When I talk to many potential or current property investors we often discuss the impending housing bubble Australia is about to have. Some time ago in 2009 I had a discussion with a client about an impending housing bubble and I also recall all the way back in 2004 my old neighbour Peter saying stay away from property, there will be a housing bubble.
I’m still waiting for that housing bubble. Like a boxer waiting for his foe, signalling with my palm, come at me bro :), ok maybe not.
The point I am getting at however is that people use these bad news stories to deter them from their goal, a goal which is to improve themselves and better their future. Have you ever wanted to do something but been told don’t do it, that is stupid and therefore stopped?
Well these bad news stories are just scare tactics certain media and ‘experts’ are creating for you. If you let it, these scare tactics could stop you from achieving your goal of financial independence.
I understand the common argument; it happened in the U.S.A so it can happen here in Australia. I also understand the fact the cost per house has risen from 4 times annual income to almost 10 times, but if it’s that fragile why hasn’t it happened already?
It hasn’t happened already because we have different income streams generating housing demands, there are also other sources of revenue to maintain property prices such as access to self managed superannuation buying property and overseas investors. More families are also looking at buying as a unit, coupled with a very strong and regulated financial sector.
When you couple the above with our increasing population growth driven by births and immigration, this will continue to place upward pressure on prices.
So what happened to my neighbour Peter who was trying to time the market waiting for the housing bubble in 2004? The house purchased in 2004 in an Adelaide suburb for $240,000, is now worth $420,000. He has missed out on nearly $200,000 in capital growth and his purchase price to enter the market is now more expensive.
If you have a goal, go for it, don’t wait for unknown’s, just do you research, if you buy in strong suburbs and in strong area’s with great house designs that are popular over the long term you will win, if not maybe it’s your bubble that your afraid will be burst not the property markets.