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Smurf1976

Bears Turning Bullish

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This is NOT a troll post although it might look like one in the first part...

In Australia at least, there seem to be rather a lot of bears turning bullish at the moment. There's been considerable debate on an Oz property forum and I have to say that I can't put a factual argument to say that house prices could not rise from this point. Many of the bears on that forum seem likewise either arguing that prices will rise from the present level or are at least willing to admit that it's possible. The most ardent bears, those found on property forums, are clearly turning at least a little bullish. Others are stating that they've simply given up on real estate altogether and will rent and not worry about house prices.

So I raise the question as to whether this signals the final "throwing in the towel" by the bears. The very last potential buyers eagerly awaiting price falls giving up on the prospect. Given the noticeable increase in house buying activity (which has enabled the VI's to report some small price increases in many areas) I think this is a distinct possiblity. The last bears who will give up have given up and bought or are buying now.

If this thinking is correct, then this is comparable to what happens at a market bottom when the final bulls throw in the towel, accept that the market's never going to rise and sell. And thus the new bull market is born. The Japanese stock market over the past couple of years is a possible example of such a bottom. Everyone's given up and then the market soars. The final non-believers piling into dot.com stock managed funds once the Y2K bug was found to be a non-event is another example of the last bears deciding that they were wrong and had better hurry up and buy.

And so I raise the prospect that the final buyers are now in the real estate market (in Oz) making their purchases. They'll be done in a few more weeks most likely. And then that's it. No buyers left whilst, even with the recent pickup in activity, the number of unsold properties continues to rise with barely a dip over Christmas. Complete exhaustion of buyers plus rising supply = outright crash. Exactly the same as trying to sell a million shares on a day when there are only one or two buyers each wanting nowhere near all of your one million shares. If you can sell at all, then you sell at a vastly reduced price - a crash. Since there will always be some property owners who simply have to sell, and it's no secret that the number of reposessions is increasing (even a very high profile Oz national talkback radio host said it as fact), the near total lack of buyers would presumably result in serious price falls.

I'm not suggesting prices fall 20% overnight. But it seems reasonably possible that the real, sustained falls in Australia could start in earnest perhaps around March - April this year. Real falls as opposed to the patchy falls so far which have been concentrated in Sydney. Thoughts?

Edited by Smurf1976

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Excellent post. Yes - I think you're right. But surely the fact that you're saying this means that YOU are the last bear so the market has to wait for YOU to give up!!

No but seriously - I know that I will be pushed harder than I ever thought possible with propaganda to make me buckle - I never realised just HOW hard and how long the pressure has been (will be) kept up! It's like relentless sleep-deprivation torture - everyone has a breaking point. EXCEPT those prisoners who GIVE UP and don't care if they are killed. Morbid analogy I know but that 's the attitude to have :- "I'm not interested in buying anymore - I'm happy renting as cheaply as I am for ever if need be"

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All I know is that my mum, who is considering changing houses here in Canberra, is being offered bigger and bigger discounts when she goes to new-build open houses.

The real head-in-the-sand bulls here are the land sellers. Not even a sign of change there, they are still putting prices up. :(

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I think you're on to something Smurf and your analogy of the bulls pulling out at the bottom of the market is a good one.

Whether a bear or a bull, its important to gain something before giving up and changing sides otherwise you are doomed. Unfortunately there are some bears on this site who suggested they might give up soon.

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Interesting. I was talking with a couple of London and Paris landlords the other day. They have more than a hundred properties each with very low gearing, both commercial and residential. Both were active sellers on the commercial front because they believed a recession was coming and that rent levels could not be sustained. Both were also strong sellers of residential property because rents in all the major cities of France have already collapsed by 15% and are still going down (that has also happened in London) and secondly because as the London landlord put it "The people who want to buy my stuff are so financially weak that I wouldn't even rent stuff to them. These people are spending 250k but are only one pay-cheque away from the gutter. When markets get like that, get out because they're being driven by those who've been shut out and never had a clue in the first place." There certainly do seem to be some parallels with the dotcom / daytrader boom.

When a landlord is cheerfully selling properties to people he'd refuse to rent to, the simple question arises: why are banks lending 250k to people a landlord wouldn't want to extend 1.5k to ???

Both landlords also saw attacks on disposable income both by government grab and recession as the clearest indication that rent levels would not return for some time and that the tailend weak first time buyers would not be able to cope causing values to decline.

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This is NOT a troll post although it might look like one in the first part...

In Australia at least, there seem to be rather a lot of bears turning bullish at the moment. There's been considerable debate on an Oz property forum and I have to say that I can't put a factual argument to say that house prices could not rise from this point. Many of the bears on that forum seem likewise either arguing that prices will rise from the present level or are at least willing to admit that it's possible. The most ardent bears, those found on property forums, are clearly turning at least a little bullish. Others are stating that they've simply given up on real estate altogether and will rent and not worry about house prices.

As BUBB has said for a long time, and I also think the same way.....

THE CRASH WILL HAPPEN WHEN YOU LEAST EXPECT IT!

what you described is a perfect scenario.

TB

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This is NOT a troll post although it might look like one in the first part...

...

I'm not suggesting prices fall 20% overnight. But it seems reasonably possible that the real, sustained falls in Australia could start in earnest perhaps around March - April this year. Real falls as opposed to the patchy falls so far which have been concentrated in Sydney. Thoughts?

Anecdotal.

I know of a couple, bought a 4 bed house in Paddington, Sydney, 5 years ago, for $600k.

Spent $200k renovating, place valued at $1.4mil last year.

They've just been forced to sell, and had to accept $850k. So that's 40% down on last year's high.

If you don't agree with that, then how about a 6% gain over 5 years.

For all that hard work and pain, practically nothing.

You say Australia had a housing boom? :unsure:

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Tried to post this as a post in its own right but it doesnt seem to have gone through the moderation.

This site seems to be getting more and more popular nearly in the top 5000 of the entire web which by my thought process is a good thing!

If more and more people are checking out the site then market sentiment (which we all know is the most important thing to effect markets) is getting more bearish as the weeks go by...

HPC is here and the snow ball is getting bigger and bigger!

Edit : - After seeing my stupidity!

graph.png

post-4019-1138551784.png

Edited by abc

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Tried to post this as a post in its own right but it doesnt seem to have gone through the censorship moderation.

Maybe you should look in About Housepricecrash.co.uk forum. ;)

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This is NOT a troll post although it might look like one in the first part...

In Australia at least, there seem to be rather a lot of bears turning bullish at the moment. There's been considerable debate on an Oz property forum and I have to say that I can't put a factual argument to say that house prices could not rise from this point. Many of the bears on that forum seem likewise either arguing that prices will rise from the present level or are at least willing to admit that it's possible. The most ardent bears, those found on property forums, are clearly turning at least a little bullish. Others are stating that they've simply given up on real estate altogether and will rent and not worry about house prices.

So I raise the question as to whether this signals the final "throwing in the towel" by the bears. The very last potential buyers eagerly awaiting price falls giving up on the prospect. Given the noticeable increase in house buying activity (which has enabled the VI's to report some small price increases in many areas) I think this is a distinct possiblity. The last bears who will give up have given up and bought or are buying now.

If this thinking is correct, then this is comparable to what happens at a market bottom when the final bulls throw in the towel, accept that the market's never going to rise and sell. And thus the new bull market is born.

Interesting twist. Sounds like a bit of sorting sheep from wool going on. I would suggest there are two possibilities:

  1. At this point those who are neither bear nor bull may accept the reality of the current situation and start buying again, in which a stable cost benchmark would be redefined. If it is too far away from reality however, that may however create a profound schizm as a stable Australian psychology around home ownership could shift. An identifiable new class of Australians who don't aspire to 'the big Australian dream' might emerge. (it would actually be a new twist on early 20th Century conflict politics all over again) But this would be a very unwelcome turn for the conservatives - mass homeownership and redefinition of class around consumer and homeowner status was Menzies invention for creating a homogeneity of middle class ideology in Australia. Howard was a great fan, but I don't know that he has Menzie intellectual capacity for playing long and short games simultaneously.

  2. The other alternative is that your scenario could play out and the situation could be renormalised within the prevailing ideology, but it is going to involve pain and I am not sure Howard is ready for that much pain.

  3. Scenario 3 is the fabled 'soft landing' and progressive attrition of house prices through standstill houseprice inflation (or minute yearly falls) / inflation in the overall economy. Politically perfect, but it doesn't really work in practice due to herd psychology.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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