I have read this site on and off for a couple years and have thouroughly enjoyed the combatants at play, such as Moops, Herbie, Shadow and Timmy, for the highly entertaining verbal argy bargy.
One thing that has changed over time on this site is the number of Bulls versus Bears. A couple of years ago it seemed like a Bulls only site with the Bears in the minority. I think at the time the consensus across Australia was pro-property, with most people believing the old time honoured mantras such as 'property doubles every 7 years' and ' it's different here'. I have to admit being a property owner I really want to believe these mantras!
But the consensus in Australia has changed.
The Bears clearly outnumber the Bulls on this site now and the word on the street reflects this view also. Instead of statements such as 'property doubles every seven years', you are now more likely to hear 'property prices are crazy!' SMSF investors maybe the last hurray for property price increases with the MSM and vested interests cheering them on. With most of Asia willing to work for a fraction of our wages, China entering a downturn, downward pressure on our wages and unemployment rising, the current medium property prices surely seem to have the laws of physics against them.
It is not because of a healthy economy that house prices have gone up, it is because of high immigration and low interest rates.
It is similar to why US stocks have gone up so much, not because the economy is good, but because it is so bad. A poor functioning economy, the US FED keeps the money rate low and market players were bidding up stocks higher when the economy looks worse.
Problem is no matter how much we yammer like economists on this forum it doesn’t make a lick of difference Clearance rates keep rising, housing prices keep rising.
The economists are always going to be right because they set the market, Its like arguing with the umpire. Interest rates won’t budge for some time yet, not until the RBA is convinced the housing market can act as Australia’s next lever for growth. They won’t touch rates until we pass the mining cliff, the shut down of car manufacturing sector and all the other headwinds they see coming down the pipe including a potential bust in China.
Australian politicians, regulators, banks and business lobbies (i.e. the guys who actually matter on economics, not us) haven’t cared about the long term structural health of the economy since Keating. All they care about is making sure things dont blow up on their short term watch.
We all know the RBA doesn’t care about inflation – it sees rampant asset price inflation out the window of its offices in Martin Place but chooses to not only ignore it but actively pump it up.
APRA is likely to come in and put in place selective macro prudential tools some time in mid-2015, my bet will be a restriction on the level of lending at 90% LVR or greater and this is a somewhat educated guess. It will do this to appease people like us who say its been inactive on reckless lending, and to cover its backside when it all falls over. But the this will have zero effect – we all know those looking to borrow at higher LVRs, mainly FHBs, have already been crushed out of the market and the govt will probably cushion any impact by a fresh round of grants / handouts / subsidies.
Sorry guys this has got a long, long way to run and there are far too many vested interests to change. We might as well just shut up shop for the next 2 years at least because nothing is going to change, the only caveat being a material external shock which directly impacts Australia’s terms of trade. Even then the RBA has 2.5% left in the chamber.
There are ways to change this problem is we all go about it the wrong way. Start targeting the things that hurt the housing Ponzi by targeting the agents that keep it afloat. Target the banks via the rating agencies, the equity analysts and most of all the regulator. Publicly and professionally accuse and provide evidence of how APRA is sitting on its hands and letting the banks get away with murder. There are ways to attack this and to make a difference.
I am sure there is a very, very strong undercurrent of displeased voters willing to walk against the Ponzi and vote against it if channeled in the right manner.
property goes up and will keep going up because of population. If you live in a city with a growing population (example melbourne - most liveable city) of coarse property closer to the city will go up in value, it common sense. If you cant afford it, buy further away from the city.
Instead of statements such as 'property doubles every seven years'...
This is mentioned regularly by the bears, but I'm yet to see a serious investor make this statement. Any chance you provide a link (or links) to where this statement has appeared in this context on this site?
property goes up and will keep going up because of population. If you live in a city with a growing population (example melbourne - most liveable city) of coarse property closer to the city will go up in value, it common sense. If you cant afford it, buy further away from the city.
What a complete load of bs.
The US has a population of over 300 million people with a similIAR land mass to Australia. Why did their house prices collapse , with over 300 million people ?
Ultimately a growing population does not increase house prices, if it did , prices in ethiopia would be 2 million dollars.
Does not matter how many people you have, what matters is if you have jobs for them, if you dont , they have no money for rent or mortgages. And thats the problem, we dont have jobs , they are dissapearing, fast.
The gfc is here to stay, no ending in sight, whatsoever. All they are doing is making things worse in the end and prolonging the decline for who knows how long.
Perhaps have a think for a moment, about what or where the correction would be if the US had of not pumped in all this stimulus and had kept rates around 5%. A recession is a natural and healthy part of any economy, to keep it balanced and stable and grounded. But the leaders decided to attempt to engineer recessions out of the mix, and it had worked for quite some time, but then their stupidity finally caught up with them and came back to bite them in the bum. And is still chewing.....
I have read this site on and off for a couple years and have thouroughly enjoyed the combatants at play, such as Moops, Herbie, Shadow and Timmy, for the highly entertaining verbal argy bargy.
One thing that has changed over time on this site is the number of Bulls versus Bears. A couple of years ago it seemed like a Bulls only site with the Bears in the minority. I think at the time the consensus across Australia was pro-property, with most people believing the old time honoured mantras such as 'property doubles every 7 years' and ' it's different here'. I have to admit being a property owner I really want to believe these mantras!
But the consensus in Australia has changed.
The Bears clearly outnumber the Bulls on this site now and the word on the street reflects this view also. Instead of statements such as 'property doubles every seven years', you are now more likely to hear 'property prices are crazy!' SMSF investors maybe the last hurray for property price increases with the MSM and vested interests cheering them on. With most of Asia willing to work for a fraction of our wages, China entering a downturn, downward pressure on our wages and unemployment rising, the current medium property prices surely seem to have the laws of physics against them.
What goes up, must come down.
Well said,
I would add that a set of scales will wiegh the goods correctlyon it as long a the someone does not have his toe on scales.
Peter
I think our positions are about to be correctly weighed.
One thing that has changed over time on this site is the number of Bulls versus Bears. A couple of years ago it seemed like a Bulls only site with the Bears in the minority.
I don't think it has changed that much. There was a poll in 2012 which identified the majority of members as bearish...
It is not because of a healthy economy that house prices have gone up, it is because of high immigration and low interest rates.
It is similar to why US stocks have gone up so much, not because the economy is good, but because it is so bad. A poor functioning economy, the US FED keeps the money rate low and market players were bidding up stocks higher when the economy looks worse.
I would say a high house prices relative to other investments is the symptom of a bad economy.
2010 to 2020 will be a period of generally no capital growth in property, meaning in real terms property speculators will be paying for no return. They are bleeding money. But it gets worse, at the end they'll be stuck with a decades worth of much the same nominal prices and the AUD it is measured in will have slumped in world terms. A double whammy.
The worthwhile moment for property speculation will arrive at the end of the decade. But those that stayed in for the decade will have bled their fortunes away!
The next trick of our glorious banks will be to charge us a fee for using net bank!!! You are no longer customer, you are property!!!
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