All Topics / General Property / Can I Get Your Thoughts on This John Templeton Quote?

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  • Profile photo of Jason StaggersJason Staggers
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    What’s up Everyone?!

    I’m curious what your opinion is on the various property markets across Australia, so I wanted to throw out a few questions in light of this John Templeton quote I came across. Would you take a moment to respond?

    1. Do you think Templeton’s quote should be applied to the Australian property market in general? Why or why not?

    2. Are there any cities in Australia where you think property market optimism is at a peak?

    3. Are there any cities in Australia where you believe market pessimism is at a maximum?

    Thanks for your feedback!

    Jason Staggers | JasonStaggers.com
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    Profile photo of Colin RiceColin Rice
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    1. Do you think Templeton’s quote should be applied to the Australian property market in general? Why or why not?

    Im hoping so as currently in acquisition phase.

    2. Are there any cities in Australia where you think property market optimism is at a peak?

    Sydney – at peak or close to

    Melbourne – at peak or close to

    Brisbane – a little ways to go for peak

    Adelaide – approaching peak

    Perth – declining market (my current hunting ground)

    Darwin – Decline

    Hobart – dunno :)

    3. Are there any cities in Australia where you believe market pessimism is at a maximum?

    Perth.

    A similar quote by warren Buffet;

    “Be scared when others are greedy and greedy when others are scared” – Warren Buffett

    • This reply was modified 7 years, 6 months ago by Profile photo of Colin Rice Colin Rice.
    • This reply was modified 7 years, 6 months ago by Profile photo of Colin Rice Colin Rice.

    Colin Rice | CDR Finance
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    Profile photo of BennyBenny
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    Hi Jason,

    1. Do you think Templeton’s quote should be applied to the Australian property market in general? Why or why not?

    I’m not even convinced that he is totally correct, though he is approaching things from the right angle. To me, the quote chosen seems a bit too “folksy” to be correct. A bit too convenient, even contrived.

    Let’s see – if enthusiasm has built up to fever pitch, buyers will be bidding up to buy anything available. So, in that way his words are sound…. but then consider other words where it is said “Booms go for FAR LONGER than they should” (Sydney reminded me of this about a year ago) so prices continue to climb even after they should have peaked. In the absence of any major national or international “bad news” the boom might grow for another year or two yet.

    And the obverse side of that coin ….. how does that stack up? Templeton says time of maximum pessimism is the best time to buy. Again, he is close for sure, but wait….. I’m sure he is talking of a market pessimism (e.g. Sydney) rather than International (e.g. a world-wide depression) so in that vein, again pessimism is a meal that takes a lot of slow cooking over an extended period. Often-times, the depression is individual-centric, and this allows “bargain buys”. But a “Market Pessimism” would be all over the news and “the herd” would be building up to maximum pessimism even as green shoots of a recovery begin sprouting.

    Add to that there is no bell at the top and bottom of any Market. Similarly, no bell is rung when Max Pessimism is reached. So, HOW does one tell when Max IS reached? What if the Max has “more to go”? Like booms, busts can go way too long, and undershoot too.

    Just HOW does one accurately gauge Max Pessimism – except in hindsight?

    As I started, he is in the right ballpark – but we ignore our own knowledge and experience (even our gut) at our peril !!

    Benny

    PS A recent comment in a property investing mag went like this:-
    “80% of buyers purchase real estate way too late in the cycle”. This must surely distort any truisms about Maximum Optimism – i.e. if 80% remain positive even as a market falls…. Or could it be that the Optimism reported in the media might lead to further buyer optimism, leading to further optimism-fuelled buying? Hmmmmm !

    Profile photo of Colin RiceColin Rice
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    Just HOW does one accurately gauge Max Pessimism – except in hindsight?

    I dont think many can pick it exactly outside of luck but the signs are easily spotted.

    Colin Rice | CDR Finance
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    Perth Based Mortgage Broker - Investment Property Finance Specialist | E: [email protected]

    Profile photo of Jason StaggersJason Staggers
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    “Be scared when others are greedy and greedy when others are scared” – Warren Buffett

    That is a great one. Thanks Colin!

    Jason Staggers | JasonStaggers.com
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    Profile photo of Jason StaggersJason Staggers
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    Booms go for FAR LONGER than they should

    Especially as central banks are suppressing interest rates. No telling how far this run with go. Still potentially 6 more RBA cuts. Then QE? I sure hope not, but anything is possible in this day.

    Jason Staggers | JasonStaggers.com
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    Profile photo of Jason StaggersJason Staggers
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    That said, I don’t think our regulators want real estate prices to go much higher.

    Jason Staggers | JasonStaggers.com
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    Profile photo of Colin RiceColin Rice
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    I reckon we will get close to a zero% cash rate within 2 years or less!

    Colin Rice | CDR Finance
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    Profile photo of Jason StaggersJason Staggers
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    I reckon we will get close to a zero% cash rate within 2 years or less!

    Agreed. But I don’t see your job getting any easier. They need to do something to stop the flow of all that new credit into real estate.

    Jason Staggers | JasonStaggers.com
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    Profile photo of Colin RiceColin Rice
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    But I don’t see your job getting any easier

    Its getting tougher and tougher but thats the best time to see what you are really made of :)

    Colin Rice | CDR Finance
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    Perth Based Mortgage Broker - Investment Property Finance Specialist | E: [email protected]

    Profile photo of Jason StaggersJason Staggers
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    Love your attitude Colin!

    Jason Staggers | JasonStaggers.com
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    Profile photo of David HallDavid Hall
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    I’m a big fan of timing the cycle. Its just very hard to pick when is the top and when is the bottom, until they have passed.

    I’m hearing some very crazy storied about prices In Sydney and Auckland. I get scared when 50% of the market are investors, and your yeilds are in the high 2% range, my fire alarm is ringing. People are not investing they are speculating that the market will keep on rising (bigger fool theory) However I think it still ans another year or so to run because the supply is so tight and the demand is still strong.

    The advantage of a depressed market is that there are some great bargains to be had with significant up side. Eg a property I went for in the weekend was advertised for $285,000, needed 20k spent on it and it would have been worth $420k. The bonus was because of the layout it would have been easy to convert it to dual income.

    I Picked up a nice splitter block for $420,000 last week. With a simple renovation the house post subdivision is worth close to what I paid for it and the Land will be worth low -mid 200’s This is the advantage of a depressed market. When its hot people overpay for these sites to the point that they will loose money if they develop them.

    Too many people blindly follow the heard.

    David Hall | The Buyers Agency
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    Profile photo of MTRMTR
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    I am a huge fan of timing the markets too, perhaps a little on the conservative side, but I only buy when markets are rising or booming and bail prior to peak.
    OK, I don’t have a crystal ball and you wont time it perfectly, but you don’t need to, most property cycles last for 3 years the point is get in when it starts rising and buy as many as you can and once you have made 40%+ get out, don’t be too greedy and move on to the next cycle. Its certainly worked for me, easiest way to make money.

    Marisa
    MTR:)

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