Australian housing bubble thread

"David Jones Slumps Most in 14 Years After Cutting Sales, Profit Forecasts"

http://www.bloomberg.com/news/2011-...fit-outlook-after-dramatic-deterioration.html

David Jones Ltd. (DJS), Australia’s second-biggest department-store chain, fell the most in almost 14 years in Sydney trading after cutting its profit forecasts.

The retailer dropped 15 percent to A$3.31 at 10:29 a.m. in Sydney, the biggest intraday decline since October 1997.

“David Jones sales tend to have a high correlation with movements in house prices and the Australian share market,” Craig Woolford, an analyst at Citigroup in Sydney, said in a report today. “Both asset classes have been soft over the past three months,” wrote Woolford, who cut his rating on the company’s shares to “hold” from “buy.”

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Comment: As a general rule, Aussie stocks aren't as volatile as those in the US.

But DJS closed down 18%, leading the entire retail sector (Myer, Harvey Norman, JB Hi-Fi) lower.

Also the banks were hurt.

WBC and ANZ and MQG and SUN at 52-week lows. CBA and NAB getting close to 52-week lows.


http://finance.yahoo.com/q/bc?s=CBA.AX,wbc.ax,nab.ax,anz.ax+ben.ax+boq.ax+sun.ax+mqg.ax+Basic+Chart
 
eurchf in 1.15ish supports it.
did i feel breath of depression ?

there is no reason for eurchf to recover as inflow in chf are constant due to large anmount of debt in chf. History any guide. Eurchf has a long way to go down.

usdjpy below 80 for same reasons.

:eek: :eek:

dont like it but thats the reality.

if eurrchf really is depression indicator then this looks bad :

http://freeserv.dukascopy.com/news/rss/info.php?id=1595429

swiss don't want to peg to eur. Sure they have good reasons.
 
"Record Interest-Rate Futures Trade on Europe Contagion: Australia Credit"

http://www.bloomberg.com/news/2011-...ade-on-europe-contagion-australia-credit.html

Traders are betting that RBA Governor Glenn Stevens will cut the benchmark rate to 4.42 percent by December from 4.75 percent. As recently as June 15, they were wagering on a 44 percent chance on an increase in the key rate to 5 percent.

****

The AUDUSD doesn't look like it is pricing in significant interest rate cuts yet ... last 1.0753
 
A lot of people bag the Ausie governments 4 pillar bank policy and the huge profits of Aussie banks, but when the shit hits the fan and Aussie banks can afforded to pay out their obligations, its going to look like genius.
 
Quote from Runningbear:

A lot of people bag the Ausie governments 4 pillar bank policy and the huge profits of Aussie banks, but when the shit hits the fan and Aussie banks can afforded to pay out their obligations, its going to look like genius.
More...

The 4 pillar policy (and lack of competition) is good for financial system stability.

However in practice this means that the big four are considered too big to fail, and unfortunately, it means that it's likely Australian taxpayers will be on the hook if and when further capital injections are required.

I wouldn't mind the status quo if we knew that in the event of failure (or near failure), bondholders would be required to take haircuts.
 
"Aust bonds rally on Westpac rate cut call"

http://news.smh.com.au/breaking-new...-on-westpac-rate-cut-call-20110715-1hgrg.html

Westpac on Friday reversed its outlook for official interest rates, saying it now expects a series of rate cuts starting with 25 basis points in December and continuing throughout 2012.

"One of the domestic banks has come up with a rate cut for December and another 75 points of cuts in 2012, and that's seen the market go a little bit better bid into the close,"

http://online.wsj.com/article/BT-CO-20110715-702171.html

Westpac said it now expects a 25 basis point rate cut from the Reserve Bank of Australia, or RBA, in December. By the end of 2012, Westpac expects 100 basis points of monetary easing in rates, which currently stand at 4.75%.

"While the catalyst for the first rate cut is likely to come from offshore we do not expect it to be a one-off. Interest rates are too high in Australia given the state of the non-mining sectors of the domestic economy and a downward adjustment is required to avert a damaging round of contraction," said Westpac in a Friday note to clients.
 
fundamental value in au housing ?

http://theage.domain.com.au/real-es...lings-that-could-be-homes-20110724-1hvf0.html

how long can one lock houses/appartments or/and convert them in hotel rooms in every suburb to keep fantasy going ?

what a waste of resources !

if this artificial restriction of supply has to end for whatever reason, say high interest rates, falls will be large in prices and rents.

can we get high int rates ? Sure do. Couple of credible scenarios in brewing.
 
Very noticeable that today Australian bank stocks were weak despite the Wednesday 3rd rally in US stocks.

$AORD down 1.2% to levels last seen in August 2010.

WBC and ANZ both below $20 to 52 week lows
CBA and NAB down more than 2%

BEN down 3%
BOQ down 6%
SUN (very weak lately) down 1.9%

MQG down 2%

http://finance.yahoo.com/quotes/^AORD,CBA.AX,WBC.AX,NAB.AX,ANZ.AX,BEN.AX,BOQ.AX,SUN.AX,MQG.AX
 
there is possibility that unthinkable happens with now recognised weakness in retail. Rents will go down as anecdotical evidence suggests people losing jobs and moving out of big eastcoast towns.

And it is possible that gold will continue to go up and therefore AUD will not fall much. UK devalued pound and property fell 15 % or so. Total fall 50% in trade weighted terms. AU may not be able to do that.

And with banks bleeding only certain amount of stimulus can be directed towards stimulating property.

And with eu bleeding & return on cash deposits up, competition for cash and loans will intensify globally.

Not saying it will happen, but odds of that scenario happening increasing considerably above random walk theory scenario.
 
It's a new month, which means that the latest RP Data – Rismark Home Value Index Release is available.

http://www.rpdata.com/press_releases/Page_1.html

http://www.rpdata.com/research/capital_city_housing_markets_flat_over_month_of_june.html

PDF file:
http://www.rpdata.com/images/storie..._data_rismark_home_value_index_jul29_2011.pdf

First part of article:

Across the combined capital city housing markets, the rate of home value declines continued to moderate with values in June falling 0.2% in seasonally adjusted (s.a.) terms. The relatively flat June result follows month-on-month drops of 0.3% in May, 0.4% in April and 0.5% in March (s.a.).

Based on almost 150,000 home sales nationally over 2011, the market-leading RP Data-Rismark Hedonic Home Value Indices showed a seasonally-adjusted fall of -0.2 per cent in capital city home values over the month of June (-0.6 per cent in raw terms).

While the June result was technically the sixth straight monthly correction in capital city home values, the rate of decline has been moderating since January when capital city values fell by 1.2 per cent (s.a.) over that month alone due to the natural disasters along the east coast of Australia.

Over the June quarter capital city home values were down by 0.9 per cent on a seasonally-adjusted basis (-1.5 per cent raw).

The year-on-year results show capital city home values off 2.0 per cent, which is a slight improvement on the 2.2 per cent fall last month based on revised figures (was -2.3 per cent).

The modest overall decline in national dwelling values conceals considerable variation across the capital cities. For example, whereas Brisbane and Perth home values are down 6.3 per cent and 4.7 per cent, respectively, over the last twelve months, property values in Sydney are up 0.5 per cent.

***

More information at the links above. [/B][/QUOTE]
 
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