Uboy,High Unemployment was the after effect not the cause of...

Uboy,

High Unemployment was the after effect not the cause of housing bubble burst in US, Spain and Ireland.

A fringe 5% (PIs) on mortgage stress is enough to cause the negative feedback loop.


Just becoz it has been good investment for last decade(due to credit expansion) doesn't garantee it will be a good investment for coming decade.

Under current condition of rising aud(safe haven?) I would not be surprised to continuing fall in housing price.
Australia has a cushion in terms of its interest rate and rate cuts can provide some buffer to those under stress but not to those who are losing jobs in an ever increasing number. ABS unemployment rate is just half picture look at participation rate falls.
But all this will, at best, stagnate the house prices for years to come.

There is a real wage pressure across Australia, even in some section of mining. Rent cannot rise without real wage growth.So a stagnating house price with falling/stagnent rent, with dim outlook for future is not a very compelling reason to be an investor.
Not many clearly understand the high leverage aspect of property investments, A property on 90-95% LVR has to rise 5% YOY just to breakeven in real terms, a fall of just 5% in real terms can wipe out more than your entire capital on a 95% LVR.


I wonder what happens if australia decides to peg aud at let say 0.8 usd :) (ie OZ's entry in upcoming currency war)