Plan for when the Perth market goes flat

[Keen]

Wondering what those on the otherside of the country (or is that another country given the difference in Property Markets ) in Sydney, Melbourne etc are doing while the market has gone flat / down?

Much value in adding value in such a market?

I'm keen to prepare a strategy when the Perth market does likewise.

Regards

Keen

 

[alexlee]

Get your LOCs in place, sit back and wait for the bloodbath.
Alex

 

[stretchy]

Keen,

I would assume that adding value during a downturn is inherently risky - you could find out the value of your improved property has dropped to or below the original purchase price. I have read a couple of stories on this forum that describe the very situation. Having said that, I'm sure there is money to be made, its just a hell of a lot harder. Years of experience would help, I wouldnt try it if I was new to investing.

Personally I would look for other areas to put my money in. There will always be some asset class doing well at a particular time, so park your dollars there and wait for things to get better. Even different locations - for example I think by the time Perth dies down, the eastern states will have settled down to steady yet low growth and could benefit from a renovation job.

-Steve

 

[Kennethkohsg]

Get your LOCs in place, sit back and wait for the bloodbath.
Alex

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Dear Alex,

1. Honestly speaking, I doubt there will be as much bloodbath after this boom in the Perth property market.... the smart monies and mass herd instincts are still not in full force in this market yet so as to push it so hard and so far that many will be trampled upon in due course!

2. While the Perth property market is presently hot, the overall fever is not as "mad and overwhelming" as during 2003 and 2004 period, when most of the Eastern States property markets were booming/peaking over at about the same time together.

3. For me, I will cash-up by selling off some of my Perth properties and start to look for new opportunities in Melbourne and Sydney to invest there in the immediate near future.

4. For your kind update, please.

5. Thank you.

regards,
Kenneth KOH

 

[Pete]

My two step plan

1. buy when can comfortably & sensibly do so (ALWAYS with downside/s covered)
2. repeat step 1

 

[Rixter]

Dont know about the rest of you buy & holders but if any market is flat or sideways it sounds like an excellent time to be buying up, providing you can do so comfortably. Why wouldnt you when the herd is looking elsewhere!

 

[kph]

Fact is there is always money to be made in property. You may have to change your current strategy if the market changes, but if Perth is your chosen market then you will and can still make a return when the market changes.
We started out doing duplex additions on blocks zoned for duplex with a quick reno to the existing house, to demolition of the old hose with the addition of two dwellings, but right now its easier to just pick up a block in a new subdivision where the developer puts in the fences and landscaping, and just add a house to it. Market value of the finished product is usually significantly higher that the cost of the land plus the house...
When this stops being the case, revert back to one of the other strategies, or find a new niche in the market.
There will always be buyers out there even if the market slows down..

kp

 

[asdf]

I think you'll find they are still pretty pricey over here in the East. Maybe give it another 12 months??

 

[see_change]

Get your LOCs in place, sit back and wait for the bloodbath.
Alex

Sydney peaked in 2003 , and there's been no blood bath yet. Probably dropped 10-15 % over all , and there are occasional examples of bargains , but to date nothing compared to what I was seeing when we bought our PPOR in 94. At that stage many places were selling considerably cheaper than the peak in 89.

Might still have 2-3 years to go before a bottom in sydney , but then it may just go sideways. No great triggers for forced sales at he moment.

See Change

 

[willair]

Wondering what those on the otherside of the country (or is that another country given the difference in Property Markets ) in Sydney, Melbourne etc are doing while the market has gone flat / down?

Much value in adding value in such a market?

I'm keen to prepare a strategy when the Perth market does likewise.

Regards

Keen

Keen, that's the only way to look at things,Stay flexible and avoid the crowds.imho Brisbane is still holding in the areas that we invest in.
But i do think several areas are in for a reality check over the next
12 months,there is only so many people from Sydney/Melbourne
with 500k in the back pocket that fly into QLD each day.
good luck
willair

 

[stretchy]

Dont know about the rest of you buy & holders but if any market is flat or sideways it sounds like an excellent time to be buying up, providing you can do so comfortably. Why wouldnt you when the herd is looking elsewhere!

Because your money goes nowhere for years waiting for the market to catch up. Unless you do some value-adding...

I like being ahead of the herd, but not TOO far ahead The herd is exactly what forces prices to go up

 

[Rixter]

Because your money goes nowhere for years waiting for the market to catch up. Unless you do some value-adding...

I like being ahead of the herd, but not TOO far ahead The herd is exactly what forces prices to go up

Now you are getting warmer with the value adding bit All depends on your overal investment strategy and existing equity levels.

 

[Kennethkohsg]

You obviously must be looking at the wrong property then. Now you are getting warmer with the value adding bit All depends on your overal investment strategy and existing equity levels.

+++++++++++++++++++++++++++++++++++++++++++++
Dear Rixter,

1. How then do we differentiate one property from the other and whether the property in this particular suburb is about to shoot up in the immediate near future, say over the next 6-12 months time frame?

2. What would be significant indicators and suburb/property characterstics that we should be looking out for, to say that the property is about ready to shoot up in prices so that it is about time that we should be getting into the market then?

3. What has been your own learning experiences and beleifs in respect to such issues.

4. I Look forward to learning from you soons, please.

5. Thank you.

regards,
Kenneth KOH

 

[Rixter]

+++++++++++++++++++++++++++++++++++++++++++++
Dear Rixter,

1. How then do we differentiate one property from the other and whether the property in this particular suburb is about to shoot up in the immediate near future, say over the next 6-12 months time frame?

2. What would be significant indicators and suburb/property characterstics that we should be looking out for, to say that the property is about ready to shoot up in prices so that it is about time that we should be getting into the market then?

3. What has been your own learning experiences and beleifs in respect to such issues.

4. I Look forward to learning from you soons, please.

5. Thank you.

regards,
Kenneth KOH

Dear Kenneth,

A quick tip for any newbies or others who dont already know, that want some quick short to mid term CG from an area -

look to where the Govt & Commercial/Retail/Private sectors are injecting money into an area and get in there ASAP. Look to where a Govt Redevelopment Authority has been created and $Megga allocated for it.

Once these sectors are going in the sign posts are lit up and the area becomes attractive - thus demand increases as people start moving in!

I have purchased property in these type areas and all of them experienced fantastic short-med term CG to be able to leverage off onto further investments.

 

[Kennethkohsg]

I think you'll find they are still pretty pricey over here in the East. Maybe give it another 12 months??

****************************************
Dear ASDF,

Thanks.

What do you personally reckon?;- whether late 2006/2007 or late 2007/2008 is more appropiate entry timing before the Melourne property market starts to run up siginificantly again into its new propertry cycle?

Thank you.

cheers,
Kenneth KOH

 

[asdf]

Its a tough call as always isn't it? All the signs still say its a flat market with pockets of strength in various suburbs. I suppose as Michael Yardney says, you have to buy well at this stage of the cycle then when everyone scrambles for stock, you can just sit back and let it ride. You could wait till you're well and truly in it and have all your funds on the side lines and can go in with cash or pre-approved funding so you don't have to wait for equity to grow like some in WA at the moment. Starting out in your IP journey in the midst of a boom is pretty tough as you watch yourself miss out on all these opportunites cos you're not cashed up. I can't recall how many low to mid $100s properties I was looking at Bunbury 2 years ago but couldn't act on all because I didn't have the equity at the time. Now they have ALL more than doubled. No one has a crystal ball but I think if you can fund it, buy it now as vendors may take a lot less for it.

Note also the market come off anymore as investors are competing with more home owners in Melb & Syd now who don't care about rent returns to fund their homes. They have Howard economic prosperity machine to thank.

 

[stretchy]

There is a good article in API regarding the very issue - its actually about some economic forecasting models being developed. Towards the latter part of the article some predictions were made and most 'experts' seem to think Sydney will be a better place to be due to the underlying demand.

I also saw the supply-demand graph (shows housing starts and underlying demand) for Sydney and the demand has well and truely risen above housing starts. Given the article talks about a 15-18 month lag before prices rise, Sydney could well be looking good right when Perth falters.