Property boom - cause for concern?

Property has done nothing for years now. It's about time it did. Rates are ridiculously low and won't be moving up ib a hurry, especially with such a large portion of people with high lvrs due to the capital increase
 
Stark100 said:
This is not a D&G post - as someone with a PPOR and IPs in Sydney I have a vested interest in a strong market - but when the property bulls start to worry does this give any cause for concern?

http://www.afr.com/p/blogs/christop...orried_about_australia_9gqc2CPE2hrAcikkRvyOGM
Click to expand...

I Dont understand completely how it all works but given the fact that all this has happened to the american housing market recently don't you think the big wigs in charge of the australia economy can learn from there mistake and adjust. e.g. capping LVR like discussed in another thread.
 
Blair007 said:
I Dont understand completely how it all works but given the fact that all this has happened to the american housing market recently don't you think the big wigs in charge of the australia economy can learn from there mistake and adjust. e.g. capping LVR like discussed in another thread.
Click to expand...

One would think so - but with the economy a bit soft and unemployment on the rise the challenge is that raising IRs to avoid a boom may (will?) have a negative effect on the rest of the economy. As for capping LVRs - that's a pretty significant intervention - and therefore I think (but what do I know!) that it is unlikely to happen in Oz...
 
Blair007 said:
I Dont understand completely how it all works but given the fact that all this has happened to the american housing market recently don't you think the big wigs in charge of the australia economy can learn from there mistake and adjust. e.g. capping LVR like discussed in another thread.
Click to expand...

In America they built too many houses , we didn't. Still undersupplied.

Hence they crashed , we didn't .

What is happening at the moment is normal in each cycle I've seen .

If anything , it's overdue .

Cliff
 
Over the last few years was we had to worry about slow growth and flat prices and now prices are heading up it is a bubble, I tend never listen to or bother to read these articles and am in it for the long haul,just look back over the past 20 years and where we are today just ride the wave and have a plan,prices have been slow for far too long and generally that is when our growth happens,About time I say.

Cheers
Macca446
 
see_change said:
If anything , it's overdue .

Cliff
Click to expand...

Yes, it's about time.

We started out with our PPOR right at the top of the boom in Sydney in 2003.
No growth at all except some very mild growth in the last 2 or 3 years, which is nothing really considering it's been 10 years.

I'd be happy enough to get 50% growth on current vals in the next 7-8 years.
 
Reading the article is interesting and he raises some valid points though on the balance of things ,monthlong he says convinces me that we won't have a boom .

My main beef is he raises concerns of a down turn in terms of months , but does nothing to justify this time frame .

He suggests a rocky landing and this maybe the case , but over the last 20 years the guys in change of the accelerator and the brake have done a better job of speed control than anywhere else .

Cliff
 
Its just a cycle.

I've seen it all before - nothing to be scared of here - as long as you manage your risk.

ATM the people with the most properties are making a killing and they are going to be filthy rich (er).

Just sit back and relax, before long you'll be wondering when the next boom is a coming!
 
very well stated article.
Definitely not a D&G article only a potential 'heads up'.

His concerns and mine are the same but he articulates them much better than I can (poor writing skills).

As I have stated previously I am will be using this current upswing cycle to offload, but not yet, far too early in the game.
 
"The reality, however, is that these same officials have exhausted most of our monetary and fiscal ammunition in the name of avoiding what is likely some natural business-cycle volatility as the growth pulse migrates from investment to production.
A related anxiety is that the RBA will confront deep resistance to properly normalising rates to the extent required to avoid these imbalances. The risk is that RBA officials talk about accommodating a bout of asset and consumer price inflation because they want to maintain ?full employment?."




This to me says that the government will introduce a cap on LVR's.

More particularly the capped LVR approach is being adopted in various countries as those countries feel they need to limit the banks exposure and safe those countries from total banking system meltdown.

The housing shortage referred to will take care of itself. Builders can and did build at previous value levels of the RE market. They don't need an expanding RE market fueled by a falling interest rate.

Maybe the timing of months in the article is related to the capping of the LVR, as I suspect that with the introduction of a cap on LVR there will be an immediate reaction.

Cheers
 
I would be very surprised if a cap on LVR were to be introduced.

If it were it would definitely have an impact on prices....less buyers able to finance a purchase of an existing OR new built home would have a dramatic impact on the rental market.

If people don't have the 20% deposit to buy....they still need to live somewhere, I think if the LVR cap were introduced people would be hit by the double whammy of paying significantly more for rent..hence not being able to save as quickly for a deposit being stuck in rental accomodation for
Much longer than planned....especially of we do have a supply shortage.
 
The cap is 80% in Switzerland and has worked well to stabilize prices since introduced after their bubble/bust 20 years ago. Prices hardly moved for 15 years after the cap was introduced.
 
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