• 26 November 2017

Approaching Crescendo

As property prices in Australia continue to push higher against all the expectations of the mainstream media and others, we are approaching a crescendo level of disbelief.

The one thing I know about markets, all and any market, is that if the sentiment is bearish, believing the market will fall, while the actual price action keeps pushing higher? Then it means just one thing…

The market can accelerate!  

This is an interesting perspective, even if I do say so myself. You see, no one else is suggesting such a scenario? And markets usually do what no one expects. The idea that Australian property prices could actually accelerate, rather than fall back, would shock most people.

However, if all the mainstream media, supported by banks and commentators, regulatory figures, and let’s not forget the non-experts from overseas, have all been telling people property prices would fall for many years, it is hardly likely that the potential first home buyer and investment market have all taken action. If they have not, it is only because they believe what they read and see on TV, and so are waiting. Still waiting, for a market correction?

This means there is still a huge hidden ‘need to buy’ out there. In financial markets, you are guaranteed to have losses. In property markets, not every purchase will work out. The skill is in minimising your losses while letting your profits run. It is about the performance of a diversified portfolio. As diversified as you can be. In this way, you can achieve significant benefit from a broad market upswing, and especially a major bull market trend. A sustained long-lasting shift of prices to previously unheard of levels. This is exactly what we have witnessed in Australia.

Those who do not understand markets do not understand what has just happened. They didn’t see it coming. We did see it coming. We understood in advance. Which is why we are all in a strong position of being able to understand and foresee even greater price gains.

There is no historic precedent for a relatively small country of 24 million being resource rich and the envy of billions of people nearby. This is a new phenomenon. It means mineral and agricultural sales enriching our people. While the buyers of those goods become familiar with the idea of moving here or sending their children here.

This is a process that has only just begun.

Clifford Bennett

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