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What barometers do you use to predict property market bottom ?

Discussion in 'Property Market Economics' started by Kangaroo, 17th Oct, 2015.

  1. Kangaroo

    Kangaroo Well-Known Member

    Joined:
    21st Aug, 2015
    Posts:
    254
    Location:
    Sydney
    Hi,

    I am not sure of the validity of this thread or if this question itself is valid and has answers.

    I know we can not 100% predict the bottom. But I do believe we should predict the market to such an accuracy that most of the normal buys will be profitable. Like the past GFC, it did not matter if you predicted the bottom should be at ASX200 3700 or ASX200 4000. If you jumped in that time, you are still ahead today even after the recent crash, assuming you did not escape successfully. The same applies to property market.

    Personally one of my bottom barometers is that the rental yield for the sub-first-home should be approximately equal to the average standard home loan interest rate of the big 4 banks. What I mean by sub-first-home are those homes we can tolerate to rent it but not to buy it as our first home IF we have the financial choice. IF we do not have the choice, we still can tolerate buying it and living in it.

    Please share your opinion.
     
  2. Graeme

    Graeme Well-Known Member

    Joined:
    26th Jul, 2015
    Posts:
    258
    Location:
    Melbourne
    I'd expect the rate of decline after a property bubble to flatten off before bottoming out. This is a price chart for Dublin, and the UK crash in the early nineties followed a similar trajectory.

    [​IMG]

    So waiting for price falls to slow would get you pretty close to the bottom of the market.

    Otherwise comparing the rental yield of a property with its holding costs seems a decent strategy.
     
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