I cant believe how naive most people are and they are STILL bullish on the Australian property market.
The party WILL come to an end...as it has in every other developed country in the world in the last decade who are on a central banking system. Cheap and easy credit is what has caused this property bubble, and eventually it will reach critical mass.
To the property bulls I ask you to answer these two questions;
- The way that property goes up in value is that you borrow money to buy a house, and then later on, someone else borrow MORE money to buy that same house form you - thus meaning their loan is larger and their repayments are higher, so who will borrow EVEN MORE to buy it from them so that they can also make a profit?
- If your answer to questions 1 is that wages will increase and therefore people will afford more, I will stop you right there, the stupidly high wages in Australia is what is killing industries and will eventually bring our unemployment rate up sky high if wages do not begin to fall or at least peak. If wages peak or drop, and families already seem to be struggling to make ends meet, how do you suggest that other families will be able to get further in to debt than the first family to buy houses for larger amounts and force the prices up forever?
- Do you always chase the wave with asset classes? I am more of a believer of investing against what everyone else does, that is where the bargains are.
- Do you want to be half a million dollars plus in debt when the music stops and your house is worth $370k and sits on the market for 12 months before selling?
Ask any Irish person if they thought their real estate market would come to an end in Ireland, or a Spanish person in Spain during their bubble, or a Canadian in Canada, or an American and the US...the list goes on... none of these people thought property ever comes down... until one day it did, is Australia different to the rest of the world you think? hahaha give me a break...
The banks are who make gargantuan profits from lending, they cause asset bubbles and have since they ever existed. So when you do "research" or seek "financial advice" just find out first... does this person receive a paycheck from a bank? or does this person have any other vested interest in property? If so then the advice is biased and should not be taken as gospel.
