owning propert is good, page-12

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    owning property is now risky The greatest threat to the property market is a three letter word - OIL! As oil prices go up so to does the cost of everything which means the average Jo has less money in his pocket and as a result less capacity to pay for 'things' - houses included. Shares are not free from this risk either but some stand to benefit significantly from this risk. Just as the value of shares in 'on paper' so too are property values.

    Example - farming properties in the Wheatbelt of Western Australia have enjoyed firm capital growth in the last 2 years especially. Up to 150% in some areas. However what is happening now is the rise is oil/gas prices is starting to flow onto the 'ability' of farmers to afford to pay these prices. Input costs have gone through the roof - fertilizer up 25-30% (those are imported and this is also with the benefit of an appreciating Aussie dollar), pesticides up 10-25% and of course diesel up 25%. These costs will continue to rise as the price of oil rises. Farmers are beginning to panic a little especially those close to retirement or with no sons and a rush to market of sorts is now starting to perpetuate. Some will tell you this is cyclical but I kid you not, this is a genuine turning point. If oil does not come down and stay down, businesses will drop like flies I fear.
 
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