Are we in the midst of a property bubble?
Debate rages on about what’s going to happen next with property prices across Australia’s various property markets – particularly in relation to those which have experienced rapid recent growth.
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Commentators, economists, doomsayers and armchair experts alike all have opinions about whether the recent price growth experienced in some suburbs across Sydney and Melbourne is sustainable, and indeed if it constitutes a ‘property bubble’.
But what about the people actually out there buying property? What do real-life investors think of all this chatter, and is it changing their plans to purchase?
We spoke to two very different investors to get their opinions on whether a property bubble is forming and why everyone’s still talking about it.
Sze Chuah is a 35-year-old investor with 21 properties who works in the finance industry.
Julian Lancey, a teacher and recent first-time father, has six properties.
Here’s what they had to say.
Smart Property Investment: There’s been a lot of commentary lately the ‘property bubble’. What do you think about this? Do you believe Australia, or any markets across the country are at risk of ‘bursting’?
Sze: I’m pretty sure I’ve heard that term used every year for the last 20 years.
So I personally don’t believe in it and I think there are some areas and some markets that are potentially a little bit over priced or there’s a lot of activity happening – but ‘bubble’ implies that there’s a substantial overpricing by 30 to 40 per cent and there is going to be some sort of correction to that kind of effect and I can’t see that given the fundamentals of the property market in Australia.
So, I personally don’t think so.
I’m pretty sure I’ve heard the term 'property bubble' used every year for the last 20 years.
Julian: I think it’s total crap. People keep trying to compare the Australian market to the pre-GFC American market and they’re just talking about two completely different things. The signs just aren’t there.
This is already evidence of the market cooling off. A property burst is everything disappearing – not slowly going down and following the property lifecycle. That’s what’s happening here.
I just think the property bubble is all bullsh*t.
There’s no better investment than property. You look at the other options and they just don’t compete. They talk about interest rates going up, sometime next year or a year away or two years away, but at the same line they talk about prices continuing to go up. So there is still no better investment than buying property.
