Don't Buy Property in 2019

there's always a spike post election

 

Yes I've noticed that and a few suburbs as well generally the four bedroom homes this quite a big jump and I think that's because you start getting pools and whole lot of other things. Xtra bathrooms etc bigger deck patio not just one extra bedroom

 

I've been talking to a range of different people when I've been out and about and this seems to be a lot of optimism their things are going to get better soon and we're getting close to the time to buy having said that these people that I'm talking to aren't necessarily seasoned property investors they are people though who have properties in Sydney or at least one property may just be a ppor. When I asked them why they think things will go up again soon all that we are at the bottom they actually don't have any particular analysis and they haven't thought about the likely impending recession it's just something that they feel and have heard. So I think there's quite a bit of optimism out there or at least wishful thinking that this will be the end of the downturn now.however I feel that's probably just wishful thinking because people are feeling a bit punished already and really don't want to think about another 10% drop which I think we have at least. I just thought id share that anecdotal information that I'm not getting the sense that people are panicking having said that I'm not talking to people far out west.

TLDR: I'm not getting a sense of doom and gloom from the 'person on the street'

 

I'm with you on the 10 to 15% further drop based on everything I read and I read a lot on property and just try to get a general feel.plus Looking back on previous cycles

 

I think it depends on the context Shane a few years ago any easing of lending restrictions would have been like pouring more petrol on a fire people were just trying to borrow as much as they possibly could to buy whatever they could in Sydney. Now in this context with the bottom falling out of the market those kinds of lending eases won't make too much difference.

 

I guess that's the one part of the equation that's hard to Quantify and put a number to though isn't it? Sentiment.

If a large enough group of people/the market are confident and all feel this way. Then the ship starts to turn.

 

As we know, China imports Iron Ore from Australia. If China goes belly up, is Iron Ore consumption a good indicator? Is there a way to keep track of how much China is buying from Australia? Or there is another way to keep track of these things?

I'm interested in understanding the monetary flow between Australia and China to gauge the economies and make my investment decision.

 

Interest rates certainly play a part , and its not always obvious.
The ability to drop interest rates by 300-400 pts during significant events over the last 40 years has kept our economy out of trouble .
Those days are long gone should another major event happens.
Would the big increases in property after the 87 stock market still have happened if interest rates remaimed virtually unchanged, rather than droping by about 300-400 pts.????.

 

ABS publishes data each month, quarter and annual for iron ore exports by country and by tonnage. Well paid economists try to put meaning to commodity risks and dont get it right. Its important to understand what the markets have factored into pricing v's actual. Thats why when the ABS publishes data it can create market movements as peopel react to their early expectations and impact on the economy

Monetary flow is misleading. Thats the balance of trade. Our imports may exceed the fall in exports. Currency values impact balance of trade. However since AUD isnt pegged to the CHY but to the USD it adds a issue of complexity

 

And in this economic era we cant do a Rudd and throw billions of dollars of spending stimulus at it. I heard albo say that on the weekend and thought he must have Rudd belching in his ear.

I reckon a stock market correction could yet save the economy and property prices could bounce.

 

Question is though is China buying iron ore a good barometer for the health of their economy, especially in the short term? They may just be building large stockpiles, or overproducing to maintain employment.

It seems like an unusual metric to use when trying to decide on buying residential property in Australia?

 

could you explain wha t you mean by your last sentence ? how would stock market correction help property ? genuinly curious

 

Hi Paul, maybe a bit of clarification required here, AUD has been floating since 1983 (good era for music) and is not ‘pegged’ but moves with demand/supply.
As an aside - when checking that date above, for useless trivia I found Tuvalu & Kiribati actually peg their currency to the AUD!
You do learn something new every day.

 

If you think of shares and property as alternatives to each other. A share market fall may push people into property instead.

 

How uni student signed property contract on $25-an-hour wage

She bought at the peak. And an OTP. Goodbye deposit. No CGs for at least a decade. And good luck with what condition it will be in by then.

I find this ironic that this is meant to be an article about property success but it's actually an example of probably the worst type of investment at the worst time.

 

There is a reason why this person is working in a finance company to ensure the same advice is passed on for someone to relay the timebomb!

 

Did you actually read the news? She was able to finance the purchase successfully and has been receiving rent ever since settlement. She kept her deposit and it's actually settled lol.

 

Yeah she purchased successfully. And so far look what she's got for her success.

She's lost about 25k in stamp duty and purchase costs.
She's lost about 50k in equity due to price drops.
On a conservative estimate she's losing over 5k per year from strata fees, maintenance and interest before she actually pays off any principal.

All this for a dime a dozen apartment in a sector with massive oversupply and serious questions over build qualities. As far as I can see she would've been comfortably better off giving up her deposit.

 

This is exactly what happened in 2000. The stock market crash lead to a flight to safety in the real estate market, leading to a 7 year bull market. Residential real estate is considered a low risk place to park money.

 

Yes. But the barriers to entry are getting very high compared to cycles past. Your average Joe will struggle to come up with a 10% deposit in major capitals. Even Tassie now median unit prices are approaching $400k, not so long ago it was half that. Yes, for the wealthy in other words, but my suspicion is getting harder for middle-class investment.