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Aussie dollar falling

s20101938

So last week the fall has finally begun. Is now the time to convert my hard earned Au$ back into Euros before it reaches its historical level of 1$ = 0.60E?

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listermint

Wanderer78 wrote: »

ive only started looking into his work, comes across as being a little arrogant but certainly is no fool

working fine for me

Ahh maybe doesn't on mobile had to Google the article which opens a mobile URL.

catbear

Wanderer78 wrote: »

ive only started looking into his work, comes across as being a little arrogant but certainly is no fool

His last summation is concise, any Trump stimulus will not be enough to counter Chinese falling demand.

Wanderer78

catbear wrote: »

His last summation is concise, any Trump stimulus will not be enough to counter Chinese falling demand.

i would imagine that would have negative implications for us?

cnocbui

catbear wrote: »

1992. That's a couple of generations who've never known a recession.

There was a dip in 08 when the global markets tanked but then Australia took the ascendent chinese commodities escalator whilst everywhere else went down. Before that happened though the Australia government did up the deposit guarantee to a quarter of a million dollars so there were jitters already about their finance sector.

This reduced risk pushed money into bank deposits and then banks lent that back into the property market and with low interest rates property funds looked more attractive etc.....basically slapping a turbo on it and filling the car with airplane fuel.

Added to that this is the beginning of the babyboomer retirees who'll want to sell up their negatively geared investment properties once they can no longer avail of that income tax break.

The Australian economy has never 'tanked' since the '30s. It has had downturns but has never delivered social misery such as Ireland has recently experienced.

The 'worst' unemployment rate since the end of WW2 was 11% in around '93. Since WW2, unemplyment over 10% has only pertained for 4-5 years in total.

Ironically, it was in the mid '90s that I bought my first house in Perth with a roughly 60% deposit and paid off the mortgage within a year. Tough times.

I absolutely agree that Australian residential property seems completely bonkers and over-valued and due for a correction. It would rather suit me if that happened. Despite the predictions I see no signs of it. Perth is an exception. The East coast seems quite impervious to reason. Iron ore prices are booming. I can't see Australia's economy 'tanking' until China's does.

catbear

Wanderer78 wrote: »

i would imagine that would have negative implications for us?

We've got an actual decent mix compared to Australia. China went from being just 2% of the exports to over 40% during the commodities boom.

Ireland is a small economy in the largest trade bloc in the world into which we can venture easily to replace any Brexit losses and we can take advantage of our atlantic connections to get whatever we can from the Trump dump. CRH shares jumped on his election.

Our real concern is closer to home, what happens to NI after Brexit. NI elections probably in March so we'll see if disenchanted DUP voters will stay at home.

There are decades where nothing happens and then there's months when decades happen.

catbear

cnocbui wrote: »

Ironically, it was in the mid '90s that I bought my first house in Perth with a roughly 60% deposit and paid off the mortgage within a year. Tough times.

Weren't average house prices roughly only twice twice the average wage then?

A lot has happened since!

cnocbui

catbear wrote: »

Weren't average house prices roughly only twice twice the average wage then?

A lot has happened since!

I don't think so. I would say it was more like 4 times. Yeah, that looks about right: http://www.rba.gov.au/publications/bulletin/2012/dec/pdf/bu-1212-2.pdf

The real factor was it was a cheap dump in a not very popular suburb. However, it was on a 1/4 acre block which had it's attractions when it came to sell.

I sold up a short while into the boost phase on the way to the stupid prices of today. A lot has changed. I would love to see prices retreat as I am thinking of moving back in a couple of years.

Still, even with the insane overvaluation in Oz, the undervaluation in Ireland is probably more insane. I had my current house valued a few years ago and it was significantly less than just the replacement construction cost of the structure alone, which is insane.

catbear

An aussie friend in Perth sent this news story onto me this morning, this bit really stood out for me.

"The year to 2012, 56,000 people came to WA from other countries and 14,000 from the rest of Australia," he said.

The housing affordability debate is increasingly becoming the home of wacky ideas ranging from dangerous to disastrous, writes Michael Janda.
"But in 2015-16, only 14,000 people came to WA from other countries and we actually lost almost 10,000 people to other parts of Australia.

http://www.abc.net.au/news/2017-04-26/perth-housing-slump-a-lesson-for-sydney-and-melbourne/8473174

Anyone on this forum still on the ground there, what's the vibe like now?

Peregrinus

Glum. The mining/resource industry is still in massive contraction, and the state's public finances are in a fairly parlous condition. A newly-elected state government has an opportunity to engage in a bit of austerity, and blame the need for it (with some justification, as it happens) on their spendthrift predecessors. That might help to improve the public finances but in the short term it means more economic pain.

catbear

I looked up the block I used to rent near the city centre and average rent appears to be 2/3 of what we were paying in 2014!

Can't say I didn't see it coming but its always a jolt when you see it.

catbear

Lifeline financial counsellor Jenny Cecil said they were servicing a new group of clients - those struggling as a result of the economy collapsing. Many had been high income earners.

She said a lot of clients were now using credit cards to maintain mortgage payments, electricity bills and council rates, making their financial positions even harder.

During the product resources boom in WA incomes doubled, and Bankwest chief economist Alan Langford told 7.30 households were not getting the income growth today they were during the boom.

It's a very different story in Perth compared to Melbourne and Sydney.

"They say in the top end of Perth on a quiet day you can hear the property values falling," Mr Hegney said.

"And property values at the top end of the market have probably dropped 30 per cent from where they were at the peak of the market in 2009."

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11846339

Wow, things certainly have cooled off there.

ifeelill

catbear wrote: »

I looked up the block I used to rent near the city centre and average rent appears to be 2/3 of what we were paying in 2014!

The apartment that i am currently renting when built was renting for $600 per week i am currently paying $360 per week.

lg123

but property never goes down in australia?!?

catbear

Canada also rode the Chinese commodity bubble and are seeing cracks appearing in their property markets.

No one really should be surprised.

res ipsa

catbear wrote: »

Always found Keen extremely dry to listen to but he's not wrong in what he's saying.

Like David McWilliams, he will be right one day.

aido79

res ipsa wrote: »

Like David McWilliams, he will be right one day.

Economists have predicted 10 of the last 7 recessions:)

[Deleted User]

res ipsa wrote: »

Like David McWilliams, he will be right one day.

Neither of them were ever wrong in their predictions except timing.
Their analysis was 100% correct.

The real tragedy was that the bubbles kept getting inflated bigger and bigger. This made it appear that they were just cranks. The bubble got so big in Ireland it took down the entire banking system and was in danger of taking down banks in Europe and the US.

In Australia the bubble kept inflated by mining for years longer than the bubbles that popped circa GFC. The huge geographical isolation here means places like Melbourne and Sydney can continue to embrace the bubble psychosis while the Perth and outback Queensland bubbles deflate.

What really matters for Australia is what happens in Melbourne and Sydney. This is where half of Aussies live or thereabouts.

"For the first time Westpac [WBC] disclosed its exposure to interest-only (IO) lending, which contributes 50% of its mortgage book and 46% of 1H17 flows," Mott writes in a note to clients.

"This compares to ~40% for the system.

http://www.smh.com.au/business/markets-live/markets-live-eerie-calm-descends-20170508-gw0j5d.html

40% of the stock of banking loans among Australian banks are interest only loans. That is systemic annihilation levels of risk. This will be contagious to New Zealand and vice versa at the least.

res ipsa

We,ve just had the budget. No cut to negative gearing. Nothing to stem the price rise tide. The only thing that can turn the Oz house price cruiser round is a rapid rise in interest rates. There was an ozzie bank transaction tax but i think it will take us inflation rises & usa interest rate rises to force the reserve bank to raise rates in Oz.

Tigerandahalf

res ipsa wrote: »

We,ve just had the budget. No cut to negative gearing. Nothing to stem the price rise tide. The only thing that can turn the Oz house price cruiser round is a rapid rise in interest rates. There was an ozzie bank transaction tax but i think it will take us inflation rises & usa interest rate rises to force the reserve bank to raise rates in Oz.

If they do raise interest rates it will lead to a flood of defaults on mortgages. A lot of mortgages are on interest only.

The banks there seem to be in bad shape. I wonder what is their exposure to commercial property?

[Deleted User]

Exactly right and thats the reason why nobody wants to intervene to cool the market. Any move like that would be like pin pricking a balloon.
It is also why ARPA/the RBA/the Government/banks have been kicking the can to each other lately blaming the other for not controlling the market.

The RBA actually claimed that interest rates are not to blame. They put the blame with lax lending policies and negative gearing.

http://www.afr.com/markets/equity-markets/the-rbas-philip-lowe-doesnt-want-to-be-blamed-for-the-property-crash-20170412-gvk438
http://www.afr.com/real-estate/low-interest-rates-not-to-blame-for-property-bubble-rba-says-20150917-gjp6nx
http://www.smh.com.au/business/the-economy/rba-governor-philip-lowe-blames-lax-lending-tax-concessions-for-house-prices-20170404-gvdmfb.html

Truth is they are all to blame

And here is a disturbing comment from an analyst from RBC Capital:

The weakness in spending over Q1 is somewhat surprising given that household wealth grew further over H2'16 given the rise in residential property prices

http://www.smh.com.au/business/markets-live/markets-live-eerie-calm-descends-20170508-gw0j5d.html

Even without any rate rise and intervention there is only so much you can borrow before the house of cards comes down. I think we are at the point of no return. Give it a few months of stalled selling then the defaults will mount and suddenly some banks will find they have no money. How long did it take in Ireland? 12-18 months? Things kinda slowed mid 2007 and by September 2008 we were guaranteeing the banks.

catbear

If remember rightly the exodus from Irish bank shares started in February 07 and the likes of AIB fell from around €20 to cents by sept 08.

I think the savings war started summer 07 where they banks fought to get in as much capital as possible. By then it was too late.

Its amazing thinking back on it now that there were many people who bought bank shares and thought they'd get back what they paid for them. They'd probably been used to savings bonds which always been more popular in the past.

res ipsa

Ireland wasnt in charge of interest rates or able to devalue its currency. This is why the crash was so painful.
Oz cant do much with interest rates, but the currency will tank once Sydney pops.

res ipsa

Sydney price fall last month. The vested interests tell us that first house buyers are waiting till July for stamp duty concessions...we will see...

Timistry

Perth house prices still dropping although office occupancy on the up. Minerals fairly stagnant but I hear jobs are becoming available again.

Sydney and Melbourne booming. It's a fine balancing act and hard to call.

Was shocked to see the dollar down to 67c this week. What's the view regarding Brexit and potential valuation of the Euro? Also talks of a cooling on the east coast of Oz. Have a lot of cash tied up there

cnocbui

Bank interest rates and not having DIRT are far more important than exchange rates, IMO. Ireland is a Bermuda Triangle for cash and investments in general.

res ipsa

The AUD is doing surprisingly well.
AUDS.ASX is up 16% in 6 months. That is an ETF that banks on a strong Australian dollar.

Lara_Croft.ie

Hi Guys...

I have moved back to Ireland after working in Australia. I have a savings account still active and i am now deciding i should close it and transfer the money back home. I am just wondering about:

1. Will the Aus Dollar get stronger or weaker against the Euro in the next few months? Currently it is 1 AUD = .66 Cents EUR

2. What is the best way to transfer my money home to Ireland? I have looked into Currency Fair but i am finding it difficult to register with them as i have two home addresses and they need alot of proof of just one address...i.e. my passport would be a different address to the address my bills are sent too....

Hope to hear from you soon! Thanks

cnocbui

I would never close that account. It would have been a good idea to have opened a high interest online savings account before moving back. If you haven't changed your residential address for your bank account from it's Australian address yet, move quick and you might still still be able to open one, or perhaps better yet, put the money into their best rate term deposit, with it set to roll over on maturity and with the interest reinvested in it and forget about it for a couple of decades and let compound interest amaze you.

be Irish banks pay effectively no interest whereas you could getting almost 1.5 % in an Australian account and that will likely improve if the world pulls out of this cheap money morass it's in.

If the Reserve Bank of Australia raises interest rates, The A$ could rise in value a bit as Australian interest rates are usually some of the highest in the world and money would head for it - in theory, pushing up the cost of A$

Long story short, IMO, you are far better off with money in Oz than in Ireland, unless you don't save or invest for the future, in which case it doesn't matter.

You probably should have opened an OZforex account before moving back. Have a look at Revolut.com and get their app for your phone. I haven't actually used them myself yet for currency transfer and conversion, but if they live up to the claims and hype, they might be even better than Currencyfair.

Passports don't have addresses in them, they are only used for identity verification, not place of residence.

niva*sis

Forecast for the dollar to hit the .50cent mark for the euro next year. Pretty frightening for those planning on moving home.

Tigerandahalf

niva*sis wrote: »

Forecast for the dollar to hit the .50cent mark for the euro next year. Pretty frightening for those planning on moving home.

A flood of money leaving the banks I wonder?