Apparently Everyone Here Is To Blame

I just don't get it. In literally 50% or more of every cycle the market slows to a crawl and properties sit on the market for months, unwanted. Where are these people then? Who takes the risks when everyone else is screaming doom - the investors. Why should this risk not be rewarded?

 

Yep, current investor lending shows it has to have an impact.

 

Not really!

For instance, I've refinanced a heap of loans. That's going to show up as investor lending, right? But the funds are sitting in offsets or undrawn. There's no way I'm going to go & buy in a heated market, but having funds available for when it's time to buy is invaluable.

 

It seems to me that "investors" are pumping extra (and easy to get) cash into a supply constrained market, ie existing mid-inner city homes, and then with a straight face say...nah...this won't push up prices.

When is the last time I saw anyone on here advising to buy out in Pakenham or Melton?

 

I wonder who's in the majority for pushing up prices in boom times ie aka Sydney now. Owner Occupiers or Investors?

 

You need to look closely at what types of properties are selling the most, and where.

I've been ranting on for ages (over at SS) how investors cannot be out there buying most of the Sydney (or any Cap City) properties because of the simple question of cashflows.

The reality is that most Mum and Dad investors need cashflow, because Mum and Dads are not wealthy. They are mostly battlers/middle class trying to do better for themselves, retire early and/or not on a pathetic pension..

A$600k+ IP with a 3% yield is going to max out most people after ONE IP. Or even 5% yield...unbless they have a lot of cash deposit - which most folks don't have.

Anyone buying above these figures is either a PPoR buyer on their 2nd or more PPoR, using built-up equity from PPoR no.1 or 2 as a part downpayment, with a smallish loan,

Or, they are a too much money/no brains investor.

How many investors out there are really like this?

Maybe I'm out of touch these days, and everyone earns six plus figures and can throw reams of folding at anything?

 

When was the last time anyone bought out there as a FHB?

Actually, I'm tipping they do all the time, but it never hits the news, because those FHB's are not whining - they go out and buy and get on with it.

But that is not newsworthy.

Any news report you see on the teev/magazine/newspaper etc will feature a FHB looking at inner-city locations...never scuzzville locations.

 

Bloody excellent!!

 

Not really for you, maybe others, but what was the number, it's grown up to near 60%?
Edit: "CoreLogic RP Data's head of research, Tim Lawless, said that 60 per cent of new loans in NSW were to investors"
http://www.smh.com.au/business/bank...akes-on-investor-lending-20150521-gh6imi.html

 

OK, just to reiterate, you will find that there is a lot of investor activity, just like me, that are refinancing - hence investor loans. Some will be refinancing to keep powder dry for a rainy day, some (many on here) will be refinancing to buy interstate. Add to that, during a boom you do see some of these, below.

Now, these are mostly newbies, have no idea of what they are doing, and will eventually become a statistic. They buy through fear of missing out, whether OO or for investment, and as soon as difficulty arrives, they sell up, swearing that property is a poor investment. Well, sure, it can be, just as it can be the perfect investment, but you've got to educate yourself & use a bit of common sense, which doesn't seem too common these days.

Remembering that MOST investors only ever have one IP. The real investors (wiser, educated, buyer of multiple IPs etc) DON'T COMPETE WITH FHBs during boom times. They might buy properties perfect for a FHB, but at the time they are buying the FHB's are often very scarce.

 

That sounds like a good idea.
I wonder if they differentiate between an investor who lives in NSW buying in SA or just an investor who lives in NSW buying in NSW. And/or an investor who lives outside NSW buying in NSW. Or if they include investors in NSW who aren't buying just yet.

 

Buyers drive the market, incentives distort it.

 

What drives the buyers?

 

Their chauffeurs of course.

 

I think prices are going up, but the driver is a shortage of supply. The government has made building new stock too expensive, by forcing infrastructure chargers onto developers (and thus onto buyers) rather than viewing them as a community expense (as it was historically), and by limiting opportunities for in-fill development.

As long as supply is inadequate for demand, prices are going to go up, whether buyers are home buyers, investors, or a mix of both. I would venture that if either was a candidate for inflating prices more, though, it would be home buyers. Investors generally drop out when the numbers no longer stack up, whereas emotive PPOR buyers will frequently pay "above the odds" to get the home that they've set their heart upon.

 

Finance?
Fear?
Greed?
Chauffeurs?

 

Hubby!

 

A family with 3 kids sees an oldish house on 700 sqm near schools as a great place to live. A developer sees townhouses. I would bet that the developer has deeper pockets, and for them "stacks up" is a bigger number than a level headed person bidding for a PPOR. Up to a point of course.

You really think that place in Glen Waverly was worth $5.5m to a family?

 

Development sites are a different story, but they're a tiny minority of all stock.

People buying PPORs will pay a premium to live in a certain school district, live near work, have that view over the garden they've always wanted, etc. etc., and will often pay prices that simply make no sense to an investor.

 

This ^^