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Tag Archive | "property"

Phil Anderson gives his take on the relationship between  recent <b>building activity</b>, the commodities cycle and <b>new technology</b>.

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Remembering the Future

Posted on 08 June 2013 by MoneyMorning

An edited extract from a presentation by Phil Anderson

[Below is a response to a question on how he interpreted recent building activity and technology]

I saw that they’re starting to build the southern hemisphere’s tallest residential tower. What it tells me is this: it tells me the strength of the commodity sector, in a bizarre sort of way.

Every single cycle I’ve seen, certainly in America and around the world and in Australia, the tall buildings get built, they open up in recession and generally it takes 6–7 years to actually recover before we start thinking about building another tall building.

This is a little different. It’s been the first time I can remember where tall buildings are getting put on the drawing board so quickly after the downturn that we’ve had.

Now they’re even thinking in Dubai of building something, I think it’s even bigger than a mile high and both the Chinese and the Americans are working quite feverishly to develop new lift technology that will allow those buildings to get built…so you can get up and down the buildings very fast.

We’re here in Melbourne and if you walk around the CBD of Melbourne and you go to many of the suburbs, every single street in Melbourne has become a construction zone. I’ve just never seen things so busy.

That to me indicates the sustainability of the new cycle going forward, based as it is, particularly for Australia, and commodity producing nations and the Middle East on commodity prices. It’s become obvious now this sort of stuff is dependent on China and things going forward and everybody is really nervous about whether this can last or not

It wasn’t so obvious ten years ago — even though it was all on my website, you can see it. It’s the 64 million dollar question really.

[WD] Gann in 45 Years on Wall Street — and Gann put this book out in 1949, so its um more than sixty years old now — Gann suggested that during the past history of the world following each depression some new discovery or some new invention has stimulated business and progress and bought on another boom.

Now that’s happened for sixty years, 3 additional cycles after Gann died, I think we can expect another one. You can see, generally in the US, what has happened after each major real estate cycle, major downturn, you get one of two things happening that starts of the next boom.

You either get the creation of new technology or you get a new energy development that just allows costs to come down and new technology does the same thing.

The US at the moment is unprecedented. It’s now having those two things happening. So you’ve now got with the energy related stuff (leaving aside the environmental concerns) and getting the gas out of the earth, it’s going to prodigiously lower cost for business to such an extent that you’re finding that manufacturing activity is going back to the United States.

That’s very significant and could bring a new, in my view, it’ll bring another huge boom. At the same time as that you’ve got all this new technology developing. I was going through some of my old files in preparation for today’s talk and you know, I had a cassette tape drop out of the file and I thought ‘I wonder what’s on there?’

Do you know, I couldn’t find a machine upon which to play it. And that’s only been, what, 15 years? Ten years even? Does anybody still have a radio player or a cassette player in their car? Not many. I don’t. I actually had to get, go to a friend, an elderly friend, they still had one…just to play a cassette tape.

The technology is prodigious. The invention is prodigious and relentless and while inflation stays low as it is at the moment because it feeds on itself as costs come down it lowers the inflationary process, it means business can look long term…much more forward, so they can continue to innovate and create. So it’s a cycle that can feed of itself.

Now I know this has gone a long way from a simple tall building question, but because I think with the energy cost savings and the technology inventions this is probably going to make Ben Bernanke a hero and its going to allow him to get away with prodigious money creation.

Money creation, as you know, it’s supposed to be inflationary. But if he continues to create that credit but the deflationary tendencies of the energy and the technology taking place, then we’re not going to get so much inflation, so he’ll be allowed to do that for quite some time and it will allow quite a recovery to take place.

In my view, and I could be wrong but what it’s tending to suggest to me out of all the cycle history that I’ve studied, it’s tending to suggest that we’re very early in the next cycle.

We’re so early to get new buildings, it could be the next cycle is very, very productive and enormous wealth could be created and lead to quite a substantial boom. And now we’ve just had the US market go into all-time new highs; nobody was expecting this, except me and one or two others.

It’s very clear in America and it’s very clear in the UK that there’s rising rents and it will eventually lead to a major recovery, and you’ve seen that already in the US. It will spur new construction and you get into the next cycle.

Now we just have to wait really to see whether Australia will continue to traditionally follow the US and its cycle or whether Australia is changing over a little bit and timing itself to what might be a Chinese cycle.

Phil Anderson
Contributing Editor,
Money Weekend

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Queensland Housing’s 100-Year Slump

Posted on 10 October 2011 by Kris Sayce

If you own a home or investment property… or are thinking of buying either in Queensland, today’s Money Morning will make you think twice.

After spending a week holidaying on the Gold Coast we’ve come to the conclusion that Queensland house prices could fall and stay low for up to 100 years!

It’s a big claim. But we’ll explain all in a moment. First… Continue Reading

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Graph: RBA Index of Commodity Prices

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Is the China Boom Rumour or Fact for Aussie Stocks?

Posted on 04 July 2011 by Kris Sayce

“Doubts are mounting about the health of China’s property market, Beijing’s ability to control inflation and the true extent of government debt. Last week, the central government disclosed that local governments owed debts equal to a quarter of gross domestic product. It’s hard to imagine a large chunk of those borrowings won’t turn sour.” – The Wall Street Journal

It is hard to imagine.

That’s why we believe the China Ponzi economy will burst.

And when it does, it’ll have a major and disastrous impact on the Australian economy. It’ll make the Aussie property crash look like a blip. Continue Reading

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Shades of Things to Come

Posted on 28 June 2011 by Aaron Tyrrell

In the Guardian this morning, the chief of UK Asset Resolution (UKAR), Richard Banks, reckons the UK could face a ‘tsunami of home repossessions as soon as interest rates start to rise’.

UKAR has £80 billion worth of bailed-out mortgages on its books. And Banks is convinced it would be better to let them go under than force homeowners further into debt.

For a lot of Aussies, this is tough to believe.

Not that it could happen to over-stretched UK homeowners. They believe that alright.

But they can’t believe it could ever happen to them. Continue Reading

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Your ‘Great Property Debate’ Digest

Posted on 10 June 2011 by Kris Sayce

Your ‘Great Property Debate’ Digest

What can we say… the Great Property Debate went pretty much as we expected.

The housing bulls would drag out their usual excuses, and we’d counter them point for point.

Of course, the format wasn’t really a debate.  Rather it was seven individuals giving a presentation one after the other.

The event kicked off with Tony Hayek.  As we understand it, Mr. Hayek owns a property investment business.  The following three quotes will give you a good idea of his 15-minute presentation:

“The property market has grown forever.”

“The property doomsayers have been wrong forever.”

“The GFC was the best financial period of my life: interest rates went down… rents went up… and capital values went up.”

[Ed note: The last quote is paraphrased; we were a bit slow jotting down his full comment.] Continue Reading

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Why the Mainstream Wants to Silence Us

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Why the Mainstream Wants to Silence Us

Posted on 09 June 2011 by Kris Sayce

Why the Mainstream Wants to Silence Us

“Currently, there is a shortfall of 200,000 to 230,000 dwellings; we should be building 180,000 to 200,000 dwellings every year and we are building less than that, he said.”

The above quote is a summary from Margot Saville at Property Observer.

She was commenting on the claim made by Dr. Shane Oliver at the Great Property Debate in Sydney on Tuesday.

We don’t know why Ms. Saville didn’t mention our presentation – we spoke straight after Dr. Oliver.

Because we can guarantee you, we made it perfectly clear there’s no evidence for a chronic housing shortage.  In fact, we made it so clear we spent 12 minutes out of our allocated 15 minutes talking about it!

(If you were there for the debate you’ll know for the first 12 minutes it was as though we were taking a leisurely stroll with our presentation as we covered one of our five points… whereas for the last three minutes we raced through it in the fashion of Usain Bolt covering 100 metres!  Sorry about that.) Continue Reading

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How to Avoid Getting Caught Between 4500 and a Hard Landing

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How to Avoid Getting Caught Between 4500 and a Hard Landing

Posted on 24 May 2011 by Murray Dawes

How to Avoid Getting Caught Between 4500 and a Hard Landing

The ASX 200 fell sharply yesterday.  It lost 89 points to close at 4643.

The banks were the story of the day.  The big four each dropped around 3% by the close of trade.

But wasn’t just in Australia where markets fell.  Asian markets all fell sharply during the day…

China’s Shanghai composite index was down nearly 3%… Japan’s Nikkei fell 1.5%… and the Hang Seng fell over 2%.

The market trouble didn’t end there.  European markets reacted badly to the possible downgrade of Italian debt by Standard and Poor’s and the election defeats of governments in Spain and Italy.

But the real story is economic growth.  It’s slowing dramatically at the moment. Continue Reading

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The Difference Between Gold and House Prices

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The Difference Between Gold and House Prices

Posted on 27 April 2011 by Kris Sayce

Here’s a headline you don’t see in the mainstream press that often:

“Plenty of glitter left in gold price”

The Australian Financial Review’s, David Potts notes:

“For a bubble, the gold price must be the slowest forming ever, having taken 29 years to beat its previous peak.”

He goes on:

“And never mind that in Australian dollars, gold peaked two years ago at $1550 an ounce.  If gold had kept pace with inflation it would be worth at least $US2292 an ounce… gold is nowhere near its peak, unlike oil, which passed its 1980 inflation-adjusted peak more than three years ago.  Nor are there any other typical bubble characteristics.  For all the attention gold gets, it is not heavily traded.” Continue Reading

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