Calling Property Bears (Bulls excuse)

Request: As per the title, if you are positive about the market (a bull), thanks but I want to hear from the bears out there, so please let the bears have a bit of conversation here. Thanks.

Hey bears, I am a bear and think the property prices will begin to go down in the next six months based on the following reasons/ events/ news. I look forward to why you think it will go down or not or as bad as I think it may be.

1. The rest of world is going to **** -
a. US-China trade war affecting both these economies badly and also the rest of the world.

b. US and global stock markets are ignoring what bond markets are screaming from the roof tops. Repo market issue in US will persist and QE4 is starting soon.

c. China’s slowdown will be big impact on Oz miners and hence affect Oz economy

d. Manufacturing powerhouses like Germany which is highly reliant on automobile industry is going into recession. Germany is the #1 economy in EU, and if it is slowing and going into negative interest rate regime, not much hope for rest of EU.

e. Brexit- more fallout in EU due to Brexit

f. Japan which has done QE for 2 decades is still in deflation. The rest of the world including Australia want to follow the example of Japan and hope for a different outcome

2. Oz PM, Treasury secretary and RBA Governor all support more lending for property market and applying pressure on banks to lend more at lower rates. QE expected in early 2020 after RBA thinks they can’t go below 0.5% interest rate. This is not good for the citizens.

3. Oz construction industry and wider economy including retail is in terrible shape- this will come to fore after Christmas on which most retailers pin their hope on.

4. Oz auction rate clearance will ultimately drop once the December-January period is over due to school year move demand subsides. The extremely low volumes in areas I am watching (Sydney hills district) is terrifying. People are bidding up prices on the few that are available pushing up prices beyond 2017 peaks but his will be short lived.

Ignoring these macro indicators can result in one’s own peril. Your thoughts?

Also please answer poll on who much you think the property market will change in next 2 years if above events happen.

 

You had me at ... "the rest of world is going to ****"

Underground bunkers anyone..?

 

I personally see most of the reasons listed as outside noise, and the main consideration for us locally having an effect on house prices, are jobs, so your point 3. "Oz construction industry and wider economy including retail is in terrible shape- this will come to fore after Christmas on which most retailers pin their hope on" would be my bigger concern out of the lot.

However with rates being cut, population growth still growing, approvals have dropped off a cliff, we will run into supply issues soon and then away construction goes again. It will be the period in between that may cause pain but as long as we can hold on, there's nothing to see here.

 

Looks like you've been a bear since 2015. Will happen eventually.

 

There is a big difference between being bearish and not own anything, and being bearish when one holds property purchased at least one cycle ago.

Didnt see the recent rebound and dont think sydney will boom anytime soon, but the second group can afford to be wrong.

The kicker is when the second group bought during the gfc. Or the banking crisis in the early 90s. No one knew what would happen then either.

Putting it another way, some can afford the uncertainty now, because they were willing to put good money down during uncertain times in the past.

What did you think in 2018 when markets fell from 2017 prices? Did you think that was a time to buy? If not, do you have a buy point? Heres where being stupid and buying, then holding for 30 years, may work better than forever looking for a 'good' buy point, whatever that is.

Find a recently sold, or currently listed property. What would you buy it for?

 

Over the next two years I think some property will go down and some property will go up - in line with the cycle. Definitely think the 10 - 25% range could happen for some of the markets that have had a good run.

That prospect might delay a buying decision but wouldn't rush me to sell.

 

For Australian property that seems a pretty good point to have become a bear. In most parts of Australia if you bought in 2015 you're financially worse off now than if you'd rented a similar property.

 

Property market moves up 80% of the time. You don't have to be Nostradamus predict a rising market .

However, I ceded to the bears for this thread.

 

I wanted to vote decrease by more than 100%

 

g. Iran Saudi war is imminent
5. the Interest Only Cliff is fast approaching.
6. Amazon is moving to Australia. The effects can't be seen by the naked eye but they're happening as we speak.
8. BREAKING NEWS: Turkey just bombed the Kurds

 

Everyone's distracted by negative interest rates they can't see the approaching negative house prices. I like it!

 

I honestly think way too many ppl get distracted/caught up with the whole bull and bear nonsense. I'm neither. I prefer to look for value at deals I think present acceptable risks to rewards for my own risk profile and then pull the trigger.

Too much bulls vs bears and vice versa nonsense.

 

To the OP: you will find far more empathisers at Whirlpool or the Ausfinance subreddit.
Everyone there is convinced that you will be able to pick up a nice house in Camberwell for a mill if you are patient.

 

Does anyone else see this point as a tailwind/bullish indicator?

 

Investors set to storm Australia's housing market - MacroBusiness

"...The organisation has just released the results of a survey of its full membership, which found that 82 per cent of investors view now as a good time to buy residential property.

About 48 per cent of respondents plan to purchase in the next six to 12 months, the survey found.

That return of optimism, combined with spikes in activity from other buyers — particularly first-timers — indicates that a market recovery is in full swing…"

 

I do too. Almost all of the economic factors that people have cited on this thread as being problematic, are actually inflationary.

Add in significant population growth in Australia, and I see a pretty substantial multi-year bull market in real estate, accompanied by a pretty aggressive global currency devaluation. These are not unrelated.

 

Since I’m not a bear and not allowed to say much in this thread. Just wanted to say this is the most I’ve ever seen you write. I’m a massive fan of your one liner sentences, you crack me up time after time. Usually brutal and to the point.

 

And his screen tag is Trainee, that's the kicker! Seriously though, @Trainee, your one liners are great.

 

The difficulty in predicting these things is the complexity of the topic and its multi varied factors that could play out in the next two years. The way I look at it is as follows:
1. Governments poliitically will try to avoid going into recession. Economically as a country we are now more of a mixed economy compared to going back 40 years. Our lower currency is attracting more tourism in Australia which adds more to our GDP because its money coming from outside. Immigration will continue to be a means to create economic vibrancy hence the need to increase infastructure construction and housing requirements.
2. I think the big indicator will be the unemployment rate and how safe people feel in their jobs. Retail is down but I think thats more to do with the structural changes in the way people go shopping with online options growing and the change in automation in society.
3. Wages growth is slow but I think this is because we have a more open, global economy. If we hit full employment it will be interesting to see if wages rise.
4. I think the relationship between the current wage levels and price of real estate in Sydney and Melbourne would indicate that they are still too expensive. APRA has done its job in lowering prices and avoiding a sharp bubble burst and probably wants a more steady level of growth so I think a stable market with low growth is probably what these 2 markets will experience. Maybe more upside in Brisbane, Adelaide and Perth,
5. All this would change if international issues become more widespread including if China's growth continues to slow and their debt levels rise.

 

Do you have any reliable source or data to back up this statement? For many suburbs in Melbourne/Adelaide/Hobart that I have monitored, if one bought a property in 2015, he/she would be way ahead now. So I cannot agree with what you said "in most parts of Australia" unless you refer to Perth/Darwin or very few suburbs in Sydney.