(03) 9020 2905Can a sci-fi expert answer me this question? Why hasn’t Captain Kirk ever teamed up with Luke Skywalker?
As two almost tsunamic forces of intergalactic, yet-to-happen, history, they must know of each other. They must be curious to meet. Have they seriously never caught up over a beer?
No, they haven’t. Why? Because they’re opposites. They don’t exist in the same time-space continuum. They wouldn’t like each other if they did. They have different goals and objectives.
And, in any case, Dr Spock believes Han Solo’s relationship with Chewbacca is “unnatural”.
There’s a great big chasm between “Star Trek” and “Star Wars”. Yes, they both travel through space, they save planets and other life forms. But the similarities end there.
Just like home owners and property investors. Sure, they’re both into real estate. Both seek the security of bricks and mortar. Each has an interest in property prices growing steadily forever (which it doesn’t).
But, as they say, “same same! But different”.
It wouldn’t be accurate to say that homebuyers and property investors have mutually exclusive interests – like fans at a Dockers v Eagles derby – but it’s not far off.
They are trying to achieve two different things. Buying a home is about lifestyle. It’s about living near family and/or friends, near work, near your current lifestyle, near the kids’ schools. Or perhaps you want to be on acreage, away from all those things.
Home is about comfort and safety. If you don’t feel safe at home, then, seriously, leave. Buying a home is emotional. It’s allowed to be. The family needs to be happy living there with the pup and puss.
Does it matter if you pay an extra few thousand dollars for your home? Probably not. You’re going to be there for a long time.
(It’s similar for those buying their second or third homes, except they are generally starting with equity and no government grants.)
But property investment is about financial wealth. “Show me the money!” Good returns, whether rent or capital gains, is what a property investor seeks.
Overpaying for property is a cardinal sin for investors. If you don’t get the property underpriced, or for a fair price, then walk away.
By rights, as a result, property investors and home buyers shouldn’t get on. And that is probably why they’re often in the market at opposite times.
The recent flow of news for first home buyers has not been good, even if entirely predictable.
The Real Estate Institute of Western Australia reported this month that the first home buyer market had “collapsed on the back of rising interest rates and the removal of the Commonwealth grant for first time buyers”. That is, the number of people who applied for a First Home Owner’s Grant slumped by about 57.5 per cent in April 2010 compared with a year earlier.
The bonus cash for first timers is gone and there’s been six interest rate rises in eight months. Make that seven if you’re with Westpac.
Even if last year was pumped up by the Rudd Government’s GFC-inspired cash bonus, that’s a heck of a vacuum.
As a result, the “first home buyer affordability” index dropped stupendously over the 12 months to March. They have warned it will get worse in the June quarter, because of further interest rate rises. It will probably test the record lows of 2007 when interest rates were above 9 per cent.
But median prices rose in Perth in the March quarter by 3 per cent to $500,000. How? Second and third home buyers rushed in to fill the void. REIWA says the bottom end of the market (first home buyer territory) will suffer worse than other parts of the industry, which was already evident.
The appeal of renting must also be rising. Vacancy rates are still above 4 per cent. There’s got to be some desperate landlords out there itching to get their places leased.
So, is a property crash around the corner? Probably not. As first-home buyers exit the market, investors will slowly move in.
It never made sense for investors to be competing for the same properties against first home buyers with bonus cash handouts. They have different aims, and sometimes competing interests.
And suddenly I get why Kirk and Skywalker have never shared a frothy one.
Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au) and a licensed financial adviser. bruce@debtman.com.au .