> Sep 2011 - Buyers Market as FHB's Struggle with SVR

Discussion in 'Property Investment - Other' started by Alex P Keaton, 26th Aug, 2010.

  1. Alex P Keaton

    Alex P Keaton Member

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    > Sep 2011 - Buyers Market as FHB's Struggle with SVR ?

    A comment that Sash made in another topic got me thinking!

    I think there will be some FHB's that are going to struggle with their repayments come the end of 2011!!

    Some FHB's would have taken out a 3 year fixed Interest loan back in September 2008. IR were so very low back then. They will not be able to afford to hold onto their PPOR's because they over extended themselves.

    I wonder just how many FHB's are going to be in trouble?

    I am sensing there will be a buyers market and good opportunites to invest!!
    In all states

    I think I will bring forward my plan of buying in 2012 to the end of 2011. I'll get my pre-approval around August so that I'm ready if a good deal comes along.

    I will be looking in Perth.

    What do you guys think? Are you excited about the end of 2011 as I am??

    I think there will be a good chance to buy something under value as the properties are going to have to be sold quickly as they cant meet repayments.

    Looking forward to next year!!
     
  2. alexlee

    alexlee Member

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    I don't know about you, but I was paying much higher rates than now back in Sep08. Fixed rates were around the same level as variable, i.e. in the 8s, at least.

    The variable rate now is in the 6s. So if someone fixed back in 08 for 3 years, it'll likely come off fixed into a much lower variable rate.

    Where did you get the idea that rates were low in Sep08? The RBA cash rate peaked between Mar08 - Sep08.
     
  3. MichaelW

    MichaelW Little Guy, Big Dreams

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    I think you're a vulture... But its a strategy and would work if the drops come you suspect. Just wouldn't be a popular dinner party strategy, particularly in a younger crowd...

    Yes I am, but for completely different reasons. Everything I read suggests Sydney is going to contine to perform strongly for the next 12 months and I'm anticipating some good price growth. :D Distressed sales, FHB or otherwise, are normally at the lower medians which is a market I don't play in so doesn't bother me. And, to be honest, I don't think its going to happen.

    Me too!!

    Cheers,
    Michael
     
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  4. bene313

    bene313 Member

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    Better yields and growth prospects over east. Why Perth?
     
  5. tess85

    tess85 Addicted to SS

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    I was about to say this too... especially considering that your 2 properties are already in Perth. Better to diversify a little perhaps?

    (I'm going to follow my own advice for IP#3 as all properties (inc. PPOR) are currently in NSW)
     
  6. tess85

    tess85 Addicted to SS

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    3 year fixed rates were lowest in Apr 09, at around 4.99% or 5.19% I believe. (Ignoring WBC's once off special offer of 4.99% in December 08)
     
  7. reeco

    reeco Member

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    Why not? Prospects are only part of the equation as we all know. Being an area specialist would be another
     
  8. csc2

    csc2 Banned

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    i wouldnt pencil in sept 2011.............if your senario is right it will be well after that before the increase bites...it wont be immediate thats without question...

    i think there are far more pressing issues to look forward to.........

    if the US goes into a double dip then the flow on effect here will affect us, and there will be little the govt can do second time round to prop up this poxy market....

    i am confident in some further pullback in many areas of aust in 2011 without even considering the sept 2011 effect locally in oz...
     
  9. dan c

    dan c Member

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    Totally agree. We bought our home in August 08, and the interest rate in the beginning was 8.9%. We are now paying less than 7%, almost a full 2% lower than August 08.
     
  10. Shaneelastic

    Shaneelastic Member

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    the buyers market if it ever happens will be in the outer suburbs where the fhb are, that said many fhb are dual income, so youd really want to be looking at suburbs that has a high multiple house price/average loan to household income.
     
  11. Alex P Keaton

    Alex P Keaton Member

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    Oh I thought I was on 5.5 SVR when I bought my PPOR in Sep 08. Maybe I was confusing that with when I bought my IP in Dec 09. :confused:
     
  12. Alex P Keaton

    Alex P Keaton Member

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    Bene313


    Well I think that by the time I'm able to afford to buy again Perth will start to rise. So the timing would be there. I'm inexperienced when it comes to buying outside of the suburbs I know. An option though could be a buyers agent if I did decide to buy over east. At some stage I would like to buy in Melbourne or Sydney but not sure when yet.
     
  13. Ridin-High

    Ridin-High Member

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    say 500k @ 5% is 25k P.A + Outgoings

    500k @ 8% is 40k

    This is an extra 288 per week or $144 per person for a couple.
    I think this can be absorbed pretty easy.

    Even easier if they have been smashing down the loan while on the lower I/R.

    I don't think its going to be the armageddon u predict.

    It would be on a minor level and the people stressed sale would be quickly snapped up @ a reasonable price by the market

    Regards,

    RH
     
  14. bene313

    bene313 Member

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    Why not? Because yields in P-town are average at best. Each to their own. But you don't need to be a specialist to see that the states are in different stages of the cycle.

    ONLY if they lose their jobs IMHO. I can't see any fire sales happening unless we see a substantial rise in unemployment.
     
  15. Gools

    Gools Member

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    I'd be interested to see a graph of fixed rate loan numbers by their loan term. Is 3 years by far the most commonly used that we can base a whole thread around it?

    Tess85, how are you looking land tax wise? Sounds like you're just lining yourself up for trouble down the track.

    Gools
     
  16. Perth Investor

    Perth Investor Member

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    I don't doubt a double dip in the US will be a problem, and I think troubles in China would be more of a problem, but if you think the government can't or won't prop up the market after what happened last time you're dreaming.

    FHOG will go to $21K again, or more, for a certainty, and interest rates will be at 4.5% retail before you can blink. If it is protracted, incentives for construction will come in as well. Government debt is at 6% GDP, there is plenty of scope for stimulus if it's needed, and compared to the damage a 25%+ drop in house prices will do to banks and the economy, the government will borrow money, like it or not.

    I'm not saying there won't be a pullback, I don't predict house prices etc, but if interest rates drop to that level for an extended period I will own more houses than underpants by the time they start going up again, and you can take that prediction to the bank!
     
  17. bene313

    bene313 Member

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    If the US goes into recession that affects China's exports, which affects our exports.

    We may have had a spend-happy government for the last three years, a government willing to throw cash at anything to makes them look better, but with any luck that wont be a problem for the next three years.
     
  18. Perth Investor

    Perth Investor Member

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    I'm not saying what should happen, only what likely will happen. I didn't vote for Labor, this election or the last, or the couple before that.

    And dropping exports won't stop our interest rates dropping. If I can buy a house with 5% rent, and pay 4% interest, I will do that, and I'm quite sure I'm not the only one. Short term price fluctuations won't bother me if it's not costing me anything to hold.