its a ponzi scheme
Australian property prices are a giant Ponzi scheme.
The reason - the only reason - they continue to be ridiculously high by international standards, is because they are already high, and the Government will do EVERYTHING in its power to keep them from falling.
The political party in Australia that presides over a big house price fall will not see power again for decades, if not totally implode. Ordinary Australians are too heavily invested - usually the largest chunk of their disposable wealth is in their house.
If it falls, they feel it keenly.
So the Government restricts the release of new land and pumps up the immigration levels massively when the economy looks like stalling.
This worked for a while but it has reached its limits and now has a net negative effect.
Sydney used to be a paradise to live in. Now there are water restrictions, toll roads and high stress as the infrastructure that accommodated 2 million people with ease is now being expected to make do for 4 million people - the increase being 100% due to immigration.
And the Rudd Government wants population to double again. There are also water restrictions in Queensland, Western Australia and South Australia. The only place with no trouble for water is Darwin, NT.
But Darwin doesn't have a proper sewage treatment system, it all gets pumped into Darwin Harbour. So when their population massively increases their standard of living will fall too as the infrastructure does not get improved to deal with the population growth.
this is coming to a head.
Massive amounts of immigration have led to civil unrest in recent years, eg: the Cronulla Riots where a section of Sydney's Muslim Lebanese community (young males from Auburn/Lakemba) engaged in 5 nights of violent rampages including random beatings and the smashing of cars and shopfronts causing police to lock down the beaches suburbs. Nobody allowed in or out.
This happened after Anglo Australians, angry at being picked on in their home suburb of Cronulla had a protest barbecue - which turned into an ugly racist violent brawl.
But that's not the only indicator of multiculturalism turning sour.
The Australian Government is importing people wholesale from Africa and moving them into Darwin and Hobart so as not to put so much pressure on Sydney and Melbourne, the traditional immigration centres.
In Darwin, Aboriginal people, long used to being the major black community, are starting to see demographic change eg: in Coconut Grove with lots of new blacks from Africa moving in. And they don't like it.
I lived in Coconut Grove from 2004 to 2008.
When I moved in there were no black Africans. When I moved out, I was the last Anglo in my apartment block, and the one next door, and the one behind. All the people working in the supermarket were black Africans.
But the local Aborigines were outraged. The Kenyan man who lived above me, Dominique, was bashed and robbed at the local ATM. He had blood pouring from his face when he knocked on my door at midnight. He knew who had done it and why - a group of Aboriginal youths and because he was the wrong kind of black. Police did nothing. Funny thing is the Aborigines there never attack the whites or the chinese. They really just don't like the new blacks.
Fights have broken out at bus-stops (i have witnessed),and other places (i have heard about) with Aborigines resenting the new intruders.
Keeping property prices high depends on massive and increasing amounts of immigration, which is hitting the twin walls of cultural resistance and inadequate infrastructure.
Living standards are falling, the health system cannot cope. We also have a slight sovereign risk vis a vis the possibility of one day being invaded by Indonesia or China. This risk is not nil, but is ignored by most Australians.
For someone in the US to invest in Australian property now, in my view, would be a mistake because the A$ is at an all time high against the US$.
Wait at least for it to drop back down to US50c - it is cyclical. There will come a time when it is undervalued. For now it is up around US89-90c and may reach parity next year.
You will one day be able to buy it for half price on exchange rate alone, wait for that day. Now is the time for Australian investors to look to the US to buy.
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