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This is one of those major on-going issues..
What do the experts of Somersoft have to say about this ?
That would be averging out Alex, people do it in the market only property involves larger chucks of money to average out & you have less opportunity to average compered to the sharemarket, basically buy when prices are down and try average out on the corrections/slumps..
=)
cheers
Alexee,
which areas and what types of property do you plan to buy? What type of return do you plan to get on these?
The problem in the US is oversupply of houses, and low demand, because so many have gone broke and can't afford houses.
In Oz, we have an undersupply of property by around 30,000 houses a year (there was an article posted on this yesterday).
We also dont have sub-prime loans here, just lo-doc (which arent anywhere near as scary as sub-prime loans) so this problem wont affect us.
The gains in the median price of homes will continue to be fueled by the shortage of housing across much of the state, according to C.A.R. economists. California typically gains nearly 250,000 new households, yet only will build about 200,000 new housing units this year, creating a shortfall of about 50,000 units.
The National Association of Realtors, which represents real estate agents, contends that low mortgage rates are one of several factors driving home sales. The others are an improving economy, strong housing demand and a supply shortage.
Well, it'll affect in the form of higher interest rates, but I don't think we'll have wholesale foreclosures like there are in some parts of the US, mainly because of the undersupply situation.
Alex
See below for a few older articles I found. I suppose the oversupply could have all been built in 2006/2007 so maybe this doesn't prove anything. Interesting to read though. Very similar in style to the crap our industry bodies feed us.
Sep 22, 2005
http://realtytimes.com/rtapages/20050922_housingprices.htm
July 26, 2005
http://query.nytimes.com/gst/fullpage.html?res=9F05E2D6123FF935A15754C0A9639C8B63
Interesting point.....then....market sentiment/buyer psychology will by far be a greater influence in the short term on prices of property than 'market fundamentals'. Prophecies of doom and gloom or alternatively of never ending sunny days of increasing RE prices are self-fulfilling prophecies. So overshooting and undershooting of prices over the true maret rate occurs.