Australian Property Market on the Up?

[Brendan]

I am part of a number of property newsletters and lists, this helps me keep my finger on the pulse of what the market thinks is happening.

So it seems the common theme of these articles is that we are now in a recovery phase of the property cycle, which means we are probably at the bottom and we should be thinking about or in the process of buying our investment properties ready for the next big wave..

What do you think..? Are you going to run out and buy property.. or do you think that another kick in the guts for the market is looming?

[abd]

I think if you can buy a property in a good location, then anytime is a good time. As for an investment, I think anytime is a good time especially if you have done all your maths correctly and factored in a buffer for bad times.

In general property is always a good investment

[gerryonline]

I have just spotted this article over at smartcompany and they also agree.. Property prices set to soar again - Business news, business advice and information for Australian SMEs | SmartCompany

So do you think we have missed the boat or should jump on board now?

[one]

I'm not convinced by property right now. Everyone has been talking for years that in Australia we are suffering a major under-supply of housing, but a few respected analysts are starting to say that it may not be anywhere near as high as thought.

Migration (both interstate and from overseas) was seen as a big driver of predicted under-supply, but due to different family living arrangements (especially for overseas migrants) the number of houses required is lower than thought. For example, many migrant families may have three generations living in the one house, rather than three separate houses.

Many GenY (and some GenX) are chosing to stay at home, including some who are married with young children. The advent of the suburban 'McMansion' has made this not only more and more possible, but also more and more desirable.

Australia has an enormous number of spare bedrooms, I forget the exact number but know it's in excess of one million. Many of these are due to young singles living in two bedroom apartments, and 'empty nesters' with spare bedrooms now that the kids have moved out of home. As youth unemployment continues to rise (which is currently the case) more and more of these young people may find their old bedroom at home more attractive than their $300 a week flat.

According to RP Data's figures, Brisbane has experienced growth of 1.77% over the last 12 months. Well at least it's not going backwards you might say, but you mustn't forget inflation. Inflation for the 12 months to the September quarter (the most recent published figure) was 1.3%, so 'real' price growth was only 0.47%. If you're paying 5-6% on your mortgage, you're going backwards.

I'm certainly not saying that property will slump, but I don't think it's about to 'boom' or 'soar'. It certainly won't be like 2002 to 2006 when you could 'flip' properties and make a killing. Sure, some people still will and can, but it will take a lot more work.

And remember, whilst the share market is a leading indicator, residential property is a lagging indicator. So just because the sharemarket is enjoying a strong recovery, it doesn't mean that property will just keep going up with it.

If you do invest in property at the moment, you really have to do your homework and work hard to find the best deals. It won't be like the good old days when you'd just buy the first property that came up, splash some paint around and sell it two months later for a fat profit.

[one]

Interesting article on smartcompany.com.au today:

Property expert questions housing shortage data - Business news, business advice and information for Australian SMEs | SmartCompany

[ray_223]

I think property is always a good investment. (Just bought our first investment property a few months ago).
But you probably should'nt be focusing on the short term boom and bust but the long term trend.
I also think that "most" solid investments will always have similar growth rates over any 5-10 year period.
e.g. investing $x in the stock market or property over a 10 year period will result in similar returns (as long as you invest wisely obviously).

[gseo]

AS far as the things i heard its ok to purchase the property in Australia. But we need to find the good location that was growing more.

[ferrorolvans]

I think that property prices have also been inflated due to government grants and such which are being phased down / out. Anyways Interesting topic though would be good to see some perspectives from those practising property investing.