Humans share some characteristics with fish, but that doesn't mean humans are fish.
Relevance? Clothing retailers and hairdressers rely on new customers, just like every market relies on new entrants.
You could say the same about cars. It doesn't mean the market is a Ponzi scheme.
Same goes for people who sell anything.
Same goes for all housing markets and stock markets. Still doesn't make them Ponzi schemes.
It's not 'my' definition - it's the definition. Google it.
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Relevance? Clothing retailers and hairdressers rely on new customers, just like every market relies on new entrants.
I already explained the difference.
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You could say the same about cars. It doesn't mean the market is a Ponzi scheme.
You sure could, and if the market for cars was driven by the expectation that the price of cars will keep rising and rising delivering a path to riches far greater than other investment vehicles of paid work you could validate the comparison.
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Same goes for people who sell anything.
Absolutely false. Food vendors sell food to people who eat it. That is it utility and the role of vendor and buyer do not interchange. People who buy houses on the other hand, once the purchase has been made, become vendors in waiting. This is a critical difference between the housing market and a whole host of consumer goods.
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Same goes for all housing markets and stock markets. Still doesn't make them Ponzi schemes.
Only full retard bears having a whinge would describe the housing as a Ponzi scheme. It if often used with the term "infester" or "specufester" It might make them feel better after that outburst but as always, it just a whinge.
Did the development of the Irish and Spanish housing markets have Ponzi characteristics?
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
You sure could, and if the market for cars was driven by the expectation that the price of cars will keep rising and rising delivering a path to riches far greater than other investment vehicles of paid work you could validate the comparison.
This is the case for classic cars. It doesn't make them a Ponzi scheme.
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Absolutely false. Food vendors sell food to people who eat it. That is it utility and the role of vendor and buyer do not interchange.
Most people eventually die, so even food vendors require new entrants, even if just to replace the entrants who moved away from the area or got bored with that vendor's food.
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Did the development of the Irish and Spanish housing markets have Ponzi characteristics?
Fraudulent - No. Based on assets that didn't really exist - No. Investor return only from subsequent investors - No.
So the answer is no. Those markets did not exhibit any of the key attributes of a Ponzi scheme.
Only full retard bears having a whinge would describe the housing as a Ponzi scheme. It if often used with the term "infester" or "specufester" It might make them feel better after that outburst but as always, it just a whinge.
If it is not a ponzi, then why have fhb dissapeared from the market ?
If it is not a ponzi, then why have fhb dissapeared from the market ?
1. If you believe new entrants have disappeared, yet the market has not collapsed, then that proves it isn't a Ponzi scheme. Ponzi schemes collapse when new entrants disappear.
2. FHBs have not disappeared from the market anyway. Although official FHB numbers are a bit below average, that's because the data is no longer being captured in those states that cancelled FHB grants (NSW, VIC, QLD).
3. FHBs are not the only type of new entrant to the housing market. There are new investors too.
1. If you believe new entrants have disappeared, yet the market has not collapsed, then that proves it isn't a Ponzi scheme. Ponzi schemes collapse when new entrants disappear.
2. FHBs have not disappeared from the market anyway. Although official FHB numbers are a bit below average, that's because the data is no longer being captured in those states that cancelled FHB grants (NSW, VIC, QLD).
3. FHBs are not the only type of new entrant to the housing market. There are new investors too.
Then why are vacancy rates rising and rents starting to crash in some capitals ?
It's not at all unusual for vacancy rates to rise or rents to fall. It doesn't mean there is a Ponzi scheme.
I have never seen rents fall 15-20% in a year or two like they have in Perth and Canberra. Is that normal in the cycle ? Do you think they will fall much further ?
1. If you believe new entrants have disappeared, yet the market has not collapsed, then that proves it isn't a Ponzi scheme. Ponzi schemes collapse when new entrants disappear.
If immigration was reduced to zero, would prices collapse?
This is why the RBA wants house prices to rise and lead to a construction boom.
Housing construction employs architects, builders, plumbers, electricians, as well as the people who supply the raw materials for building. The houses require furnishing, whitegoods, TVs, generating business for many companies. Then you've got the extra business for real estate agents, brokers, lenders, solicitors etc.
For every dollar spent on construction, three dollars worth of activity are generated in the overall economy...
Haven't read the entire thread but you were telling us the other night how highly taxed the property sector is. I would have thought that a good chunk of the spending on property is just taxed away. When you buy a new home worth $400000 with $150000 land value is the construction value just the $250000 component. Not forgetting the stamp duty, the GST and levies paid by the developer. Just curious because you were keen to emphasise the "every dollar spent on construction".
I have never seen rents fall 15-20% in a year or two like they have in Perth and Canberra. Is that normal in the cycle ? Do you think they will fall much further ?
How many cycles have you lived through? Perth asking rents appear to have fallen back to 2011 levels, and Canberra back to 2009 levels. I don't think that's particularly unusual... i.e. to give up the past few years of rental gains, considering the big changes in those markets. Asking rents could fall a bit further. But actual rents are 'stickier' than asking rents. The ABS CPI rents index, which is based on actual rents paid, doesn't show such declines. Actually the ABS CPI index shows much larger falls in Perth and Canberra rents during the 90s.
JanesAddiction
29 Aug 2014, 10:59 PM
If immigration was reduced to zero, would prices collapse?
There would certainly be downwards pressure on prices - but whether prices actually fell would depend on other factors.
But the housing market itself wouldn't collapse. There would still be a housing market.
When a Ponzi scheme collapses, it ceases to exist. The market itself is gone. Just another reason why housing markets are not Ponzi schemes - even after a bubble pops causing house prices to collapse, the housing market still exists. People still go on buying and selling homes, just at a lower price point.
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