Good work Matt747, it works the same as margin loans in the stock market. Additional demand on the way up and added supply on the way down when there is no bid.
This is a slow debt collapse and anybody in here warning readers is doing so out of concern IMO. The biggest problem with property is that it is so illiquid. When banks aren't lending it does not matter if there are willing buyers or not.
The banks know the gig is up however Joe average in the street does not yet. Steve Keen is brilliant and wrongly criticized, i always knew that. I publicly stated several years ago that property was not the place to be. Was I too early - yes. Better than too late because of the liquidity factor. I have been cringing every time I hear the property sector getting talked up.
The debt markets shine the light on the drama unfolding right now. The signs are all there if you know where to look. The distressed sales have begun but you will have to have cash. It will last for the next few years. The problem is that you need an exit strategy.
A mate of mine just bought a house as a distressed asset and is renting it out at 16.8% PA not a bad return. Flipping them wont be as easy however I believe there will be a secondary non-public market starting up very soon and this will spread as the crash spreads.
This is not a popular subject as Aussies hold housing very close to their hearts. I just feel sorry for those that have gotten caught already - life is hell for them at present as they have no way out.
