You can’t go wrong with property, can you?

Posted by Mike H on 8 November 2016 | Comments

You can’t go wrong with property, can you?

 

https://www.propertychat.com.au/community/threads/australian-property-chart-of-shame-epic-failure-of-the-australian-property-bears.411/

Unlike the authors of the article above, I must admit to feeling sorry for Australian property market bears; being wrong for 20 odd years has got to suck!

Another reason is I have been one for the last 15 years. I’ve always shuddered when I looked at the rising housing prices over that time compared to average weekly earnings.

http://www.rba.gov.au/publications/bulletin/2015/sep/pdf/bu-0915-3.pdf

Thank Goodness I’ve never had the strength of my convictions.

By force of circumstance, I still ended up buying significant amounts of property over that time.

Being lucky always seems to beat the hell out of being logical, consistent or right!

The last 30 years seem to have had a continuous chain of "lucky" events in the property market. *

The rise of dual income families

  • First home owners’ grants
  • The wealth from a 25-year Bull stock market
  • A strong economy with full employment
  • Periods of high inflation with matching increases in incomes making debt and real assets attractive
  • The rise of residential property investors
  • Changing lifestyle aspirations
  • High immigration 
  • Low and now ultra-low interest rates 
  • Government actions and inaction's (increasing building and development regulatory costs, negative gearing and fear of backlash from voters anxious about denser inner suburb development and/or falling house prices)

 

Now the latest bit of “luck”, along with record low interest rates and easy credit, is Chinese buying off the depreciated AUD and parents reaching into their savings to help their children into their desired housing. 

To date, every time I think there can be no more avenues to higher prices, another unlikely twist occurs.

However, I now suspect my generation has finally used up a lot more than a generation’s worth of luck.

At this stage I will definitely will not be betting the house on the property market (well maybe after the kids are set up!)

Regards

Mike H

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