I caught up with property expert Edwin Almeida and we discussed the pressure on property investors and their property portfolios. Is the property investment party over?
Given the falling values, the dilapidation of much of the stock, and falling demand, it may just be the case. At very least, Edwin suggests holding off as prices will fall further! Then the question becomes, how far and how fast?
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– Mr. Almeida’s views once more confirm that there is no “(one) property market” and that each property is a market on its own.
– Mr. Almeida talked about the impact of deregulation. It only confirms my personal belief that we need MORE regulation. See e.g. what happened in the US with the housing market. There was enough regulation but it wasn’t enforced.
– For at least one part of the australian property market I can provide a prediction of where property prices will be going. Chris Bates told in your first video interview with him that when a mortgage loan resets from interest only to Principal and Interest, debt servicing costs go up by some 60%. Assuming that debt servicing costs for a mortgage holder remain flat then I, using some not too complicated math, draw the conclusion that when debt servicing costs go up by 60%, then property prices must come down by some 40%.