Is it just not a good time to buy an IP

commies love Melbourne and Sydney

 

If I had a time machine... screw property.. I'm going to vegas baby

 

I think pretty good article, though would not compare the big short to Australian property market, but I would be batting down the helm.

This is just part of the cycle/property investing seen it before.
Investors do get desperate when markets turn, and interest rates rise and they have no choice but to sell and it will happen again I have no doubt about this.

I was investing when low doc and no doc was abolished pretty much overnight, that was a huge one and many did get burnt, makes APRA look like a walk in the park IMO, I could be wrong??

Learnt the hard way reduce risk, after boom comes bust, that is certain, we just don't know how far it will drop and how long it will take for a market to recover. If investors think blue chip property is bullet proof they certainly have not seen enough boom/bust cycles to understand that this is a complete myth.

I love property wont stop me investing, I am cashed up and just sitting on my hands at the moment and watching and waiting, no rush at the moment to buy.

MTR

 

Thanks everyone, I am actually looking at Canberra OR Hobart, although more likely Canberra with an older house in an older suburb with a land that's more than 600sqm.

Sum @ current rates are fine if I can get IP at IO, sum at 7.5% will be big struggle providing if there is any period of vacancy

Not sure whether I am convinced enough that market would crash in Canberra but I see the pressures appear to be coming.

Move of an agency to Armadale is complete disaster at the moment doubt any more move of APS should be on the go

As much as ppl worry about APS cut Canberra is really not as concentrated as it used to be

ANU is now one of the top uni in the world, a lot of infrastructure and proposed further international flight. Would really help if further tourist attraction can be added though.

I am not sure, am in two mind about yes or not but I think we have (sort of) made up our mind that we would only enter under certain price range. Opportunity may not come but I would rather wait than risk. Problem of course now is whether we can get the finance with the tighten lending criteria.

I have procrastinated way too many times (at least since 2009) and was so determined to do it this time, only to find the regulation changing.

 

You'll be up for land tax if you buy an IP in Canberra so do your sums. And Hobart's been running hot for at least 12 months already - its a small market and I personally don't have faith that it'll keep going at the same rate beyond the next 12 months. But that's just me.

 

Confirmed what i thought for Hobart

 

Ask the hair dresser if you need a hair cut!

 

Yes, it may be prudent to sit on the sidelines for a while.

 

Great question

 

The issue isnt IF you should be buying. Its is WHERE you should be buying and that may be affected by issues such as how the purchase is being financed or used etc. I believe that for many eastern state residents that they see Sydney / Melbourne as the market...Just as buying international shares isnt dictated by what the ASX is doing the property markets in other parts of Australian wont reflect Sydney property prices. And in some areas of Sydney there is fantastic value still to be had....The "typical" media reported property impact does not ever apply to all situations.

How many are selling their Sydney homes top bail out ???? Some even say Sydney will rise over the next year (at a low rate)

To use an old financial markets adage - You are either a buyer or a seller. Its also OK to sit on the sidelines and wait. Doesnt mean you need to be a seller when you arent a buyer.

 

Exactly Paul - there are thousands of property markets within Australia, and millions of properties. It would be folly to assume that there isn't value to be had in any of those as an investment.

There is definitely markets I wouldn't be entering in at this time, but at the same time there are some other markets with strong fundamentals and decent upside potential - it just takes looking at the broader picture and finding investments which fit your long term goals.

 

Sage advice.

 

There is a funny follow up on this. As I was saying, reverting to P&I from IO won't come out of the blue... except, it did for me. I had a 5 IO loan flip to P&I after 3 years. I don't know why and the lender can't explain it.

That said, the switch came with a nice interest rate reduction and I have run the numbers on the new repayments. The lender offered me another 2 years IO. I declined. Numbers look good, so I am keeping it as P&I.

 

Did you have it on fixed as some lenders automatically apply IO term to match fixed rate term and some revert to IO after fixed rate term under 5 years?

 

Good question. The interest rate was not fixed, it was variable. The contract was a 5 year term I/O variable. After 3 years it has reverted to P&I. I asked the lender why but they couldn't figure it out. I don't mind because the numbers work well at P&I. I just find it funny that I was preparing for 2 loans to switch from IO to P&I in 2020 and one flipped 2 years early. It works well for me though. I wasn't looking forward to 2 loans switching in the same year. Having it staggered is much better. So is the lower interest rate

 

very true @Jess Peletier , I would also expand a bit on it: the current lending environment is actually very favourable to first time or second time investors, most investors with large portfolio have been forced out of the market ( due to the changes with lending criteria), there is a vacuum ( to some extent), so less competition.

 

In short, the debt cycle has peaked and that means lower growth in asset prices across the country.

That doesn’t mean that sitting on the sidelines is the best option. Baring a massive nationwide recession, there’ll generally be somewhere generating good returns over the short to medium term.

 

Good to see these magazines catching up... been on about this for several years....

 

It sometimes amazes me how even among clued up investors, this mindset is only shared by a few.