Covid 19 price correction: Place your bets!

How can property be speculative if it only goes up? History has shown it only goes up, you used to be able to buy a house for a couple of pounds, now look at it, almost a million for a average house, anybody that can't see that is stoopid...the math don't lie...2 is greater than 1!? You watch, in 20 yrs time that million will be 8million, if not more!

 

it wasnt the if you could/couldnt afford the property that interest me, it was that it sold near 60% higher than your estimate of fair value of 950k. im not in anyway familiar with the melbourne markets, so when i read your post on "property chat" i assumed you had a solid grasp on the area in question.

i was quite shocked to see it sell so much higher especially in this uncertain time. being that it went so much higher than guide im guessing there was multiple bidders that also valued it much higher than your estimate so i was curious your thoughts on it. no disrespect meant about your ability to afford the property, just genuinely curious about it. maybe i confused your comment of "id offer them 950k" as being your estimate of what it was worth, maybe you simply meant thats what your able to offer.

is 1.45million a over perform result for that particular property/area ?

 

That's a fair call. The ratio to consider is median house price to median wages. The public will accept 7-8, but beyond that? After this crisis will the public want to hold more reserves either as cash, or being ahead on their mortgage? Meaning lower property prices.

 

Actually you might be on to something. The risk (higher likelihood) of tenant not paying rent will have to be priced by;

• Banks- By reducing the rent income they take into consideration, thus lowering the LVRs and the mortgages and asking for mortgage insurance at lower LVRs.

• Buyers - Additional buffer for unpaid rent. Landlords would want at least 18-24 month rent in the account. Since this cannot be passed to the tenant via bond, it will be passed to the seller via reduced sale price.

Would be interesting to know others views.

Stay safe