Business & Investment

Next Real Estate Boom — Seeds of the Real Estate Market Currently Planted

Dear reader,

Due to the absurdity of the financial world, one hand can wipe tears from the eyes and the other hand can make the stomach laugh.

According to news from Shenzhen, China, luxury condominiums are sold out in minutes.

Buyers pay huge fees to participate in the action.

What do you get?

The· Australian Financial Review:

Realtors say investors are taking advantage of cheap loans and other coronavirus bailouts aimed at highlighting companies that are struggling.

Instead of using relief to pay workers, they are getting a business loan using real estate as collateral to buy another apartment.. “

Have mercy on the poor workers over there.

Not only did the relief money not arrive … it’s pushing him away from affordability!

At the beginning of the week, we saw how the current stimulating tsunami would eventually permeate property.

There is some early evidence … a day or two later!

Oh what is this?

The Australian Government also does not want to waste this crisis …

Bold forecasts of Australian real estate professionals in 2026. Please read the details.

Tax cuts end up in one place

The accountant says that the corporate tax rate could be reduced from the current 30% threshold.

This is said to improve productivity and business investment.

Maybe.

There is a high possibility that new free cash flow will be absorbed by the real estate market.

Why do you and I care?

You can already see the inking about where the next real estate boom is coming from.

Proposing such a thing now may seem crazy.

2020 is amortization. We know that.

However, the property cycle moves with a long swing.

The setup is already in place for a major move from mid-2021 to around 26.

One point we have pointed out is that the land market may absorb the cash left over from tax cuts.

The second is the current collapse of housing construction.

The Housing Industry Association said yesterday that new home sales in March fell by more than 20%.

We have already built a single-family home at the lowest price in six years.

Procurement of building materials is also a problem so far.

There is no way to know when the construction industry can re-enter.

However, we can make a very reasonable assumption that it will take years to catch up with the Royal Commission of Banks and the COVID-19 twin king hit.

There are two factors behind the next real estate boom.

If the economy returns to something similar to “normal,” perhaps one-third will be a huge government stimulus to the first homebuyers market.

We have to wait for that prediction.

There are three points to note in the medium term.

How about in the short term?

“Confidence” wobbling scaffolding

It draws my eyes to the stock market.

At this point, I can’t help but feel that I rely heavily on the pesky foundation of “confidence.”

I had a big panic from February 20th to March 23rd.

Since then, ASX has bounced back at just under 20%.

The rise came in the face of huge unemployment, negative US oil prices, and a constant stream of bad news.

My big concern today is whether the market has fallen below the March 23 low of 4,372.

Even under the age of 5,000, it can surprise many.

That’s why it’s in my head …

Investment bank Goldman Sachs suggests that stock market dumps may come.

Goldman analysts believe that most unemployed workers are young.

Their life cycle puts them in a “growth” portfolio, so their money is much more likely to be invested in stocks: read stocks.

Small superfunds may not even have the cash level to deal with this.

Read: Compulsory sales will begin when the Super Fund begins processing the special redemption requests currently permitted.

These are starting now.

Perhaps it’s just a minor sales pressure that results.

But what I’m more worried about is the secondary consequences.

Most of the assets of super funds belong to the old ones.

And they dare not risk another big drawdown.

Whenever it comes, the time for recovery is no longer on their side. They now need income and need to protect their capital.

In short, in the second mass-selling match on ASX, over the age of 65, you can become a bystander wondering what to do and withdraw money.

Next month of ASX will certainly be very interesting.

How to understand the current environment?

First deflation. Inflation later.

Bill Bonner actually says it better. First go to Tokyo, then to Buenos Aires.

I pray the best wishes,

Column Newman's signature

Column Newman,
Editor, Daily Reckoning Australia

PS: Australian real estate expert Catherine Cashmore reveals why she thinks we’ll see the biggest real estate boom in our lives over the next five years. Click here for more information.

Next Real Estate Boom — Seeds of the Real Estate Market Currently Planted

https://www.dailyreckoning.com.au/next-property-boom-property-seeds-being-planted-now/2020/12/21/ Next Real Estate Boom — Seeds of the Real Estate Market Currently Planted

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