hi , I'm a total newbie . I have been stalking the threads , most sections for the past couple of months. I have read about 6 books in the last 3 weeks recommended by all the regular investors. I have always been interested in property but am a huge procrastinator and over analyse everything. I am going to take the plunge now but the one thing I don't fully get is how can I tell if the market is flat, rising or at the top ?? I understand I should buy in a rising market , any help or insight would be appreciated . Cheers
My take is, the market at the top shows low rental yields. E.g. Sydney had rental yields of 7% and now the same properties are around 4-4.5% return.. Melbourne has been a different kettle of fish with the low rental yields being the norm... Brisbane on the other hand [depending on where you buy] still offers 6% plus returns - and diminishing. When the rental yields are dropping due to price increases, you know it's a rising market......and when the rental yields just can't be justified, you know the boat has sailed.
Research of course. No body has a crystal ball . But given a bulk of the forum is buying there............and some in Adelaide - so both seem plausible
Contracting yields are usually a sign the market has grown recently and rents are yet to catch up. That's not always the case, for example Perth where rents and prices have contracted. Look at reducing stock on market for a city, region and more importantly a suburb along with reducing days on market. Another indicator in particular suburbs in capital cities is when older houses on big blocks are being subdivided and up market new builds are being developed. Land in these locations becomes more expensive and the suburb becomes more desirable.
Hi Moggy - welcome! Investing in a 'rising' market may sound great on the surface, but keep in mind that property is a long term asset class (it is too expensive to buy/sell/trade like you do with shares) - so whether a market is rising/falling/flat, focus on the economic fundamentals of the location and your long term objectives! Good luck!
Bne yield also dropping due to current and projected oversupply. Although main driver has been price growth. I still think bne houses are the best property investment in Australia atm though
