Great info on previous downturns

Discussion in 'Property Market Economics' started by Triton, 20th May, 2018.

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  1. sash

    sash Well-Known Member

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  2. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    Cost of debt matters but the ability to get debt matters the most.
     
  3. Herbert

    Herbert Well-Known Member

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    I agree, this is only just beginning.
     
  4. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    Don't underestimate the herd mentality, there is a reason we have booms(FOMO) and busts(HopeOfEvenBetterPrice).
     
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  5. Triton

    Triton Well-Known Member

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    Do downturns last that long?
     
  6. sash

    sash Well-Known Member

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    Yep...similar to booms....
     
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  7. 2FAST4U

    2FAST4U Well-Known Member

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  8. radson

    radson Well-Known Member

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    That article says:

    If recent evidence from other developed nations such as the US, UK and Japan is any indication, where wage growth remains weak despite far tighter labour market conditions than Australia, it suggests it could be significantly lower.
     
  9. 2FAST4U

    2FAST4U Well-Known Member

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    It's a global trend but having high population growth certainly doesn't help increase wages. It's simple supply and demand!
     
  10. radson

    radson Well-Known Member

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    Its always simply supply and demand, but population growth is supply and demand.
     
  11. Triton

    Triton Well-Known Member

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    How are the latest figures tracking with previous downturns?
     
  12. MTR

    MTR Well-Known Member

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    Well said:)
     
  13. Pete Arendt

    Pete Arendt Well-Known Member

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    Booms and then the subsequent downturn (bust) is normally based on external events. For example the boom is based on falling interest rates to emergency lows as the GFC took hold.

    The downturn will be dependant upon interest rates rising. Australia has some of the highest levels of household debt in the world, so hiking interest rates could be a prolonged event in Australia. It could take 10 to 15 years to return interest rates to normal, hence 10 to 15 years of falling house prices. On each rate rise, there will be another property investor forced to sell as they can't afford to keep the investment.

    Because of our extreme indebtness, some are saying interest rates won't start going up to 2021. You could expect house prices to moderately fall into 2021, before rate hikes start to really clean out the over leveraged investor.
     
  14. radson

    radson Well-Known Member

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    Interest rates are a factor but one of many factors.
     
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  15. Kangabanga

    Kangabanga Well-Known Member

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    I am expecting once China slumps bigtime, we may end up very much like Europe or Japan with persistently poor wage growth and poor economic growth as the economy goes into a super deleveraging phase. Rba will be forced to drop rates to zero for a long long time.

    Japan and Europe are only surviving on ongoing monetary stimulus.

    Quite surprised America seems to be doing well still despite fed tightening and cessation of their QE3 stimulus. But then again they are still leveraging up on debt, so it might be other forms of gov. Spending keeping then afloat
     
  16. Eric Wu

    Eric Wu Well-Known Member Business Member

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    hope it never happens,

    an slumping economy with 1.34 billion ppl is scary,
     
  17. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    Our deleverage turning out like japan or Europe is a scary prospect.
     
  18. Triton

    Triton Well-Known Member

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    Anyone have the latest version of the chart I posted in my original post? Thanks
     
  19. aushousingcrash

    aushousingcrash Well-Known Member

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  20. marmot

    marmot Well-Known Member

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    It can be a bit difficult to use previous downturns and to try and use that information present day.
    How many previous booms in Sydney and Melbourne were fuelled by IO loans.
    The present problem is being made worse by speculators that piled into IO loans, thinking they would never have to pay P&I.
    Perth was the first big market in Australia to really go hard on IO loans, and as we know that has ended pretty bad as prices overshoot the mark.
    To much easy money ,and now the party is ending many are heading for the exits.
    Those that got in early(2014/15) and made good gains are now being forced to sell as their IO terms expire and are overexposed if they made more puchases along the way.