What happens if the property bubble bursts?

The assumption in this title is that a property bubble exists. Or atleast in Sydney and parts of Melbourne. Having moved here from the US I can say that housing in Australia is most certainly expensive.

And we are not even talking about my old hometown Chicago where I could get a nice lake facing apartment in Downtown on the 33rd floor for 400K (and this was in 2012 when the Aussie Dollar was actually stronger).

Yet the relentless rise of property valuations in Sydney and Melbourne continues. Every week brings new data about how auctions in Sydney have almost 85% and above clearance rate. Spruikers are having a field day. Everyone seems to be on the property bandwagon.

Yet there are dark clouds on the horizon. Biggest among them is China.

The Chinese stock market is in an unprecedented rally right now, novice people are borrowing to invest. There is an old story about JFKs father, he sold off all his stock right before the great crash of 1929 when his shoeshine boy started giving him tips about which stock to invest in.

The Chinese demand for Australian ore is receding. And there is tidal wave of apartment stock that will become available 10 to 12 months from now in both Sydney and Melbourne based on the constructions in the pipeline. Expect apartment prices to depress in the next year or so and lower rents. Which is all good news for the young migrant like me searching for his first home close to the city.

However it also has to be recognized that property absolutely underpins Australian wealth. Australians are heavily invested in property and are 3 times more likely to be invested in property than an American. When the slowdown starts as it will invariably will I don't expect the sky to fall. However you will definitely find bank lending to project developers tighten. And a lot of honest hardworking Australians will find their property based notional wealth seem suddenly shaky.

This is where crowdfunding platforms like estatebaron.com will come in play. We are ideally positioned to fill in the gap left by the receding bank lending and provide the necessary funding for much needed development projects to proceed. And by investing small amounts in various projects of their choice an investor can achieve diversification instead of having all his eggs in one basket. An investor on estatebaron.com can invest amounts as low as $2000 AUD in one project unlike the hundreds of thousands which are needed to start investing in property.

estatebaron.com dis-intermediates the process of property investments by giving small investors direct access to property investments of their choice. And by focusing on local developments in Melbourne for Melbourne investor we want investors to have the ability to visit the projects they are invested in.

A property bubble bursting wont be a pretty affair. I was in Boston when the whole subprime Mortgage saga went down in 2008. But one of the key reasons was the many layers of middle men moving monies around. Platforms like estatebaron.com are the key to change the way finance works.

In the old Mayan tales Apocalypse is not just about destruction of the old, but also the beginning of something new. Something better.

Lets hope on the other side of this great sea we are about to cross a new and beautiful land awaits.