True I'd like to see some real drops before calling it a crash though. 30% over 6 months would do it for me.
Wouldn't that be lovely. Can't see it myself though. We'll just have to wait and see how it all pans out I guess. There's no rush, and the show is fun.
Adjusting for inflation is a new trick Steve has recently adopted. His old failed predictions, and his bet, were based on ABS house price indices and thus were nominal.
According to the ABS, house prices have fallen 6.1% from peak - not 10%.
Yep - the thread title should be updated to say "CPI Adjusted / Real Prices Down 10% From Peak". 6.1% fall nationally over 21 months, nothing at all to panic about - Sydney property has falling about that much on at least 3 occasions since the 90s, and always bounced back strongly - most recently during 2009/2010.
For Aussie property bears, "denial", is not just a long river in North Africa.....
Adjusting for inflation is a new trick Steve has recently adopted. His old failed predictions, and his bet, were based on ABS house price indices and thus were nominal.
According to the ABS, house prices have fallen 6.1% from peak - not 10%.
Yeah he explains it pretty clearly in the article. Maybe you didn't read the whole thing? Or do you just not, you know, get it?
Yep - the thread title should be updated to say "CPI Adjusted / Real Prices Down 10% From Peak". 6.1% fall nationally over 21 months, nothing at all to panic about - Sydney property has falling about that much on at least 3 occasions since the 90s, and always bounced back strongly - most recently during 2009/2010.
Sydneyite, do you think that growth in mortgage debt is going to start ticking up if interest rates fall another 0.5-1%? Is there another opportunity for the bubble to get reinflated?
Or is this the end of the credit boom as indicated by a plateauing debt/gdp ratio?
quite persuasive... didn't realise ABS prices had been falling 21 months.
...and remain 13.6% higher than 3 years ago and up in real terms too. All cap cities are up on 3 years ago.
Where are the losses for the Baby Boomers which Keen pins his hopes on of accelerated falls. The vast majority of IP holders are sitting on profits not losses.
I personally wouldnt swallow Keen or anyone elses predictions of how this will play out, its much too complex with too many unknowns. Keen has been way wrong before, though at least his overall narrative - that of debt peaking and precipitating a downturn - looks closer to the mark than the mainstream economic narrative.
What I DO agree with though, is that BBs will play an important role. Presumably as they retire, the end of their -ve gearing will require many to make decisions about their PPOR and IP strategies. Presumably some will sell. The fact most of these will profit handsomely may actually be a downward pressure on prices - they wont need to haggle over 30-50k when they will be say 500k up. They will be keen to crystallise their gains and get on with their lives.
The scale, speed and impact of this is impossible to know however.
The other point is the impact on overall confidence of falling prices. Longer it continues, more peoples mindsets adjust to the new reality. There is some element of self-fulfillment here as lower price expectations translate into lower prices. IMO we see this already esp in Melbourne. The mindset used to be "bid up and over the reserve in the hope of getting the place, better hurry as there's not many places left and prices are going up", now its "dont bid at all and hopefully can get it afterwards for less, if not there's always another place, don't want to overpay as prices are going down anyway".
The odds are that the rate of decline will accelerate in the next year.....
The normally widely reported Louis Christopher seems to disagree. He writes in this week's mail:
Quote:
In other words, the ABS will likely report a decline in house prices for the June quarter before registering a rather strong result for the September quarter series. If rates stay at these levels or indeed fall further during 2012, expect a rather big year for residential real estate in 2013.
There's a unusual silence at MB re Chris's latest email.
The normally widely reported Louis Christopher seems to disagree. He writes in this week's mail:
There's a unusual silence at MB re Chris's latest email.
With no disrespect to Louis I think he'll admit that his forecasting hasn't been the best of late. It seems that most commentators are constantly forecasting things to pick up in six months time. In six months we've forgotten about the predictions and prices are still slumping so we get a new round of forecasting for six months ahead. All designed to give hope to the investors sitting on a depreciating asset.
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