“I don’t think the Australian market is going to crash. It will of course follow market cycles and will go through corrections of 5 to 10 per cent as it is experiencing at present …
The Australian and US markets differ greatly from a tax and financing point of view but when we dig a bit further we find there are also significant demographic differences.
While culturally the two countries have many similarities, their societies live quite differently. In Australia, more than 70 per cent of the population live in the 10 biggest cities. This ensures a very centralised market where the bulk of the population competes for scarce land close to major infrastructure.
This competition for a finite commodity puts pressure on the value of land and results in a more robust property market.”
– by Mark Armstrong writing in The Age – Bold investors buy in a softer market
So everything’s going to be fine.
Of course, it’s possible that the writer is biased. Mark Armstrong is an independent property analyst and adviser and director of Armstrong Property Planning. They design property investment strategies, and so would seem to have an interest in a stable property market. That doesn’t mean we should dismiss his advice out of hand – after all, everyone has a bias of some kind. Mr Armstrong could be right, or he could be looking at the property world through rose coloured glasses.
What do you think? Do you fear a crash in the Australian property market as we’ve seen happen overseas, or are we only going to see a mild “correction”?
The property market is in its death throws and things are looking very bad. The irresponsible GFC stimulus simply kicked the can down the road and now the crash will be twice as bad. I expect to see prices down 30-40% within a couple of years. Auction results across Sydney and Melbourne have collapsed and stock is building up on the market at a rapid rate. Unless vendors drop prices to meet the market, their homes won’t sell. Simple as that. For the real estate speculators, the party is well and truly over. Stanley.
Stanley – I agree that the property market is not what it used to be, but I can’t see prices in Brisbane falling 30 to 40 per cent. That would take the median price in Brisbane back down to $250,000 to $300,000, which is what we were seeing here between 2003 and 2004. Vendors are dropping their price (on average it’s about 7 to 8 per cent off their asking price), and at the moment buyers are happy to meet them there. It would require something pretty serious, such as a sudden rise in unemployment, to really drag prices down that far.
Of course, I could be wrong. 🙂
I agree with Mark – I don’t think that the property market will crash. Certainly prices have fallen in some instances 5-10%, however, I believe that the period that we are going through at present will be short-lived. Investors have to put their money into something. Australia is in a fantastic and unique position at present – the mining boom has only just began and once the proceeds of it start to filter through to the rest of economy prices will then start going up relatively quickly. Australia’s population still has a fair way to go and as long as it keeps increasing that will of course feed into higher asset values over time. In these uncertain and unpredictable times choosing the right asset and securing it at the right price has never been so important. At Zen Property Consulting we have a proven and tested Property Rating System that measures a property’s investment potential by providing a score at the end. It takes all of the guess work out when we evaluate the property and this unique system provides our Clients with total confidence when making a purchasing decision and maximum peace of mind. All of the individual characteristics that we assess in the rating system are weighted according to importance. If anyone wants to find out more about how our rating system can help you let me know?
Zac – Thanks for your comment. First up, I’m not as bullish as you when it comes to the impact the “mining boom 2.0” will have on property prices. I think the positives flowing from mining will be less widespread than they were in the first boom.
Secondly, I agree that the property market won’t crash, but it won’t rise for a while yet either. I think investors will be hesitant about investing in property for a little while … at least until they see things start to move up a little.
Thirdly, go easy on the self promotion. A very brief comment about what you do is fine … a sales pitch goes a bit far 🙂
Thanks for the tip Darryl, I have only just commenced business for myself and of course am quite enthusiastic and excited about our new system which I reckon will provide enormous peace of mind and added confidence for any investor out there looking at purchasing at present. Additionally, I certainly agree with your comment that once things get on track again it will take some time before prices start to increase at the same levels previously.
Taking into account with what’s happened in recent days with the stock market and world events this uncertainty that we are now experiencing with the Melbourne Property is reminiscent to that of 2001. Therefore, now is an ideal time for investors to grab a bargain…
I think the market is in for a solid shakeup. The world economy is very shacky at the present time and will get worse and worse. The Australian housing market has been well supported by the big banks, Reserve Bank and the Australian Government in the past. I feel they will not be able to keep prices stable in the near future. When prices start sliding (eg. as we are seeing) the negative gearers will be shaking in their socks as they see their whole capital gain plan evaporates. Investors are like sheep, they like to flock. When the market is good, its GREAT! but when its bad, its very bad. This time is the latter and not many people see it coming. All we have to do is look at Ireland. They were in the exact same booming housing market as we were 2 years ago. Nothing could go wrong. Now their houses are worth 1/3 of what they were a few years back. Yes, we dont have the debt like they do but our economy is tied to China far to much. When we cant sell our resources (Along with many other things) their is a ripple on effect which will throw the Australia housing market off the mountain through fear. Some of the best economists and property advisors have indicated that the Australian market is way over priced, yet we just dont see it. Bargins will be had in 5 years time.
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