Property bubble ready to pop

[bez23]

http://media.smh.com.au/featured/property-bubble-ready-to-pop-5151999.html

Sometimes it is good to hear the other side of the coin. The thing I can gather from this is :
1) Buy below median price
2) Buy in states with lower median price (SA/ Brisbane)
3) Save some cash to buy in bubble prone state (sydney/melbourne/perth) when needed.

Should be able to profit irregardless of whether the crash comes if we do this?

As you can see, I'm still incline to invest in property after watching the video.

 

[perthguy]

I'm still inclined to invest in property too. I am looking at a well priced, run down unit, in close proximity to the Perth CBD for a long term hold (SMSF). A bit of sprucing up will improve the rental return and capital growth in the short term is not so imporatant because I can't borrow against the equity. If it stacks up to be a reasonable deal, I would negotiate to purchase despite the so called bubble.

 

[saiman]

if property prices in sydney fell a mere 10% there would be a buying frenzy from local and international investors alike

...we are not in a bubble.

 

[perthguy]

if property prices in sydney fell a mere 10% there would be a buying frenzy from local and international investors alike

...we are not in a bubble.

I was wondering this too. I am a cashed up investor with a chunk of equity in my existing properties looking to buy my next IP outside of my SMSF and also looking to buy an IP in my SMSF. I personally know of 6 people in my close circle of friends who are cashed up and ready to invest. Hypothetically, if prices dropped, how long would it take for cashed up investors and SMSFs to start bidding wars over the "bargain" priced properties, driving the price right back up again? This is not even accounting for international investors who, seeing Australia as a bargin after the price crash, flood into the market, driving prices up (subject to foreign ownership laws of course).

 

[bez23]

If you watch the video, the bubble will pop when China/ us/ Europe property bubble pop. No one denies that China has a bubble that the government is supporting but one day it has to go. And that will have flow on effect in Australia's high end property market

 

[bez23]

I'm still inclined to invest in property too. I am looking at a well priced, run down unit, in close proximity to the Perth CBD for a long term hold (SMSF). A bit of sprucing up will improve the rental return and capital growth in the short term is not so imporatant because I can't borrow against the equity. If it stacks up to be a reasonable deal, I would negotiate to purchase despite the so called bubble.

Good to hear. Buy and hold strategy with good rental returns should provide you with a good insulation against a y correction.

 

[bez23]

I was wondering this too. I am a cashed up investor with a chunk of equity in my existing properties looking to buy my next IP outside of my SMSF and also looking to buy an IP in my SMSF. I personally know of 6 people in my close circle of friends who are cashed up and ready to invest. Hypothetically, if prices dropped, how long would it take for cashed up investors and SMSFs to start bidding wars over the "bargain" priced properties, driving the price right back up again? This is not even accounting for international investors who, seeing Australia as a bargin after the price crash, flood into the market, driving prices up (subject to foreign ownership laws of course).

Please refer to point number 3 in the OP. No doubt there will be bargains during correction . but does that mean you keep all your cash for something that might not happen? Or do point 1/2

 

[peastman]

if property prices in sydney fell a mere 10% there would be a buying frenzy from local and international investors alike

...we are not in a bubble.

Moods change. If the mood changed to doom and gloom and economic ruin, I think those local and international cashed-up investors would decide to wait and see. It was only a few years ago Sydney was in the doldrums and had been for some years.

On the other hand, I have been trying to remember the last time mainstream housing prices "bubble burst" in Australian capital cities. There have been slow downs for a few years, but not catastrophic "bursts" that I am aware of.

 

[Tulamalula]

There are other threads about this Harry Dent guy who is predicting falls of between 40 and 90% for Australian property. Most here are rubbishing him. Sounds like a typical know it all yank to me.

 

[Jamie_]

I guess it's because the guys said the same thing for the past 4 years and nothing has happened except the opposite.

 

[perthguy]

Please refer to point number 3 in the OP. No doubt there will be bargains during correction . but does that mean you keep all your cash for something that might not happen? Or do point 1/2

Option 4) buy a house now in a good area that needs some sprucing up to increase rent potential.

 

[impala67]

As long as the immigration policy continues, the population increases with most going to the capitals, and many of the opportunities for employment stay in the 4 main capitals - then it is difficult to see much of a drop or a correction in the big population areas. Australian banks are still very conservative compared to o/seas ones in their lending, especially the USA ones (no job, no savings, no worries banks). Australia has a lot of owner occupiers that would not need to sell anyway.

He may be correct in his reasoning, but he's not taking into account all the local factors. Dent has his own agenda anyway, promoting his seminars and books. Of course he has to say the opposite of what he's promoting.

 

[bez23]

No mistakes that the fundamentals are strong in Australia but we are undoubtedly also linked to the rest of the world. I guess the way you can look at it is if china's property market burst , will the investment still hold up.

I believe part of property investment is managing risk. Note the key word managing and not avoiding.

 

[bez23]

Option 4) buy a house now in a good area that needs some sprucing up to increase rent potential.

Yes definitely if its adding value to the property and as a result giving a handsome rental return.

 

[bez23]

Moods change. If the mood changed to doom and gloom and economic ruin, I think those local and international cashed-up investors would decide to wait and see. It was only a few years ago Sydney was in the doldrums and had been for some years.

On the other hand, I have been trying to remember the last time mainstream housing prices "bubble burst" in Australian capital cities. There have been slow downs for a few years, but not catastrophic "bursts" that I am aware of.

Hi , I just checked out your page and I love it, really good for some of my friends who are too lazy! One thing though, you probably need to change the interest capitalization part.

 

[Truly Exotic]

Make enough predictions and you are bound to get one right!

 

[Highlygeared]

From what I can tell at present - I think the 'bargains' are drying up/have dried up in pretty much all the capital cities. Can't comment on regionals. I bought anotehr IP recently and have a bit of gunpowder left to go again but think I'll sit on the sidelines and see how things pan out.

Rents aren't keeping up with prices and although they don't necessarily move in tandem, fundamentals aren't looking pretty (to me). It looks a bit like 2003 out there and there's too much heat and FOMO mentality. Part of being a successful investor is knowing when to dive in but more importanty when to sit out and watch the show. Getting ahead doesn't entail doing 'something' all the time.

Best thing I reckon I can/should do right this moment is reval everything, max out my LOC's..and wait. Just my 2c.

 

[devank]

Best thing I reckon I can/should do right this moment is reval everything, max out my LOC's..and wait. Just my 2c.

How long?

 

[Highlygeared]

Till conditions resemble what they were this time 1-2 yrs ago - a more balanced, uncertain market.

I just feel a bit uncomfortable right now and it doesn't feel right. And I am a property bull with all eggs in RE.

 

[somersoftfan]

Western Sydney really need a correction. Lets wait and see when RBA hikes interest rate one or two times.