bubble trouble or not?, page-29

UT, I'll let the forumers and those who browse the HC property forum be the judge as to who is making sense and being rational. You may be right...you know.

"...Yep all those landlords are just going to dump for the hell of it just to lose money.... lol..."

By sitting there and hoping the housing crash doesn't happen is in fact the sure formula for wealth destruction (that is lose money). Of course, they'd dump ! Unless you can exercise mind control over them.

At least in the US, they haven't got such a huge % of their population indulging in (many cases highly geared) property speculation because of a tax policy flaw called negative gearing.

Landlords are not a single animal who will delicately balance and drip feed the market to maintain stability. When things go pear shape, they will be barging and pulling one another away from the exit to make room for themselves.

The answer is not everyone will jump ship at the same time. It will SNOWBALL as fright turns to flight. Bit like this graph (assuming it represents the increasing number of people ditching). The problem of course is by the time even the dumb ones decide to sell, the would-be buyers are already on strike knowing prices will fall even more.



The fact (or you may say my opinion) is that the smart investors realizing the DEC quarter was the peak have already sold. The DEC quarter (in Melbourne at least) marked one of the most busy auction season in history. It couldn't have happened if a huge volume of people didn't exit (just as many who entered to their detreiment). Do you really believe those who sold are merely trading up and not parachuting ??

Those who fell prey to the RE propaganda and bought just now are the ones who have the most to lose as they bought at the tipping point. They will be the very first suffering negative equity and likely to be most in denial.

......1) Many would own outright...

Owning outright doesn't insulate you from losses or asset value erosion. Why stomach 40%-50% capital reversal simply because you can.

....2) Many would already be sitting on significant capital gains....

That's all the more reason to realize and gain, quit and come back to multiply your wealth (similar to the principle of turning 1 house into more than 1).

....3) Majority of landlords have secondary incomes....

It's not how many incomes that count. It's the quantity of the income that determines their abilities to service their loans. Incomes are not guaranteed.

Again, it's completely irrelevant whether you have secondary or teritiary incomes if your property portfolio is to take a hefty plunge in value. If anything, a property crash will force many of seek other sources of income to make ends meet.


"...4) Rent would be covering the majority of costs for many...."

Who cares about rent (no matter what the returns is) when the property value collapse beneath your feet.

"....Just because there is no capital gain in the short term does not mean everyone will seek to exit - most have investment goals longer than a 5 minute time span!..."


Who is talking about "just because there os no capital gain in the short term" ?? That's what I call an assumption or opinion. The subject matter is a housing PRICE crash and massive negative equity.