When does a correction become a crash ?

[devo76]

Hi all.

As most would know there is a lot of talk about where the market is heading. We have bears and bulls fighting it out and we also have fence sitters as well as the crowd that think long term only and are not worried.

Much of this can be put down to what people consider to be a crash.

Is it
5 plus years of no growth
10% drop
20% drop
30% drop
40% drop

Or any combination of the above.

So when does everyone think you change from a correction/slump into a full blown crash?

I know this thread may go pear shaped a bit quick but i think it could show some interesting thinking.


Oh and i think 30% and 5 years of no growth.

Cheers

 

[Sunfish]

Anything that wipes out equity like 10% for 90% LVR?

That wouldn't matter if it was a "flash crash" so, Yes, there would need to be 5 years no growth combined. IMHO

 

[.toe]

A market correction is what's happening now, it's a short term issue where high prices attract lots of sellers at the same time that buyers dry up. If the situation corrects itself then it's nothing but a correction. But if the weakness unearths other underlying problems that are large enough then the market could crash.

So it's more a matter of underlying dynamics, at tyhe moment its just normal market forces, but watch out for sluggishness when we should be recovering, and stories demonstrating that recovery mightn't happen for some reason.

 

[Hoffy]

20% drop is a crash IMO (considering it would eliminate the equity of a massive amount of people), and 5 years with no growth is diabolically bad - worse than a crash.

 

[tess85]

5 years with no growth is diabolically bad - worse than a crash.

do you think so? Isn't that basically what Sydney experienced between 2002 and 2007? I would think that a crash is far worse than little or stagnant growth.

 

[devo76]

As sunfish says. In reality a crash will be different for everyone.If you are forced to sell due to a small correction, well i guess things just crashed for you. Time is different .I consider a stagnant market for 5 or so years not to be a crash considering most agree property is a 7 plus year cycle.

10% not great but expected.
20% hurting some but not others
30% Most are hurting. Maybe not financially but they dont like it on paper.
40% My equity is gone.

I guess this would also be the absolute bottom so things would only go up from there and in years to come the previous high will be overtaken once again.

Crash,slide,slump,stagnation,correction,hickup. No exact equation for that.

Boom,climb,rise,inflated,white hot. Thats more like it

 

[Aaron Sice]

"crash" is just a term used to excite the media.

defining it is harder though - a "recession" is defined, "depression" is defined, but not a "crash".

 

[Hoffy]

do you think so? Isn't that basically what Sydney experienced between 2002 and 2007? I would think that a crash is far worse than little or stagnant growth.

Yes, from an opportunity cost perspective, 5 years of no growth is a really bad outcome in my books.

 

[dan c]

20% drop is a crash IMO (considering it would eliminate the equity of a massive amount of people), and 5 years with no growth is diabolically bad - worse than a crash.

5 years with no growth is worse than a 20% reduction (using you definition) ???

 

[csc2]

i love forums like this actually........

punters spruking how they just purchased another investment and that makes it number 10 they have etc make me cringe....

your name can be on all the deeds you want but until you pay back the bank you really are treading a thin line in my opinion currently..........

upside for rates without question over the next few years, down to quite flat in many areas for the next few years with property prices...

if your not cashed up now and owe squillions of $$$ then id be counting my pennies very carefully.

the best can easily come undone in uncertain times.

im usually a bull but things are not exactly rosey generally at present in many areas of australia...i am confident they will get worse before they improve and that wont be any time soon.

im usually not negative with housing but short term its very average in several areas i have my eye on........anyone long, sweet as if you debt is in check.

out of 8 properties we owned i now have just a set of units in Darwin and one home under construction at yeppoon.....cash is king currently for me, ill wait for good opportunities to pop back up.

the huge boom we had is long gone and im confident to say the price increases we saw often 300-500% over six years in some areas will never be seen again in my lifetime.....

 

[Sheryn]

The Australian market is expected to go down to 4000 - 3800 by late October, this will provide a good buying opportunity for people to buy shares especially with good dividend % returns.


Kind Regards
Sheryn

 

[Propertunity]

im confident to say the price increases we saw often 300-500% over six years in some areas will never be seen again in my lifetime.....

How long are you planning to live?

 

[VYBerlinaV8]

The Australian market is expected to go down to 4000 - 3800 by late October, this will provide a good buying opportunity for people to buy shares especially with good dividend % returns.


Kind Regards
Sheryn

What do you think will drive it this low? Late October is only a couple of months away.

 

[Sunfish]

The Australian market is expected to go down to 4000 - 3800 by late October

Sheryn, These are meaningless, faceless predictions of no import.

 

[csc2]

How long are you planning to live?

my time could be up today? such is life............

i am confident no one on this forum will see increases as we did.........its a once in a lifetime thing in my opinion....

to see a house double in value in 12 mths was extraordinary...and i saw many, purchased a few....and missed many opportunities..

it wont be seen again by you or i.....

 

[Propertunity]

to see a house double in value in 12 mths was extraordinary...it wont be seen again by you or i.....

Given that they are many 20 yr olds on this forum, some of whom may well live to be 80+ yrs old, you feel confident that in the next 60 years you won't see a house price double in one 12 month period of that 60 years?

Now there's a bet I'd be willing to put money on - against you!

 

[devo76]

A quick doubling of values on its own looks great.But if its on the back of years of flat to no growth it becomes more of a catch up.
It is possible that we will see no growth for a decade. Question is what would the boom be like at the end of that flat period.
Doubling in 12 months will happen again but its the performance before and after that will prove its actual investment quality.

 

[MarkandTina]

To me a correction is a year that my property costs > increase in value of the properties.

A crash is a year that I'm forced to sell something.

I have not had either yet.

To be perfectly honest, I don't care what anybody elses definition is, its very subjective and what matters to me is my definition.

 

[devo76]

To me a correction is a year that my property costs > increase in value of the properties.

A crash is a year that I'm forced to sell something.

I have not had either yet.

To be perfectly honest, I don't care what anybody elses definition is, its very subjective and what matters to me is my definition.

My point exactly. How can it be answered when the definition is so different to each individual.

 

[Thesnowyforest]

i like the sounds of this...

where did you hear?

The Australian market is expected to go down to 4000 - 3800 by late October, this will provide a good buying opportunity for people to buy shares especially with good dividend % returns.


Kind Regards
Sheryn