I'm saying that the supply of credit inflates demand because it allows more people to be active participants.
If we had a credit crunch tomorrow and banks decided to only lend to people with 25% deposits then demand would fall.
That is demand that matters, the people who have the loot to pay.
Pretty much everybody is an active participant anyhow, either as an owner or as a renter - that is the point. Have you seen a vast pool of potential active participants living in tent cities lately?
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
That's quite fascinating Skamy I was about to post a South park clip today also
Would you believe that out of the billions of images on google i actually used your avatar image on my avatar on another board early last year?
Great minds think alike i guess
:0 it is a great little avatar hey? I have a lotta fun with the little old lady banter, not that I am not a little old lady but maybe not that old really.
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
I'm saying that the supply of credit inflates demand because it allows more people to be active participants.
If we had a credit crunch tomorrow and banks decided to only lend to people with 25% deposits then demand would fall.
That is demand that matters, the people who have the loot to pay.
Pretty much everybody is an active participant anyhow, either as an owner or as a renter - that is the point. Have you seen a vast pool of potential active participants living in tent cities lately?
That doesn't change the fact that if there was a credit contraction tomorrow as described, demand would drop and eventually prices would too.
Therefore credit availability has a key role in determining demand and thus price.
Do you disagree with that? Its glaringly obvious.
skamy
8 Aug 2013, 07:25 PM
thank you miw <br /><br />i was sobbing quite heavily earlier until the neighbours called the police <br />i've suspected one of the mods isn't a fan for a while, which is absolutely fine but i did have a lot of respect for what i believed was unadulterated freedom of expression. I would actually be curious to see what the majority of members thought - nothing would surprise me though = )
I cannot say I am surprised that you have been told off appropriately - you were a bad influence and I know that one old lady poster here damn near had a heart attack when she was led astray into posting young beautiful masculine specimens. Who knows where it could all end?<br />Are you saying that folk can just borrow any amount of money? Because that is just not the case .<br /><br />Folk borrow the same relative to income as they always have for the past three decades at least. Credit growth cannot occur without wealth growth and wages growth.<br />The reason house prices rise is because there are more folk in a city with higher wages and more borrowing capacity.<br /><br /><br />I bet you've been reading those macrobusiness charlatans with their tales of massive credit booms and imaginary Australians bowed under the weight of debt on their shoulders. Amazing how much misinformation abounds!![/quote]Youre a grade A troll.
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
How did you get so daft Veritas? I don't know what you do but it sure works a treat.
I have spent hours trying to help you understand credit and debt, good job I am such a patient person hey?
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
My mom came from Thunder Bay Canada. One grandpa came from Thurso Scotland. They both settled in Perth Western Australia. Now in brief. My cousin Derrick built a house of probably 350m2 in Thunder Bay brand new with all mod cons on 2 acres. At the same time i bought a house in Mount Lawley Western Australia for about the same cost, ($200,000 for 200m2 of house on 1012m2 of land) as my cousin Derrick. Ok so same base price. Same time 20 years ago. Now fast forward to 2013. House in Thunder Bay value is approximately $230,000. I checked with my uncle Beritel. House in Mount Lawley value approximately $2,000,000.
And yet Perth does not even have a Hoito restaurant, with kind, elderly Finnish ladies serving endless quantities of great hangover-quelling breakfast fare for next to nothing. Thunder Bay does. Sometimes the market gets things wrong.
Or perhaps the timing is critical. One branch of my family settled in Thunder Bay (Fort William) many decades ago, became moderately well-off from farming and the railroad / port work which was generously paid at the time (in a manner that would be familiar to anyone feeding off the resources boom in WA now), and made a fortune in the 70s and 80s as sprawling Thunder Bay absorbed the farm into suburbia.
A very Perth-like story, really, even if Thunder Bay no longer presents that growth rate today.
That doesn't change the fact that if there was a credit contraction tomorrow as described, demand would drop and eventually prices would too.
Therefore credit availability has a key role in determining demand and thus price.
Do you disagree with that? Its glaringly obvious.
I agree that prices would probably drop, simply because people could pay less and some people would still sell regardless. But the demand curve is so flat that would not necessarily mean demand would drop by much or even at all. Still the same number of people consuming accommodation. Just at a lower average price. Demand in my book is measured in units of consumption, not in dollars. This may be where we are coming to disagreement. If you measure demand in dollars, it can certainly expand and contract very significantly.
You would certainly have more people renting and fewer people buying. So rents would probably actually rise.
I am not saying the structure and texture of the demand can't change. It obviously can.
mel
8 Aug 2013, 08:09 PM
Oh well - at least there is no shortage of women sprayed all over the adverts around our message boards for those so inclined i guess.
Indeed. Maybe the message is that you have to pay APF for the privilege of posting pictures of 23-year-old funbags from <insert country of your choice here> who are obviously wanting it.
Its such a basic concept its amazing people can get it so wrong. Prices of any good (in a market where the government doesn't set the price) is ALWAYS determined by demand and supply. No ifs or buts.
But the government completely controls the supply and demand for land in Australia. Supply through zoning and demand through infrastructure. Setting supply and demand is the same as setting price controls. The government controls the price of land via controlling the supply and demand for it. And they will continue to do so until the market loses the ability to respond. This is called hobbling the army.
How did you get so daft Veritas? I don't know what you do but it sure works a treat.
I have spent hours trying to help you understand credit and debt, good job I am such a patient person hey?
Easy, more people have leapt the hurdle of the macro tools and inflated the price.
Whats your explanation dickhead?
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
Demand in my book is measured in units of consumption, not in dollars. This may be where we are coming to disagreement. If you measure demand in dollars, it can certainly expand and contract very significantly.
I thought we already established that the reason you're struggling here is because you done understand what demand is. Google "economic demand" and come back here if you still don't get it.
Quote:
So rents would probably actually rise.
It appears you don't understand any of the basics. It's probably best if you just google "economics for beginners" and atart at page one.
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