It is my opinion that we need to try to control our feelings of schadenfreude which arise (and will continue to arise) as the property market correction gathers momentum.
I do my best to avoid feeling any schadenfreude at the suffering that is going to be coming to Joe Average (when I say Joe Average I mean the non-property investing standard family wage earning male). On the other hand, I have absolutely no sympathy for property investors (particularly those who built large portfolios with high leverage).
The reason I draw this distinction is that I think that the average Australian lacks financial literacy, and to a large extent believes on face value what the media, particularly at a "headline level" tells them.
The years of spruik, "Australia is different" crap that were drummed out constantly year after year lead the majority of average Australians to fall hook line and sinker into the trap. Many of those people I believe were not completely comfortable with the idea of taking on a huge mortgage to buy a primary place of residence, but felt that:
a) if they didn't buy now, it would only get harder in the future (one of the favourite spruiker lines buy now or miss out forever!!); and b) at the end of the day, it would be ok because their home would continue to increase in value, so the risk-reward ratio paid off.
Many stretched their budgets to the limit based upon these beliefs. However, in view of their lack of true understanding about markets, and the difficulty for Joe average to seek out any contrarian sources, anything that challenged those beliefs was basically just "fringe". (honestly, does your average Australian have the ability or the understanding to do the research that most on Hotcopper have done?).
Case-in-point, anyone who expressed caution, or saw this coming and tried to warn others (like many of the property bears on this forum - myself included), where ridiculed and looked at like we were mad. Reaffirming this point further - even now, at a time when all the evidence points to a market that is on its way down, the mainstream media is doing the best that it can to continue to butter up the situation.
Even so, do I feel some satisfaction, a bit of "I told you so" to see the market starting to correct - most definitely I do - but do I feel happy about the fact that the average person is going to get reamed - no I do not.
At the same time, do I feel any sympathy for the property investor, who took on large risk and will probably get even more burned when the fall gathers momentum? Absolutely not. I feel instead a strong sense of schaudenfraude.
Why do I feel that - not because I am an evil bear hater with no soul - but because I think that anyone who is willing to take on huge leverage (and consequent risk) should have done their research, and anyone willing to take on huge amounts of debt purely to speculate on rising asset prices should be doing anything they can to make sure they are properly informed about the nature of the risk they are taking. Anyone who does not, is a fool and deserves everything they have coming to them.
