Montgomery: “Great property sell-off has begun”

Roger Montgomery has penned a great article today on his website, entitled Hold on tight: the great property sell-off has begun, which includes (among other things) a very good explanation of the ‘greater fool’ theory of real estate investment:

Property income yields are at historic lows and yet property buyers couldn’t be more enthusiastic.  Buyers who tell me that they don’t mind buying on a yield of 2.5% because they will get a capital gain need to understand that the capital gain will only come when a buyer is willing to accept an even lower yield.  And yields cannot fall much further when your oversupplied property Is vacant and your yield is zero…  The end of every bubble is marked by the appearance of the the greater fool principle; betting a bigger fool will come along and accept an even worse return.  It’s speculation, pure and simple.

If you are buying a property on an unattractive yield, it is not made more attractive by borrowing.  Record levels of household debt to GDP, and household debt to income, and record levels of credit card debt, mean that when bond interest rates rise – they’ve already started rising – investors will be able to least afford the additional costs thanks to having previously paid and borrowed too much…

Meanwhile, some financial planners have reported to me being cold-called by developers and offered 7% commissions to market properties to their clients.  This on top of the free holidays, free cars and free frequent flyer points being offered as incentives to property buyers. Reports of some apartments being revalued 30% lower than 18 months ago isn’t going to help either…

Financial stress is increasing even though employment looks fine.  Witness the tripling of calls to national debt helplines with much of the increase attributed to mortgagees with multiple investment properties.  Note that at current low interest rates 30% of family income is required to meet mortgage repayments in Australia.  And that’s using pre-tax incomes…

My bankers have told me all of their smartest and most successful property investors have sold up or are getting out, and they cannot lend them a cent – they won’t take it…

Why should Tweed Heads and Bowral prices be 9 or 10 times incomes, when thousands of similarly-sized towns around the world – and the same distance from capital cities – can be purchased at half the multiple?  It doesn’t make sense and it isn’t sustainable.  And neither are low interest rates.  Australia’s debt-fuelled property boom may be handing Australia an unlucky hand.  Hold on tight.

Full article here.


  1. reusachtigeMEMBER

    LOLOLOLOL!!! Ummm… LOLOLOLOL!! Been reading sh1t like this for how many years? Yeah, selling off to ever higher bidders!! That’s just how it goes regardless of the dreamers nightmares.

    • Yep.If you’d sold out of real-estate when these “experts” had started recommending it, you’d have missed out on huge gains.

      • That is location dependant, I sold out in 2013 and put my deposit into US denominated assets. The house prices in Perth haven’t gone very far in the intervening years, but my deposit has.

    • Got to love Reusa if everyne had followed his advice rather than MB for the last 10 years would be significantly better off.

      Crashnics like us get our hopes up everytime even a little bit of news comes up. If it honestly was about yields and lack of greater fools this thing would’ve popped years ago. In the suburbs with actual infrastructure (schools, transport, etc) and low crime it is all about the Chinese money. Until there is an external event impacting China this thing will continue to boom. The aussie buyer is irrelevant except for the ghetto developments they have been cast out to.

      • Give this commenter a cookie. I agree wholeheartedly. Aussie’s can’t afford these prices but good looking China folks can.

      • I told folks to get long property in 2009. We trcked the slow melt until 2012. Leith told everyone to get long Sydney from 2013. It was even published at Fairrfax mutliple times. We’ve been wrong on Melbourne though which we thought would die of oversupply by now.

        We are not perma-bears on property but if some can’t see the immense bubble in front their faces today then they are perma-bulls.

        I’ll add that forgone profits are not losses and if some had done all of the other things we’ve discussed over time they’d be much better off without the risk.

      • The bit that is different this time is that the US FED is starting to drain off global liquidity in raising rates. And on their own forecasts there is another 3 rate rises to come. This is a very small reverse of the waves of liquidity that globally boosted hard asset prices in the last 8 years. So it’s not a bad time to make a brave call on property, especially if foreign investors are moving the market. Key question is whether for Syd/Mel it’s a single digit % moderation or something bigger as observed in the resource states.

      • reusachtigeMEMBER

        Don’t embarrass yourself. Same thing was said 5 years ago… and so on. Meanwhile, in the real world… relations of the property rich!

      • Serious question Reusa – how are you going to reinvent yourself when it finally does go belly up?

        What will the persona be?

      • Serious question Reusa – how are you going to reinvent yourself when it finally does go belly up?

        What will the persona be?

        I imagine he’s giving it the same amount of thought that Mr Hitler gave to the question ‘What kind of occupation will I have if Germany lose the war?’ prior to early April, 1945.

      • Of course he won’t reinvent himself – he’ll just spend the next 10 years picking bottoms ;-P

    • Ronin8317MEMBER

      The Chinese investors don’t care about yield, and capital gain happens even when yield is NEGATIVE!! People who bought in Eastwood and Burwood in Sydney doubled their money in 4 years!! Those developers who have trouble selling their properties are just bad at speaking Mandarin, although these days they should learn to speak Hindi as well.

      • As of January there are no more Chinese. The CPC shut that down with the creation of the largest single agency ever created by the Communist state to deal specifically with money laundering and illegal capital flight.

        They shut down 500 shadow banks and curtailed $260 Billion in foreign real estate speculation in the first 6 months.

        So yeah – basically game over on the Chinese – and is the REASON why the Feds are pushing so hard for new first home buyers into the ponzi scheme – they thought the Chinese tap would run forever – and it just got shut down.

        Panic stations personified.


    • The problem is FHB just want to live too close to capital cities. I could only dream of living as close to Sydney or Brisbane and be commuting from Bowral or the Tweed. I lived two hundred and fifty nautical miles from Sydney at sea on a raft island I made out of paddle pop sticks and snorkeled my way to work and now I have seven investment properties. Talk about entitled.

    • Quite agree, this is the first time I logged in for around 5 years and it’s the same old ” the sky is falling down” doesn’t look like I missed much. I kinda stopped waiting for the crash around the same time Steve Keen fell from grace and did his Kosiosko walk.

    • For those who live in Sydney and Melbourne, nothing else exists outside those two cities. Believe it or not there do exist other states and cities in Australia, and prices are going backwards. In Perth for example 20% of property sales are being sold at a loss. Prices are back to 2009 levels and, in some cases 2006 levels. I imagine South Australia would be similar, Brisbane I’m not sure about.

  2. “Meanwhile, some financial planners have reported to me being cold-called by developers and offered 7% commissions to market properties to their clients.”
    Sounds like the FOFA reforms are working well…

    • Well why don’t you pass the reports on to say…. Oh I don’t know…. Asic maybe!!!

      • Main reason is because real estate is not classed as a financial product and therefore is not captured by FOFA. They are effectively no different to a plumber subcontracting to the developer, and they don’t advise on the sale of the land and so don’t even need a real estate license – this sounds crazy but is actually the model used in practice.

    • I’m a little curious as to why developers are cold-calling NOW. Are their usual clients pulling back and they have to find some new punters in a hurry? Especially when juicy commission is offered? If liquidity dries up, developers with unsold inventory are the first to feel it, kind of like a canary in the coal mine.

      • reusachtigeMEMBER

        Nah, actually, he’s not even as good as a broken clock. He’ll never be right. Australian housing is by far the best investment in the world as it only ever booms with occasional negative sideways movements before next huge extreme mega exceptional boom.

    • Bloody hell.
      What will we talk about if he is? And don’t say ‘the immigration crisis’ as if he is right, we’ll be in recession for the next ten years, and you’ll be able to predict NOM in those years by appending a negative sign to the NOM figures we’ve seen over the previous ten years.

      • We’ll be talking about the war that US trade restrictions start (NB, not saying the restrictions are wrong or that bilateral deals aren’t better for the populace than corporate orientated unilateral ones, just noting how things generally end up in these situations).

        Last depression Australia came in late, hard, deep and closer to WW2 than other Western countries. Then, exporting woolly mammals gave us time. Now, exporting rocks has done the same.

      • Interesting how last week the medicine was ‘stop immigration’ and now it is a completely different excelsior … searching for any solution to this problem?

  3. LabrynthMEMBER

    Mr Montgomery is assuming that rents will stay stagnate. As more people more to the mindset that they will never own a home, they will be more inclined to spend that savings living the instagram life. That means more people will be willing to spend more money on rent.

    Sure you buy at 2.5%, but what happens if rents take it to 3%?

    On a $1,500,000 house that is $37,500 ($721 a week) @ 2.5% which now goes to $45,000 ($865) @ 3%. Assuming interest rates stay where they are if someone is willing to pay 2.5% based on the 3% rent that house has now increased to $1,800,000.

    Assuming population growth and the propensity for more people to willing spend money on rent, a $144 a week increase in rent translates to $300,000 in value of the property.

    Yes rent has been flat for how many years, but structurally I see rents increasing while immigration stays at its current rates.

    • Hard to see why rents which didn’t move much in 2012 with NOM at 241k are going to suddenly take off with NOM at 180k, especially given the greater numbers of dwelling being built currently. Also, there looks to be pretty much no propensity for anyone to pay more for rent, as wages have been competely stagnant for some time now.

    • The Penske FileMEMBER

      Capital markets will end up telling us when and how much people can actually borrow. That’s the missing piece.

    • My house is EASILY worth $2.5 Million in one of the most sought after suburbs – rent =$590

      3 bedroom quarter acre 10 minutes from CBD.

      You’re having a laugh.


    • Crazy thing is that a 20% increase in rents is exactly what would be needed to justify these valuations.
      Yet it’s impossible.

    • Rents are something which cannot rise that is the base of this bubble with lowering wages, if it does quality of living will go in gutter much more than it has already and people will stop coming here. Anyone in property knows its not yield its capital gains and precisely the reason Coalition is planning demand increase by getting FHBs on it. I feel its fucked finally though not sure how long will it get dragged.

      I suggest like VIX we should have a index of negativity about housing articles in MSM, my feeling is that index will be really active now.

    • Rents are definitely on the rise in Melbourne. But rents are counted in inflation (in fact track CPI quite closely) so if they did go nuts RBA would have to tighten.Actually that scenario worth watching right now because according to SQM rents have really jumped in this quarter in the places that count most (Syd/Melb).

    • scootytootyMEMBER

      I’ll move in with the old folks and I’ll bet a shit load of others will too. I’ll just say I want to save up a deposit for an overpriced shitbox and they’ll let me in with open arms thanking the lord that I finally saw sense.

    • He’s been talking it down for years as I recall, not sure if he has as explicitly called a top, but may as well have.

      Doesn’t he sell some share tipping / investor service of some kind? i.e. has a vested interest in people not investing in property?

      • he’s not after mug punters so no actual vested interest then, he’s after the type who have a spare $mill or two sitting in the top draw

      • Not sure if you’re serious travis. Checking his website a number of his funds have min buy in of only $25k.

        But the usual line towed here is that if someone works in real estate / finance, they must be a vested interest looking to pump the shit out of housing at any cost… why would the same factors not apply for someone working in another industry?

    • reusachtigeMEMBER

      “… check out Ireland in 2007” – Oh wow, convincing new news! … #newnews

      • mine-otour in a china shop

        Your tongue in cheek humour wouldn’t be well received by the millions of Irish people who have been paralysed by the effect of the housing boom and debt explosion and the subsequent bank bail out.

        Those who saw their property dreams left in tatters with the 55% reboot in prices, unemployment, families driven apart, repossession, suicide, austerity, business blown apart, paralysing knock on into the services sector,

        You might laugh at the Irish tongue in cheek – but the real fools will be those who repeated the mistakes of others, saying it will be different.

        On that note pour yourself a little Guinness tonight for St. Patricks day and enjoy the good times while they last. Good luck you will need it “As you slide down the property investment bannisters of life – may the splinters always point in the right direction”.

      • I was there for the correction, I’m sure it was horrible for those who over-leveraged. But for me it was great, lots of options for affordable living and less queues to get into bars and pubs, cheap cars and better service (since people wanted to keep their jobs). I think it made people a lot more human too. There was more of a sense of community afterwards and less selfishness.. I thankfully didn’t know anyone who committed suicide, but a colleague at work used to come to work each day looking chewed up and shredded and at the time was in negative equity for around 80-100k euro’s (could have been worse I guess).

      • That is true but Ireland had an economy and Australia does surf and lattes, so not really the same. Looking at the price to rent Shiller Australia looks like Ireland circa 2006.

      • @Jaso – I’m not sure you could say Ireland had an economy. If I recall correctly they had bucket loads of “representative offices”, you know just like the Caymans did but with a few people (less than 10) actually manning the token office. And, they are probably only the western country that had a 100 year diaspora, momentarily interrupted for 2-3 years at the very top of the bubble, which has now resorted back to usual.

      • Ireland had, and still does, a pretty strong (for its size) manufacturing economy, in particular pharma. They copied many of the corporate perks that the Netherlands uses to entice companies to base themselves there. So in that sense they have a robust economy compared to Australia or NZ which are just gated resorts.

      • Seeing will be believing, where seeing means seeing actual price falls, not seeing predictions of price falls.

      • chidagwaMEMBER

        “Seeing will be believing, where seeing means seeing actual price falls, not seeing predictions of price falls”
        Indeed – although by that stage it won’t be of much practical use.

        Plus I’m willing to bet that the blowhards beating their chests for getting it right the last 10 years will be telling us how they called it all along…

  4. boomengineeringMEMBER

    Friend just sold vacant land for $750,000 originally wanted 1m+. Last recession lost out big time when he didn’t listen to his old man friend mentor who told him told small fish taste better. He paid $450,000 for it 3 yrs ago and didn’t want to repeat his last mistake of holding out for a better price weeks before the recession.

    • reusachtigeMEMBER

      He must be spewing only getting apx 50% profit in 3 years after expecting more than 100%. It’s a sign of the collapse if that’s all he achieved! Lower teh rates, that will fix thing!

    • Although yours is an anecdote, but it is very telling. Someone taking a 25% cut on their original price asking very quickly because of not wanting to risk it like once before says mountains.

      I knew a Dr in Adelaide, bought a 550K home three – four years ago. Last year, was telling me how property is the best investment blah blah. Out of the blue he realised his hospital was no renewing his contract and that he had apply elsewhere and move, applied to QLD, got a position in Cairns. Before moving, when they came over to our place for dinner, I asked them if they were selling this house to buy a house in Cairns. His response “…its not worth selling I cannot recover any cost…should not have bought this place in the first place, it was a mistake…”. We discussed his option of putting it up for rent and negative gearing. He was putting it up for rent without negative gearing as he did not want to declare it as “IP” … his own words “IP loans, have to extra % interest, after calculations OO interest + negative gearing works out costlier than OO loan interest..” Interesting times, hopefully with my dry powder, I will take out a good deal in the near future off a greedy specufestor!

      • Most properties have risen in Adelaide over the last 3-4 years (i.e. since around mid 2012), he must have bought pretty poorly if he’s under water IMO.

      • Structuring a loan to purchase a residential property correctly is a great thing. I’m going to go ahead and assume this Dr did no such thing despite the opportunities available to him that us “mere mortals” could not get from a bank.. By this is refer to LMI free 90 and even 95% loans, which he should have coupled w a fee free offset account.

      • You can never predict these things. I had a friend who moved back to Europe in 2011. He had a large flat in Bondi and two houses in Adelaide. I bet you can guess which of the three properties he decided to sell.

      • another decade – only if they tap the superannuation of foreigners … 🙂

        Seems to me that our FHBs are dead before they entered the ring anyway – with the unemployment and underemployment rife… highly doubtful there’s much gold in them hills..

  5. Jake GittesMEMBER

    Domainfax won’t like it. They even had a ‘literary’ angle on property yesterday. FFS.

  6. This

    “Why should Tweed Heads and Bowral prices be 9 or 10 times incomes, when thousands of similarly-sized towns around the world – and the same distance from capital cities – can be purchased at half the multiple? It doesn’t make sense and it isn’t sustainable.”

    I looked at properties from Yamba to Cabarita today on the Northern New South Wales coast. Even 20kms inland prices are in start in the high $700’s and cheap is half a million dollars. It is madness and it does not make any form of sense.

      • Reusa she heed this advice, buy up plenty of Greek Island investment properties. Think of all the fabulous relations he could have with hot Greek girls and men (if that’s his thing!).

    • I wrote about that the other day. Yes, the premium properties are expensive, and are largely bought by seachangers from Sydney, but there are cheap houses too. Comparable to coastal property anywhere else in the western world in my view. In Sydney and Melbourne, there are no cheap houses. I’d love to hear your opinion.

      • Why the emphasis on ‘coastal’ though? I don’t give a stuff about living near the coast and a lot of people the same. EXCEPT for the fact that coastal places in Aus are often nicer because more temperate weather.

        But I’d imagine there’s heaps of places in the US near the coast much cheaper. One I know for sure is Maine, beautiful coastline and way way cheaper. But then also heaps of places inland that are fantastic and also cheap.

        Then if we look at UK, plenty of coastal towns are shitholes (remember an old Smiths lyric about it…) and well cheap.

        So I think the whole ‘coastal’ thing is a peculiarity to Aus and a red herring.

      • Why the emphasis on ‘coastal’ though?

        Maybe because in Australia more than the majority of other places, if you’re not on the coast you’re in the middle of nowhere. Or to word it slightly differently, compared to most other countries, Australia is unusually lacking in inland 1st or 2nd tier cities.

      • That property should be in the $325k price bracket in Coffs.

        There is a very strong defining line in Coffs Harbour with the locals and that property would be considered to be on the “wrong” side of the highway there. Between its distance from the beach, the wrong side of high way and the need for reno’s, you would be paying too much for it.

        This is another option. Upsides – its already renovated, has views, has an extra carport, has a dining room, has multiple out door living spaces and is $20k cheaper.
        Downsides – land is bit smaller.

        I haven’t had a close look at the Coffs Harbour city areas for a while, but prices are definetly stronger than they were a year ago. Quite a lot stronger actually, which is surprising as its a low socio-economic area and with quite a big meth/drug problem, partially caused by fairly high unemployment levels.

        To be honest I’m surpised at how strong it is. I was looking a Wooli NSW today and prices there are well up on a year ago too.

      • @Bubbley

        All good info, thanks. Same as what I was thinking about prices. They are a bit expensive at the lower end (and crazy expensive at the top end) but not insane like Sydney, and in my view are contrary to the Tweed comment by RM (that I think are based on medians dragged way too high by the $2m waterfront properties).

        There’s noting wrong with these lower end properties and compare well with temperate coastal areas around the world. Almost all Australians live on the coast for a reason. It’s great.

      • At one point I was considering Coffs but its just too damn cold and wet. It also gets a lot more rain than many other areas of the NSW coast line.

        If you’re seriously looking to move there make sure you have a high demand job. There is a lot of money at the high end of town but its connected to a very small group of people, mainly in the farming, heavy equipment, aviation and construction industries.

      • @Bubbley

        Thanks Bubbley, I appreciate it. That rain must be because of the huge lift up into Bellingen. There’s a lot of nice towns up the coast, some of them mini cities like Port, Coffs and Ballina. I think they’re going to benefit with mass flight from Sydney that’s just ruined now.

      • Why the emphasis on ‘coastal’?
        Because in Australia
        coastal = have water supply = can grow
        not coastal = no adequate water supply = can’t grow

    • Even StevenMEMBER

      Yes. Two options: either property prices fall, or our currency falls. The only question is timing.

      We are not different.

    • I can attest to that – now that I’ve been forcefully recovered – I’ve been helping a very good friend of mine for a few months while the waters calm down and clear up… I know the neighbours next door, they’ve been trying to sell their place for $750K… about 20 minutes out of Maclean. Nice place (mostly because of the peisage – not the drab brick-veneer) but not 3 quarters of a bloody million! Maclean … bugger me – there’s no high paying jobs within twenty cooees of it. Why would you blow that much money to live in a place like this?!

      Obviously didn’t sell…

      Oh – and the funniest thing – every once in a while – there’s a fool who blows their wad of money on a place around here .. then – they come and of course – they slip into the Metropolite Arsehole costume… Then they realise that their little brains require constant stimulation, which this place does not provide without you putting in the physical effort, so then they become absentee landlords… and various bogans working on the Pacific Highway upgrade rent in that place… Grass is half a meter tall; trees are overgrown; shrubs are trees now… fences are laying flat in the tall grass.

      Oh yeah! [email protected]##^ing-dise – beaotch!

  7. proofreadersMEMBER

    Chinese property owners in Straya and the level of the Aussie dollar may well determine the end of the housing price bubble largely created by the RBA.

    Assuming HnH gets his wish of an Aussie dollar at US$0.50, the Chinese may well head for the exit, as while they probably don’t mind paying a bit of a premium to get their money in to Straya, they may not like facing a 33%+ currency haircut if they see the writing on the wall for Straya.

    • Hard to predict if the Yuan will fall or not with it though? If AUD falls it might encourage others to buy “cheap” in Australia.

      • ErmingtonPlumbingMEMBER

        The majority that come here are playing a long game. Currency fluctuations are irrelevant.
        Their money flows into the Anglo-sphere as a plan A or B, for getting out of a Polluted, Overpopulated Totalitorian Communist ditatorship.
        For most, money is more eaisly made there, but once your fortune is made why would you want to stay and bring your kids up in a Police State.

        Plenty of Chinese culture to be found in the Colonies.

  8. You have quoted a long only equity manager who has no more of an eduated macro view than anyone else. He is quoting anecdotes backed up by no statistics or real work

    No wonder this site is losing credibility

    • You are not even a member, so your appraisal of credibility of this site has no meaning, whatsoever!

      • I am not a member because it is not worth paying for cut and paste rubbish like this – so my assesment is valid

        In case you are not smart enough to work it out – the above is fund manager marketing – do you think the guy is some altruist sharing his view to be a nice guy ?

      • Would you rather read a journalist? Or a politician? Or a political hack on twitter?

      • “just because he is not a member does not make him less intelligent than others.”

        Members get to be more equal than free loaders

        this is your first strike and 11 demerit points

    • Someone who makes a living valuing stocks. And has applied the same method to housing and found it’s a bubble.
      Something which property investors would never do because they are a bit lacking.

      • Absolutely, Sweeper. Objective investment analysis does not belong in the CHURCH OF PROPERTOLOGY!
        The last thing that religion wants is people questioning their dogmas. Their thinking resembles sheep and we all know what happens to sheep in the end.


        Had a quick look around after reading the full and one of Montgomery’s domestic funds is holding ~ 7% in REA and ~25% in cash-thought he might be ‘seeing’ something out on the horizon.
        Course, he ‘had’ me at “Drop a pebble in a pond and the ripples will eventually impact the entire pond and everything in it.”–straight out of the mouth of Kwai Chang Cain (Kung Fu).

        In ‘this’ (property) context, made me recall Master Po’s words: ” The same tongue which laughs also screams.”


        @Ric Thanks! What I figured, too. A ‘taste’ of what could be of increasing volume of sellers. There’s a ‘what I like’ page on RM’s site and makes a good case for this position.

      • also REA and to lesser degree Domainfax, their business model is about volatility so they should make money on the way down and up

    • Jake GittesMEMBER

      Losing credibility. That hurts and undoubtedly the data for that insight is public.

    • What, if any, other sites of a similar nature to MB that in your opinion has the ‘credibility’ that this one is supposedly lacking, do you subscribe to or at least read on a regular basis?

    • Haha another one – this article has sure brought your lot out – BTW, this site will be here long after you are made redundant from Fairfax.

    • except that he has outperformed the market which is the very definition of having a more educated macro view.

      • Yep, and Montgomery also predicted the sell-off in mining services stocks about 6 months before it happened. He has a pretty good record of publicly making predictions and getting them right.

    • Even StevenMEMBER

      “You have quoted a long only equity manager who has no more of an educated macro view than anyone else.”

      Yeah. I mean what would he know? Long only? Pffft. He might as well be a cabbie. If you’re not a relative arbitrage, market neutral trader with a tilt towards managed futures, you’re just not in it.

      I don’t see how he’s qualified to comment on the investment metrics on property. Surely a real estate agent is far better qualified to tell me if the property I’m about to purchase is going to go up in value.

  9. I am categorically not bullish property – but this stuff isn’t even research, it is marketing, there is literally zero in there that is of value to anyone who is even casually interested. It is all known.

    The Twitter question is irrelevant – I wouldn’t read any of it – I am pointing out that if anyone is dumb enouh to pay someone to cut and paste from a fund manager marketing blog for them and then think they are receiving research then there is not much hope for them

    • Where else do you read a perspective on housing which applies valuation techniques (stripping away all the distractions) adopted by professional asset managers? About housing? In Australia?
      I take my hat off to Montgomery.

    • TailorTrashMEMBER

      This site puts out a lot of hard data on many issues and argues the case for a better fairer Australia.
      If you want to access that you need to contribute ….like…PAY.

      The “cut and paste ” is obiter dicta …..and not the basis for any judgement .

    • We are seeing more of this property (but not bullish about property) freeloader crap on MB every day. Looks like the top is in.

    • Even StevenMEMBER

      Fund managers do sometimes have their head well up their arse in my experience. But they’re also a damn sight smarter than nearly any property person I’ve come across.

      Fund managers generally tell the truth (doesn’t mean they’re right of course). Too proud to do otherwise.

  10. Love Roger’s work by calling IT as it IS! Just so fed up of listening to all other financial commentators/economists who can’t seem to see the wood from the trees, like the Switzer’s or Shane Oliver’s on their views on Australian property and blue sky sharemarket views. A bubble is a bubble and when it eventually pops the panic tsunami will arrive at our shoreline for sure. It was always a case of not if but when!

    • agree on switzer, i stopped watching it. its either we are going for a bull run or lets do a cost averaging when BHP shares are falling. Instead of saying yes i was wrong on BHP he is saying lets buy some more. I would expect something more from a professional…
      ASX still did not get to the pre-GFC level.

  11. Oh yeh the crash is nigh…never heard that in the past 10 years. Any other bears close to capitulation..

    • So you’re the one whose going to buy a 2% gross rental yield. Think Montgomery had a name for that.

  12. The headline talks about the selloff having begun, but the article doesn’t discuss this at all? I agree with most of the points in the article, but I haven’t seen evidence of a “great sell off”. And it’s not obviously begun from what I am seeing on the ground (Perth). Even though prices have fallen slightly here, it’s not like the market is awash with properties for sale (eg check out the SQM data).

    • People are holding out on hopes of a recover. Many will capitulate soon if that recovery does not eventuate. I would think buying in Perth is still safer than Syd or Melb. Prices here have been in neutral since 2007. A good time to pick up commercial properties on the cheap too, but i’d only do that if it was required for a business, e.g. workshops, industrial premises etc.

      • I hope it comes fast. I called bubble in 2003 and have held off ever since. Will probably buy this year. Fortunately I’m in a solid position and I can afford it if house prices go pear-shaped just after I buy. I’ll buy for lifestyle reasons and not because I believe it’s a good financial decision… That said, a crash in the next few weeks would be ideal. I think that at current prices in Perth (even with the recent falls / flat decade) the best I can hope for is a long-term break-even against rent. That 2002-2007 period was what really killed it here.

  13. Look at how a quality article which exposes the true achilles heel in the bullish case for housing – namely that the asset is in a bubble, trading way above intrinsic value where current prices are only supported by expectations of greater fools – brings out the little landlords. Who are all in way over their heads both financially and in terms of financial awareness.
    Note: this is where it hurts.

  14. Hmm my town of residence got a particular mention, should I be worried?

    Wave from Bowral.

    • @Fergie…I was at an auction in West Footscray. I shit you not 1.1m…for a house that poor people struggling would’ve lived in when I was a kid. Sunshine is another one…close to 900K for a place the other day. Sunshine! I believe that’s how you know things are at the frothy end…seriously, 1.1 in WEFO ??‍♂️…

  15. That’s why I”m calling it a market for “true believers” only, as only devout propertologists would believe we’re still going up from here. History is full of deflated bubbles and resulting ruined lives as only with the benefit of hindsight the majority will ask; WTF WAS I THINKING?

  16. At the end of the day China needs to find a way to stop capital outflow or unemployment to start to go higher 4-5 months in a row or interest rates to go even higher. If two or all three scenarios play out at same time (I said this few times here), which is a possibility, then god help us.

  17. I think that housing will crash but only when the next world financial hits which may not be that far off with USA hiking rates. Until then the govt will keep throwing everything at it and it will be more of the same. I really doubt our country will glide through the next world crash like last time

  18. I listen to ABC Melbourne a lot. I keep hearing Boomer landlords call in and say “well if XYZ happens landlords are just going to have to put up the rent.”

    Why are they being so kind to not put up the rents now?

    Perhaps we should encourage this greater fool thing otherwise they might start putting up the rents!