Best Property Type - First Time Home Buyer

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  try2bhelpful on 20/08/2017 - 12:08

  +10

  if you can afford it always go for a house, they appreciate quicker and you don't have to deal with body corporate issues. My 2c.

  • 

    LemonShapedRock on 20/08/2017 - 15:52

    Thanks for sharing, I'm on the same page.

    I'm more interested in a house for it's future development potential, even its it's not me developing I'm sure there will others who will.

    • 

      usmanyousaf on 20/08/2017 - 17:43

      You can not buy a house in oakpark for 600k anymore.

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  Trying2SaveABuck on 20/08/2017 - 14:16

  Ardeer the oldest shitest house with the biggest block of land you can afford

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  EightImmortals on 20/08/2017 - 14:42

  +1

  Wait.

  • 

    LemonShapedRock on 20/08/2017 - 15:53

    +1

    Yes, go on..?

    • 

      EightImmortals on 20/08/2017 - 16:02

      Anyone still not convinced Australia’s property bubble is close to bursting should take note of a trifecta of recent warnings: forecasts of a major contraction in construction by industry insiders, a major reversal in international capital flows to Australian real estate, and leading bank executives issuing uncharacteristic warnings.

      BIS Oxford Economics forecasts a 31 per cent collapse in the residential construction market over the next three years, from 230,000 new homes built per year down to 160,000. And high-density apartment construction will collapse by around a massive 50 per cent. The economics forecasting firm’s managing director Robert Mellor estimates the underlying level of demand for dwellings, based on population growth, is around 184,000. National building starts peaked in 2015-16 at $107.3 billion, so such a collapse will be obviously a multi-billion dollar hit to the Australian economy and potentially a trigger for a chain-reaction collapse.

      In Sydney, billionaire Harry Triguboff, founder of Australia’s biggest apartment builder, Meriton, says he expects apartment building rates to fall between 25 and 33 per cent over 12 to 18 months which, in anyone’s language, is a massive decline. Given that construction and finance are the biggest sectors in the Australian economy, this forecast is truly stunning. And combined with the derivatives bubble and the end of Australia’s car manufacturing, not to mention a looming trans-Atlantic banking crash, several triggers are present to smash the Australian economy.

      Despite BIS Oxford Economics’ dramatic forecast, Mellor seems to see property in isolation. “There will be some price declines”, he said, but “it will be a correction, not a collapse, we’re not talking about prices falling by 10 or 15 per cent.” Melbourne and Sydney could see price falls of up to 4 per cent, he said.

      Meanwhile Jonathan Tepper, founder of macroeconomic research group Variant Perception, has predicted an Australian property market crash of 30 to 50 per cent. The nation’s banking system is “unstable” and Australians are living in “fantasyland” about the impact of slowing construction on the economy, says Tepper.

      Foreign investment into Australian property is also rapidly drying up. A former top US Federal Reserve official, Nellie Liang, who recently visited Sydney, said a “trigger” for a real estate price collapse could be a reversal in international capital flows. In particular, recent laws in China preventing capital outflow will be significant given that China is the largest source of approved investment in Australian real estate. Master Builders Australia calculates that foreign investors accounted for as much as one-third of the approximately 230,000 houses and apartments that began being built last year.

      Commonwealth Bank CEO Ian Narev in the usual banker language has just stated the obvious: “Underneath the effective wealth of the household is a whole lot of mark-to-market of what’s my property worth and what are my assets worth, whereas the debt is debt,” he warned. “So you’ve just got to be very careful about the role of asset values in that.” (Emphasis added.)

      Essentially, as the head of Australia’s biggest bank Narev is warning that a large part of your nominal wealth will evaporate when property prices crash, but your debts will remain the same. This will affect most Australians and we should not tolerate such an outcome, particularly given the growing numbers saddled with a mortgage. The 2016 Census revealed that of all households in Australia, only 31 per cent owned their homes outright; 35 per cent of households were paying off a mortgage while others were renting. A trend for the last two decades shows outright homeownership is declining, while an increasing number of Australians are slaves to a mortgage.

      Westpac’s head of consumer banking, George Frazis has also made a frank admission: “This whole notion that you want a system where house prices drop is flawed. It is over $7 trillion in terms of an asset class. If that loses value, it would destabilise the economy,” he said in an interview with the Australian Financial Review. Frazis added that about 75 per cent of the bank’s first home buyers used products which allowed them to use their parents’ property as security to cover part of the deposit. (Emphasis added.)

      It would seem we have a choice between crashing property prices leaving millions of Australians with mortgages in negative equity, or as Frazis would have it, continued unaffordable housing locking out the next generation of home ownership. Both scenarios are crazy. A housing crash would wipe out the banks and whole kit and caboodle of ordinary Australian’s investments.

      • 

        TheBilly on 20/08/2017 - 16:51

        +1

        As far as Im concered, these twats couldn't predict the boom happening in the first place, why should anyone even care about what these experts have to say. Nobody could predict the boom, now we have a boom, everyones a professional able to predict the collapse.

      • 

        dcep on 20/08/2017 - 17:01

        Open the tap of immigration flood gate with free PR visa to anyone with money.

        Problem solved. Property boom again. Crash averted & pushed back for another 10 years.

      • 

        EightImmortals on 21/08/2017 - 07:52

        -1

        @TheBilly:

        Mortgage insurer Genworth Mortgage Insurance Australia, which has about 30 per cent of the mortgage insurance market, has revealed in its latest half-year results a distinct rise in mortgage delinquencies—borrowers falling behind or defaulting on their payments. Genworth pays out to the banks when borrowers are delinquent on mortgages it insures.

        The insurer has experienced a sharp rise in the number of paid claims, and an even sharper rise in the amount of those claims. In the first half of 2017, Genworth paid out 711 claims, up from 566 claims in the first half of 2016, and 633 claims in the second half of 2016. The average dollar value of those paid claims shot up from $72,600 in the first half of 2016, to $102,300 in the first half of 2017.

        This rise in delinquencies is shocking, considering that interest rates in Australia have been at record lows for a long time. It demonstrates how even a modest rise in interest rates will cause carnage among overstretched borrowers—as foreshadowed in April by Finder.com.au, which revealed that 57 per cent of mortgage holders would not handle even a $100 per month increase in their mortgage payment.

        Genworth connects the rise in delinquencies to the increase in real unemployment, even though that increase is not showing up in official statistics. Delinquencies rose in every state, but official unemployment increased in just two states—Queensland and Victoria. The biggest rise in delinquencies were in Queensland (0.72 per cent of mortgages) and WA (0.86 per cent), where the collapsed mining boom has left many jobless.

        While the overall delinquencies are still relatively low, the increase is marked. Most ominous is the increase in the manufacturing areas of Victoria that have started to suffer job losses from the collapse of manufacturing, such as the closure of Ford in Broadmeadows. Manufacturing is a much bigger employer than mining, and is concentrated in the big cities, particularly Melbourne, which are the centre of the property bubble. For every job lost at a factory like Ford, there are multiple job losses in the supply industries. Ford is already closed, but in October 2,600 Toyota workers at Altona and 1,000 Holden workers at Elizabeth in South Australia will lose their jobs when those factories finally close; it is estimated that for every job at Holden there are at least 12 jobs in the supply industry in South Australia.

        Big losses on the western front

        A new study by ratings agency Moody’s shows a rise in losses on house sales in Australia: nationwide, 7 per cent of owner-occupiers and 12 per cent of investors have sold at a loss. In a timely reminder to reckless investors on the east coast that property markets can and do fall, the Moody’s study shows that the problem is most acute in Western Australia: 20 per cent of Perth owner-occupiers and 26 per cent of Perth investors sold at a loss, while in rural WA 27 per cent of owner-occupiers and 45 per cent of investors sold at a loss.

        ABC business reporter Stephen Letts wrote on 4 August: “And there’s little good news for investors under duress about cutting their losses and heading for the exits in a downturn. Judging by results from the west in the first three months of the year, if you’re thinking of bailing out it may already be too late.” (Emphasis added.)

      • 

        TheBilly on 21/08/2017 - 11:52

        @EightImmortals:

        Whilst I agree that there is certain stresses on the market and this will have an impact in the near future, I am extremely doubtful that a full blown collapse will take place.

        A lot of people don't realise that the laws surrounding the American property collapse contributed to the insane chain reaction. Also whilst a lot of people were affected by this, a lot of people were presented with the opportunity to purchase properties for chump change and then wait out the flood until a correction occurred in the opposite direction, so it wasn't as bad as it was made out to be.

        I have met people whom were property investors before and after and have tripled and quadrupled their property portfolios and values during and after the collapse over there.

        A few points to consider:

        1. In America you can simply walk away from a mortgage and the house falls into the banks ownership - no longer your problem.
        2. In Australia you will be declared bankrupt it is not that easy. The ramifications will have a huge long term impact.
        3. Typical lending in those periods in America were at LVR's greater than 100% and not secured by appreciating assets.
        4. Whilst there was a short period of ridiculous LVR lending in Australia, this happened a decade ago when property prices were minimal, nowadays you are lucky to borrow at an LVR of 90% on top of which you pay mortgage insurance.
        5. Statistically those Genworth figures don't even register in proportion to the number of mortgages there are.
        6. Population growth is never considered in these figures. Forecasted growth figures are at about 6.5 million for Sydney and Melbourne each.

        I believe a correction "only" will occur and this correction will not affect everyone.

      • 

        Steptoe on 21/08/2017 - 12:37

        Thanks Denise

      • 

        EightImmortals on 21/08/2017 - 14:09

        @Steptoe:

        heh, the article must be doing the rounds, I wasn't even aware of her website. :)

      • 

        Steptoe on 21/08/2017 - 14:39

        @EightImmortals:

        heh, the article must be doing the rounds, I wasn't even aware of her website. :)

        Where they aren't your words, it's always good to quote your sources.

      • 

        iratepirate on 21/08/2017 - 15:45

        @phunkydude: They've all ready done that (Visa subclass 188,891,888), but globally there are a lot of competitors for that market share.

      • 

        dcep on 21/08/2017 - 21:54

        @TheBilly:

        my colleague just signed a home loan from Westpac on 95% LVR with capitalised LMI. (even LMI can be loaned … lol )

        now he's looking for credit card with 0% purchases to buy furniture.

        go figure.

  • 

    cupcake on 21/08/2017 - 11:15

    The ones who wait are the ones who cannot afford to buy.