- jmsrachel wrote:With what is happening in USA how do you think this will affect Australian property prices? Do you recommend to hold off purchasing property in Australia for now?
It's unlikely the US would affect the AU market on its own. If you took a holistic view you would have to look at the Euro area, the US and China collectively as major influences on the AU economy. The dominant influence will always be China so that's the one I watch in terms of how the AU economy might perform.
Personally I think China is a bigger basket case than the US. As a result of the ever accelerating global downturn I see the auto industry as the biggest threat to the AU economy. The auto industry consumes huge amounts of steel for manufacturing. In the US there's a kinda sub prime auto market evolving.
China Has Become One Big "Stuffed Channel"
If you start digging around the auto industry's claimed production vs sales you quickly realise production is well ahead of actual retail sales and sales figures quoted by the likes of GM etc are actually delivery of units to bulging dealerships
- With 1,300 Chinese Carmakers 25% Of Them May Be Forced Into Bankruptcy By Government
- It is estimated “China’s 12 major automakers will surpass 30 million units, far exceeding market demand” according to the National Development and Reform Commission, and the overcapacity issue will worsen in the near future.
Given AU's dependence on resources especially iron ore and the recent turmoil around plummeting ore prices you would have to conclude a collapse in auto sales/production resembling the 2008 crises would throw the AU's economy into bit of a spin. I think we're likely to continue to see a continue weakening of steel demand over the next 12 months with ore prices settling below $90/dmt. If we see sub $100/dmt for around 12 months I think FMG's a gonner.
My gut feeling is that WA is going to get smacked really hard in about 12 – 18 months as we literally plunge off a cliff with the winding up of the infrastructure expansions. Qld is also in the same boat but to a much lessor extent due to it's larger and more diversified state economy but I think they'll still cop a bit of pain as we come off the resource boom.
For me the AU RE market is too risky for the yield and CG potential on offer. Others may have a higher risk tolerance than me but I see much better options in other areas than RE at the moment.
Funny stuff Freckle,
Why so much energy to enlighten the masses about potential traps w/investing in the U.S ?
Did you get stung?
and/or do AU prop holders/investors feel a bit sad that money is flowing to overseas instead of continuing to jack up the average aussie home price?
love the use of charts and graphs, lol
10000_Lakes wrote:Funny stuff Freckle,Why so much energy to enlighten the masses about potential traps w/investing in the U.S ?
<moderator: delete language> Ever listen to a bunch of people talking and scratch your head at the absolute rubbish some people waffle on about. You like to be polite so invariably it goes unchallenged. I decided some years back that being polite actually did a disservice to friends and family if a I simply smiled and let things slide.
My eldest son (now 30) and I are similar so when I pull him up on something he believes to be correct things can get confrontational to say the least. I'm in the process of upsetting the local city rangers dept over the parking of a vehicle opposite my property. They have a poor understanding of parking rules, zone planning and state regs. They try and tell me I have to do this and that and I say no you're wrong and heres the legislation/regs that says so.
Quote:Did you get stung?I've been stung many times in life… now I'm a little bit older and hell of a lot wiser.
Quote:and/or do AU prop holders/investors feel a bit sad that money is flowing to overseas instead of continuing to jack up the average aussie home price?Doubt it. I think many wish they had the cojones or opportunity to jump on the band wagon
Quote:love the use of charts and graphs, lolI try to be creative
With what is happening in USA how do you think this will affect Australian property prices? Do you recommend to hold off purchasing property in Australia for now?
I would say it effects us all, wouldn't you? I am really surprised about the cost of living in OZ, how can you jusify the absurd prices you have on your properties.
Freckle talks about resources and raw metals more than he does about the real estate markets.
Doubt it. I think many wish they had the cojones or opportunity to jump on the band wagon.
If i can do it, why can't the foreign investor do it with the aide of good honest people in the states? If nobody was having success then the idea would have died a long time ago. Is Steve just that good of a salesman?
There are people everyday that make the same mistakes in States. Cali buyers that buy the same <moderator: delete language> properties that OZ buyers gets. I would figure one of the safest bets would be to own a house in the States. There's a reason that the Latins bought up premier Florida and China bought up the west coast.
Investing is a job, not a hobby….
kylermrice wrote:With what is happening in USA how do you think this will affect Australian property prices?It has little if any direct affect currently. GFC 2 would cause a headache or two I'm sure.
Quote:Do you recommend to hold off purchasing property in Australia for now?Difficult. For me there's not a lot of value in the market. It's tracking sideways as we wait to see one way or another when or if the continuing GFC debacle gets resolved once and for all. I think the GFC mess will take decades to resolve so unless somene can point to a new substantive engine for growth it's likely to stay this way. It will be much harder for PI's to pick winners in this market.
Quote:I am really surprised about the cost of living in OZ, how can you jusify the absurd prices you have on your properties.I can't. Successive governments who have feed the economy with cheap credit over decades and policies that subsidise the property market have fueled speculation. Throw in State governments milking developers and buyers for all they're worth and you have an over priced market to show for it. It's estimated that 40% of a new property is taxes
Quote:Freckle talks about resources and raw metals more than he does about the real estate markets.AU's economy is 30% resources. Over the last 20 years it has underpinned a significant part of the economy as China boomed. It's benefits have largely been squandered and mismanaged by governments and states eager to grab a share. WA for example is a land mass at least a 1/3 of the US land mass. It's massive yet only has a population of 2.3million. 80% of the economy here is resources. The last 2 decades here have been built on resource expansion and that's coming to an end.
The Northern Territories and Queensland have similar stories. Resources a are significant player in the property story here.
kylermrice wrote:If i can do it, why can't the foreign investor do it with the aide of good honest people in the states? If nobody was having success then the idea would have died a long time ago.
Plenty do but as a percentage of overall investors it's less than 1%
Quote:There are people everyday that make the same mistakes in States. Cali buyers that buy the same (rubbish) properties that OZ buyers gets.I think that's true in a all markets. If you actually look at ALL PI's you'll notice that around 60% don't make any money at all because they have no idea what they're doing. They think they do simply because a property is worth more 30 years later. They conveniently forget about inflation, financing cost, maintenance, fees/taxes etc etc. Then you have that grey zone of 30% who just break even to making good coin over time. The next 7% do very well – the pro investor. The last 3% are the expert come guru kinda guys.
Quote:I would figure one of the safest bets would be to own a house in the States.I think there's a few zillion of your countrymen who might disagree with you on that point. You've had the biggest property collapse in history and it's still a long way from over.
Quote:There's a reason that the Latins bought up premier Florida and China bought up the west coast.South America, especially Brazil, and China saw an explosion of wealth over the last decade primarily driven by China's high growth rate and massive stimulus program after the GFC. The GFC illustrated how fragile local economies could be in times of stress. Those with wealth looked for safe havens outside of their own economies that offered some level of safe haven value for wealth. The Chinese see property as a place to store wealth not necessarily as an investment. Capital flight from China is huge. Even with economic stimulus their CB balance sheet is contracting.
Florida was a natural repository for Latino investment. It ticked all the right boxes due to it's cultural familiarity. The West Coast offers the same kind of cultural familiarity for the Chinese.
All investment isn't smart investment. There are a lot of sheep out there. The american property market is a grave yard and many simply see an opportunity to buy something cheap. My guess is that many will find it's their own (investment) grave yard they're buying in.
Quote:Investing is a job, not a hobby….So true
Freckle wrote:mattsta wrote:The middle class is almost gone in the US.I don't think the middle class will ever completely go. The middle class is often described as the engine room of most economies. The middle class is definitely shrinking as % of population and this erosion is developing as a drift into the under class with very few moving up to higher classes.
I agree. It probably won't completely disappear, but it is shrinking pretty bad now. My American friends told me plenty of stories about high paying professional working for lower pay and unable to pay their mortgages, car insurance, car loans and etc. I really hope American economic situation won't affect Australia.
I wouldn't say the American property market is a graveyard exactly. There are ups and downs even within a descending graph, and others fluctuate in comparison. If you're diversified and hedged, there's always something to be made in any market. Cycles come and go, wealth gets redistributed, it all comes round mid and long term. But yes, a full time job.
Ziv Nakajima-Magen | Nippon Tradings International (NTI)
http://www.nippontradings.com
Email Me | Phone MeZiv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property
Hey Freckle I've got to know… what are you investing in, and are you more comfortable with your current investment strategy than with real estate? Curious
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
JacM wrote:what are you investing inSmall Cap miners – primarily PM's as a hedge rather than an investment. And business primarily my own
Quote:are you more comfortable with your current investment strategy than with real estateAbsolutely. If I was 30 years younger property might hold some attraction for me. My objective is high cash flow with little to know capital investment. As soon as I make a lot of money I stop and have a time off. I like money but not at the expense of time. Asset rich and time poor is not a good outcome.
I'm just about to set up a new business. It should generate around $2-4k net per week with almost no overhead. Time – about 10-15hrs/wk.
I can do in a few months what many in property spend half their life trying do – generate a passive income. Very few ever actually get to be passive. All investments of a significant nature require a fair amount of time in monitoring, managing and refining.
Freckle that’s a good return for 15 hours a week. Care to share or hint what it is? My wife reckons its pimping but i don’t think your that kind of guy!
jmsrachel wrote:Freckle that's a good return for 15 hours a week. Care to share or hint what it is? My wife reckons its pimping but i don't think your that kind of guy!https://www.propertyinvesting.com/comment/273034#comment-273034
Freckle and others,
Some very valid points and yes indeed the US Middle class is dwindling. It needed to happen and is!
But you need to ask yourself is this a bad thing. We need to get back to production and the only way to get competitive is lower wages and a middle class who has got fat and lazy over the last 30 years getting hungry and ready to work again. We have far superior Education, tech skills, infrastructure and huge domestic demand in comparison with our competitors now what we need to cheap labor and that's what we are getting!
Read this and you will see what will happen to the real estate market in America over the next 10 years and is just starting now.
http://in.mobile.reuters.com/article/idINL2E8K46VK20120904?irpc=932
That's right people. Wall St used to lend people money to buy the homes and they pay them interest, now they will rent them the homes instead. And just remember once they make securities out of them they will be able to sell them off at a 5% yield instead of a 10% that they are currently buying them at meaning 100% growth
Its awesome isn't it. You also need to take into account that the USA Is the only country in the world that can print money and not get hyper inflation giving us a competitive advantage. US govt bonds are still considered the safest investment in the world meaning we can keep interest rates low for long periods and keep those in negative equity happy and not feeling the pinch.
If you combine that with the fact we pretty much control the IMF, World Bank somewhat the UN and all oil and most commodities are traded in US$ you can see why the US is a good bet. Oh and to top it all off we have an army 3x as large and way more advanced than anyone else in the world.
I really think that a lot of people on these forums do hit and hope a bit and there is a hell of a lot of different opinions most of them very uneducated. It is all somewhat speculative at the end of the day but i can assure you that Wall St knows how to make money and if they are doing it there is a pretty good chance that it will be successful, maybe not for the greater good but certainly for themselves. I actually wrote a response 3 x this long but deleted it by accident so have to cut it short.
I hope you get my point and here are a couple more articles if you have any further interest.
Thanks just sure that now, Looks like your going to have to buy a bigger wallet.
Freckle wrote:JacM wrote:what are you investing inSmall Cap miners – primarily PM's as a hedge rather than an investment.
Care to share a few ASX codes I can add to my watchlist?
AYN (silver) NST (gold). Both are producing miners. Very little downside at the moment. Primary hedge is against a collapse (GFC event). I would expect an initial drop then strong recovery in price if this occurs. Secondary hedge is against currency. If the dollar falls off a cliff (which I don't expect) then they ride high on US dollar strength.
AYN is up 65% since mid Aug and 25% in the last 4 weeks. Silvers running hard at the moment. get your timing right and you kill the pig on these deals.
I sidelined NTS 18 months ago in favor of AYN. Cost me about $130k. Win some loose some.
Thanks for that. I will keep a close eye on them. Unlucky with NST.. looks like it has nearly tripled from 18 months ago! Would've been nice to have them then. MAD is my latest buy, unfortunately didn't have any in early January but got in early enough to be comfortably in the green. I think it has good potential and further to climb yet.
You say silver is running hard at the moment?… are you talking about silver miners share price or the price of the metal? I bought some silver bullion roughly 18 months ago for about $40/oz (yes, right at the peak
) and am yet to see them return to those highs! Obviously it is not a short term thing but I was expecting silver to do better then it has been lately!Cheers,
Interesting food for thought Freckle. Thanks for sharing!
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
N@than wrote:You say silver is running hard at the moment?… are you talking about silver miners share price or the price of the metal? I bought some silver bullion roughly 18 months ago for about $40/oz (yes, right at the peak
) and am yet to see them return to those highs! Obviously it is not a short term thing but I was expecting silver to do better then it has been lately!I'm into miners rather than physical – more upside but more volatility. I hooked in at $37 so I feel your pain but I was always looking at 2+ years. I'm not smart enough to be a day trader.
Silver's trying to break and hold above AU$34. If it can hold above that then the next resistance level is $41.
It's a tiny tiny bit of the overall market so it's relatively easy to manipulate. I expect to see it smashed down again if it get's over $40 but ultimately it will keep climbing.
If the AU$ falls and silver goes to AU$100 in the future then your looking at AYN at 0.50 – 600% above now. Risk reward looks good at 3-5 years.
Its awesome isn't it. 
) and am yet to see them return to those highs! Obviously it is not a short term thing but I was expecting silver to do better then it has been lately!You must be logged in to reply to this topic. If you don't have an account, you can register here.
