Ausprop said:
conversely just because something hasn't happened, doesn't mean that it will. I disagree that the less people believe somehting will happen, the more it is likely to happen - sentiment is one of the largest influences on a market!
I think this point can be overanlaysed with debates of tulips and %'s in the 60's. With the Perth market being the cheapest in Australia, at the beginning of a resources boom, large population growth (Mandurah fastest growing region in Australia), 1000's of unfilled jobs, properties sittting below replacement etc etc, I think talk of 20% drops in housing prices is just putting your head in the sand. But hey each to their own, that's why there is a market!
"I disagree that the less people believe something will happen, the more it is likely to happen - sentiment is one of the largest influences on a market!"
Hi Ausprop;
Rather than get lost in semantics, allow me to cite the most obvious example, as personally experienced by me;
- Sydney market booms.
- Most of my friends, relatives in Sydney, buying second and third properties.
- You can't get a sentence out of them that doesn't include the phrase "it's gone up by" or "over a mil" (at this point, the first faint alarm bell starts ringing in my head, but no great sweat yet)
- Banks make it easy. Deposit on 2nd / 3rd property is by mortgage equity withdrawal from increased value of PPOR. Many big ticket consumables also funded this way.
- Bullish sentiment reigns supreme. Even respected commentators assert improbability, even impossibility, of a drop ... it's quiet different this time .... One or two of them sound words of caution, but they are steamrolled by the vast majority. (Bells now louder)
- Talk of a possible bust is considered heresy.
- Thus the vast majority of people now believe in the infallibility of a market and that a crash is impossible (bells very loud now).
And I say, (but not just I, I assure you) that it is exactly at that point where critical mass is reached, and the market starts to turn (heretics having sold by now, to exorcise those damn bells).
About your further comments; I didn't say that Perth will fall 20%. I made a hypothetical based on the implications contained in particular statement, merely to encourage lateral thinking.
Yes, debates about percentages are often trite, though from tulips, valuable lessons can be learnt on what you correctly said, i.e. "... sentiment is one of the largest influences on a market!"
Mundurah ? Don't know it. Though I do know Maitland (Newcastle NSW). Central to the massive coal fields and vineyards industries of the Hunter Valley, it too fits the description you attributed to Mundurah. I am almost certain that a year or two ago, it too was said to be the fastest growing region in Australia. (or was it NSW - can't recall right now). Anyhow, Landcom housing blocks went from average $50,000 just prior the boom, to average $170,000 at the height of the boom. They are now back down to around $120,000, with $10,000 - $15,000 rebates being offered for quick settlement - and about 50% remain unsold ! But as I said, this too was touted as the fastest growing region - and it certainly was ! So nothing new or special there I'm afraid - it's simply following the general property trend - albeit 2 - 3 months behind Sydney.
Anyhow, good luck with your Perth Investments. Perth is simply a wonderful city, (better than Sydney IMO) and I understand that in the long run, WA has great potential !
Regards,
JamesP
(When everyone is running, Walk ! When everyone is walking, Run ! - old Jewish proverb).
