Unemployment is not a threat to property market.

[Token Funder]

Do you *genuinely* believe 0.1% rise in unemployment will have any effect on anything?

Seriously, do you?

You haven't answered my question but to answer yours: any trend has a beginning, so, yes.

Having done you the courtesy, do you believe "Unemployment is not a threat to [the] property market"

 

[essence]

You haven't answered my question but to answer yours: any trend has a beginning, so, yes.

Having done you the courtesy, do you believe "Unemployment is not a threat to [the] property market"

Some time ago after my net worth went over $10M, I found that I am becoming a bit too sensitive to the attacks of people who question my intelligence and integrity. Perhaps I am committing the sin of intellectual nazism, but my personal rule is never waste time arguing with people who make more money than myself, but rather watch and learn.

I am especially sensitive to the people who engage in gestapo style interrogations about my intelligence and integrity.

And even more specifically I find it very hard to like when these barrages come from the people who are so afraid even to disclose their location.

I trust that answers your question about my beliefs.

And if you believe 0.1% rise in unemployment represents any "trend", you need:

a. Go back to school and learn what "margin of error" is
b. Seek immediate medical attention

Good luck in your endevours.

 

[Gatoblanco]

I am not an economist, nor do I understand complex economics. But I have to say that increasing unemployment has to have a detrimental effect on property prices. I cannot see how it cannot.
For a start, most lenders wont lend if you are new to a job and not many people, investors or FHBs are going to buy if they ability to service loans is in doubt.
I am not D&G at all but I think that unemployment which is a factor of general economic confidence both in the sharemarket and generally across business, is a big threat to positive property growth.
So I am really hoping business gets a bit more optimistic. I do not believe this economic crisis will last too long though

 

[fald1]

Some time ago after my net worth went over $10M, I found that I am becoming a bit too sensitive to the attacks of people who question my intelligence and integrity.

ahh.. look, i'm just a newbie, but that *reads* like arrogance.
now.. maybe that's ok or what you want to be.. then cool! revel in the narcissism. if not.. well.. that's just how it reads to me.

anyway, there are plenty of wealthy dumb people around.. one of them is the president of america. IMO he has little intelligence or integrity.

 

[essence]

I am not an economist, nor do I understand complex economics. But I have to say that increasing unemployment has to have a detrimental effect on property prices. I cannot see how it cannot.
For a start, most lenders wont lend if you are new to a job and not many people, investors or FHBs are going to buy if they ability to service loans is in doubt.
I am not D&G at all but I think that unemployment which is a factor of general economic confidence both in the sharemarket and generally across business, is a big threat to positive property growth.
So I am really hoping business gets a bit more optimistic. I do not believe this economic crisis will last too long though

No offence meant, but it seems like I am going in circles.

I am perhaps sounding like a broken record 0.1% fall in employment is within error margin. It means, that statistically it does not exist.

You remind me of one nice guy who used to post to this forum - Tibor Bode. Back in 2001 he was arguing that world is going to fall apart because IT people were loosing jobs by crowds. I still feel sorry that I failed to convince him that property boom is underway.

I repeat the same I told Tibor back then - One in 30 people lost their jobs. You are that one. You are not that important. Important is that 29 people did not lose their job. Important is that sharemarket crashed and money from there are going to be poured into property market. Important is that there is no more land releases in Sydney.

Sounds familiar? Applied to today - add rental crisis and housing industry in ruins.

I am so pleased that I am going to be busy from tomorrow and will not have time to write to this forum for a while. So depressing to talk to people who fail to see the blatantly obvious.

 

[Gatoblanco]

I am perhaps sounding like a broken record 0.1% fall in employment is within error margin. It means, that statistically it does not exist.

I was not trying to comment on the current unemployment situation and how much that was affecting house prices. I was not commenting on your 0.1% figure.

I was meaning that generally, higher unemployment IMO has to have a negative effect on house prices. Most people buy houses with loans based on an income source. For most people that is a wage or salary. For those who have their own business they probably rely on wage and salary earners buying their fried foods or board shorts. So if people dont have economic security from a job that then affects the amount they are prepared to pay for properties or CAN pay for property.

I was disagreeing with the statement made in the title of your thread. Sorry if I misunderstood your position.

You mention that people will be leaving the sharemarket for property. The sharemarket has been pounded for a while now but it hasnt done much for property prices lately. What it has done is it has affected the economy and so there are less jobs and less money to buy things including houses.
I hear people talking about now being a good time to buy shares. I hear this from my girlfriend's workplace at the hospital and my work as well. As well as quite a few posters on this forum. I havent heard people around my life sound too optimistic about property lately except on this forum. Except making comments such as "in the long run one will be ok" etc.

I havent paid much attention to the economic cycles I have lived through but I doubt that people who have lost money on the sharemarket or who are afraid of the sharemarket because of the recent losses are gonna go into property in big enough numbers to make a big difference. I think they are probably broke or are too worried about their job right now. I dont think property operates that independently from the general economy. property was booming 9mths ago back when everyone was saying how much the Aust economy was booming particularly with mineral $. And now the economy has slowed not surprisingly so has property prices.

I still think this economic crisis wont last too long though because generally people and governments are more proactive now after previous sharemarket crashes so they are not so shocked and helpless as in previous depressions. I.e. I think there has always been talk of light at the end of the tunnel throughout this crisis.

 

[Aaron Sice]

december job figures mean squat - geez even November is a bit dicey.

as an employer myself - why on earth would i put on some newbie over the break then pay them 2 weeks holiday? i wouldn't, and i know many an employer who won't as well.

lets see them Jan/Feb stats - then i'll decide to factor it into my equations or not.

but Token Funder is right - all trends have a start, no matter how small. that said though, jobless figures rose and fell throughout the year by more than that (was it october that saw a rise by 0.3%? August? i forget now.)

bearing that in mind, 0.1% drop over the xmas break seems to mean employers with mindsets like mine must be a dwindling percentage of the population. i would have thought 0.1% drop over the xmas break would be a good thing...

 

[buzzlightyear]

december job figures mean squat - geez even November is a bit dicey.

as an employer myself - why on earth would i put on some newbie over the break then pay them 2 weeks holiday? i wouldn't, and i know many an employer who won't as well.

Given the figures are seasonally adjusted, then that would take this into account, wouldn't it?

 

[MarkB]

To those who see only the pissant change in the number of people unemployed, please read this carefully (quoted from the article):


"What we're seeing a a rotation in employment growth away from full time employment towards part time employment, which is not particularly good for economic growth going forward."

It's the fourth month in a row full time jobs have been cut and part time jobs added.

"What usually happens in employers cut back on hours before they cut back on staff, so if this switch to part time employment continue, that doesn't bode well for part time employment going forward. It means labour market conditions are going to be tougher than they have been for many years."


It is not a great sign.

M

ps. And I completely disagree with the sentiment that unemployment, which is the biggest cause of poverty in western nations and a proxy for the health of the economy, doesn't have some effect on the property market.

 

[topcropper]

Unemployment is only just starting it's run. The real economy is just starting it's slump.

Essence, I reckon you have made a complete balls up of your timing. Good luck, because you will need it.

Finally, Sydney will be hit the hardest in the slump. It has almost no manufacturing left, and benefits least from commodities. Sydney is almost entirely a services economy with financial services as Sydneys biggest industry. Financial services may never recover to previous levels.

I wouldn't be gearing heavily into property until the share market starts it's recovery. Too risky other wise as you can't have booming property prices with poor business health.

See ya's.

 

[keithj]

Agree with Mark_B & TC.

And I'd add that the employment figures are what has happened and are not necessarily a good indicator of what is going to happen. The ANZ Job Advertisments Survey is a leading indicator - that has been falling for the last 8-9 months. It's now at 'recession' levels - doesn't bode well for future employment figures.

The graph on p3 shows how well actual employment figures correlate with the Job Ads of 6 months ago.

 

[Token Funder]

Some time ago after my net worth went over $10M, I found that I am becoming a bit too sensitive to the attacks of people who question my intelligence and integrity. Perhaps I am committing the sin of intellectual nazism, but my personal rule is never waste time arguing with people who make more money than myself, but rather watch and learn.

I am especially sensitive to the people who engage in gestapo style interrogations about my intelligence and integrity.

And even more specifically I find it very hard to like when these barrages come from the people who are so afraid even to disclose their location.

I trust that answers your question about my beliefs.

And if you believe 0.1% rise in unemployment represents any "trend", you need:

a. Go back to school and learn what "margin of error" is
b. Seek immediate medical attention

Good luck in your endevours.

Settle down, Essence

You started this thread with the title/statement:

"Unemployment is not a threat to property market"

If what you meant to say was

"The recently disclosed .10% increase in the unemployment rate is not an indication of an upward trend in unemployment that will lead to a risk of decreasing property prices"

..I stand corrected.

Of course, had you said that, I would also have disagreed, but at least we would be playing on the same field.

Well done on the $10M, by the way.

 

[essence]

Unemployment is only just starting it's run. The real economy is just starting it's slump.

Essence, I reckon you have made a complete balls up of your timing. Good luck, because you will need it.

Finally, Sydney will be hit the hardest in the slump. It has almost no manufacturing left, and benefits least from commodities. Sydney is almost entirely a services economy with financial services as Sydneys biggest industry. Financial services may never recover to previous levels.

I wouldn't be gearing heavily into property until the share market starts it's recovery. Too risky other wise as you can't have booming property prices with poor business health.

See ya's.

Congratulations on introducing number of new concepts.

So when I stocked up on property returning 8% on average (and rising) while paying around 5% in interest (and falling) it surely will send me broke. Thank you, I was completely ignorant that profits actually might hurt.

Only consolation is that i am not alone. I am in a good company of economists who are in complete dark thinking that the housing construction drives the economy and not finance or manufacturing .

 

[essence]

Settle down, Essence


Well done on the $10M, by the way.

Your biggest problem you stirring yourself in the direction opposite to $10M goal (BTW, $10M was few years ago and I do not stand still like some).
The sooner you get over it the better for you.

 

[Bargain Hunter]

So when I stocked up on property returning 8% on average (and rising) while paying around 5% in interest (and falling) it surely will send me broke. Thank you, I was completely ignorant that profits actually might hurt.

Here is what I told a work colleague who was struggling with the idea of high unemployment rates... the unemployment rate makes no difference to lifestyle unless it includes you.

Let's face it, if unemployment rises steadily then there will be an impact on property, pure and simple. If I have a business and I have downsized I may look for smaller accommodation, if I became unemployed I would have to sell some of my portfolio probably at a discount to see some cash.

However if I have a business which is booming, or a solid job with little risk of becoming unemployed I can take advantage of the overall trend and get bigger offices or make multiple property purchases. This is to say personally I will be better off but overall the value of property is likely to fall during this period.

To say a minor downturn in employment does not effect the property market is an acceptable claim, however I cannot see how high unemployment would not have a negative impact. Whether the same impact is experienced by an individual will depend on their personal circumstances.

Regards

Andrew

 

[lizzie]

Your biggest problem you stirring yourself in the direction opposite to $10M goal (BTW, $10M was few years ago and I do not stand still like some).
The sooner you get over it the better for you.

for someone who has obviously been in business for a long time - you sure seem to be very touchy.

don't be - this is a forum. everyone is entitled to their opinion and the opinion is free to be debated ... but this delving into personal insults, posturing and plainly rude sarcasm is more reflective on the insulter than the target - and not impressive - by any of the posters who are doing so (not just picking on you).

btw - i read it as token giving you a compliment and congratulating you on your achievements. no need to be rude back.

 

[skater]

Your biggest problem you stirring yourself in the direction opposite to $10M goal (BTW, $10M was few years ago and I do not stand still like some).
The sooner you get over it the better for you.

Sheesh! Token Funder pays you a compliment and you want to cut him down. Stop trying to make yourself seem so important. You really aren't.

This place is for all to come & learn together. The rich, the no-so-rich, and the I'll-get-there-someday, types. No one is better than each other. Some of us may have more experience than others, but that really doesn't give anyone the right to make nasty remarks just for the heck of it.

 

[MichaelW]

Agree with Mark_B & TC.

For what its worth, I too agree with Mark_B, but less so in this instance with TopCropper.

I agree unemployment is going to get ugly and I agree that this does have a direct impact on the property market, so am with Mark_B (and Token Funder) on that one. I also agree this is just the beginning of that trend.

But, I agree less with TC's argument to steer clear of Sydney properties because of Sydney's employment dynamic. That forgets that Sydney property has already done a lot of the suffering that other markets have not. I think Sydney is probably one of your better property bets and I'd be steering clear of the commodity dependent markets as commodites were one of the later casualties on the equities market so it stands to reason their associated residential property bubbles will also be one of the later casualties.

Sydney formed less of a bubble and maxed out in 2003/4. Perth, Bris-vegas and Darwin kept bubbling along because "the world had changed" and we were in the beginning stages of the "commodity super-cycle". Those arguments seem dead and buried now along with global decoupling. Anyone checked the oil price lately? Hence, I'd suggest those bubble RE markets are also looking most at risk. Buy a nice top 20 postcode suburb in Sydney on a strong 6%+ yield and ride it out. You'll then be one of the first suburbs to turn the corner in a year or two and have the benefit of a strong yield putting a floor under your current price.

Also, FWIW, I don't think unemployment will peak at even 9%. I believe we could see double digits by mid 2010. One of the guys I work with here in strategic marketing said he has a friend in high places in Canberra and that they are privately modelling 12% unemployment whilst still publicly declaring 6% max.

Cheers,
Michael

 

[topcropper]

For what its worth, I too agree with Mark_B, but less so in this instance with TopCropper.

But, I agree less with TC's argument to steer clear of Sydney properties because of Sydney's employment dynamic. That forgets that Sydney property has already done a lot of the suffering that other markets have not. I think Sydney is probably one of your better property bets and I'd be steering clear of the commodity dependent markets as commodites were one of the later casualties on the equities market so it stands to reason their associated residential property bubbles will also be one of the later casualties.

True.

I'm talking economically about Sydney, not necessarily about property prices. I think Sydney will suffer economically as much as anywhere due to it's reliance on services, especially financial services. But it's property market has suffered already, and deservidly so, as Sydney property prices in 2003 were in as big a bubble as any bubble, ever.



Hey Michael, I've [as in me and my family and the farm business] has just bought a unit in Mortdale Sydney. It's not really an investment. More a bit of farm succession family planning. I have a brother there who I will one day have to buy out from the farm business. He hates the bush and farm life, loves the big smoke, and it will be his property, with the farm paying for it. Seems a good time to start puting some money in, as no one will pick the very bottom, but for the 300k Sydney market, the bottom must be very near.

See ya's.

 

[MichaelW]

True.

I'm talking economically about Sydney, not necessarily about property prices. I think Sydney will suffer economically as much as anywhere due to it's reliance on services, especially financial services. But it's property market has suffered already, and deservidly so, as Sydney property prices in 2003 were in as big a bubble as any bubble, ever.

Hey Michael, I've [as in me and my family and the farm business] has just bought a unit in Mortdale Sydney. It's not really an investment. More a bit of farm succession family planning. I have a brother there who hates the bush and farm life, loves the big smoke, and it will be his, with the farm paying for it. Seems a good time to start puting some money in, as no one will pick the very bottom, but for the 300k Sydney market, the bottom must be very near.

See ya's.

Ah, gotya!

That makes perfect sense then. I agree the sydney economy will suffer through the ensuing recession / severe downturn (if we manage numerically to sidestep a technical recession). But I've lived in Sydney my entire life and I can vouch for it being a very resilient economy. We get our ups and downs, but there will be a back-end to this whole GFC thingamajiggy, and when that does happen Sydney will prosper once more. In fact, the resilience of our domestic banks puts Sydney in a position of relative strength to other global financial hubs. I also read that Sydney is pitching to become the market for carbon trading for the Asia/Pac region. Would give it another arrow in its quiver.

It might be 3-5 years off, but I think the next Sydney boom will be a biggie. Too many years of relative under-performance. All we need is a Bracks-ish government in NSW to sort out the union domination, and to invest heavily in infrastructure and then watch out! There's an old adage in investing which goes: "Never bet against the Fed", which I pray holds true. But I'll add my own domestic adage of: "Never bet against Sydney". She's just proven her potential too many times in the past to stay down for too long.

Cheers,
Michael