Post to SinFongChanRE.Wixsite.com on 14/5/2018 1:54 PM
Commenting on “As Australia's house prices fall, watch the bottom pickers start to emerge”
https://www.domain.com.au/advice/fomo-is-out-foop-is-in-how-to-avoid-paying-too-much-when-buying-your-new-home-20180429-h0zelf/
I predicted the fall of house prices months ago, and expected the prices might rise slightly after April 2018, but just for a short time. The rise and fall will be bumpy, but overall, the fall will be greater than the rise.
Like investing in the share market, one needs to set target price to buy and sell. However, I do discourage you to borrow money to invest in shares, because unlike investing in property, share market carries a greater risk.
When investors perceive the property market has reached the bottom, they will move in to pick. As a result, the prices tend to get pushed up. Many so called investors are inexperienced and they rush in too soon. There is still plenty of room for the prices to go down.
If you think you have saved enough money to approach the bank for a loan, then this is the right time to knock on a bank manager’s door for a serious discussion. You may not buying now, but it is nice to know how much loan you can raise, and when the time comes, you can strike without worry.
Globally, the US economy has come out from the doldrums and the interest rate is rising.
The Chinese is still performing very well and meeting annual growth target. However, it is a concern that her wealth has great political influence over the rise and fall of other nations.
The latest development between North Korean and South Korean relationship is a suspect, and creates political uneasiness to the Chinese.
All these foreign economies and geopolitics can have an impact on our interest rate and demand of real estate. We have seen how the combined effect of curbing of outflow of money by the Chinese government and tightening of the loan lending by the Australian government led to the present market downturn. Will the fall be more than 20% by 2020?
If the current downward trend is to continue, 20% is not achievable. Without the sudden surge of mainland Chinese pouring money in the real estate market I The past few years, the growth was steady until reaching the peak around the end of 2009. When I was estimating house prices then, I had to add 20% to 25% on top of what the real worth of the property in order to reach the final sale price. Depending on the size and location of the property, I even estimated some properties to be around 50% over the valuation by the Council.
In short, I do hold the view that many properties were 20% to 25% overvalued in the very hot market. For some, they were 50% overvalued. The auction results show that the days of frenzy buying is over. Properties will sell only if the price is right! In plain English, the prices have to fall by at around 25% or more.
Thank you for reading.
Disclaimer. Please consult a qualified financial adviser for your personal investment needs based on your financial circumstances.
Commenting on “As Australia's house prices fall, watch the bottom pickers start to emerge”
https://www.domain.com.au/advice/fomo-is-out-foop-is-in-how-to-avoid-paying-too-much-when-buying-your-new-home-20180429-h0zelf/
I predicted the fall of house prices months ago, and expected the prices might rise slightly after April 2018, but just for a short time. The rise and fall will be bumpy, but overall, the fall will be greater than the rise.
Like investing in the share market, one needs to set target price to buy and sell. However, I do discourage you to borrow money to invest in shares, because unlike investing in property, share market carries a greater risk.
When investors perceive the property market has reached the bottom, they will move in to pick. As a result, the prices tend to get pushed up. Many so called investors are inexperienced and they rush in too soon. There is still plenty of room for the prices to go down.
If you think you have saved enough money to approach the bank for a loan, then this is the right time to knock on a bank manager’s door for a serious discussion. You may not buying now, but it is nice to know how much loan you can raise, and when the time comes, you can strike without worry.
Globally, the US economy has come out from the doldrums and the interest rate is rising.
The Chinese is still performing very well and meeting annual growth target. However, it is a concern that her wealth has great political influence over the rise and fall of other nations.
The latest development between North Korean and South Korean relationship is a suspect, and creates political uneasiness to the Chinese.
All these foreign economies and geopolitics can have an impact on our interest rate and demand of real estate. We have seen how the combined effect of curbing of outflow of money by the Chinese government and tightening of the loan lending by the Australian government led to the present market downturn. Will the fall be more than 20% by 2020?
If the current downward trend is to continue, 20% is not achievable. Without the sudden surge of mainland Chinese pouring money in the real estate market I The past few years, the growth was steady until reaching the peak around the end of 2009. When I was estimating house prices then, I had to add 20% to 25% on top of what the real worth of the property in order to reach the final sale price. Depending on the size and location of the property, I even estimated some properties to be around 50% over the valuation by the Council.
In short, I do hold the view that many properties were 20% to 25% overvalued in the very hot market. For some, they were 50% overvalued. The auction results show that the days of frenzy buying is over. Properties will sell only if the price is right! In plain English, the prices have to fall by at around 25% or more.
Thank you for reading.
Disclaimer. Please consult a qualified financial adviser for your personal investment needs based on your financial circumstances.
