Demand for housing comes from people who need a house to live in.
Not in Vancouver. Or some parts of Sydney and Melbourne or London or ....
Houses are financial assets now. People who live in uncertain regulatory regimes use houses as regulatory hedges. Some use them to launder money, still others as regulatory arbitrage.
Still others use them as speculative vehicles, especially when there is a credit spread between borrowing and price growth. If house prices are rising @ 12% and interest rates are @ 5%, anyone with capital can carry the interest and flip the house. Why put a tenant in there and destroy liquidity?
Governments who control land release and immigration can create any level of demand for housing they want. It doesn't float out of the ether. The limiting factor is always the cost to service or carry the loan.
“Talk sense to a fool and he calls you foolish.” - Euripides
Not in Vancouver. Or some parts of Sydney and Melbourne or London or ....
Houses are financial assets now. People who live in uncertain regulatory regimes use houses as regulatory hedges. Some use them to launder money, still others as regulatory arbitrage.
Still others use them as speculative vehicles, especially when there is a credit spread between borrowing and price growth. If house prices are rising @ 12% and interest rates are @ 5%, anyone with capital can carry the interest and flip the house. Why put a tenant in there and destroy liquidity?
Governments who control land release and immigration can create any level of demand for housing they want. It doesn't float out of the ether. The limiting factor is always the cost to service or carry the loan.
Those who buy them as assets still need a tenant, so a household has a demand for a rental house or unit.
I doubt that many investors would buy a house and put it in mothballs. If they do that they won't get the benefit of writing the costs off their tax. It's the most efficient way of holding the asset.
I'm not saying that some markets don't have a speculative nature at times, but nationwide it isn't the major driving force.
Take risks - if you win you will become wealthy, if you lose you will become wise
IO now at $52 but Trollie doesn't seem to understand something. The CAPEX is over. Doesn't matter if IO goes to $152. Those jobs aren't coming back. BHPB have used a straight razor to eliminate as much labour involvement from the production process as technically feasible. I know 2 guys in Brookfield Place whose job it is to carve a slightly more efficient line for the robot trucks to follow day after day. That's it. No truck drivers or attendant crews. Once Ajilon complete the process of getting their hooks buried deep enough I'm pretty sure their jobs will be outsourced to somewhere cheaper. And the profits BHPB will make go to paying down $35Billion in debt or compensating shareholders in London and NY. Perth, and Australia as a whole, will not see a $5 note out of it.
IO now at $52 but Trollie doesn't seem to understand something. The CAPEX is over. Doesn't matter if IO goes to $152. Those jobs aren't coming back. BHPB have used a straight razor to eliminate as much labour involvement from the production process as technically feasible. I know 2 guys in Brookfield Place whose job it is to carve a slightly more efficient line for the robot trucks to follow day after day. That's it. No truck drivers or attendant crews. Once Ajilon complete the process of getting their hooks buried deep enough I'm pretty sure their jobs will be outsourced to somewhere cheaper. And the profits BHPB will make go to paying down $35Billion in debt or compensating shareholders in London and NY. Perth, and Australia as a whole, will not see a $5 note out of it.
High prices drove the capex boom, because they wanted to get in as quickly as possible before the prices faded. If prices rise again, you'll see more capex activity not less.
Your whole scare story about jobs and robots is the same shit from the 90's where everyone was told a computer would take their jobs. didn't happen then, won't happen now. It merely free's up labour for more profitable tasks.
High prices drove the capex boom, because they wanted to get in as quickly as possible before the prices faded. If prices rise again, you'll see more capex activity not less.
There may be some additional capex if prices rise again, but it won't be like last time. All the big majors in IO and O&G competing for the same small pool of workers at exactly the same time.
They got milked last time around and they know it. They won't allow it to happen again.
Quote:
Your whole scare story about jobs and robots is the same shit from the 90's where everyone was told a computer would take their jobs. didn't happen then, won't happen now. It merely free's up labour for more profitable tasks.
Part of the design brief for all of these projects was to make everything as automated as possible with minimum maintenance requirements. Driverless haul packs are just the most publicised.
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.
IO now at $52 but Trollie doesn't seem to understand something. The CAPEX is over. Doesn't matter if IO goes to $152. Those jobs aren't coming back. BHPB have used a straight razor to eliminate as much labour involvement from the production process as technically feasible. I know 2 guys in Brookfield Place whose job it is to carve a slightly more efficient line for the robot trucks to follow day after day. That's it. No truck drivers or attendant crews. Once Ajilon complete the process of getting their hooks buried deep enough I'm pretty sure their jobs will be outsourced to somewhere cheaper. And the profits BHPB will make go to paying down $35Billion in debt or compensating shareholders in London and NY. Perth, and Australia as a whole, will not see a $5 note out of it.
Actually the Government get more corporate taxes, state government gets more royaly payments. Due to the Australian dollar being down some 30-40% off its peak when prices were well over $100 a ton means more dollars flowing into this nation and government coffers then you may think. 40% increase in Iron Ore prices combined with a 30-40% fall in the Aussie dollar equals alot more tax and royalty income.
Plus if you were looking at the longer term and recently purchased mining stocks you will reap those dividends. I said a few months back I was moving into buy mining stocks and I continue to do so while they are so cheap as it will not last forever.
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