Only a few months ago I was reading an article from a real estate institute over a bowl of muesli. About half way through this article I could not believe the dribble that was being fed. “All of the signs point to a new housing bubble and prices were set to rise. After spitting out half of a mouthful, I realised that what we all need now is a good look at the figures, just to see what could have possibly have supported this notion.
In fact there was nothing to support these comments, it was just another way this person thought they would be helping agents out. I have said for a long time now that agents do not need a new housing boom because the bust would make the years following it so dark that we would see massive office closures across the country.
There has been nothing from any of the major political parties leading up to the election that will help agents or consumers. The problem with housing, is that too many people have too much of an interest in prices rising. Governments – local, state and federal, banks and to a lesser extent agents.
Today I was alerted to an article written on July the 9th from the U.S. and I can tell you that much of what this contains rings true for Australia and New Zealand.
“Today’s home prices can best be described as a recession in the making, but are most often referred to as a bubble. Prices have grown so much in the last decade that they are now completely disconnected from the fundamentals that have historically ruled the real estate market. Today’s prices are not sustainable and the graphs and analysis below demonstrate why.”
I think this makes fascinating reading and I think you should take the opportunity to read it. Not all is relevant but one thing that is – is the growing disconnect between home prices and average incomes.
This is why I think massive changes need to be made in the way we deal with property prices and investment!