Time to buy or wait a bit?

[Graemsay]

I'm not sure on Ballarat, but in Melbourne there's a general concensus that prices are falling (but not crashing).

The REIV figures for the first quarter of this year showed a fall of 6% in house prices, and 4% off units over the last three months. The ABS figures show a slower decline of around 2.5%.

Annualised, that's between a 10% and 25% fall, and if it continues for a couple of years is definitely in crash territory.

As with all these things, it's a case of where you draw the line.

I've said it before, but falling house prices are often a precursor to a recession. If this is a major correction, soon to be followed by a general economic downturn, then hold off for a few years. If it's not then buying in sooner might make more sense.

Of course we won't know which it is for a few months...

 

[tess85]

Annualised, that's between a 10% and 25% fall, and if it continues for a couple of years is definitely in crash territory.

Annualising a figure based on 3 months of data is a fair bit of extrapolation, don't you think?
http://xkcd.com/605/

 

[Sheryn]

Wanting a house to clean up and rent out for long term.

Yes Reno would be good. Thinking kitchen, bathroom, garden and maybe split system install and tidy up electrical since i'm a sparky and air con tech. Should be able to do that with a 2 of my guys in a couple of weeks but pay a tiler. My last bathroom reno cost less than $3k as the pipes didn't move that would be ideal.

If I bought in Ballarat the idea is to be very close to the CBD and suitable for duplex to keep options open down the track.



Just think it's a good long term investment. Has all the requirements for a robust town, and within commuting distance to a capital city.

There you go - you have a plan of what you want and how to improve value eg. duplex, you are a sparky so can utilise your skills to your advantage.

Take your time and scout out a good property as at some stage a good property will pop up. The longer interest rates are going up the more opportunities out there for a good buy to come along.


Cheers
Sheryn

 

[Corey Batt]

2013-2014. Sounds like some decent years depending on whether we end up going into recession. Otherwise increase by 2 years.

 

[lizzie]

The REIV figures for the first quarter of this year showed a fall of 6% in house prices, and 4% off units over the last three months. The ABS figures show a slower decline of around 2.5%.

as pointed out - again and again - australia is not one market!

where have these house prices dropped - what locations, area or even city?

i agree there has been some softening ... but NOT every house everywhere has dropped by 4-6%. some have gone up 4-6%.

 

[wisty]

you forgot to use the "roll eyeballs" smilie at the end.

with your $50,000 deposit in the bank at 6.51% you'd get $3,255/yr return (less income tax)

with your $50,000 buying a $250,000 neutral geared property, the value would only have to go up in value by less than 1.5% to get the same return.

granted - more risk - but i'd rather have my money conservatively leveraged in a historically good location.

And it only takes a tiny interest rate hike, and your "neutral" gearing is way negative. Unless you are talking about fixed rates.

 

[Wunderbar]

Properties that are neutrally geared from day one in this environment are guaranteed not to be in a 'historically good location'.

 

[Kristine..]

Annualising a figure based on 3 months of data is a fair bit of extrapolation, don't you think?
http://xkcd.com/605/

Hi Tess

Wow! I like it!

Four dozen husbands in one month! Yep, if, as Graemesay has extrapolated from the REIV figures Annualised, that's between a 10% and 25% fall, and if it continues for a couple of years is definitely in crash territory we certainly are heading for a property crash of about 200% by the time the Olympic Games open in London in 2012!

Considering that the Mission Brown Wonder I bought during The Recession We Had To Have in 1994 has improved from $105,000 then to about $425,000 now, a 200% drop in prices would put the MBW back to about what it was worth circa 1998 (or would a 200% drop mean that it was worth less than before it was built??)

Definitely there looks to be a 'Buy Up Big' time just around the corner!

Almost as good as Four Dozen Husbands!

Cheers
Kristine

 

[b simpson]

Thanks for the input guys/gals. I think I have a plan to move forward. It's probably the time to work hard and save while keeping an eye on the market to see were it goes.

Im regards to researching a particular market does anyone have any tips? Maybe create a spreadsheet of listings offered/sold including main info such as date, # bdrms,house condition, location category, duplex possibility etc. Alternatively simply track the medium price in that area. The problem with just tracking the medium price is it gets effected by properties not in my interest and won't really show up particuarly underpriced properties based on the above criteria.

Is there a buyers agent which covers ballarat?

 

[Andrew_A]

Thanks for the input guys/gals. I think I have a plan to move forward. It's probably the time to work hard and save while keeping an eye on the market to see were it goes.

Im regards to researching a particular market does anyone have any tips? Maybe create a spreadsheet of listings offered/sold including main info such as date, # bdrms,house condition, location category, duplex possibility etc. Alternatively simply track the medium price in that area. The problem with just tracking the medium price is it gets effected by properties not in my interest and won't really show up particuarly underpriced properties based on the above criteria.

Is there a buyers agent which covers ballarat?

Spreadsheet is an excellent idea and great way to build your market knowledge, try and seperate land value from dwelling value as another benchmarking tool and measure yield as well.

 

[devank]

try and seperate land value from dwelling value as another benchmarking tool and measure yield as well.

I did a bit similar analysis before and it is posted at
http://www.somersoft.com/forums/showthread.php?p=777614#post777614

Happy to answer any questions but just don't ask me to do the analysis

 

[albertwt]

...............
I'm looking to get something neutrally geared so holding costs hopefully won't be an issue?

What is neutrally geared means ?

 

[wobbycarly]

What is neutrally geared means ?

When all your income from the property covers all the costs from the property (before tax).

Neutral cashflow is the same but after tax.

 

[tom32]

What is neutrally geared means ?

The tax man views it as not costing nor making you any money. It may actually be thowing off cash though.

simplified example:

100k property with a 100% interest only loan at 7% interest

revenue
10k rent

expenses
1k rates, water, general.
7k interest repayments
2k depreciation

This is neutrally geared but cashflow positive.

The 2k depreciation is not a cash expense so you get 2k in your pocket every year while holding but do not have to pay income tax on it.

Good luck in your search to find one of those.

 

[albertwt]

well, from this article it is better off to wait i guess ?

http://news.domain.com.au/domain/first-home-buyers/firsthome-buyers-beware-20110525-1f38k.html

http://www.news.com.au/money/interest-rates/ratings-change-may-lead-to-rates-rise/story-e6frfmn0-1226060823878


and this one: http://www.news.com.au/money/property/warning-that-carbon-costs-will-sting/story-e6frfmd0-1226061911903

cmiiw