What prop cycle is essentially highlighting is migrants do come to oz for better opportunities, I understand the objectives quite well as they are no different to previous Euro & other migrants decades go where some strived to improve their quality of life..eg my own parents.
The mining big wigs are more reticent about the outlook for commodities, mining does move in cycles, so understandably there's is some requirement to reduce one operational costs & scale back some investment. Yeah Some employment prospects have been crappy for some & it's certainly not pleasant to be involved in some short term contacts not knowing what your employment status will be in the coming months.
At present the demand continues at a slower pace.
@massive Hard work is certainly not the only prerequisite for success in PI...
Buy for the position, buy for the long term, don't over commit & buy when ever you can. Realize there's ways to do stuff for ones advantage.
Eg if IR is rising its still a good time to buy coz inflation is also moving up & that in turn pushes the rents & values too.
No guts No glory I say.
Each era has its specifics & 2016 is gonna be interesting.
The longer term resolve is a safety net for most investors....people do gamble out there & take large risks to win in the short term on any investment mode. It's whether those bitten have understood their mistakes... & modified their objectives.
History shows that nobody predicted the impact of the awesome effects of the Red Dragon, the major resource suppliers were not anticipating this.
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$ It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do. Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
What prop cycle is essentially highlighting is migrants do come to oz for better opportunities, I understand the objectives quite well as they are no different to previous Euro & other migrants decades go where some strived to improve their quality of life..eg my own parents.
The mining big wigs are more reticent about the outlook for commodities, mining does move in cycles, so understandably there's is some requirement to reduce one operational costs & scale back some investment. Yeah Some employment prospects have been crappy for some & it's certainly not pleasant to be involved in some short term contacts not knowing what your employment status will be in the coming months.
At present the demand continues at a slower pace.
@massive Hard work is certainly not the only prerequisite for success in PI...
Buy for the position, buy for the long term, don't over commit & buy when ever you can. Realize there's ways to do stuff for ones advantage.
Eg if IR is rising its still a good time to buy coz inflation is also moving up & that in turn pushes the rents & values too.
No guts No glory I say.
Each era has its specifics & 2016 is gonna be interesting.
The longer term resolve is a safety net for most investors....people do gamble out there & take large risks to win in the short term on any investment mode. It's whether those bitten have understood their mistakes... & modified their objectives.
History shows that nobody predicted the impact of the awesome effects of the Red Dragon, the major resource suppliers were not anticipating this.
Glad there's still some sensible people here.
How I see it is that money is being created every second. Fresh money being injected into the financial system. These money have to go somewhere. Realestate forms one of the safest asset classes. I remember seeing old news clips on affordability in Australia. From the 60's. 70's. 80's. Especially when the interest rates were very high. In every generation there would be people screaming crash crash crash. Overpriced. Doomed. But where are we today? Crashed? Doomed? I guess this could bring up another heated discussion. There is always "this time it is different" in every generation too. And ofcourse the bears will always always always use these as examples. Don't forget there is no"one market". Conditions are very very different between countries.
End of the day there is no point discussing and arguing. Only time will tell. Everyone makes their own choices. If you make the right choice and create a pleasant life for yourself, good on you. If you make the wrong decision, that's ok, get back up. Learn from it. Just watch your risk appetite when you make decisions.
Risky speculations can spell trouble. Being too conservative can also spell trouble.
It's all about risk management and learning along the way. Everyone makes mistakes. Just don't put yourself in a position where an unbearable mistake could very likely happen and jeopardize your life. Simple as that.
Buying opportunities might be in the horizon. Next couple of years will be interesting that's for sure. =)
Remember the net effect on the economy though. People swapping highly paid construction jobs for less paid jobs elsewhere means less disposable income.
Going back to ratios, 5000 persons taking a very conservative 25% pay cut (in reality closer to 50% and assuming they all find alternate employment) won't be offset by 500 persons in new operations roles (which pay significantly less than construction).
Also I note you quote figures from 2009 which are completely out of touch with today's commercial realities. The current situation with Gorgon is revealed in the below SMH article published in August this year.
"US oil major Chevron is struggling to lock-in 20-year sales contracts for its Gorgon liquefied natural gas (LNG) export plant in Australia, the world's most expensive, as buyers spoiled for choice from new suppliers hold out for cheaper deals.
The high level of unsold LNG shows how the US shale gas boom has played havoc with major investments now coming to fruition in Australia, and threatens to undermine the industry's traditional sales model where projects tie up forward sales in long-term contracts."
"Spot prices slump
The vulnerability of producers is reflected in a near 50 per cent price fall for Asian spot cargoes in recent months to three-and-a-half year lows, which has taken spot LNG well below long-term oil-linked contracts and surprised many industry players."
Recall comments from my previous post regarding low cost competitors. This will have a significant dent on the $40bn government revenue figure and jeopardise any further expansion plans.
If you read your article you will see that the problem lies in the funding model for new projects - IT DOES NOT LIE IN REDUCING THE ACTUAL PROJECTED INCOME FOR PROJECTS LIKE GORGON.
1. There has been massive price inflation since GORGON was planned, recent lows were down from unexpected highs. Spot LNG prices have been rising again since July (a gain of 41%) so the article is already dated.
2. Gorgon has locked in 65% of its supply it is a 30 year project and this problem if it does hit will take years to have an effect.
So maybe your article was a bit hasty on its negative analysis.
What is happening is that there are expectations of increased supply from the US and from Africa that is hindering the signing of long term contracts as there are expectations of future price drops. These long term contracts are needed to fund expansions and new supply.
However, if this persists it could in fact lead to higher prices long term if less new projects can get funded.
Don't forget that for every article like the one you posted there areplenty of upside projections eg huge new demand coming online from Asia. Eventually Asia will move away from coal but when Gas demand goes to coal demand and vice versa Australia has a two way bet.
There is no doubt that Australia will prosper when these supplies come online.
To predict a crash in an economy set to become the largest exporter of LNG in the world is a silly notion IMHO.
herbie
25 Sep 2014, 09:05 PM
I would have personally thought their collective understanding of boom/bust would be even higher/more recent than ours - What with them having got whacked in the late 90s Asian Financial Crisis - But maybe it was only the youngies who came 'n their daddies omitted to tell them how things work?
Hi Herbie I think it is more likely that we people fromeconomies that have suffered badly understand cycles very well - the bears who think a property crash can just appear in a wealthy economy that has been stagnant for years are maybe the ones who are a little naive.
My life experience tells me that price rises are much more likely than falls in the current market. That is just the way I see it. We lived through the nineties and have seen all this doom spruiking before, most of it is hot air. The world just carries on the way it always has.
People say Perth is cyclic and I am sure that is true but Perth property has been increasing with the population and wealth for most of its life. Any effect of these so called cycles are pretty hard to see in the historical trends of property prices in Perth. The GFC dented the market for sure, but what is currently around that could make it fall even further, a change over in the construction wages of a few thousand people ain't gonna do it.
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
My life experience tells me that price rises are much more likely than falls in the current market. That is just the way I see it. We lived through the nineties and have seen all this doom spruiking before, most of it is hot air. The world just carries on the way it always has.
Maybe.
Of course, the cash rate didn't even fall out of the double-digits until the later half of '91 and only fell as far as 4.75% (after a couple of years) - far higher than we are currently sitting at now. And this followed Australia's worst economic shock since the Great depression. How can that be?
I don't think it takes a genius to figure out that our private sector is so remarkably-heavily indebted today - largely for mortgage debt - that we have had to take interest rates to not that far above effective zero in order to keep things ticking over. Monetary policy has almost reached it's limit as an economic counter-stabalization tool - and we haven't even been hit by a serious economic shock yet.
The world has changed since the 90's skamy. Interest rates are getting close to as low as they can possibly go. Private sector debt is around the highest on record and house prices are now mainly driven by speculation rather than the need for shelter. It doesn't remotely resemble to the world of the 90's. What will happen if a severe shock strikes under these conditions?
I bet Leftee, if and when the external Chinese slowdown shock hits us some more (which it will eventually, as all signs point toward a rapid and severe slowdown in China)...........'skammy the grandma' will be the first in line to lose her stack of frosty crusted underwear.
Perth's pathetic 'condition' is getting harder to ignore these days.
Yes, it's looking more and more like a rising bloodbath over there.
More than 1000 jobs to go from coal here in central QLD - the 700 figure was only BMA I think but I'm not concerned about checking right now, suffice to say it doesn't look good.
So far, Gladstone house prices have mostly defied gravity through the first stage of the slowdown - they are down a little but not much. Investors accounted for 75% of all housing activity in the Gladstone area at the peak, I wonder how many of them are (were) high-paid coal miners?
Leftee a friend of mine recently sold two houses in in Gladstone. One was in Tannum Sands.
Both were sold for a loss! well below purchase price from 2009.
I told him when he purchased them back during the bottom of the market to not do it............dummy didn't listen to me.
He thought that all the coal projects and Curtis Island would spawn a boom like none other in the history of Gladstone. I just laughed at him, needless to say he ended up paying all that interest, and losing all that rent. What a fool.
Now he's into shares too and on the same foolish track with that imploding market. All those bhp, Rio and FMG shares are on borrowed time. We're talking 2009 share prices now, with possibly no bottom in sight. Nothing but a speculative economy now.
Leftee a friend of mine recently sold two houses in in Gladstone. One was in Tannum Sands.
Both were sold for a loss! well below purchase price from 2009.
I told him when he purchased them back during the bottom of the market to not do it............dummy didn't listen to me.
He thought that all the coal projects and Curtis Island would spawn a boom like none other in the history of Gladstone. I just laughed at him, needless to say he ended up paying all that interest, and losing all that rent. What a fool.
Now he's into shares too and on the same foolish track with that imploding market. All those bhp, Rio and FMG shares are on borrowed time. We're talking 2009 share prices now, with possibly no bottom in sight. Nothing but a speculative economy now.
TBH its Still hard to believe that there are souls out there that fell 4 dud investments like tannum sands!
Drongos earning more money than their IQ are a recipe 4 disaster!!!!!!!!
The GFC dented the market for sure, but what is currently around that could make it fall even further, a change over in the construction wages of a few thousand people ain't gonna do it.
So why have prices risen less than inflation in the last 12 months and fallen in the last quarter?
Why are vacancy rates up by so much in the last year?
It is all well and good pontificating about why prices won't fall, but the fact is that they are falling. How do you explain that?
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be rising.
TBH its Still hard to believe that there are souls out there that fell 4 dud investments like tannum sands!
Drongos earning more money than their IQ are a recipe 4 disaster!!!!!!!!
oh shit yeah, how many 'educated' fools we know amongst us doubleview?
fuckin hell one seems to be born every second! You ask them the question, on why did they do it, and the answer is the same old beaten to death............oh everyone else was buyin em.........I thought I'd miss my chance.........
I know several of these fools who invested in the GC units/ apartments market, and long ago were taken to the cleaners when the Surfers unit market crashed 5 years ago now.
God, it still hasn't recovered!
The icing on the cake will be the brisi market.............just watch it drop off the cliff with the mining bust. All them ass clowns holding onto IP's in brisi are well set to get busted. No doubt anymore. It's inevitable...........there are no jobs anymore period. It's eerily quiet these days that brisi.
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