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A century of Australian interest rates - mortgage rates are not at historic lows or emergency levels
Topic Started: 8 May 2013, 05:41 PM (14,145 Views)
Veritas
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Frank Castle
8 May 2013, 06:47 PM
Thanks.

But what if everybody starts doing that?

Wont we get an oversupply?

In other words, for you to turn a profit lots of people have to shit themselves rather than follow your model.
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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Frank Castle
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Business As Usual

Veritas
8 May 2013, 06:52 PM
Thanks.

But what if everybody starts doing that?



But they are not are they
Quote:
 
Wont we get an oversupply?

Quite possibly, if everyone was doing it in every area
But they are not, the figures prove this
Quote:
 

In other words, for you to turn a profit lots of people have to shit themselves rather than follow your model.

Its the way of the world

Fearful and the bold
Losers and the winners

Guess which I am ;) :tu: :bye:

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The forum fuckwit goes RRRAAARRRGGHHhhh - But not a fuck was given..................by anyone.
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Catweasel
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Frank Castle
8 May 2013, 07:04 PM
But they are not are they


Quite possibly, if everyone was doing it in every area
But they are not, the figures prove this


Its the way of the world

Fearful and the bold
Losers and the winners

Guess which I am ;) :tu: :bye:
It Frankie the Castle.

Chip off a old the block.

Raised by its Mama and Pappy.

Loved by its cousins.

It the Oracle of Rocky.
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Veritas
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Frank Castle
8 May 2013, 07:04 PM
But they are not are they


Quite possibly, if everyone was doing it in every area
But they are not, the figures prove this


Its the way of the world

Fearful and the bold
Losers and the winners

Guess which I am ;) :tu: :bye:
But you are saying that this is the path to riches.

It only the path to riches if some people do it but most do not.

Otherwise, what is scarce becomes plentiful.

The overbuilding phase of a bubble, by the way, usually comes at the end. Irish example charted below.

Posted Image

Edited by Veritas, 8 May 2013, 07:20 PM.
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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Frank Castle
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Business As Usual

Veritas
8 May 2013, 07:19 PM
something about some place on the other side of the globe that had mass overbuilding
Now tell us about the building starts here compared to Ireland again?
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Veritas
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Frank Castle
8 May 2013, 07:24 PM
Now tell us about the building starts here compared to Ireland again?
But the clock starts now Frank.

You are saying that this is how one should proceed.

That means past building rates are not relevant, only future ones.

Simple example: I decide that I am getting to get rich by flipping properties.

I buy some shithole tommorrow and lever up extra to afford the refurbishments. Takes me say a year to bring the new properties to market.

In that time, three other guys could have had the same idea. Should be fine.

Alternatively, 100 other guys had the same idea. Oh shit. Profit margin aint looking too good now.

At least, the proper builders have to get a certain volume of sales in the bag before the bank will look at them.

In your model, your balls are in the wind.

Not saying it wont work, it could, but hey, recent history is littered with the bankrupt carcasses of guys bragging down the boozer about how much money they were going to make flipping property.
Edited by Veritas, 8 May 2013, 07:32 PM.
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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Enjoy The Ride
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Shadow- There is a reason interest rates were low for a long period of time, the world was fixed to a quasi gold standard. Inflation was also kept well in check.

In 1971 when Nixon closed the gold window and the world went to a true FIAT currency model, much changed.

Posted Image

As this chart illustrates, prices pre 1971 were also stable. Another effect of the Gold standard.

To compare rates under the Gold standard era to those of today is a misrepresentation of the facts. The only comparison which can be made is post 1971. Before that the world monetary system was anchored to the Gold standard (through reserve status of the USD).


Enjoy The Ride!

The case for individual freedom rests chiefly on the recognition of the inevitable and universal ignorance of all of us concerning a great many of the factors on which the achievement of our ends and welfare depend. It is because every individual knows so little and, in particular, because we rarely know which of us knows best that we trust the independent and competitive efforts of many to induce the emergence of what we shall want when we see it. Humiliating to human pride as it may be, we must recognize that the advance and even the preservation of civilization are dependent upon a maximum of opportunity for accidents to happen.”
― Friedrich A. von Hayek


"I, on the other hand, am a fully rounded human being with a degree from the university of life, a diploma from the school of hard knocks, and three gold stars from the kindergarten of getting the shit kicked out of me." Blackadder.


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Shadow
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Evil Mouzealot Specufestor

Enjoy The Ride
8 May 2013, 07:32 PM
Shadow- There is a reason interest rates were low for a long period of time, the world was fixed to a quasi gold standard. Inflation was also kept well in check.
In check?

Inflation was wild and unpredictable under the gold standard. It regularly cycled from periods of sky-high inflation to devastating deflation.

Inflation was a mess under the gold standard.

Since the gold standard / quasi gold standard ended, inflation has been relatively steady and predictable, especially post Bretton Woods...

Posted Image
Edited by Shadow, 8 May 2013, 08:02 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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Frank Castle
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Business As Usual

Veritas
8 May 2013, 07:32 PM
But the clock starts now Frank.........


Actually, I heard the bears saying it started seems like ten years ago now.
Quote:
 
But the clock starts now Frank.......
..
Yeah, the bears always have an excuse as to why it cant work...........................for them

I'm just lucky I guess
Funny thing is the harder I work at it the luckier I get :lol ;)
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Enjoy The Ride
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Shadow
8 May 2013, 07:58 PM
In check?

Inflation was wild and unpredictable under the gold standard. It regularly cycled between from periods of sky-high inflation to devastating deflation.

Inflation was a mess under the gold standard.

Since the gold standard ended, inflation has been relatively steady and predictable.

Posted Image
Well it's a matter of perspective, the rigidity of the gold standard punished malinvestment quickly.

You cannot deny the fact over the whole period on average prices moved within a tight band favouring neither inflation or deflation. The purchasing power of currency was largely maintained.

Anyway still just a sideshow, comparisons are not valid pre 71'.
Enjoy The Ride!

The case for individual freedom rests chiefly on the recognition of the inevitable and universal ignorance of all of us concerning a great many of the factors on which the achievement of our ends and welfare depend. It is because every individual knows so little and, in particular, because we rarely know which of us knows best that we trust the independent and competitive efforts of many to induce the emergence of what we shall want when we see it. Humiliating to human pride as it may be, we must recognize that the advance and even the preservation of civilization are dependent upon a maximum of opportunity for accidents to happen.”
― Friedrich A. von Hayek


"I, on the other hand, am a fully rounded human being with a degree from the university of life, a diploma from the school of hard knocks, and three gold stars from the kindergarten of getting the shit kicked out of me." Blackadder.


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