WHERE & What would you buy at the moment?

Discussion in 'Where to Buy' started by Skyegirl, 27th Nov, 2018.

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  1. Skyegirl

    Skyegirl Well-Known Member

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    Hi, I'm looking for an IP at the moment, with about 400k cash and budget is less than 800k (can go up a little depends on the deal). Property can be at Melbourne/Brisbane/Tasmania/Vic smaller cities.

    Would like to have some suggestions and ideas on where and what you would choose to purchase, house/townhouses (not looking at apartments) in 2018/2019 please.

    Or would you just hold cash and equity to see how the markets react to the economy changes?

    Thank you all very much.:)
     
    Last edited: 27th Nov, 2018
  2. TMNT

    TMNT Well-Known Member

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    Thats like saying what car would you buy now

    Whether it be performance, economy or resale value
     
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  3. Skyegirl

    Skyegirl Well-Known Member

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    True. Sorry for the broad question. I'll find a way to alter it a bit.
     
  4. Skyegirl

    Skyegirl Well-Known Member

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    Changed it haha
     
  5. TMNT

    TMNT Well-Known Member

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    Much much much much much much better
     
  6. Central Coast

    Central Coast Member

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    I believe your first step is determining: What is your objective and how will this property get you towards that objective? Then identifying location with good fundamentals will follow.

    Why are you ruling out apartments?
     
  7. Skyegirl

    Skyegirl Well-Known Member

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    Looking for capital growth mainly.

    Any suggestions for apartments selection?
     
  8. Lindsay_W

    Lindsay_W Well-Known Member

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    If you're looking for capital growth you can pretty much rule out most highrise apartments, stick to inner ring suburbs, low rise (3 story brick walk ups) ideally with no lifts or pools and low body corp fees. In addition make sure there's some funds in the sinking fund to cover any maintenance etc.
    BUT is property the only investment you're considering?
    Depending on what you're trying to achieve and what your end goal is you might benefit from some diversification - best to seek specific advice IMO
     
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  9. albanga

    albanga Well-Known Member

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    I think right now is a crazy time to buy.
    The market (particularly Sydney/Melbourne) is in free-fall.
    Why not wait until mid next year for the dust to settle?
     
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  10. Skyegirl

    Skyegirl Well-Known Member

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    Thank you very much for the detailed explanation. I ignored most of the apartments but still look at the old school units, normally with only 4-8 units in the block.

    Been looking for a side business for more than half a year but haven't secured anything yet, so at the stage I'm questioning myself is the opportunity cost too high. Property market has changed since 2017, which was as predicted by our forum members, and my knowledge base might be outdated already. I'm still a learner for investing.
     
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  11. Central Coast

    Central Coast Member

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    Think about what drives capital growth - limited supply / scarcity, desirability, affordability (income & access to credit), etc.

    That already excludes a vast amount of properties in Australia & narrows your search.

    Depending on area, what people look for in that area, and your price point - I wouldn’t exclude an apartment - but avoid the enormous OTP complexes (no scarcity). For example I like units in older blocks of 8-12 which means each has a reasonable share of the underlying land.
     
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  12. Skyegirl

    Skyegirl Well-Known Member

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    Thanks heaps for your suggestion. I do think that might be a good choice. Sydney is falling out of question but don't know much about Melbourne. According to stats the south east part of Melbourne is still growing.

    But why mid next year?
     
  13. albanga

    albanga Well-Known Member

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    Because I personally believe we will hit the bottom around mid next year. I have been quoting around 15% for a while and Sydney from last statistics are around 10% from peak with Melbourne around 8%.
    At this stage no measures have been put in place to stop the decrease but their are no shortage of articles suggesting they may have gone too far with the credit crunch.

    So as I see it playing out the market will continue to correct and around mid next year we will find the new base line (based upon new credit measures such as servicing) OR as @Redom our finance guru has suggested, RBA/APRAxwill step in and make some adjustments to stop the fall.

    Until such time though I wouldn’t be buying anything.
     
  14. rjw180

    rjw180 Well-Known Member

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    Sydney peaked before Melbourne though. Might be useful to perhaps use Sydney as a lead indicator for what will happen in Melbourne when looking for the bottom too...
     
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  15. Skyegirl

    Skyegirl Well-Known Member

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    Thank you and I agree that interest rate will only go up and the bottom will be hit later.
    Doubt if RBA would step in to stop the fall when the market is only going back for about 10% as 1) there's not much tool left for the economists to use at the moment; 2)property price drop about 10% is only a correction of market.
    Sydney and Melbourne houses are still good for the long run, however maybe not the best time for me to get on the boat again.
     
  16. johnmteliza

    johnmteliza Well-Known Member

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    Avoid the largest cities and especially inner city suburbs as this is where the largest declines are occurring due to the area being hugely overvalued. Victoria appears to be the best performing state with the strongest economy to support future growth. Regional Victoria and Tasmania have been the best performers in the past 12 months. Mornington and Geelong are ideal satellite cities to invest in. The two have strong demand, low supply and solid growth within the past 12 months. Infrastructure projects underway are also set to make these places more popular in the future. Also, houses are still fairly affordable when compared to the Sydney and Melbourne inner suburbs. You can definitely afford a townhouse or house with your budget in these areas.
     
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  17. Andrew Hancock

    Andrew Hancock Well-Known Member

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    There is the theory that it is always a time to buy as there will always be opportunities out there.

    While this is probably true, I also think it only applies to certain buyers too. To buy in certain markets, you also have to be the type of buyer who is willing to take a little more risk, be very cashed up and have the purchase fit your strategy and goals over the long term. Broadly speaking, most residential property buyers can't afford to get it wrong too often, if at all, and particularly not in what really is an unknown quantity at the moment.

    There are currently three main unknowns:

    1. Outcome of the Royal Commission
    2. Election result (although when Labor most likely get in, what their final NG and CGT policy will be and when/how it will be implemented)
    3. What will happen with the credit supply (this will partly be a function of the above)

    I personally don't think it's the time to buy in any market until we have some transparency and markets start to show signs of buyers coming back to the market. What you don't want to do is buy in a declining market and immediately erode your capital. There are markets where this wouldn't happy of course, but it's very important to get the first purchase right in an investment journey and my experience tells me now is not the time to start it.
     
  18. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    @Skyegirl

    We have headwinds in next two/three years like
    • Fresh over supply hitting Syd/melb
    • OTP settlement issues due to shrinking valuations
    • Potential NG reform short term and long term impact
    • Potential CGT short term and long term impact
    • Demographic baby boomer headwinds
    • Credit tightening being the new normal
    • Rising international yield risking funding cost
    • FONGO effect.
    • Falling valuations impact on equity extraction and thus negatively effecting piggy backing by exiting investors.
    • Many existing investors even if they want to can't get loans due to total debt cap and reduced credit leverage given to rental incomes etc.
    • 380bn IO2PI rollover.
      As against general consensus here on PC,
      I think under current credit env will result in a quite a few forced sales as majority of those who could have would have rolled-over by now due to penalising IO only rates.
    • Even if fall stalls due to intervention, recovery won't be in a hurry, It will be good 7/8 years before we see past peaks crossed in forth cities, unless APRA drops the ball totally and credit growth goes back to good old days and some.
      They could ...but would they?
      I think RBA/apra will make lot of noise and sabre rattle without impact-full intervention as I think the movie is playing as per their script,
      but If they decide to drop the ball all together I wonder what was the point of any of the macro prudential interventions for last couple of years?
    Headwinds in next two three years are simply too many and all at the same time for anyone looking to buy in Sydney/Melbourne to be in any kind of hurry.

    Though the headwinds will impact all markets to some extent frothy segments will suffer the most, I think Sydney/Melbourne has much further to fall (I will not touch anything which is at least 25/30% off its peak and by late 2020 unless RBA/APRA drops the ball),



    Your ability to borrow is and will be the most priced asset for next few years, so spend it wisely to get the most bang for your buck.

    Even If I disagree I take what @Redom says seriously,
    So will keep a close watch on investor credit growth figure to see signs of change. When the fact changes I change my tune.
     
    Last edited: 28th Nov, 2018
  19. gary176

    gary176 Active Member

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    Sydney will experience a min of 20% fall... this was required and it will happen..

    anyone telling otherwise probably don’t understand how bad things will turn out next year.... a lot of vendors in denial but eventually data will show it’s already down 10% from peak and another 15-20% in 2 years is not unthinkable....

    Feel sorry for those who bought couple of years ago.... but no sympathy for those will but now... but do your own due diligence....
     
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  20. sydneysider19

    sydneysider19 New Member

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    Thoughts on Brisbane/Logan area?