food for thought on aussie property

Food for thought...

Australia ranks 235th (equal with Iceland) out of a total 241 countries on the list of countries by population density with approximately 3.1 people per square kilometre. We rank 2nd on the Human Development Index (a measure of life expectancy, literacy, education, standards of living, and quality of life for countries worldwide) and 3rd on the Index of Economic Freedom. Incidentally, we're 6th on the list of countries by beer consumption per capita at 96.95 litres consumed annually per man, woman and child!

Needless to say, we are the lucky country!!! We're a wealthy nation, chokka-blok full of natural resources with a relatively stable government and opportunities aplenty. Even the poorest among us enjoy a higher standard of living than literally billions of people around the world. We're reasonably isolated from the many global hotspots of military conflict and have enjoyed a peaceful, free lifestyle for decades.

Despite high population densities in our major capital cities, we must concede that by comparison there is room for massive population growth in Australia. As technology advances, we will find ways to populate regional Australia and exploit our vast island nation. Think water pipelines feeding salt-water to desalination plants in the outback?!?!?! Surely this would be a better investment than the NBN LOL!!!

Similar to the way technology is drip fed into the mainstream arena to maximise profit, new land developments are slowly released into the property market. Whether by chance or by design Aussie property will remain a hot commodity well into the foreseeable future as hundreds of thousands of people migrate to Australia every year.

Is it really that feasible to predict a scenario where Australian property prices plummet by up to 50% as some pundits and so called experts predict??? Sure everyday pressure from rising unemployment, fluctuating interest rates and government policy may cause a 10% swing either way, but unless hostile aliens arrive from outer space to exterminate us or a plague of flesh eating zombies wipe out 90% of the worlds population, Australian property will remain strong.

You only have to look at the way Australian property prices have consistently risen over the past 20 years despite most of the key indicators suggesting a correction is imminent. Do I think property prices are too high? Sure I do!!! I bought my first house last year and took out a mortgage that will take me the rest of my life to repay but hey, it's better than sitting on the sidelines renting for another decade waiting for a crash. As an investment however, there will always be opportunities in property if your smart and if you're long term then property is a no-brainer.

Property investment has been popularised over the past 2 decades by books, TV shows, seminars and investment gurus. As such, more and more people are getting into the wealth creation scene. There will always be stories of success and failure as there are in any field of endeavour but the basic premis of supply and demand will always be strongly in favour of a rising property market.

Unless we are forced into quantitive easing and our dollar becomes massively devalued, it's hard to fathom a median house price in Australia in excess of $1M anytime soon. I think prices will take a breather and move sideways over the next 10+ years. Historically, this will be accepted as a boom time, however the future is ours to write!

Anyway, just my two cents worth on the whole house price crash debate...