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Will Abbott Burst The Real Estate Bubble?

June 8, 2013

Let’s make a huge assumption: The Coalition has a massive majority victory and Tony Abbott takes control of Australia.

There is dancing in the street and happy consumer investors buy up big in the auction rooms and we hit property highs.

But what will happen next? Abbott is promising to curb spending and stop the boats. He’ll stop the carbon tax and de-fund renewable energy and soften manufacturing. He’ll slow down spending on the NBN and curb anything that draws criticism by the media.

How will this impact on the value of real estate?

As we’re all told: By the end of 2013 Australia will have been riding on 22 years of uninterrupted growth. Increasing mineral prices plus increasing export volumes, drawing more and more export dollars even despite the stronger AUD. We’ve also had an immigration boom. We have “boat people” (asylum seekers), migration and working visas all increasing in numbers.

What happens when all of this goes in reverse at once? Less immigration = less housing demand. Slowing economy, public servants being let go, government programs stopped = lower prices.

Once our omnipresent confidence in ever increasing house/home unit prices rolls off, real estate speculation disappears and the bubble is finally burst.

This will be terrific for new entrants to the housing market, but I’m not sure if that is what the majority of Coalition voters really bargained for.

Please leave a comment or tweet to @james00000001.

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