Is the Australian Property market a bubble waiting to burst

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Damian George

New Member
Has the australian property bubble burst?

With rising rates and buyers looking for bargins the market looks like it is in for a tough ride in 2011

REAL estate agents have a huge stockpile of unsold properties as potential buyers lose confidence.

Sales are being hit due to rising interest rates and banks tightening their lending to would-be purchasers.




Read more: Rising interest rates add to homes stockpile | News.com.au
 
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EPI_Den

New Member
I don't think the bubble has burst because I'm not so sure there was ever a bubble in the first place. I am aware that there are many sensationalist reports of people such as GMO Capital founder and investment strategist Jeremy Grantham saying that our market is overvalued by in excess of 40%.
I simply don't agree, and here's why:
1. We have a shortage of supply in most, if not all, desirable areas.
2. We expect to have a substantial increase in population.
3. The Reserve Bank has reported that, contrary to what I have heard in many popular (read "sensational") media reports, that a large portion of property debt is held by those who can MOST afford it.
This being said, I do believe that the market is softening at the moment but the underlying foundations are still pretty strong. Stacked up against other investment strategies, I still reckon property looks pretty good!
Cheers,
Den
 
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Damian George

New Member
Hi Den,

Australian Property prices are based on two things at the moment

1) overseas investors
2) commodity prices, driving high share prices and the nations wealth.

What happens when the party is over, China is overheating, the world is growing closer to finacial melt down, new zealand is getting credit downgrades (Australian banks are massively expossed to this market)

Think investing - could be time to take a profit and let the dust settle as the next 2 years could see a 10% fall and bargins over the current overinflated prices
 
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Felipe

New Member
I don't know much of this game, but I know allot about the mining and oil & gas industry.
If you rewind the clock to when property went through the roof (2004-2007) this came on after the wave of the resource boom. I have been heavily involved in this industry for 10 years now and I certainly noticed that when plenty of projects are running, everyone is working, everyone has expendable available cash, property starts to rise.
Simply people are smashing off their loans or buying more or renovating their house, as for the "cashed up bogans' they just buy there plasma's, jetski's and HSV's either way Australia suddenly has a population of people who are high money earners and the price bar is raised accordingly.

There will be another boom, I would say about 2013 to 2016, I wouldn't be holding my breath
for the market to go plummeting down because the follow up is on it's way, I am still buying and I am on the forefront of one of these projects and there are another 3-4 major projects
starting up in the next year or two.
 
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Damian George

New Member
Hi Felipe,

how is the market looking in 2011

As the australian dollar exchange rate continues to rise those overseas must be thinking of better places to buy in
 
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TKline

New Member
I don't think the bubble has burst because I'm not so sure there was ever a bubble in the first place. I am aware that there are many sensationalist reports of people such as GMO Capital founder and investment strategist Jeremy Grantham saying that our market is overvalued by in excess of 40%.
I simply don't agree, and here's why:
1. We have a shortage of supply in most, if not all, desirable areas.
2. We expect to have a substantial increase in population.
3. The Reserve Bank has reported that, contrary to what I have heard in many popular (read "sensational") media reports, that a large portion of property debt is held by those who can MOST afford it.
This being said, I do believe that the market is softening at the moment but the underlying foundations are still pretty strong. Stacked up against other investment strategies, I still reckon property looks pretty good!
Cheers,
Den
he so-called shortage is a myth, an illusion dreamed up by the vested interest spruikers. The reality is there are hundreds of thousands of empty houses in Australia and these are being held empty for speculative purposes. What we're seeing now as interest rates rise is stock on the market is soaring as these empty houses begin to flood onto the market. The USA and Ireland thought they had a shortage too. Look how that turned out!

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Damian George

New Member
I think there may be a shortage now with sadly 30k houses been destroyed
 
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TKline

New Member
In case anyone doesn't believe me about the empty houses, the data is from the Australian Bureau of Statistics from the last census so it is pretty reliable. The chart below shows the empties in Sydney alone.....


Oh, the system wouldn't let me post the chart, something about no links being allowed, sorry.
 
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Wendell Zuchs

New Member
Maybe in some other place of Australia turn down the Real estate business. Let say in Queensland. If you remember the previous disaster there flooding for almost a month. This dilemma really affects the housing bubble here in Australia.
 
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proprateanalyst

New Member
Due to rising rates, they maybe a small pull back. However, long term fundamental point to an upward trend. Unless more houses are built and restrictioons on supply of land is loosened -the long term trend is upward, with pull back in prices.
 
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