Opportunity -- Property -- After 20 yrs its here again
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Yes my apologies, wrong thread. 
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Good question, got me thinking actually. Like Homer, I was a bit dozed off.
I was thinking more in terms of containing the situation so that people can still hold onto the assets bought with debt. The thread is about property so let's say holding onto homes and investment prop's. That may be possible paying almost nothing on the principal at current interest rates. You can stay on top of the repayments even on the dole (Centrelink) combined with a side hustle a few hours a week at the moment, so my point stands.
The point that woke me up from my doze-off is when you mentioned growth ! I have no idea where that is going to come from, unless RBA pushes interest rates below zero. I'll be a net borrower in that case, perhaps go deep, a few mil in debt to earn the -ve interest that is payable to borrowers.
Thanks for the wake up call. Likes given.
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Absolutely
, Good question.
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There wont be any real price growth, over the next few years. IMO
Like I said in an earlier post on this thread, once the herd has turned and headed for the doors, it is hard to generate any enthusiasm.
Only what is seen as a bargain will move, what was fear of missing out, is now fear of getting caught. Also the apartment debacle in Sydney, wont help sentiment.
No it will be quite a while before anything starts moving. IMO
Flight Centre will probably do o.k.
I agree, but price rarely stays stable. If no growth then the prudent bet is contraction.
I think quite a good fundamental bear case is in place and that over the next few years waiting for the low will be the smart move. IMO jumping in now, despite the fact that Scomo may have generated a bounce here, is being a little too keen. JMO, DYODD etc...
Hey Aus,
In a nut shell I think the fact that we are running into trouble with historically low rates is troubling. My immediate expectation is that rates will go lower BUT I think that this next thrust lower will be a good candidate for THE LOW in what has been almost a 40 year bond market bull (driving rates down!). Due to the fact that rates are so low any turn in that trend will result in enormous pressure on variable rate lenders. Every basis point up from here results in a much bigger payment increase than it does from a higher rate. No trend ever says in place forever, this one is over due to turn and the only probable prevention is the HIGHLY inflationary policy of direct monetization of debt aka print money @ a faster and faster rate.
Anyway... I can see all sorts of stress coming in our housing market if this bond bull market falters, which is a WHEN, not an IF.
Personal debt is 125% of GDP, its way more comfortable if it sits in the 50% to 60% range BUT markets doing what they do we will probably have to dip below that to get there.
+ All this would pressure boomers to liquidate to cover their collective butts. As a generation they tend to be a self fulling prophecy in market terms, which has generally been good for them. Just remember that their needs will roughly align and they will change direction at about the same time for about the same reasons. What has been a virtuous cycle could become a vicious one if rates go too far north OR too much inflation kills the game. Remember real estate lags when inflation gets off the leash.
Anyway... I'm probably wrong, so don't worry.
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I think that may be the case in Sydney and Melbourne, but if you take for example Perth, prices are back to a point where 2-3 years wages buys a property in a reasonable suburb.
It is getting to the point, where you can buy a 3x1 rental for $200k and get $300 P/W rent no problem.
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Wow! You can't buy a dog-house to live in for that price in Melb/Syd. So your view is valid IMO. I'd be interested in property at the matrix you mentioned.
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I think you are probably correct.
Interest rate lever has been pulled to the maximum, unprecedented levels that has been ever experienced since the invention of money and lending that mankind has ever seen. As you said they can jab on it a couple of more times before going -ve i.e. provide incentive to borrow. We are in "unknown" territory, let's see how it plays out...
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That is the whole problem, all the news is Sydney/Melbourne specific, but the collateral damage in other areas is massive.
On t.v and in the newspapers, it doesn't tend to emphasis that the problem with prices is Sydney/Melbourne specific, they generalise and the other markets react accordingly.
I never wanted to get back into RE investment, as I'm retired and can't be bothered, however the returns are becoming compelling. IMO
That is good, and you are well ahead of us in terms of price correction, but if the debt level is still high in your market then there is still an issue. You need specific market data to decide, cheap can always get cheaper.
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Yes, I'd be interested in property at the prices/yield you mentioned.
It will become compelling at some point here, that much is true. I'd like to see rates swing up first, personally.
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I don't think we have an equity bubble, but property is a different story. I well remember house prices going sideways for 10 years or more, which is what may happen. This an old graph but illustrates the sideways prices.
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Nice chart, but since the 2007 GFC dip, it has gone exponentially up. So I think a long period of consolidation as you mentioned is likely.
Melb/Syd may also see a reversion to mean scenario, I guess a long sideways grind or a slow decline back to reality. No one wants their home to fall in value including me, but we have to be realistic I think.
I think that is quite probably best case, we should end up looking like Perth at the least. JMO.
Garpal Gumnut
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