Australian housing bubble 'yet to burst'
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Hello Boomie I see you still believe at this late date that the economic nightmare that I, Token funder, Evand and many others have been alluding to for sometime is going to blow over.
I just hope for you and many other SS posters are just talking things up but have enough sense not to go out and continue to gear up at above 40%.
As a sophisticated investor I am absolutely gob smacked that you or anyone else with a modicum of common sense would believe that the Amercians or the Europeans have any hope of spending our way out of the financial abyss.
The world banking system is insolvent and the silly stimulation packages (how many are we up to now counting all the countries?) is just like Nero fiddling while Rome burned to the ground
Deficit spending.
This is not the income statement of someone you would lend money to:
http://www.fms.treas.gov/mts/mts1208.pdf
Particularly when accumulated liabilities are, um, well...
http://www.treasurydirect.gov/govt/reports/pd/mspd/2008/opds122008.pdf
Edit: In the US, a trillion is a million millions. Or, in this case, 10 of them
The United States federal government deficit] has been officially forecast at US$1 trillion for 2009 - double the 2008 deficit and equal to about 7.5% of US gross domestic product - without Mr Obama's proposed stimulus package, but some private sector economists forecast a deficit of as much as US$1.5 trillion. Quoting Editor's Opinion, Obama's weight of the world , The Australian Financial Review, 9 January 2009, p. 50..
Unfortunately, the US gummint can't open up a LOC on the country.
Public debt as a % of GDP is worth a look. Here's an example but I'm not sure if it includes the most recent forecasts noted above.
http://www.cedarcomm.com/~stevelm1/Debt_GDP.png
Unfortunately, the US gummint can't open up a LOC on the country.
Public debt as a % of GDP is worth a look. Here's an example but I'm not sure if it includes the most recent forecasts noted above.
I agree the P&L doesn't look good with a lot more L than P - just wondering about the state of the balance sheet and for that we need assets as well as liabilities...
Thanks!
I'll call it a LOC when they start putting up the individual states as security
"What LVR will you give me against Iowa? OK, how's about Nevada, everythings legal there, you know"
At the moment, T Bonds are arguably secured against the goodwill of foreign investors . If an Oz bank gave a loan to an individual with an financial position analogous to that of the US Govt. the Ombudsman would hand back it's b**ls on a plate
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Housing Prices to remain reasonably firm
Construction of homes is 140,000 per year demand is 170,000 per year. Rental vacancies across most capital cities is very low.
The Australian position is not that comparable to other countries.
The Australian market at the start of this Global Financial Crisis was caught at in a period of moderate under supply.
There will be some stagnation and contraction in home prices due to increasing unemployment, fear of unemployment and some deleveraging investments due share losses. There will be a number of mortgagee sales and so forth. But it wont be chaos or a melt down.
Need/demand for rental and affordable housing is going to keep growing regardless of the economic conditions and eventually that has to feed into firming and then increasing prices.
They are predicting an up to 10% reduction in prices across some areas (no doubt those most affected by unemployment) before a firming. However we shouldn't forget the large growth in 2006, 2007 and 2008 that puts most longer term investors well ahead of the game even with a 10% hit.
My prediction is for Qld to soften quite a lot for 12 months then because of the inevitable results of need begin to increase again. Darwin and Palmerston will probably have some small growth this year and strong growth after that due to under supply and a heap of cash about to be injected into the economy.
The rest I think will remain flat for a while but not dramatic plunges. Even a halting of the job losses in the USA will be see Australia's economy get a boost (a halting of job losses actually means growth will be in effect in the USA. Probably 7 months down the track if they can get their package through quickly.) China on the other hand has realised to not wait for the USA to recover and are now heavily involved in developing their domestic economy with large gifts and subsidies and development in their rural sector - the wholly under developed part of the economy. This will certainly add a few points to their growth over the next 12 months.
As for housing affordability. It should be based on average household incomes as that is who the buyers typically are, working couples. And so 7 times the average salary really still is 3-4 times a salary - the household salary.
Construction of homes is 140,000 per year demand is 170,000 per year. Rental vacancies across most capital cities is very low.
The Australian position is not that comparable to other countries.
The Australian market at the start of this Global Financial Crisis was caught at in a period of moderate under supply.
There will be some stagnation and contraction in home prices due to increasing unemployment, fear of unemployment and some deleveraging investments due share losses. There will be a number of mortgagee sales and so forth. But it wont be chaos or a melt down.
Need/demand for rental and affordable housing is going to keep growing regardless of the economic conditions and eventually that has to feed into firming and then increasing prices.
They are predicting an up to 10% reduction in prices across some areas (no doubt those most affected by unemployment) before a firming. However we shouldn't forget the large growth in 2006, 2007 and 2008 that puts most longer term investors well ahead of the game even with a 10% hit.
My prediction is for Qld to soften quite a lot for 12 months then because of the inevitable results of need begin to increase again. Darwin and Palmerston will probably have some small growth this year and strong growth after that due to under supply and a heap of cash about to be injected into the economy.
The rest I think will remain flat for a while but not dramatic plunges. Even a halting of the job losses in the USA will be see Australia's economy get a boost (a halting of job losses actually means growth will be in effect in the USA. Probably 7 months down the track if they can get their package through quickly.) China on the other hand has realised to not wait for the USA to recover and are now heavily involved in developing their domestic economy with large gifts and subsidies and development in their rural sector - the wholly under developed part of the economy. This will certainly add a few points to their growth over the next 12 months.
As for housing affordability. It should be based on average household incomes as that is who the buyers typically are, working couples. And so 7 times the average salary really still is 3-4 times a salary - the household salary.
Australian Property Monitors figures - Darwin is it
Australian Property Monitors latest reports - one glaring fact. Darwin/Palmerston continues to be strong and a country mile ahead of the rest.
And it is only just taking a short breather now until the end of this year when it she leap back into action again.
http://www.homepriceguide.com.au/media_release/APM_HousePriceSeries_DecemberQ08.pdf
http://www.homepriceguide.com.au/media_release/APM_Rental_Market_Report_December2008_Quarter.pdf
The Age has a story of the Chinese now going around all the capitals picking out commercial and residential properties they intend to buy but will wait to see if prices soften some more.
Australian Property Monitors latest reports - one glaring fact. Darwin/Palmerston continues to be strong and a country mile ahead of the rest.
And it is only just taking a short breather now until the end of this year when it she leap back into action again.
http://www.homepriceguide.com.au/media_release/APM_HousePriceSeries_DecemberQ08.pdf
http://www.homepriceguide.com.au/media_release/APM_Rental_Market_Report_December2008_Quarter.pdf
The Age has a story of the Chinese now going around all the capitals picking out commercial and residential properties they intend to buy but will wait to see if prices soften some more.
Growth prospects in the Darwin area firm at least
If people were doubting the future of the Darwin Palmerston region for future growth given its already stellar rise and sky rocketing rents should take heed of Inpex's CEO latest statement that means a construction start to the $20bn project proper at the beginning of 2010.
"He acknowledged that demand for resources is falling amid the economic slowdown but the Japanese firm nevertheless plans to start production in Australia in 2015 and in Indonesia the following year."
http://www.ogj.com/display_article/...npex-president-upbeat-about-LNG-developments/
If people were doubting the future of the Darwin Palmerston region for future growth given its already stellar rise and sky rocketing rents should take heed of Inpex's CEO latest statement that means a construction start to the $20bn project proper at the beginning of 2010.
"He acknowledged that demand for resources is falling amid the economic slowdown but the Japanese firm nevertheless plans to start production in Australia in 2015 and in Indonesia the following year."
http://www.ogj.com/display_article/...npex-president-upbeat-about-LNG-developments/
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