Prosper Calls For Buyers Strike
RP Data reports there are over 900 Melbourne auctions scheduled for the weekend and 2700 over the next three weeks. Prosper believes this enough to decisively tip the market into oversupply.
“I remind you there are 1.3 million Australians with negatively geared rental properties. They are diverting all rents and some personal income to meeting interest payment in the hope of capital gains. When only capital losses are expected, investors will flood the market and overwhelm demand. Buyers will step back, making it virtually impossible to sell at any price.That would be the rational response. You'd be surprised how many owners at the start of a downturn hold off the market "until prices recover" because they cannot stomach the loss they know and are willing to gamble on future unknowable losses. A lot of them will do this. And then a year or two later they mail the keys to the bank. But enough will dump immediately. Especially those not selling at a loss, but realizing they are about to miss their last chance to lock in profits.
Hat tip mflat at VCI