I know nobody has a crystal ball, but what are people’s opinions as to where we are in the property cycle in Melbourne?
I regularly attend auctions and have noticed a big difference in the last 6-12 months, multiple bidders, properties usually selling and sometimes well above reserve. Thru 2004 and early 2005 auctions were very quiet, little or no bidding, often just vendor bids, properties passed in. According to the 2005 Oct-Nov-Dec quarterly results, Melbourne median house prices rose about 6%. However, is this just a small reversal in a longer term downtrending market, or the beginning of longer term uptrending market, or a blip in a long term stabilisation phase, or something else? I know that interest rates play a massive part in this also, so I would be interested to hear people’s views on that too.
Marco[confused2]
I think it is wise to take a step back and look at the big picture when analysing the property market. In the longer term interest rates are going to rise and the median house price will fall, this is the typical cycle. When prices do start to drop and investors start selling properties to cover excess cost (not too distant future) I think bargains will be found, particularly at auction.
Our research suggestes that some parts of Melbourne, in particular the middle ring south eastern suburbs, are past the slump stage of the cycle and already in the upturn. long way befor the next boom
There are half a dozen suburbs, where we have been actively buying properties where prices have risen at least 10% in the last year. This is not hypothetical, nor speculation, but a fact.
For an update on where Melbourne and the other states are in the property cycle check out the following link
http://www.propertyupdate.com.au/articles/45/1/The-State-of-our-Property-Market
The cycle has moved on, and astsute investors are actively buying properties, while most investors are still wondering what is going on
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 11,000 readers each month.
FREE subscription http://www.PropertyUpdate.com.auIt does not matter, if you can afford to buy, then buy!.
Look forward in 5 years and you realise how cheap they are now. Mostly likely they will double.
Property are for long term investing. If you’re looking for short term, check the share market.
My advice is keep away from CBD apartment and new unit development. Buy houses with land because it will be the land that appreciate.
Good luck
Regards
ptnThanks for your reply ptn,
Property to double in five years, that’s highly optimistic in my opinion, but hey I won’t complain if you’re right. I’ve made a couple of very poor investment decisions over the last few years so that would really make my day (or five years).
I have 3 IPs. Two bought in 2001, fully paid off, good capital gains. One bought in 2003 currently on about 80% LVR. All 3 with excellent rental returns. However, I bought the third one at a very stressful time, when I was pretty heavily invested in the stock market (about $140,000, as much as my stomach could bear at the time) and losing money. Market had been in decline for three years as stock market followers would know. I panicked, sold out and bought a $420,000 townhouse instead. Then, of course, the stock market took off and the property market slowed. Those stocks that I sold in panic are now 100-200% more expensive! My townhouse has probably gained 10%, woopeedoo.
Had I put the $420,000 into the stock market instead of buying the townhouse back in 2003, well I don’t even want to think about it.
Anyway, I’ve still done OK and hindsight is 20/20, but if I’ve learned one thing, it’s that you need to be diversified in your investments and stick with them, because markets go in cycles and tops and bottoms are hard to pick, until you look back and realise it years later.Marco [blush2]
3056,
I bought into an apartment 3-4 years ago and I am still down by about 100k. But I haven’t sold it so it’s only paper loss… if the market goes down another 100k, I am still at paper loss of 200k but I won’t sell. I know that property will appreciate sooner or later.
Just don’t talk to that property banker for a while.Just thinking 33000 immigration moving into Victoria p.a. Allowing 4 people per family; that’s 8200 properties in demand per year!. [biggrin]
Over the next 5 years that’s like 41,000 properties in demand.I tried to persuade my banker that my other IP are appreciating about 5% p.a and use that equity to buy more IP. If the valuation comes back the same than I just pay the fee $275.00. But hopefully they will all double in 5.1 years time.
If you’re confident about the share market, then diversifying is good as I can’t comment there.
Good luck and I hope your Town house appreciate but also remember that it’s the land that appreciates and not the structure. My IPs are mostly simple house with a large land 500-600SQM.
Regards
ptn
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