property 2008

Just back from hearing Swanee etc. Ears will be ringing for days.

Spoke to an acquaintance about property. He has a short term contract at Macquarie, he said Mac have moved out of mortgages (already knew that) but all his feedback is pretty negative re property. He was talking 30%+ drop in prices. He was previously a mortgage broker.

I am neutral property (must confess that I don't understand Property, to me it is either very expensive or just expensive), but all I have been hearing lately is how bad it will get.

Know quite a few people that are trying to sell and there is NO interest at all.

An investment like property, needs to stack up on the numbers, ie interest rate, rent, capital growth etc.

The bottom line - property prices cannot grow faster than peoples incomes (ability to service loan).

I know a guy who had 50 properties in Perth $7.5 million in assets and $3 million in loans.
A year ago, he was starting to switch to Adelaide. Don't know what he is doing now. He knew property back to front. I used to throw obscure towns at him and he would give me a description of the region. It blew me away. A year ago, he said that there were no bargains left.

My call - sharemarket will struggle, property will struggle even more, easy credit gone for years to come, and a tough recession to come.