cloudnine wrote "then property would be the best thing you could do with a small amount of money....say $40k I have already shown this with the leverage"
In your example if prices fall 10% then your initial investment is wiped out, also prices would need to rise 20% (plus selling and holding costs) to get your initial investment back. Have these kinds of rises are going to be infrequent due to tighter lending conditions.
tciboss wrote "property has over the last 18 months defied all economic models which makes it all the more harder to really predict."
What I have observed is prices have fallen and since risen back to where they fell from thanks to government intervention into the market, I do not know how sustainable this is. I think they are counting on a quick recovery, which does not seem to be occurring.
kincella wrote "in the meantime...you are all paying rent (or someone is paying it for you, if living at home etc)....the equivalent to a high interest rate..."
Well this is not quite true. The interest alone on a middle ring $425k property in Sydney would be $440p/w and this is at 50 year low interest rates of 5%. The rent on these properties is roughly $400, so by renting you are actually $40 week better off. Families also receive rental assistance which would make renting even more attractive at current prices.
tcisboss wrote "Investors are waiting for choice"
Why would not have investors bought last spring when there was more choice and less competition from FHB without the grant? Sorry I do not buy the suggestion that investors will take over with same gusto from the frothing FHBs free money.
