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4 Corners Housing Bubble thread; To be broadcast 21st August 8:30pm
Topic Started: 15 Aug 2017, 03:08 PM (12,967 Views)
Rufus
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Simon_S
22 Aug 2017, 06:51 PM
The Bulls live in this Fantasy Bubble State where the Economy only Grows.....there's Never another Crisis or a Recession.

History clearly shows otherwise......Boom...Bust.....Boom....Bust.....Boom.....You know what comes Next.... :lol


Umm - maybe it does trend upward over the long term.

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Edited by Rufus, 22 Aug 2017, 07:23 PM.
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Blondie girl
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Ex BP Golly
22 Aug 2017, 01:13 AM
The other bank chiefs know they come of second best against a guy of his intellectual capacity.
Having just an ANZ CEO face the party and no other banks was rather poor.
Rufus
22 Aug 2017, 01:47 PM
I thought that the arguments were generally weak, but specifically from my perspective the supposed "mortgage broker" they interviewed was just bullsh*tting to get on TV - he is no longer a broker BTW.

He said that brokers have to meet targets - almost none do and no independent brokers do.
He said they have to write $2M to $3M per month otherwise they are under financial stress - that would give them an income of approx. $20K per month plus trails - so between $240K to $500K per annum including trails after some years in the industry - which is the sort of stressful position most people dream about.

In fact the average broker earns $140K pa - so most are not writing anywhere near that level of business.

The interviewer when talking to Beavis and Butthead mentioned that they earned $130K between them for a debt of $1.2M or $1.3M (somewhere around there) and they had $300K in equity - so property worth around $1.6M.

He didn't mention what the rental income is. In fact Four Corners don't know what the rental income is. Here is the link to a tweet from Elysse Morgan confirming that -
https://twitter.com/ElysseMorgan/status/899735656930213888

I would think the rental income would be between $65,000 and $90,000 per annum depending on where the property is. At an average price of about $300K per dwelling it isn't Sydney or Melbourne - so the yields will be just over 4% to maybe 5.5%
Loan to income ratio therefore isn't 8 times, it's probably about 5.5 times.


I have no idea why they bothered with Mandurah where losses haven't been that bad - why didn't they go for Gladstone of other some other areas where investors were encouraged to go and are now underwater.

Martin North from DFA is fast turning into a media tart - his data has some merit but I doubt that he has covered every postcode with depth as mentioned, that's a lot to survey for one guy.

I thought that overall it was a poor effort and not up to the usual standard of Four Corners. I guess at least we didn't have to suffer a couple of other clowns waffling on about control fraud.
In any industry, profession there does exist rogues... Builders, re agents, police, etc etc.

A naive old lady on verge of owning her own home to call her own and provide to her family when she passed on, missed out on that opportunity due a broker fraudulently filling out the documentation and she was nuts not to check stuff .

No sugar coating that.
Edited by Blondie girl, 22 Aug 2017, 07:45 PM.
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$
It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged
Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do.
Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
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zaph
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Blondie girl
22 Aug 2017, 07:37 PM
a
Quote:
 
A naive old lady on verge of owning her own home

So it was you in the show.
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Blondie girl
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zaph
22 Aug 2017, 07:47 PM


So it was you in the show.
No I'm the one talking about piña colada, in need of dental work....

:z:
Edited by Blondie girl, 22 Aug 2017, 07:50 PM.
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$
It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged
Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do.
Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
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Rat
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Simon_S
22 Aug 2017, 06:08 PM
Are you saying the Business Cycle is Dead........ :lol
No.
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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Rufus
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Blondie girl
22 Aug 2017, 07:37 PM
Having just an ANZ CEO face the party and no other banks was rather poor.

In any industry, profession there does exist rogues... Builders, re agents, police, etc etc.

A naive old lady on verge of owning her own home to call her own and provide to her family when she passed on, missed out on that opportunity due a broker fraudulently filling out the documentation and she was nuts not to check stuff .

No sugar coating that.
Her story didn't add up either. How could she mortgage her own house that was paid off, and buy another one, and stand to lose both.
That makes no sense. If she bought poorly she still could have sold for a loss and came out with a larger debt, but still keeping her own home.

If she is losing both there must be gross incompetence in buying and managing property, or something which they didn't bother telling us. That outcome isn't normal.
Take risks - if you win you will become wealthy, if you lose you will become wise
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Veritas
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Rat
22 Aug 2017, 05:32 PM
Why not? They're making a lot more money than you, their leverage is reasonable, and their income easily services the mortgage repayments.

They seem to be in a pretty strong position. Perhaps you're just envious because you're still renting?
Yeah, you're right its probably all part of the cycle you keep telling us about.

Which part of the cycle I'm not exactly sure.

Might it be the speculative frenzy on easy money part?
Here is an interesting compare and contrast excercise.

The documentary embedded below is called Future Shock and was first aired in Ireland in 2007.

It foreshadowed the collapse of the Irish property market.

Happy viewing!



Edited by Veritas, 22 Aug 2017, 09:11 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
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Rat
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Veritas
22 Aug 2017, 09:08 PM
Here is an interesting compare and contrast excercise.

It foreshadowed the collapse of the Irish property market.
Yes, definitely good to compare and contrast.

Irish house prices quadrupled in ten years (quintupled in Dublin). They had a big property bubble over there.

Australian house prices haven't even managed to double in the past ten years.

Sydney has doubled, but that was after a decade of going nowhere.

If Australian house prices ever quadruple in ten years (quintuple in Sydney) then we'll probably experience a similar crash to Ireland.
Edited by Rat, 22 Aug 2017, 09:23 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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Veritas
22 Aug 2017, 09:08 PM
Yeah, you're right its probably all part of the cycle you keep telling us about.

Which part of the cycle I'm not exactly sure.

Might it be the speculative frenzy on easy money part?
Here is an interesting compare and contrast excercise.

The documentary embedded below is called Future Shock and was first aired in Ireland in 2007.

It foreshadowed the collapse of the Irish property market.
If Rat is as genuinely knowledgeable on the Irish housing market crash as lots of us just possibly have cause to suspect she may be Veritas, I'm sure she'll be able to tidy up up my loose 'facts' on this (should she choose to) when I say that to my recollection the housing industry generally accounted for something in excess of 20% of the Irish economy prior to the crash (which really is quite extraordinary) whereas in Oz (last time I looked anyway) it was still more down around the 10% mark?
Edited by herbie, 22 Aug 2017, 09:24 PM.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Veritas
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Rat
22 Aug 2017, 09:19 PM
Yes, Irish house prices quadrupled in ten years (quintupled in Dublin). They had a big property bubble over there.

Australian house prices haven't even managed to double in the past ten years.

Sydney has doubled, but that was after a decade of going nowhere.

If Australian house prices ever quadruple in ten years (quintuple in Sydney) then we'll probably have a similar crash to Ireland.
Yes, because offering nothing but wishful thinking you have decided that property prices would have to quadruple before a crash would be possible.

The best you can ever do is offer some pseudo economics to back up your mad cap theory of 'the property cycle'.

Let's put it this way: if interest rates trebled in the next two years (for whatever reason) that would be enough to put the property market into a downward spiral.

So what does the fact that prices in Sydney have only doubled in ten years got to do with anything?

Ireland was vulnerable to a shock and the shock came.

The Australian housing market is in the same boat.
herbie
22 Aug 2017, 09:23 PM
If Rat is as genuinely knowledgeable on the Irish housing market crash as lots of us just possibly have cause to suspect she may be Veritas, I'm sure she'll be able to tidy up up my loose 'facts' on this (should she choose to) when I say that to my recollection the housing industry generally accounted for something in excess of 20% of the Irish economy prior to the crash (which really is quite extraordinary) whereas in Oz (last time I looked anyway) it was still more down around the 10% mark?
We've had this before Herb.

That is a major factor.

But it doesnt quite explain why prices halved and more.

To explain that you have to look at the behaviour of the banks, the government and the Irish Beavis and Buttheads at the time.
Edited by Veritas, 22 Aug 2017, 09:28 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
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