The dotcoms were like that, interestingly the fundamentals supporting that bubble were actually stronger that those of our property bubble. They didn't have a fraction of the personal debt attached to that one. We have clear of a trillion dollars hanging on this one
What were the yields that the dotcoms were paying? What are the yields that property is paying?
I think you'll find that, on average, dotcoms paid nothing, whereas property pays a few percent.
You're nitpicking stinkbug, looking for differences that don't matter. There are greater differences than the matter of yields but the single similarity that both investment classes drew in massive volumes of new players and pushed prices up 100% in 7 years is what matters in talking about bubbles.
Why do you look for an escape from this reality? Didn't the US and EU property collapses teach you anything. They collapsed because of the consequences of a market distorted by what we see here, a doubling of investment activity in a very short time in what was traditionally a private housing market. House prices rising well beyond rises in real on the ground wages. 50% of all stock going to investors!
It's all before your very eyes if you open them and look, but like most people with a vested interest in a bubble you don't look, instead you seek justification that what has occured is normal, that first home buyers being driven from the market is normal in the NEW housing economy. That the lowest interest rates since the foundation of banking is NORMAL. That the highest levels of personal debt since the collapse of 1929 are normal and ok.
It is not normal, I can see that, all the first home buyers can see that, the elderly struggling to pay their inflated rates bill see that. That is why you you will always find fault in my posts, not because they are wrong, or wrong for the Australian property markets. But because you have a vested interest in them being wrong.
Like I said once before sb, you have no other plan, you can't just walk into a dealer tomorrow and sell your houses and roll all that investment capital into something else because most of it doesn't exist yet. Won't exist for a decade or 2. Shadow is even worse off in terms of leverage, he has no option but to believe the spruker who sold him on the plan and hang on tight.
Shadow was hopelessly wrong about the Gold Bull Market. What else is he wrong about?
You're nitpicking stinkbug, looking for differences that don't matter. There are greater differences than the matter of yields but the single similarity that both investment classes drew in massive volumes of new players and pushed prices up 100% in 7 years is what matters in talking about bubbles.
Why do you look for an escape from this reality? Didn't the US and EU property collapses teach you anything. They collapsed because of the consequences of a market distorted by what we see here, a doubling of investment activity in a very short time in what was traditionally a private housing market. House prices rising well beyond rises in real on the ground wages. 50% of all stock going to investors!
It's all before your very eyes if you open them and look, but like most people with a vested interest in a bubble you don't look, instead you seek justification that what has occured is normal, that first home buyers being driven from the market is normal in the NEW housing economy. That the lowest interest rates since the foundation of banking is NORMAL. That the highest levels of personal debt since the collapse of 1929 are normal and ok.
It is not normal, I can see that, all the first home buyers can see that, the elderly struggling to pay their inflated rates bill see that. That is why you you will always find fault in my posts, not because they are wrong, or wrong for the Australian property markets. But because you have a vested interest in them being wrong.
Like I said once before sb, you have no other plan, you can't just walk into a dealer tomorrow and sell your houses and roll all that investment capital into something else because most of it doesn't exist yet. Won't exist for a decade or 2. Shadow is even worse off in terms of leverage, he has no option but to believe the spruker who sold him on the plan and hang on tight.
That was actually one of your better, more thoughtful posts.
In fact it was going swimmingly until you had to drop that childish little "nyer nyer" comment about the liquidity of gold. Can you please just try and leave the gold thing out of it? Or do you secretly like getting abused by the bulls here? Is it some weird fetish?
"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.
That was actually one of your better, more thoughtful posts.
In fact it was going swimmingly until you had to drop that childish little "nyer nyer" comment about the liquidity of gold. Can you please just try and leave the gold thing out of it? Or do you secretly like getting abused by the bulls here? Is it some weird fetish?
Well said.
It could have been a good discussion about the relative importance of the different aspects of a bubble, but I guess it was not to be.
goldbug
14 Aug 2014, 09:09 AM
You're nitpicking stinkbug, looking for differences that don't matter. There are greater differences than the matter of yields but the single similarity that both investment classes drew in massive volumes of new players and pushed prices up 100% in 7 years is what matters in talking about bubbles.
What was the yield on Tokyo property at the peak of their bubble?
Would you say we have a problem of massive overbuilding despite lack of sales or demand?
Would you say we have a problem of massive overbuilding despite lack of sales or demand?
If only! If only we did! A surplus of well-located property near centres of commerce would be a wonderful "problem" to have. Sadly, such a scenario seems like a distant dream.
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
Around Sydney, many of the new constructions are labelled as "luxury apartments". I always smile when I see that. When I see luxury, I imagine inside the building a fitness room, a swimming pool with a bar next to it, golden taps etc... But all those new constructions have nothing that could qualify them as luxury. They are just like the good old apts built in the 70s, with newer bricks. well, Maybe they hide a few diamonds in each apt. A fancy paint color on the outside doesn't count as luxury. The crowd is so attracted into buying in this property market that they will buy that these new constructions are worth their premium price because they are luxury apts. meriton for instance is a champion in abusing from this trick. It's one sign we are in a bubble IMO, or at least that the market is a bit crazy.
Didn't the US and EU property collapses teach you anything. They collapsed because of the consequences of a market distorted by what we see here, a doubling of investment activity in a very short time in what was traditionally a private housing market. House prices rising well beyond rises in real on the ground wages. 50% of all stock going to investors!
Only 10% of EU countries had a crash. Globally, about 3% of countries in the world had a recent crash. Those countries that crashed had huge residential construction booms leading to an oversupply of homes, as well as massive increases in price/income ratios in the immediate run-up to the crash. On the other hand, Australia's price/income ratio today is roughly the same as it was over a decade ago, and while a construction boom did kick off in Sydney in early 2012, it has not yet resulted in an oversupply of homes.
It's no wonder you fail so badly when you can't even get the basics right.
Quote:
Shadow is even worse off in terms of leverage
LOL, leverage only increases my profit. Try not to forget that Sydney house prices are at record highs, still booming very strongly, and set to continue rising for another year or two at least. Plus they provide rental income every month on top of all that capital growth.
On the other hand, gold has crashed below its early 2009 price and is going nowhere, while paying zero yield. What a dud.
Try not to forget that Sydney house prices are at record highs, still booming very strongly, and set to continue rising for another year or two at least. Plus they provide rental income every month on top of all that capital growth.
On the other hand, gold has crashed below its early 2009 price and is going nowhere, while paying zero yield. What a dud.
Try not to forget that Sydney house prices are at record highs, still booming very strongly, and set to continue rising for another year or two at least. Plus they provide rental income every month on top of all that capital growth.
On the other hand, gold has crashed below its early 2009 price and is going nowhere, while paying zero yield. What a dud.
a wise investor would actually think the opposite : buy low and sell high.
Sydney house prices are at record highs, still booming very strongly, and set to continue rising for another year or two at least. Plus they provide rental income every month on top of all that capital growth.
On the other hand, gold has crashed below its early 2009 price and is going nowhere, while paying zero yield. What a dud.
a wise investor would actually think the opposite : buy low and sell high.
A wise investor knows that an investment should provide an income stream, otherwise it's just a speculation.
A wise investor also considers the future outlook for the asset.
Sydney house prices will keep growing while interest rates remain low and while there is no oversupply.
Gold will keep going nowhere because there are no fundamentals to drive it higher, despite the goldbugs praying for global disasters, wars and misery.
Why do you look for an escape from this reality? Didn't the US and EU property collapses teach you anything. They collapsed because of the consequences of a market distorted by what we see here, a doubling of investment activity in a very short time in what was traditionally a private housing market. House prices rising well beyond rises in real on the ground wages. 50% of all stock going to investors!
Shadow already pointed out that there was no such thing as an "EU property crash". I would add re your comment about investor levels being a "bubble indicator": Can you explain Germany then? Germany had/has no property bubble according to pretty much everyone, had no crash - just very steady house price growth (pretty much just CPI) when many countries had booms. And yet 60% of property in Germany is owned by investors?
Seems to me that Germany may actually show that increased investor holdings of property leads to a more stable / less boom/bust market than with a higher proportion of OOs? Woops, there goes your "bubble indicator" theory.
Quote:
the elderly struggling to pay their inflated rates
I think I have corrected you before on this! Try and learn something and repeast after me - RATES DO NOT GO UP WITH PROPERTY VALUES! Rates only increase if the councils want to increase their budgets. Property values could double tomorrow and your rates would not change.
The only reason unimproved land value comes into rates is to determine which "tier" of rates you have to pay - ie what share of the local government budget do you have to pay for. Your share remains constant if all land values change by the same amount.
... Can you explain Germany then? Germany had/has no property bubble according to pretty much everyone, had no crash - just very steady house price growth (pretty much just CPI) when many countries had booms. And yet 60% of property in Germany is owned by investors?
Seems to me that Germany may actually show that increased investor holdings of property leads to a more stable / less boom/bust market than with a higher proportion of OOs? Woops, there goes your "bubble indicator" theory.
Germany had its tax incentive/investor driven boom and bust - A decade before the others is all (the timing being directly related to the reunification of the country):
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