Housing prices fall! (or do they?)
Home value falls trap buyers, reports Saturday’s Australian. So has the house market slump finally led to the bursting of the bubble? No, ‘Prices in parts of western Sydney as well as the inner Sydney and Melbourne apartment markets have fallen well below their mortgage costs.’ This isn’t surprising since: (a) there has been a glut in the inner city apartment market for at least 2-3 years, and (b) the prices were probably near/below mortgage costs when the apartment was purchased.
People who buy inner city apartments do so at their own peril. Not only because of the huge glut, but also because many such apartments fail to fulfill the cardinal rule of investment property: You make the most money when you buy. Leading investors tend to interpret this differently, leading to different wealth growth strategies, but all would acknowledge that the best time to make your profit is at purchase time. The big sell of inner city apartments is usually either wild promises of future growth, or a guaranteed rate of income/return. Neither are particularly beneficial if your property value is plummeting while your mortgage is growing.