Normal
Prawn, be careful leveraging the residential real estate market.In my opinion, current returns woefully underprice the potential risk for capital deprecation.A lot of real estate is held on leverage for private consumption or negatively geared investments. That means the asset itself does not liquidate the debt which creates a nexus with employment to sustain the status quo.The potential for falling house prices and unemployment to feed off each other could set in place a pretty serious negative feedback loop that could get very deep pretty quickly.Considering there is no sound logic for house price growth to exceed the rate of real wage growth, and in fact can’t over the very long term, then this long term view sounds plenty of warnings.[ATTACH]49274[/ATTACH]The last 60 years have sown the future – the real questions now are when and how. (And of course it will be a called a black swan when it happens)And when it happens, Australia’s net foreign Liability means there is less scope for macro intervention then many may perceive.If you really want to invest in residential property then USA looks a much better option.If you want to buy a house for your own private consumption then now is probably not the time to go more grandiose then you can comfortably afford afford on a pessimistic basisAll just my but please carefully consider.The first home buyer generation is unfortunately most at risk of making real loses as long term holders see the paper gains handed back.
Prawn, be careful leveraging the residential real estate market.
In my opinion, current returns woefully underprice the potential risk for capital deprecation.
A lot of real estate is held on leverage for private consumption or negatively geared investments. That means the asset itself does not liquidate the debt which creates a nexus with employment to sustain the status quo.
The potential for falling house prices and unemployment to feed off each other could set in place a pretty serious negative feedback loop that could get very deep pretty quickly.
Considering there is no sound logic for house price growth to exceed the rate of real wage growth, and in fact can’t over the very long term, then this long term view sounds plenty of warnings.
[ATTACH]49274[/ATTACH]
The last 60 years have sown the future – the real questions now are when and how. (And of course it will be a called a black swan when it happens)
And when it happens, Australia’s net foreign Liability means there is less scope for macro intervention then many may perceive.
If you really want to invest in residential property then USA looks a much better option.
If you want to buy a house for your own private consumption then now is probably not the time to go more grandiose then you can comfortably afford afford on a pessimistic basis
All just my but please carefully consider.
The first home buyer generation is unfortunately most at risk of making real loses as long term holders see the paper gains handed back.
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