Seneca21

Totally agree. I think Aussie house prices are due for a massive crash of megatsunami proportions - the problem is I think we're looking at 10 years etc, not any time soon.

littda01

I think it will be sooner than that, though I dont know if it will be a megatsunami. The only way it could come in 10 years, IMO, is if that 10 years is essentially a period of price stagnation.

Remember asset bubbles can and do burst even in booming economies. They burst when the maximum amount of leverage has been reached, and market sentiment does a 180.

A little fear, uncertainty and doubt, and those loss-making investors will want out of there sharp.

I think a sign of this is the fact that house-building rates are dropping significantly. If supply is short (supposedly), credit is cheap (as it gets anyway), the economy is booming and the housing market is only going up, why is it that developers either can't get the funding, or can't forsee a profit, and are therefore sitting on potential projects?

Now should be a golden time for them, how could conditions possibly get any better?

Maximum leverage is nearing. JMO of course, could be 100% wrong

ozzieeagle

Problem I have with this, is I'm about to undertake a project and all builders are telling me they cannot start for at least 6months. They are all booked out way ahead.

Melbourne's housing market has been like this for years now, with building prices to match.

Coincidently, I heard on the radio yesterday that the average wage for a Tradesmen on a building site here is 130,000 Aud. Some Electrical contractors livng away from home.... Like the Wonthaggi desal project are pulling in more than 200,000.

Wendy

Yes, I can well believe that, I have seen some of the contracts! (I work for the company who are building the Desal Plant, albeit I am based on a different project in SA )

paulry

Funny, I was thinking about that yesterday. Property prices are likely to drop further so it might be a compelling option once OH and I are breaking even earning AU$

littda01

I know, I saw your comments in another thread, and I'm not at all surprised that builders are busy because I see them every day around my area remodelling crappy homes into million dollar mansions

What I was talking about specifically was large-scale development, where many companies are faring poorly - few projects ongoing, poor returns on those that are, low stock market valuations etc.

What this says to me, as well as high building costs and high land costs, is that they can't get the funding models they need even with pretty favourable conditions, and they don't see the potential returns looking 2-4 years out (and neither do investors, hence the low stock prices). That is a bad sign IMO.

This all reminds me (just from own experience) both of SE Asia in 1997 and Spain more recently (and probably Ireland). When the downturn came, it hit even harder because of the amount of resource and capital tied up in construction. Thousands of projects just stopped mid-train because the funding evaporated overnight.

Some of the stuff going on in the outback is mental. Monthly rentals in places like Karratha are approaching $10k per month because there's no places to put the workers who are needed to build houses (for the miners), and the materials all have to be trucked in. So its like a catch-22.

All of this is not sustainable. Its nuts frankly.

Don_Angel

You're not wrong. Land lord has just been charged $300 and had to wait 5 days to replace a bog standard mixer tap in the kitchen. I offered to do it myself but was not allowed. Took him longer to right the bill than the actual job.

Seneca21

Why did he not do it himself on the QT? No one would ever know.

paulry

Currently 1.62

Where to from here?

freebo

No-one knows, but there are (quiet) calls from the treasury among others that the AUD strength is hurting exporters and tax revenues.

Wendy

I don't know against the pound, but I heard talks on the radio this morning that they are 'expecting' the Aussie dollar to reach parity with the US dollar in the next few weeks. They being the banks

freebo

vs the USD we're currently at 0.99 so parity probably isn't as far away as that. What Australia is slowly waking up to is a strong dollar may not be such a good thing.

paulry

It's a tough one. My instincts tell me to wait but then again the 20th is coming and there are new rumours of further QE. Wifey is putting pressure on me to transfer her savings now even at this apparently insane rate so I might just do that and "borrow" from her if things get even worse.

Wendy

I've seen a bit of both.

I really have no idea myself, I only really have any interest because I want it to stay high until after my UK trip in a couple of weeks



Wish I had a crystal ball you could borrow!

freebo

I was in this position 6 months ago, we transferred our startup cash at 1.68, 1.74 and 1.78 (from memory) but only for a total of about £30,000. For startup sums we just bit the bullet, as flights where booked and we knew we'd have expenses, but for life savings its a bit more difficult.