Article

[Bigtone]

I don't always agree with what Terry says especially his predictions on certain areas. I do however agree absolutely with his comments in this article about "australian property market" and 'experts' from melb and syd applying local conditions to the whole country when making predictions. I believe this article is spot on !


http://www.theaustralian.com.au/bus...he-business-flow/story-e6frg9gx-1225971666976

 

[Player]

Ya beat me to it BT.

I also read that in Primespace this morning and was going to post it in reply to another thread.....got sidetracked.

Bottom line, there is no one Australian property market. It ain't all yipee kayay everywhere right now, however to dismiss the opportunities that exist in pockets (likely outside of our backyards) is short sighted.

I still maintain that keeping conservative LVR's is prudent and being organised with buffers (offsets, LOC's , etc) will ensure the little duckies are all lined up to pounce on distressed assets or assets in areas that are going to outperform in the near to medium term.

Thanks for sharing here.

 

[MichaelW]

I see next year as a time of tremendous opportunity for developers and investors who have the sense to look past the inexpert generalisations and see the potential emerging in specific hotspots around Australia.

Sounds good to this small time developer...

I'm still very optimistic about 2011. I've said before that interest rates don't correlate with capital gains. Terry points this out again, but others seem to draw all sorts of correlations and conclusions.

Cheers,
Michael

 

[HomePage]

Sounds good to this small time developer...

I'm still very optimistic about 2011. I've said before that interest rates don't correlate with capital gains. Terry points this out again, but others seem to draw all sorts of correlations and conclusions.

Cheers,
Michael

The ANZ certainly seems to think that low interest rates have been largely responsible for significant growth in recent years in terms of price to income ratio in this article: http://www.anz.com/resources/5/5/55....pdf?CACHEID=5517ce804331090793ff9f5b4fbd8721

To quote from their conclusion:

The halving of mortgage interest rates almost fully explains the measured rise in house price to income ratio

And in reference to the following statement in the originally quoted article:

Confidence will be high amid vibrant business activity and healthy employment.

Vibrant business activity if you are a mine worker perhaps, otherwise there are some pretty dark clouds out there for the rest of us, especially the retail sector.

 

[Aaron Sice]

by that reasoning we must be in for the mother of all booms with the latest banking review seeing the banks want to raise rates when they damn well like.

 

[MichaelW]

The ANZ certainly seems to think that low interest rates have been largely responsible for significant growth in recent years in terms of price to income ratio in this article: http://www.anz.com/resources/5/5/55....pdf?CACHEID=5517ce804331090793ff9f5b4fbd8721

To quote from their conclusion:

The halving of mortgage interest rates almost fully explains the measured rise in house price to income ratio.

Hi HomePage,

Don't confuse structural with cyclical. I agree that the structural lowering of interest rates following the high inflation environment of the 80's was a significant driver of house price growth. I was commenting on cyclical interest rate movements within their new normal band.

When the economy takes off, interest rates go up but this does not slow the property market. On the contrary, when the economy takes off often the property market is in lock step or leading.

The current interest rate increases we're experiencing are entirely cyclical, not structural. If we see 18% rates again then all bets are off and I agree with the ANZ that this will have the opposite impact on house prices from when they halved from this level in the 80's. But personally, I don't think we'll see 18% again...

Cheers,
Michael

 

[sash]

Yep...spot on.....

The "charltans" come from Sydney and Melbourne and fail to see that there is a market outside of these cities and the property market is not "One" market!

I don't always agree with what Terry says especially his predictions on certain areas. I do however agree absolutely with his comments in this article about "australian property market" and 'experts' from melb and syd applying local conditions to the whole country when making predictions. I believe this article is spot on !


http://www.theaustralian.com.au/bus...he-business-flow/story-e6frg9gx-1225971666976

 

[Intrinsic_Value]

Yep...spot on.....

The "charltans" come from Sydney and Melbourne and fail to see that there is a market outside of these cities and the property market is not "One" market!

this may be true, but 'sub markets' are still influenced by the market characteristics of the market as a whole.
In otherwords residential property has been seen as an overall 'worthy' investment on a macro basis. This still has an influence on the valuation of the 'sub markets'.

Those people who have experience with the share market over recent times have learnt this the hard way.

So yes its very possible for a particular sub market to act independently of the macro broader market, but it is still influenced by the macro market.

 

[HomePage]

Hi HomePage,

Don't confuse structural with cyclical. I agree that the structural lowering of interest rates following the high inflation environment of the 80's was a significant driver of house price growth. I was commenting on cyclical interest rate movements within their new normal band.

When the economy takes off, interest rates go up but this does not slow the property market. On the contrary, when the economy takes off often the property market is in lock step or leading.

The current interest rate increases we're experiencing are entirely cyclical, not structural. If we see 18% rates again then all bets are off and I agree with the ANZ that this will have the opposite impact on house prices from when they halved from this level in the 80's. But personally, I don't think we'll see 18% again...

Cheers,
Michael

I see what you mean now Michael. I concur.