Todays reality is last year extremism
Lets have a look at my extreme views that is alluded by that section of Somersofters who believe that property is largely immune to financial firestorm that is engulfing the world.
Back in Febuary 2008 in a post on Somersoft on superannuation I borrowed the term soft depression which came from a book entitled "Financial Reckoning Day: Surviving the soft depression of the 21st century" by William Bonner published in 2003. I had forgotten where I picked up the term soft depression because I had read the book 5 years ago and still have it on my book shelf.
I view this prediction as my most extreme because in Feb 2008 none of the gang of seven on wall street had failed.... yet. I knew it was coming because I had ignored the mainstream press and was following the subprime debacle on the internet since July 2007. The world wide depression is now a fact, some will play games and try to call it a world wide recession
My next extreme view was that a crisis in liquidity would occur and I explained that it would become difficult to borrow money. This has also occurred but in Australia as far as home borrowings has been delayed by the Government guarantee on deposits that stemmed a panic run on banks as the economic storm clouds developed in December 2008. All large development programs where large amounts of capital have been requirred like Victoria's desalination plant are now unlikely to proceed. The restriction on property borrowings to date has been only on the margins. As the financial crisis really bites in 2009 and 2010 this is what is going to bring so many over extended property investors to grief.
My third most exteme view was the stock market crash and I gave a time frame of six weeks which one poster described as a very brave call. It took seven weeks for the crash to occur. After the event in one of the exchanges I had with the legion of critics was; Well if your so smart "why didn't you short the market"
Again that to me reveals not the thoughts of an investor but a smart @ss speculator whose mindset will ensure they retire on a government pension.
My fourth most exteme view was that the reserve interest rates would drop to 2%. This was way back in July 2008 when rates were still going up. I was laughed at and and told that if this came true it would negate my other extreme views and that with those rates would mean they would be able to gear up even more, ignoring the reality of the liquidity squeeze
The fifth and on this board most extreme view is that residential property prices are to drop 40-50% . This is really the only area that is yet to play out but the first signs of this have been in the wealthier suburbs such as Brighton.
Some have tried to say that I have falsely changed the time frame which when you go back and read the posts was always going to lag a year or more behind the equity crash.
Finally my call that a goal of 30% gearing has generated almost as much heat as the 40-50% collapse in residential real estate values. For those who have just started their property journey this I recognise is a tough ask. If it is not achievable immediately then you should have a written plan to achieve it over the next five years. You may not increase your net worth over the five year period but you will ensure your on the ground floor with enough asset backing to pick up the shattered portfolio's of others who have not been as prudent.