40,000 Aussies have 6 or more investment properties

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The AFR reports that Mark Burgess, chairman of asset management firm Yarra Capital and the investment committee of industry fund HESTA said,“Two million people had investment properties in 2013 and I’m sure it’s much higher today, 40,000 had six or more.” 

It reminds me of the scene in The Big Short when Mark Baum is talking to the lap dancer about what she’ll do when mortgage rates reset  and admits she has 5 properties and a condo.

It also reminds me of a time when working in London in the early 2000s and my uncle mentioned one of his staff had nine properties. Nine. That’s what I call leverage.

Of course being on the property ladder is sort of a right of passage in Australia. The angst and wailing of first time property buyers not being able to pursue the Aussie dream is ringing louder. When the Victorian government offers 25% of the value of a home as an interest free loan or the federal government allows access to ring-fenced superannuation funds as a way of assisting them it is hard not to think that the bubble is reaching bursting point.

Unlike shares or bonds, properties aren’t liquid in a downturn. With private debt to GDP ratio of 180% and four spots in the global top 10 most expensive property markets what am I missing? Yes relentless overseas buying and a supply shortage but “affordability” exceeding 13x average income vs 7x prior to GFC doesn’t bode well.

Interesting to see another article which read,

“According to a new survey from Manulife Bank, nearly 75% of Canadian homeowners would have difficulty paying their mortgage every month if their payments increased by as little as 10%.”

I’m sure it’s nothing! I guess aliens haven’t entered the global property markets yet.

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