Australian Property in Crash Mode? Is It a Crime to Buy Australian Property?

I was reading one of my trading gurus this morning........and was surprised to see that he wrote about the Australian property market recently.

Australian Property in Crash Mode? Is It a Crime to Buy Australian Property? | Armstrong Economics

I often don't agree with his views. However, I have learnt a ton from him over the years in respect to trading......and he saved my trading and superannuation bacon when he called a market high in 2007/8......years prior to the actual event.

If you haven't heard of him, he is considered an international guru in semi/professional trading circles.

I take him with a grain of salt........and just add his commentary to my bag of daily readings...but always take note and pay attention, given his past performance.

 

The first graph makes absolutely no sense. There is no title. The x and y axis don't represent anything.

 

Bahaha I remember a certain world renown economist telling anyone who would listen about the imminent housing crash that Australia was about to experience in early 2014- right before one of the biggest booms we have seen for a long time. Nightmare vision of impending property crash

 

Good article. Except for 1 thing. I would give this market a bit more time before the crash.

 

The majority of the article is about the anti-foreign investment position taken by Aust Govt and while foreign dollars are going elsewhere, tougher lending restrictions were brought in.

And the end result of the two being a softening of the housing market.

In terms of a crash, per se, I don't know. Perhaps flat line / declines as experienced in the past, while investment dollars go elsewhere.

 

I've been hearing crash since I started investing when I was 18 years old.

It's been quite entertaining actually.

When the markets are flat - they cry poor investment.
When the markets are booming - they cry bubble, crash is coming
When the markets dip and correct which is normal - they cry property has crashed

Their overriding agenda is wanting to be right. Our primary agenda is wanting to build wealth.

You gotta love em.

 

"Marxist influence" wow

 

Yeah - he is out there. He regularly advocates for less govt controls and regulations, cutting taxes and letting corporations and supply and demand sort it out all.

That said, he stock market calls are impressive.

 

A broken clock is right twice a day. I give little credence to "gurus".

All in all, that is a woeful article and displays a complete lack of understanding of the Australian situation.

I hope his newsletters are free.

 

That's right. Sometime in the future that might end up with a right call. I wonder what will happen to the wealth of those who didn't take notice.

 

I predict that at some stage Australia will undergo a reduction in house prices, and at some stage it will have another boom.

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The article doesnt give a compelling argument or data for a crash. People can be right about something then wrong the next time i.e. the danger of surviorship bias, heinsight bias etc. Thar said of course a crash is possible.

 

Its always next year.. a little like those prophets predicting Armageddon.
When someone is willing to say it's going to happen this year and their not selling something I'll stand up and take notice.

 

Yeah stopped reading there.

 

Spot on.
If these OS experts commenting on the Oz market keep saying it, one of them will be right - eventually.

 

He has a good business model:

If his forecasts do not come true it will be because governments “wave the magic wand and kick the can down the road again”.​

If he keeps predicting a "crash" every 12 months, at some point the property market will correct and he will be able to say oh look, I predicted this, I was right. For every year the market doesn't "crash", he can just blame government intervention. So, he ends up always being right!

He is still peddling the same line:

Indeed, some commentators, mainly based overseas, are predicting the price bubble will burst. The US forecaster, economist and demographer Harry Dent predicts prices could fall as much as 50%. Part of his rationale is that house prices in Sydney and Melbourne have reached almost 10 times income levels – the same point they were in California when the US market peaked before bursting.
But local analysts have hit back. Dent’s prediction does not reflect the history or underlying strength of the Australian housing market’s dynamics, Andrew Wilson, senior economist with Australian Property Monitors, told the The Sydney Morning Herald. Wilson said that while Sydney’s current price growth of 15% was unsustainable, it was not a bubble, and he expected growth to flatten this year. Michael Yardney, a director at Metropole Property Strategists, also rejects Dent’s bubble theory, saying it is not the first time Dent has predicted a bust. “Remember, for a property market to crash, you need desperate sellers willing to give away their properties at fire sale prices and no one willing to buy them.”​

Is the property bubble about to burst? - Money magazine

I think the local analysts have a good point. Can you imagine a likely scenario in Sydney where desperate sellers are heavily discounting there properties but there are no buyers? I can't. I know Sydney is on the watch list for a lot of investors and any hint of discouting will attract interest. This means we are in for a correction, not a crash. And any talk of 50% is pure fantasy IMO.

 

It's risk and reward. Time will tell if one's strategy is sound.

 

Yes, the report is a bit wacky. An over emphasis on a single issue being foreign ownership. Anyway what is wrong with some control of foreign ownership? Hardly "Marxist".

We scoff at the idiot gurus who called a downturn a few years ago. But now we have prices 50% higher. Things are far more acute than when they were putting out the warnings