No Housing Bubble in Australia…is there?

Devo76 are you serious when faced with what you believe to be a stagnent property market for the next 5  years all you can do is sit in the market like a rabbit in the headlights waiting for the market to turn around. No wonder our property prices are as crazy as they are……FYI property is at a all time peak sell out now & buy back later you dont even have to put your money into shares the Bank would do 5 years fixed deposits are paying 5%+ = $107K in lost earnings on  $500K (Median house price) deposited into a bank…You have to be winding me up….

Hehehe, Get into him Devo.

Have to say, the only reason to sell is if you can make more money somewhere else. So at this point in time do you think there is more money to be made in the stock market? Analysts are talking about a bear market for a long term trend. There are these delightful adds on tv tracking both property and shares through lit up blocks. The property market shows a steady long term growth and the share market shows a highly volatile trend upwards. The add also omits the last year (funny that) in which many many people lost alotta moola. Funny how most houses don't collapse the way some business' do.

Personally I think property is great. I have gone away from buy and hold as a personal strategy but that is only because now I can manufacture profits through development. Not every property investor is sitting on dud property that will not see growth long term. Most of those people are not even called investors.  

D

That's awesome Devo! Gotta love a rezoning. Then you get it revalued then you get more of everything. I don't see anyone getting their shares revalued?! Or subdividing them to add value…..

D

As is the assumption that rents will stay flat for the next 5-10 years. That 5% yield will soon turn into a 10% +ve geared property and any capital gains the icing on the cake.   

I’m a property investor in Brisbane but have made moves to get out of the property market. Sold a couple of places and paid off most debt. There are plenty of reasons to be confident that Australian housing is in a bubble, even if prices in many parts of the country have apparently been stagnant for seven years.

But if any readers are interested in analysis of some of the property promoters claims – such as a housing shortage, population growth and urbanisation as a driver of prices – I have written some detailed articles at my blog.

http://ckmurray.blogspot.com/2010/07/effect-of-dwelling-composition-in.html
http://ckmurray.blogspot.com/2010/01/population-growth-and-residential.html
http://ckmurray.blogspot.com/2010/02/housing-investment-is-not-productive.html

I have been taking my own advice and getting out of property into fixed income investments. Can we really get away from the GFC completely unscathed? Is Australia really that lucky?

I also note the thread started with a comment that Australian debt is low compared to incomes. Not sure how that comparison was made.

All comments on the articles are appreciated.

People with a grip on how the real world operates knew the government would get involved in the event of a decline. They even said they would do it again if required. Why would anyone think they would not do the same this time. Sounds like some players are falling for the same trap. I predict posts in a couple of years saying how property would have collapsed in 2010 if this didn’t happen or the government didn’t do that. Assuming we have a decline in the first place that is. I feel the only difference this time around will be that any stimulas will target new properties more heavily and they will try to cap price growth. How succesful they are will be the question but.

This is pretty much the crux. Will the govt and RBA come to the rescue with stimulus and lowerring IRs a second time? And, if they do, will the same amount have the same effect? If not, can they afford more? And, even if the RBA slashes rates, will the big 4 follow suit, given the current cost of OS funding?

I see the Australian economy (especially the housing market) as a a vehicle that is travelling too fast and has the speed woobles. The powers that be are trying to steer that vehicle out of the wobbles but these kind of vehicles can crash, run off the road and occassionally pull straight again. Impossible to judge accurately until all the factors have played out.

WJ Hooker,

What you say is alo true. Bearish positions aren't treated well here, by most but not all. I have always found that a little narrow minded.

Well I'll weigh back in then.

WJ, I NEVER said "Don't sell"! I said the only reason to sell is when you can do something better with the money! So if you can do better, whether it is in shares or in managed funds or silver or developing or whatever then you should always be looking to do better!

I have 2 properties on the market. I am freeing up cash for the next development. In property! I can do something better with the money! I wouldn't sell just because some one got on a forum and started saying that property was a bad investment or that they had a bearish out look for the property market in the future. That is one persons opinion just as my own comments are my opinion.

By all means have a bearish outlook on your portfolio. My portfolio is looking pretty fine. I think as long as an investor has mitigated as much risk as they can, then if they are happy with the risk and return of whatever asset class then let them be.

Opinions and talk are free.

D

Here you go two cents again.

Japan population 127 odd Million people. There is a gap of 100 million people between Australia and Japan.

"Japan's population density has helped promote extremely high land prices. Between 1955 and 1989, land prices in the six largest cities increased 15,456 percent. Urban land prices generally increased 40 percent from 1980 to 1987; in the six largest cities, the price of land doubled over that period. For many families, this trend put housing in central cities out of reach. The result was lengthy commutes for many workers; daily commutes of up to two hours each way are not uncommon in the Tokyo area. Despite the large amount of forested land in Japan, parks in cities are smaller and scarcer than in major European or United States cities, which average ten times the amount of parkland per inhabitant. However, despite the high cost of urban housing, more people are likely to move back into central city areas, especially as the price of transportation and commuting time increases. National and regional governments devote resources to making regional cities and rural areas more attractive by developing transportation networks, social services, industry, and education institutions in attempts to decentralize settlement and improve the quality of life. Nevertheless, major cities, especially Tokyo, remain attractive to young people seeking education and jobs."

http://countrystudies.us/japan/51.htm

 143619 square miles Japan and 7 692 024 km² for Australia, please do your own conversion! You can see a picture here http://www.ga.gov.au/education/geoscience-basics/dimensions/aus-size-compared.jsp

This excerpt tells of an increase in land prices of 40% over 7 years. We have had nothing like this. If we do then maybe we will be in trouble. I think time will show Australia to become the "safe bet" of international and Australian investors in property and in business. Nothing says park your money here like a country that has never had a civil war, coup (no I don't count yours Julia!) or political assassination etc, etc, etc. We have a relatively stable currency and compared to many other nations we have small debt.

I won't keep going, I think I made my point.

D

Hehe.I would not class myself in any camp other than the "Can I make money from this?" camp. It's a good camp to be in

I actually have had one of my properties double in 4 years, And at this stage am selling a property I have held for only a year which still looks as if I'll at least see my money back after all buy in and sell out costs.The opportunity cost of that property was too high. We would be held back from making more money elsewhere. So I have a hard time arguing against these two points.

Tell me hschmid, just for curiosity why are you on a PI site and a broker if you think values will drop that dramatically? Won't that wipe out most of your business?

D