Interest rates to remain steady woo hoo!

[Jase]

To quote the latest Quartile Property Network emailout.
( http://www.quartile.com.au/ )

"Good news – another month of steady interest rates!
This week the Reserve Bank of Australia delivered good news to Australian home buyers electing to leave interest rates steady at 5.25% for the fourth consecutive month. The decision came as no surprise to most economic forecasters who claim a slowdown in the Aussie housing market and continuing economic uncertainty in the USA were enough to sway the Reserve Bank to leave interest rates unchanged. It is now expected that the Reserve Bank will leave interest rates on hold for at least the next few months."

just thought I'd share that as I'm sure most of you will agree it's what we've been wanting to hear.

Jase

 

[geoffw]

But then some longer term rates have risen slightly.

I have many of my loans now fixed- excep for the LoC against PPOR, which can vary enormously. So short term rises don't worry me. There could be some great bargains if the rates get high.

 

[JFEWSTER]

But then some longer term rates have risen slightly.

I have many of my loans now fixed- excep for the LoC against PPOR, which can vary enormously. So short term rises don't worry me. There could be some great bargains if the rates get high.

Surely GeoffW you woke up to reality 10 months ago, and hedged your bets by fixing interest rates and ummmmmmmmm holding off on purchases because there may be better bargains ahead?

Or.... maybe you decided to support the fanatics who were saying at that time- Now is the time to buy and it will only get better!

I ever there was a time for the "pessimists" to say........should have listened to ALL OPINIONS.... this is it!

 

[geoffw]

It's a moot point as to whther or not I had the foresight not to buy six months ago.

I applied to my bank in March last year for a reval (especially for my flock of bats) which was appraised as having increased $170K. The bank gave me $20K.

I got a formal val in October which showed $250K increase. Bank policy would not let a reval within 12 months of a previous val.

Now an attempt to shift it to another bank is taking a looong time (though the rate is quite good if it does go through).

 

[see_change]

Surely GeoffW you woke up to reality 10 months ago, and hedged your bets by fixing interest rates and ummmmmmmmm holding off on purchases because there may be better bargains ahead?

Or.... maybe you decided to support the fanatics who were saying at that time- Now is the time to buy and it will only get better!

I ever there was a time for the "pessimists" to say........should have listened to ALL OPINIONS.... this is it!

I bought several properties about ten months ago at a time when the pessimists were saying there was no where to buy. So far up about 40 -50k per house. The market there is still going strong with decreasing supply.

See Change

 

[see_change]

Oh , by the way , I 've just signed a contract on another , and I'm as confident as I can be that it's current market value is about 20k up on the purchase price. The purchase price is about 20 % up on value ten years ago , and again I'm pretty confident it will double in the current cycle.

See Change

To be pedantic , I didn't sign the contract , my wife did..

 

[Aceyducey]

We're just revaling several properties - all have had healthy growth in the last 10 months.

And we're planning more purchases.

I still can't find that doom & gloom ANYWHERE (though I assure you I'm still looking!)

Cheers,

Aceyducey

 

[JFEWSTER]

No, I dont see dropping prices. Nor doom and gloom. Nor do I even predict it.

But since I believe an investment property HAS to be the right house with the right attributes, gees its much easier to go looking now without feeling like you have to bid top dollar at the first open to even stand a chance.

Bearing in mind that my market is Adelaide Southern, which I believe is holding up better than most parts of the country (going by the march Q), it is now possible to offer a lot less and possibly get it.

Try doing that 10 months ago.

 

[L Bernham]

uh.. anyone who doesnt see any doom and gloom must have missed the latest results from Australian property monitors.
and I quote "THE housing bubble has burst, with property prices falling by an average 8.4per cent in the March quarter, according to the Reserve Bank, confirming that interest rates will remain stable for months"

They fell by 14.5% in Melbourne alone. For one quarter that is a mammoth drop. even I didnt expect that. I would have more expected a few percent every quarter for the next few years but not this quick. Also around 10% fall in Sydney, This doesnt even include the effects of the NSW govt tax on sellers yet. WAtch for a similar drop next quarter (and there would be 29% of my expected 35-40%)

My outrageous predictions shouldn't seem so far fetched anymore.

This means that out of everyone who bought property in Australia in the last 3 months of last year the majority of those have lost around an average years salary in net worth in one quarter.
I hope there arent any forumites in this situation.

I'm really glad I sold my Melbourne apartment when I did. I think I might have picked the exact tip of the boom. I've got to admit, that was a fluke.

LB
PS - if anyone wants a source for my info, go to google news, type in australian property monitors OR RBA interest rates and read any news from today.

 

[Jamie]

Hi L Bernham,

Im still intrigued as to your inclination to post - youre not actually a property investor, are you?

I guess its kind of like me saying Ive read Tim O'Briens "The Things They Carried" so that makes me an expert on the Vietnam War...

This means that out of everyone who bought property in Australia in the last 3 months of last year the majority of those have lost around an average years salary in net worth in one quarter.

Im sure I can say that, with complete confidence, NOT ONE PERSON on this board bought a property in Australia in that period. They bought a certain property, in a certain street, in a certain suburb, in a particular, town/city, in their preferred state. Did YOU invest in an AUSTRALIAN property in this period?

As an absolute novice, I can understand your propensity to generalise, but can you back it up with statistics? The suburbs I have just purchased in/am still purchasing in are showing trends quite unlike the stats youve claimed in your post. IS the whole Australian property market to be tarred with the same inexperienced brush you seem to wield with such fervour?

Can you say there is not one place in Australia a property investor can make a decent return in the present climate?

You are obviously a well versed share investor. How many times have you made money on a share when the ASX when south?

Why is it too much to ask that you expand your perspective to realise that the property market is just the same?

Jamie.

 

[L Bernham]

Im still intrigued as to your inclination to post - youre not actually a property investor, are you?

I have invested in property and want to do more. But that doesnt mean competing with others to buy at top prices

I guess its kind of like me saying Ive read Tim O'Briens "The Things They Carried" so that makes me an expert on the Vietnam War...

I guess it could if a) I had never invested in property and b) I claim to be an expert, neither of which are true

As an absolute novice, I can understand your propensity to generalise, but can you back it up with statistics?

I didn't make up these statistics, merely communicated them. I gave a reference.

IS the whole Australian property market to be tarred with the same inexperienced brush you seem to wield with such fervour?

some suburbs rise, some fall, we're not disputing that, never have, at the moment more are falling. Using averages gives a good indication of general trends. The macroeconomics of the property market are a valid tool for property investment. If you dont appreciate that you dont have to take any notice of them. Its a free country.

Can you say there is not one place in Australia a property investor can make a decent return in the present climate?

If I did then I would clearly be a novice.

You are obviously a well versed share investor. How many times have you made money on a share when the ASX when south?

I think I'm getting your point. Unfortunately its based on an incorrect assumption that I think an average 10% fall means that every single property fell by that amount. It doesnt - for each one that rose by 10% another must have fallen by 30% to keep the average at negative 10% (or 2 fell by 20% or 3 by 16.67% etc)

Why is it too much to ask that you expand your perspective to realise that the property market is just the same?

I cant win. Some tell me that I shouldnt compare the property market to the share market as they are different and then others are telling me that I should because they are the same.

cheers
LB

 

[Jamie]

HI,

I can too quote figures to prove my point:

The Melbourne median house price fell 0.8 per cent, down from $371,000 to $368,000 for the March quarter 2004.

This is the first fall in the median price since the March 2001 quarter.

This latest result takes the annual increase to 6.1 per cent, the lowest annual growth since March 1996. However, Melbourne’s median house price has increased by an average of 2 per cent for the previous 11 quarters

http://www.propertyreview.com.au/archives/2004/05052004/reviewed/05052004008.html

One group says it fell 14.5%, another says it fell 0.8%. Unless you have sales data for every single property sale in the area for the period we have no way of knowing who is indeed correct.

My point is this: You seem to be looking for every possible reason NOT to invest in proprety at the moment.. and that fair enough for someone with next to no experience in property, and hence little ability to spot a great deal when it appears....

some suburbs rise, some fall, we're not disputing that, never have, at the moment more are falling. Using averages gives a good indication of general trends.

Again, youve given us no references apart from a vague hint to "search Google"... Can you verify that the suburbs that have fallen in value are predominantly investor driven? Are they million dollar plus suburbs in Sydneys North Shore? IS it Docklands in Vic? Rockhampton? Hobart? Perth?

Averages are great to prove any point you want to make...

My point is this:

Members of this forum are not "the general public"... the majority of them research an area before they buy, utilising any number of resources to ensure they do not make the mistakes you seem to believe are inherent in property purchases in this climate...

Using ABS statistics, there are just under 2 million property investors in Australia... and less than 5,000 frequent this forum...

Who are you trying to warn?

I cant win. Some tell me that I shouldnt compare the property market to the share market as they are different and then others are telling me that I should because they are the same.

This is priceless, even for you... Maybe you need to change you nick to Joan of Arc, such is the level of martyrdom you are forced to exhibit...

I wasnt comparing the markets, I was talking about your perspective.. and rather than answer my question, you chose to take the "Woe is me" viewpoint...

Maybe you can answer this time... If you can make money in ANY other investment market, why do you deride the abilities of others on this forum to do the same with property?

Jamie.

 

[Glenn]

I suppose this thread is heading in a direction other than that dictated by the original post, but I will offer an opinion\observation from Perth:

There is an oversupply of some types of properties, and some projects that would develop more of these have been put on hold as a result of high vacancies, low yields and stagnant sales price growth.

The market that I am interested in: median priced houses > 40yo and 60's\70's style flats within 3km of the Perth CBD is continuing to perform stronlgly.

In the state government's latest budget, they have announced a planned scrapping of stamp duty for first home buyers on properties up to $220,000 with discounts available on a sliding scale up to $300,000. In theory this will save these buyers around $8,000 which when added to the First Home Buyers Scheme would be quite a nice enducement. As this is another artificial stimulus to the market (the sharemarket never gets these....why does the property market???...politics I guess!) that will create more volatility, I expect that sales to these buyers will dry up until July 1...followed by another strong year for sales in suburbs with median values under $300,000.

Good hunting

Glenn

Do you want to talk about history or create it?

 

[BV]

This means that out of everyone who bought property in Australia in the last 3 months of last year the majority of those have lost around an average years salary in net worth in one quarter.
.

LB
That is not a correct statement.
I actually read yesterday in the daily telegraph that LILLI PILLY
(postcode 2229) prices dropped 59%.
I thought great, its time to upgrade so I went on my PC and had a look
at finding a property at half the price. Good luck at finding one.
I also went and checked that postocode with home price guide
and its showing an 18% increase since the last 12 months.

In short, don't read much into what the media are telling us.
The median price is a funny thing.
It could be that a developer released 100 townhouses in the area and that
dropped the median price for the month in that suburb by 50%.
But how did the newspaper found out that the median price fell and
Home price guide didn't?
It could also be that there are not many people buying +1Mil$ properties
for the month and they are buying cheaper ones instead.

cheers

 

[always_learning]

Well after just completing a development in Melbourne and finding that values are well down and losses mounting, to be honest I feel fear. The relationship of the twin evils of "greed" and "fear" on the market should not be underestimated. However I would propose that fear is the main driver in high growth and falling markets in high growth markets like last year "Get in now or lose and never be able to get in again for that price" to now "Sell now or risk losing more, dont buy or you will find values are less latter". Greed, well that motivates people in a rising market to not to sell...by waiting I can get more!

What the stats dont say is the difficulting in finding a buyer...ie nobodies buying even at a reduced price....compounding my fear! Properties selling at a reduced price is OK, but properties not selling really sets in the fear factor!

I would propose it is very very hard to purchase investment property in a falling market for this reason.


I now "fear" that L Bernham may be right!

I would have predicted a year ago, that a slowdown would happen with prices in "investor" areas falling 20% but prime residential going backwards just a few percent and then finding it feet again with a long period of stagnation. Clearly now prime residential in Sydney is down 10% ( one example was the house next door to my cousin... agent said $1.1-1.2M...house was withdrawn from auction when price looked like it would not go above $950 and closer to $900).

Unlike the stock market (which offers paper, not something that can be used) I think the housing market will find it's feet again (when and at what level who knows, I hope LB is not right, but I fear he will be proved correct) with prices for home owners with the following ideas "Upgraders" with think "Sure the price of my home is down, but if I buy and sell in the the same market I can now get my hands on a better house that I couldnt have afforded a few years ago, my $500K house is now down to $425, but the house I want which was $800K is now $650K". First home buyers may find that developers transfixed with fear like me will sell cheap and thus they can enter the market with the new tax reductions grants by the eastern states (VIC,ACT,NSW,QLD).

 

[L Bernham]

Its quite possible that buyers will wait until they can buy positively geared properties again before they jump back in. Thats certainly what I'm doing. It seems like I'm not the only one in that boat.
Its apparent now that prices will fall for this reason, whether they do slowly due to lack of buyers or quickly due to panic sellers is anyones guess.
I can't imagine there will be too many panic sellers around as nobody likes to take a loss, however the sellers may be those who bought before the boom and want to lock in profits. Towards the end of the decline (whenever that is) I expect there will be a fair few forced sales as I know there are a few people who are already having trouble with repayments on their IP as they only planned to hold for a few years anyway and make large windfall capital gain.

This is where the fall could affect the economy - It was a booming property market that kept everyone spending throughout the last few years. With declining property values the 'wealth effect' goes into reverse and people look to pay off debt, sell of assets etc . This has a negative effect on the economy and CAN (I'm not saying WILL) create unemployment due to lower profits, less spending etc. Its basically why groups like IMF and the RBA have been warning Australia about the property bubble. They saw it coming, but unfortunately we were a bit to wrapped up in the excitement and hype to listen.

LB

 

[always_learning]

L.B. Maybe that is fair if the market is driven and composed by investers only. However the majority of owners are owner occupiers who dont really think about buying/selling based on positive gearing or not. However poor consolation for me thinking that I was building something that first home buyers and/or babyboomer downsizing would like to own!

 

[L Bernham]

Thats True AL.
The parallel for the owner occupiers re postive gearing or not is doing your sums and finding that you would save more money by renting than buying. There admitedly arent a great deal that do this however.

 

[always_learning]

As in Japan, most advertising for units basically say "how much are you paying rent 120,000?, if you buy you can pay just 89,000yen/month and have a new unit that is yours!"

 

[Aceyducey]

Let's see - L Bernham reckons he's more experienced than your average property investor because he has bought & sold one property in his life.

He reckons that he's be clearly inexperienced to say that there are no areas where investors can make good returns even in the current climate.

He says he wants to buy property in the future.

Well L Bernham - if there are still areas where investors can make a good return - WHY AREN'T YOU OUT BUYING IN THEM?

Bet you refuse to ever answer that question!

(BTW: L Bernham has also on occasion claimed to be a Medical Doctor & a female - he simply can't let go of the lies!)

My clear view is that you are simply here trolling. You never offer CONSTRUCTIVE advice - because you don't have the experience to offer it.

You never ask QUESTIONS because you're not here to ask other peoples' views.

You're simply here to Troll for controversy.

In the entire time you've been here you've added no value whatsoever to the forum.

And frankly I think most people have now worked that out.

Aceyducey