He who hesitates is lost
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Very VERY interesting.Any way Jason Anderson (BIS Shrapnel) provides an interesting perspective (his opinion.....don't shoot the messenger please!)......." The impact of the anticipated rise in unemployment on the housing market is not likely to be as big as expected. Every 1 per cent fall in interest rates puts $ 8 billion into household budgets, and every 1 per cent rise in unemployment takes out $ 6 billion."
I knew this relationship existed obviously, but I didn't know the magnitude of it. i.e. That 1% drop in IRs equals $8Bn injection and a 1% rise in unemployment takes out $6Bn. Awesome info!! Kudos.
So, with 4% in cuts already, that's $32Bn in cash injection. With unemployment at 4.5% it would need to rise to 9.5% ($30Bn reduction) before the loss of jobs would even almost offset the injection the RBA has given us already!! Wow!!!
Where's the gloomers arguing unemployment is the great undoer now? Of course, if you see unemployment running to 11% or more, then the RBA and Federal Government will have to dole out more cash to support the market, but they do have more room to move yet. Maybe even another 50bp ($4Bn) in cuts tomorrow by the RBA.
Cheers,
Michael
Ahh - obviously a man I need to be counting on for guidance.
Not me my friend, unless you like your advice volatile and STORM(y)
.Simple is, as simple does .......what is that saying about "taking one to know one"
Ascribe to the KISS principle. Keep It Simple Somersofters.
The falls in interest rates are distributed v. evenly across the population OTOH the increases in unemployment will affect only a few percent.... and that few percent will be the ones at the margins setting prices.
I'm not sure that there's as much of a correlation as he's making out. Although interesting figures from a macro POV.
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Sure, it's not, but unempoyment is just one of the countless factors that determine property prices, and it's right up there with the most important ones,.......
Unemployment and property prices are probably directly related, as people who are out of work have to sell their houses. And they are probably even more related indirectly, as unemployment rises in times of weak economic conditions, which also lessens the amount of cashflow people have to spend on housing.
See ya's.
Agreed, but look at the graph and see the ever widening gap between the arrow heads thru the years....also the rise in property prices as unemplyment reaches 10% and the stimuli kicks in, be it tax cuts and or interest rate reductions.
Absolutely..... we have had a massive run up in prices accompanied by a massive run up in int.rates...followed by a slight fall in prices v's a massive drop in int. rates designed to stop unemplyment from going higher and therefore the property market tanking massively.
Chicken and egg stuff i spose, but the recovery will blow away any drop in property pricing attributed directly to unemployment IMHO.
Those who say unemployment is one of the more important ingredients should agree record low interest rates would be another...? No..?
Yes, a very interesting thread going forward...
Those who say unemployment is one of the more important ingredients should agree record low interest rates would be another...? No..?
Yes, a very interesting thread going forward...
I really admire all you bullish people. I really hope you'se are right and I'm wrong. It's like in footy tipping, picking the team you think will win, rather than picking the team you've followed all your life. Go you boomers..!!
Just on interest rates. It would be cool to overlay interest rates onto that chart. Interest rates rose strongly right up to the property top in 89/90. Peaking at 17%. Property doubled in a few short years and also topped in 1989.
Interest rates then dropped from 17% to just above 6% by 1997. Property either did nothing or dropped in that time. When this current boom started, in 97, we then had rising interest rates again culminating in the interest rate top 6 months ago. Also, a boom in everything, that also ended with the interest rate top.
History shows if anything, property goes up with rising interest rates, and drops with falling rates. Theres a pretty simple reason why this happens.
See ya's.
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Thorpie, check that chart again mate.
Everytime unemployment is rising, we have falling property prices. 82 to 83, and 90 to 93.
Every time unemployment hits 10% we have had a flat period for property. 83 to 87, and 93 to 97.
See ya's.
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Which satisfies those of us who are remaining positive (though cautious) about property investing. With historic lows in IR's they can't stay down here for too long. When they move up again we can all expect some positive CG.
I too was interested in overlaying a chart with IR's.
Where's our graphman Shadow gone?
Yes, I just checked it again.....so you call 82 to 83 and 90 to 93 a falling property market...??? compared to unemployment rising buy a much much larger margin...???
You say unemployment hits 10% we have FLAT period for property.....I agree...FLAT (sideways)....not falling or plummeting as some say....
Did you check the chart again and aknowledge the ever widening gap I mentioned....? the percentages on that chart are overwhelmingly obvious as to the relationship between Unemployment and property prices over long term...I agree with you short term(like 3yrs max)..... but long term.... no way
If you study the chart even closer you will notice the property prices falling before unemployment goes up...just like it has done so this cycle...SYD first followed by Perth, Bris etc etc....
I have followed the same team all my life but am studious enough to realise they can't win every year, but they have won on average most years than most teams.....I like 'em from the start because they won more than most.....I also don't do footy tipping...too hard there is no form to follow....property provides me with reliable form to follow.
We could argue the point all night but I don't see property tanking because of unemployment reaching 10%....you do... so why did you invest. recently..? Because you thought SYD would be the next to boom right...?
People are **** scared right now but I'm totally confident with the situation I have myself placed in and are doing better than ever as we move thru the years of our investing plan. Buy hold prosper....
I can see why you would be a bit nervous TC...being the farmer I know you are....I reckon you are in the most risky business ever and hats off to all farmers, especially you TC, I know your farm and situation oh so well...People here should note TC and his Dad have consistently taken out farmers of the years awards in our area for yonks....awesome stuff and very good management......but I reckon you just cannot seem to see that there might be something a hell of a lot easier to make money with than risking everything each year on a crop that may or may not be put in the silos. Something that you have far more control over personally than shares or the weather....I guess I should concede that if property tanks 50% then we are definately all in the ****...! Meantime I'm just moving on....you will see with your new IP how it works...so long as you don't panic...you'll be right...
I don't see property tanking either. I've lost a heap from shares, and I now view property with the respect it deserves. Just remember though that 90% of my assets are in property, deep black stuff.
I'm just posting my views on whats going on. I bought that Sydney unit because I thought it wouldn't go much lower and I happen to be in a very fortunate, unleveraged position thanks to last years motsa on the farm that wiped out all our debt.
I'm not nervous at all. Had 146 mills for February, and an overall very wet and good summer. Just can't believe how well things are going and looking forward to the opportunities ahead. I can also now see how safe resi property investing can be compared to what I do. That's why I'm here, to learn from all the experts. Just need to get the timing right.
Cheers mate.
ps. I must admit, I was a bit nervous a few months ago with grain prices dropping further and further lower. With what I'd spent, and didn't look like they'd find a bottom. They did bottom and have risen and found a sensible level that farmers can make a buck from.
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ITA. It's too simplistic to look at 2 metrics and make a conclusion that one cancels out the other. There isn't really one pot that you put $8bn in & take $6bn out and that leaves you +$2bn = growth. The mortgage holders who keep their jobs (without decreasing hours as under-employment is rife & not seen in unemployment figures) will be a LOT better off. These people always do better, comparatively, in a recessionary period. Most people don't hold mortagages, BTW. To the other hundreds of thousands who lose their jobs the low IRs will be no consolation. Many of those mortagage holders will be forced to sell and that will be negative for the property market.
WR, Low IR's are a benefit and a protection to those even without mortgages since the housing industry is such a huge sector of our economy and provides so much employment. There is a sound reason why the Govt (& RBA) is trying to prop it up.
Toowoomba as an IP
Any thoughts on this area? Is there any bad areas to be concerned about?
Thanks for your input.
Andrew
Any thoughts on this area? Is there any bad areas to be concerned about?
Thanks for your input.
Andrew
I agree entirely that wealth flows into many sectors with a strong housing market and it's in everyone's interests that it stands up. I just don't believe that low IRs will be enough to do it in the face of rising unemployment.
For us, who have had to borrow to get ahead start, property looks the most likely winner over time to enable us, who started with nothing at all, to work hard for and get ahead and have something worthwhile in retirement.
That's the shot....! Way to go TC...!
I'm not nervous at all. Had 146 mills for February, and an overall very wet and good summer. Just can't believe how well things are going and looking forward to the opportunities ahead. I can also now see how safe resi property investing can be compared to what I do. That's why I'm here, to learn from all the experts. Just need to get the timing right.
Cheers mate.
Geeze Mate, didn't know thought of me as an expert...!
Thanks!TC, now it's time for me to pour praise on you...you are well taught and smart enough in your game to be at the top, heck...you even call yourself TOP cropper...and it's true folks...
You know your game well and you have come to the right place to learn another game...just be careful who you listen to though...Getting in now while you are still relatively young, and still have the kids at home, is better than leaving it too late and trying for the quick bucks.....it don't work that way...keep it long term...the gloomers are shorties and very risk averse. To do nothing is to take a risk...long term...See you soon at the footy
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