It's a bubble! Australian real estate up there with worst purchasing opportunities on the planet!
It's a bubble! Australian real estate up there with worst purchasing opportunities on the planet!; In Australia and Canada the housing bubbles are still there to pop
I was at a seminar in Frankfurt last week which was basically looking at ‘bubbles’ in play – How they got there and what they mean – how they play out. The one which got the lengthiest discussion (by a mile) was what they called the ‘English Speaking world’ (US, UK, Ireland, Canada, Australia and New Zealand) and its focus on real estate as a driver of aggregate demand, the tax breaks in play supporting it (and to some extent they have a lot of similarities across the ‘Anglosphere’ although each nation/state has its own peculiarities).
But the general idea (which was explored extensively) was that from here (2013) pumping up Real Estate in the US and UK (as well as Canada and Australia) is basically about buying time to get other economic drivers in play – it isn't a long term strategy. A couple of the speakers noted it was supporting the few at the expense of the many and would have its own social political implications on that basis, but there would be diminishing return on the strategy (for reasons similar to those put in the article – it is a noose around the economy, stifles innovation etc, embeds debt into the economy, socially regressive etc). People noted that the Irish property collapse has slowed, but the Irish government (and I also spent a night getting tanked in Dublin with a mate in this position) has just started changing laws to put pressure on home owners under water with their loans (a large chunk) and there is a massive property overhang on the market.
They seemed strongly of the view that in Australia and Canada the bubbles were still there to pop – when I pointed them in the direction of advertising, prices and commentary on RE readily available in Fairfax etc there were guffaws – but there was general expectation that governments would continue to try and pump them. In the end my views tended to drift towards Australia needs to have the bubble as the only way to get the economy on some sort of productive footing in the longer term was that there needed to be the bust. There is no political way around paying off a ransom to those embedded (through tax systems) into rent seeking positions. The slow melt theory I think requires sustained political discipline of the type we don’t have. Unless we get the downturn in real prices the economy become progressively more moribund.
I was actually with some fund managers who spent time considering how to most effectively short the market. That discussion is likely to be ongoing. But my takeaway (as someone who has thought of buying – but is basically of the view that Australian Real estate is right up there with the worst purchasing opportunities on the planet) was a few beers with a guy who handles staggering sums (across all asset classes) and is basically a walking encyclopaedia of the global financial system. He asked me about Australian real estate (it was the first time I had seen him in a couple of years). I pointed him in the direction of realestate.com.au and his eyebrows lifted as the prices came up, and they went higher when I showed him rents, higher again when I showed him prices of everyday things in Oz, and he lit up a smoke when I showed him the debt/disposable income chart from the last RBA chart pack. He asked if I had bought since coming back, and I told him no. He said to give him a call if ever I was thinking about it. But the question he posed which has stuck with me was ……’even if they get the uptick in house prices, where do they think they go from there? At a certain point it is all one way, and that certain point has to be getting closer every minute’.
We're not Ireland, UK or Netherlands nor even the USA (although that might be worth a separate topic).
The big difference is our truly amazing seemingly inexhaustible natural resource assets.
As long as we are prepared to sell those assets to fund ourselves why can’t current policy go on.
The RBA is hell bent on blowing up this housing bubble to fill in the apparent gap following mining investment decline.
As such it is reducing interest rates as much and as quickly as it can.
Given our willingness to sell assets to fund ourselves which gives us ‘street cred’ internationally it looks like Ben has just underwritten our external account.
So, without some major unexpected event, there will be plenty of funds available to fund us.
Further the result of Ben’s shenanigans this week the RBA is free to set sail towards zero with nominal interest rates.
What’s to stop them going there now?
Inflation doesn’t matter.
Everyone has a reason why there will be no inflation.
IMO they are completely wrong but even if there is inflation at some point the RBA will ‘look through’ it because they have no choice.
If inflation gets going cost of development and construction accelerates rapidly again driving house prices generally upwards in the absence of serious interest rate hikes.
Thanks for sharing that with us, sounds like you had a good time and very interesting, wish I was there.
Our is economy is going down hill fast, and the government thinks directing more money into housing and housing debt is some sort of solution, when all it really does is direct more money away from our already struggling economy. The result can only lead to one thing ,which is a further struggling economy, so a mindless strategy at best. Our high wages have helped bubble up housing prices over many years now, the problem is we are at a point where the economy here is dying and from here can only get worse. People have so much of their wages directed into housing ,wheather it be by home owners and also investors that there is simply nothing left for the economy.
Imagine for a moment that house prices were only half of what they were now, we would have so much more money to spend elswhere, money that would be directed into the economy and away from billion dollar bank profits , which the staff dont really see except for the elite at the top like gail kelly who earns 15 million per year . the money is being funneled into an elite few, many the four banks who rob everybody bling and the shareholders. So most of our wealth is directly at asmall few in reality and away from us and the economy. the government have there hand in the till in the form of stamp duty and when house prices go up the more they get , the more they get to waste of mindless shit like pink bats in peoples roof in the name of mindless green strategies and think some sort of economic boost, again given to the majority who are allready fortunate enough to own there home while evrybody else got nothing.
our high wages have made us now so uncompetative with the rest of the world we now dont stand a chance, most of our jobs have gone overseas, the reason is our high wages. We have the highest minimum wage in the world at over $16 an hour, in the states its 7.25 an hour ,so less than half ours. If you think the US is struggling to compete on their wages what possible chance do we stand here, no chance at all is the answer and the reason our economy is going down at a rapid rate. the high wages have helped to bubble up our house prices. shadow can talk all he wants about wages keeping up with house prices, which is not only the biggest croc of shit but the reason our house prices will collapse. becuase to become competative in this modern world the stark and unfortunate reality is that our wages will simply have to be lowered to be more in line with the rest of the world or you simply cannot compete, game over. so even the US with a minimum wage less than half ours is still not competative. so to be competative ,realistically our wages need to be lower than theirs . so even if our wages were to halve now ,we still will not be able to compete. This is the reality we now face in the modern world, a case of adapt or perish.
if you look in the link below and scroll down the page ,you will see the minimum wage of many different countries , ours is so high by comparison it is not funny and the very reason we dont stand a chance in the modern world. So if you think the US is doing it tough we will end up doing it tougher. you clowns think what bs I am going on about but what I have said is the stark reality we now face. we cant produce anything anymore , our wages are simply too high compared to the rest of the world, a prime example is our farmers , they are plowing their crop into the ground because they cant compete, they have to pay some moron a shitload of money just to pluck oranges they they become expensive to the point we now import friut from overseas. so overseas, they can farm it, maintain it it, pay somebody else to pluck it, pack it, then pay a shipping costs , quarantiene costs, trucking costs andfuel costs, send it half way round the fucking worls and still have a much cheaper product then us, ultimately killing our industry and jobs.
I could go on forever and I have explained evrything in great detail to many of you before about these things , so will just direct you to the wages link I mentioned just before, link below, scroll down ,look at the wages and see why we dont have a chance. house prices are a joke ,along with our wages by comparison by world standards and simply cannot be sustained, some will rise through cheap interest rates and the jobs we still have ,but not for much longer. the bigger they are the harder they fall, and the same goes for our wages . our record low interest rates cant go much lower now , so the effect they have is fast running out too,so prepare for a stark reality change over the coming years.
It's impossible to get affordable housing, or a transition to a different economy, without a bust. FHBs aren't buying new builds, and investors will dry up eventually.
Fuck the slow melters, I reckon they're just middle aged people with kids around 10, expecting that their kids will buy at the trough.
stinkbug omosessuale Frank Castle is a liar and a criminal. He will often deliberately take people out of context and use straw man arguments. Frank finally and unintentionally gives it up and admits he got where he is, primarily via dumb luck! See here Property will be 50-70% off by 2016.
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