$27 billion wiped off banks

Monday will be cheap..Tuesday cheaper....

 

Is it time to start buying straw hats, yet?

 

only if you think winter is coming or already here for stocks. Don't think its winter yet, maybe just going into autumn. ASX hasn't really fallen that much yet, only 10%+ off this year's highs. Currently its sitting at about the same level as this time last year.

However if it does do a repeat of 2011 and get down to low 4000 points (and this wont take long), it would then seem like a good time to start collecting straw hats.

addit : ASX has reached a low of 5000 points range today.

 

Sixty beez off the market. Finance/trader friends saying this one's for real.

 

Luckily most of the banks are done with their capital raisings when the market was better.

If this is a repeat of 2011 the property market should be going down soon in most states and growth in Syd/Melbs should be flattening out soon.

 

How does the stock market affect housing market? Sorry for the silly questiob

 

several ways - people feel poorer which reduces consumer confidence which leads to lower GDP growth which leads to lower job creation and muted wages growth which leads to less immigration and desire to leverage up to buy property. Lack of economic confidence also leads to less job security and higher unemployment which tends to result in muted or non-existent house price growth.

are just some reasons off the top of my head. I imagine there are many more.

 

Previously not real? Real as in we are entering recession for sure?

 

looking at the crash in core commodity prices that australia relies on, which has happened in the past half year or so, which the other sectors more or less rely on as well, we are most inevitably entering a recession. Well unless RBA does some crazy intervention like bringing interest rates to zero and doing quantitative easing like the USA did back in the GFC.

ej89 : if you look at the stock market prices and property prices, a lot of the time a significant drop in the ASX results in a drop or flattening of the property market after some lag time of some weeks or months later.

 

Or people feel uncertain with the stock market so pull their funds out and put it into property.

 

that's not very likely, that only happens in China where people chase whatever everyone else is investing in and flipping property is as easy as flipping shares.

In australia, in general property is a longer term and less liquid investment asset class with more fees attached to it.

I would think if you pull out liquid funds from sharemarket into cash coz of a falling market, it would be very unlikely you would want your liquid funds to be tied down in an asset class like property.

Also a lot of the stock market companies like banks and developers are tied to property market, so if one was uncertain about the stock market, one would unlikely be certain about the property market.

 

People do generally want to invest their money and shares and property are the two mainstream form of investment so there is a correlation there. If someone is in danger of losing most of their networth then they'll probably find the lack of liquidity with property a good thing. Money have been leaving China at a decent rate the past few months due to their stock market as well as devaluation of the RMB. I can tell you that a fair proportion of that has/will make its way into property, whether here, Canada, HK etc.

The flee from the sharemarket also contributed to the run up in property prices in 09 in Melbourne and Sydney (lower interest rate obviously helped).

 

we were discussing this on SS many years ago. I think I or someone else hypothesised that stock speculators burnt in the 87 crash or '00 tech wreck swore off stocks and committed to speculating on the seemingly less volatile housing market instead The beginning of the run-up in house prices across the country from 00 coincided nicely with the tech wreck.

 

+1
Burnt (repelled) on shares will push individuals to seek better returns else where, such as RE. Natural. Repeat the market cycle a few times, reinforce the experience and mean more allocation of investments to RE.

 

So no negative effect really?

 

mind you, the proportion of Oz investors invested in direct shares dropped off after the GFC and has never re-reached those levels so not as many would have had their fingers burnt this time around. Also, judging by today's price action where the Chinese market got bollocked while ours rallied, this may just be a blip ASX-wise.

there is a chart showing the declining participation about somewhere if you dig for it.