We have high housing prices because 'we' want high housing prices; Figure out some way to get 'us' wanting low housing prices and we just might get low housing prices
Tweet Topic Started: 1 Oct 2014, 08:18 PM (2,189 Views)
So prices are never going to drop substantially across the board. Property investors are going to keep buying buying raising the price to some sky high level. It will plateau at that level, a price level which will be so fantastically expensive it will exclude the vast majority of Australians from the hope of ever buying property.
Careful now - Black Pansy's an old man, you're going to be seriously raising his blood pressure there will all that bull porn talk.
"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.
So prices are never going to drop substantially across the board. Property investors are going to keep buying buying raising the price to some sky high level. It will plateau at that level, a price level which will be so fantastically expensive it will exclude the vast majority of Australians from the hope of ever buying property.
Sadly, we're already well down the path you describe — at least in Melbourne and Sydney, as far as detached housing is concerned. Soon duplexes and townhouses will be similarly out of reach. But this is the path plotted by the great and good at the RBA. To fight them is, surely, a lost cause. The RBA has plans for you. It's best you embrace them.
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
Sadly, we're already well down the path you describe — at least in Melbourne and Sydney, as far as detached housing is concerned. Soon duplexes and townhouses will be similarly out of reach. But this is the path plotted by the great and good at the RBA. To fight them is, surely, a lost cause. The RBA has plans for you. It's best you embrace them.
We aren't actually meant to beat the system of course Doc. The Capitalists would be pissed as we'd stop being loyal little wage slaves. And the Socialists would be pissed as we'd stop being amenable to their bribes. That said, it's probably still not a real bad idea to at least have a crack at beating the system if you think you just might happen to have what it takes. And feel personally motivated for whatever reasons to have a crack at doing so. Given that in our system, there still do seem to be a few from time to time who do manage it. But doing so requires you to at least understand the system so you can make the most of it - If that makes sense?
As for changing the system? Well I for one don't think I'm smart enough to figure out how to do that without most likely totally effing it up. And I've surely not seen anyone commenting here who figures they are that smart, give me anything but cause to disagree with their self assessment of their intelligence.
We aren't actually meant to beat the system of course Doc. The Capitalists would be pissed as we'd stop being loyal little wage slaves. And the Socialists would be pissed as we'd stop being amenable to their bribes. That said, it's probably still not a real bad idea to at least have a crack at beating the system if you think you just might happen to have what it takes. And feel personally motivated for whatever reasons to have a crack at doing so. Given that in our system, there still do seem to be a few from time to time who do manage it. But doing so requires you to at least understand the system so you can make the most of it - If that makes sense?
As for changing the system? Well I for one don't think I'm smart enough to figure out how to do that without most likely totally effing it up. And I've surely not seen anyone commenting here who figures they are that smart, give me anything but cause to disagree with their self assessment of their intelligence.
I hear what you're saying there Herbs. I don't know how to beat the system but I gave up trying to fight it, about one year ago to be precise. That was the day I got down on my knees and converted to Property-anity or Property-ism or whatever our national religion currently is. I couldn't deal with the stress anymore. I was having nightmares of walking down the street, and I kept seeing this giant mack truck coming towards me, at high speed, driven by Stevens and Hockey and with a load of wealthy Chinese in the back. I wanted to have sweet dreams again so I converted to Glenn's religion of choice. He makes a wonderful preacher. Commandments one to ten in the RBA bible are the same: House Prices Shall Go Higher. That much is clear to me now. Stevens is our shepherd, he leadeth us to pastures green.
You do realise price rises or falls do not occur in a bubble (excuse the pun), if your house falls in value then so does your neighbours. If your suburb falls then so does the suburb next to it and so on and so forth. Although your house is worth less so is the one you wanted to upgrade to a few suburbs over, you haven't actually lossed or gained much at all if this occurs.
High values do not equate to higher wealth for PPOR, the only ppl benefitting from higher house prices are investors, of which there are only a reported 1.4mil.
Chris
When prices threaten to fall people take their homes off the market and they put off moving, downsizing etc etc. people put off new building and subdivision plans etc etc. Jobs are lost and the down cycle really kicks off. This is what some bears yearn for because they have been sold a lot of rubbish to make them believe it will be good for them. Worse still these bear are told a nonsense about downturns changing society for the better,downturns always exacerbate inequality.
The reality is very bad for young people. People in Ireland, Spain and Greece who suffered the most were the young, who were the first to lose their jobs and were also the first to lose their homes as they had no time to build up a buffer.
The people buying houses at bargain basement prices from stressed young home owners were cashed up investors, who bought for returns. Rents rise in a downturn.
I do not cheer on high house prices, and I am in total agreement with you that investors gain most from price rises (together with banks and real estate agents), but they gain even more in a downturn as they pick up bargains and raise the rent,then wait out the downturn to emerge even richer.
So investors gain most, but so do all owner occupiers, they build up real money in equity which renters don't have access to. After a few years they have more disposable income and they also start businesses with this equity etc etc. it is far from a perfect world but that is just the way it is. The big crashes in Europe and the US did nothing but give investors a great buying opportunity. Things are already heading back to business as usual, within a couple of years everyone will be back telling you house prices double every 10 years, rent money is dead money etc etc.
House prices are like wages they rarely ever drop, why ? because either spells doom for the government. It is not some hidden agenda it is common sense. It has been so for a very long time.
Quote:
Government has no other end, but the preservation of property. ------ The reason why men enter into society is the preservation of their property.
John Locke (1632-1704)
Veritas
2 Oct 2014, 05:14 PM
You don't understand basic economics.
Why? because you make no attempt to.
Lazy posting Veritas
Why not put forward an opposing case?
ThePauk
2 Oct 2014, 05:53 PM
Most Australians disagree rising house prices are "a good thing"
And they would be right about that. But take a look at the future of any government that presides over dropping real estate prices.
CSI
3 Oct 2014, 09:25 AM
"Transmutation" = big property investors are going to buy up all the housing stock. All of it. Then charge the earth for rent, so the majority of the population are going to be trapped in abject poverty for generation after generation due to having to pay these exorbitant rents. Is this the Transmutation?
You have described what has occurred in Germany. It was also true in Victorian times throughout Europe.
John Frum
3 Oct 2014, 10:13 AM
She certainly doesn't.
But her role here at APF is a useful one - she provides to reasonably intelligent people an example of the stupidity that has gripped this country.
In a way i think Herbie might be onto something though. There may be an evolutionary reason in favour of high house prices - enslaving with debt servitude by offering them the dream of 'owning' a live-in asset that magically keeps rising in real terms and making them rich keeps people busy and focused. You know, the whole 'knuckle down and pay it off' mantra that bulls bleat on about.
The only problem being of course is that, similar to a ponzi scheme, it's inherently unstable for reasons we all know. Oh, you mean like before basic medical care, human rights, cheap and powerful communication tools etc...all this devolution just so little Doc doesn't have to drink cleanskins for the rest of his life??
Come on don't be such a sore loser Mr Frum.
Like Veritas you have proved incapable justifying your extremism so resort to ad hominem attacks. It must be hard for you Miles as your dreams of owning a little place on the lower north shore drift out of reach.
At least you are finally understanding what I have been trying to explain here for years. You have stopped harping on about the inevitable crash just around the corner.
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
Sadly, we're already well down the path you describe — at least in Melbourne and Sydney, as far as detached housing is concerned. Soon duplexes and townhouses will be similarly out of reach. But this is the path plotted by the great and good at the RBA. To fight them is, surely, a lost cause. The RBA has plans for you. It's best you embrace them.
You have described what has occurred in Germany. It was also true in Victorian times throughout Europe.
I was posing an extreme example to try and work out exactly what Black Panther means by his "transmutation". I don't think this will actually happen. And I don't think Germany is like this at all from I've read. Landlords there are held to fairly strict conditions with what they can charge.
But investors aren't really interested in being feudal overlords. That isn't what they signed up for. When property prices stagnant or drop with no sign of recovery - which has to happen sooner or later - then they will lose interest in owning property.
I was posing an extreme example to try and work out exactly what Black Panther means by his "transmutation". I don't think this will actually happen. And I don't think Germany is like this at all from I've read. Landlords there are held to fairly strict conditions with what they can charge.
But investors aren't really interested in being feudal overlords. That isn't what they signed up for. When property prices stagnant or drop with no sign of recovery - which has to happen sooner or later - then they will lose interest in owning property.
No because if people are not buying they are renting so yield goes up. I do not think we can really understand what is happening until we some stats on who are these investors. Young people are using investor homes as a mechanism to get a toehold,older people are buying as a future income for retirement and we also have overseas investment.
It is usual that investors dominate the market when it emerges from a downturn, it is als o usual to emerge with a lower level of home ownership and a greater wealth divide.
Germany does have a problem with high rents their price to rent ratio is extremely low
You can buy a house there and pay it off with the high rents in almost half the time it takes to do this in Australia.
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
But investors aren't really interested in being feudal overlords. That isn't what they signed up for. When property prices stagnant or drop with no sign of recovery - which has to happen sooner or later - then they will lose interest in owning property.
There's was a good reason residential property investors were traditionally 'advised' that if they weren't prepared to hold the joint for at least a decade, they should consider alternative investment classes. With me having 'advised' the most recent entrant to the game who I know well, to think a bit more in terms of 15 years right about now.
A Professional Demographer to an amateur demographer:"negative natural increase will never outweigh the positive net migration"
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