Has the property market hit rock bottom yet? Is it already on the upswing? Not likely, it seems.
The government is pumping money into building new houses, which will go some way towards improving things in the construction industry, but is not likely to push prices up. Quite the opposite, in fact. The property news is full of articles about tiny increases in prices, interspersed with articles about how the market may take between three and eleven years to recover.
Property prices look set to remain static for a while. This recession will take a long time to work out. Consumer confidence is at an all-time low and the comparison to the Depression of the 1930s is being made more often. In fact, the 1930s Depression took only three or four years to work itself out. This one has been going for two years now, with no strong indication of improvement.
Real estate forums are still busy, the industry is certainly not about to go under, though it has lost a lot of people. But this is the case for many industries, such as building and construction. Other businesses are experiencing the flow-on effects of the drop in the export sector, and many are restructuring. Job losses are mounting, and those who took advantage of 100% home loans offered by the banks a year or two ago may now find that even the drop in interest rates (assuming they were able to take advantage of them) is not enough to stave off financial ruin. So there has been an increase in mortgagee sales. Some home owners are being forced into quick house sales, needing to convert their property into cash as fast as possible. This means they are likely to lose a substantial amount of value of their investment.
Some of those not prepared to sell at a discounted amount are hanging on to their asset and attempting to rent it out. This is beginning to show in decreased rents, which is good news for those renting. The over-inflated housing market has made rents very good value in the last decade, and this trend looks set to continue.
So all in all, this doesn’t seem a good time to buy. The bottom line is, don’t get into debt. If it’s possible to buy outright, perhaps a modest investment is sensible, but there may well be better bargains around in a year or so.
Tags: house sales, property, property market, property prices, quick sales, real estate forums, sell for cash