Greater ownership of 2010 myth was probably the assertion that Australia was a 'property bubble' which was about to explode.
BY MICHAEL YARDNEY
It all started when 'apocalyptic Economist' Steve Keen predicted years ago Australia would be dropping the price of housing. Clumsily for him, average house prices came up for up to 40 percent, after Dr. Keen made a very public statement that sell their house in late 2008, Sydney, just prior to the Sydney market recovered and values in your suburb soared. OOPS!
The Economist magazine also said Australia property was overvalued. In fact has reached the same conclusion for years. But this time suggested that our property markets were overvalued by 61 percent based on current share price of the House of quotas and of historic proportions.
Then Jeremy Grantham, legend which, on the basis of their calculation in the premise of housing investment trades around 7.5 times today front family income to about 3.5 times in the early days, also saw a bubble. And of course the International Monetary Fund (IMF) cautioned that while were our property values. Curiously Grantham and IMF since then have lowered their warnings.
So is our property market really so overpriced and a bubble waiting to burst?
Curiously, I have read similar comments magazine The Economist, year after year and heard the apocalyptic economists make similar predictions over the years and meanwhile property values only have kept increasing.
I guess that it would be his argument: "Yes, the bubble is only getting bigger and bigger means Australia is directed to a larger property falls as an alien."
Why don't think houses in Australia fall in value as did foreign?
In some areas property values have been declining, and are probably a little farther from their highs, especially because interest rates increase next year after. This is happening in some of the outer suburbs and lower socio-economic suburbs, as well as regional Australia and Gold Coast. But our global market might collapse because the foundations of current, including our strong economy property, rise of wages, population growth, rising costs of construction and the shortage of housing in the suburbs of our inner ring and a half, isolate a property crash Australia. The problem is that these remain economists analyze Australian properties as if they were actions - is like comparing apples with oranges.
Remember, in Australia 70 percent of the properties is purchased by owner-occupiers. And one of the things that keeps pushing our property up prices is that, in general, these owners all want to live in the same areas. If you think, 70% of our population lives in one of the eight major capital cities and most of these people want to live in the suburbs of inner ring and environment, near the city, near amenities and near their jobs.
Secondly, Australia does not have full of empty houses suburbs waiting financier as the sales. Instead we are not building insufficient homes. And in spite of our growing population dropping lately, continues to grow at a faster pace than the more developed nations.
Certainly some Australians now have problems with the affordability of housing and are postponing their home buying decisions. But people still need a roof over their heads. People are still married and people are still getting divorced, some have babies and others have to move house for their jobs.
If they cannot afford the luxury of buying a House to rent one, therefore the vacancy rates are casualties unprecedented and pushing up rents.
However growth of prices is leveling
Our property markets have changed: there is no wait type capital growth in 2011 which many of us enjoyed in the last year or two.
The Reserve Bank has deliberately put speed bumps on the road. Interest rates have increased to delay our burgeoning markets property and a measure of the economy in general, in the end.
What this means is to buy any property and with the hope of make it a good investment only work in this new era in the property. Now is the time to buy well in areas beyond the averages and buy properties that can add value.
Indeed, we have a two-speed property market with properties rising in some areas and not in others. Values will keep growing in Interior, more prosperous suburbs and not so much on the outside, working-class areas and regional Australia.
But our markets are not going to crash and it is hoped that it will hear us much less bubbles in 2011.
Is this article useful? Place a link to it from your Web site, or share via the button below.
No comments:
Post a Comment