates.

That lower end may, however fall off as job losses hit OO's who over-committed a couple of years ago and perhaps even locked in at nine's. This is the sector I find the most frustrating to prognosticate on. Perhaps some pull-back of the low shelf rally due to unemployment (in family OO's) or no effect.

Of course we will all have the benefit of the retrospectoscope to assist our "told ya so stories" in a couple of years or so.

The market is presenting us with falling interest rates on the one hand enhancing affordability and softening economy and pending rising unemployment on the other hand. Like all things in nature, homeostasis will prevail and the market will find its own equilibrium.......12-18 months.

This too shall pass.

 

[kum yin lau]

Hi, don't know where those figures come from. Adelaide certainly is not priced at $287500. In 2005/6, I counted 253 suburbs listed in the Advertiser Open Inspections. Only a handful had houses under $250000 then and now you may find only 2 maybe 3 suburbs sub $300000.

Plenty above $350K.

KY

 

[atti]

then the answer is right there, the more people unemployed the more lower the price will drop. i think we are definately going to enter a period where price will drop to a certain level and will stagnate for 10 years before another mining boom to fuel the economy predicting start of boom 2020-2022.

my strategy will be debt reduction and ride out until next boom for upgrades.
setting realistic goals i think 2-3 good properties owed outright is plenty for retirement

 

[cosy]

HI,

my strategy will be debt reduction and ride out until next boom for upgrades.
setting realistic goals i think 2-3 good properties owed outright is plenty for retirement

If i got only 1 IP what do you think? buy 2nd IP or put that money into home loan ?

 

[atti]

HI,

If i got only 1 IP what do you think? buy 2nd IP or put that money into home loan ?

cannot give you advice on what i think based out of thin air,
1 can u afford to service the loan for second IP ?
2 can you afford it if interest rate rise to 10% ?
3 how much do you own in your PPOR ?

i think its good time to buy if your FHO especially house/land package that offers 30k in grants, if your answer s yes to 1-2 then its very good time to buy a block with a house returning good yeild that has developmental potential close to amenities.

 

[cosy]

if your answer s yes to 1-2 then its very good time to buy a block with a house returning good yeild that has developmental potential close to amenities.

Thanks, Yes to both 1 and 2 but Not the FHO so need to go with your option.
So what do you mean good yeild? and development potential?

For Q3 i owe 300K

 

[zaph]

thanks forum members for your thoughts:

i'm not a doomer with 40% reductions, although i dont dismiss this may happen (that's why i'm asking). it's happened elsewhere so i wonder if it could happen here????? i want your thoughts
i believe prices will drop. by how much? i'll get the crystal ball out and let you know once the resident wich has told me
i've noticed a 7% drop in asking prices in the outer sth bris burbs i'm looking at.
rents for these outer sth burbs (ok i'll name them - sunnybank and hills. runcorn and surrounds) haves flattened
OFIS and rea's interest now tells me there are not many buyers here. buyers are looking. not buying. very little investors. (it's a unique investment area - lots of chinese)


thanks for all your thoughts.

 

[BoatBoy]

So what do you mean good yeild? and development potential?

Seriously Cosy, I would suggest having a read on this forum, using the search function and using google to help find those answers and more before doing anything else .

Dave

 

[Danners]

I personally do not believe that prices will be going down much further.

Working with agents, open homes have been insane (WAY more people than last year) and people are paying above the asking price as there are multiple offers.. This was unheard of 6 months ago... Maybe a little bit of confidence has been restored with the rate drop in November being the catalyst.

With the interest rates tipped to go down 0.5 or 0.75 percent next week, this will increase peoples borrowing power and investors will start coming back to the market as houses will be getting closer to cash flow + as the rents soar up.

That is my opinion at least , I am in the ACT, for those wondering.