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Foxbats new prediction; House prices and all assets to come under pressure
Topic Started: 25 Nov 2015, 06:17 PM (59,405 Views)
Foxy
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Zero is coming...

Matthew
3 Dec 2015, 05:14 PM
Yes.


A company has far more chance of surviving if its C1 costs are below the spot rate than one with C1 costs above it.


BHP's actual relevant (All in delivered) number is US$27.20 at the moment and they are working it lower.


BHP will be fine because they are not a one trick pony welded onto Iron Ore. However their iron ore business will not send them under if a stand alone. Therefore they will be ok.





Bullshit Peter.
Bullshit Mathews.
Peter
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propertymogul
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Matthew
3 Dec 2015, 05:14 PM
Yes.


A company has far more chance of surviving if its C1 costs are below the spot rate than one with C1 costs above it.


BHP's actual relevant (All in delivered) number is US$27.20 at the moment and they are working it lower.


BHP will be fine because they are not a one trick pony welded onto Iron Ore. However their iron ore business will not send them under if a stand alone. Therefore they will be ok.





Bullshit Peter.
A company with C1 costs below the spot rate but all in costs above the spot rate won't survive for too long. Very few companies would have C1 costs above the spot rate. The C1 cost is almost irrelevant to survival, as it excludes many costs.

The post you replied to said bhp has all in costs of around US$28, you then responded that their cash costs are $19 and that they will be fine. No big deal Matthew, but the post you responded to was more correct than yours. You will also find that the all in sustaining cost quoted does not include depreciation and amortisation, only sustaining capex, so their financial statement breakeven point will be a bit higher.

I do agree though that bhp will be fine, although they may need to cut their dividend if prices don't turn up soon.

I think Peter is correct - a buyer with a 10% deposit (plus legals) that is forced to sell at a 10% discount to their purchase price will get basically wiped out. It is worse though because on a $1m property a 10% deposit of $100k would also require mortgage insurance, stamp duty etc, plus an agents fee on the forced sale. They would lose closer to $200k in that scenario.
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Matthew
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propertymogul
3 Dec 2015, 06:22 PM
I do agree though that bhp will be fine, although they may need to cut their dividend if prices don't turn up soon.

Then we agree, why keep arguing about it?

Quote:
 
I think Peter is correct - a buyer with a 10% deposit (plus legals) that is forced to sell at a 10% discount to their purchase price will get basically wiped out. It is worse though because on a $1m property a 10% deposit of $100k would also require mortgage insurance, stamp duty etc, plus an agents fee on the forced sale. They would lose closer to $200k in that scenario.
Why would they be forced to sell just because their property value drops 10%? If they are able to service their loan and want to reside in their $1m (now $900k) home that will over time rebound in value then exactly why would the bank force them out? As long as they make their repayments every week / fortnight / month in accordance with their loan contact then there is nothing forcing them out is there?

The somewhat ludicrous notion that a person would buy a $1m house on a 10% deposit aside their ability to service the debt comes from their income, not from the property value.
foxbat
3 Dec 2015, 06:13 PM
Bullshit Mathews.
Peter
in what way Drunkbat?
Edited by Matthew, 3 Dec 2015, 06:54 PM.
My only hope for my three boys is that they turn out nothing at all like Chris.
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Foxy
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Zero is coming...

Matthew
3 Dec 2015, 06:53 PM
Then we agree, why keep arguing about it?


Why would they be forced to sell just because their property value drops 10%? If they are able to service their loan and want to reside in their $1m (now $900k) home that will over time rebound in value then exactly why would the bank force them out? As long as they make their repayments every week / fortnight / month in accordance with their loan contact then there is nothing forcing them out is there?

The somewhat ludicrous notion that a person would buy a $1m house on a 10% deposit aside their ability to service the debt comes from their income, not from the property value.

in what way Drunkbat?
In what way Mathews??
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Trollie
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Right now would be a great time for the majors to swoop in and demand a deferral of royalties.
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Foxy
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Zero is coming...

Trollie
3 Dec 2015, 08:35 PM
Right now would be a great time for the majors to swoop in and demand a deferral of royalties.
Someone could look at the 50% to 90% losses in mining companies and calculate the loss of equity and dividend income, but hey houses are far more important, especially if they are empty and generating no income :D :D :D
http://www.asx.com.au/asx/research/company.do#!/AGO

A slow and steady decent has begun.

The Titanic has hit the iceberg.

Peter
oh,
Really...

I mean who would have thought??


http://www.theaustralian.com.au/business/property/housing-rents-record-slowest-annual-growth-on-record/story-fn9656lz-1227632679819
nooooooo,
It can't be true can it Mathews,???


https://www.mywealth.commbank.com.au/property/property-investors-stung-by-record-low-rental-growth-news20151203
Edited by Foxy, 3 Dec 2015, 09:54 PM.
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Matthew
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Trollie
3 Dec 2015, 08:35 PM
Right now would be a great time for the majors to swoop in and demand a deferral of royalties.
When prices are still above historical average in US$ and A$ terms how would they achieve that?
foxbat
3 Dec 2015, 09:24 PM
Someone could look at the 50% to 90% losses in mining companies and calculate the loss of equity and dividend income, but hey houses are far more important, especially if they are empty and generating no income :D :D :D
http://www.asx.com.au/asx/research/company.do#!/AGO

A slow and steady decent has begun.

The Titanic has hit the iceberg.

Peter
oh,
Really...

I mean who would have thought??


http://www.theaustralian.com.au/business/property/housing-rents-record-slowest-annual-growth-on-record/story-fn9656lz-1227632679819
nooooooo,
It can't be true can it Mathews,???


https://www.mywealth.commbank.com.au/property/property-investors-stung-by-record-low-rental-growth-news20151203
slow growth is still growth
Edited by Matthew, 3 Dec 2015, 11:30 PM.
My only hope for my three boys is that they turn out nothing at all like Chris.
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Foxy
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Zero is coming...

Matthew
3 Dec 2015, 11:29 PM
When prices are still above historical average in US$ and A$ terms how would they achieve that?

slow growth is still growth
hey Mathews what about the empty properties now at a record high getting no rent???
?
Still growth????
?
You must be a realestate agent??//
/
Peter
propertymogul
3 Dec 2015, 06:22 PM
A company with C1 costs below the spot rate but all in costs above the spot rate won't survive for too long. Very few companies would have C1 costs above the spot rate. The C1 cost is almost irrelevant to survival, as it excludes many costs.

The post you replied to said bhp has all in costs of around US$28, you then responded that their cash costs are $19 and that they will be fine. No big deal Matthew, but the post you responded to was more correct than yours. You will also find that the all in sustaining cost quoted does not include depreciation and amortisation, only sustaining capex, so their financial statement breakeven point will be a bit higher.

I do agree though that bhp will be fine, although they may need to cut their dividend if prices don't turn up soon.

I think Peter is correct - a buyer with a 10% deposit (plus legals) that is forced to sell at a 10% discount to their purchase price will get basically wiped out. It is worse though because on a $1m property a 10% deposit of $100k would also require mortgage insurance, stamp duty etc, plus an agents fee on the forced sale. They would lose closer to $200k in that scenario.
WHAT I AM SAYING IS THIS HAPPENED IN THE u.s. IT WAS CALLED SUBPRIME..
.
i THINK PEOPLE IN PORT HEDLAND AND KARRATHA HAVE ALREADY EXPERIENCED THIS..
.
I WOULD SAY PEOPLE IN PERTH ARE GETTING A TASTE OF IT NOW..
.
RECORD LOW INTEREST RATES ARE LIKE A AIRBAG FOR THE REALESTATE MARKET CRASH..
.
QUESTION I ASK IS WHO IN THEIR RIGHT MIND WOULD LEND MONEY AT 2% FOR 10 YEARS???

I SEE THIS AS A TEXTBOOK CRASH HAPPENING, IN SLOW MOTION..
.
EVERY MOVE JUST CONFIRMS AND COMPOUNDS THE OUTCOME..
.
gOOD LUCK PEOPLE..
.
pETER
?
Edited by Foxy, 4 Dec 2015, 11:08 AM.
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propertymogul
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Matthew
3 Dec 2015, 06:53 PM
Then we agree, why keep arguing about it?


Why would they be forced to sell just because their property value drops 10%? If they are able to service their loan and want to reside in their $1m (now $900k) home that will over time rebound in value then exactly why would the bank force them out? As long as they make their repayments every week / fortnight / month in accordance with their loan contact then there is nothing forcing them out is there?

The somewhat ludicrous notion that a person would buy a $1m house on a 10% deposit aside their ability to service the debt comes from their income, not from the property value.

in what way Drunkbat?
I never disagreed about bhp surviving, just your focus on the c1 costs as I've explained, as they are almost irrelevant to survival. You replied to a comment which used the all in cost of bhp of US$28, and you responded with their C1 costs of US$19 (I think it is actually lower than that) saying they will be fine. I was simply letting you know that the number you were using was not very relevant, whereas the number you responded to actually was quite relevant. No more needs to be said, I can see you are getting a little defensive.

I said if they were forced to sell they would be wiped out. There are many possible causes for being forced to sell (which will occur once the homeowner is substantially behind on their repayments), the number one on the list is losing a job, and not being able to find another one, or finding one on substantially less pay. Right up there as well is divorce.

Where did you get the idea that the property value could force them to sell?

Having said that forced sales will be higher at times that property values fall, compared to when they are rising, on average.
Edited by propertymogul, 4 Dec 2015, 01:27 PM.
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Foxy
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Zero is coming...

What about all that money that just disappeared, how many billion in capitalization has BHP, RIO and FMG and Atlas Iron lost??

That money belonged to some people, they are a whole lot poorer today??

Peter
Trollie
3 Dec 2015, 08:35 PM
Right now would be a great time for the majors to swoop in and demand a deferral of royalties.
Just tell the stumbles to shut the mines.
Peter
Edited by Foxy, 5 Dec 2015, 12:59 AM.
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