Property prices starting to unwind...

Originally posted by Barg ↑

Hi Forged
As much as I like your RE market positivity I despair that you are sending the wrong message to the less experienced readers on this property forum by reflecting your belief that RE prices will continue to appreciate. As much as I agree with your assertion that property prices have continued to rise long term (over the past 100 years), this is a gross oversimplification of reality, given you seem to ignore periods when prices were decimated by factors beyond anyone's control. As I recall, you are in your mid-forties, so you were circa 15 years of age during the 90s crash and have scant experience of that or preceding crashes (not including the GFC where the Australian market was manipulated), or the ensuing dynamics of a catastrophic fall in property prices. And while no one can predict the next crash it is equally unwise to predict that there will not be another one - as you so often assert. Nevertheless, going by the laws of probability alone there is sure to be another crash (sooner or later) that will crush the hopes and dreams of the many like yourself that thought the party would never end.

That said, when the next property crash does materialize, it will be one of the worst in our history, given record low interest rates have lured the inexperienced into the land of overleverage. And there will be no government bail-out such as we saw with the GFC, given virtually every government in the world is running a massive deficit. Shooeet happens, as they say, and it will only take an unforeseen geopolitical event to end the party. And for the investor, don't think that your tenants will carry your load until the market reverses to the up-side, because when the goo hits the fan communal living becomes the norm. Renters move back to the sanctuary of their folks home and renters take on borders. The dynamic can change in the blink of an eye. Where once there were 100 tenants vying for that vacant property, suddenly there are two with a dubious rental history.

History always repeats - tulip economics 101.

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"Nevertheless, going by the laws of probability alone there is sure to be another crash (sooner or later) that will crush the hopes and dreams of the many like yourself that thought the party would never end."

Anything can happen, but only "if". I always an advocate of investing 10% of my investable money into physical gold (Not penny gold explorers, sorry). That's my rule of thumb of my asset diversivication. Like land, Gold also appreciate in value along with inflations, but with safe-haven hedging effect, the only downside it does not pay you divvy. AUD$500 in 1970, today AUD$1700. Much less appreciation compared to land value, but works during crisis, as people move paper assets into precious metals. That's my wealth insurance if the SHTF.