look how long the tulip bubble took to deflate. why is that? because it was stupid. you can't live in it and they aren't very nice to eat.
A bit like gold then?
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look how long the tulip bubble took to deflate. why is that? because it was stupid. you can't live in it and they aren't very nice to eat.
A bit like gold then?
In the boom bust cycle - after a bust - do the items usually rally and continue from where they left off?
Tulips don't seem that expensive these days - did they substantially recover after the 1636 bubble?
Looking long term it would appear there is a bubble in house prices.
Do rents have to play catch up because based on the purchase price the return on the IP business is too low? Another way yield could improve would be for prices to drop and stay down. It would be of little comfort to all those with 'skin in the game' of course but that is one way it could rebalance itself.
You're starting to sound like a property seminar presenter Michael!
I think evand is quite right, and not the only one who has observed that only the bottom end of the market showed any significant price growth after the government grants were announced. Its effects are slowing down, so there is a good chance this boost to the market can only be temporary.
The so-called massive undersupply has been mentioned for years, it doesn't explain what happened in the last 6 months.
Immigration is on the way down, not on the way up.
Banks are very reluctant to finance developers, most likely because they see it as a high-risk activity in a weak economy. I wouldn't bet that the banks are stupid in this assessment.
Cheers,
Investors are definately waiting in the wings looking to pounce when first home buyer grant reduces,including myself.
Anyone remember the words "Cycle" and "Supply and demand"?
Where in another one. House prices had their run, rents are now playing catch up, then prices will rise again.
The more things change, the more they stay the same. It's not different this time. Never has been, never will be. Human nature won't allow it to happen. Because we can't see the future, we look at the past and guess what? We just go with what we know.
Project 1080.
The project: 10 IPs in 80 mths.
there is debate about whether the FHB will ever be abloshed
As a real estate agent for many years I would have to disagree with you on all points.
Immigration is going to be SLIGHTLY less but still very,very high historically.Just check the numbers to confirm this.The new immigrants are also good earners and not mostly family immigration.
I absolutely see the sellers of units to first home buyers desperately looking for upgrades to houses.There is a massive shortage of properties available at present compared to buyers looking.This is due to winter but very much due to upgraders.
Investors are definately waiting in the wings looking to pounce when first home buyer grant reduces,including myself.
The banks reluctance is due to stricter lending policies arising from OS costs and is cyclical but this is great for investors as it adds to pent up demand,whether it be this year or next,doesn't really matter as most property investors invests don't just invest for a year or two.The less properties built the better for investors if you already have a good portfolio.
I cant stress enough to my fellow Somersofters the dangers of this way of thinking. Over the very long term your view is DEFINATELY correct so long as two things happen
1) money is slowly debased over time; AND
2) population growth continues over the long term.
However the long term is just that..... long (more than 10 years).
I am confident that i am going to be proved wrong in the short to medium term as markets take time to realise their falicies.
But some points made by Yld Matters (even though i disagree alot with what he says), essentially wages to property prices, have to stack up over the long term. You can have a very decent period of time when the market opperates in a state of disequilibrium due to a number of factors, but over the long term, factors which cause the disequilibrium are eliminated and the market moves back to its intrinsic value.
For those of you that are thinking that if we move into a high inflationary environment, it will be 'all cool' with property as it will inflate to match the higher inflation rate, again i caution you. This way of thinking is correct over longer periods of time, but first the market must adjust to that higher inflation rate (and this adjustment phase can cause significant pain in short term prices).
(again i use reference to the late 90's, many 'professional' views at this time was that if australia enters a time of prolonged low inflation, property will UNDERPERFORM. What these professionals failed to realise is that once the market realises that inflation will be low, interest rates adjust accordingly and hence purchasing power increases).
Factors that tend to limit price growth include
- Market sentiment / recession fears
- Tighter lending
- Unemployment
What cycle? There is no cycle. What evidence is there of a sustainable cycle? House prices rise, debt levels rise ... that's about it. Occasionally incomes rise as well - but that is just levered up with debt and again house prices rise.Anyone remember the words "Cycle" and "Supply and demand"?
Where in another one. House prices had their run, rents are now playing catch up, then prices will rise again.
true. note that it is important to realise that the prevalence of FHB buyers is having the effect of depressing median prices via skewing the typical sale profile towards the lower price ranges.
Exactly why looking at median price as a market indicator for cap growth is a waste of time, mostly.
- Unemployment