Are we heading into a Recession?

Hi folks,

Would like inputs of big bulls. Do you foresee a recession a year or two down the line?

Is Investment property you preferred financial strategy in coming year ahead or liquid assets?

I am at loggerhead with my father who suggests not investing into property at present as I am on my way constructing my first POR.

Thanks in advance

 

What were each of your opinions about property a year, 2 years, 3 years and 4 years ago?

for those who already have property, going liquid is a costly exercise.

and if you are looking for bulls to answer, guess what they are going to say?

 

Who knows? Just make sure you stress test your strategy ie returns, loan repayments and not if but when interest rates start rising…. Can u hold the asset

One nice little strategy is to buy something where u can add value, deve site, reno

 

2 years ago I did not have a mindset nor foresight into property investing. I am a newbie.

If I knew what they are going to say I wouldn't have asked the question !

 

Thank you for your input. I agree with the stress test strategy.

 

If it wasn't for C-19, we were headed for a recession (I have mentioned it before) - government needed an excuse to go against policy, run up massive debt, pump it into benefits & support consumer confidence at the risk of putting pressure on CPI & disenfranchising voters.

 

Since interest rates are the lowest in a long time, once they start rising some people may not be able to afford repayments, does this mean that housing prices may drop? Or reckon the government will continue to pump it up?

 

Too many bad news locally and globally,

Higher inflation 3.8%, slower growth, supply chain issues, issue with china, higher debt, shortage of coal, higher electricity cost, higher fertiliser cost, higher natural gas price,

 

If you can identify value and afford to invest without being financially stretched to the max - that's all that matters. Everything else is noise.

 

Whether it's on the way up or down.

 

Good question. I am seeking the answer

That's the real concern. I think in 2 years time when interest rates pick up, property values are bound to be affected. My question is how significantly? Invest now or wait?

 

Meaning you'll wait to invest after property value falls? For how long?

 

You should wait until it hits the cyclical bottom. Which in 2018, took about a year. After that…

 

Sounds like your father has a better view of your financial position than you do....

A recession today isn't likely to be like the recessions/depressions of the past, more just a cycle !

So if you have a relatively secure decent paying job it doesn't much matter.

Your dad sounds like he is being cautious, you are (on your way to) constructing a PPOR and there's going to be many costs not covered in your fixed price build (from gardening to curtains and a new lounge suite) and possible build overruns, so maybe he is implying that you wait until you have finished the build before jumping into an IP purchase ?

It's your life and your choice, take on board all comments and make your own choice

 

Maybe listen to your Father ,as the heart of the media debate is whether the latest constant media headlines about Inflation is persistent 0r transitory as most are linked to pandemic related disruptions and other outliners..

 

Past performance is not indicative of future performance. Take is a calculated risk. Focus on building your PPOR. Park your money in an offset account and earn tax-free return. I don't think is it is good time to buy investment proper especially for a new investors. The market is overvalued and even market don't go down 20-30% it can still remain sideways for 4-5 years.

As I mentioned in my last post, currently we have too many bad news locally and globally. Give market a time to factor those bad news.

 

We already are in a recession that is being propped up by hundreds of billions in more gov debt.
The unemployement numbers are so low because a lot of people are no longer even looking for work.
Currently there is a universal income $600wk + benefits. Who's dumb enough to work?

 

As per SQM research average asking house price in Sydney is $ 1,700,000

A couple earning $ 100,000 each in Sydney. Their take-home income is $ 150,000. It is 11 times their price to income ratio.

Either investment or PPOR it is not fitting into any of my equation at current valuation.

 

Makes sense. Thank you for your inputs!

 

I see this argument constantly, but doesn't make much sense. If a couple has a take home income of $150k, but if they are thrifty and only spend $60k-70k a year - They have upto $80k to spend on mortgage repayments. $80k is enough to service a $2m loan at 4% interest. So I don't quite understand, why a $1.7m loan should be refused for this couple if they have a good history of savings and some insurance in place.