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I called the Australian housing bubble in 2003 and watched a decade with no crash. 2013 - what now?
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Topic Started: 7 Jan 2013, 09:32 AM (18,704 Views)
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Veritas
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8 Jan 2013, 01:22 PM
Post #61
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And yet the very same publication that hosts those charts says
Australian house prices 56 per cent over valued
http://www.abc.net.au/pm/content/2011/s3155728.htm
Go figure.
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skamy
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8 Jan 2013, 01:35 PM
Post #62
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- Stavros
- 8 Jan 2013, 10:47 AM
Skamy, you called me silly for pointing out that the 14K FHOG inflated property prices.
Do you now understand, that using a LVR of 95%, this can really boost prices?
Its not really good form to call someone silly, when it is in fact you that have made an embarrasing oversight.
And for the Original Poster, also note that uninformed and finacial illiterate people like Skammy are keeping the ponzi alive by 'setting up their kids in houses'. This is a massive reason why house prices havent fallen as rapidly as us bears predicted. The only people I know that are my age (30) and are buying houses right now, are those that have been gifted their deposits from their parents. This aspect of the ponzi is also running dry, as more and more kids knock back the offer - knowing it to be fools gold!
So Skamy, you are "Setting up your kids" alright, setting them up for a financial nightmare.
It seems Skamy has everything to lose if this bubble does crash, so no wonder she denies a bubble at every opportunity
Do you honestly know how stupid and silly all this talk about ponzi schemes and bubbles actually sounds. You guys spend so much time in this imaginary world when the real world out there is just getting on with doing what it has always done.
I have lived through several boom and bust cycles and the bust cycles always bring out a lunatic fringe similar to the one you pertain to adhere to-- when doom and gloom talk becomes never ending and the evils of the world are moaned and groaned about. You are not saying anything to me I have not heard before. Ponzi claims, massive crashes etc etc it is just the same old, same old downturn mantras, you are just the evidence of a new generation falling yet again for that rubbish, because you got such a fright when house prices dared to drop.
The truth is that there is money to be made in the boom and the bust, you just need a little wisdom and a little caution and you definitely should not follow the herd. You should make your own decisions based on your own research outside in the real world, get out to a few home opens and then decide if you think these buyers are gonna suddenly stop buying. Don't just believe bubbleheads on the internet with fantasies of folk selling off their property on the cheap. It is quite clear by now that folk are holding onto their homes and have no intention of running scared and selling them cheap.
BTW, the 14 K did not inflate the market - the deadline for it caused the inflation, and I have previously stated that I disagree with such activities elsewhere on this forum. The FHG only effects the lower end of the market and thus can have very little effect on median house prices. Without deadlines $7K just adds $7K to the budget of a small group of home purchasers and if the market is competitive it will inflate the price for the group by $7K no more than that. It is really silly to believe that today's median house prices are held up by a $7K FHG. BTW who in their right minds would pay the insurance required for a 95%LVR and the higher interest rates . Most sensible folk buy when they can afford 80%LVR.
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Veritas
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8 Jan 2013, 01:50 PM
Post #63
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- Quote:
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Do you honestly know how stupid and silly all this talk about ponzi schemes and bubbles actually sounds. You guys spend so much time in this imaginary world when the real world out there is just getting on with doing what it has always done.
I have lived through several boom and bust cycles and the bust cycles always bring out a lunatic fringe similar to the one you pertain to adhere to-- when doom and gloom talk becomes never ending and the evils of the world are moaned and groaned about. You are not saying anything to me I have not heard before. Ponzi claims, massive crashes etc etc it is just the same old, same old downturn mantras, you are just the evidence of a new generation falling yet again for that rubbish, because you got such a fright when house prices dared to drop.
No, you havent, which only serves to underscrore your ignorance.
As has been pointed out to you many times before, the credit bubble that enveloped the world from the 1990s and that culminated in the GFC and the "Great Recession" was an extrordinary event almost without precedent. Localised credit bubbles yes but none on the global scale we have just witnessed.
Go and read some books on the subject skamy before subjecting us to your ill informed bullshit.
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skamy
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8 Jan 2013, 02:24 PM
Post #64
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- sylvester
- 8 Jan 2013, 12:30 PM
You say Australia does not have a bubble. I think, when the average house costs 8 or 9 times the average wage, and when the only way people can afford to buy a roof over their heads is to take on huge debt, that's a bubble.
A bubble (though I hate to even use this simplistic laughable terminology) is by definition unstable and although I agree the rich make a packet out of a crashing market -the Government and the RBA do not have the same to gain so hence a bubble is not desirable.
8 or 9 times the median wage is not expensive. Two median wage earners, with a saved 20% deposit can purchase above the median home price in Australia's most expensive city, borrowing only 4 times their income. This is virtually unheard of in so many cities throughout the world. In Perth two median wage earners can get a way above median house.
Take a real hard look at the world around us and compare where our cities rank on a world wide scale.
Our major cities have ratios of Sydney (9.4) Perth (8.65) Adelaide (3.58) Darwin (7.8) Brisbane (5.32) Canberra (6.32)
Look at the following cities London (15.31) Luton (8.64) Plymouth (9.21)Belfast (5.24) hamburg (10.24) Amsterdam (10.13)Zurich (12.8) Toulouse (10.6) Paris(15.16)Barcelona (in recession hit spain) (11.72) Marraesh (14.7) Dayton OH (9.53) New York (10.9) Lima (11.53) Bogoto (19.4) Nairobi- Kenya (10.65)
Dublin after the crash in Ireland stands at (6.22),it has massive overbuilding problems and massive unemployment problems yet is is still more expensive to buy a house in Dublin than to buy in Brisbane or Adelaide. It is almost the same price to buy in post crash Dublin as Canberra,the capital city of one of the richest countries in the world.
Lets just finish off with a few cities that are really expensive----
Algiers (37.91) Monaco (48.5), Rio (22.1) Bankok (20.94)Tokyo (26.07)ShangHai (29.42)
So in summary, I think people whinging about Sydney have a median wage price to house price ratio of 9.4 need to wake up to themselves.
As for the rest of the Australian cities they are undeniably cheap when compared to other similar cities.
- Veritas
- 8 Jan 2013, 01:50 PM
No, you havent, which only serves to underscrore your ignorance.
As has been pointed out to you many times before, the credit bubble that enveloped the world from the 1990s and that culminated in the GFC and the "Great Recession" was an extrordinary event almost without precedent. Localised credit bubbles yes but none on the global scale we have just witnessed.
Go and read some books on the subject skamy before subjecting us to your ill informed bullshit.
Ha ha I hit the spot there didn't I.
You honestly believe that these times are so special and different and not at all like any other busts in other countries throughout the world since the 70s- sorry Veritas but that is indeed the usual mantra of bust time doom and gloomers. You are falling for their smoke and mirrors.
Mr Murdoch increased his wealth by $2bn last year, his media outlets are kinda fond of your hero, Mr Keen, what do you think that is all about?
Edited by skamy, 8 Jan 2013, 02:34 PM. |
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Sydneyite
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8 Jan 2013, 02:35 PM
Post #65
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- skamy
- 8 Jan 2013, 02:24 PM
A bubble (though I hate to even use this simplistic laughable terminology) is by definition unstable and although I agree the rich make a packet out of a crashing market -the Government and the RBA do not have the same to gain so hence a bubble is not desirable.
8 or 9 times the median wage is not expensive. Two median wage earners, with a saved 20% deposit can purchase above the median home price in Australia's most expensive city, borrowing only 4 times their income. This is virtually unheard of in so many cities throughout the world. In Perth two median wage earners can get a way above median house.
Take a real hard look at the world around us and compare where our cities rank on a world wide scale.
Our major cities have ratios of Sydney (9.4) Perth (8.65) Adelaide (3.58) Darwin (7.8) Brisbane (5.32) Canberra (6.32)
Look at the following cities London (15.31) Luton (8.64) Plymouth (9.21)Belfast (5.24) hamburg (10.24) Amsterdam (10.13)Zurich (12.8) Toulouse (10.6) Paris(15.16)Barcelona (in recession hit spain) (11.72) Marraesh (14.7) Dayton OH (9.53) New York (10.9) Lima (11.53) Bogoto (19.4) Nairobi- Kenya (10.65)
Dublin after the crash in Ireland stands at (6.22),it has massive overbuilding problems and massive unemployment problems yet is is still more expensive to buy a house in Dublin than to buy in Brisbane or Adelaide. It is almost the same price to buy in post crash Dublin as Canberra,the capital city of one of the richest countries in the world.
Lets just finish off with a few cities that are really expensive----
Algiers (37.91) Monaco (48.5), Rio (22.1) Bankok (20.94)Tokyo (26.07)ShangHai (29.42)
So in summary, I think people whinging about Sydney have a median wage price to house price ratio of 9.4 need to wake up to themselves.
As for the rest of the Australian cities they are undeniably cheap when compared to other similar cities.
Great post! What's more, you used detached house prices in your Aussie figures. In Sydney nearly 30% of dwellings now are units/semis/townhouses. The median dwelling price to average single income is a much lower 7.4 vs 9.4 for houses.
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skamy
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8 Jan 2013, 03:02 PM
Post #66
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- Veritas
- 8 Jan 2013, 12:56 PM
Where does the Irish property bubble fit into that analysis?
It didnt quite have a plataue but prices softened before the falls became dramatic.
Mate House prices in post crash Dublin with all of its problems are more expensive than Brisbane wake up and almost the same price as canberra.
How can you seriously keep believing that Australia can crash like Ireland - pure fantasy land. We would get to third world country and slum prices, how can you possibly accept that as plausible?
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Maz
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8 Jan 2013, 03:34 PM
Post #67
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- sylvester
- 8 Jan 2013, 12:30 PM
There is some middle ground between a one-child policy and the fastest rate of immigration in the western world. Note that Rudd turned on the immigration tap when prices started falling in 2008. Gillard hasn't turned it down. And where's the infrastructure to support massive immigration? What's wrong with slowing down the rate of immigration? Sure, we can cope if we have to. All we have to do is lower our standard of living and live on top of each other while the population swells. There are much more crowded places than Melbourne or Sydney. But do we really want to live like they do in Hong Kong or worse, in Mumbai?
Immigration is a big one, I would say. True you can't force them to buy a house, though several of them will, and those that don't will add to the pressure on rents. Countering this is if unemployment rises it'd be tough to bring more people in.
Foreign investment (as opposed to migration) is a related option. We all know the stories of Chinese buyers holding places empty. Think they won't do it because it's not good value? Maybe, but I've seen no evidence that the Chinese are any better with investment strategies than Australians or anyone else. They may also hold for strategic reasons as others have alluded to on this site in the past - it's a good way to have an exit strategy for a wealthy Chinese who falls out of favour with the Party.
Other things, probably with less impact, include further restricting land release, allowing early drawdown of super to pay down the family home (avoiding a forced sale), or even a slackening of bank capital requirements (we've seen this in the last few days).
Also when we say lower rates haven't had any effect - I'll bet they have. It's just that prices haven't gone up. I argue that if rates had not moved down we would have seen bigger price falls. There is still room to move on this front which can temper any price falls.
All the above are measures that don't cost money in the short term. I wouldn't put it past the government to go into deficit in trying to prop up the market if it really comes down to it.
Before I get flamed for this commentary, I do concede that their attemps to prop up the market may prove futile. But to say there's nothing they can do is to be unrealistic in my opinion.
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Veritas
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8 Jan 2013, 03:40 PM
Post #68
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- skamy
- 8 Jan 2013, 03:02 PM
- Veritas
- 8 Jan 2013, 12:56 PM
Where does the Irish property bubble fit into that analysis?
It didnt quite have a plataue but prices softened before the falls became dramatic.
Mate House prices in post crash Dublin with all of its problems are more expensive than Brisbane wake up and almost the same price as canberra. How can you seriously keep believing that Australia can crash like Ireland - pure fantasy land. We would get to third world country and slum prices, how can you possibly accept that as plausible?
First of all, there is plenty of room for further deflation in Irish property prices. Given the rate of mortgage delinquency there it would be stupid to presume otherwise.
Secondly, I have never said Australian house prices will crash like Ireland and I guarantee you that if you check any of my posts you will see that I have never said anything of the sort.
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Strindberg
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8 Jan 2013, 03:58 PM
Post #69
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- Veritas
- 8 Jan 2013, 01:22 PM
That wriggle does not hide the difference between Ireland and Australia shown by the chart.
The Economist has been predicting an imminent crash in Australia since 2003. They need to look at their own charts and get educated.
You can get some links to the Economist's failures in 2003/4/5 etc here.
Anyway, the Ireland/Australia house price chart is so compelling here it is again (if I was trying to say Australia had a bubble and was presented with that chart I'd give in gracefully and not continue to make an arse of myself):
That last Ireland v Australia was the nominal price index. I know that bears prefer real terms so here's the chart for house prices changes in real terms for Ireland and Australia.
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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
1990-2010 20 year house price growth the SLOWEST since 1950-1970
CHRIS BECKER NOW NEUTERED
"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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Veritas
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8 Jan 2013, 04:09 PM
Post #70
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Wriggle my arse.
I am pointing out that the same publication is, it would seem, saying two different things.
Or is it? The fact is that their charts, on the face of it, dont rhyme with their stated opinion on the Australian property market and this begs some fundamental questions.
The Economist newspaper is, naturally, the only body that can answer them.
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Strindberg
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8 Jan 2013, 04:09 PM
Post #71
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- Veritas
- 8 Jan 2013, 03:40 PM
Secondly, I have never said Australian house prices will crash like Ireland and I guarantee you that if you check any of my posts you will see that I have never said anything of the sort.
You have repeatedly claimed that Australian house prices are in a bubble. Bubbles pop/burst/crash. That's why they are called bubbles. Saying that Australian house prices are a bubble but they'll not crash is an adoption of a private language - useless for communication. But really, you're just trying to wriggle out of your contradictions in the face of facts.
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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
1990-2010 20 year house price growth the SLOWEST since 1950-1970
CHRIS BECKER NOW NEUTERED
"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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Shadow
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8 Jan 2013, 04:10 PM
Post #72
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Evil Zealot Specufestor
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- Strindberg
- 8 Jan 2013, 03:58 PM
Anyway, the Ireland/Australia house price chart is so compelling here it is again (if I was trying to say Australia had a bubble and was presented with that chart I'd give in gracefully and not continue to make an arse of myself)
The Ireland vs Australia price/rent chart is a beauty too. More here... http://australianpropertyforum.com/topic/9473451/4/#post8355310
PRICE/RENT
Edited by Shadow, 8 Jan 2013, 04:11 PM. |
Shadow's Blog - The Australian Housing Market
1 - Debunking Demographia. Demographia Survey Debunked. Australian housing is not particularly unaffordable by global standards.
2 - USA, Ireland, UK, Spain and Japan Property Bubbles versus Australia. All confirmed property bubbles had one thing in common... a particular house price/income ratio pattern.
3 - Banks can't margin call on residential property unless borrower defaults, because residential property loans are regulated by the NCCP Act 2009.
4 - Housing is the second highest taxed sector of the Australian Economy. Renters don't pay their fair share of tax, and are subsidised by high taxes incurred by homeowners.
5 - Epic Fail! Steve Keen's Bad Calls and Predictions.
Parse: A rep's spare spear pares pears, reaps as per AREPS.
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Veritas
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8 Jan 2013, 04:13 PM
Post #73
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- Strindberg
- 8 Jan 2013, 04:09 PM
- Veritas
- 8 Jan 2013, 03:40 PM
Secondly, I have never said Australian house prices will crash like Ireland and I guarantee you that if you check any of my posts you will see that I have never said anything of the sort.
You have repeatedly claimed that Australian house prices are in a bubble. Bubbles pop/burst/crash. That's why they are called bubbles. Saying that Australian house prices are a bubble but they'll not crash is an adoption of a private language - useless for communication. But really, you're just trying to wriggle out of your contradictions in the face of facts.
Ugh...Skamy put it to me that I have said that Oz house prices would crash like Ireland.
I have never once said that. In fact, on more than one occassion I have said that i cant forsee that at all; barring the harderst of landings in China.
What I can forsee, however, or think emminently possible is a long drawn out period of deflation in house prices.
That is my view so you can save that somewhere for future reference.
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Strindberg
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8 Jan 2013, 04:14 PM
Post #74
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- Veritas
- 8 Jan 2013, 04:09 PM
Wriggle my arse.
I am pointing out that the same publication is, it would seem, saying two different things.
Wow. What are those different things? One thing it is saying is that Australian houses are 56% overvalued. What can the different thing be? Australian houses are NOT 56% overvalued? Seems so according to the charts.
Here's the real price changes chart again;
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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
1990-2010 20 year house price growth the SLOWEST since 1950-1970
CHRIS BECKER NOW NEUTERED
"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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Veritas
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8 Jan 2013, 04:16 PM
Post #75
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- Strindberg
- 8 Jan 2013, 04:14 PM
- Veritas
- 8 Jan 2013, 04:09 PM
Wriggle my arse.
I am pointing out that the same publication is, it would seem, saying two different things.
Wow. What are those different things? One thing it is saying is that Australian houses are 56% overvalued. What can the different thing be? Australian houses are NOT 56% overvalued? Seems so according to the charts. Here's the real price changes chart again;
Yeah, so you have the same organisation saying two contradictory things about the aussie property market.
Thats the point: the Economist newspaper is not being consistent, which is the original point I was making. Obviously.
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