Don't Buy Property in 2020

Hi Bill, it depends. Everyone's in different situation. Each to their own.
I am proceeding with my plan.
Settlement early May.
I will share my experience in a separate post over the next or two.

 

Wow nice now landlords have to foot the bill and waive rent just read on AFR. Is the State Govt waiving my land taxes an banks waiving my interest, or just deferring it and make me pay back when my tenant does a runner in the end?

 

So, based on recent events, should we buy property in 2020? Or wait till 2021?

 

Depends on what, where and for how much it is being bought for. I say, keep an eye out for opportunities but deffo not be in a hurry to buy.

 

Buying property when it is cheap is silly. Wait till 2021.

 

Yeah I am talking about over the next few years. This economic crisis has only begun and the stimulus has also only just begun, banks are under pressure now as they are bracing for a wave of bankruptcies over the coming months. The government & RBA will have to step in further down the line to kick start consumer confidence once again to get people spending. Once the banks start to feel like the worst is over they will ease credit and a new wave of asset inflation will begin.

My thinking could be completely wrong and it could all go belly up but I am fairly confident that we will see a huge boom once again (we live in a debt based monetary system, only way it works is if we keep creating more debt), however in the meantime there will be pain for some who are unlucky/unprepared, that's unfortunately also part of how the system works.

 

So Frydenberg is expected to announce a new stimulus package this week, $50k to new home builders... this is just the beggining guys, prices will skyrocket once again.
This is our monetary system and you can't fight it, RE is a hedge for inflation. DYOR.

The government will this week unveil new homebuyer grants – not just for first-timers

 

Boom! Exactly. Like the old Wall Street saying, "Don't fight the Fed".

 

why only 50K? i thought 5million is more appropriate

 

Croseks I got worried with the post thread thought this was a negative post do NOT buy in to property. There will be a book for sure in further, when is anybody’s guess

 

I'm all cashed up ready to buy around late this year/early next year.

I reckon the job keeper expiration + end of mortgage deferments will see some panic sellers in the market. Looking forward to these potential buying opportunities!

 

I bet he and his team are working hard to avoid a Pink Batts 2.0 headline. If they did provide a grant for renovations they would need some good rules to avoid the rorting.
PM eyes house builds for construction boom

 

Any idea if this grant can/will apply to kit homes?

 

I generally agree but I’m not 100 % on this. We’re at the lower bound on interest rates. A 50 basis cut is probably like a 6 % rise in income there’s only one left. We’ve gotten here from 2012 by cutting 600 basis points out of the system. There’s not much left.

 

The most important factor in housing demand is credit availability. This alone will decide what happens. A few extra 10s of k in grants for new builds won’t do much.

RE is only an inlation hedge if you own the land or your mortgage rate is fixed, which isn’t a lot of middle class.

 

Great post.

Why is real estate only an inflation hedge if you have a fixed mortgage?

Also, I would add that well located Sydney apartments are also an inflation hedge. Apartments contact a land component, and they are tangible assets. Any asset that is tangible and scarce is an inflation hedge.

 

Is real estate going to prove a good hedge against inflation this time?

Property has been rising far faster than incomes for much of the last twenty years. Over the very long term studies such as Robert Shiller's work or the Herengracht Index suggest that these should move in lockstep, and that makes sense if you've got a clue about exponentials.

Don't believe me? Work out the median multiple of Sydney based on 3% income growth and 10% property price rises over a century. (Hint: it would be about a thousand times more expensive than now.)

So an inflationary spike might allow incomes to catch up with property, especially if interest rates rose in an attempt to control it. The net result might be a flat nominal price, but its real value might have reduced significantly.

 

Depends how you define inflation. If inflation is a debasement of the currency, it still works beautifully. Think of the crash of the AUD between 2012-2017 where the AUD lost about 40% of its value, moving from $1.10 to $0.70. In the same time Sydney and Melbourne property moved up by 40%.

CPI doesn't measure inflation.

 

Probably you Bill if you put your cash in the bank. Thanks maaate, I dont pay for petrol, I dont use cash, some other sucker funds it, while GC allow me to use a credit or debit card and it is debited to a line of credit BTW been lots of CG in the last 2 months I cant use that much fuel or eat that much food. If I couldnt afford debit I wouldnt be eating at subway, and i didnt when building asett base. I wouldnt be wasting cash there .

 

It just ocurred to me Bill those Salad rolls I made, instead of buying for 15c Meant savings greater than any-one could imagine. I bought 5 Pivot shares for 50c each (2 weeks worth of salad rolls), a few years later Doug Shears wrote wanting to buy them for $ 50 tempted to sell but strongly advised not to they went to $180.00. Later there was a share splitt of 10 or 11 for one and the dividends grew to be about 150 x p/a, my original investment. My 15 cents salad roll could buy about $70 worth every year 30 years later when I sold. Your 15c might have feed you once in 1975 but wouldnt feed you once 30 years later, it would be usless.