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.
You asked me to conduct a "compare and contrast exercise" between Ireland and Australia, which I did.
If you don't like the outcome of that exercise, too bad.
Quote:
The Australian housing market is in the same boat.
No, house price growth in Australia has been very moderate compared to Ireland. We won't have a crash like Ireland.
There will of course be a correction, as there is every few years - just part of the cycle - but we're not going to see the 40% crash you dream of.
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. 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.
I have looked at it in the past mate - Just plucked a little tome off my bookcase called "Boomerang - The Meltdown Tour" by Michael Lewis that I remain sure would contain a pretty accurate summary of the facts (and is the source of my previous general statement.) Pretty damn sure I've got no real personal interest in dredging through it again though - But it's still just possible you could find it an interesting read on the off chance you've not come across it I suppose.
This chart illustrates the magnitude of Ireland's boom versus Australia...
It's just silly to compare Australia and Ireland. Irish banks suffered capital flight and had to be nationalised, that won't happen here. Crazy comparison.
Take risks - if you win you will become wealthy, if you lose you will become wise
It's just silly to compare Australia and Ireland. Irish banks suffered capital flight and had to be nationalised, that won't happen here. Crazy comparison.
Did Irish banks stupidly expose themselves to residential property at 60% of their book?
WHAT WOULD EDDIE DO? MAAAATE! Share a cot with Milton?
It's very easy to criticise the two of them, but they may be smarter than we are - how can you judge them in a few minutes of TV time that has probably been edited to show them in their worst light.
Why would they do that????
Ex BP Golly
22 Aug 2017, 10:55 PM
Did Irish banks stupidly expose themselves to residential property at 60% of their book?
If they did they would not have been nationalised
This is going to hurt when it hits...
SittingOnDeFence
22 Aug 2017, 11:50 PM
The thing is though - throughout the boom in Ireland, there was never talk of empty apartments....
So comparing Ireland to Australia is probably a bit off - Ireland's more like China. Making Australia more like Spain
The thing is though - throughout the boom in Ireland, there was never talk of empty apartments....
So comparing Ireland to Australia is probably a bit off - Ireland's more like China. Making Australia more like Spain
Yes, Australia is more like Spain.
But Shadow's argument is nonsense. Well, it isn't one really.
Australian housing markets are out on a limb and its all a legacy of the policy response to the GFC and the neoliberal experiment that preceded it.
That is not part of the cycle. The cycle doesn't exist as Shadow describes it. Its a con job.
What actually happened is that the RBA accepted house price inflation in order to protect the real economy in the post GFC years.
Unfortunately, as is want to happen, in key markets they sparked a speculation driven frenzy which leaves us in the vulnerable position described on last nights show.
Its not simple demand for housing as Rufus would have you believe. If that were true rents would have spiked too. The opposite is true.
herbie
22 Aug 2017, 09:35 PM
I have looked at it in the past mate - Just plucked a little tome off my bookcase called "Boomerang - The Meltdown Tour" by Michael Lewis that I remain sure would contain a pretty accurate summary of the facts (and is the source of my previous general statement.) Pretty damn sure I've got no real personal interest in dredging through it again though - But it's still just possible you could find it an interesting read on the off chance you've not come across it I suppose.
Ive read it.
Whats your point?
Rufus
22 Aug 2017, 10:58 PM
You can choose to ignore a banking crash if you wish.
Is this the part where you tell us that Australian banks cant crash because Australia cant run out of dollars?
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
The thing is though - throughout the boom in Ireland, there was never talk of empty apartments....
I doubt that mate "when anyone with eyes could see, in the vacant skyscrapers and housing estates around them, evidence of bank loans that were not merely bad but insane."
Source: Page 98 (and up towards the top of it) of that little tome I mentioned that I just VERY recently plucked off my bookcase for 'old time's sake' ...
Veritas
23 Aug 2017, 12:28 AM
Ive read it.
Whats your point?
My point was that if you'd not read it you might find it interesting.
Though you've read it - Same as me. So that's nice.
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