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Originally posted by cashonlynocard: ↑

Surely property will collapse soon right?
my old mate at the pub said he bought a house in the late 90’s for $350k. Said he’d get about $2.3mil on the market right now. Essentially doubled in value every 5 years.
on that trajectory if he were to hold it for another 50 years, it’d be worth, drum rollll,,,,,
$2.3billion!!!!
But what is really ironic about this whole thing is, the place only gets $1220/week rent.
Which @ property value of $2.3mil, when you subtract, fee’s, taxes, maintenance, insurance, & periods of lost rent…. Is only actually a return of…. Wait for it…. 1.0003%
So how do Property P/E’s work?
well no science here, is done on debt levels.
How can I confirm this?
Well wages averaged $37k p.a in the 90’s. Today the wages are $70k p.a. So if wages have only risen by X 2, how have house prices risen by X 5? Well debt levels have week exceeded the X 5 multiplier. It’s almost like playing a pokie.
When you earn an extra $1k you can borrow $10k, so debt levels have soared.
So all well and good yeah?
But when interest rates move, which will happen soon. That 1% return is all but gone. So how do u improve the return, you put rents up, but when your rental market are the ones on $60k p.a and they are competing against immigrants coming to the country happy to work for less, how do you provide the pay rise to the renter when there are others lining up to take their job for less money?
Confusing right, or seems pretty obvious!
>>>This property Ponzi scheme<<<"" is getting close to melt down, and when it does, it’ll be the best thing that us ever happened to this country.
The last 25 years has been some drunken debt fuelled bender, the era of the property investor is about to come to a fashionable and dramatic end.
The collapse will happen from the bottom up.
As interest rates rise, the ability to borrow will be reduce to smaller amounts, investors won’t be able to be opportunistic because they will be getting squeezed. This will considerably reduce demand, once the cheaper properties stop moving, the next up the food chain can’t sell, and can’t pay more to move up the ladder, and before you know it, this whole thing will tumble.
I don’t think it’ll fall by a lot, but I’d go to say at least high 20% with no growth for 10 years.
So if you have a $2mil house I’d predict by 2025 it’ll be worth around $1.5mil and not return to those precious highs until around 2035.
A good property market should still be providing yield that is better than interest rates, but it isn’t, this should be a red flag for those buying right now.

discursive
1,654 Posts.
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05/02/22
23:15
Post #:59383833

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That all stated you forgot the house needing as $upply
No way has suppy kept Ulp with demand
more & more people with more spendulars.
Wages have not kept up with desired rent but many more needing both $$$ & houses to rent
Supply as also the cost more in building for same sort of rent ot residential owning .
less building and demand when %%% rates are more interesting but Supply wins over lo$t demand there.
If wanting netter rent ? commercial use switched from residential to say a dentist or medical rooms ? vet? as long as planning, parking etc
But less bubble p popping seen there?in houses per see but that is not same as office prices etc as they maybe incubating testing =
Where all the Ponzi's backed by metals? As a whisper a gold backed? is there copper backed ? mmm diamond backed? or others?
Ca$hh on? home = as castle all ways =