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Australian Property could drop by 50%


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Guest The Pom Queen

Really:goofy:

 

http://www.adelaidenow.com.au/realestate/news/us-demographer-predicts-hit-to-aussie-home-prices/story-fni0ckon-1226816510923

 

 

How many times have we heard this now. We have been here over 10 years and each year they say in another 12 months the bubble will burst.

 

 

Harry Dent, a widely respected economist and demographer who has predicted a range of economic events including the 2008 global financial crisis, pointed to falling affordability in Melbourne and Sydney where prices are ten times the average income.

 

 

"Bubbles ultimately peak when the people buying can't afford to buy it," Mr Dent said.

 

 

"Melbourne has been, actually, the biggest bubble in recent years and I would expect the biggest burst there.

 

 

"In Australia obviously the bigger bubbles are in Sydney, Melbourne, Brisbane and Perth because they had the greatest growth and the greatest limitations in supply - but not quite as much in Adelaide and other cities."

 

 

The bubble would burst after a crash in the stock market and would be linked to an anticipated crash in the Chinese property market.

 

 

Mr Dent, who headlines a Secure the Future event in Sydney and Brisbane later this month, said most global markets, from London to a number of US cities, would also face market reductions.

 

 

"I see it like a popcorn popper, different markets are bursting at different times … but all of real estate in coastal cities all around the world is greatly overvalued and they're all going to burst whether it be 30 per cent or 40 per cent ... or 90 per cent in the worst case," Mr Dent said.

 

 

He said that worst case scenario would likely be China. Surging interest in Australian property from Chinese investors could be a sign the Asian superpower's rich were afraid of a looming crash at home.

 

 

"They want to leave the country, a lot of people have already left - and their favourite places to go are Australia, Canada, the US and New Zealand and London," he said.

 

 

Mr Dent has predicted the economic and real estate bubble in China will burst in the next couple of years, and Australia would be hit hard when it does.

 

 

"The China bubble is going to burst, starting around next year, and it is going to be the biggest bubble to burst. It is the greatest bubble, the most government driven, the most extreme in valuations," he said.

 

 

"Australia is the best country to weather this downturn and take advantage of the next boom.

 

 

"But this China bubble is going to back up on resource and commodity markets and it's going to hit Australia hard and I think it's going to cause your real estate to get hit and finally burst.

 

 

"I see real estate going down 60 to 65 per cent in the US, it's probably more like 30 to 50 per cent in Australia, but that's still enough for you to say: Hey why would you go buying real estate?"

 

 

Mr Dent argued buying property and expecting significant growth, 10 to 15 per cent, is crazy.

 

 

"Your real estate bubble is peaking ... and it is going to burst pretty substantially," he said.

 

 

"So why would you want to own real estate unless you're going to live in it forever or it's very important to your business.

 

 

"And why would you speculate on real estate, that's crazy at this point."

 

 

Mr Dent's views have been challenged by a number of local commentators.

 

 

RP Data senior analyst Tim Lawless said neither Sydney nor Melbourne were in bubble markets, particularly with mortgage arrears rates at about 0.5 and 0.6 per cent across the country, but continued unsustainable growth in some areas could cause alarm.

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Your Mr Dents of this world get paid to make predictions and every now and then they get one right and live like a king saying how good they are for the next few years. See how they mention he predicted the GFC, makes him sound like some guru.

 

They never mention the hundreds of times he got things wrong. It's absolute common sense what he's saying and everyone knows it. Comes a time when the houses are just too expensive to buy and there has to be a levelling off or fall. Seen plenty of people on here predicting doom and gloom for the last few years. Not happened yet but I'm sure there will be a bit of a slump soon.

 

Beats me why people buy property to make money on any way, same with the stock market, may as well go down the casino. I guess it's OK for multi millionaire investors, who can stand to lose a few hundred thousand. They're the ones that can follow the old speculate to accumulate slogan.

 

The rest of us should find a house and a neighbourhood we like then try and keep up the payments for the next 25 years and eventually it will be ours.

 

It doesn't make me feel any richer that our place was bought for $130,000 in 92 and is worth upwards of $700,000 now. If we sold it tomorrow we still need somewhere to live and whatever we buy will have gone up just as much. Thing is though we love where we live, that's why we bought it and I can't see us moving or worrying if it drops a few thou. Other places will drop a few thou too.

 

All evens out.

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My parents house has been on the market for nearly a year now. They bought a house for £115000 and sold it for over £300000 10 years later and then bought another one for £350000 and it's now supposedly worth over £500000 they reduced it to £450000 because it wasn't selling and are probably going to have to reduce it again. The housing market for houses like theirs just seems like a lot of hard work! We are looking at buying in the next few months and we have decided not to spend more than £200,000 just in case. It's a mine field to me lol x

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The Australian housing market is like the European housing market; rather diverse. I don't think you can have a rational discussion about it without mentioning which postcode your examples come from. Round by me some houses are selling today for the same dollar value they had in 2008. Not exactly a 50% fall, but certainly not a bull run either.

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Beats me why people buy property to make money on any way, same with the stock market, may as well go down the casino.

 

Do you have a super fund or is it all hidden under the mattress? Property and stocks are what your fund are mucking about in on your behalf unless they're at the Crown every night!

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Do you have a super fund or is it all hidden under the mattress? Property and stocks are what your fund are mucking about in on your behalf unless they're at the Crown every night!

 

We have to have a super fund and we've seen it go up and go down. I guess we could go self managed but I'm one of those people who just go with the flow and leave it to the "experts". It's money gone from the salary anyway and hopefully the super fund managers have a modicum of understanding, at least more than me. I'll leave it to them.

 

I wouldn't dream of waltzing into a cokpit on a flight and tell the pilot how to fly the plane, same with the super fund. :cool:

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...I'm one of those people who just go with the flow and leave it to the "experts". It's money gone from the salary anyway and hopefully the super fund managers have a modicum of understanding, at least more than me. I'll leave it to them.

 

I wouldn't dream of waltzing into a cokpit on a flight and tell the pilot how to fly the plane, same with the super fund. :cool:

 

If you were in a taxi and the driver was going past where you want dropping off, would you say something?

 

Financial experts often have more in common with taxi drivers than airline pilots.

 

And it is your money, after all. Put aside to pay for your retirement. I don't advocate watching it on a daily basis, but spending 15 minutes per year would be prudent. Just to see how things are ticking along. As retirement comes over the horizon, it's usually too late to alter it's course. Like steering a super tanker.

 

[There, that's 3 travel analogies in one post. Beat that!]

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They keep on saying it and I guess one day it will happen. When it does the whole world will be in strife. I read an article the other day where they were saying the conditions at present are similar to the last depression in the late eighties, however interest rates were very very high then, so that was not entirely true.

 

One day it will just happen and we might as well wait till then to worry about it.

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I think the best way of avoiding any "burst" is the old term location location location. Buy in sought after suburbs, the new big housing estates on the outer edges of the city are more likely to lose their value than inner city due to the old supply and demand.

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They keep on saying it and I guess one day it will happen. When it does the whole world will be in strife. I read an article the other day where they were saying the conditions at present are similar to the last depression in the late eighties, however interest rates were very very high then, so that was not entirely true.

 

One day it will just happen and we might as well wait till then to worry about it.

 

The worrying thing is when they had interest rates high and there was a depression they could lower the rates and try to do something about it.

 

Now, with rates at all time lows the banks don't have any room for manoeuvre. At least in Aus they can drop them a bit if things do turn bad. In the US, UK and most of Europe they have nowhere to go.

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It did happen, between 2008 and 2010, in the UK, for one. It can happen here, even if most of those in the property industry with a vested interest tell us it won't (the same people sang the same song in the UK). The complacency here alarms me. And it *does* matter if you are about to buy or sell. You don't want to buy at the top of the market or sell at the bottom if it. Right now, I'm looking at selling near the bottom of the UK market, and buying near the top of the Melbourne market, and I can assure you it's not a pretty sight...

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It did happen, between 2008 and 2010, in the UK, for one. It can happen here, even if most of those in the property industry with a vested interest tell us it won't (the same people sang the same song in the UK). The complacency here alarms me. And it *does* matter if you are about to buy or sell. You don't want to buy at the top of the market or sell at the bottom if it. Right now, I'm looking at selling near the bottom of the UK market, and buying near the top of the Melbourne market, and I can assure you it's not a pretty sight...

 

 

Why not hold on to the UK property and rent in Melbourne?

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Why not hold on to the UK property and rent in Melbourne?

 

Precisely what we are doing at the moment. But we're not getting any younger, and eventually we need to get back on the ladder before we get too old to take on a mortgage. Moreover, whilst we try to sit tight, local prices climb steadily out of our reach... Classic stick or twist dilemma!

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Precisely what we are doing at the moment. But we're not getting any younger, and eventually we need to get back on the ladder before we get too old to take on a mortgage. Moreover, whilst we try to sit tight, local prices climb steadily out of our reach... Classic stick or twist dilemma!

 

Very true. On the plus side, The pound is picking up so hopefully outperforming any price increases in Vic (although has weakened a fair bit this week).

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The worrying thing is when they had interest rates high and there was a depression they could lower the rates and try to do something about it.

 

Now, with rates at all time lows the banks don't have any room for manoeuvre. At least in Aus they can drop them a bit if things do turn bad. In the US, UK and most of Europe they have nowhere to go.

 

I agree no-one wants to say the "D"word but with the interest rates so low I would imagine it could be distinct possibility.

 

The way the job market is here in Aus is completely different to the job market the government of Aus sees it. I heard on the radio this morning there is 20% youth unemployment in the Frankston area and that is only one such area could be higher in the western suburbs of Melbourne. So many people are working part time and want full time and they are not counted in the unemployed figures, people being put on casual etc etc and Mr H says we have to look after ourselves well better make the jobs so people can in my view. If people have no money the cannot spend and then what happens, the D word did happen in Japan.

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