What would you do if you were in this situation ?

[toony]

I believe prices will fall over the next 3 years.

I remember when I started out back in 1995, a $85k 2 bed unit on beach rd in Parkdale was alot of money for a newly married couple. Houses in Aspendale were $130k. Now they are $350k.

And my income has not really gone up all that much in that time. In fact its the same, as my wife now does not work to look after the kids.

I would hate to be a first home buyer now having to come up with a large deposit or a huge home loan.

So I still reckon we have a bit more to go before house prices are equitable with incomes. When interest rates rise again, you will see further falls in property prices.

So I am sitting on my hands. I am still looking around but dont expect to buy anything for a while.

 

[Jerry Maguire]

Hi Toony,

I believe prices will fall over the next 3 years

that is just your opinion

I remember when I started out back in 1995, a $85k 2 bed unit on beach rd in Parkdale was alot of money for a newly married couple. Houses in Aspendale were $130k. Now they are $350k.

Won't you like to buy the Aspendale property now at $130K?
Buy the Aspendale property now at $350K and in 10 years time it will be worth about $650K

So I still reckon we have a bit more to go before house prices are equitable with incomes. When interest rates rise again, you will see further falls in property prices.

If you were to say that i did not see any drop in property prices and the same as our incomes i haven't seen that before
there is only a few drop in property prices that i can recall over the last 10 to 20 years but the price just shot back up stronger than ever within 2 years and sometimes nearly double after a drop

Regards
Jerry

 

[WillG]

Hi Toony,

there is only a few drop in property prices that i can recall over the last 10 to 20 years but the price just shot back up stronger than ever within 2 years and sometimes nearly double after a drop

Regards
Jerry

Is this known as a 'dead cat bounce' ? This happens in the stock market right ?

I admire your passion Jerry. How often have you purchased IP's in the last 5 years ?. Do you intend to keep on purchasing at the same rate over the next 5 years ?

Property investing is a lot like the games of 'Monopoly' and 'Cashflow'. I recall several games where I have sold/traded houses to finance houses on 'Mayfair' or 'Park Lane' knowing that somebody would eventually land on them. Monopoly and Cashflow is about 'time in the market' - not 'timing'

 

[Glebe]

I believe prices will fall over the next 3 years.

Hi Toony,

that is just your opinion
...
Buy the Aspendale property now at $350K and in 10 years time it will be worth about $650K

Jerry

Jerry,

I love it how you attempt to put someone in their place by telling them 'that is just your opinion' when they already acknowledge it to be their opinion (ie 'I believe..') yet you've thrown your beliefs around as though they are fact. Quite the hypocrite, no?

 

[Jerry Maguire]

Hi Will & Glebe,

This happens in the stock market right ?

No this happens in property ask John Edwards he is the person running Residex
that does all the prediction

How often have you purchased IP's in the last 5 years ?. Do you intend to keep on purchasing at the same rate over the next 5 years ?

I have purchase property every year from the time i started investing in IP which is back in 1987

I love it how you attempt to put someone in their place by telling them 'that is just your opinion' when they already acknowledge it to be their opinion (ie 'I believe..') yet you've thrown your beliefs around as though they are fact. Quite the hypocrite, no?

If you were to go back 10 years ago i don't know what state you are from
If i were to say to you that Redfern would be worth $650K and above
whereelse the current price is about $300K you would be telling me no way
Another good example is Logan in Brisbane
If you were to buy there at Logan 10 years ago at under 100K
you would be laughing all the way to the bank right now
The same goes for Aspendale.

Is this my own beliefs that this happen, NO
the market make it happen
Are they FACT?
It's up to you to find out
Have you ever wonder 10 years ago if you were to buy in Redfern for $300K and in 10 years time it will be worth $650K which is 2004 would you actually try to Beg, Borrow or Steal just to do it if right now it is 1995?

Regards
Jerry

 

[Glebe]

Jerry,

I accept your historical analysis. To push it forward another 10 years and call it fact is erroneous.

Glebe.

 

[likewow]

I wouldnt be surprised if Redfern is worth $650k in 10 years time. And i wouldnt beg buy or steal to buy there anytime. Theres much better areas to buy in.

 

[WillG]

Hi Fellas,

This thread is beginning to heat up.
Jerry,
It sounds like you practice what you preach. You probably own 15+ IP's by now seeing you have purchased one property per year simce 1987. Good work.

I agree with everything you are saying about investing for the long term.

I accept that property will probably double in value in a 10 year period (compound growth of 7%) but this is often non linear (prices may remain flat or increase marginly in the first half of the 10 years then double in the last half). If we have just entered year 1 of 10, what difference will a year or two make before buying another IP

IMHO, the market has only just started to turn into a buyers market. Only time will tell if this will continue.

You have been through 1 - 2 complete cycles (87 - 2004)
Is there anyting to suggest that this next cycle won't behave like previous cycles ?