PPOR I'd go in now if I could afford to but IP seems more risky. It's all banking on interest rates moving down for crazy growth to continue and don't see that happening next 6 months.
Theoretically yes. I'm practice, no one in Australia builds to rent out so there's no net gain from investors to the housing market - it's pure rentseeking
I dont see what's the difference between rentseeking and ppor. I am not buying just for the sake of rentseeking. I also pay rent and want to balance that so its almost same like a ppor.
Ok so ppor means you live in your own house. Totally normal, reasonable thing to do. Rentseeking is an antisocial, unproductive behavior that means you take advantage of someone else for your gain.
Rentvesting is a gray area, where you're typically bidding up prices in a specific region beyond what they would be if you just built in that area (sometimes it's beyond your control e.g. council restrictions)
if one cant afford to buy in their area, what should one do?
I get your point. I hate being a LL but I dont know what else to do. my reasoning behind buying an IP in Perth is build some equity and then eventually buy a PPOR in Sydney.
There’s a very strong almost Maoist anti-landlord vibe in some circles in this country. Ignore them. There’s nothing wrong with buying and selling real estate to try and improve your position in life. As long as you treat your tenants like human beings, I don’t see anything wrong with that.
I really don't think interest rates will lead to crazy growth straight away. The reason rates get cut is because people don't have money, they aren't borrowing money, high unemployment etc. I think once the economy has slowed down there will be a delay between when interest rates are cut and normal growth.
These interest rates could be the norm now... especially while people keep buying up property.
Yeah there could be a delay. Once interest are cut it will send a signal to the market that cheaper money is coming back. Hopefully no one thinks the near 0% rates are coming back anytime soon.
Not for 6 months at least. They say don't try to pick perfect time to time your entry into property market if PPOR... you will hold long term. But for IP you could lose some money as you don't necessarily hold it as long. I'm watching Canadian property market closely and there's absolutely a stack of people losing serious $ who thought property prices only go up. It seems there's a few similarities between Canada and Australia when it comes to property prices.
Is there a massive over supply in Canada?
Can only see prices going up in Aus, severe under supply across most capital cities and if rates go down in 6 months, it will only fuel current demand. Just my thoughts
It's quite similar on supply side but the inflated prices have reached a point where they're running out of buyers in some areas that have previously gone up really quickly. You can't rely entirely on foreign investors that have loaded pockets. Sooner or later, like in Sydney or Melbourne, you have to look at first home buyers and see how much money they are earning and how much the banks are prepared to lend and compare with asking price. Of course there's different suburbs and different types of homes but finding a few typical properties and realising that top 10% of earners are not able to afford the mortgage, you realise that crazy growth may not continue...
Yeah at some point wages won’t support any more growth, everything will just be too expensive. Melb and Syd are just nuts. Perth, Adelaide and Brisbane still have a fair way to go growth wise for mine, wages are higher in some of these states and median prices are 30% or more lower
They say don't assume an investment will continue to do well in the future simply because it's done well in the past.
It's very hard to get out of the habit once you've seen something go in one direction for 30 years... I think hosting investments will get more unpredictable in the future. Bitcoin seems like a better bet for next 6 months and I can't believe I'm saying that.
You have to ask yourself is all the good news factored into the market? It is efficient so what other really good news could come through to drive property? I honestly can’t come up with any ideas here so I have to think a flat period at best or a Ben a downturn is more likely
Just bought at auction earlier in the month. Was on the sidelines for a long time, not sure if I should jump in. Not settled yet but feeling ecstatic to have done it. Feels like I finally made some progress in life. If it's something you want, just do it (in a sensible way, with a thought out budget). Life won't wait.
Don't be sorry, valid questions, the stock market is much more unpredictable than a property. It's the reason why a bank will give you a million dollar loan for a house and not Tesla stock. The property market is absoloutely booming here at the moment and you either jump on it if you can and sit on it and reap the benefits or you don't and miss out.
We've all heard this before the whole houses always go up pitch yet again.
Is OP as an investor really better off buying a negatively geared property banking on growth that has to beat at least 5% cash interest plus (1-marginal tax rate) * negatively geared amount per year? Maybe, maybe not. But you seem to feel entirely comfortable giving the financial advice that he is better off with an IP than other forms of investment.
It's not financial advice please, it's purely general, I'm completely unqualified to give financial advice. I am however a 2 time home owner and buyer and attend auctions and keep an eye on the market here very closely. If you own a property in majority of large cities in this country especially Melbourne in a nice suburb you'll do well long term it's just the nature of the beast
Feeling the same but looking to buy my first PPOR. I'm a bit concerned because I've been doing well building my wealth with other investments, I'm hesitant to lock most of it into property. I'm also debt free and would then be taking on a big mortgage for the first time. Extra complication for me is a desirable location ppor such as an apartment won't have growth, as compared to a less desirable location but an actual house...
But hey as long as the property gravy train continues I'm happy to leverage into that
I’m in a 3 bed, 1 bath, 1 garage villa ‘quadriplex’, a laneway division in Scarbs. Built in ‘88. No body corporate, no strata fees. But there is group insurance, we cant do it separately. 115sqm living space and approx the same outside space, so it’s decent sized. You could definitely raise a young small family and even teens, as some have in the other properties but you just can’t hoard a crapload of stuff. Though there are plenty of ways to ‘build’ on storage options.
Mine has consistently kept up with the median house price in Perth over 22 years. I mean it’s been approximately the same, pretty close though, as the Reiwa quoted figures over that period of time. If I look on any property site now and they give an estimate for mine and my neighbours properties, they are saying high range is just under 800k. That seems way too much to me. I’d say it’s about $660-680. Last one sold about 2 - 2.5years ago for $600k. I know this current market is crazy but yeah nearly 800k seems way too much in my opinion. Hope that info helps. Good luck.
Very helpful thanks! I think in these types of properties the fact you're usually on a bit of land for yourself (noting any shared components) makes it more comparable to houses than multi storey apartments.
This market is crazy places are going for 50-100+ more than what shows on corelogic etc.
Of all the major metro markets I’d say Perth would be one of the ones that has significant growth upside still. I won’t even ask about which suburb - just from how you’re able to say “house” and “$650k” in the same sentence is enough.
Pretty much impossible in Syd/Melb.
Yes it’s only good to buy when the economy is booming and nothing bad on the horizon!
I made a massive mistake buying a inner Brisbane IP at the height of COVID fear in May 20.
737k immigrants have entered Australia in the last 12 months with already limited housing stock. I don't see any falls in the next 12-24 months, especially once the RBA starts lowering rates again.
If these immigrants had cash they would not be immigrants. They come here poor and cannot afford to buy a house let alone rent.
I am not a FOMO thinker,
[https://www.realestate.com.au/nsw/cardiff-2285/](https://www.realestate.com.au/nsw/cardiff-2285/)
prices are falling.
Whilst a reduction in interest rates will cause pressure for prices to rise it will not occur in the short term. Unemployment is rising and your 737K immigrants are either going to take jobs or handouts, either way banks are not going to be lending to unemployed people.
[https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/latest-release](https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/latest-release)
Let us hope enough coffee carts pop up to service the 737K immigrants daily caffein hit.
Sorry, but an immigrant is someone who moves here regardless of wealth. For example, my husband in an immigrant from New Zealand.
Unless you know the name for someone who has moved here from another country that I am aware of?
>if these immigrants had cash they would not be immigrants
Tell that to the wealthy Chinese fleeing their own housing crisis to migrate here (or to simply expand their investment portfolio).
Source: https://www.yourinvestmentpropertymag.com.au/buying-property/the-rise-of-chinese-property-investment-in-australia
>Whilst a reduction in interest rates will cause pressure for prices to rise it will not occur in the short term
>Unemployment is rising
Unemployment rising, in conjunction with subdued economic activity and the CoL crisis, are reasons for raising rates early. It provides a way to bring confidence back in the market while easing pressure on current borrowers.
You might be able to get single-digit percentage discounts now if you find the right paranoid seller. I recently did in Sydney, but the vendor was a foreigner and needed the cash. However, I can't see prices dropping by 10%+ barring another international black swan event. Everything else has been priced in (unemployment, low GDP growth, etc.)
But only time will tell.
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>I am actively looking to buy in Newcastle region but still see falls to come in the next 12 months
It's been fairly stable in the Newcastle region despite huge interest rate rises. I very much doubt prices will fall much. And if they do, it'd be fairly temporary. Prices in Newcastle have doubled in the last 6 years.
It's not speculation if the bank has revalued it and he's been able to draw down on the loan based off that valuation to put towards other investments 🙂
The banks are the biggest speculators of all. Their balance sheets are swollen with big fat loans on shitty properties. I see it every day on this forum shitty little cottages on 300sq/m within a 20 km radius of Melb/Syd CBD’s going for $1M+ it’s a joke. A house is worth what it settles for, everything else is speculation.
I feel like we're saying the same thing but also not. If a 3 bed, 1 bath 300sqm house sells for 1mil on a street where I own a house with the exact same specifications, I own a home worth 1mil and the bank will value it as such. Pretty straight forward.
I am not expecting rates to go higher this year, but they could. If rates go up another 1% and stay there for 12-18mo it could change valuations across the entire property sector in Australia. So in that scenario, your $1M house may not be worth the same 12 months into this new, however unlikely rate cycle. Valuations aren’t forever, they are speculation around the future market. So a house is with what it settles for.
> .I thought once interest rates drop , property will stop growing / fall . Never happened, it just went up again
When rates drop then the ability for a buyer to service a debt increases and this is then absorbed by higher prices to maintain maximum pressure against buyers so that the FOMO mentality stays in full swing. Prices are always dictated by the ability of a borrower to service a debt.
Depends on what country wins the war and who takes over as leader ..
They may repossess all the land or let people keep it... If china they own 90% anyway if Russia may lose it all
House prices are all about supply and demand and in Perth there just not enough housing so housing will keep going up while there demand. Have a look at Sydney and Melbourne and how expensive the housing is there. Plus we have had 13 interest rates and has had no effect on the market.
What’s the point of even asking this question the masses are always wrong. How much has the property gone up in 5 years? If it’s 200-300k or something crazy like that then I dunno, I’d be thinking that’s a lot of future growth brought forward. Worse case scenario you gotta sit on it for 10 years.
Currently there is a huge demand for rentals . So as an IP you can really dictate what you rent it for. That demand seems to be fuelled by overseas and interstate migration. When that settles down , who knows?
We’re about to push go on a $1m townhouse in NZ as a 3rd IP- it’s taken forever to build and interest rates have spiked since we pressed go. Are we concerned, sure but it’s all about your mindset and ambitions with investing and your level of appetite for risk. It’s a long term game. If you don’t have a good advisor and property investment strategy I suggest you get one.
If you're buying an IP go for it
PPOR I'd go in now if I could afford to but IP seems more risky. It's all banking on interest rates moving down for crazy growth to continue and don't see that happening next 6 months.
Oh they're practically guaranteed to lose money. I'd hate to see a ppor bleeding money now, but anyone actively rentseeking deserves what they get
Things people have been saying for 30+ years
Someone has to own the house being rented, right? The difference is whether they charge a reasonable amount of rent or not.
Theoretically yes. I'm practice, no one in Australia builds to rent out so there's no net gain from investors to the housing market - it's pure rentseeking
That's not true, plenty of investors build to rent.
Roughly 0.2% of the residential housing sector according to a report from EY. I wouldn't call that plenty
I dont see what's the difference between rentseeking and ppor. I am not buying just for the sake of rentseeking. I also pay rent and want to balance that so its almost same like a ppor.
Ok so ppor means you live in your own house. Totally normal, reasonable thing to do. Rentseeking is an antisocial, unproductive behavior that means you take advantage of someone else for your gain. Rentvesting is a gray area, where you're typically bidding up prices in a specific region beyond what they would be if you just built in that area (sometimes it's beyond your control e.g. council restrictions)
if one cant afford to buy in their area, what should one do? I get your point. I hate being a LL but I dont know what else to do. my reasoning behind buying an IP in Perth is build some equity and then eventually buy a PPOR in Sydney.
There’s a very strong almost Maoist anti-landlord vibe in some circles in this country. Ignore them. There’s nothing wrong with buying and selling real estate to try and improve your position in life. As long as you treat your tenants like human beings, I don’t see anything wrong with that.
I really don't think interest rates will lead to crazy growth straight away. The reason rates get cut is because people don't have money, they aren't borrowing money, high unemployment etc. I think once the economy has slowed down there will be a delay between when interest rates are cut and normal growth. These interest rates could be the norm now... especially while people keep buying up property.
Yeah there could be a delay. Once interest are cut it will send a signal to the market that cheaper money is coming back. Hopefully no one thinks the near 0% rates are coming back anytime soon.
So you don’t see rates going down or prices continuing to grow? Interested to know your thoughts behind this
Not for 6 months at least. They say don't try to pick perfect time to time your entry into property market if PPOR... you will hold long term. But for IP you could lose some money as you don't necessarily hold it as long. I'm watching Canadian property market closely and there's absolutely a stack of people losing serious $ who thought property prices only go up. It seems there's a few similarities between Canada and Australia when it comes to property prices.
Is there a massive over supply in Canada? Can only see prices going up in Aus, severe under supply across most capital cities and if rates go down in 6 months, it will only fuel current demand. Just my thoughts
It's quite similar on supply side but the inflated prices have reached a point where they're running out of buyers in some areas that have previously gone up really quickly. You can't rely entirely on foreign investors that have loaded pockets. Sooner or later, like in Sydney or Melbourne, you have to look at first home buyers and see how much money they are earning and how much the banks are prepared to lend and compare with asking price. Of course there's different suburbs and different types of homes but finding a few typical properties and realising that top 10% of earners are not able to afford the mortgage, you realise that crazy growth may not continue...
Yeah at some point wages won’t support any more growth, everything will just be too expensive. Melb and Syd are just nuts. Perth, Adelaide and Brisbane still have a fair way to go growth wise for mine, wages are higher in some of these states and median prices are 30% or more lower
Based on the last 30 years, Australia's idea of sooner or later is much, much later.
They say don't assume an investment will continue to do well in the future simply because it's done well in the past. It's very hard to get out of the habit once you've seen something go in one direction for 30 years... I think hosting investments will get more unpredictable in the future. Bitcoin seems like a better bet for next 6 months and I can't believe I'm saying that.
Also, there's a risk of a much higher increase in emigration as the current huge immigrant intake starts to leave (average stay is <2 years).
Nobody really knows. But I was just referring to the idea that interest rate cuts means crazy growth...
What’s IP?
Investment property
Your ISP will give you an IP when you pay them for a connection, which costs a lot less than 650k
Are we doing Dad jokes now? Because I'd send you a udp joke but I'm not sure if you'd get it.
I got that joke much faster than I would have if it were a tcp joke. But seriously, I don’t more what IP means in the original post. Please help.
Investment Property
You have to ask yourself is all the good news factored into the market? It is efficient so what other really good news could come through to drive property? I honestly can’t come up with any ideas here so I have to think a flat period at best or a Ben a downturn is more likely
Just bought at auction earlier in the month. Was on the sidelines for a long time, not sure if I should jump in. Not settled yet but feeling ecstatic to have done it. Feels like I finally made some progress in life. If it's something you want, just do it (in a sensible way, with a thought out budget). Life won't wait.
It's now or never. You can consume media and follow in self pity or you can take the step. Your call.
Why is it now or never? Would you be saying the same if OP is asking about Tesla stocks? Literally just an investment.
Coz there will always be “bad news” every year
Sorry, not Tesla stocks but more like Tesla calls.
Don't be sorry, valid questions, the stock market is much more unpredictable than a property. It's the reason why a bank will give you a million dollar loan for a house and not Tesla stock. The property market is absoloutely booming here at the moment and you either jump on it if you can and sit on it and reap the benefits or you don't and miss out.
We've all heard this before the whole houses always go up pitch yet again. Is OP as an investor really better off buying a negatively geared property banking on growth that has to beat at least 5% cash interest plus (1-marginal tax rate) * negatively geared amount per year? Maybe, maybe not. But you seem to feel entirely comfortable giving the financial advice that he is better off with an IP than other forms of investment.
It's not financial advice please, it's purely general, I'm completely unqualified to give financial advice. I am however a 2 time home owner and buyer and attend auctions and keep an eye on the market here very closely. If you own a property in majority of large cities in this country especially Melbourne in a nice suburb you'll do well long term it's just the nature of the beast
Feeling the same but looking to buy my first PPOR. I'm a bit concerned because I've been doing well building my wealth with other investments, I'm hesitant to lock most of it into property. I'm also debt free and would then be taking on a big mortgage for the first time. Extra complication for me is a desirable location ppor such as an apartment won't have growth, as compared to a less desirable location but an actual house... But hey as long as the property gravy train continues I'm happy to leverage into that
PPOR is different though man. The security of your own home is invaluable
That's true, I just don't want to shoot myself in the foot financially.
Come retirement you’ll be thanking yourself. Generally only those with their own home are comfortable in retirement.
Middle ground? Townhouse or decent duplex, triplex, quadriplex not too far out.
That's what I'm thinking and mostly looking at yeah, best of both worlds per se
I’m in a 3 bed, 1 bath, 1 garage villa ‘quadriplex’, a laneway division in Scarbs. Built in ‘88. No body corporate, no strata fees. But there is group insurance, we cant do it separately. 115sqm living space and approx the same outside space, so it’s decent sized. You could definitely raise a young small family and even teens, as some have in the other properties but you just can’t hoard a crapload of stuff. Though there are plenty of ways to ‘build’ on storage options. Mine has consistently kept up with the median house price in Perth over 22 years. I mean it’s been approximately the same, pretty close though, as the Reiwa quoted figures over that period of time. If I look on any property site now and they give an estimate for mine and my neighbours properties, they are saying high range is just under 800k. That seems way too much to me. I’d say it’s about $660-680. Last one sold about 2 - 2.5years ago for $600k. I know this current market is crazy but yeah nearly 800k seems way too much in my opinion. Hope that info helps. Good luck.
Very helpful thanks! I think in these types of properties the fact you're usually on a bit of land for yourself (noting any shared components) makes it more comparable to houses than multi storey apartments. This market is crazy places are going for 50-100+ more than what shows on corelogic etc.
Of all the major metro markets I’d say Perth would be one of the ones that has significant growth upside still. I won’t even ask about which suburb - just from how you’re able to say “house” and “$650k” in the same sentence is enough. Pretty much impossible in Syd/Melb.
Yes it’s only good to buy when the economy is booming and nothing bad on the horizon! I made a massive mistake buying a inner Brisbane IP at the height of COVID fear in May 20.
Can you tell us more? What mistakes?
He's being sarcastic
Ha we live in different world 😞
Why was it a mistake?
in the news we have been having tech layoffs and teetering on the edge of a recession for over a decade
But the gvt mask it with ever increasing rates of population growth
If you are hesitant, don’t be. The time to buy is NOW. Buy small and work up. DONT sell.
Time in the market > Timing the market
Go now
Also Perth is the opposite of a tech hub
It's a mining hub So even more exposed to boom bust?
Agree. But next few years looks lovely.
How so? Mines are currently closing down with large job layoffs
And the lithium boom is over. Recession coming to Australia this year.
Isn’t iron ore the big resource of WA? Apparently it’s still going strong for now. It’ll cool off eventually but probably not for a year or so.
It's down 10% in a month and a bit Nickel has fallen through the floor Lithium is following
China opened up those nickel mines in indo, iron ore is falling. As you say lithium is following, only means one thing for Perth
I think a lot of australia is still wearing rose tinted glasses
What are you smoking?
ya but I work in tech.
I am actively looking to buy in Newcastle region but still see falls to come in the next 12 months
737k immigrants have entered Australia in the last 12 months with already limited housing stock. I don't see any falls in the next 12-24 months, especially once the RBA starts lowering rates again.
If these immigrants had cash they would not be immigrants. They come here poor and cannot afford to buy a house let alone rent. I am not a FOMO thinker, [https://www.realestate.com.au/nsw/cardiff-2285/](https://www.realestate.com.au/nsw/cardiff-2285/) prices are falling. Whilst a reduction in interest rates will cause pressure for prices to rise it will not occur in the short term. Unemployment is rising and your 737K immigrants are either going to take jobs or handouts, either way banks are not going to be lending to unemployed people. [https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/latest-release](https://www.abs.gov.au/statistics/labour/employment-and-unemployment/labour-force-australia/latest-release) Let us hope enough coffee carts pop up to service the 737K immigrants daily caffein hit.
Sorry, but an immigrant is someone who moves here regardless of wealth. For example, my husband in an immigrant from New Zealand. Unless you know the name for someone who has moved here from another country that I am aware of?
>if these immigrants had cash they would not be immigrants Tell that to the wealthy Chinese fleeing their own housing crisis to migrate here (or to simply expand their investment portfolio). Source: https://www.yourinvestmentpropertymag.com.au/buying-property/the-rise-of-chinese-property-investment-in-australia >Whilst a reduction in interest rates will cause pressure for prices to rise it will not occur in the short term >Unemployment is rising Unemployment rising, in conjunction with subdued economic activity and the CoL crisis, are reasons for raising rates early. It provides a way to bring confidence back in the market while easing pressure on current borrowers. You might be able to get single-digit percentage discounts now if you find the right paranoid seller. I recently did in Sydney, but the vendor was a foreigner and needed the cash. However, I can't see prices dropping by 10%+ barring another international black swan event. Everything else has been priced in (unemployment, low GDP growth, etc.) But only time will tell. RemindMe! 3 Months
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Aren’t most of them students?
> Aren’t most of them students? Lol, I wonder how many empty level 1 course desks there are in Australian universities on March 1? Bazinga, 737K :)
>I am actively looking to buy in Newcastle region but still see falls to come in the next 12 months It's been fairly stable in the Newcastle region despite huge interest rate rises. I very much doubt prices will fall much. And if they do, it'd be fairly temporary. Prices in Newcastle have doubled in the last 6 years.
[удалено]
Your house is worth what it settles for, everything else is speculation.
It's not speculation if the bank has revalued it and he's been able to draw down on the loan based off that valuation to put towards other investments 🙂
The banks are the biggest speculators of all. Their balance sheets are swollen with big fat loans on shitty properties. I see it every day on this forum shitty little cottages on 300sq/m within a 20 km radius of Melb/Syd CBD’s going for $1M+ it’s a joke. A house is worth what it settles for, everything else is speculation.
I feel like we're saying the same thing but also not. If a 3 bed, 1 bath 300sqm house sells for 1mil on a street where I own a house with the exact same specifications, I own a home worth 1mil and the bank will value it as such. Pretty straight forward.
I am not expecting rates to go higher this year, but they could. If rates go up another 1% and stay there for 12-18mo it could change valuations across the entire property sector in Australia. So in that scenario, your $1M house may not be worth the same 12 months into this new, however unlikely rate cycle. Valuations aren’t forever, they are speculation around the future market. So a house is with what it settles for.
Once interest rates start dropping which they will then property should go up again. But i have been wrong before.
lol..I have been wrong too ..I thought once interest rates drop , property will stop growing / fall . Never happened, it just went up again
> .I thought once interest rates drop , property will stop growing / fall . Never happened, it just went up again When rates drop then the ability for a buyer to service a debt increases and this is then absorbed by higher prices to maintain maximum pressure against buyers so that the FOMO mentality stays in full swing. Prices are always dictated by the ability of a borrower to service a debt.
Not everything is about interest rates
Asking people who don't own a house if you should buy a house is just stupid.
Depends on what country wins the war and who takes over as leader .. They may repossess all the land or let people keep it... If china they own 90% anyway if Russia may lose it all
House prices are all about supply and demand and in Perth there just not enough housing so housing will keep going up while there demand. Have a look at Sydney and Melbourne and how expensive the housing is there. Plus we have had 13 interest rates and has had no effect on the market.
What’s the point of even asking this question the masses are always wrong. How much has the property gone up in 5 years? If it’s 200-300k or something crazy like that then I dunno, I’d be thinking that’s a lot of future growth brought forward. Worse case scenario you gotta sit on it for 10 years.
Currently there is a huge demand for rentals . So as an IP you can really dictate what you rent it for. That demand seems to be fuelled by overseas and interstate migration. When that settles down , who knows?
We’re about to push go on a $1m townhouse in NZ as a 3rd IP- it’s taken forever to build and interest rates have spiked since we pressed go. Are we concerned, sure but it’s all about your mindset and ambitions with investing and your level of appetite for risk. It’s a long term game. If you don’t have a good advisor and property investment strategy I suggest you get one.
I wouldn’t be purchasing in Perth right now. I would wait until September.
Interested to know, why September?
By August, you’ll understand.