Jordy Posted March 31, 2015 Report Share Posted March 31, 2015 This financial article by Forbes is a little worrying. I was wondering what our forum economists thought?It says:Aus dollar to the US dollar to drop to $0.49 in 2 years. A Recession is a real possibility - 33% chance of it happeningThe mining Book has collapsed faster than anyone expectedhttp://www.forbes.com/sites/timtreadgold/2015/03/30/aussie-dollar-down-25-in-two-years-and-could-go-down-another-25/What I am particularly interested in is what the experts think will happen to property prices? Quote Link to comment Share on other sites More sharing options...
Tiermelk Posted March 31, 2015 Report Share Posted March 31, 2015 Scary article, might want to buy something in USD now.I so wish the property prices would fall - but I don`t think it`s going to happen - not in the areas we would like to buy in any event. (*no expert)Some more reading on this topic here:http://forums.whirlpool.net.au/forum-replies.cfm?t=2387329 Quote Link to comment Share on other sites More sharing options...
Donovan83 Posted March 31, 2015 Report Share Posted March 31, 2015 There probably will be a recession (I think it's already started), prices of property will probably fall and the exchange rate will probably weaken. Is it bad news? Absolutely.Will it be as bad as the worst case scenario that sometimes gets predicted? Probably not. Is it something we can control? Nope. Should we lose sleep over it? No. If a recession happens it happens. We'll just deal with it. Recessions have happened before, they'll happen again. If I lose my job, I'll find another, if the value of my property drops, so be it - if I sell it for less than I bought it for, it's undesirable, but it would also mean other properties would have lost value too. I'll still have a roof over my head and my only sore spot would be that I could've bought it for less. Worrying won't change anything. 1 Quote Link to comment Share on other sites More sharing options...
Bob Posted March 31, 2015 Report Share Posted March 31, 2015 There's no denying that property prices will come down, hopefully not collapse altogether.Looking at housing prices, in the parts of Australia where there has been a mining boom . . . . Western Australia, Queensland and the Northern Territory . . . . housing has gone from being your every day average price to something only wealthy Aussies could afford.There's a couple of factors driving this. One is the extra income that the resources (mining) boom has brought in, lining people's pockets who live in Perth with loads of extra dough so that paying another hundred thousand dollars for a house isn't so big a deal. It's affordable on the wage they are bringing in, for a change (so they thought).That sort of outlook has pushed house prices up. . . . . . and then some.Another factor is the lessening of the Foreign Investment rules allowing wealthy Asians to buy up big. It's estimated that one in ten houses throughout the whole of Sydney is just being bought up by wealthy Chinese, let alone the Indians or foreigners from Russia, etc.This also pushes house prices up.Even in the early 1980s, Sydney house prices were outrageous. Newly married couples were buying a single house together by pooling their money and income, with one couple choosing to live upstairs, the other couple downstairs. That way, they got their leg . . . or legs . . in the housing market and could ride the increase in prices to come.The biggest factor pushing housing prices up is immigration. Whenever you get 100 immigrants coming into Australia, there is a demand to house them. With a static population, once the housing increase has caught up with demand, then house prices aren't going to keep being pushed up . . . . supply and demand equation.Australians simply won't keep paying 20% more for housing if there isn't so much demand.A simple parallel would be selling cars. If people want a new car all the time, the car showrooms are full with new buyers signing up for a new vehicle.Without those new people, the car dealers have to start becoming more competitive to move their cars off the showroom, and they do this by dropping their prices . . . . . the opposite direction in prices to what was previously with people signing up all the time for a new car.So . . . . . the price of housing in Australia will be determined largely by demand. If demand falls away, by less immigrants coming to Australia, or Aussies simply not having extra cash in their back pockets to afford the price increases, what do you reckon is going to happen to house prices, especially in the inflated housing markets of Perth or Sydney?If Australia's economy begins to take a downturn, which is what is happening with the inevitable slowdown now happening in the Chinese economy, then more and more immigrants won't keep flooding into Australia. There will be less of them. The economy of Australia simply won't be able to provide the extra jobs for them to support themselves.Also, Australians once they begin to lose their jobs will end up getting lower paid jobs and having less of an income to afford higher property prices.There are so many variables in the international economy which are likely to have an impact on the economy here . . . . Greece getting kicked out of the Eurozone and the consequential adjustments that will take, the lowering of demand in the Chinese economy with the over inflated housing prices there and the level of indebtedness of various Chinese provinces, and so on.Trying to forecast the future economically with so many variables in play is like forecasting the weather in three months time. We know it will be colder, but by how much? 1 Quote Link to comment Share on other sites More sharing options...
Fish Posted March 31, 2015 Report Share Posted March 31, 2015 There's no denying that property prices will come down, hopefully not collapse altogether.Looking at housing prices, in the parts of Australia where there has been a mining boom . . . . Western Australia, Queensland and the Northern Territory . . . . housing has gone from being your every day average price to something only wealthy Aussies could afford....Just a note on this Bob....while some Qld country mining towns had crazy house prices Brisbane has become the second cheapest market on the mainland after Adelaide. Quote Link to comment Share on other sites More sharing options...
Sunnyskies Posted April 1, 2015 Report Share Posted April 1, 2015 Australians outside of the resources sector have been in a recession for the last 6 years. Everyone has been complaining about not being able to afford what they could afford 6 years ago. I know of a number of people who have been made redundant and have really struggled to find new jobs - some haven't and are living off the equity in their "overpriced" homes.Yes, people can still feed their families, but it's tough going.Yes, there are jobs available, but yes there is a lot of competition and you have to work out what puts you above the next person to get the position.I'm not trying to stop anyone from moving, but be aware that it is not always easy and you should come with as much as you can while you also fight for a job. Don't give up, there are jobs, just not a lot that you can simply walk into by being here. Quote Link to comment Share on other sites More sharing options...
Jordy Posted April 1, 2015 Author Report Share Posted April 1, 2015 One thing everyone must remember: Prices are going to to rise. Take Apple for example: They hiked the priced of the iPhone by 15% overnight. They did it quietly with no announcement. So 15% on a $1000 iPhone jumped to $1150. They did this because when the iPhone was released 6 months ago the exchange rate was A$0.90 cents to the US dollar. It is trading at A$0.77/US$1 at the moment. So Apple just increased the price by 15% to make sure they got the same exploitative profits. You can be sure that all technology is going to be adjusted in the weeks to follow. If you are thinking of replacing anything technological, do it now. Or pay 20-30% in the months to come as the exchange rate weakens. Apple Jacks up Aussie iPhone prices Quote Link to comment Share on other sites More sharing options...
ottg Posted April 2, 2015 Report Share Posted April 2, 2015 If you ask 10 economists this question you will get 10 different answers, thus I think anyone with an opinion may be an "expert". :-) Here is mine:Because most things are relative and we need to view factors in relation to each other: slowdown in economic activity, indicators such as GDP (gross domestic product), investment spending, capacity utilization, household income, business profits, and inflation fall, while bankruptcies and the unemployment rate rise (wiki). Comparing this to the 2007/8 GFC may help as we have all experienced that. The Tables I compiled for download shows various trending factors dating from 2006 - 2015You can play with them here:http://www.tradingeconomics.com/australia/gdp-growth-annualThe Economic Index shows that it has risen above the GFC recovery level in 2010 while the past few months are in a upwards trend.The Gross National Income shows a rapid increase followed by a steady increase since GFC and recently a flatting off trend.The House Price Index shows high volatility since GFC days and sharp decline between 2010/11 with a steady rise in 2011/2013 and recent stagnation. The New Home sales shows a steady increase since 2012. However you need to view this against the steady population growth. Not showing in this figure is the immigration rate which is another major economic driving force that strongly influence house sales.More interesting is the National Income which shows a steadily rise and then a recent flattening-off but nothing like the delayed response of the GFC during 2008. Lastly the Job Vacancies shows a increasing trend since 2014 however the unemployment rate also increased since 2012. Unfortunately I dont have a graph that measures the one relative to the other. The higher unemployment rate can be because too many people with wrong skills in new changing markets and/or an increase in migrants looking for work. (So obviously we need to dig a bit deeper here). However from the above - are we heading for a recession? Definitely not but it doesn't mean that it wont happen in the longer term future. As Donovan83 says worry about it when it happens. It seldom happens overnight just keep watching the the ASX200 trend. Quote Link to comment Share on other sites More sharing options...
Jordy Posted April 2, 2015 Author Report Share Posted April 2, 2015 Thanks for the reply. Very helpful. Your graphs are also helpful. A little scary when one looks at unemployment though. Quote Link to comment Share on other sites More sharing options...
Jordy Posted April 3, 2015 Author Report Share Posted April 3, 2015 If you ask 10 economists this question you will get 10 different answers, thus I think anyone with an opinion may be an "expert". :-) Here is mine:ottg you will appreciate this:https://www.youtube.com/watch?v=HN2iVe8_Ato 1 Quote Link to comment Share on other sites More sharing options...
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