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Australia's one trick pony is heading out to pasture; Mining boom over, what's the next money maker? Troubling for Australia, there's nothing.
Topic Started: 16 Dec 2012, 11:17 PM (10,372 Views)
Miles McCarthy
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Veritas
17 Dec 2012, 06:14 PM
Here is another doozy. Look how many people rely on the property industry for a living. Its the State's largest employer!

Which brings us back to an old chestnut: A price crash is not possible without a recession but what if like Ireland and Spain, for example, the deterioration of conditions in the housing sector of the economy, precipitates the recession.
That is a fairly scary chart.

So rising property prices leads to employment of large numbers of people (possibly?), but if prices stagnate, will that precipitate a drop in employment in the sector? Or would it take a decline in prices to have that effect?

If mining contracts even slightly, will that cool demand for housing?


The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.
H. L. Mencken

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Veritas
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Miles McCarthy
17 Dec 2012, 06:56 PM
Veritas
17 Dec 2012, 06:14 PM
Here is another doozy. Look how many people rely on the property industry for a living. Its the State's largest employer!

Which brings us back to an old chestnut: A price crash is not possible without a recession but what if like Ireland and Spain, for example, the deterioration of conditions in the housing sector of the economy, precipitates the recession.
That is a fairly scary chart.

So rising property prices leads to employment of large numbers of people (possibly?), but if prices stagnate, will that precipitate a drop in employment in the sector? Or would it take a decline in prices to have that effect?

If mining contracts even slightly, will that cool demand for housing?
Its all about our old friends supply and demand.

If demand for housing fallls then the number of people employed on the supply side should fall too.

Falling prices would, in theory, lessen investor appetite for housing and thus demand which would then precipitate contraction on the supply side.

the multiplier effects are what you have to watch out for: first go the high vis brigade, then the real estate heads, then the people who work in the furniture shops, then the solicitors and so on.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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Miles McCarthy
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Veritas
17 Dec 2012, 07:03 PM
Its all about our old friends supply and demand.

If demand for housing fallls then the number of people employed on the supply side should fall too.

Falling prices would, in theory, lessen investor appetite for housing and thus demand which would then precipitate contraction on the supply side.

the multiplier effects are what you have to watch out for: first go the high vis brigade, then the real estate heads, then the people who work in the furniture shops, then the solicitors and so on.
Just to play the devil's advocate (i.e. the bull position) for a moment.

What if the large numbers of people employed by the property industry is a result of the mining boom spurring an employment boom, and the demand was largely driven by net migration (i.e. actual growth) rather than speculative activity?

If that is the case, even if the hot money slows, as long as employment continues to be strong in the mining industry, the demand for accommodation may remain strong, even if price growth is weak or flat. That is, the demand for more houses can remain while the demand for the same houses can taper off.


The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.
H. L. Mencken

.
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themoops
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mel
17 Dec 2012, 02:19 PM
Timo if they open the immigration floodgates (really open them) there won't be any issue controlling property prices provided they can steer employment towards the building industry. Its the wrong thing to do but it's been shown to work in the past.
They could do that. But what sort of immigrants would they be?

Would they have skills? Would they be able to speak english well enough? Doubt it. Most of them would probably head straight for the dole queue putting an even further burden on stretched government finances. A lot of the Asians have pretty poor english and barely even bother trying.

Even if they did have skills, that would reduce the wages of Australian workers, then the Australian workers wouldn't have as much money to pay their massive mortgages. :D

Employers are very fussy these days.

You hear about all these jobs and fantastic pay in the mines but 99% of them want x years being a diesel mechanic or some such, and the pay isn't that good except for geologists and the like.

Plus the US is a FAR superior destination for the really smart and highly skilled people, cheaper everything, especially housing, less tax, better culture in that they don't elevate morons above smart people.

Did you guys see that series "Dumb, drunk, and racist?"?

There was an Indian women who advises wannabe OS students and she said Australia is the least preferred destination for students.

Australia doesn't need some big king shit industry. Look at the damage mining has done to people not involved in it. We just need to go back to the good old days where we did a bit of everything and just cruised along.
Edited by themoops, 17 Dec 2012, 07:19 PM.
stinkbug omosessuale


Frank Castle is a liar and a criminal. He will often deliberately take people out of context and use straw man arguments.
Frank finally and unintentionally gives it up and admits he got where he is, primarily via dumb luck!
See here
Property will be 50-70% off by 2016.
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Ex BP Golly
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Veritas
17 Dec 2012, 06:08 PM
Be that as it may, its not as if making the transition would be easy.

Far from it. Check out WA for example. The reliance on mining is well documented. But in second place is property. Houses and holes.

Posted Image
And how many of those other sectors would be reliant upon the housing ponzi. For example (other than home ownership) ' finance and insurance', and ' social services', and ' government administration' etc?

The ponzi is huge!
Edited by Ex BP Golly, 17 Dec 2012, 09:31 PM.
WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
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NotFooled
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The Bear Whisperer

Ex BP Golly
17 Dec 2012, 07:19 PM
And how many of those other sectors would be reliant upon the housing ponzi. For example (beings home ownership) ' finance and insurance', and ' social services', and ' government administration' etc?
Maybe not so many. For example, finance would be proped up by the super industry and education is dependent on overseas fee paying students.
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The ponzi is huge!

You know what else is huge? Your boner for AREPS.
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Veritas
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Miles McCarthy
17 Dec 2012, 07:12 PM
Veritas
17 Dec 2012, 07:03 PM
Its all about our old friends supply and demand.

If demand for housing fallls then the number of people employed on the supply side should fall too.

Falling prices would, in theory, lessen investor appetite for housing and thus demand which would then precipitate contraction on the supply side.

the multiplier effects are what you have to watch out for: first go the high vis brigade, then the real estate heads, then the people who work in the furniture shops, then the solicitors and so on.
Just to play the devil's advocate (i.e. the bull position) for a moment.

What if the large numbers of people employed by the property industry is a result of the mining boom spurring an employment boom, and the demand was largely driven by net migration (i.e. actual growth) rather than speculative activity?

If that is the case, even if the hot money slows, as long as employment continues to be strong in the mining industry, the demand for accommodation may remain strong, even if price growth is weak or flat. That is, the demand for more houses can remain while the demand for the same houses can taper off.
There will always be a natural floor for demand ( People need somewhere to live)but that is not to ignore, as many bulls so, the singular effect of credit availability in creating demand.

The question at hand is whether we have the right amount of people working in the property industry or whether there are too many. If there are too many (Spain, Ireland, parts of the US) in the event of a down cycle, you can expect significant job losses which can bring the broader economy into recession ( negative multip,lier effect)and worsen the property down cycle too.

Essentially, if the economy is overreliant on the construction property sector you have a situation where people are producing housing for people who produce housing. not good.

Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?

The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly.
Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
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miw
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Isn't amazing when you see it dawn upon some people that housing is the cycle.
Edited by miw, 17 Dec 2012, 08:05 PM.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
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Pig Iron
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Bogan scum

Ex BP Golly
17 Dec 2012, 07:19 PM
And how many of those other sectors would be reliant upon the housing ponzi. For example (beings home ownership) ' finance and insurance', and ' social services', and ' government administration' etc?

The ponzi is huge!
and yet so many bears on here think a housing collapse wouldn't touch them.

how do you idiots reconcile these 2 facts?
I am the love child of Tony Abbott and Pauline Hanson
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Miles McCarthy
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timmy
17 Dec 2012, 08:50 PM
and yet so many bears on here think a housing collapse wouldn't touch them.

how do you idiots reconcile these 2 facts?
Everything in my life is on the short side you idiot.


The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.
H. L. Mencken

.
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