'Tsunami' to hit Oz real estate: Dent predicts world will experience a second, deeper downturn

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posted on Sep, 11 2011 @ 07:03 AM
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'Tsunami' to hit Australian real estate


Australia's love affair with property is about to turn sour as an "economic tsunami" looks set to hit world markets, American economic forecaster Harry Dent says.

Mr Dent, who arrived in Australia on Sunday, predicts the world will experience a second, deeper downturn, which will arrive between the beginning and the middle of next year.

Starting in Europe, the downturn will spread to the US, China and eventually Australia, he said.

"Australia is probably the best place in the world to survive this, but we do think Australia will not escape as well as it did from the last crisis (in 2008)," Mr Dent told AAP....

Mr Dent said Australia's house prices would return to late 1990s or early 2000 levels.


So the economic forecaster predicts the world will enter a second deeper downturn by the beginning or mid next year and Australia's property will not be spared. Well while I really don't highly appreciate being told by someone from America to sell excess real estate and purchase assets in USD, I have to agree with his assessment. I bought my unit in 2009 and it had doubled in price since circa 2002 (as per my contract). Property prices in Canberra Australia skyrocketed in recent years and had since leveled out, and perhaps depreciated a little. Dent is forecasting prices to return to late 90s early 2000s, which would have my property value plummet back down to about half-price again.

But the bigger issue here is Dent's prediction that the world is facing another worse downturn, presumably from that of the 2008 GFC. He also predicts, as per further on in the article, gold and silver are going to crash as they are in a bubble now. Other than a drop off in spending, Dent doesn't provide a trigger as to what is going to lead to the next downturn or The Great Crash Ahead as his book is titled, which incidentally he is promoting while visiting out shores here in Oz. Dent's seeming claim to authenticity is his apparent prediction of the current housing crisis which he predicted some 20 years ago.

I think a number of us will be watching with some level of anticipation or interest over coming months.




posted on Sep, 11 2011 @ 07:08 AM
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reply to post by surrealist
 


whats the bet people will have to sell their land cheap as to more than likely the government or big corps..
whats the one asset people have?
land
without that its just a lot of debt



posted on Sep, 11 2011 @ 07:27 AM
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I love reading the comments after articles like this - usually at least 1 a day at the moment in the Aussie papers - you can always tell who the investors and 'baby boomers' are, they're the ones saying it's all nonsense and that it's never been a better time to buy blah blah blah.......



posted on Sep, 11 2011 @ 07:32 AM
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reply to post by Kryties
 


Thankfully I put my head down and payed for my house out-right before I was thirty. I was thinking of selling in the next couple of years to move deeper into the peninsula. I may have to hold off on those plans but it's no biggie. All real estate is cyclical. It's all about patience!

IRM



posted on Sep, 11 2011 @ 07:36 AM
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reply to post by InfaRedMan
 


Unfortunately I'm still stuck in the rental market - living in Sydney on our income prevents us from buying. We have actually started to look up in the Blue Mountains, around Blaxland/Springwood. House prices there are still what I would call decent and with the M2/M7 it's literally only a 35 minute drive into work (whereas even 10 years ago you would be looking at an hour at the least).

But I'm still worried about buying even up in the mountains at the moment - I would hate to buy then the whole thing comes crashing down and I find out I could have bought for half the price lol.



posted on Sep, 11 2011 @ 07:45 AM
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Originally posted by Kryties
reply to post by InfaRedMan
 


Unfortunately I'm still stuck in the rental market - living in Sydney on our income prevents us from buying. We have actually started to look up in the Blue Mountains, around Blaxland/Springwood. House prices there are still what I would call decent and with the M2/M7 it's literally only a 35 minute drive into work (whereas even 10 years ago you would be looking at an hour at the least).

But I'm still worried about buying even up in the mountains at the moment - I would hate to buy then the whole thing comes crashing down and I find out I could have bought for half the price lol.


id me more concerned that the $500000 property you bought today dropped to $250000 value while you loan still has 25 years to go, and about 650000 in total payout



posted on Sep, 11 2011 @ 09:45 AM
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Think of your properties as stocks. Sell when they are high, and buy other properties in distressed state
after the crash. Fix them up and rent them out. Or buy farm land and rent it out. I bought a property in 2007 to flip so I could redo my kitchen without spending the principal. I got stuck with the property and had to rent it out.
It has been a four year headache. However, I now look at it as my 401K, the money is not getting spent and someday in my old age I will sell it. As for the kitchen, who really cares.... I don't really need nice cabinets and granite counter tops. Financial security is much better idea.



posted on Sep, 11 2011 @ 10:07 AM
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reply to post by frugal
 


It's amazing how we look back on things that we thought were bad originally and see how well they turned out isn't it?

I wanted to fix up my workspace in my garage, and after looking at the various upgrades available, decided that it still suited it's purpose. Later I found kitchen cabinets on the side of the road that worked perfectly and actually made the garage look not only better, but more functional as well.

And it was all free, unless you count the labor installing them, but I just thought of it as a fun project.



posted on Sep, 11 2011 @ 01:24 PM
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I remember Mr. Dent from his outlandish prediction made in 2000 (just before the market collapsed) that the Dow would reach 40,000 by 2009. A claim he reiterated in 2004.

Before my friends from 'down under' completely despair, or worse, make life altering investment decisions based on Dents' demographics research, I recommend they read the following links.

A Look At Harry Dent's Track Record

Harry Dent: Bold Predictions of the Great Depression Ahead

Good market timers are few...good marketers are many.

GL



posted on Sep, 12 2011 @ 12:34 AM
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reply to post by Kryties
 


I thought you were in Melbourne Kryties!

Had friends that went for the treechange in the Blue Mountains. They sold their house within a year because it was too cold up there. Apparently it puts a lot of people off. If you can push through the winters for a couple of years and acclimatise, it really is a beautiful area!

IRM



posted on Sep, 12 2011 @ 05:09 AM
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Originally posted by InfaRedMan
reply to post by Kryties
 


I thought you were in Melbourne Kryties!


Hehe no mate, I've always been in Sydney lol, I thought you knew that sorry.



Had friends that went for the treechange in the Blue Mountains. They sold their house within a year because it was too cold up there. Apparently it puts a lot of people off. If you can push through the winters for a couple of years and acclimatise, it really is a beautiful area!


My wife's father and aunt live together (long story, out of convenience) up in Blaxland so we visit them every few weekends. Winters particularly are quite harsh but I'm getting used to them - nothing a good fireplace and a few hot water bottles can't fix anyways
. It really is a beautiful area, that and the people there are so much nicer than closer to the city.



posted on Sep, 12 2011 @ 05:12 AM
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He is right about the Australian property market but wrong about buying the USD.

Avoid BOTH!



posted on Sep, 12 2011 @ 05:48 AM
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Now this is just plain scary.
Mainstream media is trumpeting a smaller than expected trade surplus
ABC News
But a trade surplus is only part the whole Current Account Balance
Interest payments and paying back foreign debt are also part of the equation, and it doesn't look good for Australia.
Source
For 2010, -$30.4 billion (2010 est.)

Despite the mining boom, we still can't pay our way in the world.
Examining the graph on the page, the effect of the housing boom from 2001 onwards and the foreign borrowings by our banks to fuel it, can be seen in our massive blow out in the Current Account Balance.

A drop in commodity prices would devastate our Current Account balance, which already is one of the worst in the world.
If you follow the link on the page for the rankings - Rankings
You have to scroll a long way down to find Australia. We rank 180 out of 188 countries listed.

And if you convert this to a per capita basis, we are easily the worst around with the mining boom. When that ends, its curtains.
Yep, all rosy for Australia.

edit on 12-9-2011 by Colbomoose because: Typo



posted on Sep, 12 2011 @ 05:50 AM
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In Australia?

Dont think so.. a house is worth $350-$400 grand in Mandurah, Rocko or even Newtown NSW for a reason.

Australia only has a few proper cities.. and majority of people own houses within comuting distance.

There's a SHORTAGE of houses within comuting distance to Perth,Melb,Syd,Bne..

sure, houses will drop, but i remember a 3 by 2 in Halls Head for $150,000.00 in the 90's.. there's no hope in hell a home in halls head worth $450-$500,000 will drop to that level ever. because there's that many people desperate for houses like this, within 35-40mins of Perth to ensure the prices remain high.



posted on Sep, 12 2011 @ 06:01 AM
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Originally posted by Agit8dChop
In Australia?

Dont think so.. a house is worth $350-$400 grand in Mandurah, Rocko or even Newtown NSW for a reason.

Australia only has a few proper cities.. and majority of people own houses within comuting distance.

There's a SHORTAGE of houses within comuting distance to Perth,Melb,Syd,Bne..

sure, houses will drop, but i remember a 3 by 2 in Halls Head for $150,000.00 in the 90's.. there's no hope in hell a home in halls head worth $450-$500,000 will drop to that level ever. because there's that many people desperate for houses like this, within 35-40mins of Perth to ensure the prices remain high.





They will drop massively.

There is no shortage of homes in Australia.

In 1911 we had an average of 4.5 people living in each household. Today this figure is 2.4

As the purchasing power of all fiat currencies decline exponentially, more and more people will move in with family and friends, leaving a massive number of overpriced houses on the market. The prices will PLUNGE!



posted on Sep, 12 2011 @ 06:26 AM
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live with family and friends? the housing market forced australias young to remain at home until mid 20s..
most houses in suburbia are owned by families or investors... the young couple or the single working 20s man is priced out of the market.
of the two catergories owning the homes, working families have incomes in solid industry,banking/minining/legal...
and the investors are 40s, 50s, 60's who bought in the 90's when it was cheap.
these arent people that need to sell out of nessecity.. theyll keep their assets.

where as the smaller section of mortgagee's barely making meat will be forced to sell their homes, but they wont sell them for 150-200,000 because the investors are still up around 450-500 grand.. they know they can still sell it at a reasonable price because there's uber amounts of people being forced to rent, and rent's paying around 400pw, a mortgage can be around 350-450 per week...

housing in Australia may drop, say 15-20%, but returning to the 90's level, when a coke cost 90c and most of australia was earning peanuts isnt rational.



posted on Sep, 12 2011 @ 06:32 AM
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Originally posted by Agit8dChop
live with family and friends? the housing market forced australias young to remain at home until mid 20s..
most houses in suburbia are owned by families or investors... the young couple or the single working 20s man is priced out of the market.
of the two catergories owning the homes, working families have incomes in solid industry,banking/minining/legal...
and the investors are 40s, 50s, 60's who bought in the 90's when it was cheap.
these arent people that need to sell out of nessecity.. theyll keep their assets.

where as the smaller section of mortgagee's barely making meat will be forced to sell their homes, but they wont sell them for 150-200,000 because the investors are still up around 450-500 grand.. they know they can still sell it at a reasonable price because there's uber amounts of people being forced to rent, and rent's paying around 400pw, a mortgage can be around 350-450 per week...

housing in Australia may drop, say 15-20%, but returning to the 90's level, when a coke cost 90c and most of australia was earning peanuts isnt rational.




Try and tell an American that it is irrational for their $200,000 home to be now selling for less than $35,000.

I am not exaggerating.

Check out this website for some more info: www.debtdeflation.com...



posted on Sep, 12 2011 @ 06:37 AM
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oh yeah i agree, America took a nose dive off a cliff...
but lets be honest... if your working at 7-11, have minimal savings and no real long term goals, and your given a 200-350,000 k mortgage.. thats a means to disaster. and the US banks just seemed willing to hand out credit to every tom dick and harry... your work dried up, people couldnt pay mortgages, all of a sudden you have uber amounts of cheap, common housing..

Australia but, the people owning the houses OWN the houses..
the small sector of mortgagee's stupid enough to take a 2x1 fibro from coodanup for 350,000 will lose their homes.
but this is a minority..

Also, Australia's built on mining... now, if there was a super massive world drop off.. the world will still need metal, minerals and mining, which is where a large portion of Australias home ownership income comes from.
it would take something pretty astonishing to kill all mining and export in Australia, of which will force realestate to drop like a rock.



posted on Sep, 12 2011 @ 06:38 AM
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Originally posted by Agit8dChop
oh yeah i agree, America took a nose dive off a cliff...
but lets be honest... if your working at 7-11, have minimal savings and no real long term goals, and your given a 200-350,000 k mortgage.. thats a means to disaster. and the US banks just seemed willing to hand out credit to every tom dick and harry... your work dried up, people couldnt pay mortgages, all of a sudden you have uber amounts of cheap, common housing..

Australia but, the people owning the houses OWN the houses..
the small sector of mortgagee's stupid enough to take a 2x1 fibro from coodanup for 350,000 will lose their homes.
but this is a minority..

Also, Australia's built on mining... now, if there was a super massive world drop off.. the world will still need metal, minerals and mining, which is where a large portion of Australias home ownership income comes from.
it would take something pretty astonishing to kill all mining and export in Australia, of which will force realestate to drop like a rock.





Actually we don't own them. Our private debt to GDP ratio is worse than the US.

This is a fact.



posted on Sep, 12 2011 @ 06:42 AM
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Course..
We' are a nation on credit, cars, tv's, plasma's... investment properties...

these debts will always be paid.. but, in australia if you fail to pay off your cc, if you miss a telstra bill.. you are refused credit.. your made to pay off and wait until you can get it again.

the problems will begin when banks give you a 4th credit card, because your only on part-time at bigw and your other 3 credit cards are maxed out.

Australia will lose heaps of jobs, and people will lose their houses..
but there' will always be a large working sector not affected that can purchase these firesale items..

prices will remain high, atleast in my opinion!





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