Sure the car dealerships/travel agents and their employees all get a short term benefit but it's all based on one thing, rising house prices.
That was his point. I see you agree with him.
But the OP author's point is susceptible to a reductio ad absurdum extrapolation (even if Chris hasn't quite portrayed it that way).
Basically, North's argument is that 70% of the population benefits from high and rising housing prices, through "capital gains...[and by] crystalising some of the on-paper gains for holidays, a new car or other purposes, stimulating retail activity" and that this overwhelms any detriment to the 30% of the population that does not benefit.
"Overall, the wealth effect of rising property is an umbrella which spreads widely. The sheer weight of numbers indicates that there are more winners than losers."
If that's true, then why wouldn't the sole purpose of *any* economy be to ramp up real estate prices? Why wouldn't we be looking for billion-dollar medians in every suburb, around the world?? At those valuation levels, we could no doubt provide for the needs of the residual 30% from the spare change found in the average couch.
Basically, North's argument is that 70% of the population benefits from high and rising housing prices, through "capital gains...[and by] crystalising some of the on-paper gains for holidays, a new car or other purposes, stimulating retail activity" and that this overwhelms any detriment to the 30% of the population that does not benefit.
"Overall, the wealth effect of rising property is an umbrella which spreads widely. The sheer weight of numbers indicates that there are more winners than losers."
If that's true, then why wouldn't the sole purpose of *any* economy be to ramp up real estate prices? Why wouldn't we be looking for billion-dollar medians in every suburb, around the world?? At those valuation levels, we could no doubt provide for the needs of the residual 30% from the spare change found in the average couch.
North is referring to the current environment, where national house prices have broadly increased in line with income growth for more than a decade. If we could ramp up both house prices and incomes to billion-dollar levels, then the majority would continue to benefit financially. However you appear to be proposing an absurd scenario where we have billion-dollar medians, without similar income growth. North isn't talking about that type of environment. Under that type of environment, the majority would no longer be homeowners.
Please include a number of smileys in your response, consistent with your level of failure.
But the OP author's point is susceptible to a reductio ad absurdum extrapolation (even if Chris hasn't quite portrayed it that way).
Stubby, you are being very narrow minded on this. The 70% figure is just fluff, it doesn't tell the whole story and merely goes to merky the waters.
Let's look at it in these terms, if I was selling meth at a $100 a gram and making $20 and all of a sudden supply tightened and it went to $200 a gram but I'm now paying $40 wholesale. Am I any better or worse off?
Rising house prices reward investors and speculators, no one else benefits at all. If I have a $209k home that rises in value to $1m in 5 yrs am I any better off? Let's say in the same period a $400k home I couldn't afford rises in same percentage terms, can I now afford to buy that?
If I use my home to speculate on property or shares I can potentially benefit from it. What you fail to see shadow is that nobody else does.
I know these are crude examines but if you ponder them long enough you will see the point I am trying to make. Only a minority benefit from rising house prices at the detriment of everyone else.
Stubby, you are being very narrow minded on this. The 70% figure is just fluff, it doesn't tell the whole story and merely goes to merky the waters.
Let's look at it in these terms, if I was selling meth at a $100 a gram and making $20 and all of a sudden supply tightened and it went to $200 a gram but I'm now paying $40 wholesale. Am I any better or worse off?
I didn't realise that I was dealing with a meth expert when I referenced you in my earlier post.
No. Not just wages. Total income, including non-wages income like share dividends, interest on savings, other investments etc...
This is grey man at his best. Dats that covers every man and woman from 18-100 (who still owns a home) and plonks them into the same basket ignoring the massive demigraphical, sociological and generational changes that have happened in that time. It completely ignores the shift in wealth from younger to older generations leaving a wealth devide that massively favours boomers. What your stupid figures say is that 'on average' it's stayed the same, meaning some got a lot richer and some got a lot poorer but on average............
Why don't you get figures outlining a specific generational group e.g. Gen y for the same period. Very very deceptive shadow and now turns the argyement you have been using to shout down everyone into a steaming pile of shit.
Why don't you get figures outlining a specific generational group e.g. Gen y for the same period. Very very deceptive shadow and now turns the argyement you have been using to shout down everyone into a steaming pile of shit.
My argument is that house prices have broadly tracked income growth since 2003. I haven't made any argument about Gen-Y specifically.
If you wish to move the debate onto Gen-Y specifically, then you're welcome to post some data to support your position.
But the OP author's point is susceptible to a reductio ad absurdum extrapolation (even if Chris hasn't quite portrayed it that way).
Basically, North's argument is that 70% of the population benefits from high and rising housing prices, through "capital gains...[and by] crystalising some of the on-paper gains for holidays, a new car or other purposes, stimulating retail activity" and that this overwhelms any detriment to the 30% of the population that does not benefit.
"Overall, the wealth effect of rising property is an umbrella which spreads widely. The sheer weight of numbers indicates that there are more winners than losers."
If that's true, then why wouldn't the sole purpose of *any* economy be to ramp up real estate prices? Why wouldn't we be looking for billion-dollar medians in every suburb, around the world?? At those valuation levels, we could no doubt provide for the needs of the residual 30% from the spare change found in the average couch.
What could possibly go wrong?
Well I think that the central banks targeting of consistent cpi rises pretty much ensures that the prices of assets in demand continue to rise giving home owners a wealth effect. I believe that is deliberate, and I agree with North that it is generally beneficial for the majority, but naturally there are limits. If house prices grow too quickly we get a situation as we have now where people in some cities are locked out and that damages them financially. That creates a wide gap between the "haves" and the "have nots"
It's relative though. When you and I first argued over house prices, they were portrayed as being way too high then, but now in Sydney and Melbourne they are far higher. So what we labelled as "too high" back then would be called a 'bargain" now, and in the interim wages haven't gone up by that much.
Property is just so important. Whatever we do we do it in our own property, someone else's property, or community property. Every square metre is owned by someone who may be entitled to charge a fee when we occupy it.
I think that the long term danger is that we may create a new class system based on wealth, and property is wealth. I think that is a greater danger than the systemic risk that you were referring to, which just causes a short term shock to the financial system.
Any expressed market opinion is my own and is not to be taken as financial advice
Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.
Forum Rules:
The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.
Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.
Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.
This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.
Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ
Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy