How low is it possible for the rate of mortage interest to fall in order to keep supporting strong, sustained price growth? I don't know.......but I don't think it's wise to allow a situation to develop where large numbers of ordinary income earners owe perhaps three-quarters of a million to a dollars.
We have a loooong way to go before we would approach that point; the average new mortgage is just under $300k, with the average FHB mortgage a bit less than that again at around $290k.
For Aussie property bears, "denial", is not just a long river in North Africa.....
No one has a crystal ball but kudos to anyone who is prepared to put in significant time/skill/effort and then be happy to share their findings with other people for their own consideration.
IMHO Shadow rocks. He just does.
APF - a place where serious people don't take themselves too seriously. There's nothing else like it.
It was high interest rates, not the GFC, that killed the property market in 2008.
Interest rates rose very gradually from 2002 to 2008, although the frequency of the rate hikes did speed up in 2007-2008.
Finally, by 2008, when mortgage rates were approaching double digits, the property market started to fall.
But then the GFC hit, rates were slashed, and the property market took off again. The GFC was the best thing to happen to the Australian property market. Were it not for the GFC, interest rates would have kept rising beyond 2008. Inflation was at 5%, and the RBA was on a mission to keep raising rates until it got inflation under control. The RBA attack on inflation did kill the property in 2008 through high interest rates, and house prices would have fallen substantially had the GFC not arrived, allowing rates to be slashed.
Note that there is a lag of 6-9 months before rate cuts (or increases) start to have an impact on house prices...
At the beginning of the GFC, unemployment was rising - but then it started falling.
Don't you think what set off the rise in prices was the combination of lower interest rates AND falling unemployment? Perhaps the 'lag' was how long it took unemployment to start falling (which I guess could be argued to be partly due to the falling interest rates).
No one has a crystal ball but kudos to anyone who is prepared to put in significant time/skill/effort and then be happy to share their findings with other people for their own consideration.
IMHO Shadow rocks. He just does.
Catweasel laugh. So if it parrots the master and the expert, it rocks. Catweasel can see what that appeals to its ears.
In that the case, a master and a expert rock even the more. Because that the one who devise a master plan. It need to respect its omnipotence.
Catweasel laugh. So if it parrots the master and the expert, it rocks. Catweasel can see what that appeals to its ears.
In that the case, a master and a expert rock even the more. Because that the one who devise a master plan. It need to respect its omnipotence.
I think Mel was refering to the efforts Shadow puts in.
Sydneyite
24 Sep 2012, 09:28 PM
We have a loooong way to go before we would approach that point; the average new mortgage is just under $300k, with the average FHB mortgage a bit less than that again at around $290k.
It sounds so reasonable when you say it like that. But in a few years time you could repeat that statement and get gasps of shock horror.
I think Mel was refering to the efforts Shadow puts in. It sounds so reasonable when you say it like that. But in a few years time you could repeat that statement and get gasps of shock horror.
Catweasel say that a seem like it refer to the mouzealot metaphor. And there really the nothing a wrong with a that. Decide its gurus and work hard to learn. In a world of a craftsmanship, that a highly honorable.
Don't you think what set off the rise in prices was the combination of lower interest rates AND falling unemployment? Perhaps the 'lag' was how long it took unemployment to start falling (which I guess could be argued to be partly due to the falling interest rates).
Yes, the employment rate, fiscal stimulus, and monetary stimulus all played their part. I believe the monetary stimulus probably had the greatest impact on house prices, but others disagree with me, and it's impossible to prove one way or the other since we can't isolate the impact of each factor.
mel
24 Sep 2012, 09:52 PM
No one has a crystal ball but kudos to anyone who is prepared to put in significant time/skill/effort and then be happy to share their findings with other people for their own consideration.<br /><br />IMHO Shadow rocks. He just does.
I think Mel was refering to the efforts Shadow puts in.
Thanks Newjez - that's exactly what i meant.
Quote:
Catweasel say that a seem like it refer to the mouzealot metaphor. And there really the nothing a wrong with a that. Decide its gurus and work hard to learn. In a world of a craftsmanship, that a highly honorable.
No love lost Cat - while i don't yet fully understand all your posts i know you are a big picture kind of guy and i respect that.
No love lost Cat - while i don't yet fully understand all your posts i know you are a big picture kind of guy and i respect that.
Catweasel laugh. It all the good.
And it a think a mouzealot had moment of clarity. It knows it cannot quantify an impact so its "beliefs" are a based on a logic of what it knows and what the read. And, of a course, the faith-based. Not many a like to admit a latter as it looks the weak in a modern secular. Admitting its faith is not the bad thing. It gives it freedom. The facade of control in such matters of asset price is more irrational than a many like to a believe. The philosophical framework essential for its wellbeing or it will b-slapped when it least expect.
Some is trained in risk manage and many take it to extreme. But a most just play a party line. It all need to get paid.
And it a think a mouzealot had moment of clarity. It knows it cannot quantify an impact so its "beliefs" are a based on a logic of what it knows and what the read. And, of a course, the faith-based. Not many a like to admit a latter as it looks the weak in a modern secular. Admitting its faith is not the bad thing. It gives it freedom. The facade of control in such matters of asset price is more irrational than a many like to a believe. The philosophical framework essential for its wellbeing or it will b-slapped when it least expect.
Some is trained in risk manage and many take it to extreme. But a most just play a party line. It all need to get paid.
Call it faith or call it heuristics. If we analysed everything we did, it would be knockoff time before we got though the morning crap.
It works until it doesn't.
Talking of Risk Management, have you had a look at "The Top Ten Operational Risks: A Survival Guide for Investment Management Firms and Hedge Funds" by Holly Miller et. al. It is a really good book to have in the crapper because each essay is about the length of the average crap, and in fact many of them will help you with those difficult movements.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
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