Another weekend flashing pass with more BBQs and dining out with friends. More conversation about everything and anything, however I'll make particular mention about the property speculation that some friends were discussing.
Friends who have bought property have nothing negative to say about property- only loads of positive comments and experience. One friend who bought her town house for $465k (ish) said that she was so glad that she bought because merely two years later, she would have been priced out of her suburb with town houses in the very same block recently sold at $600k (ish). She'd have to save $135k in two years if she had decided to delay her purchase.
Friends who have not bought any property are saying that they believe property is overpriced and that they'll wait for it to go down before buying.
Since a house purchase is on the cards for the forthcoming 2012 year, I can't deny that those speculations have plagued my mind somewhat. I can't tell what the future holds and judging by the disastrous financial performance by plenty of traders, fund managers and economic forecasters - neither can they.
But you know - the waiting game has never really paid back. The action and execute methodology works significantly better. Property prices were appreciating around 2003 in Sydney and I was bummed that I missed that boom. I thought, well it's stable again and not going anywhere with the glut of rental properties(particularly city apartments) around. A two bedroom, one bathroom and one carpark apartment in Sydney city were selling for $360k in 2007. Around 2008 it reached another few years of price increases. Fortunately I had my finger in the pie by that stage.
2011 - that same two bedroom, one bathroom and one carpart apartment in Sydney city are selling for $600k. $240k price appreciation in four years.
During recessions and bust cycles - at the most, the prices have stabilised, dipped a few thousands and in a few short years later, continued their strataspheric climb.
Unless unemployment and redundancies make the rounds down under in Sydney, I can't see house prices crashing 30 to 40%. Not when I know that so many of our friends have so much money. All around me, I see friends spending lavishly, dining out frequently and heading overseas for month long trips. As long as people are employed, house prices will be rather stable - that's my chrystal ball. It's only overpriced or crashing if people can't afford to buy property and the glut builds up. But Sydneysiders are on relatively huge incomes compared to other countries and until a significant number of working professionals are made redundant, I don't see the impetus for a property price crash.
Check back with me in 5 years time to see what has happened with the property market. Will it be up or down or going sideways? Who knows?