Property Investment To Save the Australian Economy?

Sigh - sometimes I feel sooo old! Like I can remember the last time it was hard to get a job especially if you were young with no qualifications and experience. That time has come again, even in Australia, and the newspapers are going flat out to explain to the under-25's what to do with this strange concept that the world doesn't owe them a living of at least $70k straight out of school!

There is also the equally odd idea that Australian's compulsory superannuation, which is generally in managed funds, can go down not up!

The answer - well my local paper has been doing a series on "How to Survive the Recession" -and we have been through the -  stop buying designer gear, eat in occasionally, don't update the car every  6 months stuff. Now we are up to the "buy a house and buy it now" - get into property investment right now!  I'm sorry - but WTF?

The weekend paper's summarized the property market in Australia quite succinctly:

• middle and upper market frozen
• no one is listing
• first home market is booming because of government grants.

Too many bedrooms, too many bathrooms anyone?

Although auction clearance rates continue to edge up - the number of sales has plummeted. So Sydney's clearance rate is up to 63% from 47% the same weekend in 2008, but the number of properties listed was just 127 down over a hundred from the previous year.

And yes most first=home buyers can get $21,000 or more in government grants - which is states such as Victoria is  going to go at least in part to paying the government's sales tax!

The sad thing is that young couples appear convinced that buying a new $400k 4-bedroom, 2-bathroom home 25km from the CBD - is a great investment! Well hello the problems with the "success stories" I see being trumpeted by the media (wonder how much of their ad revenue is from real estate these days?) is:

• $400k is not cheap - even if you only paid $280k for it!
• No couple needs a 4-bedroom home: even if you have 2 kids, you don't need 4 beds until they are teenagers - don't pay the interest now on a property you don't need for another 15 years!
• No young couple wants to live in the middle of nowhere.
• The house is all shiny new now but do you know how much its going to cost to maintain?
• You won't be able to sell after 30 June  - this is not real market- the government is subsidising the first home buyers "boom" - and it will go bust when they stop - your "bargain" $380k home - will again be worth its real value probably $250k