I’ve been acquiring Residential Property in Adelaide for years.. its gone well.. great capital gains. But what does the future hold for the portfolio as far as capital gains go? I’ve come to the conclusion that at best, nothing. At worst, a slow decline in values.
Most Western societies are perhaps now in their twilight, we’ve been gorging ourselves on Petrochemicals for the last 80 years. We’ve built a society around the idea that oil is endless. The layout of our suburbs, our shops, our schools, our jobs are all predicated on a free and easy supply of oil. The price of petrol is going to skyrocket over the next few short years, its perhaps not inconceivable that we’ll be paying $5 a litre in 2 years time. The effect on the family budget of a doubling in petrol prices is not just related to the cost of fuelling the family cars, it related to almost every single good and service that we consume.
Increases in property prices are based on demand, demand is largely determined by affordability. With petrol prices rocketing upwards affordability drops without a corresponding significant rise in wages. I believe new IR legislation in Australia will see wages DROP in real terms over the next few years. Increases in fuel costs will see a greater percentage of the family budget go towards petrol and funding increases of those goods and services affected by rising oil prices... This will come from the discretionary spending portion of most peoples budgets. Drops in spending on entertainment, doodads and toys will lead to job losses in those sectors. Job losses will create a larger pool of unemployed people, a larger pool of unemployed people keeps wages low.
Low wages, low affordability, less demand for houses, no capital gains.
Whilst driving to work this morning I pondered the idea of liquidating almost all of my property portfolio, keep some units close to the city and sit on the cash for a while.. I can always buy back in if I’m utterly wrong when the next boom starts to kick off.. I have enough insight into the market now to read the trends and I have the confidence to act on them.
I just don’t see any prospect of capital gains in the suburbs in the next 10 years if at all perhaps (on a standard buy and hold). The problems of climate change and a lack of oil are breathtakingly serious.. massive, foundational changes are going to take place in the way humans live in a post-oil world.. Property must suffer surely?
Where can the capital gains come from over the next 10 years? I know there's been threads on peak oil here etc.. but are we on the cusp of a massive reconfiguration of our society, as an investor with significant suburban property should I act on my hunch? or have I got it completely wrong?
Most Western societies are perhaps now in their twilight, we’ve been gorging ourselves on Petrochemicals for the last 80 years. We’ve built a society around the idea that oil is endless. The layout of our suburbs, our shops, our schools, our jobs are all predicated on a free and easy supply of oil. The price of petrol is going to skyrocket over the next few short years, its perhaps not inconceivable that we’ll be paying $5 a litre in 2 years time. The effect on the family budget of a doubling in petrol prices is not just related to the cost of fuelling the family cars, it related to almost every single good and service that we consume.
Increases in property prices are based on demand, demand is largely determined by affordability. With petrol prices rocketing upwards affordability drops without a corresponding significant rise in wages. I believe new IR legislation in Australia will see wages DROP in real terms over the next few years. Increases in fuel costs will see a greater percentage of the family budget go towards petrol and funding increases of those goods and services affected by rising oil prices... This will come from the discretionary spending portion of most peoples budgets. Drops in spending on entertainment, doodads and toys will lead to job losses in those sectors. Job losses will create a larger pool of unemployed people, a larger pool of unemployed people keeps wages low.
Low wages, low affordability, less demand for houses, no capital gains.
Whilst driving to work this morning I pondered the idea of liquidating almost all of my property portfolio, keep some units close to the city and sit on the cash for a while.. I can always buy back in if I’m utterly wrong when the next boom starts to kick off.. I have enough insight into the market now to read the trends and I have the confidence to act on them.
I just don’t see any prospect of capital gains in the suburbs in the next 10 years if at all perhaps (on a standard buy and hold). The problems of climate change and a lack of oil are breathtakingly serious.. massive, foundational changes are going to take place in the way humans live in a post-oil world.. Property must suffer surely?
Where can the capital gains come from over the next 10 years? I know there's been threads on peak oil here etc.. but are we on the cusp of a massive reconfiguration of our society, as an investor with significant suburban property should I act on my hunch? or have I got it completely wrong?