Had you been reading my posts on SS (Thommo then) you would have read the same thing. But you wouldn't be a gold baron because you wouldn't have believed.
Tsunami' to hit Australian real estate
- Thread starter bluestorm
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Spann should re-read it too. Might help him recover the losses of his 4 excela funds.
macquarie should have a re-read too. their investment products were dogs with fleas
The interesting thing has been that economists outside Australia have consistently predicted a bubble in Australia's real estate market, whilst economists in Australia have predicted a mere slowdown. The reason for the difference is that the guys OS look mainly at ratios, whereas the folk down here look into further detail.
Not sure how accurate this Harry Dent guy is overall as we haven't heard of all the things he predicted that didn't come true. I think the key influencers will be unemployment and interest rates. Even so, if they become too high it will mainly hit particular suburbs where people have borrowed above their means and are in mortgage stress. The Henry review identified that the biggest issue related to affordability was the favourable tax savings from property investment that doesn't exist anywhere else in the world. The recommendation was to change this but it was completely dismissed by the government. Add to this that generation Y are starting to invest in property whilst still living at home and you start reducing the number of people who will likely be in mortgage stress.
The current slowdown we are seeing is what everyone over here expected and it is likely it will stay this way for a while (although who really knows?). Bear in mind though that the recent boom we had after the GFC got through a whole heap of first home buyers and people are very cautious at the moment, with household saving on the increase. Therefore, what you get is that people are becoming more cashed up and ready to invest once things become a bit rosier, but that will take a while...
Not sure how accurate this Harry Dent guy is overall as we haven't heard of all the things he predicted that didn't come true. I think the key influencers will be unemployment and interest rates. Even so, if they become too high it will mainly hit particular suburbs where people have borrowed above their means and are in mortgage stress. The Henry review identified that the biggest issue related to affordability was the favourable tax savings from property investment that doesn't exist anywhere else in the world. The recommendation was to change this but it was completely dismissed by the government. Add to this that generation Y are starting to invest in property whilst still living at home and you start reducing the number of people who will likely be in mortgage stress.
The current slowdown we are seeing is what everyone over here expected and it is likely it will stay this way for a while (although who really knows?). Bear in mind though that the recent boom we had after the GFC got through a whole heap of first home buyers and people are very cautious at the moment, with household saving on the increase. Therefore, what you get is that people are becoming more cashed up and ready to invest once things become a bit rosier, but that will take a while...
Problem with Dent is his past performance has been poor. I used to subscribe to his newsletter but he was soo wrong most of the term I cancelled.
he once predicted the DOW would reach 40k. In my view he makes some good points but personally I like Gerald Celente much better.
Mind you I dont think the economy is glowing so Dent and I would agree on those points.
he once predicted the DOW would reach 40k. In my view he makes some good points but personally I like Gerald Celente much better.
Mind you I dont think the economy is glowing so Dent and I would agree on those points.
i would believe you had i seen it
but how does property crash there related to government printing money? i thought their economy tanked because of the housing market crash, not the other way around?Scanning that old thread is fun.
This from MichaelW sort-of summed it up:
Michael worked it out. Wonder why so few others did?
It doesn't have to be printing money (in the strictest "run the printing presses" sense) alone that increases the supply of money in the economy -> the availability of credit, and in particular easy credit, most notably to people who (as it turns out) could least afford it is another way to build a house of economic cards.
....and then creating a maturing equity out of the debt they carry - when the debt is defaulted againt, the equity not only doesn't mature but is worthless to sell.
the real crime is against those who offered an AAA rating to CDOs.
Wash your mouth out with soap. Property never crashes!!!!
The economy was tanking so "helicopter" Ben pumped up the property and share market to maintain the "wealth effect". So which was the egg and which was the chicken?
hmm interesting, wonder if they did that on purpose, printing more money to build up the 'boom' knowing all along the economy will tank. sort of like last shot before going to die, except they are taking many other people with it, leveraging their loses
In case some people are not familiar with that term it refers to a situation where people feel wealthy (typically because of rising asset prices - such as rising house prices) and hence spend more (ignoring, of course, that their incomes remain largely unchanged).
A great example I can think of is when the CBA (many years ago now) ran an advertising campaign, the gist of which was a guy who had all the do-dads (a boat and a flash car) and when his neighbour asked him how he could afford all these things he replied with those immortal words "equity maaaaate!".
BINGO! That's why we get these wild claims. Even people like Stephen Keen are guilty of it too. They focus in on a narrow set of variables and don't take the full picture into account.
IMO there are several factors, which TOGETHER make up the strength of the property market.
1. Interest rates
2. Bank's desire to lend, and financial products created to allow this
3. Unemployment
4. General strength of the economy
5. Rental yields
6. Supply of new property
7. Demand - Number of potential entrants to the market
8. Government regulation (negative gearing, stamp duty rates, etc)
One of these factors cannot destroy the market. One factor going against you will reduce growth a bit. A whole lot will affect it more.
I think at the moment we're thumbs down on 1&2. Neutral on 8 and thumbs up on the rest. To varying degrees of course.
Think back to the boom times a few years ago. Every single factor was going in property's favour.
So coming in and only talking about debt levels is simply not taking enough factors into account. It's a complex market. More complex than many realise.
wonder how we compare to US, japan, ireland, england on those items. we are probably on better side if we compare to item number 3 and 4. however property bust (trying to avoid c word here) will probably affect those too.
@ Tubs I've seem similar lists in the past.
It wasn't on your list (not explicitly), but SF is right about the role of sentiment.
If people think there is a buck to be made they'll make the plunge (irrespective of the price - and that applies to property, shares, gold, whatever). And now (using NZ has an example) the interest rates are ridiculously low and banks are again out offering 95% loans, but the property market is zzzzz (because the sentiment isn't there).
It wasn't on your list (not explicitly), but SF is right about the role of sentiment.
If people think there is a buck to be made they'll make the plunge (irrespective of the price - and that applies to property, shares, gold, whatever). And now (using NZ has an example) the interest rates are ridiculously low and banks are again out offering 95% loans, but the property market is zzzzz (because the sentiment isn't there).
yeah i think sentiment does play big part in market. everyone sort of believe the property will tank in near future it's hard to convince them otherwise. global turmoil has played big part on that sentiment too
misery loves company and nothing interest people more than news about doom and glooms we are seeing all over the news at the moment
I have and I don't. I just like to show my intellectual superiority.
No way do I sell our home though.
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