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Classic car bubble

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https://www.classicdriver.com/en/article/cars/it-too-late-buy-porsche-911-carrera-rs-27

 

I've talked with a couple of folks recently and noticed there is almost a 'panic' buying of S30Z's lately.

 

“There’s always going to be one car that causes quite a considerable spike in values; the deck of cards gets shuffled and all the others rise in line,” continues Schofield.

I can't help but think maybe that car in the classic Japanese car scene was the Toyota 2000GT hitting the 1M mark, followed by the KPGC10 Skyline GTR and L10A/L10B Mazda Cosmo's hitting the 250K USD mark and more recently the PS30 Fairlady Z432's also hitting the 250K USD+ range.. Early Mazda R100 Coupe's exceeding $100K AUD and even KGC10 Datsun Skyline 240K's climbing over $70,000 AUD which has had a knock on effect on other early rotary coupe's (in Australia in particular) and the Datsun 240z and 260z's etc....

 

Interesting times.. who knows if it will be sustained?

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There seems to be a lot of  people in Australia asking higher prices for their classic cars. Even a lot of the 90's coupes have expensive asking prices compared to even 2 years ago if they are in good condition and low kilometres. Such is the situation that 350z's, 370z's and Toyota 86's seem like bargains. Interest rates are low at the moment and people are feeling that Australia's economy is stable. Where we may come stuck in the future is our level of debt we are in. Currently we are using immigration to fuel spending on the economy and in particular real estate to attempt to service this debt but these may lead to other problems. I'm finding that everything in Sydney in particular very expensive.

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In my opinion it's record low and persistently low interest rates that is driving asset price bubbles at the moment.

When debt has hardly any price on it, money's value starts to deteriorate.

 

Why leave money in a bank with a questionable government guarantee on your deposit when you can put it into a physical object and watch it's value increase each year?

Bank of Japan is trying negative interest rates, which has all these unintended consequences.

The Fed is trying to increase rates from 0% but is having a hard time doing so. Each time they hike global markets go crazy.

 

The whole world growth system is based on people taking on MORE debt, thing about debt is that it's stealing from the future. As in your can get people to borrow today and spend today, but it just means they can do that tomorrow because they have to pay back their debts. So it's a short term solution to growth.

 

The dangerous thing about real estate asset inflation is that in many places house prices are higher than they were in 2007/8 when the GFC hit. So basically rather than let the big institutions fail, governments propped them up with tax payer funded bail outs and all that happened was the can got kicked a little further down the road.

 

China is the biggest proxy for Australia and they are due for a correction in asset prices, stocks etc.. The question is when? Australia's growth is directly tied to China so any tremors in China becomes Earth Quakes over here.

 

I know I know I sound like a Debbie downer, but I think GFC 2.0 is coming and it will be bigger and worse than last time. Last time Australia escaped due to the mining boom, this time I don't think China will buy enough dirt from Australia to keep us going and India isn't the powerhouse that China is.

 

The question is when? Nobody can say, timing a crash is impossible. It could be 6 months, it could be 6 or 16 years? But with the car industry closing in Australia over the next 2 years (estimates are that 200,000 jobs are tied to this industry) and all other growth engines in the Australian economy spluttering, it means things are going to get tougher not easier. With or without a crash of some kind. The current politicians don't want to talk about it, Scott Morrison's budget was very very optimistic.

 

I was living in Ireland in 2008 when the bubble burst there, a lot of Irish went to Australia, the US, abroad for work, A lot were out of work and lost their homes. It wasn't nice, a lot of Europe introduced austerity measures etc.. Sadly it could happen here too! Expect cuts to health, education, welfare/pensions etc..

 

So where does this leave the Real Estate and Classic car values in future? Well who knows really? The difference between a classic car and houses in this country are (and I'm sure I'm missing more):

 

1. Not making anymore classic cars. (limited supply)

2. Making plenty of dog box apartments. (supply)

3. The classic car market is a global market. (prices are set in whatever currency your buyer is in/using etc.. to some extent)

4. Real estate generally gets sold locally and is priced in $AUD

5. No capital gains tax on classic cars (keep this quiet before the Government decides to change it ;)).

6. In many ways classic cars are about conspicuous consumption. (not a basic human need)

7. Houses are a utility / need for a lot of people. (although you could say in some regards they are used as a store of wealth (when left vacant) for many foreigners who own them in places like London, Sydney, Vancouver etc..)

8. It's far easier for a Government to tax land because unlike financial assets or businesses/capital) owners cannot move them abroad to places like Panama. The land is stuck in Australia so it's a very effective tax method and foreigners don't vote here so easy to administer with the electorate).

9. It's far harder to tax a car that is not on the road. Although governments could tax them, but hard to do when not registered.

 

In theory if Interest rates continue to go low or negative, asset prices can be inflated to infinity...

 

My take on classic cars is that a global economic s*&t storm could drop their values. But as more and more cars become electric and automated thanks to self driving cars etc.. With global warming becoming an issue and carbon emissions under scrutiny I think owning classic cars will be a privilege and not a right. You may have to apply for carbon credits to use them on specific days / events. They may become an indulgence that only the uber rich can afford? (I'm talking 20-30 years time here).

 

Their values may continue to grow and make them a Veblen good, kind of like diamonds or certain designer goods. Which in part is what I think is driving them and their values up. Where as a lot of the real estate being created is dog box apartments that are all the same and have no soul or character to distinguish them from 1 another. So a crash in their values in my opinion will be far worse than a classic car bubble pop.

 

Bit of a long rant, but the weather in Sydney is shite and I'm stuck indoors for now, so I thought I'd drop a bit of philosophy in here. ;)

 

 

 

 

 
 

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I think another way of looking at this situation is how Nissan-Renault-Mitusbishi will decide what the next Z will be. There is no doubt that they are holding back at the moment. I would have thought that a replacement would have arrived in 2014 for Mr K to see and Nissan's 80th birthday, but nothing has happened and we are halfway through 2016. The point I think I'm trying to make is that I feel that Nissan are trying to work out whether the younger generation are interested in cars like previous generations. Seeing those SUV Z concept was not what I would have envisaged but that could have been just a z derived concept rather than the real thing. If this is true, that the younger generation is less sports car interested, could this also be the case for classic cars as baby boomers and generation X start to decline. Many current high school and university students that I work with seem to be very much green orientated in their thinking and seem to look judgementally on those  whosa turn up in a performance type car.  There is no doubt that the Toyota 86 and new Mazda mx5 are interesting experiments on the international market.

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This is why S30Z values are going up.

 

http://www.hemmings.com/magazine/hsx/2015/12/Pictures-Don-t-Lie---1971-Datsun-240Z/3749199.html#PhotoSwipe1465356967112

 

Great story and great car!

 

 

"They had this one, paint code 918 Mexican Orange, and that mustard color."

 

That mustard colour ;).

 

 

"The car had already been dressed out--they chucked the steel wheels and hubcaps in the trash and installed a set of slot mags, put in air conditioning, and also installed a front bumper guard."

 

Yep and that's why they are so hard to find now!

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I know it's not about S30Z's but I can really relate to what he says in this article.

http://www.motortrend.com/news/freigner-lead-singer-kelly-hansen-celebrity-drive/

 

Of course I too am a famous lead singer of a world wide successful band. :).

 

But on a serious note the reason I linked to it here is that I think it highlights 1 of the reasons why people are chasing classic cars, the ability to work on them and the simplicity of them is very rewarding. 

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Yesss now i can buy that 275 GTB i have been holding out for with the drop in price that's coming. haha

 

This article is stating the obvious for me. The people that aren't the 'real' enthusiasts are getting out and trying to make their money before it goes too far wayward. Car share market stuff right there, which a lot of people were taking advantage of while other types of investments weren't returning.

I don't think this effects the price of 240Zs and especially Australian ones.

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Interesting that GTHO Falcon's may have hit their peak and be coming off a notch.

http://www.carsguide.com.au/car-news/xy-ford-falcon-gtho-phase-3-fails-to-reach-half-million-mark-at-auction-41234

 

Interesting to compare expectations of an LJ XU-1 Torana.

http://www.carsguide.com.au/car-news/1973-lj-torana-gtr-xu-1-up-for-auction-43179?utm_source=outbrain&utm_medium=outbrain&utm_campaign=ob_editorial

 

It's expected to fetch up to $70,000 when it goes under the hammer on Monday night.

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Figure this would be of interest.

 

Elvis' old BMW 507 is restored.

http://www.foxnews.com/leisure/2016/08/05/elvis-presley-rare-bmw-507-rediscovered-and-restored/

 

Why thank you very much!

 

I couldn't help but think the Chevy V8 is oh so typical... That's why you don't cut up classic cars!

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Are Japanese classics finally gaining street cred?

http://www.ctvnews.ca/autos/are-japanese-classics-finally-gaining-street-cred-1.3031875

 

 

"Early [Nissan] Skylines are becoming desirable and even some of the sort of more utilitarian stuff like the [Toyota] Land Cruiser. They're highly regarded and go for pretty big money," says Haynes. "Whatever snobbishness may have existed, I think that it's going -- look at the Datsun 240Z. People are finally looking at it as a car and saying that it is a really great looking car...They are finally being perceived as desirable and the values will continue to grow."

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The article has completely missed the point about WHY 240Ks are becoming increasingly valuable.

 

The 240K was frumpy and boring in it's time, but it was also the first generation of Nissan Skyline sold locally*. As younger enthusiasts grew up playing Gran Turismo and watching Fast and Furious movies they became passionate about Japanese car culture and the historical lineage of the Skyline. This has increased demand locally from the tiny pool of cars which still exist.

 

The supply issue is further exasabated by the high prices these cars fetch when they are exported to the Middle East and Japan because as discussed in this thread previously Australia is increasingly connected to the rest of the world when it comes to classic car pricing. Hence the high prices and insane demand.

 

*with the exception of the Prince Skylines which IMO predate the "GTR era" of Skyline which most people associate Skylines with

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http://www.driving.co.uk/news/forget-property-classic-cars-are-proving-the-best-investment-for-smart-savers/

 

“We can’t see the current trends slowing down at the moment,” says Marcus Atkinson of Hagerty, a specialist classic car insurer. “The difference between now and the early Nineties [when the market collapsed] is that people are not borrowing money to buy these cars. They are moving their money out of one asset into another.

 

Translation: It's different this time.

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Yeah but this is a non-turbo boat. Not really talking about the best in bread at all. The TT is fast and oh the sweet T-Tops... i miss those.

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In my humble opinion, I don't think that the bubble will burst on the popular cars.  Its all about supply and demand.  As the years go by, there are more people looking for certain cars.  The number of these cars is pretty static there are a finite number of each car available.  Some are added to the pool through restorations, and others are written off, turned into race cars or retro modded.  Under these conditions, the prices will inevitably continue to rise over time.

 

Theres an old saying: - "..you never pay too much for a classic, you just pay it too soon...."

My favourite quote of 2017 so far!

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And many around here scoff at 10-15K project cars..

 

http://www.dailymail.co.uk/news/article-4054286/The-abandoned-Aston-Martin-s-worth-500-000-Rusting-car-left-middle-woods-set-sell-fortune.html

 

3B89178E00000578-0-image-a-1_14823084059

 

Imagine a project car that costs more than your entire restoration x 5 ;).

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And many around here scoff at 10-15K project cars..

 

http://www.dailymail.co.uk/news/article-4054286/The-abandoned-Aston-Martin-s-worth-500-000-Rusting-car-left-middle-woods-set-sell-fortune.html

 

3B89178E00000578-0-image-a-1_14823084059

 

Imagine a project car that costs more than your entire restoration x 5 ;).

 

Reminds me of the guy in the USA that had a Ferrari 250 GTO rotting away outside on his property for 15 years that he wouldn't sell. 

http://www.carbuildindex.com/28354/the-unbelievable-but-true-full-story-of-1962-ferrari-250-gto-3589/

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