Well they can prophesise d & g all they like, my gut feeling is 2 small rates rises then a drop, then stable and a wise old property investor told me once, that was the best time to wheel and deal because you know what you are dealing with. And to back that, we have just bought a ppr townhouse - the most fabulous buy of the century, and not just because of price. Wish they would name a settlement date (we want to bring it forward) will keep you posted
Bloomberg story, pretty dire.
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It's a joke. A one in 100 hundred year event happens about once every 10 years. That's what happens when you plot 20 years of data, extrapolate and assume it's normally distributed (which markets are not). How many times have we had a crissis of some sort that was a 1:1000 chance (17% rates, 6% rates, asian crissis, US subprime, tech bubble, etc etc).
Any Australian gov't that allows house prices to fall dramatically will not be in Gov't at the next election. 70% of Aussies own their own homes. It only takes a "few percentages" swing to sack the Gov't.
I think it was Jan Somers who said....."I've heard all this before".
LL
I think it was Jan Somers who said....."I've heard all this before".
LL
I'm curious how you think the Government can stop it. They can influence it for sure - they have been pumping it up for years through bad policy - but they don't control it.
Best they could do would be to print money and cause enormous inflation so people "think" their house value is flat - in real terms though it is crashing.
YM... The only way for that kind of a huge price drop to occur, there has be a considerable number of desperate vendors. This could happen e.g. if a lot of people chose to leave Australia, but, in fact, we have the opposite happening on that front. Once we've established in general that the demand-supply equation is "in the right direction" , it's down to affordability. In essence, decrease values ( a bit... not heaps), increase income, decrease interest rates... which seems to be kinda where we're headed for the next couple of years.
LL
LL
Not sure if we are heading in the right direction. I expect migration to be cut significantly in the next 12 months. It seems every day we hear about a company sacking employees. Today its Fairfax with 550 jobs.
http://business.theage.com.au/business/fairfax-media-to-cut-550-jobs-20080826-42fu.html
Rents are close to a peak for the moment. Owners are being unrealistic with asking prices and places are sitting vacant for weeks.
I don't have a good feeling at all about the next few years. I would love to jump in and buy however i don't feel its time. Anyway it gives me longer to save more money for future purchases.
They might reduce it a bit, but once again, politically sensitive and Kevo wants to be local hero
on the international circuit. Lot's of people want to migrate to Oz. Lot's and lot's of countries wish they had our "problems"....And every other day we hear about the skills shortage, the doctor's shortage, mines can't get enough workers etc
A few owners maybe...but not in general. Read the thread "Rents more affordable than in 2001". If you're a renter, it's more rises in general to come. Rents have to rise.
..and that's exactly how "they" WANT you to feel right now so "you" won't make huge wage demands. You're right in as much as I don't think there's any immediate rush to buy, but remember the old demand exceeds supply...so watch the market closely if they start to reduce IRs. If you're a long termer I think we're coming up to a great period to be making low-ball offers.
LL
I guess it depends on what sector you are focused on.
Construction/industry and trades remain chronically short of skilled workers. This will take yrs to fix.
So maybe the migrant intake will focus more in those areas.
There are some strange categories that qualify immediately such as hairdressers. Apparently we are short of hairdressers. ???
Otherwise regular tradies such as chippies qualify readily.
You can get caught up in all this negative sentiment and let it affect your investing decisions.
Waiting to buy and saving more in the meantime may or may not work.
You risk that elusive property always being 'just' out of reach to buy.
I have never found it possible to 'save' faster that I could make a property appreciate in value.
In hindsight I can conclude that I have personally made every 'investing' mistake over the years ( shares, options, penny dreadfuls, AND property mistakes) but it was always property that saved me.
kp
This is exactly the core of my argument on the macroeconomic side of all this. Take a step back and think about your statement - if what you are saying applied to everybody then it is profound - we have wealth coming out of thin air!
Anyway - I'm not disagreeing with you or accusing you of making stuff up. In your personal experience it is probably absolutely true. It just interests me when I try to apply it to the whole economy.
PROPERTY WEALTH IS MONEY OUT OF THIN AIR!
it's all perceived value - i buy for $100k 5 years ago and is now worth $160k today. why? becuase there is someone who will pay that much.
there's $60k out of thin air. sure it's ludicrous, sure it's near on fantasy - but thems the rules. don't try and change it, work with it.
if no-one wants to buy house, value drops. just like shares.
i know you're not an idiot, but that's just stating the obvious.
our economy is BASED on perceived value - look at the share market.
therein lies the basis for our economy, perceived value AND money out of thin air. the trick is to be the person receiving, not giving. knowing where the demand will be will see you receive. following the crowd will see you donating.
that's a whole lotta economy based on a whole lotta money that wasn't there beforehand, or money from thin air.
banks create money and debt out of thin air by typing numbers into a computer with no basis to the claim. if they can do it, why can't we?
Sky's the Limit, as you wil see over the next 6 monts;
The headline is an attention seeker , that's for sure.
It makes everyone read the article.
that's what newspapers want.
With quite low unemployment , very low rental vacancy rates , a shortage of new houses and immigration at 200,000/year I am not concerned with some fluctuations in housing prices.
As far as the economy is going it could slow more and it would still be going bang busters.
Who was that messenger .... so I can shoot him
It makes everyone read the article.
that's what newspapers want.
With quite low unemployment , very low rental vacancy rates , a shortage of new houses and immigration at 200,000/year I am not concerned with some fluctuations in housing prices.
As far as the economy is going it could slow more and it would still be going bang busters.
Who was that messenger .... so I can shoot him
Ok I thought about it ... ( ouch that caused a brain pain !!)
I guess the point is that it can apply to anyone who chooses to ACT.
But the reality is that most will not do so. Therein lies the human herd instinct.
The penny dropped for me many yrs ago so I guess I do take it for granted.
The point being that there quite often is a 'gap' between the cost of land plus improvement vs the final 'market' price.
My experience is that Mr Market never lies and the only other ingredient in this mix is 'willing seller' and 'willing buyer'.
The risk you take is that this 'gap' does not eventuate.
If and when it does however, then I guess it equates to making money out of thin air otherwise known as wealth.(or willing buyer/seller coming to agreement)
Don't bother trying to transpose this into the whole economy, it probably does not have any correlation.
Just think global but act local.
kp
Is this nescessarily always true?
In a closed system I can see why it would be, in a system where you have new inputs, same from wealth and people flowing in from other places then it might not be.
The wealth flowing from other places is actually our trade deficit. It allows it to happen at the macro level.
Doubt it! I would content that it’s many years since rents have been so cheap. ~50% discount on property holding costs.
Not sure where you got your information from?
a little bit of "vested interest - big picture" perhaps....
One of my mental reminders is "always beware the vested interest" and since this thread started with a Bloomberg article (and Morgan Stanley etc) you have to remember these guys make ALL their money pretty well from the share markets. They have a vested interest in making IPs look as scary and risky as they can. Next, you have to know the US stock market and financials are just in awful, awful shape as the sub-prime just continues to unfold.
This guy writes the Planet Wall Street article for the Age. You may like to read. I think he's a pretty straight shooter.
http://business.theage.com.au/business/powerhouses-of-capital-up-for-grabs-20080826-433i.html
Then consider this ...sure, houses in the US are tanking...but at least BEFORE they fell... they rose "lot's" over the last 10 years. Compare that with the DOW, the index made up of the (supposedly) USA "blue blue chips". Alan Kohler featured a graph on his ABC Finance. Hang onto your hats folks.. the DOW is roughly at the same level as 10 years ago. NO CG. Zippo. Remember all those "advisers" who told us we have to have "International" exposure ????
Perhaps, this may help to put the Bloomberg article in perspective.
Those guys are all in deep -do-do and it just keeps getting deeper!!
LL ( Sorry for long post).
One of my mental reminders is "always beware the vested interest" and since this thread started with a Bloomberg article (and Morgan Stanley etc) you have to remember these guys make ALL their money pretty well from the share markets. They have a vested interest in making IPs look as scary and risky as they can. Next, you have to know the US stock market and financials are just in awful, awful shape as the sub-prime just continues to unfold.
This guy writes the Planet Wall Street article for the Age. You may like to read. I think he's a pretty straight shooter.
http://business.theage.com.au/business/powerhouses-of-capital-up-for-grabs-20080826-433i.html
Then consider this ...sure, houses in the US are tanking...but at least BEFORE they fell... they rose "lot's" over the last 10 years. Compare that with the DOW, the index made up of the (supposedly) USA "blue blue chips". Alan Kohler featured a graph on his ABC Finance. Hang onto your hats folks.. the DOW is roughly at the same level as 10 years ago. NO CG. Zippo. Remember all those "advisers" who told us we have to have "International" exposure ????
Perhaps, this may help to put the Bloomberg article in perspective.
Those guys are all in deep -do-do and it just keeps getting deeper!!
LL ( Sorry for long post).
I buy a property every year or two anyway, so I'm not so concerned with the cycle itself.
As far a $$ out of thin air, think about working for a week. The cost of your labour has effectively been 'created'. Of course, your employer theoretically sells this value on... to be bought by people paid with $$ from working!
As far a $$ out of thin air, think about working for a week. The cost of your labour has effectively been 'created'. Of course, your employer theoretically sells this value on... to be bought by people paid with $$ from working!
^^^^ exactly - the whole economy is money from nothing.
