Australian Property Crash????

It's always funny to look back at some of the old doomsayer’s articles, which have been crying out for a property crash year after year.

Here is one article I read about four years ago. The article and many similar ones made me a little nervous to invest at the time. However, I bought based on the numbers and backed the property market as a good long term investment.

Since this article was written the Australian property market has increased by 26.9% (Weighted average of eight capital cities - ABS 6416.0 - House Price Indexes). Sydney grew by 44.1% over that time! The article predicted a 60% fall.........

It just goes to show the media is always going to sensationalise what ever they can get their hands on.

So let the herd follow the headlines and the rest of us will quietly go about our business

Scott O'Neill

http://www.news.com.au/…/blood…/story-e6frfmd0-1226248472949

 

Yea true if you listen to the media all the time you would go know where . You need to look beond that . Great to have you on pc Scott

 

To be the Devil's Advocate (Doomsayer?)....

What amazes me is how property has continued to rise over the last several years (always has risen over the longer term), yet wages and the spendability of folks' wages has not increased at anywhere near the same rate.

Something has got to give, and until recently the thing that has is interest rates and lending criteria, overseas purchases.

If the interest rates do go back up, and/or lending criteria tightens, and/or wages stay at this low rate of increase, unemployment stays high, and/or NG is removed from the table, O/S purchasing stops, then it is not likely that property will keep going up much more.

My prediction is a few years of bugger-all growth in many areas, and probably a number of corrections in many areas.

 

I myself thought that Brisbane is a better option but renting out Brisbane (in 10 K Radius)property is very hard. In Sydney with all these negative media coverage you can rent out your property ( in 15 K radius) in a week and I still get a good yield . So the demand for rental property is still strong and that would push up prices even higher.

 

The interest only go higher if Economy is doing good that means low unemployment rate , strong wage growth and strong commodity market. All these would push the prices up specially in mining states. Many people believe that this scenario doesn't happen for a while.

 

I agree with you. However I would isolate your comments towards the property markets that have hit affordability glass ceilings (like Sydney and Melbourne). A slowdown is a must after years of such massive growth.

I'm more of a fan of buying at the bottom of a property cycle in high yielding properties. The great thing about Australia is there is always going to be a market at the bottom of its cycle.

Buy low, revalue high!

 

because.debt.

 

You have got to be joking? We are at almost full employment.

 

Our unemployment rate is higher at the moment than previous years, and that is not looking at the real facts at all.

There have been an enormous amount of full-time jobs disappear, only to either not be replaced at all, or have morphed into part-time and/or casual jobs.

Have you not been listening to the news over the last few years and heard of the mountain of large businesses which have cast off thousands of full-time jobs - some forever?

I am on the ground every day Ed, talking with customers and reps from a very wide range of industries...generally, and broadly; there is very little good news out there.

Again; we (not me) are being conned by stats that don't reveal the true picture.

 

It's just the favour of the month at the moment. I am sure that the media will latch onto something else soon too, just like hollywood atm producing marvel/ DC movies.

 

Tend to agree

I work for an energy efficiency company and spend a lot of time looking for opportunities in manufacturing. Everyones story is the same. We used to have 'x' amount of employees, now we only have half that.
About the only industry i see which is doing well is aged care. Which is not really a good thing

 

Oh, christ yes....drives me insane how folks here in this fishbowl only look at a stat to tell them anything.

I have a truck full of anecdotes about this unemployment situation.

Here's just one; one of our good friends works for an energy company...we meet them every Sat morning for swimming lessons with the kids....they have laid off over 40 out of approx 100 folks in the last 3 months at his company. He is still there, but sweating bullets currently, because it is not over yet, apparently.

Not in the news either.

 

Higher than a brief 4-5 years in the mid/late 2000's. Other than that, current unemployment is lower than any other period in the last 30+ years. UE is 5.7% and has been going down.

If I used news reports as a measure of employment I would think that no one has a job, and it's been that way for my whole life. A headline of a big company shedding 1000 employees sells more newspapers than 100 employers hiring 10 people each.

The definition of employment used by the ABS is BS I agree. But it's been consistently used for a very long time.

 

Really?

Other than cafes - which will typically employ mostly casuals - which industries are in the mode of increasing their workloads?

I guess a few new Aldis and Bunnings etc will be doing it.

There are also plenty of small employers dropping off 5's and 6's of employees who are not in the news either.

 

Casinos. You should bet the workshop on black.

Seriously I don't know. I don't believe the quantum of UE data, but do believe the direction.

 

But isn't that what you've been saying for a while ....

IMHO your opinions are clouded by your own personal experience . The reality is that much of Australia is doing ok.

Cliff

 

Some critics doubted the performance even when i started investing in 1983 that the upswing would only last a few years,then neg gearing went into stall mode then the upswing started again,1990's the prices did stall in Brisbane,and some we purchased were 50% lower then the vendors paid 5 years prior,that's something you can't plan for politicians can that's why it's always pays to be carefull that if something feels true in your gut
and you think it's true you may become part of the herd without even knowing it..

The RBA set to meet as odds of a Fed cut dive

Employees reinvent themselves in Victoria's manufacturing base

 

Respectfully, I believe Bayview's economic thoughts are heavily influenced by his business malaise. Confirmation bias.

The last half of the Howard years provided a great economic time. Ever increasing prosperity and middle class welfare. Joe six pack accepted a few years of tough times due to the GFC, but expects the economy to return to something that was exceptional. They think the exception was the rule - it's not!

Low-interest rates have had their stimulus on prices. I don't expect IRs to drop much more, so I don't expect much more property price rises. I think IRs will remain around 4-5% for a long time, perhaps 5-10 years. Then people will be shocked when rates return to a more normal of 7% and property prices will stagnate.

 

And yet, the Howard years left Australia in a structural deficit. Costello had other plans, but Howard instead insisted on economically stupid populist measures.

 

Since I started investing I know a number of investors who got burnt, went bankrupt.

It's not necessarily about following the herd it's far more basic, it's about managing debt. In each case greed got in the way, it consumed them and logic flew out the window.

Property works in cycles, good times don't last forever, if you understand this then you will protect you have and there should be no need to panic as you can service debt, weather the storm