"The Crash" has been called... end of 2017.

Hey @Barny, here is a good one for you. A less hysterical look at the Australian Property Bubble:

"It is seems reasonable to expect that the market in Australia will normalise.
This could take the form of a fall in property values, or under a more optimistic scenario, prices could cease to grow from here for an extended period.
The widespread expectations that residential property generates real long-term growth would be disappointed.
Under either of these possibilities, the widespread expectations that residential property generates real long-term growth would be disappointed."​

http://www.moneymanagement.com.au/expert-analysis/editorial/there-property-bubble-australia

Why is this important for property investors to understand? The first is that if housing prices and rents have become disproportinate (i.e. buying in IP is a loss making proposition) and housing prices and rents normalise, it will be more profitable to own an investment property and investors will not have to rely so heavily on capital growth to make money. This is not a bad thing.

The other is that if we assume no or low real price growth (prices increase at close to the same rate as inflation), what are the options for making money in property?
- buy a development site and build mutiple houses or apartments
- buy an older 3x2, renovate it and convert it to a 4x2
- buy an older 4x1, renovate it and convert it to a 4x2
- just renovate and rent out for a higher rental return

There are lots of ways to make money in property besides ridiculous capital gains.

 

Dear Perth Guy

You are not the first person that has tried to attack our credibility. All of which have without a doubt not read any of the research we deliver or have any understandings whatsoever of my professional background... And you certainly won't be the last...

Regards
Lindsay

 

Hi LIndsay

Perhaps it would be a good idea to put up Philips and your own background to clear up any misconceptions?

 

Since its your first post not sure it's you. I'm about to buy your book, it better be good.

 

Hi Lindsay and welcome to the forums. I hope you find it interesting.

 

Hey @Ldavid, one of our forum members @MTR will be excited that you have joined. Your ponzi article spawned an argument that lasted almost 50 pages...

https://propertychat.com.au/communi...ke-a-ponzi-scheme-and-its-about-to-bust.3086/

 

I hate it when people with vested interests push their barrow.

A sharemarket newsletter Facebook page is currently pushing a theme along the lines of 'housing is too risky. Invest in shares.' Just trying to sell more of their newsletter subscriptions.

Not that I'm complaining about the sharemarket. Return on my portfolio of Australian shares in the last 12 months has been 17% ( dividend income combined with capital growth ).

 

Lindsay David is a macroeconomic researcher, co-founder of LF Economics, author of 'Print: The Central Bankers Bubble' and 'Australia: Boom to Bust.' and has an MBA from IMD. Sourced from his twitter profile: https://twitter.com/linzcom and http://blog.australiaboomtobust.com/about-us/

Philip Soos is also a co-founder of LF Economics and has his own website: http://www.philipsoos.com/ It does not have a profile.

He has a Bachelor of Computing from Swinburne University of Technology and an MBA from RMIT University. As of 2011, he was listed as a Researcher at Deakin University.

Philip Soos is a researcher at Deakin University’s School of International and Political Studies. He is also a Masters candidate at the School of Management and Marketing, Faculty of Business and Law at Deakin University, and a researcher for the Land Values Research Group, Melbourne.

https://theconversation.com/profiles/philip-soos-3405/articles

It's interesting that Lindsay raised the point that I don't "have any understandings whatsoever of [his] professional background", which is true. Apart from what I posted above, I can't find anything about him.

To clear up a misconception too, in my original post, I wasn't implying that Lindsay tries to pass himself off as an economist when he isn't one, that is all down to the media being sloppy.

"Mr David said he never claimed to be an economist.

'We've made it very clear we're macroeconomic researchers,' he said."

Read more: http://www.dailymail.co.uk/news/art...arket-bloodbath-prediction.html#ixzz3pO5wfLw3

I think it's really clear from their online profiles that they are not economists and do not claim to be. Seeing this claim repeated in article after article is poor journalism IMO. I guess the confusion is that their company is called LF Economics. Still, SBS managed to describe Lindsay correctly in this article: http://www.sbs.com.au/news/article/2015/06/23/housing-bubble-or-scaremongering

"The latest is former strategy consultant and macroeconomic researcher Lindsay David."

 

That's a great return!

 

Which is around about 50 pages more than any thread Perthguy has ever started.

 

Notwithstanding that your maths is rather shabby... quality over quantity baby!

 

Up to page 4, boom to bust. gonna hopefully get through most of it tomorrow. Part of copyright law, I can't post any of it, or can I?

 

I don't think copying and pasting would be considered fair use. It would perhaps be ok to summarise some concepts in your own words. Better would be to think analytically about what you are reading an provide a critique.

 

@Barny, here is an example of a review where material from the book has been incorporated into a review of the book http://www.socialistpartyaustralia.org/archives/7122

 

Looking forward to reading it. Would have started today but tired from reading Saul eslake, 50 years of housing failure. Actually really enjoyed it. I'll get back to you shortly about it.

 

Which side of the media - is the question?

One side is in love with academics; especially if they are from the same side as themselves - no matter what they talk about - and the other side; isn't.

 

I'm in that group.

I have not seen an "ever rising tide of property values" in my 30 years of property awareness and activity.

What I have seen is lots of factors, lots of events, interest rate rises, Gubb policies, boom frenzy mentality and total market fear...and so on.

What I have seen is a slow and gradual rise of prices over time in line with the rest of the economy - wages and inflation, and based on demand.

It is not a straight line rise; but an up-ticking roller coaster. Go back 30 years and pick out any house in Aus and see what it was worth then, and now.

This is why my group will argue against the panic merchants of a giant crash...I've been hearing those words for ages and ages.

There are times when houses do drop in value; most of the big drops for a particular property and price range (and area) are forced sales due to an economic situation, and/or massive interest rate rises which folks can't handle on a personal level.

The rest of the time? The vast majority of folks just keep living in their houses and paying their mortgages.

Probably the biggest crash we have seen in my lifetime is right now; since the end of the mining boom in those areas related to that industry.

 

Yeah, but I've started 50 threads here and over at SS over the years, and trainwrecked 50 more over the years... so I win.

 

I can totally understand that position given what you have experienced, but if you take a big step backwards and take a look at that 30 year window you'll see that it has been a period marked with progressively decreasing interest rates towards zero, increased availability and accessibility of credit, wage growth outstripping inflation, government policies introduced favouring property investment (eg. negative gearing, CGT concessions), increased public awareness of property's investment opportunity, an increased willingness to forgo yield in exchange for anticipated capital growth, and, through greater participation of women in the workforce, a massive increase in household income able to service high levels of debt.

Unless new tricks of similar influence, quantity and regularity can be rolled out in the future, it's hard to see how the party can continue at similar levels of intensity to the recent past. One of the possible outcomes of such a fallback or plateau is property investors eventually having enough of not seeing the bountiful capital gains they were used to compensate for the tight or even negative serviceability they have been enduring in such anticipation. While a plateau is much more likely given our collective stubbornness to let go of what we have been used to, a major correction is not out of the realms of possibility if enough of them head for the exits at the same time. I completely understand that this latter scenario is difficult to swallow when all you've ever experienced in your lifetime is increasing prosperity with occasional pauses along the way, but in my view it should not be dismissed outright simply because of that experience.

 

In high school perhaps?