So if a whole bunch of wannabe PIs get in on the action – that's not going to effect the demand side of the equation, the consequent rises in equity and lowerring of bank lvrs?

Don't get me wrong here, I'm not saying that PIs who are in it for the long haul and smart about their lvr can't make a good thing out of their investments. What I am saying is that a market where everyone and their dog wants to own a second house and is given the oppurtunity to do so must effect the game for those long term PIs.

For instance, take NG. The rise in the amount of NG property in Australia has been pretty impressive over recent years (I'll probably use it as a way to lessen my ever increasing tax and pay off my holiday/retirement home whilst I rent close to work) and this has an effect on how much government attention NG gets. The more tax payers that claim it, the more of a target it is likely to become. Ultimately, I'd like to think this doesn't effect all the really smart LLs who should be positively geared anyway.

Also, though I agree investors bear the risk, I'm not sure how much banks have. It's the age of bailouts, don't forget. If our property market tanks, I bet the country is given no choice but to rescue the big 4. Commonwealth bank may become more commonwealth again:)

<br /:)” title=”>:)” class=”bbcode_smiley” /> I've been around for ages.

Actually, I started reading and posting here before I found any bear sites.

I still think the same basic logic applies though. It looked like the Aussie housing market was going to correct in 2008 (more than the 5-10% average it suffered) until Rudd's housing/construction/retail stimulus package came into play. Now, it looks like it is going to correct again if another stimulus package doesn't come into play.

Of course it's something different – it's the downside of a second peak. In shares that always signifies time to get out. Housing is less liquid than shares though. It's still time to get out but the effects are going to take a while to play out.

Further, unlike the first slide in 2007/2008, I agree with you that sentiment is a lot worse now. It could be the big slide down but it also could not.

All I am saying is that no-one should count their chickens before they hatch. I've been watching, researching and saving for the time to buy a house in Australia for my family since 2007 and I know it isn't that time yet. I'm sure we will know by the middle of next year exactly how things are going to play out.

Bears are not too different to bulls in the end, you know? We come from opposite ends of the economic spectrum on a given asset class but each always tries to positively re-enforce their own POV and prophesise boom or bust before it occurs. Human nature I guess. I'm with your POV – I hope you are right but I think I have grown to be a bit less anxious with my predictions.

Yea, that makes sense – play it safer.
I guess that is why many PIs try to lvr more bottom end property. 2 slum apartments vs a 4 beddy in the burbs for rent.
Land banking seems safer still, for the first little piggy though.

And then?

Ultimately, this descision will increase supply in a market where supply is already above what is required. What happens to the price of established homes in NSW next year?

Of course we have to take our medicine – why do you think I haven't brought a house yet:)

Just saying that a credit injection is the only thing that will stop the market from continuing to soften ATM – never said it was a good idea.

Canberra seems very up and down – I think because it is a small sample.

I think this property observer article is very relevant to Canberra (even though it claims not to be – the amount of building that has happened over the past couple of years here is massive). And, there are still PS wages to rely on.

http://www.propertyobserver.com.au/residential/australia-s-housing-market-is-oversupplied.-yes-oversupplied/2011083051360

macrobusiness has some graphs
http://www.macrobusiness.com.au/2011/08/housing-fall-accelerates/

I think Joyce's comments on the RBA's tightening cycle are a little bit irrelevant. If the RBA does lower rates, what guarantee is there that the banks will follow? Credit is becoming harder to obtain for our lenders:

http://www.news.com.au/money/banking/job-losses-start-to-bite-at-investment-banks/story-e6frfmcr-1226126148932

The article also suggests that our banks lending ability is affected by local house prices.

'The big four retail banks are also starting to look to their staffing levels as the housing market softens.'

Seems to me that without a prompt credit injection, at rates borrowers can afford, the market will continue to soften or begin to crash. Question is, where does that credit injection come from?

I think your observations fword are based on the circle of friends you keep, as hbbehrendorff's may be. I guess ours all are – it is hard to look beyond our immediate sources of influence to try and get an understanding for a majority that those influences may or may not represent.

I do think however, that it doesn't matter what anyone wants, if they can't afford it they can't have it (without credit expansion). Rent has never been based on credit – it is based on what people can afford there and then.

My take on the rental market for the last 5 years or so (trying to be unbiased) is that the bottom is always in hotly contested demand, whereas prices higher than that get much less tenant interest. This suggests to me that a kind of peak rent has been reached – that even those who would normally rent in the middle of the market (myself included) prefer to rent at the bottom and those that rent at the bottom can barely afford the cost.

If I lived in a state close to either my parents or inlaws, I would consider moving in with them – not for comfort but just because it would make economic sense for both of us. If I gave either of them half of what I pay in rent – they would be stoked and I could save at twice the rate but it would be uncomfortable for the time. The discomfort, however, is working towards a long term goal – me buying a house with as much of the money up front as possible.

I agree that few would actively make the same choice but I feel that some now have no choice because of rising costs. And in the news today, 50-100k people are tipped to lose work over the coming year. That is more that will have choice taken away from them. 

simple wrote:

Been negative about real estate does not mean been negative generally. Say returns on physical Silver over last 52 weeks been 90%

I would go as far to say that being negative about RE is being positive about Austrlaia's (long term) economic growth.