We are in a very interesting market, the inflation is headed higher but no one knows if it will last or turn into stagflation. And even if it was going to be proper inflation, do you buy Gold, Crypto, Property or Equities?
I think when GFC happened, the answer to that question was easier partly because the inflation and the pick up in market was linear and partly because you didnt have Crypto, and Interest rates were not this low. So it was likely going to be Gold and/or Equities mostly in the short term and property in mid term.
Now the property market in Sydney is continuing to surprise with sentimental and euphoric buying and inch higher. I am a strong believer that in this country we don't have good policy making.
From one end you have the government that introduced an absolutely useless incentive for home building which has now put strains on an industry that was doing just fine previously and if anything has supply chain issues as well as unnecessarily inflating prices creating a property market that we are witnessing now.
From another end you have the reserve bank that is almost always slow to make a decision. They are reactive and slow when they should bring rates down and now they are sitting on their hands whereas they should be increasing the official rate now.
Other than that property prices are going higher by the week, I kid you not. I am and have always been a bull on Sydney property market but now I am watching it with great fear. We could create our own mini GFC.
Over the weekend I attended an online auction on a piece of land. I could have bought nearly twice the size of this land, in the same suburb, same school catchment and a few streets down, couple of years ago for around $1.9 Mil (didnt pull the trigger for various reasons). I could have then subdivided that.
Now the land that sold which was just a few streets up (arguably on a slightly better street albeit in the same suburb and same school catchement but half the size) sold for just shy of $2.4 Mil!.
Think about it, two to three years ago I could have bought twice the size for about $2 Mil (including stamp duty) and now sell each for at least $2.3 to $2.4 Mil each.
Thats nearly 150% increase, not in 10 years but rather in 2 to 3 years! Have we as a nation hit gold or have we discovered lots of oil somewhere and we dont know yet? What has changed that we suddenly have this much increase in property and how are we going to pay it?
