Fundamentals that keep Oz property foundation strong..

Thoughts @ All???

• Firstly, two out of three Australians own their own home or are living in a home with the owner and one in three are in a rented place. Of the 66% who own their home, half of these homes are fully paid off with no loan whatsoever.

• Next, let’s look at the generational change occurring, where many Baby Boomers (aged 60 to 75 approximately) are assisting their children secure a first home and of course as the life cycle turns, many will also be leaving their often considerable assets to their kids.

• We are enjoying a robust economy, low levels of unemployment, record low interest rates and significant overseas immigration and investment. None of these are likely to change significantly into the future. After all, we are the lucky country.

• On top of this, our country has a unique population concentration with just under 70% of Australians living in one of only eight capital cities. This concentration, coupled with a chronic undersupply of housing, particularly in Sydney and Melbourne, keeps a rock-solid platform under home values.

• APRA can help ease regulations to stabilise the falling market if we start seeing rapid falls.

• RBA still has room to move with cash rate currently at 1.5%. Most of the economist are predicting next move upwards sometime mid to late next year but if tsunami was to hit our shores, we will see RBA dropping the rates.

 

Over the next 5-10 years its very likely that interest rates are going to go up and up and up.
Pretty sure house prices rarely go up to quick when interest rates are going in the same direction.
But its good to think that the government will bail us all out if the prices drop to much.

 

I don't think the banks care

 

1. note sure that is still the current data, we may actually reach a point where 50% of the people rent. In that world, government will have an incentive to 'help' renters

2. I am not sure how much you can get if you are from a family of 3. With baby boomers dying, I can see house prices in some areas dropping fast as too many supply coming online at the same time

3. We have an underemployment problem. If you want to see a really strong economy, see US

4. I'd question 'chronic undersupply of housing'. Rental vacancy is going up

5. Well, that would be a slap in the face. If their regulations were right, why do not need to change it. And given the comments from Royal Commissioner, I am not sure APRA chairman would be in a rush to change their rule. Probably sitting on the sideline and observe again

 

RBA can cut rates but the banks are not likely to pass much of it on. It would also signal weakness to the masses.

 

This will depend on the reason rates are rising. If it's due to inflation associated with a booming economy then house prices can go up in tandem.

But if it's due to other reasons like increasing rates on overseas funding or the economy is not doing well , house prices would be expected to drop.

 

You still need the income for people to pay the mortgages which are so far in front of income atm

 

..…. Just re reading the heading of this thread.... OK the long term fundamentals for Oz property may be strong???..... but does not mean the time to buy is NOW. ???
Me thinks....NO

In particular for the buy and hold strategy.... are the fundamentals to buy now right???Does it stack up …….

Reality check......

Interest rates are rising

Rental yields are averaging around 3/4%, can you even keep up with inflation after all costs??

Property markets across Australia - either falling and going sideways

Market sentiment is negative in the main, this impacts on markets, means buyers sit on their hands.

APRA - sourcing loan criteria is much harder
Are investors out??? in the main FHB/OO.... me thinks YES, can FHB?OO soak up the volume? Doubt it??

 

Buy NRAS haha

 

Their are mining areas with low vacancy.
High yield .
Have a friend who just purchased for $500k less than previously sold 4 years ago and achieving 10+% yield.

Blanket can't buy property comments now are silly.

Thousands of properties transacted monthly.

Some members on PC are smarter than thousands thousands.
Opportunity is everything

 

You call it blanket statements... I call it facts... what is actually happening. If property investors can make it work today great...…

.... show me the good deals ?? I am all ears

Average buy and hold investor is going to find it tough, APRA for one.

This is just the beginning of a down turn market....what you actually think is a bargain today could be a different story tomorrow... paid too much

Mining town??? which mining town?
I also know investor who purchased well below market in a mining town in WA recently, Karratha and prices still continue to fall. Buying $500K down I am assuming Pilbara?? So what?? Does not mean its a great investment. Mining boom is over.
Certainly did not turn out to be a great investment for this particular investor.

Mining towns are always going to be high risk, all to their own, I would not touch mining towns

MTR

 

Your facts, I call opinions.

Do you think there will only ever be one mining boom?

Does not a buy and hold strategy in terms of success, depend on investment time-frame?

 

I don't know when the next mining boom will happen? but I would not buy in a market that has gone pear shaped and no immediate signs of recovery. Sometimes its best to do nothing and just wait and watch just my opinion

So are you saying if you buy in a falling market it does not matter because if you hold for 10 years or longer it will eventually rise and will make money?
I think market conditions far more important than buying for the sake of buying. There is no rush if markets are flat or falling.

 

So what can you contribute for the next 4+ years to the forum?

If you are convinced the property market is done for 2/3/4+ years why bother?

Aren't you just wasting time for the next 4 years or more?

I

 

The problem with these public forums is that everyone knows they’re talking to an audience of lurkers so the bulls won’t ever openly admit it’s a very bad time to buy in melb/syd unless you are an experienced and successful real estate investor that knows what you’re doing. And the bears want to keep pointing to how bad the market is going to get.

That’s why you gotta do your own research. And trust nobody.

 

I dont think anything has changed property is about cycles.

Seen plenty of boom bust cycles and sharing my experiences since 2008, the good, the bad and the ugly

If investors dont like my posts, or see any value ignore.

We all have a choice its a forum

MTR

 

Im saying that dependent on timeframe and investment hypotheses, a year or two falling values may not matter as its really hard to pick bottoms (or tops)

If somewhere like Karratha that has a vacancy rate of 1.7% with yields of 7-13%, and all the big losses (60%) are potentially in the rear view mirror then yeah I think its not the worst decision.

I do agree though, that doing nothing is a very credible option.

 

I strongly believe there is always value to be found somewhere in Australia at any time . I have been investing for 18 years and I can never recall a time where I wasn't able to find a deal.

 

^^^ Leo you summed it up well in another post

from here Should we worry about a crash of the housing market? Let's all take a deep breath

 

My comment inline in red

• Firstly, two out of three Australians own their own home or are living in a home with the owner and one in three are in a rented place. Of the 66% who own their home, half of these homes are fully paid off with no loan whatsoever.
  • How is that going to change the financial situation for a desperate investor who can't meet the repayment? Remember a small number of desperate forced sellers are enough to create panic and feed into the mass fear

• Next, let’s look at the generational change occurring, where many Baby Boomers (aged 60 to 75 approximately) are assisting their children secure a first home and of course as the life cycle turns, many will also be leaving their often considerable assets to their kids.
  • Don't underestimate the down sizing risk in terms of sellings ageing population bring to to big cities.

• We are enjoying a robust economy, low levels of unemployment, record low interest rates and significant overseas immigration and investment. None of these are likely to change significantly into the future. After all, we are the lucky country.
  • In many of the recent cases (in many cities in US/Ireland) rising unemployment was not the reason for price falls rather it was the consequence of it. During boom time, Housing sectors and its periphery service industries employs very many people.
    The primary reason for falls had been reduced buying power aka credit tightening compounded by desperation of over leveraged players.

• On top of this, our country has a unique population concentration with just under 70% of Australians living in one of only eight capital cities. This concentration, coupled with a chronic undersupply of housing, particularly in Sydney and Melbourne, keeps a rock-solid platform under home values.
  • Australia is already tightening its immigrant intake just like every other developed countries.
  • Thanks to ongoing boom Sydney/melbourne has access supply issue rather then shortage in next two/three years.

• APRA can help ease regulations to stabilise the falling market if we start seeing rapid falls.
  • Highly unlikely due to ongoing global macro headwinds and our banks massive exposure to housing sector, its already one of the highest in the world. RBA is trying to proactively avoid systemic risk before it become unavoidable.

• RBA still has room to move with cash rate currently at 1.5%. Most of the economist are predicting next move upwards sometime mid to late next year but if tsunami was to hit our shores, we will see RBA dropping the rates.
  • Highly unlikely, with rising international bond yield, our banks over exposure to housing sector and household debts at all time high, RBA is not left with many policy options.