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Reserve Bank says housing crash will not improve affordability.; Luci at it again
Topic Started: 28 Oct 2014, 01:04 PM (6,491 Views)
skamy
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Veritas
28 Oct 2014, 04:24 PM
quote]The observed reality in Ireland and in the US is that home ownership rates dropped. In Perth closer to home during the downturn nobody bought land or built homes, why? because their perception, and that of the banks and lending institutions, was that there was more inherent risk in the market. Banks wont lend and people are reluctant to borrow as they fear for their jobs. So the perception of affordability changes









The height of the mining boom seems like an odd time for a correction Skamy. I wonder what is going to happen not that the end of the mining boom is accelerating in severity.

Where is the boat that I missed going?
Veritas you are detached from reality - there was indeed a crash in land prices during the mining investment boom. There is now a boom in land prices.
How can you just deny reality like that?

Edited by skamy, 28 Oct 2014, 11:13 PM.
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.
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Veritas
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Guest
28 Oct 2014, 10:07 PM
Super simple. Look at US and Ireland (the cases she was added to discuss, plus UK).

Huge housing price crashes, but hardly an improvement in affordability. Some combination of worse income prospects (unemployment, weak wages), tighter credit (do you think the banks will be as happy to lend so much when prices have fallen so far?) and reduced new supply. Dismiss her all you like but there has never been a case of a major crash on prices that made it massively easier for FHBs.
Like Skamy and a few other around here you are confusing cause and effect.

In Ireland and Spain, the property bubble that brought about the high house prices was the sickness.

The crash was the recovery.

Ill write it again so that you understand:

THE CRASH WAS THE RECOVERY

Do you understand?
skamy
28 Oct 2014, 11:12 PM
Veritas you are detached from reality - there was indeed a crash in land prices during the mining investment boom. There is now a boom in land prices.
How can you just deny reality like that?

So you cant cite rising house prices so you cite rising land prices yeah?
Edited by Veritas, 28 Oct 2014, 11:23 PM.
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
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skamy
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SittingOnDeFence
28 Oct 2014, 07:50 PM
The only way they will crash is if there's a credit crunch, in which case it'll be impossible to get a mortgage.

If there's no money to buy, then there's no money to build too, so supply will dry up. You'll have a situation (like Ireland now) where rents are sky-high relative to price.

What happens is the bankers, investors, and equity rich owners sell to the struggling people first, giving them cheap credit, wait for the prices to drop, then buy them back from the struggling people.
Well now you might be onto something there. I have always thought that if crashes did not happen on their own, some big bankers would manufacture one. Wait until you see how rich the banks of Europe and the US emerge from this one, maybe it will be like the 90s and the banks emerge with vastly improved property portfolios just in time to ride the RECOVERY. (You know when all the money that was ripped out of housing heads back in again for the new property owners to enjoy.)
Emmanuel
28 Oct 2014, 07:59 PM
I think you're far too paranoid and you can rest assured that you can't lose in most cases.

And like Shadow, you can make gains that you could never hope to make from your own labor.
Emmanuel, the market can and does crash and hesitate, it can drop back and it can stagnate. New houses can also drop in value as they become dated etc etc. Parts of the Perth market dropped by up to 40% after the GFC eg Mandurah, Yanchep and all the expensive property above $2m.

The banks have built in safeguards ie getting FHBs to stump up for insurance for 20% of the property price. However, the owner has no such insurance.

When buying property, the trick is to manage the risk, eg by not over borrowing, by paying down ASAP and never selling in a downturn etc etc.

Having said that, I think it is very very unlikely for the Australian market to crash at this time after so many years of stagnating prices.
bundy
28 Oct 2014, 09:56 PM
Cheaper houses are less affordable?
Some classic Doublethink going on in here.
If people lose their jobs and find less work, no overtime etc etc their housing becomes increasingly unaffordable and it shows up in all the housing stress indicators.

People across the board from first home buyers to those a few years in struggle to pay home loans due to the subdued business conditions.
To the majority homes look more expensive than ever, only the rich have a field day picking up a few extra properties at prices that reflect the risk in the market ie bargains.
bundy
28 Oct 2014, 10:33 PM
Can't wait for prices to go much much higher from here.
Maybe then, everyone will able to afford one!
Yes maybe then everyone will find a house that they can afford and have a steady job with which to buy it.
Veritas
28 Oct 2014, 11:21 PM
Like Skamy and a few other around here you are confusing cause and effect.

In Ireland and Spain, the property bubble that brought about the high house prices was the sickness.

The crash was the recovery.

Ill write it again so that you understand:

THE CRASH WAS THE RECOVERY

Do you understand?

So you cant cite rising house prices so you cite rising land prices yeah?
Veritas

This is your fundamental error
THE CRASHED PRICES ARE CRASHED PRICES. They are not the intrinsic value of the home. The prices are only low because people lost their jobs etc. Dublin is rapidly heading back to where it was, and it will grow again until the whole bubble looks like a little shoulder on a graph. This is what happened in the UK after the crashes in the 70s and the 90s.

You did not believe me when I told you this two years ago and now the evidence is there in front of your face yet you still deny reality.
Edited by skamy, 28 Oct 2014, 11:52 PM.
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.
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Veritas
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skamy
28 Oct 2014, 11:27 PM
This is your fundamental error
THE CRASHED PRICES ARE CRASHED PRICES. They are not the intrinsic value of the home. The prices are only low because people lost their jobs etc. Dublin is rapidly heading back to where it was, and it will grow again until the whole bubble looks like a little shoulder on a graph. This is what happened in the UK after the crashes in the 70s and the 90s.

You did not believe me when I told you this two years ago and now the evidence is there in front of your face yet you still deny reality.

Translation: High house prices equal true intrinsic value. Lower price do not equal true intrisnic value.

More Skaminomics.

Where do you get this nonsense from?
:re:

BTW, Dublin house price are still over 30% off peak.

And the central bank of Ireland just introduced lending restrictions.

Ireland must be full of clowns like you that think the solution to the fallout from one housing bubble is to blow another one. :wak:
Edited by Veritas, 28 Oct 2014, 11:59 PM.
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
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skamy
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Veritas
28 Oct 2014, 11:56 PM

Translation: High house prices equal true intrinsic value. Lower price do not equal true intrisnic value.

More Skaminomics.

Where do you get this nonsense from?
:re:

BTW, Dublin house price are still over 30% off peak.

And the central bank of Ireland just introduced lending restrictions.

Ireland must be full of clowns like you that think the solution to the fallout from one housing bubble is to blow another one. :wak:
Veritas you always resort to name calling when the debate does not go your way. My economics is simply that which over 30 years in the property game has taught me.

You have bought this nonsense that the world is going to change, it is not.

Just sit back and watch how history repeats itself and you will be joining me at the next downturn trying to help young people who are getting sold a bunch of lies.

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.
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Veritas
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skamy
29 Oct 2014, 12:24 AM
Veritas you always resort to name calling when the debate does not go your way. My economics is simply that which over 30 years in the property game has taught me.

You have bought this nonsense that the world is going to change, it is not.

Just sit back and watch how history repeats itself and you will be joining me at the next downturn trying to help young people who are getting sold a bunch of lies.
Sorry, but the stupidity of your posts is offensive.

You are arguing that property prices in Ireland ought to (and will) return to the same levels they were at pre crash.

Even though we know that these prices were unsustainable and the set of events that allowed it to happen wrought havoc once the inevitable crash arrived.

Why is it so difficult to understand how offensive and stupid this argument is?

Anyway, you will be proved wrong. The Irish central bank has already moved to stop another bubble from emerging.

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
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skamy
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Veritas
29 Oct 2014, 12:42 AM
Sorry, but the stupidity of your posts is offensive.

You are arguing that property prices in Ireland ought to (and will) return to the same levels they were at pre crash.

Even though we know that these prices were unsustainable and the set of events that allowed it to happen wrought havoc once the inevitable crash arrived.

Why is it so difficult to understand how offensive and stupid this argument is?

Anyway, you will be proved wrong. The Irish central bank has already moved to stop another bubble from emerging.
Veritas you seriously have been brainwashed, you are offended by the truth.

Of course, Ireland prices will return and they will grow again from there. I have watched this play out several times in my life in different places.

This time last year you swore blind Dublin would never recover when I told you it was already in recovery. Now prices are up 25% since then. There are a lot of rich Irish people all over the world, they will bring their money back to Irish real estate eventually. You are so naive to think otherwise.

The truth is that only a tiny fraction of Dublin homes actually sold at the low crashed prices. Crashed prices are a passing phenomenon, that happens when the confidence falls out of a market. When confidence and normality returns prices return to normal.

The doomers have sure done a job on you Veritas, look at you, a socialist, wanting Keystart in private hands and suggesting that helping disabled and disadvantage people into home ownership undermines the property market.

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.
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Veritas
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skamy
29 Oct 2014, 01:11 AM
Veritas you seriously have been brainwashed, you are offended by the truth.

Of course, Ireland prices will return and they will grow again from there. I have watched this play out several times in my life in different places.

This time last year you swore blind Dublin would never recover when I told you it was already in recovery. Now prices are up 25% since then. There are a lot of rich Irish people all over the world, they will bring their money back to Irish real estate eventually. You are so naive to think otherwise.

The truth is that only a tiny fraction of Dublin homes actually sold at the low crashed prices. Crashed prices are a passing phenomenon, that happens when the confidence falls out of a market. When confidence and normality returns prices return to normal.

The doomers have sure done a job on you Veritas, look at you, a socialist, wanting Keystart in private hands and suggesting that helping disabled and disadvantage people into home ownership undermines the property market.
So your position is this:

1. Irish house prices will return to levels not seen since the height of probably the largest property bubble in history.
2. Government and regulatory elites, despite the fact that the crash of that same bubble, precipitated one of the largest recessions in a Western country since the great depression, will stand aside as something (I don't know how you think this is going to happen) causes the house price to income ratio to return to bubble highs.
3. The unique economic conditions that allowed the bubble to inflate will somehow ( do you know how?) emerge again to allow it to happen again.
3. Notwithstanding the fact, that by any metric you care to mention the property bubble was extremely damaging to Ireland you think that a re run of those very same bubble conditions is desirable.

Ladies and Gents, welcome to the wonderful world of Skamenomics.

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
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miw
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skamy
29 Oct 2014, 01:11 AM
The doomers have sure done a job on you Veritas
Nobody has done a job on Veritas. He's already on record in this thread saying "The Crash is the Recovery".

In other words, he is happy for others to go through any amount of pain, including the people he cynically purports to represent the interests of as long as he can get his cheap house.

Not only is he a selfish POS, he's dumb enough to believe that (a) post crash he would be able to buy something he can't buy now, and (b) posting bile-spattered rants on this forum is going to make one lick of difference.
Edited by miw, 29 Oct 2014, 01:35 AM.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
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skamy
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Veritas
29 Oct 2014, 01:30 AM
So your position is this:

1. Irish house prices will return to levels not seen since the height of probably the largest property bubble in history.
2. Government and regulatory elites, despite the fact that the crash of that same bubble, precipitated one of the largest recessions in a Western country since the great depression, will stand aside as something (I don't know how you think this is going to happen) causes the house price to income ratio to return to bubble highs.
3. The unique economic conditions that allowed the bubble to inflate will somehow ( do you know how?) emerge again to allow it to happen again.
3. Notwithstanding the fact, that by any metric you care to mention the property bubble was extremely damaging to Ireland you think that a re run of those very same bubble conditions is desirable.

Ladies and Gents, welcome to the wonderful world of Skamenomics.
It was not the bubble that damaged Ireland so much as the onerous task of bailing out shonky developer lending by German Banks and US speculators.
The rest of your post is a lot of hyperbole. The crash in the UK was much worse in the 1990s as interest rates were so high there was so many mortagee sales etc. Ireland did not see this and low interest rates helped people survive.

Why don't you read the history of Canary Wharf in London, if you are interested in opening your mind ?

Over and over and over again these crash spruikers have lied to you, yet you still believe their silly nonsense about a crash being a recovery. Tell that to the people of Ireland who lost their jobs and to the families of those who committed suicide as the banks ripped everything from them. You have a cheek to call me offensive.
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.
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