Does a perfect storm provide a perfect opportunity?
If the global financial crisis can be categorised using the metaphor "a perfect storm", then the property market in parts of Australia could soon wear the tag "a perfect opportunity". With population continuing to rise, demand in the property market slowing, supply increasing as a result, upward pressure on rents and falling interest rates now could be "a perfect opportunity" to buy.
With major banks like Westpac offering a three year fixed rate at 4.99% and property yields in good locations approaching 4 - 4.5%, it makes good sense to buy property now. At those figures, along with possible depreciation, we are getting closer to neutrally geared. The challenge in the market place at present is to pick exactly where to buy and for how much? We are noticing many vendors still trying for top dollar on their properties, which may have been last year's price but is certainly not this year's price.
This time of year usually throws up some good buying opportunities and this year it has certainly been enhanced due to people either needing to sell or panicking and selling to reduce debt. Now is not the time to sell unless you absolutely have to, now is the time to buy, if you can.
I imagine those people that fixed their interest rates at the beginning of this year are feeling a little sick in the tummy now with the recent drops that have happened. Those that decided to role with the punches, take the gamble and stick it out on variable can now take advantage of the low interest rates, along with equity in their property and delve into the market.
My crystal ball prediction for the new year is that, although we may not have seen the end of the global financial crisis, and some say the worst of it, we are entering a time where affordability is coming back into the property market for both first home owners and investors. During this time there will be three kinds of people, winners, losers and those that did not act!