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I’m by far a doom and gloomer, perhaps my headline was a little harsh but it was to get noticed. I’m still buying property, still renovating and still building. But I’m using a different strategy now, if properties go down 20% or more, I will survive it as I’m being realistic. Those out there who keep buying anything and over committing themselves will get caught out and lose big time. This concerns me in a big way, as no one should have to go through that. US is not out of the woodwork yet, in fact it will still get much worse. The government is trying to sugar coat it and make it sound positive but the facts indicate other. It will affect us here too, don’t think it won’t. With a reduced FHOG at least 2 or 3 interest rate increases by Christmas, next year will be an interesting year. The only thing I see sustaining the current property value are investors. As first home buyers will be forced out of the market. This will create higher rents and possibly increase in property prices. No I’m not contradicting myself, as when something goes too high, it has to crash, and it will, I just don’t know when.
I don’t have a crystal ball, I wish I did, I’m not backing away from the fall I’m predicting as the data is there to indicate it. Best case scenario, we will have a stagnant market, my prediction is a “20% plus” adjustment, worse case scenario, I’d hate to think. Things may appear rosie at the moment. Wait and see what will happen when all these young couples who have over committed themselves to buy an overpriced property and cannot afford the repayments. I’m not a pessimist as I’m still investing, I’m a realist who says be very careful. oh yeah and the 20% wasn’t plucked from thin air, it was REIV report in the Age. Mainly in the new suburbs where properties were cheaper.
I would like nothing more than being wrong, let’s compare notes in twelve months from now.Now brace yourselves….
Dan, I’m still a property investor as we speak today, in fact I bought a property 2 months ago and looking at developing 3 units. But the data is there to back up my (Garbage Rant as you put it), outlining how over inflated our properties really are, people, couples with good jobs, nurses, teachers etc. cannot afford to buy a house. Something is wrong. Our prices are much dearer in Australia than what they were in US before the crash. We have further to fall. The only reason we haven’t crashed yet is due to the population explosion the country is undertaking, and a quick fix injection of funds, with no long term prospects. If the Real Estate Market doesn’t crash within 12 months, at best it will just stand still, but forget your 10% yearly increase in property, those days are well and truly over. Renos and developments will still bring you profits, but capital gains?
The Economy is doomed!
http://www.youtube.com/watch?v=HPeu88ibdl8Any investments this year have to be made very diligently as there’s a huge property crash on the way. There is plenty of historical data to prove this and it will be worse than the US! What appears to be an economy slowly coming our of a slump may just be an illusion. Interest rates are bound to go up, first home owners grant will be phased out and foreclosures and unemployment is still on the increase. Having said that there are still bargains out there and profits to be made. I just sold one of my properties that was valued at $325k after renovating it over 5 weeks spending $25K, I had two offers on it the first open day of $415k+. Not mega dollars but $65k for 5 weeks work is not too bad! And that was purely Renos. The reno kings made a lot of mistakes when they started out but as property was booming they couldn’t go wrong! Now they are very experienced and can still make a reasonable profit during downtimes. If you have any doubts be very careful as times are tricky. Personally if I find another bargain this year, I would still do it. But it would need to be sold this year. Understand your market really well and I’m sure you can do alright. Pick a suburb you understand. Good Luck!!!
p.s After the RE crash, imagine the bargains and profits that will be there to be had!
