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Six years on from the GFC, what have we learnt?; Entrepreneurs piling into property faster than ever
Topic Started: 17 Jul 2014, 10:03 AM (4,960 Views)
stinkbug
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Veritas
17 Jul 2014, 12:08 PM
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Professor Emmett Brown has really let himself go...
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While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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Poontang
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peter fraser
17 Jul 2014, 12:21 PM

Yes I did - why?
Watsons statement says "starts small business"


My post was, well at least I thought so, clearly pointing to the support of business.....
There are some people who seem angry and continuously look for conflict.
Walk away, the battle they are fighting isn't with you, it's with themselves.

The first lesson of economics is scarcity: There is not enough of anything to satisfy all who want it.
The first lesson of politics is to disregard the first lesson of economics. ~ Thomas Sowell.

Who was the fool, who the wise man, who the beggar or the Emperor? Whether rich or poor, all are equal in death.
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peter fraser
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Poontang
17 Jul 2014, 12:34 PM
Watsons statement says "starts small business"


My post was, well at least I thought so, clearly pointing to the support of business.....
Well I read it as just declaring that homeowners would spend some of their equity and not necessarily supporting small business, but if I misread your intent then I apologise.
Any expressed market opinion is my own and is not to be taken as financial advice
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Dr Watson
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Here's a link to an article from a year ago that summarises the RBA position. They were expressing concern that house prices were not rising fast enough to support entrepreneurs. Some snippets ...
Quote:
 
The current slow rise in house prices could create problems for Australia’s vital small business sector, the RBAs head of domestic markets, Chris Aylmer, has warned.
Quote:
 
“That home equity actually allowed small businesses to fund themselves to grow,” he said, meaning a new business model was needed to fund new start-up ventures. However, he said there was no easy answer because if there was “someone would have sorted it and made a business out of it”.

Aylmer said there would probably need to be innovation in the venture capital space and “intergeneration transfers, because the people who have the home equity are the older generations.

MacroBusiness, perhaps unsurprisingly, took a different view:

http://www.macrobusiness.com.au/2013/06/pascoe-rba-miss-the-point-on-housing/

I'm doing a bit of work on the side for a guy at the moment who has used home equity to start and grow his own business. He had the bank valuer come out recently and the valuer told him his house had increased in value. He promptly accessed the equity to buy things like a new $5,000 printer for his office. The RBA would approve.


Edited by Dr Watson, 17 Jul 2014, 02:15 PM.
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
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Poontang
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peter fraser
17 Jul 2014, 12:53 PM
Well I read it as just declaring that homeowners would spend some of their equity and not necessarily supporting small business, but if I misread your intent then I apologise.
It's OK.. I re read my post a few times before I posted because I am aware that there is sometimes a disconnect between what I am thinking in my head and what I end up writing...
There are some people who seem angry and continuously look for conflict.
Walk away, the battle they are fighting isn't with you, it's with themselves.

The first lesson of economics is scarcity: There is not enough of anything to satisfy all who want it.
The first lesson of politics is to disregard the first lesson of economics. ~ Thomas Sowell.

Who was the fool, who the wise man, who the beggar or the Emperor? Whether rich or poor, all are equal in death.
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Veritas
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stinkbug
17 Jul 2014, 12:24 PM
Professor Emmett Brown has really let himself go...
Actually...

Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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stinkbug
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Veritas
17 Jul 2014, 04:02 PM
Actually...

I didn't watch the video, but isn't that from the strange show in the early 90's about a tall dude dancing with horse in a black lodge drinking really good black coffee?
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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zaph
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stinkbug
17 Jul 2014, 04:14 PM
I didn't watch the video, but isn't that from the strange show in the early 90's about a tall dude dancing with horse in a black lodge drinking really good black coffee?
I thought it was all about the crazy old guy from Back to the Future...
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Veritas
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stinkbug
17 Jul 2014, 04:14 PM
I didn't watch the video, but isn't that from the strange show in the early 90's about a tall dude dancing with horse in a black lodge drinking really good black coffee?
Sure is. In the scene in question, the Giant is warning the FBI agent, Cooper, than the murderer he seeks is about to kill again.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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silverman47
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Dr Watson
17 Jul 2014, 11:33 AM
In six years you can — and should — learn a lot. The biggest lesson (for me) was the difference between the cycle and the supercycle. I knew about cycles but got my first lesson in the supercycle in 2008. I've learnt that asset prices and the economy are two different things: we see the DJIA booming but the US economy still languishing and stuck on emergency settings. I've learnt that Australian residential property can be stimulated and proofed against economic downturns. I've learnt that the RBA values high house prices because this fosters an "entrepreneurial culture" and this means the RBA will act to support house prices. I've learnt about the power of mass immigration and once-in-a-century terms-of-trade booms and how they can make your country immune from the ups and downs suffered by mere mortals like the USA. I've learnt about the power of Chinese investment in our residential housing stock. I've learnt that policymakers are not quickly spent and can conjure up new tricks for much longer than you might imagine.
Can you point me in the direction of some good books on cycles such as your referring to?
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