Australian housing market - property Bubble & Banks, 2018 Insights

Stumbled on this, detailed and long, interesting and worrying.



Edit : I posted this because if you think there is any truth in it as a property investor, it could offer a hedge, ....and if you think its rubbish, ......then you won't need a hedge.

 

Interesting.

Who are the speakers and how do we short a bank?

 

Yeah, considering the difference to the u.s. banks? I'm keen to hear

 

So I agree with the guy in the video.

Here is a good place to start if you wanna short. ASX Short Selling: All You Need to Know

I would also note as an active share investor. I don’t short because it’s not a game for kids. And especially not naked shorts.

So basically even though I agree with him. I ain’t gonna short the banks.

 

I would question his logic here in comparing the US incessantly to Australia- two things that are very different are:

1. The US is a very segregated country, so there are plenty of cities which are regional and very affordable with low income to price ratios. Given 50% of our population is in our two major cities I would compare the house to income ratio of Melbourne/Sydney to similar scale US cities.

2. The financial system in the US is surprisingly immature in terms of how individuals access credit, a large amount of the population still use local banks who don’t have an appetite to lend large multiples even if it appears the individual can afford it - this is because their loan portfolio isn’t large enough to spread risk and they cannot diversify their risk away from economic factors of their local town - where as Australia and Canada do have banks of scale.

It is funny that he says the lending is at levels people cannot afford given Australia’s mortgage arrears are the lowest seen in decades...

 

I think he addresses why there is no bad loans yet specially in that video. Because when they think the house is going up they kill themselves to keep it. When they think it’s not they stop killing themselves to keep it. You may agree or not. But that’s his argument.

The loan industry is dodgy tho. Sorry to the brokers here. I’ve got mates where on their 3rd property and wife on leave with a baby. Broker just says - if it’s not an issue let’s not mention that.....

 

I would say that buying put options is probably the safest way, in that you fix your downside, on the other hand, only really good if you are expecting a major move.

 

Lol this is ridiculous. Have you looked at RMBS in Aus lately? Do you know how much wholesale fund the banks rely on? International money can disappear in a day? If you don’t believe that, just ask South Korea during the Asian crisis.

Agree with this guy. I don’t see the trigger in Aus to have a massive slide like Ireland did. But good risk/reward trade. Bank shares aren’t going up much that’s for sure.

Banks in Aus have a lot higher valuations than overseas mostly because of wealth management and other stuff. Banks won’t be able to keep them after royal Commission. Banks shares will be revalued even if property plod along.

 

This guy uses scare tactics to get you to buy his product. It's a technique as old as the hills and an insult to a bogan's intelligence.

Property investing will make you money. It always has. Sure, there's been boom bust, boom bust, boom boom, cha cha, booma boom, cha cha. Hey, I got a dance going lol.

Just don't over extend your self. You should be right on the down turn.

 

It is a good risk/reward trade. He is not wrong.

As to property always make you money long term. Talk to Ireland plz.

 

Also the US property market don't forget.

But here in Oz, we have down turns and then big booms. We are different from foreign property markets.

 

Interesting, but who even are these people?

 

Go through the bankruptcy lists, on companies, quite a few brokers recently.

 

Plot RMBS funding vs other sources, you will be surprised.

Last time I looked 70% of funding is local (ie/ deposits) so there is minute impact from international rates

 

And where do you suggest the banks come up with that 70 percent?

Also when Aussie rates stay where it is and US rates keep going up, super funds will move their cash.

 

Banks just raised rates citing higher cost of funds...

 

Let’s see if there is a round 2 next year.

4 more rate hikes prices in by the market from Fed before the end of next year.

 

You do realise he makes money on shorting the industry?

 

This is simply not true. The arrears are highest for the last 6 years, and very high for the last 20 years. The more important thing it is rising each month, and this time it is different - it is increasing when we have very low interest rates.

 

They are local retail deposits hence why our rates haven’t skyrocketed due to US rates going up