In 2006 Keen wasn't wrong - he just blew his load early. It was a bubble then, it's a bubble now. Then we had record high wage growth, population growing at 2.25%, record high rental yields, low private debt and a booming economy. Now we've got record low wage growth, population growing at 1.4% and slowing, record low rental yields, highest private debt in the world and an economy where our only industry is a housing bubble. Oh and rates are rising. He'll be right eventually, then he can say he "called it".
In 2006 Keen wasn't wrong - he just blew his load early. It was a bubble then, it's a bubble now. Then we had record high wage growth, population growing at 2.25%, record high rental yields, low private debt and a booming economy.
He was completely wrong! His arguments then were the same as they are now! Private debt cannot go any higher - well guess what, it did! You then go on to list all the fundamental factors that were in play at the time that show exactly why SK was always going to be wrong - which anyone knew about at the time, and yet you still claim he was "right"?
Re the whole private debt thing, SK like most bears mis-understand the nature of private / household debt in Australia. For a start growing household debt as a proportion of income can simply be a manifestation of greater income equality when compared to other economies - ie a broader, less struggling middle class, and the fact that even the lower income echelons in Australia are quite well off compared to most countries (due to high wages here). Additionally the tax system promotes the taking on and maintaining of "book" debt - eg through the use of offset accounts, and IO loans for investment purposes - many households (my own included) maintain a "high" level of "on book" mortgage debt, even though it is all 100% offset by cash held in bank accounts and the debt could be extinguished at any time - but maintaining the open debt saves tax, and provides more flexibility compared to not having it.
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Now we've got record low wage growth, population growing at 1.4% and slowing, record low rental yields, highest private debt in the world and an economy where our only industry is a housing bubble. Oh and rates are rising. He'll be right eventually, then he can say he "called it".
Wage growth is fine - it is still equal to / slightly above inflation. Talking about "record low" wage growth is just designed to evoke a feeling of fear and panic that something is "wrong". Population growth is still very high, rental yields are low (but mainly only in Sydney - take Sydney out and everywhere else has quite high yields). However they will likely rise from here, and current low yields are just a consequence of the low interest rates and strong price appreciation that property has seen - mainly in Sydney and Melbourne, over the past few years. And the Oz economy is very diversified and is about far more than "bubble housing" as you so emotionally put it.
SK will be shown to be wrong again - don't know if he is even in the country, but if he was he would see all the construction, the road, rail, airport / infrastructure projects that are all going on in Sydney right now - with all that economic activity, a booming housing market, lowest unemployment in NSW in years, there is only a very very low risk that Australia as a whole will dip into recession next year IMO. A LOT would have to change and very quickly. Also the housing market outside of Sydney/Melbourne has been quite subdued for years - 10 year appreciation of 3-5%pa is hardly bubble territory. Even Sydney and Melbourne - at the tail end of a big boom, have a 10 year growth rate of 6-7%pa - which is good, but nothing like what you see in a true housing bubble (eg Ireland etc).
In 2006 Keen wasn't wrong - he just blew his load early. It was a bubble then, it's a bubble now. Then we had record high wage growth, population growing at 2.25%, record high rental yields, low private debt and a booming economy. Now we've got record low wage growth, population growing at 1.4% and slowing, record low rental yields, highest private debt in the world and an economy where our only industry is a housing bubble. Oh and rates are rising. He'll be right eventually, then he can say he "called it".
Whilst I hearing you, and actually I don't fully understand it all myself, what I'm seeing in Brisbane, is people spending money like its water. Stuffed If I know where it's all coming from.
Renos everywhere, new constructions everywhere, traffic everywhere, everything booked out from Noosa to Coolangatta, restaurants and bars full. Well perhaps I'm exaggerating a little but it feels like that. I just wish I was a part of it, but I've got to be frugal!
Whilst I hearing you, and actually I don't fully understand it all myself, what I'm seeing in Brisbane, is people spending money like its water. Stuffed If I know where it's all coming from.
Renos everywhere, new constructions everywhere, traffic everywhere, everything booked out from Noosa to Coolangatta, restaurants and bars full. Well perhaps I'm exaggerating a little but it feels like that. I just wish I was a part of it, but I've got to be frugal!
Sometimes if you hold onto the pennies too tightly you have no hands free to catch the pounds floating your way.
Brisbane has just been through a very long period of decreased confidence and house prices have been stagnant for a long time. In my long life I have rarely seen times like these, to me it looks like a good time to be investing not hoarding.
You have seen what happened in Melbourne and Sydney. You have witnessed the many tears of Terry, createdby, Chris, TED etc etc do you really want to follow then into their financial graveyards.
The doomers were wrong dump them and look after your own long term future. These doom and gloom charlatans are happy to see young people miss out if they can use them to drive their extremist agendas.
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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