Buying First Home during Bubble Prices

usmanyousaf on 15/06/2015 - 01:03
Last edited 15/06/2015 - 15:20

Hey folks,
I am interested in buying property with 10% deposit in Melbourne Nth suburbs for an average price 350k - 375k.

Just wondering is it a good time to buy a First Home property or should I wait?

Seems like property prices are very high and this bubble soon burst. Wondering how much a 350-375 house will come down after the burst and when this bubble will burst???

Thanks in advance guys,
Usman

UPDATE

Thanks Guys for your valuable time and feedback. I have decided to buy a property now. Also, I managed to get 5% loan/borrow from my family So paying 15% total amount of the house.
I also believe that the prices in all over Melbourne & Sydney are very much high and it will burst soon. However, I also believe a property worth 375k will not effected by the bubble burst with a large proportion.
Anyways, thanks folks for your time once again and good luck with everything.

Financial

Comments

  • subywagon on 15/06/2015 - 08:28

    I wouldn't be buying at the moment personally, as I think we've reached an apex in pricing. It's hard to judge how hard it will fall. It's a sellers market at the moment. The only advantage is cheap money, but I think the losses in value may be more than the savings on interest in some cases.

  • The tiger on 15/06/2015 - 08:40
    -3

    Housing price in every surburb is at its highest , and at its ridiculous condition.Almost all bidders are foreigners . To them money seems chicken feed and they have plenty. Can't anticipate the time of bursting the bubbles . Perhaps one should wait for a while till the demands subside as I think government is taking action for those overseas spectculators spoiling housing market.

    • Davros on 15/06/2015 - 15:38
      +2

      Almost all bidders are foreign? What a load of rubbish. Did you check their indidual id's to make sure?

  • tomclancy on 15/06/2015 - 09:09
    +7

    No-one has a crystal ball and there will be many varying opinions on future market direction. It sounds as though you are in the camp of believing in a bubble burst and subsequent drop in prices.

    In my opinion if you are buying it as an investment and you believe prices will come down then you would be foolish to buy now. Would you buy shares if you thought the share market was about to drop?

    On the other hand if you are buying to live in then it wont matter if prices drop $X for the next X years. You should buy when it suits your needs/lifestyle and future market direction will have a much lower impact on your purchase decision.

  • uder on 15/06/2015 - 10:09

    Everything points to this being a bad time to buy. Although that could be said of the conditions two years ago and now prices are even higher. Can't predict this market because it is so irrational. I'm in Sydney which is where things really are crazy.

  • Cheeper on 15/06/2015 - 10:54
    +1

    Too much demand in the market still. Buy now.

  • tomleonhart on 15/06/2015 - 10:57
    +5

    To be frank, i thought an OTP @ 400k 2 beds in Sydney 5 years back was expensive.

    Then i thought an OTP @ 500k 2 bed was expensive 3 years back.

    Now i think an OTP @ 900k 2 bed is expensive.

    Every man and his dog has an opinion on what's going to happen. Do what appropriate to your financial situation/intention.

    • [Deactivated] on 15/06/2015 - 12:37

      Yeh, I waited for the bubble to pop from around 2008, it never did.
      Economic academics such as Steve Keen made all these forecasts , I really thought the sky was going to fall in, it never did.

      The prices kept on rising fueled by a number issues. They allowed self funded super,negative gearing for the masses, overseas the US and Pom's were awash with quantative easing and rich Chinese poured in( North Sydney) spending the bounty of China's growth.

      I came to the conclusion that for me, buying a house is an emotional issue (raising a family etc) and that I should probably choose somewhere I don't mind being stuck if prices were to fall.

      As "tomleonhart" suggests "do what is appropriate to your financial situation/intention".

      • Mad Max on 15/06/2015 - 21:52

        "Economic academics such as Steve Keen made all these forecasts"
        If they really knew they would not be telling others…they would make the most of it themself.
        They are all just guessing, educated guessing perhaps, but still guessing.

    • congo on 19/06/2015 - 01:12

      "Winter is coming".
      With winter coming, the market will cool down a bit.
      IMO it will pickup again during the summer period.

      IMO In, Sydney, I don't think that prices will drop.
      Worse case, it will stay stagnated.

  • toniyellow on 15/06/2015 - 11:03

    The "bursting" of the bubble may likely just be a point when the demand drops and prices stagnate - but don't fall. 0% growth in prices would still be a dramatic change from the current climate. So if it is a good time in your life to buy (looking for stability etc) you may as well just buy now.

    If you only have 10% deposit and are in no rush, it seems like you could wait until you have 20% so you don't pay LMI

    You need to do some serious research into the suburbs you want to buy in to make a better informed decision. No-one here is going to get that in depth for you.

  • gevidian on 15/06/2015 - 12:04
    +1

    The bubble has now been going for 16 years (and perhaps even longer). You can find articles over the last 10 years talking about how demand will drop and prices will crash. If you can find a property at what you deem to be a good price and good value (price is what you pay, value is what you get), then go for it. Getting what you think is a bargain is key - do your own research and due diligence and you will come out ahead in the long term.

  • dasher86 on 15/06/2015 - 13:09

    the bubble will burst if negative gearing is disallowed.
    Also with the population, it just keeps growing so buy when you can.
    I don't actually think prices will decrease unless the above happens.

    • congo on 19/06/2015 - 01:14

      Agreed.

  • leiiv on 15/06/2015 - 13:40

    I read somewhere that when the bubble burst (God knows when) the most highest correction will be on multi million dollars properties. If your property is already dirt cheap to begin with, it should be really hard to have the price drops even lower.

  • kev98 on 15/06/2015 - 15:25

    I am interested to hear how much the people with +million dollar mortgages are earning, especially those with families. They would have to be on at least 150k before tax I would be thinking, otherwise how could they afford anything once food, cars, insurance etc is accounted for

    /rhetorical question/

  • tokziktigah on 15/06/2015 - 16:20
    +2

    5-6 years ago, I thought prices were too high and kept waiting for things to die down. Been regretting it for 5-6 years since! If you plan to hold it long term, generally it'd be pretty low risk for prices to crash.

    • congo on 19/06/2015 - 01:15

      True. It is a long term investment. Decades.
      In the end, you won't make a loss.

      Buy one, if you need a place to live :-)

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