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Leith van Onselen deceit exposed on Macrobusiness by Peter Fraser; Unconventional Economist's deceit exposed
Topic Started: 23 Apr 2012, 03:10 PM (7,860 Views)
Sherlock
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peter fraser
24 Apr 2012, 06:42 PM
When an apology is in order, an apology should be made.
Peter, I don't know why you bother posting there, on Macrobusiness -- they lack balance, never admit mistakes, and lash out at you in their rage!!
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Strindberg
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jester77
24 Apr 2012, 08:26 PM
So the Brisbane people should have worked out for themselves that Peter's advice didn't apply to them?
That's a separate issue, involving many factors, which can be discussed. It in no way mitigates LVO's false claim and the devious support he offered for his claim.

LVO was entirely false to claim that "most buyers" in Brisbane in January 2009 now have a debt greater than the value of their house.

His further claim that his above false claim is supported by prices at the beginning of 2008 and at their peak in 2010 is reprehensible illogical rubbish.

His refusal to acknowledge his mistakes with his false claims, and his refusal to apologise for encouraging wide unfounded attacks on Peter, leave him dishonourable.

Thanks for keeping the thread going.
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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jester77
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Strindberg
24 Apr 2012, 09:31 PM
That's a separate issue, involving many factors, which can be discussed. It in no way mitigates LVO's false claim and the devious support he offered for his claim.

LVO was entirely false to claim that "most buyers" in Brisbane in January 2009 now have a debt greater than the value of their house.

His further claim that his above false claim is supported by prices at the beginning of 2008 and at their peak in 2010 is reprehensible illogical rubbish.

His refusal to acknowledge his mistakes with his false claims, and his refusal to apologise for encouraging wide unfounded attacks on Peter, leave him dishonourable.

Thanks for keeping the thread going.
You're most welcome.

I don't agree the issue are completely seperate. I believe their criticism is partly flawed as is your deference of his statement.
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genX
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Strindberg
24 Apr 2012, 08:16 PM
In a desperate effort to regain credibility for LVO you are addressing a totally different issue.

Peter alerted people to January 2009 being a good time for FHB's to buy. He never mentioned Brisbane. For the great majority it WAS a good time to buy. Melbourne prices are up 22% since then and Sydney prices are up 19% since then. All capital cities are up since then according to the ABS.

The issue here, in this thread, is the false claim made by Leith van Onselen that "most buyers" in Brisbane in January 2009 are now "underwater". "Underwater" is an American term used by them to mean negative equity ie when the debt owed is more than the price of the house. That claim is absolutely false, regardless of any other issues you wish to introduce to defend your bear pin-up boy. It is clearly false to everyone.

LVO deceptively tried to support his false claim using data from other times. He's a deceptive scoundrel and should apologise to Peter. But Leith has a history of making false statements and not retracting them. He never retracted his provably false claim that the average FHB in the UK is 37 years old. He makes shit up and then uses his privileges on MB to protect his statements from exposure.
Actually I was addressing the claim that housing is up 2.6% since January 2009 being a good investment.

A quick Google search does not reveal any data that supports your claims (Melb 22%,Syd 19%), so perhaps you would improve the credibility of your claims if you cite a link for any numbers you post.

Taking the numbers you pulled out of your hat:

19% for Sydney over 3 years is 6.33% flat which is a compound rate of 5.96%. Which isn't even keeping up with the interest, much less inflation.

22% for Melbourne over 3 years is slightly better at a compounding rate of 6.85%. Still not quite keeping up with interest and inflation, but at least you get the privilege of paying council rates, body corporate fees and repairs.

Now, to address your accusations of deflection from point about Leith van Onselen. YOU have not supplied figures for the rise in prices from Jan 2009 to present in Brisbane. Care to pull a figure out of your hat? Then I can calculate if the mortgage is 'underwater' or not.

If you put cash in your mattress when the risk-free rate was 5%, would your cash be 'underwater' in three years time? :D

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Strindberg
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genX
24 Apr 2012, 09:40 PM
Actually I was addressing the claim that housing is up 2.6% since January 2009 being a good investment.

A quick Google search does not reveal any data that supports your claims (Melb 22%,Syd 19%), so perhaps you would improve the credibility of your claims if you cite a link for any numbers you post.

Taking the numbers you pulled out of your hat:

All the figures are from the ABS. I don't make up shit like LVO.


http://www.abs.gov.au/ausstats/meisubs.NSF/log?openagent&641601.xls&6416.0&Time%20Series%20Spreadsheet&E17A939315FD44ECCA257996000FA1B7&0&Dec%202011&01.02.2012&Latest
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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peter fraser
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genX
24 Apr 2012, 09:40 PM
Actually I was addressing the claim that housing is up 2.6% since January 2009 being a good investment.

A quick Google search does not reveal any data that supports your claims (Melb 22%,Syd 19%), so perhaps you would improve the credibility of your claims if you cite a link for any numbers you post.

Taking the numbers you pulled out of your hat:

19% for Sydney over 3 years is 6.33% flat which is a compound rate of 5.96%. Which isn't even keeping up with the interest, much less inflation.

22% for Melbourne over 3 years is slightly better at a compounding rate of 6.85%. Still not quite keeping up with interest and inflation, but at least you get the privilege of paying council rates, body corporate fees and repairs.

Now, to address your accusations of deflection from point about Leith van Onselen. YOU have not supplied figures for the rise in prices from Jan 2009 to present in Brisbane. Care to pull a figure out of your hat? Then I can calculate if the mortgage is 'underwater' or not.

If you put cash in your mattress when the risk-free rate was 5%, would your cash be 'underwater' in three years time? :D

Hi Gen X,

To put a couple of things in perspective - in 2009 I had a readership of 1 and that was me, so whatever I said has made no difference. My comment wasn't particularly directed at any geographic area, so I don't know why Brisbane was chosen as the litmus test. Perhaps it was a random choice, perhaps it wasn't.

I can't find the Jan 2009 RPData figure, so I'm not 100% sure on the difference in Brisbane as at now, but it's quite minimal and it may vary a little depending on the data set used - some up and some down.

The 2,6% figure was from earthsta, who made a comment, he would never intentionally post anything bullish, so I'm sorry if that upset you in some way.

If you chose not to buy in 2009 and you think that your ahead of the game because of that, then good for you. I hope that you are.

This thread reminds me of why I don't use facebook or twitter. Tomorrrow is another day.

Cheers...

Any expressed market opinion is my own and is not to be taken as financial advice
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genX
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Strindberg
24 Apr 2012, 10:01 PM
According to the supplied spreadsheet, the Brisbane index went from 138.0 to 141.7 between Dec 2008 and Dec 2011. == 3.7%.

The interest paid will vary according to the LVR, but let's be generous and use an LVR of 80%, with principle reduction of 2% per year.

Interest expense is capital lost, so the years 2008 would have an interest expense of roughly 5.6% + 5.46% + 5.32% = 16.38% less the 3.7% capital gain is a total loss of capital 12.68%.

In that time you have taken the principle down by 6%, and the price is roughly 3.7% over the principle+deposit. So if you sell you get the 6% back, but you have to pay ~2% in costs to sell (agent fees), leaving 1.7% of the price gain, and then there is the early payment penalties the lender applies.

Technically, your sale price may be above the outstanding principle, but you took a 12.68% capital loss on the funding. Does this mean that you are not underwater, even though the interest payments were definitely part of your debt? Probably. Still doesn't change the fact that you took a bath financially.

Of course, this doesn't even apply the discount rate on the deposit. Current risk-free rate is 4.25%, which is a discount rate of ~0.88 over three years. So the opportunity cost on your deposit is 12%. Another capital loss.

But going backwards by 5-6% each year is OK, as long as you are not 'underwater' I guess.
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genX
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peter fraser
24 Apr 2012, 10:49 PM
Hi Gen X,

To put a couple of things in perspective - in 2009 I had a readership of 1 and that was me, so whatever I said has made no difference. My comment wasn't particularly directed at any geographic area, so I don't know why Brisbane was chosen as the litmus test. Perhaps it was a random choice, perhaps it wasn't.

I can't find the Jan 2009 RPData figure, so I'm not 100% sure on the difference in Brisbane as at now, but it's quite minimal and it may vary a little depending on the data set used - some up and some down.
Hi Peter,

What annoys me about the majority of bears and bulls is how they express their opinions but don't run the numbers.

I know it was earthsta who cited 2.6 (it's actually 3.7 according to supplied spreadsheet from ABS, see other post), and it was earthsta that I was responding to, taking his comment at face value.

Strindberg seemed to think my response to earthsta was a defence or deflection for LVO. I'm new here, so I don't know who LVO, or earthsta or Stringberg are, so I responded by running some numbers (again, see other post).

Claims of rising prices, falling prices and future prices are known in financial markets as 'sophistry'. In the end, what matters are the numbers. Total return, real return (after discounting).

According to my numbers, Jan 2009 was NOT a great time to buy. Certainly better than 2007, but still not great. But that's just by the numbers. Personally I'm not a fan of property in the same way I'm not a fan of organised religion. i.e. because people's beliefs about both are irrational and personal. (IMNSHO).

I chose not to buy from 1994 to present and I am much better off for it. I may be a buyer soon though. I believe the coming correction with be the buy opportunity of a lifetime and I am expecting around a 50% drop. But now I am indulging in sophistry. :lol

Good luck with your blog.


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raveswei
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peter fraser
23 Apr 2012, 05:46 PM
However it is just not true that Brisbane values are below the prices available in Jan 2009 and certainly in other capital cities they are well ahead.

residex will disagree with you. According to their (repeated sale) index house prices fell 4.4% since Jan 2009.

http://www.residex.com.au/indices?state=QLD&dwelling=H#indices

I think prices actually fell more than 5% since than.

So even with extra FHBG people actually lost the money.

Quote:
 
If you actually read what I wrote you will find I was explaining the generous FHB and boost available at that time.
For those who are reluctant to believe, dig up the medians for Brisbane in Jan 2009 and now.


nobody expects honesty from a man who has a job to push people into lifetime debt.

You have huge vested interests so people should not listen whatever you say. What I expect is clear disclosure that will make people aware of these vested interests.
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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peter fraser
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genX
24 Apr 2012, 11:06 PM
Strindberg
24 Apr 2012, 10:01 PM
According to the supplied spreadsheet, the Brisbane index went from 138.0 to 141.7 between Dec 2008 and Dec 2011. == 3.7%.

The interest paid will vary according to the LVR, but let's be generous and use an LVR of 80%, with principle reduction of 2% per year.

Interest expense is capital lost, so the years 2008 would have an interest expense of roughly 5.6% + 5.46% + 5.32% = 16.38% less the 3.7% capital gain is a total loss of capital 12.68%.

In that time you have taken the principle down by 6%, and the price is roughly 3.7% over the principle+deposit. So if you sell you get the 6% back, but you have to pay ~2% in costs to sell (agent fees), leaving 1.7% of the price gain, and then there is the early payment penalties the lender applies.

Technically, your sale price may be above the outstanding principle, but you took a 12.68% capital loss on the funding. Does this mean that you are not underwater, even though the interest payments were definitely part of your debt? Probably. Still doesn't change the fact that you took a bath financially.

Of course, this doesn't even apply the discount rate on the deposit. Current risk-free rate is 4.25%, which is a discount rate of ~0.88 over three years. So the opportunity cost on your deposit is 12%. Another capital loss.

But going backwards by 5-6% each year is OK, as long as you are not 'underwater' I guess.
I think that a simpler explanation of "underwater" was implied by LVO - my take was that he thought that the median now is less than the median then - nothing more complex than that.

It becomes a complex equation when you factor in varying capital gains depending on which city you are in, interest costs, rental costs if you hadn't bought, opportunity cost on the deposit, rates, insurance, maintenance which can vary considerably depending on the condition of the property.

You could spend all day working that out and still be wrong.



Any expressed market opinion is my own and is not to be taken as financial advice
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