What about the home owner/occupier? If they do not care for the value of their home, other than to pay it off, then how are they speculating at all?

The issue with that idea is that property is considered both an investment AND a place to live.

The credit is unsustainable, but who is to say that the overseas investors (read Chinese investors) are using credit to speculate? It was only recently that laws allowing overseas investment by Chinese were relaxed to allow this surge. They could be investing using savings.

On another note the difference I can see with speculators and investors (in the share market) is that speculators look for trends that will provide capital gains. Investors commit themselves to a company because they believe the company will utilise their capital effectively to increase its earnings (dividends) over time.

A lot of speculators rarely care about company earnings, as long as the share price trend is up (applies to property, eg cap. gains). Investors expect earnings growth and only factor in share price as an entry point (applies to property, eg rental yields).

Those are my thoughts on it though, I am sure they are much disputed

In the same way, practically everyone with a valued asset is a speculator. Who in their right mind does not wish their posessions to magically increase in value without doing anything?

What is unsustainable is the easy money, printing press policies of the G7 since Nixon threw out the discipline of gold/silver backing in 1971.

That is what is unsustainable. When 'credit' (ie read credibility to repay loans) begain expanding at a rate of knots. This faux credibility, as it does when the printing press becomes is revered, eventually reaches the shoe-shine boy, who eventually is allowed to speculate on the markets (with other peoples money), just like the best of them.

Disaster dead ahead is not speculation, it is well precedented historic fact.

Agreed Pete, homeowners buy to live somewhere. Speculators hold as long as they can see light at the end of the tunnel.

Have a look at the Case-Shiller index. If you bought at the height of the 1890s property boom, it would have taken almost 100 years before you reached the same value on an inflation adjusted basis! A steadily falling market, or even just level pegging for a couple of years, should clean out large numbers of leveraged speculators, which leads to a more rapidly falling market. Why buy a cash flow negative investment if there isn't a capital gain? Then imagine the actions the RBA and government might take in a seriously falling market - 0.5% interest rates and borrowing to spend? Quantitative easing anybody? Not going to be good for the aussie dollar, further squeezing any overseas investors who buy in now. Should be fascinating to watch. I'll be sitting back with my scotch to observe - if I can find one that's made in Australia.

They are not wanting to redevelop property or use it for 'income'.

This makes them speculators, plain and simple.

What this also does is make them unreliable in the longer term.

Yes, I know a lot of them may well hang on to properties for longer...but I believe that as soon as things start shifting the other way they will be selling as soon as they can.

This is also greatly affected by the strength of the AUD. Whilst they are getting a capital gain and AUD is rising, everything is peachy. If the AUD falls and their gain is not being realised, it will look like a pretty awful investment.

So, whilst these overseas investors may be filling the buyers gap in the domestic market, I do not believe it is a sustainable practice.

I guess we'll see within the next few years.

And the last time I visited him (1997 perhaps?), he and his were living in a large modern highset home in one of Brisbane's upper middleclass suburbs - And chatting to him since over the phone, I gather that he thinks his brother is the smart and competant one in the family? (The brother operates a software development business in Sydney.)

Blokes like that are smart, hard-working and very, very highly motivated. There is no way that given my core beliefs that I can wish them anything but success. But I'm still damn glad my mob got here first to give me a headstart!

Those foreigners can easily lose out in currency fluctuations, a housing crash, anything .. but a this time, anything looks better than holding USD for China's wealthy.

Getting off the topic of the article a bit, but I had a think about this once. We as a society are about 2-3 generations behind on debt. What I mean is, if all housing finance was ceased (including for investment), and people were forced to buy houses on savings, it would probably take something like 2-3 generations to pay off existing debt and save up to start buying anew. Yet there would be no housing crisis after that - just total home ownership. ... after I had those thoughts the drugs started wearing off and I woke up

At about $400k, they'll have the place paid off reasonably quickly I guess, even if they had to borrow a high % of the purchase price. Real quickly even, if there is a doctor or two amongst those adults. And then be working on the next one.

I was told years ago that was how a lot of the Italian families got their cane farms in Queensland - Big families working together - Pay off one and then buy the next one and do the same again. Sounds a bit Darwinian to some I guess? And one property sale over 20 km from the centre of Brisbane doesn't make a trend of course. But knowing the layout of the house, nothing that I heard surprised me. And I won't be at all surprised to see more of the same.