Eye of the Storm

[josko]

No worries Jo,

I reckon Australand's business model requires them to sell a few of them at completion, and tightening credit markets limit sales. Mine, on the other hand, is predicated on holding 100% on completion and letting them. Completely different model. In fact, the tighter the credit markets get, the better my rental market becomes!!

Cheers,
Michael

Excellent, just want I want to hear.

(How BAD is my typing today?)

Regards JO

 

[Chomp]

if UE holds - i think the banks need to ease up the credit a little to get things rolling again. if growth can match inflation then i think it'll be a recovery.

but there's the prob - they're all caught up in cash. they all missed the last big share market swing, and now we're in a consolidation phase again, they're all not rushed to liquidate and be cashed up again.

newsflash banks. no credit = no growth = no jobs = no renters = you holding empty houses. we all know the bank doesn't WANT to repo your house, they make 20x it's value by YOU holding it. so what gives?

the asset grab is on. it's started in the US and it'll start here with less success, but some nonetheless. since when has high-end real estate been "risky"...? never. that's all i'm saying, and i'm sure Sunfish probably understands what i'm saying. RE is not, in historical terms, a risky venture. it's not liquid. it's not prone to being a AAA rated home and suddenly not worth the ink value on the deed it's held by. why are the banks working against the country ...?... bit by bit, it's a scinch - mile by mile, takes a while....

i called the eye of the storm about 4? 5? months ago. there's been steady progress since. but the tail of the storm will be worse than the head. always is.

obamarama will witness the move away from the united states dollar as the world reserve currency. maybe i should re-fi with HSBC...

We were the succesful tenderer to build a 3m dollar house in Cottesloe subject to finance.

He bought the land with an existing house to be demolished for 3.6m and the bank just revalued it 2m so looks like it will be cancelled, only found out this morning so details are a bit sketchy. This is the third project this year to go belly up one was substantially higher in value as well.

Chomp

 

[Aaron Sice]

awful news there chomp - see vacant land has a whole different val to it.

knockovers are being treated as vacant land - so they dont even benefit from a basic house value any more.

sorry to hear.

 

[Ausprop]

even worse news for the owner of the land. Vals have fallen but this smells of a valuer serving the bank more than serving their client

 

[lizzie]

we've had two offers to buy our development site, with house on it, from fhb's for nearly 20% more than the bank revalued it at only 2 weeks ago.

we're happy with the very low valuation as we're selling it out of the hdt directly to hubby - so the hdt will make a very nice claimable loss (due to architect, council, engineering etc costs) and hence a lovely tax claim. also means the stamp duty was reduced.

but - seems valuations and actual market values don't seem to be aligned.

 

[Chomp]

even worse news for the owner of the land. Vals have fallen but this smells of a valuer serving the bank more than serving their client

Could be, but if he can service the loan why would they not lend the money, they are throwing away alot of interest there in my opinion.

Chomp

 

[Ausprop]

they really don't care Chomp. the banks are taking real losses just to pull cash in. I believe that they need to sort out the commercial property trusts later in the year hence the cash grab. All development hurdles have been lifted impossibly high. you only have a shot if you have an exisiting loan with them (read: we will help you out if you have a devy site with us because if we don't you become a problem)

 

[chilliaa]

valid points, but seriously where can any supply come from? govt is hopeless and there is no funding to develop.

funding is there for residential.
Just look at the sunday newspapers for all the new developments.
In this environment though developers have to secure presale commitments, also im talking capital cities, i dont know about regional/coastal/country/lifestyle properties.

Also one statistic that recently came up, apartment construction commitment is up, (but maybe this is only month on month i dont know, from memory yoy is still down).

But keep a close eye on supply statistics, this really will be the killer in the future so long as two conditions are met:
1) booming property prices in the next couple of years; and
2) booming property prices whilst interest rates are low.

If this current potential boom pitters out in the next few months, then i wouldnt be worried.

Also i should add, im not getting out just as the boom starts, if it does go, it should last for a while so i will do the reverse of what i was doing in the stock market:
REVERSE DOLLAR AVERAGING,
ie offload a property every 6 months or so. But again with emphasis, only if this boom shows some real legs.

 

[Ausprop]

Just look at the sunday newspapers for all the new developments.

? must be a Melbourne thing. In Perth they can't even get people to settle on the stuff that's been sold.

yes some funding is available, tho the guy I heard about on TV the other day couldn't get it... experienced large scale developer with a fully sold project. I understand that if you presell 100% of your debt on rock solid 3rd party contracts that are prepared to put up 10% deposits and you have 30-35% project equity then you may have a chance, tho some banks such as bankwest have ruled out all property development lending. RAC WA also have a moratorium. Westpac are pretty mcuh closed for business. I think CBA and NAB may be doing a bit.

 

[topcropper]

but if there is a trigger for the next bust I'll punt that it has something to do with China. Maybe a realisation that China is in a bubble too, or a China housing bust, or something to do with a bank.
.

Hmm, maybe something along these lines,.....

http://www.telegraph.co.uk/finance/...ent-waiting-to-happen-to-every-one-of-us.html


See ya's.

 

[topcropper]

Shenhua isn't just a coal miner...

They also own about 20% of China's electricity generation capacity (one of the big four / five coal generators in China - a way of getting their coal to market)
They also are one of the biggest wind farm owners in China.
They also own a large swag of hotels,
They also (used to) own an airline,
They also own (a lot) of railways,

!

Wow, didn't know that.

Doesn't really change my view about broke state governments reaping a one off quick dollar to a Chinese company to make a profit for Chinese shareholders in exchange for Aussie farm land that if not dug up will still be producing food a thousand years after the coal mine is gone.

See ya's.

 

[Perp]

He bought the land with an existing house to be demolished for 3.6m and the bank just revalued it 2m

Ouuuuccchhhh!

 

[grossreal]

hi ozperp
ouch
try this I have a client on my desk
be has one business value 16.5 mil valued 6 months ago
value today 12 mil
another business valued 15.5 mil 12 months ago value 11 mil
anther valued 12 months ago 8 mil
current value went in last wendsday at 2 mil
all covering there interest repayments and never missed a beat and i am going to be chatting with three assett mangagement teams to keep the operation afloat
current lvr
250% average

is that a storm.
thats a typhon

 

[chilliaa]

funding is there for residential.
Just look at the sunday newspapers for all the new developments.
In this environment though developers have to secure presale commitments, also im talking capital cities, i dont know about regional/coastal/country/lifestyle properties.

Also one statistic that recently came up, apartment construction commitment is up, (but maybe this is only month on month i dont know, from memory yoy is still down).

But keep a close eye on supply statistics, this really will be the killer in the future so long as two conditions are met:
1) booming property prices in the next couple of years; and
2) booming property prices whilst interest rates are low.

If this current potential boom pitters out in the next few months, then i wouldnt be worried.

Also i should add, im not getting out just as the boom starts, if it does go, it should last for a while so i will do the reverse of what i was doing in the stock market:
REVERSE DOLLAR AVERAGING,
ie offload a property every 6 months or so. But again with emphasis, only if this boom shows some real legs.

Big smile, hope this can continue:

Mixed messages: retail sales jump, building slumps
By Online business reporter Michael Janda

Posted 3 hours 28 minutes ago
Updated 2 hours 17 minutes ago


Retail surge: The Government's stimulus measures "kept spending going in May". (ABC News: Giulio Saggin, file photo)

 

[josko]

we've had two offers to buy our development site, with house on it, from fhb's for nearly 20% more than the bank revalued it at only 2 weeks ago.

we're happy with the very low valuation as we're selling it out of the hdt directly to hubby - so the hdt will make a very nice claimable loss (due to architect, council, engineering etc costs) and hence a lovely tax claim. also means the stamp duty was reduced.

but - seems valuations and actual market values don't seem to be aligned.

Hi Lizzie,

A little sideways from the topic, but can I ask why you are selling from your HDT? Is it to do with the ATO and related issues to HDT?

Regards JO

 

[MichaelW]

Hi Lizzie,

A little sideways from the topic, but can I ask why you are selling from your HDT? Is it to do with the ATO and related issues to HDT?

Regards JO

Land tax I think. Any form of trust ownership means the $400K cap before land tax kicks in is ignored and you're taxed on the whole lot. I pay $8K per annum land tax on my single IP because its held by an HDT instead of in my personal name. If it were in my name it would be land tax exempt...

Cheers,
Michael

 

[chilliaa]

Big smile, hope this can continue:

sorry didnt realise i couldnt post the full article, anyway the part of the article i was interested in was the cutback in new development, not the retail spend figure.

 

[WinstonWolfe]

Meanwhile back at the ranch, the Chinese coal mining company Shenhua has started buying up farms on the Breeza Plain not far from me. I don't get this at all. Buggered if I do.
See ya's.

Those who think Australia has a secure future in Asia need to read more.
China is still run by people who brought down Tibet and support the North Korean regime.

Check out the flurry of complaints heading into the WTO recently regarding China.
They are going to play hardball like soft smug self interested Westerners haven't experienced in 5 decades.

100 million tonnes of iron ore stockpiling is meant to hurt Rio, BHP, and Australia.

Purchase of Oz minerals by Min Metals, and then a refusal to sell zinc to the USA is meant to hurt the US.

The Chinese are going to turn the West's ETS policy back against us.....and rightly so. the policy is smug self interest....

China are playing things logically and with self interest as strong as the West.

The Bob Brown enviros of the world have no friggin idea the can of worms they have opened for CHina to play with, in screwing the West.

 

[chilliaa]

Wow, didn't know that.

Doesn't really change my view about broke state governments reaping a one off quick dollar to a Chinese company to make a profit for Chinese shareholders in exchange for Aussie farm land that if not dug up will still be producing food a thousand years after the coal mine is gone.

See ya's.

i wouldnt worry top cropper, maybe they will offer top dollar for your farm.
This whole situation reminds me of the Japanese in the 1980's. Remember the fear about the Japanese buying out the gold coast. Yeah they paid top dollar for it, and subsequently sold much of it at a loss.

At the moment its China's time in the sun. If they wont to pay top dollar let them. Asset prices will always revert to the mean as dictated by the maximum profit usage of the asset.

Remember the dot.com age, its going to be different, yeah yeah yeah, its always different.

And for those of you with a speculative mindset, heres the next potential dot.com: GREEN ENERGY

Theres a great story building, even better its dam hard to value forward estimates (im not just talking the energy companies direct, but also all the potential start up support companies), just the sought of ingredients necessary for a 'boom'.

I cant play it because it goes against my investment doctrines (i want to see the profit first, i want to see sustainable profit first, i want to see quantifiable and realistically extrapolataple and sustainable earnings figures).

 

[grossreal]

hi all
I post some time ago about china and that Aust has got a bit of a problem.
china does not want to buy the land to remove the iron or what under it.
it wants the land.
china is growing to the stage it has to bit a wall and with that hit it will be looking for two things.
1. a place to go
2. food for the masses
both of which we have but we could not have very soon.
if you own the land you in effect own what on it
its the old don't buy 100% of the company buy 35% this gives you control and then you can do what you like anyway.
now if you own the land and rent the land to a farmer thats fine until you need the farmers produce the meat
now the farmer has a problem
if he does not sell to you you will kick him of the land not now but eventually and you can make it very uncomfortable for him so he sells to them.
this will reduce the current stock of food stuffs and cause a very big problem
add to that that the banks are not regulated on what they can and can't do with rates
and throw into the pot if a chinese bank becomes a very large rural lender and decides to give one rate to farmer selling to china and lot higher rate to the ones that arn't.
also add to that the current position with the rural lender ie they are lending very little
you are sending lambs to the slaughter as they say
this could not happen
why not the chinese have the money
they have the knowledge
and they have the means
now not all will sell out but I think alot will
bank of china just need to bring out a 2% rural loan
and they will be in undated
just a thought
the chines eare not buying up for coal and iron they have enough of that
they are buying up the future iron ore coal grain and meat
so all I can say is watch out