Well, I predicted on here a year ago that there were icebergs ahead. If you have property I hope you are well and truly hunkered down because the bubble has well and truly burst.
My prediction (which is a moderate one compared to some of the pessimists who are predicting a 10 year down turn and 30% drop in Current Market Values) is:
- A two to five year downturn in the residential property market
- A decline of between 10-15 % on the median market value
- An increase of around 10% in residential rentals due to declining capital gains and incresed interest rate costs for investors
- A lot of pain for folk who own more than one property
The causes:
- The domino effect from the finance company crashes
- An oversupply of new housing
- Baby boomer generation approaching retirement and cashing in their investment properties
- General greed and lack of risk management from many private investors into the property market
My advice:
- If you own residential property hunker down and ride it out. If you are lucky enough to sell second homes straight away count your chickens.
- Don't buy a second home as a nest egg, look at low risk high yield options with foreign exchance, the stock market, or better still term investments
- If you are renting, be aware there is a supply glut, but also be aware that there will be many people out there who are currently priced out of the market who may soon be joined by others who can't service their mortgage. The banks will get tougher. Rents will rise.
- If you want to buy a first home hold out for at least 2 years until this 'correction' begins to flow through the marketplace
There is no doubt, market forces are speaking now and theres nothing any government can do about this so the election won't provide any silver bullets.
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