Which Retailers are exposed to falling Property?
As you well know, we have been calling an end to the Australian property price and construction boom/bubble for some time. And now property prices appear to be declining and auction clearance rates falling, the latter suggesting price falls are not over yet.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Anthony
:
Dear Roger,
Looking at the articles about variables affecting property values as listed below your article we can see that the variables having a negative impact on property values are controls by overseas governments prohibiting the citizens for taking out cash out of their country and local controls on interest-only loans to make the borrower pay the principal earlier together with interest.
The variables that have a positive impact on demand are (i) people leaving the nest and demanding property and (ii) people entering capital city from interstate and overseas. Of course the negative variables are people emigrating out of a capital city or dying.
I can see that a decline in prices would be affected by regulations imposed on citizens transferring money out of their country and prudential regulations on the types of loans. Once that market ‘dries up’ wouldn’t prices go back up again given the flows of people into the capital city and people leaving leaving the capital city nests to buy their own capital city property?
Could your Roger or any other person comment on this please?
Thank you,
Anthony of exciting Belfield
Roger Montgomery
:
Those longer term variables have existed for hundreds of years and in all countries, and yet they haven’t prevented very harsh sell offs from time to time.
jay
:
Could you briefly explain how an acceleration of wages is anticipated?
Roger Montgomery
:
yes Jay, an economist is anticipating it!
Luke Fennell
:
And don’t forget to actually get a fall in nominal prices the price is falling faster than inflation and faster than the increase in value to housing stock from renovations. More often than not the renovation is far more than simply maintenance and the annual investment is about $30bill per annum.
Roger Montgomery
:
Thanks Luke. Good points!
david.chen.92123
:
Jul 25, 2017 – Super Retail Group has decided to discontinue the Amart Sports and convert its 65 stores into Rebel Sport as part of a consolidation strategy
Roger Montgomery
:
yes you are right but because the smart brand still exists we thought we’d include it.