La La Land. According to answers.com, La La Land is "a place renowned for its frivolous activity," and "a state of mind characterised by unrealistic expectations and a lack of seriousness." Welcome, then, to Australian financial markets.
The real economy is not La La Land, mind you. By that mean we mean extractive industries that dig and drill the earth for real assets. That is not frivolous. It's pretty serious. But the stock and housing markets...
The stock market has opened lower today. Wall Street was only down mildly on Friday. But Aussie stocks are on tenterhooks this morning. The RBA meets tomorrow to decide whether to increase interest rates a third time in a row. The economist money is on a cash rate hike of 25 basis points. That would bring short-term rates to 4%.
Meanwhile, conflicting data is coming out of the housing market. Imagine that. Data from the Australian Finance Group shows that borrowing fell to a five-year low in December. AFG reported a 19% fall in mortgage activity. It was the lowest figure in any one month since 2005. And according to AFG's data, first home buyers as a percentage of new mortgages fell by half from the same time last year. They were just 13% of the market in the AFG survey.
Part of the falling mortgage demand is explained by rising rates. Part is explained by the expiration of the first home buyer's grant. And part is the expectation of rising rates. All three conspired for a huge surge in prices in the December quarter which ran out of steam in the last month.
The result was that median December prices were quite high. The Real Estate Institute of Victoria reports that Victoria's quarterly median price was $540,500. It was just over $405,000 in the March quarter. The Institute said the difference is explained by more sales to first home buyers in March (at lower prices) compared to more sales to more established buyers at higher prices in December.
That's the property ladder, isn't it? Investors sell starter homes to the newbies and turn around move on up. The question now is, with credit getting tighter and all that first home buyer demand having been brought forward, where is the new demand going to come from? Oh that's right...immigration!
We have our doubts about how long all this can last, even with government support. But no point in beating a dead drum here.
We're still about six weeks away from last year's March 9th bear market lows. The big issue for investors at the moment is whether this is a buyable correction or a path to new lows. The bulls are hoping this dip below 5,000 on the All Ordinaries and the ASX/200 is just a pause on the way to bigger and bullier things to come.
The bears, your editor included, think the March lows will be retested and taken out. We just don't know when. For the record, we did say on January 15th we thought it was the best time in a long time to reduce your allocation to stocks and liquidate some positions. The All Ords is down 6.75% since that.
Our old friend Marc Faber thinks there is more pain ahead for stocks. He told Bloomberg that he thinks the S&P 500 could drop 20% from its 15-month highs. He says profit and growth expectations are overdone in the U.S. and stocks are expensive.
The picture here in Australia is a bit murkier. Stocks are definitely expensive. But the press is again referring to Australia as a "miracle economy." And with inflation up and GDP positive, the mood is pretty good. Whether that will translate into higher stock prices is another matter.
One way to guarantee that stock prices go higher - and that profits at financial firms are high - is to increase the mandatory contribution to super annuation. That's just what the government should do, says the Investment and Financial Services Association!
IFSA says compulsory super contributions should be increased from nine percent of your earnings to twelve percent. This will prevent a "disaster for retirement savings" says IFSA director John Brogden. He says Australians face a collective $700 billion "shortfall" between what they'll have to retire and what they need.
Last we checked, retirement was something you did privately, not collectively. Thus, whether you have a shortfall or not depends on your own wealth game plan. Nonetheless, you could see this coming a mile away.
It's being done for your own good, of course. But day by day and step by step, your money is less your own and more the government's and the financial industry's. No doubt some of this new super money will buy Aussie stocks. But you can bet some of it's going to buy government bonds too, to fund Australia's deficits. Yep, definitely time for a survival strategy.
Dan Denning
for The Daily Reckoning Australia
P.S. to get The Daily Reckoning direct to your inbox sign up to our free e-mail newsletter or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.
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About the Author
Dan Denning is the author of 2005's best-selling The Bull Hunter (John Wiley & Sons). He began his financial publishing career in 1997 and has covered financial markets form Baltimore, Paris, London and, beginning in 2005 Melbourne. He’s the editor of The Daily Reckoning Australia and the Publisher of Port Phillip Publishing.
Comment by Roy on 1 February 2010:
You could this this comming a mile away (unless you are suufering from some mental illness from spending to much time at the property alter). FHB's have been pulled forward the extra demand supported prices but who are the buyers now - Oh I forgot rich migrants (Thats actually an oxymoron if you consider most migrants arrive with less than 20K then spend there first decade plus in lower than average paying jobs). Of course the BULLS say well no crash in 2009 so it will never happen, they fail to see how bringing this demand forward now just sets the scene for further falling demand.
I suppose that is just the nature of a speculative boom, people are blinded by their own beliefs and brain washed enough to swallow the vested interest media hype (I really do have an issue with the media using FEAR to get the gullable in our society to take out massive loans and the Govt is no better holding out the FHB BRIBE).
From what I read most property speculators think well its been successful so far why would the future be any different (seriously flawed investment logic). It will be the lenders who stop the insanity whether its a slow lowering of LVRs (already happening)or an aggressive pull back from the Aussie property market as demand falls. We might even end up where we were in the 80s when I was a loan officer in a bank, house valuations for loan purposes for investors were based on actual income stream generated from rent, back then max loan was around equal to 10 years rental income, the investor had to stump up the rest. I dont dismiss these rigid rules returning to the bank sector at some stage in the future as this sector has always been part of the greater economic cycle, boom / bust.
As they have so far the Govt will do just about anything from reality returning to this market, so who knows what the future holds for the highly leveraged speculator or FHB, I'm just glad my children and I are not one of them.
Comment by Fiscal Phil on 1 February 2010:
I had to laugh when I saw the "Investors Club" Rally outside the RBA.
When this bunch of rabid real estate spruikers starts whingeing about interest rates you know they are scared.
As someone who "almost" fell for the tripe this mob preach it's heart warming to see them scared.
In fact one of their big "facts" is that the "smart" real estate investor does not worry about interest rates because they can just charge more rent OR (and this is the goody) they can just borrow some more money against the ever increasing capital value of their housing portfolio to pay the loans.
This bunch of debt servicers are feeling the wheels of their investment vehicle wobble very badly, particularly if the rising interest rates keep the first home sheep and new (more cautious) real estate investors out of the market.
They now realise the secret of this type of "investing" may now not be who has the most properties and debt, but who's hold the least when the music stops. And it will stop.
Comment by Biker Pete on 1 February 2010:
Australian Bureau of Statistics has some interesting stats, released today.
"The Australian house price index rose 5.2 per cent in the December quarter, the Australian Bureau of Statistics said today. This compares with an upwardly revised 4.4 per cent in the September quarter. In the year to December, the house price index rose 13.6 per cent."
But it's OK, Roy and Phil. Your investments are all doing better than that... and paying you a fortnightly dividend to cover the interest, providing an ongoing income as well. Right?
And of course, rents will fall "if the rising interest rates keep the first home sheep and new (more cautious) real estate investors out of the market... " Right?
Roy" "..."...unless you are suufering from some mental illness..."
Yep, if you buy the line that house prices are falling... and rents will fall, that could be the problem. Pillman can probably help you there... .
Comment by Stillgotshoeson on 1 February 2010:
ASX and DOW will both touch new lows. ASX 2400 and DOW sub 5000 is my reckoning. House prices 30% to 50% drop depending on location.. some areas of course wull be hit harder than others.
The 64 million dollar question is when..
Comment by Fiscal Phil on 1 February 2010:
You damn straight my investments are doing better than that.
This financial year I've gone ballistic on cheap (and I mean cheap) mining stocks that kept going up until I just couldn't take it anymore. I got out in late sept early Oct and I'm just sitting back for them to poo themselves as well.
I made 300% returns on an amount of money I could access at any time and cash in the shares as well and if you picked the right ones in jan Feb March 09(basically the cashed up juniors and mid caps who where exporting product)you got a dividend!!!!!! whoa Nelly. My only problem this year is I've got a tax bill on INCOME.
This may not apply to you Pete, but plenty of your ilk are relying on negative gearing to make their investments even go close to making sense.
Now compared to the millions (all borrowed) I would have had to have sunk into the property market to get the same results, IF i could have sold the houses. I'll take my way anyday.
And as someone who's been leveraged in the past (and done ok) the really big difference is the worry factor. No sleepless nights when you carry your own bag and don't have to rely on an entire nation of financially ignorant buffoons to keep the massive Ponzi scheme going.
Spruik away Pete, we've got you covered in the investment wisdom stakes and soon we'll have your money.
Comment by Snappahead on 1 February 2010:
Firstly a bit of disclosure - I want home prices to drop so I can buy a decent place for my wife and myself. I've got a six figure deposit and earn ~150K, so I could "afford" to stick my neck out and jump in.
I spent 7 years out of the country and returned in 2007. Everything is waaaay more expensive. I was living in Tokyo, supposedly one of the most expensive cities in the world, and naively hadn't really been keeping in touch with things back here. Sure, I knew the economy was going very well, but failed to pick up on the surge in property prices.
I had a house in Japan - bought for about 300K, sold for about 240K...awesome investment...not. I've been bitten by falling property prices, just to give some more perspective on where I'm coming from. So, here's me in 2007, thinking that people are dreaming here - no way can these high prices persist.
Coming back was a rude shock. I was thinking I'd be able to get a decent place for around 350K - silly me. Not only that, food had become exorbitant - just about everything had gone up way beyond what I'd expected. It's much cheaper to live in Japan than here, but quality of life is (borderline) better in Australia, but that's being eroded away.
I kind of feel for a lot of people the steady rise in prices hasn't been as noticeable until a couple of years back, as they had been here the whole time. It's a bit like when you see a kid you haven't seen for a few years and notice how big they got "all of a sudden", while their parents don't see it as much as they are with them every day.
Half of me regrets not buying when I came back in 2007, as prices have gone up about 20% since then, but that other half of me is constantly stunned at the levels prices are reaching and is glad I don't have my head in a noose. I can rent for much less than it would cost my to buy somewhere that I would want to live. Works for the landlord, works for me. Sure I would rather own my own house, but I just can't see the value in the market at the moment. Listening to people talk about property prices (those who own property that is) is kind of like listening to drug addicts talk about getting high. They all feel pretty good that the value of their place has increased.
My selfishness in wanting cheaper property prices aside, I would like to think I would feel this way even if I was an owner, but I am not so sure. It's amazing how vested interests can make you change your mind one way or the other. A bit like when a footy player on your team gets reported - you can spend a lot of time justifying why they shouldn't be or why the penalty should be slight as it "wasn't that bad", but if your a supporter of the opposing team then you'd be screaming for blood.
There are ALOT of vested interests in Australia for high property prices. I live in the ACT, and the local government here relies on stamp duty and land taxes to survive. They get to arbitrarily increase the land value (through and independent consultant of course) whenever they need to raise more money. As they're as incompetent as the rest of our politicians and have a MASSIVE bureaucracy to pay for, 25% increases in land values in 12 months isn't uncommon. That's just one example. People that "invest" in property to take advantage of negative gearing are also happy to see the boom. Would be interesting to see how many investment properties our politicians own too...
I don't blame anybody for trying to make a buck and exploiting the rules to their full advantage. Seems there a few who like to comment on this message board that have done very nicely thank you very much from the framework we have in place to lock up capital in houses. The fact that I am not in the market myself is my own fault - not someone that owns 10 houses and "exploits" renters. I do it out of choice, and I do it as I think houses are absurdly overpriced in Australia. I could be very wrong - but it sure is an interesting time, and its very interesting to listen to people justify their opinions dependant on which side of the fence they are on.
It was funny when we had the IMF stating that "the high rates of growth experience over the past years are set to continue for the foreseeable future" a couple of months before the GFC started, then seeing Chairman Rudd and Secratary Swann quote the IMF in saying their stimulus spending was the best method to prop up the economy. Just solidified to me how little anybody really understands what is going on...
Bring on the bust
Comment by Biker Pete on 1 February 2010:
Fibbin' Phil (Prozak?!): "I made 300% returns on an amount of money I could access at any time.." Of course you did, son. And you're obsessed with talking property down, right? Your reference to excreta is appropriate!
As a 457 Visa Sponsor, I'm interested in your statement: "...most migrants arrive with less than 20K...", 'Roy'. Where _did_ you locate that statistic?
Comment by Roy on 1 February 2010:
Drug free at 78 years young.
What is this fantastic rental return compared to current value 3-4% ?.
How far do yields have to be squeezed before you see its speculation on capital growth and the benefits sucked out of the tax base through negative gearing that make your position profitable. I learnt young investing is about yield, speculation is about price. Nothing wrong with speculation as long as you know that is what you are doing. How many speculators here call themselves investors. How many people even know the difference, do you?.
Of course your next post will tell us what? your yeild is 8-9 or even 10% based on current rental return and current market price - dream on there young fella.
Comment by Chunkton on 1 February 2010:
I have some condos I renovated in Thailand, just sold off one at a 40% return even in this market, have rented out two more long term at 10% return and have another finishing now that will also flog this month. These were bought for cash, so no finance, the tenant pays any taxes and maintenance fees and there is no yearly land tax or rates, so 10% means that. Property is OK depending on what and where, albeit other risks can exist OS.
Also expecting a serious crash this year with stocks, commodities and real estate, partly why have been converting some assets to cash. May buy some real estate in OZ again only after the shake out and at the right price, plus stocks at the bottom. Time will tell.
Comment by Biker Pete on 1 February 2010:
Answer the question, Roy.
Let's evaluate your claims through your answer to this simple question:
"...most migrants arrive with less than 20K...".
Where _did_ you locate that statistic? A URL will do... .
Comment by Dan on 1 February 2010:
I would have thought most migrants do not come in via refugee visas but via business/work visas. Either way, they tend not to buy houses immediately until their visa status firms up, by which time they are usually fairly cashed up. But all the work/business migrants I've met have usually had a good eye for property.
With regard to Dan's article, many of the things that made me think a housing market was in for a correction in Australia didn't actually eventuate last year. So, I waited. But now with interest rates creeping up, the FHOG coming to a close (really this time?) ... maybe souring employment figures ... maybe a stock market correction ... is the real estate fruit finally ripe? Will we be hearing the satisfying thud on the grass this year, telling us it's time to go out and grab some? The thing about real estate (IMO) is that if it falls away, you'll hear about it months after it has already happened.
I don't know enough about the resource sector, but because of all the bail-outs and stimuli world-wide it has done well in the face of a credit contraction - will this continue? Haven't governments reached their credit limits? China was apparently facing high inflation and so froze new loans from major banks in January. Hmm.
Had to laugh when I remembered the old elephant's backside analogy. Mining and resources are like a huge elephant turd - very serious stuff (nay, a bonanza!) if you're a fly, but a potential problem if the elephant is busy or constipated - boom and bust. Whereas real estate is simply making a buck out of various parts of the elephant's backside - how the flies will land is an ever changing problem .. or will they all leave and find another backside somewhere? Currently the flies are multiplying in numbers, and we sit upon, shall we say, a very productive elephant.
And to Dan's last paragraph (worth reading the article just for that!):
I just wonder if the mining boom will ever end? What do you think?
And for survival strategies? Well mine is farm, farm-food, off-the-grid and family. That's for a start anyway.
Comment by Fiscal Phil on 1 February 2010:
Pete,
I'm not sure I qualify to be called "son" anymore.+
You really should have taken notice of small and mid cap miners in 09, but then maybe you're not in WA and find the whole "mining boom thingy" a bit daunting.
Unfortunately for you it's at an end, but no matter it will be back, one day. Just keep your eyes open next time.
In the mean time I'm resting comfortably and have no fear and no motivation to talk the property scam..eerr market down.
It won't need any help from me.
Comment by DavidH on 1 February 2010:
Leave it alone and go on your bike elsewhere biker pete. Its clear to all that read this that your either in the "industry" or your stupid. Only a fool would suggest that property goes up forever, and lets face it, its had a bloody good run. But to suggest that things are looking up just isnt washing with anyone that matters anymore. Times is a changing and your type is very boring...
Comment by DavidH on 1 February 2010:
"Data from the Australian Finance Group shows that borrowing fell to a five-year low in December. AFG reported a 19% fall in mortgage activity. It was the lowest figure in any one month since 2005."
Awwh Pete, does this mean you'll be leaving us soon...
Comment by Biker Pete on 1 February 2010:
eerr (?).... you mean 'erm' right, Prozak?!~
Comment by Biker Pete on 2 February 2010:
eerr.... 'erm' ? Old habits a little hard to break, Prozak?!~
Comment by Biker Pete on 2 February 2010:
Now, what was it Woody Allen said about stats, 'Roy'?
"94.5% of stats are made up." Make a lot of stuff up, do you 'Roy'?
Comment by Bertie on 2 February 2010:
yes, I think there is a zero or something missing of that migrant 'statistic'
Comment by Biker Pete on 2 February 2010:
Have to agree, Bertie. The people we know are in the professions and highly-skilled trades. They're bringing in many hundreds of thousands of dollars...
Comment by Ned S on 2 February 2010:
The IFSA is the superannuation industy's peak lobby group.
Comment by Greg Atkinson on 2 February 2010:
For what it is worth I think the question we should be asking about house prices is how long can they keep rising? Can they really keep heading up without a pull-back sometime and can we be sure that an ever increasing population will keep driving them upwards? http://www.shareswatch.com.au/blog/economy/can-australian-home-prices-keep-rising/
As for stocks, well all I can say is every time the stock market starts heading down the bears come out with the message of fear about a new market bottom. The chances are we have seen the stock market low of this nasty economic cycle and I do not expect the market to get down near the lows of 2009 for many years. Remember we saw an over 50% drop to get to the lows of March, that is quite a hit!
Oh and by the way, if you measure how the stock market is going by looking at an "Index" just remember that the dud stocks are taken out of the ASX 200 etc from time to time, so this actually makes it difficult to get down to the old "Index" lows again.
Have a nice day all
Comment by BB on 2 February 2010:
Sounds like 'Biker' Pete's predictably bias analysis and comment on property prices only reflects the status of acting like the 'town bike' for legions of real estate spruikers. And by the way if he were of the genuine 'biker'clan wouldn't he have made his money on a far more reputable business strategy like the manufacture and sale of amphetamines - not the murky world of flogging property?
Comment by Biker Pete on 2 February 2010:
DavidH, 2/02/'10: "...your stupid." Pretty much sums you up, Steven.
Doubt you'll know why, though... .
Latest news on WA rents, from APM: "Average Perth rents could hit $400, an increase of 11 per cent, and in line with average growth of 12.4 per cent experienced since 2003... "
How long did you have to wait for your new tag to be approved, Steven?
Look mate, you don't like my stuff, don't read it. (Now where have I read _that_ before, Steven?!
Comment by Matto on 2 February 2010:
im in two minds about property and see two conflicitng scenarios.
some common facts i think we can all generally agree on are that property prices have been in am (unprecedented) prolonged boom fed by easy credit, continued economic expansion and supply shortages due to red-tape. Rental yields have been squeezsed over time but generally rents have continued to rise as well so people have accepted a lower yield up-front but have found their yields increased to a more nuetral positon within a couple of years.
thats generally been the name of the game for the last ten or so years.
The scenarios i see from here revolve around whether or not the factors that got us to this point can continue
scenario 1. prices are exorbitant and arent readily justifiable. a potentail liquidity crisis overseas and a further global economic collapse could easily tip us over the edge and precipitate a collapse in prices. this would be generated by high unemployment and an inability to borrow / tighter lending requirments.
scenario 2. that factors that got us here havent really been addresed. supply problems have only gotten worse, the rest of the world is maintaning a low interest rate environment and are prining money like its going out of style. australia is leading the way in raising rates and no doubt is a target for overseas cash. our banks are seen as being rock solid and apparently have no problem raising funds overseas. the cheap cash being printed overseas will be looking for a home sooner or later(ive been wondering if the RBA ha been quick to raise rates so as to attract international funds to help finance the phase of mining expansion we're entering).
which one is it going to be? i really dont know. the ponzi scheme is being exaserbated but its still a ponzi scheme after all. i guess the deciding factor as far as i can see is the maintenance of chinas boom which from what i read is well and truly on the nose. i dont see the developed world picking up the slack anytime soon. entering a period of international stag-flation we may well be able to have an economic crises while inflation maintains asset prices.
Comment by Matto on 2 February 2010:
(excuse the spelling)
Comment by Fiscal Phil on 2 February 2010:
Latest news on WA rents, from APM: "Average Perth rents could hit $400, an increase of 11 per cent, and in line with average growth of 12.4 per cent experienced since 2003... "
Nice quote Pete. The 12.4 % increase is impressive however I wouldn't take too much notice of the predicted increases.
And at $ 400 per week the holder of all that debt is only losing about 10-12K pa !!!!. Investments that lose money, thats what i look for, NOT.
Comment by Biker Pete on 2 February 2010:
BB: "Sounds like 'Biker' Pete's ... acting like the 'town bike' for legions of real estate spruikers. ...if he were of the genuine 'biker'clan wouldn't he have made his money on ... the manufacture and sale of amphetamines - not the murky world of flogging property?"
Typical stereotypical comment from a DH who hasn't figured out the difference between 'a biker' and 'a bikie', despite the media's ability to differentiate in every news item I've read. BB? Probably one of Prozak's
multiple personalites barfing again. Notice the Brit DR site won't print his retched stuff... (?)
We're not loved by realtors, I'm afraid. We use our own signs... and sell privately most of the time... . We insist on bulk deals which cut realtor's commissions when we have to buy through them. They don't particularly like our habit of declining 'exclusives' either. They don't like 'conjunctionals' which halve their cut... .
So, wrong on both counts... but the 'amphetamine' slur is a new angle. Not much more successful than 'Claytonator'/Prozaks's 'paedaphilia' allegation.
How low can property bears sink in their desperation ... ?!~ Nah, it's only a couple of very unhappy souls who are struggling in their mire...
Comment by Matto on 2 February 2010:
Biker Pete - are you in Aus? im interested in selling a place without agents, any tips or websites i should check out??
Comment by finditfunny on 2 February 2010:
@DavidH. Take a look at charts produced from these downloads. http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6416.0Dec%202009?OpenDocument.
Thats over 20years of stats and although I couldn't find it, the chart looks the same for last hundred years.
HOUSING PRICES GO UP MORE CONSISTANTLY THAN SHARES. To say otherwise is plain ignorance.
@BB. Does BB mean BaBy. Jeez how old are you ?
@all of you. If you don't spread your investments then more fool you. I have an investment property. I have some blue chip shares. I some small mining company shares (which have not gone up 300% sadly) and I have gold and silver bullion.
Keep up the good work.... very entertaining.
Comment by Biker Pete on 2 February 2010:
Yes, Matto. We're in WA.
The key is a _really_ good Settlement Agent (we've done so many purchases and sales we get 40% off); and a set of forms (Offer & Acceptance). We've also developed an 'Options' format we've used a few times. Often we don't take a deposit... we sell an Option To Buy. (Some realtors themselves are unfamiliar with that legal strategy, which we've developed for instances where multiple property sales in one tax year would be too great a tax burden.) Sometimes a buyer fails to exercise an option... generally a very wealthy individual... .
This has paid for four months' travel in Europe, in one case... .
This isn't something you should do without thorough research, BTW. Mess it up and you'll probably suffer litigation!
Every sale we've managed since '79 has worked perfectly, but we are very, very careful in all matters requiring signatures!
Gotta laugh at some of the posts, above. 'Fiscal' Phil? - Giggle~
Comment by Biker Pete on 2 February 2010:
Snappahead: "I don't blame anybody for trying to make a buck and exploiting the rules to their full advantage. Seems there a few who like to comment on this message board that have done very nicely thank you very much from the framework we have in place to lock up capital in houses. The fact that I am not in the market myself is my own fault - not someone that owns 10 houses and "exploits" renters."
Ah, but if you believe 'Fiscal' Phil, we're losing money: "And at $ 400 per week the holder of all that debt is only losing about 10-12K pa !!" So, according to Phil, we're subsidising your rent $11K per year, you 'exploiter' you!
The quality of debate here is opportunity for mirth, but it's a nice cool day here... ideal for landscaping... .
Prozak, I've enjoyed interpreting your multiple contributions, but the quality is falling. No wonder the Brit DR site blocks your overmedicated mumblings... .
Comment by Matto on 2 February 2010:
thanks pete, i'll look into it a little more.
yeah not sure who the personalities are but the bitching amoungst some people on this site is bit off-putting. i came looking for the DRA site and was hoping for a bit more informed debate in the comments. there's plenty of other places on the internet to mindlessly sling p00p at others.
Comment by hadenough on 2 February 2010:
what happens when people cannot afford to buy, an then, cannot afford to rent. whats next
Comment by Biker Pete on 2 February 2010:
Agreed, Matto.
Looks like the investor club may have won the day (haha!)
"The Reserve Bank has shocked market-watchers by opting to hold interest rates steady at its board meeting today."
Comment by Ned S on 2 February 2010:
If you own more than one property in Oz Matto, there is an element out there that own none and despise you.
Plus a huge number of comments are being added under many different names and "personas" by one Brit based chap who despises Aussies in general, Oz baby boomers in particular, and Oz baby boomers who aren't total personal and financial failures most particularly.
Comment by Matto on 2 February 2010:
Well i guess they'll have to despise away...
looks like the grey nomad investor club of adelaide (sorry, 'greedy investors') won the day in the end. good effort chaps!
Comment by Joe on 2 February 2010:
Biker Pete needs a job.
Anything to keep him off this site.
Anyone would think he were the author of this blog the way he defends every post.
Ah ... yet more tedium.
So to give Pete something to reply to (cause we all know he likes that), what is the difference between a bikie and a biker?
Is a bikie a member of a gang of bikers, where as a biker is just a plain owner/rider of a bike?
Comment by Biker Pete on 2 February 2010:
We think the RBA is concerned about the decrease in building and the likely effects of accommodation shortages on a rapidly-rising population, Matto. We'd budgeted for a 1% interest rise this year. Our guess is that it may be half that, but we'll leave the extra cash in offsets. Rates may well rise after the election... .
As a Grey Nomad myself (white-haired, white-bearded, anyway) I wasn't aware of the full name of the group. Their protest obviously did no harm!~
Comment by Biker Pete on 2 February 2010:
'Joe': "So to give Pete something to reply to (cause we all know he likes that), what is the difference between a bikie and a biker?"
Look it up yourself, ya lazy little sod, Prozak... !~
Comment by Ned S on 2 February 2010:
We get to change our accommodation expectations/standards hadenough - As one wit said: "The solution to high house prices is high house prices."
We just aren't being good little vegemites and doing what governments want us to yet. But we will change our naughty ways eventually I imagine.
Of course it would also help if local councils were considerably more supportive of high density development. But they have to answer to their existing local voters first and foremost.
So there we have it; Noone ever claimed our three seperate levels of govenment work together especially efficiently or effectively.
Comment by Biker Pete on 2 February 2010:
Ned: "We just aren't being good little vegemites and doing what governments want us to yet. But we will change our naughty ways eventually I imagine."
Well, Ned, apparently I _am_ being 'a good little vegemite' according to that Fiscal Fool Prozak. According to his fiscal figuring, I'm subsidising tenants to the tune of almost $150K per year!
One thing he's half right about, though, is my frequency of posting. Half right, because half the postings here are his deluded mutterings. Should ignore his multiple-personality-disorder posts (probably bi-polar) and only respond to genuine queries like "Mate, how can you possibly survive annual losses like those?!"
Too much to do on the current project, so I'll leave you to it for awhile.
Do check out the UK property site:
http://www.dailyreckoning.co.uk/property-investment.html
It's DEAD. Our property markets are alive and well and that's reflected on the DRA site. As Dan himself says, in his latest article: "...no point in beating a dead drum... ." Go have a look at the UK scene. Terminal.
Comment by Ned S on 2 February 2010:
Biker Pete: "I'll leave you to it for awhile"
Righto mate - Yes, I imagine the Brits aren't that keen on chatting property prices at the moment. Or their national debt? To think that poor old Cecil Rhodes once opined "To be born British, is to have won the lottery of life!" (or somesuch)
Comment by Stillgotshoeson on 2 February 2010:
@Greg
"The chances are we have seen the stock market low of this nasty economic cycle and I do not expect the market to get down near the lows of 2009 for many years. Remember we saw an over 50% drop to get to the lows of March, that is quite a hit!"
I disagree, the majority of the ASX gains have been limited to the top 20 companies.. RIO, BHP and the Big Four banks a significant imput to the top 20. and with fear and greed the great drivers of the market.. up or down it will not take much to see a large drop in the ASX from either external news.. There is not enough good news for it to run up much more. China/USA or domestic.. credit restrictions. The company I work for built a factory in China a couple of years ago, it is a white elephant, has not been the success they hoped it will be. Wages there have doubled.
The chances of a correction I feel at this time are greater than us not going backwards.
Comment by Bargeass on 2 February 2010:
The RBA is trying it's hardest to pull off a local sub-prime crisis and look to have a good chance of succeeding.
Comment by Dan on 2 February 2010:
Interesting analysis, Bargeass, though if you've noticed commercial banks have padded their rates substantially over the low interest period - they can forestall such a crisis by giving leniency or "competitive rates" to prevent foreclosure when it doesn't suit them.
Comment by Bargeass on 2 February 2010:
Dan to some extent both the RBA and Krudd are, by their policies 'bludging' off the banks by deliberately manouvering them into the firing line of public anger.
A country without a profitable banking system is an economy with a banking crisis and all that flows therefrom.
Comment by Bertie on 4 February 2010:
Er, it is the Rudd government that is trying to pull off a subprime crisis with all their stimulus. The RBA has a mandate to keep inflation in check, if the government 'overstimulates', then inflation will rise and the RBA will raise rates