Residex's John Edwards argues that property prices are likely to accelerate from here. In the short term he may be right.
Although we haven't yet seen much
growth in mortgage issuance
.... the
kind of
clearance rates we are seeing are consistent with higher credit
growth to come.
His main reason:
China is serious about rebalancing because the costs of inaction are
now higher than the costs of action
-->
Australia's terms of trade to continue to be down for the next few
years
--> At some point both national income and mining
investment are going to drop more precipitousl
--> Rising unemployment and falling standards of
living will pressure rents because more people live together. Now that rates are falling because real risk is
growing, the market is warming up.
There are swings and roundabouts here.
People are paying down debt
faster
--> more credit availability despite capped aggregates
-->
The stock market rally may draw out deposits but it also boosts equity.
But as long as APRA maintains this discipline,
property prices cannot
rise like they used to, nor far above inflation, for any period of time.
(1) Long term goal to live in the property - then who cares, right? As long as your equity is good and you intend
to live in it for a goodly period.
(2) Long term goal to invest for capital growth and yield over the medium term - then I'd be asking myself if you're being appropriately
compensated for risk, especially when you can get the same exposure in
bank shares, with better yield and the same capital growth prospects.
And most importantly, in a liquid form.
For full article : http://news.domain.com.au/domain/real-estate-news/is-australian-property-worth-the-risk-20130308-2fpoy.html
