property and inflation, page-5

  1. 846 Posts.
    ***rito *** re: property and inflation and all the Rito,

    Some of your questions are ones I have myself pondered, I even posed one of them to Redabyss as he says he is an economist in property areas.

    The past does often show what will happen in the future but sometimes not, it's hard to be sure. The growth in property prices is simply driven by an increase in the number of people wishing to living in a finite area.

    The population aging does mean that there is some danger of massive sell offs by baby boomers in their twilight years but they need to live somewhere afterwards so it becomes zero sum, it simply means the proportion of renters increases.

    The dying off of baby boomers is already being adjusted for by a steady increase in immigration. Melbourne and Sydney benefit initially from this (more recently Melbourne has a disproportionate number of immigrants, I dunno why).

    The coastal boom has been accelerated by the boomers retiring to the coast but coastal properties will always be more desirable due to the beauty of the ocean.

    As to the number of investors, that number is driven by the demand for the investment properties ie renters. For many years the proportion of the population which rents has increased. Social reasons such as contract labour and general relative insecurity in employment, later marriage ages, divorces, etc drive more people to rent.

    If the renters are not there then pretty quickly neither will be the investors.

    I think current vacancy rates and therefore rental returns are dissuading some investors (I know I'm having trouble finding properties that have sufficient return to make them attractive).

    Slowly but surely buyers are not coming in, so slowly the number of available properties for rent will decrease proportionately. Equally slowly, the number of renters will increase and the vacancy rates will decrease and the rents will go up and finally the return will be sufficient that investors will come back.

    It's called the property cycle clock (you can get it off the net).

    - Z
 
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