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Old 21-12-2017, 03:29
FXBtrading FXBtrading is offline
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Safe as houses? Not if you live in Australia

According to Jonathan Tepper, one of the world’s experts in housing bubbles, Australia is experiencing the biggest property bubble in history. It has lasted 55 years and seen prices increase 6556% since 1961. “It is the only country we know of where middle-class houses are auctioned like paintings,” he observed recently.

When it crashes it’s likely to bring Australia’s economy crashing down with it, as it’s the only sector which has driven GDP growth of late. It’s one of those rare opportunities traders relish because the volatility in the market will be big and significantly increases the chance of being able to make a huge gain from an investment.

You can thank State and Federal governments for this opportunity. They have done everything they can to fuel the housing market in an effort to boost Australia’s economy and offset the decline in the value and volume of its chief exports iron ore and coal. The growth of the economy has provided governments with a source of tax revenue and proof to voters that their policies result in economic success.

The Australian media has also been complicit in the perpetuation of the property bubble. Objective reporting on property has disappeared because the Murdoch and Fairfax duopoly, which controls media output in the country, have been protecting their only major growth profit centres and Domain the country’s two largest real estate portals.

Headlines celebrating a 26-year-old train driver who services the debt on five million dollars worth of property with his salary and rental income have become commonplace, with hordes of others being similarly celebrated for their achievements.

The formula for success which has enabled individuals on modest incomes to gain ownership of seven figure property portfolios comes through the black magic of cross-collateralised residential mortgages, where Australian banks allow the unrealised capital gain of one property to secure financing to purchase another property.

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