Is It a Good Time to Buy an Investment Property with the current market trends?

Hi Everyone

I want to be financially free, I am no good with stocks and shares, ITFs and all that, so I feel like the best thing I can do is buy bricks and mortar. I have the loan deposit ready and loan approved.

  • Do you think the current trends indicate the market is going up, sales have risen and clearance rates in the areas which I want to look at are quite high at 70% form 40%.

I am looking at positively geared properties with potential growth and this particular areas which I have looked at show this.

My worry is, interest rate hikes, how a recession may impact me in terms or rates, value of household etc.

I want to be financially free by 35 and just step back from the rat race, and travel the world.

I currently own a negatively geared property

Comments

  • +6

    It's always a good time when you got the correct amount of money.

    • Thanks

  • +4

    Definitely maybe.

    • I'll consider that a yes.

  • +4

    Its all speculation but I think we can agree that; we're on a downward trend with a possible recession.

    Prices are slipping and a lot of people are upside down and going to be hurting more, wanting out IMO

  • +13

    I want to be financially free by 35 

    OP is 34.5

  • +2

    Where the dude with the crystal ball?

    • +1

      Oh Hai!

      Interest rates wont be going up anytime soon IMO, ANY increase at this point in time would break the 'conomy.

      On the other hand when the 'big one' hits (nope nobody can tell you when it will happen and those that do know aint telling anyone except their friends)house prises will tank for a while. World situation ATM, not good.

      Be interesting to see where all this push for negative interest rates ends up too. :)

      • +5

        I don't like your crystal ball.

        Anyone with the limited rose tinted edition?

        • I rarely wear mine now for fear I might damage them. How about a song to cheer you up? A friend sang this at my wedding, almost 15 years ago :)

    • +1

      Where the dude with the crystal ball?

      Dr Doom? Robert Shiller, the Noble Price winner and economist who accurately predicted 2 economic crises? Yeah, well he says his crystal ball is seeing a 3rd one in the very near future.

      • A lot depends on the trade war between Trump and China. Trump favors minus interest rates. He has a lot of support because the USA has no inflation so far.

        A lot of economists including Americans say he is driving the world into recession.

        As the Australian economy depends on China whether you like it or not, the worst is yet to come unless Trump loses his second term.

  • +1

    I hear there are plenty of apartments for sale in mascot going cheap

    • +1

      It's a cracker of a deal but the holding costs is a real breaker.

  • +2

    If you look at billionaires, majority of their money is not in property

    • All those peasants are going to be billionaires soon!

      They too have little money in property.

    • ….how would you know? Are you a billionaire?

  • Buy bitcoin. Sure thing.

  • +3

    If it was that easy, everyone would be doing it. Sounds like you want financial advice, talk to a financial planner.

  • +9

    Number one rule of investing in property - nobody, I don't care if you're Warren Buffet or Jimmy Buffet, nobody knows if prices are going to go up, down sideways or in circles, least of all OzBargain.

  • +2

    $150million powerball tomorrow. $50k of tickets will improve your odds drastically.

  • +3

    Your post history = OzProblems.

    • -1

      OzProblems?

  • What areas are you considering that have strong growth indicators and positive cashflow properties?

    • Sounds like the next Moranbah to me.

  • +3

    Not sure if real question or trolling..

    • +1

      "I want to be financially free by 35 and just step back from the rat race, and travel the world."

      Based on this gem, I'd say the latter.

    • Real question, no trolling

  • As with any property purchase, you are looking at the main fundamentals. If the fundamentals are right, generally prices go up faster in boom times and will lose value slower (than other properties) in difficult times.

    What I would be looking at 1. location, location 2. proximity to good transportation 3. proximity to good schools 4. proximity to shops, amenities, lifestyle.

    Based on the current clearance rates, assuming you are in Sydney, they are a bit misleading. Sure 10+ weeks of 70%+ clearance rates sounds great - but the level of stock that is out there is way below expectation. Naturally given that the the supply/demand situation, house prices in Sydney anyway, are still holding up if not going up.

    Looking at other indicators, the global economy is dragging and troubling, and for Australia, in my eyes, is in recession. There are pockets in the economy that are still doing (very) well, like in every sector out there, but there is a lot not doing so well.

    Ps. and there is absolutely nothing wrong with negative gearing so if you have 2, 4 or 17 negative geared properties, go for it.

  • +1

    What is the yield from the investments you're looking at?
    Investments either make money from capital growth or rental yield, or both.

    Don't count on capital growth in the short term.

    You could also look into a diversified managed fund where you don't need to be 'good with stocks', just choose your risk profile, for example: https://www.vanguardinvestments.com.au/retail/ret/investment...

  • +1

    http://www.ask8ball.net/ should sort your needs out as best as anyone here can. :)

  • Yes because the property market is being propped up continuously by illegal foreign investment. Banks and real estate agents look the other way because they're making a mint.

    The only people who lose out are first home buyers because they are always priced out of the market, assuming they have average jobs.

  • +1

    Unless you're getting a really good deal on the property, I wouldn't . It's only going to go down , down ,down … for the predictable future.

    Edit: I'm not a financial advisor and I'm in Melbourne. That was the advice I was given by several financial planners but I still went ahead and bought an investment property. I knew that if worst came to worst, we could still pay it off so was willing to take the risk.

  • +8

    If you are already losing money in property, are you sure more properties are a good idea?

    Investing is very simple, buy low and sell high.
    Sometimes you can tell when things are low - everybody hates the asset, it is unpopular, the graph is pointed steeply downward, nobody posts questions about it - because the common wisdom is it is a dog investment.
    Sometimes you can tell when things are high - new websites/magazines/TV shows pop up, everyone is talking, the graph is pointing steeply upward.

    Most of the time, you can't be sure. Conditions aren't all aligned one way or the other. It was like this in property for many years. Property increased at rates similar to inflation, occasionally, it had a year where it went up a few percent above inflation.
    It was a slow investment, rents covered the mortgage because you had to put down a fairly large deposit.
    After 15 years, you looked at your property and realised the mortgage was half paid off and it was worth 15% more than you paid for it and the rent was up nicely, and you looked forward to the day in a decade time when you would own the property and enjoy the rental income.

    For the last 20 years this has all gone out the window, and people expect prices to rise, rise, rise.
    They will even plan to make a loss hoping the price growth will mean they get out with a profit.
    We have seen a massive increase in property prices in Sydney and Melbourne.

    Can it double again? Simply, no. It can't. People don't have enough income to service a doubled property value, interest rates can't fall enough, rents can't rise enough. It isn't possible.

    Does your investment make sense if the price cannot double in the next 20 years? If the price stays the same, how long will it take you to pay off the investment? If the price falls 5% over the next 5 years, and rents stay the same, how long then?

    There are property markets overseas and possibly in some other Australian areas where prices can still climb, but the probabilities for Sydney and Melbourne aren't big price rises.

  • +1

    I would wait until a more optimistic world view emerges. Even war is a possibility in the near future.

    If long-term rental income is the aim, maybe jump in, but house prices still may drop to 1/3 of mid-2000s level, my area is nearly there now in sor perth (sad face).

    Interest rates seem to be headed down, but planning for at least 16% is best.

  • Property is a long term investment. By the time you pay stamp duty and expenses, you're actually in negative territory.
    However, if you've got the cash, it's a better option than parking it in an account that'll attract a negative interest rate in the not distant future

  • Why not visit /r/fire on reddit? It is a bit US centric, but you might get some ideas from there…

    fire = financially independent retire early