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

Yeah, going by what I'm reading so far, this is my understanding. I'll read the rest and see what comes of it. I do find some things interesting such as our over leveraged banks, but as perthguy said earlier, there is always a counter argument, and I need to follow up on the stuff I find questionable through other sources.

Also, @Natedog , the author did reference the dwelling being significantly smaller to Australian homes, mentioned he's comparing apples with oranges.
So I agree with you, and also I need to check what prices the houses in New York City sell for, as he didn't indicate the prices. I'm sure houses will be much more than apartments.

 

Comparing income vs property price against cities in other countries is very misleading - different finance rules, tax laws, etc. Anyone who uses this stat is just fear mongering or being a sensationalist.

They're supported at different levels - 5x might be high in one country but low in another.

 

Using super as a deposit for fhb is a absurd idea..

Just look at what the fbg grant did for the bottom end of the market - inflated it by the fbg amount + some..

I think that would be economic gambling by the government. Using people's retirement funds now in an attempt to make them financially secure. If it doesn't come off - no super, no pension - economic disaster..

 

And another reason why it's misleading country by country comparison is because of purchasing power. Eg 1usd has significantly more purchasing power than 1 aud or even 1.4 aud after conversion.

 

I feel uncomfortable with SMSFs being able to buy residential property. I have seen some people lose money doing this. Still, we let people gamble on the stockmarket, so a SMSF could lose just as much on shares. What's the line between allowing people to make their own decisions and being a nanny state?

 

SMSF investing is unrelated to what he's talking about. One of the polis came up with the idea of super (whether in smsf or not) being usable towards first home deposit, which sucks because
1) People of FHB age wouldn't have much Super anyway
2) Saving really isn't that hard - media just likes to sensationalise it
3) It'd just raise the prices by the equivalent amount
4) If they get on the back foot from an early age with super, then they're probably not going to have enough of it to retire on

 

I agree it's not valid to simply compare income vs property price in different countries. All it really proves is that the median house price in a particular city is relatively high at a point in time. This doesn't mean there will be a property crash. For a very brief time, the Perth median house price was higher than Sydney's median house price. Now Perth's is around $540,000 and Sydney's is over $1,000,000. The Perth market didn't "crash" to normalise. It is undergoing a correction right now. Markets overheat, markets correct. This doesn't point to the biggest property crash in Australia's history.

 

That's what happened in Perth with FHB grant.

They run a similar program in Canada but you have to pay back the money you borrow from super. The scheme should be designed to make sure any funds borrowed are paid back.

Still, the main point is whether we want to add fuel to an already overheated property market.

 

Well in Perth it is crashing.... it's just not burning........yet.

 

These days any boom is a bubble, any correction is a crash. Especially if you are trying to sell books

Back in the real world, it's just a correction.

 

Would depend on what kind of parallel universe you call the real world?
In Perth it has all the characteristics of a full scale crash and it is only ever boom or bust in Perth.

Better to be selling books in this market because crazy doesn't sell anymore.

 

i wonder if they'll do better with their predictions than this book which was all the rage a few years ago ....

THE GREAT DEPRESSION OF 1990 .

There is a constant stream of doomsday scenario books all designed to make money for their authors .

The reality is it's always easy to find a reason why markets will crash but trying to predict the direction of the economy is way too complicated for the anyone .

Economists never get it completely ( or to be honest , even close to accurate ) , so why are these self professed experts going to get it right unless via pure coincidence

run for the hills if you want to but put any IP's you have in Brisbane up for sale before you go .

I'm still wanting a couple more

Just spent some time checking out " my indicators " in the areas I'm buying . Vacancies still in low range of normal , stock on market trending down and prices trending up .No lift off yet . Properties seem to be listing 20-30 K about when we started buying a few months ago . Now it's a matter of having to look for the good deals , rather than selecting the better ones .

Damn , should have bought more earlier .

The crash will come with the next major economic shock . One will certainly come , but they're unpredictable in their timing .

Cliff

 

Exactly! That's why I was interested that someone would put their reputation on the line by calling a specific timeframe for "the crash" aka, the great Australian property bubble finally bursting. It's interesting because a burst real estate bubble is typically caused by an unforeseen economic event. I was wondering how the author can foresee an unforeseen event 2 years out?

 

Not really. It depends where you are looking. Of course if you are hanging around Mandurah, the market is looking very bad. However, in areas where there is still demand, prices are holding up too well. That's where I want to buy a PPoR and I still can't find something I would consider value. Where I am looking, your "crash" is an illusion. Other areas, where I would consider living, are flat, not falling. The only places that are really crashing are places I don't want to live.

 

An unforseen economic event. Really... like what?
This is not what happened in Japan btw. and they've had decades of no growth following their asset bubble.

 

Seriously? What took down the USA property bubble and the Irish property bubble?

 

So what you are saying is "where you can slum it, where everybody can afford, prices are still affordable and aren't crashing"? but in the desirable areas it is looking really bad because less people can afford it?

 

Financial Engineering
What's unforseen about that?
It happens everytime.

 

Good write up on the Melbourne "bubble". Does the claim hold up to scrutiny?

http://www.domain.com.au/news/five-ways-to-pop-the-housing-bubble-myth-in-melbourne-20150628-ghxg5x/

Some good info here @Barny

 

In retrospect it is clear that financial engineering caused these bubbles to burst. However, GFC was not foreseen by buyers at the time it happened.

What is a housing bubble?
General Manager of Sales and Operations for Australian Finance Group Mark Hewitt says a housing bubble occurs when there is unsustainable growth in property prices.

The bubble ‘bursts’ when there is a significant shift downwards, normally caused by a unforeseen economic event.​

http://www.realestate.com.au/blog/qa-is-australia-in-a-housing-bubble/