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Another Interest Rate Drop?? What will happen

Discussion in 'Property Market Economics' started by MTR, 20th Sep, 2016.

  1. MTR

    MTR Well-Known Member Premium Member

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    Lots of talk of another interest rate drop, what will happen to property if this actually happens?

    Will we continue to see ongoing growth, in particular Sydney and Melbourne market... these markets have been booming since 2013.

    I have witnessed 6 boom cycles, but I have never seen interest rates at historically low levels, could we see a 6 year boom? I am at a loss as what will happen over the next 12 months

    If you consider a $2M loan will now only cost $80,000 pa, extraordinary times.

    MTR:)
     
  2. Azazel

    Azazel Well-Known Member

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    More people over-extending, heading for an even bigger fall?
    Don't think it will be great for the economy.
    Probably time for another war soon.
     
  3. MTR

    MTR Well-Known Member Premium Member

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    In boom times you always get those that over extend, they lose their heads...

    As house prices continue to rise will it be cheaper to rent than buy?
     
  4. Azazel

    Azazel Well-Known Member

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    In some places. Some places it already is pretty close.
    But interest rates go up too, will be some fun times ahead when that happens. Things will get a lot worse before they get better.
     
  5. MTR

    MTR Well-Known Member Premium Member

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    Timing is everything, that little chestnut, buy at peak and you will be stuffed and wearing it for years, paying off debt and waiting for the next boom cycle
     
  6. Azazel

    Azazel Well-Known Member

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    So many Sydney people talking about property and wanting to buy. FOMO in full effect. Home buyers, not investors as well. I don't get it.
     
  7. Steven Ryan

    Steven Ryan Mortgage Broker Business Plus Member

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    Another cut = minimal impact on property IMO. Just a little more steam for all markets.
     
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  8. Shawn

    Shawn Well-Known Member

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    Everybody wanting to get in before they miss out.
    They don't want to be the last man standing, the family that never bought a house when prices were in the $1-mil bracket.

    2015 was a great year to be a Real Estate Agent, I regret not having tried.
     
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  9. MTR

    MTR Well-Known Member Premium Member

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    Try now, but be selective, lower end/bread and butter areas???? seek opportunities, markets that are moving
     
  10. zed_kid

    zed_kid Well-Known Member

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    IO right? $80k a year every year for 30 years, and you don’t own the property at the end. Sounds like a great deal, sign me up.
     
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  11. Azazel

    Azazel Well-Known Member

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    But it will be worth $4,000,000 in 2 years, surely. Sydney prices only ever go up!
     
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  12. Shawn

    Shawn Well-Known Member

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    I definitely could try ; but I don't have the "balls" to quit my well-paying desk job to take more risk.

    I need some good reading material on how to take the plunge. Any ideas?
     
  13. zed_kid

    zed_kid Well-Known Member

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    Ah of course, and because it’s a PPOR there is no CGT. Brilliant! I’m in.
     
  14. Azazel

    Azazel Well-Known Member

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    I just left Sydney to move back to Brisbane, got a job paying $7k less per year. But can now easily afford a house within 10kms of the CBD. No chance without being completely over extended in Sydney. And I prefer Brisbane anyway :)
    You don't have to quit to get something going in the pipeline.
     
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  15. MTR

    MTR Well-Known Member Premium Member

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    why quite your job? you only do this when you have created income streams.

    Keep reading posts on all States, IMO I would look at some of the land and house packages in Melb read posts by @Cactus and @sash. If you can buy with the correct yield and the land is still rising then perhaps there are opportunities here. There are other strategies keep researching PC.
     
  16. 2FAST4U

    2FAST4U Well-Known Member

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    I left Sydney at the beginning of 2014. At the time I was looking to buy a house with my partner in Minto for 500k (Minto is about 50km south west of Sydney for anyone not from Sydney). We didn't have the deposit and we would've really struggled to make the repayments so we decided against it. None of us work in specialist occupations that are exclusive to Sydney so we took the gamble and moved to Adelaide in March 2014. Within months we were both working full-time with similar pay to what we were getting in Sydney. I now have 2 houses. If I stayed in Sydney I'd be renting for life.
     
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  17. Azazel

    Azazel Well-Known Member

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    Good stuff.
    We're you from Adelaide or just chose it as a nice place to live?
    I had already lived in Brisbane, so it wasn't as difficult.
     
  18. Magoo

    Magoo Well-Known Member

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    You need to able to handle rejection well above anything else.
    Excellent negotiations skills, high energy, get along with all types, from stingy misers to the eccentric...& not be easily offended.
    I wouldn't bother picking up a book unless you have these traits....
    Lee Woodward's material is excellent.
     
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  19. Azazel

    Azazel Well-Known Member

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    Absolutely. As with anything you aren't experienced in, you don't start at the top, there's a learning curve.
    I find it a lot easier having an offer rejected for a house I really want than receiving a rejection letter from a job I really want though.
     
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  20. vbplease

    vbplease Well-Known Member

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    Another interest rate cut will make almost no change to serviceability but will no doubt stimulate the syd/melb booms just through sentiment..

    It will make affordability worse for fho's in the long run.

    Like the US I think we should raise the rate.. Low interest rates have only been a sedative rather than a stimulant so far. That's why retailers like DJ's are having unusual 40% off sales this time of year o_O
    Why Rising Interest Rates Could Be Good For America's Small Business Owners  
    JP Morgan argues for interest rate rise to boost US economy