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It's not a bubble. It's not even a boom.; Sydney only 4.3% above previous peak 10 years ago. All other cities remain below last peak.
Topic Started: 11 Aug 2014, 04:50 PM (817 Views)
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You have to work very hard to concoct a property bubble when we're nowhere near a boom

Terry Ryder, 30 July 2014

Every week there’s more evidence disproving the notion of a national property boom and the even more fanciful theory of a bubble fit to burst.

You really don’t need to go much beyond the price figures, which show wide variations in the results from different capital cities, with growth ranging from negative to low to moderate to strong to boom.

But given the steady flow of bloopers from economists whose five-second media grabs last longer than the research they do - and the plaintive cries from the industry about the “exodus of first-home buyers” because of the affordability crisis caused by the housing shortage they’ve spent years fabricating – here’s some more information.

The Home Buyers Index from the Commonwealth Bank and RP Data suggests that most markets around the country favour buyers. In other words, most markets are not booming.

According to this index, when you look at things from a statewide perspective the ACT is the only jurisdiction with a sellers’ market. Four states have a “balanced market”, two others have a “buyers’ market” and one (Tasmania) has an “extreme buyers’ market”.

So there are four different situations across the eight states and territories – and only one has a market strong enough to be classified as a “sellers’ market”.

When they examine the situation in each capital city, there are three cities deemed to have sellers’ markets, three with balanced markets and two with buyers’ markets. Eight cities with three different scenarios.

I could spend all sorts of time critiquing the methodology and wondering how on earth they managed to perceive Canberra as a strong market when all other indications suggest it’s struggling – and noting that it’s based on March quarter data and we’re now in the September quarter, so it’s dated even before they publish it.

But the bottom line is that the report has found a whole range of different scenarios happening nationwide and only a small number of locations have a market worthy to be called boom. In fact, the national top 10 list of the strongest markets includes only four locations rated as sellers’ markets. The other six on the top 10 list are merely balanced markets.

A graph in the HBI report shows that markets have overwhelmingly favoured buyers over the past four years. Only four out of the past 50 months have been classified as sellers’ markets. This would tend to harm the case of those arguing for a price bubble.

Also recently published was Australian Property Monitors’ Rental Report for the June quarter, which found that only one capital city recorded growth in house rentals. On an annual basis, three cities recorded significant decreases in rentals, one city had no change, three had growth between 1.5% and 2.6%, and the best in the land was a 5.6% annual rise in Melbourne.

It’s a similar situation with apartment rents.

I can’t see any evidence there of a booming market, nor anything to support the strident claims of a dwelling shortage from developers who seek to use the fictional shortfall as ammunition to coerce politicians into making their lives easier, faster and cheaper.

Turning to those persistent claims about our dwellings being over-priced, Cameron Kusher wrote recently on Property Observer that only Sydney among the capital cities has price levels (adjusted for inflation) higher than the previous peak.

In real terms, Sydney’s market is only 4.3% above the previous peak, which was 10 years ago. All other cities remain in deficit – most of them by more than 10%.

All cities have shown some kind of growth recently, according to these figures, but not enough to lift values to the levels of the previous peaks (the timing of which varies from city to city) and anywhere close to them

You have to work really hard to concoct a bubble out of this situation.

Read more: http://www.propertyobserver.com.au/forward-planning/advice-and-hot-topics/33960-no-property-bubble-no-national-housing-boom-terry-ryder.html
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bundy
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The usual nonsense from this guy.
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vdmruss
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When somebody complains about baby boomers, these are the kind of characters they refer to.
Let me assure you that this isn't one of those shady pyramid schemes that you've been hearing about. No sir, our model is the Trapezoid which guarantees each investor an 800% return within hours.
Those who can, do. Those who can't, teach.
"It's an itchy blanket, it's designed to remind you how lucky you are"
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David Bassanese says house prices are not going to crash

Jonathan Chancellor | 6 August 2014

David Bassanese, in his inaugural Switzer website blog, noted this week that rarely a week passes without the perennial issue of house prices being raised.

He's long been of the view that Australian house prices are not wildly over inflated – and are not about to crash any time soon.

And recent research from the Reserve Bank of Australia only affirmed his view.

He says a major reason why house prices seem high relative to household incomes in this country was because of the large “proximity premium” that has been built into the value of most of our homes which have been allowed to luxuriate on large parcels of land very close to our major urban job centres.

"We haven’t had the huge house price bubble that many have feared," he said.

"In fact, the adjustment in house prices in recent decades to these forces has been remarkably orderly.

"Consider at the national level, for example, that house prices have broadly tracked household disposable income over much of the past decade. "Of course, there have been cyclical swings around this average – in line with cyclical swings in employment and interest rates – but little evidence of a wayward upward trend.

"Household debt levels have also flattened out, and there’s still little evidence of a broad-based upsurge in mortgage defaults.

"Indeed, more and more Australians are taking advantage of low interest rates to save more and get ahead of their mortgage repayments.

"It’s for this reason, moreover, that I dispute billionaire fund manger Kerr Neilson’s recent claim that “to believe home prices in the next 10 years will meaningfully outpace the consumer price index (CPI), as they have in the past, would require a remarkable set of circumstances.”

"All we need is household incomes continuing to rise by more than inflation – consistent modest real wage gains on the back of rising productivity – and for house prices to continue to broadly track household income."

Read more: http://www.propertyobserver.com.au/forward-planning/advice-and-hot-topics/34194-david-bassanese-says-house-prices-are-not-going-to-crash.html
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Jimbo
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"All we need is household incomes continuing to rise by more than inflation – consistent modest real wage gains on the back of rising productivity"

Nuff said.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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Chris
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The same argument could be made in reverse, could it not?!

It could be argued that the bubble has burst because the market is now stagnating without more and more people buying into the ponzi?
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Jock
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vdmruss
11 Aug 2014, 05:54 PM
When somebody complains about baby boomers, these are the kind of characters they refer to.
unfortunately true, however most are nothing like this C. Many Gen x also up to their necks where I work.
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