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Empty houses destroy myth of supply and demand—prepare for a crash!
Topic Started: 25 Jul 2017, 07:53 PM (2,972 Views)
khoan
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https://www.facebook.com/notes/citizens-electoral-council-of-australia/empty-houses-destroy-myth-of-supply-and-demandprepare-for-a-crash/1570924026312574/

cut 'n' pasta to the benefit of those no face no book.

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25 July 2017—The 2016 census has destroyed the lie/delusion that “demand” has driven up house prices, revealing that a million—one in ten—Australian homes are empty. Buying houses to stand empty for the capital gain is not real demand, but speculation. It is also dangerous for the market: when property prices are rising empty houses push prices (and rents) even higher, but in a downturn the speculators are the first to stampede for the exits, unlike genuine homeowners who try to hang on for as long as possible—the rapid sell-off of this much housing will push prices down faster and further.
For years, vested interests have denied that the Australian housing market is a bubble, insisting that prices are driven by demand and a claimed housing shortage. The census has now obliterated that claim. It is a bubble, and all bubbles end the same way—they burst. As Deloitte Access Economics’ latest Australian business outlook report declares: “We’re sitting on a housing powder keg.” It is time to snap out of denial and prepare for a crash!
In London, investing in houses and apartments for the capital gain and leaving them empty is called “land banking”. The practice has grown in Australia alongside the bubble, the percentage of empty homes having almost doubled since the 2001 census, when property prices had just started rising. Since the 2011 census the number of empty houses in Melbourne increased by 19 per cent, and in Sydney 15 per cent. The 18 July Sydney Morning Herald reported figures from property market analysis firm CoreLogic showing Sydney’s dwelling prices skyrocketed 18.4 per cent, more than $120,000, over the past year, and Melbourne’s have risen 13.1 per cent, more than $70,000. Rental income could never match such capital gains. Until the house is sold, however, the gains are all on paper.
Since the property bubbles in the USA, UK, Ireland and Spain all crashed in 2008, only Canada has had a property bubble to rival Australia’s. According to Crescat Capital, the Australian and Canadian bubbles exceed 200 per cent of GDP, proportionally much larger than the US property bubble at 160 per cent, which blew up the global financial system when it crashed in 2008. Canada’s bubble is starting to shake: house sales since March have fallen 14 per cent, while the average house price has dropped by 10 per cent since April. Ominously, this drop is concentrated in the two cities, Toronto and Vancouver, which like Sydney and Melbourne are where the Canadian bubble is concentrated. Similar falls in Australia would be enough to send some speculators scrambling for the exits, which could soon turn into a stampede.
The looming crisis in Canada and Australia coincides with mounting losses in the USA’s corporate debt bubble, which is bigger than its 2008 housing bubble. On 17 July a US$2 billion Texas private equity fund called EnerVest, which started in 2013 to focus on energy investments when oil was US$90 per barrel, disclosed it is now almost worthless. Its collapse is an echo of the July 2007 collapses of hedge funds affected by the rising defaults on US mortgages, which were the harbinger of the crisis that snowballed into the 2008 meltdown. At stake is US$14 trillion in US corporate debt, US$5 trillion of which is from speculating in shale oil. The decade of high oil prices up until 2014, and the subsequent crash, is an example of what happens when prices are driven by speculation, not real demand—and a lesson for Australian housing investors.
A housing crash is a banking crash
As the Citizens Electoral Council (CEC) and others have long warned, the collapse of Australia’s property bubble will be just the beginning of the crisis. It will set off a much bigger crisis in the banks. Mortgages are 60 per cent of the Big Four’s businesses, making them the biggest speculators in the housing market. They will be wiped out when the property bubble bursts. This is not academic: the USA, UK, Ireland and Spain all suffered devastating banking collapses on the back of property crashes, leading to massive taxpayer bailouts, bank nationalisations, and brutal austerity.
Imagine it’s 2007 again, but this time the authorities in the USA, UK etc. know the 2008 crash is going to happen. Wouldn’t the public expect a massive pre-emptive government intervention into the banks, in order to avert hundreds of bank collapses, multi-trillion-dollar taxpayer bailouts that lead to massive budget deficits, and hundreds of thousands of people losing their homes and becoming impoverished? That is the situation Australia is in right now. The government has the benefit of being able to heed the lessons of the 2008 crash and act now, ahead of the crash, to reorganise the financial system to avert a similar, or likely worse, crisis hitting Australia.
The government’s first act must be a full separation of Australia’s banking system, modelled on the USA’s successful 1933 Glass-Steagall Act. Commercial banks that hold deposits must be divided from speculative investment banking and all other financial services, which would involve breaking up the Big Four banks into separate, smaller institutions. This, and only this, would protect depositors from a crash; it would also stop banks from using deposits for speculation, which would start to deflate the speculative bubble in the housing market.
Political leaders in the USA, UK and other European nations are fighting to restore the Glass-Steagall separation. The CEC has led the fight for Glass-Steagall in Australia, and has just prepared a formal Glass-Steagall proposal for Members of Parliament. The banking crisis in Australia has become so acute that Parliament is only one vote away from establishing an inquiry into the banks, in which breaking up the banks would be on the agenda. If you want the government to act before a housing collapse brings the banking system crashing down, join the CEC’s Glass-Steagall campaign today!


Pecora-like investigation with unreserved prosecution ensued by Glass Steagall, a good idea?
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Tick Tock
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English please?

Glass Steagull was the Gold backed U.S paper currency which finished in 1971.

Now all they..... 'The Federal Reserve' do is just print money to infinity and loan it to the goverment and charge interest on it also which is payed buy the tax payers as the U.S debt clock spirals closer and closer to 20 Trillion day by day. :wak:

http://www.usdebtclock.org/
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Sydneyite
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Complete rubbish. This argument is brought out and dusted off every time census data is discussed or updated. Read this article today from SMH on this very topic:

https://www.domain.com.au/news/the-real-reason-one-million-homes-were-vacant-in-the-census-data-report-20170726-gxhy8q/

Quote:
 
There are more than a million empty homes in Australia, but despite commentators slamming it as “cruel and immoral”, a new analysis suggests there hasn’t been a significant spike in investors leaving their properties vacant.

At the time of the 2016 census, 11.2 per cent of all dwellings in the country were vacant and property prices and rent costs had surged in many of the east coast’s property markets.

But an analysis of the data released on Wednesday by SGS Economics & Planning economist Terry Rawnsley found there “does not appear to be a large pool of dwellings withheld from the housing market”.


Key points:

* The number of "vacant"homes on census night as a proportion of total dwellings has been pretty much constant for decades. The latest census only shows a small increase compared to the last census (2011), with that increase in line with overall dwelling number increases.

* Reasons for vacant homes on census night include:

- Currently available for rent but unoccupied
- In the process of changing hands due to new lease, or sale/purchase
- Undergoing renovation
- New dwelling completed but not yet occupied
- Holiday home
- Owners simply overseas or away on census night

* Interestingly, Sydney had the lowest number of "vacant" homes at 7.3%

* Highest numbers are found in traditional holiday areas (eg Shoalhaven).

So pin your crash hope to this census vacant home data if you like, but as usual, it actually doesn't indicate anything like what many bears claim it does. :re:
Edited by Sydneyite, 26 Jul 2017, 02:46 PM.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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Rufus
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Sydneyite
26 Jul 2017, 11:50 AM
Complete rubbish. This argument is brought out and dusted off every time census data is discussed or updated. Read this article today from SMH on this very topic:

https://www.domain.com.au/news/the-real-reason-one-million-homes-were-vacant-in-the-census-data-report-20170726-gxhy8q/




Key points:

* The number of "vacant"homes on census night as a proportion of total dwellings has been pretty much constant for decades. The latest census only shows a small increase compared to the last census (2011), with that increase in line with overall dwelling number increases.

* Reasons for vacant homes on census night include:

- Currently available for rent but unoccupied
- In the process of changing hands due to new lease of sale/purchase
- Undergoing renovation
- New dwelling no yet occupied
- Holiday home
- Owners simply overseas or away on census night

* Interestingly, Sydney had the lowest number of "vacant" homes at 7.3%

* Highest numbers are found in traditional holiday areas (eg Shoalhaven).

So pin your crash hope to this census vacant home data if you like, but as usual, it actually doesn't indicate anything like what many bears claim it does. :re:
Yep the CEC are a bunch of fringe types who are always predicting doom and gloom, rattling on about debt, and really don't know much about anything.

There is better information here in the good old MSN as you pointed out - https://www.domain.com.au/news/the-real-reason-one-million-homes-were-vacant-in-the-census-data-report-20170726-gxhy8q/

Note that the areas with the higher percentage of unoccupied houses are rural where housing is generally cheap and no one wants to migrate to, so it's not really going to solve anything unless someone can convince people to move to outer bumf*ck where there are no jobs.

No doubt the usual suspects will be out peddling this meme over the next few weeks.
Edited by Rufus, 26 Jul 2017, 12:14 PM.
Take risks - if you win you will become wealthy, if you lose you will become wise
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Rat
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Filthy Rodent

Sydneyite
26 Jul 2017, 11:50 AM
- Owners simply overseas or away on census night
Yes, this accounts for much of it. If each household takes an average of two weeks holiday per year, that would mean 4% of homes are empty on any given night, simply because the owner is on holiday. My household spends at least four weeks per year on various holidays and breaks, so that means my home is vacant 7.7% of the time. Add in all the other reasons why a home might be vacant on census night and 10-11% seems like a reasonable 'vacant' rate. It doesn't mean those homes contribute to an 'over supply'. Just because they're vacant on a particular night doesn't mean they're going to suddenly become available for silly bears to live in.
Edited by Rat, 26 Jul 2017, 12:49 PM.
Consumer protection laws extended to small businesses. Banks not permitted to repossess due to non-monetary defaults (for example, a fall in the property value).
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zaph
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Rat
26 Jul 2017, 12:48 PM
Yes, this accounts for much of it. If each household takes an average of two weeks holiday per year, that would mean 4% of homes are empty on any given night, simply because the owner is on holiday. My household spends at least four weeks per year on various holidays and breaks, so that means my home is vacant 7.7% of the time. Add in all the other reasons why a home might be vacant on census night and 10-11% seems like a reasonable 'vacant' rate. It doesn't mean those homes contribute to an 'over supply'. Just because they're vacant on a particular night doesn't mean they're going to suddenly become available for silly bears to live in.
I wouldn't take too many holidays. You might come home to Ted in the shed, Chris in the master and Simon burning your antique furniture to stay warm.
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DragonGM
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Sydneyite
26 Jul 2017, 11:50 AM
Complete rubbish. This argument is brought out and dusted off every time census data is discussed or updated. Read this article today from SMH on this very topic:

https://www.domain.com.au/news/the-real-reason-one-million-homes-were-vacant-in-the-census-data-report-20170726-gxhy8q/

I read the SMH article and it is complete rubbish.

1 million homes vacant is still 1 million homes vacant. 10% of homes in the pipeline for future housing does suggest future supply will be strong and put downward pressure on prices.
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Rat
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Filthy Rodent

DragonGM
26 Jul 2017, 07:28 PM
I read the SMH article and it is complete rubbish.

1 million homes vacant is still 1 million homes vacant. 10% of homes in the pipeline for future housing does suggest future supply will be strong and put downward pressure on prices.
Approximately 10% of homes have been vacant on census night for the past four decades. This has not put downward pressure on prices, because those homes are not available, and therefore do not contribute to supply. They just happened to be unoccupied on the night of the census. That doesn't mean they're unoccupied for the rest of the year. It just means the normal occupier was on holiday that night, or the house was being renovated, or transitioning between leases etc.
Edited by Rat, 26 Jul 2017, 07:48 PM.
Consumer protection laws extended to small businesses. Banks not permitted to repossess due to non-monetary defaults (for example, a fall in the property value).
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herbie
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DragonGM
26 Jul 2017, 07:28 PM
I read the SMH article and it is complete rubbish.

1 million homes vacant is still 1 million homes vacant. 10% of homes in the pipeline for future housing does suggest future supply will be strong and put downward pressure on prices.
Take a drive thru bumf*** - None of youse flash little Sydvegas/Melvegas cnts would live in tha joints wot's available there.

Nor half tha inner city 'dog box' apartments (as ya calls 'em) wot IS available in that shit hole called Sydvegas/Melvegas.

So I's got no sympathy for ya (well not no longer anyways) ... Flash little cnts that ya's are - 'N ya can just go 'n continues ta f*** yaselves ... For mine.
Edited by herbie, 26 Jul 2017, 08:04 PM.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Sydneyite
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DragonGM
26 Jul 2017, 07:28 PM
I read the SMH article and it is complete rubbish.

1 million homes vacant is still 1 million homes vacant. 10% of homes in the pipeline for future housing does suggest future supply will be strong and put downward pressure on prices.
I don't think you actually read the article - if you did you failed to comprehend it. It presents a range of essentially indisputable facts about the data that does not support your argument one bit! :re:
For Aussie property bears, "denial", is not just a long river in North Africa.....
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