ossigeno

I know some people have a urge to rush out and buy a house as soon as they arrive in Australia. But I don't understand why anyone would buy a house in the current climate unless for some major negative gearing or they live in Perth.

Interest grows as house values fall

"..house prices in Sydney have fallen for a second consecutive year.."

"..only exception to this trend is Perth.."

"..more in debt for houses that are worth less than they were a year ago in Sydney and Melbourne.."

"..in Perth house prices were now more expensive than those in both Melbourne and Brisbane.."

"..price of a house in Sydney has fallen by 5.1per cent over the past year.."

"..we still think property across the major capital cities is overvalued and there will be further corrections going forward.."

"..prices in some suburbs could fall by 20per cent.."

"..the higher debt burden could explain why Australians have lost their enthusiasm for retail therapy.."

jad n rich

Havent you got that the wrong way round, why would you buy in Perth at the peak of a boom cycle, you dont buy at the end of 3 years of price rises, thats when you start to be cautious.

Thats a typical investor error,to buy AFTER prices have risen, like shares you need to watch out for new markets or recovering markets.

BadgeIsBack

Agreed, its different to buy after a price rise when there is more to come, but even Perth will flatten soon. It was a delayed reaction that's all.

renth

Agreed. But EVERYONE in Perth thinks house prices "will never go down".

Amazulu

I think the short to medium term outlook for Perth is rising house prices. But house prices can fall in a strong, growing economy. It's happening in America right now. Same could happen here.

Wol

>>I know some people have a urge to rush out and buy a house as soon as they arrive in Australia. But I don't understand why anyone would buy a house in the current climate unless for some major negative gearing or they live in Perth.<<

Just a guess here - but how about buying a house to live in?

Australia has probably the sickest real estate market in the world. So many people have been piling into "investment" properties for so long, aided by the tax breaks, that the market is distorted to an amazingly unhealthy degree. A frightful number have mortgages they can only just manage and the number of repossessions can only go up as and when rates rise even by a little.

Having said that, I am just paying well over the odds for a lot to build - but then I look upon a house as something to live in. More fool me....

Amazulu

You raise a valid point. I think it comes down to the stupid tax system in this country (& the UK to a certain degree). The government taxes us heavily (too heavily) then gives it back to certain people in the form of negative gearing etc. Thus distorting the housing market. Surely a better, more efficient way would be to have lower taxation & no tax breaks. It'll never happen though as the government uses tax breaks as a sweetener to get re-elected.

renth

The idea behind negative gearing is to have a large stock of rental accommodation so they don't have to build loads of government housing and secondly to subsidise people's retirements, again so they don't have to pay out the (means tested) old age pension.

Wol

It's a problem in most places, especially when a "captive" vote depends on sweeteners to that vote. It becomes increasingly unlikely that the government that is pouring money back to that section can ever truly reform the system, so they just tinker with it around the edges and it gets worse and worse.

The day they bring in a flat tax system, with negative tax for the poor and zero tax breaks - save perhaps for pension provision - will be the day when (a) we'll be able to work out how our own tax is arrived at (b) we'll pay a fair tax - probably less - (c) millions in the financial industry will be out of work and (d) cows will fly!

phoenixinoz

Generally speaking, houses are a long term investment. Buy when the market is at it's weakest, get a bargain and wait for your investment to grow.

It may take a while and sometimes the market is stagnant, but always, so long as you buy at the right price, in the right area, your money grows.

Buy wisely and only buy what you can afford.

Bricks and mortar are one of the best ways of earning money.

Always has been.

Amazulu

Sure, but it just so happens that the people with the most to gain from negative gearing are the middles classes who are just the people who tend to vote for them. Funny that.

NickyC

Labour government tried removing the negative gearing tax break in the 1980's.

Didn't last long - shortage of rental accommodation, rents went sky-high, all the labour-voting renters kicked up an enormous fuss and it was brought back in quick-smart.

ozzieeagle

Best time to change up, or move onto 2nd or 3rd house is on a falling market.

So totally agree, boy some of those waterfront houses down around Patterson lakes are looking tempting, from a property point of view I wish I were 15 years younger given the present market conditions. Find someone struggling to pay a expensive house of now, and you could really make a lifestyle change, and a huge 'longterm' investment gain.

phoenixinoz

Agree Ozzie. I've often thought that myself. Over the years I've seen some really good bargains that were "just" out of my reach so never quite had the balls to go for it. I was always wondering "what if"....i.e "what if" interest rates go up and we can't afford the mortgage etc.....so we always played it fairly safe and bought the right house in the right area at the right price. Knowing what I know now...maybe we should have gone for something that bit bigger and then made a killing. Who knows..on the other hand buy too big for our boots and we could have ended up losing it all maybe

Like you said, if we were a few years younger ...and given what we know now...maybe could have taken the risk. Then again....better to be safe than sorry sometimes too eh

BTW.....got a better bargain on the pool front too [shopped around and got names / contacts etc so managed to get all sorts included]

lauralollipop

We are looking around that area now, waiting for them to fall somemore while our PR visas come through, then we will buy one.... cant beleive we can actually even think about living there....
Laura