in 2007 or 2008 according to Danny and Paul Hanna. The consumer spending cycle over a lifetime has a person spending the most at age 46.5 years. When you compare the birth rates graph with the economic graph from 1905 to present day they basically mimic each other.
With the babyboom there were more people born in 1961 than any other year in history and then birth rates fell for 12 years. Using this theory (and it is only a theory as none of us have a crystal ball) there will be a 12 year slump (recession) from 2007 or 2008. Therfore my goal now is to accumulate as much income producing assets as I can in the next 5 years to tide me over for the following 12.
Good news is….. if this theory is correct, it will then peak again in 2053. [
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FibejebeIf your read yesterday’s Sydeny Morning Hearld (29/10/03) and look in the ‘Money’ liftout, Steve McKnight is quoted as saying “It has to stop” and “It will stop abruptly and it will end in tears”. and finally: “But let’s be realistic – this boom will end sooner than later”.
Some food for thought.
Some people will believe anything wont they ?
The world is a different place today. I think the past is usefull but not always a garantee of the future. If anything our high dollar may see a slowdown in Australia now, and ease pressure for rate increases. Were talking property soft landing not property crash in my opinion.
These people waiting for the ” crash before they buy may be waiting for a long time.MJK
Can anyone say “Self-fulfilling prophecy”?
Is the burst to be caused by people starting to panic rather than interest rates or economic downturns.
Highly leveraged (or not) individuals reading constant doom and gloom articles produces a glut of property for sale – prices forced downwards to effect the sale, a never ending spiral of paranoia fueled by the RBA, IMF and journos.
Voila, you have your bust.
Yep. The Sydney Telegraph predicted that house prices were going to fall 20 percent. They may be right. Just not sure when tho as that prediction was published 7th June 2000. Can’t believe everything you read. It keeps the pessimists happily sad tho. [8D]
Polar Bear,
” Voila , you have your bust “
I think your confusing property with shares.
The last propery crash was caused by 17% interest rates. Now thats doom and gloom!
MJK
The thing with busts is (if it is going to happen) is that they are short term. Historically the time over which property prices decrease is comparitively short i.e. 3-4 years.
So it’s important to get some perspective with this, think about your individual strategy.
Like shares if you plan to hold for the medium to long term, in a good location, it doesn’t matter when you buy or sell, because for the majority of the time you’ll be in the market when it is rising. All you really need to do is make sure you are not over extending yourself, and you are confident in your financial situation. That way you never need to sell in a hurry and you can wait out any downturn.
Ofcourse it is different if you are speculating for the short term…Thanks Mort Man,
I was going to make this point myself but thought I’d said enough. Over extension is the real issue, lesser so the market.I agree with you.
MJK
I can see your points but the term bust is relative. A fall in value in property is not the same as a share market where values fluctuate by a good deal. Stocks are much softer than a few years ago but are a highly liquid investment.
Many people will get nervous if the market softens irrespective of market forces or interest rates. Selling increases supply and the buyers being nervous will decrease demand, which results in lower prices.
Just an alternative theory – and property needs to fall far less in value than shares to precipitate what the media will term a “bust”.
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