Property outlook the worst in 30 years: Morgan Stanley

Property outlook the worst in 30 years: Morgan Stanley - AFR, 5th Apr 2018
Prospects for growth in the residential property market are the worst in 30 years, which is when Bob Hawke was prime minister and the median property price for a Sydney house was $141,000, according to analysis by investment bank Morgan Stanley.

Morgan Stanley takes gloomy view of Housing Prices - The Australian, 5th April 2018
Investment bank Morgan Stanley is as pessimistic about the outlook for housing prices as it has been over the past 30 years on the back of a tightening supply of credit.

Are you still buying? Or should now be the time to hold and reflect.

 

If I wasn't spending all my time wrapping up a couple of projects then it's would buy in Perth. I would not touch Sydney or Melbourne right now. Just my opinion.

 

Always take a look at the person or organisation writing the article.
A lot of these investment banks, DB and Morgan are notorious for it come out with these predictions due to vested interested i.e. they've bet the market will go down.
Answering a question like should it be time to hold and reflect is purely personal and there's always a reason or article suggesting it's not the "right" time

 

Homebuyers' borrowing capacity could be cut by up to 40 per cent

The government is flush with money and the economy is starting to show signs of good growth, the only thing I can see knocking down property prices significantly is a credit tightening event (possibly from recommendations arising from the Royal Commission) or a black swan event.

 

Like to know what they thought 10 years ago.

 

If this is implemented good luck to everyone!

Homebuyers' borrowing capacity could be cut by up to 40 per cent

 

Jesus those assumed living expenses are high!? @Angel you'll be interested in this article- Imagine the luxury!

 

Assuming a family of four can live on 32k/yr is a joke.
I think assumed living expense of 58k/yr for a family of four is realistic albeit at the lower side of living expense.

 

This comment is not aimed at you, but its been my experience that generally ppl who ask these types of questions often struggle with building wealth.

To answer you, I've never felt there was a time period since I started investing 18 years ago ( and alot longer than that when reflecting on what older investors achieved) where there was no good buying opportunities in Australia. Today I can think of at least 5 different areas of investing in RE which should yeild good results.

All these doom and gloom articles is aimed at the mediocre masses.

 

I guess its probably a fair representation of what people are realistically living off. Doesn't really help the frugal though.

 

Love your positivity Leo!

 

That completely depends on your assumptions.

In Sydney, childcare can run at $30,000 per year, per child, so it is not realistic for a couple with children in Sydney.

On the other hand, in Perth, one working parent, no mortgage, it is possible. We have a chain of discounted fruit and veg in Perth called spud shed. As an example, 5kg of potatoes is $1 right now. If a family is prepared to shop at spud shed and make food from scratch, then $32k per year is doable. Last time I calculated my total cost of living for 12 months it was $12k. 2 adults in a shared house, no mortgage, splitting expenses. But then for transport I walk, cycle and use public transport. Where I live there is not a lot of point trying to drive. It's too slow.

With a mortgage or rent then $32k per year, for a family of 4, is not doable in Perth IMO.

 

the articles might be written targeting the mass, not PCers.

they are good click bites I think.

when reading these articles, it might been a good idea to separate the Facts from Opinions.

 

Was getting 4kg for $1 at my local store recently. sounds like you got a bargain there

 

IMO - the article of the HEM new benchmark is quite reasonable for a family.
Maybe a bit conservative.
Time will tell how things pan out with the borrowing.
Not everyone is frugal - that is actually the minority.

 

Exclude mortgage, our total monthly living expenses is around $3k. Most of my friends are in the range of $3-3.5k per month. 2 adults and 2 school kids. Of course, no private schools.

 

The first bag was pink potatoes, so that really was a bargain.

The second bag was just the blerg white ones. They take a bit to make palatable, so not such a bargain.

 

$32K with no rent or mortgage maybe. With no hobbies too. That is $2600 a month.

I was just about to ask you Braniacs if I should call my bank and ask them to change the DD for our mortgage payments down to the Min monthly amount for a while (we are paying extra). I did a calculation on the Moneysmart website on what that should be, but it's only $100 a fortnight. I think i'd rather keep paying it off the mortgages.

We have paid $43,600 off our mortgages in the two years since March 2016 when we refinanced under the stricter rules.

 

I would consider my lifestyle fairly lavish and I'm still under the HEM benchmark, even considering trackday expenses.

 

It all depends on your financial situation but personally I would keep paying the extra because it saves a lot of interest over the long term.

You can jump on one of the repayment calculators and see how much $100 a fortnight makes over the life of the loan. It is a lot.