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 Post subject: Re: Ominous signs in Australia
PostPosted: Fri May 19, 2017 9:26 am 
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http://www.smh.com.au/business/the-econ ... w8fva.html


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 Post subject: Re: Ominous signs in Australia
PostPosted: Sun May 21, 2017 6:47 pm 
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>What is a normal figure for building houses per 1,000 people?

I was shocked when I started to read about my home Poland. 147k in 2015 and 162k in 2016 of properties vs irish 120k at the peak. Poland is around 38milion people and it looks like one big construction site now.


What happened in Ireland 10 years ago was so bonkers...

_________________
Why it was so windy there?... I am out.

For future reference, a 'soft landing' theorem:
06/2007: Central Bank predicts soft landing for housing
http://www.independent.ie/business/iris ... 96858.html
It's all grand


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 Post subject: Re: Ominous signs in Australia
PostPosted: Sun May 21, 2017 7:07 pm 
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mightyz wrote:
>What is a normal figure for building houses per 1,000 people?

I was shocked when I started to read about my home Poland. 147k in 2015 and 162k in 2016 of properties vs irish 120k at the peak. Poland is around 38milion people and it looks like one big construction site now.


What happened in Ireland 10 years ago was so bonkers...


This is some analysis I did over two and half years ago on the rate of property purchase for the property-buying cohort in Ireland and how it has collaped. I could bring this analysis up to date if I was bothered and if anyone would actually care.

viewtopic.php?f=10&t=63205&p=791369#p791369

A normal rate of property purchase would be around 40-45 per 1,000 of people in the property cohort of 25-50. You can easily work out the difference between the total number of properties that should be bought based on the population size in this group and estimate the proportion that should be new and calculate the difference between what the number should be and what it is.

Just one I-told-you-so quote for a small amount of smug self-satisfaction that I feel I am entitled to:

Quote:
Without property supply, some of the latent demand will remain latent. The latent demand that becomes actual will cause short-term price increases as demand chases supply.


And Simpleton Simon actually thinks he deserved to lead Fine Gael.


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 Post subject: Re: Ominous signs in Australia
PostPosted: Mon May 22, 2017 9:03 am 
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http://www.smh.com.au/business/banking- ... wa6pd.html



Quote:
"The risk of a sharp correction in property prices has increased," S&P said in a statement on Monday.

S&P Global Ratings downgraded the credit scores of more than 20 smaller financial institutions as it warned the risks of a property market downturn are increasing, although expectations of government support saw the very largest banks spared.

About 23 issuers had their ratings lowered, including Bank of Queensland, Bendigo & Adelaide Bank and AMP Bank.

The credit assessor exempted the Big Four banks - Australia & New Zealand Banking Group, Commonwealth Bank of Australia, Westpac Banking Corp and National Australia Bank - on the assumption that the government would step in to provide support if needed.


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 Post subject: Re: Ominous signs in Australia
PostPosted: Tue May 23, 2017 4:17 am 
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http://www.sbs.com.au/news/article/2017 ... tal-cities

Quote:
Home prices across Australia's capital cities have again edged lower, in a sign the property boom has likely past its peak, but auction clearance rates in Sydney and Melbourne have rebounded.

However, the value of homes across Sydney, Melbourne, Brisbane, Adelaide and Perth fell by a collective 0.5 per cent for the week and 1.1 per cent for the month.


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 Post subject: Re: Ominous signs in Australia
PostPosted: Tue May 23, 2017 12:18 pm 
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Blindjustice BATONEFFECT wrote:
http://www.smh.com.au/business/banking-and-finance/sp-cites-risk-of-sharp-correction-in-property-prices-as-it-cuts-23-banks-ratings-20170522-gwa6pd.html



Quote:
"The risk of a sharp correction in property prices has increased," S&P said in a statement on Monday.

S&P Global Ratings downgraded the credit scores of more than 20 smaller financial institutions as it warned the risks of a property market downturn are increasing, although expectations of government support saw the very largest banks spared.

About 23 issuers had their ratings lowered, including Bank of Queensland, Bendigo & Adelaide Bank and AMP Bank.

The credit assessor exempted the Big Four banks - Australia & New Zealand Banking Group, Commonwealth Bank of Australia, Westpac Banking Corp and National Australia Bank - on the assumption that the government would step in to provide support if needed.


Assuming a correction to say, 25% of current prices, how much would the government need to stump up? Has anyone published any scenarios?


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 Post subject: Re: Ominous signs in Australia
PostPosted: Wed May 24, 2017 4:55 am 
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Quote:
“Interest-only could be Australia’s sub-prime,” they said, referring to the poor quality loans written in the US prior to 2007 that led to cascading defaults and the global financial crisis.

“Interest-only loans proliferate throughout the mortgage book, across cohorts and circumstances,” they said.

“Only one trend emerges; interest-only households tend to have lower incomes and higher amounts of credit outstanding and tend to use interest-only to borrow more.”

Bank defenders say borrower “buffers” where the house value is in excess of loans offset the risks, but JCP analysts maintain most of the buffers reside with the least risky borrowers.

http://www.perthnow.com.au/news/western ... 9f5da0d928


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 Post subject: Re: Ominous signs in Australia
PostPosted: Thu May 25, 2017 1:10 am 
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Quote:
Speaking at an industry lunch in Brisbane on Wednesday, Propertyology managing director Simon Pressley told the audience how inaccurate the constant hype around the affordability crisis was, arguing the whole debate focuses only on Sydney and completely ignored the rest of the country.


Quote:
Mr Pressley says he was noticing a trend among some young buyers who are “rentvesting”, where they invest in another location – one which they can afford – and continue renting where they actually want to live.




Two young women who have done just that are Sarah Collison, a 31-year-old Sydney biologist, and Sam Douglas, a 25-year-old client liaison coordinator from Brisbane.

Ms Collison owns two properties in regional towns but rents in a Sydney suburb close to her job; her two properties pay for themselves and she still has money left over to save.

“It takes hard work and discipline but I wouldn’t say I’m deprived,” she says. “I think a lot of young people in Sydney look at the house prices and give up before they even get started.

“By looking at housing outside of Sydney, I’m able to pay my rent, still save money and the houses I have are increasing in value.”

Ms Douglas, along her her partner, also owns two properties in regional centres and is looking at buying her third within the next year. The couple originally looked at buying in Wavell Heights, where they lived, but simply couldn’t afford the $700,000 to $800,000 price tag.

“This way we still get to live where we want but we’re growing our money through property,” she says.

“I still go out and have smashed avocado on toast every weekend; I absolutely love it.”

Mr Pressley says Ms Douglas and Ms Collison are cases in point of young Australians cutting through the “horseshit” and taking responsibility for their futures. He says wannabe property owners striving to “afford” to buy in Sydney should be careful what they wish for.

“While we encourage all Australians to work on getting a foothold in the property market, does one really want to saddle themselves to an $800,000 mortgage for a $1 million property at the top of growth cycle and interest rates likely to trend north?” he says.

https://www.domain.com.au/news/the-grea ... 24-gwc8l6/


Quote:
Meet the 33-year-old investor with 10 regional properties

An unconventional investment strategy has paid off for Victorian Ashley Thorsen, 33, who recently bought his 10th property.

While most property investors advise purchasing inner-city real estate for quick capital growth, Thorsen focuses solely on buying land in small towns just outside Greater Melbourne.

“What you get rent-wise for properties in Craigieburn is pretty similar to what we get out here, and for half the amount of spend,” he says.



Quote:
“The total cost of the new home with land was around the $275,000 mark, minus the grant, which meant the real cost was only $238,500.”

Nine months later, the property was valued at $330,000.

“I decided to list it and sold it on the second day on the market for $335,000 … From that day I was $100,000 up and I had a bug for it!”

While land prices in the Broadford area have risen considerably over the past seven years, Thorsen says they remain relatively cheap compared with city real estate.

“Percentage wise the land has probably gone up 60 per cent, but as a price point it’s not much because the land was $76,000 when I first bought it – it’s cheap,” he says.

“By using this method of buying and building in my area I have been able to pay off my own home while only ever paying the interest component on my loan over the past six years.”

https://www.domain.com.au/news/meet-the ... 24-gwa4ff/



Quote:
BUILDING WORK DONE
◾The trend estimate for total building work done fell 1.1% in the March quarter.
◾The trend estimate for non-residential building work was flat and residential building work fell 1.7%.
◾The seasonally adjusted estimate of total building work done fell 2.8% to $26,227.2m in the March quarter.


http://www.abs.gov.au/ausstats/abs@.nsf ... enDocument


Quote:
The odds of Australia recording another negative quarter of economic growth have increased following the release of construction data from the ABS earlier today, say economists at the National Australia Bank.

Yes, after recording a shock 0.5% contraction in the September quarter last year, there’s now an increased risk that a similar scenario could arrive when Australia’s March quarter GDP report is released in early June.

Tapas Strickland, an economist at the NAB, explains (our emphasis in bold):


The private sector components from this release imply a 0.2% detraction from Q1 GDP growth, slightly weaker than what NAB had expected. More encouragingly, the public sector components were stronger, but these do not automatically translate into GDP with the Statistician incorporating additional government spending figures to be released the week after next. NAB’s models point to Q1 GDP growth of 0.4% quarter-on-quarter, but today’s data suggests the risk is to the downside with a real risk of a flat or even a small negative outcome.

Read more at https://www.businessinsider.com.au/ther ... HBdyDq4.99


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 Post subject: Re: Ominous signs in Australia
PostPosted: Thu May 25, 2017 5:27 am 
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as expected......

http://www.abc.net.au/news/2017-05-25/c ... et/8557182

Quote:
Chinese investors are pulling out of Melbourne's apartment market, prompting a downturn.



Key points:
•Melbourne apartment market expected to face a downturn
•Chinese investors are losing interest in buying apartments in Melbourne
•Off-the-plan apartments being resold at a loss or no price growth

In the past, they helped drive the inner-city apartment market to new heights. Around 5,000 new apartments are expected to be completed and up for sale this year.

However, around 80 per cent of Chinese buyers will not be able to settle because of trouble getting finance, according to Ming Li, a real estate agent in Melbourne's eastern suburbs who specialises in selling Australian property to Chinese investors.

He said many of his clients had either forfeited their deposits or sold their apartments at a loss.

"The Melbourne apartment market is cooling down," he said.

"It is kind of the oversupplied market, and the Chinese investors are losing their interest in buying an apartment in Melbourne


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 Post subject: Re: Ominous signs in Australia
PostPosted: Fri May 26, 2017 3:23 am 
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http://www.abs.gov.au/ausstats/abs@.nsf ... enDocument

Quote:
◾The Rental, hiring and real estate services industry grew strongly across all key data items in 2015-16. In particular, earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 14.0% or $6.8b.
◾The private sector Education and training industry exhibited strong growth as reflected by sales and service income increasing by 17.7% and EBITDA by 19.6%.
◾The Retail trade and private sector Health care and social assistance industries both experienced growth across most key performance indicators.
◾In contrast, the Mining industry in 2015-16 contracted strongly across all key indicators, with sales and service income declining by 11.4% and EBITDA by 17.5%.



I recently went long term short on the ASX. I believe the timing here is early/mid 2007 Irish bubble equivalence


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 Post subject: Re: Ominous signs in Australia
PostPosted: Mon May 29, 2017 1:59 am 
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Quote:
Western Australia may ask Rio Tinto and BHP Billiton to pay potentially billions of dollars to end a mining rent tax to help patch a budget decimated by lower commodity prices.

"We have a very major budget issue in Western Australia and it's quite catastrophic," McGowan told reporters in Perth.


Quote:
The government has previously said that erasing a debt mountain of more than $30 billion will take decades.

Instead of increasing the miners' rental payments levied on iron ore, currently fixed at 25¢ a ton, the companies would be asked to pay them out in advance under the potential plan.

The proposal has so far received a lukewarm response from BHP and Rio, who fought against a National Party proposal to boost the levy to $5 a ton during the election campaign.



http://www.smh.com.au/business/mining-a ... wf584.html

more info on the debt http://www.abc.net.au/news/2017-02-09/w ... ed/8252358

At the end of a once in a lifetime mining boom the state should have found itself bristling with new shiny infrastructure and debt free.
Yet mismanagement finds them crippled.


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 Post subject: Re: Ominous signs in Australia
PostPosted: Mon May 29, 2017 3:11 am 
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Quote:
Adelaide, Perth and Brisbane prices inched up, between 0.4 and 0.1 per cent, in the week to May 28, but Melbourne prices dropped 0.5 per cent to sit 1.8 per cent lower than a month earlier.

Prices in Sydney fell by 0.1 per cent, a seventh straight weekly decline that left prices in the NSW capital 1.3 per cent down over a month. Nonetheless, Melbourne property prices have still risen 11.4 per cent in the past year, with Sydney prices are up 10.9 per cent in the same period. Aside from two minor blips in Melbourne, home prices in Australia’s two largest cities have been easing since shortly after the Australian Prudential Regulation Authority told lenders to limit higher risk interest-only loans to 30 per cent of new residential mortgages.


http://www.theaustralian.com.au/busines ... 7fdcc3dd9e


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 Post subject: Re: Ominous signs in Australia
PostPosted: Mon May 29, 2017 3:39 am 
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Quote:
The state's chief environmental watchdog has been keeping "significant" chemical contamination hidden to protect residential property prices, internal documents show.

The Environment Protection Authority told a government review that it wanted to avoid "unnecessarily blighting" land values and could be trusted to manage the contamination without its usual public disclosure.


http://www.smh.com.au/nsw/epa-keeps-con ... we2mb.html


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 Post subject: Re: Ominous signs in Australia
PostPosted: Mon May 29, 2017 6:45 am 
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Storm is brewing............

Full story (paywall)
http://www.afr.com/real-estate/storm-br ... 525-gwd5dy

But if you check the 3.18pm entry here:
http://www.smh.com.au/business/markets- ... wf5sl.html

Developers are probably going to start going bust in numbers soon followed by banks followed by the tax payer
You already know how it goes


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 Post subject: Re: Ominous signs in Australia
PostPosted: Tue May 30, 2017 2:04 am 
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Quote:
Australian asset manager Altair Asset Management has made the extraordinary decision to liquidate its Australian shares funds and return "hundreds of millions" of dollars back to its clients, citing an impending property market "calamity" and the "overvalued and dangerous time in this cycle".

"Giving up management and performance fees and handing back cash from investments managed by us is a seminal decision, however preserving client's assets is what all fund managers should put before their own interests," Philip Parker, who serves as Altair's chairman and chief investment officer, said in a statement on Monday.



Quote:
"I would like to make clear this is not a winding up of Altair, but a decision to hand back client monies out of equities which I deem to be far too risky at this point," Mr Parker's statement said.

"We think that there is too much risk in this market at the moment, we think it's crazy," Mr Parker said more candidly.


"Valuations are stretched, property is massively overstretched and most of the companies that we follow are at our one-year rolling returns targets – and that's after we've ticked them up over the past year."

"Now we are asking 'is there any more juice in these companies valuations?' and the answer is stridently, and with very few exceptions, 'no there isn't'."


Quote:
However Mr Parker, displayed little nervousness about making such a significant decision.

"Let me tell you I've never been more certain of anything in my life," Mr Parker said. "I am absolutely certain we are in a bubble in this property market."

"Mortgage fraud is endemic, it's systemic, it's just terrible what's going on. When you've got 30-year-olds, who have never seen a property downturn before, borrowing up to 80 per cent to buy three and four apartments, it's a bubble."

Using the benchmark S&P/ASX 200 index as a proxy, he outlined a situation where the measure could fall as low as 5200 points in the coming months, depending on the confluence of his identified risk factors.

"Australia hasn't had its GFC event, we've been living in this fool's paradise. But if China slows down the way the guys think it will towards the end of this year, then that's 70 per cent of our exports [affected]. You can see already that the commodity market is turning down."


http://www.smh.com.au/business/markets/ ... wfgua.html


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