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From: Liz Skinner
Hello all...
Being a 23 year old physio beginning to pay off first home and very very interested in investing in property for the long term, I am very excited about the prospect and beginning to pay off non-deductible debt etc etc and doing all the right things, but all my friends love shares! I think they are okay in their place, but i have heard all the common arguments as to why i should not invest in property. I know that most of them are myth/not exactly true, but there are some that concern me (even though i remain steadfast in my support of property as an investment). I wonder if i can draw on the experience of many years and ask the stars of the forum and property investment world (you all know who you are - The Wife, Sim, Rolf etc etc to name but a few) to put these questions to you all so that next time my friends ask i know what to say...
I also find it hard to source answers to questions like these:
1. What about the declining growth of the population with the average woman only having 1.6 children? What effect will this have on property demand in the long term?
2. The prices of property in the long term cannot keep going up because people cannot afford to service the debt (i.e. house prices in melbourne for example will not continue to increase even in blue-chip growth areas because people won't be able to afford to buy properties). I.e. if property grows as it has done in the past (theoretical doubling every seven to ten years - in case you have not realised along an exponential scale and we are reaching the end of the exponential curve), in about twenty or thirty years melbourne house prices(or even in just good growth areas) will be astronomical for the average worker, even if wage rises increase with inflation.
3. House prices drop and there is no guarantee that house prices will keep going up
4. WHen interest rates go up, no one will be buying property and the affordability of property will drop and therefore prices will drop, and will not be able to increase dramatically again even when the cycle turns and interest rates drop again (maybe six or seven years whenever...) as previously mentioned, the house prices will be limited by peoples ability to borrow...
... I am very interested to see what better heads than mine think of the above points...
Cheers all
Funky
Hello all...
Being a 23 year old physio beginning to pay off first home and very very interested in investing in property for the long term, I am very excited about the prospect and beginning to pay off non-deductible debt etc etc and doing all the right things, but all my friends love shares! I think they are okay in their place, but i have heard all the common arguments as to why i should not invest in property. I know that most of them are myth/not exactly true, but there are some that concern me (even though i remain steadfast in my support of property as an investment). I wonder if i can draw on the experience of many years and ask the stars of the forum and property investment world (you all know who you are - The Wife, Sim, Rolf etc etc to name but a few) to put these questions to you all so that next time my friends ask i know what to say...
I also find it hard to source answers to questions like these:
1. What about the declining growth of the population with the average woman only having 1.6 children? What effect will this have on property demand in the long term?
2. The prices of property in the long term cannot keep going up because people cannot afford to service the debt (i.e. house prices in melbourne for example will not continue to increase even in blue-chip growth areas because people won't be able to afford to buy properties). I.e. if property grows as it has done in the past (theoretical doubling every seven to ten years - in case you have not realised along an exponential scale and we are reaching the end of the exponential curve), in about twenty or thirty years melbourne house prices(or even in just good growth areas) will be astronomical for the average worker, even if wage rises increase with inflation.
3. House prices drop and there is no guarantee that house prices will keep going up
4. WHen interest rates go up, no one will be buying property and the affordability of property will drop and therefore prices will drop, and will not be able to increase dramatically again even when the cycle turns and interest rates drop again (maybe six or seven years whenever...) as previously mentioned, the house prices will be limited by peoples ability to borrow...
... I am very interested to see what better heads than mine think of the above points...
Cheers all
Funky
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