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Interest rates will stay low for at least another 20 years to keep house prices propped up; This is exactly why we’re so bullish on the stock market
Topic Started: 28 Jul 2014, 05:54 PM (9,604 Views)
Veritas
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Shadow
11 Aug 2014, 05:01 PM
Good. That wasn't too hard now was it?


Define 'serious bubble' in this context.
Serious enough that the fiscal and monetary kitchen sink had to be thrown at it to keep it inflated.

Not mention the Chinese doing the same.
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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Wisebear
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Shadow
11 Aug 2014, 05:01 PM
Good. That wasn't too hard now was it?


No. Knowing that you accept that it is a serious bubble made my job a lot easier. Thank you.

Quote:
 
Define 'serious bubble' in this context.
At last we can discuss this point as friends with no silly disagreements about whether Australia has a serious property bubble or not. I would say that the extremely low interest rates globally, easy credit and huge private debt are the primary reasons for the serious bubble. Welcome to the bear camp by the way, friend.
Edited by Wisebear, 11 Aug 2014, 05:16 PM.
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Shadow
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Wisebear
11 Aug 2014, 05:14 PM
I would say that the extremely low interest rates globally, easy credit and huge private debt are the primary reasons for the serious bubble
I wasn't asking for reasons why you believe a bubble exists.

I asked you to define 'serious bubble' - i.e. what does it mean? What is a 'serious bubble'? Describe it.
Edited by Shadow, 11 Aug 2014, 05:25 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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Wisebear
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Shadow
11 Aug 2014, 05:23 PM
I wasn't asking for reasons why you believe a bubble exists.

I asked you to define 'serious bubble' - i.e. what does it mean? What is a 'serious bubble'? Describe it.
Large, unstable, likely to have a significant impact when it collapses.

The word "Large" is probably somewhat superfluous since "bubble" adequately covers this.
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Shadow
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Wisebear
11 Aug 2014, 05:32 PM
Large, unstable, likely to have a significant impact when it collapses.

The word "Large" is probably somewhat superfluous since "bubble" adequately covers this.
So a bubble is any unstable market that is likely to have a significant impact if it collapses.

Doesn't that describe most markets, everywhere?

Most markets are unstable, in that prices move up and down, and most markets would cause a 'significant impact' if they collapse.

You definition of 'bubble' seems to be no different to a definition of 'market'.

What is different about the Australian housing market that makes it a 'bubble'?
Edited by Shadow, 11 Aug 2014, 05:38 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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Wisebear
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Shadow
11 Aug 2014, 05:35 PM
So a bubble is any unstable market that is likely to have a significant impact if it collapses.

Doesn't that describe most markets, everywhere?

Most markets are unstable, in that prices move up and down, and most markets would cause a 'significant impact' if they collapse.

You definition of 'bubble' seems to be no different to a definition of 'market'.

What is different about the Australian housing market that makes it a 'bubble'?
I think that most markets, particularly cash markets, are reasonably stable. As soon huge amounts of debt is used to drive the price higher and this is fueled by lower interest rates and easy terms then I think it becomes unstable.

Under these circumstances both the risk and impact of collapse is elevated.


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Shadow
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Wisebear
11 Aug 2014, 05:48 PM
I think that most markets, particularly cash markets, are reasonably stable. As soon huge amounts of debt is used to drive the price higher and this is fueled by lower interest rates and easy terms then I think it becomes unstable.

Under these circumstances both the risk and impact of collapse is elevated.
You didn't answer the question. What is different about the Australian housing market that makes it a 'bubble'?

The definition you gave pretty much defines almost every housing market and stock market in the world.

Come on, you've been saying for years that Australia has a housing bubble. Surely you can define what that actually means?
Edited by Shadow, 11 Aug 2014, 05:56 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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Sydneyite
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Wisebear
11 Aug 2014, 05:48 PM
I think that most markets, particularly cash markets, are reasonably stable. As soon huge amounts of debt is used to drive the price higher and this is fueled by lower interest rates and easy terms then I think it becomes unstable.

Under these circumstances both the risk and impact of collapse is elevated.


By this definition all housing markets in all western economies have always been in a "dangerous bubble" for over a century or longer - given that for most of this modern era most people have had to take on a mortgage (and usually quite big ones that have 20/25/30 year terms) to buy a home. :dry:
Edited by Sydneyite, 11 Aug 2014, 05:55 PM.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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Veritas
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Sydneyite
11 Aug 2014, 05:53 PM
By this definition all housing markets in all western economies have always been in a "dangerous bubble" for over a century or longer - given that for most of this modern era most people have had to take on a mortgage (and usually quite big ones that have 20/25/30 year terms) to buy a home. :dry:
Eh...financial deregulation?


Shadow
11 Aug 2014, 05:51 PM
You didn't answer the question. What is different about the Australian housing market that makes it a 'bubble'?

The definition you gave pretty much defines almost every housing market and stock market in the world.

Come on, you've been saying for years that Australia has a housing bubble. Surely you can define what that actually means?
And then you'll go, its not a bubble because ( Insert shadow talking points here)

What have we learned? Fuck all.
Edited by Veritas, 11 Aug 2014, 06:09 PM.
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
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Evil Mouzealot Specufestor

Veritas
11 Aug 2014, 06:07 PM
And then you'll go, its not a bubble because ( Insert shadow talking points here)
Let's cross that bridge when we come to it.

At this stage we can't even get Wisebear to explain what the bubble is.

Can you describe it?
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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