Forum Replies Created
I suppose the sequel will be 'Billionaire'
Brisbane isn't going anywhere soon. There's no economic driver to underpin any sort of meaningful resurgence. Performance will rotate closely around the mean.
Houses up units down for the time being.
There will be the odd hotspot as there always is and the occasional larger region within the city that will produce a few headlines for a while but in terms of medium to long term performance Brisbane is not likely to set the world on fire.
Previous growth spurts haven't shown to be sustainable and over all averages are anemic. Qld is largely a resource exporter. Given resource sector growth has now ceased and is trying to consolidate in slow growth over supplied markets all the economic pressure currently being exerted is negative. This shake out should peak around mid to late 2014. It's unlikely though that the LNP will be able to trigger alternative economic activity to replace the vacuum left behind by the resource sector contraction. That doesn't bode well for Qld in the short to medium term at least. 2015/16 could see quite tough conditions as federal and state governments try to keep growth above 2%.
Rick sta wrote:In a best case scenario of hyperinflation, the banksters will erode the property debt and I won't be holding devalued fiat currency.Hyperinflation is when confidence in a currency has collapsed and that's a disaster. What's more likely is asset deflation accompanied by cost inflation. Inflation is generally considered as a bonus for PI's but that's too simplistic. In the 08 crises inflation was suppressed so CB's could lower interest rates to stimulate activity. If a crises includes inflation then CB's could be inclined to hold or raise rates(Paul Volcker FED mid 80's). Cost inflation such as Japan (mainly energy) without accompanying wage growth would work against you. You could see CG stagnate or go negative while costs rise (IR's, fees etc) and rents decline in a rising unemployment environment.
Everyone goes through that initial stage of high risk high leverage as they build their investing base. The era we are in now is more high risk and volatile than any other time over the last 50 years. If a crises hit now the attrition rate amongst PI's would be horrendous.
jmsrachel wrote:… if the “world should cave in” aren’t we all doomed to some point?Not necessarily. A financial collapse would impact on sections and classes of a population differently and to varying extents. The impact will be felt differently from country to country and even within regions of a country. In terms of Australia you could see unemployment of 8-10%, asset corrections that average upto 30% and extended periods of deflation.
It's impossible to know how and to what extent any negative forces might affect the individual. The point is that there is a growing recognition that this economic system is in terminal decline and the only way to protect yourself is to develop strategies that minimise or emolliate any damage.
The types of things a PI might look at would be:
- streamline portfolios and cull any deadwood,
- reduce leverage to cope with;
- 30% equity loss, and
- 25% revenue reduction
The basic premise in all investing is that if the economic winds change and you're over leveraged and under capitalised then the chance of failure rises exponentially. It's relatively easy to adopt a defensive posture and still grow a portfolio albeit the more one leans towards defensive (low risk) the slower that would be. If you knock on a few doors here you'll find almost all the of the long time experienced investors here have deleveraged and streamlined their portfolios over the last few years to cope with above normal stressors. They might not say it in so many words but they expect problems and challenges in the next few years.
..
Elliott Capital's Paul Singer:
I don't want to paint a picture of clarity about the workout of this thing. Because
once a society, a financial system gets in a position of the central bank being
trapped, and being unwilling or frightened of stopping this merry go round,
things get very dicey.
If you look at Fed minutes from 2004-2006, the Fed seems clueless about the
financial system. Therefore, to rely on those people now is a bit foolish.
Sadly, the alternative to "those people" are those other people in Congress,
whose stupidity has been enabled by the same people at the Fed, whose
creeping take over of the world using monetary policy means has resulted
in the peak impotence of the US fiscal apparatus and a Congress which is
now, as is painfully evident, completely broken.
Full article here
And another article that indicates how Australia could follow the US into a plutocracy if this Abbot government has its way. The LNP in its latest incarnation is a bigger threat to the Antipodean way of life than many realise.
Abbott set to sign highly secretive TPP agreement this month
If you thought the Labour muppets were bad you ain't seen nothing yet.
The Gillard government made it clear that Australia would not sign another trade
agreement that included international dispute settlement by tribunals.
The TPP seeks, among other things, to rewrite the global rules on intellectual property
enforcement that would give Big Media new powers to lock users out of our own content
and services, provide new liabilities that might force ISPs to police our online activity,
and give giant media companies even greater powers to shut down websites and remove
content at will. It also encourages ISPs to block accused infringers’ Internet access,
and could force ISPs to hand over our private information to big media conglomerates
without appropriate privacy safeguards. You can see a more complete list of new
restrictions below, but it appears that the TPP would turn all Internet users into
suspected copyright criminals. In fact it appears to criminalize content sharing in
general.
An interesting article by Simon Black this morning (Soveriegn Man Blog)
Now the Chinese are wagging their fingers at Obama
As the US government’s international reputation craters after one embarrassing episode after
another, other nations are beginning to no longer trust the US, whether it comes to spying or
managing a sound currency.
This puts the US dollar at even greater risk of quickly losing global reserve domination, and
along with it, the ability to print money without damning ramifications.
As history has shown so many times before, this is exactly how the end begins.
US decline is fairly obvious in my mind. The dollar losing reserve status will simply be the coup de grâce. Problem is I think we could be into WW3 by then. It is a sham democracy now and has been for a while. As a plutocracy the US is too dangerous to be allowed to carry on the way it has been.
My gut tells me that over the next 50 years the world may well see unprecedented carnage.
Below is an interesting read on how a financial crises similar to 2008 might play out if it couldn't be contained with regard to our complex supply chains. My personal belief is that a crises of greater magnitude to 2008 is only a matter of time now. Predicting when is impossible but logic suggests that an unknown trigger will be all it takes to set the next crises off. My real concern is not that there will be a crises at some future time but our ability to contain and repair/recover from a significant system failure.
We have a fractional reserve banking/financial system that is reliant on credit growth for its existence. When credit growth is exhausted there is no option left but a collapse and reset.
Trade-Off
Financial System Supply-Chain Cross-Contagion:
a study in global systemic collapse.
David Korowicz
http://www.feasta.org/wp-content/uploads/2012/06/Trade-Off1.pdf
This study has two broad aims. The first is analytic and expository – about how we might
understand systemic and complexity risk in the globalised economy at a time when such
risk is rising. The second is a, probably futile, plea for urgent risk management and a
coming to terms with the possibility that within this decade we may see catastrophic
failures in the socio-economic systems upon which we rely for our basic welfare.
One of the effects of massive credit over-expansion and/or the peaking of global oil
production is the growing risk of a global systemic financial shock. The likelihood, as with
so many financial crises of the past, is that the breakdown of the global financial system
will be sudden and catastrophic, marked by complacency and hope turning to fear and
panic. It would happen over hours and days
Use the same tactics against them. People like this generally have a bullying personality. They find it challenging when you bully them back. They can be devious but they more often than not lack any real intelligence. There's a 100 subtle ways to drive idiots like this crazy.
JacM wrote:I work with several clients who, like yourself, are working overseas and therefore do not have access to all the same mortgage products as those residing here in Australia. However it comes down to careful property selection. I ha e not had a problem with consistently finding solid property that yields well, thus allowing my clients to keep buying.You're starting to sound like Nigel…. scary!
I would look at leasing or managing before buying. Many a dream is shattered when fantasy meets reality.
You can if you take someone like Nathan Birch's approach. Buy burnt out or vandalised bangers for sub 10k in regional areas and refurb them for a reasonable equity gain. Wash Rinse Repeat.
Go and look at his Youtube channel http://www.youtube.com/user/binvested
I don't necessarily endorse Nathan's approach. It's not for everyone.
Why would you deal with Optus? They do not own a copper network. They lease line access from Telstra Wholesale. Their infrastructure is limited to fibre, cable, mobile, microwave and hardware located in Telstra exchanges that connect to the copper network.
There should be a Telstra service pit outside your property. There will be a conduit that runs from the pit to some point on your property. You need to find that point and run cable to that conduit. Personally I would run conduit suitable for copper, cable and fibre(NBN) so that you are effectively future proofed.
Jacqui is absolutely right. A property must pull its weight from the get go.
Growth in Sydney is typically sub 3% across the investment cycle. That's below real inflation. The areas you have selected above are middle to upper middle class renters. They are vulnerable to wage growth pressures brought about by low business margins and an increasing drive for automation across the work force. Sydney contracted in 2011 and 2012 saw modest growth and now we're seeing a mini boom at this stage. There are indications the financial system may not let Sydney get too far ahead of itself due to bank leverage on mortgages being extremely high and vulnerable to a contraction.
To complicate matters further Abbot has essentially abrogated responsibility for the housing sector to the RBA. That only leaves interest rates as the primary tool to address housing sector imbalances. Given that rates are at historical lows the obvious future outlook is for rates to increase in the next few years.
If those selections are negative now then within a few short years the risk of growing losses is high. Couple that with a modest contraction of 5% and your proposed properties could be underwater within 5 years.
The most like scenario over the next 10 years is for price growth to be at or below inflation. There will be suburbs that exceed that but if you can pick them good luck. Investing strategy must be centered around growing equity through either renovation or development and positive operational income must form the base of the overall strategy. A CG based strategy in this climate is high risk and has a low probability of success.
Italy is the next Spain or worse Greece. Somewhere between now and the next three years everything points to Italy requiring massive bailouts that I doubt the ECB can facilitate.
When Hope Fails: Why Italian Banks Better Be Praying Draghi Can Still Do "Whatever It Takes"
and France is right behind them
jayhinrichs wrote:. I see a huge up tick in TAx sales in the next 5 to 10 years.What's the percentage mix of corporate investors and private investors…50/50????
What's not being talked about is all the vacant HF inventory… 50% by some accounts. I'm only seeing comment about monetising occupied rentals at this stage.
If HF's panic there could be a race for the exits and that'll destabilise a fairly fragile market. I just don't see enough investor dollars there that could make a dent in the quantity of inventory likely to hit the market over the next few years. Not above a 30% discount anyway.
Corie wrote:I was actually talking to an agent up there and he said he has seen this cycle 3 times in the last 10 years. He believes demand is still very strong.I was there from Apr07 and the market was simply up, no real cycles at all. He/she is simply talking the market up because its as dead as a dodo at the moment.
You need to understand the drivers that underpin that market and where you'll be in about 5 years.
WA in general is coming under increasing pressure as the resource construction boom unwinds. I would tend to wait and see on Geraldton. It has the potential to be a trap. With that kind of risk profile I don't see the returns reflecting the risk
If you like resource centric regions then Newman is a far better bet. Reinhart is continuing with the Roy Hill expansion ($8-12B) and FMG look like it will have it's debt burden under control by mid 2014 if ore prices stay above the $110/dmt for the short term. That suggests things will be fairly stable in Newman for the near term. The big if is the sheer amount of oversupply (iron ore) coming onto the market over the next 18 months. Either prices or volumes will fall perhaps both. I don't see Newman taking a hit though. It's survived the downturn till now relatively unscathed. It wasn't over built in residential like Karratha and Port Hedland.
I don't see anything other than stable steady growth in Newman regardless of the economic climate.
Our friend is now closing their business (D&A testing) in Nov and leaving town. Her client base has dwindled to just a few companies. In contrast other friends of ours are expanding (auto electrical). Go figure.
Our son is plastering houses and says there is 6 months work there… interesting
4sale = 329
rent = 201
Not a lot of change
