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it is said that real estate is one of the safest investments for it only appreciates in value, but that's only if you're investment is direct ie: buying a piece of land and selling it for a higher price or buying and bulling of houses and apartments to rent or sell out but when we look at real estate in another perspective of finance of international finance we get introduced to a highly fluid and risky market. this was witnessed in the 2008 real estate crash resulting in the financial crisis of 2008.
Australian real estate market has been on a rise in this corona pandemic as of many in different economies like China, USA, UK(London) but most of those have been as a result of people spending so much time at home. this made them realize that the space in their home ain't enough and some simply grew tired of their houses so went on to search and buy new ones.
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the reason why we are focusing on Australian real estate is that in addition to the other reasons for rising in real estate markets all over the world, the Australian economy added another factor of low-interest rates. so some of you might be looking at this wondering, why this matters but am going to get into it. when interest rates are low, banks can issue out loans at a low cost(interests) to the loan applicants and the most reason for loans issued in commercial banks is buying real estate(houses and apartments).
this is a good investment opportunity so sometimes and is not that sustainable as commercial banks push loans to uncreditworthy people creating a bubble of bad debts and when they default on the payment the bubble bursts and lead to a financial crisis like that of 2008.
but in finance, we live ad breathe risk for the higher the risk the higher the return. when these loans are issued, the commercial banks sell these loans to investment banks who in turn create synthetic financial products called MBS(mortgage-backed securities ) which they sell on investors. what I advise is to talk to your wealth manager after reading this to assess a smart way to benefit from this Australian real estate bubble for they were many people who made millions and millions of dollars before and after the real estate burst of 2008 investing in real estate.
