Real Estate Update
Well, here we are in the middle of a world financial crisis and the inevitable question that arises is, “what will happen to real estate?” This is not an easy one to answer, because this situation has not arisen for a long while.
The last time we had a share market collapse, was in 1987. The result then was a huge rush by investors to real estate, resulting in huge price rises till ‘the recession we had to have!’ (Thanks Paul Keating) occurred and we all remember what happened in 1999. Well if you don’t remember – real estate prices fell and we had virtually a flat line on price rises till 1997.
So what is my guess? This year we have seen a fall in demand with a resulting ‘cooling off’ on prices. Further more there is an increase in stock levels in the months of October to December. This may well cause a further drop in prices. The only red herring right now is – what are investors going to do with their funds. If they turn to real estate, we could well see a strengthening in the real estate market.
My advice right now is if you are buying and selling – it makes no difference. If you are first time into the market jump in and use the additional home savings grant.
If you are an investor I would ask you this question. Considering real estate prices have averaged 10.8% per annum growth for the lat 100 years – would it make any sense to wait?
I say jump in now. If the market eases you know it will improve in the near future. If it rises you can say that you knew it was going to happen!
Cheers
Bertram
