The great deleverage

Well... they got the GFC quite wrong and were hit very hard, and had a lot of exposure to garbage mortgage backed securities. I know, I was working at their investment bank in Zurich when it happened, my pay was cut 20%. And we had to start paying for coffee from the office machine (they put a card reader thing on it). And all the Christmas parties were cancelled (the one previous to the GFC were pretty extravagant). And the Swiss government had to bail them out. And my UBS shares went down 90% and still haven't recovered.

So not a good record on property. But maybe they are right this time.

 

As far as I can remember, UBS started calling for property crash since 2014, and every single year after that.

Is there a housing bubble that’s about to burst?

Lucky, I did not listen to them.

 

Well prices started falling in 2017, timing is very difficult with forecasting... arguably the hardest part.

I would never expect precision of timing from any economic research, but broad brush strokes of future expectations can be very profitable.

 

UBS ... uh yeah this....
If only their predictions were this good that they could save themselves from worst analyses on the planet

 

It sounds like getting the GFC right should have been easy! I’m sure lots of banks and organisations predicted it well, oh wait

Regardless I’m referring to Australian UBS economic unit, who were early, but have been right if you consider 15-20% price declines enough.

I would suggest as a general rule - if you need to use a punch card for coffee in the office, it might be time to move on

Was the tea at least free?

 

Ahh quick, simplistic generalised judgement on the whole organisation...

I’m sure those devious Swiss were the only ones nationalising and bailing out banks... oh wait

Hell even the BIG 4 (and Macquarie) got propped up by govt

 

Exactly, as far as I’m concerned they know less than my grandma. Her tea leaf reading is usually a better predictor!

 

The inconvenient truth is that UBS predictions about residential property have proven to be correct.

 

Lol. 3 years mismatch is not small. 2014 was still the early phase of Sydney boom while Melbourne just started. Within that 3 years window, a lot of suburbs in these two cities had doubled in price. After 15-20% decline in the last 18 months, I would assume the investors who bought in 2014 or even 2015 (not talking about OTP apartments) are still laughing.

Boom and burst are parts of normal property cycles. Can I become an expert if I say the market will recover, and it starts recovering in 6 months/3 years/10 years time? Since timing is very difficult. Lol.

 

To be fair the UBS spokesperson clearly states that the AUD dropping below 85c would limit the "bubbly" nature of the housing market. Considering it dropped from 89c to 70c I don't see how you can say the UBS statement was definitively wrong.

 

Yeah, not this particular article. If you read what they had continuously said between 2014-2017, you will see what I mean. I am not saying I am smarter than them. Indeed, they are qualified people to talk about it not me. But they do have their own very clear agenda imo.

 

Hey I think predictions on property are notoriously terrible. The Steve Keen types predicting doom for decades are idiots. At the same time there are plenty of "experts" who called the idea of a 15% drop in Sydney as impossible or called the bottom in Perth 2+ years ago which looks similarly idiotic.

In terms of UBS I can't find much from that time. This that I found sounds very reasonable from late 2015. Classifies prices as overvalued but not in extreme bubble territory and that there a possibility of a significant correction in the medium term depending on outside factors like Asian demand. It actually seems pretty accurate:

Sydney house prices 'significantly overvalued' and at risk of drop, UBS says - ABC News (Australian Broadcasting Corporation)

 

Seems like deleveraging continues apace, housing credit is basically stalled in May.

Lending for property slows in May: RBA - 9Finance

 

UBS certainly have their own agenda. They along with other investment banks are very active shorters on the ASX.

Investment banks run aggressive short-long strategies and they use their ‘analysis’ to drive their agenda.

A couple of examples of investment funds that use wholesale services of large investment banks, including UBS.

Bennelong Long Short Equity Management // Bennelong Long Short Equity Fund

Investments | Regal Funds Management

 

Hmmmm let’s see.
APRA comes in and cuts majority of people’s borrowing capacity by approximately 15%.
House prices drop by approximately 15% before we are starting to see them leveling off.

This is not David Copperfield stuff going on people.

 

whats that have to do with the fact hes borderline obvious troll ? i see balanced posts on this forum for both bearish and bullish opinions, i like reading them all. i dont enjoy reading "lol your all stupid, did i hit a nerve, oh over invested emotional etc.." with out any substance. it doesnt add to the board, its just creates arguments

 

In some ways they will be,but the facts they miss is real estate is a market within a market..

One only has to look at the inner southside of Brisbane from units at Moorooka to development blocks and free standing house's within the 7klms from the central CBD ,very limited stock in prime locations and sold signs everywhere...Maybe it's the start of the 10k per month up ward trend..

 

I haven't seen many examples recently, but before the downturn was in full swing (and I was just a lurker here) I recall some users posting statements like "you are just upset you didn't buy 5 years ago." Or "you are jealous you missed out".

So yeah I agree that these days we hear more extreme bearish calls than bullish ones. However from what I see I don't really think anyone here is a "troll".

Both sides are likely to be highly invested or motivated to see an outcome that benefits them and will talk up their own book. I like that there is a good spectrum of views and opinions on property chat as it challenges my views and broadens my understanding of the current environment.

 

But how many people really benefit from falling house prices? Apart from institutional investors shorting banks and the like, and I doubt they're posting on forums like this too regularly, we all lose out.

I'm bearish on Aus property because from what I can see the bearish arguments are more logical and sound (there are exceptions of course). In contrast most of the bullish commentators seem to run exactly the same arguments that were run in other countries before big housing crashes (strong immigration, serviceability isn't too bad, the fundamentals are strong, etc). And there's way, way more self interest in promoting property prices with huge portions of the economy being reliant on property.

I hope I'm wrong. If I'm right and Melbourne and Sydney property drops another 20% or more then we'll see massive economic pain. On a personal level my job will be at risk and my superannuation will likely be crushed. Even if I don't lose my job we'll likely have a credit crunch so being able to buy a house even if they're cheaper will likely prove near impossible. So there's no benefit in being right here. But I can't ignore what I see as reality and the more bogus arguments the property bulls put out the more worried I become.

 

Yeah I share your views on where we are headed.

My guess is that the percentage of people here that benefit from dropping prices is smaller than the same metric taken from the population at large.

I'm not really able to provide a clear picture about likely recession scenarios and what impacts different demographics.

There are so many potential large changes in a large drop that I don't know how I would be affected. Losing my job for a year would suck and I would lose net worth but being debt free I could end up benefiting more if asset prices crash. Then again if there is a bail in then my strategy goes up in flames. Also there's the international investors that will influence the outcome.

In the end increasing prices from here benefits the established players and to an extent some of their children (not all). In my opinion Australians of the future, who greatly outnumber the established players, are unlikely to be better off if we repeat the last 15 years over and over again.