Praemium

Property

Property soars to the stratosphere

8 Dec 2021 8 month(s) ago

Nothing, it seems, will stop Australian property prices. The 'pandemic' has pushed them to new heights.

The property bubble continues apace. The ABS has released the latest quarterly capital city “Residential Property Price Index” and following the recent near 7% quarterly jump in prices, the annualised rate over the last 12 months has now exceeded 21%. Here are the percentage changes:

The average price is up $42,000 to $863,700 across the country:

Residential property is approaching $10 trillion, more than three times the superannuation pool:

The massive asset inflation that this represents will only abate when interest rates rise. The Reserve Bank’s use of quantitative easing in theory increases the money supply, although that is a less clear phenomenon. It is perhaps more about retiring debt.

For investors, it suggests that using super to buy property for capital gains is downright perilous. Looking for higher yielding property makes more sense, although that is getting harder.

Of course now is the time for pundits to state the obvious, although just because it is obvious does not mean it is wrong.

Doron Peleg, co-founder of BuyersBuyers, says that an ebullient market is often the time when buyers make the most catastrophic mistakes, and property buyers need to beware stepping on minefields.

“When prices are rising quickly, such as we have seen in 2021, there can be a fear of missing out, and this leads homebuyers and investors to take shortcuts on their due diligence.”

Quite.

 

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