Bears, why you post this nonsense of affordability & bubbles? Certainly the days of 20% pa house price growth are well and truly back in Australia. Few investments over next few years have potential to match that. It is good to see "savers" punished. My average rate annual of return on investment property is above 80% - this is plus 80% (above inflation) because of the magic of....... LEVERAGE! Your bears were getting this wrong in the 1960s, "oh property it so out of reach and we wait for the crash!" Well how long you waited? To 2014 and how much longer?
Nice clippings, they have actually found the equivalent of newspapers in ancient Rome with comment and complaints on why such and such suburb were more expensive than the other. It has always been thus!
The generation who could still remember the vestigial acrid ‘smell’ of the great depression and WWII, are rapidly leaving us.
Paradoxically, they raised a large, global wolf pack of very big consumers. While their parents typically avoided the burden of debt (even shunning credit cards) and repaired their items instead of replacing them, the progeny feasted on ‘minimum’ payments, lines of credit, and EZ finance in the ‘keeping up with the Jones’ race that has no finish line.
Madison Avenue learned quickly that cracking that human ‘desire’ code was pretty easy after all and devised entertaining and very effective ways to encourage the people to ‘buy now and pay later’.
Rising in tandem with this group’s unquenchable desire saw the lenders develop ever more potent ways to amplify the debt merchant’s share price.
Centuries old methods of improving one’s financial position like building a productive farm and expanding outward, refining a process or item to produce better ‘quality’, or linear, layer based savings of income has now been superseded by borrowing astonishing levels of money and betting that when you spin Fortuna’s wheel, you will be correspondingly rewarded for the ‘risk’ you have taken.
But, what happens if you are not rewarded? And, at these current prices, the property growth rate needs to be a whole lot higher that 15% yoy since one potentially stands to lose a whole lot more if prices even descend just 15%. With that level of risk, I think growth of 50% is required before we get around to shaking hands.
First, the enormous propaganda machine suggests that like others who have ‘gone over there’ and wave and beckon to join them, my ‘experience’ will likely be like theirs. But, what will that experience be? This is no JV, all the risk is shouldered by the investor.
Second, the ‘marketplace’ itself, reveals a frightening mix of participants who are so ‘self-aligned’ that to expect a rational or normal transaction to occur is bordering on preposterous.
Here, the accountant wants me to proceed as I’m solid billable hours into the future. The lender wants me to proceed for the ‘revenue’. And, same with the RE agent. And, that chubby insurance policy too. And, the life/ TPD insurance and trauma policy and income protection to keep the flywheel spinning even if you can’t. And, same with the local Gov’t, who gets the biggest ‘commish’ in the stamp duty. So many people ‘benefitting’. All thanks to the assumption of more debt?
Third, perhaps the inherent ‘thrill’ (be it a good or bad eventual transaction) has some real drawing power—like a big push of the black chips at the table when you just convinced yourself that losing is ‘not at all’ possible.
Fourth, there exists a lack of authenticity in the ‘market’ that is hard to define or measure or validate using scientific or economic methods.
It’s just a human ‘gut feeling’ that everything about the scene has been distorted. It has botox and pheromones, like a steam cleaned and detailed used car with ‘wet’ gloss just legal tires and newly replaced clutch and brake lever pads and with a line like “the boss wants to move the sporty cars today”. And on the side of the that little shack with the picture window behind all the used cars, there is a signwriter’s faded drawing of a top hat, cane and dinner gloves. Beneath the drawing are the words “On the spot finance” and below that it reads “Deal with Gentlemen”.
Bears, why you post this nonsense of affordability & bubbles? Certainly the days of 20% pa house price growth are well and truly back in Australia. Few investments over next few years have potential to match that. It is good to see "savers" punished. My average rate annual of return on investment property is above 80% - this is plus 80% (above inflation) because of the magic of...
Tell me Mick, what other investment regularly makes 20%?
WHAT WOULD EDDIE DO? MAAAATE! Share a cot with Milton?
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