The future of Australian property prices

[againsthegrain]

Until the interest rate on savings deposits at least meets or exceeds the rate of inflation, cash is still trash. Those who do not pay down debt or fixed loans at artificially low interest rates deserve no sympathy.

Interest on savings is slowly creeping up on rental yields, looks like not many places u can hide and exceed the rate of inflation on your investment.

 

[sptrawler]

Until the interest rate on savings deposits at least meets or exceeds the rate of inflation, cash is still trash. Those who do not pay down debt or fixed loans at artificially low interest rates deserve no sympathy.

I tend to think the rise and fall of inflation will be as they are expecting, very fast.
Talking to a neighbour who works in a pie shop, they were saying the owner had to put up the price of their takeaways, but once they hit a certain price people just stop or reduce the amount they buy.
At the moment $5 seems to be the magic number, if they go above that sales reduce, maybe that is only temporary but apparently that is what's happening ATM where she works.

 

[divs4ever]

Interest on savings is slowly creeping up on rental yields, looks like not many places u can hide and exceed the rate of inflation on your investment.

YEP , that is how i remember the '70's you were always chasing the increases hoping for break-even

hopefully those shares i was buying cheap will help ( the div. yields look pathetic at current share prices , but i was buying at less than a quarter of the current share prices )

property if you need to put in the bucks for maintenance and renos doesn't look so attractive to me

 

[divs4ever]

I tend to think the rise and fall of inflation will be as they are expecting, very fast.
Talking to a neighbour who works in a pie shop, they were saying the owner had to put up the price of their takeaways, but once they hit a certain price people just stop or reduce the amount they buy.
At the moment $5 seems to be the magic number, if they go above that sales reduce, maybe that is only temporary but apparently that is what's happening ATM where she works.

yes in most cases that is what happens , cash-strapped folks will come to work with pre-cut sandwiches ( made at home ) and stuff like that , and such buyer resistance can last for years

the shop keeper will either have to spectacularly lift the quality and sell a $10 pie ( sell less pies but twice the price ) , or cut costs on the existing pies

 

[Trader X]

Interest on savings is slowly creeping up on rental yields, looks like not many places u can hide and exceed the rate of inflation on your investment.

There are quite a few income stocks paying dividend percentages in excess of inflation but of course this entails varying degrees of risk. As the "risk free" (using this term with caution) rate of return rises though, this will exert downward pressure on the share price of such companies.

 

[againsthegrain]

There are quite a few income stocks paying dividend percentages in excess of inflation but of course this entails varying degrees of risk. As the "risk free" (using this term with caution) rate of return rises though, this will exert downward pressure on the share price of such companies.

I was making that comment more in relation to the thread, don't think there would be a big % of mum and dad investors willing to pour life savings into a decent stock generating 5-6% div returns.

Term deposit or property would seem like the 2 only cushy safe options

 

[Trader X]

Term deposit or property would seem like the 2 only cushy safe options

Unclear if leveraged property or REIT investments will be a safe haven if forecast falls of up to 20% eventuate in major metro areas. But yes, most see term deposits and property as safe options.

 

[againsthegrain]

Unclear if leveraged property or REIT investments will be a safe haven if forecast falls of up to 20% eventuate in major metro areas. But yes, most see term deposits and property as safe options.

I hold a small amount of clw gone down since my initial buy in however with ~6% div the way I see it I will get back my paper loss eventually. Since its commercial leases the rent increases in theory will cover the valuation of the decreased property value... well at 20% who knows.

For residential property won't be that easy either.

But im mostly in cash and pm collecting the puny interest however having my powder dry.

 

[JohnDe]

 

[divs4ever]

I was making that comment more in relation to the thread, don't think there would be a big % of mum and dad investors willing to pour life savings into a decent stock generating 5-6% div returns.

Term deposit or property would seem like the 2 only cushy safe options

the 'dividend theme ' make the BIG banks and TLS widely held ,

and of course the patient mum & dad investor could have bought WOW for $30 back in 2015 ( and scored so bonus EDV on the journey ) or WES under $40 in 2015 scoring a bonus COL on the way or WES in 2018 ( without the COL spin-off for $31.25 )

HOWEVER to those small investors trying to park that money NOW ( at good div. returns ) will have to dig deep and research carefully to find robust companies that are capable of paying reliable returns .

trying to park your 'life-savings ' currently at good returns is very problematic as even term deposits don't offset official inflation

 

[againsthegrain]

the 'dividend theme ' make the BIG banks and TLS widely held ,

and of course the patient mum & dad investor could have bought WOW for $30 back in 2015 ( and scored so bonus EDV on the journey ) or WES under $40 in 2015 scoring a bonus COL on the way or WES in 2018 ( without the COL spin-off for $31.25 )

HOWEVER to those small investors trying to park that money NOW ( at good div. returns ) will have to dig deep and research carefully to find robust companies that are capable of paying reliable returns .

trying to park your 'life-savings ' currently at good returns is very problematic as even term deposits don't offset official inflation

I think at the moment nobody knows anything, term deposit you know you are getting 2% and giving back another 6%? to inflation or around there.

Get 2% rental yield but possibly see 10% value drop (in short/mid term anyway)

I remember buying fmg at 14 around a year ago but bought at 17 then 16 and so on until got the bottom at 14. This time think ill take my time.

Oh yeah there were guys saying last chance to pick up btc under 100k aud mark get your hedge get your hedge here.

 

[gartley]

I think at the moment nobody knows anything, term deposit you know you are getting 2% and giving back another 6%? to inflation or around there.

True, inflation erases any gains from deposit interest. But on the flip side without holding or raising cash we are not able to swoop on the bargains when the opportunities finally present.....

Then again if things get really bad, it's not a matter of deposit interest but rather have your funds in a safe bank......

 

[wayneL]

...but rather have your funds in a safe bank......

Is there such a creature?

 

[gartley]

Is there such a creature?

Probably not!! So under the matress or the back yard might be a better option!! In the great depression something like 5000 institutions went belly just in the USA alone....

Just trying to append some EW labels to the AUS 2yr yield chart. looks like this leg up seen the best of the gains but might consolidate here before putting in one last high. The bottom two charts before are the 2 year yield count as it stands now, and last year what was expected to play out

 

[divs4ever]

Is there such a creature?

aah ! the trillion dollar question

will there be bail-ins this time ( instead of bail-outs )

i wonder what the current status of the government deposit guarantee is ?? ( they wouldn't need it if they were assured there would be no run on banks )

 

[gartley]

aah ! the trillion dollar question

will there be bail-ins this time ( instead of bail-outs )

i wonder what the current status of the government deposit guarantee is ?? ( they wouldn't need it if they were assured there would be no run on banks )

Look what happened in Cyprus and Greece just 10 years ago......

 

[wayneL]

G'mint has denied bail-ins are possible under the legislation, but were pretty slippery about it. And their refusal of Senator Robert's simple amendment to clarify, probably tells us all we need to know....

Bastids!

 

[divs4ever]

Look what happened in Cyprus and Greece just 10 years ago......

i remember it well , and took the opportunity to trim my interest-bearing securities ( ESPECIALLY in banks ) to absolutely trivial exposure ( and cross term deposits on my investment options list .

i have been ALMOST out of interest-bearing securities since the end of 2016 , previously they had been close to 20% ( including property assets )

 

[divs4ever]

G'mint has denied bail-ins are possible under the legislation, but were pretty slippery about it. And their refusal of Senator Robert's simple amendment to clarify, probably tells us all we need to know....

Bastids!

the IMF , and World Bank ( and other international entities ) say they have plans and provisions for bail-ins , in fact that is what Basel III is about ( how much pain a bank can take before the bail-ins are needed )

now AUSTRALIA can say whatever , but who did the hatchet-job on Greece and Cyprus ( hint it was NOT the National governments )

 

[gartley]

i remember it well , and took the opportunity to trim my interest-bearing securities ( ESPECIALLY in banks ) to absolutely trivial exposure ( and cross term deposits on my investment options list .

i have been ALMOST out of interest-bearing securities since the end of 2016 , previously they had been close to 20% ( including property assets )

It's still not time to be in interest bearing deposits yet. The worst in the markets IMO is a long way off. We have further upside in this current rally and god only knows how far up it carries, whatever the case it will be choppy and shake most pundits out. You know what reversals are like, they can be either very abrupt or we can get multiple re tests of former highs. I beleive the former in this case because a 40 year bull market does not reverse like that. Good news for traders