Is It Time to be Cautious?

Agreed.

However when market sentiment changes we are at much higher risk for property prices to actually fall back or go sideways, especially those markets close to peak or at peak.

Perth, WA the economy is going pear shaped and has impacted on property values. Yes, mining boom is over and it will impact Australia wide because they were also reliant on this revenue.

We are actually seeing a softening of the economy (posted the facts on this) of course it will impact on property, we would be totally foolish to ignore this, I certainly wont.

Never popular to mention property may go on the nose on a property forum....

MTR

 

It shouldn't be that controversial. Hopefully most are aware of cycles, and those that aren't may be about to find out. It's probably a good time to think about active investing. Taking profits and looking for other assets or other markets rather than just hanging on to a bloodsucker and hoping for the big boom.

 

I've sold one Sydney IP already, and planning on the second after this financial year, hopefully values hold.

While I would have no issues sitting through the 10%-30% falls due followed by 5 years of stagnet prices, I would rather invest elsewhere.

 

Do you have any evidence of that?

 

....but but but if you can take your profits and continue to make money why not? beats sitting back waiting for the falls, even worse paying back banks while markets do nothing for 7 years. All to their own, but if you know better you should be able to do better. I know more than I knew 10 years ago, lessons learnt along the way

 

No, just anecdotal, I probably shouldn't have been quite so glib. It happened in Ireland and UK during the recession though.

 

I agree it should not be controversial but I have been called a doom and gloom merchant in the past because I dare to mention anything that remotely challenges the future performance of property markets in Australia.

I have no vested interest other than to educate and open investors eyes to the good, bad and ugly what people do with this information is their own business.

MTR

 

You'll have seen yourself M that it's mainly good news and back slapping that people like to see on here. Those are the posts that get a zillion positive responses, not the ones about paying down debt, paying p&I, or asking if a 5% rise in values this year really does mean we should all jump in and throw a spare few thou at buying and holding costs because a boom must be inevitable surely

 

It's been nearly a decade, but I recall reading that rents decreased in recessions in Ireland, USA etc. That makes sense to me. What do you do if you lose your job and struggle to find another? Bunch up! Rent out spare rooms, move in with family etc.

 

It's just sensible thinking and it is definitely better to be a little early than late. People have different risk appetites though, some are basically the junkies at the Roulette table. They won't listen they are enjoying putting on a show.

 

Well they did as the market peaked. Actually it was a big sign the peak had arrived. Rental growth stalled, rental yields began to fall in 2005, 2006. Then there was a real flash crash through in 2007-2009, but by 2010 (when property was still falling reasonably quickly) rents bottomed and began growing pretty quickly at that time - around 5% per year at least.

By 2010 the government had started bulldozing a lot of the overstock. Many properties were also swallowed up as they were abandoned and became "untouchable" (mainly new developments). Banks were still careful and the economy was still struggling - so fewer people could buy. A combination of those things meant competition for good quality rentals really heated up, especially for family homes. So it did take a couple of years.

 

Rents from 2011-2013 were flat in USA with no rent increases during this period, however properties rented out within 2 weeks. Today rents continue to soar

 

I'm thinking of doing this too. I have a property tentatively pencilled in to list, this will be when the tenancy agreement is over and will occur in the next financial year. The current market value is significantly higher than the purchase price from when I bought it back in 2010, (8% growth per year since purchase... i'm not going to complain) and the rental return isn't strong if I consider the achievable sale price.... (<4% gross)

I wouldn't be happy to sit through this so much... then again, buying and selling incur quite high costs too. It's a case of assessing what other opportunities you have if you release the funds...

 

Ah yes, I remember well. You were under the impression that because Perth was suffering, the rest of the country was too. Alas, unemployment continues to fall in NSW despite the migration from west to east. Now under 5%.
Don't remember anyone pointing the finger at you specifically, though. Just some members with a reality check for those doing it tough in the west. It's not happening everywhere.
Come on Perth, you had a good run. A pity all the money went to the miners and not to the govt but we live and learn.

 

+! on that - see a lot of over positive posts on booms on certain places with ridiculous theories on why it should occur. Any small news link without much thought is a boom from more jobs, chinese moving interstate or some theories city x should follow city y, numbers stack up when it is negative in some case and some graphs that show everything has gone up, no high paying jobs coz ppl hold on to them, ppl don't bid coz they're tight on 2-3K and overhyping to the point where no real pros and cons are discussed.. i prefer to read up more intellectual reasonable post like that of sash. he has talked abt certain suburbs like officer and what he says is true, i've been on the ground to verify it.

i am more for reality checks than some than looking few yearly charts

 

Reread the thread....this is about interest rates rising and the state of the economy in Australia. I have posted the associated data to confirm/verify this information.

it's not intended to be personal or directed at anyone, I have no idea why you are attacking me for reporting some facts that may interest investors.

This is what I referred to in an earlier post, some investors will be threatened by these facts.

Don't shoot the messager, if the content hurts find another thread and move on. I am interested in helping people.


MTR

 

I agree, we need to look at good, bad and ugly, it's just a forum but it's up to us to work it out and if people get threatened by the facts/information perhaps they feel fear and perhaps uncertainty in their own choices?

 

Sounds like a good plan
I think they will, still very strong markets, most experts are stating mid 2017? perhaps this is when the penny will drop, we won't see massive drops straight away

Mtr

 

Definitely time to be cautious in my opinion. I am paying down debt and not taking on new debt for a while. I am watching the market for a while so I will be ready when it is time yo jump back in.

 

Sounds good, you would seriously be naive to ignore the signs

It's also nice to be cashed up