Hi
A recent report went something like this:
the Stock Marrket indicated that there have been five clear Bear Markets in the stock market over the past 100 years.
Of the five, four have taken up to 12 years to decline to their natural bottom prior to rising again with the exception of the great depression which "crashed " over a period of four years.
In each instance the "drop" was about 60% from the previous peak before a steady rise which followed.
The current bear market drop is almost 50% in Australia (30% on the NY Stock Market) so by the charts has another 10% points to go in Australia before the bottom is reached, further in NY.
If you have some spare cash AND KNOW WHAT YOU ARE DOING, then short trading the stock market may be great value for you. My personal feeling is that the market still has some distance to travel - DOWN, but please do your own due diligence.
As a general rule, Gold moves in the opposite direction to the Stock Market. In other words, gold is a "hedge" against the market.
To a slightly lesser degree, Real Estate works in a similar manner to gold. Recall the last big drop. In the 80's, the stock market was going gang busters, rising at an enormous rate and despite all the warnings, people kept on buying and forcing Market values up. When the "stock market bubble burst" in 1987, people deserted the market into property forcing the value of property up to unrealistic levels. The inevitable had to happen, the market rallied in 89/90 and property collapsed.
So how does it compare to today? The opposite!
Today the stock market is working in reverse. It is steadily dropping and has been so for all this year despite the "money Market" people trying to talk it up. They cry, increase interest rates, stop the FHOG scheme, the property market will burst, anything to get people to BUY into the stock market and not short trade the stock market. So what does it all mean?
To stick my neck out. The world stock markets are all going down. This is partially causing the property market to remain high in places and to increase even further. Sydney is far to high, rental levels are far below the comparable sale price, and Melbourne is not far behind. Brisbane has been flat for several years and is now taking off and according to all the experts will continue to do so for some time, maybe two or three years. That is, Brisbane is the NOW place to be.
So to answer your very good question. My feeling is to be very cautious about investing in SYD or MEL properties until it levels out. There won't be a bubble burst. This is money market and media hype. There will be a plateauing effect, maybe a slight drop but no crash. So not such a strong investment property market. Is my neck out far enough yet?
Do your due diligence, research before you invest and avoid buying those properties inflated to unrealistic levels based solely on the promise of future gain. They will go soft.
My money for the next several years will be in short trading the Sydney Stock Market, trading NOT investing, and investing into the Brisbane property market.
Regards
Ross