Discussion in 'Real Estate' started by Simon Hampel, 23rd Apr, 2009.
Sydney tipped to lead housing recovery - ABC News (Australian Broadcasting Corporation)
There quite a few big assumptions in the article not to mention it another one of those mass media article that still seems to be "surveying" the people that to date have consistantly been overshooting or blatantly wrong.
The notion that their could be property growth in real terms in Australian capital cities before 2011 is starting to looking dimmer each passing month.
I'm not saying that things can't get better by the back end of 2010, but there still is nothing positive on the horizon to speak of and there is still a truckload of worsening data being announced every month. So I don't think now is the time to be making speculative guess as to when housing is going to turn around and which cities it will turn first in...
There seems to be a big divide on this one. On one hand you have the suggestion of a first home owners bubble, mortgage troubles ahead with rising unemployment etc. On the other hand there are historically low interest rates, a market that has been resiliant through a very tough year, and (in sydney at least) a market that hasn't moved in 7-8 years.
I can't help but think that there is very limit downside and some substantial upside to the sydney property market. when it will kick up is the big question, but with holding costs at the moment almost zero (and indeed actually positive on some properties) it feels like a no brainer to be buying and holding for a least 5 years.
my 2 cents. DYOR.
I think the vast majority of analysts out there would be confident in saying that minus the FHOG boost Australia would have been seeing a quickly deteriorating property market, as it has happened it has boosted the market well and probably helped to keep our generally economy limping forward without the major declines the rest of the world has seen as we wait for them to give us the lead that a true recovery is on its way.
This however doesn't negate Australia's fundamental price bubble in the property market that was, and still is present. The only reason it didn't burst is because the government has attached a turbo charged air pump to it and it looks like banks around going connect theirs too with their not foreclosing for 12 months on individuals that lose their jobs given the rising unemployment. So it looks like between the governments and banks they have managed to construct a market for "an orderly decline" to hopefully ward against a banking crisis as seen in the US and Europe.
Historically low interest rates are not a buy signal - they are a sign that the RBA is throwing everything including the kitchen sink at this problem trying to reinflate the still shrinking asset price bubble.
People need to be careful when thinking assets are "affordable" because "short term" interest rates are low. Ultimately if assets are still very expensive (ie their is an asset price bubble) with rates at traditional levels (8 - 9%) then the asset is still overpriced and probably will need to correct to longer term trends before seeing good growth in real terms.
It is a very high risk game of overextending oneself whilst rates are low on the expectation that their won't be asset price deflation and that growth will resume in the not too distant further without inflation getting out of control such that the RBA would be forced to raise rates.
I think your best bet would be to be looking at the big property developers, if they scaling up operations you get probably bet that the big boys in town believe things are looking positive for property's future... the reality is most big developers have really scaled back operations and are just looking to survive at the moment.
My good mate and investment partner is a property economist by trade and he wouldn't call this a "no brainer buy market" it's a very much "wait and see if the ass falls out" market.
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