Dead Cat Bounce

[see_change]

Agree completely...


The "I am right and you're all idiots" arguments are becoming very polarised. Its quite entertaining sitting in the middle and watching the pot shots back and forth. Maybe nonrecourse and essence should start a new "why my opinion is right" thread and duke it out for our public edification.

Cheers,
Michael

I'd agree

Thinking of alter ego's who was that .... in ? 2006 who really polarised opionions ... Can't seem to find a couple of posts I know I started ... Seem to have been deleted.

Wasn't astroboy , who was it ?


Cliff

 

[BayView]

I'm Yossarian in the Other Place, BTW.

So does that mean you are here as a troll, or over there as one?

Or is your new nick going to be "Token Each Way Bet Funder".

As for the topic; I tend to think it's a dead cat bounce.

Why?

The Banks are getting as hard as hell to get money out of. Only the people who are in solid financial positions are getting loans generally (other than the FHB's).

Given that the trend these days is for people to spend more than they earn and accumulate junk and consumer debt, this leaves very few in the position to put deposits together, and/or be able to service a decent loan after their debts have been factored in by the Bank.

There are still people floating around who can borrow, but the numbers have thinned out considerably.

My guess is the best we can hope for this year is for the current situation to remain the same with maybe a little bit of an increase in some areas.

 

[quoll]

My opinion it's a localised adjustment to the low end of the market because of the grant, until the upper and middle start to move it's not the start of an up swing.

Saying that I don't keep a close eye on Sydney so not sure what is really happening with the middle and upper bits of the market over there.

In Adelaide with in the suburbs I concentrate on the price is still down roughly 10%, the old housing trust 3br 1bth have dropped from ~$300 to ~$270 for a nice rectangle block of about 700sqm and thats in 12months looking from Jan 08 to Jan09.

Regards
Graeme

 

[Witzl]

thats not the case here in sydney.
The standard 3bed/1bath house on a 600sq.m block in the western suburbs used to cost you around $230-250K back in Jan 08.

Now, that will cost you $280K upwards, and for a lower grade property too.

Im no economist... but i dont think this is a dead cat bounce.
I dont think that things are going to rocket off anytime soon though. I see the low end rallying a bit on the back of the FHOG, and possibly continuing a steady incline afterwards. Then we will see some flow-on effects at the higher ends of the market.... as confidence returns.

Where im looking, below the median in the western suburbs... there is no lack of confidence at all. Interest rates are down, FHOG is up, people are now just able to walk out with a couple of grand in their pocket and easily buy a house.
And they are doing it in force.

 

[steveadl]

In Adelaide with in the suburbs I concentrate on the price is still down roughly 10%, the old housing trust 3br 1bth have dropped from ~$300 to ~$270 for a nice rectangle block of about 700sqm and thats in 12months looking from Jan 08 to Jan09.

Regards
Graeme

Mind if I ask which suburbs Graeme?

 

[quoll]

Christies Beach, would have pasted in a link but access to RE.com.au is no good from work, unusable slow. Had a look couple of nights ago and there was a funny shaped small block for $229k about 650sqm old housing trust house at the eastern end of Christies Beach.

 

[perky29]

I think its the start of a new trend - in Sydney that is. I think QLD and WA will need to wait for a few more years (after Sydney has its next boom again).
I think the Fed Government will extend the FHOG beyond June 30 to keep underpinning this new growth phase - and eventually this will flow through to the 500k properties and up.
The only thing that will stop this is unemployment over 8% , but I am predicting (hoping) it will stop somewhere in the 7% band in 2010.

 

[AUSPROP...]

I think its the start of a new trend - in Sydney that is. I think QLD and WA will need to wait for a few more years (after Sydney has its next boom again).

hmmm... how's that for Sydney-centric thinking? Why would Sydney boom when it's industry has been decimated? I accept that supply has been strangled. if it remains a destination of choice then sure. I think the housing markets of these cities all have their own drviers. I can see commodities picking up before financials which could take loooong time - but I am an old fashioned industrialist optimist.

 

[perky29]

hmmm... how's that for Sydney-centric thinking? Why would Sydney boom when it's industry has been decimated? I accept that supply has been strangled. if it remains a destination of choice then sure. I think the housing markets of these cities all have their own drviers. I can see commodities picking up before financials which could take loooong time - but I am an old fashioned industrialist optimist.

It is Sydney Centric I agree, however ..
When you look at how property has behaved over here since July 2003 (i.e dropped by around 15 to 20% in some areas such as suburbs 20 to 30 km from the city) compared to the rest of Aus its been the worst performing capital by far. But eventually migration will shift back to Sydney from the "sunny" states and this will help the start of the next price recovery. Same thing happened last recession, when those that moved to QLD for example came "home" when jobs dried up and they missed their families.
It just has to happen at some point...now if we can get rid of this state goverment like WA did.....

 

[Token Funder]

So does that mean you are here as a troll, or over there as one?

Or is your new nick going to be "Token Each Way Bet Funder".

Nah.

Yossarian is my preferred on-line identity (when I can get it...a lot of people like Catch 22) but in joining Somersoft I thought I'd come up with something that better reflected my purpose for joining...to be the token funder in a forum which talks a lot about lending but doesn't appear to have any members that admit to being in the industry.

I wouldn't say each way bet, exactly. As I've said before, from a personal perspective I don't care. I own my PPOR and don't really care if it moves up or down by 50% in the next 12 months.

Professionally, of course, I *really* care.

 

[chilliaa]

Nah.

Yossarian is my preferred on-line identity (when I can get it...a lot of people like Catch 22) but in joining Somersoft I thought I'd come up with something that better reflected my purpose for joining...to be the token funder in a forum which talks a lot about lending but doesn't appear to have any members that admit to being in the industry.

I wouldn't say each way bet, exactly. As I've said before, from a personal perspective I don't care. I own my PPOR and don't really care if it moves up or down by 50% in the next 12 months.

Professionally, of course, I *really* care.

Ah token funder you have stated one of the best reasons why i dont think property will crash by 50%. Residential property is still 70% owner occupied and is hence more of an emotional driven asset, than an investment asset.
You stated you own your PPOR and dont really care if it moves up or down 50%: its your place of abode, its your castle, modified to your style, to reflect your temperment, its a reflection of Token Funder.

And thats how the vast majority of other people view their homes as well. Of course people would feel happier seeing the value of their homes rise, but to most home owners the most important issue is bank repayments, so long as they are comfortable meeting the bank repayments, they can get on with the main purpose of their life: living their life.

People on Somersoft can suffer from insular thinking, most of us here are in the great minority. We look at property as a wealth generating investment mechanism rather than as a place of abode. As such we are much more likely to make decisions based on investment criteria rather than emotion. We should however not forget that the majority of the population does not think this way.

 

[Shadow]

We look at property as a wealth generating investment mechanism rather than as a place of abode. As such we are much more likely to make decisions based on investment criteria rather than emotion. We should however not forget that the majority of the population does not think this way.

Well said. This is something the D&G crowd always fail to consider.

 

[yieldmatters]

We look at property as a wealth generating investment mechanism rather than as a place of abode. As such we are much more likely to make decisions based on investment criteria rather than emotion. We should however not forget that the majority of the population does not think this way.

Absolutely correct. However the banks that are financing the sheep is where you hit limits. Can't push up property prices with emotion - you need the cash too.

 

[handyandy]

Ah token funder you have stated one of the best reasons why i dont think property will crash by 50%. Residential property is still 70% owner occupied and is hence more of an emotional driven asset, than an investment asset.
You stated you own your PPOR and dont really care if it moves up or down 50%: its your place of abode, its your castle, modified to your style, to reflect your temperment, its a reflection of Token Funder.

And thats how the vast majority of other people view their homes as well. Of course people would feel happier seeing the value of their homes rise, but to most home owners the most important issue is bank repayments, so long as they are comfortable meeting the bank repayments, they can get on with the main purpose of their life: living their life.

But it will be exactly the perceived loss in value which will influence the OO thinking making them depressed and unwilling to spend money on improvements. The 70% then not spending money on improvements will further depress the economy and so the downward cycle continues.

A classic example of this (although isolated) was a friend lamenting the lack of further increases (perceived) in his property and that he would now cease doing any further improvements at the risk of over capitalising. His words not mine.

The other aspect of a property boom that I have observed over the years is that with a real boom it starts slowly and in the eastern subs and other 'better' areas and then runs outward over time, with the last areas to boom being the FHB suburbs. This perceived start of a boom is all wrong within this context.

I voted for the dead cat but am prepared to jump if required.


Cheers

 

[see_change]

I remember " The Wife " complaining how the FHOG affected the lower end when it came in , but that co-incided with the correct timing for the bottom end to take of .

There certainly is a lot of comments in the papares at the moment about the strength in the lower end .

Bargain hunter , Skater , hows your reading of your area at the moment ?

Cliff

 

[skater]

Hi Cliff.

I've been so overworked at the moment I haven't been on here much. I've PM'd you my thoughts.

For the record, in my neck of the woods there is certainly much activity going from FHO & investors alike. The low prices, high rents and low interest rates means that you can now get some +CF properties out this way.

Prices are slowly moving upwards. Rents are doing the same.

I have no idea if it is a Dead Cat Bounce or not, as some have mentioned, the movement is coming at the lower end, not the higher end, which is usually where the prices start to move. All I know is if you have stable employment & can pick something that doesn't cost you anything out of your own pocket & you can just sit back & hold on, then regardless of what the ecconomy is doing, you will come out a winner.

We've just bought our first property since 2003, but it's a PPOR, not an investment, which means the current PPOR will become our new IP. It's in a better location and has a higher price tag (of course), but when looking we found that even the more expensive, better located properties out this way were moving. I suppose it's still FHO territory, but at the high end.

 

[Token Funder]

As such we are much more likely to make decisions based on investment criteria rather than emotion. We should however not forget that the majority of the population does not think this way.

To be honest chil, my observation of this forum would suggest, in fact, that relatively few members of this forum "make decisions based on investment criteria rather than emotion".

Unless of course by investment criteria you mean heavily gearing to buy an asset in the hope it will appreciate in price without you adding value it, whilst ignoring the yield.

I don't consider that investing: it's speculating. There's nothing wrong with speculating and I've done a bit myself, but it is not investing the way I think about it.

There is a notable and high profile group that just do the numbers, assess the risk and look at the cashflows, but most on this forum embrace faith rather than science IMHO.

 

[sash]

Token

I think your observation is well founded.

The old faithful of yields, cashflow, economics has some groups on this forum glaze eyed.....mention the word risk management???...and you have a party...LOL.

Property investing is pretty simple......but it is amazing how complicated it gets on this forum for some.

To be honest chil, my observation of this forum would suggest, in fact, that relatively few members of this forum "make decisions based on investment criteria rather than emotion".

There is a notable and high profile group that just do the numbers, assess the risk and look at the cashflows, but most on this forum embrace faith rather than science IMHO.

 

[Lake]

Token

I think your observation is well founded.

The old faithful of yields, cashflow, economics has some groups on this forum glaze eyed.....mention the word risk management???...and you have a party...LOL.

Property investing is pretty simple......but it is amazing how complicated it gets on this forum for some.

Well, the fact is, property investing in Australia since 1996 have pretty much made the concepts of yields, cashflow etc largely irrelavant. I think many of us on this forum have made lots of mullah on the strong capital growth of the past decade, even in the face of some significant negative gearing.

 

[Strannik]

don't see the bounce in brisbane, at least not in the suburbs i'm looking at
prices are falling gradually, even though some real estate agents already started sending out letters advising about the start of the next boom

what has happened is that lower end properties which couldn't sell for 2-3 months prior to Christmas now finally got sold to FHBs

in my opinion now is a good time to buy PPOR (especially if you can still make use of increased FHOG) and pay it off while the rates are low