Forum Replies Created
I suppose if people just voted for Howard over and over things would be ok? Even the most die-hard conservatives would admit Howard has lost his way on economic reform. He ran out of ideas after the GST, and its time for the likes Costello and Turnbull to take over.
Democracy is the best system we have. It gives the people a chance to kick out the manangement when they screw up.
BTW, corporate profits follow the business cycle as well.
I’m not insulted either … this is much more entertaining than a bearish forum like HousePriceCrash (www.housepricecrash.co.uk/forum/index.php?showforum=22)
I just don’t believe anything is going to burstSo you are believer in the “soft landing” then? I assume you don’t believe the current economic expansion will continue forever, or that markets just go up forver in a nice straight line. There has to be a correction one day, and as I’ve pointed out this is already the longest post-war expansion.
Mate, if I have a biased opinion because I want to see a lower AUD (something only vaguely related to property) can you find it within yourself to admit you have more than a passing interest in seeing the property boom continue?
Email me at:
sydneyhousehunter (at no spam) hotmail.comHey Matt, you must be one of the few 19 year olds cheering on the housing market. Most young people I know would like nothing more than for housing prices to come back to earth.
I hope you don’t mind being asked, but what do you do for a living?Self-employed software developer, 95% of sales overseas, 70% in the U.S. (Yes, I have more than a passing interest in seeing a lower AUD)
So lets base our medium to long-term investment decisions based on 3 failed auctions in an area that has not been identified.Not at all. I’ve been to dozens of auctions over the past 6 months. No-one ever bids. Dunno why the agents persist with the whole charade, but its helpful for someone like me who is trying to figure out what’s going on in the market.
Why would you run an auction on a Saturday morning anyway?Auctions (and inspections) have always been held on a Saturday in my area, as they are in across Sydney AFAIK. Don’t ask me why.
Why are you so negative all the time?Actually, I think a downturn in property (and the economy in general) is the best thing that can happen to Australia. Booms always bust, and the bigger the boom the bigger the bust. If the economy were to continue like it has for the next 12 months (i.e. a credit-fuelled bubble) the bust would be much more severe. A bust would also mean a fall in the AUD and (hopefully) rescue our exporters befores its too late.
Because nearly everyone else is!
As I said in the other thread, the economic consensus at the moment is the economy is slowing and the most likely outcome is a so-called “soft landing”. As you know, my view is considerably more bearish, and would probably be considered extreme by most people.
Economics is a field where no-one is ever wrong. The problem with most economists (and yourself) is that they tend to follow the flockThe economic consensus at the moment is the economy is slowing and the most likely outcome is a so-called “soft landing”. As you know, my view is considerably more bearish, and would probably be considered extreme by most people (including yourself). I don’t think that is following the flock is it?
guess you believe that the exit tax in NSW has nothing to do with it either.Its certainly affected the investor market, but all of the places I saw today were owner-occupied houses.
I am also of the opinion that when the Liberal Government takes over the Senate in July, things will change very quickly for the better from an overall economic perspective.The Coalition certainly has a historic opportunity to introduce real economic reform. Unfortunately Howard is a populist (with no interest in reform) and he has to honour at least some of the crazy promises he made before the election. I believe Costello is a frustrated reformer and would like to make big changes but can’t until Howard goes. Beazley is a dinosaur with very little to contribute. Honestly, the only politician who gives me any hope at the moment is Malcolm Turnbull. Lets hope Malcolm and the “ginger group” can get some of their ideas through Howard’s thick head before its too late.
Hmmm … well I find it fascinating that a mortgage adviser is “getting out of all property investments”. Have you told your clients this, especially the ones borrowing 100% for a 50sqm apartment?
Most of the “rubbish” I have quoted has come from the most respected economic commentators in the land; Gittins, Colebatch, Kohler, Garnaut … not to metion The Reserve Bank of Australia, and of course, the piece by the chairmain of GMO.
I spend plenty of time researching property, both reading reports (thanks for the PMI report BTW, which confirms my views) and getting out into the real world. I went to three auctions today. They all passed in without a bid. I haven’t seen anyone bid at an auction for 6 months.
I am personally getting out of all property investments to enter into other more profitable and certain investments which are property related but do not require holding property.Well, I think its time for you to ‘fess up then! Please do tell where this wonderful investment opportunity is. I have some property-related investments that are yielding 9% but they’re certainly not 100% risk free and I’m thinking of moving all my money into cash before things get any worse.
It can be difficult to do so without appearing to ‘blow one’s own trumpet’Exactly. Robert seems to think anyone who has a negative outlook on property is some poor disgruntled student frustrated that they can’t get on the property ladder, or “missed out” on the big boom. (Robert said: “Are you jealous because you cannot afford to buy any property or do not have the knowledge to find a way?”). That’s not my position at all, but I’m not going blow my own trumpet here.
I still think oil’s a sure bet, gold should do well as inflation risesHave you read wulfgar’s gold posts over at the cracker housing forum? I’m a super bull compared with this guy. He reckons we should all be burying gold ingots in the backyard!
http://cracker.com.au/viewthread.aspx?threadid=52250&categoryid=11061I just thought I’d add that one of the most important money making vehicles over the next few years will be having a (excuse the dirty word) J – O – B. You know, the type where you work 40 odd hours per week providing a service or product that somebody else is prepared to pay for.Radical stuff foundation! It would be nice if the economic geniuses running this country taxed honest labour at the same rate as capital gains.
Another suggestion for a money making vehicle would be a business that exports its goods and services to the world. Believe me, its been a hard slog being an exporter since the AUD shot up to 80c in late 2003.
http://finance.yahoo.com/q/bc?s=AUDUSD=X&t=2y&l=on&z=m&q=l&c=Why protect capital when you can increase it if you know how?Sorry, I’m really not interested in your sales pitch. I’m perfectly happy where my money is now.
Your big investment idea is putting money in the bank at 6% per annum?????Its not a big idea, its a defensive strategy for troubled times that’s all. Preserving your capital is better than losing it.
Longer term, I guess you could look at investing in Australian exporters. These companies have suffering with the high $AUD and their stocks have been battered recently. When the correction in the AUD comes, they will do well.
I don’t see over investment in property as the source of all woes in this country. Contributing factors include: lack of access to capital, small population hence insignificant on the world scene, no entrepreneurial culture, shocking tax rates, obsession with giving farmers a fair go, tall poppy syndrome, lack of respect for white collar achievements, too much focus on sport… could go on all day actuallyAUSPROP, excellent article, and I couldn’t agree more. Over investment in property is not the only source of all our woes, but imagine if all that money that was poured into real estate had gone into more productive enterprises?
It seems the RBA may have jumped too soon to raise interest ratesRemember, the RBA’s role is to control inflation (between 2-3%) not manage economic growth, that’s the government’s role. Its quite possible to have slow growth and high inflation (stagflation) and the RBA may be forced to raise rates despite a slowing economy.
A lot of people think inflation in Australia is inevitable through a lower AUD to restore our export competitiveness, and to reduce our massive debt burden (inflation reduces the real value of debt over time)
If inflation rears its ugly head the RBA will be compelled to act, even if it results in a recession.
Instead of regurgitating other people’s negative economic commentary, why don’t you tell us what you consider to be a good investment and show some positivity and originality for a change?Just because I don’t have a positive economic outlook at the moment doesn’t mean I don’t have original thoughts. As I’ve said before, I think the next few years will be about preservation of capital rather than maximising capital growth and yields. Now you might consider bank returns “lame”, but +6% in the bank might look pretty good compared with -20% in property (and it could be worse)
Here’s some more grim news for good measure:
http://www.henrythornton.com/article.asp?article_id=3275The ABS today told us that the trade balance (sa) in the March quarter was -A$7072m, up from -A$6700m in the December quarter.If the net income deficit rises as it has in the last three quarters, net income in the March quarter will amount to -A$9100m. The current account deficit would be A$16172m.
If GDP rises from A$214031m in the December quarter to A$220000m (a big increase), the CAD/GDP in the March quarter will be 7.35%. If GDP is unchanged, the CAD is 7.55% of GDP.
December quarter was 7.1% (but may be revised down a touch if the ABS is right in its new seasonal adjustments), September quarter 6.75% and June quarter last year 5.65%. The four quarters to the March quarter 2005 (my preferred measure) would be 6.7%.
Alex Erskine comments: “This is a huge CAD by any standards, and makes us think RBA will not be able to ease up on its rhetoric on needing to restrain a growing imbalance between supply and demand that will fuel inflation (and put the economy at risk of external crisis – not that the RBA would say such a thing) if the gap is not closed. The rise in iron ore and coal exports – which is yet to flow through to the export data – is desperately needed.”
This monster CAD has come despite recent evidence of falling housing approvals, weak retail sales, “acceptable” inflation and record terms of trade.
The general conclusion about this unholy conjunction is that the Australian economy is far less competitive than we like to imagine.
If domestic demand remains weak, competitiveness may not deteriorate from here and import volumes may decline, or at least stop growing.
If global growth continues then export volumes may rise.
If the export/import balance improves and the terms of trade stay high, or rise further, the CAD may improve. Remember that global interest rates are rising and this makes Australia’s debt service – already large because our international debts are large – larger.
If international investors decide Australia’s CAD is too big, the exchange rate will drop and market rates of interest will rise. This will eventually restore competitiveness, but if the necessary movements are large there would be considerable damage to prospects for growth and jobs.
It is white knuckle time for the economy, and our leaders are fighting for control of the steering wheel.
Further commentary, 6/5.
Tim Colebatch points to Australia’s rising international debt; this will create a further deficit as global interest rates rise..
Note Westpac chief David Morgan’s cautious tone, and his suggestion that we’d have been better off if the Reserve Bank had raised interest rates sooner. Hear, hear, Dr Morgan.
Sorry, been away for a couple of days. I’ll answer these questions:
Why are you in a property investng forum if you are so against property investors?I believe the Australian economy is in serious trouble, and that property speculation is one of the root causes of our economic problems. Sure, on the surface everything looks rosy; unemployment is low, economic growth is strong, inflation is under control (as long as you don’t include house prices in the CPI). But have you ever asked yourself where all this wealth is coming from? We don’t seem to manufacture much (everything we buy comes from East Asia). We don’t have a high-technology industry to speak of (that happens in America). Indeed, we don’t sell much to the rest of the world (as can be seen by our horrific trade deficit figures) so why is our economy so strong? The answer is debt, and most of that debt is housing debt. The Australian economy has been relying increasingly on debt to a point where we now have a negative savings rate. We are literally using our houses as ATMs to borrow more and spend more in a manic spiral of debt that can only end in disaster.
When the debt bubble bursts the consequences will be devastating, and a lot of struggling home owners will be saddled with debt for many years. They will learn the harsh lesson that their debt is real, but the value of their house was illusory.
The CEO of Westpac (David Morgan) had some interesting things to say today:
“The downturn will come at some stage and when it does, there are going to be some ugly pockets of adjustment in the housing sector.”Morgan has been around long enough to have experienced the bust of the early 90s (more than I can say for some of the people on this forum) and is being extremely cautious at the moment.
Some articles to read (sorry for endlessly posting links to support my arguments)
Economic gloom as deficit blows out
http://smh.com.au/news/Business/Economic-gloom-as-deficit-blows-out/2005/05/05/1115092628743.htmlWestpac keeps its powder dry
http://smh.com.au/news/Business/Westpac-keeps-its-powder-dry/2005/05/05/1115092628749.htmlTough times for retailers
http://www.abc.net.au/am/content/2005/s1360713.htmShocking trade numbers have markets stunned
http://www.abc.net.au/worldtoday/content/2005/s1360777.htmAre you jealous because you cannot afford to buy any property or do not have the knowledge to find a way?Its not exactly difficult to borrow money these days. If you have a pulse someone will lend you money. About 12 months ago I had some vague interest in an investment property. For a giggle I thought I’d find out how much the bank would lend me. To my astonishment I walked out of the branch 15 minutes later with a pre-approval for $1 million. That’s when I knew things had gone haywire.
BTW, the “jealous” remark was unnecessary and uncalled for.
Your little ‘real terms’ inclusions in brackets are of no consequence.Ahhh … so its the nominal dollars that matter. Silly me, there I was thinking house prices should be adjusted for inflation.
We are discussing the current market and my comments refer to short-medium term economic outlooks.So when exactly do you expect a recession? This is already the longest post-war expansion (which IMHO has been prolonged by ultra-low interest rates and easy credit)
However, if Labor wins an election, I would be predicting a rescession within 2 years.Labor won’t be winning any elections until after the recession.
Regarding Mortgage broker bias, surely a booming property market is in their interest?foundation, you keep taking the words out of my mouth. There has been an explosion in the mortgage broking business since the housing boom began. Think back to the early 90s (when I bought my first house). Who did you go to for a home loan then? A bank. Aussie Home Loans didn’t exist, neither did Wizard, or any of the myriad of smaller mortgage brokers.
You can’t tell me the housing boom hasn’t been good for the mortgage broking business.
