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Guest janetridley

Thinking of buying a house in Mebourne. Do we buy now or wait?

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Guest janetridley

We moved over here in March 2010. It took us a while to settle and do our research but we've been ready to buy for the last three months. We put in an offer on a house recently but were just outbid (it was a really good one) when it went to last offers. We're still looking but nothing quite so good has come up yet.

In the meantime I am watching a large number of properties hang around on the market for months and months. A lot of these are being substantially discounted before a sale is finally agreed. Auctions are performing abysmally and there's a possible GFC2 looming on the horizon. Add into this that China is possibly slowing down and the Aussie economy may not be in such a strong position as it was in GFC1.... My question is this.....

 

What are peoples opinions on the likelihood of house prices coming down substantially. Should we keep renting and saving or should we buy in the next six months?

 

Thanks Guys

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Guest sanda

I looking at the same problem was I'm out in rural Victoria. The exchange rate is still poor and frankly I have just missed out on a house too as we just were too unsure about the area and the resale should things change. I so want a home back really badly, the condition of the homes on decent size plots is poor, or have a new one with no or tiny garden (Iused to live from my garden in the UK). We need to continue with our life and living in limbo out of boxes is really gettting me down. Relatives are lined up to come over and we just aren't ready for them. I feel we have lost a lot so far financial I can't afford to lose anymore. It's a tough decision but if your in for the long haul it should be ok to buy, just do your homework. Stick to you price and walk away no matter how upset it has made me I know I don't want to pay more even if Aussies can I'll have to be patient and wait for the right one at the right price. Struggling after over one year feel free to read my blog to see my story so far http://www.squidoo.com/my-little-eden

Good luck x

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It is very difficult to know what is going to happen, there are stories every day in the paper which are conflicting, talkling about increases in population, construction figures down and not enough housing etc. Real Estate agents will talk the market up as always, but some financial advisors advise caution in rushing in just yet. I have just sold my house, and because it was in a good postion and the 'right buyer' came along I found it a pretty good process, however I did take a lower price than I would have done 18 months ago......but I wasn't ready to sell then. You are right about some of the houses hanging around, and if you find one of these houses and ask the agent the right questions, you could find out what the situation is (i.e people could have bought elsewhere and in a hurry, people divorcing, moving interstate etc). Then you could make a low offer and see what happens. My sister bought a house for $60,000 less than they wanted for it because they were going into a retirement home and there was a unit that came up there just at the right time, so they let their house go. They tried to get more over a period of a day or so, but my sister just stuck it out as it is a buyer's market - eventually the sellers agreed to the lower price. You are in the driving seat, if you feel a good house comes along and you don't want to lose it, and feel it's a good buy, then maybe it is worth thinking about?

Otherwise you might have to wait another two years to see what happens, depends on your circumstances I guess. Good luck with what you decide


If your actions inspire others to dream more, learn more, do more and become more, you are a leader.”

John Quincy Adams

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It's a tough one, we have been over here 8 years and every year they say property is going to drop and it never has. Up here in Cairns is a different story and houses over $550k don't move at all. People are making stupid offers and getting the house of their dreams, a lot are in negative equity and the only way the Market can go is up.


If you are depressed you are living in the past. If you are anxious you are living in the future. If you are at peace you are living in the present.

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I believe that good houses in good areas that do not come on the market often will keep pace with the market.

 

My friend's daughter just bought an apartment and it was discounted down to $530,000.00. Its in an inner city area great apartment and location. So if she thought oh well I should wait to see what happens with prices she would not have this lovely apartment where she wants it.

 

The main thing in uncertain times for me is being able to service the mortgage i e having stable employment everything else takes care of itself. Also if its a variable loan then have room to increase payments if rates rise.

 

For me my house is my home and I did not even think about it when we bought the land we have now, glad I didn't would not have been able to buy it now :laugh:


Petals

:ssign15:taking no prisoners :wink:

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It's a tough one, we have been over here 8 years and every year they say property is going to drop and it never has. Up here in Cairns is a different story and houses over $550k don't move at all. People are making stupid offers and getting the house of their dreams, a lot are in negative equity and the only way the Market can go is up.

 

If "people are making stupid offers and getting the prices of their dreams", coupled with "a lot are in negative equity" are strong indicators that the price of property has already dropped. Neither imply that the only way the market can go is up.. :wubclub:

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You can hang around forever waiting for the right price / interest rates to come down / that little bit more deposit etc. All that time you're paying rent. If there are places hanging around unsold then put in a low offer and you never know.

 

Ultimately there are very few places worth less than they were ten years ago for sale.


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Guest janetridley

Thanks everyone for your comments. It is a tough one and I've managed to become less emotional about it over time. Like you Sanda I miss my garden enormously but we have an excellent 3 bed, low rent unit and I am now gardening in pots which I can take with me when I go...

Thanks Olly for your informed advice. Isn't it amazing how positive the real estate agents still are? They are such good actors!!!

After loads of research my perception is that prices are coming down in the area we are looking to buy. I think this is going to be a continuing trend for the next 6 months at least so we will be better off staying put. If however something really good comes on the market at a realistic price we might put in an offer.

Good luck with the house hunting Sanda... I hope you find the house of your dreams....

 

Thanks again everyone

 

Janet xx

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By the way, one more comment: I see you are on the Peninsula, there is some good buying down there at the moment (my sister looked at a lovely place in Mt. Eliza but changed her mind due to travelling, otherwise it was good buying). Where Petals is around Somerville too are some good properties.


If your actions inspire others to dream more, learn more, do more and become more, you are a leader.”

John Quincy Adams

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Guest janetridley

Thanks again Olly.

We're looking to buy in Frankston South which is just down the road from Mount Eliza. We were hoping to find a property to structurally renovate and sell on in a year or two but the market isn't on our side for this at the moment. I'm happy to play the waiting game for now although we might look into an investment property in the meantime.

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I've been doing a lot of research on this for the last year or so in anticipation of getting my visa. I've never rented, and made a lot of money out of property investments in various (3) countries. Right now, all I can say is that unless you really need to buy in Melbourne, don't. Prices have already started to go down, and they're only going in one direction for the next year or so. Put your money in a term deposit, collect your 6% interest, and rent somewhere a LOT cheaper than paying a mortgage. Save all you can now so you have a bigger deposit in 2/3 years when prices have fallen. Sydney is slightly different, prices are falling/stable there, but Melbourne is definitely (IMHO) is on the slide. There's a lot of information out there, e.g.

 

http://www.propertyobserver.com.au/residential/melbourne-massively-oversupplied-with-september-housing-figures-alarming-sqm/2011100751841

 

“Still, it represents what I now regard as a massive oversupply situation for the city and I believe it will translate to further house price falls from here.”

 

http://www.myrp.com.au/showNews.do?id=500 shows auction clearance rates and median prices falling recently.

 

On some of the Australian forums that I read, even those optimistic about prices are saying that Melbourne prices are going down. On the other hand, people don't always buy for purely financial reasons.

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A long time ago I was given advice by someone and he said to me, when looking at houses, discard the furniture, the fittings everything else,look at the layout, size of land and size of rooms.

 

Bottom line for value is land, the house is the used car so buy as much of it as you can afford.

 

Buy the smallest house in the best street for gain.

 

South Frankston has some lovely homes especially up on the hill towards Mount Eliza. Violet Street, Neil Street, those areas are old houses but good size blocks and not a lot come on the market.

 

Top of Overport Road and streets off it also lovely area.

 

You can buy with superb views of the bay from a street in the Whistlestop Estate in Frankston and also the streets across the road from the Karingal Shopping centre go right up and the houses up there have views across the bay.

 

Unfortunately Tahnee Lodge overlooks the new freeway now so expect the prices will drop a bit in that estate.

 

In Somerville there are cheap houses which are generally small but on large blocks of land so people are tending to buy and extend them now. Although these houses are highly sought by investors as the new freeway will be only 10 minutes away and Somerville will have the easiest access to the freeway. Then again there are more expensive housing in the Woodland Estate and other areas and actually these houses do not change hands very often, only the rentals seem to change hands a lot, people who own in Somerville tend to stay due to the convenience of the way the town is laid out.


Petals

:ssign15:taking no prisoners :wink:

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Statistics again, how many times since 2000 have we seen articles like this in the paper.

 

As we have a high divorce rate there are a lot of properties just got rid of for example, also people buy investment properties and are told they will get a great return only to find out that is not so. In other words they do not do their homework.

 

How many people sell their house because they think that they can upgrade because prices are dropping only to find themselves left short because the property they are interested in is not dropping in price.

 

In my line of work we kept waiting for the prices to slump and as others have said we have been waiting a long while. How much is a slump ??? that is the question.


Petals

:ssign15:taking no prisoners :wink:

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Statistics again.

 

That's right. We've all got opinions, I just think that a bit of evidence to support them can be useful. That's how I come to my opinions, but if anyone wants to ignore the evidence then that's fine with me. I've no axe to grind, no vested interest (i.e. I'm not a REA).

 

I was just trying to be helpful. If you want to buy now, go ahead. I'll wait for a couple of years or so and save myself a lot of money.

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Guest janetridley

Thank you Petals for the local advice... very useful.

Thank you Steve for the links and your input... I have to say I agree with you. I also have done loads of research and from everything I've read (both good and bad) I just can't see the sense in buying here at the moment. It's been quite disappointing really as I was looking forward to getting my teeth into a renovation project! As I said before... we are in a fortunate situation with our rental. We also both have good jobs and are able to save each week. We will buy in Melbourne.... but not yet...

 

Good luck with your visa Steve and thanks again Petals.

 

Janet xx

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Guest Irmaal

Australia's housing buble is going to burst in the coming years-we also want to by, but signs are too clear to avoid making this step now. You could save hundreds of thousands in the coming years. Australia has the third largest foreign debt in the world after US and Spain, and almost half of it (350B) is short term debt-12 month. How do you think government is gona refinanse it all? Uncle Sam will give 350Billions? After 12 months things will be more scary than today, and real esate will be hit hard. I am waiting at least 50% drop in prices in the next three years. Hold cash is the best option at the moment.

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Australia's housing buble is going to burst in the coming years-we also want to by, but signs are too clear to avoid making this step now. You could save hundreds of thousands in the coming years. Australia has the third largest foreign debt in the world after US and Spain, and almost half of it (350B) is short term debt-12 month. How do you think government is gona refinanse it all? Uncle Sam will give 350Billions? After 12 months things will be more scary than today, and real esate will be hit hard. I am waiting at least 50% drop in prices in the next three years. Hold cash is the best option at the moment.

 

I'm not sure if I'd go this far (a 50% fall), but I think a significant fall is on the cards. A poster on another thread here was renting and paying around a third of the amount he would have been paying on a mortgage on a similar property, taking expenses and opportunity costs into account. That is the kind of money its possible to save by renting for a while in the current market.

 

I did say that renting may not be for everyone; for example, if you have children and need the stability of being near a good school, that could be a factor making buying a better option. I just wanted people to be aware that there are other options for new migrants than selling in the UK and immediately buying in Australia.

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I could see a 50% bust in real terms hitting parts of Australia. Whether prices fall that much nominally is a different matter.

 

Economists have defined mortgage stress as a household spending more than 30% of its gross income on mortgage costs. It's generally seen as a bad situation to be in. For an average house in Sydney to merely cause mortgage stress in families with a typical income then prices would have to half.

 

In fact, you have to be in the top 10% of earners to be able to afford such a property in that city.

 

Rental properties in Melbourne and Sydney, and possibly in other state capitals can often yield 3% to 4% gross (of the purchase price), against borrowing costs that are twice that.

 

On pretty much any metric you can think of, the exception being those concocted by RP Data, Aussie properties are stupidly expensive.

 

Will there be a crash? No idea.

 

London still falls into a seriously expensive category despite a shrinking financial sector that's still suffering problems, a lack of first time buyers, and difficulties obtaining mortgages.

 

But I would expect property to be cheaper at some point in the next few years.

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I guess for anyone looking for a home and not an investment then it comes down to how long do they want to stay in rented accommodation wondering and waiting to see what happens with prices.

 

After all if the gov suddenly does an about turn and increases migration what happens then.

 

If gov changes and more money is given to first home buyers which the libs are good at what happens then, usually the prices increase more than the amount provided, that is what happened after the last hand out.

 

In ordinary land the cheaper housing to pick up is the good old mortgagee auction, or realisation sale as they now like to call it.

 

If only we had a crystal ball how rich we would all be, as it stands no-one seems to know until afterwards, then they say "oh I could see that was going to happen".

 

If experts had known then they would have put a stop to the stupid lending practices and junk bond carry on, fictitious money I call it :laugh:


Petals

:ssign15:taking no prisoners :wink:

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I agree with you there Petals.

 

Anyone who claims to predict events with any degree of accuracy is either deluded or trying to sell you something. :biglaugh:

 

As for the home versus investment, over a fifteen or twenty year timeframe, owning trumps renting in virtually any market outside of a prolonged, Japanese style slump. The problem is that for a first time buyer the sort of place that might suit over that period is simply unaffordable.

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I agree with you there Petals.

 

Anyone who claims to predict events with any degree of accuracy is either deluded or trying to sell you something. :biglaugh:

 

As for the home versus investment, over a fifteen or twenty year timeframe, owning trumps renting in virtually any market outside of a prolonged, Japanese style slump. The problem is that for a first time buyer the sort of place that might suit over that period is simply unaffordable.

 

I totally agree with you and the enemy of anyone getting a first shot at the housing market is the negative gearing of investment properties. What happened was that when the house prices suddenly took off after the GST ordinary people had a lot of equity in their homes and the financial advisers all told them to buy an investment property. Often these were properties that first home buyers would have bought in the past to get a foothold on the property ladder, they then found they were pushed out. The only thing for them was overpriced little boxes in the burbs with a 95 percent mortgage. They got the first home buyer grant which was more for a new house as the gov was supporting the building industry. However the home buyer grant just got added on to the price by the builders seeing an opportunity for more profit. So it goes round and round.

 

There are quite a few smaller older houses here in Somerville with walking access to public transport and the facilities of the town but who buys them, investors again, they are pushing the price up, they hope to make a killing when the new freeway opens.

 

Its sad and I have two children and both of them are not in the housing market as yet and one wonders do we pop our clogs and leave the dosh to them before they get a go. My son will be ok because he lives in the country but my daughter lives in the city and as we know the prices are way too high there compared to the wages of most Aussies.

 

Powers that be handed the golden egg to those that already had a silver one in my view and did nothing to keep house prices within normal limits.


Petals

:ssign15:taking no prisoners :wink:

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