australian housing bubble about to burst, page-34

Forget all the noise and focus on one thing only: yield (i.e., return on capital)

As long as the yield is enough to justify the investment, it won't crash. Considering the rent in inner Sydney is around 350-500 for an apartment and around 500 - 000's for a house per week, it's hard to justify why house prices will fall.

Now think outside the box. Only 1/3 of Australian's have a mortgage, 1/3 rent and 1/3 own. The 2/3 who own outright and rent will be picking through the quality supply that trickle from the 1/3 that can't pay up. With unemployment kept low, this opportunity is few and far between.

Add the chinese investors who can get 1% loans from their banks. And to add another perspective, Australian properties are actually cheap... for overseas investors. Try buying a 1 bedroom apartment in Hong Kong or Singapore for the same price you can buy in Sydney. You'd be hard pressed.

Untill the government finally decides to improve infrastructure for outer suburbs, and banks willing to lend to developers, property prices will be pushed upwards to reflect the increase in rent prices. Same as shares really. The higher the dividend, the higher the market cap.



Cheers