interest rates down over the next 12 months?, page-29

Had an intersting chat with my best mate today regarding property prices..

He got a phone call from the agent he bought a house from 4 weeks ago asking if he wanted to sell it for a 110k more than what he paid last month. He paid $577k and the agent tells him he has a buyer for 690, no marketing fees, just a straight up private sale on 2% commission.

Now my mate is a chippy, works hard but not a real smart man, great bloke, but not very intelligent.

He's made so much paper profit on property the last 5 years he thinks its easy. He's already on 1 wage with a new born and has a mortgage on this new house of 350k. He's now talking of buying an investment property on top of this with his new found equity.

I've tried suggesting too him that maybe all his eggs in one basket might be over doing it but he laughs at me.

And why wouldn't he... i lost virtually 80% of my personal wealth in the sharemarket in 2008, recovered now but still lagging what i put in. And he wont let me forget it.

The problem is.. we people in our 30's dont see property as a 'cyclical' investment(which its supposed to be) instead for australians its an emotional investment 'the great aussie dream', we've only seen our property investments continue to grow at ridiculous rates, we haven't been burnt by high interest rates and we've never seen prices drop( bar 2008 maybe slightly).

So if the only form guide you have to read is the one from the last 15 years why would you even contemplate losing money on a property investment. Personally, i think people buying at the moment are paying a premium and the one's selling are the winners but we are living in the best country in the world and with so much money coming in from overseas at the moment its probably not helping the situation.

The banks get away with whatever they like because they know we're emotionally attached to property and its supported by the government.

We pay for the banks priviledge of having a monopoly.