What if the market tanks??

What would be those indicators?
falling rents?, increased supply? increasing unemployment?

or the fall in price itself?(It will be too late by then I guess)

 

@TheSackedWiggle: Perhaps this graph can show you the general situation of each city / market:



The updated version for August 2015 hasn't come up yet.

 

Which offset were the funds transferred to?

pinkboy

 

Really, this is pretty much what happened after the 2003 Sydney boom. Lots of places selling in 2006 down 20% on the peak, then bugger all through to 2013.

 

Tekoz where do you source that graph from?

Thanks in advance.

Phil

 

If the market tanks - it would be a good and healthy thing for our economy in the long run.

 

I would buy more properties. As a cash buyer I can do this.

Most say they would buy more, but are reliant on banks - and will unlikely to be able to do so. If prices tanked most would not have the equity to be able to borrow for more acquisitions and banks would become very picky about who they lent to.

 

Which market specifically are we talking about?

 

@Phil_22: I got that from Herron Tod White who regularly publish article and market insight.
I haven't seen the latest data for August 2015 yet.

More information is here: http://www.htw.com.au/downloads.aspx

 

So far I'd say Sydney and Melbourne since WA and SA ahs already in the downturn process.

 

This is the affects a market slump would have personally

Values Drop by 20% or so
-difficult or impossible to access equity and do new projects
-net equity total does not sound so impressive

Increase in interest rates
-+ve CF so can handle interest rates of up to 7% with no rent increase. Higher than 7% and start hurting

Increase in vacancy rates
-not a big problem. drop rents and ride out long vacancy periods

Everythin Happens - values drop, interest rates increase, vacancies increase, unemployment rises
-depending on the severity, could be in serious trouble once cash buffer is used up. A good time to become relgious

 

I'm looking at selling Melbourne later this year and reinvesting in Perth when a good deal comes up.

 

More concerned about employment losses than prices dropping

 

In the last cycle , we'd cashed up a couple of years before the GFC and were sitting on the sidelines watching .

When GFC hit we went shopping and there were lots of good deals around . Will be the same next cycle .

My job is relatively bullet proof , short of a health issue . Insured for most things ....

Currently we're buying in Brisbane ( 8 cheapies so far ) in the expectation that Brisbane with go up significantly in the next years . My fall back time frame has been 5-10 years but I was expecting to see significant growth in the next 2-3 . Not sure what impact the changes in the lending will have , but it's the only smoking gun out there from my view point .

We have thought about not buying more at the moment but have decided to keep on buying at this stage . I think the APRA may result in a slower take off in Brisbane , but I'm still expecting movement at some stage .

Aim is to sell some when we have good capital growth to pay down other debt .

Still undecided as to how many we sell in Brisbane . Will depend on how I'm feeling about work etc and whether we've been able to pay down any debt via saving .

Once we've sold in Brisbane , if we can see other good opportunities in places that haven't moved , then we will look there . Might be time for WA or Darwin ....or who knows , even tassie

We're borrowing more at the moment than we have before , but will be keeping a healthy buffer in LOC's at a couple of different banks

Cliff

 

Last weekend auction result is coming down: https://www.realestate.com.au/auction-results/nsw.html

I've been to the Auction in South west and it didn't went through, the buyer asking for $730k median market price but somehow the bidding stops at $680k. People just staring at each other and left the property . Now the agent is calling me for the follow up.

I guess yes, the market starts to cool down a bit thanks to APRA.

 

Which suburb in SW was the auction you went to ?

 

I've been watching Hobart and Launceston closely since my last trip there.

 

Will it? If median in Brisbane only doubles within the next 15 years it would be a pretty bad investment, what's that 4 or 5% per year? Not worth the capital and time

 

@teg499 pardon me, remove the W accordingly It's on South Hurstville.

The owner somehow was under the impression that next street sold price last month can be beaten or equalised last weekend. But it turns out to be awkward moment when everyone just silently walk away.

 

Certain markets I purchased in have tanked and I can't see any real signs of improvement on the horizon.

For example, similar properties (to mine) are selling 30-40% below their peak prices of late 00's - I have had to drop rent by an average of 30+% on 4 of my properties and one was vacant for 9 months; had to drop the rent by 50% to get someone in that place.
In another property I own, I've had a take a less than idea tenant (after being vacant for 3 months) who is in the red already after only a few months in - I've had a few nice ventilation holes added to the exterior as thanks.

If it weren't for - buying before the peak, having a pretty good job and other properties to even the ledger, I think I'd be up the creek. I wouldn't like to imagine what other investors (who bought recently >5 years) are going through. There is some pretty serious over-supply going on, hopefully none on this forum get burned.

P.S. These aren't solely mining towns either - Rockhampton, Mackay and Dalby.