Would you continue to invest in IP if population growth stopped ?

Hi all,

Steve,

assuming as mentioned we're talking about Japan sort of scenario

My understanding is that neither shares nor property has been that flash as an investment there over the last 20 years.

bye
 
Hi all,

Steve,

My understanding is that neither shares nor property has been that flash as an investment there over the last 20 years.

bye

You're probably spot on Bill, I don't really follow it. I'm referring more in general to a problem of leveling off or slow decrease in population like Japan is experiencing (from my understanding)? This sort of scenario wouldn't necessarily put me off property as an investment vehicle.

If however Keith was referring to a situation more like Detroit (a city, not a country I know) where there is a fundamental problem with the economy and population is decreasing, as well as total income of the population may be looking at falling as well. This scenario I would have to think long and hard and may not choose property as my vehicle. ie. I don't know the market, but as a big generalisation I would be hesitant to buy even inner suburb blue chip property in a city like Detroit who has been sliding for decades and doesn't look to have a solution yet.

It's the same way I would have similar reservations if I was around 500yrs from now in Australia if our resources were heading towards exhaustion and we hadn't sorted out a replacement niche for ourselves in the world market.
 
Winston...you must be seriously deluded if population increases do not fuel price increases.

The reason why WA and Qld grew was due to both interstate and immmigration! The trend has reversed due to economic situation in both these resource states thus less people are coming and this is affecting prices there.

The interstate migration and immigration is now into VIC and NSW...that is why prices there are now rising faster than other states.

Whilst credit supply is one aspect....demand is what drives prices. The immigration is targeted to people who are younger this stimulates demand.

Winston....your comments are off mark. I would be curious to see if you took your own advice in invested in the back of Thagaminda (to borrow a phrase from Peter Spann) somewhere and made money!! Perhaps....you could highlight to us what towns have grown 200% without the population increase!:p

Also....please go easy with the charts.....I think I have seen enough from you for a lifetime. A couple of cohesive sentences would be fine!;)



The last boom had nothing to do with population increase.

Property went up >200% in most areas across Australia - capitals, and regional towns with no population change.

Even if net resident population doesn't increase, there's always opportunity to make money from interstate migration and people wanting to be closer to work.


I'd stop investing in property if credit was tightened significantly, or there was a significant softening of the economic outlook. The cost and looseness of credit drives prices in my view.
 
Whilst credit supply is one aspect....demand is what drives prices. The immigration is targeted to people who are younger this stimulates demand.

Demand without cash goes nowhere. Obviously, if every bank in Australia stopped lending tomorrow, demand would matter nought.
 
The reason why WA and Qld grew was due to both interstate and immmigration! The trend has reversed due to economic situation in both these resource states thus less people are coming and this is affecting prices there.

The interstate migration and immigration is now into VIC and NSW...that is why prices there are now rising faster than other states.

Nope, not in 2008:
http://www.abs.gov.au/ausstats/[email protected]&prodno=3101.0&issue=Dec 2008&num=&view=

http://www.abs.gov.au/ausstats/[email protected]/mf/3101.0

In the same period, Western Australia continued to record the fastest population growth at 3.1%, followed by Queensland (2.5%), the Northern Territory (2.0%), Victoria (1.9%), the Australian Capital Territory (1.7%), New South Wales (1.4%), South Australia (1.2%) and Tasmania (1.0%).
 
Sash, I appreciate your buddies are happy with quaint populist anecdotes delivered monosyllabically, that reinforce last year's investment decisions.

Though there's no need to dumb down everyone else to that level.


Also....please go easy with the charts.....I think I have seen enough from you for a lifetime. A couple of cohesive sentences would be fine!;)
 
Demand without cash goes nowhere. Obviously, if every bank in Australia stopped lending tomorrow, demand would matter nought.

Spot on TF, Obviously if everyone in Australia dropped dead tomorrow cash without demand would go nowhere, cash would mean nought.

What chance do you think either possibility may occur?

Cheers

Pete
 
Aaahh.......Winston.....that is why I like to be slightly ahead of the curve...

Still have not answered my question.....do you own anything....or are you just here to present your 1950s ideas and pretty charts.

There is an old saying.....and being a Queenslander...I am sure you would understand....."big hit....no cattle"....are you one of them??



Sash, I appreciate your buddies are happy with quaint populist anecdotes delivered monosyllabically, that reinforce last year's investment decisions.

Though there's no need to dumb down everyone else to that level.
 
Last edited:
Spot on TF, Obviously if everyone in Australia dropped dead tomorrow cash without demand would go nowhere, cash would mean nought.

What chance do you think either possibility may occur?

Cheers

Pete

Irrelevant analogy.

Sash was suggesting credit was an element in price increases, whilst demand was the key driver. I was simply pointing out the obvious fact that if credit was constrained demand becomes irrelevant.

Credit is becoming more restrictive and this will ultimately be an entry on the neagative side of the ledger.
 
Aaahh.......Winston.....that is why I like to be slightly ahead of the curve...

Still have not answered my question.....do you own anything....or are you just here to present your 1950s ideas and pretty charts.

There is an old saying.....and being a Queenslander...I am sure you would understand....."big hit....no cattle"....are you one of them??

Run away and read some migration stats and Steve McKnight books Sash....there's a good boy.

 
Seems to be no issues here judging by the stampede of FHB...

Keeping the bovine theme going. In an empty paddock, two steers running in the same direction look like a stampede.;)

FHB activity has occured in spite of reducing LVRS, increased genuine savings requirements and wary mortgage insurers, courtesy of Kev.

It's kind of like borrowing money from your parents, except in this instance the resulting sovereign debt means you're actually borrowing from your kids.
 
Last edited:
Irrelevant analogy.

Sash was suggesting credit was an element in price increases, whilst demand was the key driver. I was simply pointing out the obvious fact that if credit was constrained demand becomes irrelevant.

Credit is becoming more restrictive and this will ultimately be an entry on the neagative side of the ledger.

Not irrelevant at all, I was pointing out that if there was no demand that the supply or non supply of credit is irrelevant the same as your analogy that if there is no credit available the demand is irrelevant.

Without exaggerating I have never seen a time when there is no credit nor no demand available, have you?

Do you think that any of the following have had an effect on depressing the Japanese property market,
a falling population,
lack of credit supply,
or a combination.

I tend to think that when there is an imbalance (excess or lack of) of any driver it becomes a key to what the market is doing, but the other drivers don,t become irrelevent.

Cheers

Pete
 
*snip*
Without exaggerating I have never seen a time when there is no credit nor no demand available, have you?

Yep. As a result of the loss of the securitisation market, particularly in respect of impaired or no-doc product, there is a cohort of borrowers who simply can't borrow that could do so as little as 12 months ago.

Do you think that any of the following have had an effect on depressing the Japanese property market,
a falling population,
lack of credit supply,
or a combination.

Japan is a long and complicated story (as, ultimately, the US will be) and a good deal more complex than credit and/or population.
 
Yep. As a result of the loss of the securitisation market, particularly in respect of impaired or no-doc product, there is a cohort of borrowers who simply can't borrow that could do so as little as 12 months ago.


Nice reply TF but my question was in regard to your analogy that,


"Demand without cash goes nowhere. Obviously, if every bank in Australia stopped lending tomorrow, demand would matter nought."

So the question still remains, in relation to your post referring to Australia,

Without exaggerating I have never seen a time when there is no credit nor no demand available, have you?

Cheers

Pete
 
Without exaggerating I have never seen a time when there is no credit nor no demand available, have you?

Cheers

Pete

Turk, fair go..... TF was highlighting the relative contribution of consumer demand and credit availability/cost.

A well connected mate today said three of the Big 4 senior lending executives talked candidly this week in Brisbane about deliberately throttling the approval of home loans, in cooperation with the Fed Govt, to reduce the risk of a higher volume of defaults during a recovery, and to govern the volume of grant bonuses issued by the Fed Govt.

They are also controlling supply, via more restrictive loan criteria to developers. Go ask your local commercial banker what % presales you need now.

Maybe you could clarify why, if demand is the more important criteria, banks aren't hiring more loan app processing staff.....more loans mean more profits right? Or how about an explanation for why non bank lenders are losing market share if demand is the primary driver.
 
Turk, fair go..... TF was highlighting the relative contribution of consumer demand and credit availability/cost.

A well connected mate today said three of the Big 4 senior lending executives talked candidly this week in Brisbane about deliberately throttling the approval of home loans, in cooperation with the Fed Govt, to reduce the risk of a higher volume of defaults during a recovery, and to govern the volume of grant bonuses issued by the Fed Govt.

They are also controlling supply, via more restrictive loan criteria to developers. Go ask your local commercial banker what % presales you need now.

Maybe you could clarify why, if demand is the more important criteria, banks aren't hiring more loan app processing staff.....more loans mean more profits right? Or how about an explanation for why non bank lenders are losing market share if demand is the primary driver.


Hi Winnie

TF used the analogy in answer to a post supporting demand as the main driver, I thought it was poor analogy a bit like if my auntie had b#@#@ she would be my uncle(which is actually more likely to happen than every Australian bank stopping lending).

TF is capable of much better than this.

As to your questions- Maybe you could clarify why, if demand is the more important criteria, banks aren't hiring more loan app processing staff?


I have never said I support the view that demand is the primary driver, my view as I posted is-I tend to think that when there is an imbalance (excess or lack of) of any driver it becomes a key to what the market is doing, but the other drivers don,t become irrelevent.

and

Or how about an explanation for why non bank lenders are losing market share?

Not being an expert on this I would think that perhaps the problems they had
in accessing funds when the GFC began and then the increased costs of funds above the banks costs would not have aided them in keeping their market share and perhaps the fact that a number of non bank lenders were taken over by banks would also impact on market share or perhaps consumers became wary of borrowing from these lenders may also have had an impact.


However Winnie you're obviously much wider read than I so please feel free
to correct me if these events did not affect non bank lenders market share.

Always happy to learn.

Although a little confused about what your mate told you, with the banks
throttling the approval of home loans, in cooperation with the Fed Govt, to reduce the risk of a higher volume of defaults during a recovery, and to govern the volume of grant bonuses issued by the Fed Govt.

and you posted,

more loans mean more profits right?

Cheers

Pete
 
Ask those who en mass went and invested in non main cities without regard to the population growth or industry of those towns.

Obviously they were under priced and people made money but there is now the risk that those holding in these areas will be hold illiquid property. They were originally illiquid which was why the returns were so high.

Just to throw some charts into the equation from the ABS we have the chart for population age groups in 1980, overlaid with 2008, which show just how severe the aging pop shift is. We differ slightly from the US chart as our peak extends through 15 years 35-49 whereas in the US the top is in the 45-49 age group.

This shift has to have some effect on the demand profile of property maybe not tomorrow but possibly in 15 years time.

Cheers
 

Attachments

  • auspopspread.GIF
    auspopspread.GIF
    26.5 KB · Views: 92
Australia has always had population increases - it's averaging more than 1%pa. It's current govt policy to encourage migration and also provide bonuses to those who have more kids.

If these policies were to change and population growth stagnated (like Japan), would you continue to invest in IP ?
I would have to say yes,from all the new students from the India-Middle East-Asia that i see walking around the place,those numbers alone would keep near any Brisbane QLD uni property values above forecasters erorr rates for the next few years,then a very high% end up staying here they have to live somewhere, it does not worry me shorterm Brisbane can go nowhere for several years,then in Matter of few short years the property values can go up over 250%,when that happens it makes the
flat times seem unimportant..imho..willlair..
 
Back
Top