Thanks for those reasons. I will say that prices always seem to be at record highs, this is one of the reasons why I have been told for the past 20 years that property is about to drop as opposed to the last 5 years as Miles said.
I am concerned about the ratio between the average wage and the average property value, it has been the reason why I have been a bit worried about going large(r) into property investment this year.
I was also worried about the opportunity cost if I miss out on a great run so that is why I am searching for answers.
The more stringent lending standards is a good thing I think. It will have some effect on how many eligible buyers there are but how much effect? The same with increased credit costs but these are not new things, we have had credit crunches in the past with no discernible effect on property price growth.
Low rental yield is a problem and is slowly being addressed through the restricted supply. Rents are rising and should be giving noticeably better returns by the end of this year. I expect that interest rates will drop by the end of this year which will make returns more attractive. I base this on our historic following of the direction of US rates.
The media pessimism will have an effect on the supply of rental properties which will exacerbate the rental situation pushing up rents that little bit more. Having said that, the media's analysis has to be separated between the clinical analysis stories and the sensationalist stories which much of the media loves to present.
I am not saying it is not possible that a drop will occur, I am saying that the reasons why property rises are fundamental and those fundamentals need to change before there will be a higher probability of significant drops in price.
It is important to understand those fundamentals and how particular some of them are to Australia before you compare us to other countries.
If I can be convinced that great falls in price are imminent, and that proves to be true, I will be very thankful to those who helped me see how it was going to happen and thereby saved me a lot of money.
