What's going to happen to the property market?

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Permalink Reply by Bandwidth on August 13, 2008 at 7:09pm

As an asset class property tends to return around 12 to 14% per annum when you combine capital gain and rental return. When capital gain is reduced rent yeild starts to climb. There is no reliable measure of property prices, especially short term. Shares are easily priced at any given point in time so in property people ignore the downs and emphasise the ups.

The bias to property has been there since the start of time and there is no sign of it abating.

With a falling $AU our property market will start to interest international buyers.

A major group of purchasers in Perth /WA is Singaporeans

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Permalink Reply by Edward on August 27, 2008 at 3:29pm

Sure it is. Supply shortage is the core factor that push Australian property markets up higher and faster than USA and Europe in the last 2 decades. The shortage is a fact, and cannot see the government has willingness and capability to solve it in the near furture.

But the fact is disproportionately quoted by journalists to support their bullish market viewpoints. They overlook another fact, the affordability. When affordability is broadly concerned by the society, it means people's income increases slower than the price of properties. That's ture?

So the point is when you buy an investment property, you should ask yourself who will buy property from your hand in the future? Don't forget the first word of 'Investment Property'. It's an investment, isn't it? The answer is only those people can afford to buy it from your hand., who are richer than you, or earning money faster than you, and even faster than the appreciation of property markets.

I'm not denying property markets as a good option for investment. The thing is timing.

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Permalink Reply by moonbuggy on August 27, 2008 at 8:43pm

A lot of things are quoted disproportionately by journalists! ;) Fear and greed is what it's all about. That's what sells papers.

Right now they're on the interest rate cut bandwagon, and up to 50 basis points too. Again, I reckon it's because they all own property and want interest rates to go down. I want them to go down too, and I want the sharemarket to go up, but it doesn't mean that it will.

Will they really cut rates next week? Perhaps, but not by 50 basis points. [happy to eat humble pie if they do]

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Permalink Reply by Bandwidth on August 27, 2008 at 11:51pm

I think there is a high probability both will happen soon, either way both will happen at some stage :-).

If they do I have a strategy to handle it if not I have a strategy for that. It is all in the planning

No matter what happens, I believe in having action plans in place. This way I wish less, get less emotional and take appropriate action. I may not like what happens but if that is the case at least I can minimise the damage. If I do like what happens I can maximise the gain

Be careful not to be caught on the sidelines watching, wishing and regretting :-). This is the "plan" of the unwashed masses. ;-} (of which there are none off on this site)

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Permalink Reply by Edward on August 29, 2008 at 11:35am

Has anybody thought about the impact of 'first home owner account' on the property market? The intention of Rudd government is clear: to postpone part of the demand to 4 years later.

It would not ease the issue of affordability, but could limit the pace of price rising of properties, and on the other hand keep the rental vacancy still at low level, which is a good news for investment property owners who are expecting further upswing of rental income.

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Permalink Reply by Kbot on August 29, 2008 at 11:52am

This is to counter the disaster for first home owners created by the First Home Owners' Grant. People essentially received $7-14k, and property prices went up by 2-5 times that, maybe more. Great idea by the Howard Govt...not.

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Permalink Reply by Mary M on September 6, 2008 at 3:26pm

I agree Kbot - the FHOG was a disastrous policy, with any gain for first home owners negated by the surge in prices it created.

Permalink Reply by Edward on September 5, 2008 at 12:03pm

recommend an article 'Housing slowdown not a crisis', and its interesting commends

anyhow, the judge of future direction of the property markets is no difference from those analysis in share markets, some people are positive and some are pessimistic. don't forget market is a place to re-allocation people's wealth.

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Permalink Reply by Kbot on September 7, 2008 at 3:18pm

And property is not just an investment! For most people it is a home - their castle ;)

Any capital growth on the property is a bonus, but not the reason for buying it in the first place.

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Permalink Reply by Edward on September 7, 2008 at 11:46pm

Yes, you are right. But who is nervous most about the up or down of property market? The investor. First home buyers also feel nervous of course but they have to wait until price down to their affordable level.

And who made house unaffordable? The government. On one side they didn't make effort to solve under supply problem, or they didn't realize it was a problem while they enjoyed the booming of mining sectors and at the same time kept attracting foreign skilled immmigrants to solve labor shortage. On the other hand they encouraged investors to enter property markets by way of tax subsidies (negative gearing) to boost demand side.

And who will benefit most from an inflated market? The investor. They earn the bonus, just like what you said 'capital growth', and then sell it to first home buyer. Unless first home dreamers can earn money even faster than the speed of capital growth, they would find tomorrow's price is even unaffordable than today's.

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Permalink Reply by ff123 on March 22, 2009 at 8:52pm

Still going down in price in Northern burbs of Perth - also local rag is a lot little and now has articles ...

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Permalink Reply by Marie on March 22, 2009 at 11:28pm

ff123 - I understand your first comment - but not the second bit -"......is a lot little and now has articles".
Fat Cat members - all other comments are 6 months old. Has anything changed since then? I'd be interested to know.
Have I 'missed the boat' because I'm 49? I hope not! I don't want to rent for the rest of my years.
I'm fed up with people who have homes & rent them out & make more money. I'm also fed up with people who are rich & who work just for the hell of it! Why don't they do voluntary work, to free up paid jobs. I'm fed up with people who want to be the richest.
Marie

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