Who could have predicted that interest rates would have be slashed in response to the GFC and this would start the largest effort episode of speculative investment in the Sydney property market
Interest rates are always slashed in response to financial crises. It was widely predicted, by myself and many others.
This was a frequently discussed topic on GHPC back in 2008 - i.e. how would the RBA respond to the financial crisis.
The daft bears said the RBA could not cut rates due to inflation, and they said even if the RBA cut rates the banks wouldn't pass it on due to overseas funding costs.
They said a 40% crash was inevitable regardless of what the RBA did. They said the crash was set in stone and could not be avoided.
But Lord Shadow and others on GHPC at the time (including Sydneyite and Peter will back me up here, maybe Zaph too?) said the RBA would slash rates, the banks would pass it on, and the government would introduce fiscal stimulus, and the result of all this would be a property boom in Sydney due to the massive undersupply and pent up demand at the time.
As usual, the bulls were right. The RBA slashed rates even with inflation at 5%, the banks passed it on, and house prices boomed in response.
This exact outcome was widely predicted by most bulls at the time.
The Great Shadow may have put some numbers and dates on the table (approaching $1M by 2015, construction boom kicks off around 2011 etc) but the general up-cycle was predicted by all the bulls.
GHPC is gone now, so I can no longer link to the source, but this is an old quote I saved...
Because they are lifelong Perth residents and always will be, therefore they have a deep emotional connection to their properties & the prospects of the Perth market.
Fair enough i guess. But that's why you never hear an utterance from the Perth investors on any other property market in Australia. They are too blinkered and bogged down in their own patch and will blag on and on and on about Perth until the end of time and they'll NEVER concede because of their emotional connection to their town. A bit like those people you see who have a family member who obviously committed a crime, but instead of accepting it they are willing to turn the other cheek and deny it all in the face of irrefutable evidence.
As i've always said, i quite like Perth and the surrounding areas. A bit dull, but nice nevertheless. However in my opinion the prospects of Perth will always have a very hard ceiling for growth and a very limited diversity in its economy due to it's geography.
The Perth bulls need to wake up to that fact sooner rather than later and diversify into markets that are actually worth their while.
Interest rates are always slashed in response to financial crises. It was widely predicted, by myself and many others.
So you are admitting that we are currently in the midst of a global financial crisis then?
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be rising.
Interest rates are always slashed in response to financial crises. It was widely predicted, by myself and many others.
This was a frequently discussed topic on GHPC back in 2008 - i.e. how would the RBA respond to the financial crisis.
The daft bears said the RBA could not cut rates due to inflation, and they said even if the RBA cut rates the banks wouldn't pass it on due to overseas funding costs.
They said a 40% crash was inevitable regardless of what the RBA did. They said the crash was set in stone and could not be avoided.
But Lord Shadow and others on GHPC at the time (including Sydneyite and Peter will back me up here, maybe Zaph too?) said the RBA would slash rates, the banks would pass it on, and the government would introduce fiscal stimulus, and the result of all this would be a property boom in Sydney due to the massive undersupply and pent up demand at the time.
As usual, the bulls were right. The RBA slashed rates even with inflation at 5%, the banks passed it on, and house prices boomed in response.
This exact outcome was widely predicted by most bulls at the time.
The Great Shadow may have put some numbers and dates on the table (approaching $1M by 2015, construction boom kicks off around 2011 etc) but the general up-cycle was predicted by all the bulls.
GHPC is gone now, so I can no longer link to the source, but this is an old quote I saved...
Might be able to find the originals on Wayback Machine.
No, its not who could have predicted the slashing of interest rates. Its who could have predicted the fact that the GFC would necessitate it.
Did you Sydney prediction predate the GFC?
Are once in a century financial crises part of the property cycle too?
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
There's the problem......Your Ignorance on the true state of the Global Economic Condition.
Personal attacks are obviously easier than answering my question.
Jimbo
12 Aug 2017, 12:46 PM
So you are admitting that we are currently in the midst of a global financial crisis then?
Why do you say that?
Veritas
13 Aug 2017, 03:43 PM
Did you Sydney prediction predate the GFC?
Lord Shadow made his Mighty Prediction in 2007. The unfolding financial crisis was widely discussed on GHPC at the time. It was pretty much the main topic of conversation.
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