Soft Depression? I don't think so!

[Shadow]

A question for nonrecourse. How does your view of a 'soft depression' gel with the following data coming out at the moment.

1. Massive rebound in the Baltic Dry Index.

2. Sydney and Melbourne auction clearance rates jumping to 75%+ over the past few weeks.

3. Westpac Melbourne Institute survey of 'is it a good time to buy a house' jumped by another 7% this month, after massive jumps in the previous two months, to the highest reading now since December 2001.

4. First uptick in housing finance after a sharp decline, which history shows is always a precursor to an extended period of further growth. In all six of the previous six major housing finance downturn events over 34 years, the first uptick has been a precursor to an extended period of growth. Now we're at number seven. This is a very bullish signal for property.

Source data: http://www.abs.gov.au/AUSSTATS/[email protected]/DetailsPage/5609.0Dec 2008?OpenDocument

NR, do you still think residential property will fall by 50%. If so, what will cause this to happen?

Cheers,

Shadow.

 

[Bill.L]

Hi all,

Gee Wizz Shadow, Don't let the facts get in the way of a good story.

Just imagine if all the G&D brigade changed their views to being bullish?? That possibly would signal the end!!

The D&Gers think that because we had a depression 80 years ago that this will be the same, yet governments are pursuing the opposite policies to what they did at that time. If they (govs) did the same things as before then the results would have a high probability of being the same.

My question to the D&G lot is why they think the results will be the same with different inputs??

bye

 

[Shadow]

Sydney to see extra 63,000 first homebuyers in April

Better buy before April, D&Gers!

http://www.yourmortgage.com.au/news/2841/default.aspx

A staggering number of aspiring home owners are expected to storm into Sydney's property market over the next few months to take advantage of the government incentives, according to an expert.

Mark Mendel, CEO of property research portal Find Investment Property, predicted that 63,000 additional households across Sydney could be actively seeking their first home by April 2009 as it becomes cheaper to buy than rent.

"These new buyers will cause the property market to not only stabilise but ensure some growth at the bottom and middle of the market. This may result in the start of the next property boom for Sydney which could be driven from the bottom up this time around, rather than the top of the market pulling the bottom up, which occurred during the early 2000s," said Mendel.

With median property prices expected to rise, Mendel said rents should start to ease off as more people are buying rather than renting. While this may result in a slight drop in vacancy rates, rental yields remain promising.

"Investors may see a halt in rapidly increasing rental returns, but this is ok as they are already high. However, property prices should rise, and investors should see sufficient capital growth over the next three to five years.

"An outside influence that may affect the property market is the growing unemployment rate. If the government is able to keep this at a reasonable level and continue to stimulate the economy, then we should see some great returns, going forward."

Many investors are now achieving after-tax cash flow neutral or positive returns on their real estate investment, making it a simple decision to invest for any direct property investors who have a small deposit or equity in another property.

"We arrived at the 63,000 figure by calculating the current percentage of people renting in Sydney whose rent will become more than the average mortgage repayment after the latest rate cut. With over 450,000 households currently renting in Sydney (ABS Census 2006), it's likely that 7% on either side of the median rental market may look to move into the market. Therefore, 14% of the rental market may look to purchase property -- 14% of 450,000 is 63,000," said Mendel.

Cheers,

Shadow.

 

[essence]

A question for nonrecourse. How does your view of a 'soft depression' gel with the following data coming out at the moment.

1. Massive rebound in the Baltic Dry Index.

2. Sydney and Melbourne auction clearance rates jumping to 75%+ over the past few weeks.

3. Westpac Melbourne Institute survey of 'is it a good time to buy a house' jumped by another 7% this month, after massive jumps in the previous two months, to the highest reading now since December 2001.

4. First uptick in housing finance after a sharp decline, which history shows is always a precursor to an extended period of further growth. In all six of the previous six major housing finance downturn events over 34 years, the first uptick has been a precursor to an extended period of growth. Now we're at number seven. This is a very bullish signal for property.

Source data: http://www.abs.gov.au/AUSSTATS/[email protected]/DetailsPage/5609.0Dec 2008?OpenDocument

NR, do you still think residential property will fall by 50%. If so, what will cause this to happen?

Cheers,

Shadow.

I am getting old - keep forgetting. All this data relating to January/Dec activity is subdued. Overwhelming majority of people did not give a damn about property - they were on holidays. Real action is now, while we waste time on D&G goblins.

 

[Shadow]

Surprise jump in full-time jobs

The news just keeps getting better and better. Where are all the gloomers?

http://business.smh.com.au/business/surprise-jobs-jump-20090212-85cg.html

February 12, 2009 - 11:41AM

Employers took on an additional 33,700 full-time employees in January, the most in six months, spurring hopes the economy may yet avoid a recession.

All up, the economy added 1,200 job last month, compared with the 18,000 job losses economists had been tipping.

The overall net gain was held back by the loss of 32,600 part-time positions last month, raising the overall unemployment rate to 4.8% from 4.5% in December. The jobless rate is now at its highest since June 2006.

The gain in full-time employment marks a turnaround of more than 81,000 such positions in just one month, after the economy shed 47,700 full-time jobs in December.

Cheers,

Shadow.

 

[willair]

I am getting old - keep forgetting. All this data relating to January/Dec activity is subdued. Overwhelming majority of people did not give a damn about property - they were on holidays. Real action is now, while we waste time on D&G goblins.

I now know who you are and after studying all you old posts, on doom and gloom and nimbin assumptions you still have no idea,just go back to your coin-flip games at least that way you have a 50-50 idea of getting it right the only reason people change their names in this site is because they can't face the fact that they were wrong,but keep on posting even "coin-tossers" win 50% of the time ..lol..willair..

 

[essence]

Cheers,

Shadow.

List is in fact a bit longer - with some corrections.

1. Clearance rates in Sydney 78% (not 75 as news.com lies) Melborne unfortunately had to deal with fires and did not fare that great

2. Rents up by the largest amount in 20 years.

3. Consumer confidence is at boom levels towards the property. Consumer confidence at recession levels towards anything else. Which means:
a. RBA will cut interest rates to 0%
b. Consumers are ready to use money saved elsewhere to compete for property (smart people for purchases - others- for rents)

4. Shares, gold, cash - suck. There is nowhere to park your money apart from property if you have any.
5. greedy compats returning back to Australia at the rate about 20,000 per month. (Times published 7,000 from UK, I assume twice as much from US). All cashed up, willing to buy
6. Immigration program is still at 300,000 a year. Have to live somewhere, not so cashed up, putting pressure on rents
7. Big buck chasers coming back from WA and QLD
8. Unemployment is well under the level of previous property boom. Companies taking the chance to get rid of dead wood, nothing beyond that
9. Bad commercial debt is mounting and there is no other real alternative for lenders to offset the losses but to increase residential lending
10. Credit is becoming cheaper. Central banks saturated institution with liquidity - not long before markets will be flooded again with cheap money
11. Right stats start to flow into media. Days of D&G based on obsolete data from days of interest rate hikes are over
12. Mortgage repayments in Sydney are down from 30% of income back to 21%. Mortgage stress is in the past. Days of fire sales are well over.
13. Increasing number of RE agents report suffering from shortage of listings
Internet full of listings that are not already available.
14. Fuel and goods become cheaper by the day - money will be used to compete for rents. Same with Gov handouts. Expect 25% increase in 2009
15. Property shortage is severe. Occupancy rates are hovering around 1% almost everywhere. Builders are dropping like flies. This means period of property shortage will last longer than usual

I am already tired, but this list is not exhaustive.

Argument on the D&G side -

1. I want 50% drop because I want cheap property
2. I want 50% drop because I feel miserable and desperate for company

 

[essence]

I now know who you are and after studying all you old posts, on doom and gloom and nimbin assumptions you still have no idea,just go back to your coin-flip games at least that way you have a 50-50 idea of getting it right the only reason people change their names in this site is because they can't face the fact that they were wrong,but keep on posting even "coin-tossers" win 50% of the time ..lol..willair..

Are you Brett from geosites?

 

[essence]

The news just keeps getting better and better. Where are all the gloomers?

http://business.smh.com.au/business/surprise-jobs-jump-20090212-85cg.html



Cheers,

Shadow.

Translating into plain English:

Despite resource bubble burst, we still have unemployment rate 3% lower than pre-bubble levels (widely trumpeted as an achievement of previous Government).

What 's this time - petrol over the corpse of D&G vampires?

 

[The Y-man]

I guess statistical data is all very good - but when you are actually trying to sell a property, it makes one wonder.....

Presently, I am trying to sell a 2BR apartment in the inner city (to meet some other debt obligations).

1. The asking price is 10-15% BELOW what similar properties sold for last April
2. It has been on the market since October.
3. We have had NO offers
4. We have very few people coming through on inspections.

Yes, this is empirical; no this does not constitue a "relevant sample" - but it does impact me, which therefore gives a bias on my view of reality.

As a matter of interest, we recently got an offer for an inner city house we took to auction in November. Again, with asking price probably 15%-20% below last April, we got no offers until a few weeks ago (when you get no offers, you can't even negotiate!).

Cheers,

The Y-man

 

[Shadow]

List is in fact a bit longer - with some corrections.

1. Clearance rates in Sydney 78% (not 75 as news.com lies) Melborne unfortunately had to deal with fires and did not fare that great

2. Rents up by the largest amount in 20 years.

3. Consumer confidence is at boom levels towards the property. Consumer confidence at recession levels towards anything else. Which means:
a. RBA will cut interest rates to 0%
b. Consumers are ready to use money saved elsewhere to compete for property (smart people for purchases - others- for rents)

4. Shares, gold, cash - suck. There is nowhere to park your money apart from property if you have any.
5. greedy compats returning back to Australia at the rate about 20,000 per month. (Times published 7,000 from UK, I assume twice as much from US). All cashed up, willing to buy
6. Immigration program is still at 300,000 a year. Have to live somewhere, not so cashed up, putting pressure on rents
7. Big buck chasers coming back from WA and QLD
8. Unemployment is well under the level of previous property boom. Companies taking the chance to get rid of dead wood, nothing beyond that
9. Bad commercial debt is mounting and there is no other real alternative for lenders to offset the losses but to increase residential lending
10. Credit is becoming cheaper. Central banks saturated institution with liquidity - not long before markets will be flooded again with cheap money
11. Right stats start to flow into media. Days of D&G based on obsolete data from days of interest rate hikes are over
12. Mortgage repayments in Sydney are down from 30% of income back to 21%. Mortgage stress is in the past. Days of fire sales are well over.
13. Increasing number of RE agents report suffering from shortage of listings
Internet full of listings that are not already available.
14. Fuel and goods become cheaper by the day - money will be used to compete for rents. Same with Gov handouts. Expect 25% increase in 2009
15. Property shortage is severe. Occupancy rates are hovering around 1% almost everywhere. Builders are dropping like flies. This means period of property shortage will last longer than usual

I am already tired, but this list is not exhaustive.

Argument on the D&G side -

1. I want 50% drop because I want cheap property
2. I want 50% drop because I feel miserable and desperate for company

Good list. I think this one is very important:

'11. Right stats start to flow into media. Days of D&G based on obsolete data from days of interest rate hikes are over'

The gloomers have been holding out based on six month old data, from when the financial crisis was at its peak, interest rates were supposed to go into double digits, and public sentiment was at its lowest. All before the big interest rate cuts and government stimulus started to kick in. Things have changed a lot since then.

Six months from now the gloomers will be sitting open mouthed and wide eyed, wondering 'how did the crash pass us by?' and 'where did this massive boom suddenly appear from?'

Cheers,

Shadow.

 

[essence]

I guess statistical data is all very good - but when you are actually trying to sell a property, it makes one wonder.....

Presently, I am trying to sell a 2BR apartment in the inner city (to meet some other debt obligations).

1. The asking price is 10-15% BELOW what similar properties sold for last April
2. It has been on the market since October.
3. We have had NO offers
4. We have very few people coming through on inspections.

Yes, this is empirical; no this does not constitue a "relevant sample" - but it does impact me, which therefore gives a bias on my view of reality.

As a matter of interest, we recently got an offer for an inner city house we took to auction in November. Again, with asking price probably 15%-20% below last April, we got no offers until a few weeks ago (when you get no offers, you can't even negotiate!).

Cheers,

The Y-man

I stay away from VIC (for purely irrational reasons) and have no slightest clue why property was booming there in the last years.

But your selling process might have nothing to do with the market.

Perhaps your apartment is just too nice.

Every time I deal with the agents I curse John Howard for banning semiautomatics.

I have sold 2 properties in Australia, both renovated - and every time I had the same trouble - no inspections, no offers, although dog kennels across the road were selling like hotcakes.

Problem is that agents have relatives, friends, mates in pubs and clubs and every now and then these "friends" approach them for help with "nice property". Means cheap one also.

I had totally bizzare things happening. For example, main selling agents generated 2 inspection a week on average. Fortunately, one of her relatives got into accident and she hastily left for two weeks. Guy who was her substitute (i.e did not care that much if her property sold or not) in two weeks conducted 40 (forty!) inspections and there were 7 (seven!) offers. ended up selling above asking price.

Even when I rent out it is always fight with the bloody agents - they always attempt to put their friends in for under market rent. Just because the house is nice and they want to do a favour at my expense.

Advices:

1. Never sign exclusive agency agreements
2. If you feel you have to sign - no more than for two weeks.
3. If agent does not pay for advertising - give them a flick without any regret. If they are not prepared to put their money where mouth is they would not work for you
4. If they say - oh we are so great and we do only longer than usual exclusive agreements - vote with your feet.
5. if sale does not work for you annoy them at least three times a day.

 

[Aaron Sice]

These new buyers will cause the property market to not only stabilise but ensure some growth at the bottom and middle of the market. This may result in the start of the next property boom for Sydney which could be driven from the bottom up this time around, rather than the top of the market pulling the bottom up, which occurred during the early 2000s," said Mendel.

why does it have to "boom" all the time?

no boom - a return to normal growth perhaps - a floor under the market.

if sydney stabilises, the rest of the country will.

 

[Ms Jade]

"We arrived at the 63,000 figure by calculating the current percentage of people renting in Sydney whose rent will become more than the average mortgage repayment after the latest rate cut. With over 450,000 households currently renting in Sydney (ABS Census 2006), it's likely that 7% on either side of the median rental market may look to move into the market. Therefore, 14% of the rental market may look to purchase property -- 14% of 450,000 is 63,000," said Mendel.

Huh?
Not sayin' there won't be lots of FHBs in the market, but I don't know where to begin with this explanation.

 

[sparky23]

The news just keeps getting better and better. Where are all the gloomers?

http://business.smh.com.au/business/surprise-jobs-jump-20090212-85cg.html



Cheers,

Shadow.

If I was them I would have crawled back into my hole with no plans to emerge for a very long time! Oh except to retract all the crap they had to say about the mad woman who thought people should buy instead of rent way before anyone else thought it might be a good idea!

 

[MichaelW]

Hi Guys,

I also like the attached chart from Shane Oliver's latest instalment. The full article is available here:

Falling household debt and rising savings - how big a problem?

He's actually a share primer and is anti direct resi property. Doesn't earn AMP enough commissions... But even in his anti property spiel, you can find the odd supporting anecdote for its future prosperity.

The attached chart should once and for all put to bed the argument that its the same here as it is in the USA. Look at the impact of the RBA rate cuts to mortgage servicing costs in Australia versus what the Fed could pull off. Powerful comparison isn't it!

Shadow, consider that a free gift. You can add it to your arsenal...

Cheers,
Michael

 

[Shadow]

Look at the impact of the RBA rate cuts to mortgage servicing costs in Australia versus what the Fed could pull off. Powerful comparison isn't it!

Shadow, consider that a free gift. You can add it to your arsenal...

Nice chart, thanks mate! I have added it to my bag of tricks! I think it goes nicely with this one...

 

[chilliaa]

Hi Guys,

I also like the attached chart from Shane Oliver's latest instalment. The full article is available here:

Falling household debt and rising savings - how big a problem?

He's actually a share primer and is anti direct resi property. Doesn't earn AMP enough commissions... But even in his anti property spiel, you can find the odd supporting anecdote for its future prosperity.

The attached chart should once and for all put to bed the argument that its the same here as it is in the USA. Look at the impact of the RBA rate cuts to mortgage servicing costs in Australia versus what the Fed could pull off. Powerful comparison isn't it!

Shadow, consider that a free gift. You can add it to your arsenal...

Cheers,
Michael

Spot on Michael, when people dont compare apples with apples they are bound to make distortions in their investment analysis.

However:
What happens when interest rates increase again? If residential property doesnt fall materially (which i dont think it will), then how will people service the loan when interest rates adjust upwards. Just as your graph shows how responsive changes in affordability are to changes in RBA decreases, what happens when interest rates return to normality, the reverse will occur, except this time there wont be a lax lending environment to absorb the decrease in affordability, and naturally generating savings takes a long time to build.

As soon as things return to normalicy expect to see the RBA quickly reverse interest rates upwards to a more normal range band, regardless of inflation figures.

This is the primary reason why im just neutral on 5yr basis

 

[nonrecourse]

Plagiarism of my thread soft depression is tantamount to admitting defeat

The score is now NR 4... blue sky geared to yer back teeth 0

As someone else coined the term sock muppets you lot are really pathetic. You position is absolutely untenable. The financial soft depression is here, world trade is contracting but no you say things are going along swimmingly and there is no loss of jobs

You must be sniffing ether. You have lost credibility on the board. People who in the past have argued with me about my pessimistic scenario are now questioning your logic.

 

[Shadow]

NR, do you still think residential property will fall by 50%. If so, what will cause this to happen?

NR 4... blue sky geared to yer back teeth 0
sock muppets you lot are really pathetic
You must be sniffing ether

Well, how could I possibly refute your well presented and logical argument. Once again, you have clearly stated exactly why residential property prices will fall by 50%. You have certainly convinced me anyway. I don't understand why people give you such a hard time when you explain the soft depression so eloquently and concisely. SELL SELL SELL!