Nerfonomics

[Calvin27]

Interesting statement from RBA today: expect the rba rate to double by years end.

I don't buy the inflation argument at all. A huge part of that is not discretionary spending but neccessities like cars, energy and food. Take a look at the CPI basket and most of that stuff has inflated. You have much more inelastic demand for neccessities.

• Food and non-alcoholic beverages - Up massively.
• Alcohol and tobacco - up
• Clothing and footwear - neutral
• Housing - Up heaps
• Furnishings, household equipment and services - neutral
• Health - slight increase
• Transport - neutral
• Communication - neutral
• Recreation and culture - netural
• Education - netural
• Insurance and financial services. neutral

 

[jrewing]

How’s the bicycle industry going? Seems lots of good secondhand bikes for sale that aren’t moving at cheap prices. Same with Motorcycles.

 

[beeb]

are you saying a factor of prices increasing is due to people using both incomes to service a mortgage? if so I disagree. Thats a direct symptom of higher mortgages, not the other way around. Supply and demand is the primary driver. Historically supply has been held back by red tape and now that a lot of the red tape has been removed, building material supplies availability, and now inflationary pressures.

We're pretty much in agreement on a chicken and the egg argument again. I'm saying because people borrow against dual-incomes they're able to service higher loans and out-compete others, you're saying it's the reduced supply causing people to do it. Some of it also ties into the 'aspirational' mindset too though, where people wanted to live in 'nicer' suburbs or own larger houses, so combined incomes to stretch their borrowing power and buy where/what they otherwise wouldn't have been able to afford. It's all shades of grey but the working dynamic of families with more women working after having kids and the like has changed over the decades either to allow it, or because of the requirement to do so (once the prices rose).

Interesting statement from RBA today: expect the rba rate to double by years end.

I don't buy the inflation argument at all. A huge part of that is not discretionary spending but neccessities like cars, energy and food. Take a look at the CPI basket and most of that stuff has inflated. You have much more inelastic demand for neccessities.

• Food and non-alcoholic beverages - Up massively.
• Alcohol and tobacco - up
• Clothing and footwear - neutral
• Housing - Up heaps
• Furnishings, household equipment and services - neutral
• Health - slight increase Up (just look at doctor's fee increases)
• Transport - neutral Up significantly (fuel costs, car prices, etc...)
• Communication - neutral Up slightly
• Recreation and culture - netural Up
• Education - netural
• Insurance and financial services. neutral Up (will be up massively but it'll happen gradually over time to minimise the 'sticker shock')

Tweaked to reflect my experience.

 

[Flow-Rider]

How’s the bicycle industry going? Seems lots of good secondhand bikes for sale that aren’t moving at cheap prices. Same with Motorcycles.

I was going to say it before but I didn't, still plenty of money around for some. I went into a Toyota dealership for spare parts and walked past the new car sales area, there were about 12 highend fourwheel drives prepared for pickup with the wank ribbon and the names on the cars.

 

[caad9]

I was going to say it before but I didn't, still plenty of money around for some. I went into a Toyota dealership for spare parts and walked past the new car sales area, there were about 12 highend fourwheel drives prepared for pickup with the wank ribbon and the names on the cars.

Only issue is those Toyotas were all purchased 6months ago or a lot more

 

[Flow-Rider]

yep no one has the crystal ball. They've been touting Australian housing prices as unstainable for 20-30 years? Predicting crashes and corrections etc of 20-30% for about the same time. And somehow weave weathered it all (ecxept where the local economy is reliant on mining or tourism - Perth and mining town housing and Airlie beach /Mackay in QLD come to mind as outliers).

It could crash, it could grow again, who knows. The fundamental demand hasn't changed though and supply hasn't increased to meet it. So as far as i can tell it all swings and roundabouts for most people as long as theyre not so debt laden they cant afford the rises for a bit. If you believ the RBA everyone has save so much money during the pandemic, they'll be fine (lol - like they have any credibility these days).

I pre booked a holiday home every year for the last 12 years, no shit, was $400/week 10 years ago, now $900/week and if you don't get in before 6 months you miss out.

Only issue is those Toyotas were all purchased 6months ago or a lot more

Possibly, but most people that have ordered get offered more money from the dealers to resell again. My cousin has had a hybrid Rav4 on order for the last 12m months and has had multiple offers to resell.

 

[Squidfayce]

I pre booked a holiday home every year for the last 12 years, no shit, was $400/week 10 years ago, now $900/week and if you don't get in before 6 months you miss out.

not really the point i was making around tourism/mining centered economies.

local economies that are based on one industry tend to suffer significant housing market shocks when things go south. Thats not necessarily reflected in the cost of a holiday rental

Airlie beach is a good example - There's mining or gas projects down in Mackay and Airlie beach is a beutiful idylic holiday/retirement destination. A number of employees earning great money down in Mackay bought up huge in Airlie beach, but when the extractive industries in mackay took a hit a while back( 5-7 years ago i think?), all those million dollar homes the workers purchased couldn't be paid for, causing a glut of high end properties to hit the market in airlie beach. We sold a 1.8M penthouse for 600k to recoup losses from one engineer. I reckon the holiday rental on it would be great, just no where at the time to earn enough money working to pay a 1.8M mortgage.

 

[Squidfayce]

also at 400 bucks for 12 years, you were due for an increase

reminds me of when we rented in brunswick east (a trendy inner melbourne suburb) for 10 years. Our rent didnt change much over that time because the old lady loved us and wasn't tracking market trends. I remember her appologising for raisng it 5 bucks per week one time. it was so cute and sad at the same time. When we left, she got a realestate agent and rented it for a grand more per month than we were paying at the end.

 

[Flow-Rider]

also at 400 bucks for 12 years, you were due for an increase

reminds me of when we rented in brunswick east (a trendy inner melbourne suburb) for 10 years. Our rent didnt change much over that time because the old lady loved us and wasn't tracking market trends. I remember her appologising for raisng it 5 bucks per week one time. it was so cute and sad at the same time. When we left, she got a realestate agent and rented it for a grand more per month than we were paying at the end.

Not in sleepy QLD deserted fishing towns, that's hipster Bondi increases.
I think after this trip, I'll be swagging it on the beach with cold showers in the ocean.

 

[Flow-Rider]

not really the point i was making around tourism/mining centered economies.

local economies that are based on one industry tend to suffer significant housing market shocks when things go south. Thats not necessarily reflected in the cost of a holiday rental

Airlie beach is a good example - There's mining or gas projects down in Mackay and Airlie beach is a beutiful idylic holiday/retirement destination. A number of employees earning great money down in Mackay bought up huge in Airlie beach, but when the extractive industries in mackay took a hit a while back( 5-7 years ago i think?), all those million dollar homes the workers purchased couldn't be paid for, causing a glut of high end properties to hit the market in airlie beach. We sold a 1.8M penthouse for 600k to recoup losses from one engineer. I reckon the holiday rental on it would be great, just no where at the time to earn enough money working to pay a 1.8M mortgage.

It was standard practice at one stage for investors to flock to mining towns, the ones that were too greedy or bought later on got caught holding the bag. Covid has really put a dent in the tourism up the east coast of Qld, the Chinese used to be the big spenders after the GFC.

 

[Calvin27]

How’s the bicycle industry going?

Market is softening. Bike shortages are not massive anymore, some brands still have shortages or at least orders filled already, but given giant seem to be somewhat overstocked in AUs right now and they are the biggest brands speaks volumes. Used market is coming back down to earth at prices I might even have a crack, parts are still munted but probably because the OEMs scooped up and had priority dibs for parts from the big 2 'S'.

I rekon bikes is a better proxy than CPI basket, it's a better indicator for discretionary spend.

 

[beeb]

I rekon bikes is a better proxy than CPI basket, it's a better indicator for discretionary spend.

Strong agree.

 

[MasterOfReality]

Airlie beach is a good example - There's mining or gas projects down in Mackay and Airlie beach is a beutiful idylic holiday/retirement destination. A number of employees earning great money down in Mackay bought up huge in Airlie beach, but when the extractive industries in mackay took a hit a while back( 5-7 years ago i think?), all those million dollar homes the workers purchased couldn't be paid for, causing a glut of high end properties to hit the market in airlie beach. We sold a 1.8M penthouse for 600k to recoup losses from one engineer. I reckon the holiday rental on it would be great, just no where at the time to earn enough money working to pay a 1.8M mortgage.

When we were living in Moranbah during the last downturn, the 18 month old house we were in would struggle to sell for $250k. Owners paid $750k for it in the boom.

There were heaps of 4WDs, boats and jet skis for sale as well!

The previous downturn before that (~2002) was the same. I remember guys on crew pissing and moaning about having to sell their holiday homes in Mackay or Airlie Beach, as well as their V8 Commodores.

 

[Ultra Lord]

When we were living in Moranbah during the last downturn, the 18 month old house we were in would struggle to sell for $250k. Owners paid $750k for it in the boom.

There were heaps of 4WDs, boats and jet skis for sale as well!

The previous downturn before that (~2002) was the same. I remember guys on crew pissing and moaning about having to sell their holiday homes in Mackay or Airlie Beach, as well as their V8 Commodores.

View attachment 391436

Love that meme

 

[Asininedrivel]

Love that meme

Transition Reluctant Memes on Insta is a good time if you're looking for more.....

 

[Squidfayce]

When we were living in Moranbah during the last downturn, the 18 month old house we were in would struggle to sell for $250k. Owners paid $750k for it in the boom.

There were heaps of 4WDs, boats and jet skis for sale as well!

The previous downturn before that (~2002) was the same. I remember guys on crew pissing and moaning about having to sell their holiday homes in Mackay or Airlie Beach, as well as their V8 Commodores.

View attachment 391436

If the don't already, extractive resource companies should be giving their staff access to appropriate financial advice IMO

 

[Flow-Rider]

If the don't already, extractive resource companies should be giving their staff access to appropriate financial advice IMO

The only people resource companies think about are themselves, they're probably squabbling about which family member they're going to retrench next to save their own useless arse.

 

[MasterOfReality]

If the don't already, extractive resource companies should be giving their staff access to appropriate financial advice IMO

In the 20 years I have worked in mining I have seen financial advice provided twice. Both times in the event of mass redundancies. Probably a little too late anyway. There is also access to employee assistance programs in case you find yourself in the shit, and access to financial planning discounts via a 3rd party but that is pretty much the same as every other large company.

There are financial advisors who specialise in providing advice to high income mining professionals, just in case they don't know what to do with their money.

 

[Flow-Rider]

In the 20 years I have worked in mining I have seen financial advice provided twice. Both times in the event of mass redundancies. Probably a little too late anyway. There is also access to employee assistance programs in case you find yourself in the shit, and access to financial planning discounts via a 3rd party but that is pretty much the same as every other large company.

There are financial advisors who specialise in providing advice to high income mining professionals, just in case they don't know what to do with their money.

Is this something for upper management, I've worked with multiple worldwide companies over a 15 year span and never seen one. The shitshow in Port Hedland was a joke, engineers miscalculated product conveyors and about 120 workers were dumped on their arse, they gave everyone 2 weeks bonus pay and that was it.

 

[pink poodle]

If the don't already, extractive resource companies should be giving their staff access to appropriate financial advice IMO

Lol...they used to be a popular target for "financial advice" ties to taxation schemes.