PPOR in a tanking market

Perth and Darwin have been on the decline now for 3 or so years. The downturn is tangible and opportunities are now starting to present themselves......

Sydney's downturn only just kicked off a few months ago. Where it goes from here is always going to be a guess, but consensus here is that you'll have at least a year of either slow or negative growth to safely "see what happens".

I was thinking about buying because an oppourtunity came up where someone else will have copped the majority of the price drop (500-370k). At 370k its not a huge risk to me as at the end of the day, I have to rent for the same money anyway.

What you're talking about seems to me to be riskier on a whole other level.

Don't forget to factor in opportunity cost. I'd wait a year and see. If prices stay flat, then go for it. If there is a downturn then 1m will allow you access to some great opportunities.

 

Similar situation for us too. Buy the cheap house and loan is less than rent. Buy the middle cost house and it's equal to rent.

But prices are dropping.

We eventually decided to wait until middle 2017 and reassess. Our logic was:

1) Just because you love this house, doesn't mean you won't love another. Going to multiple open houses has convinced us of that. So we have no "we must buy this one" pressure.

2) Buying in a falling market doesn't make much financial sense

3) This year we're probably going to have the first election in Australia's history where NG/CGT discount is a major battle. We're in no rush so we can wait it out to see what happens there.

4) The only way this is a bad decision is if prices suddenly skyrocket - and so far there is nothing to indicate that is possible.

It's still a hard decision though. We have all those romantic reasons you want a PPOR. I've rented for a long time so another year or two won't be too bad.

 

We are in a similar situation and renting in Balmain. We are keeping an eye on the market but for us the rent versus buy equation financially speaking is hugely in favour of renting. Alas a PPOR is not just a financial decision and we are constantly lured and tempted by nice looking homes popping up in our email inboxes. Still we cant justify a cheeky 1 million on a lacklustre 2 bdr apartment.

I have been consistently wrong about Sydney real estate, always thinking that prices couldnt get higher over the last 10 years. For now though, staying strong and renting in the place we love and buying IPS in other cities where the maths make much more sense.

 

Have you spent a couple of weeks in Medina?

 

I've driven around the suburb, night and day, went to the shops on a number of occasions, looked at the crime states etc etc...

Looks like a bit of money being pumped into the area as well.

It doesn't seem as terrible as some would have you believe, unless you know something?

I'm looking forward to having a yard for the dogs, and a house that I can do with what I wish...

 

I'm out. Not buying a PPOR

As part of my DD, I did the numbers on the big gas project up here and it's just too risky.

Warning on Darwin

Shall be buying an IP interstate and renting here.....

 

When owning is cheaper than renting, that to me is a very strong signal of value. So provided that you believe in the growth of Darwin long term and/want to reside there is a buy signal. Having said that, a bigger issue is what the future of Darwin is. Will it stagnate and slowly die? Ideally you are investing in fast growing cities like Gold Coast for best long term gains.

 

If prices are still dropping I would keep on renting. You can be settled while renting and quietly poke around for a really cheap PPR. If the market is still dropping, who knows, you might be able to pick up a cheap mortgagee in possession property?

Remember to factor in insurance and rates in your price payments if you haven't already, because on those numbers renting looks even cheaper.