Very good post Norm. Its pretty much how i see it as well and a lot of investors without a property myopic view of investing would see it.
Why anyone would buy an IP now with rental yields at record lows, vacancy rates very high in most places (its a renters market), prices sky high, interest rates on the move upwards and the probability of flat or neg. capital growth in the next few years have got me absolutely stumped.
All the above are the symptoms of an assett bubble at its peak and just about to pop.
There are two disclaimers here:
1...Investors finding bargains, but they appear in any market at any time and really shouldnt be a valid reason to vote 'now'.
In any case there will be a lot more bargains around in the next few years without doubt.
2...See_Changes' scenario of markets that havnt caught the recent price boom yet and stil have great rental yields and good cap. growth going forward. Im very sceptical about this one as any market that hasnt increased by now in the recent boom would, i think, be a very suspect investment over the long -medium term - well, over any term.
A friend of mnine bought a property in Kandos (pop. 1500) and an absolute nothing town beside the cement works, even that place has had yields halved from 10% to 5% in the last 18 months.
Even Broken Hill has had rental yields reduced by this boom and places like Kalgoorie or similar (which is probably where SC is referring to) i wouldnt touch with Suggo's money
I did some research on Rockhamton (thanks for the info See_Change) and came to two conclusions:
1...I came in a bit late to benefit in the short - medium term.
2...I dont like its prospects for good growth long term but if punters are getting 9-10% yield that dont matter.
So, im still waiting for valid reasons besides the above two invalid ones to buy investment property NOW.
Im really raving this morning
Originally posted by NormH
Hi,
I voted 2 years but really it is anytime that a property meets my criteria. But if you look at my criteria it is sort of self selecting anyway as I am after a return of x as a minimum and won't buy below that as to me the investment is becoming too hot/over heated.
I suspect prices will drop some what and rents will gradually climb a tad, things will start to fall into place, numbers wise again, and I will be buying again, as those hens teeth get easier to find. .
I suspect that to be 1 to 2 years out max, mortgagee sales will help, and as interest rates raise that is when cash is king and I plan on having some ready.
Mean while I will continue to purchase the odd batch of blue chip shares and pick up some growth until the crazies leave the property market again.
I believe we follow about a 7 year cycle where shares peak, then property peaks and then short term interest peaks and then shares again. That is the pattern I believe, the time between the peaks varies but the whole cycle is about 7 years on average.
Things have been a bit of a mess this time however as the 1995(about) to 2000 share run, the smart money was starting to get out, property picks up and has then started its run. Taxi drivers are starting to talk about 'property' so it is time to get out. Interest rates will climb and money will shift there as a type of holding pattern until share markets start to lift and away we go again.
That is the world as Norman sees it. Simplistic but rough and ready guideline.
Norman
Norman