No.
It is well known that real estate doesn't fare that well in an aggressively inflationary environment, it becomes impossible to keep rents in line, historically they have always lagged. That is where we are headed... like it or not.
The future of Australian property prices
- Thread starter Joe Blow
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No.
It is well known that real estate doesn't fare that well in an aggressively inflationary environment, it becomes impossible to keep rents in line, historically they have always lagged. That is where we are headed... like it or not.
I think you have that backwards.
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Yes yes prices run alot harder than rents in such times i agree. but as of late it has been rents who have been outpacing prices, looking forward to where you think we are headed though a leveraged property investors dream. unless of course your thinking property wil be immune to the inflation? either way most data including what you have provided is illuding to the opposite like it or not.
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The Age reports a clearance rate in Melbourne of 40%
Yes, property will be to some degree immune. Property thrives in low and constant inflation where growth exceeds or meets the rate of inflation. When you hit stagflationary conditions and inflation is outpacing growth then property suffers and very much lags. This is simply because it is leveraged and the ability of the average person to pay interest is limited by the rising cost of staples against stagnating or evaporating wages. You also reach the point where the central bank moves to contain inflation and pushes rates to nose bleed levels.... that is the time to buy, just before rates top.
Property works most of the time, in "normal" inflationary conditions... it is simply a leveraged bet that inflation will continue, normally a no lose proposition BUT once inflation starts growing too quickly and growth suffers then the dynamic fails, as it does under deflationary conditions (not likely aside from specific market deleveraging). IMO it is not as simple as inflation or deflation, the dynamic is a little more complex than that but for the sake of this discussion.... YES I beleive we will see inflation that we exceed properties ability to maintain its current price levels especially when you consider the historically high debt levels we are starting with. You can only borrow so much, even @ 0% you must be able to cover principle. As a group Australians have pushed this debt limit... this is changing... as per the RBA credit growth chart... it counts, even if you don't like the idea. Shrinking credit will equal shrinking prices.
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Ok can someone please explain to me why everyone on this forum seems to think every property on oz has a substancial morgage attached?
You should probably understand just how "leveraged" oz realestate is overall then see how well it sits with your little theories on how this market works.
Just how shrinking credit shrinking prices goes with agressive inflation is beyond me. your not scm's dad are you?
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Doesn't need to be every, just enough to make a difference to the stock on market.
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Hint: its not enough, and once again your out of context did you even read your dads post?
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Falling house prices say otherwise.
Glen48
Money can't buy Poverty
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As the economy tanks people will keep moving down a notch in their life style and cut back on thing's they consider not be of any benefit and a money waster such as phones, less Air con, car usage when they can use public transport etc and as the collapsing grip tightens they will keep cutting back until they have to move out of their abode and into their car or what ever and spending less just to survive so the retail sector will feel the pinch and only stock the bare necessaries even down to smaller tubes or bottles of goods.
In USA you can buy meat in $1 slices.
Farmers won't be able to grow due to the lack of profit margin, rents will come down high interest rate will be of no benefit's to the banks as no one can afford to borrow so reduce rates to find where the market is.
So all this will lead to Deflation not Inflation,one is just as bad as the other.
In USA you can buy meat in $1 slices.
Farmers won't be able to grow due to the lack of profit margin, rents will come down high interest rate will be of no benefit's to the banks as no one can afford to borrow so reduce rates to find where the market is.
So all this will lead to Deflation not Inflation,one is just as bad as the other.
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If you think defaults are the sole reason for the current lower prices well there really is no hope for you. But thankyou for yet another exellent example of confirmation bias.
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I never said anything about defaults, stop putting words in other peoples' mouths.
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What exactly were you saying/insinuating then?..........
This should be good, keep in mine everyone can read your previous posts.
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That there only needs to be enough people with substantial mortgages who have or feel they will soon have any difficulty in servicing it, to make an impact on the total housing stock, in order to drive prices down.
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You forgot the most important bit what were you insinuating when you then posted the above? why are house prices falling?
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No, I'm pretty sure my previous post covers that pretty well.
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It does just wanted to be clear that that is your conclusion to what has driven the price of oz realestate down.
Why are they selling again? Loan servicing difficulty, right?
The difficulty to service the homeloan is the reason for lower realestate prices in australia.
like i said there is no hope for you!
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Well that's a big part of it, the other side of the coin is flat credit growth.
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Actually SCM did not say what you thought you read sparticus.
Obviously it is only the houses that are turning over that determine the direction of the market.
And it is not the level of current mortgages,
BUT
The ability to generate NEW mortgages to continue to ponzi scheme which dictates which direction prices go.
Since banks are tightening up, I can not see prices rising for quite a while. So, in effect, houses either stagnate for a long time or decrease or a combination...
IMO a good time to be sitting on the fence and observing.
Pity I didn't sell any houses, but then again, I don't need to
MW
PS Where is Robots?
Obviously it is only the houses that are turning over that determine the direction of the market.
And it is not the level of current mortgages,
BUT
The ability to generate NEW mortgages to continue to ponzi scheme which dictates which direction prices go.
Since banks are tightening up, I can not see prices rising for quite a while. So, in effect, houses either stagnate for a long time or decrease or a combination...
IMO a good time to be sitting on the fence and observing.
Pity I didn't sell any houses, but then again, I don't need to
MW
PS Where is Robots?
numbercruncher
Beware of Dropbears
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