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Annual Housing Credit Growth at Lowest Level in 35 Years
Topic Started: 30 Apr 2012, 03:22 PM (1,874 Views)
raveswei
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Sydneyite
30 Apr 2012, 06:15 PM
Given your oft stated view that RP-Data is complete rubbish and dodgy as, let's see what the ABS stats say tomorrow then shall we?

ABS will tell us nothing about prices in April

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Or are you happy to rely on RP-Data is they say prices fall but not when they say prices have risen?


I'm not relying on RP data I just reminded people that even bullish not seasonally adjusted RPData index points to huge falls.

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PS: Even by RP-Data, if April is down a bit, prices are still up for the year according to their index, especially in Sydney.


Nominal prices are down since the beginning of the year

Posted Image

in seasonally adjusted terms even Sydney is 0.5%-0.8% down.
(in previous years seasonally adjusted price movement was 1.2-1.5% lower than nominal price movements in first 4 months of the year)
Edited by raveswei, 30 Apr 2012, 06:37 PM.
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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NotFooled
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The Bear Whisperer

nuff_ced
30 Apr 2012, 05:32 PM
OK I get it.. The general population aren’t talking on enough debt fast enough to keep the wheels turning, so the authorities are very un-happy. What’s needed is for them to slash rates to entice more suckers so the ish doesn’t hit the fan. Thanks for your explanation.
The government is losing control of the wage slaves. More debt will bring them back under the thumb.
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newjez
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Sydneyite
30 Apr 2012, 06:15 PM
raveswei
30 Apr 2012, 05:48 PM
yes they are

[snip]

According to very bullish RPdata mysterious index in seasonally adjusted terms Sydney prices are down almost 1% in April
Given your oft stated view that RP-Data is complete rubbish and dodgy as, let's see what the ABS stats say tomorrow then shall we? Or are you happy to rely on RP-Data is they say prices fall but not when they say prices have risen?

PS: Even by RP-Data, if April is down a bit, prices are still up for the year according to their index, especially in Sydney.
Shadow - you sound like a schoolgirl with a secret. Let me take a wild guess that you already have sight of the ABS figures?
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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Sydneyite
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newjez
30 Apr 2012, 07:09 PM
Shadow - you sound like a schoolgirl with a secret. Let me take a wild guess that you already have sight of the ABS figures?
Shadow???

Anyway I certainly have not seen the ABS numbers (I wish!), but I just think that based on what all the other data providers have already come out with that ABS will show a rise in prices for Q1, especially for Sydney.
Edited by Sydneyite, 30 Apr 2012, 07:12 PM.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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newjez
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Sydneyite
30 Apr 2012, 07:11 PM
newjez
30 Apr 2012, 07:09 PM
Shadow - you sound like a schoolgirl with a secret. Let me take a wild guess that you already have sight of the ABS figures?
Shadow???

Anyway I certainly have not seen the ABS numbers (I wish!), but I just think that based on what all the other data providers have already come out with that ABS will show a rise in prices for Q1, especially for Sydney.
Sorry - that (shadow) was a valid mistake - I wasn't meaning to imply anything.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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Elastic
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Sydneyite
30 Apr 2012, 05:13 PM
No they're not - you are so 2011 Earthsta! Prices are currently rising on average and especially in Sydney and several other cities since the end of last year. ABS Q1 2012 data out tomorrow will confirm this for you once and for all.


Yes - low credit growth means that the broad monetary base is not expanding fast enough to maintain (EDIT: the monetary growth required to support) population growth, economic growth, and the target inflation rate of 2-3%. So the RBA needs to pull back monetary policy to a more expansive setting in order to encourage faster credit growth, and avoid deflation and recession in the Oz economy. If total (not just housing related) outstanding credit were actually falling in nominal terms, rather than just growing slower than the authorities would like, then we would be seriously up shit creek without a paddle already- this is what the RBA will try and avoid at all costs.
Aaah yes, we just need people to borrow more money and things will be just fine until they aren't.

Increasing debt without productivity increases will lead to EPIC FAIL!
Only a rat can win a rat race.

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Sydneyite
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Elastic
1 May 2012, 12:57 AM
Aaah yes, we just need people to borrow more money and things will be just fine until they aren't.

Increasing debt without productivity increases will lead to EPIC FAIL!
You are right that our economic prosperity depends on over-all productivity - but an increasing aggregate debt level on it's own does not necessarily mean that we will suffer lower productivity. For every borrower their is a lender. Every cent the banks make lending money goes somewhere else - interest to depositors, wages to employees, dividends to shareholders, capital purchases of required goods and services needed etc. Fiscal management, efficient business practices and so on across the economy more broadly is what is important to ensure ongoing efficient use of the capital that monetary policy makes available. Ie making sure that we use the mobilisation of real resources enabled by monetary policy to do things ultimately that improve our standard of living, produce things we or others need, and generally create / grow our wealth.

It seems that you imagine that when people (or companies) choose to take on debt, and thus participate in the process of expanding the broad money supply, that is automatically somehow an unproductive use of capital? That is an incorrect assumption . Whatever the money is initially used to purchase, it will still continue to circulate around the economy after it's initial "use".

We live in a (mostly) capitalist system, with some regulation, but it is far from a controlled economy. What this means is that nobody - not the government, not you, not I etc, get to "tell" people whether they should or should not borrow money, save money, nor how much, nor what they should spend their money on. However Monetary policy settings can make it more or less attractive to do certain things (borrow, save, invest, spend etc). The banks role is to assess the risk associated with primary allocation of capital and lend accordingly, then manage the risk on an ongoing basis.

I probably need b_b here to help me articulate these concepts better?
Edited by Sydneyite, 1 May 2012, 12:18 PM.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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Elastic
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I agree with much of what you say but the private debt load to GDP is going to continue to act as a drag on the economy simply because the principal payments on the debt are not available to be spent in the wider economy.
The interest payments on the debt do get recirculated through the economy but our major bank shareholders are mostly OS banks so that money is being stripped out.
Only a rat can win a rat race.

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Sydneyite
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Elastic
1 May 2012, 11:53 AM
I agree with much of what you say but the private debt load to GDP is going to continue to act as a drag on the economy simply because the principal payments on the debt are not available to be spent in the wider economy.
The interest payments on the debt do get recirculated through the economy but our major bank shareholders are mostly OS banks so that money is being stripped out.
Your point about the higher principle repayment being a drag with high debt / GDP levels is a fair one. That money does in effect "disappear", and the higher the over-all debt the more principle repayment in theory will be going on. I personally don't think we are past the tipping point yet with that though. I think that a large part of the high debt/GDP ratio is due to the widespread use of mortgage offset accounts, and LOC loans in the household sector. Ie, a fair proportion (I cannot find data to say how much so just postulating here), of that total debt is not actually debt that is being repaid, nor accruing interest, and therefore Australia's real debt/GDP position (household sector portion anyway) is actually lower than we think.

An example - I personally have nearly $400k sitting in a mortgage offset account, against a loan of the exact same amount, currently interest only. In the stats that's $400k loan asset and also a $400k deposit/liability sitting on the banks books. I also have another $250k of LOC accounts that I have had for ages, of which I have only deployed about half the available capital (for investment / business purposes). So there is $500k+ of debt in the stats that actually does not cost any interest nor is it generating any principle repayments. I am sure I am not alone in this sort of set-up!

The other side of this coin is that there is a lot of money sitting in these sorts of facilities that could quickly be deployed into the real economy if/when confidence were to increase, without causing an increase in current debt levels (the debt is already accounted for in the stats).

Anyway this is just a theory. I'd love to find the stats to look at this properly!
Edited by Sydneyite, 1 May 2012, 12:31 PM.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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davel
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Theres no need for any forensic MMT analysis...

The simple fact is that debt is risk, because it makes a commitment to the future and the future is uncertain. Risk is necessary to create growth, but too much risk is dangerous. In some respects, markets can price and control this risk, but in some respects they cant.

Its unrealistic to expect individuals to collectively make good risk decisions because they have no way to have a realistic view of the future. This is why IMO there should be regulation around LVRs and income multiples, as well as on the lending side. Its fine for one individual to make their own bed and lie in it, but when millions do that its systemic risk, both on the upside and downside. At the very least there should be pricing, so higher LVR means higher price.

But in the ever-optimistic traditional economic model, this debt is no problem, its just waiting to be inflated away by growth in the economy and asset values i.e. by the creation of ever-more debt. The problem here is that when the debt engine stops, the parts of the economy that depend on it stop too, and they then slow the debt engine down more. Take a look at Private Equity, what fun those boys had for a few years, funding takeovers of massive firms through phenomenal leverage. When the risk was repriced, they basically disappeared (for now anyway).

Its strange that analysts can keep a careful eye on the Gearing Ratio of individual companies, but not on a national economy for example.
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