Manage episode 286424663 series 1537109
Property values can’t keep rising!
It’s all a Ponzi scheme and is going to come crashing down around us!
The only reason our property markets have survived COVID-19 is because of bank and government support.
That’s some of the commentary you’ll find in the media and over the Internet at present and on the other hand you’ll find many experienced property commentators saying we’re at the beginning of a new property cycle, one where property values will rise considerably.
Who is right?
Can property values keep rising, and can they rise as much as they have over the last three or four decades?
That’s the question Stuart Wemyss and I discuss today as we explain the various factors that created the significant property price growth over the last couple of decades.
However, looking forward many of those growth drivers won’t be the same. So what’s ahead for property values?
That’s what we going to discuss so welcome to today’s show.
Will property values continue to rise?
As we enter the beginning of a new property cycle some people are asking can property prices continue to rise at the same rate at which they have over the last three or four decades?
In fact, some people asking can property values keep going up at all considering how expensive they are today?
I know that’s a question that has been asked of Stuart Wemyss, an independent financial adviser and author because he’s written recently written a blog outlining his thoughts, so I look forward to hearing how he would answer these questions.
Some of the topics Stuart and I discuss
In Stuart’s blog he had a graphic showing what happened to house prices over the last five decades from 1970 to 2020.
Now I know I bought my first investment property in the early 1970s, paying $18,000 and I got $12 a week rent and I was excited.
$18,000 was a lot of money in those days when the family car was a Holden Kingswood and cost $2000; so I guess one of the first things we have to do when looking at house prices is see how they performed after inflation.
- Property has always been expensive. It seemed like a lot of money in the 70s because it was a lot of money in the 70s. You need to take a longer-term view to understand how property prices have occurred. But no, property prices can’t keep growing at the same level.
- Over the last 40 years, there has been population growth along with the rise of 2-income households.
- Some properties won’t increase in value, but others will and some will perform better than others. It’s important to look at real price growth, ignoring inflation.
- The bigger impact population growth has with investment-grade property is overall economic activity.
- Established money areas are liable to do better over the next 2 years or so.
- Borrowing capacity not likely to increase, interest rates not likely to decrease because they’re already low.
- You want a property that will appeal to someone whose income is rising faster than the general population
- People from the work from home movement will want to live where things are, not out in areas where there’s nothing around.
Links and Resources:
Stuart Wemyss’ blog mentioned in this show – Property prices cannot keep rising at the same rate
Stuart’s Book – Rules of the Lending Game
Shownotes plus more here: Property prices can’t keep rising at the same rate they used to; with Stuart Wemyss
Some of our favorite quotes from the show:
“It’s real, after inflation, growth that’s important.” – Michael Yardney
“There are more of us (Australians’s), but we’re also wealthier. We’re earning more.” – Michael Yardney
“As always, demographics is going to be very important moving forward.” – Michael Yardney
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