Firstly, let’s look back at some articles from Kevin Young in 2016-17:
“Eighteen months ago we predicted the squeezing of supply would lead to “APRA inflation”. We predicted this property jump would be right around all the markets in Australia. This has happened and the chart below clearly shows the APRA effect.”
“With property investing you reap the benefit of both – a high rent return that is getting higher, thanks to APRA’s policy of restraining supply. You’ve heard my banana story! So you are getting rising rents, thanks to APRA, and rising capital values as well from this falling supply.
Note the media think there is good supply coming into the market but they are unaware that the supply is of rotten bananas that people don’t want!”
“The above chart shows that the prices rose higher in the previous boom. Interest rates then were higher than now and there were no Chinese buyers to blame.
Now in fact, we have lower rates than the Chinese yet we have a lower boom. But, now we have the APRA EFFECT keeping up property prices!”
“Eighteen months ago I predicted, when APRA came out with its foolish edict, that it wouldn’t contain property prices in Sydney and Melbourne, but speed it up. With normal supply anticipated I had earlier, predicted that Sydney and Melbourne would reduce to a normal annual growth rate in 2016.
After Wayne Byres blunder I predicted eighteen months ago that in fact, we would have an APRA boom. The prices in Sydney and Melbourne would continue to rise on the back of rising demand, rising population yet falling supply.”
I think you get my point!
So then . . . this article comes out this week in The Australian :
“APRA and ASIC say there is a bubble. I say there is no bubble.
“But APRA and ASIC direct the banks, so if they want a bubble, then there will be a bubble because banks will lend less and less at the directions of APRA and ASIC. Eventually there will be a bubble.
“If banks were allowed to lend as much as they think is prudent then there will be no bubble.” The bank must decide whether the client is able to repay or not.
“Prices rose in Sydney not because the banks were reckless — it was supply and demand. “Sydney is today probably the most desirable place on earth, that is why people were prepared to pay more. Sydney belongs to the world, not only to Sydneysiders.
“Now let’s assume that there is a bubble. It will be catastrophic. Not only will the banks be running to the Commonwealth government for help, but also most people in Sydney (and Melbourne) will become poorer because their properties will drop.
“Already the building industry is contracting. If APRA and ASIC force a bubble to burst there will be a rise of unemployment. Today many businesses are vibrant only for one reason—higher property prices.
“They either sold their real estate to developers at a high price because floor space ratios were raised, or, if they did not sell, the book value of their businesses rose because of property. Now if there is a bubble and their properties lose value then banks will send them broke”.
Makes a lot of commonsense doesn’t it?
So what does this mean for us?
Firstly, Kevin & Kathy Young with nearly half a century’s worth of property investing experience prove to be pretty accurate soothsayers!
So . . . what are Kevin’s latest musings?
Click through our latest media release and see which areas you should be investing in to take advantage of this unique situation we find ourselves in due to APRA!
Have a look at what Property Club Millionaires members are getting up to – a very different and successful retirement!
Check out the latest PMC Postcards and see why you should make it your New Year’s resolution to have your retirement goals reassessed and see what type of summer you will be looking forward to in your twilight years.
Have a great weekend and catch you next week!