The next big financial crisis to cause havoc with the Australian Economy could be sparked by a Domestic Housing Crisis. The Australian Property Market has been unfaltering since the early 1980's increasing by more than 250% and all growth with no pitfalls is unsustainable in any market. The normal market principles here are flawed because property ownership demands huge prices, which limits new buyers from entering the market, which will inevitably result in an oversupply, unless there is a serious price correction.
Please refer to the graph below to see what happened to the property market in the US, it is reasonably foreseeable that a similar market correction might occur in Australia.
Australia's Property Market is geared to fail because the current demand, is sustained by debt and the willingness of purchasers to borrow more and more debt to pay for property. This market does not correspond with increased returns on rent or even substantially increased incomes, this market has been stimulated by fear tactics, misrepresentations and deceptions represented by real estate Agents to venders and purchasers. The only reason that this market misrepresentation is tolerated to the detriment of consumers, is because Australia's State Governments earn far too much of their revenue from Capital Gains Tax to risk any price correction to the property market.
No comments:
Post a Comment