Hi all I work in a role where I discuss peoples assets and balance sheets daily. This is what I have seen and am seeing now Many property investors struggle to keep there investments going. Some even sell down other assets, or increasing borrowings to hold onto thier propertie(often more than 1_ to date the consolation of risong equity or paper gains has allowed them to feel comofortable, but relative to their debt, their LVR is still very high. EG recent eg 1.65 million in inv property debt and 2.4m Income combined 150k, loss per yer on properties after expenses 24K. retirement plans - sell properties. Ability to hold this assets if they are down in retirement - zero. Actual wealth if property drops 30% Zero. age 55 eg 2 Age 56 income 65k properties 3. debt 1.1m assets 1.6. has sold down 60 k of assets to finance loans and maintainence over last 3 years. Other inv assets 55k
In the last few weeks an increasing number of clients have been saying, dont know if I want to buy now as they look over valued, seems to be a glut of properties now. The returns are too low etc etc
behind the figures and articles I see too many people considering unrealised equity as real wealth. Behind the scenes I see people holding ridiculous amounts of debt stuggling with current interest rates on incomes that barely support and often dont support debt Behind the scenes I see demand "peoples intention to create wealth through property dropping off"
and to top it off, everyone knows this is the elephant in the room, banks are instructing the bankers to focus on referrals into other parts of their business instead of writing loans, valuations are coming in with lower numbers than 3 -4 years ago. Motgae borkers are complaining becuyase new laws force them to prove someone can afford a property loan. The fact is more people than we think know the state of the market. Next time you meet someone who is positive on property, ask them one simple question, do you think the current property market is undervalued, or overvalued. You will be amazed the percentage that answer overvalued. Most people even current property holders know it, the difference now is its been commented on and following from the commentary we will see actions, once people start to sell )alaready started), then the downward spiral will take hold
