Unless more rental supply comes on line then I think rents will move up. From what you have said, it seems they have quite some way to move up.
My recommendation to anyone looking to buy an investment property right now is to play hard ball. If one vendor doesn't want to drop in price there will be another who will.
This is thanks to higher interest rates and many many thanks to sensationalist media (who our friends on the property thread faithfully copy and paste at regular intervals - thanks guys) that are intent on scaring the pants off everyone.
Anyone with a skerrit of understanding of the fundamentals of the Australian property market takes great amusement from the sheer stupidity of shows like 60 minutes, Today Tonight, A Current Affair etc. Then again people who understand things are not really the target market of these shows are they? These shows are aimed squarely at the brain dead.
When you say "unless they are committed to a long term hold" I can't imagine what other form of property investment there is. When you look at stamp duties getting in and agents fees in getting out you'd have to at least be looking at 5 years, me I think in terms of decades.
In answer to interest rates, this is the most beautful part of this. Interest rates WILL move down at the end of this year and continue doing so into 2009.
This is because of our long term following of US interest rates displaced by 6 - 9 months. The rates rises we have experienced were the result of US rises a year or more ago and the current frenzied drops of US rates will inevitably result in Aus rates dropping.
I am guessing it will be at the end of this year but it may take until the start of 2009, I actually am pretty sure it will be a nice Xmas present for those who held their properties or bought more.
Now the tirade of copies/pastes will come from Zen_Machine and Blue Balls. They will be furiously Googling for stories of US cities where prices have fallen 90%.
Only time will show if I am right or wrong. Please keep in mind that since 2003 I have been on HC arguing with these peopele about property. In 2003, 2004, 2005, 2006, 2007 there have been people SCREAMING that a 50% drop was coming very soon.
Of course it didn't happen and in fact property rose even more and more than I thought it would (I am but a man). I had to congratulate Zen_Machine the other day on his anniversary because he had copied/pasted 12 months earlier (to the day) an article which said the 50% drop was any day now. On Zen's anniversary (still copying/pasting the same selective subject matter) most suburbs in Melbourne had risen 20% or more, some (like Dandenong) nearly 40%.
DO you listen to him now or do you start to question the motivation behind the posting? You decide.
