Today Tonight



From: Peter Davidson

Did anybody watch "Today Tonight" last night on Channel 7, Melbourne. Heading was "Property Boom, Bust". The report said that even before September 11 and the global economy slowdown, property in Sydney, Melbourne and to a lesser extent Brisbane is predicted to fall by 5 to 10% over the next 6-12 months, due to it being majorly overpriced. I'd hate to imagine what it will drop to when there is a major economic slowdown, more people lose their jobs and interest rates start to rise. BIS and Shrapnel(I think that's who they are) predicted interest rates to be at 9.5% in 2004, adding $150 per week to a $200k home loan. Time to lock in. Scary. Any thoughts on this and has anybody seen similar reports?

They also said it was the wrong time to invest, as rents had plummeted due to a huge supply of rental properties and renters often negotiated up to 40% off the asking price, landlords barely making ends meet and many already selling.

Any thoughts on this?


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Reply: 1
From: Nigel W

Sorry didn't watch it Peter, but I wanted to comment upon "forecasters" generally (no criticism of your post - and a good topic to bring up!)

Does anyone know what BIS Schrapnel's forecast in 1998 for 2001 interest rates and jobless figures were? I must confess I don't BUT I would not be surprised if they were wrong by a figure of 1-3%! If they were spot on the money all the time they'd make a killing on the market! In this context its interesting to note that three quarters of the active fund managers out there can't even outperform the market index.

Nobody has a crystal ball. You can take some good guestimates from historical events but the economy is a living, changing beast!

Should you take prudent risk management strategies, including perhaps fixing some of your loan/s now that we are almost at the bottom of the interest rate cycle (well at least that's my opinion)? Of course! But then you'd be doing that whatever BIS or is it BS ;^) Schrapnel has to say!

now where did I put that economic divining rod???

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Reply: 2
From: Margaret Macdonald

Peter it may be handy to know that in the stock market field, it is commonly acknowledged that when everyone is wanting to get into investing in the stock market its time to move on. That doesn't mean that there are no more opportunities, what it does mean is that you need to know what you are doing and why. Stock investing seminars have been around for a while, it is only recently that similar seminars have been popular in real estate, i'm sure that is some sort of indicator for the future.
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Reply: 3
From: Rolf Latham

Head for the hills and bury your money :eek:)

If history is anything to go by, the last time we had a major stock market correction the $ flowed to tangibles like property .

SAme this time ??


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Reply: 3.1
From: H T

but it did back my experience with yields falling. With one of my properties, despite it having two carparks (stkilda) and water views and very comfortable inside, the rent has actually dropped in the last 3 years and it definitely has been harder to get tennants.
Its not like the condition has deteriorated either - i always have it painted, and professionally cleaned whenever the need arrives..

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Reply: 3.1.1
From: Michael Yardney

BIS Schrapnel are one of the most respected firms of economic forecasters, and I have followed their reports since 1987 when they were spot on.
Unfortunately that was one of the last times they were spot on. At the time of their reports they give all the economic data behind their reports and they make sense.
What usually happens is that each year there is an unexpected factor such as September 11th, the Asian crisis, the oil crisis that messes things up.
Even they admitted at the last briefing 2 weeks ago that they got it wrong last year
Michael Yardney
Metropole Properties
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