Insight SBS Tues 7.30 Sep 9 - Bursting the Bubble

[tcocaro]

I don't know how you (and others) can claim to have an informed, broadminded view of these things when you just dismiss them out of hand as rubbish..

Ok.. look up the word "broad" in the dictionary. This show only presented individual situational analysis with no background detail whats-over. Whats more important is overall stats. Also wheres the balance? throw some people who made money in there too to get their views.

As for Toccaros post. Property is linked to the economy very closely so how can he say the show was too much about the economy and not enough about property? They are like Siamese twins. Anyway, the majority was on property discussion.

So when i go to the doctor to get a problem i have examined do we speak about the specific problem or how the general environment we live in maybe effecting my health?

Toccaros post would have to be the most biased i have read for quite a while and so has about zero credibility for me.

how so? - re-read your own post and nowhere do you explain why you believe this was such a fantastic show? I at-least argued the point whereas you simply shout out louder and louder that you liked what you heard.

"biased"??? I accuse you of making "assumptions" mate, I didn't state i thought they were wrong i said the show didn't talk about anything? it was like a Sunday brunch talking about incoherent points of discussion but nothing worthy for broadcast?

But you "assumed" that I didn't like the negative overtone? My main issue was I sat down expecting a program about property instead i got one about individuals own situations about anything BUT property (light store owner, florist/plastic owner, business owner (didn't say what he did), employee earning 100k+ so on and so on...

please be honest with yourself if you did a program about property wouldn't you get on;

1. first home buyer
2. investor (good experience)
3. investor (bad experience)
3. builder
4. developer
5. recently repossessed?

camon.. seriously this show was today tonightish.

 

[MichaelW]

And its not a two way bet......its called STAGFLATION.

stag·fla·tion (stāg-flā'shən) Pronunciation Key
n. Sluggish economic growth coupled with a high rate of inflation and unemployment.

Hi Evan,

Cool, thanks for clarifying. I agree stagflation is a high risk, but to me a booming commodity sector whilst creating high inflation also creates a stronger Australian economy generally. So that wouldn't necessarily be stagflation, but would be inflation (in isolation) and would keep rates high. But in that environment, the "economy is going nowhere but down" misses the mark completely. In that environment, the economy is robust as is wage growth, jobless rates etc.

I see two possible scenarios, dependent on what happens with the China factor:

1. China stays strong: The Aus economy stays strong and inflation stays high. Interest rates stay up, but the economy is not "going nowhere but down". The jobless rate stays low and the strong economy puts a floor under house prices. Increased immigration and strong jobs might even move the market up; or

2. China softens on the back of a global recession: The Aus economy falters and inflation falls. Interest rates are cut severely to stimulate the economy absent the fear of inflation. Properties go to positively geared and its happy days for investors provided they've managed to hold onto their job. They pile into the market and build a nice sizable portfolio until the US sorts itself out and the global economy moves forward again in a year or two. There's no stopping the industrialization of China and India, just the prospect of delaying it temporarily during a global financial crisis.

Cheers,
Michael

 

[buzzlightyear]

Why is it when "experts" talk about shares, they are clearly classed into different industries and their outlook is debated without a one size all approach. An obvious example is the comparison between financials compared to resource stoks of late. It seems as if the level of debate for property has not reached that level, at least what you see in the media.

With property, it is more often than not discussed as if its one homogenous product with one location. I know that I am guilty of it sometimes, or at least give a view that is based on my experience in property of certain property type & location(s) and sometimes make the assumption that it applies across the board, when I wouldn't have a clue what is happening in the burbs of Hobart, regional areas of Queensland or the Sydney CBD, let alone distinction between resi & commercial

Given the challenges in the economy and the sharemarket issues, why is it people still invest in specific listed companies, whether directly or via their super fund? Not all stocks follow the broader market. Surely the same applies to property.

 

[WinstonWolfe]

I relented to watching the online version...

Tcocaro, I agree with most of what you said, but not Gittins and Keen. They both made reasonable points. I thought Keen's retort to Eslake that Australia's economic fundamentals look ok as long as you ignore household debt, was valid.

Where the leftist elite political and ideological bias of the ABC expressed loudest was in loading the show with commercial naives from West Sydney.
The title of the show is "Bursting the Bubble"
THe sub heading was "Could a slowing economy actually make housing more affordable? Tell us your experiences"

Well, a Year 10 economics student could tell you a slowing economy will reduce property prices.

I think the goal of the ABC is to keep applying negative spin on property to keep rolling negative sentiment. Being good little socialists, they think property prices have bubbled, and they'll do all the can to feed negative sentiment. And in their Big Brother/Aunty paternalist way, they are trying to scare the ignorant into not being burnt on a pullback in property prices.

The ABC see their role as social engineers. Their programs are not so much about telling the truth, but about 'protecting' the ignorant. If that means skewing the facts and logic in shows such as Insight and QNA, then that's apparently ok. As with many of the ideologically driven, the ends justifies the means.

 

[evand]

I have a close relative that lives at Newfarm. I have property around Brisbane and get up there and the Gold Coast quite a lot. I keep a keen eye on these markets and disagree with you. There must be an anomaly in your findings.

Brisbane inner ring blue chip. I have no intention of being more specific because my decision to buy there is the result of 2 years of research.

 

[MichaelW]

by the way - grand designs was great as usual, but i'd hate to have their end mortgage! the piering and groundwork alone cost 300,000pound. was interesting because they bought a prefab house from germany ... individual design (3 story + basement) but contructed in a factory on the continent and then shipped over and put together ... in 3 days. they also visited the factory and showed how the houses were made. was a good watch.

Hi Lizzie,

I loved this episode too. I watch the show religiously...

But I have to correct you slightly. The piering was ₤300K, but the groundwork was another ₤300K. The pre-fab house itself was another ₤300K. In summary the host said it was about ₤1M split evenly between piering, groundwork and the house itself. ₤1M!! Wow!

But it did look kinda funky. Couldn't help but think they'd have been better off building that house at ground level instead of excavating. It was a slight slope but nothing that couldn't have handled a decent driveway. Or maybe it was a height/view exclusion issue with the neighbour behind. Somehow I don't think they're the bets of friends, particularly after they undermined their fence and garden during the piering work...

Cheers,
Michael

 

[tcocaro]

I have a close relative that lives at Newfarm. I have property around Brisbane and get up there and the Gold Coast quite a lot. I keep a keen eye on these markets and disagree with you. There must be an anomaly in your findings.

evand your wrong, get stats to prove your comment rather than uncle bobs comments who lives in New Farm.

UNITS
New farm 16.37% growth for the year (source June 2008 Residex)

HOUSES
New farm 11.62% growth for the year (source June 2008 Residex)

When you say close eye what exactly do you mean? watching insight?

 

[boomtown]

I have a close relative that lives at Newfarm. I have property around Brisbane and get up there and the Gold Coast quite a lot. I keep a keen eye on these markets and disagree with you. There must be an anomaly in your findings.

Lets talk about New Farm (which is not my area but I spend a bit of time wandering around there). Volume way down. Quality of residences for sale way down - alot of crappy units currently for sale. We are seeing units in the 200k range for sale for the first time in the last 18 months but in my view this is reflective of investors dumping low quality stock onto the market. I have inspected a few of these units and seen significant termite damage. I expect the median sale price in New Farm may be down slightly but this is reflective of the quality of stock currently on the market. On the other hand we have OTP like Platinum on the River which is moving but very slowly.

None of this points to a reduction in prices - just vendors of quality stock staying off the market until sentiment improves.

*edit* I made my comments before seeing Tocaro's post. Which frankly is even more surprising due to the crap that is being dumped on the New Farm market atm.

 

[tcocaro]

Tcocaro, I agree with most of what you said, but not Gittins and Keen. They both made reasonable points. I thought Keen's retort to Eslake that Australia's economic fundamentals look ok as long as you ignore household debt, was valid.

I agree with Ross Gittins his views are balanced but not Keens'.

That "retort" you make mention works both ways.. his claim of economic "POOR" fundamentals has the same "retort" when you look at EVERYTHING else.

In short he is extreme, Ross summed it the best when said the likely hood is more of the same than a sudden jump in values but i still think the comments where made very much with a Sydney centric view and more specifically WESTERN SYDNEY.

 

[evand]

It was SBS mate.....LOL

WW...if you get any more to the right. Genghis Kahn might have to watch his butt.

And Keens comment re "Australia's economic fundamentals look ok as long as you ignore household debt, was valid". Its only valid if you think Australia's household debt is a minor issue, which of course it isnt. It is massive and will largely influence our economy for some time yet.

I relented to watching the online version...

Tcocaro, I agree with most of what you said, but not Gittins and Keen. They both made reasonable points. I thought Keen's retort to Eslake that Australia's economic fundamentals look ok as long as you ignore household debt, was valid.

Where the leftist elite political and ideological bias of the ABC expressed loudest was in loading the show with commercial naives from West Sydney.
The title of the show is "Bursting the Bubble"
THe sub heading was "Could a slowing economy actually make housing more affordable? Tell us your experiences"

Well, a Year 10 economics student could tell you a slowing economy will reduce property prices.

I think the goal of the ABC is to keep applying negative spin on property to keep rolling negative sentiment. Being good little socialists, they think property prices have bubbled, and they'll do all the can to feed negative sentiment. And in their Big Brother/Aunty paternalist way, they are trying to scare the ignorant into not being burnt on a pullback in property prices.

The ABC see their role as social engineers. Their programs are not so much about telling the truth, but about 'protecting' the ignorant. If that means skewing the facts and logic in shows such as Insight and QNA, then that's apparently ok. As with many of the ideologically driven, the ends justifies the means.

 

[evand]

I have explained why i think the show was good. And i have explained why i think your post lacked credibility and was biased. Don't need to go over it.

Its TV mate, not a high level academic discussion on the state of Australian property/economy. Where was it stated that it was supposed to be that?

Oh and i didn't understand your analogy with you visiting a doctor and the property market.

If broad environmental aspects are relevant in your illness, yes it will be discussed at your doctors visit.If they arent, it wont.

Ok.. look up the word "broad" in the dictionary. This show only presented individual situational analysis with no background detail whats-over. Whats more important is overall stats. Also wheres the balance? throw some people who made money in there too to get their views.



So when i go to the doctor to get a problem i have examined do we speak about the specific problem or how the general environment we live in maybe effecting my health?



how so? - re-read your own post and nowhere do you explain why you believe this was such a fantastic show? I at-least argued the point whereas you simply shout out louder and louder that you liked what you heard.

"biased"??? I accuse you of making "assumptions" mate, I didn't state i thought they were wrong i said the show didn't talk about anything? it was like a Sunday brunch talking about incoherent points of discussion but nothing worthy for broadcast?

But you "assumed" that I didn't like the negative overtone? My main issue was I sat down expecting a program about property instead i got one about individuals own situations about anything BUT property (light store owner, florist/plastic owner, business owner (didn't say what he did), employee earning 100k+ so on and so on...

please be honest with yourself if you did a program about property wouldn't you get on;

1. first home buyer
2. investor (good experience)
3. investor (bad experience)
3. builder
4. developer
5. recently repossessed?

camon.. seriously this show was today tonightish.

 

[boomtown]

New Farm sales statistics for houses - pds live

Year / Number of Sales / Average Price / Median Price / Growth

1991 66 $149,572 $138,500
1992 67 $195,347 $159,900 15.5%
1993 78 $207,123 $175,500 9.8%
1994 69 $247,424 $200,000 14.0%
1995 65 $263,805 $195,000 -2.5%
1996 86 $229,777 $209,000 7.2%
1997 72 $277,366 $225,500 7.9%
1998 67 $300,511 $260,000 15.3%
1999 65 $352,291 $280,500 7.9%
2000 76 $357,049 $268,500 -4.3%
2001 111 $367,573 $355,000 32.2%
2002 84 $694,265 $497,500 40.1%
2003 98 $721,197 $667,500 34.2%
2004 114 $931,323 $852,500 27.7%
2005 108 $946,236 $797,500 -6.5%
2006 86 $998,087 $832,500 4.4%
2007 99 $1,198,918 $939,000 12.8%
2008 $1,555,652 $1,500,000 59.7%

This shows 58% price growth in 2008 for houses in New Farm. LOL. &$(#&$#*$ now I wish I had bought a house in New Farm last year. Hahaha fark. It makes my measly 22% CG last year look anaemic.

 

[Aaron Sice]

okay i think a few people are missing the mark here - but i'm no pro so feel free to shoot me down as well.

investors WILL return to the markets looking for properties with a good yield. if IRs fall to 6.5% (as some are predicting) then source a rental yield on a new-ish place for about 5.5% (not hard!) and add the depreciation and you have a cashflow neutral-ish scenario. do this 5x over and wait for the global economy to gain traction again. doesn't cost you anything NOW does it?

if we aren't going to see any growth for the next 5 years or so - someone care to explain Adelaide's market then? or is this just the exception to the rule, like Perth and Brisbane as well...? Maybe these people should pick up API once in a while and check out the current CG returns for Adelaide, or Perth... (seen Freo recently?)

i've still got my eyes trained across New York state, Texas, and California for stunning deals. i'm watching my own backyard EVERY DAY for great deals - and finding them. i'm seeing fantastic yields in Melbourne and Adelaide.

who cares if we don't see any growth for a few years? if you hold 100 properties, all cashflow neutral - then you could lose your job tomorrow and not be out of pocket (and not be able to apply for the dole either).

it's a great opportunity for an accumulation phase of your portfolio.

CG is off the cards for the moment for a majority of Australia.

so find something new-ish in a good area with a good yield and sit tight.

worried about your job? get your rigger's ticket and heavy vehicle licenses and apply to all the minesites you can.

if you waste opportunities like these presented to you, you deserve to end up with nothing.

 

[boomtown]

Just for comparison unit sales for New Farm:

Year / Number of Sales / Average Price / Median Price / Growth

1991 198 $160,331 $118,000
1992 183 $162,718 $128,500 8.9%
1993 250 $176,283 $148,000 15.2%
1994 284 $197,997 $159,000 7.4%
1995 285 $181,933 $162,000 1.9%
1996 363 $192,969 $143,000 -11.7%
1997 408 $203,214 $154,000 7.7%
1998 313 $205,435 $183,500 19.2%
1999 486 $256,008 $218,000 18.8%
2000 518 $262,560 $239,500 9.9%
2001 681 $342,808 $270,000 12.7%
2002 497 $348,515 $275,000 1.9%
2003 517 $390,519 $283,000 2.9%
2004 430 $536,697 $358,000 26.5%
2005 338 $560,455 $393,000 9.8%
2006 342 $679,369 $390,000 -.8%
2007 405 $726,330 $465,000 19.2%
2008 105 $673,333 $511,200 9.9%

 

[evand]

As you know a few very high sales can skew that 2008 figure off the chart. Especially if the volumes are low, which i suspect it is. Looking at the figures i'd say thats whats happened. As i said, an anomaly.

Doesn't mean for one second all property increased by 59% in 2008. But i'm sure you know that.

New Farm sales statistics for houses - pds live

Year / Number of Sales / Average Price / Median Price / Growth

1991 66 $149,572 $138,500
1992 67 $195,347 $159,900 15.5%
1993 78 $207,123 $175,500 9.8%
1994 69 $247,424 $200,000 14.0%
1995 65 $263,805 $195,000 -2.5%
1996 86 $229,777 $209,000 7.2%
1997 72 $277,366 $225,500 7.9%
1998 67 $300,511 $260,000 15.3%
1999 65 $352,291 $280,500 7.9%
2000 76 $357,049 $268,500 -4.3%
2001 111 $367,573 $355,000 32.2%
2002 84 $694,265 $497,500 40.1%
2003 98 $721,197 $667,500 34.2%
2004 114 $931,323 $852,500 27.7%
2005 108 $946,236 $797,500 -6.5%
2006 86 $998,087 $832,500 4.4%
2007 99 $1,198,918 $939,000 12.8%
2008 $1,555,652 $1,500,000 59.7%

This shows 58% price growth in 2008 for houses in New Farm. LOL. &$(#&$#*$ now I wish I had bought a house in New Farm last year. Hahaha fark. It makes my measly 22% CG last year look anaemic.

 

[boomtown]

I agree it has to be skewed - its just unbelievable otherwise.

But it sure as hell doesnt look like a depressed market?

 

[BV]

I think the goal of the ABC is to keep applying negative spin on property to keep rolling negative sentiment.

WW
They don't have to do this.
The RBA is doing a very good job at that.
They think that doing nothing is going to increase consumer confidence....
Cheers

 

[evand]

I admire your balanced view on this debate. The stats you posted dont show whats happening in other price ranges in New Farm (or inner Brisbane) and from what i've seen they aren't doing real flash.

I agree it has to be skewed - its just unbelievable otherwise.

But it sure as hell doesnt look like a depressed market?

 

[buzzlightyear]

BC, who would have known that simple logic, a bit of innovative thinking & a measured response is what is called for here.

okay i think a few people are missing the mark here - but i'm no pro so feel free to shoot me down as well.

investors WILL return to the markets looking for properties with a good yield. if IRs fall to 6.5% (as some are predicting) then source a rental yield on a new-ish place for about 5.5% (not hard!) and add the depreciation and you have a cashflow neutral-ish scenario. do this 5x over and wait for the global economy to gain traction again. doesn't cost you anything NOW does it?

if we aren't going to see any growth for the next 5 years or so - someone care to explain Adelaide's market then? or is this just the exception to the rule, like Perth and Brisbane as well...? Maybe these people should pick up API once in a while and check out the current CG returns for Adelaide, or Perth... (seen Freo recently?)

i've still got my eyes trained across New York state, Texas, and California for stunning deals. i'm watching my own backyard EVERY DAY for great deals - and finding them. i'm seeing fantastic yields in Melbourne and Adelaide.

who cares if we don't see any growth for a few years? if you hold 100 properties, all cashflow neutral - then you could lose your job tomorrow and not be out of pocket (and not be able to apply for the dole either).

it's a great opportunity for an accumulation phase of your portfolio.

CG is off the cards for the moment for a majority of Australia.

so find something new-ish in a good area with a good yield and sit tight.

worried about your job? get your rigger's ticket and heavy vehicle licenses and apply to all the minesites you can.

if you waste opportunities like these presented to you, you deserve to end up with nothing.

 

[tcocaro]

my stats arn't skewed its taken from land titles... for 12 months.

let me guess theres some hocus pocus in the figures i posted too?

seriously come to grips with it.

my analogy was that when your discussing a problem you discuss it... e.g. property bubble??? not the entire economy...

PS why are all stats that don't support someones explanation always "skewed"

As you know a few very high sales can skew that 2008 figure off the chart. Especially if the volumes are low, which i suspect it is. Looking at the figures i'd say thats whats happened. As i said, an anomaly.

Doesn't mean for one second all property increased by 59% in 2008. But i'm sure you know that.