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Inflation

greggles

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That's when interest rates stop going up, that's crunch time, how many immigrants are coming again? ;)

If that's the case then we should be prepared for quite a few more interest rate rises. Unemployment is at lows because COVID-19 reduced the available workforce. This is why there is more immigration planned, to fill low paying jobs that can't currently be filled and increase the personal tax base.

It's ironic, but cutting back on spending will stop interest rate rises but we are a nation obsessed with services and spending. We will happily accept high mortgage payments as long as we can continue to get new iPhones and takeaway food delivered by Uber Eats.

Things are going to get a helluva lot worse before they get any better.
 

wayneL

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How many people own a house in Sydney? They're all millionaires, if not this week, definitely next week. 不

"Own" being the operative word.

We bought our ponderosa via an end date sale process. We were in fact the lowest offer (and 300k lower than the highest offer ), but the only all cash offer.

There are a lot of stonking big mortgages out there (and maybe neg equity for some).
 
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"Own" being the operative word.

We bought our ponderosa via an end date sale process. We were in fact the lowest offer (and 300k lower than the highest offer ), but the only all cash offer.

There are a lot of stonking big mortgages out there (and maybe neg equity for some).
The rich make money from inflation, because as their asset value increases their borrowing capacity increases and they can buy up distressed assets at a mortgagee sale price.
The rich are usually those on the highest incomes, so I will post up a picture of recent earnings information, zoom in on Canberra all blue. 不
It really does show the problem, when the two green specks of Melbourne and Sydney can cause so much housing pain and those who can sort it are in the smaller blue speck.
While the rest of us wear the fallout. 不
Nearly half of Australia's population is between those two small spots and 90% of Australia's decision making is made between the three Sydney, Canberra and Melbourne, how bizarre is that. Is there any wonder we have a mess?

Screenshot 2023-05-18 103559.png
 

over9k

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Genuine wealth or top 1% is above 8.5m AUD wealth..somewhat doubt many of these are affected by much taxes or unemployment or holiday parks
This was my whole point - it hasn't been the 1% spending their money like madmen on loius vuitton or whatever.

It's been the plebs using credit.
 

over9k

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It will take a substantial increase in the unemployment rate before this happens. As long as people have a job they will spend on services and demand will not be affected. Once people lose jobs and have to rely on savings (if they have any) or family, that's when spending on services falls off a cliff.
Ehhh dunno about that greg. People can only borrow so much, especially with rate increases.

The better question might be to ask exactly when people are actually going to be tapped out?
"Own" being the operative word.

We bought our ponderosa via an end date sale process. We were in fact the lowest offer (and 300k lower than the highest offer ), but the only all cash offer.

There are a lot of stonking big mortgages out there (and maybe neg equity for some).
buy up distressed assets at a mortgagee sale price.
Exactly what I'm doing lowballing the f**k out of places at airlie beach with cash offers ;)

There's a lot of real estate agents that are the proverbial meat in the sandwich between people like me that know it's a buyers' market (and know why) and vendors in complete denial about the reality of the holiday housing market (the most luxury of luxury goods) situation.

This happened back in the GFC with entire towns that were just annihilated and retirees or those close to retirement just sat on their IP going "We'll just have to wait for prices to go back up, they always do".

This is the kind of strife you get yourself into when you buy a place because "housing always goes up" while simultaneously having absolutely no idea WHY housing "always goes up".

It's only the immigration that's keeping sydney/melbourne pumping even now. Anywhere that migrants haven't moved to is an absolute bloodbath.
 

wayneL

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Ehhh dunno about that greg. People can only borrow so much, especially with rate increases.

The better question might be to ask exactly when people are actually going to be tapped out?


Exactly what I'm doing lowballing the f**k out of places at airlie beach with cash offers ;)

There's a lot of real estate agents that are the proverbial meat in the sandwich between people like me that know it's a buyers' market (and know why) and vendors in complete denial about the reality of the holiday housing market (the most luxury of luxury goods) situation.

This happened back in the GFC with entire towns that were just annihilated and retirees or those close to retirement just sat on their IP going "We'll just have to wait for prices to go back up, they always do".

This is the kind of strife you get yourself into when you buy a place because "housing always goes up" while simultaneously having absolutely no idea WHY housing "always goes up".

It's only the immigration that's keeping sydney/melbourne pumping even now. Anywhere that migrants haven't moved to is an absolute bloodbath.

I'm interested in a spot close to us... Taken a couple of potshots, but waiting now to see the whites of their eyes...

...happy to stand aside until there is value.
 

over9k

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...happy to stand aside until there is value.
Same. I'm even getting agents texting/emailing me asking if I still want to make an offer, "Oh the seller has revised their asking price" etc etc. They get the "Nah that was two months ago, now I'll only offer X" every time.

Vendors are just chasing their tail on this - asking me 6 weeks later after another RBA hike if I'll still offer (whatever) and I'm just like nope, that was when interest rates were 4%, now they're 4.25% I'll only offer X, and if they go up again (which they will) then I'll only offer Y, and so on and so forth.

At least two of them would have made a sale if they'd actually taken my offer when I made it rather than coming back to me weeks/months later after another 50 or 75 or 100 points of rate rises asking me if I'll still offer what I mentioned a couple of months ago.

Here's a nice little 2 bed-2 bath apartment I've been "negotiating" with (that I've honestly been looking at more as an investment than a holiday place but different discussion):

343756333_151500051237175_3798190941685484977_n.jpg

"The market is starting to move and interest rates shouldn't effect your decision". Aka trying to sow the seeds of FOMO. Amazing.


A few months ago it was up for 650. They readvertised at 590, I said 550, they said nope, already got a 560 offer we're sitting on, a fortnight later he contacts me the literal day after another rate hike and I throw 520 at him.

I mean I know real estate agents aren't known for their intellect but he texts me THE DAY before an expected rate hike asking if I want to make an offer? Could they have possibly tipped their hand any more?

They couldn't make the fact that their other offer's just been withdrawn (or was about to be) after the hike more obvious if they tried.
 

over9k

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Meanwhile, here's the XYZ billion euro question for europe:

234525632456.jpg

It seems they might have concluded that it'll be cheaper to just mothball the factories than to pay the inflated gas prices. I don't see how they keep doing that for long, you can't just shut an entire continent down every time it gets cold forever.
 

over9k

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This was my whole point - it hasn't been the 1% spending their money like madmen on loius vuitton or whatever.

It's been the plebs using credit.
Extension of this point: It's exactly what's been happening with housing too. Nobody that's bought a, say, holiday place in airlie beach with cash is going to be panic-selling.

It's the people levered up to the hilt and in "negative equity" that are sh!tting themselves.
 

over9k

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Certainly in the U.S, the jobless numbers just came in at 229k vs 246k estimated and this is now the result:
2345234524354325.jpg

234523462346.jpg


The AUD's dropped another 0.4% in response after already being in freefall the rest of the week:

23452346243562435624.jpg

A drop in AUD will only serve to increase energy costs (and therefore raise inflation) here more as the demand side for most of this country's exports (I'm looking at you, iron ore) is toast and not coming back.

I'd start pricing this in to your ASX trades now if you haven't already. I mean I own basically nothing denominated in AUD except a few coal miners as I think this country's headed for some major strife but this is an aus based forum so I know most of you have your wealth in aus companies rather than overseas.

It should make another hike from the RBA a virtual certainty now, if not for nothing more than the whole "All the other countries are hiking, why aren't you? You're way behind the curve aren't you?" narrative that's being spun.
 
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Meanwhile, here's the XYZ billion euro question for europe:

View attachment 157332

It seems they might have concluded that it'll be cheaper to just mothball the factories than to pay the inflated gas prices. I don't see how they keep doing that for long, you can't just shut an entire continent down every time it gets cold forever.
well if industry has moved elsewhere ( outside of Europe ) why would anyone be surprised

( obviously much small industry has already closed )

if the traders feel the need to ask that question they obviously need a different vocation ( if there is nobody left to buy .. how can you expect demand )
 
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A drop in AUD will only serve to pummel energy costs (and therefore raise inflation) here more as the demand side for most of this country's exports (I'm looking at you, iron ore) is toast and not coming back.

I'd start pricing this in to your ASX trades now if you haven't already. I mean I own basically nothing denominated in AUD except a few coal miners as I think this country's headed for some major strife but this is an aus based forum so I know most of you have your wealth in aus companies rather than overseas.
a buddy i was talking to tonight suggested BHP around $39.99 was a reasonable target , i thought that was a bit low ( am thinking sub $41.25

i guess we will find out tomorrow
 

over9k

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a buddy i was talking to tonight suggested BHP around $39.99 was a reasonable target , i thought that was a bit low ( am thinking sub $41.25

i guess we will find out tomorrow
Well a drop in AUD actually helps exports (not entirely, it still raises the costs of inputs to produce the export) but it's the demand side that's done for with iron ore.

If you've done your DD on BHP you'll know that they started very quietly rotating over into copper and precious metals (lithium, cobalt, nickel etc) mining a year or two back. They did this for a reason and it's the same reason why twiggy's been moving FMG over to energy and so on - iron ore's day is done.

I very seriously looked into a BHP play back then as I was thinking the exact same thing that the company's execs (thankfully) were - iron ore's done and they need to move over into supplying the inputs into whatever the next boom is going to be (namely, electric cars, meaning batteries and copper electric motors) and concluded that they were just way behind the curve.

23456235624562456.jpg

I think we'll be back in those sub-$40 troughs before long.
 

over9k

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Meanwhile, another heritage listed building in sydney that they wanted to demolish and build high-rise on just happens to burn to the ground:



I wonder how long it'll be before we get some kind of "We just won't be able to rebuild it, the damage was too extensive, the best thing to do is just turn the site into "affordable" housing" type of line from whomever.

Come on. Let's start the clock shall we?
 
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Meanwhile, another heritage listed building in sydney that they wanted to demolish and build high-rise on just happens to burn to the ground:
A quick search online finds that 20 litres of kerosene costs $85 or $4.25 per litre.

From an offline record the price in 1983 was 40 cents / litre back when service stations commonly sold it. So that's a fair bit of price inflation but it's still a bargain if you've got a good enough use for it. ;)
 

over9k

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A quick search online finds that 20 litres of kerosene costs $85 or $4.25 per litre.

From an offline record the price in 1983 was 40 cents / litre back when service stations commonly sold it. So that's a fair bit of price inflation but it's still a bargain if you've got a good enough use for it. ;)
I run E98 though, it burns much cleaner/hotter for only $5/drum more:

243562652456.jpg


2345234524352.jpg 2345623624356.jpg




>_>
 
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Phil Lowe has already flagged higher rates. Issue is the mortgage environment in Aus IMO - too sensitive to hikes particularly with the fixed rate cliff.
Banks have already made adjustments to allow for refinances at a lower assessment rate compared to new borrowing.
 
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