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Steve Keen ... Australian House Prices Down 10% From Peak; The odds are that the rate of decline will accelerate in the next year
Topic Started: 2 May 2012, 12:41 PM (4,029 Views)
raveswei
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Strindberg
2 May 2012, 03:11 PM
What Keen's piece does do, is explain why Macrobusiness last year stopped presenting their chart comparing Oz falls with US falls. What they did was find short term sections in each of the US and OZ (RP Data rather than ABS - it didn't give the desire picture with ABS figures) house price time charts, transpose one of them by 5 years or so and change the scales to make the slopes match. This made them all wet their knickers with glee and fill them with confidence that Oz was going the same way as the US. They ceased presenting that chart in November despite constant members' pleas for the chart to be updated. They even repeated their pleas this week.
We now know, thanks to Keen using the ABS data, why they stopped producing the chart in November. The Oz slope no longer follows the US slope. To overcome that little detail Keen has now transposed the Japanese chart by 20 odd years and found a correlation of sorts.

I suggest there is better correlation between the price of lipstick in Nigeria and the murder rate of English vicars.

Time transposing time series charts and changing the scales in this manner to find correlation is a clear case of:

APOPHENIA

It is a common disease of bears.
US scenario (relatively fast crash over 5 or so year with subsequent healthy recovery) would be much better option for Australia than the multi-decade Japanese melt which we are heading right now.

In my opinion we will get a combination of both – at the beginning (while mining boom is still running) it will look like Japanese meal (they had hi-tech export) but once boom ends it will turn into freefall crash US or Irish style.
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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Ben D
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Shadow
2 May 2012, 03:29 PM
If you're referring to my list of Steve Keen's bad calls and predictions, you will note that each of them is a link to the source, so readers can verify that the list is in fact quite accurate.


I imagine you were saying the same in 2008 before house prices rose another 20%...
I was referring to the post I quoted. How could you not understand that?

And, what has 2008 got to do with anything? Again you use your misguided opinion then try to present it as some kind of fact. It's not. Bringing 2008 into it is not only fabricated, it is irrelevant.
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Shadow
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Ben D
2 May 2012, 03:42 PM
And, what has 2008 got to do with anything? Again you use your misguided opinion then try to present it as some kind of fact. It's not. Bringing 2008 into it is not only fabricated, it is irrelevant.
2008 is the year that the bears first started telling me that my tendency to believe my own bullshit is what keeps me holding onto the now blatantly untenable position of being bullish on Australian house prices. Bears have been telling me that constantly since 2008. Meanwhile, house prices just keep on rising (with a few minor and insignificant dips along the way, of course). Bottom line - since the bears began telling me in 2008 that my position of bullishness was untenable, my properties have increased substantially in value.

I expect your rent is up quite a bit in that time too, right? No worries... just you keep on waiting for that big crash, I'm sure it will be here soon. :tu:
Edited by Shadow, 2 May 2012, 03:50 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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Ben D
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Shadow
2 May 2012, 03:50 PM
2008 is the year that the bears first started telling me that my tendency to believe my own bullshit is what keeps me holding onto the now blatantly untenable position of being bullish on Australian house prices. Bears have been telling me that constantly since 2008. Meanwhile, house prices just keep on rising (with a few minor and insignificant dips along the way, of course). Bottom line - since the bears began telling me in 2008 that my position of bullishness was untenable, my properties have increased substantially in value.

I expect your rent is up quite a bit in that time too, right? No worries... just you keep on waiting for that big crash, I'm sure it will be here soon. :tu:
You have moved further from the topic, again used your opinion like it matters and introduced useless, broad generalisations on what "the bears started telling you" etc.

Anyhow, I have made my point (well you actually made it for me with your predictably defensive responses).
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WestAussie
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Shadow
2 May 2012, 03:50 PM
2008 is the year that the bears first started telling me that my tendency to believe my own bullshit is what keeps me holding onto the now blatantly untenable position of being bullish on Australian house prices. Bears have been telling me that constantly since 2008. Meanwhile, house prices just keep on rising (with a few minor and insignificant dips along the way, of course). Bottom line - since the bears began telling me in 2008 that my position of bullishness was untenable, my properties have increased substantially in value.

I expect your rent is up quite a bit in that time too, right? No worries... just you keep on waiting for that big crash, I'm sure it will be here soon. :tu:
2008 is the year that the bears bulls first started telling me that my tendency to believe my own bullshit is what keeps me holding onto the now blatantly untenable position of being bullish bearish on Australian house prices. Bears Bulls have been telling me that constantly since 2008. Meanwhile, house prices just keep on rising falling (with a few minor and insignificant dips ups along the way, of course). Bottom line - since the bears bulls began telling me in 2008 that my position of bull bearishness was untenable, my properties have increaseddecreased substantially in value.

I expect your rent is up quite a bit 'due to the fact the bottom of the market just fell out and rates are down because the economy is about to crap its pants' in that time too, right? No worries... just you keep on waiting for that big crash, I'm sure it will be here soon. :tu:
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Thatguy
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NotFooled
2 May 2012, 01:40 PM
True :D I'd like to see some real drops before calling it a crash though. 30% over 6 months would do it for me.
That would be close to crashing the economy and creating widespread job losses and disaster. Another 5% by the end of the year would be plenty for me, but not expecting it.

With almost no wage inflation for the foreseeable future I think growth in prices will be hard for a few years yet. Expect a flat line. I would expect this 0.5% to arrest the decline.
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Thatguy
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Strindberg
2 May 2012, 02:49 PM
It is totally misleading. When the ASX200 is reported as having fallen 35% from its peak no one except a fool will imagine that the writer has removed inflation from the change. Likewise with a reported change in the price of gold. You would get quite the wrong message if you imagine that reports of price changes have always had CPI removed from the actual price changes (which is what is meant by real terms).

The actual price fall, according the ABS, is 6.1% not a fictitious 10%.

You sound angry. Is Steve your pin-up boy? Do you have his picture on your bedroom walls?
I like things normalised. I have no problem with his assessment to include inflation.
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Strindberg
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Thatguy
2 May 2012, 05:15 PM
I like things normalised. I have no problem with his assessment to include inflation.
You show with that statement that you have no idea of the meaning of "real" inflation adjusted prices.

"Real" prices have CPI inflation REMOVED. Keen's assessment excludes CPI inflation. He has removed inflation from the prices. Nominal prices "include" inflation and are actual prices which the seller will insist you pay.

It seems common sense to include something which actually happened (inflation) rather than pretend that inflation never happened. "Real" prices are a pretence that there was no inflation.

Do you also think that debt should be expressed in "real" inflation adjusted terms?

Removing CPI inflation from prices does nothing to "normalise" the prices. A comparison between the nominal prices of any items will show exactly the same relativities as a comparison between "real" inflation adjusted prices. Adjusting everything by the same percentage (whatever inflation measure you choose) has no effect on the relativities.

"Real" prices are the last resort of bears when they have lost.
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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