"Property buyers and developers should be quaking in their boots"

I wonder if you’ve been around long enough to personally observe that it’s pretty good.

However , the reason we have booms IMHO has nothing to do with individual economic / population indicators . There is one factor that determines booms and busts and that is human nature . Once we make up our mind what’s going happen it takes a lot for us to change our minds . Simplistically that’s why in shares we have the phrase “ the trend is our friend “ . It’s why so many people were in denial at the start of Covid , because it’s not normal ( the trend ) . When we went through Sydney airport in March 2020 , despite there being very solid evidence (if you looked with an open mind ) most people were not doing the right thing and wearing masks .

So once people become convinced that property is risky and never goes up , it takes a lot to convince most people that that’s wrong , so it tends to over shoot “ logic ‘ and go flat for a long time . Once the market starts moving and enough people believe it , then it tends to keep ongoing past the point of logic . People read stories about profits and get caught up in FOMO . There’s always a new generation coming along who haven’t seen a boom or bust and won’t believe it happens until they personally see it ot they might like to believe the “ this times different “ brigade …

maybe the underlying rate at which property increases in relation can change , but IMHO , the boom bust nature of the property market is determine by the one factor that is always involved and that US .

cliff

 

Agree to a point.
Boom / Bust probably are, but constant demand is governed by population, since we are dealing with a basic need that cannot be sources any other way.

Similar to food. Sushi and Smashed Avo might not be an in demand product, depends on market trends and economical position, but wheat, rice, sugar, oil - will always be in demand.

Properties, or land to be accurate, will can never go down forever. It can not go flat forever.
It has to go up, as the population growth is positive and "they are not making more land".
When you have constant growth in demand and finite supply - the only thing that can happen to that product is to increase in price.
Basic economy.

One might claim that better utilisation of the resource increase it supply, but as can be seen in many places on earth, even if humans are willing to consume much lower doses on land (3rd world countries where the density of population per sqm is sky high), still cost of land goes up (try to buy property in the middle of Mumbai, Beijing, Singapore, Brazil, Manila).

And to be honest, if Australia gets to that position, I reckon property cost is going to be second to much more pressing issues.

 

Masses of people are going to want to move to Australia. Not just because of quality of life as evidenced by the pandemic, but also fear of future pandemics.

 

Early 2000’s Tasmania boomed despite having negative population growth …

cliff

 

Money is just an idea. There is no limit to it.
Can prices go up forever? Yes. Will it? Well...... everyone make your bets.

 

The most important thing I've learnt in the last 20 years is it's a waste of time to try and figure out where prices will be in 5, 10, 15, 20+ years. Complete waste of time.

I am banking on only 2 things.

1. Human nature will remain the same.
2. Long term, Australia will continue to be (overall) a great country to live in.

That. Is. It.

I keep investing as I see value in markets.

Ignore all the noise.

 

Solid argument Cliff.

I am grey around the gills and have participated in booms and flat periods.

 

Look at it this way.

House prices will continue to rise. Why? As an example, There were certain suburbs in Sydney and I won't mention any suburb names, but these suburbs were supposedly the pits. You'd be stark raving mad to try and invest there, people would say.

Who in their right mind would splash money out there? 45 km west of Sydney on The Great Western Highway and turn right at Carlisle Ave and follow it up for a few kays.

Sure, some did invest there, and their investments flatlined for a while. But then, bang-o, prices skyrocketed and investors made a motza.

So, I guess, what I'm trying to say is that there is no certainty in property investment but in the long term there is.

 

Don't you love reading the good ol' class warfare opinion pieces with poor victims and prosche-driving villains - throw in some graphs to justify your highly divisive and irresponsible commentary, presented as 'responsible journalism' in one of the most widely read news sources in Aus, and you have the ultimate clickbait success:

Drastic swing in Aussie housing market

"For a moment, Australia’s housing market was about the young. People were getting into their first home. First-home buyers were ascendant and it was a glorious and hopeful time. A time when dreams were made into reality.

That time is over. Show up at an auction and a 51-year-old man will climb out of his Porsche and bid against you, until you are forced out of the bidding and he adds a dozenth home to his portfolio. i.e. Australia is back to normal, as the next graph shows..."

 

I have been thinking about how migration impacts property vs cheap money.

If you get your average migrant who needs to find a job to buy property - this drives down salaries for all employees (reduces wealth of middle and lower income classes) and thus impacting those suburbs that attract this cohort. If supply of affordable properties can increase at the same rate then it may have a nil effect in general. Land bankers / developers could profit nicely though.

For high net wealth migrants - I am not sure they can sustainably set a higher plateau for prices without underlying local demand as well. I.e. Once one wealthy migrant sets the marginal market price for a property, you would need another to come and buy at the same price and so on and so forth. Once the speculative/ emotional buying gravy train stops what will happen to the price? Unless we can project that these areas are so tightly held that every new sale will go to these foreigners willing to pay above local prices. One thing I am seeing now is the crazy amount of new French style homes popping up hoping at some stage to find Chinese buyers in the 2-10 mill range, at what point does the price need to reset to local demand?

What do people think?

 

Are u over thinking this a little? Most ppl I know who are migrants don't lower wages for rest of us. That is an urban myth.

Who are these high net worth migrants? They are small in number.

Who in their righting would be trying to attract Chinese money right now?.

Maybe a more back of envelope calculation us more ppl need more houses. Puts a floor underneath prices. Less people the opposite.

 

Your falling into the trap of thinking you can predict. You can't.

My message never changes.

Buy value.
Stick within your risk tolerances.
Ignore all the noise.

 

This articles pretty much sum it up.

Home Affairs rejects RBA link between migration and wages

All Australians are better off with immigration
All Australians are better off with immigration

 

Can't believe I am siding with Lowe. Scrap that thought bubble.

 

I can barely predict what I will have for the breakfast the next day let alone property prices.