Tony Fleming has worked in the same Domino's pizza outlet for the last seven years
- He has 10 investment properties
- "After the value of my properties grows, I take out the equity to purchase more."
- "I only buy in areas I think are undervalued, but will see price growth soon"
OK, what this guy is doing is not unusual in Australia:
- Methods like this are the subject of many weekend property investment seminars
- Done at the right time on the right properties and it does work here in Australia (or at least it has done for the past 200+ years)
- There are ups and downs, but the long term trend has been higher
- As long as its safely financed (positive cash flow is best) it's a very low risk for long term investment growth
Good on him I say.
OK, but what does GS (Goldman's chief economist Tim Toohey ) say? You might be surprised.
- "Australian house prices are currently 20 per cent above 'fair value' - the most expensive since December 2007"
- BUT ... Goldman argues that its housing valuation findings only apply to domestic buyers:
- For foreign purchasers that "are not dependent on the cost of finance from the Australian banking system", our bricks and mortar are actually "cheap in Australian dollar terms, and even cheaper in US dollar terms post the [exchange rate's recent] decline"
- If much of the marginal demand for our homes increasingly derives from overseas buyers, Goldman contends that "attempts by regulators to tighten the availability and the price of credit for domestic residential investors may prove relatively futile"
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Is Goldman Sachs right?
I think back to prior housing booms in Australia, especially the wave of Japanese investment a few decades ago. That ended in tears for many ... but if you could wait it out, prices recovered and boomed again.
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More detail at the Australian Financial Review, here (may be gated)
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Also ... pizza!
I haven't had breakfast yet ... 13 18 88