Calling all prophets - Where will the market be in...?

For the hypothetical question, say 7%.

 

Start house hunting. I'm cashed up and ready to buy.

 

I will hold the current and buy 2 more maybe?

 

I'd be lowballing older homes on subdividable blocks in blue chip suburbs. I'd be wanting another 20% on that in those areas . I'd be hanging on to what I have as long as it was still renting.

 

Cool. You guys should keep the markets nice and bouyant when the carnage occurs. Don't forget, it's not a real interest rate rise. And not everyone is adversely affected by the APRA stuff either. Melbourne was supposed to be inundated with apartments this year. Still hasn't happened. Even when it does, fhbs will do their own thing. There's a lot of people waiting on the carnage. ..

 

That's the rub isn't it? I know of a lot of cashed up investors ready to buy when the market crashes. And what happens to a market when there are a lot of buyers?

 

Ugh! I should have been called about this! This is clearly a prediction only manageable by the most senior of prophets - yours truly.

The prophecy: There will be a market consisting of some combination of buyers and sellers. It will be as is written.

 

Correction: I am the commander-in-chief of all wise prophecy
I am also the biggest Don of property in these forums.
..also the tsar of all things hyping brisbane.
...what the hell...it's Friday.

 

If there was to be a big correction, then I'd expect:

• The economy would be in a bad way. This would mean that there are fewer cashed-up FHBs or investors, or they'd be less willing to step in.
• The banks would suddenly get very cautious about lending. The chances are that deposits would go up, particularly if there's a credit crunch.
• Vendors will refuse to reduce an asking price that was probably optimistic at the time a property went on the market. They'll probably end up shifting it at a much lower price a year or two down the line.
• Plus the number of properties actually selling will probably fall.
• A significant fall will probably take two or three years to play out, possibly longer. I've heard that a bubble (if the market is in one) takes as long to deflate as it did to inflate.
• The building trade will pretty much shut down. I wouldn't be surprised if there are incomplete apartment blocks in the Melbourne CBD in a few years time.
• All those new build, two bedroom apartments will collapse in value.

The above are things that I saw in the UK during the GFC. The chances are they'll pan out similarly if there is a downturn here.

 

Excellent info.
If anyone would like to spend 5 minutes and read this article, can give you an idea what happened in Ireland and what is occurring. It's not saying we are headed for one, but definitely useful for property investors.

http://www.businessinsider.com.au/b...-the-lessons-from-the-irish-experience-2015-9

APRA preparing to bail out the banks in worst case scenario.

http://www.businessinsider.com.au/a...ion-emergency-liquidity-line-to-banks-2015-10

 

That liquidity facility... We should make our big four into small to medium forty and let those private businesses rise and fall without intervention.

The moment banks became too big to fail and received Government guarantee they stopped caring about risk.

Where is the bakery liquidity fund? The shoe shop liquidity fund?

Governments backing the private risk of private businesses is pure idiocy.

 

That's interesting Barny. There are some interesting findings in that article that directly contradict many posts on this forum:

Residential mortgages share of total loans is less than 65% yet there are claims on this forum that residential investor lending is soaking up all the loan money in Australia and stopping businesses from getting loans.
And finally, the conclusion and most important of all:

Those claiming Australia will experience the same thing as Ireland really need to find something new to say.

 

An Irish media journalist that formerly worked for News.com now working for Business Insider.
Hmmn I don't think that will cut it.

The Irish experience was caused by reckless lending practices along with reckless media practices.

No national newspaper was without a glossy property supplement and weekend papers were often equally filled with property ads, reviews of new developments, stories of successful purchases, makeovers, and a gamut of columnists relating their property experiences. TV and radio schedules were filled with further property porn - house-hunting programs and house makeover programs were regular features on every channel. Even in July 2007, Irish Independent journalist/comedian Brendan O'Connor urged people to buy property, even as the bubble was clearly bursting.[39] In April 2011, journalist Vincent Browne admitted that the Irish media had played an important role in adding to the frenzy of the Irish property bubble.[40]

 

Nothing wrong with reading different articles and taking an interest in others views relating to things that can directly affect us as property investers. I'm not saying that property/economy will crash, no one knows it will crash until after a crash has happened. But it is good to be educated, on both sides of the argument, so we can make informed decisions with further and future investing.

 

Yes good to make informed decisions.
Informed decisions that is.

 

Did/Does Australia have reckless lending practices?

 

You have to make up your own mind about that..

 

I think it did, when someone can borrow up to 95% of a purchase.
I believe it's slightly better now since some changes have been made.

It would be great to have a real discussion with people's thoughts on the topic the op posted. I've read some of the other doom and gloom posts, and it seems the same trend happening each time, people start insulting or over expressing their views onto others.

 

Well, my opinion is that there's no chance prices rising in the next 5 years minimum.
High unemployment and next to no wage growth will be a big part of that.
Further to that, when prices do rise, they will be coming off a much lower base.

 

Do you think every area, in every state, will have no growth?
I understand if unemployment does go up, then it's a flow on affect everywhere and to everyone.