tech/a
No Ordinary Duck
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- 14 October 2004
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There will be a return to very much lower real estate prices and rents in the large metropolitan cities and a concomitant rise in values in those centres where the real work of Australia is done, mining materials, oil and gas production and exploration and agriculture.
Supply governs everything. You dont have supply in the metro area or the local towns so rents and house prices won't be falling.
The real wealth will return to the North and the West with high wages and near full employment in the regions producing wealth.
You currently have high wages and full employment. So higher wages will just pull a finite number of people from other industries to add to the cost of housing and rents as those who are cashed up in super and understand inflation,---- rush (NOW) to buy anything that has a resistance to diminished value (IE anything that isn't cash) housing and increasing rent is the top of the list.
Nobody cares about inflation when they are earning the big bucks.
The biggest losers are those with heaps of cash and no assets and those with no assets and no cash but earning heaps and living week or month by month.
Lots of Super fuelled cash-rich retirees are smashing asking prices on Housing scrambling to grab an asset that can return a better-than-average rate without being eaten alive by a diminishing value of cash held.
My best guess is that there will be a slow unwinding of real asset value against earnings and affordability.
this will take many years until we return to something that looks more like an equilibrium.
Right now it is severely skewed toward those who have money. They are the current drivers of inflation. Everyone else is left behind.
The gap is wider than ever and will take many years to close.
You won't see bargains these piranhas are just hovering for anything that reeks 5 + % return. You may want to live in it ---they want to rent it!
Pain for years Im afraid--the writing has been on the wall for a LONG LONG time.
None are as blind as those who cannot see.