Ep.136 | Four Corners and Q&A – The Property Bubble, Being Burnt and Afraid to Invest: What Not to Do
Summary: Well folks, after Awe-Guest, it seems like a long time since our last Q&A!<br> So a lot of you have been writing in to us wanting to know our view on Four Corners’ recent episode on property investment in Australia, <a href="http://iview.abc.net.au/programs/four-corners/NC1704H028S00">Betting on the House</a>.<br> Now, there was a bit of doom-and-gloom in this episode and we want to talk about it.<br> To do this, we’re going to answer YOUR hard questions about property investment — the difficulties, the consequences of poor asset selection, bad property investment advice, the fear of debt and the “1 – 2 property block”.<br> <br> Note: Ben’s reference to <a href="http://www.pipa.asn.au/">PIPA’s</a> Framework on regulating Property Investment (very, very important stuff) can be found if you <a href="http://www.pipa.asn.au/images/files/Constitution%20PIPA.pdf">click here</a>.<br> <br> Today’s Questions!<br> Hot Markets & The Overall Economy from David:<br> Hi Team,<br> Wanted your thought on this <a href="http://thepropertycouch.com.au/episode-014-buy-in-a-boom-and-property-bubble/">“bubble” topic</a> and the actions we see from ASIC and APRA with the banks.<br><br> The way I see it (I am an Australian working in Malaysia, with 1 property investment in WA and 1 being built in NSW Blue mountains) the rate increases are short-sighted and will hurt more than they help.<br><br> With <a href="http://thepropertycouch.com.au/episode-49-out-of-cycle-rate-rise/">increasing rates</a> it means more money is pumped into paying debt. This means there is less for discretionary spending (going out, movies, dinners, gifts, holidays). With less mining and less manufacturing, Australia needs these service based industries to grow. With less spending on them, due to rates, they will shrink — this in turn hurts our overall economic situation … almost starts to lead us down the “R” word path and a certain “bubble” correction.<br> Would it not be better to strict things in <a href="http://thepropertycouch.com.au/abc-news-24-property-bubble-in-sydney/">Sydney and Melbourne markets</a> as a standalone action by:<br> <br> * Restricting bank refinancing and equity accessing for those hot markets – ensure LVR at 70% minimum for a refinance<br><br> 2. Ensuring all investment purchases in those hot markets have 20 – 25% deposit minimum<br><br> 3. Assessing <a href="http://thepropertycouch.com.au/7-common-mistakes-selecting-property-loan/">loans for investment</a> on 10% interest rate for P&I<br><br> 4. Limiting foreign investor purchasing in the hot markets?<br> <br> This will mean the wider economy can continue, other markets needing a boost can see a rate cut maybe, and first home buyers in ‘hot markets’ do not get squeezed out.<br><br> Is it that easy?<br> <br> Asset Selection (Numbers versus Emotions?) from Anne:<br> Thanks for your fascinating podcast! Just had a quick question regarding <a href="http://thepropertycouch.com.au/ep20-science-of-asset-selection-buyers-decision-quadrant/">looking for investment property</a>. I often hear that the property should have <a href="http://thepropertycouch.com.au/ep123-owner-occupier-appeal/">owner/occupier appeal</a>, and yet I also hear that you need to take your emotions out of the equation and just look at the numbers! How do you balance these seemingly conflicting ideals? I am trying to just look at the numbers on an area, which I personally would not live in, and am finding it difficult.<br> <br> Why Most Investors Stop At One from Andrew:<br> Hi Ben, Bryce and Ivise,<br> My question is about moving onto the <a href="http://thepropertycouch.com.au/cpa-lorne-passive-income/">2nd property</a>. I have often heard statistics such as the overwhelming proportion of property investors stop at 1 investment property. I understand that <a href="http://thepropertycouch.com."></a>
