What happened to you during the last recession?

Discussion in 'Property Market Economics' started by Ketsle, 15th Aug, 2019.

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  1. Ketsle

    Ketsle Well-Known Member

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    As a relatively young person i've had the benefit of never experiencing a recession as an adult. So this question is for the older, sometimes wiser, members of the forum.

    What happened to your house price during the previous recessions? How did the market impact you personally? What was the flow on effect in your day to day regarding your PPOR debt/position? Was it generally ok however some sacrifices had to be made? did you ahve to seriously rethink spending habits and work some financial magic to come out ok?

    Curious to hear peoples personal stories rather than reading the data
     
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  2. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    I was a student trying to self fund university in the early 90s. Casual staff levels were reduced significantly. I got by, but had to take every opportunity to work that I could. There was a lot of restructuring at all levels.

    Fundamentally I guess, business slows down during a recession, fail entirely. Middle management is often the first to go, followed by those beneath them. People loose their jobs.
     
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  3. Ketsle

    Ketsle Well-Known Member

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    Thanks Peter. We're you still living at home? How about your parents? Did your rent reduce if not?
     
  4. The Y-man

    The Y-man Moderator Staff Member

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    For the context of this thread, when was the last recession?

    Thanks

    The Y-man
     
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  5. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    Coming into 1990 RBA cash rate was at 17.5%,
    It cut IR from 17.5% to 4.5 between 1990 and 1995
    current RBAs cash rate is at 1%, how much low can it go?
    upload_2019-8-15_13-50-33.png



    Coming into 1990 household debts was much lower, what it is now?

    Current HPrice2DIncome is 2 times with HDebt2DIncome 4 times it was in 1990, sydney/melb much more.

    upload_2019-8-15_13-53-43.png


    Construction job loses are beginning followed by slowdown in periphery sectors, Retails is already in a consumer led slowdown.
    how do you think it will pan out from here on?
     
    Last edited: 15th Aug, 2019
  6. kierank

    kierank Well-Known Member

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    I assume you are talking about the one that started in the September quarter of 1990 and lasted until the September quarter of 1991.

    We just battened down the hatches (mainly minimised our expenses and kept a close eye on our cash reserves) and then, when the “cyclone had passed”, we can out with “all guns blazing” including:
    • Setting up our SMSF and bought shares
    • Buying our first IP in July 1992
    • Expanding our business (moved into our own office, hired staff, ...)
    Post recession was the best time to be alive :).
     
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  7. The Y-man

    The Y-man Moderator Staff Member

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    Ok, I was blissfully unaware under the financial care of my parents.... :D

    The Y-man
     
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  8. Trainee

    Trainee Well-Known Member

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    Whats bad for the group doesnt have to be bad for the individual.
     
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  9. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    I lived away from my parents during the academic year at a university residence. The rent I was paying did not reduce. I recall my parents were doing okay at the time, but two out of four kids had just left home. They had quite a bit of extra income as a result.

    There's a perception that the 90s recession lasted many years, which isn't really true. The worst of it was less than 12 months, but recovery did take a while. I've heard that the great depression was similar.
     
  10. Trainee

    Trainee Well-Known Member

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    Remember it being really bad for people just joining the workforce. Similar stories out of the US during the gfc.
     
  11. Ketsle

    Ketsle Well-Known Member

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    I should have rephrased and said 'any' previous recession. 90's, 00's, even 2008 if you want to look at it that way. Understand the economies were different at each point in time but I'd presume human behaviours and money management strategies remain relatively similar?
     
  12. Ketsle

    Ketsle Well-Known Member

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    Nice one. Was this due to things turning and growing well or just good investment options becoming available?
     
  13. The Y-man

    The Y-man Moderator Staff Member

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    2008 was big for us..... written about it elsewhere....(on my intro thread I think...)
    7 figure losses, liquidation of our IP portfolio, usual stuff.... but no impact on the employment fronts so all fine there....

    The major rethink as a result was to be less geared ~ especially on the share market and exited derivatives and 100% geared managed investments altogether. Also gave up on trees around then too.

    It's funny because I only just realised the other day that many of my students in my classes would not have a memory of the GFC, whereas it is still "just like yesterday" in my head!

    The Y-man
     
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  14. TheSackedWiggle

    TheSackedWiggle Well-Known Member

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    Youth unemployment aged 15-24 is already high at 13% as against national figure at 5.2%
     
  15. Trainee

    Trainee Well-Known Member

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    My observation was for uni grads. no idea on how that translates to youth unemployment in general.
     
  16. willair

    willair Well-Known Member Premium Member

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    Perhaps future historians will conclude that the world-wide slowdown we may go into is to blame Donald --Trump --Boris the battle of brexit Johnson --and a new period of China's dominance all combined in one box..
    Myself i have worked through several..1990 onwards..

    Still food in the supermarkets..

    Some high rise building in the CBD and the Valley just went into shutdown mode and stayed that way for up too 18 months..

    Builders go belly up and a lot of small businesses go down the same path as people just stop spending ..

    Sun comes up in the morning goes back down in the afternoon..

    Some people who went in blind and over spent and this this did happen to a few i know one within my family circle..The local bank manager would take 2 months leave or be sent to another branch,then end up a taxi driver..Then the Bank would bring in a new chain-saw manager and start to call in all the risky loans give them a time--frame then wacko..

    Share markets crash--property sit for sale for anything from 6--months up to 18 months as the for sale signs fade outside and fall apart and interest rates explode..

    I think the date to watch is 31st October and the lead up to that date because Brexit will take place what ever the circumstances..
     
    Last edited: 15th Aug, 2019
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  17. kierank

    kierank Well-Known Member

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    Great investment options becoming available.
     
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  18. kierank

    kierank Well-Known Member

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    The GFC was far tougher for us.

    By April 2008, our business was running at $1+M loss.

    We had to make some really TOUGH decisions including giving everyone a pay cut (and I mean everyone), letting some staff go (they copped a really big pay cut), ...

    We just put all the cards on the table for staff to see, discuss and understand.

    By end of June 2008, the business was back to break-even.
     
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  19. SatayKing

    SatayKing Well-Known Member

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    Mark the Graph: Dating Australian Recessions

    A bit old but you get the drift. Doesn't cover the ones in 1973 (Oil shock time I think) or 1975 (just rubbish economy) when even those with PhD's were driving taxis I believe.
     
  20. Scott No Mates

    Scott No Mates Well-Known Member

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    Yes, yes and no, mum and dad wouldn't reduce my rent. :rolleyes: