Residex Report: The Stock Market Falters and Housing Takes Off

[Shadow]

Here is the latest Residex report.

It paints a very good picture for property over the coming year...

http://forum.globalhousepricecrash.com/index.php?showtopic=26453

Cheers,

Shadow.

 

[trendsta]

Hi Guys,

I often here conflicting arguments on this forum, sometimes said by the very same person. One of my favourites is this:

"Property in upper class Syd, Melb, and Perth has been booming because sharemarket is strong" ... then the same person will say "sharemarket is going down so property will go up" ... errr, so which one is it??

another favourite is "Australian property will not bust like US, UK because the fundamentals are different and our economy is soo strong" ... then the same person says "interest rates wont go much higher, and may infact start going low like in US and UK, If they are lowering rates surely we would be too" .. umm so whats the view point here..

 

[Shadow]

Hi Guys,
I often here conflicting arguments on this forum, sometimes said by the very same person.

Hi Trendsta. Really? I can't believe anyone here would do that!

One of my favourites is this:

"Property in upper class Syd, Melb, and Perth has been booming because sharemarket is strong" ... then the same person will say "sharemarket is going down so property will go up" ... errr, so which one is it??

Both! When the stockmarket is booming, those people making lots of money in the stockmarket may use their stock market profits to purchase property. When the stockmarket begins to fall, those people may decide to exit the market, stop buying more shares, and instead redirect their personal income and dividend income towards property, or even sell their existing shares and put this towards property. It's all good for property!

another favourite is "Australian property will not bust like US, UK because the fundamentals are different and our economy is soo strong" ... then the same person says "interest rates wont go much higher, and may infact start going low like in US and UK, If they are lowering rates surely we would be too" .. umm so whats the view point here..

Really... somebody actually says both those things? At the same time? Crazy!

I guess what they might mean, is that our economy does not have the same level of problems as the US, so is much less likely to have a property bust - i.e. no subprime, no ARMs etc. However at the same time, the Australian government and RBA may be looking at the world economy and decide to lower rates here to ensure we don't fall into recession, and there may also be pressure from the US to ensure that our rates do not fall too far out of alignment with theirs.

Perhaps that is what this person was thinking?

Cheers,

Shadow.

 

[casper007]

It's beware of what you read ... BIS Shrapnel predicted Perth prices to drop 20% over 3 years ... that was back in 2003 ... how wrong an economist can be... Huh?

Nothing beats due dilligence and when all else fails 'go with your gut instinct'

 

[Ausprop]

when all else fails 'go with your gut instinct'

good point... you only have to look around to see that prices of everything is going thru the roof and you can't find a contractor for love nor money. This economy is way too strong to be considering lowering rates.

 

[trendsta]

ive been harping on about an imminent global slowdown and US recession for months now.. anyway its much closer to reality now, so no need to point the obvious...

what i will point is the following in regards to resi property:

1. corporate profits
2. problems in china
3. UK commercial market

no time and not in much mood to explain further..

 

[MPmelb]

ive been harping on about an imminent global slowdown and US recession for months now.. anyway its much closer to reality now, so no need to point the obvious...

what i will point is the following in regards to resi property:

1. corporate profits
2. problems in china
3. UK commercial market

no time and not in much mood to explain further..

to phrase a dim minded politician from another era, "please explain!"

the way the world economy is, what do you think will happen to Aussie shares and resi property in 2008+????

 

[House_Keeper]

Here is the latest Residex report.

It paints a very good picture for property over the coming year...

http://forum.globalhousepricecrash.com/index.php?showtopic=26453

Cheers,

Shadow.

Residex have always been bullish on property.

Cheers,

 

[alexlee]

Ah yes, the argument that property never goes down because when things are going well, people pour sharemarket gains into property. And when sharemarkets tank, people take their money off the table and put it into property. By that logic, property never goes down.

I'm just old enough to remember the early 90s, though, so I'll just take my cautious road. I don't plan on selling, and in fact plan on buying more, but I'll be keeping the LVR reasonably conservative.

Will property go bust? Who knows. My bet would be on a slow, gradual fall.
Alex

 

[Mofra]

Will property go bust? Who knows. My bet would be on a slow, gradual fall.
Alex

alex, this is a Residex thread and I doubt they ever manage to mention property without putting a spin on things.
A softening market becomes "rental yields will rise in real terms"

 

[redsquash]

Historicallly this is how investors perceive events.

When the share market is going well, then funds are not directed into property but into the share market.
In a strong share market players don't pull money out to put into property they continue to put it back into the share market.
Thats how it generally goes ,regardless if a small percentage put funds into property from share profits.
If housing is booming then funds get diverted from the share market into property, which prevents the share market from booming.

Shares and property tend to be the the compliment of one another.

 

[trendsta]

Hi Trendsta. Really? I can't believe anyone here would do that!



Both! When the stockmarket is booming, those people making lots of money in the stockmarket may use their stock market profits to purchase property. When the stockmarket begins to fall, those people may decide to exit the market, stop buying more shares, and instead redirect their personal income and dividend income towards property, or even sell their existing shares and put this towards property. It's all good for property!




Really... somebody actually says both those things? At the same time? Crazy!

I guess what they might mean, is that our economy does not have the same level of problems as the US, so is much less likely to have a property bust - i.e. no subprime, no ARMs etc. However at the same time, the Australian government and RBA may be looking at the world economy and decide to lower rates here to ensure we don't fall into recession, and there may also be pressure from the US to ensure that our rates do not fall too far out of alignment with theirs.

Perhaps that is what this person was thinking?

Cheers,

Shadow.

Hi Shadow,

So u say "When the stockmarket is booming, those people making lots of money in the stockmarket may use their stock market profits to purchase property. When the stockmarket begins to fall, those people may decide to exit the market, stop buying more shares, and instead redirect their personal income and dividend income towards property"

it seems like these excellent investors are always selling shares to buy prop.. they sell when shares go up, and sell when they go down.. when do they BUY the shares? or do they have infinite shares handed to them, or won through lotto??

here is another conflicting argument i have heard here:
" property prices are going up due to HOME BUYERS not investors, as they represent 70% of the market. Then the same person will say Property prices are going up as investors take money out of shares and pour into property" .. huh??

 

[DavidMc]

it seems like these excellent investors are always selling shares to buy prop.. they sell when shares go up, and sell when they go down.. when do they BUY the shares? or do they have infinite shares handed to them, or won through lotto??

Funny you should mention that. Plenty of guys I've worked with have been handed truckloads of shares. They usually sell them off once they vest and renovate their houses or upgrade.

 

[trendsta]

Funny you should mention that. Plenty of guys I've worked with have been handed truckloads of shares. They usually sell them off once they vest and renovate their houses or upgrade.

Hi David,

plenty of guys i know make more than 250k .. so what ..
in the scheme of things that no of people is insignificant compared to the overall market.. just like the no. of ppl you know who are using thi strategy.

i dont see your point..

i just think its funny that such obvious contradictions are made .. property goes up when shares are up, and goes up when shares are down. can the same be said about shares .. shares go up when property goes up and go up when property goes down (based on same logic)? Note: reading in this forum you will see that ppl have been using the increased equity from property to buy shares ..

anyways, things looking shaky..
interesting to see labor make its first economic mistake already, i look forward to this with great anticipation. real impact of all this is yet to come..

 

[Dis]

1) For every seller there is a buyer. The Net money entering / exiting the share market is zero (new placements excluded). So unless the new money entering the sharemarket is coming from non property related sources and the money leaving is entering property, I dont see why property will have any sudden boom (in property).

2) The real loss in the sharemarket is equity. These days aot of that equity was finded with debt so LVRs for alot of people are now uncomfortable. I would imagine that alot of the money that becomes available for investment over the new few months will be used to offset / retire debt. Again no sudden boost for property.

3) Once people feel safe, they will then start to put their money where they see the best returns. Resi property has poor yields. The upper end of town has already had a strong run in many cities. Demand here will get crunched by lower corporate profits and bonuses so I cant see the upside in teh short term. The more affordable areas are stunglig with higher interest rates and petrol.

4) I dont see why we need property or shares to go into another bull run. People may simply reassess their risk vs reward criteria and go for yield rather than growth.

 

[trendsta]

1) For every seller there is a buyer. The Net money entering / exiting the share market is zero (new placements excluded). So unless the new money entering the sharemarket is coming from non property related sources and the money leaving is entering property, I dont see why property will have any sudden boom (in property).

2) The real loss in the sharemarket is equity. These days aot of that equity was finded with debt so LVRs for alot of people are now uncomfortable. I would imagine that alot of the money that becomes available for investment over the new few months will be used to offset / retire debt. Again no sudden boost for property.

3) Once people feel safe, they will then start to put their money where they see the best returns. Resi property has poor yields. The upper end of town has already had a strong run in many cities. Demand here will get crunched by lower corporate profits and bonuses so I cant see the upside in teh short term. The more affordable areas are stunglig with higher interest rates and petrol.

4) I dont see why we need property or shares to go into another bull run. People may simply reassess their risk vs reward criteria and go for yield rather than growth.

A very balanced and logical post. Id give u a kudos if i knew how..

Thank you Dis.

 

[tubs]

The majority of people who buy houses are people who are buying their PPOR. These people drive prices, not investors, who make up about 20% of the market only.

So, I for one dont really believe the whole correlation between the share market and property. There's probably something in it, but not as much as people make out.

BTW, what the hell has the UK commercial market got to do with the price of my house???

Oh, and on Residex, they are bullish on property. They have been over the last few years and quite rightly so. However, they also predict fairly low to average growth overall for Sydney for the next few years, so the idea that they're maybe biased is probably not entirely correct. They do mention a lot on buying wisely where the demand and infrastructure really supports it, and not just randomly.

 

[steveadl]

A very balanced and logical post. Id give u a kudos if i knew how..

Thank you Dis.

Yeah I was going to do the same for that post, but apparently I need to spread them around more. It's the little scales picture at the top right of the persons individual post.

 

[evand]

When hasn't Residex talked up the market? John Edwards is almost as bad as the REI's. Not to mention individual agents and anyone else with an interest in talking the market up.

 

[DavidMc]

i dont see your point..

You asked 'do they have infinite shares handed to them' and I was saying that yes, some people do. And some of these put it into property as soon as they can.

What portion of the market does this represent? I have no idea.

How much of this influences the property market? I have no idea.

Just an observation.