Is a Property Crash Inevitable?

https://www.youtube.com/watch?v=r8TWc1q3r-8 With everything that's happening in the world right now is an imminent property crash inevitable? Or could the opposite potentially happen? In this episode I explore this idea in more detail and talk about some of the reasons it may happens as well as some of the reasons it may not. Book a Free Property Strategy Session Is a Property Crash Inevitable? 2:06 What Are The Signs A Property Crash May Occur 4:46 Other Factors To Take Into Account 6:45 7:56 What Could Have a Positive Effect On Property Prices Over The Medium Term? The U-Shaped Recovery 10:20 Will We See Hyperinflation? 10:55 Is The Property Crash Inevitable In The Short Term? 12:25 What Can You Do To Improve Your Finances During This Time? 13:55 My Strategy To Thrive During This Time 15:06 What To Do If You Want To Take Advantage Of This Time In History 18:23 Recommended Videos: Ray Dalio's Video on Cycles Transcription: Ryan 0:00with everything that's happening in the world right now a lot of people especially my youtube comments are talking about how there is this inevitable property crash down the line an economic crash because while the government is propping up people now through this health crisis that as time goes on and people don't have jobs and can't afford their mortgages we're going to start to see this major crash and major decline in the australian property market so in this video i want to talk about whether or not the property crash that these people are talking about is inevitable and what are some of the things that suggest that it may happen and what are some things that suggest that the opposite may be true and we may actually be in for a bull run and markets do actually go up and assets to go up in value so we're going to talk about that and kind of have an honest chat about that in this video hi i'm ryan from onproperty helping you achieve financial freedom and while it's really interesting to look at these economic cycles and to try and predict the future with our crystal ball as to what's going to happen through this cycle and through this phase of the cycle what i actually think is more important is actually you and how you're responding to this and how you're improving your finances through this so for me personally while i think this is really interesting and while this plays a role in the decisions that i make i actually need to focus on myself and focus on creating good income for myself focus on setting up my financial future focus on creating passive income streams in my life so that when the cycles do come when these market crashes do come when recessions do happen that i'm set up because let's face it there's a lot of people losing their jobs at the moment but if you're one of the people who hasn't lost their job and you've still got a job safe steady income then you'll actually find through this and through recessions a lot of people are fine you want to not be one of those people that gets hit hard so that's the most important and we'll talk more about that towards the end but is a property crash inevitable the short answer is no the longer answer is maybe and the really long answer is yes and i'll kind of explain what i mean by that and it's a bit of tongue in cheek there but i'll explain what i mean by that so first thing is it inevitable so are we set for an imminent property crash in the next couple of months or within the next year is that definitely going to happen now i interviewed steve cain who is an australian economist back in 2016 so a little under four years ago now and he was talking to me then about the australian property bubble and how it was due to crash and how it should drop by about 40 or 50% he was talking about that in 2016 to me i'm pretty sure he was talking about that before the financial crisis and didn't really expect what the government would do to actually prop up the australian economy and to prop up the australian property market and this is the issue that i have with the people who were in the comments saying this is exactly what's going to happen and the issue that i have with economists as well who are way smarter than me who know way more than i do about the markets and about the data behind it is that they have these models and they map out these things of what will happen and what should happen based on history and based on the data and then what happens is something happens that they don't expect or governments do something that they don't expect or react in a way that wasn't anticipated and then that starts to throw things out and so when you're just listening to one economist another thing now the thing with economists is that they're always so opinionated as well this is exactly what's going to happen based on the data and for them they they talk opinionated in an opinionated way but i think really they know that they're adjusting daily but when we listen to them we think oh my gosh they're so sure that this is exactly how it's gonna play out all listen to them and do nothing so imagine 10 years ago you're listening to steve cain you did nothing with your financial future you did nothing to set yourself up because you're too scared of a market crash well where are you today and are you any better off probably not so is this property crash inevitable let's talk about what actually may lead to this property crash and why people think it's inevitable and then let's talk about some of the reasons why it may not be and why the opposite may actually be true and this is just a discussion that i want to have with you i don't really have an opinion about what's going to happen so signs that a property crash maker obviously we're going through an economic downturn at the moment that's pretty obvious with four shutdowns of lots of different businesses with us being stuck inside our house like i am right now and not allowed to go out where you're not even allowed to sit on the beach and watch your children as they exercise in the water, you have to be in there with them. Otherwise you have to leave. When that's the situation that we're in, we're in an economic downturn, a lot of people have lost their jobs, or lost their income temporarily, or perhaps lowered their income either through taking a reduction in shifts that they're doing, or through their company going into a hibernating state, and getting the job helper allowance from the government, their incomes may have gone down. So you're in a situation where people have lost their incomes, lost their jobs, and no longer credit worthy. And so these people who may have been looking or thinking about buying property, now can't buy property. Now you got people who own property. And as a percentage of those people are in the same situation that have lost their jobs lost their income, or reduce their income, they're now struggling to pay their mortgage. Now, there's freezes on mortgages that are available, banks are helping people out the government or helping people out. There's all that sort of stuff going on for six months, potentially 12 months, maybe it could even go longer up to 18 months, who knows. But you're seeing this happen. But the argument here is that ultimately down the line, you've got these people with no income, who can't afford to maintain their mortgage, who will be forced to sell their property. And because you've got the market, less people actually looking to buy, that's going to lead to a flood of properties on the market without a flood of buyers. And so you got an oversupply and not enough demand, and then prices plummet for the property market. So that's kind of the thinking behind what could happen. And obviously, there's some great thoughts in there, and how that could affect things. But when you're looking at the property market, when you're looking at property prices, there's more than just those simple things that go into play. Obviously, available, availability of credit is a huge thing. In 2017, when Sydney and Melbourne hit that peak, we saw Apple bringing in new lending restrictions, we saw the government put lending restrictions, and purchasing restrictions on oversea buyers, which really dampened the market and the availability of money in the market. And we obviously saw a decline over the next 12 or 18 months in those markets as a result of that. Not necessarily that we saw the economy drop 15% in that time, but Sydney and Melbourne did, because of those lending restrictions. And I'm sure there's a lot of other forces at play, as well. They're not just that, then for the middle of 2019, we actually saw Sydney and Melbourne skyrocket again, and go Melbourne even past its 2017 Peak prices. So you know, we saw that cycle there. And so availability of credit and how much credit is available and how expensive that credit is also plays a major role. And so we're in a situation where interest rates are extremely low, with the government talking about keeping those interest rates low, while the economy is in a bad place and not raising them until we're really back to stability, you're looking at extremely low interest rates, the lowest in history, availability of credit, because the government wants to stimulate things that could actually have a positive effect on property prices as well. Even though there's less overall people in the market, the people that are credit worthy and can borrow, can borrow more, and that could lead to asset prices going up. So we've got a few things happening there. What else is the government doing that could potentially inflate these asset prices over the medium term, you're looking at helicopter money. So the government dropping money into people's bank accounts, whether it be the $750 drops that they're doing, or people who are getting the jobseeker payment, plus the Coronavirus bonus.