Why I have faith in Australia and the Australian property market

There are always debates on this forum about the direction of the market , what drives it and how sustainable it is .

Last weekend at a friends place we were having a similar debate and one friend , was quite negative about the sydney property market saying it was being driven by immigration and that was a poor basis to drive a market and the economy .

I've always had faith that the market will in the long term will always go up , but since that comment , I started thinking about what justified that faith .

Well , this is my conclusion .

People might debate this point , but I think australia is one of the nicest places on this planet to live . We may not have the history or sense of culture that some countries profess to have , but on a practical day to day basis , I think it's pretty good . So while people may aspire to certain things in their live , I think Australia is an aspirational place to live . The continuing rate of immigration is confirmation of this .

So immigrants ... It's a recurring theme to complain about immigrants , always picking on the more obvious or latest wave from a different part of the world .

This has never changed

I've just comeback from visiting my wife's uncle who is a fiesty 90 year old who is currently recovering in ICU at the local hospital. On the way home , my wife recounted the family story of how he became involved with his second wife She was working for him as a house keeper and one day he dropped her to her home. As she got out she was abused by some local youths . He got out and threaten to beat th s.... out of them if they caused her any more problems ... Her crime .. She was Italian .

The reality is that people who emigrate to Australia are seeking a better life for themselves and their children . My career , medicine always has a higher level of immigrants and their children than the normal community.

Immigrants are motivated and often harder working than your average Aussie . Certainly many of the current immigrants have overcome serious personal danger to get here .

My dad was lucky . All he had to pay was 10 pounds ....I'm a doctor and both my sisters have ended up as CEO's of major organisations , an example of what immigrants achieve . Both my parents have OAM's in recognition of what they have contributed to this country.

I don't know how Australia will develop over the next decades and centuries . I'm not sure what will be the economic drivers / industries going into the future but we've always had the reputation as the clever country and personally , given the factor of being an aspirational place to live and attracting motivated emigrants , I see no reason why that will change. If we can't workout how to move forwards economically , I don't fancy the chances for the rest of the world

Is that a sensible basis for an economy ? Don't know , but it is what it is .

Sounds like your family has much to be proud of, congratulations.

I hope you are right about the economy and housing markets. My investing future relies on it.
Agree has the same discussion just then. Sydney is one of the most desirable city inThe world.

Even in our current house price in Sydney, if interest do goes up, few will get burned, but there will be people that will take it as oppurtunities.

I do also believed in our economy and property market
SC thank you for that heavy duty post. It nearly brought a tear to my eye.

I would just like to add that if we are seeing prices above 400k in houso Mt Druitt then this economy has got to be rock solid. Furthermore, i was talking to a RE agent in Cabra (2166) today and he is telling me about some recent sales in the area eg 700K for a townhouse and many houses over 1m$....one went for $1.6m...i was blown away, across the street into a nearby cess pool.

Seriously, this boom is like no other.
Well done on your families achievements, no doubt the result of hard work all around.

It is a great country, but that doesn't mean we don't pay ridiculous prices for our homes at times, resulting in overvalued prices or bubbles.

I expect the market to always go up nominally over the long term too, but it's not due to faith, it's because the nature of our monetary & financial systems demands it to remain viable (why do you think the RBA maintains an inflation target of 2-3%?).

Sometimes the "long term" can be in excess of an individuals (planned) investment time frame.
Cliff you raise some interesting thoughts and ideas about the Australian economy, and the desire to live in this country by those who emigrate here.

But to me, the most interesting concept you raise, is one that I've been doing a lot.of macro-economic research on, lately. This is the concept that 'if Australia were ever in a position where it is doing frighteningly poorly on all levels, I'd hate to even imagine how badly the rest of the world would have to be doing, at that time'.

When times are good in the world, Australia is a desirable place to want to live. Well guess what, in bad times throughout the world, this country remains to be desirable still. Ive been listening to a lot o podcasts lately on the state of the global economy. You know... How the BRICS are doing, how th PIGS are doing etc. Guess what.. Times are tough (in the words of several economists this month).

But to paraphrase one of them (I forget which one, I listen mostly on SoundCloud on my commute to work and always forget to save them!!), there's an expression he mentioned that I think very much applies to what Cliff is saying right now. And it goes like this:

'In a field of blind men, the one-eyed man is king'

Australia might just be losing an eyeball right now, and I'm certainly not suggesting we are any kind of kings right now (there remains to be some elusive, highly stable, spectacular diamonds in the rough of the world economy right now, who seem to be coasting along unscathed, specifically, the likes of Norway, Singapore, Switzerland, coincidentally all being small, low-populatipn countries...)

But I definitely agree that we are doing so much better than so many of the 'blind' countries, and this alone will help keep us in good stead.
I expect the market to always go up nominally over the long term too, but it's not due to faith, it's because the nature of our monetary & financial systems demands it to remain viable (why do you think the RBA maintains an inflation target of 2-3%?).


And the thing that drives our monetary and financial system are the people in our country .

Kudos to you and your family. It always amazes me how often we hear of migrants achieving so much despite starting with nothing, when so many Aussies think it's stacked against them and do very little.

Massive generalisation, I know, but well done.
Australia is built on immigration. Ask your friend if his forefathers were here thousands of years ago (like the Chinese are in China or Indonesians are in Indonesia). If not he's just the descendent of another immigrant.
Well done Cliff on your family's achievements and I dont know what exactly drives us immigrants to achieve something, and do something more, probably just the fact that we can! And the countries we are coming from we just couldn't!

I love Australia! And love the way people are free to do whatever they want with their life, everyone has a CHOICE! and choice is freedom!

Maybe when coming from conservative countries to Australia, immigrants realise they have that freedom to prove themselves how far their achievements can go!

But the question was why I have faith in Australian property market, honestly I dont know, but I really do! And more and more I travel to different countries and having friends from all around the world, I realise how happy we are to be part of this society!
Great post SC and it's very timely for me as I am about to become an Australian Citizen this coming Thursday.

I've been doing a bit of self-reflection recently on my time here (20 years) and how fortunate I've been and grateful for the opportunities that Australia has provided for me.

Have never regretted my decision for a single moment to move here and am equally excited as to what the next 20 years will have in store because I truly believe there is no better place to live and fulfil your goals whatever they may be.
They don't call it the lucky country for nothing ;)
Well done Cliff on your family's achievements and I dont know what exactly drives us immigrants to achieve something, and do something more, probably just the fact that we can! And the countries we are coming from we just couldn't!

I believe it is because immigrants generally don't bring complacency with them.
I was having a similar conversation with my girlfriend yesterday on the topic of immigrants driving up the property prices, and in stead of focusing on them purchasing properties, I try to focus on the myths of how the media and a majority of the people were saying Sydney does not have enough housing supply for the population growth both new born and immigrants hence we are not in a bubble.

I suppose when we look at population growth data it does seems like there is a housing shortage, but what we failed to realize is that the more immigrants/population we got in here, the higher the unemployment rate.

When people are not having jobs or salary doesn't increase due to too many labour supply, how can we sustain this housing market?

For an investor to make money from properties we need speculators, and to be a speculator you'll need to have some sort of cash/wealth to start with.

However, when the market is getting eaten up by large players and pushing all the small players outside, really, these large players are only trading within themselves. which at one point when one large player collapse, the market either stalled or dominos effect and GFC repeat itself.

Not trying to support or against the Aussie property market but more trying to look at it from a different point of view when we relate it to immigrants. :)

And to further that, I simply don't think OTPs will have much effect on the overall Aussie housing market (Because overseas buyer restricted to OTP), in stead, in my own opinion, the baby boomers are the ones that contribute the most.
I work for global IT company. 12-18 months ago we did a lay off about 10% in my group. One of the VP came out from US said it to our face...we're an expensive country. Our dollar was over 1.0 USD then...

Fast track 12-18 months to now, my company is conducting interview after interview, anticipating hiring another 50 people this year.. Why? because the dollar is now 70c USD and we're no longer branded as an expensive country.

This is from a business perspective. I would think the real estate benefit if the USD maintains 70c ish...