The soft depression has arrived

[nonrecourse]

OK - understood - your D&G is just medical problem. Otherwise you are fine.

You haven't answered my question. In your thimble full of investment experience you would deem someone who has a commercial tennant in Collins street not a real property investor ? Prey tell eskie we have gathered around to partake in recieving some of your pearls of wisdom on property investing please elucidate

 

[J Martin]

Confidence , lack of it , or over confidence is the underlying driving force. It's widely accepted as the driving force in the driving force in the share market. ( Elder is a Psychiatrist who has written several influential books on the subject with regards to the share market ) Technical analysis is basically an attempt to analyse crowd behaviour.

Obviously underlying fundamentals do have an impact , but they don't explain the depth and rapidity of changes . Once a particular trend is established , it takes a long time and a lot of changes in underlying fundamentals for that market to change direction . That's part of the reason why I think that the current increase in lower priced properties is a dead cat bounce. Out side the FHOG , nothing else has changed and I don't think that is enough to trigger a widespread change in confidence.

If people relied on common sense in their dealings , they wouldn't have come up with the need to create the various financial instruments on steroids that have been in a large part responsible for the leveraging that has occured.

Over confidence in their ability and the products they created.

Cliff

Absolutely agree that human psychology is a fundamental factor in boom bust cycles. The point is, you can't have the boom without the bust simply by willing the bust away.

P/E's can't keep going up forever in the sharemarket, just because the P is being driven by confidence. The E in the equation is driven by real world fundamentals.

Same with Property. You can't have debt increasing and increasing indefinately, and that debt can't be willed away by 'confidence'.

The system is at worst broken, and at best, needs a good fine tuning. Human beings simply continuing to consume what they haven't paid for yet(debt in the form of credit) cannot and will not go on indefinately.

 

[sparky23]

Dazz is out of town. I'm sure he'll post when he gets back.

I expect he is creating some wonderful words of wisdom to post at the appropriate time, he wouldn't miss out on such as opportunity I'm sure!

 

[see_change]

Thank you for enlightening. And I stupidly thought that moving from expensive rent to cheaper mortgage is a common sense.

And your point is ??

How does this have any bearing on what I was talking about ?

A stupid comment like that reaffirms my current decision to skip many of the current long winded repetative threads going around at the moment ...

Cliff

 

[ILoveProperty]

Confidence , lack of it , or over confidence is the underlying driving force.
...
Cliff

Well said. Understanding this is like finding the holy grail.
The interactions between confidence, greed, fear.
Currently fear rules.
Confidence is of course low.

I can't help but think that things won't improve, in terms of mass confidence, until interest rates start going up?

 

[see_change]

I think in the current circumstances , for the market to change , people need to have a view point that things will get better and at the moment I don't see that happening.

There are people who are prepared to buy at the moment if they think they can get value , but I think there won't be mass buying by investors untill there is at least a glimmer of hope in the distance.

Every day I'm talking to people who are having financial problems , having their hours cut back , loosing jobs , behind in repayements . In 20 years as a GP , I've never seen so many people hurting financially.

Two close personal friends ( senior execs _) have been retrenched and another one is going in mid year . I know at least one will have problems if he doesn't get a job within a few months. Not sure on the financial situation of the other two .

Another friend is behind on repayments since her husband was retrenched and their income doesn't meet repayments . They don't see a way out.

In the recession we had to have , we didn't have any friends who were directly affected.

Cliff

 

[ILoveProperty]

Good anecdotal info. Good for people like me who would normally be oblivious to it.
I don't see any hurt. Friends all doing well. I'm currently posted in with government. Department I'm in are always hiring. Tearing down meeting rooms to make room for more cubicles. It's at the exact opposite end of the spectrum to what you (and many others) are seeing.
Where I am will be one of the last sectors to be affected.

Either way, going to be a long time before confidence returns. Which in itself is quite calming. No rush to do anything.

 

[ffc1883_1996]

I've really enjoyed this thread. Pity it drifted a little but I guess I always felt it would.

Thanks to all contributors - in particular, nonrecourse and keithj.

I still don’t understand NR’s reasoning behind his regular, extremely gloomy predictions but I suspect he’s done everything he can to explain them. For what it’s worth, just like NR, I’ve got quite a bit riding on him being wrong.

 

[essence]

And your point is ??

How does this have any bearing on what I was talking about ?

A stupid comment like that reaffirms my current decision to skip many of the current long winded repetative threads going around at the moment ...

Cliff

Ok, Eventually you will learn:

2009 - Unemployment - 4.25%, Cash rate - 3.25%
2010 - Unemployment 7%, Cash rate - 0%

1996 - start of the property boom - Unemployment - 8.7%, rates - 5.6%(ish)

2001(2) -(second installment of property boom) - Unemployment 7.5%, rates 4.25%

 

[topcropper]

For what it’s worth, just like NR, I’ve got quite a bit riding on him being wrong.

Hey, we all have.

50% house price drops and all ords at 2200 would see no banks left, Probable depression, most people on here bankrupt and probably a total breakdown in law and order.

How does anyone plan for NR's scenario?

See ya's.

 

[see_change]

Ok, Eventually you will learn:

2009 - Unemployment - 4.25%, Cash rate - 3.25%
2010 - Unemployment 7%, Cash rate - 0%

1996 - start of the property boom - Unemployment - 8.7%, rates - 5.6%(ish)

2001(2) -(second installment of property boom) - Unemployment 7.5%, rates 4.25%

As Mark pointed out in another post , the economy was growing strongly in 96 and 01 .

It aint doin' that now ....

Maybe if you gave a detailed explanation of how you get from your raw data to your conclusion ..... Oh ........ you didn't put a conclusion down .... ummm

I always thought if you where presenting an arguement or hypothesis you actually needed to tell people what your hypothesis was ...

Geee .....must have missed something in high school science

People here are are only too willing to enter into an informed debate but when we don't know what we're debating , it's hard to do that .

A quote with a set of figures isn't a debate.

Cliff

 

[keithj]

Originally Posted by ffc1883_1996
For what it’s worth, just like NR, I’ve got quite a bit riding on him being wrong.

Hey, we all have.

Including NR funnily enough .

50% house price drops and all ords at 2200 would see no banks left, Probable depression, most people on here bankrupt and probably a total breakdown in law and order.

How does anyone plan for NR's scenario?

Veggie garden, chicken coop, couple sheep in the back garden, AK47, bunker full of rice, .....

 

[BoatBoy]

How does anyone plan for NR's scenario?

Boat for a house, solar panels for power, Desalinator for water, fish,crabs,oysters and crays for food, home brew for drinking.

Almost there.

Dave

 

[Bill.L]

Hi all,

Boatboy,

fish,crabs,oysters and crays for food

Sounds ordinary

Seaweed for vegetables??

bye

 

[The Y-man]

Veggie garden, chicken coop, couple sheep in the back garden, AK47, bunker full of rice, .....

....plus strategically defendable property, banks safes in several different localities.

I thought goats were the animals of choice?

Any reason you chose the Kalashnikov?

Cheers,

The Y-man

 

[topcropper]

....

I thought goats were the animals of choice?

Goats are horrible. You can't keep em fenced in. Plus, they taste like crap.
If it's a depression you may as well be eating eye fillet and lamb.

See ya's.

 

[Aaron Sice]

i see what this is about now.

it seems all the D&G'ers think that house prices will fall to 50-60-70% of their boom values. which may happen yet, i dont know because i'm not nostradamus.

but there's an brewing under the surface that prices will never return, that there will never be another boom like it, even asking for a return to normal (average, median, historically accurate average - whatever NORMAL is for you) growth seems a bit outta the Q for a lot of D&G'ers - at least in the medium term future.

and now, i see, more and more people are jumping on this D&G wagon. does that make it right? i dunno. but i do know one thing - from historical evidence - that even during the GD, WW1 & 2, gold bubble of the 70s and the tech crash if you were a contrarian you could have built a lot of wealth by buying everything at depressed prices.

the economy was NOT strong in 2001-02 - anyone remember the NASDAQ? the tech crash? the crash to end all crashes? the Y2K bug? yes - the world as we know it will come to an end, those 18 Waco nutters formed another cult and killed themselves in their college dorm rooms - yes, the four horses of the apocalypse are - a'comin round the mountain when they come (*yeehah!*), they'll be comin' round the mountain when they come! (*yeehah!*)...

never mind the fact that the underlying sentiment across the SP500 and the DJI reflected another completely different story. but no, the media was all over it, people lost their jobs, UE went to 7%+, interest rates fell - but people FLOCKED to buy houses. the Aussie market was just realising the mining boom, so fundamentally strong and a lot of room for investment.

we built it, and they came.

credit was easier, yes. can we look forward to tighter lending criteria, proven saving records with a lower LVR req? i think so. don your sunday best and head on down to the bank with everything in tow, fill out forms A thru J, sign Q, intital Yii (clause c), attach your first born's birth certificate to form Z, jump thru these three hoops on your way out and thanks for paying our salary for the next 50 years.

this doesn't mean that everything will go to the dogs - tighter lending criteria = more stable and sustainable lending practices = quality mortgages = confidence in AU RE = return to "normal" growth = stronger RE market. if RE is strong, then those that "missed the boat", in their short sighted opinion, will turn to shares.

so, during the last tech crash, there was strong underlying fundamentals, a ton of media hped D&G, just above average UE and low IRs.

no, china will not pull us out of a possible recession. i think to predict that a recession will NOT hit AU is futile - but i feel it will only be technical as i have said before.

however, the beast has been fed. it may be sleeping, but it will wake, hungry again for the food we provide. we won't see a spike in nickel prices. SIMS will probably go bust in the meantime. steel prices will be on the up and up. copper will move again. wheat and rice prices will return. will they boom again? how the bluddy hell should i know?

we're seeing an overshoot, that i agree is confidence based.

i'll take the
300+% from 2001 - 2007 (WA)
7% in 2008
-10% in 2009 and
-20% in 2010.

i look forward to the return of hstorically correct, average growth patterns.

that's all i've ever wanted.

 

[keithj]

....plus strategically defendable property, banks safes in several different localities.

I thought goats were the animals of choice?

Agree with TC. All recyclable waste goes to worm farm, compost bin & chooks - goats are redundant, smelly, difficult to manage. I'm going to have to break the news to my daughter that the pony ain't gunna happen.... it's half a dozen lambs instead .

Any reason you chose the Kalashnikov?

It was easy to type .

 

[essence]

As Mark pointed out in another post , the economy was growing strongly in 96 and 01 .

It aint doin' that now ....

Maybe if you gave a detailed explanation of how you get from your raw data to your conclusion ..... Oh ........ you didn't put a conclusion down .... ummm

I always thought if you where presenting an arguement or hypothesis you actually needed to tell people what your hypothesis was ...

Geee .....must have missed something in high school science

People here are are only too willing to enter into an informed debate but when we don't know what we're debating , it's hard to do that .

A quote with a set of figures isn't a debate.

Cliff

There is nothing to debate. There is not a single one indicator that does not blatantly obviously demonstrate that we are in a property boom. Simple like a whistle.

Second, I already answered that it is not growing economy that props up property market, it is property market props up economy. If you do not know how Australian economy works and what drives it - what you are arguing about. Learn the basics - GDP follows "new house commencements" like tail follows the dog. It is locomotive pulls carriages, not carriages push locomotive.

You do not understand primitive basics, why would you expect me to read you cycle of lectures on the advanced economics on the public forum?

If you would have realised how many things you have no foggiest idea of, you would be terrified.

If you want, get "Das Kapital" of comrade Marx, read it from beginning to end couple of times - it will get you out of the dark.

 

[steveadl]

I'm going to have to break the news to my daughter that the pony ain't gunna happen.... it's half a dozen lambs instead .

Lot of work anyway Keith, get her one and have it agisted like we do. Much easier!