For the past four years we’ve been waiting for the property bubble to burst. To be honest, it’s been a little like waiting for the end of the world.
When I was a kid, there was a slated date for the end of the world to occur. We knew what it would look like – black thunder clouds, strong winds and then judgement day would be upon us. Depending upon your religious persuasion, a couple of things would happen on that day – you’d either be saved while non-believers everywhere perished, or the entire world would disappear in a fireball. There was also the threat of the nuclear bomb giving us incurable cancer, turning the earth to fallow pasture and causing slow and painful deaths always foreshadowing our everyday existence.
More recently, another end of the world date came and went, but the real one, sometime this December, is still before us, scaring our children and creating lively debate.
For property investors, though, we haven’t given the imminent destruction of the world a second thought, given the more dire situation surrounding the property bubble and its impending bursting. It’s consumed us and dictated our every investing move, and it seems like we are finally sick of it. Property investors have decided that enough is enough, and that if something was ever going to happen, it should have happened by now.
I’m somewhat cheered that there seems to be a renewed confidence in the market, but extremely worried, too. You see, the dodgy spruiker is back, in fine form, and investors, many with memories too short to recall the bad old days of rip-offs and questionable deals, are just begging for their money to be taken.
A recent Sun-Herald investigation established that “aggressive marketing by Heritage Financial Solutions of often overpriced and second-rate Queensland properties has left a trail of burned investors, bankruptcies and broken hearts”. This is by no means a one-off situation, and I am seeing more and more people being taken advantage of, and a return to a situation we saw in the early 90s.
The problem is this – there is no regulation to protect property investors, and therefore literally anyone can call themselves a property investment adviser and get away with it. In doing so they create around them an illusion of expertise and qualification, and usually their websites are so professionally created that this illusion appears real and legitimate.
So what is happening here? Well, it’s quite simple – the spruikers are once again convincing a whole new generation of property investors that they have only their best interests at heart and selling them deals with exceptionally poor underlying assets. And the investors, often time poor and looking for the solution to their retirement income woes, are lapping it up, neglecting due diligence and choosing to place their trust in those who have a big financial incentives to tell them what they want to hear.