If you have a mortgage, this is a 60 Minutes you must watch.

60 minutes is great way to kill time...

 

Property Outlook Live Event – Recording 18 Sep 2018

I have watched about three-quarters of this blog and it seems quite reasonable to me.

Martin North is not happy with 60 minutes either, see the blog about 25 minutes in.

 

i did see it today on youtube.. it did look like more of drama episode than news.
but then again reality could be bad but not definitely bad.

 

Don't blame him. He put the 40-45% drop at 20% chance. 60m didn't report that.

 

oh, mortgage arrears will prolly go up one day & we'll never hear the end of it

from 2009:

Rising rates will increase default rate: report

 

@petewargent Is immigration growth really declining Melbourne? How fast is it falling?

 

if links are allowed:

Pete Wargent Daily Blog: Brisbane looks to rediscover that mining boom vibe

Pete Wargent Daily Blog: Where is the Aussie population growing?

mods pls delete if not, cheers

 

I think the doom & gloom camp may have its valid point but just not in the sense of what meeting
our eyes. My own perspective is as following ....

For a hypothetical suburb Wonder Land where long term historical worst case scenario
correction is 50% (god forbid) . A different way of looking at it is that the 50% correction
becomes its relative or adjusted 100% wipe off figure for Wonder Land.

Let's assume Wonder Land median price is $1m before a crash. The translation of the above
is that if its median hits $500K, it has just lost its (adjusted) value completely (100%), which
of course in absolute terms means it still worth $500K.

For a better case scenarios, let's assume Wonder Land median has only corrected to $800K,
(ie losing $200K or 20% in absolute term), that translates to adjusted loss of 40%!!!

So, to look at correction that way in the spirit and context of the 60-minute program, 40% loss is
not completely impossible as predicted by the doom & gloom gurus.

At the end of the day, I think each suburb market has its own relative or adjusted wipe off
number and it's up to the bold investors to do the homework and find out what that is.
Hopefully this perspective may help restoring some sense of cool, confidence and clarity to
enable one to see through where value opportunity may be.

It's my very simplistic 2 cents ...

Cheers,
FXD

 

54% today. That will be in the 40’s - 30% unreported.

30% a real chance (unless they all go private sale)

 

The follow on from Martin North

 

That segment of 60 Mins was canned on the ABC’s Media Watch last night.

 

You mean a caning.

Like I said last week, North and Christopher were appalled by how they were reported.

Remember two of our PC friends on ABC a few years ago when David Marks at the ABC asked them about Negative Gearing?

 

No, I meant “canned” as in “**** canned” .

If that is not PC, then I meant “caning” .

 

Yeh 60 Minutes chose to run with the least likely worst case scenario that was presented. Not exactly balanced reporting.

Noone really knows for sure what will happen, which is why it makes sense to think of things in terms of probabilities and not absolutes.

They presented one of those probabilities as an absolute.

 

That's your simplistic way of looking at it?? I'd hate to see your complicated view!!

 

Yes, it's simplistic because I am thinking that lands will most likely where the real values remain.
In the event of a crash large enough to wipe off the dwellings values, personally I believe
lands may be the last line of defence of where the Aust properties valuation may be.

And the thought in my initial post was more or less based on the hypothesis where that
"adjusted wipe off figure" may primarily be the land values only and completely write off the
dwellings.

I am most likely very wrong in my hypothesis.

Cheers,
FXD

 

Valuation played little bearing when it comes to crashed and panics as most people cant borrow, banks aren't willing to lend so the only people who benefit are the people who has cold hard cash or very large deposit.

With high leverage on the way down you are in serious trouble as banks look at you and said you got no asset or even a liability all your equity got wiped out, in this scenario you cant borrow money and if you force to sell you sell to people who has the cheque book and in better negotiation position, time is on their side and time is against you.

I know it hard to imagine something like that can happen in properties in Australia and I don't think it will but if it comes to that mass crowd psychology comes into play, human emotion and psychology now dictate the deal.

Most people cant imagine it but psychology played a huge part in human decision when it comes to money, the best money maker are the one that master that arts.
the best trader when you sit across the room with him you don't know if he losing 10K trade or profit a 10K trade but anyone else you can see shift and changes in their expression and optimism and sadness and that where mistakes are made.

that why some are buying at the top of the market and master of the arts sit and do nothing, these people fear they are missing out, emotions is too strong in dictating their greed.

The master concentrate on doing a good deal not any deal, and when you do good deal money just comes naturally, the novice concentrate on making money and fall for the emotions and do any deal

 

Here's that segment:
Ep 33 - 60 Minutes property

 

Thanks for the links @petewargent. I really enjoy reading some analysis of the data rather than agenda driven hysterics

A quick comment on another post about the looming IO cliff... I refinanced all my loans to new 5 year IO loans in 2015. These were due to revert to P&I in 2020. I have been progressively flipping these over to P&I to take advantage of lower interest rates. I only have one IO loan left that will be changed to P&I by end of next month. I would be surprised if I was the only investor taking advantage of lower P&I interest rates. What this means is that the 2020 IO to P&I rollover will be smaller than predicted.

 

We went to P&I in 2016 and because the interest rate was so much lower than what we had been paying, the "increased" repayment was only about half as much as what we first expected it to be. We have reduced our debt by $50k in that time, we still eat well and have a pleasant lifestyle. The only problem we faced was a small tax bill after the first year because I didn't think to modify the income tax variation. Principal repayments are not tax deductible and I forgot to recalculate it.