Dead Cat Bounce

[see_change]

Obviously divided opinions about what is happening in the market at the moment.

There appears to be some strength in the lower levels in outer areas ( eg Western Sydney ) triggered by the FHOG.

Personally I think this isn't the start of something more sustained , but what do you think ?

Cliff

 

[essence]

Obviously divided opinions about what is happening in the market at the moment.

There appears to be some strength in the lower levels in outer areas ( eg Western Sydney ) triggered by the FHOG.

Personally I think this isn't the start of something more sustained , but what do you think ?

Cliff

None of the answers is right. It was a "start of a new trend" late October - November. At least in Sydney it is property boom in full swing. Bargains already gone.

Those who are late have missed on at least $50K on each property they have not bought. Athough - go further out - there is still plenty to scavenge on.

 

[hobo-jo]

I think it depends on what happens with the FHOG. I think if it remains at the higher level this might provide enough support to keep prices reasonably stable in the lower end of the market.

 

[Gee Cee]

Maybe the Titanic just managed to shut a few water tight doors for a while.
And get Time to arrange the survival life boats

As the rest of the world seems to be having trouble treading water, and are not taking any people onboard. Rather throwing off board. I just cannot see a substainable movement of property into constant growth of values.

 

[essence]

Maybe the Titanic just managed to shut a few water tight doors for a while.
And get Time to arrange the survival life boats

As the rest of the world seems to be having trouble treading water, and are not taking any people onboard. Rather throwing off board. I just cannot see a substainable movement of property into constant growth of values.

Serious problem. If you can not see the obvious - then see the optometrist.

Here the table to check your sight:

2009 - Unemployment - 4.25%, Cash rate - 3.25%
2010 - Unemployment 7%, Cash rate - 0%

1996 - start of the property boom - Unemployment - 8.7%, rates - 5.6%(ish)

2001(2) -(second installment of property boom) - Unemployment 7.5%, rates 4.25%

 

[Gee Cee]

What does that mean in real life stuff?

 

[boomtown]

On the fundamentals the 30 percent fall in the Australian dollar means that miners taking a 20 percent cut on ore prices are still ahead.

On the technical side BDI is going up like a scalded cat and copper broke upwards from its snake in the tunnel.

But it all means nothing until people feel safe in their jobs again and that will take at lleast a year.

 

[essence]

On the fundamentals the 30 percent fall in the Australian dollar means that miners taking a 20 percent cut on ore prices are still ahead.

On the technical side BDI is going up like a scalded cat and copper broke upwards from its snake in the tunnel.

But it all means nothing until people feel safe in their jobs again and that will take at lleast a year.

Thats OK. I can repeat as many times it needed for you to remember:

2009 - Unemployment - 4.25%, Cash rate - 3.25%
2010 - Unemployment 7%, Cash rate - 0%

1996 - start of the property boom - Unemployment - 8.7%, rates - 5.6%(ish)

2001(2) -(second installment of property boom) - Unemployment 7.5%, rates 4.25%

When you feel more secure - at 8.7% unemployment or 7% unemployment?

And let go the resource bubble for a God's sake. It's over. There is one and only one true engine of Australian economy - residential construction.

 

[chilliaa]

Obviously divided opinions about what is happening in the market at the moment.

There appears to be some strength in the lower levels in outer areas ( eg Western Sydney ) triggered by the FHOG.

Personally I think this isn't the start of something more sustained , but what do you think ?

Cliff

Personally i am of the view 'who cares'. Are you a property flipper that needs to be right on the short term direction of the market, or are you a property investor investing for the long term.

More importantly in my opinion, can you structure the buy such that you can achieve immediate free cash flow with a long term fixed loan. If you can, then you are not reliant on property moving upwards to maintain your solvency and you can afford to take a long term view.

If transaction is negatively geared or even positively geared only after tax offsets against your personal income, then the risk is much higher because, although not a flipper in the traditional sense, you are effectively trying to flip either equity or personal income tax into revenue to support the financing of the loan. In the current environment this is much more risky.

 

[see_change]

What does that mean in real life stuff?

Greg

Where's your B..S.... translator ??!!

I thought you had a good one .....

Cliff

 

[sash]

I voted that the this trend is sustainable....with caveat...

I think that the FHOG will put a floor on prices and will move prices at the very low end by 10-15% this year....in otherwards stuff in low end suburbs well below the median will perform.

I can't see a boom happening till the unemployment situation stabilises.

I still see plenty of bargains....but these will dry up in the next six months!

 

[BoatBoy]

On the fundamentals the 30 percent fall in the Australian dollar means that miners taking a 20 percent cut on ore prices are still ahead.

And still seems to be plenty of jobs advertised in those mines, even some expansion.

On the technical side BDI is going up like a scalded cat and copper broke upwards from its snake in the tunnel.

That it is and the BDI has always been a leading indicator so I have been told. The copper , I'm sure I read that China was buying up a few million tonne?

But it all means nothing until people feel safe in their jobs again and that will take at lleast a year.

True, but the confidence has got to start somewhere. Maybe its here, maybe?

Dave

 

[willair]

I voted "Buggered if i know",and with all the uncertainty around i have no idea what the next few years will bring,as long as the rents keep comming in,the div's still keep turning up in the bank accounts,and the local bottle shop has German imported beer for less the the aussie brands i'm happy..
imho willair..

And let go the resource bubble for a God's sake. It's over. There is one and only one true engine of Australian economy - residential construction.

 

[Sunfish]

Or you cheesed off by resource bubble comment? Well - it is over. Thanks God.

Unfortunately I don't believe in "God". Thus I must make all my investment decisions on my own without guidence.

But I'll make a bet or two (real ones on the ASX) that it ain't. I don't have the stomach to go short thus I will not touch banks/builders/REITS.

It's easy on a forum: You make a lot of noise but if you're wrong you just change your nic.

 

[ffc1883_1996]

I was looking forward to a response from essence to the following when it was posted by TC a few weeks ago.

Essence, I'm almost convinced your a troll from that unmentionable forum, what is it..?? World home cost drop or something, having some fun with our eternal optimist members. Your incredible bullishness is unbelievable considering what is so blatently obvious.

How say you, essence?



By the way, dead cat bounce? Buggered if I know!

 

[essence]

I was looking forward to a response from essence to the following when it was posted by TC a few weeks ago.

How say you, essence?

By the way, dead cat bounce? Buggered if I know!

I will be damned if I know what you are all murmuring about. What would you say if I suggest that all you D&G merchants are agents of news.com who conspired to brainwash people out of property market to save share market from mass exodus of investors?

This kind of BS about "other forum" only demostrates your despair - you have nothing rational to say.

Once more for those who have troubles remembering:

2009 - Unemployment - 4.25%, Cash rate - 3.25%
2010 - Unemployment 7%, Cash rate - 0%

1996 - start of the property boom - Unemployment - 8.7%, rates - 5.6%(ish)

2001(2) -(second installment of property boom) - Unemployment 7.5%, rates 4.25%

 

[BV]

essense

what if unemployment by 2010 was @10%?
what would be your position in that situation?

I ask because 29 people got retrenched from my work today
and I am sure more are being retrenched elsewhere every day

 

[essence]

Unfortunately I don't believe in "God". Thus I must make all my investment decisions on my own without guidence.

But I'll make a bet or two (real ones on the ASX) that it ain't. I don't have the stomach to go short thus I will not touch banks/builders/REITS.

It's easy on a forum: You make a lot of noise but if you're wrong you just change your nic.

Do not worry - God does not give a damn if you believe or not. Same goes for property cycles. And since 1980 I was never wrong in my predictions. Slight deviations in timings - that happened (and mostly because of silly Government interventions). But in identifying trends - never.

 

[essence]

essense

what if unemployment by 2010 was @10%?
what would be your position in that situation?

I ask because 29 people got retrenched from my work today
and I am sure more are being retrenched elsewhere every day

BV, it seems like you around long enough - do you remember Tibor Bode in 2001 who said that world is going to fall apart because he was retrenched like other IT during IT crash? I lost my job too back then. I said to Tibor - do not worry, we are not that important.
OK, say unemployment 30%. So what? People are going to live in gutters?

It does not matter if people own or rent, are they employed or not - they are going to live somewhere. And since they are bunching up in Sydney since 2003, bunching up capacities already exhausted.

Rent will go up no matter what - everything that people save as a result of deflation they will spend to compete for place to live. And with interest rates at 0% - mortgage will be cheaper -so buying is not going to stop.

Unemployment, affordability - largely irrelevant. Supply and demand rule.
While I see no cranes on the horison - there is no reason to loose sleep.

Also think about stupendous amounts of money which are deinvested from share market. Well, people can waste them on bonds and gold, but what is blatantly obvious that all these bailouts will make Governmets insolvent and they will be forced to sell their gold reserves.

There is no other way to make money in the next 5 to 10 years apart from redidential property.

Print these words in gold, frame it, put it on the wall.

 

[joeExpat]

There is no other way to make money in the next 5 to 10 years apart from redidential property.

Baloney.
The stockmarket has a far greater chance of showing gains from where it is now than residential property does, even if it takes a while. Now is not the time to be panicking and fleeing the market.