Every bubble has its naysayers and disbelievers. Usually, no one pays them much attention, at least not until the bubble bursts and the media are casting around for someone to explain what the hell just happened.
This time though, people calling ‘time’ on the stupendous increase in property prices in Sydney and Melbourne are being handed media megaphones with a brief to be as alarmist as they like.
Take Treasury Secretary John Fraser, who last month said Sydney was ‘unequivocally’ in a bubble. Unless they’re close to retirement and have a bonnet full of bees, econocrats don’t use language like that.
Is this bubble of so much concern to policymakers that they have to abandon their usual tempered, cautious, language so no property buyer has the excuse that they weren’t warned?
The oddness was turned up to 11 last week when buyers' advocate David Morrell was quoted in the Financial Review: ‘Are we in a bubble? Of course we are. It just depends who is caught with the parcel.’
Morrell has just broken the first rule of his profession: if you work in real estate, talk prices up, not down. In fact, so common is the idea of an Australian property bubble it even has its own Wikipedia page.
All of this makes me wonder; if one of the preconditions of a bubble is the widespread acceptance of its “unbubbleness”, then this time really is different. Maybe Sydney and Melbourne property isn’t in a bubble after all?
Maybe all those arguments about land shortages and growing population do explain everything.
Then up pops 24-year old Stephanie Brennan, one of Australia’s youngest property tycoons according to news.com.au (see image).
Stephanie owns six properties worth more than $2.3m. Aiming to retire by 30, Ms Brennan is a uni dropout who’s been investing for three years, proving that it is “still possible to buy property in Sydney.”
Well, of course it’s still possible but that doesn’t make it sensible. Wasn’t it this attitude that made the GFC possible? Easy money and a false premise built on the notion that prices always, always go up (which is true if you’re 24)?
But it gets better. Stephanie thinks ‘there should be a lot more guidance’ in property investing, which is why she’s launched her own business ‘to help others do what she’s done, offering everything from financial planning to accounting and mortgages.’
Surely this is it, the final ringing of the warning bell?
If, after three short years of ‘success’, a 24-year old is in a position to advise retirees on where to invest their money and the mainstream media is breathlessly labeling them a ‘tycoon’, talking up their new business, this has to be the top.
The Sydney and Melbourne property bubble is real. And Stephanie Brennan, full of youthful hope and hubris, proves it.
When it all goes pear-shaped don’t worry about Stephanie, she’ll be fine.
Having attended Pymble Ladies’ College and won a position as a former advisor to Bronwyn Bishop at the age of 20, her well-to-do parents are a great insurance policy.
But for stretched property buyers without those advantages, the best thing to do is take David Morrell’s advice and make sure you’re not left holding the parcel.
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