VIDEO – Is there really such a thing as a property bubble?

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Have we ever had a housing bubble? To answer that we need to define what a ‘bubble’ is. Financial experts talk about a ‘housing bubble’ but to keep it in perspective – I’ve got tell you that if we’ve got a ‘bubble’ were to pop million dollar houses would then be selling for $200,000 – that is a bubble.
In that context…has there been a bubble in Australia? No!   Bubbles lose about 80% of value when they burst. A “housing bubble” has such a dramatic ring to it, and it sounds scary and sells papers! Is it possible that house values will decline soon?  No one can predict if or when prices will decline, where they are likely to decline or even by how much.  It is a mistake to think that we have one market in Australia.
In fact we’ve got hundreds if not, thousands of different markets around the country that work independently with each other. Some do drop in value at the same time as others around them, some neighbouring suburbs, even grow in value while their neighbours fall.  So how do you protect yourself? You do it the “old-fashioned way.”
Here are some tips:  When you buy a property, buy one you intend to own for a long time. You see, how much a property goes up or down in value each year doesn’t really make any difference at all – until you have to sell it.  Buy and sell in the same market.  If you are selling in a slow market – you’re also buying in a slow market.
If you’re buying in a hot market – you are also selling in a hot market.  It equals out, provided you have enough equity to make your next purchase and you don’t procrastinate with your decisions.  There is a saying in real estate that you will make money when you buy the property not when you sell and that’s because it’s important to buy well.
To successfully speculate with property requires a lot of skill, market knowledge, business sense and patience.  It is likely there will be some time in the future when values decline, at least in certain areas.  It could be in a year or it could be in sixteen years it could even be next month. How do you cope with that fact?  Simply by holding on knowing that the property market would turn again.  Forget about timing the market and think more about time in the market.

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