Recent studies show the affordability of property in most capital cities is out of reach for a lot of people. When you also consider that many people are up to their necks in debt, where does that leave demand for property in the future? Will our salaries/wages grow enough to enable us to buy property at higher and higher prices? Could it lead to a trend of people moving away from cities to country areas where property may be more affordable?
I’m interested in thoughts of experienced property investors who have been in the game for a long time.
Wes.
I think properties will have to come back to statistical levels of affordability. Especially with the RBA trying to contain inflation, especially wages inflation. So I dont think wages are gonna catch up to the increases that have happened in property. Therefore property will meet wages, not the other way around.
I don’t think a lot will move outwards from cities either because property prices are not the sole factor in determining where to live. A lot of people who live inner city do so for lifestyle and convenience reasons and will not change this just because properties are too expensive at the moment.With all the hype and news of affordability, interest rates etc. it’s enough to make your head spin. I think property will eventually come back to where it should have been statistically had we not had a boom.
Hope this helps…G7
I think subdivision and new estates will fill the gap. Otherwise peoples expectations adapt just as they do in other countries…. and we have seen that with the slow change from 1/4 acre blocks to smaller lots and now onto cottage lots. This will be accelerated by a natural preference for smaller lots – so many of our sales come from oldies aching to get rid of their sprawling suburban properties for a low maintenance villa or cottage home.In fact you don’t even need to be an oldie – after wasting 2 years trying to make a garden of eden on my 1/4 acre blcok I abondoned that and now struggle to keep 6 pot plants alive!
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
Metropolitan living is where I believe things are heading in the near-distant future. We may end up as a society mimicking that of the U.S with a proportion of the population occupying high-rise apartments in the city and boarder suburbs. I.e. Think New York but without the cab/taxi congestion!.. JT
Dont hold back. Take a chance and go for it.
I dont think people will leave the cities either. That is where the jobs are, and that is also where more of the jobs are being created.
Market forces will take care of themselves long term. If home affordability goes too high, it will be un-sustainable, and will come back down again. There are only so many people that can afford to purchase the high price houses.
Cities will in most cases continue to grow outwards, and those outer suburbs are usually cheaper.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsCan’t afford a 1/4 acre block with 4 bedroom house in the middle of Melbourne? Do you have a 1/4 acre block with a 4 bedroom house in the middle of Melbourne but can’t find tenants at the price you thinks it’s worth?
As has happened: subdivide to buggery and build a zillion units on the lot and rent/sell each of the smaller and more affordable homes at or above the price you think it’s worth. [exhappy]
I think that’s the way it works. If you want a big house and land you have to either pay through the nose (to compensate the owner for not subdividing to buggery) or enjoy a lifestyle associated with a more “rural” setting.
You can easily pick up a 20 hectare property for $100k then slap a great big house on it for $200k and thus have a palacial estate the envy of all your city friends… so long as you don’t mind them (your friends) having to travel for a couple of hours into the outback to get there!
Also as cities fill up and become too expensive people do move to satelite communities that are more affordable and so do businesses. Those places build up in size and become cities themselves and so on. Expectations change, but so do growth areas and population trends.
I think look for a satelite community with good access to a city and buy big blocks there. Given 10 or so years those big blocks will be worth their surface area in gold.
Originally posted by surreyhughes19905:I think look for a satelite community with good access to a city and buy big blocks there. Given 10 or so years those big blocks will be worth their surface area in gold.
Hi Guys
Steve Navra’s slant on the original question of “Property Affordability” is to keep ruthlessly applying this “Rental Reality” formula (go to http://www.navra.com.au and click “Articles” in the dropdown menu: read all articles exhaustively).
He bases his “when & what property to buy” decisions on this Rent-based formula, and it’s very, very time-honoured.
By the way, can anybody tell me where Steve got this Rental Reality formula from? Given that ROI calculations have been “bread & butter” to property investing since time immemorial, I presume Steve didn’t invent it, but perhaps just tweaked an existing rule of thumb.
Is this right? And if so, what keywords should I put into Google to research its antecedents?
Cheers
Greg
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