As you might be aware, best selling author Harry Dent has been travelling the country promoting his new book. I know I've asked some of you to share your opinions through email, but I'm curious what the rest of you are thinking. The Sydney Morning Herald ran this article late last week, "Nightmare vision of impending property crash", and they included a video interview with Dent. Remember, it's important to have an opinion. What's yours?
http://www.smh.com.au/money/investing/nightmare-vision-of-impending--pro...
Are we the lucky country? Surely our houses prices are high, but we have relatively low unemployment. Wages are high and that makes us vunerable as our economy is based on resources. There is a limit to housing afordablility and I think we have reached it. It's the forgein investment that is raising prices, not our economy. Becoming better educated in risk assestment and management is what I am looking at, so for the moment I'm holding off.
As far as I can remember, he said this years ago as well. Keep saying it, eventually you'll be right when it happens?
Real esatate in some places is over-priced. Sydney as an example. But while people can afford it, and lots of people are buying at the moment, it's not a problem. There was an auction for a house in Eastwood that went $1M over the reserve. There's now 197 suburbs with a median of $1M+ in Sydney. Crazy.
Unemployment has risen to 6%, it's highest level since 2003. Inflation is up. The current government is going to have to make some cuts to pay off the massive debt that we've been left with from the previous governments. Will interest rates rise eventually? Yes. Will it affect me personally? Probably. Will I be able to afford it? Probably.
Harry has some scary predictions, that's for sure. My question would be.... if property prices were to fall as dramatically as he predicts, would interest rates not drop (as they did in USA GFC) in an effort to help the housing industry? While a price drop would be a disaster for investors looking for capital growth or for equity needed for future investing, any IPs already owned with borrowed funds would increase to cashflow +ve with lower interest rates which would be great for investors looking for passive income.