NKSK version 2

Don't you want to scream at those who consistently said that Perth prices will never fall?

Falling base metal prices, big drops in iron-ore spot prices and the difficulty in getting credit all adds to the mix.

(But interestingly, next to the above article in yesterday's paper I saw an ad for no-doc mortgages - and I thought that sub-prime lending didn't happen in Australia...?!)

NKSK version 2

And another thing....!

The future is now very uncertain - everyone is banking on business as usual with regards to China and immigration to WA in terms of keeping house prices high.

But, given the mining boom, migration into WA over the last 18 months has probably been as high as it ever will be but this has failed to even keep Perth house prices steady. So how will it do so in the future...?

And if...IF....recession in Europe and the US causes Chinas exports to stumble (as falling metals prices seem to indicate) and a lack of credit causes mortgages to dry up then Perth could face the mother of all house price collapses

Catch

interesting view,I think it could be right

jimbo_d

mining boom is already over i'm afraid, a lot of the companies are finding it very hard to finance new operations, jobs on hold or cancelled, may come good again if the banks start working otherwise even perth is in for a rocky time. add to that the likely takeover of rio tinto by bhp, that will shed thousands of jobs.

NKSK version 2

Fortescue mine plans at risk

Evelin

Telstra in Perth told its accounting staff yesterday, that in 3 weeks they will be out of job. A whole floor will be empty. Jobs go to Sydney.

Although the job ads in Sat paper are down by quite a bit. pity, that the West Australian doesn't write any more on the front pages how many job ads are in the paper. They stopped it a few years ago.

GinaUK

A no-doc mortgage isn't the same as sub-prime lending in the US.

For starters, despite its name you do need some documentation to show your income. But the important difference is that you can only get between 65% and 80% of the value of the property.

Sub-prime mortgages were often "ninja" loans (no income, no job, no assets), where people were given a mortgage with no payments to be made for a few years (interest was just added to the loan amount). These loans were even given on properties that couldn't be resold on the open market. Many lenders ignored the voluntary guidelines for clients that reputable lenders followed.

So, no-doc/low-doc mortgages aren't in the same league as the subprime loans.

Gina

Amazulu

I work for FMG (for Worley Parsons really but on the FMG project). I had a chat with Graeme Rowley yesterday actually. Here's the situation:
Original project was for a mine/rail/port to do 45mtpa - project finished.
We are just finishing the design (desands plant, lump circuit, 2nd stacker, 2nd berth) for optimisation to take this to 55mtpa should be finished early next year.
We are just starting the design to go to 80mtpa - new mine, 60kms of rail, major port upgrade. This is hoped to be finished by the end of next year. This will be financed out of company revenue due to inability to get finance due to current crisis.
Further upgrades will happen when finance can be obtained, or from company revenue if it cannot.
FMG, like BHPB, Rio and Vale sell most (all in the case of FMG) of their iron-ore on long term contracts that are negotiated between the buyers and suppliers. This price went up 90% this year. The price is expected to fall in next year's negotiations - by how much nobody knows yet.
Iron-ore has quadrupled in price in recent years. Mines were profitable at a third of today's price.
Rowley, along with BHPB and Rio are confident in the fundamentals of the Chinese economy and the facts of that country's industrialisation/urbanisation. Now you could say that 'well they would say that wouldn't they?' and there is some truth to that. They have to 'appear' confident to the market/investors/customers. On the other hand they also have to be realistic. They are not going to commit multi-billions (which they are) if they cannot make money out of it. Chinese growth is expected to fall from 11% to 8% in the short term.
BHPB and Rio do not have funding problems.
Smaller companies with no revenue stream are going to struggle to get funding and some may fold.
BHPB is just starting RGP6 (they were only doing RGP2 a few years ago).
Rio is continuing their expansion.
FMG is still expanding.
Molly Mines has just got interim funding to continue their project.
The Port upgrades at Karratha and Port Hedland are continuing.
Gorgon and North West Shelf LNG are continuing.
Rankin 1 and 2 (oil) are continuing
The new port at Oakagee (sic) is continuing.
Iron-ore projects out of the midwest are continuing.
Inpex has just started out. Although this will be built near Darwin, a load of plant and piping will need to be done in WA.
A new mine near Albany has just managed to get funding.
These are just off the top of my head - there are many more projects that are doing just fine.
Uranium is coming.
Major infrastructure projects are coming.

WA is gonna be okay.

NKSK version 2

Well, can't argue with any of that.

Amazulu

Cool. Some interesting info about big infastructure in this article too:
http://www.theaustralian.news.com.au...60-601,00.html

Rog and Deb

Bridie thanks for the advice, mucho appreciatto, however feeling daunted by other comments regarding Dalyellup. In a quandry as to whether we should look elsewhere (original plan was to rent on Dalyellup whilst we managed the build) was hoping to do it ourselves. Our friends live there also, to date they have not given us any negative feedback?

Olibeneli

Not IF..........WHEN.
Not COULD...........WILL

NKSK version 2

Amazulu - just going back to your post above....

Why do you think that the FMG is getting hammered so much on the stock market if things are all rosy?

Was the stock over-priced before? Does the stock market have less faith than the miners in the China boom - and if so, why? Or is it something else?

I read today that Fortescue has lost 2/3 of it's share value over the last three and a half months...

Amazulu

FMG was at nearly $13 a few months ago now it is about $4.50. I don't know. Andrew Forrest blamed short sellers - and there may have been some truth to this. Since short selling was stopped the share price has been $4.50-$7.00. Here's a scenario: Although FMG is operational, it is really only ramping up. Full production - 55mtpa - is not expected until next year. Their costs are high and I guess the project is still in a risky stage. Also there is a lot of uncertainty in the market. Forrest and Rowley are still very confident about the future, but their inability to get finance for expansion has got to have an impact. They will get to where they want to be - 200mtpa and beyond - but it will take longer than originally planned.

jimbo_d

You'd hope so, however if the share price carries on diving they're looking at fighting for their survival, or more likely being bought by one of the big two.