can you connect some dots here for me please BC.... what is the link between inflation and being out of growth property? Won't the personal debt deflation be your friend?
yes absolutely - but not if IRs are hiked to match and contain. i know growth + high IRs = good, but not so good if your wage isn't moving to compensate.
and no, i'm not using govt stats - just what i see every day talking to people.
the key is the trifecta - inflation, IRs and wage growth.
wages haven't moved in real terms in a good 3-4 years. inflation is running, IRs are running.
that means that prices go up, cost of your debt goes up, but your ability to service said debt does not. if your wages aren;t moving then your debt effectively doesn't, either, because your money buys no more than it did previously.
from your cashflow scenario, that sounds like the same effects that deflation would have. but assets are gorwing, so where's the problem, right?
if no one can afford the rising costs, land prices fall but house construction prices go up because of inflation.
i'm not a bear, but just being realistic. property is still an amazing wealth vehicle, but play your cards close to your chest.
and it just something i've seen playing out. growth in this country will be hard to contain so here's a scenario that stops it.