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Supply and demand. Sorry to repeat myself.
Topic Started: 4 Aug 2013, 11:13 AM (17,698 Views)
Sherlock
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Wisebear
9 Aug 2013, 05:45 PM
If supply and demand are initially in equilibrium then......
If -- then. A conditional statement, thank you, for amending your original position.

You're learning, my young Padawan!!
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Shadow
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Evil Mouzealot Specufestor

propertymogul
9 Aug 2013, 06:03 PM
Coming into this thread late. Have I got the right impression, that the bears are saying easier credit has increased demand and the bulls are saying that easier credit does not affect demand?
No. The bears were saying it's all about easy credit, and easy credit will always lead to demand exceeding supply, resulting in people bidding up prices.

The bulls were saying, no, while easy credit can increase demand, it won't necessarily cause demand to increase sufficiently so that demand exceeds supply, and therefore it will not always be the case that easy credit causes people to bid up prices (e.g. Japan and Detroit... easy credit but people are not bidding up prices).

Wisebear does finally appear to have conceded that easy credit will only lead to demand exceeding supply under certain conditions, so I guess we're getting somewhere.
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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mel
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Hey, I called bullshit on page one.

What do I win? :lol
APF - a place where serious people don't take themselves too seriously. There's nothing else like it.
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miw
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mel
9 Aug 2013, 06:46 PM
What do I win? :lol
A wonderful prize, but I can't give it to you any more.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
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mel
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miw
9 Aug 2013, 06:47 PM
A wonderful prize, but I can't give it to you any more.
thanks miw the sentiment is much appreciated - im sure it would have been brilliant :oo:
APF - a place where serious people don't take themselves too seriously. There's nothing else like it.
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Veritas
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Shadow
9 Aug 2013, 06:42 PM
propertymogul
9 Aug 2013, 06:03 PM
Coming into this thread late. Have I got the right impression, that the bears are saying easier credit has increased demand and the bulls are saying that easier credit does not affect demand?
No. The bears were saying it's all about easy credit, and easy credit will always lead to demand exceeding supply, resulting in people bidding up prices.

The bulls were saying, no, while easy credit can increase demand, it won't necessarily cause demand to increase sufficiently so that demand exceeds supply, and therefore it will not always be the case that easy credit causes people to bid up prices (e.g. Japan and Detroit... easy credit but people are not bidding up prices).

Wisebear does finally appear to have conceded that easy credit will only lead to demand exceeding supply under certain conditions, so I guess we're getting somewhere.
And presumably, with love breaking out you, will concede that cheap credit in the face of inelastic supply was a precondition for the housing boom in Australia?

Thought not
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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Shadow
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Veritas
9 Aug 2013, 06:55 PM
And presumably, with love breaking out you, will concede that cheap credit in the face of inelastic supply was a precondition for the housing boom in Australia?

Thought not
If you're talking about the boom that ended in 2003 (i.e. the period during the late 90s and early 2000s when house prices rose faster than incomes), then yes, that was partly driven by easier credit (i.e. lower interest rates and increasing willingness of banks to lend based on dual incomes) in an environment of restricted supply. But it was not just easier credit that drove this boom - other important factors included rising incomes and population growth.

Price rises during the following decade (2003 to 2013, during which time prices have simply tracked income growth) were driven primarily by income growth.
Edited by Shadow, 9 Aug 2013, 07:04 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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Veritas
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Shadow
9 Aug 2013, 07:00 PM
Veritas
9 Aug 2013, 06:55 PM
And presumably, with love breaking out you, will concede that cheap credit in the face of inelastic supply was a precondition for the housing boom in Australia?

Thought not
If you're talking about the boom that ended in 2003 (i.e. the period during the late 90s and early 2000s when house prices rose faster than incomes), then yes, that was partly driven by easier credit (i.e. lower interest rates and increasing willingness of banks to lend based on dual incomes) in an environment of restricted supply. But it was not just easier credit that drove this boom - other important factors included rising incomes and population growth.

Price rises during the following decade (2003 to 2013, during which time prices have simply tracked income growth) were driven primarily by income growth.
What does tracked income growth mean in this context?

Do you mean that price have increased at the same rate ( exactly?) as incomes?

What about Perth's boom in the mid 2000s

What about the boom immediately after the GFC with the FHOB and IR cuts.

In both cases, price rose at a much greater rate than incomes.
Sherlock
9 Aug 2013, 06:36 PM
Wisebear
9 Aug 2013, 05:45 PM
If supply and demand are initially in equilibrium then......
If -- then. A conditional statement, thank you, for amending your original position.

You're learning, my young Padawan!!
Ah another Johnny come lately to the debate

Make a proper contribution of fck off pal.
Edited by Veritas, 9 Aug 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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Sober
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Shadow
9 Aug 2013, 06:42 PM
(e.g. Japan and Detroit... easy credit but people are not bidding up prices)

Sorry to have skipped a few pages, but what is your Detroit-specific evidence that there is "easy credit" available to purchase Detroit housing?

:pop:

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Wisebear
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Sherlock
9 Aug 2013, 06:36 PM
If -- then. A conditional statement, thank you, for amending your original position.

You're learning, my young Padawan!!
The condition was in my original position.
Unfortunately you're not learning at all, my young Padawan!!
Thanks for playing though :lol
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