To buy now or wait?

[rockola57]

With recent interest rate rises is there anyone else like moi who are sitting and waiting for house prices to drop to realistic prices.Is this prudent? what do you think?We planned to buy in first 3 months of 2011.Would you wait longer?:confused:

[Kabroom]

Hi

 

We bought seven months ago and since then we have had I think about 6 interest rate rises, omg.

 

Now I don't know whether we have been stupid or we are just getting on with things but for me it is not just down to when it supposedly makes the most sense from a financial point of view because at the end of the day none of us have a crystal ball so who knows.

 

All I know is that I didn't want to be in a rental anymore and it felt right to buy and I'm glad we did, renting for me is just dead money.

 

Wendy

[byrned]

With recent interest rate rises is there anyone else like moi who are sitting and waiting for house prices to drop to realistic prices.Is this prudent? what do you think?We planned to buy in first 3 months of 2011.Would you wait longer?:confused:

 

I am waiting, at least until all this financial crap around the world is sorted, people say renting is dead money, but I want to work to live not live to work if that makes sense, i have a decent rental, i dont pay the rent, the interest on my savings which the bank pay me pays the rent, and it is so nice to be for the first time in my life to be debt free and have no mortgage around my neck, no house to maintain, friends of ours have had mortgage increases now of 500 per month, they cannot even take the kids out for a meal, go on hols because they are just skint, they have a great big house, which they rattle around in but cant do anything or go anywhere, say it is getting to stage of counting k's due to price of petrol, so try not to travel too far, whats that all about.

[Kabroom]

If you are really going to be pushing yourself to the limit then yes I agree it wouldn't be worth doing it at the moment or anytime really, obviously we are noticing things getting a bit tighter because of the rate rises but fortunately we are still ok without me having to find a job. That could all change further down the line but then that could be said for anything.

 

Wendy

[Guest Bob Tonnor]

Hi there

 

Im with Wendy on this one, we just got sick of renting, of being treated like second class citizens. If you do want to buy have a look at this site for the cheapest mortgages around Product Snapshots, no brokers. Check out the credit unions. I dont think anyone really knows where the market is heading so i cant say whether you should wait or not, but what i would say is that if your going to buy, then buy something that you really 'want' as opposed to buying for an investment, after all your going to be living there. I know that sounds silly but in a few years time all this uncertainty should have passed and if you have found something you like and can afford it and actually bought it, it probably wont matter what the market has done, after all you will only lose or gain if you actually sell the house. Does that make sense?

 

Sorry if i confused anyone!

 

Bob

[theonetruechris]

Sitting it out waiting for a few reasons

Waiting till temp visa is upgraded to pr

Prices 'have' to drop

Don't even know if Melbournes the place so why fork out fees for buying and selling.

Did the whole get the best house you can thing back in the uk, I'm not that bothered out here (although the rental is a dog can't wait to get out of it)

[Guest chris955]

House prices do have to drop as they are getting less and less affordable but the big question is when, I can't see them dropping much short term as they are still rising out of control. It may be a number of years before we see any real drop in prices.

[Guest daveintaiwan]

There definitely seems to be somewhat of a property bubble at the moment, and I'm sure that these interest rate rises will eventually have some effect. Prices will have to readjust at some point, but who knows if it will be this year, next year or several years from now. I always feel people have an odd view of homes mainly because they have been conned into the belief by estate agents, mortgage brokers and anyone else who makes money out of buying and selling houses that they make a good investment. A good investment is one where there is a reasonable rate of return, minimal risk of your asset losing money, low ongoing costs of holding the asset, and easy disposal of the asset. A house ticks none of these boxes.

Therefore, you should view a house the same way you view a car. Do you need one and do you need one now? I understand we all want to get the best deal and that usually means we hope not to buy at the top of the market, but really the decision needs to be whether you want to own your own home and whether you can afford it.

[Guest daveintaiwan]

An interesting analysis (June 2009) of the Aussie housing market and what it may or may not do.

However, it does show that prices have been averaging 8-9% increase over the last 50 years. Compare this to mortgage rates since the 1960s and you can see that any growth in your home's value would have been eaten up by your interest payments on the mortgage (which have averaged around 10% over the same time period) - not such a good investment anymore, huh?

 

Chart 1: RBA Home Loan Interest Rates

 

From a return point of view, it only becomes an investment if you buy it outright (ie no mortgage payments) or you have someone else paying your mortgage (ie tenants). Even then, high maintenance costs and illiquidity don't make it a first choice for investment. You're better off with a stock portfolio and government bonds.

 

Apologies if this is starting to sound like a bit of a rant, but my point is that if you need a home and can afford to buy the home you like, then buy it and don't worry about what the price may or may not do in the future. To all intents and purposes, it's irrelevant. When you buy a car, do you consider whether it will become a classic and might be worth more in 25 years time? No, you buy one because you need/want one and you buy whatever you feel is good value at the time.

[Guest chris955]

Actually our house ticks all those boxes, it cost us $115,000 9 years ago and is valued at $400,000 now so I'm pretty happy with the return. :wink: I dare say those buying today will not be in quite as good a position though.

 

I always feel people have an odd view of homes mainly because they have been conned into the belief by estate agents, mortgage brokers and anyone else who makes money out of buying and selling houses that they make a good investment. A good investment is one where there is a reasonable rate of return, minimal risk of your asset losing money, low ongoing costs of holding the asset, and easy disposal of the asset. A house ticks none of these boxes.

 

[gpo1971]

I'm with the others, am sick of renting. I'm not interested whether I pay slightly over the odds or whether the house falls in value in 5 years. I want my own home and I don't let my finances rule where life take me.

[Guest chris955]

Unfortunately for more and more people it isn't a case of allowing finances to rule their lives, they are just not able to buy anything half decent. If housing was only slightly 'over the odds' it wouldn't be a real issue but when we see prices rising by upwards of 20% a year in some areas it is getting out of hand.

[Guest The Ropey HOFF]

With recent interest rate rises is there anyone else like moi who are sitting and waiting for house prices to drop to realistic prices.Is this prudent? what do you think?We planned to buy in first 3 months of 2011.Would you wait longer?:confused:

 

Hi rockola

 

only you know what your personal circumstances are and what you can afford. Us for instance would try to haggle with a builder and land sales, if its a new house, you never know they might knock something off. If your not after a new build, you could come in with a crazy offer, say $50,000 under the asking price and don't budge, leave them to sweat, you have a year to wait and i would put in half a dozen offers and leave them to think about it. I don't like the idea of renting i never have, i know that i will have to do this if we emigrate, but buying your own property is always the best option, a mans home is his castle. Best of luck what ever you decide,

 

cheers jim:wink:

[Guest chris955]

When it's a sellers market there really isn't much room for movement on the sale price unless of course the property is way overpriced to start with or it's in a less desirable area. The same applies with builders at the moment, they might be a little flexible but as I say in this market there isn't much room for movement.

[nickynush]

We have been here just over 9 months and have seen house prices increase by around 10% in our area in that time. We have just bought some land and will build this year..... we are renting but felt we had to buy before prices went too far out of our range. Speaking to people who have lived here for many years it's apparent that the housing market rarely, if ever, suffers drops over here. A guy we spoke to who has invested in property here for almost 50 years told us that house prices NEVER go down! There may be a flat period but almost no decline in value, I think negative equity is pretty much unheard of here. Obviously everyones situation is different and not everyone can afford to buy right now but I personally wouldn't risk waiting for a drop in house prices as I don't think it will happen.

[gpo1971]

Unfortunately for more and more people it isn't a case of allowing finances to rule their lives, they are just not able to buy anything half decent. If housing was only slightly 'over the odds' it wouldn't be a real issue but when we see prices rising by upwards of 20% a year in some areas it is getting out of hand.

 

The thread is titled 'buy now or wait'; I'm stating that I would rather buy now.

[Guest daveintaiwan]

Speaking to people who have lived here for many years it's apparent that the housing market rarely, if ever, suffers drops over here. A guy we spoke to who has invested in property here for almost 50 years told us that house prices NEVER go down! There may be a flat period but almost no decline in value, I think negative equity is pretty much unheard of here.

 

It's amazing people's perception of reality and actual reality! Let's have a look at some actual figures, inflation adjusted:

 

 

I won't argue that the general trend hasn't been upwards, but real growth of 2.1% since 1955 (8.6% before adjustment for inflation) and there have been plenty of dips in that time.

 

Actually our house ticks all those boxes

 

Sorry chris955, but I beg to differ. Do you have a mortgage? What has been your average rate of interest on the mortgage? Also add on any costs of maintenance. This is the cost of the asset. By comparison you would probably pay 1-3% in management fees for a stock and bond portfolio.

If you so wished, could you sell your house tomorrow, and move the cash into an alternative investment? No. It takes time to sell a house, therefore it's illiquid.

Does investing in one type of investment, property, minimise your risk? No. Diversification is the only safe way to minimise risk.

I would agree that you have been very fortunate with your home's value, however, what I'm saying is that one shouldn't view a house as an investment. Buy one because you need a place to live and call your own. If you happen to make money on it, so much the better, but purely as an investment vehicle, it is not a sound choice.

[rockola57]

 

Unfortunately for more and more people it isn't a case of allowing finances to rule their lives, they are just not able to buy anything half decent. If housing was only slightly 'over the odds' it wouldn't be a real issue but when we see prices rising by upwards of 20% a year in some areas it is getting out of hand.

Well said Chris!I agree totally.:biggrin:

[Guest daveintaiwan]

If housing was only slightly 'over the odds' it wouldn't be a real issue but when we see prices rising by upwards of 20% a year in some areas it is getting out of hand.

 

Which is what leads me to believe that there is a housing 'bubble' in Australia that will pop at some time. We saw it in the UK. When first-time buyers are unable to get on to the bottom rung of the ladder because prices are too high, the whole pyramid collapses.

[Guest chris955]

Exactly, I can't see this just going on and on with no end in sight as it appears at the moment. Already first home buyers are unable to get onto the ladder and with prices still going up AND interest rates on the up it isn't good for those not on the ladder already.

[Guest thethreemacs]

Sitting it out waiting for a few reasons

Waiting till temp visa is upgraded to pr

Prices 'have' to drop

Don't even know if Melbournes the place so why fork out fees for buying and selling.

Did the whole get the best house you can thing back in the uk, I'm not that bothered out here (although the rental is a dog can't wait to get out of it)

 

 

Sorry to hijack the thread but

Interested to know what visa your are on we are on a 496 changing to a 887 x:wubclub:

 

We are waiting doing exactly the same thing and have watched interest rates rise and the First Home Owners Grant go down - so unfair!!! am so frustrated with not being a PR!!!:arghh:

[Penelope Pitstop]

.... one shouldn't view a house as an investment. Buy one because you need a place to live and call your own. If you happen to make money on it, so much the better, but purely as an investment vehicle, it is not a sound choice.

 

I totally agree. Everyone bangs on about how you have to get on the property market, how property is a good investment, rent is dead money etc etc. We were stuck with a house in the UK which was hard to sell. I felt totally trapped. All our eggs in one basket, totally illiquid. In the end we did sell, at a reduced price, and luckily still more than what we paid for it. When I left the house for the last time I felt a huge weight lifting, a great sense of freedom.

 

We are renting here in Adelaide at the moment, not ideal as I would love to decorate this house to my taste and change a few things - but the house is comfortable, in a really nice area and there are none of the burdens of ownership. I'm not in a hurry to buy again, house prices in this area are pretty stagnant and hopefully the exchange rate will improve in the next year, then we can bring our money over.

[cazmayo]

When we finally get to Perth, we will not buy, but rent until the global recession settles, as I dont think Oz are exempt from what is happening in the world, from what I read what happens in euro zone has little effect on Oz, but asia has alot of uncertainty at the min, which would have an effect on Oz. i worked in perth 10 years ago on a massive project (oil and gas) it was canned when the japanese put there order on hold.

 

Im here in Ireland, and watched on programme called Ghost Estates a couple of nights ago. Unfinished housing estates, no street lighting for the few that bought, sewage problems, children left to play on unsecured scaffolding, and the houses they bought for 295,000 selling at 150,000. One fella bought his house thinking he bought the last house, 1 remaining the marketing flyer said, when actually only 4 were sold out of 80+, hes now living in a ghost town.

 

I dont mean to be negative, it just made me rethink my attitude that we must own our own home. I think I would want to buy in an already established area (after watching the programme) with facilities etc.

 

Cant wait for the day when I can buy in Perth, but wont be rushing into it.

 

cheer caz

[fish.01]

It's so hard to pick. From what I can work out:

 

Upward pressure on prices coming from:

- Very high population increase.

- High development taxes leading to less new houses.

- Low unemployment (heading down to less than 5% again next year).

- Very healthy economy due to mining boom.

- Foreign investment in good economy.

 

Downward pressure on prices coming from:

- Rising interest rates (though still only average or slightly less than average).

- Rule changes re-limiting temp resident home ownership.

 

Potential game changers:

- Chinese economy blows up

- Worldwide GFC number 2 happens caused by those dodgy european countries

 

WHICH BLOODY WAY IS IT GOING TO GO :arghh:

[starlight7]

The government are bringing in a lot more migrants and plan for huge population growth in the next 10 years. To me this means property will just go up not down. I have actually only known it to go down once in the last 35 years and that didn't last too long. Moral is, if you can, get into the market asap. I am talking about Melbourne and Sydney here- not sure about the rest though they say West Australia is going up because of the resources boom.