“Get on the property ladder.” Will this story end?

“Get on the property ladder.” Will this story end?

My life has been dotted with constant reminders to ‘get on the property ladder’.

Wise experts, conservative friends and family or committed peers all hint (or outright proclaim) that the property ladder is the way to secure the future.

If I heeded this advice 15 years ago, my investment would likely have increased – significantly. Heck, even if I heeded this advice as recently as 12 months ago in the Sydney market, I’d likely be wearing a Cheshire Cat grin.

But with every property boom comes talk of property bubble and bust. The ups are generally followed by the downs. Yet conventional wisdom, the story that keeps telling me to ‘get on the property ladder’, is yet to crumble.

So my question is, (when) will this story come to an end?  

Why is ‘get on the property ladder’ such a strong story?

When we experience positive property results, and these results gets reinforced over time, it pretty quickly becomes public knowledge.

We talk with friends, family and children about our wild property success, and everyone with a stake has important wisdom to impart. Lenders vocally espouse trendy “rent money is dead money” slogans. Governments tell their voters that they are keeping the economy strong. Real estate agents ensure we know when property prices are rising. Entrepreneurs sell books outlining the way to wealth through property.

The fruits of a strong property market fill the pockets and fuel the ego of the whole economy, giving the story great momentum and strength.

‘Get on the property ladder’ is also strong and deep simply because it has worked out well for a lot of Australian, UK and USA residents, businesses and societies for a very long time.

Those who haven’t had the same good fortune, opportunity, or appetite for risk remain silent, asking themselves, ‘should I buy a house?

And then quickly answering, ‘yes’. 

 

 

What keeps this property story so strong?

We do.

Not only do we share our good property experiences en masse, we also believe in home-ownership as a badge of success, security and freedom.

This ingrained belief is firmly reinforced by these success stories, business PR, and government, financial and legal instruments.

It is also then reinforced by our own internal biases. We are experts at justifying our existence, and even in the face of slow or negative property returns we come up with ‘can’t lose’ statements like ‘rent money is dead money’, ‘I wouldn’t have saved this amount if I wasn’t paying something off’, or ‘at least I have something to call my own’.

And most people who join the property ladder, especially in the last 15 years, have had these beliefs reinforced through excellent returns and results.

When will this property story end?

Given the strength of the property story, is it possible for it to end?

Societies, cultures and economies change. Nothing will stay the same forever. Even the definitions of conventional wisdom and common sense shift over time. 

So when will parents to tell children, “Don’t invest in property; it’s just not worth it”?

I’d be interested in anecdotal evidence or otherwise from the USA, where the property bubble started bursting around 2006. The Great American Dream was home-ownership, but is that still the dream of people who had homes taken away from them during the recession? Has that negative event stemmed the flow of ‘good news’ stories about property?

Is it breaking down the foundations of the Great American Dream?

I don’t think it is.

Strong beliefs and aspirations take generations to shift. Too many of us are deeply vested in the notion that property will continue to rise. That it is the best investment. That it will continue to grow. That it is the safest investment around.

While these mindsets exist, so too will the policies and economies that support them.

But we see dents in consumer confidence. We hear people question the true value of property. We all wonder if property can continue to consistently grow from its already high levels.

But until we get another few bubble bursting, or until we have sustained (10+ years) periods of negative or no property growth, the story that tells us to ‘get on the property ladder’ will probably remain strong.

 

 

 

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