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Real estate prices to plummet?

By johnboy - 30 October 2006 24

The Canberra Times informs us that BIS Shrapnel is predicting a 10% fall in real estate prices once the new developments in Gungahlin and Molonglo come online.

With a double interest rate rise on the cards the spectre of negative equity must be looming large for a lot of over-committed home-buyers.

What’s Your opinion?

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24 Responses to
Real estate prices to plummet?
bonfire 12:10 pm 01 Nov 06

yeah a 21 year old is just going to magic a 40k deposit out of what ? his arse ?

VYBerlinaV8 11:15 am 01 Nov 06

Alternatively, the 21 year old could get a unit, put renters in to pay the mortgage for him/her, then by the early 30’s could have several hundred thousand dollars of equity to play. The assumption here that you can’t have a satisfying life AND pay off a mortgage is just plain wrong. Sorry.

bonfire 9:46 am 01 Nov 06

3 people sharing a 3 brm unit even at 500 bucks a week its only around $160 bucks a week.

dont give me this woe is me shit.

in their 20’s kids are supposed to have fun.

a 21 year old with a mortgage ? he will have no life while he pays it off. he should wait until late 20’s, early 30’s when hes sown his wild oats and climbed up the food chain a few notches salary wise.

then the mortgage wont hit the hip pocket as bad as it would at 21.

VYBerlinaV8 9:40 am 01 Nov 06

Most of the young people I know in their 20’s (and I’m only 31, so I know a few) are far too busy traveling, partying, and generally pissing away whatever they earn anyway. In these times of zero deposit home loans, it shouldn’t be that hard.

vancouver 7:56 pm 31 Oct 06

I just feel so sorry for the young people in their 20s who are trying to find somewhere affordable to rent – especially as their earning capacity is not high – they can’t afford to buy and they can’t afford rent – does this mean we parents are never goi ng to get rid of them??

VYBerlinaV8 8:56 am 31 Oct 06

I’m a few years behind Vic, but with the same approach. We are currently choosing #3. Frankly, a drop in the property market would mean it would be easier to acquire more investment property.

Vic Bitterman 8:07 pm 30 Oct 06

If the bottom line drops, then I’ll increase my investment property purchase rate. Averaging around 1 per year, with #8 in my sights soon…..

ash 5:47 pm 30 Oct 06

Look at little more carefully at the title, they’re only talking about land prices dropping 10%.

Then apply the current upwards trends on gov fees, building, etc and prices will still be higher.

Mr Evil 5:33 pm 30 Oct 06

I wonder if BIS Shrapnel are the same mugs who predicted that petrol would be at $3/litre by December this year?

seepi 5:16 pm 30 Oct 06

smokey have you been to braddon? or turner – or even ainslie?

smokey2 3:34 pm 30 Oct 06

Canberra is a closed shop for development compared to Melbourne or Sydney. In Melbourne almost every street has a house being pulled down and replaced by several units. Same thing doesn’t happen up here. Looked up the Frankston council planning list today and the number of duel and multiple occupancy applications is staggering. If things do slow down then latent demand in the ACT should reduce its effect.

VYBerlinaV8 1:21 pm 30 Oct 06

I must admit it’s hard to see a contraction in prices when rental auctions are taking place…

vg 12:18 pm 30 Oct 06

10%. Utter bullshit.

There are bugger all houses for sale in Canberra (comparitely speaking) and the record prices for auction are constantly being espoused. With a very low property vacancy rate for rentals the market will stay where it is or grow slightly

bonfire 11:39 am 30 Oct 06

I agree with you Vy, but i think other factors need to be taken into account.

With a booming economt, many folks can afford to buy and live in a 3 or 4 brm house on their own. They dont need to rent or even have lodgers.

When the economy cools or interest rates rise a notch or two, this market will contract and peopel will ‘share’ houses.

The rental market will loosen in this scenario.

I believe this single person home dweller is probably what is driving canberras real estate boom, as the population figures dont support it.

VYBerlinaV8 11:34 am 30 Oct 06

10% is a big move in property, and unlikely to occur as a market average in Canberra (my opinion only). Given the ever-increasing rental demand, I’d be bloody suprised if this happened. It’s worth remembering that lots of these figures can be in ‘real’ terms, that is, including CPI/inflation. When including CPI/inflation figures can do all sorts of funny things.

The main thing for people to remember is that it’s only a loss if you sell. If you feel your property may not be worth as much as a few months ago, and you’re not about to go bankrupt, DON’T SELL.

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