For the property true believers it is always a good time to buy. Booming market: get in now before it is too late. Stagnant market: great opportunity to buy at a discount. Falling market: what a bargain!
Housing, it would seem, is not a place to live nor even an investment. No, it's a religion. Facts are curved, fitted, ignored, dismissed. Faith reigns supreme. All you have to do is believe and house prices will keep on rising.
Like religion, the protagonists are vociferous and dogmatic. Just check out the online comments under any article on housing on a major newspaper website and you'll see how fervently the views are held.
And, to be fair, it has not taken much of a leap of faith to be a believer. Before the GFC, house prices just kept rising, which only fed absolute belief.
If you didn't get in, then you either got left behind or had to leverage even further to the point where you were hocked to the hilt. Then the GFC hit and house prices started to come off the boil a little, until the Rudd government increased the First Home Owners Grant and reignited the market. Which did wonders for vendors, who were able to increase their asking price, and very little for first home buyers.
Of course, getting those first home buyers on to the property ladder is a great thing if house prices just keep going up. But, like any boom in any market, the last entrants are the ones who get burnt. If you used the boost in the FHOG to buy a house in Brisbane then you'd have seen much of any benefit eroded by the decline in house prices (7 per cent for the year according to Australian Property Monitors). Some buyers might even find themselves in negative equity, where the mortgage value is more than the property value.
So where to now? Is this fall in house prices just a temporary setback, or are we seeing the bursting of a housing bubble that will result in a decade of sliding prices? Well, in short, believe what you want to believe. There's enough evidence out there to support whatever view you care for.
According to contrarian economist Professor Steve Keen, it was accelerating debt that drove house prices up and it is decelerating debt that is causing the fall.
Keen has argued the significance of private debt in the economy - something which mainstream economists largely ignore. In a recent post on his blog, debtdeflation.com, Keen reveals the debt to disposable income ratio for Australian households has been rising until recently. Now Australians are saving and paying off debt rather than spending and this has a negative impact on house prices.
The end result, Keen argues, is that house prices will fall 40 per cent over the next 10 or so years, or 5 per cent to 10 per cent for 2012.
All sounds a bit morbid? Don't worry, you only have to look at the recent offering from financial economist Chris Joye in Property Observer and you'll find a neat set of graphs and analysis arguing the exact opposite.
"Australian households actually have more income left over after purchasing the dwelling of their dreams and meeting their principal and interest repayments than any of their predecessors since our analysis begins in June 1985," Joye says.
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