Property could fall 30%- LOL

Am interested in the ability to extend the life of the loan, as was mentioned....any of the big banks apart from CBA doing it (without full serviceability checks)?

 

But the interest still accrues. If this continues for another 12months a once upon a time 25year loan that looked ok all of a sudden looking a little shakey..
Then again the deferals could have to last 2 or more years

 

This poll is preposterous

 

I expect there will be a slow decline in prices as people sell off non-essential property once the reality of a couple of hard years looms ahead. First signs will be increased listing of small blocks of rural land and holiday homes based on the 1995 experience in Canberra and surrounding regions, including Batemans Bay, Broulee etc. Inner city apartments will also be a bellwether but a market dynamic I am unfamiliar with.

 

If we are going to have rolling lockdowns for 18 months + until/if they find a vaccine, then a 30% drop doesn't sound unreasonable. How many people/businesses can plan for stop/start work over an 18 month period?

I know a tonne of people who live paycheck to paycheck and they are on high six figure salaries... Our culture over the last 30 years does not reward savers.

 

Property faces 30% declines

Oh no...we got another one folks. When will these people learn, my real estate agent said property doubles every 7-10yrs and everybody knows this.

*A guarantee is not a guarantee

 

Not in Perth.... lol ..... 12 years no growth


Another thread said 40% drops, let me split it in the middle

 

There are no real consequences if a bank makes a prediction and gets it wrong.

For an individual who actually makes investment decisions based on a bearish prediction and getting it wrong, though......

 

Years/decades of PTSD to follow.


In time these types of threads I always find painfully amusing. Painful for the doomers, amusing for me.

 

It’s always a bit of a gamble on bull or bear markets. Much is an hindsight situation although some can predict better than others. Eg., some PCers.

 

It's safer to be a bull. Real estate goes up 80% of the time, and our population growth is very strong. And if you're wrong, you won't be wrong for long.

 

Historically, it's a losing bet to bet against RE in Australia. Then when you add in a few filters to increase your odds of out performing in the medium to long term.... it's really a no brainer to have a decent part of your wealth creation portfolio made up of RE.

Unfortunately for many, the lack of education and understanding of risk, risk management and wealth creation in general is to their long term financial detrimental.

Very, very few people are driven enough to work out and solve the equation of wealth creation in life.


.

 

I like to think that I am mostly right on property. But the times I have been wrong has cost me a LOT of potential wealth. 2012 and 2022 in particular. I didn't buy last year because I expected prices to continue falling - clearly they did not. in 2012 I sold too early and missed the boom. I've never had to regret buying, only not buying.

 

Yes, over time, property is a safe investment. Timing it right helps. The most difficult decision is when everyone tells you, you are catching a falling knife, but you know prices will bounds back. But seeing a 10% drop after signing the transaction is gut-wrenching. But when over time you see the gains and thought to myself, I am a wise man...

 

I think you are being too hard on yourself to get timing right. Just control what you can control, which is really just asset selection. Controlling timing is like controlling how old you are.

 

When it falls it always looks like it will keep falling. With the bears cheering it on. Takes a bit of crazy (or deafness) to buy in those times.

 

Real estate growth has a feature that is unique to it. You can use its growth to borrow against and diversify into shares etc. Its far harder to do with shares as few will lend 80% against shares. Tax acts like a disincentive to sell down. Then you get compound growth. And often its leveraged compound growth

You put in $100K and buy $1m. Its grows to $2m. Everone says its doubled in value. But it hasnt. The $100K has created $1m. Its a 10 fold ROI. Reborrow $500K abd buy shares. They double. And property is then $3m

So $100K has produced growth of $2.5m. A 25 fold ROI is far ahead of CPI.
Sure if you sell you face a lot of tax. But its under 25% tax rate.

 

This is exactly the point with property and what I’m trying to explain to my friends that invest in shares only. One close friend makes $1.5M per year and rents. He invests half his net in shares. Imagine he did that in property. He’s have 10X wealth.

 

That is good advice. A share investing saying is buy in gloom, sell in boom. I use the buy in gloom part and rarely sell. This has worked for me, mostly. That is, I attempt to get the broad timing right, and while I'm rarely very accurate, over time it has been good, up 10-15 times for the best and 2-5 times for most of the rest. Some are total failures, but the good ones offset these. This is another factor. It does not matter too much if company A or property B goes up or down in value this year. I look at the portfolio value and income over time, decades.

What a lovely way to describe investing. It is also possible to say that the initial $100,000 has created an asset worth $2 million, up 20 times. It does not matter as the above shows the power of gearing. My first investments were shares using borrowed money, with borrowed funds for PPORs and IPs. Due to rising interest rates and the markets being a bit risky for me I've paid down all my debts.

Bad news sells media. Harry Dent is rather good at this, but his figures are no good.
Barefoot Investor takes down Harvey Dent

I searched for
Australian property prices will fall
and got this.

Nov 22, 2021 By 2023, Sydney's house prices are expected to fall 12%, Commonwealth Bank says.

Jul 31, 2022 Many analysts are predicting Australian property prices, on average, will fall between 10 and 20 per cent (from peak to trough) — with the two most expensive cities Sydney and Melbourne likely to suffer the biggest declines.

Sep 20, 2022 2021 saw a significant increase in median house prices across Australia, ... Dr Lowe is not alone in predicting a fall in Australian house prices.

Nov 4, 2022 Leading economists predict that property prices will eventually fall between 15 and more than 20 per cent.

Jan 4, 2023 Economists had been predicting a 15-20 per cent fall in property prices since the Reserve Bank started increasing interest rates in May.

Feb 7, 2023 Property prices are set to fall up to 10 per cent nationally by the end of 2023, as rising interest rates weigh on prices, according to a report

Jul 21, 2023 An astonishing rebound in Australia's housing market is set to send property prices up almost 10 per cent over the next 18 months, according to NAB.

Sept 25, 2023 Homeowners at the Western Australian capital will likely enjoy an 8.4 per cent boost to their properties for the 2024 financial year.

In January each year there's a report by economists, bankers, commentators and others about where the market will be in a year. These people are highly qualified and very experienced. They detail things like interest rates, ASX prices, GDP and more. There's a section devoted to the predictions of a year earlier by a similar group of people, many of them the same as this year. Mostly they get it wrong - this is not their fault. I'm very dismissive of Harry Dent. I respectfully ignore the January economists etc. I'm happy with them discussing facts but not for long-term predictions.

What happens happens. I'm not buying or selling. All investments are up , income exceeds expenditure, there's no debt, and I'm happy. If I was starting investing now or buying a PPOR it would be different.

 

Renting defiantly has its advantages over owning for some people.
But don't forget that if your friend is making $1.5m per year he might have solved the investment problem that most 'successful' investors fail to ever do - deciding how much is enough.