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

Where do you sit with all your current info, a crash, or a correction in certain areas with price reductions, credit freeze, banks without bailouts as the debts are to big now?

I can see one more way, properties can be boosted in certain areas. If they allow fhb to use their super to pay the deposit, not sure if it will ever pass, but they did speak about many times.

 

If we see a fall I'll just average down my portfolio In all honesty though even if the heavens fell in and Sydney dropped by 30% what have you lost 2 years growth. That doesn't sound to bad on paper at all. NB no real maths was done for this post

 

Well, there's that, but these people predicting a crash are going further than just property prices dropping. My research on people predicting a crash so far are indicating that the banks have lent to much, so if the worst case did occur our government won't be able to back it up. Total credit freeze, no more borrowings.
A lot of people throughout every industry will loose jobs, even people with 100k mortgages won't be able to pay the repayments, as no jobs, so your house will not only drop in value but may get taken by the bank. This is just a basic worst case example, but compound that throughout the country and you get the idea.

 

I think a big crash in the immediate future is a low probability as some of the aforementioned tricks have not yet been milked for all they are worth. A large, external shock eg. GFC MK2, beyond the remaining stimulus arsenal our government could unleash to stop it, could do it though. The more likely scenario is a long plateau over the next half century, having our descendants at the turn of the next century wondering what we were all thinking at the time!

Yes, that could give the game another shot of adrenaline, until it became mainstream and the effect is already priced in.

 

If your personal investment strategy is one that is correct for your personal circumstances then the movement of the markets, up, down, sideways should not affect you. Wealth is distributed differently in a down market and people make money in bubbles too.

 

Well this is the issue, the people predicting the crash, not a correction, are referencing mass fails throughout affecting all industries, all jobs, population. If an economy tanks like they mention, even if people have savings in the bank, will be affected. Every investor is prepared for corrections, I am, but a crash of what they predict will be felt and will hurt.

 

What on Earth is a macroeconomic researcher? Sounds self-titled in an attempt to give their opinions more weight.

 

If it's only been one year in all the Australian property market then that's not bad numbers,and thanks for posting those facts,i only went back 100 years..

 

The irony about these two is they really are the worst kind of speculators. Creating FUD (fear, uncertainty and doubt) to spread their version of the gospel...all to make money.

 

I don't agree with this position at all. I think it makes a lot of assumptions and then get's it wrong. For example, if this happened, myself and my investment partner have a decent enough cash buffer to get us through 2 or 3 years of unemployment and also pay the mortgages of our investment properties. I wonder how many other people have cash buffers to see them through hard times? I understand in a recession, many people could lose their jobs and many people could default on their mortgages. However, there are many other people like me, with cash reserves, that will do just fine.

I have also seen the numbers on banks being too big to save. To go under, a bank would have to have a significant number of its customers default on their mortgages. Many of their customers (like me) will be fine. To be accurate, the authors would really have to take into account personal savings. I bet they don't. They look at a bank and say, the government can't bail them out. Well, the government won't need to. At worst, they will only have to cover the percentage of people who default. Has that percentage been estimated by the authors? I wonder.

 

You might not remember the 1980's recession. It was deep. It hurt a lot of people. People lost their jobs, their money, their houses. But they survived. And afterwards, the economy built back up to be stronger than ever. If you really want to see the aftermath of such a crash, look at Ireland. Did any banks go under? I don't know. As far as I can tell, they got bailed out https://en.wikipedia.org/wiki/Post-2008_Irish_banking_crisis

 

Ironically, they are from a Philip Soos article. Those two do good research!

 

Ok 1/7th of the way through the book. In no way am I agreeing and promoting a bust. Will post info and let discussions take place. I'm referencing any info I can find off the net, so no copyright laws are broken.
So far Lindsay is indicating prices of property to household income and how much they vary from American city's with more population, from Tokyo, Melbourne, Sydney, Houston, New York, London etc.
Also referenced how the media, the papers, and Andrew Wilson have been listing preliminary results of sales and not final results, skewing the actual results to show how well the markets are doing every week, and that Fairfax owns the papers.

Also how expensive Australia's living expenses are compared to the rest of the world.

 

Also thinks the bust will occur 12-36 months from when the book was written. Last year I believe it was written

 

http://www.businessspectator.com.au/article/2014/7/23/australian-news/three-forces-pushing-australia-towards-recession

This article writes much about what's in the book so far. Referencing the 3 pillars as Lindsay calls it, banking/realestate/mining, which he says is what grew they economy, and is what will also take the economy down, to new lows, in the near future.

. If one of them gets into trouble the other three will quickly follow suit and suddenly we’re off to the races with feedback loops costing jobs, further mortgage defaults and ballooning government debt. Points out the same thing in the book, one falls, they all fall

this graph indicating what our banks own in 2013, and also referenced the lehman brothers debt before the gfc.

 

Interesting stuff @Barny. Something to think about is, what is the counter-argument to each of the arguments you have presented?

 

That's why I have you. I'm still researching one side. Throw in some info please. Counter it.

 

People need to learn to think for themselves. Otherwise you end up with a scared kid, gambling his family's future on the word of some author he doesn't know.

 

I can't see the relevance of comparing cities from other countries where people are used to living predominantly in shoe boxes with Autralian capitals when talking "median" priced properties.

If there was a price per sqm of living space comparison of "median" dwellings this would be more relevant.....maybe.

 

You are describing a depression here.