Thread: Q's about economic crisis

Hi mate, what a question you ask. "How far will prices fall, and 'when is the best time to buy'. I'm a real estate agent in Victoria with about 18 years experience and really, the answer is, nobody knows exactly what is going to happen. What I can say is, the government handouts to first home buyers such as yourself have never been higher and probably never will be.
If prices fall a bit more over the next 12 months, so be it, the difference will be probably be small. There are a lot of so called experts out there trying to predict the 'bottom of the market' and so far, they've all been wrong, so the right time to buy is when you are ready to. Good luck and congrats on your PR.

thanks butt, yeah i understand it's a bit of a how long is a piece of string, but as of yet i've been relatively unaffected by the "economic crisis". i watched the news yesterday probably for the first time in a yr and it was all doom and gloom about how bad things are going to get so i've now started to wonder - what the best thing to do is.
i just don't want to spend x amount of money only for it next year to be worth half of **** all,

I am monitoring the RE market in the wide Bay area and I can telling you that the hot properties are the ones below # 300.000
I some areas we have a drop of 8%. The majority of the houses that come down are the rent ones which are own by people that lost the job

Here is a better proposition to get a house already built and not building.

What happens in the future.....I do not know but if you can get a cheap loan go for it because keep the money in the bank is not much good

Originally Posted by taff

thanks butt, yeah i understand it's a bit of a how long is a piece of string, but as of yet i've been relatively unaffected by the "economic crisis". i watched the news yesterday probably for the first time in a yr and it was all doom and gloom about how bad things are going to get so i've now started to wonder - what the best thing to do is.
i just don't want to spend x amount of money only for it next year to be worth half of **** all,

In reality houses/land rarely or barely get cheaper, they just stop appreciating for a period of time.

Highly on likely that properties will fall by that much mate. Here's the question you need to ask...... "If the market picks up, will I kick myself in a years time?"

I do a lot of work around you area were you are thinking of buying. If you look at the work that is going on down the road with the new livestock sale yards and the new highway and industrial centers I belive that the price may fall a bit but it will be harder to find another area as nice and as close to what you have. IMHO buy the land build a big shed live in that and build your new home. Cheers Ian

I am also an agent in Qld. The other thing you have to think about is that the housing grants will come to an end sooner or later. There is talk about this happening end of june this year. So then you will miss out on the extra $21K for new builders. This makes a total of $45k the market will have to drop for you to just break even if you keep renting for another year. Don't forget that by building rather than buying an existing property you won't have to pay stamp duty either. (not in QLD anyway, not sure about WA)

Jason,

It would depend where you are buying and what the prices are like at the moment. The lower end of the market is likely to appreciate in the coming months, with first home owners flocking to buy property on the back of low interest rates and government incentives (FHOG and no stamp duty <$500k).

In the middle of the market, you are likely to pick up some bargains, which is it is generally out of reach for first home buyers and investors hurt by the falling share market are forced to sell. As an aside, those with more wealth
are generally more affected by the crisis, as many will have invested in shares on margin loans which are often backed by mortgages. As the sharemarket goes down in value, so does their "perceived net worth" and this is when banks get nervous and start calling in their margins. The financial strain results in "toys" being the first to go, followed by non-income generating property. Hobby farms, weekend / beach houses and the like.

Getting back to the topic, if you're going to build, I'd say build now rather than later. Its best to build when interest rates are low, as you're effectively doubling your outgoings during the building stage (with rent and mortgage to pay at the same time), which can place severe constraints on your cashflow.

When doing the majority of the work yourself, you should balance how much work you do yourself Vs how much longer it will take to do, because if it takes you longer to complete the house, it will cost you more in mortgage repayments.

The biggest cost saving in building a house you can make is managing the tradies yourself (least time for the most saving) followed by painting, laying down floors, tiling (if you're handy) and establishment of the yard. If going down this route, I would employ the services of a competent building consultant to inspect each stage of the work to identify any defects that can be covered up at finish.

Lastly, the 20k you'll "spend" on rent is a deceptive figure. If you pay more than $350k, you'll be "spending" more money on the interest then you would be renting, so that's also something to consider.

Nehow, gotta get back to work, even if it is a slow day today. I've built a house and have seen several others go through the same process, so let me know if you want to have a chat and I'll PM you my contact details.

Cheers

Bojan