http://www.alwayson-network.com/comments.php?id=10732_0_24_0_C
Housing bubbles don’t collapse suddenly. They go through a long series of self-reinforcing deflationary stages that typically last five to seven years. Given the extreme and unprecedented nature of the current housing bubble, I expect a ten- to fifteen-year downturn to follow this boom. The government…..
I am probably regarded as a “negative” by many on this board, experience will do that to you, but I am finding many journalist and economists TOO negative.
They are talking of downturns similar to Japan and flat markets like Germany, but both of them had demographics that are quite different from us & the US.
I remember the commercial real estate back in the late 80’s, looked at a strata for 400K for 100sqm,
in Castlereagh near Park St. (close to city centre), in 1988, did not buy as they pulled it from market.Same property was passed in with a 260K bid and a 320K reserve in 1993. ( Hows that for cap growth )
and at the time people were saying that as the vacancy rate had hit unheard of levels (think it was around 15% ) that Sydney would take over 10 years to soak up the surplus. Yeah right.Commercial bounced back in around 5 and construction started anew.
Yes there will be adjustments, and no I think the blind mantra of ” doubles every 7 years ” which ignores the effect of inflation on post war property (and please don’t tell me what your father paid for……) is almost funny if it had not been so abused by the spruikers, but the market will recover sooner than later.
Boom again in seven ?????
Don’t think so.Hi,
Interesting read.However it does seem to miss out a few points.
1. If everyone has stopped buying houses, where do they live? They must be renting = house value may have dropped (ie no-one buying) but rental yield goes up (everyone renting). Does that make it bad for investors?
2. If people are moving out of houses to go where there is more work (due to the rampant unemployment), to where are they moving? Again this will place demand on the places that have work = good for investors.
3. McMansions used as multi-family living? WTF? Are we living in post revolution Moscow? No. That’s rediculous. The rich don’t just suddenly keel over and stop living in lovely big houses just because they aren’t able to sell them (funny logic).This article really does reinforce the need to do your research before buying. Property in established cities with good prospects for employment and good transport infrastructure will always be in demand. Aparently more so in the author’s scenario (as the masses of unempoyed proletariate must exodus their mansions in the suburbs). What it’s really saying between the lines is that Australia has borrowed all it’s house equity and has to wait now for demand to catch up with out ambitions and spending. No surprise there.
15 years until the trough bottoms out? Gee, that’s a long time. Kids will be adults by then looking for their own place and I guess immigration stops in the meantime and all the people growing up just hold their breath? I’d say it’s more likely there will be structural shifts in industry and transport as more affordable community hubs fill up and become economically vaible for businesses to open.
15 years before the next big real estate push? Not unreasonable but I think the author’s scenario sounds a little economic halocaust to me.
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