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RBA relying on moronic data, says Louis Christopher of SQM Research; House prices not stabilising. Auction results weaker than same time last year.
Topic Started: 18 Apr 2012, 03:15 PM (2,325 Views)
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RBA relying on 'moronic' data: SQM

By Adam Smith | 18/04/2012 4:00:00 AM

SQM Research has lambasted the RBA for suggesting that house prices have stabilised, saying the bank was relying on "moronic" data.

In the minutes from its April board meeting, the Reserve Bank claimed house prices had showed signs of stabilising, while auction clearance rates in Sydney and Melbourne had picked up. SQM Research managing director Louis Christopher rubbished the claim, and said he was "deeply concerned" by the RBA's assertions.

"Let me tell you now, house prices have not stabilised. In many parts of the country, they are still falling. And auction clearance rates are weaker than recorded this time last year," he said.

Christopher said a recent uplift in clearance rates was seasonal, and chided the Reserve Bank for failing to note this.

"The RBA should typically know this, and yet are still suggesting that there is stabilisation in the market. Well, not for Melbourne, and not for Sydney, and not for Canberra, and not for Hobart, and there are still some question marks on Brisbane and there are still no signs of the Gold Coast or Sunshine Coast coming out of their property crash," he said.

Perth and Darwin, Christopher suggested, are the only cities to have experienced a "genuine bottoming out". He warned the RBA against relying on what he characterised as unreliable housing data.

"I can only hope that the RBA is not relying on daily house price indexes that moronically suggest that Melbourne house prices rose 1.8% in January, or relying on certain commentators who have suggested deceitfully that auction clearance rates are in genuine recovery when clearly they are not," he said.

Read more: http://www.brokernews.com.au/article/rba-relying-on-moronic-data-sqm-128234.aspx
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raveswei
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Looks like RBA will use any data to justify their “hold” to please the banks.

RBA is not in charge of rates and that is more obvious every day.
http://popping-bubble.blogspot.com/

Thinking of an Australian property speculator (PI):
Inaction = missing opportunities.
Missing opportunities = losing.
Too much thinking = inaction.
Thinking = missing opportunities.
Therefore thinking = losing.

disgraceful little man Frank Castle owes a house to Salvation Army

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b_b
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raveswei
18 Apr 2012, 03:58 PM
Looks like RBA will use any data to justify their “hold” to please the banks.

RBA is not in charge of rates and that is more obvious every day.
As the monopoly supplier of AUD, the RBA is in total control of the cash rate.

The major banks, acting as oligopolists, are free to charge whatever rate they choose. The banks do not require any money from offshore. This is for term only, not for funding. Since all loans create deposits, their "rant" about cost of funding only fools the ignorant (which is quite a few people). APRA can reduce the cost of funding for the banks overnight is they so wish.

Barring that, the RBA will continue to move rates down until they achieve the desired mortgage and business interest rate. If that means ZIRP with a 4% mortgage rate, then so be it.
(S – I) + (T - G) + (M - X) = 0
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raveswei
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b_b
18 Apr 2012, 04:15 PM
raveswei
18 Apr 2012, 03:58 PM
Looks like RBA will use any data to justify their “hold” to please the banks.

RBA is not in charge of rates and that is more obvious every day.
As the monopoly supplier of AUD, the RBA is in total control of the cash rate.

The major banks, acting as oligopolists, are free to charge whatever rate they choose. The banks do not require any money from offshore. This is for term only, not for funding. Since all loans create deposits, their "rant" about cost of funding only fools the ignorant (which is quite a few people). APRA can reduce the cost of funding for the banks overnight is they so wish.

Barring that, the RBA will continue to move rates down until they achieve the desired mortgage and business interest rate. If that means ZIRP with a 4% mortgage rate, then so be it.
RBA is still in charge of cash rate but not mortgage rates. And mortgage rates are ones that matter the most.

In theory our banks do not need offshore money, but they already borrowed a lot of money overseas (for whatever reason) and now they have to service that debt.

APRA can change requirements and provide funding to banks but at what cost and with what economic and political consequences.
http://popping-bubble.blogspot.com/

Thinking of an Australian property speculator (PI):
Inaction = missing opportunities.
Missing opportunities = losing.
Too much thinking = inaction.
Thinking = missing opportunities.
Therefore thinking = losing.

disgraceful little man Frank Castle owes a house to Salvation Army

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b_b
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raveswei
18 Apr 2012, 04:41 PM
RBA is still in charge of cash rate but not mortgage rates. And mortgage rates are ones that matter the most.


Agree - which is why the RBA will keep cutting rates until they reach their desired mortgage / business rate

Quote:
 
In theory our banks do not need offshore money, but they already borrowed a lot of money overseas (for whatever reason) and now they have to service that debt.

In practice they do not need offshore money. Any foreign money raised is swapped back into existingAUD. The only reason they do this is because ARPA require the banks to secure a portion of their funding with term (which is crazy since the Aussie banking system can never run out of Aussie dollars). +5 year term in Australia is not really existant in Australia for non-government paper (yet). Once this market emerges, or APRA changes the rules, Bank funding costs will reduce substantially. I see both of these scenarios as inevitable.
Quote:
 
]APRA can change requirements and provide funding to banks but at what cost and with what economic and political consequences

APRA do not provide any funding to the banks - they are a regulator.

If APRA chnage the requirements for term, it will have no conseqences for Aussie banking except lower mortgage rates.
Edited by b_b, 18 Apr 2012, 04:53 PM.
(S – I) + (T - G) + (M - X) = 0
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Shadow
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In the minutes from its April board meeting, the Reserve Bank claimed house prices had showed signs of stabilising, while auction clearance rates in Sydney and Melbourne had picked up. SQM Research managing director Louis Christopher rubbished the claim, and said he was "deeply concerned" by the RBA's assertions.

"Let me tell you now, house prices have not stabilised. In many parts of the country, they are still falling. And auction clearance rates are weaker than recorded this time last year," he said.
The fact that clearance rates are lower than the same time last year doesn't contradict the fact that clearance rates have picked up.

The fact that in many parts of the country house prices are still falling doesn't contradict the fact that national house prices show signs of stabilising.

So I don't see really what is 'moronic' about the RBA statements. The RBA statements are accurate. Louis?
Edited by Shadow, 18 Apr 2012, 05:15 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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Black_Dragon
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Shadow
18 Apr 2012, 05:14 PM
Quote:
 
In the minutes from its April board meeting, the Reserve Bank claimed house prices had showed signs of stabilising, while auction clearance rates in Sydney and Melbourne had picked up. SQM Research managing director Louis Christopher rubbished the claim, and said he was "deeply concerned" by the RBA's assertions.

"Let me tell you now, house prices have not stabilised. In many parts of the country, they are still falling. And auction clearance rates are weaker than recorded this time last year," he said.
The fact that clearance rates are lower than the same time last year doesn't contradict the fact that clearance rates have picked up.

The fact that in many parts of the country house prices are still falling doesn't contradict the fact that national house prices show signs of stabilising.

So I don't see really what is 'moronic' about the RBA statements. The RBA statements are accurate. Louis?
So, Melbourne house prices rose by 1.8%?

Did they?

Sir, that's your opinion if you think its all ok. And I guess, I have mine.
"No sympathy for the devil; keep that in mind. Buy the ticket, take the ride...and if it occasionally gets a little heavier than what you had in mind, well...maybe chalk it off to forced conscious expansion: Tune in, freak out, get beaten."My Webpage
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Shadow
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Black_Dragon
18 Apr 2012, 05:40 PM
So, Melbourne house prices rose by 1.8%?

Did they?

Sir, that's your opinion if you think its all ok. And I guess, I have mine.
I didn't mention anything about a 1.8% rise in Melbourne. Monthly movements can be noisy, especially for individual cities.

The RPData index seems to show Melbourne still trending down, but the national trend appears to be one of price stabilisation, after the declines of 2011.

Posted Image

The points I made were...

1. The fact that clearance rates are lower than the same time last year doesn't contradict the fact that clearance rates have picked up.

2. The fact that in many parts of the country house prices are still falling doesn't contradict the fact that national house prices show signs of stabilising.
Edited by Shadow, 18 Apr 2012, 05:56 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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Elastic
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Shadow
18 Apr 2012, 05:48 PM
I didn't mention anything about a 1.8% rise in Melbourne. Monthly movements can be noisy, especially for individual cities.

The RPData index seems to show Melbourne still trending down, but the national trend appears to be one of price stabilisation, after the declines of 2011.

Posted Image

The points I made were...

1. The fact that clearance rates are lower than the same time last year doesn't contradict the fact that clearance rates have picked up.

2. The fact that in many parts of the country house prices are still falling doesn't contradict the fact that national house prices show signs of stabilising.
Shadow, there is significant seasonality to the stabilisation you are seeing.
Last year there was also a small uptick in both prices and clearance rates.
Personally, I'd be very surprised if prices don't continue falling (nationally) over the next six months, particularly if they don't cut rates significantly.

If the RBA is actually listening to the spruikers talk up the market and believes they are making sense then bad luck spruikers, it's come back to bite you on the arse.
Only a rat can win a rat race.

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CapedCrusader
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Shadow
18 Apr 2012, 05:48 PM
The RPData index seems to show Melbourne still trending down, but the national trend appears to be one of price stabilisation, after the declines of 2011.
To confirm, the blue line is trending down, but the black line is stabilising? They both look quite similar to me.
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