Australians asked to take more risks

Discussion in 'Property Market Economics' started by PropDir, 16th Nov, 2020.

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  1. PropDir

    PropDir Well-Known Member Business Member

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    Hi all - RBA governor recommends consumers, businesses, and property investors to take more risks to help in the recovery.

    See article here - https://www.smh.com.au/politics/fed...covery-needs-risk-takers-20201116-p56f37.html

    What do you make of this? Is this going to drive prices up further, and if so, do you see this occurring Australia-wide.

    What are the other impacts that may not be immediately apparent? And would be good to understand if you are all on the front foot or back foot in the current situation.

    Thanks.
     
  2. Mulianto

    Mulianto ~~

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    So the point is demand (key driver to inflation) will remain weak. We need more international migration and quickly since we are not making enough babies.

    Interest rate to stay low to achieve target inflation rate.

    For property, yes the governor want to buy, invest, build, renovate, consume, whatever it takes for the money to go around to value adding, be productive etc

    All direction to increase in property prices.

    Good night and good luck
     
  3. C-mac

    C-mac Well-Known Member

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    As Mulianto says; Australia is highly exposed without immigration to Australia re-commencing.

    Birth rates are incredibly low (sidenote though; we won't know if covid caused a mini baby boom for a few more months at least - it's possible that pregnancies may have increased at present!). The over supply of apartments in most cap cities will only exacerbate over the coming 12 months with towers still finalising construction, launching to market.

    I'm really unsure where the buyers will be, for those apartments.... (Sidenote I have a contrarian POV on this. Whilst I wouldn't touch apartments in most locations with a barge pole now; in 12 months I think some could be worth a look. I say this ONLY if the following two things happen in the following timeline. 1) Larger apartments with good amenity and decent build quality get pummulled in price over the next 12 months and reduce at least 30% or more in actual purchase price. 2) if an investor then takes advantage and buys at enormous discount just as Aus announces any 2022 easing on international immigration; tourism; students returning).

    At the macro level though, there could be more money sloshing around Australia if the gov and RBA are successful in their goal of getting the AUD down from around 0.72 today to the high 0.50's or low 0.60's. If that happens our trade and exports will pickup and offset the current China factor (China have slapped many trade blockages on Aus on a number of export categories because they are cranky with us at present).

    The extra money could "trickle down" to working families (maybe..) which may see for more buyers in the house (non-apartment) market; inflating house prices higher whilst apartments will (probably) continue to flounder at the same time.

    Investment wise I concur; Aussies may start taking more risks given savings accounts and term deposits are actually LOSING them money as the return is no longer keeping up with inflation (and bloody tax is payable on ANY interest-gain from savings/TD's even when pacing behind inflation - that is so unfair. ATO should have a rule that any savings yield/earn at or less than the ~ 1.7% inflation rate, should NOT be taxed at all...)
     
  4. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    It does appear that over the next 6 months a perfect storm is going to be created for price rises. At this point immigration seems a long way away, but then so did a vaccine only a few months ago. One thing we continually fail to perceive as humans is the non-linear effect of technology (or anything - including value compounding!), and in this case as it applies to these impending vaccines and roll out. It's conceivable that by mid-2021 we're going to see borders reopening again before anyone right now thinks they will.

    Once immigration kicks off again (and it will), low interest rates and and an influx of population growth has the potential to create the mother of all booms. Whilst on one hand as a business and property owner it's great, there is the logician in me that has concerns. We are not immune to bubbles - and I'm not saying there will be one - but the possiblity always exists and we must be wary.

    - Andrew
     
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  5. Lacrim

    Lacrim Well-Known Member

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    I wonder if this will be the opportunity I need to seize to finish my FI journey.

    My guess is it'll take some time to get to that boom as the herd is slow to act. My 2 cents is the boom will start partway in 2022/3 and peak a year or two after that. A lifting of the cash rate will probably be the balloon buster.

    Beyond 2025, I have no idea. In fact in general, I have no idea lol.
     
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  6. Harris

    Harris Well-Known Member

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    I am convinced (as with every single cycle), that the boom will arrive a lot earlier (unexpectedly) than most people expect (just how it works) - akin to how the bust arrives quickly and before people are able to offload their assets. Whilst the convergence of the views across all & sundry (RBA, Big 4 banks, peak bodies, industry) is that the boom commences H2 next year, given the 95% success with both Pfizer and Moderna which might enable earlier opening to o/s students & immigration, that we might see this kicking off in H1 next year. It is very possible that we are entering the boom cycle as we speak. We will find out in coming weeks.
     
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  7. Mulianto

    Mulianto ~~

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    Bill Clinton Says Xi’s Reign Upends U.S.-China Ties: NEF Update
    Bill Clinton Says Xi’s Reign Upends U.S.-China Ties: NEF Update

    Bloomberg Economy Forum, lots of good insights from the world economic leaders.

    And yes I believe boom is already underway, it’s a no brainer for investors at the moment. Only silly people will put their money into term deposits where you know the government is just going to print more money and dilute your savings.

    It’s all fair, developed countries can afford to print more, bring the currency down while avoiding the dreadful deflation scenario. This gives the chance for developing countries to grab opportunities to grow through trade with developed countries then sooner or later PPP (purchasing power parity) in the world will eventually balance out...
     
  8. Traveller99

    Traveller99 Well-Known Member

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    The vaccine news will no doubt drive sentiment.
     
  9. CowPat

    CowPat Well-Known Member

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    You do know
    the RBA is a private company



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  10. Just_A_Name

    Just_A_Name Well-Known Member

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    Borrow as much as you can, as long as you could afford to lose the pot of money.
     

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