If... we see a property crash, will you be better off....?

Originally posted by speculator101 ↑

So.. I have been pondering this for ages.

Simple question really.

Is it better to borrow big like the vast majority of Australia citizens (and perhaps this could be broadened to across the globe) or, be conservative and be debt free?

I ask because, to date, I have yet to see any government or Federal bank, not bend over backwards to support asset prices. BOJ, US FED, EU FED, etc etc etc. I mean, there are now negative interest rates in most of the largest economics in the world. When I see articles like this - First Denmark, Now Belgium Is Paying People To Take Out A Mortgage

I just wonder, have I been wrong all along (how I live my life and run my finances)? Should I have followed the herd and borrowed up to my eyeballs? Biggest house I could afford?? With what to me seems like an almost guarantee that governments across the globe will not support me in my largess? At the expense of savers?

I may post this question on the Economics thread to, as I feel it has multiple dimensions to it.

Just to put a further example out there as to my frustration with the current financial system, I was speaking to a 28 year Australia, who recently returned from the UK. She had bought an apartment in London (a small one). It had gone up quite a bit in the past 5 years. She drew out all the equity she could, ($180k AUD) and brought it home to buy another property here. Why.... because her home loan in the UK, is 1.24%!!!!! Bloody crazy and yet... I makes me wonder, why the hell would I not do the same if I could....

So in summary, I am looking at buying a bigger house, in a suburb near to my work, because in the end, where you live is very important, and if I can do so, with some certainty that even thought I am taking on more 'risk' by borrowing more, its still barely going to compare to the rest of Australia who has already done so, without, perhaps thinking things through to the same extent I have.

Looking forward to hearing others thoughts on this.

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What a great thread!

I think the key point the bears fail too realise is unlike the stock market which is free to crash at will, there are so many vested interests in property that will do anything and everything possible to keep it going. We are a country of home owners, not renters.

Unlike the rest of the world our rates are also substantially higher-hence the upward pressure on the AUD. We have plenty of scope to cut rate further, heck we could cut rate another 50% and still be much higher than the rest of the world and that is the plain and simple fact.

You have doom merchants like moon peeping for the end of the world and total and utter financial destruction 'never before seen blah blah blah'. What he doesn't get is there has been soooooo much money created in the last decade, so much cheap money-its all out there in circulation. Theres millionaires and billionaires being created at a rate never before seen.

The only thing Id be wary of is high inflation which will be curbed by increased interest rates. But if you aren't over leveraged inflation can be a wonderful gift, so as always only those over exposed will be caught out.