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RBA enormously worried about Australian house price surge, but won't admit it; House prices are popping, Sydney is going berserk
Topic Started: 26 Sep 2013, 05:04 PM (8,096 Views)
Pig Iron
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Bogan scum

Massive
26 Sep 2013, 07:33 PM
what terminology would you prefer - invested ? distributed? allocated?
no, you are just plain wrong no matter how you'd like to term it.
I am the love child of Tony Abbott and Pauline Hanson
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Veritas
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Pig Iron
26 Sep 2013, 07:35 PM
no, you are just plain wrong no matter how you'd like to term it.
Timmy, why do you insist on being a retard?

If surplus capital is being invested in houses that were built thirty years ago it is not being invested in productive works.

That is the opportunity cost.
Edited by Veritas, 26 Sep 2013, 07:38 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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Pig Iron
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Bogan scum

Veritas
26 Sep 2013, 07:35 PM
Person B has just taken out a hefty mortgage.
nothing to do with capital

i note with great amusement you have gone straight to wanting to compare first year mortgage costs with renting. why don't you compare their housing costs over a life time???

let's flip it on it's head and compare someone who's in the last year of their mortgage vs someone renting?

Veritas
26 Sep 2013, 07:37 PM
Timmy, why do you insist on being a retard?
you've gone straight to abuse in 2 posts, do i get a medal?
Edited by Pig Iron, 26 Sep 2013, 07:40 PM.
I am the love child of Tony Abbott and Pauline Hanson
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Veritas
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Pig Iron
26 Sep 2013, 07:39 PM
nothing to do with capital

i note with great amusement you have gone straight to wanting to compare first year mortgage costs with renting. why don't you compare their housing costs over a life time???

let's flip it on it's head and compare someone who's in the last year of their mortgage vs someone renting?
Of course it is.

First year mortgage costs bla fucking bla.

If you borrow 400k you will pay back about 1 million. Its a lot of loot, even taking inflation into account.

Do you accept that there is an opportunity cost to surplus capital rushing into established housing instead of productive sectors of the economy? That includes new builds btw.

Do you get that?

Edit: your abuse is richly deserved. Why not just read Shadow and Strindbergs post and put everyine else on ignore? Your learning curve would be unaltered.

Edited by Veritas, 26 Sep 2013, 07:43 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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Massive
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Pig Iron
26 Sep 2013, 07:35 PM
no, you are just plain wrong no matter how you'd like to term it.
In a stumbling economy one would think you want new construction and investment - stock market etc - providing necessary capital to companies to employ staff and create business and avoid as much speculation as possible to keep inflation low.

Money spent speculating values on existing properties is dead money in terms of stemming the loss of jobs and stimulating business. For example the dumb money rushing into IP's with SMSF etc is money that would have been spent on capital raising ventures in days gone by..

I reckon Australia is far from a point of no return - train just pulled out of the station really - but if things dont change and mining employment continues to ease, can see where concern is coming from..
Edited by Massive, 26 Sep 2013, 07:52 PM.
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Strindberg
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Massive
26 Sep 2013, 07:51 PM
Money spent speculating values on existing properties is dead money in terms of stemming the loss of jobs and stimulating business.
Money used in transactions (eg the exchange of houses and shares) simply changes ownership. It doesn't die. It remains just as available after a transaction as it was before a transaction.

Even the money paid as interest on a loan simply changes ownership. Money only dies when loans are repaid, and grows when loans are created. As pointed out, we've been through this at length.
Edited by Strindberg, 26 Sep 2013, 08:10 PM.
Housing costs to Income broadly unchanged since 1994 - re-ratified here
The People of Australia have the highest median wealth in the World
2002-2012 10 year house price growth the SLOWEST since 1952-1962
"There are two kinds of people in this world: ones that fiddle around wondering whether a thing's right or wrong and guys like us." (Hugo to Gagin in Ride the Pink Horse)
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Timo
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Bulls bulls bulls where for art thou bulls?
After a bubble has burst, no one denies that it existed. But before it does, the popular refrain is that though bubbles existed elsewhere in the world, “there’s no bubble here”. So housing bubbles are admitted to have existed in Japan, the USA, Spain and Ireland – because they’ve already burst.
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Trojan
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Massive
26 Sep 2013, 07:18 PM
the more capital that gets locked up in residential market, the less there is available to spur the economy ( jobs are lost, businesses fail etc ) , and the more pressure for increased stimulus ...
Yawn .....

And the age old bear myth gets dusted up and trotted out again.
Guess the countries with the highest GDPs must be those which lives in caves as they have no capital locked up in housing ....
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
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Massive
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Strindberg
26 Sep 2013, 08:10 PM
Money used in transactions (eg the exchange of houses and shares) simply changes ownership. It doesn't die. It remains just as available after a transaction as it was before a transaction.

Even the money paid as interest on a loan simply changes ownership. Money only dies when loans are repaid, and grows when loans are created. As pointed out, we've been through this at length.
Didn't say it had died...

just that it is directed into speculation of property, rather than at offering capital for new business to stimulate employment...

Recent charts are showing increasing amount of new loans are upgraders ... ie Money from property sold is moved straight into a new property of higher value with a new mortgage...

Capital earnt is not directed back at generating new business, is used to push up property higher... people are pooling their retirement funds to further boost the prices, which means MORE capital is needed from upgraders to match the newer prices...

its not a positive trend .. ( edit: especially as RBA is trying to stimulate the economy )

up to now we've had mining employment to curb the balance.. either that needs to stabilise and retain workers or something else needs to adjust to take up the slack..
Edited by Massive, 26 Sep 2013, 08:57 PM.
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Timo
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Pig Iron
26 Sep 2013, 07:28 PM
this has already been debunked ad nauseum. captial is NOT "locked up" when the banks write a loan.
Not debunked, no at all. Period.
Pig Iron
26 Sep 2013, 07:34 PM
something tells me this FORMER rba member is feeling left out in the cold. but how to get back in the game? i know, let's tell some journ's something shocking!
Head back in sand dumb dumb, pop!
Edited by Timo, 26 Sep 2013, 08:25 PM.
After a bubble has burst, no one denies that it existed. But before it does, the popular refrain is that though bubbles existed elsewhere in the world, “there’s no bubble here”. So housing bubbles are admitted to have existed in Japan, the USA, Spain and Ireland – because they’ve already burst.
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