re:depression coming soon-property The article could not have explained the property market in australia any better if it had been referring to our country itself. For convenience I will paste it here again:
"All areas of the country, with the notable exception of California, are experiencing either flat or declining residential real estate values. And now, even lofty California is beginning to see things turn lower. Properties are vacant longer. The days of the buying frenzy, where buyers bid above the asking price in order to get the property, are either gone or on their way out. Bidding frenzies occur at the end of every bubble, as we saw three years ago before the bottom fell out from under stocks. he bursting of the real estate will be severe, since it will involve many more people than did the stock market bubble and it involves an illiquid asset. Prices declined 50% during the Great Depression. That should be a conservative figure this time around: look for an even more severe decline in the bubble markets such as California.
Rents and prices will drop over the next few years. And debts that aren’t paid off will be discharged, hurting the banks and other lenders even more."
Its me again: I was going to a number of property auctions towards the end of last year to try to pick up a bargain and what I saw sent shivers up my spine. People were bidding with careless regard for what the price actually was. They'd be laughing while bidding ridiculous increases against others as if it was one big joke. They seemed to have the opinion that "it doesnt matter that I pay $600K for this property (that was selling for $150K 5 years ago) because "property always goes up" so I'll be able to sell it later to a greater fool than I.
They had the same look of greed and ignorance in their eyes that those who quit their day jobs in 1999 had.
Anyone who seriously believes that the property market is not going to burst dramatically (not talking about just a 10% decline) I would love them to post here and explain why. It happened in Japan and in Singapore to the tune of some 90%. HOw could the same thing not happen in Australia where there is technically no land shortage. Every second person owns an investment property which is barely getting a return to cover costs. Compare this to a stockmarket before a crash occurs. The property market in Australia is trading at a P/E of about 50-100 !!! This is asking for trouble. Even without a pending recession. Should a recession occur it'll be even worse. My middle initial is not W but MAKE NO MISTAKE -there will come a time when you will be able to purchase a residential property for the cost of building the house less depreciation plus a realistic token value for the land its on. Come on people. Wake up!
