No they're not. Despite the big talk about buying low and selling high, very few people have either the guts or the financial horsepower to make it work.
You then say a large number are still employed. Perhaps they are, but will they be employed in future, many who were, are now not employed. Unemployment there is growing, and there is very little to support it from here. How do you top the biggest mining boom in history ??? The biggest jobs and wages growth ? The lowest interest rates ever ? All I am seeing is one very big ,very long windown , with very little to support it moving forward.
You then tell me in ten years time it will cost 50 % more in ten years . Could they afford 50 % more in ten years time ? With our wages so out touch with reality , will they be able to afford 50 % less in ten years time ? Wages must fall here not grow. If they dont fall then our jobs will just keep falling, its pretty much that simple.
We dont know what interest rates sill be in ten years time. They could be 6% in two years time, they could be ten. What we do know is that they cannot go much lower so there is practiclly zero chance of any relief from there. Only up side. People are paying interest only loans in record numbers, which includes owner occupiers. The reason is, that is all most can afford after taking on so much debt. Will they have a job in five or ten years ? Will it be full or part time ? How will all these pdople go when rates rise when they csn barely afford repayments while rates are at sll time lows. No problems here right.
After all that has supported this market for quite some time now, prices have not risen much at all over this time Everything that has supported this market, the biggest mining boom in history is now over. So too is the construction boom, so jobs are dissapearing there too now. There is nothing to replace all these jobs.
Just one big long windown is what the Perth market is facing, with little if ANYTHING to support it, now or forever. Future economic conditions are looking so dire both here and all around the world, that Perth may have already seen the highest prices you will ever see in your life. Sort of like those mining towns port hedland or karratha. When do you think these house prices will exceed their previous highs ? Do you expect to see this in your lifetime ???
The bigger picture for Perth is not that much different . All that was supporting it, is now disspearing. These little towns show us the macro of the bigger picture, an exaggerated example. Shows how the economy goes great when its all on the up, but how it will go when all that dissapears. Things elsewhere are just happening much more slowly. The effects take longer to filter through, but the signs are all there.
Good luck with your purchase chopper. Buy five, everybody else is.
I'll answer your question with more questions.
Before the mining boom started, before the Massive increase in capital expenditure in WA, Before the iron ore price Boomed and it was still around 50-60 USD a tonne. Interest rates were 7% or above, and somehow, the jobless people of perth, without a mining investment, without an ore price boom , paid for their own median to hit over 500,000.
All this happened before any jobs, before any investment, before any extra money went into WA, and while interest rates were going up to 7% - there was not a record forclosure%, no-one called it a bubble How did they afford it then?
We are now out the other end - The iron ore price is 50-60USD a tonne still, WA is now producing physically - a lot more than it did in 2007, for a lot less cost, and there are more jobs now than there were in 2007. Despite all this, mining GPD, has increased from 20 Billion in 2007 ( After Perth's price boom ) up to 38 Billion this year... must double every 10 years hey So if no-one now has a job, and there is twice the money coming in, where is it going?
Tell me why with interest rates at under 4%now , more jobs than in 2007, you seem to be worried that we lost the extra jobs that fueled the CAPEX, which had nothing to do with Perth Prices going up in the first place.
Perth prices went up in the first place, because the entire eastern seaboard had been going up for years, and Perth was left behind them. In 2003 Perth median was $200,000, Canberra, melbourne $300, sydney $500. By 2007 Perth was $480,000, Sydney still $500 and the other states approaching $400 - without any mining influence Capex had increased by 50% over 5 years, Iron ore price didn't climb until 2009/10, an peak in 2011. Now Perth is hovering at $500, Canberra $550, Melbourne $600, Sydney $780. Mining capex is at its peak, and has increased by 1000% since 2003, or by 700% since Perth house prices reached plateu And mining income has doubled since perth prices hit the top.
The reason is simply that everyone in Australia wants to own their own home, and clearly still does want to if they can afford it. They bought in perth cause it was half the price of the eastern states.... simple.
I can tell you now, if rates hit 20% in 10 years, I cannot afford to own a house, so what, it won't stop me from buying a house now, and trying to pay it off at light speed while the going is good, so when interest rates hit 20% I couldn't be less interested.
Wages should at least keep up with CPI at a minimum
If you have lived in Perth, it has a much to do with Port Headland in 2007, as Sydney had to do with realestate prices in antarctica the same year.
Before the mining boom started, before the Massive increase in capital expenditure in WA, Before the iron ore price Boomed and it was still around 50-60 USD a tonne. Interest rates were 7% or above, and somehow, the jobless people of perth, without a mining investment, without an ore price boom , paid for their own median to hit over 500,000.
All this happened before any jobs, before any investment, before any extra money went into WA, and while interest rates were going up to 7% - there was not a record forclosure%, no-one called it a bubble How did they afford it then?
We are now out the other end - The iron ore price is 50-60USD a tonne still, WA is now producing physically - a lot more than it did in 2007, for a lot less cost, and there are more jobs now than there were in 2007. Despite all this, mining GPD, has increased from 20 Billion in 2007 ( After Perth's price boom ) up to 38 Billion this year... must double every 10 years hey So if no-one now has a job, and there is twice the money coming in, where is it going?
Tell me why with interest rates at under 4%now , more jobs than in 2007, you seem to be worried that we lost the extra jobs that fueled the CAPEX, which had nothing to do with Perth Prices going up in the first place.
Perth prices went up in the first place, because the entire eastern seaboard had been going up for years, and Perth was left behind them. In 2003 Perth median was $200,000, Canberra, melbourne $300, sydney $500. By 2007 Perth was $480,000, Sydney still $500 and the other states approaching $400 - without any mining influence Capex had increased by 50% over 5 years, Iron ore price didn't climb until 2009/10, an peak in 2011. Now Perth is hovering at $500, Canberra $550, Melbourne $600, Sydney $780. Mining capex is at its peak, and has increased by 1000% since 2003, or by 700% since Perth house prices reached plateu And mining income has doubled since perth prices hit the top.
The reason is simply that everyone in Australia wants to own their own home, and clearly still does want to if they can afford it. They bought in perth cause it was half the price of the eastern states.... simple.
I can tell you now, if rates hit 20% in 10 years, I cannot afford to own a house, so what, it won't stop me from buying a house now, and trying to pay it off at light speed while the going is good, so when interest rates hit 20% I couldn't be less interested.
Wages should at least keep up with CPI at a minimum
If you have lived in Perth, it has a much to do with Port Headland in 2007, as Sydney had to do with realestate prices in antarctica the same year.
Click on 20 years on the below graph and look at iron ore price history.
Does it look like a recovery or just a minor little up before the next leg down. Just as we have been seeing for years now.
It was the zillions of ghost cities being built in china all of a sudden that sent the price throught the roof. They dont need anymore, they have about enough to last the next 30 years. After years or decades of huge and non stop growth, the chinese economy is decending from all of this.
I expect iron ore price will continue on the trend they have been on for years now.
At least you made an effort here chopper, which is much better than most, in that reguard, well done.
You seem to be out on a few things reguarding the mining boom and when it began. So we will go over a little bit of history just to get things clear.
BEFORE the mining boom, iron ore price has sat at around 10-12 dollars a tonne for a decade or more. The mining boom began around 2001-2002. Prices started taking off around 2003. By January 2005, prices were more than double that of around twelve months prior, and almost triple that since 2001.
The minimg boom did not begin when prices were 50-60 a tonne. Perth jobs and wages were rising as a result, Perth house prices doubled from 2001-2005 as a result. See below. Click on the pdf file on Perth house price history.
So the mining boom and price rises began long before 2007 or so or when iron ore was 50 or 60 a tonne.
Wages were growing fast then as a result. Now they are collapsing.
Look at the below graph and click on max. You will see the clear rises in wages and then the clear decline. You ask me what supported price back then. Look below. Can you see it ? This is not just for Perth but for all states.
Now back to the iron ore price. You say the decline in iron ore prices are behind us, and are now back to the price before the boom began. We can see above that this is not quite true. Prices would need to return to around $12 a tonne to back where they were before the mining boom began.
So current prices are around 50-60 tonne. Merely a minor rise from a recent low. Just as we have seen as the price has dropped from near 200 a tonne. They bounced up off 100 a tonne for a while before the next leg down. This is most likely the same scenario, merely a minor rise before the next leg down. How many more ghost cities do china need ? That is the question here.
As a result, iron ore will most likely just keep dropping as is has been doing for a few years now.
At least you made an effort here chopper, which is much better than most, in that reguard, well done.
You seem to be out on a few things reguarding the mining boom and when it began. So we will go over a little bit of history just to get things clear.
BEFORE the mining boom, iron ore price has sat at around 10-12 dollars a tonne for a decade or more. The mining boom began around 2001-2002. Prices started taking off around 2003. By January 2005, prices were more than double that of around twelve months prior, and almost triple that since 2001.
The minimg boom did not begin when prices were 50-60 a tonne. Perth jobs and wages were rising as a result, Perth house prices doubled from 2001-2005 as a result. See below. Click on the pdf file on Perth house price history.
So the mining boom and price rises began long before 2007 or so or when iron ore was 50 or 60 a tonne.
Wages were growing fast then as a result. Now they are collapsing.
Look at the below graph and click on max. You will see the clear rises in wages and then the clear decline. You ask me what supported price back then. Look below. Can you see it ? This is not just for Perth but for all states.
Now back to the iron ore price. You say the decline in iron ore prices are behind us, and are now back to the price before the boom began. We can see above that this is not quite true. Prices would need to return to around $12 a tonne to back where they were before the mining boom began.
So current prices are around 50-60 tonne. Merely a minor rise from a recent low. Just as we have seen as the price has dropped from near 200 a tonne. They bounced up off 100 a tonne for a while before the next leg down. This is most likely the same scenario, merely a minor rise before the next leg down. How many more ghost cities do china need ? That is the question here.
As a result, iron ore will most likely just keep dropping as is has been doing for a few years now.
very informative and excellent analysis ...thank u
At least you made an effort here chopper, which is much better than most, in that reguard, well done.
You seem to be out on a few things reguarding the mining boom and when it began. So we will go over a little bit of history just to get things clear.
BEFORE the mining boom, iron ore price has sat at around 10-12 dollars a tonne for a decade or more. The mining boom began around 2001-2002. Prices started taking off around 2003. By January 2005, prices were more than double that of around twelve months prior, and almost triple that since 2001.
The minimg boom did not begin when prices were 50-60 a tonne. Perth jobs and wages were rising as a result, Perth house prices doubled from 2001-2005 as a result. See below. Click on the pdf file on Perth house price history.
So the mining boom and price rises began long before 2007 or so or when iron ore was 50 or 60 a tonne.
Wages were growing fast then as a result. Now they are collapsing.
Look at the below graph and click on max. You will see the clear rises in wages and then the clear decline. You ask me what supported price back then. Look below. Can you see it ? This is not just for Perth but for all states.
Now back to the iron ore price. You say the decline in iron ore prices are behind us, and are now back to the price before the boom began. We can see above that this is not quite true. Prices would need to return to around $12 a tonne to back where they were before the mining boom began.
So current prices are around 50-60 tonne. Merely a minor rise from a recent low. Just as we have seen as the price has dropped from near 200 a tonne. They bounced up off 100 a tonne for a while before the next leg down. This is most likely the same scenario, merely a minor rise before the next leg down. How many more ghost cities do china need ? That is the question here.
As a result, iron ore will most likely just keep dropping as is has been doing for a few years now.
Yes. Part of the problem is that the mining boom and prices were used as an explanation of great fortune and future prosperity. As soon as that become less certain, the media and the Joe Hockeys moved on to other explanations to create a sense of safety and security, even as far as to suggest that mining is nothing more than a side show. The suburbanites should be schooled in complexity and insecurity. In the long run, they would be far better off instead of being smothered in simplistic cliches and hope.
Yes. Part of the problem is that the mining boom and prices were used as an explanation of great fortune and future prosperity. As soon as that become less certain, the media and the Joe Hockeys moved on to other explanations to create a sense of safety and security, even as far as to suggest that mining is nothing more than a side show. The suburbanites should be schooled in complexity and insecurity. In the long run, they would be far better off instead of being smothered in simplistic cliches and hope.
The sheer denial of the mining boom always amazes me. What are these people on?
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
The mining boom in WA was negative for house prices in Sydney and Melbourne, where the angst is.
How was the WA mining boom negative for house prices Sydney and Melbourne? Did it negatively impact sentiment somehow? Have you quantified this in any way or was it something you read in the newspaper?
How was the WA mining boom negative for house prices Sydney and Melbourne? Did it negatively impact sentiment somehow? Have you quantified this in any way or was it something you read in the newspaper?
Sigh.......
Take risks - if you win you will become wealthy, if you lose you will become wise
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