You’ve got to love 60minutes extremist journalism, reporting on the state of Australia’s property market and making claims like:
- “Our entire economy faces catastrophe”
- “The party’s over”
- “This gale could lead us to a recession”
- “A death trap existence with no way out”
- “The most inflated prices on the planet”
Do we have a major problem? In our opinion, yes and no, which is exactly what we’ve been saying to people for a long time now.
We look at it like this: if we were sitting in Western Sydney (which is where their story was focused), we would definitely be worrying. House prices north of $1m with household incomes at average levels, is simply not sustainable – proven by people being in mortgage stress when they have an interest rate under 4%.
Thankfully, most of Australia, including SE Queensland, is not in Western Sydney’s shoes. Most have a healthy household debt to income ratio.
But we can’t hide from the fact that there are risks more generally in our economy, including the property industry. Which is the fundamental reason that interest rates remain at historic lows.
So should we all run and hide, doing nothing, expecting the sky to fall in?
Our opinion is that we shouldn’t batten down the hatches like it’s late 2008. But it’s probably also not prudent to play without a care in the world for that little 4-letter word that everyone forgot in 2007 – “risk”.
Do what is always advisable: assess and understand the risks in everything you do, and make your business and investment decisions off the back of research, analysis and educated opinion.
What’s your opinion?
This is definitely one deserving of a conversation – leave your comments below!
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