Another property market sell off call

"And that is the point. We know that the boom in property prices has little to do with anything other than historically low interest rates, which have made paying an extra million at auction as insignificant as an impulse purchase of a bar of chocolate at the supermarket checkout."

Worth a read with many good points but i think it's still a bit premature to call a property market sell off based on what's happening on the ground and based on all the new government initiatives coming down the track.

Hold on tight: the great property sell-off has begun

 

I havent seen a single bit of data that indicates "property is being sold off" The RBA also said as much the other day...They have a concern that oversupply may lead to a price collapse and specified some areas such as Brisbane.

Take note the website reference is a financial investor adviser talking property down to encourage other types of diversified financial investments they manage. Some good points but some generalised views.

Dont always believe what chicken little is shouting... all of their (the Banks) smartest and most successful property investors have sold up or are getting out, and they cannot lend them a cent – they won’t take it.....Really ? Hands up investors who are all telling their brokers and banks they want out and dont want more ?....I bet at least one reply here says they dont agree.....Love some feedback ...Who is OUT and Who is IN ??

 

Interesting.
Mentioned before we are now starting to get lots of media reports and they are starting to be a little negative, this is how market sentiment starts to change, fear sets in and people do not buy, we go from low stock to over supply...... boom/bust cycles.

Regardless what is written on paper you have watch for the signs, property booms do not last forever, finance is tightening and interest rates have already started rising. US is raising interest rates this does impact on Australia.

Boom cycles in Syd and Melb been running hot since 2012/13 that is now 5th year of boom cycle, that's significant period for any boom cycle, affordability also needs to be considered.

I am not preaching doom and gloom, but I also don't live in LA LA Land, that is why I have already taken my profits, perhaps a tad early but I am cashed up and ready to pounce when I see another opportunity in Australia.

MTR

 

Other than having just committed to another development, Im on the sidelines.
Not actively selling, but not actively purchasing.

This has more to do with 1project due for completion imminently, and the commencement of the one mentioned above.
Once the 1st project is sold off, I will sit on the cash for a while holding low(er) debt levels.
I will keep actively looking for the next buy, and will jump if it sticks its head up. However, Im also very happy to sit on the sidelines and watch for a bit. There's not much Im seeing which makes sense atm.

So far, I havent hit my finance wall - so will keep going while the going is good.

Blacky

 

I don’t know. I’m not seeing it in the auction results. Clearance rates are high, stock on market also high, median price going up.

 

I have followed Roger Montgomery's youtube channel for some time and he is very knowledgeable (mostly relating to shares). He runs the Mongomery investment fund and is regularly on SKY money news and on the radio. I certainly wouldn't dismiss him as just some "financial advisor". I think sentiment is definitely changing. I will be cashing out soon.

 

Seling revenue property isnt same as disposing of CGT assets.

 

Thanks for sharing the article. The first half about quantitative easing, government bond yield, corporate bond, etc. gives pretty knowledgeable information. However, the second half has not enough fact to support about "head-in-the-sand wishful thinking" opinion.

 

I am not buying or selling right now. I am just finishing up a major reno and starting my first build. When these projects are completed and all IPs rented out, I will be hitting my mortgage broker up for a borrowing capacity assessment to see how much I can borrow for my next project. I am definitely IN, not OUT.

 

Interesting article. I like the "greater fool principle", definitely seeing a lot of this in peoples' reason for buying, becoming less concerned with yield and more about "prices are just going up so much I need to get in".

Though I do agree that interest rates are pivotal in the market reaching the height it has, it think saying " the boom in property prices has little to do with anything other than historically low interest rates" completely misjudges the fact that the eastern states have had record jobs and population growth while the rest of Australia has struggled, and that scenario is not normal. Rates lower during economic hardship and rise during prosperity, and putting things in a national context explains why this irregularity was able to happen.

Government policy has had to account for all of Australia and given the huge GDP contribution from mining activity, our "damage control" economic policy only exists because Australia overall has been facing its challenges. The policy that Melbourne and Sydney have been operating under is designed for weaker economies than they have. They are reaching the ceiling of what can be achieved under their current policy, while other states are now lifting again. The disparity will close, policy will be adjusted, and that will impact jobs, migration, and of course, interest rates.

 

I've never bought something in my life for less than 5% yields from memory. I'm glad everyone's happy to pay 2% now. Rookies.