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I'm more interested to know, Shadow, whether you own property and if you do which cities the properties are in?
Peter is this correct?
Why does the bank count cash at bank as income.?
I thought I was doing the right thing going in applying for a loan with 30-40 thousand sitting around.
Possibly the flaw in both trends is that a low inflationary environment may not trend the same way. Can we compare 1926 to today?
I wouldn't be spooked. If markets dropped by 12% I would be out there buying. I keep a pretty low LVR, cash, and ungeared shares for risk management purposes.
Inflation isn't always a bad thing re investment property, because inflation drives the 'real' value of your MORTGAGE down as well.
Alex
so, do you think we could be in for another 10 years above trend, similar to the 1968 to 1984 period? There is still that 15 years period below trend from 1986 to 2001 to be 'cancelled out'...
Do you not consider that factors like the SUB PRIME problems and the widening GAP between WAGE growth and property price will conspire to puncture the boom before 2009 is out?
You mention 7 or 8 years before a big bust.
I would love to have your iron clad guarantee on this.
Do you consider "a big bust" to be a larger squiggle on the trendline than is current?
No, in fact I think the opposite. The US sub-prime phenomenon will help drive Australian investors away from the stock market, and into the property market!
This move away from shares and towards property as the preferred investment vehicle is just one of the many factors I see driving the next boom.
Even when the liquidity crunch moves interest rates up and decreases available loans? Even Australian mortgage backed securities sales have taken a hit recently. Most people can't buy property if they can't borrow.
Alex
A bit more about this subject has been covered by Foundation over at GHPC:
Thanks for the link FHB, that's turning out to be quite an entertaining thread .
Even when the liquidity crunch moves interest rates up and decreases available loans? Even Australian mortgage backed securities sales have taken a hit recently. Most people can't buy property if they can't borrow.
Alex
Property booms do not necessarily follow a recession, nor do they need to be preceded by one.
And if we have a recession, how likely is a boom in the short term?Alex