property investing advice for a beginner, page-5

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    Warren Buffett,

    Great plan - and if you 25 opportunity galore ahead. The problem with your modelling is that growth has been underpinned by debt combined with diminishing interest rates.

    Your modelling works off capital growth yet historically property averages about 2.5% per annum I think you would be struggling to find 3% plus averages anywhere over time.

    "In conclusion, the data presented should provide more than enough evidence to suggest that Australia’s residential property market (specifically land market) is vastly overvalued, driven by debt-financed speculation and the relative non-taxation of land rent. While land bubbles have been a continual feature of the Australian economy, what separates this cycle is the relative enormity of the boom in both land values and private debt. A smaller private debt to GDP ratio during the 1880s and 1920s was enough to produce two devastating depressions, including a number of recessions during the mid-1970s, early 1980s and early 1990s"

    http://www.macrobusiness.com.au/2013/02/the-history-of-australian-property-values/
 
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