Welcome Guest [Log In] [Register]


Reply
  • Pages:
  • 1
  • 7
  • 28
Christopher Joye turns bear - Australian housing bubble is now here; House prices have inflated at a 9.5% annualised pace (triple wages growth)
Topic Started: 19 Jul 2014, 01:12 PM (21,434 Views)
Shadow
Member Avatar
Evil Mouzealot Specufestor

Veritas
20 Jul 2014, 02:21 PM
That may have happened in other countries but that does not mean that all bubbles must cleave to this model.
Right... so you're sticking to your theory that Australia has a special new type of bubble that behaves differently to every other bubble that has ever popped.

Quote:
 
bubbles deflate when sentiment does a volte face, investors start rushing for the door and demand drops
Sentiment and demand etc. fall after prices have risen to a level that can no longer be justified by incomes. The rise in price/income ratios to some unsustainable level always happens first. If prices never rise to an unsustainable level then there is no bubble to burst.

Quote:
 
500,000 people are still buying houses each year.

You think thats sustainable because its been sustained for ten years. That is an opinion not a fact.
It's a fact that Australian house prices have not outpaced incomes over the past decade - i.e. they have not risen to a level that can't be justified by incomes. They have not risen to an unsustainable level. Australians currently have sufficiently high incomes to be able to afford homes at their current prices, and this has been the case for over a decade.

Your problem is you are projecting your own inability to afford a house onto the rest of the population. Try not to forget that the majority of your peers already own one.
Edited by Shadow, 20 Jul 2014, 02:34 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
Profile "REPLY WITH QUOTE" Go to top
 
Poontang
Member Avatar


Shadow
19 Jul 2014, 11:42 PM
Mortgage rates were close to double digits in 2008. People could still afford their homes.

Many were struggling with mortgage repayments at that time..



As unemployment continues to rise and wage growth continues to slow to barely rate of inflation, as opposed to wage rises above inflation, and mortgage rates rise either through RBA raising rates or the bond market forcing borrowing costs up again.

Those "affordable" payments will again become unaffordable for many recent borrowers.

A dilligent home buyer who bought 10 years ago and has worked hard to pay down the balance will be less affected by rising mortgage rates than a recent purchaser who has purchased at 95% and has filled th house with items bought on credit.

As will the home buyer whom bought 10 years ago and now owes more on their home than they originally paid for it by using it as as an atm to fund their lifestyle.

Default rates are relatively low now. Expect them to rise....


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.
Profile "REPLY WITH QUOTE" Go to top
 
b_b
Default APF Avatar


Ex BP Golly
20 Jul 2014, 11:56 AM
Shadow, is this a chart of a bubble?:

Posted Image
For what its worth, below is a nice chart on Japanese wage growth. Looks like it averaged 5% per annum in the 1980's. Eyeballing the price chart (blue line) suggests prices doubled after ten years (7% per annum).
http://pdf.reuters.com/pdfnews/pdfnews.asp?i=43059c3bf0e37541&u=2013_04_22_06_52_1bcd2928e3ce4dc584b4598b0044eae8_PRIMARY.jpg

Posted Image
Edited by b_b, 20 Jul 2014, 02:40 PM.
(S – I) + (T - G) + (M - X) = 0
Profile "REPLY WITH QUOTE" Go to top
 
Shadow
Member Avatar
Evil Mouzealot Specufestor

Poontang
20 Jul 2014, 02:32 PM
Many were struggling with mortgage repayments at that time..

'Many' are always struggling, regardless of conditions. But the vast majority are not struggling. Our mortgage arrears are very low, even during high interest rate periods. Compare Australia below with countries that had actual bubbles...

Posted Image

Quote:
 
Default rates are relatively low now. Expect them to rise....
Rise? When? Interest rates are not going back up by any significant amount for a long long time, and as the chart above shows, even when interest rates were much higher, mortgage default rates were still very low.
Edited by Shadow, 20 Jul 2014, 02:41 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
Profile "REPLY WITH QUOTE" Go to top
 
Veritas
Default APF Avatar


And while we are on the subject of inflection points. Lets look at Ireland.

Posted Image

House price behavior was well into bubble territory as evidenced by the steep increase in prices up to 2002. Then what happened?

There was a dip before the upward march continued. What happened? As far as I know, during this time a Negative gearing like tax law was repealed and the market took a hit. In the face of intense lobbying from the VIs the Government of the day reinstated the investor friendly tax code and prices continued upwards. Clear evidence that Governments can keep bubbles inflated if they so wish.

Now you are going to argue that the bubble didn't begin until after that dip in prices. Arent you?

Well, you have to. Otherwise you iron law is bust. So lets be having you.
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
Profile "REPLY WITH QUOTE" Go to top
 
Shadow
Member Avatar
Evil Mouzealot Specufestor

Veritas
20 Jul 2014, 02:40 PM
Well, you have to. Otherwise you iron law is bust. So lets be having you.
Like Sober, you have posted an irrelevant price chart. My argument is based on price/income ratios. As I said before, please try to refute the point I'm actually making, rather than some other unrelated point.

Were price/income ratios in Ireland sustained at a relatively stable level during the decade prior to their crash?

No, they were not. Price/income ratios Ireland actually went through the roof in the decade prior to their crash.
Edited by Shadow, 20 Jul 2014, 02:47 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
Profile "REPLY WITH QUOTE" Go to top
 
Poontang
Member Avatar


Shadow
20 Jul 2014, 02:40 PM



Rise? When? Interest rates are not going back up by any significant amount for a long long time,
3 years, give or take 6 months.. mortgage rates will be around 7%
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.
Profile "REPLY WITH QUOTE" Go to top
 
Shadow
Member Avatar
Evil Mouzealot Specufestor

Poontang
20 Jul 2014, 02:47 PM
3 years, give or take 6 months.. mortgage rates will be around 7%
And if Chris Joye's predicted bubble does develop during those next few years, then a 7% mortgage rate might be sufficient to pop it. But first let's see if the bubble actually develops, which would mean a rapid escalation in price/income ratios over the next several years.

Personally I just expect prices to track incomes over the next several years, in which case 7% mortgage rates will have roughly the same effect as when we last had 7% rates (2011 and 2006) - i.e. not much.
Edited by Shadow, 20 Jul 2014, 02:54 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
Profile "REPLY WITH QUOTE" Go to top
 
Guest
Unregistered

The Australian housing bubble is recognised by most International monetary industries as the largest in the world.

A bubble is reflected by more people taking out larger and ever increasing loans for longer and longer periods of time and having ever increasing numbers paying an interest only loan to do so. At a time when job security is declining.

Add in that there is now not enough room to lower interest rates to counter the effect of continuing jobs losses and further economic decline.

These comentators can only pretend to have their head in the sand for so long before they make themselves start to look stupid. Then they have no choice but to start to sound a bit more realistic.

"REPLY WITH QUOTE" Go to top
 
Ex BP Golly
Member Avatar


zaph
20 Jul 2014, 02:20 PM



That's fine. You can have your own terminology, that the vast majority of Australians don't use.

Perhaps you should return to the ye olde terminology of owning, buying and renting?




"To possess by right; to have the right of property in; to have the legal right or rightful title to." -http://en.wiktionary.org/wiki/own




So I don't own the TV and kettle that I purchased yesterday on my credit card?




I'm sure my bank would not be concerned if I painted a wall pink, yellow or ever green. My LL might be.
"to possess by right"...."to have legal right or rightful title to"

You don't understand what that means?

Your name might be on the title, but as possession is 9/10th the law, where is your title held, as a debt slave?

Have you ever even seen or touched your actual, real title?

How many here have? :lol

WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
Profile "REPLY WITH QUOTE" Go to top
 
1 user reading this topic (1 Guest and 0 Anonymous)
ZetaBoards - Free Forum Hosting
Create a free forum in seconds.
Learn More · Register Now
Go to Next Page
« Previous Topic · Australian Property Forum · Next Topic »
Reply
  • Pages:
  • 1
  • 7
  • 28



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.

For more information go to Limitations on Exclusive Rights: Fair Use

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