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Back to boom: Sydney house prices jump 14% in 2014 - APM; Sydney property market is in hyperdrive while the rest of the country is in second gear
Topic Started: 29 Jan 2015, 08:49 AM (5,618 Views)
Veritas
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John Frum
29 Jan 2015, 05:45 PM


I think its per capita gdp we're interested in here:

Posted Image

and does it not concern you that financials make up over 40% of the ASX now?:

https://twitter.com/David_Scutt/status/560689520585093121

... and of that 40%, the majority of the business is making money from mortgages? It's absurd to even compare the current situation to 20-30 years ago. The "we've been here before" argument is pure smoke and mirrors.
Only 40%?

Posted Image
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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peter fraser
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John Frum
29 Jan 2015, 06:11 PM

This is what the bulls happily forget about when doing their merry dance over interest rate falls. You're extending your bet of economic prosperity for 30 years, and in the wake of an unprecedented era of good fortune for this country.

My bet is that thanks to that boom sydneyite payed his 91 purchase off a lot quicker than 30 years, assuming he didn't refinance to lever up into property harder. Can you really say the same for the FOMO kids diving into cashflow neutral/negative IPs now?
When Sydneyite bought in 91 (if that's when he bought) the country was in the grip of a savage recession, unemployment was 11% and interest rates were over 10%.

At the time some of Sydneyites friends would have thought that he was mad to buy, and many would have said almost exactly what you are saying right now.

Any expressed market opinion is my own and is not to be taken as financial advice
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Veritas
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peter fraser
29 Jan 2015, 06:22 PM
When Sydneyite bought in 91 (if that's when he bought) the country was in the grip of a savage recession, unemployment was 11% and interest rates were over 10%.

At the time some of Sydneyites friends would have thought that he was mad to buy, and many would have said almost exactly what you are saying right now.
But little did he know that neoliberal revolution was just finding its feet with the largest credit bubble in history taking shape.

Unless you think massive credit bubbles that cause recessions almost a large as the Great depression is the new norm using the last 20 years as an indicator for the next 20 seems very foolish to me.
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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John Frum
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Quote:
 
Only 40%?


That was 40% of ASX market cap.

So using your chart with this figure (and a lot of hand waving assumptions) you could say around a quarter of our wealth now comes from people's ability to lever up into property. :lol
Edited by John Frum, 29 Jan 2015, 06:29 PM.
"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.
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peter fraser
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Veritas
29 Jan 2015, 06:25 PM
But little did he know that neoliberal revolution was just finding its feet with the largest credit bubble in history taking shape.

Unless you think massive credit bubbles that cause recessions almost a large as the Great depression is the new norm using the last 20 years as an indicator for the next 20 seems very foolish to me.
No he didn't know, no one did at the time.
Equally you don't know the future either. Why do you think that Central Banks will suddenly stop inflating house prices?
Any expressed market opinion is my own and is not to be taken as financial advice
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Veritas
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peter fraser
29 Jan 2015, 06:29 PM
No he didn't know, no one did at the time.
Equally you don't know the future either. Why do you think that Central Banks will suddenly stop inflating house prices?
Because high house prices are indicative of overleveraged households and overexposed banks presiding over economies over dependant on FIRE.

You could be right; the banks might convince their central banks not to take away one of the most lucrative rackets they have every engaged in.

Alternatively, you might find that central banks follow the lead of Ireland with tough limits on lending to discourage property speculation and its associated ills.
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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ThePauk
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Peter
House price rises well above wages growth, so as I understand you, this is not a good thing...
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peter fraser
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Veritas
29 Jan 2015, 06:32 PM
Because high house prices are indicative of overleveraged households and overexposed banks presiding over economies over dependant on FIRE.

You could be right; the banks might convince their central banks not to take away one of the most lucrative rackets they have every engaged in.

Alternatively, you might find that central banks follow the lead of Ireland with tough limits on lending to discourage property speculation and its associated ills.
Or we could see 13% per annum inflation like we saw in the seventies and after a few years of that, those who make it through owe loans that are suddenly small.

I've never seen a decade in property (or the share market) that could have been predicted.

Seventies - massive inflation - over 10% per annum for a few years
Eighties - huge interest rates - home loans over 17% - Farm loans 21% and Westpac offering 20% on Certificates of deposits and short dated bills.
Nineties - more huge interest rates followed by plummeting interest rates
Noughties - Tech crash followed by 911 followed by recession followed by boom followed by global crash

See anything predictable there?

shoulda seen it coming?

My money is on further turmoil -

Current decade so far - QE, ZIRP, currency wars, failure of sovereign funds, etc etc.

What is your money on next? By contrast houses have been remarkably stable even in the USA.
Any expressed market opinion is my own and is not to be taken as financial advice
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Veritas
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ThePauk
29 Jan 2015, 06:37 PM
Peter
House price rises well above wages growth, so as I understand you, this is not a good thing...
Get with the bull program Paul.

High Inflation in general....bad (we should contain that)

High inflation in house prices....good ( sign of a healthy economy where everyone can get rich buying and selling houses to each other)

Got it?


peter fraser
29 Jan 2015, 06:44 PM
Or we could see 13% per annum inflation like we saw in the seventies and after a few years of that, those who make it through owe loans that are suddenly small.

I've never seen a decade in property (or the share market) that could have been predicted.

Seventies - massive inflation - over 10% per annum for a few years
Eighties - huge interest rates - home loans over 17% - Farm loans 21% and Westpac offering 20% on Certificates of deposits and short dated bills.
Nineties - more huge interest rates followed by plummeting interest rates
Noughties - Tech crash followed by 911 followed by recession followed by boom followed by global crash

See anything predictable there?

shoulda seen it coming?

My money is on further turmoil -

Current decade so far - QE, ZIRP, currency wars, failure of sovereign funds, etc etc.

What is your money on next? By contrast houses have been remarkably stable even in the USA.
I see uncertainty too but your contention regarding property is false.

Many millions of people have lost their bollix on property since the 2008 crash in Europe and the US. And China is crashing now.
Edited by Veritas, 29 Jan 2015, 06:47 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
Profile "REPLY WITH QUOTE" Go to top
 
peter fraser
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Veritas
29 Jan 2015, 06:45 PM
Get with the bull program Paul.

High Inflation in general....bad (we should contain that)

High inflation in house prices....good ( sign of a healthy economy where everyone can get rich buying and selling houses to each other)

Got it?



I see uncertainty too but your contention regarding property is false.

Many millions of people have lost their bollix on property since the 2008 crash in Europe and the US. And China is crashing now.
People make and lose money of all investment categories.

there is nothing "good" or "bad" about the various categories, any profits or losses are usually down to luck and kahunas.

Quote:
 
I see uncertainty too but your contention regarding property is false.


What was my contention? I didn't know that I had one.

Any expressed market opinion is my own and is not to be taken as financial advice
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