Thought id share another article released today on the latest doom and gloom media headlines.
Doom Gloom and Boom
There are a lot of negative headlines lately on the economy and the outlook for Australian property.
Just this week I have read headlines such as ‘Melbourne Property Bubble Finally Bursts’, ‘Brisbane Property Market in Free Fall’, ‘Land Sales Slide To Lowest In Decade’ and ‘Households Struggling To Keep On Top Of Their Bills.
Wow, we really are in bad shape. If these headlines are true I better sell all my investments before the situation gets worse!
In the fifties we said the price of property could never go up because we’d lost half the
male population due to World War II and a recession, yet prices doubled. In the sixties
they said property prices would never rise again because of affordability and wages
couldn’t keep up, but prices doubled. In the seventies they said prices couldn’t increase
due to the oil crisis… yet prices doubled again. In the eighties they said prices couldn’t
increase due to the introduction of capital gains tax and high interest rates which
reached 22 per cent at one stage, but prices doubled. In the nineties they said prices
wouldn’t increase anymore due to low inflation and wages not keeping up, but prices
doubled. In the noughties they said prices couldn’t increase due to the introduction of
GST, but they doubled.
“In 2003 when the property boom was full-on and the stock market had bottomed and
was losing lots of money, I had clients coming to see me in a panic and wanting to sell
out. I told them the same thing I’m telling everyone now: just hang tight.
“All I can say when people make claims of gloom and doom is ‘yeah, yeah, yeah I’ve
heard it all before’. So why am I so calm when everyone panics? “One must understand
the fundamentals first before you can make a sensible analysis of what is happening.
“We’ve experienced world wars and depressions and recessions and high interest rates
and low inflation and high unemployment etc. but we’ve managed every time to move
through this and come out the other side stronger and wealthier.
“As long as the human race is wanting to ‘improve their lot’ then we’ll ride through the
economic ups and downs. A simple way of explaining this is if you’re uncomfortable in
your seat, you’ll move around until you’re comfortable again. This may happen straight
away or it may take some time but you will get comfortable again. This is the same as
economic conditions.
“As we bring more people into our country to maintain our standard of living we have to
provide more housing. In New South Wales alone there is a high building shortage and
the demand will continue to push the prices of properties upwards like it has done since
1901.
Do NOT lose your optimism in property as a great investment tool.
that certainly puts things in perspective!
I always like a balanced perspective James – believe what one may but, make decisions based on the 'whole' – which means combining current empirical data and supposition with historical fact.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
