Highly recommended reading on the epic Australian land price bubble and it's inevitable bust

[John]

Dear all,

My time is still limited to post more regularly, but I came across the following piece on the Australian land/property bubble and I simply had to pass it on. It really is brilliant work. Furthermore, it's a valuable and fascinating insight into the issue from the point of view of a "Gen Y" Australian (who is clearly very intelligent).

For those of you who are "invested" in Australian real-estate (particularly those of you who are pinning your hopes on capital appreciation), you might find some of the article hard to read. Unfortunately, reality is a bitch sometimes.... and it's inevitable that Mrs Reality will be paying a visit to Australian real-estate.

Here's the article. I can't recommend it enough:

The housing crash we had to have: A Gen Y perspective on the bubble: http://rationalradical.me/2015/06/the-housing-crash-we-had-to-have-a-gen-y-perspective-on-the-bubble/

Addendum: 

After you have read the article, tack on this important point: Presently the people holding the power to correct the distorted policies that created this bubble - the present political leadership - are (generally) Baby Boomers who have considerable real-estate holdings of their own (which have performed famously thanks to the policies and legislation they oversee). Their snouts are deeply in the trough and this self-interest is making them reluctant to fix these problems. However, their position of power has a time limit. Over the next 10 to 15 years an increasing proportion of people entering politics will be post-baby-boomers - in other words, there will be more and more entering politics that are not "landed gentry" and do not own significant holdings of real-estate. They will not be fettered with such self-interest to retain the status quo. In other words, even if the current baby-boom-landed-gentry-political-leader-class found some magical levers to keep this bubble inflated, this inevitable demographic shift pushing the post-boomers into political leadership will put an upper limit on how long this bubble can continue without bursting. In short, 10-15 years is the maximum I expect this bubble to continue. But in reality the fever-pitch nonsense going on in the property market now (particularly in Sydney) combined with the relative underperformance (and downright decline) in other areas is a classic sign indicating that it's going to come unravelled MUCH sooner than that. I think we're seeing last feverish gasps right now.

Those of you who've been on my list for a long time can correctly note that I expected the Aussie property bubble to burst before now. But I've also made it quite clear that timing is the hardest part. But I'm more certain than I've ever been that this Aussie property bubble is the biggest in Australia's modern history, it absolutely will pop, and it's going to be incredibly difficult (particularly for those carrying debt).

There are other opportunities out there which are free from the horrendously huge downside risk that currently exists in Australian property.

All the best

John