Its just a perception people have on where house prices should be in their own minds.....or what a graph showing history looks like.
The reality is house prices are what they are becuase the market is or was happy to pay the price, simple as that.
Now I hear 50% price drops, people are just kidding themselves, you'll be waiting forever.
There is something going up......rent.
More sellers = more renters = higher yield = happy investor
Supply for rental accommodation dries up further yet the demand increases faster.
Will the property prices drop? In some places ....yes.
Question?
If property prices are dropping, rents are going up, more properties for sale, higher interest rates, then wouldnt the next 6 months be the best time to buy?
look forward 2 years from now...say 2010
Interest rates back at 7-8% Much higher rental yields than 2008 More renters than ever before Property market returns to good growth for most areas.
If the above happens in 2010, which it will, sellers in 2008 will come back to the market as a buyer which will drive prices back up......so now is actually the time to buy imo not when rates come down.
Its easy to say "buy when Interest rates are cheap and sell when rates are high"
If anyone believes that, then wouldn't property prices be high when rates are lower due to more buyers and less sellers? And less growth when rates are higher due to less buyers?
So if the above is true,then does it not make sense to buy when there are less buyers, and higher rates, than lower rates and more buyers meaning you pay higher prices?
So if you are a seller wouldn't you look to sell when rates are low and not high?
Interest rates......
400,000 house I/O at 9.5% is 38,000 p.a 400,000 house I/O at 7.5% is 30,000 p.a
So a 2% interest rate drop or rise is only $8000 difference p.a
If the same house grows in value at just 2% p.a it covers the difference anyway.
People become so rate conscious yet its negligible when buying property.
I look for a house that is easily rentable, and will achieve high long term growth.
The interest rate is the last thing I look at, you shouldnt buy or sell real estate based on the current interest rate.
Its funny, notice how the biggest thing the banks advertise is their interest rates, as they know the public are rate conscious and not interested as much in getting the correct finance vehicle for their situation.
Id much rather pay more in interest and have the correct loan setup and best backup and customer support from my lender.
I go to the same petrol station every time. Is he always the cheapest....no Is he ever the cheapest....probably not
So why go there?
He wipes the windscreen, checks the oil, checks the tyres every time I come in......so he probably gives the car less chance of requiring repairs etc, so he actually saves me money long term, and I like the customer service he provides.
So it costs me more for the fuel but my long term concern is how many times I will need to repair the car in its lifetime, not the 2 to 3c difference in the fuel price.
Home finance or property investment is exactly the same.
Again like house prices, the interest rates are what they are. Peoples perception is they are high, they just are what they are.....whats low and whats high?
