Market analysts warn on property rents

ScreenHunter_07 Jul. 17 21.09

By Leith van Onselen

From The AFR comes another story warning that the slowing rental market could soon place pressure on house prices:

A softening residential rental market will drive yields down further and could be the canary in the coal mine of a coming correction in property prices, analysts say.

Latest figures from Fairfax-owned Australian Property Monitors show gross yields fell in Perth and Canberra as rents tumbled. Yields have also fallen in Sydney, Melbourne and Brisbane…

Housing analysts SQM Research and BIS Shrapnel expect rents and rental yields to continue to soften across most markets in 2015 and beyond with vacancies rising amid a rush of new housing flowing onto the market…

Property investment advisor Andrew Crossley said most of his client’s strategies were to “buy and hold” and wait for capital growth – rather than rental income – to generate wealth.

The last sentence nicely encapsulates Australia’s housing specufestors, who tend to chase capital growth rather than worry about income or holding costs.

A quick check of the aggregate data also suggests that it could take a while before deteriorating rental yields weigh on the investment market. As shown in the next chart, rental yields are still well above the 2010 trough, which suggests that prices could rise for a while yet:

ScreenHunter_3859 Aug. 20 14.50

But another year of strong price growth and weak rental growth would obviously change the situation, as would an unlikely rise in mortgage rates.

 

86 Responses to “ “Market analysts warn on property rents”

  1. AusDreamNoMore says:

    Many investors expect the same level of capital growth seen over the past 10+ years lol

    • AngryMan says:

      I think they would be content just to maintain the current level of value. As long as there is no huge correction and they can keep servicing the loan i think people will hold expecting the value to go up, even if they hold for another 10 to 20 years

      • bv2726 says:

        That is what a lot of the folks I have spoken to are planning – not bothered by one or two year up or downs – 20 years holding time.

      • Timon says:

        And if they hold for 10 or 20 years and there has been no real price growth they will still think that they are ahead as inflation never figures in their calculations.

      • AngryMan says:

        I think with the way fractional reserve banking works on lending money its inevitable that housing will cost more in 20 years than now, assuming you keep it that long.

        Honestly i wish i had never heard of Steven Keen or read his stuff. Should have bought at the same time as all my mates back then

      • Jagster says:

        I feel for you mate..

        Even in an environment of low property growth you can still do comparatively well when compared to alternative investments..

        Looking at Capital Gain only in this example…

        Data
        Purchase Price in 2009 was $300000
        Purchase costs @ 4% of price is $12000
        LVR @ 80% is $240000
        Capital Growth over this period is a very modest 3% pa

        Owners Equity Invested
        Deposit 20% x $300000 = $60000
        Purchase costs is $12000
        Total Owners Equity is $72000

        Capital Gain 2009 – 2014
        $300000 x 1.03^5 = $347780
        $347780 – $300000 = $47780 Capital Gain

        Compound Capital Growth Rate on Owners Equity
        ($47780+$72000) = $72000 x (1 + r)^5
        r = 10.7% pa growth on Owners Equity over 5yrs

        This is over triple the inflation rate over the period!!

        And just think, for an IP this would be considered a LOOSER of an investment in the last 5yrs

        Note: Rental Income and Holding Costs have not been considered in this senario… Also Sell Costs and CGT have not been considered if you decided to sell after Year 5.

      • flyingfox says:

        @jagster what happens when you include holding + selling costs?

      • Jagster says:

        FF- Depends on rental income and cash/non-cash expenses ie cashflow positive or cashflow negative after Negative Gearing. Depends on Conveyancing expences and Real Estate marketing and Sale Costs…. As you can see many variables are involved.

      • flyingfox says:

        Well you have given many examples… take this one… what are your holding costs? I think in 2009 your cash position would have been around -3% …

      • Jagster says:

        How you can calculate Holding Costs without more information… It cant be done.

        Anyway, Holding Costs is just one half of the equation… What about Rental income?

        What if the net rental income and tax deductions are greater than holding costs?

        Then the property would be cashflow positive and youd be earning income, like in yesterdays example I showed you.

        Im going to have to start charging you for all this free education Im giving you…

      • flyingfox says:

        assuming that was true, sure….ofcourse you might be able to find a place if you did the legwork…right? In the real world, the cash positions of most properties are negative…in 2009 they would have been worse with IR > 8%

        BTW the 5yr TD in 2009 was between 7-8.5% from memory. Need to check.

        So your 10.5% is not really that much better than unleveraged TD.

        Edit: An example challenged by many others which you haven’t been able to refute.

      • Jagster says:

        FF – Property investing is a long-term proposition. Youve got to think long-term.. Dont compare guesstimated figures for 2009 only. Think out to 2014 or 2019.

        What if the property increases 5-6%pa for a few of those years and 8-9% for a couple others… Crunch those numbers then get back to me.

      • flyingfox says:

        @Jagster

        Thats called speculation not investing. What if property prices don’t increase at. No drops but no increase? What happens then?

        Edit: I am using the figures for the time frame you put up. Not guestimated, retrospective. You’re the one who is guestimating and trying to come across as some kinda genius.

      • paulF says:

        Good arguments on both sides Jagster and FF.
        As you both mentioned,I think it boils down to the actual property and how its performing.
        On the plus side of owning a rental property, even if the property is costing you some money for many years which is the worst case scenario(not breaking even or positively geared), at least you will end up with an asset eventually.

      • flyingfox says:

        @PaulF

        As you both mentioned,I think it boils down to the actual property and how its performing.

        I am talking from the average numbers and from what I have seen. Ofcourse you can get a property then bucks the trend, that hardly makes a universal investment case.

        On the plus side of owning a rental property, even if the property is costing you some money for many years which is the worst case scenario(not breaking even or positively geared), at least you will end up with an asset eventually.

        I don’t understand how that is a plus?

      • Jagster says:

        Well… Thats just the RISK you take.

        Just like when youre prepared to buy a stock that could be worth zero next week or next month.. But you take a calculated risk in the true scence of the word… Before you consider a purchase run numbers through a model, use different what-if senarios…

        What if the property gradually falls 10% over the next 3yrs? Can I withstand that?

        What if the property gradually rises 10% over the next 3yrs?? Is the RISK worth it, worth taking…

      • flyingfox says:

        @Jagster

        Now you’re talking some sense. The risk pricing is built into shares. That is why they return above TD etc, unlike property which CG aside, still does not.

        Have a look at the other post on CG….
        http://www.macrobusiness.com.au/2014/08/capital-growth-wealth-effects-by-state/

        Sydney aside, the market hasn’t really gone anywhere in 5 years….

      • Jagster says:

        Rubbish… Thats an average.

        One would hope all your research would be able to find a property in a certain location that will grow better than average… If average is all youre aiming for, then property investment probably isnt for you.

      • flyingfox says:

        @jagster

        Well then you shouldn’t come across as someone who has the ultimate investment solution! The average is what you will achieve on average.

      • Escobar says:

        FF

        If as you say, the market hasn’t really gone anywhere in the last 5 years (except Sydney)…. why is everyone on this site ropable about house prices? Is everyone commenting actually from Sydney? Also “The risk pricing is built into shares. That is why they return above TD etc, unlike property which CG aside, still does not.”

        Yeah right… the share price doesn’t guarantee any return in the future.

      • flyingfox says:

        @Escobar

        When did I say it did? Shares typically are growth stocks or blue chip. You can have a look at their books and make up your own mind.

        Either they are likely to go up in price or they give you a healthy return (> 5% franked) for the risk you are taking.

        Ofcourse there is speculation in shares, much more than housing. But to an extent the risk is priced in (atleast until the CB printing started).

        Edit: As per house prices, look at the other post and make up your own mind. It is mainly a Sydney and Melbourne thing but everyone is ropable because we have had no deleveraging.

        Secondly, CG is great! But if you are CF negative to begin with, you need to make up for it with even more CG. Hence my comments. If you are making leveraged bets like our friend jagster, it looks great on paper.

      • Jagster says:

        FF – You wouldnt have a clue.

        My IP portfolio has consistantly performed much better than the average over the last 5 years.
        Shows how much you know and how much confidence you have in your own ability to be considered and calculated in your investment decisions…. >9% on CIP Portfolio my ass.

      • flyingfox says:

        @jagster

        That doesn’t mean that anyone can do it and expect the same…on average, the average it right.

        I hope you real position is in the same galaxy as your paper position…

        Edit: So you “portfolio” is one apartment in Melbourne? Docklands?

      • Escobar says:

        Agree Jagster

        If you chose carefully in the past you would have done incredibly well.

        I would not take notice of FF.

        Yesterday he was condescending toward you. Telling you to go away etc.

        Yet he said yesterday that opportunity cost of your deposit meant you actually made a negative cash flow…

        He doesn’t know what cash flow is and tells you to go away.

        It’s one thing to be naive, and it’s another to be both naive and rude.

      • flyingfox says:

        @Escobar

        If you chose carefully in the past you would have done incredibly well.

        I never said otherwise….I should know…

        Yet he said yesterday that opportunity cost of your deposit meant you actually made a negative cash flow…

        Compare your two cf positions as well as returns. You can’t just do one and not the other. Otherwise you can always be CF positive by having enough deposit and then compare you’re leveraged paper returns and say you’ll be in front.

        Simple logic.

      • Jagster says:

        Es – What he doesn’t realise is that there may be 100ppl following this dialogue right now… And the way he writes, he doesnt sound reasoned or considered. He just sounds like a young one-eyed jackass that doesnt know much about property investing or cash flow… A lot of his arguments are foolish. He sounds foolish.

      • Escobar says:

        Jagster

        I was surprised no one else picked him up on his cash flow garbage….

        Hope that doesn’t reflect badly on MB readers.

      • migtronix says:

        Well well Esco has found a buddy from the good old days.

        Wake me up when you see wages grow Jag!

      • flyingfox says:

        @Esco

        I was surprised no one else picked him up on his cash flow garbage….

        oh…let me see…could it possibly be…remotely….no….no way I was right….

      • Escobar says:

        Come on, Mig

        FF was wrong about cash flow and basically called Jagster a fool.

        What an upstart.

        Sometimes you have to call out bad behaviour.

      • Escobar says:

        FF

        You are 100% wrong in deducting opportunity cost to come up with a negative cash flow.

      • flyingfox says:

        @Esco

        happy to rephrase it. The final cash positions between a TD and the apartment (given the numbers are correct) are identical (TD was higher if I’m not mistaken). Therefore you’re only ahead by the GC amount.

        Now in many cases, you are already behind at this stage.

      • migtronix says:

        I don’t have any issues with that Esco that’s the whole point of this place, everyone can call anyone out :)

      • Jagster says:

        FF – That Docklands Apartment would be probably a reseached outcome more to your style of investing… There are also a few apartments on the Gold Coast you could buy with all your CIP Portfolio winnings…

      • flyingfox says:

        @jagster

        Like I said, I don’t believe in speculating …

      • dumpling says:

        flyingfox,

        Speculation pays you big when the odds are in your favour. One way to win is to own a minor stake in a casino or CWN/TAH/TTS. Another is to wait for a fat pitch and pounce on it when it finally comes…..

        As long as you take a probabilistic approach, you would be fine…..

      • flyingfox says:

        @dumpling

        No arguments there. But lets call a cat a cat and a dog a dog. It’s not investing …

      • Jagster says:

        Isnt investing in the stock market more speculation than investing?

        If you really consider it, only investing in blue chip shares with reliable cash flows and earnings could be considered investing… That is along with investing in other safe and reliable instruments such as in bank accounts, TDs and bonds.

        The rest is just speculation hoping that a patient get awarded, a trial is successful, quarterly drill results are positive, takeover speculation to be soon announced, Plain Jane speculation…

        Investing is mainly speculation.

      • paulF says:

        @FF, what I meant in regards to the plus of owning a rental property is that at the end of the day after you pay it off(with the help of rent that should be easier too), it will turn cashflow positive(capital gains aside, if any …)

      • flyingfox says:

        @Jagster

        No arguments there. But like I said, a lot of that gets priced in (or used to). The blue chips return relatively high dividends to attract investors. Microcaps offer the possibility of large cap gains. If you (or your analyst) knows about the area than it is an educated punt. You lose out, too bad. You price in the risk.

        There is something fundamentally wrong if property behaves like microcaps…and you’re not getting and divs in the meantime.

      • Escobar says:

        FF

        Unfortunately we’re not a communist society where we are restricted in the number of houses one can own, so that many more may own at least one house.

        However a house earning 3% yield is still an investment ( a bad one on face value) and how you choose to finance the deal is up to you.

        Don’t assume all investors are negatively geared or are speculators.

        A low yield is usually synonymous with property. It’s worse now due to various factors mentioned many many times on this site.

        If you want property to match stock market returns then you really shield be invested in the share market.

      • migtronix says:

        There is something fundamentally wrong if property behaves like microcaps

        That’s when you have Port Hedland circa 2002/3

        EDIT:Unfortunately we’re not a communist society

        What the hell Esco, that’s a new one for you

      • flyingfox says:

        @paulF

        I understood. But if property is still returning net less than a TD, you need CG to get ahead. No two ways about it.

        Say I had 1M to invest. I could buy a house in Melbourne for example and be around the 4-4.5% mark, gross. Your interest is ~5%. If you are getting depreciation than you might just come out ahead. The only reason this is so popular is leverage. Basically that someday I will pay this off …

        You could invest it a combination portfolio (not just shares) for income and easily beat that. Heck Telstra is returning 5.5% franked.

      • flyingfox says:

        @Esco

        Unfortunately we’re not a communist society where we are restricted in the number of houses one can own, so that many more may own at least one house.

        Never said we were. Not stopping anyone from doing anything. Just don’t proclaim its the best thing since sliced bread.

        However a house earning 3% yield is still an investment ( a bad one on face value) and how you choose to finance the deal is up to you.

        All I wanted to hear!


        Don’t assume all investors are negatively geared or are speculators.

        I know many have done brilliantly well but a lot of them know their boat rose with the tide.


        A low yield is usually synonymous with property. It’s worse now due to various factors mentioned many many times on this site.If you want property to match stock market returns then you really shield be invested in the share market.

        A low yield yes. But a nominal negative yield, no. This is very distortionary. Like i said risk and credit pricing.

      • flyingfox says:

        @mig

        Ahahahahahahahaha! Shouldn’t laugh. I nearly bought into Gladstone!

      • Escobar says:

        Mig.

        I know… its new for me.

        I mean, it’s the reason people get heated.

        Housing should be shelter first and foremost, shouldn’t be an investment… should it?

        Others on this site want to maximise supply to meet any demand (especially from low rates) to quell “speculation” ie. Housing becomes a consumption item.

        I get that. But because it won’t happen any time soon. Housing is apparently fair game. Sanctioned by govt

      • Escobar says:

        FF

        Again. Housing isn’t a negative investment per se.

        It’s the amount of leverage that mates it negative.

        Just like a stock returning very little dividends eg 2%. .. its still positive.

        It’s up to you if you leverage into that stock to a point where your invested funds are negative.

      • flyingfox says:

        @escobar

        You can draw a curve between you two equity positions. All in and 100% borrowed and look at cash returns and CG. Compare this to TD for your deposit or even inflation.

        The case is a bit more grey since the last round of IR cuts but a few years back, the majority of property returns curve was below TD …

        You are nominally ahead. In real terms you are negative.

        Edit: I should clarify, in real terms, compared to risk free returns, you are behind.

      • migtronix says:

        @esco anything should be an investment opportunity but nothing should be a restricted monopoly. Not electromagnetic spectrum and not land development.

        Oh!!! And especially not fiat legal tender ;)

      • Escobar says:

        FF

        For arguments sake. Let’s say a TD over 10 years matched the return on a property (income and CG)

        The property would win after tax due to it being concesionally taxed

      • Jagster says:

        FF – The debt is nominal, therefore return and price should be measured nominally… Come on.

        The return you recieve is dependent on a few variables, most notedly LVR and subsequently interest rate and interest paid on the debt.

        Low yield pluse low LVR and low interest paid = Positivly geared investment

      • dumpling says:

        Escober,

        “Just like a stock returning very little dividends eg 2%. .. its still positive.”

        I assume you are insinuating that low dividend payout is a sign of a bad investment? No, just the opposite. You would want to go for a stock with a low payout ratio, preferably zero. Here is why.

        You want to put your money in a high return business. By this I mean you want to put your money to a business with very high return on equity. Then, you want that business to reinvest its earnings to itself at its high return rate, not to pay cash back to you. Otherwise, what is the point of investing in the first place?

      • flyingfox says:

        @Jasgster

        What is your return when you’re buying cash? No debt…

      • migtronix says:

        Otherwise, what is the point of investing in the first place

        Actually dumpling that’s the point Esco and Jag were making.

      • Jagster says:

        FF – “What is your return when you’re buying cash? No debt…”

        Ahh not as much as if you were leveraged I guess.. But you should have known that… duh.

        Im really starting to have my doubts about you and your claims.

      • dumpling says:

        “Actually dumpling that’s the point Esco and Jag were making”

        Ah! Ok.

      • Escobar says:

        Dumpling

        Totally understand.

        I didn’t want to get into earnings… just used dividends for simplicity because FF used the word dividends.

        I didn’t want to make an issue of FF’s claim that blue chips return high percentages to attract investors.

        Earnings are everything. Whether retained and used or paid as a dividend.

        Companies are driven by earnings growth and priced on a probability of those earnings coming through.

        Dividends are attractive to those that can use them

        Ta

      • flyingfox says:

        @jagster

        Make a spreadsheet. At each LVR from 100 to 0 you have CF, CG and interest for your deposit (TD) less tax if you must. In real terms, you are ahead if CF > TD. Otherwise your CG has to make up for it. Ofcourse our wonderful tax system makes it so that it is best to increase CG and decrease CF.

        Anyways, that’s me for the day. Need my beauty sleep. Some other time.

      • Jagster says:

        FF – Time plus inflation is a debt killer.. Public enemy No1.

        If (for some reason) you decided to hold an IP for 20yrs, the debt will seem minimal in the scheme of things..

        An interest only $300k debt taken today with inflation averaging 5% pa over the next 20yrs will feel like a debt of $113k at expiration…

        You can model your own what-if senarios.

      • migtronix says:

        You can do your own what-if senarios.

        Like, what if the bank gets caught up in a global liquidity squeeze and calls in all the loans, or gets bought out and the new entity calls it all in??

        That’s the difference between people of your and Esco’s generation an mine, you think it happened once in your lives and that’s it, it’ll all go back super inflationary normal.

        Except…. Japan? What if you only get sub 1% inflation? WHAT IF?????

      • flyingfox says:

        @jagster

        That we agree on … A speculative leverage play…definitely…it has already worked out for so many and it will in the future…just call it for what it is…

      • Jagster says:

        Mig – I wrote on this earlier…

        That is the RISK you take.

        If your not prepared to take calculated risks then invest in bank accounts, TDs or bonds. Property investing probably isnt for you.

        Goodluck with that.

      • Jagster says:

        FF – Call it whatever the hell you want. Whats with you guys all up on labels and names… It is what it is. I call it INVESTING. You don’t, I don’t care… All real successful investing involves some degree of speculation anyway.

        My Risk appetite is greater than yours when it comes to property investing… Your risk appetite is definitely greater than mine when it comes to leveraged positions in the stock market or FOREX trading.

        When it comes to investing, your job to do for your family is the best you can with the carefully considered information you have without losing the farm… If you’ve lost the farm, you’ve probably gone too far.

        All INVESTING involves RISK.

      • Escobar says:

        Mig

        I was still in uni in early 90′s.

        I think housing did not drop by very much.

        Perhaps high end did by 10-15%.

        Midrange did not drop as much but definitely did not go up for some time.

        I fully expect it to happen again.

        But expect 10-20% drops.

        But I think we have a little more time, however I used to say “a few more years” so even I’m getting bearish.

        And I’ve said unemployment is the key…. usually with a credit event.

        You say income….

        Anyway here’s a little story from a professionally employed marketing manager who developed houses on the side…

        When she speaks to her colleagues about housing (senior managers) they tell her financial planners have told them to buy a house instead of rent. These colleagues tell her they have no intention of paying back the loans, ever (except if they have to move). I’ll add unless they lose their job.

        Only the unemployed will sell. The rest will do their best to hang on… as they know/ think it will bounce back… with the next round of stimulus.

        Well be Japan…. later on.

    • Jagster says:

      FF – Ill give you the tip of the day..

      DONT SELL!!

      • flyingfox says:

        whats your holding cost?

        Let me give you a tip. It’s not worth whatever the hell you think it is until you sell…

  2. The Patrician says:

    Rent Schment, this is about capital gain.

    Try 49% overpriced against rental return, and still climbing.

    With ZIRP all assets have infinite prices. Fiat money has no value.

  3. AusDreamNoMore says:

    Surely other investments would pay off better over the 10 – 20 year mark.

    • bv2726 says:

      Based on folks I have spoken to there are lot of people who have bought property that would have no idea about their yield, return or anything to do with it, other than “I will hold it for years and it will go up”.

      Many people I have spoken to have not bought a rental property after analysing its return – they have bought it for other reasons (i.e. its quite fashionable to talk about at BBQ and dinner parties).

    • joonix says:

      Other asset classes don’t have banks pestering average schmucks to take their offer of 20:1 leverage

  4. reusachtige says:

    Nah, who cares about, what’s it called… “yield”? Houses only go up in this country and investing in property to sell it for big gains later is the Aussie way and what the cool people do. Again, what’s this “yield”?

  5. Stomper says:

    Those numbers look decidedly dodgy to me – more Frankenumbers from the REIA?

    My sample size of ONE would indicate a much lower gross yield.

    Sold on Saturday for $1.825m +$70k stamp duty

    http://m.realestate.com.au/property-house-nsw-haberfield-117271775

    Two very equivalent properties currently for rent on the same street with an asking price of $850 per week

    http://m.realestate.com.au/property-house-nsw-haberfield-413827147

    And $950 per week

    http://m.realestate.com.au/property-house-nsw-haberfield-413826591

    Gross rental return of between 2.3% to 2.5%

    • dumpling says:

      I prefer to use P/E ratio instead of yield for a few reasons. Anyways, your examples correspond to the P/E ratio of 43.5 and 40, respectively.

      That’s expensive.

      But wait, your figures are gross yield, not NPAT. So,….. the real P/E ratio could be over 100, woooooohooooo!!

  6. Acme says:

    Low rental yields might imply that prices will fall restore yields to an equilibrium (something comparable to yields on other assets, taking into account risk).

    On the other hand, rents might go up to restore yields.

    The standard MB story is that supply of housing is restricted by planning regulations, which has put up house prices, and which means many people can’t afford to buy. Well, they have to live somewhere. If they don’t buy, they’ll rent. Increased demand for rental properties by frozen-out-of-ownership non-buyers implies that rents are going up.

    • AusDreamNoMore says:

      Or move elsewhere…

      The bubble will pop the set time frame has been delayed by lowering interest rates and foreign investment. However eventually it will catch up and pop!

    • The Claw says:

      supply of housing is restricted by planning regulations, which has put up house prices, and which means many people can’t afford to buy. Well, they have to live somewhere. If they don’t buy, they’ll rent. Increased demand for rental properties by frozen-out-of-ownership non-buyers implies that rents are going up.

      Not exactly. The restricted supply would be expected to cause prices and rents to be higher than would otherwise be the case. In a severely restricted market where demand persists (for whatever reason) one would expect to see rents that are unusually high as a percentage of income. This is what we are seeing in Australia’s capital cities. The continued restriction does not imply rents will increase from this point.
      The current high rents are already forcing poorer people to downgrade, to share, to move further out, or move completely away.

    • Schadenfreude says:

      No chance of rents rising much further with unemployment increasing and very little in the way of decent job opportunities…

  7. dystopeon says:

    +1. FF

    not one single savvy investor (we’re talking stocks as property is speculation) holds for 20 years. It doesn’t happen. Only wogs hang onto property more than 20 years anyway (more like 40+) and they buy when blood’s on the street. Skips are on average – silly.

  8. Vata says:

    I hope every reader here takes these articles (and comments) with a grain of salt.

    Its almost as if the title of “analyst” gives a person Nostradamus like abilities, but in reality there are some very ordinary analysts getting about. I know an analyst that scraped his way through Uni and that has made woeful personal investment decisions over the last few years. Yet he still has the nerve to accept payment for his opinion, and remain employed at a respected company. I also personally know a property developer that has pulled in $20+ million by gearing up and building big (600+ units) when macrobusiness and analysts were predicting a catastrophic crash a few years back.

    Basically what I’m trying to say is: If analysts actually knew what they were talking about, then they wouldn’t be stuck in the grind “working” in the first place.

    If you want to be a successful investor- yes, consider opinions, but more importantly, BE the analyst. Look at the data yourself and form your own opinions about the direction of the market.

  9. Tamash1 says:

    I hate property, but Jagster has been right. But he is investing is currently is THE SYSTEM. The system being bank regulations, tax benefits, immigration policy, RBA policy.

    If all of these stay the same, then geared property is a no brainer.

    However if just one on these change to the detriment of property, then the house of cards comes crashing down. Maybe this is when the system is how it is. The ponzi needs supporting otherwise total financial collapse ( eg USA 2008 ) without QE / money printing