Will property dump - please VOTE everyone

[blaster]

Hi guys.

I have an idea and maybe this will sort it out as I've read and read and then read more - for mths . I'm no clearer . Why don't we just take a vote ?

What about a simple ' yes or no vote ' and say 1 or 2 lines explaining our reasons for our vote .

Every few days we can see where the voting is at and who knows - maybe the over riding vote is the answer .

Cheers

 

[blaster]

yes

My reasons are many but basically 1 - the world is dumping and 2 we have had a massive boom leaving our prices way unreasonable and way unsustainable .
I go for a 30% drop min' and a min' 5 yr slump.

Cheers

 

[nonrecourse]

Yes

After 16 years of unprecedented growth Newton's Third law of thermodynamics applies, for every action there is an equal and opposite reaction.

 

[andrew_de_a]

Australia has many submarkets so its not as simple as a 'yes' or 'no'.

 

[Player]

Australia has many submarkets so its not as simple as a 'yes' or 'no'.

Exactly. It cannot be as black or white as we all care to think. Some markets are still gaining, whilst others are coming off and others trending to the side.

To provide an answer though to blaster's question, dumping...No way, not in Aus and certainly not in the sense of the sort of hammering that stocks have taken.

 

[WinstonWolfe]

the answer lies 100% with what unfolds in the USA.

 

[mikew]

What do you mean by "property" and "dump" and what time frame?

 

[blaster]

What do you mean by "property" and "dump" and what time frame?

Well - Property , the Aust' market any or all. Dump , many of our economists are predicting price drops of 30% - 40% , and many aren't ! Time frame - particularly the rest of 08 , into 09 and from there as far as your game to go !

Cheers

 

[Rixter]

the answer lies 100% with what unfolds in the USA.

I doubt it!.....totally different marketplace & underlying factors.

 

[Maverik]

Very unlikely.

We have a huge undersupply of property and vastly more secure and stable finance. Both the opposite of the US.

It is also a tangible asset that is mostly funded by secure and relatively stable finance and cash. Again vastly different to shares and US property financed by insane lending.

 

[Beef_Hooked]

According to The West Australian yesterday, in the big feature article about the stock market upheaval, it speculated that the end of easy credit will have a dramatic downward effect on property prices.

Then further towards the back of the same edition, it was offering advice that their will be a flee of capital from the stock market into property, boosting prices and hence CG.

Both perfectly feasible assumptions based on observations of what's happened in the past. However I think the appearance of two diametrically opposed statements in the same publication, on the same day, sum it up perfectly.

1./ It depends on who you ask, and in reality
2./ No-one knows.

Cheers,
Beef.

 

[blaster]

According to The West Australian yesterday, in the big feature article about the stock market upheaval, it speculated that the end of easy credit will have a dramatic downward effect on property prices.

Then further towards the back of the same edition, it was offering advice that their will be a flee of capital from the stock market into property, boosting prices and hence CG.

Both perfectly feasible assumptions based on observations of what's happened in the past. However I think the appearance of two diametrically opposed statements in the same publication, on the same day, sum it up perfectly.

1./ It depends on who you ask, and in reality
2./ No-one knows.

Cheers,
Beef.

Exactly Beef - there's the problem hey. I thought at least with votes we might have some numbers on the two.
I've seen totally opposite reports within the one news some nights
I've got a lot riding on it over the next 6 mths but I'm damned if I can come to a conclusion with how to handle things as yet .

 

[WinstonWolfe]

We have a huge undersupply of property and vastly more secure and stable finance. Both the opposite of the US.

It is also a tangible asset that is mostly funded by secure and relatively stable finance and cash. Again vastly different to shares and US property financed by insane lending.

Then explain

- why Aussie banks have been tightening credit.....

- why Aussie and Chinese share markets have seen some of the most extreme volatility since the Great Depression.

 

[spark]

Propery and sharemarkets correlate. In Sydney the correlation is All Ords x 110 equals Sydney median house. For more info - press on my signature and do the maths yourselves the data was posted on this forum.

If sharemarkets will continue falling, so will property. And vice versa.

Property price rises are the outcome of growing economy and growing credit. Currently both are shrinking.

 

[Maverik]

Then explain

- why Aussie banks have been tightening credit..... Hi WW. Yes, it has tightened, however apart from low doc above 80 lvr, no doc etc it has not tightened drastically. From my experience broking i would say about 10-15% less people "could" get finance approved compared to before the sub prime credit "issue".

The explanation for the tightening is well discussed in your thread on the % funds we get from OS. As many people have noted we can still source or replace much of these funds from elsewhere.

- why Aussie and Chinese share markets have seen some of the most extreme volatility since the Great Depression.

My view is that our residential property market is vastly different to the share market. So what is there to explain or link the volatility of shares when you are comparing them to a relatively strictly financed, tangible asset with no where near the sudden and so drastic changes in demand.

 

[GIDDO]

Dump 30-40%?? I doubt it.

However I am taking action now to ensure I have more than 60% equity in my investments. (including some in a bank acc)

I am selling 2 properties in order to achieve this. Put some money in the bank for a while.

I have thought about it for months now and I reckon now is not the time to expect to be rewarded for taking risks. I don't think I will gain a lot by hanging in with big LVR ratios.

If I have a 60% equity I reckon my risk and SANF would be quite adequate.



Meaning that I may miss out on some capital growth for the next few years but may also miss out on capital losses.

Who knows? I certainly don't. But this way i will still be around to take bigger risks in a couple of years or three.

 

[twobobsworth]

I hope so. Wanting to buy again next year.

 

[MarkandTina]

I think the more important questions are:

To what level will fixed interest rates drop before I fix in my loans.
i.e. will my IP become CF+ before I fix

How much will I be able to rent my IP for in 20 years time.

Unless prices drop by over 50% I couldnt care less, I don't plan to sell anyway and I'm under 50% LVR. If property prices drop I'll buy some additional CF+ ones, if they go up I'm building equity.

So my answer is a strong dont know and don't particularly care.

Now if rents go down and rates go up, thats a different story.

 

[MarkB]

Depends on how you define "dump".

Dump as in like the US housing market?

Unlikely.

But certainly a correction is in the making.

Other responses have mentioned our undersupply of property => upward pressure on rents => floor protecting the real estate market from the sort of correction the US is experiencing.

Once confidence returns (and it won't take long, all things considered), then I would expect that house prices will start working their way up (esp as the rent v buy decision becomes more in favour of buy).

I also think the sharemarket volatility of the last year will put people off the asx for a while (particularly older investors) - in due course, they'll be looking for somewhere else to put their money.

 

[blaster]

Dump 30-40%?? I doubt it.

However I am taking action now to ensure I have more than 60% equity in my investments. (including some in a bank acc)

I am selling 2 properties in order to achieve this. Put some money in the bank for a while.

I have thought about it for months now and I reckon now is not the time to expect to be rewarded for taking risks. I don't think I will gain a lot by hanging in with big LVR ratios.

If I have a 60% equity I reckon my risk and SANF would be quite adequate.

Meaning that I may miss out on some capital growth for the next few years but may also miss out on capital losses.

Who knows? I certainly don't. But this way i will still be around to take bigger risks in a couple of years or three.

Hi Giddo
That's my strategy - I'm thinking about anyway .
If I can structure stuff I've got in mind at a future 60% lee way after costs , I should be covered and they're around .
My theory is that even if things do dump 30 or 40% I'll still have a 10-20% profit margin and room to drop and tempt buyers should they die in the a''s .
I used it in on the far Sth Coast NSW for a reno when 'everything' had stopped moving .
Because I had the lee way normal sellers didn't , my place still sold in two wks and I still made great profit .
I sort of believe that if you can do it at the right price anything is sell able but - it is scary times and I could be wrong .
I really want to keep moving because compared to most round here I've only just started.
So I'm specifically only looking at stuff with big gain able equity margins that I can ad to myself and it must be rent able and preferably at CFP encase I get stuck with it .
Well that's the plan anyway !

Cheers