In real terms yes. In real terms I see no reason why they couldn't fall to 1995 prices or lower.
Comparing any prices over time in nominal terms is, of course, just silly.
It's very difficult to buy a house in inflation adjusted or 'real' terms. The vast majority of vendors expect to be paid in nominal dollars. If you make an inflation adjusted offer, then it's highly unlikely that you will secure the property, since you will be competing with other potential buyers who are willing to pay the actual price.
Are you expecting some kind of winding back of the financial deregulation that allowed price/income ratios to rise during the late 90s and early 2000s?
Do you expect banks to stop lending to women or stop lending based on dual incomes?
Or is there some other major change you think will cause prices to revert?
It's an opinion all right. How about you consider the variation in income and wealth of families, though, before comparing today (or the 90s) to 1940?
This chart shows that as people have gotten wealthier they are willing to price property higher compared to other assets. Why do you believe this is justified?
I believe it’s not justified but is simply the result of speculation due to low rates and easy credit.
If we could return financial conditions to what they were in the past we would see who was right.
stinkbug
16 Jul 2014, 11:25 AM
This I agree with. I also think we need to consider real incomes, real wealth and the real cost of financing.
This chart shows that as people have gotten wealthier they are willing to price property higher compared to other assets
I believe it’s not justified
Who are you to decide what is 'justified' for other people? If other people want to spend more of their spare income on housing then that is their choice.
Quote:
If we could return financial conditions to what they were in the past we would see who was right
Not sure what you mean by 'see who was right'. I don't think anyone is saying prices couldn't revert if the financial conditions prevalent in the past returned. But what is the likelihood of financial deregulation being wound back? What is the likelihood of returning to a time when banks didn't consider the wife's income when assessing loan serviceability?
You are pinning your hopes of a crash on some very unlikely scenarios. That is a highly risky approach.
Not sure what you mean by 'see who was right'. I don't think anyone is saying prices couldn't revert if the financial conditions prevalent in the past returned. But what is the likelihood of financial deregulation being wound back? What is the likelihood of returning to a time when banks didn't consider the wife's income when assessing loan serviceability?
Even the most misogynistic bank CEO isn't going to jeopardise his market share by doing that.
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
It's very difficult to buy a house in inflation adjusted or 'real' terms. The vast majority of vendors expect to be paid in nominal dollars. If you make an inflation adjusted offer, then it's highly unlikely that you will secure the property, since you will be competing with other potential buyers who are willing to pay the actual price.
Are you expecting some kind of winding back of the financial deregulation that allowed price/income ratios to rise during the late 90s and early 2000s?
Do you expect banks to stop lending to women or stop lending based on dual incomes?
Or is there some other major change you think will cause prices to revert?
You don't think tighter controls over the banks are possible?
I'm sure banks have been reined in time and again when their irrational exuberance has destroyed economies and pushed normal people into debt slavery , impoverishment and depression.
BTW, Who would have thought a workers representative like the great Paul Keating would have allowed the banks to do this? Here is just one of the parasites!:
WHAT WOULD EDDIE DO? MAAAATE! Share a cot with Milton?
It's very difficult to buy a house in inflation adjusted or 'real' terms. The vast majority of vendors expect to be paid in nominal dollars. If you make an inflation adjusted offer, then it's highly unlikely that you will secure the property, since you will be competing with other potential buyers who are willing to pay the actual price.
“Real” = “Nominal” in the present.
Quote:
Are you expecting some kind of winding back of the financial deregulation that allowed price/income ratios to rise during the late 90s and early 2000s?
Yes.
Quote:
Do you expect banks to stop lending to women or stop lending based on dual incomes?
No.
Quote:
Or is there some other major change you think will cause prices to revert?
I eventually expect the global economy to stabilise with higher rates, less debt and better regulation.
You don't think tighter controls over the banks are possible?
Possible, but unlikely.
If anything we will continue to move in the direction of less regulation, lower structural interest rates, more competition, foreign lenders, Coles now issuing loans etc.
Who are you to decide what is 'justified' for other people? If other people want to spend more of their spare income on housing then that is their choice.
It's an opinion. Do you allow them here?
Quote:
I don't think anyone is saying prices couldn't revert if the financial conditions prevalent in the past returned.
WOW! Your position has just collapsed. I never thought that you would accept that a return sound financial regulation and higher rates would crash the property market.
Quote:
You are pinning your hopes of a crash on some very unlikely scenarios. That is a highly risky approach.
It's sad that you believe that any move from the current excessive financial environment to one of sensible, sound policies is unlikely.
Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.
Forum Rules:
The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.
Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.
Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.
This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.
Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ
Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy