Global Financial Crisis Looming, Or speculation?

What if your job took you to a different part of the country?

 

[QUOTE="Ethan_89, post: 224994, member: 3363" If the crisis hits I would change my loan to interest only so that the rent would cover any increases in interest rates from the bank.[/QUOTE]
You should change it to IO now - in a GFC lenders may not be so accomodating. Offset accounts are a wonderful thing.

 

T

thats why the response is what it is - we haven't had a recession since 1991 in Australia. It'll come, probably when people expect it least, and those who are over leveraged will have a different response next time around. The level of household debt in Australia does concern me, but tough to know when the music will stop..

 

Agreed, I'am very interested to see what the elections bring also with Negative gearing.....if that ever happens, only time will tell.

 

You should change it to IO now - in a GFC lenders may not be so accomodating. Offset accounts are a wonderful thing.[/QUOTE]

Valid point Jess, I think I may need to consider it sooner than later before the economy is squeezed any more.

 

I'll stay thanks....I'm on the forum to learn and gain understanding, regardless of my opinions or whose feather's I might ruffle. If Someone wants to help me with solid tips and information I'll always be thankful. If I thought I knew it all I simplify wouldn't be on the forum......

 

As the future of the Australian economy, I really hope you study your economics right!

 

And grammar. And spellings.

 

I don't think there will be another financial crisis but the world is definitely in a slump atm. Look at Europe. Even closer to home in Australia it's not all smooth sailing. Take GDP for example. YOY is 3.1%, which sounds great, but real net national disposable income remained weak, expanding just 0.2 per cent for the quarter, to be down 1.3 per cent YOY. On a per-capita basis, it shrunk for the eighth quarter in succession. Wages and inflation are both stagnant as well with wages recording the slowest growth in 20 years. Underemployment is another problem and the list goes on.

We can't control the economy though. As you said the best thing we can do as individuals is hold our jobs, keep saving, and just be cautious about getting into too much debt (or more importantly the leverage). Personally I just bought another house a couple of weeks ago so I'm up to my eyeballs in debt and don't plan on making anymore purchases until I'm back down to 80% LVR.

 

For property investors IMO the most relevant statistic is Net Migration. GDP, employment, consumer confidence, negative gearing etc are all less relevant. If Australia's population is growing significantly, and more specifically the state your invested in, then you will see continued demand and reduced supply. That will continue to push housing prices north. Economomics 101, Supply V Demand.

 

Do nothing; unless you are extremely neg cashflowed.

You always need to be able to sell quickly - and selling quickly means not getting the price you expect...this can lead to being still in debt after the assets have been sold off to avoid the first disaster.

 

Property? I must have been asleep all my life. When was the last property crash in Australia? And the one before that?

 

How much cash have you got as buffer? I think $150,000 is a good start.

 

Disagree. I have done it three times. It's not that hard... peaks that is. Not sure about bottom of the market. I have certainly bought near the bottom. Top is easy, it turns fast. Bottom is difficult, it drags on and it's hard to pick a particular point in time and say 'that was the bottom of the market'.

 

Did you pick Sydney's peak?

 

I don't follow Sydney. I only follow the markets where I have properties in case I want to sell at a peak. It is a reasonable amount of effort to do that accurately, hence I don't try to do this with markets where I have no interest (Brisbane and Sydney as examples). I should clarify that I only try to do this with specific markets, for example with my last sale, development potential sites in the Heidelberg area of Melbourne. Looking back, I sold within 1 week of the absolute peak. Prices have fallen since I sold but the Melbourne market overall has kept increasing. For particular properties that I am interested in selling, I haven't had any trouble picking the top of the market. I also buy somewhere either side of a market trough. Buy low, sell high seems to be working for me so far

 

If it aint broke, no need to fix it

 

I am expecting a recession. To prepare, I deleveraged before my properties dropped in value. Now I am keeping my LVR low and managing cashflow. I won't get into more aggressive investing until after the downturn or recession or whatever it is.

 

Interesting. I'm in a position that I can keep holding and do other things. Might not be best but certainly least labour intensive. I don't see a huge drop for my inner bris houses in the med - longish term regardless of what happens in the next couple of years

 

That's great! That's where I want to get to too. I started investing with a view to buy but never sell. But circumstances change and sometimes it works out for the best. For example, my last sale was a negatively geared development site where I had the option to develop or sell. It was not a realistic long term hold. I am using the proceeds to buy a positively geared development potential (retain and build) property in Perth. So that works. Everything I am currently holding is for the long term, which is what I would prefer.