In Australia, we have special treat for properdee investors, its called Negative gearing. So the properdee investors believe they always win, plus they do believe properdee price doubles every 7 years😅
Show me a mans property choices i.e. purchase and sale history.., and ill show you the outcome of the man.
Lets have a look at Australia ...
Chart 1 - Inflation adjusted AUD returns of the ASX index since Jan 2008 orange - non-currency adjusted.
Chart 2 - Inflation and currency adjusted Australian House price index since Jan 2008 orange
Chart 3 - 80/20 Portfolio 80% of wealth in House and 20% in Pension (Super fund), inflation and currency adjusted, since Jan 2008, Orange = Australia portfolio vs Blue U.S. Portfolio
Chart 4 - Australia % return on Housing since Jan 2008, assuming 80/20 LTV, inflation adjusted, USD currency adjusted after all debt payments, so Equity minus all cash paid in debt. Meaning you got back only ~50–55 cents of real USD value for every $1 you put in.
Big picture ...
This is what actually happened.
You continuously invested capital (Mortgage).
"Asset" didn’t compound in real USD terms.
Result? Negative real compounding despite rising house prices What people in Australia think ..,
“Leverage made me rich”
What actually happened?
- Leverage turned weak returns into negative returns.
Homeowner equity got wrecked. Even though they thought it didnt.
All this despite record immigration levels propping up nominal values.
Outcome of these choices? Misplaced confidence, delusion, a permanent gut wrenching feeling that something is wrong, why am I not feeling richer despite rising prices? Why am I feeling poorer despite rising prices? Promises of the Aussie dream broken / shattered. It's not my fault, must be someone elses fault, increasing desperation and withdrawal, Middle Class depression & mental illness. Addicition to escape reality. Breakdown.
Be honest with yourself Aussies.
These are your neighbours.
Everyone of you knows someone like this (unfortunately) ...
Now look introspectively.
The most depressing part?
Yes, the system did f7ck you. But you allowed it too.
You believed in the system and bought into it.
You outsourced your future to strangers (government, banks, RBA) that couldn't give two f7cks about you. You could have done something about it, but you didn't. Thats why you're in a mess.
It's time to face the music.
Poor choices have consequences.