- I’m going to show my age here.
Remember the Road Runner in the Looney Tunes cartoons where he’d run racing along the road, screech off the edge of the cliff, hang in the air for a bit, realised he was cooked, then drop like a stone?
That’s Australia’s construction market currently.
The latest building approval figures were released yesterday. Talk about a swan dive!
We’re back to levels last seen a decade ago.
That’s a bit of a problem when we have a record number of immigrants about to surge into the country.
Apparently, some people don’t get what’s going to happen here.
My friend is sitting on some land ready to build a house for immediate sale.
Apparently, the real estate agent is urging him to get on with it because property prices are going to fall further.
That real estate agent is talking out his hat!
Sydney home prices are moving up since the bottom in February. The turn is on. Perth never even saw a downturn.
What we do know is that builders are collapsing left, right, and centre.
We also know that the RBA and APRA, between them, now have a chokehold on the market because interest rates and the serviceability buffer are so high.
Limited supply? Booming demand? I don’t see how house prices can go anywhere but up.
Oh, and there’s something else. The Albanese government is going to leave the Stage 3 cuts in place, and they are due to come in next year.
Hello!
The government is going to give more spending power to high income earners…the very people who can afford to buy a second property, or a third. It’s the logical thing to do to catch the coming uplift.
Too bad for the first home buyer or the renter.
There’s little you and I can do to stop this idiocy. Australia’s government and central bank have got us into this mess.
It’s ludicrous to think they can get us out anytime soon. You and I might as well potentially make some money out of it.
Builders with good land banks that can survive this downcycle will be well-placed to capitalise on this trend in future years.
Their competition is being wiped out all over the place.
A company liked Stockland [ASX:SGP] has the diversification and money to withstand the current pressures.
It’s been rising since late last year. That’s one to accumulate in my book.
There’s a decent yield while we wait for the Road Runner to pick himself up off the canyon floor.
In the meantime, Stockland has the largest land bank in the country, at least as far as public stocks go.
They can feed that into a rising market and capitalise on the coming higher prices and roaring demand.
I’ve got two other developers I like and cover in my advisory Australian Small-Cap Investigator. You can check both out by starting here.
One is up about 25% since December. The other hasn’t moved yet. Both are still heavily down from their previous peaks.
This is how you play the current bear market on the ASX. Few stocks are moving up with much conviction.
You can accumulate quality while prices and sentiment are depressed.
- I was up in Queensland last week. I caught up with a property fund manager while I was there. There are lots of exciting things happening in the Sunshine State!
But the reason I was in Brisbane was to watch the Torian Pro semifinals. This an annual CrossFit competition.
It’s absolutely staggering what these athletes are asked to do. CrossFit demands a combination of strength and cardio power that is gruelling.
I’ve been doing it for years and am still beyond ordinary.
Now, take a look at this young man:
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His name is Jay Crouch. He won the competition.
That makes him one of the fittest men in Australia. He also happens to train at my gym. He’s built like a brick…well, you know what.
Jay will now head off to compete at the CrossFit Games in the US in August.
Way to go, Jay!
Best wishes,
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Callum Newman,
Editor, Money Morning
