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Higher than exuberant times of 2003 - property spruikers signal overheating market
Topic Started: 4 Aug 2014, 09:34 AM (457 Views)
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Property spruikers signal overheating market

PUBLISHED: 02 Aug 2014 02:44:00
Jacob Greber and Duncan Hughes

Pat Mesiti, whose mission in life is to create 10,000 millionaires before he dies, wants you.

The Sydney-based organiser of property seminars boasts he can show Australians the secrets of how he and his friends “built fortunes in real estate, starting from scratch with no special skills and not a lot of spare cash”.

All you need do is attend his “property millionaires” tour – in Melbourne this weekend – where you can learn how to develop, renovate and churn property.

“Many of you want to flip properties,” Mr Mesiti declares in a YouTube clip on his website.

“We want to teach you how you do that safely, securely, and make money.”

It’s the kind of pitch that worries analysts watching for signs the property market is overheating.

There are plenty of reasons to worry. Reserve Bank of Australia figures showed this week that investors now account for about 45 per cent of home loan approvals in NSW – a record and well above the previous peak in 2002-03.

RP-Data on Friday said Sydney house prices rose 1.5 per cent last month and are almost 15 per cent higher than a year earlier, a sign price growth may be accelerating.

Experts say an apparent explosion in property investment seminars is a warning parts of the property market are overheating.

“A pick-up in the property spruiking business is a signal things may be getting a little too exuberant,” said Paul Bloxham, HSBC Australia’s chief economist.

The former Reserve Bank official co-wrote a 2010 central bank study into the causes of the 2003 Sydney housing boom and bust.

Housing seminars are a common sight around hotel conference rooms, where they pitch to retirees or younger investors. Direct telephone marketing is also on the up.

Mr Bloxham’s original report noted that one of the alarm bells about Sydney’s overheating market a decade ago was a crackdown on property investment seminars and increased scrutiny by the tax office of rental deductions.

“Some of the tell-tale signs are there,” he said on Friday.

Higher than exuberant times of 2003

“The investor share of loans is at a record high, and higher than the very exuberant times of 2003, which ended with house prices falling and parts of Western Sydney doing it tough.”

He says the city appears to be following a familiar pattern, fuelled by record-low official and commercial lending rates that start with price rises based on fundamental drivers, such as a shortage of new homes and rising incomes.

“People then get overly excited about it and start buying assets because the price of those assets is rising.

“The solution is not to leave interest rates too low for too long. It’s one of the reasons the Reserve Bank won’t be cutting rates further and we have in mind they’ll be lifting early next year.”

Chris Curtis, a Sydney property buyers’ agent, said there was no doubt pushers were once again proliferating, but are more sophisticated.

They still use well-worn arguments to drum up business, such as negative comparisons to shares and a shortage of housing supply, while updating the pitch to emphasise affordability of property investments for self-managed super funds and the “globalisation” of Sydney as a haven for global capital.

Read more: http://www.afr.com/p/business/property/property_spruikers_signal_overheating_2TXvv9qcoLHkMHTVTuBxeI
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Property spruiking levels tell-tale signs of exuberance: Paul Bloxham

Jonathan Chancellor | 4 August 2014

The current higher levels of property spruiking activity was a sign that the Australian property was becoming overly exuberant, Paul Bloxham, HSBC Australia's chief economist has warned.

“Some of the tell-tale signs are there,” he told Fairfax Media on Friday.

“A pick-up in the property spruiking business is a signal things may be getting a little too exuberant,” said Paul Bloxham.

The former Reserve Bank official co-wrote a 2010 study into the causes of the 2003 Sydney housing boom and bust, noting it was accompanied by housing seminars in hotel conference rooms, along with direct telephone marketing.

Last month it emerged that state consumer watchdogs were closely monitoring 37 property investment spruikers.

The NSW Fair Trading, Consumer Affairs Victoria and Consumer ­Protection WA warned spruikers that “regulators across Australia are currently monitoring the information, advice and products that are being ­provided in the marketplace”.

Spruikers may be breaking the law for the unsolicited selling of property or education services at free-advice events, the consumer agencies suggested in letters sent to them.

They note the “many instances” where they hadn’t complied with the requirement that they tell people about the right to terminate contracts during a cooling off period.

Making false or misleading representations about property investment carries the possibility of criminal and civil action and all claims made at seminars must be substantiated, advised the letters, obtained by the Australian Financial Review.

Read more: http://www.propertyobserver.com.au/forward-planning/investment-strategy/property-news-and-insights/34056-property-spruiking-levels-tell-tale-signs-of-exuberance-paul-bloxham.html
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I don't see it, I remember the 2003-2007 period and that felt like exuberance!!!. Everyone at work, social settings and even random taxi drivers were talking property and the 'money for jam, mad if you don't buy' mantra. Everyone wanted to know if you owned, where did you but, where's your investment property etc.

Price escalation was on the front page of most national papers, it was all positive too. I think around 2006 there was a front page that read 'your getting $900 richer a day' based on house price rises.

I can't recall the last then anyone mentioned property to me in a social or work setting since 2012, no one really appears that excited anymore.
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