Who invest knowing recession is on the way - 2019-2020

What makes you to invest in property now knowing we are entering in recession.

Do you expect another property boom which going to happen to stop the recession this time?


‘So grim’: Aussie retail is in recession


When we have lot of new apartments and townhouses to be completed, may be in 2020 what makes you to invest in Sydney?

 

Never invested in Sydney, recession or no recession.

 

The beach babes.

 

If your in it for the long haul it could be just as dangerous sitting on the sidelines waiting for the crash.

 

That’s why we are moving to the GC

 

There are ALWAYS good deals regardless of any situation.

That’s like saying to Warren Buffet what makes you invest in the share market when the market is in a huge bear run...the good investors love the bad situations.

 

100% agree with you. In fact thats my fear too. But waiting 1 or 2 year won’t hurt for a long run.
Im not emotional too.

From the history all points sydney is not in the right position for capital growth nor positive gear. Still i can see some investors around Sydney want to buy. Are they making mistakes on fundamentals?

Very confusing

 

Reminds me of that great Mark Twain quote: “It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.”

 

Better late than ever. I've already got more than eight years on you

 

A poor economy doesn't necessarily mean prices (asset or consumer) decline. Ask anyone in Venezuela or Zimbabwe if a poor economy keeps a lid on asset prices.

One thing we know, is that APRA and the RBA are going all in to put a floor under property prices.

And "why Sydney"? Well, Sydney is the market that matters most in terms of influencing policy.

Say for example there are recessionary conditions in Hobart, Perth or even Brisbane - these are not sufficient conditions for market interventions to prop up house prices. However a recession in Sydney or Melbourne, is a metaphoric "call to policy action". Buying conditions in Sydney are good at the moment, and if they worsen still, there will be intervention to prevent any deterioration.

 

poor example these countries asset price gone up because of their money has collapsed and inflation hits the roof, if you have debt you be paying similar amount in interest payment.

you aren't paying 4% in these countries for rate when your asset gone up 10 folds due to the money system has collapsed, you be paying whatever the inflation is be it 100% 200%

 

Well, it is an exaggerated example of the principles that apply wherever there is inflation. But the more resilient economies are not immune to these laws of economics if they mis manage their currencies.

Stagflation in the 1970's was an example of high inflation and low growth. Reagan and Volker had to pay the piper in the 1980's with much higher interest rates in order to defend the dollar.

 

There are markets within markets...personally....I think we will avoid a recession...it will be more of lower growth over the next 2 qtrs. I can see one qtr of low growth...but it should pick up by Q4.

Some markets like Baby Boomer target products will not be impacted.

Unfortunately...the most exposed areas will be Sydney ...followed by Melbourne...

 

Yeah but the GC ones won't pay for their own smashed avo..

 

If they are eating smashed avo, they are too young for me .

I prefer older ones, with a couple of large portfolios ...


... properties and shares .

 

This is not true. APRA has started a policy review to maybe loosen credit slightly and RBA is very concerned about slowing growth and high unemployment...

Hardly all-in

 

Banks got hammered today because APRA now want them to hold more capital for IO and risky loan, so less money to go around again.

Banks won't be too keen writing IO loan because it cost them extra capital and that mean lower Return on Equity for their shareholders

APRA proposal targets higher risk home loans

 

There's a saying - 'more money has been lost waiting for downturns than in downturns themselves' or something. Maybe if PE ratios were something ridiculous like 30 I'd try to time the market by selling down but right now it's still quite reasonable.

Also one lesson my investing journey has taught me is - the things everyone talks about is never going to be the surprise - right now everyone's talking about impending recession etc, so naturally it's priced in. It's the unknown unknowns we need to attempt to imagine and consider.

 

Generally agree with this.

Did any/many of the smart people out there or in this forum see the GFC coming in the thick of 2007?

As I recall, it was all systems go and the daily bombardment in the media of inflation running rampant.