No Need to Speculate - Lets Look at the Facts

Discussion in 'Property Market Economics' started by MTR, 12th Dec, 2017.

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  1. melbournian

    melbournian Well-Known Member

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    Yes but mainly the prime cities - nothing extraordinary - they buy in Portugal too.
    in fact there are lots of articles that US market is also over inflated but again it is all subjective to whether it really is happening
     
  2. MTR

    MTR Well-Known Member

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    Not at all, wealth Chinese investors are buying up premier pockets in New York etc.

    Poor people like me are buying in the sub prime markets:p
     
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  3. Whitecat

    Whitecat Well-Known Member

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    I get that they like to stick together (refer Sunnybank and surrounds in Brisbane - high price despite distance to CBD) but that is not the whole story. They are more sophisticated than that. If they want to invest in Australia they will also see where the upsides are. Particularly if they have already invested in Sydney or Melbourne.
    Similar (non resi example) is loads of low-rise commercial being brought up in Milton, Brisbane by Asian firms for eventual development.
     
  4. MTR

    MTR Well-Known Member

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    Chinese buying in US could hit $50Billion by 2025
    Wealthy Chinese buyers are a growing force in U.S. real estate markets

    There are no rules in USA anyone can buy if you have cash. The economy is roaring and foreigners with money are flocking, have been for some time now. Its number 1 for wealthy Chinese investors

    Foreigners now have to jump hoops to buy in Australia when they can buy in 50 States in US, with different price points. Its common knowledge now that US property markets are booming, makes it more attractive for foreign investment.
    I guess the Stats speak for themselves.
     
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  5. melbournian

    melbournian Well-Known Member

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    Depends what level of investment it is or stage it is. They will buy farms, power grids etc but it wouldn't necessarily mean anything in terms of localised investor who has a property or 2 in SEQ for e.g. Take example the Power Grids now some majority owned by the chinese - it will def boost investment into the state gov but ideally it depends on how the money flows on from that sale - what the state gov does to increase jobs or infrastructure. As you see the apartment markets in Brisbane can't sustain that many apartments - they need ppl to buy them eventually - no point some big Asian company comes in and then develops something to be empty with less buyers or lower rentals.

    Of course there will be some level of Asian investment in Brisbane but majority are still buying in Melbourne and Sydney. Majority of the major res devs in CBD are all SE Asians in Melbourne.
     
  6. HGM

    HGM Well-Known Member

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    According to the CoreLogic Index, the current rate of house price falls in Sydney, if annualised, is around 12-15%.
    That's excluding units which are still growing very slightly. Houses and units combined ("dwellings"), the rate of price falls is somewhat lower, around ten per cent, but accelerating.
     
  7. Perthguy

    Perthguy Well-Known Member

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    It's basically because people are sheep. Think of a flat market, people buy, people sell prices are stable. Then if prices start picking up for some reason and more people start buying then prices increase more. The more prices increase the more people try to buy, pushing up prices more. There is an element of greed (in a rising market people can make money fast) and FOMO (fear of missing out).

    Prices peak when people run out of capacity to take on additional debt. There is a correction phase when people are scared to buy in case they lose money. The market goes flat and the cycle starts again.

    "Behavioural bias
    Standard economic modelling tends to assume that people make decisions by logically weighing up all the variables and available information. However, this doesn’t account for human emotion and what psychology experts refer to as ‘behavioural bias’.

    More studies are being conducted on a global scale to assess the decision making process, in a bid to provide a better reflection of how human behaviours influence financial markets, as opposed to the common theoretical models of how markets should operate – if we were all robots.

    Remember I mentioned ‘herd mentality’? ‘Herding’, as the experts call it, is one of the things that can influence investors to make decisions that on any other day might seem a tad irrational. But they get caught up in the pervasive fear mentality and all reasoning goes out the window."

    Property investing & behavioural biases – what influences your purchasing preferences?
     
  8. KevinJ

    KevinJ Well-Known Member

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    Limited increase of blue chip land holdings. Increased international high net worth investor appetite for Sydney and the growth of China should make blue chip properties fare better this downturn than the 03'-09'
     
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  9. MTR

    MTR Well-Known Member

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    Who knows??? Nothing has changed... blue chip property is blue chip
    There is a bigger picture and there are many variables to consider such as this.....

    Foreign investment in Australia does not drive markets, I posted an article on this, its less than 2%. Now if we are talking immigration then that is a different kettle of fish and is what drove many markets north in Oz... But affordability will also impact on markets

    Beijing has tightened capital controls, cracking down on investors wanting to send money overseas. Chinese individuals are now capped at sending $50,000 a year overseas and banks must report any foreign currency transfers of $10,000 or more. Add to that the changes in bank lending rules here in Australia for foreign investors, and it seems now 20 percent of Chinese buyers are walking away from their deposits.
     
  10. Gavin Ng

    Gavin Ng Well-Known Member

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    IMO, talking about "Chinese" is almost as broad as talking about the "Australian housing market"

    There are many different types of Chinese that affect different segments of the markets.

    - Middle class Chinese from mainland china that have until recently bought up big on OTP products.

    - Big Chinese multi-national groups from mainland china buying up big on infrastructure, agriculture and property development

    - Big multi-national groups from Singapore, Malaysia, Indonesia (who have Chinese background) buying up on agriculture, commercial, developments

    - Middle class Indonesians, Singaporeans, Malaysians (the majority of people from these countries are actually Chinese. They are either buying up OTP directly, or buying ppor stock via their children who are permanent residents.

    - Local Chinese, been here for decades, buying ppors and investments locally.

    Many different types of Chinese driving different segments of the market. When you talk about Chinese government tightening capital outflows, only a small portion of "chinese" are actually affected.

    Majority of in Indo, Singapore, Malaysia activley investing in Australia are actually held by people with Chinese blood,
     
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  11. Illusivedreams

    Illusivedreams Well-Known Member

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    1.9% for the quarter drop in Value.
    4 Quarters So under 8% if trend continues. Not sure how 15%-12% came to be.
     
  12. HGM

    HGM Well-Known Member

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    It's not rocket science. Take November monthly index for houses (not dwellings), times twelve (ignoring some finer mathematics here I know)= rough annualised rate of decline based on November. Look at daily/weekly updates to see if increasing velocity or not. Update.
    If you want more fun, maintain a spreadsheet and do graphs with forward trend added. Can be very pretty even if the data are depressing.:)
     
  13. AlexV_Sydney

    AlexV_Sydney Well-Known Member

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    yep, it's accelerating (-0.4% for first 2 weeks in Dec vs -0.7% in Nov), but it can suddently stop when it reaches some support level, or if the government implement something unexpected.
     
  14. MTR

    MTR Well-Known Member

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    What APRA did not work? why are investors out of the market? no loans no buying.... more supply comes to market.
     
  15. HGM

    HGM Well-Known Member

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    Yes, it's not a prediction but a current snapshot. But I wouldn't use the language of "support level" etc for property, that belongs to the much more volatile share and currency markets. The property market is like an oil tanker: yes it can turn but very very slowly... So there is some predictive value to current upwards or downwards velocities because it will be much more difficult to turn the trend around.
     
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  16. MTR

    MTR Well-Known Member

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    Yes, this is true.
    When property markets turn it can also happen very quickly, you don't what hit you. This was the case in Perth, mining boom over... CRASH

    Perhaps Melb will have a much softer landing due to numero uno for immigration
     
  17. Illusivedreams

    Illusivedreams Well-Known Member

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    Ok. I see.
    Take figures you want and or Worst Months x12 and get predictions.
    Check I got it.
     
  18. Illusivedreams

    Illusivedreams Well-Known Member

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    Perhaps Sydney will due to record spending by State government and huge Federal support.

    Perhaps
     
  19. radson

    radson Well-Known Member

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    I wouldnt say Perth crashed. Pilbara and certain regionals yes but not Perth.
     
  20. MTR

    MTR Well-Known Member

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    Depends what area/suburb

    For example Girrawheen/Koondoola have gone from $450K in 2014 perhaps now around $350-360K, perhaps 20-25% drop, is that a crash? I don't know? not good anyway.. also rents have come off at least 25% that is Perth

    Also the crash of 2007, blue chip high end Perth still not recovered 10 years later.

    Mandurah, is a dead duck, they are suffering, some real pain here.

    I could start going though various suburbs, but it takes time to work through this stuff, when its a buyers market there are always going to be a trend down surely?.
    At the end of the day the end of the mining boom has impacted in a negative way on Perth market. The jobs have gone, its got to hurt
     
    Last edited: 14th Dec, 2017