Independence Days – Everyone’s in a house buyin’ frenzy

Photo by: mugley

Lately I’ve been having quite a few Aussies asking my advice about buying a house. I’ve been telling them that I think that the Aussie housing market is in a giant bubble and due to correct sometime in the not too distant future, but mostly that’s not what they want to hear.

I understand why they ask my opinion, since I have bought and sold a few houses in the last decade. What I don’t understand is why they ask my opinion if they’ve already made their mind up to buy the house. Is this just a case of people only hearing what they want to hear? Do they just want me to tell them they are doing the right thing? Do they figure since I bought properties in the past that I think that buying property is always the right thing to do?

During one conversation I was told, “But everyone on TV says the property market is going to go through the roof in the next couple of years!” And I guess this gets to the center of the issue. House buying mania has come to Australia. The media is sprouting on about how the market is just going to keep going up and if you don’t get in now, you’ll miss out. People buy into this, literally. The fact that a number of people in my life have contacted me this month is simply an indication that the mania has spread far and wide.

Bah! What do I know? I’m not on TV. I hope for everyone’s sake that I’m wrong. I really do. I’d like to be wrong about so many things, but I guess only time will tell.


  • We had an interesting office function on Friday. It was an ‘Earthquake Preparedness and Team Building’ event. That earthquake last weekend has people here rattled (so to speak). Even long time Californians who are used to the Earth shaking said that they were scared by that 7.2. Most of them take Earthquakes for granted and I think I’m the only one in the office who has an emergency kit already prepared. Obviously we Aussies are not quiet so blasé about Earthquakes since they are rare on our continent. Anyway, the point is: After Friday, everyone has agreed to pool resources and put together a 72-hour kit for the office. This is great! I didn’t even need to be the one to suggest it. I think they already think I’m a little weird, but mostly they put that down to cultural differences 🙂

Grow some food

  • I’ve been so slack in the garden lately. Watering, weeding and harvesting are all I’ve managed this week. I really should be sowing our Summer crops. Motivation…..Where are you?

Reducing Energy Dependence

  • I think I briefly mentioned a few weeks ago that Brendan has been doing some consultancy work for a start-up renewable energy company here in SoCal. He has been designing a complete off-grid system to run some equipment for a large company. It’s been a big learning curve for him, but very worthwhile. He asked me last night whether we can go off-grid for electricity when we get back to Australia. Umm…..of course! I always planned to get off-grid solutions set up as much as possible. We’ll likely be renting for some time when we get back, so we’ll probably just set up a small, portable solution to power essentials like a chest freezer, some cooking, lighting and a laptop.

Hedge against disaster

  • I’ve been reminding my friends here in America to make sure they have some cash out of the bank and on hand in case of emergency. I have an uneasy feeling about the US currency and the banking sector here. It is always a good idea to have some cash on hand in case the banks declare a bank holiday (it happened during the first great depression) or the ATMs stop working due to power failure. News from Citigroup just confirms that something is up:

Effective April 1, 2010, we reserve the right to require (7) days advance notice before permitting a withdrawal from all checking accounts. While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change. Read more


  1. Off the grid, how nice would that be! We are finally getting our solar panels & inverter this Friday (it’s taken 11 months!!) and so wish we could set up a battery system for storage too. I always thought that being solar meant we’d have power even when there was a blackout… nope!! Apparently, for safety reasons they don’t allow it?? Not sure, exactly, but must find out more…

    That also reminds me. After reading another of your blog posts, I said to my husband that we must keep some cash in the house somewhere, but haven’t done it yet. I usually have a decent note on hand, but need to have a wad of smaller denominations for emergency situations…

    1. Yay! At least you have your panels. We are still in the pondering stage.

      Keeping cash on hand is something I never thought of before, but since the financial crisis here in the US, we’ve made sure we have some hidden away in case of need.

  2. Interesting, what you say about the Australian housing market.

    As an ex-Aussie, I agree with you. We bought in Melbourne in 2001, sold five years later, having made over A$200K profit on a two bedroom townhouse. Absolutely ridiculous.

    With what we paid for our tiny little townhouse in Melbourne, we’ve bought a beautiful three acre farm with a 4 bedroom home on it in Dunedin, New Zealand. Best decision we ever made.

    So we used the property bubble to our advantage, and got out before it burst, and now have a smaller mortgage on a much better property in a beautiful country setting closer to town than we were in Melbourne!

    I think the average house price in Melbourne is about $500-600K now. But the biggest indicator that it is a housing bubble is that people couldn’t afford to buy their own homes, if they had to buy them all over again, starting from scratch. If you couldn’t afford your own home, it’s a bubble!

    The logic of the market – if prices are high, sell. Don’t buy. It’s the same for houses as anything else. Prices are sky-high right now. It’s a bubble.

    And the Australian market will CRASH pretty soon. I have no idea when, but I’m guessing within the next ten years there will be a lot of people out of pocket.

    1. ex-Aussie??? Have you defected? I though once you were an Aussie, you were always an Aussie 🙂

      I LOVE your place in New Zealand. It is everything we dream of for ourselves one day.

      We recently sold two houses which had appreciated nicely since we had bought them. We just couldn’t see them increasing much more in the near future, and we decided getting out of debt was much more important at the moment.

      We are now waiting to see what happens with the market and plan on renting until prices for our dream property come down to a reasonable level.

  3. Hi Mia. I have to agree with you about the Australian housing market. It is completely ludicrous. Just divide the median house price by the median wage today, then compare that ratio to the same ratio for our parents generation. Once upon a time a family with one wage earner (working for the public service) could buy and pay off a house in a fraction of their life time. These days, most of us would be lucky to pay off a house before we retire.

    I would be interested to hear more about the ideas that you and Brendan have for off-grid power. One of my longer term goals is to provide power for lighting at least, so I am interested to hear any thoughts you may have, especially given Brendan’s current work.

    @Daharja: I am always a bit jealous of people who managed to profit from the housing market, but well done 🙂 It looks like you have a great life and property.

    1. LS. I’m sure Brendan would love to write a guide to off grid solar. He’s super busy at the moment, but when things settle down a bit, I’m sure I can convince him.

      1. Hi Mia, that would be great when Brendan has the time. Personally I am looking at a mix of windmill (in the 1 kilowatt range) and solar if I ever have the money.

  4. We too managed to ‘get out’ just in time. We sold up to go to Tas just as the Perth market was collapsing, so we most likely lost some money (if you believe the bank’s evaluation) but anyway we still got out ahead, and are now debt free on our little farm. Friends who wanted to make more money than the market was willing to pay at that time (2 yrs ago now) are still sitting on their houses, of which the mortgage is now bigger than the value of the house. Similar experience as you: “What should we do?” Answer: “Sell now!” Reply to this: “But we want to make more money…” They would have come out at least a little bit ahead if they had sold, but what can you say…

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