Inflation is again predicted to be within the target range of between 2%-3%. Last year, it was 3.2%. the year before that 3.4%. The only wild variation was after the implementation of the GST, when it was 6% a few years ago (2000-2001).
I believe inflation will be around 2.4% this year. We’ll have to wait a few months to see. But that’s hardly “deflation” banana republic style. And one can’t have it both ways. Inflation is not a good thing for consumers. Who wants rising prices and devalued purchasing power? Australia’s record growth can partly be attributed to inflation being managed, and remaining within its targets.
I get the feeling some folks want us to sell up our RE in a panic and buy shares instead?? Falling prices in RE is NOT a bad thing, if you’re a buyer. And most of us have made our CG in the boom, and now we want to buy again. RE investors are *always* wanting to buy- it’s what we do!
So why the sad faces, guys?
kay henry
Kay,
People, economists included tend to make projections based on the immediate past. However, to get the real picture we must look further back. I won’t go into the psychological reasons for that. People like Robert Prechter explain it far better than I ever could.
But there is a observable cycle in the social mood, which includes such things as the stockmarket and real estate values….and music, politics,wars and lots of other things that goes back centuries…with fractal occurances within that cycle….and further fractal occurances within that smaller cycle and so on.
If you are aware of it, you can attempt to survive and prosper from it.
We have now had in excess of twenty years of continuous economic growth. The last slump was in the seventies, which was merely a fractal retracement of the overall cycle. But the sharemarket was a disaster and property values went sideways for a decade in a high inflation environment….substantially backwards in real terms.
The resilience of the boom is always a surprise to students of these cycles. The eventual bust is never a surprise.
I just think it is wise to be prepared for the eventual turn. The smarties who were aware of the cycle made a bloody fortune subsequent to the crash of ’29 and their fortune has sustained 3 generations with above average wealth since then.
Many people think it predatory to prosper at the expense of others misfortune. At least if I try to make people aware then my concience is clear.
This is why I give away information (that cost me a great deal to learn) for free via my website. Information that others charge for….errr, well, there’s not a lot there yet but I’m working on it.
Finally, yes I am banking on subsantially lower RE prices in the future. It doesn’t matter to me if that doesn’t come off in my relative youth (ummm a very young 42) to benefit from RE into my dotage ’cause the share market thing is doing OK fo me. But it would be nice to pick up some nice houses at the right price….when the market eventually tanks.
Actually, I know some pretty smart people who are not interested in RE OR shares. They are buying physical gold, silver and platinum with their ears pinned back! and stashing it in holes in the ground (I wish I knew exactly where[evil4])
Take note of Bill guys, he has been around the traps long enough to observe the cycles.
Also have a read of “conquer the crash” by Robert Prechter…just to realy give yourselves a fright.
Here is an excerpt from an interview he gave in 2002
>>”Now the fascinating thing is, to me, what you just brought up and that is
the Grand Super Cycle, as Elliott called it. We have actually probably
completed five waves up from the 1780’s. In 1720 there was the peak of a
tremendous bull market in England. That led to a sixty-four year, three
step, ABC, bear market bottoming in 1784. And from that point forward we
have a very clear sequence of five waves right into the early portion of
2000 and that’s why I’m saying this is very similar to 1929 or 1835 or 1720.
Those were the key points.”<<
These were periods of Deppressions and deflation. Analysis of market cycles indicate that we are due for the next one around about now, and it may have already begun.
It’s all cycles…and please don’t shoot the messenger folks[fear]
I trade the US markets (work from 9PM til 5AM perth time) so I know what you mean. It’s getting that if the sun’s rays strike me I recoil in horror[blink]
Anubis, why not send WayneL a PM? He could do with an outlet.
Your disparagement of me thus far has been witty and humerous, even if your phraseology was faulted…and as I was sh*tstirring, I probably deserved it. No worries, fair cop.
If you buy at very high historical valuations, you run the risk of REDUCING your equity, and net worth, when things ultimately correct.
In the long run this will be temporary….but how long is temporary? 1 year, 2 years, 5 years?
Is it not better to buy at historically neutral or lower valuations?
If you can find good value now, and I don’t mean relative to todays market, I mean relative to historical valuations, then go for it.
But that is not a common thing at present.
I see nothing wrong with sitting back and waiting for value. The most successful investor in the world (as much as I hate trotting out this arguement) Warren Buffet, practises this and I dare say it works quite well.
The man has s***loads of cash sitting there waiting for value investments. The important point to note is that he is STILL waiting.
Something to think about, remember the days of the Whitlam Government[blink], the 18% interest rates etc. etc.[weird], scary stuff. Guess who is Latham’s mentor, Whitlam of course, dare we go there again[glum2].
foston
This is exactly why I have a one way ticket in my top drawer.
Fortunately because of mixed parentage (some say mongrel breeding [biggrin]) I have many choices and I hate seeing this once great country going where it’s going.
An American decided to write a book about famous churches around the world. For his first chapter he decided to write about Australian churches. So he bought a plane ticket and took a trip to Hobart, thinking that he would work his way across the country from South to North.
On his first day he was inside a church taking photographs when he noticed a golden telephone mounted on the wall with a sign that read $10,000 per call”. The writer, being intrigued, asked a priest who was strolling by what the telephone was used for.
The priest replied that it was a direct line to heaven and that for $10,000 you could talk to God. The writer thanked the priest and went along his way. Next stop was in Melbourne.
There, at a very large cathedral, he saw the same golden telephone with the same sign under it. He wondered if this was the same kind of telephone he saw in Hobart and he asked a nearby nun what its purpose was. She told him that it was a direct line to heaven and that for $10,000 he could talk to God.
“O.K., thank you,” said the writer.
He then traveled to Sydney,Canberra, Adelaide, Brisbane , Darwin, and Alice Springs. In every church he saw the same golden telephone with the same “$10,000 per call” sign under it.
The American, upon leaving Alice Springs saw a sign for Perth and decided to see if Perth had the same phone. He arrived in Perth and again, there was the same golden telephone, but this time the sign under it read “10 cents per call.”
The writer was surprised so he asked the priest about the sign. “Father, I’ve traveled all over Australia and I’ve seen this same golden telephone in many churches. I’m told that it is a direct line to Heaven, but in every state the price was $10,000 per call. Why is it so cheap here?”
The priest smiled and answered, “You’re in Perth now son, it’s a local call”.
Wayne, I still don’t know if your point is any more than cliched rhetoric.
So, yes. Enough said.
cli·chéd also cliched ( P ) Pronunciation Key (kl-shd)
adj.
Having become stale or commonplace through overuse; hackneyed: “In the States, it might seem a little clichéd; in Paris, it seems fresh and original” (Nina Martin).
rhetoric
Rhet”o*ric, n. [F. rhtorique, L. rhetorica, Gr. ???? (sc. ???), fr. ??? rhetorical, oratorical, fr. ??? orator, rhetorician; perhaps akin to E. word; cf. ??? to say.] 1. The art of composition; especially, elegant composition in prose.
2. Oratory; the art of speaking with propriety, elegance, and force. –Locke.
3. Hence, artificial eloquence; fine language or declamation without conviction or earnest feeling.
4. Fig. : The power of persuasion or attraction; that which allures or charms.
Sweet, silent rhetoric of persuading eyes. –Daniel.
***************************
Puleeze!
But if you’d accused me of making mischief, I would have to plead the 5th[}]
WayneL – how about you start with something. Anything at all…
But let’s just say that an unacceptably high proportion of government spending I consider to be electoral bribery.[V]
Okay, so your point actually has nothing to do with any political party in particular then…
What is your point?
No, this has nothing to do with either party, they both are guilty….they should be able to find $5bil like falling off a log…but I don’t believe they will.
One way ticket is sitting in my top drawer though…just in case of change of government.
>>how many economist in the richest 200 or even the richest 200000 are there present?<<
Is this relevant at all? How many property educators are there in the same group? How many residential property investors are in this group?
>>in most regions – 50 within CBD, large regional areas prices will at least hold or increase at CPI rate where supply < demands <<
True, but prices will oscillate to either side of the long term regression line/trendline. I would prefer to buy when prices are undernieth the trend line i.e. when value is present.
The weathiest share investor in the world, (who is in the top 20, nevermind 200) practises this.