The next bubble - what is it?
Discussion
Let's not forget that the seeds of the last credit bubble (which hasn't deflated properly yet) were sown in the low interest rates designed to rescue the US economy (and the stockmarket) following the dotcom bubble and 9/11. The "Greenspan Put" as it was called - the belief that the Fed will always come in and rescue the stockmarket, and this in itself helped hold up equity prices.
So here we are again in a zero interest rate world, designed to rescue the global economy from the financial followed by Euro debt crises...
So here we are again in a zero interest rate world, designed to rescue the global economy from the financial followed by Euro debt crises...
Bibbs said:
johnfm said:
Good shout on WA Eric.
I might need to do a bit of digging on my home town to see how much of the boom is leveraged. A lot of the hear in the market is from mining employment. People are getting very well paid to work either on site or fly in-fly out and are buying property with their excess spending power - but I need to explore what sort of credit liquidity is over there. If the massive price inflation is credit fuelled - they're in the mire. If it is earnings fuelled, they're slightly less in the mire if China stops consuming minerals.
The banks are still quite tight with the lending (I'm looking to buy in the next few months).I might need to do a bit of digging on my home town to see how much of the boom is leveraged. A lot of the hear in the market is from mining employment. People are getting very well paid to work either on site or fly in-fly out and are buying property with their excess spending power - but I need to explore what sort of credit liquidity is over there. If the massive price inflation is credit fuelled - they're in the mire. If it is earnings fuelled, they're slightly less in the mire if China stops consuming minerals.
No self cert and big insurance payments needed if you don't have a 20% deposit.
But I recon it's too late to jump in just for investment. I was looking about 7/8 years ago and just couldn't afford it from the UK. Now, it'd be silly as house prices have doubled. Before it was a bargain, now it's only comparable with the rest of Aus.
You are looking at $500k for anything near the CBD really, for FIFO people. Lots of apartments going up near the city, but the rent wouldn't cover the loan (and strata fees and rates - payable by the owner, not the renter make it very costly).
WA will shrink but when is unknown - depends who you listen to.
There are lots of very wealthy averages joes here with lots of equity and savings so there might just e enough cushion if and when it goes.
AJS- said:
Didn't social media peak in about 2008 and deflate slowly from there?
Yeah but since the sale of Facebook, the pressure is on to monetize.And there's absolutely no way to do it without losing the userbase that was so attractive in the first place.
Personally, I've started buying gold coins. And renting a safety deposit box.
Bibbs said:
Pommygranite said:
Bibbs said:
Pommygranite said:
if and when it goes.
Any day now it'll crash, as we've just had an offer accepted on a house.Where are you off to live?
I can hear the rumblings of a crash on the horizon already.
I'm unsure itll be a crash more just a slow decline.
Pommygranite said:
Quoting due to knowledge or sheer presumption?
No one has knowledge of the future, least of all me, and it depends which bubble we're talking about (mining, property, investments in general, or the overall economy).I spent some time a few months back following the Aus media coverage of the property "situation", and it smells exactly like Ireland circa 2005/06.
The combination of large household debt and economic coupling to China is worrying.
HundredthIdiot said:
Pommygranite said:
Quoting due to knowledge or sheer presumption?
No one has knowledge of the future, least of all me, and it depends which bubble we're talking about (mining, property, investments in general, or the overall economy).I spent some time a few months back following the Aus media coverage of the property "situation", and it smells exactly like Ireland circa 2005/06.
The combination of large household debt and economic coupling to China is worrying.
You're wrong, there isnt the level of household debt as seen in other bubble places, greater level of household savings and it won't be a crash and more a deflation (when it happens) as there are already sizeable projects fully funded (talking billions) for some time yet coupled with variance of export.
Yes if china slows (it's not going to dive from 7.5% GDP to -% overnight) areas will contract but not mass collapse. Banks here are far better financially guarded and with less exposure to some of the toxic countries.
I think we will slowdown in 3-5 years but not crash.
Pommygranite said:
Ah presumptive guessing. I like it.
You're wrong, there isnt the level of household debt as seen in other bubble places, greater level of household savings and it won't be a crash and more a deflation (when it happens) as there are already sizeable projects fully funded (talking billions) for some time yet coupled with variance of export.
Yes if china slows (it's not going to dive from 7.5% GDP to -% overnight) areas will contract but not mass collapse. Banks here are far better financially guarded and with less exposure to some of the toxic countries.
I think we will slowdown in 3-5 years but not crash.
We should put some numbers and dates on this and do one of those PH charity bet things.You're wrong, there isnt the level of household debt as seen in other bubble places, greater level of household savings and it won't be a crash and more a deflation (when it happens) as there are already sizeable projects fully funded (talking billions) for some time yet coupled with variance of export.
Yes if china slows (it's not going to dive from 7.5% GDP to -% overnight) areas will contract but not mass collapse. Banks here are far better financially guarded and with less exposure to some of the toxic countries.
I think we will slowdown in 3-5 years but not crash.
t hits the fan 
HundredthIdiot said:
Pommygranite said:
Ah presumptive guessing. I like it.
You're wrong, there isnt the level of household debt as seen in other bubble places, greater level of household savings and it won't be a crash and more a deflation (when it happens) as there are already sizeable projects fully funded (talking billions) for some time yet coupled with variance of export.
Yes if china slows (it's not going to dive from 7.5% GDP to -% overnight) areas will contract but not mass collapse. Banks here are far better financially guarded and with less exposure to some of the toxic countries.
I think we will slowdown in 3-5 years but not crash.
We should put some numbers and dates on this and do one of those PH charity bet things.You're wrong, there isnt the level of household debt as seen in other bubble places, greater level of household savings and it won't be a crash and more a deflation (when it happens) as there are already sizeable projects fully funded (talking billions) for some time yet coupled with variance of export.
Yes if china slows (it's not going to dive from 7.5% GDP to -% overnight) areas will contract but not mass collapse. Banks here are far better financially guarded and with less exposure to some of the toxic countries.
I think we will slowdown in 3-5 years but not crash.
johnfm said:
PPPPPP said:
China.
This is interesting.Reading in the Telegraph about some massive regional infrastructure projects - one province claiming they will invest $470 billion in the next ten years - in a region with a population of 35m.
Looks like more empty apartments, offices etc.
Pommygranite said:
Deal. Name your price, date and judging factor.
This might be a long one. Property bubbles tend to pop slowly as denial and market paralysis take hold.How about Darwin average house prices down 30% on June 2012 levels in June 2015, according to the ABS:
http://www.abs.gov.au/ausstats/abs@.nsf/mf/6416.0
Would 30% off-peak in 3 years be a popped bubble? Don't know.
There's probably some more dynamic shorter term indicator like sales volumes, mortgage approvals, etc but I don't have a source for those to hand.
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