what's happening at the moment

[mynameisnobody]

hi everybody
I am new in the market and analyzing what I hear, saw and see to make the right decision to invest. The job allows me now to borrow, mortgage broker is pushing to jump in even for 10%, because house price rise will pay the insurance :0... yes, I am looking for a new one.

What's going on in the market at the moment?
I made up some theories for myself to find orientation, but it becomes complicated. See here:

- Aussi $ needs to become more competitive, Gov prints dollars, that lets Chinese investors pull out to prevent loss and that lowers house prices and rents

- China is slowing down economy to prevent bubble, first shortages of growth there might bring investors to pull money back out off the Aussi property market. House price drops, rents too

- Aussi housing market becomes, in this economic climate, unaffordable, potential buyers wait or turn house purchase the back for good.
House prices fall, rents go up

- Gov needs to keep rents low in crisis for people loosing jobs, approve developments, house prices fall, rents too

So in the long term I would only buy apartments/ flats and duplexes, make sure rental yield is secure?

 

[Redom]

Interesting theories there. I quite enjoy hearing peoples thoughts on this.

Re currency intervention: I'm not sure the RBA think its all that fashionable intervening in the FOREX market right now. Besides, our reserves levels make the RBA's ability quite limited. You can rule out the RBA printing money, inflating our economy, and driving the currency down. The currency is not nearly as important as price stability. Also, there's no need to.

Re China slowdown: I think people may over-estimate their influence on Australia's house prices. The link between our two economies is intimate, but its link to house prices isn't all that intimate. Our relationship with them is more tied to our external sector, which flows through to our income.

Re Government desire for house market conditions: True, policymakers are engineering a construction boom through monetary policy settings, but they've got no genuine intention of supressing rents.

I definitely like your approach of analysing market conditions, coming up with your own views and forming a strategy to match it. Taking into account fundamental market shifts seems like a 'more complete' assessment of a strategy.

 

[superAndrew]

So in the long term I would only buy apartments/ flats and duplexes, make sure rental yield is secure?

Why do you think that? Houses will always be superior than units from a long term investment point of view. You will need land to put those units on.

Cheers

Andrew