David Hocking from SIBA left an interesting comment this week where he suggests that governments are the drivers of the real estate boom as it is they who have the most to benefit. While I see his point and agree that State and Local Governments are making abnormal profits, there are other parties playing significant roles and profiting. The banks play a significant role in controlling the tenor of the market to ensure they maximise their profits. It’s especially easy for them to do within the Australian banking cartel.
As I’ve said before bubbles always pop …

I may as well keep banging this drum. This beat goes out to my friends Bill and Misha who just bought a second property. They hold the view that the worst that could happen is housing prices could plateau for a few years. For their sake I hope Edward Chancellor is wrong.
AUSTRALIA is in the midst of an unsustainable housing bubble that could burst at any time, warns the man who predicted the global credit bust of 2007.
Edward Chancellor, of US investment bank GMO, says the Australian economy is yet …

At some point the Australian residential property bubble will pop. It’s not a matter of if, it’s simply a matter of when. Everything else is noise.

My partner is keen as mustard to invest in residential property. Being an outstandingly nice guy, I too wish to benovently allow someone to pay off a mortgage for me. Professionals and amatuers both have strong opinions on where housing prices are headed. Most prognosticators or at least the loudest, are predicting higher prices. Cough, cough. Are they fricking insane.

I am not an expert in residential property, but I am a pretty darn good investor. For most long term investors there is only one time when you should buy any asset. You should only buy long term assets when they are cheap.

With that in mind there is only one question that we need to answer. Is residential property in Australia cheap?

Mining and Energy
Fresh data from the Australian Bureau of Agricultural and Resource Economics (ABARE) shows exploration in the mining and energy sector reached record highs in the 2007-08 financial year.
The figures show $5.5 billion was spent scouting for new projects, with petroleum and iron ore the favourite commodities because of high global prices. read more
And hence why cycles exist. As prices and returns increase more capital floods reducing future profits. Couple that with decreasing demand and more falls are possible for mining and energy.
Still the master wave rider, Warren Buffett, …