When the Australian property Market crashes, how will Classic Cars fair ?

As the Australian economy completes the final stage of it's development, how will Classic Cars be affected ?.

As we are all aware, the Australian Property Market has absolutely boomed over the past 24 months, in line with the usual jump that we have all witnessed every 7-8 years. The usual trends have been followed, with Sydney and Melbourne leading the way, followed by Brisbane 18 months later, and now Hobart and some other areas of Tasmania, as retirees head that way.

That said, there are three differences this time around, inasmuch as firstly the growth has been far greater (bubble territory), and that secondly, Western Australia and far North Queensland have actually already dropped by 25-55% at this time, due to the fact that the mining boom is now a distant memory, and finally everyone accepts this fact (despite recent jumps in the price of Iron Ore). Thirdly, back in Sydney and Melbourne, the property growth was largely driven by Investors from China and Australia, with the result that prices skyrocketed as a combination of masses of buyers and very low borrowing costs flooded into the market. So what now ?.

Well, when looking at the Australian property market from an overseas perspective, it has always been easy to see what will occur. For example, firstly there are now 220,000 apartments yet to be built in Sydney and Melbourne, when the saturation point of ALL dwellings in Australia is approximately 260,000 per year, including houses. There are already many apartements purchased "Off the Plan" in Melbourne which are worth less now than when they were purchased.......... and they are empty.

Secondly, the smallest of interest rate rises will place some people into a repossession scenario given their 90% leverage (they would have started lower, and this is where it has ended up).

Clearly, this time we went too high too fast on too lower borrowing costs. It does therefore not take a NASA scientist to predict the result.

And so how will Classic Cars perform ?. Well, throughout the GFC prices rose by 22% per annum across the Collectibles range, as can be seen by using the Hagerty Valuation Tool. How will Classic Cars perform in Australia ?.................... They will continue to grow at the present rate, because Classic Cars are purchased with cash and not borrowings, and are now seen as the best safe-haven for investment money, along with Gold. Government Bonds have dropped off the radar due to such low yields, and so this new asset class is now racing ahead........... Globally.

We are heavily involved in Real Estate, and are presently diverting 80% of our funds into Classic Cars.

Call us when you decide to join in.