If that image doesn't tell you something is badly wrong I don't know what would.
All Part of the cycle though apparently.
absolutely. it shows a country that is failing to invest in innovative business and an economy too reliant upon an unproductive asset class.
peter fraser
28 Aug 2014, 10:26 AM
Yes that makes sense. Probably because of the high proportion of investors in the market. They tend to use lower LVR loans to avoid the LMI cost and to avoid issues with LMI exposure limits per borrower.
People may not be aware that mortgage insurers have a $2.5M exposure limit per borrower. That doesn't matter to a PPOR buyer who has no investments, but it sure stops investors buying a lot of properties with high LVR loans, which is what most people think they do.
There is also a fair bit of cash out there in the market.
the whole high LVR thing is a nonsense. whether somebody borrows at 80 or 95 if pretty irrelevant if they lose their source of income, they default.
That would still mean buying now would be ill advised.
If there was a crash now, yes. But if there wasn't one at all, or even for 4+ years then buying now wouldn't be ill advised. Telling people not to buy for the last 10 years was ill advised
Lindsay David may sound crazy comparing Australia’s banks to Lehman Brothers and Bernie Madoff.
But in his mind, it’s everyone else who is living in a “Disneyland” delusion by failing to spot a bank-led property bubble that shows no sign of deflating.
It’s “the sheer size of the loans relative to the incomes here” that troubles Mr David.
“No one in the Western world has ever done what we are doing.”
Mr David, who used the case studies and research projects from his time at the IMD business school in Switzerland to form the basis of a book, Australia: Boom to Bust, warns that the three shaky pillars of real estate, resources and the banks will eventually collapse.
He says that as Chinese authorities appreciate, they’ve built more houses and apartments than they need, demand for Australian ore will grind to a halt, triggering a weakness in the economy that will expose the banks.
“There are going to be more apartments than people in China and all of a sudden if [the construction] stops, then what is the floor on the spot price of iron ore? We don’t know what that is,” he said.
Lindsay David may sound crazy comparing Australia’s banks to Lehman Brothers and Bernie Madoff.
But in his mind, it’s everyone else who is living in a “Disneyland” delusion by failing to spot a bank-led property bubble that shows no sign of deflating.
It’s “the sheer size of the loans relative to the incomes here” that troubles Mr David.
“No one in the Western world has ever done what we are doing.”
While I agree with David’s overall view on the Australian housing market – specifically concerns around its overvaluation and mortgage debt levels – as well as his view that the underlying pillars of the Australian economy are fragile, I strongly disagree with him that supply-side barriers have not played a role in increasing land/house prices, raising household debt, and increasing financial stability risks.
Over the past 20 years housing supply has become less responsive to demand (price). The huge escalation in fringe capital city land values is bona fide proof that supply-side barriers have become increasingly obstructive. Ultimately, however, unresponsive housing supply is a key determinant of price volatility, and tends to lead to bigger boom and bust cycles than in markets where land/housing supply is relatively responsive (elastic) to changes in price. Miami, Florida, which David notes in the interview to debunk the whole supply-side argument, is a perfect case in point.
Yes, Norway is the only country above Australia on the UN Human Development Index.
I wonder why the bears don't just move there, instead of whining about how bad things are here in the country ranked number 2 on the index?
Any chance you might stick to what's actually being discussed?
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
Yes, Norway is the only country above Australia on the UN Human Development Index.
I wonder why the bears don't just move there, instead of whining about how bad things are here in the country ranked number 2 on the index?
2nd best's for loosers, why put up with a 2nd best shithole like australia when norway's got more going for it and no housing bubble and only 5 million people so its less crowded, I'd be there in a heartbeat if it wasnt so cold
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