The Cycle of Market Emotions

Discussion in 'Property Analysis' started by MTR, 18th Jan, 2017.

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  1. MTR

    MTR Well-Known Member

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    search my posts, I have mentioned the triggers but I think I am now confused :p....I think various strategies can work well, no right or wrong
     
  2. BeachBabe

    BeachBabe Well-Known Member

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    Mmm... not sure i'd agree @getridof5cents.
    I'd be inclined to say 'consumer sentiment' plays out quite significantly as an underlying but possibly difficult quantifiable measure within the economy. I'm a researcher and month on month for the last 30 years, (of which I've been privileged to be involved the past few years), a longitudinal study has been conducted spanning over 3 decades specifically on 'consumer sentiment and business sentiment' that is then used to advise those within key positions of high influence within our country. The research continues to this month, every month....

    In fact the latest statistic shows in the past decade investment properties have increased from 15% of the market a decade ago to 50% of the market in recent years which is a 3 fold expansion. Hence why RBA and banks have tightened lending LVR's and policies to put some brakes on the IP sector.
    We all need somewhere to live but purchasing has been more in favour of IP (Investment Property) rather than the OO (Owner Occupier) of late.
     
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  3. sash

    sash Well-Known Member

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    sure is max....hard to pick but when you buy when eveyone is running a2ay the most profits are made
     
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  4. Natedog

    Natedog Well-Known Member

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    Inexperienced investor greed is a driver that overtakes logic....and I also reckon emotionally driven PPOR home buyers are the big drivers of booms though...logic is chucked out the window when you you really want a place of your own...I know personally speaking it's the fear of missing out that makes you pay more. I see this with people everyday also
     
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  5. RetireRich101

    RetireRich101 Well-Known Member

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    Is this from the Newcastle thread :p where some are saying it already increased 120% in the last 6 years ( so a moderate 20% increase per year in their language) and still mother of all boom coming to Newcastle..?
     
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  6. GetRIDof5CENTpiece

    GetRIDof5CENTpiece Well-Known Member

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    Really? I was of the recent understanding that the percentage of renters in Australia are 32%. The remainder of households are home owners ( of which just under 50%) have a mortgage.
    So at a high level 1/3 of Australians households rent, 1/3 live and own their home and the remaining 1/3 live and have a mortgage on their home.

    Also only 80% of renters come from the private sector.
     
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  7. Gockie

    Gockie Life is good ☺️ Premium Member

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    Sounds about right. The dramatic increase in the proportion of homes being purchased as IPs has only happened recently so APRA put in the 10% growth limit on Investment property loans for ADIs. Then the banks added the .27% loading on investor loans. But still the vast majority of housing is owner occupied.
     
    Last edited: 19th Jan, 2017
  8. GetRIDof5CENTpiece

    GetRIDof5CENTpiece Well-Known Member

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    Agree and what makes Australia a little different to other markets is people forget that just under a 1/3 of all Australian households carry no mortgage debt... effectively balancing "bubble" risk.
    So again... I go back to fundamentals. Even if you say a new land / growth outer fringe suburb is predominantly made up of FHB and Investors paying premium or above premium prices... and the market cools off... what is going to cause a fire sale as seen in other markets overseas and Perth?
    It would have to be a recession of some sort. Anything else people just move on and live through it. Also for FHB... after they purchase... they are not looking to sell so even if interest rates rise they just tighten their belt. They are not hanging on comparative sales and capital growth and if their home doesn't go up in 3 years or goes down... it's broadly irrelevant as it's their home... most don't even know.

    Just my two cents.
     
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  9. Perthguy

    Perthguy Well-Known Member

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    I haven't seen any of their recent work but they have been calling for the Australian property market to catastrophically crash since 2014. I find their datasets are the best around but their interpretation of the data is not accurate.
     
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  10. Bunlee

    Bunlee Well-Known Member

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    Hey all

    Having been involved in buying & selling shares in the past I can definitely relate to the roller-coaster of emotions detailed in the OP chart.

    Property investment may differ in some ways I think. Of course, those that speculate and take on significant risk would certainly relate to the roller-coaster.

    The market is, of course, made up of thousands of individuals and I suppose it depends on when you bought and the degree to which you have speculated. For me, and I imagine that I am not alone, the recent boom in Sydney made mere 'more interested ' but definitely not euphoria and when the boom trails off I will move towards 'interested '. If we have price declines of some significant degree I think I would move to 'less interested ' and switch off.

    My individual curves is more towards a flat-line when it comes to property.

    Having said the above I have not doubt that there is a significant number of property market players that totally relate to the emotions outlined and in that approximate order.

    Of course, I enjoy the emotion of 'more interested ', but call me old-fashioned :)

    Regards to all
     
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  11. Perthguy

    Perthguy Well-Known Member

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    The WA economy is already in recession which is one factor keeping prices low. It would be hard to see a crash in Perth prices from this point, even if the wider Australian economy also slumps into recession.
     
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  12. GetRIDof5CENTpiece

    GetRIDof5CENTpiece Well-Known Member

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    Yes I agree and that's what I am referring. Jobs/economy growth have largely driven property prices dropping off.
     
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  13. Citycat88

    Citycat88 Well-Known Member

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    Perth still has an oversupply of rental properties, even compared to 12 months ago when the market was already bad. I'd say it is still somewhere between the "Fear" and "Desperation" stage. There is still room for the market to continue falling.
     
  14. Perthguy

    Perthguy Well-Known Member

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    Really? I feel like it is bottoming out. I know a number of people who are holding off selling until prices improve. That is one sign of a bottoming market.

    There is certainly some heavy discounting going on. "Capitulation"?

    I would have pegged the Perth market to be sitting between Capitulation and Despondency.
     
  15. Barny

    Barny Well-Known Member

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    If Melbourne's at euphoria, how long does a city roughly take to move on to the next stage...anxiety? 1 year, 2 years, more?
     
  16. MTR

    MTR Well-Known Member

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    That will be dependent on a number of factors, if interest rates keep rising perhaps we will all go to anxiety mode
     
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  17. Heinz57

    Heinz57 Well-Known Member

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    So 2c is OK but the 5c has to go!
     
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  18. tc8

    tc8 Well-Known Member

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  19. twobobsworth

    twobobsworth Well-Known Member

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    I would say Euphoria in Sydney and I'm starting to get concerned.

    House in our suburb just sold for $1.7m previously sold for $1m in 2014!

    No reno's, and wasn't sold below value back in 2014. That's insane.

    Prevoious sales as well.
    2012 - $890K
    2005 - $689K
     
  20. MTR

    MTR Well-Known Member

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    Don't you just love property boom cycles... where can you double your money in 3 years?
    See what I mean about timing the market.