The future of Australian property prices

[shouldaindex]

RE: That sales person. I love cyclical information, but it's dangerous to make black and white judgements from them.

 

[Mrmagoo]

Question:

If the AUD drops, what happens to the cost of funding credit ?

 

[sydboy007]

Question:

If the AUD drops, what happens to the cost of funding credit ?

Why do you think all the banks were so quick to rush with rate rises on IP loans

CBA CDS spreads have been on a continual rise over the year.

Atg least before the GFC we had generational high interest rates. They were able to mask the 130+ basis points increase in rates the banks had to pay for off shore borrowing. Remember local 5 year TDs got to 8%.

Now, the RBA might be able to help insulate the first 100 basis points then after that it's either bank profits or higher interest rates.

 

[sinner]

Question:

If the AUD drops, what happens to the cost of funding credit ?

If the funding happens in other currencies then the cost of funding is partially a function of the AUD exchange rate.

If the funding happens in AUD (which I think it mostly does these days), nothing.

 

[sydboy007]

It's never been a better time to buy



Pity those with an IP in Darwin or Perth, and the mining CAPEX cliff has much further to drop us.

 

[trainspotter]

I was wondering if anyone has ever had anything to do with, or heard of this guy?

He claims to be a property cycle guru and is saying current cycle is no where near finishing and will run for at least another 14-15 years. Hard believe if the stock price trend of the big four banks is any guide at present??

He says property prices follow cycles of 14 years of expansion followed by 4 years of contraction (18 year fixed cycle)

http://www.phillipjanderson.com/18-year-real-estate-cycle/

Does not make sense? If he is stating it takes 14 years of growth and 4 years of shrinkage he is sadly mistaken as property has risen consistently for 20 years now in the capital cities. CERTAIN areas are contracting (Perth & Darwin) but this is due to mining associated downturns. Heat has come out of the market with APRA and banks slowing lending to investors blah blah blah ... me thinks he is spruiking?

http://www.macrobusiness.com.au/2013/02/the-history-of-australian-property-values/

Taken from his website ...

2013:
THE NEXT GREAT BOOM IS COMING

‘We are now (have been since the late 1990s commodity lows) on the upside of the Kondratiev commodity price wave, so commodity prices will stay high, (relatively) and indeed are set to go higher till the mid 2020s. (Assuming I suppose the cycle repeats.) With effectively zero holding costs on real estate, unemployment low, commodity prices set to stay high, does this help you to see why I stay bullish on world events? Add to this mix the relentless technological developments AND the lower and set-to-go-even lower energy costs, and you have things tailor-made for another real estate cycle in the mid 2020s, something similar to all the prior ones we’ve had.’

http://www.phillipjanderson.com/past-forecasts/

DERP !

WHOOPS ... He meant the US of A and "generally" the rest of the world !

Granted, I make an assumption. And that is the cyclical behaviour I’ve discovered will repeat. But once you discover the fundamental law of economics — 19th Century economist David Ricardo’s Theory of Rent — you’ll see that a repeat is all but inevitable. Why? Because the underlying structure of the economy never changes, despite the endless fiddling and additions in regulations and laws.

You can see this most clearly in the history of the United States.

http://www.phillipjanderson.com/18-year-real-estate-cycle/

 

[sinner]

Does not make sense? If he is stating it takes 14 years of growth and 4 years of shrinkage he is sadly mistaken as property has risen consistently for 20 years now in the capital cities. CERTAIN areas are contracting (Perth & Darwin) but this is due to mining associated downturns. Heat has come out of the market with APRA and banks slowing lending to investors blah blah blah ... me thinks he is spruiking?

On his website it has a bunch of his calls.

I like this one from 2013:

2013:
The Next Great Boom is Coming

‘We are now (have been since the late 1990s commodity lows) on the upside of the Kondratiev commodity price wave, so commodity prices will stay high, (relatively) and indeed are set to go higher till the mid 2020s. (Assuming I suppose the cycle repeats.) With effectively zero holding costs on real estate, unemployment low, commodity prices set to stay high, does this help you to see why I stay bullish on world events? Add to this mix the relentless technological developments AND the lower and set-to-go-even lower energy costs, and you have things tailor-made for another real estate cycle in the mid 2020s, something similar to all the prior ones we’ve had.’

I wonder which commodities he meant

 

[notting]

OOops

Tenants market: residential rents are barely budging.

Chinese are struggle to shift money out of the country following Beijing's move to tighten capital controls, the AFR is reporting quoting local property agents.

One Chinese property agent, who focuses on the Australian market but asked not to be named, said the latest effort by the central government to avoid large capital outflows was having a "significant impact" on his business.

"It has affected 70 to 80 per cent of current transactions and some have already been suspended," he said.

I have been waiting for this! In the hope that there will now be a glut in supply and apartment prices in Melbourne and Sydney will collapse and we can start buying entire blocks from developers.

But it was a bit of hope for the economy as it was a significant investment countering the effects of the drop off in mining investment. I don't mind the Chinese buying new apartments, because I new it was a losing game.

 

[velloxal]

http://www.macrobusiness.com.au/2013/02/the-history-of-australian-property-values/


Thanks for fantastic site. Saved me time to look for it :

 

[Mrmagoo]

Lets see... silly geriatrics thought $1 million appears out of thin air because "they worked so hard" and that money was borrowed, from a clever investor (i.e banks etal).

Mythical, magical, and borrowed money coming out of a magic goats **** making property owners rich. No one thought to question that ? I can think of another country where magical borrowed money flowed out of a goats ****. Greece.

 

[notting]

There is a tsunami of home supply coming," said Nigel Stapledon, head of real estate research at the University of New South Wales Business School and former chief economist at Westpac.

"The market is going to be tested in accepting this sort of supply. It's not like there is economic growth to support it. Income growth has gone from boom time to the lowest in a number of years and population growth has eased back."

Coupled with China curbing the leaky boat of money fleeing into international property. It's about time we had a reality check.

 

[sptrawler]

Coupled with China curbing the leaky boat of money fleeing into international property. It's about time we had a reality check.

It's a win/win for the Government, there is an oversupply of housing, which deflates prices, rents and supplies housing for the poor.

 

[Mrmagoo]

Can't wait for the boomer tears /s

Boomers

"I just got laid off from my 100k a year job of thirty years working in an office organising stationary that I worked hard for after finishing year 10. I only got a $200,000 redundancy and can now only afford to buy 6 investment properties instead of 7 and will have to cut short our yearly trip to Europe during retirement from 4 months to 3 months. It still may be okay because I have a $1,000,000 in inheritance coming soon. It is so unfair that my work life was cut short, please Mr Government do something to ease our suffering boo hoo hoo".

Gen Y:

"I now have to sleep in my car"
"We can't afford to feed our children anymore"

 

[trainspotter]

Try Googling Gen Y "Age of Entitlement" ....

Boomers are committed, hard working and career focused – which has caused them to be tagged as workaholics by Gen X and Gen Y. The Baby Boomer work ethic is also characterised by dedication, loyalty and a willingness to stay in the same job for a long time. They have a lot to offer businesses with their work and life experience, skills and knowledge that many younger people can’t offer. They tend to work longer hours – and respect is paramount when managing a Baby Boomer.

http://www.careerfaqs.com.au/news/news-and-views/workplace-warfare-baby-boomers-gen-x-and-gen-y/



Gen Y

"We can't afford to feed our kids but we have the Iphone 6s strapped to our ears and blindingly fast internet"

Or you could do this instead ...

THEY’RE in their mid-20s and earn average incomes, yet Emily Sharp and Luke Rogers own 22 homes ”” 19 purchased in the last year alone.
The Sydney couple’s $3 million property portfolio includes homes in Sydney, the Blue Mountains, Central Coast and Queensland, which they’ve purchased mostly over the past 12 months despite one of the biggest price booms in history.
Ms Sharp, 25, and Mr Rogers, 24, purchased their homes with no financial help from friends or family and have relied instead on a clever home buying strategy and savings from their salaries ”” she works a graduate position in marketing, he works in the army.
They owe their success to a mix of determination and strict saving, Mr Rogers said.

http://www.news.com.au/finance/real...in-a-single-year/story-fnd91nhy-1227533445956

 

[satanoperca]

Hi TS,

While I agree with your opinion on Boomers vs Gen Y (who are generally lazy as they have not experienced a recession due to our RBA delaying it, you need a recession to reset things when they get out of wack).

The article you linked to is a bit mainstream B...S. It doesn't mentioned their debt levels or LVR's. They could only have 10% equity in their entire portfolio, not much to go by if there is a correction.

Cheers

 

[trainspotter]

Hi TS,

While I agree with your opinion on Boomers vs Gen Y (who are generally lazy as they have not experienced a recession due to our RBA delaying it, you need a recession to reset things when they get out of wack).

The article you linked to is a bit mainstream B...S. It doesn't mentioned their debt levels or LVR's. They could only have 10% equity in their entire portfolio, not much to go by if there is a correction.

Cheers

Not my opinion at all ... I am a Gen X myself being born after 1964

Mrmagoo was whinging how HARD it is and how EASY the Boomers have had it Pffffffffffttttttttttt !!!!!!

The article was to evidence that it is possible to be in your 20's and own property. How much they are leveraged and do they have income to cover loss of rental $$$ who cares or in the event of a downturn it is all doom and gloom. The fact of the matter is that it is possible to own property in this current climate.

 

[sptrawler]

Not my opinion at all ... I am a Gen X myself being born after 1964

Mrmagoo was whinging how HARD it is and how EASY the Boomers have had it Pffffffffffttttttttttt !!!!!!

The article was to evidence that it is possible to be in your 20's and own property. How much they are leveraged and do they have income to cover loss of rental $$$ who cares or in the event of a downturn it is all doom and gloom. The fact of the matter is that it is possible to own property in this current climate.

Well TS, I'm a boomer and pretty comfortable, due to hard work and doing without.
I tried to instill this in my kids, but have failed miserably, they spend everything they earn.

We still don't spend money on phones, cosmetics, going out etc.
The only extravagence would be one overseas holiday a year.

Now that things are getting tight, they are getting worried, due to no savings and excessive debt.

As they say, you can't put old heads on young shoulders, they have to learn from experience.

 

[vrahul1984]

*BINGO* .... posted on 10th-August-2013 11:31 AM

You HAD been warned !

hi, price hike purely depends upon country's economic condition as few of above mentioned authors tries to conclude some points to show the reason behind price hike. well, i must say, if you want to earn a property in Australia, you need to plan it properly with government aided funds.

Regards !

 

[Mrmagoo]

Try Googling Gen Y "Age of Entitlement" ....



http://www.careerfaqs.com.au/news/news-and-views/workplace-warfare-baby-boomers-gen-x-and-gen-y/


"We can't afford to feed our kids but we have the Iphone 6s strapped to our ears and blindingly fast internet"

[/url]

Are you honestly suggesting that technological progress is the fault of generation Y ?

Are you ignorant or are you just attempting to troll me ? Because in all seriousness, the iPhone argument would suggest that it is made by someone either trolling or suffering some form of brain injury. And I don't mean that to be insulting, brain injuries can affect the logical center of the brain.

Either way I don't see a reason to continue to argue this one. However, if you genuinely believe what you said I suggest making a trip to your local GP to get some brain scans done.

 

[Mrmagoo]

Well TS, I'm a boomer and pretty comfortable, due to hard work and doing without.
I tried to instill this in my kids, but have failed miserably, they spend everything they earn.

We still don't spend money on phones, cosmetics, going out etc.
The only extravagence would be one overseas holiday a year.

Now that things are getting tight, they are getting worried, due to no savings and excessive debt.

As they say, you can't put old heads on young shoulders, they have to learn from experience.

Hehe it is coming in a big way, people are tired of the system, they're sick of the system. The young people have given up trying to fit into it. There are no houses, no jobs, if you move further out there is no transport or infrastructure. You have now a generation of people who do not fit into society.

I feel for the young ones of today. We have made the world bad for them when it used to be good.

My generation should have done a better job of protesting the baby boomers take over when we were young, but I guess we were too busy finding working a jobs during the boom times to notice.