The property boom may finally be about to bust
In this article for Professional Planner, Roger discusses how the population of real-estate experts has grown so much faster than the Australian population itself. Read here.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Bruce
:
I just sold my house in NW Sydney, settle in weeks. Collected more than 3 x’s increase in 14 years. I sold partially because we are down-sizing (5 bedrooms, triple garage , pool,…) but also we are almost certainly at the top of the market. House prices increase as credit increases, and credit must be close to its peak. This may mean price stagnation in the short term or if china has a downturn and we have a recession I suspect we could have a collapse in prices given the multiples of median income a lot of people have as their mortgage. I had my first loan during the 17% interest period, and was prepared for interest rates to exceed 20%, and had a 6 month buffer in the bank as I was lucky enough to pay a sensible multiple of my yearly income for a house. Any one younger than 45 has no idea what a recession is. I am out renting for next 12-24 months. Wait and see….
Andre
:
My reluctance to accept the end of the boom is linked to the fact that like Roger’s recent commentary the frothy share market valuations, that plenty of people have retreated to the property sidelines in the hope of a crash. This will soften any slow down. In addition, the appreciation in rents for the more desirable Sydney suburbs will keep a lot of people interested as investors. I have made comment previously that unless the unemployment rate increases the market will not crash. The Australian population has witnessed massive capital growth over that past 14 years and they are long on property
jimbo james
:
Throw in AMP’s move yesterday to cap LVRs for property investment loans to 50% and it’s tightening in a very rapid manner indeed.