Loads of us living in Melb and Sydney have been totally priced out of the market. Some of us found an alternative.
We had been waiting for the correction which everyone said would happen after the first boom about 4 -5 years ago. I saw property I was interested in double within a year. The prices of some have gone from 200,000 to over 600,000.
Then when the stock market crashed in 2000, loads of money went back into property and has been fuelling it ever since. Even if those properties were to fall by 20% that hardly compares to the gains that have been made.
While the stock market keeps dropping the property market will continue to grow. People generally feel their money is safer in a bricks and mortar investment, then the stock market and investment alternatives. I think a lot of people have lost faith in the financial markets, and have lost a lot of money. I doubt if they will ever return to the stock / financial markets. They will stay with the property market, and manage their own investments.
I do not believe property will revert to the pre boom prices. There are too many other reasons driving the market, including lifestyles and of course the baby boomers.
Loads of us went looking elsewhere, in the country, into big thriving rural cities, and near the water.
In some of those areas there had been no property boom, in fact the prices had been stagnant for a long time. Most of the buyers in those areas came from Syd and Melb. Heaps sold their city properties and bought in the country for a quarter of the price. The profits they took meant a lifestyle change as well. They have big amounts of cash left over, and investing it in all areas.
People were viewing propeties on the net, or calling agents, and could not believe the prices. Loads of properties were never advertised. I know because I was looking for more properties.
I bought several properties before the boom hit the country, including commercial properties. Most of my properties have a current market valuation of at least double the price I paid. All return above 9% in gross rents. There is a huge shortage of rental properties in these towns. I am in it for the long term. I believe property will increase on average 10% pa over a 10 year period. Allowing for ups and downs in the market that is a good return compared to the stockmarket, blue chips.
I would not dream of selling, there is absolutely no guarantee I could get back into the market. Some big name mega stores all moving / expanding into these towns. I think it is harder for the younger generation to buy in the Melb and Syd areas, there is also a generation not interested in buying but in renting. I believe rents will eventually catch up with the prices.
That is my view, I am very happy with property.and will buy, more. Cannot get enough. The shortage of builders and tradesmen is the only big problem. You have to wait 6-12 months to get a good tradesman.
