Lots of crying on a hot day? [:p]Quote:
quote:Originally posted by aspex
c. A misture.
I'm certainly not a property bull but I don't see terra firma apocalypse in the offing. There are no obvious triggers for the kind of income expansion that working women have created. Gareth Morgan has it right that the 2nd income hasn't been that beneficial - most of it has flowed through to mortgage payments. Pay Parity (between sexes) offers the prospect of somewhat rising incomes but with any sort of birth rate parity is not really practical - a proportion of partners will leave one parent at home at least part of the time - this impacts career prospects and earnings.
In practical terms we are probably close to full employment. There is a base of unproductive labour that will always be too stupid, lazy, undereducated or even physically / mentally handicapped to provide the same sort of benefits to the economy and the household that most of us take for granted. Even if unemployment drops from 4 to 2%, the incremental impact is little compared to the original drop from 10% and the benefits likely mixed given many of them will be the least productive labour available.
This tells me there needs to be a seriously different trigger* to the ones we have had to maintain real property growth. With Baby Boomers retiring and dying, we'll be competing hard with other countries just to maintain status quo. Immigration may achieve this but it will require a very different local mindset to double the number of immigrants each year even as locals (dare I say "pale skinned"?) are diminishing.
In short, no property implosion, just a reordering of "hot" versus "has been" and perhaps even extended periods of no or even negative real growth (but still managing nominal growth in dollar terms) without lots of new arrivals in one form or another.
Given even recent property performance is anemic compared to an actively managed equity portfolio, I see little need to switch from equities to real estate. While I fully expect equities to underperform current norms in the future, my expectation is that performance over longer time periods will remains at relative parity- i.e. both will be relatively subdued. I have an equity portfolio (Should call it a cash portfolio at the moment) worth many times the average house. When I double the value of that portfolio (as I have several times over the last few years without any debt), on a purely financial analysis opportunity cost of even 20% housing gains become apparent.
* I am interested in the "seriously different triggers" though! If such a thing exists in a positive form ...Robotics & AI? Transport improvements? whatever other productivity tools? ...there will be much more money to be made in those than in real estate.