I am constantly having conversations with people (often non-investors) about whether the property market is going to plummet in the coming few years.

Is there going to be a repeat of the GFC, but this time in Australia?

My 2 cents is that a defensive approach always pays, especially in times of uncertainty. Aside from this though, here’s just a couple of reasons why what is going on in Australia is different to what has happened in the US:

1. The Australian banking system isn’t making crazy loans to people who can’t afford it, as was the case in the US.. the running joke, if you had a heartbeat, you could get a loan
2. It is reported by the ABS that about 1/3 of all Australian property is owned outright, while another 1/3 of property have very little debt. These 2 factors combined create a terrific safety net for us. As a nation, we hate debt, so we are quick to pay it off where we can. In contrast, the average American does not have an incentive to pay off their mortgage because it is a tax deductible expense…can you imagine??!!

Anyway, I am definitely not into crystal ball predictions.

Here’s what I do suggest:

• If you have exposure to high risk/speculative property, reduce it if you can
• If you carry a lot of personal debt (car leases, credit cards, personal loans) get rid of them as a priority
• Don’t let fear or greed drive your investment decisions
• Keep cash reserves that equate to a minimum of 4 months living expenses
• Above all else, make sure your sleep at night factor is high, by not investing in anything that causes you to wake up worrying.

Here’s to your freedom

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