Post to Facebook on 8/2/2017 at 10:18 PM
https://www.facebook.com/SinFongChanRealEstate/posts/1833159276925792
Commenting on "Australia's property boom showing signs of slowing as buyers hold back"
https://www.theage.com.au/business/the-economy/australias-property-boom-showing-signs-of-slowing-as-buyers-hold-back-20170206-gu65mz.html
Not being able to borrow money from banks or financial brokers, the real estate industry will come to a standstill. Unless you have a lot of money dashed under the mattress, money from rich parents or uncles, or you have other means like some buyers from foreign “you-know-where” countries, you too will be affected.
Like any market, there are buyers with different buying / spending capacity and product preferences. The market is therefore segmented. What I can afford, you probably can’t. What you prefer, may not be my cup of tea. Some very loaded foreign investors like mocked French style McMansion, while others stick with traditional square-box architecture. With that in mind, you can now understand it is unlikely that not every segment will boom and bust at the same time, unless the economy of both Australia and other countries’ rise and fall in unison, or the demographics of the different regions experience the same economic fate at the same time.
Just about a decade or two ago, Western Australia and Queensland enjoyed great mining boom, but good times never last. Queensland, the sunshine state, attracted many southerners to migrate north especially Melbournians whinged about the four-season-in-a-day and wanted to have a sea change in Queensland. Without the help of Nostradamus, one can foretell that good time in the sun and beach cannot beat good social circle of friends and activities, not to mention familiar territories of the past.
Scarcity is the key factor for a real estate boom. If there are a lot of demand and not enough supply, the price of property will go up. The first question you need to ask is what creates such demand, and whether you need to join the crowd. Unless you are an early starter and go for a hit-and-run, then stay conservative. The risk is high for this group of investors, and if you do not let go fast enough, you may lump with an “expensive” asset, and costs you not only just holding it but also the opportunity loss, that is, the money that could have been invested in other form to generate more return.
CBA has just released news that it is going to tighten loan to new investment borrowers. CBA is the second largest lender after Westpac, and very soon other banks and lenders will follow. This can only point to lack of money in the market place, and existing property owners / sellers will experience buyer drought. In other words, the supply is greater than demand, resulting in reduction of prices.
Several high price properties in Glen Waverley are stuck without any interested buyers, or buyers who can no longer channel money to Australia to buy them due to Australian legislation and Chinese government restriction of money flowing out of the country. Not having a buyer is worse than a bust!
I have discussed often about apartment investment in this FB page. I am never in favour of this kind of investment, unless you are going to stay in the apartment long term for reason that I cannot understand.
Like many buyers I encountered before, they chose properties for convenience to certain places. The question you must ask is how often you need to go to those “convenient” places. A live show in a theatre may hang around for months. Are you going to watch the same show over and over again? You like to eat Curry Laksa or Roast Duck from certain restaurants, and want to live near the restaurants. I guarantee that you will get sick of Curry Laksa and Roast Duck from those restaurants after 10 visits.
I have an exercise for you - keep very calm with your eyes closed; imagine a particular area you intend to invest in and visualise what it will look like in 10 years time.
Can you “see” the children grow up, old people move into aged care homes, expansion of railway station, construction of high rise building to accommodate growing population, etc? You answer is playing like a YouTube video in your mind.
https://www.facebook.com/SinFongChanRealEstate/posts/1833159276925792
Commenting on "Australia's property boom showing signs of slowing as buyers hold back"
https://www.theage.com.au/business/the-economy/australias-property-boom-showing-signs-of-slowing-as-buyers-hold-back-20170206-gu65mz.html
Not being able to borrow money from banks or financial brokers, the real estate industry will come to a standstill. Unless you have a lot of money dashed under the mattress, money from rich parents or uncles, or you have other means like some buyers from foreign “you-know-where” countries, you too will be affected.
Like any market, there are buyers with different buying / spending capacity and product preferences. The market is therefore segmented. What I can afford, you probably can’t. What you prefer, may not be my cup of tea. Some very loaded foreign investors like mocked French style McMansion, while others stick with traditional square-box architecture. With that in mind, you can now understand it is unlikely that not every segment will boom and bust at the same time, unless the economy of both Australia and other countries’ rise and fall in unison, or the demographics of the different regions experience the same economic fate at the same time.
Just about a decade or two ago, Western Australia and Queensland enjoyed great mining boom, but good times never last. Queensland, the sunshine state, attracted many southerners to migrate north especially Melbournians whinged about the four-season-in-a-day and wanted to have a sea change in Queensland. Without the help of Nostradamus, one can foretell that good time in the sun and beach cannot beat good social circle of friends and activities, not to mention familiar territories of the past.
Scarcity is the key factor for a real estate boom. If there are a lot of demand and not enough supply, the price of property will go up. The first question you need to ask is what creates such demand, and whether you need to join the crowd. Unless you are an early starter and go for a hit-and-run, then stay conservative. The risk is high for this group of investors, and if you do not let go fast enough, you may lump with an “expensive” asset, and costs you not only just holding it but also the opportunity loss, that is, the money that could have been invested in other form to generate more return.
CBA has just released news that it is going to tighten loan to new investment borrowers. CBA is the second largest lender after Westpac, and very soon other banks and lenders will follow. This can only point to lack of money in the market place, and existing property owners / sellers will experience buyer drought. In other words, the supply is greater than demand, resulting in reduction of prices.
Several high price properties in Glen Waverley are stuck without any interested buyers, or buyers who can no longer channel money to Australia to buy them due to Australian legislation and Chinese government restriction of money flowing out of the country. Not having a buyer is worse than a bust!
I have discussed often about apartment investment in this FB page. I am never in favour of this kind of investment, unless you are going to stay in the apartment long term for reason that I cannot understand.
Like many buyers I encountered before, they chose properties for convenience to certain places. The question you must ask is how often you need to go to those “convenient” places. A live show in a theatre may hang around for months. Are you going to watch the same show over and over again? You like to eat Curry Laksa or Roast Duck from certain restaurants, and want to live near the restaurants. I guarantee that you will get sick of Curry Laksa and Roast Duck from those restaurants after 10 visits.
I have an exercise for you - keep very calm with your eyes closed; imagine a particular area you intend to invest in and visualise what it will look like in 10 years time.
Can you “see” the children grow up, old people move into aged care homes, expansion of railway station, construction of high rise building to accommodate growing population, etc? You answer is playing like a YouTube video in your mind.
