Correct - Sober's charts had nothing to do with the point I was making regarding price/income ratios - hence I dismissed them. If Sober (or anyone) can find an example of a bubble that burst after price/income ratios had been sustained at roughly the same level for a decade, then they are welcome to post the details.
Shadow, is this a chart of a bubble?:
WHAT WOULD EDDIE DO? MAAAATE! Share a cot with Milton?
Japan had a bubble. House prices rose faster than incomes for many years before it popped. But you can't see this on the chart above because that chart only shows prices - not the ratio of prices to incomes. Remember - prices can rise very fast, but if incomes rise equally fast then prices are not in a bubble.
Im sorry mate. That ABS shit didn't mean that much to me. Maybe you and the ABS have a non standard definition of the words "own" and "ownership" perhaps?
The ABS says this " As the number and age of children increase, many families will upgrade to a larger house. After the children have left home, most home owners will probably remain in the same home at least until retirement, by which time most will own their home outright. "
Thems be weasle words Shady, that suggests the ABS' figures about "ownership" aren't about "outright ownership" me thinks.
You arent confusing owning a debt obligation to a bank for a house , with actually owning a house are you?
Like I have previously said, ABS material is politically motivated propaganda not worthy of calling itself toilet paper.
Shadow
20 Jul 2014, 11:58 AM
Japan had a bubble. House prices rose faster than incomes for many years before it popped. But you can't see this on the chart above because that chart only shows prices - not the ratio of prices to incomes. Remember - prices can rise very fast, but if incomes rise equally fast then prices are not in a bubble.
So despite everything you know, even the history of Japanese house prices, you maintain that that chart is not in fact a depiction of the 'Japanese Asset Price Bubble'
Maybe you and the ABS have a non standard definition of the words "own" and "ownership" perhaps?
Incorrect. Don't forget there are two forms of ownership - outright owner, and owner with a mortgage. In both cases the buyer's name is on the title and they are recognised by law as the legal owner of the property.
Veritas and Chris can't afford to buy a home - they are just renters - i.e. they fall outside both categories of ownership. I was simply pointing out the fact that the majority of their peers already own one of those supposedly 'unaffordable' homes that Chris and Veritas can't afford to buy.
Ex BP Golly
20 Jul 2014, 12:14 PM
you maintain that that chart is not in fact a depiction of the 'Japanese Asset Price Bubble'
The chart is a graphical representation of dwelling price movements in Japan, however it is irrelevant to my point that Sober was attempting to refute - i.e. that every bubble in history that has ever burst has only burst after a lengthy run-up in price/income ratios immediately prior to the bubble bursting. On the other hand, Australia has had a relatively steady price/income ratio for more than a decade. No bubble has ever burst after a decade of stable price/income ratios. The reason why is pretty simple... if a price/income ratio can be sustained for a decade or more then it is clearly a sustainable ratio and there is no bubble there to burst.
Correct - Sober's charts had nothing to do with the point I was making regarding price/income ratios - hence I dismissed them. If Sober (or anyone) can find an example of a bubble that burst after price/income ratios had been sustained at roughly the same level for a decade, then they are welcome to post the details.
Waste of time arguing with you. You just turn conversations back to what you want to talk about, which is to establish some narrow definition of a bubble like it's set in stone, or iron, or your own excrement.
Things are complicated. That's why we come here to discuss them. What's not so opaque is the general direction this country is headed over the next few years, and your little semantics sideshow just makes you look like Nero, fiddling away while Rome burns.
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness. "Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
Im sorry mate. That ABS shit didn't mean that much to me. Maybe you and the ABS have a non standard definition of the words "own" and "ownership" perhaps?
The ABS says this " As the number and age of children increase, many families will upgrade to a larger house. After the children have left home, most home owners will probably remain in the same home at least until retirement, by which time most will own their home outright. "
Thems be weasle words Shady, that suggests the ABS' figures about "ownership" aren't about "outright ownership" me thinks.
You arent confusing owning a debt obligation to a bank for a house , with actually owning a house are you?
It's extremely widely accept in Australia that 'ownership' relating to property refers to property that is owned with, or without a mortgage. The entity named on the title deed owns the house. A financier may be named on the deed, but they will be named as mortgagee, not owner.
If I have a personal loan on a car, do I own it? If I buy a TV and pay for it on a credit card, do I own the TV?
Waste of time arguing with you. You just turn conversations back to what you want to talk about, which is to establish some narrow definition of a bubble like it's set in stone, or iron, or your own excrement.
My definition of a bubble is based on looking at data pertaining to every asset bubble that has ever burst. All of them, every single one, only burst after a strong rise in price/income ratios took prices to an unsustainable level - i.e. a price level that could no longer be justified by incomes.
It makes no sense to say Australia's current price/income ratio is unsustainable. It has been sustained for more than a decade!
Others here attempt to refute my point by turning the conversation over to something unrelated to the point itself. When that happens I simply bring the discussion back to the point I was making. If someone wishes to refute my point, then they need to refute that actual point, rather than refuting some other unrelated point that I didn't make.
But if you find it a waste of time arguing with me, then don't. Simple.
It makes no sense to say Australia's current price/income ratio is unsustainable. It has been sustained for more than a decade!
There are plenty of discussions on other threads here as to how it was sustained. Which you never seem to participate in.
The important takeaway from Chris' article is not whether he is calling a bubble at this precise moment in time or not (anyone who reads him regularly knows how he carefully phrases his predictions so they can retrospectively be interpreted either way)
The main takeaway is that his rhetoric, like the Kouk's, is becoming progressively more gloomy.
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness. "Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
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