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Latest RBA Financial Aggregates
Topic Started: 2 Nov 2010, 01:12 PM (6,923 Views)
PuntPal
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Shadow
23 Jun 2011, 10:30 AM
PuntPal
23 Jun 2011, 10:08 AM
No you are now changing your argument coz you got caught out....as I have explained, when credit growth slows...house prices fall.
Housing credit growth did slow, from 15% several years ago, to the current level around 8%. During that time, house prices generally rose. House prices today are higher than they were when credit growth started slowing.
Shadow...here it is again for you. This is that graph explained for you and it totally supports Keen's theory that slowing credit growth causes falling houses prices (even if the growth rate is about 7% as it is now).

2005- mid 2007 - Credit Growrth was between 13-15%

2007-2008 - GFC kicks in, Credit Growth falls to between 7-10%

AT THIS POINT...HOUSE PRICES WERE FALLING...REMEMBER!!! THAT IS WHY THEY BOOSTED THE FHB GRANT!

2009-early2010 - Ultra low rates and FHBG to gullible young people means Credit Growth resumes growing again to about 9%

AT THIS POINT...HOUSE PRICES STOPPED FALLING TICKED UP AGAIN

2010-present - Credit Growth falls again and this time it is lowest in a decade...


So - the point I am making is perfectly proven by the data. When we last saw a slowdown in credit growth (2008) house prices fell. Due to the political intervention of the FHBG...the growth of credit resumed and house prices took off again.

Now the sugar hit has worn off we have credit growth at decade lows.

This ^ isnt even disputed by the Bulls. They argue we have a shortage of houses so prices cant fall much, so the fact you are taking me on over this point shows how dogmatic and ignorant the bulls have become.



"Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble." - Paul Krugman 2002

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Strindberg
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PuntPal
23 Jun 2011, 10:08 AM
....as I have explained, when credit growth slows...house prices fall.
Bollocks.

RBA table D1

Credit growth FELL during the following periods. House prices ROSE during all of them.

8/1977 - 9/1978
9/1979 - 3/1980
3/1981 - 2/1983
7/1985 - 3/1987 (credit growth fell for 2 years! - house prices kept on rising) (corrected)
3/1989 - 8/1991
8/1994 - 3/1996
9/1996 - 3/1997
6/2000 - 6/2001
9/2002 - 2/2003
3/2004 - 12/2005

Edited by Strindberg, 23 Jun 2011, 04:56 PM.
Housing costs to Income broadly unchanged since 1994 - re-ratified here
The People of Australia have the highest median wealth in the World
2002-2012 10 year house price growth the SLOWEST since 1952-1962
"There are two kinds of people in this world: ones that fiddle around wondering whether a thing's right or wrong and guys like us." (Hugo to Gagin in Ride the Pink Horse)
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Shadow
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Evil Mouzealot Specufestor

PuntPal
23 Jun 2011, 10:37 AM
Shadow...here it is again for you. This is that graph explained for you and it totally supports Keen's theory that slowing credit growth causes falling houses prices (even if the growth rate is about 7% as it is now).

2005- mid 2007 - Credit Growrth was between 13-15%

2007-2008 - GFC kicks in, Credit Growth falls to between 7-10%
In 2004, annual housing credit growth was running at 22%.

Today, annual housing credit growth is running at 6%.

Are house prices today higher or lower than they were in 2004?
Edited by Shadow, 23 Jun 2011, 11:17 AM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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Count du Monet
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pauk
23 Jun 2011, 09:46 AM
Why the uptick on the M3?
M3 = deposits in the retail banks + cash in circulation.

If you have money in a transaction account, savings - time locked term etc. Congratulations, you've contributed to the M3.

If you've been getting exited about Ubank then you've contributed to the M3.

Overall credit growth has been anemic only 3.2% for the last year. The M3 is increasing faster because money has fled commercial investment for the perceived safety of retail bank accounts. This M3 growth is now slowing to a halt and if Glen drops rates the M3 could even contract.
The next trick of our glorious banks will be to charge us a fee for using net bank!!!
You are no longer customer, you are property!!!

Don't be SAUCY with me Bernaisse
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sentsie
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Shadow
1 Jun 2011, 03:24 PM
Latest chart... business and personal lending growth still looking very unhealthy. Housing credit growth slowing down too.

Posted Image
Shadow, do you have the excel data from May 2005 please.
The RBA website only provides current data from Dec 2009.

Thanks.
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sentsie
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PuntPal
23 Jun 2011, 10:37 AM
Shadow...here it is again for you. This is that graph explained for you and it totally supports Keen's theory that slowing credit growth causes falling houses prices (even if the growth rate is about 7% as it is now).

2005- mid 2007 - Credit Growrth was between 13-15%

2007-2008 - GFC kicks in, Credit Growth falls to between 7-10%

AT THIS POINT...HOUSE PRICES WERE FALLING...REMEMBER!!! THAT IS WHY THEY BOOSTED THE FHB GRANT!

2009-early2010 - Ultra low rates and FHBG to gullible young people means Credit Growth resumes growing again to about 9%

AT THIS POINT...HOUSE PRICES STOPPED FALLING TICKED UP AGAIN

2010-present - Credit Growth falls again and this time it is lowest in a decade...


So - the point I am making is perfectly proven by the data. When we last saw a slowdown in credit growth (2008) house prices fell. Due to the political intervention of the FHBG...the growth of credit resumed and house prices took off again.

Now the sugar hit has worn off we have credit growth at decade lows.

This ^ isnt even disputed by the Bulls. They argue we have a shortage of houses so prices cant fall much, so the fact you are taking me on over this point shows how dogmatic and ignorant the bulls have become.


Keen's credit impulse theory :
Change (aggregate demand) = change (income) + change (credit growth).

You miss one variable, ie : change (income).
If change (income) > change (falling credit growth) then house price will not fall.

BTW this is only a theory.
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Shadow
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Evil Mouzealot Specufestor

sentsie
23 Jun 2011, 11:25 AM
Shadow, do you have the excel data from May 2005 please.
The RBA website only provides current data from Dec 2009.

Thanks.
Data here going back to 1977... http://www.rba.gov.au/statistics/tables/xls/d01hist.xls
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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PuntPal
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sentsie
23 Jun 2011, 11:34 AM
PuntPal
23 Jun 2011, 10:37 AM
Shadow...here it is again for you. This is that graph explained for you and it totally supports Keen's theory that slowing credit growth causes falling houses prices (even if the growth rate is about 7% as it is now).

2005- mid 2007 - Credit Growrth was between 13-15%

2007-2008 - GFC kicks in, Credit Growth falls to between 7-10%

AT THIS POINT...HOUSE PRICES WERE FALLING...REMEMBER!!! THAT IS WHY THEY BOOSTED THE FHB GRANT!

2009-early2010 - Ultra low rates and FHBG to gullible young people means Credit Growth resumes growing again to about 9%

AT THIS POINT...HOUSE PRICES STOPPED FALLING TICKED UP AGAIN

2010-present - Credit Growth falls again and this time it is lowest in a decade...


So - the point I am making is perfectly proven by the data. When we last saw a slowdown in credit growth (2008) house prices fell. Due to the political intervention of the FHBG...the growth of credit resumed and house prices took off again.

Now the sugar hit has worn off we have credit growth at decade lows.

This ^ isnt even disputed by the Bulls. They argue we have a shortage of houses so prices cant fall much, so the fact you are taking me on over this point shows how dogmatic and ignorant the bulls have become.


Keen's credit impulse theory :
Change (aggregate demand) = change (income) + change (credit growth).

You miss one variable, ie : change (income).
If change (income) > change (falling credit growth) then house price will not fall.

BTW this is only a theory.
You are spot on. But my contention is that increases in income have been totally dwarphed by increases in house prices

Now that credit growth is slowing again and incomes are pretty flat, then the change in debt will be the driving factor behind falling house prices.

If hosue prices do continue to slide, as seems to be the case by continuing poor auction results, then Keen's theory is bullet proof and we are headed for a massive correction over the coming years.

"Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble." - Paul Krugman 2002

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Shadow
Member Avatar
Evil Mouzealot Specufestor

PuntPal
23 Jun 2011, 10:37 AM
2005- mid 2007 - Credit Growrth was between 13-15%

2007-2008 - GFC kicks in, Credit Growth falls to between 7-10%

AT THIS POINT...HOUSE PRICES WERE FALLING...REMEMBER!!! THAT IS WHY THEY BOOSTED THE FHB GRANT!

2009-early2010 - Ultra low rates and FHBG to gullible young people...

Housing credit growth didn't fall to 7-10% in 2008 when the GFC 'kicked in'. It had been trending down since 2004 anyway.

You are taking a recent sample of just a few years and extrapolating this to convince yourself that house prices always fall when credit growth falls. What you have there is one single instance of house prices falling and credit growth slowing at roughly the same time.

But if you look at the long term historical data, there is little correlation between housing credit growth slowing, and house prices falling. Strindberg has posted many examples going right back to the seventies where house prices rose while credit growth was falling.

Even if you look at the most recent period, housing credit growth has been on a downward trend since 2004.

But house prices today are higher then they were in 2004.

Posted Image

Just because you can find a single example where house prices fell and credit growth slowed at the same time, does not mean that slowing credit growth must result in falling house prices. The historical data shows this not to be the case.
Edited by Shadow, 23 Jun 2011, 12:03 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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PuntPal
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Strindberg
23 Jun 2011, 10:38 AM
PuntPal
23 Jun 2011, 10:08 AM
....as I have explained, when credit growth slows...house prices fall.
Bollocks.

RBA table D1

Credit growth FELL during the following periods. House prices ROSE during all of them.

8/1977 - 9/1978
9/1979 - 3/1980
3/1981 - 2/1983
7/1983 - 3/1987 (credit growth fell for 4 years! - house prices kept on rising)
3/1989 - 8/1991
8/1994 - 3/1996
9/1996 - 3/1997
6/2000 - 6/2001
9/2002 - 2/2003
3/2004 - 12/2005

Income can support house prices if credit growth slows..

But anyone that claims income growth has supported our house bubble is kidding themsleves.

We have mountains of private debt that has been piled on at record rates until 2006...it slowed down leading to GFC and we had falling house prices (even though incomes were rising). This is because the change in debt was the primary driver of house prices - not increasing incomes.

"Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble." - Paul Krugman 2002

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