Rambo in 2009

We are currently witnessing the reincarnation of Rambo in 2009. I am not talking about the muscle man Rambo but how several central banks are resorting to "quantitative easing". Put it simply, they are printing their respective currency, stopping short of throwing money off a helicopter...Hold this thought for the moment.

Turning back to the property market, I assume everyone has worked out where the market is by now...If you are a First Home Buyer, you must have noticed you are at war vs. your fell0w citizens. If you are everyone else, the market is very boring. There are just not many new or interesting listings. I relish having my Saturdays back. I just can't be bothered anymore. Most of the listings have been around for awhile and the vendors are not keen to meet the market either.

A few observations though.....Some houses still got sold. Those vendors probably cut their prices by $100-200K. Fortunately, if one works hard and happy to compromise a bit, there are bargains to be had. I noticed two good transactions in Cremorne in the past 2 weeks. A house (4/5 bedrooms + decent land + OK condition but not great BUT no car park) with an almost stunning harbour view was sold for $1.66M. Another house (4 bedrooms + pretty run down but decent land in a good street + next to an apartment block yet to be built) was sold for $1.22M. The original asking price was $1.6-1.7M late last year.

I usually don't follow the "dream" segment. The other day I wandered to this auction in the City where 3 houses were going to be auctioned. 2 houses in Palm Beach and a house in Mosman (expecting $2.8-3M). When I got there, I found out that the auction was cancelled. Guess the agents couldn't find enough interested parties.

What do the Rambo central banks have to do with the Sydney property market ? First, one suspects it is a big deal. The brains in these central banks would not resort to this "nuclear" option unless they have no choice. One can surmise that things are looking pretty grim in UK and US. Second, I was sitting on the sideline quite happily waiting to see if my thesis holds water. Things were brewing in my favour for awhile. Third, now I am not so sure......

Think about it....What is the major consequence if a government tries to debase its currency ? Inflation is a likely outcome. In an inflationary environment, one wants to have debts and real assets.

To wrap this up, my gut instinct is to hang on to my thesis. With the latest interventions, the world may stabilise but likely won't go back to the races in 2009. The prospect for further job losses is real in Australia. And the fact that the LNS market is hardly (10-15%) off its high makes me reluctant to throw in the towel now.