‘Craziest’ market in 30 years: the impact of the global housing boom

Discussion in 'Property Market Economics' started by Sackie, 6th Jun, 2021.

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  1. Sackie

    Sackie Well-Known Member Premium Member

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    A global phenomenon

    It’s not only Australian home buyers facing a tough market. Property prices around the world are surging on the back of ultra-cheap interest rates and stimulus measures put in place to deal with the coronavirus pandemic.

    Full Article:
    How Australian house prices are being affected by the global housing boom




    @Sackie hears distant permabear ***** accent echoes of " how can prices possibly go higher" 12 months ago.

    Gotta love it.
     
    Last edited: 6th Jun, 2021
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  2. datto

    datto Well-Known Member

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    And loving it. lol.
     
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  3. Sackie

    Sackie Well-Known Member Premium Member

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    How dare you rub it in:oops:
     
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  4. Robert Chatsworth

    Robert Chatsworth Well-Known Member

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    Unsustainable bubbles are great on the upside.

    The only problem is you have to get out at the right time, or you are in a world of pain when it bursts. Anyone invested in the USA or Ireland in 2008 and want to share their firsthand experiences?

    There is another thread here about the parallels with 1920's and the global depression. It's possible a global housing bubble could suck so much money out of the economy, world trade collapses and sends us into a global depression.

    Me personally - I prefer sustainable growth. Less Sleepless nights, worrying about when it blows up.
     
    Last edited: 6th Jun, 2021
  5. trendsta

    trendsta Well-Known Member

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    The interesting part is as soon as the RBA yield curve intervention is reduced / removed (July-end of this year) the mortgage rates may go up by 0.5% , without any hikes

    so 3yr mortgage rates from 2.00% to 2.50% (25% hike in payments, and potentially equal reduction is serviceability / borrowing power

    upload_2021-6-6_12-38-26.png
     
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  6. Robert Chatsworth

    Robert Chatsworth Well-Known Member

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    In the other thread the hypothesis is we are at the start of the 1920's boom due to the spanish flu/coronavirus event. The boom is expected to last 8-10 years until the great depression.

    You actually wonder if the start of the boom was the GFC - we have only seen interest rates fall since then. Interest rates are now effectively zero. Maybe interest rates rising this year is the start of the great depression, so we are actually closer to 1929 than people think.
     
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  7. Harris

    Harris Well-Known Member

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    Apples Vs Cupcakes!
    USA bubble was formed on the basis of "if you have pulse, you get 110% of the prop value loan". Chalk n Cheese to what is now happening in Aus.


    I see these 'parallels' regurgitated & published ad-nauseam and published before the peak, at the peak and after the peak - drawing from dozens of supposedly 'identical' scenarios. Co-relation is not causation!

    Don't we all! But markets care less about sustainability and more around the sentiment and affordability. When we have run this course, the markets would stagnate or go side ways for a few years, just how they do after most surge cycles. Technically, the growth in this cycle has delivered 10% increase in values nationally but quite a bit more for Syd and Bri.

    This is my fourth cycle since 2000 and I see identical commentary and posts around the warning signs and the mayhem about to befall the resi investors but I have seen my portfolio doing magic after each of those cycles. Trading mentality is different than investing mentality. Hold your nerves and you will be ok. There is no 'blowing up' here!
     
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  8. Harris

    Harris Well-Known Member

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    Sydney 2020 "Megaboom" [NSW]

    Thought you were expecting 20% p.a growth until 2024! Which works out to be over 207% of growth in 4 years :)!
     
  9. datto

    datto Well-Known Member

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    Hold property and rent it for long time, it will love you long time. There might be be a few bumps on the road, sure.

    And what about all these shenanigans by some agents. The actual price of houses is a great mystery. You don't know wat the actual price is
     
  10. skater

    skater Well-Known Member

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    I see you found somewhere to use it.
     
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  11. Sackie

    Sackie Well-Known Member Premium Member

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    Life is short enough as is. Why not have some fun along the way. :)
     
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  12. Squirrell

    Squirrell Well-Known Member

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    Ive said it so many times it doesnt need restating but here goes. We dont have a housing market, we have a govt/rba sponsored ponzi scheme which has been in place for 25 years or so. How long it goes depends on how long they are willing and able to hold it up. The broader ecconomy and remtal yields are irrelevent, hell its actually the opposite. The worse things are the more excuse they have to turbocharge the stimulus. One thing is for certain, no one has a clue where this is ending up, least of all the people on this site or our govt.
     
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  13. Trainee

    Trainee Well-Known Member

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    Ah well, being lucky is good enough.
     
  14. Sackie

    Sackie Well-Known Member Premium Member

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    Why "least of all people on this site"? It suggests investors on PC are the most clueless of all.

    I find that quite hard to believe.
     
  15. Squirrell

    Squirrell Well-Known Member

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    Sorry, probably a bit harsh. im more reacting to the bullish confidence in the future of property which seems to me dependant on ever increasing debt levels. I dont discount it may continue for decades with govt support but equally the arguments for a complete meltdown seem to be stronger every year.
     
  16. Sackie

    Sackie Well-Known Member Premium Member

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    I'm the first one to admit I have no certainty in terms of how the future will play out. I truly believe there are a wide range of things which could happen, plus the crazy unexpected.

    From an individual investor's pov, I have a much better idea, give or take 10-20% how much my own portfolio based off my own risk parameters/ equity/cf/business ventures will likely do. Definitely no certainty, anything can happen I agree.

    I always only look at how market movements may affect my own position. Then I know it's possible a variation of 10-20% could occur for me. More than 20? Sure. Anything is possible. But all I got to work off are probabilities.
     
    Last edited: 6th Jun, 2021
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  17. Trainee

    Trainee Well-Known Member

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    The problem is, if the property market is random, how do you make investment decisions?
     
  18. paulF

    paulF Well-Known Member

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    Investment decisions are a calculated risk as opposed to gambling which is just plain risk. There is always risk and no one knows what is around the corner (i.e: covid) and you would think that in a pandemic , property prices would go down but look at the current boom.
     
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  19. Sackie

    Sackie Well-Known Member Premium Member

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    My 2c, personally I don't believe it's random but regardless, I make RE investment decisions based on 4 things.

    1. Do I believe long term fundamentals for major cities in Australia will grow enough for leveraged investment to make sense? Yes

    2. Am I able to invest according to my risk tolerance based on historical volatility levels of RE in the major cities and my current financial position? Yes.

    3. Am I able to identify value in the market at the time of looking? Yes

    4. Am I able to add value in some way? Yes.

    If all answers are yes, I buy.

    Ignore all the noise.
     
  20. Trainee

    Trainee Well-Known Member

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    Thats ok. I can fool myself into thinking the bull case is more likely.
     

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