I had a chance to buy property a couple of years ago and thought better of it. Hindsight shows I should have gotten in given prices went up by 20% last year. Though to my mind that was the last thrust.
When people express their hope at getting in at cheaper prices with the caveat that they don't want others to suffer, well this is only because our society has indoctrinated us to believe we are less for not owning a home, and they are being compassionate in not wanting others to suffer. No one wants others to suffer, so I don't think their caveat can be knocked.
It is not fair but neither has been living in a society where property has been hoarded by a generation of investors (baby boomers please stand up), squeezing the affordability sponge dry for their sons and daughters (you want them to move out of home, then just give them one of your investments :0)) NB: the average baby boomer has 3.3 investment properties.
The taxation system set up by the government is really to blame for the mess we find ourselves in though, through: * Halving capital gains tax * Introducing negative gearing * Allowing property investment/speculation through SMSF
The result being a rise of property by 300% between 1998 and 2008 while inflation went up by 38% .
The mantra of property doubling every ten years just got hit by the fast forward button !!
Ok, so the government want to redress the situation. What did they do. Hand out free money for young families who are left with rising costs to fuel an already over inflated asset class. Brilliant !! Sounds not too dissimilar to the CDOs bundled off to local councils just prior to the GFC.
But rest assure.. All the while our big four banks release property reports analysing the rosy picture of our markets, saying of all things "Yes prices are higher here than overseas, (but wait for it), THINGS ARE DIFFERENT HERE IN AUSTRALIA"... if that doesn't sound alarms I don't know what will.
Sorry but by definition: Rising assets falling yields = " a bubble ".
All the while overseas hedge funds are currently shorting these very same banks for the fact they are over leveraged to the housing market.
So, Who are the investors: By enlarge, The baby boomers who on average have 3.3 investment properties and $30 000 in savings. What happens when they realise that their rents are less than the costs of running the property and they have little alternate income to cover their living standards, all the while their properties remain stagnant or fall, while their costs (inflation) and fear are rising....heard mentality: they all head for the gate at the same time. Maybe, maybe not..
"No, no. We are old and wise and have experienced many fluctuations of the market" (as one older friend told me when I was discussing this). Well perhaps, but I doubt that the nature of the beast has changed all that much.
