THINKING OUT LOUD

Life on the real estate edge

We have ventured in so deep into Australia’s wellness being built on residential property ownership that we can’t logically understand asset valuation, mean reversion nor economic cycles.

Reserve Bank (RBA) discussions are increasingly biased towards the pressures borrowers will face should they raise interest rates.

Then government critique banks who fail to adjust their rates in step whenever the RBA’s eases and compliment this with media commentary, lifestyle programs and a colloquial belief that “you can’t go wrong with property”;

Australians actually think that buying real estate is a risk-free investment proposition.

Unlike the Great American Dream which strives for a better, richer and fuller life for everyone with opportunities for achievement, the Great Aussie Dream is to “own” a home.

Although, the majority don’t own their real estate, instead they have borrowed money to acquire it. Actually, the bank owns the property until the debt is discharged. This may sound obvious and somewhat condescending, though the truth is either forgotten or not acknowledged. Real estate debt amongst individuals & their family households is omnipresent which then lends to a long period of servitude.

I’m not a caller of doom but it’s time to wake-up to reality.

 

https://www.afr.com/real-estate/sydney-and-melbourne-house-price-fall-sharpest-in-five-downturns-since-1965-20190318-h1ci6p