I keep getting told of the chances of deflation in Aust are small but I look at the US with rates at 1% and wonder.. is there any historical data or comments on the effect of deflation on property[?]
Hiya Jumbuck,
I don’t think you should be so worried about deflation, it may happen, it may not. What is more important is that you are using the right strategy at the right time. If you were receiving positive cashflow from a rental property would deflation matter that much? Or if you were wrapping a property would it matter? There are many real estate strategies you can use in any type of market. Find one that both suits you and the market and have a go.
Best of luck,
Justin xThanks Justin X.. I too can’t see the difference deflation would make as long as you get the +ve cashflow..but this in itself can be a tricky thing to accomplish when you play with a few variables, eg rental yields, vacancy rates.
I guess it is the things none sees that ends happening and causing some pain, so I wonder if there is any historical experience in Aust of overseas.. (Japan?)Hi Jumbuck
If you have purchased well then ‘demand’ should have a greater impact on your property’s value rather than inflation or deflation.
Remember that housing is a commodity – everyone needs one. Even in a deflating market the quality areas and assets may still benefit from some capital growth.
But who knows where the economy is going to go – even the economists don’t.
As a general rule – if you buy a quality asset then you should enjoy a good return in the long term (this should apply to all asset classes).
Cheers
Stu
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at http://www.prosolution.com.au
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