NZSX50 - Good News!

[percy]

Looks okay in the rear view mirror but the storm clouds on the horizon looking forward, not so good.

May get "my fill" of Orion Health IPO.!!!!
Well positioned!!!! lol.

[MAC]

Looks okay in the rear view mirror but the storm clouds on the horizon looking forward, not so good.

You should be more concerned in a bull market if it didn’t seem to many that there is trouble ahead, markets climb a wall of worry as they say after all.

Bull markets don’t end due to old age, they end when economies enter recession, in recent decades predicated by central bank tightening controls hitting the ceiling of their efficacy. That's a way off just yet.

[winner69]

I did say 5500 before the end of the year

No more 5000 by Xmas predictions ..... maybe 6000 by Xmas is the new cry

Methinks we might just make that 6000 by Xmas ......this year

[winner69]

Could all happen again

Look at those faces in the article ....distraught aren't they

http://www.stuff.co.nz/dominion-post...month-to-broke

[couta1]

Could all happen again

Look at those faces in the article ....distraught aren't they

http://www.stuff.co.nz/dominion-post...month-to-broke

All the more reason to invest in companies that have a good chance of coming out the other side intact. Just sit on paper losses for a few years and she'll come right aye.

[BFG]

Could all happen again

Look at those faces in the article ....distraught aren't they

http://www.stuff.co.nz/dominion-post...month-to-broke

Nice article. Apt reminder that we are all only one day/trade away from eating a large dose of humble pie.

The equivalent today would be Aucklanders being "rich" based on new QVs, going out and remortgaging the house for a new boat/car/moose farm. This one line sums it up best:

"By this point he had assets worth more than $1m. But it was all just paper."

All just paper...

[MAC]

Would an NZ residential property valuation peak and reversal into a property market downturn trend, facilitate a rotation into a secular share market bull cycle through multiple PE expansion ?.

http://www.nzherald.co.nz/business/n...ectid=11366443

http://www.nzherald.co.nz/personal-f...ectid=11366091

Interested in the view of others.

[BFG]

Would an NZ residential property valuation peak and reversal into a property market downturn trend, facilitate a rotation into a secular share market bull cycle through multiple PE expansion ?.

http://www.nzherald.co.nz/business/n...ectid=11366443

http://www.nzherald.co.nz/personal-f...ectid=11366091

Interested in the view of others.

"Eleven city suburbs had capital value increases of more than 50 per cent. Residents in some suburbs are facing rates rises of more than 40 per cent."

Says it all really. A 40-50% return in 3 years on what should be a basic human right immune to over speculation is insanity at its best. This is totally unsustainable and sounds like the extreme leveraging a lot of Americans took just prior to the GFC. However, the insanity of the market can play out a lot longer than anyone can predict. Everyone was calling 1997 the top of the Dotcom Bubble (including Greenspan), and that was 2 years before things REALLY got insane! Hot money can only chase itself upwards for so long...

In saying that, I highly doubt a crash in real estate would result in an instantaneous rotation of said hot money into the stock market. Such a crash would have devestating effects upon residential/commercial/indudtrial property stocks, not to mention the book values of the likes of RYM, SUM etc. Last time a crash like that happened it too the entire market undrr with it. Combined with a huge reluance on the real estate market to keep chugging upwards, still dropping dairy price, rebuild slow down in coming years and a persistently high dollar I'm pretty sure NZ would be devestated on all fronts if the real estate market crashed tomorrow. Massive cash flows outwards to traditional safe havens like USD would only compound the problem.

Regarding the second article, that is just pure idiocy. Sure there are bad landlords out there, but I'm pretty sure there are more bad tenants! Besides, renting is massively cheaper than mortgaging to the hilt and "buying" a house right now, so I see them as doing me (I am still young and renting and not falling into the "Kiwi Dream" of being indebted for decades) a huge favour!

Disc - No money anywhere near NZ real estate market, either in stocks or Kiwisaver.

[MAC]

There you go Moosie, something we can agree on,

Provided house hold debt as a percentage of income remains flat and sustainable, then residential property prices, government intervention aside, are likely to keep increasing, just because that’s where we Kiwi’s, appropriately or otherwise, put obsessively nearly all our free hard earned savings.

Although, one could argue that house hold debt did not substantially reduce during the bottom of the interest rate cycle, and thus from that plateau, rising interest rates over the next couple of years now could make all the difference.

Attachment 6537
HHdebt.jpg

[BFG]

I don't think it is sustainable as house price annual increases by %age are much larger than annual wage increases by %age. The average house price to annual wage is over 7 to 1 in Aucland vs an average of 3-4 to 1. The cross over on servicing debt to interest rate %age back in 2000 is also a worry.

Fact is, Kiwis (or anyone else for that matter) don't get taught enough (or any) economics/financeby either their parents or school. The only investment most are taught to make is in housing, and that doing so with massive amounts of debt is fine because everyone else does it. This has been part of the key to the run up in costs way beyond what houses/land should be worth.

One key sign of over exuberance is the permiation of investment sectors into every day life. Aucklanders crashing the Council website after new QVs, the explosion of home building programs on TV and daily talk around the office/home of "paper profits" show how out of touch with reality prices have become and how innured we have all become with high prices as the "new normal".

I wouldn't call the top yet (no one truly can), but insanity like you posted earlier, rising interest rates here and worldwide, as well as global growth slow downs mean we can't be that far off.