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More misery for Sydney renters

Discussion in 'Real Estate' started by Billv, 29th Oct, 2008.

  1. Billv

    Billv Getting there

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    As we all know, in recent times Sydney rents have gone through the roof so people have been forced to look for shared accommodation or to look for cheaper accommodation further out.

    However, it's not all bad news for renters,

    The doubling/tripling of the FHOG is likely to convince some renters to go out and buy their first home and therefore some rental properties will become available and therefore we will have less upwards pressure on rents...:)

    cheers
     
    Last edited by a moderator: 30th Oct, 2008
  2. Jacque

    Jacque Team InvestEd

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    Valid point, Bill, but then again lots of FHO's still live at home, so perhaps it's not going to affect the supply as much.
    From what I'm seeing, well located properties in good condition are still in short supply in most suburbs that I work in- from the busy North Shore to out here in the Hills, rental properties aren't being advertised on the net for long at all (if at all) and vacancy rates are very low at 1% or so.
     
  3. Billv

    Billv Getting there

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    Jacque

    I've noticed that as well.

    btw, how are sales going?
    I've noticed an increase in the number of listings on domain and realestate.com in the end of October but the numbers dropped down again 1-2 weeks later.

    cheers
     
  4. 02bsure

    02bsure Well-Known Member

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  5. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Given that interest rates are dropping - mortgage holders are far better off now than they were 12 months ago, and will likely be in an even better position next year.

    If you aren't planning (or needing) to sell, then there's not a lot to worry about beyond losing your income (which for some is a very real worry, but isn't directly related to property prices).

    Renters are continuing to see strong increases in rent - the pain will continue there for some time, until we see a surge in new construction start to ease the housing shortages.
     
  6. 02bsure

    02bsure Well-Known Member

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    prediction ,

    - 12mths from now mortgage rates will be heading higher.
    - For sale inventory will climb throughout 2009.
    - Price reductions will be significant.

    Result - buying now is a lousy idea.


    This doesn't look like 7% compounding hpi to me.

    House prices fall in Melbourne suburbs amid real estate slump
     
    Last edited by a moderator: 12th Nov, 2008
  7. Billv

    Billv Getting there

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    02bsure

    Here is my prediction:

    My portfolio would have grown with 2 new IP's by then and it's not a guess it's a plan..:D

    Now what's your plan other than to talk down the property market?

    cheers
     
  8. 02bsure

    02bsure Well-Known Member

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    My plan,

    - buy SSO at $20
    - sell SSO at $38 January09
    - buy SDS in January09 (price?)
    - buy gold/silver miners when gold hits between $500/500 oz
    - buy Good delivery bars and vault it in Zurich
    - late in 2009, consider buying agriculture comods.

    Note - my list does not include 'take on debt' anywhere.

    As you can see, there is no real estate in there anywhere (ok apart from my two houses, but I don't regard them as investments).

    ___________________

    My outlook for 2009 (and the premiss for my plan) is deflationary until 2nd half 09 but then inflationary thereafter.

    I expect the following,

    - bankruptcy of some major companies
    - global losses in real estate (oz officially included in 2009)
    - high unemployment (I mean nearing 10% by the end of the 2009)
    - a US treasury default(how soon?)
    - higher mortgage rates (I expect 15% in oz by 2011)
    - significant stock market declines (ASX 3000)

    In summary, the pain we've witnessed to this point in time is only a warm up. I believe 2009 will be a good deal worse.
     
    Last edited by a moderator: 12th Nov, 2008
  9. AsxBroker

    AsxBroker Well-Known Member

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    Hi 02bsure,

    Why do you think interest rates will rise to 15% in 3 years time?
    At the moment they are dropping very quickly, are you expecting a ratchetting after the RBA rate hits 3.5% mid next year (Bill Evans from Westpac prediction not mine! Though I do believe they are still dropping).

    Are you worried about inflation and expecting rates to increase to hold inflation off?

    Cheers,

    Dan
     
  10. Billv

    Billv Getting there

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    02bsure

    You haven't taken up my suggestion for a good holiday to clear up your thoughts.....:D
    Anyway, my comments in red

     
  11. 02bsure

    02bsure Well-Known Member

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    I guess you can look at it like this.

    Its a bit like two huge tectonic plates that have built up enormous pressure
    against each other over a very long period of time.
    Eventually the day arrives when something occurs, a major slippage.

    In a similar way, the long bond market yields are under pressure by central bank rate cutting policy. Eventually, no one is going to buy them at the given low yields. Who is going to step up and buy a 30yr treasury yielding 3% when the US is technically bankrupt, fear of defaulting and huge amounts of new paper are flooding the market?

    The Chinese, I don't think so, who else is there, nobody.
    That just leaves the US government to buy them, that means printing money.
    That means higher yields , I mean much higher yields.

    This event will spark similar reactions in all corners of the world as investors demand a re-rating of risk.

    Where the long bond treasury market goes so goes the mortgage market....much higher.

    The question is, does the US default before interest rates go crazy?

    Thats it in a nutshell.

    _____________


    You can interpret the current rate cutting phase as the calm before the storm. Lock into the lowest fixed you can get your hands on because it will be the difference between life and death. How long this calm lasts is the big question.
     
  12. Billv

    Billv Getting there

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    I am not fixing because they are asking for too much
    If I could get a 15 year rate of 6.5% I'd take it but they want 7.5% for now.
    Let's wait a few months they should drop a bit more