Thnings are slowing a lot quicker than I thought!
- Thread starter sash
- Start date
Mate, it is overcomplicated to me. I am not that bright.
First, can we agree that inflation is no longer worry. You can distrust me but you probably shall trust RBA, Treasury and Government who suddenly started to worry about deflation. They perhaps are better informed than us brought together.
Second. How long you are going to stick to your property? If you buy to sell in 12 months - yes, you should worry about "inflationary erosion".
If you are REAL RE investor, you never going to sell and then your CG over the time is always outperforming inflation.
Personally I am excited about "inflationary erosion" as it erodes my mortgage, thus paying off my properties even when I am on IO loans.
Evan, I make great rock caves if you're interested.
Some F62, chicken wire, sand & cement and a little creativity is all it takes.
How about, let's wait and see
it's mostly from the construction industry using localy produced products. There are also, retailers, real estate agents, banks, surveyers, pest and building inspectors, solicitors, office clerks, it's an army of people really and the government will also collect some money from GST and stamp duty (where applicable)
Urchin,
The property industry (includes buidling new homes) contributes to 35% of the GDP of Australia. And this also translates to follow-on to other part of ththe economy like Harvey Norman spend.
That is why the government is targeting this area.
Successive governments have used this trick everytime the economy slows! It is quicker than buidling infrastructure as this requires planning and approvals.
Cheers
Sash
The property industry (includes buidling new homes) contributes to 35% of the GDP of Australia. And this also translates to follow-on to other part of ththe economy like Harvey Norman spend.
That is why the government is targeting this area.
Successive governments have used this trick everytime the economy slows! It is quicker than buidling infrastructure as this requires planning and approvals.
Cheers
Sash
This is basics of the Aussie economy. Usually (but not in recent resource bubble years) GDP and "new house commencements" are tied together. If commencements go up, GDP follow it up within 3 months. If commencements go down GDP follows it down within three months.
Property values will no longer decline - forget it. Rents are now rising at the pace of 12% pa in capital cities. Rates will go down to alltime lows before Easter. Is it really long time?
Thanks BV,
May I also share my observations. I monitor Sydney's North Shore. Before changes to FHOG were announced, properties on average were getting 30 hits a day on realestate.com Yesterday on vacant land hits increased to 300 a day (10 fold), on lower end properties to about 150 a day (5 fold) and on middle-band to 100 a day (3 fold).
So much for property market crash.
No, it's driven by internal demand - a mixture of consumption and investment. The investment component is quite high, and is the most vulnerable.
GP
Sounds like the recipe for a boom, Essence?
isn;t inflation your FRIEND when it comes to property valuations?
i thought inflation worked the other way against property - as in, 5% inflation just made your proerty 5% more expensive to replace, therefore 5% more expensive to purchase, therefore 5% more CG?
I'll second that.
Ingredients for this recipe emerging at unbelievable speed. Before August we had tightening bias on interest rates, which stopped the boom from powering ahead. In September we switched to easing bias and now we have "cut and spend like mad" bias.
Till yesterday media was sceptical at best about property, yesterday we have seen the switch to "First home buyers storm market" and "Interest rates head to zero" hype.
It will take a bit of time to point the herd of mammals in the right direction, but this is definitely in progress.
My concern that there is not enough fuel (money) yet to start the property engine, but I think we have seen nothing yet.
For example, I have noticed persistent whingeing in the media about lost super, which tells me that Government is massaging the old Howard/Costello idea of allowing super to be used as a deposit for PPOR.
Perhaps they seem lower if you are looking at the previous quarter's statistics
but the sign is on the wall, PRICES ARE NOT FALLING FURTER and there will be upwards pressure. Wait a few months and you will see.
Don't worry, I am looking at Sydney, but the slight drop could be because vendors are waiting for the market to start moving before they put their properties on the market.
If properties in your area are increasing it's a good thing because you will have more to choose from.
It's still a buyer's market so if you are thinking of buying do it early while the competition is still low.
You're better off waiting until you see a sign of a market turnaround (not a dead cat bounce caused by a one off government grant to stimulate the economy)
You might pay a little bit extra but that's the insurance premium for the safety that you wont buy and the market keeps falling.
This one off economy stimulating package by the government wont turn the property market around. It should only provide a short term spike on the chart thats flat as pancake or falling.
The fundamentals of property wont change.....low yields, historically very high prices, huge personal debt etc
You might pay a little bit extra but that's the insurance premium for the safety that you wont buy and the market keeps falling.
This one off economy stimulating package by the government wont turn the property market around. It should only provide a short term spike on the chart thats flat as pancake or falling.
The fundamentals of property wont change.....low yields, historically very high prices, huge personal debt etc
True. Whilst people may look around and decide to wait a bit etc. as investors we analyze the price market much more and in a different way than PPOR'ers do.
The young couple work out how much they've saved, what they can/want to afford with repayments and get a price range. They then go and search for a property they're happy with. Interest rates falling only makes this equation better for them.
They're more focused on things like where to live, what sort of house and all the other fun stuff. Not, 'oh we've got the money, we can buy now, we're getting married in 6 months, but let's wait another 2yrs cos the house prices may fall.'
Of course there are exceptions to the rule, but a vast number of home buyers are more concerned with the life decision of getting a house than debating whether to put off plans and bet on a 20% fall etc.
