Boom-and-Bust Theory for Australian Real Estate: Do Economists Agree?

Owners of investment properties in Perth, as well as property managers in Perth have been pounded lately with negative predictions about the economy and housing market by mainstream economists. But are those economists really right? Are prices going to rise and then fall by the end of 2014?

Perth, Australia

Nobody can say for sure, but many economists are firing back at those who predict boom and doom for Perth and WA real estate.

Most mainstream economists believe that property prices are going to stagnate from now until the end of 2014, due to less demand in China for Australian resources.

Also, the trend of numerous Chinese citizens emigrating to Australia is projected to slow down. Investment bank Citi reports that Canada, New Zealand, US, and UK are now seen by middle-class Chinese as the best places to move to.

The Citi report is more conservative (and optimistic) than previous predictions: It projects that real estate won’t bust, but will stagnate between now and December, 2014.

The recent decline of the Australian dollar is causing many to predict that interest rate cuts won’t be as fast as they have been, but rates aren’t projected to go back up until at least the end of 2014.

What does all of this mean to you?

We agree with the general tone of this article, but we see a rosier outlook for the housing market. We believe that the economy really needs a strong housing market to succeed, and we think that the RBA will step in and continue to cut rates if that’s what it takes to keep the housing market growing.

There is a possibility of a major slowdown if the housing market doesn’t continue its recent performance.

Long-term investments are the best strategy

We found a great report listing median housing prices in Capital Cities from 1970-2003.

The median price of a house in Perth was $17,500 in 1970. Fifteen years later, in 1985, it was $52,050; in 1990, it was $101,125; in 1983, the meidan price was $49,000, rising to $141,000 in 1998 and $205,000 in 2003.

In other words, those who bought houses and kept them 20 years reaped ROI’s from 400% to 600%. Call 1300 472 427 today for more information.

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