property correction risk in australia high, page-19

Who said 9% per year? The important figure is how much above inflation.

My understanding is that the long term average for property growth in Australia is about 3% above inflation.

In the end it matters not a whit what the nominal prices are, it is all about keeping pace with or exceeding inflation and property investment has maintained that admirably.

Before you jump and say that the rises of the 2000's are way above that average, keep in mind that the 90's were pretty much dead in the water for property growth and dragged the average down for that decade.

I urge people here to think about the fundamental decisions we make as a society that collectively increase demand for property. If those fundamental decisions start changing then I will be one of the first to divest. So far I am not seeing those changes.

Those fundamental societal decisions are:

1. People per household
2. Location
3. Square metres per property

If I see Australians begin to smaller floor space, in areas like smaller towns and have more persons per square metre of floor space then I will agree the long term average will change.

But I don't see that. What I see is that we have tended toward an average of 2.7 people per household as opposed to 5 (approx) back in the 1940's, I see the major cities growing in population at the expense of rural areas and I see people insisting on 4 bedrooms and three bathroosm instead of the standard of two bedrooms and one bathroom in times past.

Change those fundamental decisions and prices will come down.