Medium term GBP vs. AUD

John_Pierpoint

About 16 years ago, I noticed that Tasmanian farm land could be had for as little at £500 per acre and suggested to a farmer/small holder acquaintance that it was time for the family to emigrate. (I think they thought I was joking by I was deadly serious)
For those of you who have no knowledge of Tassie, think of an Island, the size of Ireland, but with a population trying to shrink to half a million. It is sort of France in the North Eastern corner. "Dorset" in the North & Eastern hills, Eastern England down the rest of the Eastern shore & central Eastern part, whose hills have a touch of Scotland. (though there is no CAP to subsidise it for grain farming against more economic parts of the world).
The middle is a sort of eucalyptus New Forest with a few nice mountains. The West side is seriously wet forest (logged) and (former) mining towns. Think Bellamy and the Franklin river dam.

Generali, any idea of what a 500 - 1000 GBP Tasmanian acre 16 years ago would now be worth? As Mark Twain once tried to explain, the government cannot print it.

I am far from clear how UK can grow in real terms, with a still increasing debt and between a third and half the economy. dependent on government spending?

Generali

John_Pierpoint wrote: »

About 16 years ago, I noticed that Tasmanian farm land could be had for as little at £500 per acre and suggested to a farmer/small holder acquaintance that it was time for the family to emigrate. (I think they thought I was joking by I was deadly serious)
For those of you who have no knowledge of Tassie, think of an Island, the size of Ireland, but with a population trying to shrink to half a million. It is sort of France in the North Eastern corner. "Dorset" in the North & Eastern hills, Eastern England down the rest of the Eastern shore & central Eastern part, whose hills have a touch of Scotland. (though there is no CAP to subsidise it for grain farming against more economic parts of the world).
The middle is a sort of eucalyptus New Forest with a few nice mountains. The West side is seriously wet forest (logged) and (former) mining towns. Think Bellamy and the Franklin river dam.

Generali, any idea of what a 500 - 1000 GBP Tasmanian acre 16 years ago would now be worth? As Mark Twain once tried to explain, the government cannot print it.

I am far from clear how UK can grow in real terms, with a still increasing debt and between a third and half the economy. dependent on government spending?

The simple answer is, "It depends".

For a small holding:

http://www.realestate.com.au/property-lifestyle-tas-stowport-7507643

That's well under a thousand bucks an acre. There's no house(a shack is there perhaps in one of the pictures?) but you will almost certainly be able to build one.

For something more farmable:

http://www.realestate.com.au/property-cropping-tas-moorleah-7493663

It's harder to assess the cost of the land alone because there's a house and river frontage too. River means it's easier to fight fires and there's more reliable water in drought conditions. The house looks like it'll be little more than a shack, albeit a large one. It's impossible to say for sure but it's old: look at the roof which has bleached in the sun.

This:

http://www.realestate.com.au/property-dairy-tas-elliott-7444879

Is a bit more like it. A couple of million for an actual, proper dairy farm. It's probably losing money though.

If I was a farming bloke looking for land, I'd be looking north to somewhere that can export to China/Japan more easily and probably looking to produce beef. Aussie beef is considered to be about the best in Asia by Asian customers (I believe Aus is the #1 producer of Wagu beef for Japan for example). Something like this perhaps:

http://www.domain.com.au/Property/For-Sale/Rural/NSW/Hogarth-Range/?adid=2009539502

Now $3,000,000 plus (after negotiations) is a pretty decent sum of money but you're getting over 1,000 acres for that along with a couple of houses, a couple of sheds and some machinery. Even better will be to wait for the next drought and buy it off the bank for $2,000,000 and get change!

John_Pierpoint

The Chinese don't metabolise dairy products very well do they?

They call us foreign devils "big noses smelling of cheese" sort of levels the playing field with the people we accuse of smelling of curry.

My Tasmanian informant told me he had a nice little earner growing poppies.

So there we have it a garlic farm with morphine as a side line.
http://en.wikipedia.org/wiki/Morphine

Would I be right in thinking that the AUD would have doubled in value against the GBP since 1997 ?

Mind you even if this farm has doubled against its sterling value of 15 years ago, I doubt it would fetch £2,000,000 and sell to a banker even airlifted into 160 acres in the UK Dorset.
Not quite thatched stone farmhouse material:D:

Generali

John_Pierpoint wrote: »

My Tasmanian informant told me he had a nice little earner growing poppies.

So there we have it a garlic farm with morphine as a side line.
http://en.wikipedia.org/wiki/Morphine

The legitimate harvest is apparently quite lucrative as the US keeps bombing places which grow legal and illegal crops indiscriminately which keeps prices up. Tough luck if you just broke your leg or have cancer.

John_Pierpoint wrote: »

Would I be right in thinking that the AUD would have doubled in value against the GBP since 1997 ?

I don't think that's right. It has certainly doubled since 2003 though.

John_Pierpoint wrote: »

Mind you even if this farm has doubled against its sterling value of 15 years ago, I doubt it would fetch £2,000,000 and sell to a banker even airlifted into 160 acres in the UK Dorset.
Not quite thatched stone farmhouse material:D:

Indeed not. Aussies have a rather more pragmatic approach to housing than many Europeans.

I guess our banker would have to airlift a Provencal farmhouse to go with his airlifted land!:)

oz0707

Generali wrote: »

The simple answer is, "It depends".

If I was a farming bloke looking for land, I'd be looking north to somewhere that can export to China/Japan more easily and probably looking to produce beef. Aussie beef is considered to be about the best in Asia by Asian customers (I believe Aus is the #1 producer of Wagu beef for Japan for example). Something like this perhaps:

http://www.domain.com.au/Property/For-Sale/Rural/NSW/Hogarth-Range/?adid=2009539502

Now $3,000,000 plus (after negotiations) is a pretty decent sum of money but you're getting over 1,000 acres for that along with a couple of houses, a couple of sheds and some machinery. Even better will be to wait for the next drought and buy it off the bank for $2,000,000 and get change!

2/3 hours from where I used to live! Have to get my mam to do a rekkie!

John_Pierpoint

Generali wrote: »

I don't think that's right. It has certainly doubled since 2003 though.

0.4137 - 41 pence plays 69 pence so not actually doubled (yet?)

http://www.westpac.com.au/docs/pdf/pb/fx-calendar-fin-year-averages

Mind you '97 was just after the Asian melt down = so that is the reason we bought a return ticket and went for a look round - biggest worry was that the air line might go phut.

oz0707

I seem to remember a pound buying 2.7ish dollars up until 2000?

Generali

oz0707 wrote: »

I seem to remember a pound buying 2.7ish dollars up until 2000?

There was a Barmy Army song during the 2003 Ashes, "We get 3 dollars for a pound"

oz0707

Generali is this song on the way back?
http://www.valuewalk.com/2013/05/stanley-druckenmiller-shorting-aud/
Seems sentiment is turning. Didn't really want to see any massive changes for a few months!

Generali

oz0707 wrote: »

Generali is this song on the way back?
http://www.valuewalk.com/2013/05/stanley-druckenmiller-shorting-aud/
Seems sentiment is turning. Didn't really want to see any massive changes for a few months!

I'd be surprised if it drops to anything remotely like that in the next 12 months without a banking crisis.

Now that isn't an impossible outcome. Aussie houses are expensive and Aussie banks are highly exposed to mortgages on them. Furthermore, a lot of investors have bought relying on negative gearing to afford the losses on the rents. The budget position isn't great here and negative gearing has got to be on the table. Are you going to hit BTL owners or disabled people to bring things back to balance?