The relevance is the similarly precarious position Australia finds itself in relation to its housing and financial system in my view.
You argue in circles! Shadow has shown quite clearly how the situation right now in Australia is NOTHING like Ireland 2006. You have offered nothing to counter his points re the level of housing construction and the recent growth in property prices here now vs there then. I agree with Shadow, that if you must try and draw a parallel, it would be Ireland 1999/2000 vs Australia 2013, but even that's a long bow, as we do not face the impact they did due to the monetary policy imbalnces created by the change from the Irish Pound to the Euro.
So what exactly is it you think makes the situation in Ireland 2006 similar to Australia in 2013? How is our housing and financial system precarious? Doesn't look that way at all - quite the opposite it would seem?
Which may have been a revelation for you, but ..... um.. derp. Most of us have been aware of this since we first spent 30 seconds thinking about it.
But it is irrelevant. As Shadow pointed out, Ireland in 2006 was at the end of a massive overconstruction binge and a near-decade-long price boom. Sydney is 12 months out of a decade-long construction downturn and price stagnation. To compare it with Ireland 2006 is asinine.
Note that Shadow didn't say a bubble and bust could not eventuate. He just pointed out that there's a lot of water needs to flow under the bridge before we can get there. And he's right.
Its not a revelation.
Just making the point that a construction boom is not a necessary precursor for a bust which is what Shadow post suggested.
In any event, since when are you his spokesman?
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 argue in circles! Shadow has shown quite clearly how the situation right now in Australia is NOTHING like Ireland 2006. You have offered nothing to counter his points re the level of housing construction and the recent growth in property prices here now vs there then. I agree with Shadow, that if you must try and draw a parallel, it would be Ireland 1999/2000 vs Australia 2013, but even that's a long bow, as we do not face the impact they did due to the monetary policy imbalnces created by the change from the Irish Pound to the Euro.
So what exactly is it you think makes the situation in Ireland 2006 similar to Australia in 2013? How is our housing and financial system precarious? Doesn't look that way at all - quite the opposite it would seem?
Believe me, you are your like are not my audience.
If I said black you would say white.
Arch bulls here don't concede ever. Learned that a long time ago.
I think the Australian banks are overexposed to res property.
I think there is far too much speculative demand in the market.
I think many investors are over leveraged.
And I think this makes the banks and the individual investors themselves extremely vulnerable as the result of a deteriorating economy or as the result of an investor sell off as prices deviate even more from fundamentals which, in turn, sparks a deflationary cycle as other investors head for the door.
And in holding this view, I can assure you, I am not Robinson Crusoe.
Shadow
27 Sep 2013, 05:53 PM
I haven't made that claim, but I have stated many times that the existence of a bubble is a necessary precursor for a bubble bursting.
It's an open forum, we can all agree or disagree with other forum members on various points.
you did.
You said, if Australia was anywhere on Ireland's timeline, it would be 99/00, before the overbuilding commenced.
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
Just making the point that a construction boom is not a necessary precursor for a bust which is what Shadow post suggested.
In any event, since when are you his spokesman?
But a construction boom was the precursor to Ireland 2006 and the bust that followed, so your comparison is specious. Perhaps you should give us an example of a property crash that was not preceded by overbuilding.
I'm not Shadow's spokesperson by any means, but in this case he has you bang to rights.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
But a construction boom was the precursor to Ireland 2006 and the bust that followed, so your comparison is specious. Perhaps you should give us an example of a property crash that was not preceded by overbuilding.
I'm not Shadow's spokesperson by any means, but in this case he has you bang to rights.
California, Holland.
The California Building Industry Association (CBIA) continues to express alarmover what it calls an ongoing housing crisis in Southern California… only 185,000 to 205,000 building permits will be granted this year, far short of the240,000 new homes needed each year… The population increase, coupled withthe housing shortage, has the CBIA worried that it will be increasingly difficult for first-time homebuyers to find a moderately priced unit (CBIA, 2006)
The construction boom did not cause the irish housing bubble. The market was overwhelmed by cheap credit, the supply response came much later in the piece when the speculative band wagon was already careering towards its certain doom.
We have been through this. So.Many.Times.
Sentiment: just like here, the Irish chattering classes thought all they had to do was buy houses and watch the money roll in.
miw
27 Sep 2013, 05:57 PM
But a construction boom was the precursor to Ireland 2006 and the bust that followed, so your comparison is specious. Perhaps you should give us an example of a property crash that was not preceded by overbuilding.
I'm not Shadow's spokesperson by any means, but in this case he has you bang to rights.
How does he have me bang to rights?
His view is that there is no bubble so there is nothing to go pop.
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
And in holding this view, I can assure you, I am not Robinson Crusoe.
don't worry we know exactly where this idea comes from, and who keep perpetuating it.
you will continue to be dumb founded that property doesn't crash while you continue to believe this kind of nonsense.
Veritas
27 Sep 2013, 06:06 PM
California, Holland.
The California Building Industry Association (CBIA) continues to express alarmover what it calls an ongoing housing crisis in Southern California… only 185,000 to 205,000 building permits will be granted this year, far short of the240,000 new homes needed each year… The population increase, coupled withthe housing shortage, has the CBIA worried that it will be increasingly difficult for first-time homebuyers to find a moderately priced unit (CBIA, 2006)
The construction boom did not cause the irish housing bubble. The market was overwhelmed by cheap credit, the supply response came much later in the piece when the speculative band wagon was already careering towards its certain doom.
good grief you really are a macrobusiness groupie aren't you???
Right now the fad has to be invest in inner city real estate - ignoring developing areas.... speculation high, pushing unaffordability BUT one saving grace is its contained in high value areas.
IF somehow the government's push for development and investment in outer areas to deal with supply works, and speculation is still high - a fad for IP and dumb money investment may move to these areas - as people still see property as the gravy train ... thats when an ireland or spain may develop - may even hit overbuilding phase ...
In my mind, thats why property speculation has to be tempered now, and why the RBA has recently said as much... as much as we need investement, it has to be contained, and spread with investment in business.. ( and why we still badly need that low $ to offer an alternative to property investment )
If speculation continues into perimeter areas, then we are on the fast train to dead capital in a few years as there won't be an economy to support the speculation ... and THEN i would jump on the crash bandwagon...
for now though, steady as she goes - but can see why comments about a cautious RBA would be coming from ..
don't worry we know exactly where this idea comes from, and who keep perpetuating it.
you will continue to be dumb founded that property doesn't crash while you continue to believe this kind of nonsense. good grief you really are a macrobusiness groupie aren't you???
Timmy, please dont bother.
I really have no interest in your point of view on...well anything.
Massive
27 Sep 2013, 06:27 PM
Right now the fad has to be invest in inner city real estate - ignoring developing areas.... speculation high, pushing unaffordability BUT one saving grace is its contained in high value areas.
IF somehow the government's push for development and investment in outer areas to deal with supply works, and speculation is still high - a fad for IP and dumb money investment may move to these areas - as people still see property as the gravy train ... thats when an ireland or spain may develop - may even hit overbuilding phase ...
In my mind, thats why property speculation has to be tempered now, and why the RBA has recently said as much... as much as we need investement, it has to be contained, and spread with investment in business.. ( and why we still badly need that low $ to offer an alternative to property investment )
If speculation continues into perimeter areas, then we are on the fast train to dead capital in a few years as there won't be an economy to support the speculation ... and THEN i would jump on the crash bandwagon...
for now though, steady as she goes - but can see why comments about a cautious RBA would be coming from ..
The evidence suggests that is inevitable if the status quo ( rising prices) is to occur.
Increased investor demand was a massive catalyst for the boom, and when they began to retreat, so too did prices.
The recent turn around in the market would have been impossible without resurgent investor demand.
So, if the mums and dads start to question that the path the riches lies in buying and selling houses to each other, and demand drops off, you can expect it it to translate into lower prices too.
EDIt: before anyone starts getting bichy about the age of the graph, its the most up to date one i could find. If you can do better, please do.
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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