Will Australia have a hard landing from the boom?

jahn said:

Hi
I would go with 'soft' based on employment forecasts, interest rates, and economy predictions etc.
In this area, the front page of the Telegraph ran an article last week quoting the almost record level of building approvals continuing on this year from last years high. (OK, so I know we are a bit behind up here in Newcastle, compared to Sydney, in most people's minds, but thats their loss. )

Peter 147
I take it you are referring to enthusiastic, impatient, financially uneducated, people when you post -

"Fools buying anything because RE always makes money.
Fools buying because of NG. "



jahn

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Hi Jahn

You are correct to point out that to state “fools” is sensationalizing a bit. Your description is more apt however I would add those who believe all what “seminar experts” tell them.

My bookkeeper told me of a client she has who bought 7 NII units and did not pay his GST on his business because he thought NG would cover it?!?!?!

Peter 147

HSBC Commentary

This weeks HSBC commentary indicates we've already had a soft landing.

So far this year the RBA has used a supposed fall in house prices to rationalise steady interest rates. The data on which it relies are the median house price measures most sensitive to changes in the composition of house sales. As typically happens when a big price boom ends, the most expensive transactions slow most dramatically. This automatically drives down the reported median price, giving a false signal about the market.
Those measures which attempt to correct for this compositional change show either no price fall or an insignificant fall. Last week Residex, which publishes repeat sales or matched sample data reported that if there had indeed been any fall in prices, it was now over. Given that mortgage rates are at the average of the last six years, and employment and incomes continue to increase, this is surely not astonishing. One might add that if it is the case, as the RBA believes, that house prices have fallen in the last six months, it had has no unfavourable impact on consumer or business confidence or the economy generally. When surveyed by the Melbourne Institute a few weeks ago, consumers were more confident than at any time in the last ten years, and the index was not very far below the record high for the last thirty years of data.
By the end of this year, which is the first real chance to tighten, inflation will appear to be higher, growth to be faster, and house prices will appear to be resilient. None of this will actually be new, but it will be clearer – sufficiently so, anyway, for the RBA to begin discussion of another tightening or two.

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There's also some reasoning why the next interest rate rise cannot happen before Nov, but you'll have to look at the link.

I hope nobody takes the 85% "soft landing" response as investment advise.

SS respondents are like currants.

Thommo

Thommo said:

SS respondents are like currants.

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We're like dried up grapes?

Cheers,

Aceyducey

Aceyducey said:

We're like dried up grapes?

Cheers,

Aceyducey

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It's a bad joke which usually includes Tasmanians. Musta drank more than I thought last night.

Sorry..... T

Thommo said:

It's a bad joke which usually includes Tasmanians. Musta drank more than I thought last night.

Sorry..... T

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Then the grapes were dried up because they were used to make a whine?

Masterbuilders have commented:

According to Master Builders Australia (MBA), the peak body for the building and construction industry, the Australian housing sector is entering an uncertain period but, despite this, the MBA believe there is nothing to suggest the market will experience a substantial crash.

Ongoing speculation about further interest rate rises and the impact of interest rate rises in November and December last year contributed to a slow down in housing activity.

In addition, the traditionally slower winter period and the fact that we are in the lead up to a Federal election have also had a dampening effect on the housing market, although these reasons are not enough to conclude we are in a housing freefall.

In fact, the most recent building activity data from the Australian Bureau of Statistics (ABS) showed residential building activity was at its highest level since the June 2000 quarter.

The ABS statistics showed, on a seasonally adjusted basis, the value of all building work completed during the March 2004 quarter was $12.1 billion, a 0.6 per cent increase on the previous quarter and 3.8 per cent above the March 2003 quarter.

During the March 2004 quarter investment in residential building also increased by 2.4 per cent to $7.0 billion, 4.3 per cent higher than the March 2003 quarter.

Investment in alterations and additions fell by 0.6 per cent to $1.3 billion during the March 2004 quarter, although this level of activity was still 9.6 per cent higher than the same period last year.

Chief Executive Officer of Master Builders Australia, Mr Wilhelm Harnisch, said “While in both volumes and raw dollar terms building activity was at a record high, all indications are that a mild slowdown is now underway.”

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Source: Quartile Research Property insider (http://www.propertyinsider.com.au/e...e.cfm?clientid=49&fullstory=1205&periodid=174)

Cheers,

Aceyducey

Will Australia have a hard landing from the boom?

Hopefully =)

I would have to agree with xbenx.....hopefully.

unfortunately i find it unlikely to happen now that we have already witnessed a slow cooling off.

Just need a nice big credit squeeze =)

Unlikely? depends on this election outcome :/

seems more likely everyday that interest rates may stay low for another 3-4 years.

from todays smh....

"Labor will confront a backlash today after it backs the Government on the free trade agreement with the United States, in the face of widespread opposition from within the party and warnings that it could be a vote-loser.

The party's support, expected to be sealed at a fiery caucus meeting this morning, will pave the way for the passing of the legislation through Parliament, which will begin debating it today."

A post I've hijacked off HC

Some of this I was aware of, but I was unaware of the big picture. This post is by Grant62, a working economist.
..............................................
(Subject Heading: US jobs down, down, down)
So, then, what does that say about a commodity based economy such as Australia.

Locally:
1)
foreign debt out of control;
2)
BoP deficit rapidly approaching 7% of GDP;
3)
local GDP flat (0.2% in March Quarter, and likely 0% to negative in June quarter, with only the prospect of the $600 family bonus payment to reverse that outlook);
4)
a currency under siege without relief (remember, an A$ above 64c is decidely negative to our export sector);
5)
exports now performing at their worst proportional level since 1990;
6)
consumer spending far worse than the equivalent in the USA;
7)
proportional debt in Australia greater than should otherwise be the case and quite possibly far worse than is the case in the USA;
8)
our foreign debt now exceeds 50% of GDP (actually, closer to 60%);
9)
our level of savings below that of the USA, the UK and Europe;
10)
our "real" interest rates are amongst the highest in the developed world (even worse, on a nominal rates basis);
11)
our level of energy (read - "oil") dependency is far greater than that of the USA (within several years, we will be importing >90% of our oil requirements);
12)
a flight to safety in the event of Mark Latham being elected is likely to see a capital crunch in Australia with foreign funds being withdrawn from Australia;
13)
the removal of NCP from the Australian Indices will see a marked exodus of foreign funds from Australia resulting in the ASX being further relegated down the ranks of the world's recognised stock exchanges;
14)
the A$ increasingly assuming the status of a speculative currency without any safe haven status (especially if Mark Latham gets elected);
15)
a local economy heading for a U-turn in the not too distant future.

So, whatever, the fate of the US economy, the Australian fate is far, far worse. That's the problem really. Most on this Board contend that the US economy is a disaster but ignore altogether the rapidly emerging disaster in their own backyard.

All the best,
Grant62

Who said the boom's over?

I have just had a haircut and for twenty mins (she was in no hurry) the stylist just talked about her real estate and how well it is doing now. Her block in a northern beach area has increased 80% since March. And units in her block are getting good money too.

Thommo

Thommo said:

I have just had a haircut and for twenty mins (she was in no hurry) the stylist just talked about her real estate and how well it is doing now. Her block in a northern beach area has increased 80% since March. And units in her block are getting good money too.

Thommo

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80% since March?! I think she was pulling more than just your hair there, Thommo. Sydney market (in MHO) peaked towards end of 03 and hasn't done much since realistically.

Jacque said:

80% since March?! I think she was pulling more than just your hair there, Thommo. Sydney market (in MHO) peaked towards end of 03 and hasn't done much since realistically.

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True story!

Refer my earlier post @ http://www.somersoft.com/forums/showthread.php?p=112533#post112533
Her block, which she bought for $60k is just up the road. This auction was so odd it was reported in the Courier Mail I believe. There is a gold rush now for this type of property.

But what I thought was interesting is that, in Townsville, the bell-hops and cabbies (hair dressers?) are still talking property.

T

Hi Thommo

Whatever goes up that much must come down. Sounds like the last days of the Tech Boom to me.

Peter 147

Peter 147 said:

Hi Thommo

Whatever goes up that much must come down. Sounds like the last days of the Tech Boom to me.

Peter 147

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"Whatever goes up that much must come down." What heresy!!!!!!!

Real estate just never goes down. Dont you know that? Everyone just extrepolates the last few years and believes it can go on for ever.

But seriously! You have also missed my point. The punters still believe!

Thommo said:

"Whatever goes up that much must come down." What heresy!!!!!!!

Real estate just never goes down. Dont you know that? Everyone just extrepolates the last few years and believes it can go on for ever.

But seriously! You have also missed my point. The punters still believe!

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Kinda got the point. Hence my tech boom analogy. But I accept that while the Punters believe the dance can go on. The RBA might be the bouncers though.

Appreciate the update on whats happening in sunny Qld. Got a good holiday resort you recommend?

Peter 147

"the stylist just talked about her real estate and how well it is doing now."



Some might take that as a contrarian signal..

wheres the old tea leaves..

So long as people believe the economy is doing well...can there be a recession?

Belief can move economies....

Beware the change in belief!

Cheers,

Aceyducey