2.
Same is true, by and large, of those people who buy multiple properties as an investment. Investors in property typically buy with a medium to long term time horizon in mind, seeking a passive source of income in the form of a rent, and a stable return on their investment, which will come from a combination of rental collected and possible “capital gains” over time. By contrast, Sayce’s simple minded worldview would have you belive that property investors buy because they expect the value of their purchases to double every 7 – 10 years. As far as I am concerned, Sayce is nothing but clueless about property ownership psychology.

3.
Home owners and property investors by and large do not have the irrational belief attributed to them by Sayce, that the value of their properties will double every 7 – 10 years. What they do believe, in my view, is that over time, as inflation keeps eroding the purchasing power of paper money (whether kept in their pockets, under the mattrasse, or in the bank), property prices will more or less keep pace with inflation, and thus protect their savings and investments against the slow but sure erosion caused by the government and the banksters stated policy and practice.

4.
Home buyers and proberty investors, by and large, do not have the irrational belief attributed to them by Sayce, that property prices in Australia are immune to a crash. The history of prices drops and price rises in this country all but precludes such a misguided belief to be widespread among the population in general, and as Peter Fraser made the point in an earlier comment, it is unbelievable to suppose that investors in any asset class should be oblivious to the dangers and risks involved in their investments.

5. Home owners and property investors in general are unlikely to dump their homes and property investments in a panic, at the first sign of trouble, like investors in shares, for example, are prone to do. They do get concerned and worried, of course, at the prospect of significantly higher interest ratess that would make it imposssible for them to service their loans, but it is not likely that they will dump their properties en masse just because of falling prices, as Sayce appears to suppose. They might be under water and upside down with their investments, but as long as they can service their loans, they are likely to hang on and see the slump through. In other words, a property owners do not, as a practice, put a stop loss order in with their purchase. Property ownership and investment is unlike share investment in this regard, and Sayce’s claim that property is currently the highest risk investment in this country is not only absurd, but indicates his lack of grasp of the different risk characteristics of different investment classes.

To be continued ……..

It serves us all well to listen to all voices of reason so that each of us can determine the best course of action to follow for our situation.

In Steven Keens latest post he finished by saying that 2010 will be an interesting year in property, you could also add equities to that.

Whatever happens it is the best show on in town.

I have been a massive fan of MM and the whole DR crew, but sometimes I feel as if the property bears and bulls argue past each other, rather than direcly confronting the other’s rationale for their belief.

I think the strongest way in which you can make your argument regarding the inevitable crash in the Australian property market is to directly deal with each of the arguments put forward by those who believe house prices wont crash in Oz.

You did this with the supply issue, but if you wanted to really show
Joye who has the stronger argument, you should:
- Go through and identify ALL the arguments put forward by the bulls (by Joye in particular – he seems the most convincing, and confident!, out of the bulls I have come across)
- Discuss and acknowldge where their (Joye’s) arguments may have some merit (this is something that happens all too rarely)
- Then outline your reasons why, despite the valid points they may or may not make, you are still confident in your predictions of a housing crash.

Once we reach this level of debate, then you could really start convincing the masses of why they are ignorant of what lies ahead.

Keep up the good work mate!

I’d like to see that list. Why wait for an invitation, just post it.
When you run the flag up, someone is sure to salute.