House prices

Blowin's picture
Blowin started the topic in Friday, 9 Dec 2016 at 10:27am

House prices - going to go up , down or sideways ?

Opinions and anecdotal stories if you could.

Cheers

velocityjohnno's picture
velocityjohnno's picture
velocityjohnno Wednesday, 18 May 2022 at 7:04pm

https://www.macrobusiness.com.au/2022/05/imf-new-zealands-housing-bust-t...

"“There is likely to be a larger impact on consumption through wealth and sentiment effects. In a scenario of a marked housing correction, macroeconomic policy support may be needed to avoid second round effects and a pronounced downturn”…"

velocityjohnno's picture
velocityjohnno's picture
velocityjohnno Wednesday, 18 May 2022 at 7:14pm

https://www.reuters.com/markets/us/powell-fed-will-keep-pushing-until-cl...

Volckeresque, message seems consistent.

"But if inflation does not fall, Powell said the Fed would not flinch from raising rates until it does.

"If that involves moving past broadly understood levels of 'neutral' we won't hesitate to do that," Powell said, referring to the rate at which economic activity is neither stimulated nor constrained. "We will go until we feel we are at a place where we can say 'yes, financial conditions are at an appropriate place, we see inflation coming down.'" "

flollo's picture
flollo's picture
flollo Wednesday, 18 May 2022 at 8:37pm
flollo's picture
flollo's picture
flollo Thursday, 19 May 2022 at 10:10am

Some latest info on wages, some good, strong indicators in here like labor participation rate and job opening rate. But salary growth itself is still sluggish. Good thing is, most who want to (or can) work have some sort of job.

Also, if the cash rate goes to 2.5% by mid-2023 as indicated I cannot see an apocalypse of epic proportions in the housing market. That is still under or just around 5% retail which many can handle in my opinion (assuming solid employment opportunities).

https://www.ampcapital.com/au/en/insights-hub/articles/2022/may/econosig...

freeride76's picture
freeride76's picture
freeride76 Thursday, 19 May 2022 at 11:55am

Agreed Flollo.

Subdued wages growth will also weigh into RBA decision making re rates.

garyg1412's picture
garyg1412's picture
garyg1412 Thursday, 19 May 2022 at 2:02pm
flollo wrote:

Here we go, more issues on the horizon - https://www.news.com.au/finance/business/crisis-talks-underway-as-buildi...

Flollo not on the horizon at all - it's on our doorstep.
Not wanting to be too pessimistic but this is going to play out on a more regular basis and has the potential to be one of the biggest issues the construction industry has ever faced. Companies like Metricon are basically a conveyor belt, pretty much like your brewery punching out a large quantity of their product. Now imagine you can't get glass bottles or cans like they can't get timber framing, trusses or reliable sub trades - how's your cash flow going then. I went bust in 2011 and believe me when you have cash flow problems in the construction industry the debt goes from being and arms length away to knocking on your door before you can blink.
If Metricon goes down, that is two of Australia's biggest builders from both sides of the industry going under in a space of 3 months. Only extremely switched on operators are going to survive this unfortunately.

velocityjohnno's picture
velocityjohnno's picture
velocityjohnno Thursday, 19 May 2022 at 4:02pm

https://www.fool.com.au/2022/05/19/why-is-the-woolworths-share-price-sli...

off the back of a horror Target US earnings announcement

"Ringing a warning bell on inflation, bricks and mortar retailer Target Corporation (NYSE: TGT) told shareholders that rising labour and freight costs took a bite out of the company’s bottom line. On top of this, customers tightened their budgets during the quarter — perhaps due to inflation — resulting in reduced spend on discretionary items."

a bit odd staples get smashed after US discretionary does, but who am I to judge?

Related, as here's that shift in sentiment/reduced discretionary spend stuff I've been mentioning, in concrete results.

flollo's picture
flollo's picture
flollo Thursday, 19 May 2022 at 4:40pm

Target sunk 25% in the last few days. Even Home Depot price is struggling despite overachieving on the expectations.

kaiser's picture
kaiser's picture
kaiser Thursday, 19 May 2022 at 10:29pm

Wage growth demand will always lag inflation, and will eventually occur out of necessity. And how far does the inflation genie fly in the meantime? US And UK are cases in point.

To wait for wage growth is to tempt the spiral. And once that happens, well, it’s a spiral…

monkeyboy's picture
monkeyboy's picture
monkeyboy Friday, 20 May 2022 at 8:10am

US reported pretty dismal housing numbers today.
Same with Canada.
NZ is struggling.
Seems a lot of demand has been pulled forward. Prettty much every western country implemented the same pandemic response. Not saying it was a bad thing but at some point the demand has to fall back to pre-pandemic levels.

All of this is deflationary.

udo's picture
udo's picture
udo Sunday, 22 May 2022 at 7:54pm

flollo's picture
flollo's picture
flollo Wednesday, 25 May 2022 at 10:41am

New Zealand is expected to raise rates by 0.5% today.

In China, central bankers are urging banks to increase lending to stimulate growth.

https://www.bloomberg.com/news/articles/2022-05-24/china-s-central-bank-...

velocityjohnno's picture
velocityjohnno's picture
velocityjohnno Wednesday, 25 May 2022 at 1:03pm

New Zealand raises unterest rates 50 bps, sugnals more aggrissive hikes

https://finance.yahoo.com/news/zealand-raises-interest-rates-50-02454913...

Island Bay's picture
Island Bay's picture
Island Bay Wednesday, 25 May 2022 at 1:41pm

We have 7% inflation at the mo (NZ). Screwed.

Just cycled past the petrol station ($3+ petrol, $2.75 diesel), and did a quick mental calc. Diesel has gone up 700%+ in 20 years. My salary, not quite...

monkeyboy's picture
monkeyboy's picture
monkeyboy Wednesday, 25 May 2022 at 1:51pm
Island Bay wrote:

We have 7% inflation at the mo (NZ). Screwed.

Just cycled past the petrol station ($3+ petrol, $2.75 diesel), and did a quick mental calc. Diesel has gone up 700%+ in 20 years. My salary, not quite...

I read cauliflowers are $15 a pop over there ? What are they feeding them ???

Seriously I think there is some price gouging happening in NZ; meanwhile we're chucking our veggies away (well, Avocados anyway).

freeride76's picture
freeride76's picture
freeride76 Wednesday, 25 May 2022 at 1:57pm

How's the cost of living over there IB?

Price of fuel is definitely biting here.

Island Bay's picture
Island Bay's picture
Island Bay Wednesday, 25 May 2022 at 2:03pm

Ridiculous. Food and fuel and building materials especially bad. You don't buy a red cabbage at the supy - you buy a quarter of a red cabbage! (In Denmark we used to joke about Norwegians because they sold half cucumbers).

I've seen grownups break down in tears at the petrol station because they can't afford fuel and food, and without fuel the can't get to work etc etc. It's a complete charlie foxtrot, and a heartbreaking one.

But "Be kind!"

kaiser's picture
kaiser's picture
kaiser Wednesday, 25 May 2022 at 2:18pm
velocityjohnno wrote:

New Zealand raises unterest rates 50 bps, sugnals more aggrissive hikes

https://finance.yahoo.com/news/zealand-raises-interest-rates-50-02454913...

Potential for them to be at 3%+ by year’s end. If we stay at .35 we are gonna be way out of whack.

Roadkill's picture
Roadkill's picture
Roadkill Wednesday, 25 May 2022 at 2:19pm

I'm surprised fuel is not more expensive in NZ.
I still can't get over NZ voted her back in again..the regret will eventually kick in.

On a good note...I get to come back soon.

flollo's picture
flollo's picture
flollo Wednesday, 25 May 2022 at 2:24pm
kaiser wrote:
velocityjohnno wrote:

New Zealand raises unterest rates 50 bps, sugnals more aggrissive hikes

https://finance.yahoo.com/news/zealand-raises-interest-rates-50-02454913...

Potential for them to be at 3%+ by year’s end. If we stay at .35 we are gonna be way out of whack.

We probably won't as our $AUD will turn to shit. Maybe some rationalise it as 'good for export' situation. But all our day-to-day consumer goods are imported (+cars) so it would trigger even bigger inflation. Also, repaying debt in foreign currency would get a lot more expensive.

kaiser's picture
kaiser's picture
kaiser Wednesday, 25 May 2022 at 2:36pm

Exactly. Now is not the time to dawdle and wait to see more prints.
Interestingly (not surprisingly) all who have raised rates have seen prop prices decline. Why will we be any different?

donweather's picture
donweather's picture
donweather Wednesday, 25 May 2022 at 3:16pm

Don’t be too hasty wishing for rising interest rates. Watch the US of A over the coming months to see what happens if you rise too quickly and then have to hit the brakes!!

monkeyboy's picture
monkeyboy's picture
monkeyboy Wednesday, 25 May 2022 at 4:36pm
donweather wrote:

Don’t be too hasty wishing for rising interest rates. Watch the US of A over the coming months to see what happens if you rise too quickly and then have to hit the brakes!!

Not too far off: https://wolfstreet.com/2022/05/24/housing-bubble-getting-ready-to-pop-un...

The home loan rates are over 5% in the USA. They are still at 3% here.

velocityjohnno's picture
velocityjohnno's picture
velocityjohnno Wednesday, 25 May 2022 at 6:21pm

IB that sounds like a nuts situation. Is that Auckland or Wellington area? Is life less expensive in the NZ countryside?

Island Bay's picture
Island Bay's picture
Island Bay Wednesday, 25 May 2022 at 6:27pm

We're in Waikato, just south of Auckland, but it's the same in Wellington. And no, a lot of goods are more expensive in smaller towns than in cities.

NZ is generally expensive, and now that the massive borrowing/moneyprinting is starting to bite, and productivity is low, it's just coming together in a massive shit storm.

velocityjohnno's picture
velocityjohnno's picture
velocityjohnno Wednesday, 25 May 2022 at 6:34pm

Cheers, IB, just had a gander and there are some wonders of the world in that location :) would love to do a NZ surf and road trip one day...

Perhaps I can offer a cure to the borrowing/money printing and resultant shitstorm:

https://www.macrobusiness.com.au/2022/05/reserve-bank-vows-to-crash-new-...

"In delivering its decision, the RBNZ stated that it needs to “act as a constraint on demand until there is a better match with New Zealand’s productive capacity”. It also noted that “expected increases in mortgage interest rates are likely to contribute to falls in house prices” and that “house prices are now headed toward a more sustainable level”.

ASB senior economist, Mike Jones, said the RBNZ was “more hawkish than expected”:

“We thought the RBNZ would came out swinging, but today’s statement was still more hawkish than expected. The OCR was lifted 50bps as we and the consensus expected. But the RBNZ’s new OCR forecast profile implies both a higher OCR peak than we’d expected, and a more rapid pace of tightening to get there”

Indeed, the RBNZ’s ‘forward track’ released with its Monetary Policy Statement was far more bullish than economists expected. It shows the OCR at 2.7% by September of this year, 3.4% by December, then 3.7% by March and peaking at 3.9% in June 2023.

This would send mortgage rates to around 6% – more than double their pandemic low:"

Looks like they are going to stay the course, right the wrongs, correct the craziness. I'm impressed.

"In turn, the RBNZ expects “house prices to fall by about 14% by early 2024”:
Given New Zealand house prices are already down 5% from their peak nationally, the RBNZ’s forecast seems optimistic given its bullish OCR forecast."

In markets (14+5=19) 20% is usually termed a 'correction'...

freeride76's picture
freeride76's picture
freeride76 Wednesday, 25 May 2022 at 6:44pm

be interesting to see how far Oz goes down that same path.

Albo will not be keen to own a recession in his first term and be almost guaranteed to be voted out after one term.

Island Bay's picture
Island Bay's picture
Island Bay Wednesday, 25 May 2022 at 6:51pm

VJ, one of the problems is that RBNZ's mandate was changed by the Labour govt. It used to be "Hold inflation at 3% or less" but Full Employment was added during Covid, and so we were on the slippery slope.

And for your viewing pleasure, here are Westpac NZ's mortgage rates:

freeride76's picture
freeride76's picture
freeride76 Wednesday, 25 May 2022 at 6:57pm

How is all this going down over in NZ IB?

Island Bay's picture
Island Bay's picture
Island Bay Wednesday, 25 May 2022 at 7:00pm

Like a bowl of cold sick :-)

kaiser's picture
kaiser's picture
kaiser Wednesday, 25 May 2022 at 7:51pm

‘ In markets (14+5=19) 20% is usually termed a 'correction'...’

Correction-
10% is a correction.

20% is a bear

S&P 500 is currently staring down the bear. But the bear is hungry and the s&p is smothered in honey

Nasdaq tried to play dead but it was already too late

flollo's picture
flollo's picture
flollo Thursday, 26 May 2022 at 2:46pm

Here's a good link for those who like to dig around a bit.

https://app.remplan.com.au/

velocityjohnno's picture
velocityjohnno's picture
velocityjohnno Thursday, 26 May 2022 at 2:48pm

Right you are Kaiser, it just looks like a horrid, slumping shouldered beast to me at present (that said, 61.8% of people don't expect a counter-trend ripping bounce...) Not sure if I can be any further cryptic... not investment advice!

freeride76's picture
freeride76's picture
freeride76 Thursday, 26 May 2022 at 2:51pm
flollo wrote:

Here's a good link for those who like to dig around a bit.

https://app.remplan.com.au/

Nothing on Northern Rivers in there that I could see?

san Guine's picture
san Guine's picture
san Guine Thursday, 26 May 2022 at 5:43pm
flollo's picture
flollo's picture
flollo Thursday, 26 May 2022 at 6:03pm
freeride76 wrote:
flollo wrote:

Here's a good link for those who like to dig around a bit.

https://app.remplan.com.au/

Nothing on Northern Rivers in there that I could see?

https://app.remplan.com.au/northernrivers/economy/summary?state=15Nxfx5e...

You can click on that icon next to Brisbane on the map and it will zoom in. All regions are in here, there's also a community and economy version.

Nick Bone's picture
Nick Bone's picture
Nick Bone Thursday, 26 May 2022 at 6:20pm
velocityjohnno wrote:

Right you are Kaiser, it just looks like a horrid, slumping shouldered beast to me at present (that said, 61.8% of people don't expect a counter-trend ripping bounce...) Not sure if I can be any further cryptic... not investment advice!

Just scratching my head. Cryptic enough.

flollo's picture
flollo's picture
flollo Thursday, 26 May 2022 at 6:29pm

Liquidity crisis? Always a bad idea to use ATO's money as working capital.

https://www.abc.net.au/news/programs/the-business/2022-05-25/thousands-o...

Craig's picture
Craig's picture
Craig Thursday, 26 May 2022 at 6:32pm

VJ you reckon there'll be a bounce after it crashes a bit?

kaiser's picture
kaiser's picture
kaiser Thursday, 26 May 2022 at 8:25pm
flollo wrote:

Liquidity crisis? Always a bad idea to use ATO's money as working capital.

https://www.abc.net.au/news/programs/the-business/2022-05-25/thousands-o...

Right on cue:

https://www.news.com.au/finance/business/other-industries/sunshine-coast...

simba's picture
simba's picture
simba Thursday, 26 May 2022 at 8:31pm

yep they will start folding like dominoes this year

kaiser's picture
kaiser's picture
kaiser Thursday, 26 May 2022 at 8:50pm

Company rep assured everyone was paid before they went into admin. So maybe as a way to avoid ATO being first (& only) creditor paid, they paid everyone while knowing the ATO debt (allegedly etc), then folded? Clever, but inviting trouble. Maybe ATO might challenge that they continued trading while insolvent? Just a guess…

Allegedly

velocityjohnno's picture
velocityjohnno's picture
velocityjohnno Thursday, 26 May 2022 at 9:46pm

Hi Craig and Nick, I was replying to Kaiser mentioning the SP500 (largest index on earth) and similar to the Nasdaq and Dow it has undergone a certain pattern when viewed on a long term chart. That bit's bearish and has already occurred. In bear markets, rallies are often hectic and will test downsloping 30 week moving averages.

https://vdoc.pub/download/stan-weinsteins-secrets-for-profiting-in-bull-...

A good book, dunno about the link, I have a physical copy.

https://www.investopedia.com/terms/f/fibonacciretracement.asp

This link might illuminate a bit further. Amazingly, this stuff does happen, seen too much of it to deny it. Will it this time? Only you can know when to try to catch the falling knife. The book above would scold you if you went against the overall trend!

Craig's picture
Craig's picture
Craig Friday, 27 May 2022 at 8:02am

Thanks VJ.

velocityjohnno's picture
velocityjohnno's picture
velocityjohnno Friday, 27 May 2022 at 4:20pm

"To add further insult to injury, construction giant Metricon continues to teeter on the edge of “imminent collapse”. Accordingly, the NSW Government is preparing a rescue package for ‘too-big-to-fail’ Metricon and the industry:

...One option being examined is a rescue package at a cost of hundreds of millions of dollars that would shore up industry players at risk of collapse due to a confluence of factors, including the pandemic, rising material costs, recent flooding and labour shortages…"

https://www.macrobusiness.com.au/2022/05/australian-home-builders-droppi...

TBTF, bitchez.

AndyM's picture
AndyM's picture
AndyM Friday, 27 May 2022 at 4:30pm

Yeew, privatise the gains and socialise the losses!

Lemon socialism at its finest.

bonza's picture
bonza's picture
bonza Friday, 27 May 2022 at 10:45pm

Was it ever going to be any other way.

donweather's picture
donweather's picture
donweather Tuesday, 7 Jun 2022 at 5:36pm

Anyone who bought at or near the top in the last 12 mths or so will be getting a wee bit nervous right about now. Particularly if they have/had fck all equity/deposit. Watch the slippery slope begin!!!

flollo's picture
flollo's picture
flollo Tuesday, 7 Jun 2022 at 7:47pm

Received this in my email as an off-market opportunity. 'Only' $3m for a 600sqm block. Surfed here so many times, and love the place but I never liked these houses as I'm worried they might sink one day.

https://preview.mcgrath.com.au/?id=15P56335&preview=781707cdc4b291287025...