If the rate rises are so bad, the property market is in free fall (or soon will be) then sell me all your properties. I'll take them all off your hands for this discount of 40 % or in other words the fall in price that is being predicted. It is not 1929…….. DO NOT JUMP!!! Things will get better! I have some tissues!!!

Time heals most investments and if it doesn't heal yours you bought the wrong thing. Even Alan Bond has managed to get rich again!

While all this hot air is being puffed out by these people I will be buying all the property they shoulda, coulda and woulda (if only…) Australia doesn't need an ETS just get some of these people to be quiet for a few minutes, that should clear the air a bit!

D  

From The Age:

A revival in sales of luxury homes has helped drive nationwide house prices to their biggest annual gain in six years, with all but Perth among the capital cities to end 2009 at record highs.

After posting a 4.8 per cent gain in the December quarter, average prices nationwide clocked up an average increase of 12.1 per cent in 2009, Australian Property Monitors said.

"While the First Home Buyer sector kept the overall market afloat through the end of 2008 and the first quarter of 2009, it's been the activity at the top end of the market that has driven the extraordinary overall result for 2009," said APM economist Matthew Bell.

WJ, I'm not sure what your agenda is. The article I linked to focuses on the higher end, but also says that the entire market rose by 12% for the 2009 year.

Perhaps you could read the link again, a little more slowly this time.

Still on track for what? An October 09 price crash???

Hi
Love a debate, so I'll put in my two cents worth.

"We are in a housing bubble" – agreed, but I also think that the govt and the banks will do absolutely everything they can do to stop a dramatic busting of the bubble.  I wish they wouldn't.

Maybe the enormous rate of immigration, the trade shortage and the cost of development will mean the bubble is sustained for the time being.

My prediction – at risk of being shot down, I'll go out on a limb.  Stagnant or low price growth until everything else catches up with the price of housing.  No dramatic plunge, at least not across the board.  Possible a plunge in values in some areas.  I think that if the RE market does drop by 20%, across the board, then there will be some serious economic problems in Australia.  It will mean that the govt and the banking sector have lost control of the economy and we will be in some sort of free fall.  It's scary and unlikely but possible.  I wonder what the banking sectors tolerance of a correction would be.  I mean, how much would have to be wiped off the value of Australias real estate to destabilise the banking system?  You should see the price of farming land.  I don't mean hobby farms, I mean real pastoral land.  I can't work out how graziers are paying what they are paying for the land.  Perhaps because of drought subsidies on interest, don't know.  But I think that the banks have got themselves in a situation where the market is overpriced, but they daren't make any moves which may stimulate a correction because it would wipe too much off their own books.  That might be happening in other types of RE too.   

So what am I doing – continuing to reduce debt, monitor the market and invest in cattle for the time being.  Planning an investment strategy that focusses strongly on cash flow (generating equity by paying off debt).  Considering investments in areas that may experience strong growth due to local factors.  Also considering making some investment in shares.

shoot me down – love the debate.  Makes us all smarter

Have the doomsayers set a new date yet ???  

we are in nearly in March 2010 no sign of slow down or property crash in Sydney yet, Im making more money than ever

Yeah, me, for one. That aside, a mortgage is a good thing to have.

Maybe I'm a little simplistic here. But assuming a person owns a number of properties but is not geared up to their eyeballs, a lag in the property market isn't going to hurt them. If the first-home buyers are over-committed and have to release their properties to the market, it's going to be soaked up by investors at reduced prices.

And then these same first home owners need a place, so they need to rent, hence keeping the investors around. Really, unless people start living in tents or on the street, I don't understand how a huge fall in prices is going to occur. Small drops will happen with shares or any other investment I suppose, but a drop in the property market of 40% or so is something I wouldn't expect.

Still, I'm a newbie, so all this discussion is good.

I'm with you, Sailesh.  The demand, particularly from immigration and overseas investors, is still there.  A lot of these migrants are cashed up in a market where there is a shortage of land for housing.  Many investors are shying away from the stock market.  They've got to put their money somewhere, and at the moment, it appears to be in property.

I predict a 6-7% increase in prices across Australia with Brisbane and Perth being the standout cities.