rise or fall during the war?
- Thread starter voodoo
- Start date
l agree that war is a case of when not if.
If the war is swift and the US gains control of Iraq rapidly then the price of oil will drop and the effect on the Australian property market may be negligible.
However if things get drawn out and Iraq manages to drag some of the other ME countries into the conflict by perhaps launching missiles into Saudi, Israel or Kuwait then the flow of oil from the entire region will diminish significantly. Obviously the price of oil will rise to who knows where, $45/bbl and beyond perhaps. This will push inflation higher, stifle the economy and be a doulbe blow to property prices.
Just my 2 cents...
If the war is swift and the US gains control of Iraq rapidly then the price of oil will drop and the effect on the Australian property market may be negligible.
However if things get drawn out and Iraq manages to drag some of the other ME countries into the conflict by perhaps launching missiles into Saudi, Israel or Kuwait then the flow of oil from the entire region will diminish significantly. Obviously the price of oil will rise to who knows where, $45/bbl and beyond perhaps. This will push inflation higher, stifle the economy and be a doulbe blow to property prices.
Just my 2 cents...
Metal shares would do well, but I do hope that its all a lot of saber rattling.
Ta
rolf
Ta
rolf
Gee Glenn , I hope that was said in Jest
see change
In relation to the original question - basically, who knows? No one. In my opinion, there's no real point worrying about it, cause what happens, happens. There is very little that investors can do to stop the coming events. (I mean property prices, not the war).
I read also the Weekend AFR that U.S. stocks shot right up when the Gulf War happened. Maybe it'll happen again (with stocks our houses) maybe it won't. Maybe they'll fall like bricks. Now, coming from a totally amateur point of view, let's take a look at house prices then and now.
I'm sure people were asking the same questions in 1991 as people are asking now, and prices did drop around then, but look where they are now. My guess is, how will Australia's involvement in this nonsense affect our position in the world? By that I mean, will we be focussed on as a terrorist target? If so, what will THAT do to property prices?
Mark
'no hat, some cattle'
Post edited for content and to keep it on topic - Sim'
I read also the Weekend AFR that U.S. stocks shot right up when the Gulf War happened. Maybe it'll happen again (with stocks our houses) maybe it won't. Maybe they'll fall like bricks. Now, coming from a totally amateur point of view, let's take a look at house prices then and now.
I'm sure people were asking the same questions in 1991 as people are asking now, and prices did drop around then, but look where they are now. My guess is, how will Australia's involvement in this nonsense affect our position in the world? By that I mean, will we be focussed on as a terrorist target? If so, what will THAT do to property prices?
Mark
'no hat, some cattle'
Post edited for content and to keep it on topic - Sim'
Last edited by a moderator:
Sim
Administrator
Off topic posts have been deleted from this thread.
This is not the place to discuss politics, religion, or the evils or merits of war.
If you wish to discuss these topics, please start a new thread in the coffee lounge - but be warned that such threads will be monitored carefully by the moderators to make sure that they don't get out of hand. Moderators do reserve the right to delete threads which are off topic and which do not follow in the spirit of the forum. You may well be better off looking for a political or religion based forum if you want to discuss these issues in full.
Now... back voodoo's original question please...
This is not the place to discuss politics, religion, or the evils or merits of war.
If you wish to discuss these topics, please start a new thread in the coffee lounge - but be warned that such threads will be monitored carefully by the moderators to make sure that they don't get out of hand. Moderators do reserve the right to delete threads which are off topic and which do not follow in the spirit of the forum. You may well be better off looking for a political or religion based forum if you want to discuss these issues in full.
Now... back voodoo's original question please...
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"This will push inflation higher, stifle the economy and be a doulbe blow to property prices."
Inflation up = interest rates up????
Economy stifled = interest rates down????
Has anyone any ideas on what war would do to interest rates?
My guess is interest rates would remain low to help stimulate the economy.
Cheers,
Crystal
Inflation up = interest rates up????
Economy stifled = interest rates down????
Has anyone any ideas on what war would do to interest rates?
My guess is interest rates would remain low to help stimulate the economy.
Cheers,
Crystal
I am not old enough to have invested in a high inflation economy, however I thought that High inflation increases property prices as well as rental income (and interest rates).
low inflation = low rents = low interest rates.
High inflation = rising rents = higher interest rates.
low interest rates = high affordability = rising house prices.
high interest rates = low affordability = stagnating property prices.
All the old investement books I have read seem to point to inflation being essential to investment in property, and a desired condition, yet the last boom has proved this to be incorrect.
That means at some point in the future when interst rates go up, people who have extended themselves beyond their means will lose their houses, these people will be forced to rent, pushing rents higher, there will be a glut of properties on the market, that will be sold at an attractive price, lowering house values. This will then put the return of an average rental property back to 8% were it belongs instead of the current 4%.
The cost of houses at the moment, ie an average inner suburban Adelaide house is around $300,000 even an interest rate rise of 2% will see people in alot of trouble.
If this is right then there is a danger period for most of us investors where the rent rises will lag the interest rate rises. (if it happens quickly). We will find ourselves getting the same rent we do now, while paying higher interest rates.
low inflation = low rents = low interest rates.
High inflation = rising rents = higher interest rates.
low interest rates = high affordability = rising house prices.
high interest rates = low affordability = stagnating property prices.
All the old investement books I have read seem to point to inflation being essential to investment in property, and a desired condition, yet the last boom has proved this to be incorrect.
That means at some point in the future when interst rates go up, people who have extended themselves beyond their means will lose their houses, these people will be forced to rent, pushing rents higher, there will be a glut of properties on the market, that will be sold at an attractive price, lowering house values. This will then put the return of an average rental property back to 8% were it belongs instead of the current 4%.
The cost of houses at the moment, ie an average inner suburban Adelaide house is around $300,000 even an interest rate rise of 2% will see people in alot of trouble.
If this is right then there is a danger period for most of us investors where the rent rises will lag the interest rate rises. (if it happens quickly). We will find ourselves getting the same rent we do now, while paying higher interest rates.
the correlation between i rates and house prices is probably of interest to this thread - its been posted here before, try a search, if not its over at the residex site.
(just a warning to those of you that are academics - dont take too much notice of the way the paper was written) its interesting
(just a warning to those of you that are academics - dont take too much notice of the way the paper was written) its interesting
Hi all,
Lets play devils advocate,
Assuming a rise in terrorism because of war and it comes to Australian cities, then inner areas are the most likely to suffer with these areas becoming LESS desirable and property prices falling. Because outer suburban areas and regional centres are remote from the terrorist action, they become MORE desirable and prices rise.
In the longer term inner areas return to being the slums, where as outer areas with the quarter acre for the kids to run arround safely in are much more attractive.
The above is a distinct possibility, but my personal opinion is that Iraq and terrorism are 2 totally seperate issues.
Bye
Lets play devils advocate,
Assuming a rise in terrorism because of war and it comes to Australian cities, then inner areas are the most likely to suffer with these areas becoming LESS desirable and property prices falling. Because outer suburban areas and regional centres are remote from the terrorist action, they become MORE desirable and prices rise.
In the longer term inner areas return to being the slums, where as outer areas with the quarter acre for the kids to run arround safely in are much more attractive.
The above is a distinct possibility, but my personal opinion is that Iraq and terrorism are 2 totally seperate issues.
Bye
Hi Crystal,
regarding your qu about interest rates, I heard on the "Today" show this morning that many lenders (from Mac bank to Aussie) are predicting a fall in official interest rates to keep the economy bubbling along in these uncertain times. Apparently, some lenders have already lowered their fixed interest rates in preparation.
Cheers
John
regarding your qu about interest rates, I heard on the "Today" show this morning that many lenders (from Mac bank to Aussie) are predicting a fall in official interest rates to keep the economy bubbling along in these uncertain times. Apparently, some lenders have already lowered their fixed interest rates in preparation.
Cheers
John
The Age newspaper recently ran an interesting comentary on some of the possible effects/motivations of another war:
http://www.theage.com.au/articles/2003/02/05/1044318666539.html
http://www.theage.com.au/articles/2003/02/05/1044318666539.html
I've been thinking about the original issue a lot in the last few days, and came up with this:
Okay, in relation to house prices being affected by the war. People need to look at their strategies. Okay, if you are a buy and holder, in ten years time, is it really going to matter to you what house prices do now (or in a few months)? If you do your research and buy well, then what's the problem? It could be an advantage, if prices fall, then there could be plenty of bargains around.
I'm beginning to look at property in much the same way as Warren Buffett looks at shares:
1. Do heaps of research
2. Buy well (below intrinsic value) Unlike shares, this is mostly determined by the market, so know your market!
3. Be patient, don't buy just for the sake of buying, only buy when you have found something that meets your criteria
4. Hold for the long term
It's worked for him in the stockmarket, don't see why it can't work in property as well. In fact, it IS working in property, I know a number of people that invest like this. Think about it.
Mark
'no hat, some cattle'
Okay, in relation to house prices being affected by the war. People need to look at their strategies. Okay, if you are a buy and holder, in ten years time, is it really going to matter to you what house prices do now (or in a few months)? If you do your research and buy well, then what's the problem? It could be an advantage, if prices fall, then there could be plenty of bargains around.
I'm beginning to look at property in much the same way as Warren Buffett looks at shares:
1. Do heaps of research
2. Buy well (below intrinsic value) Unlike shares, this is mostly determined by the market, so know your market!
3. Be patient, don't buy just for the sake of buying, only buy when you have found something that meets your criteria
4. Hold for the long term
It's worked for him in the stockmarket, don't see why it can't work in property as well. In fact, it IS working in property, I know a number of people that invest like this. Think about it.
Mark
'no hat, some cattle'
