It’s too late to panic now. Sure, there may be a little more fallout in the market. There may have been an over-reaction yesterday, but I’m not going to forecast the short term stuff. I like to look beyond the current difficulties.
Certainly, we have one company having difficulties in refinancing, but if you look at the property markets themselves, the US is not doing too well, England is not doing too well, but Australia is going from strength to strength.
What this could do is cause some short term difficulties for the listed property trusts. It could cause some problems with selling assets, even though there have been concerns recently about the paucity of assets available for sale in Australia.
Beyond that property markets will be strong next year. In six months’ time, this will have been forgotten. We may have some changes of ownership along the way, and for some this may represent some pretty good buying opportunities, only because the Australian property markets are strong. There are some very good propositions opening up here because this market is over-reacting.
If you look at the commercial and industrial markets demand is strong. The economy is booming and retail sales are strong, incomes are rising, and so what we’re seeing now are problems of financing for the more highly geared operators, who may have to rethink their gearing ratios. But the properties they are investing in are doing just fine, the developments they are making and the businesses they are investing in are doing well, and that’s what the companies are worth when all of this is over.
The fact remains, we have lots of swings and roundabouts in the superannuation area. We’ve been on a wild bull run for a long time, albeit with a few setbacks along the way, and this is just another one of those. It’s not the end of all of this and my feeling is that people’s super is not threatened by this. If you are invested in just one company, you may have problem, but if property is just a part of your super then you should continue to do quite well.
Final word: this is not a time to panic. The time to panic was about three days before it happened. It’s my view that the market will come back from here, probably not today, but over the next two, three weeks, or maybe a month.
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