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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 (21,433 Views)
b_b
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Poontang
20 Jul 2014, 02:47 PM
3 years, give or take 6 months.. mortgage rates will be around 7%
In three years mortgage rates will be on their way to 2.5% (as we approach zirp).
(S – I) + (T - G) + (M - X) = 0
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Shadow
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Ex BP Golly
20 Jul 2014, 02:57 PM
Your name might be on the title, but as possession is 9/10th the law, where is your title held, as a debt slave?
Based on this silly logic, anyone with savings in the bank doesn't really own their savings. Anyone with an online share trading account doesn't really own their shares. :re:

A homeowner's name is on the title, and the homeowner actually lives inside the property itself, and the only way they can be forced to leave is if the Sheriff, with a court order, forcibly evicts them. Possession, in this case IS the law, and the owner possesses the property, regardless of any mortgage they may have against it.
Guest
20 Jul 2014, 02:57 PM
The Australian housing bubble is recognised by most International monetary industries as the largest in the world.
Can you post a link to a few of these 'International Monetary Industries' (whatever that means) who claim Australia has the largest housing bubble in the world.

It sounds like the sort of unsubstantiated nonsense they preach at Macrobusiness.
Edited by Shadow, 20 Jul 2014, 03:43 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.
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Poontang
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b_b
20 Jul 2014, 03:18 PM
In three years mortgage rates will be on their way to 2.5% (as we approach zirp).
Without getting caught up in "exact figures" in 3 years time.... 1 of us will be right..

If it's 3% or 6.5% in 3 years I'm not going to argue specifics

There maybe room for more downward in the very near term, I expect that to be relatively shortlived before mortgage rates rise...

This may not be from RBA (or international central bank moves either)
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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ThePauk
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Shadow
20 Jul 2014, 02:44 PM
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.
Shoddy
Your argument only hold up if we count dual incomes, as opposed to the single income that could afford to buy.

"Assuming house prices will behave as they have over the past decade (instead of the past 60 years) changes the equation significantly, though. For instance, over the 10 years to 2006, real house price grew so quickly — 6.5 per cent a year — that had that rate continued, the cost of buying a home at that time was in effect free.

By contrast, if our April buyers endure real house price growth akin to the average over the past decade (1.7 per cent a year) they would have been better off ­renting."

http://www.theaustralian.com.au/business/opinion/home-buyers-punt-on-inflation/story-fnc2jivw-1226992723692

"At the other end of the spectrum, regional Queensland had 23 per cent of sales at less than the purchase price." March, 2014
http://news.smh.com.au/breaking-news-business/one-in-10-homes-sold-at-a-loss-20140616-3a7qu.html
Edited by ThePauk, 20 Jul 2014, 04:20 PM.
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Shadow
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ThePauk
20 Jul 2014, 04:15 PM
Your argument only hold up if we count dual incomes, as opposed to the single income that could afford to buy.
Nope. Single incomes or household incomes, it doesn't matter. The ratio to house prices has barely changed for a decade.

The ABS data I posted earlier was actually for single incomes...

ABS House Price Index
Dec 2003: 71.6
Dec 2013: 112.4
A rise of 57%

ABS Full-time adult ordinary time earnings
Nov 2003: 939.6
Nov 2013: 1437.7
A rise of 53%

Single adult wages up 53% and house prices up 57% over the past decade - i.e. the house price to income ratio has barely changed.
Edited by Shadow, 20 Jul 2014, 04:25 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.
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Ex BP Golly
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Shadow
20 Jul 2014, 03:40 PM
Based on this silly logic, anyone with savings in the bank doesn't really own their savings. Anyone with an online share trading account doesn't really own their shares. :re:

A homeowner's name is on the title, and the homeowner actually lives inside the property itself, and the only way they can be forced to leave is if the Sheriff, with a court order, forcibly evicts them. Possession, in this case IS the law, and the owner possesses the property, regardless of any mortgage they may have against it.

Can you post a link to a few of these 'International Monetary Industries' (whatever that means) who claim Australia has the largest housing bubble in the world.

It sounds like the sort of unsubstantiated nonsense they preach at Macrobusiness.
Crap.

ABS use to use the terms "owners" and those "purchasing a home" or some such.

Now it is "home owner" to describe both groups, even though they have the slippery little " outright ownership".

Whose interests does this serve?

Aspirational as it may be, not the intending home owner!



WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
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ThePauk
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Shoddy
Doh!, we have been in a bubble since 2003 and now, one in ten homes sell at a loss.

http://www.ahuri.edu.au/downloads/publications/EvRevReports/AHURI_Final_Report_No154_The_benefits_and_risks_of_home_ownership_for_low-moderate_income_households.pdf
Edited by ThePauk, 20 Jul 2014, 04:29 PM.
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Shadow
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ThePauk
20 Jul 2014, 04:27 PM
we have been in a bubble since 2003
I disagree. Australian house prices have simply tracked incomes over the past decade. That's not what happens in a bubble. All bubbles that have ever burst were characterised by strong rises in price/income ratios over many years immediately leading up to the crash. There has never been a crash after a decade of relatively steady price/income ratios.

Quote:
 
Your PDF is four years old, so I'm not sure it can tell us much about what is happening now.

I didn't read it, but if it really does say 90% of homes were selling for a profit (or breaking even) four years ago, then what's the problem?
Edited by Shadow, 20 Jul 2014, 04:41 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.
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Ex BP Golly
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Shadow
20 Jul 2014, 04:37 PM
I disagree. Australian house prices have simply tracked incomes over the past decade. That's not what happens in a bubble. All bubbles that have ever burst were characterised by strong rises in price/income ratios over many years immediately leading up to the crash. There has never been a crash after a decade of relatively steady price/income ratios.


Your PDF is four years old, so I'm not sure it can tell us much about what is happening now.

I didn't read it, but if it really does say 90% of homes were selling for a profit (or breaking even) four years ago, then what's the problem?
A very narrow world you live in Shadow.

Even though you limit your analysis to the last 10 years, something only 4 years old can't tell us much :lol

I have to (shiver) agree with The Pauk though, we have been a bubble since 2000.

Gold medal bubble blowers- Australia!

WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
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Shadow
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Ex BP Golly
20 Jul 2014, 05:20 PM
Even though you limit your analysis to the last 10 years, something only 4 years old can't tell us much
Pauk produced a 4-year-old document to show what is happening 'now'. Four year old data can't tell us anything about what is happening now.

I presented data for the past decade to show what happened over the past decade. Data for the past decade does tell us what happened over the past decade.

Why are bears so incapable of logical/rational thought?
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.
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