Australian Property Bubble
The writing may well be on the wall for the Australian property investment economy, and it seems that no one is paying attention.
Steve Keen, Professor of Economics of Kingston University, believes that the country is living in a property bubble not far removed from the one that caused the 2008 recession. The concern is the credit that homeowners are taking on, which they might not be able to pay back. A similar bubble resulted in the subprime mortgage crisis in the US that led directly to one of the most devastating economic crises in modern history.
China and Australia were able to mitigate the impacts of the recession by absorbing debt. The Economist noted that in 2016, China’s debt to GDP ratio soared from 150% to 260% over the last ten years, which, per the magazine, usually leads to a crash or a sudden slowing of growth.
Right now, with Australian personal debt pegged at some 200% of GDP, combined with low interest rates, Professor Keen has described this as a “zombie economy,” at risk for falling to a recession or crash in the very near future.
Property Investment Advice To Australians
Various experts have weighed in on the situation, some advising Australians to reduce spending, save up, and pay debt. Others remind Australians not to let debt exceed the growth of one’s income – seemingly obvious, but difficult in a time when salary growth is sedentary.
It’s not all bad, though. The International Monetary Fund indicates that global growth may hit just under 4% given corporate tax cuts in the United States.
Meanwhile, China, the subject of much fear about economic growth and risk, is still growing steadily. Chinese citizens maintain lots of savings and little debt, and banks generally have few loans that aren’t being paid.
Sydney Off-Market Property Investing
As concerns about the housing and real estate market become more widespread, off-market property investing has become a more popular option for plenty of prospective owners. Such private sales feature less competition with other buyers, putting more bargaining power in the hands of the investor. These used to be fairly rare in the past, reserved for exceptional circumstances or very rich buyers of very expensive and exclusive properties. Today, though, they are becoming an appealing choice, and offer an alternative to the traditional housing market ridden with uncertainty.