I go to the City a few times a year for various things.Bayview, as soon as I am able to escape the rat race of Sydney, I too will be high-tailing the f**k outta here, at least for a good few years. Packing more human sardines into the squashy boxes of Sydney seems to be the plan for this city, sadly. Too many people. And I'm not exactly sure many people here are getting along.
Our township is directly South of the CBD. I look directly North at the city lights and the MCG lights etc across the Bay. In a straight line it is about 60km's from memory.Guessing this could be a similar strategy to your peninsula life? What is it - a 90 minute drive to Melbourne from the middle of the peninsula? 2 hours tops?
What does a house worth $100 million TJamesX dollars on TJamesX Island mean to you?
Markets also have a tendency to trade to a position where at some point there are a number of factors which mean the probability of pricing going much higher (or lower) become outweighed by the other and creates a floor or cap in pricing direction... and I think Aus real estate is at that point
Australian real estate? Or Sydney?
While Sydney is at its peak, there are plenty of places at the bottom of the cycle.
Can you summarise what these keys fundamentals will be ?2) the key fundamentals that drove that growth over the last 50 years no longer hold true and the market will shift to a different pricing mechanism (ie flat real for 20 years) or
3) there are new and different fundamentals (ie rise of Asia) that will drive price growth going forward
I'd be 80% camp 2 and 20% camp 3... so fundamentally bearish on real price direction
Can you summarise what these keys fundamentals will be ?
I'm not sure why you're mentioning Short Term issues when you've made a Long Term predictionShort term;
1) difficult to see Aus avoid a recession (first in 20+ years). People are underestimating how much oil & gas and mining saved Australia in 2009-10
2) population growth, immigration levels will have to drop - unemployment now in a long term trend upwards and continues... overcapacity in the economy
3) balance sheet capacity of household balance sheets has maxed out
4) Govt rhetoric and politics means that further deficits will not be recieved well or supported.... which creates a self reinforcing cycle in an economy when it slows
All 3 levels of govt benefit from high land values (Rate, Land Tax, Stamp Duty & CGT). 70% of the population (home owners & landlords) benefit from high prices. What changes do you expect ? and how popular do you expect them to be ?Medium/long term;
1) tax, increasing liklihood that tax treatment of property will change to the negative (whether through neg gearing or land tax) - unlikely that it can get more favourable
The rise of disposable income has been around 6%pa for the last decade (wages increase at 4% and inflation at 3%). Admittedly, wages have trended lower since GFC, but they are still above inflation, and are likely to return to trend. This continued increase in disposable income is likely to lead to a corresponding l/t increase in house prices.2) household income, the rise of the two income household has been a phenomenon since post war that will not be repeated over the next 30 + years. Working mothers now go back to work as soon as possible to manage family budget - hence stress in childcare.... I think we are maxed out here
So you think IRs will return to a little under their long term average of 7%, but property won't return to it's long term doubling every 10 yrs ?3) interest rates and debt cycle, 30 years of year on year decreasing cost of servicing debt aligned directly with increasing ability and propensity to take on more debt (which manifests directly into house purchase price). IMO much higher liklihood that cash rates return to 5-6% over the next 10-15 years rather than head to zero and stay there over that time... this is the single biggest factor.
You haven't addressed the ABS forecast of an extra 10M people in Oz by 2035. Where do you expect these extra people to want to live ? What effect do you think this will this have on existing house prices ?Whilst not all of these will play out I think for each of these factors, the probability and risk is to the negative for house prices... which in effect is the turning of a big tide. The one balancing impact is the potential rise of China on our population and economy - but I think this will be outweighed by the above