# There is no housing bubble!



## wayneL (28 February 2006)

For all of you worried about housing prices, this blog should allay a few fears...

http://thereisnohousingbubble.blogspot.com/

 Cheers


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## Porper (28 February 2006)

wayneL said:
			
		

> For all of you worried about housing prices, this blog should allay a few fears...
> 
> http://thereisnohousingbubble.blogspot.com/
> 
> Cheers




Quickly read it Waynel, and agree as most people will, over the long term if you buy the most expensive house you can afford when young you are quids in.

That's not to say house prices won't and aren't falling because they are and will 

Also, in my opinion the real estate/property sector has a long fall ahead of it (it hasn't really turned negative yet)and I for one intend shorting at every opportunity.


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## wayneL (28 February 2006)

Porper said:
			
		

> That's not to say house prices won't and aren't falling because they are and will
> 
> Also, in my opinion the real estate/property sector has a long fall ahead of it (it hasn't really turned negative yet)and I for one intend shorting at every opportunity.




Oh totally agree!!!

But spend it bit more time reading it Porper, it's a total p!sstake. LOL

(I missed on first read as well) Hilarious!


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## crackaton (28 February 2006)

Um your point being?

A single professional making a good wage above 60K can rent at far less cost than to buy, and save to buy property out right. 

If you are stuck with a big mortgage, or any loan for that matter then good for you.

As to year 2100, does any of you seriously believe you will still be around then to care?


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## wayneL (28 February 2006)

crackaton said:
			
		

> Um your point being?
> 
> A single professional making a good wage above 60K can rent at far less cost than to buy, and save to buy property out right.
> 
> ...




I don't have a point, but clearly the author has one, which you may have missed.


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## crackaton (28 February 2006)

lol Well I guess it keeps estate agents in business.


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## Knobby22 (28 February 2006)

Classic stuff.
...and he even included details of the effect of family members being murdered.
Very funny.


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## Julia (28 February 2006)

Wayne:  you come across some interesting stuff, don't you.

Rather chilling piece of black humour with this one.  Funny, but slightly scary at the same time.

Julia


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## wayneL (28 February 2006)

Julia said:
			
		

> Wayne:  you come across some interesting stuff, don't you.
> 
> Rather chilling piece of black humour with this one.  Funny, but slightly scary at the same time.
> 
> Julia




Found on a Bears housing forum...lots of good stuff there.


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## Porper (1 March 2006)

wayneL said:
			
		

> Oh totally agree!!!
> 
> But spend it bit more time reading it Porper, it's a total p!sstake. LOL
> 
> (I missed on first read as well) Hilarious!




Ahhhhhhhhhh, yes.Read more than 2 lines now, see what you mean.


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## chicken (1 March 2006)

Waynel....I hear in Geralton in WA where you are the house prices are ON THE RISE.....must be all the iron Ore mines coming on stream..as far as the house prices falling...I think most of you are in a dream world...as house prices are to what does it cost to build a new one $200000 plus section....so if you think you can steal it...with 200000 immigrants per year..well just keep dreaming as it will find a level itself..but not the price you dream about..after all its a supply and demand situation..so they come down a few %%% but thats it...believe it as far as renting...RENTS ARE ON THE RISE..and the landlord can allways kick you out...A house is a good investment as in later years eg me...I would not be able to live where I am had it not for me buying..so anyone who rents is stupid in my book as buying a house is compulsive saving..and the value is in later life..when you appreciate that you now life rent free...RENTS ARE GOING UP YEAR BY YEAR...after all when you retire you got a decent roof over your head and no bloody landlord to worry about...does that make sense...it does to me


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## wavepicker (1 March 2006)

chicken said:
			
		

> Waynel....I hear in Geralton in WA where you are the house prices are ON THE RISE.....must be all the iron Ore mines coming on stream..as far as the house prices falling...I think most of you are in a dream world...as house prices are to what does it cost to build a new one $200000 plus section....so if you think you can steal it...with 200000 immigrants per year..well just keep dreaming as it will find a level itself..but not the price you dream about..after all its a supply and demand situation..so they come down a few %%% but thats it...believe it as far as renting...RENTS ARE ON THE RISE..and the landlord can allways kick you out...A house is a good investment as in later years eg me...I would not be able to live where I am had it not for me buying..so anyone who rents is stupid in my book as buying a house is compulsive saving..and the value is in later life..when you appreciate that you now life rent free...RENTS ARE GOING UP YEAR BY YEAR...after all when you retire you got a decent roof over your head and no bloody landlord to worry about...does that make sense...it does to me




Are you sure it's a "supply and demand" situation chicken? I don't see any shortage of land in a country of this size just yet!!! Rather the housing bubble is something that is not localised to australia, rather it has occured in the most of the western world. Some parts have a shortage of land others have heaps of land like australia.  The mechanism here is not so much fundemental but rather psychological. If you care to dispute this then why was there a housing crash 10 years ago (75% average falls in prices) in both Japan and Hong Kong? Both these countries have very little land with huge populations. But they crashed.  The reason is because markets are markets irrespective of what people are trading, houses, land, stocks, commodoties etc, and all markets WILL correct after prolonged periods of TREND. Although property prices increase seem perpetual, they too will correct. Everyone who enters a market knows this. The question is not "if" but  "when"?


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## crackaton (1 March 2006)

Global credit ocean dries up
(Filed: 24/02/2006)

The cash machine that sustained a world boom is about to close, and it's going to get ugly, says Ambrose Evans-Pritchard

One by one, the eurozone, the Swedes, the Swiss and now even the Japanese, are turning off the tap of ultra-cheap credit that has flushed the global system for the past year, keeping the ageing asset boom alive.

The "carry trade" - as it is known - is a near limitless cash machine for banks and hedge funds. They can borrow at near zero interest rates in Japan, or 1pc in Switzerland, to re-lend anywhere in the world that offers higher yields, whether Argentine notes or US mortgage securities.

Arguably, it has prolonged asset bubbles everywhere, blunting the efforts of the US and other central banks to restrain over-heating in their own countries.

The Bank of International Settlements last year estimated the turnover in exchange and interest rates derivatives markets at $2,400bn a day.

"The carry trade has pervaded every single instrument imaginable, credit spreads, bond spreads: everything is poisoned," said David Bloom, currency analyst at HSBC.

"It's going to come to an end later this year and it's going to be ugly, even if we haven't reached the shake-out just yet," he said.

"People have a Panglossian belief in the march of global capitalism but that will change as soon as attention switches back to US financial imbalances," he said.

There were early signs of panic this week when the Icelandic krone crashed 8pc in two days, setting off dominoes in high-yielding currencies of New Zealand, Australia, South Africa, Hungary and Brazil.

The debacle was triggered when the rating agency Fitch downgraded Iceland's sovereign debt, a move that would not normally rattle markets.

The new skittishness comes against a backdrop of ever more hawkish moves by Japan and Europe.

"There are several hundred billion dollars of positions in the carry trade that will be unwound as soon as they become unprofitable," said Stephen Lewis, an economist at Monument Securities. "When the Bank of Japan starts tightening we may see some spectacular effects. The world has never been through this before, so there is a high risk of mistakes."

Toshihiko Fukui, the Japanese central bank governor, gave a fresh warning yesterday that this day is near, saying the country was pulling out of seven years of deflation. The economy grew at a 5.5pc rate in the fourth quarter of 2005.

In his strongest words yet, he said the bank would act "immediately" to curtail its extra injections of liquidity, preparing the way for rate rises above zero in coming months.

"The moment of truth is approaching,'' said Kenichiro Ikezawa of Daiwa SB. In Europe, Sweden raised rates to 2pc this week in the face of an overheated Stockholm property market, while Germany's IFO business climate index soared yesterday to its highest level in 14 years.

The European Central Bank will almost certainly raise eurozone rates to 2.5pc in March, with likely moves to 3pc by the end of the year.

Most of the world is now tightening, with no sign of a fresh credit window opening to keep the game going. This is new. Japan has had the tap on continuously as the trade exploded over the past five years, while America itself became the source of funds after it slashed rates to 1pc at the end of the dotcom bubble, and held them there until June 2004.

The US Federal Reserve has since raised rates 14 times to 4.5pc in a belated effort to restore monetary discipline, with at least two more rises priced into the markets.

It is an open question whether the yen, euro, Swiss franc and Swedish krona carry trades have occurred on such a scale that they have led to over-investment in Latin America and beyond, and compressed US yields, fuelling the American housing boom in 2005 despite Fed tightening.

There are other big forces at work: huge purchases of US Treasuries by Asian central banks, and petrodollar surpluses coming back to the US credit markets. Stephen Roach, chief economist at Morgan Stanley, warns that the carry trade is itself, in all its forms, a major cause of dangerous speculative excess. "The lure of the carry trade is so compelling, it creates artificial demand for 'carryable' assets that has the potential to turn normal asset price appreciation into bubble-like proportions," he said.

"History tells us that carry trades end when central bank tightening cycles begin," he said. Ominously, almost every bank other than the Bank of England is now tightening in unison.

........................................................................


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## wayneL (2 March 2006)

LOL
Housing booms not good: Costello
From: AAP

March 02, 2006

THE Federal Government would be happy to never see another housing boom, Treasurer Peter Costello said.(  WTF? Why did they let this one go so far?????)
Apart from WA and the Northern Territory, housing prices have flattened in recent times, after they boomed through the early part of this decade.

Mr Costello said it was a welcome thing that housing had been slowing for some time.

"I think house prices got too high and as a consequence of that, you would expect a correction and we're getting a correction," he told Southern Cross Broadcasting.

"I want a see a correction, once you have had that correction, what you would like to see is stable prices, maybe small increments, but I don't want to go back to the situation where house prices were booming in the way they were a couple of years ago.

"That's not good for an economy. Remember this point, the bigger the boom, the bigger the bust".

"The reason we're against booms, is we're against busts," he said.


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## wayneL (2 March 2006)

There is a house for sale near a friend of mine here. It's nothing special, no views or limited supply features about it. It would rent for about 220-240 per week.

The price?

$490,000!!!!!!

Lord, let there be sanity!


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## crackaton (30 March 2006)

Boom, then in comes the roof

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By Ben Schneiders
March 30, 2006
AdvertisementAdvertisement

RESIDENTIAL construction spending in Australia is falling sharply as the boom conditions of recent years taper off and concerns rise about huge increases in taxes on new houses, research reveals.

Spending is forecast to slide in real terms by 4 per cent over the next two financial years, according to research conducted by Econtech for the Construction Forecasting Council.

The figures come amid warnings of an impending shortage in housing stock as a result of a blow-out in taxes and charges on new homes. As revealed in The Age this week, a study commissioned by the Residential Development Council found that government charges on a typical new house and land package in Melbourne had risen 150 per cent over the past five years.

Econtech economist Emily Brown said residential construction was expected to remain flat until 2007-08.

Property Council of Australia chief executive Peter Verwer said the residential construction market was yet to feel the full impact of the tax hikes on new housing.

Mr Verwer said until recently strong consumer confidence had meant that new home buyers were spending regardless of the ever-escalating government tax take. "I don't think we've seen the full impact to date; people have been borrowing lots of money and money has been cheap," he said. "If you're paying $1500 per month (on a mortgage) and $500 off that is paying off the cost of taxes, clearly that has an impact."

Taxes and charges from the different levels of government now represent nearly 25 per cent of the total cost. In some parts of Australia, they represent more than a third of the total cost.

As consumers became more cautious, the full effect of the taxes on housing would start to bite. "I think these high taxes are more likely to have a bigger impact in the future," Mr Verwer said.

He said there had been three responses from governments to the RDC report on the huge increase in taxes on housing: "Denial, excuses and spin."

While the Federal ALP Opposition and the State Liberal Opposition were happy to speak to The Age this week about the issue, neither Victorian Treasurer John Brumby's office or the federal Treasurer's office would comment on the issue.

On a typical house and land package, the study found the State Government would reap more than $22,000, mainly in stamp duty, while the Federal Government would garner in excess of $38,000, mainly through GST.

Kim Carr, the federal shadow housing minister, said yesterday the Federal Government was hiding its head in the sand on the housing affordability issue.

While the Australian residential construction market is set to soften, the outlook in Victoria will be even weaker, although this is largely a product of the strong conditions previously.

"Victoria has been the biggest-spending state in terms of year-on-year growth for the last decade," said Mr Verwer.

From 2004-05 to 2006-07, residential construction spending in Victoria would decline in real terms by a combined 7 per cent, with a new cycle set to emerge in 2007-08, Ms Brown said. The Victorian apartment sector was particularly weak, with construction spending forecast to fall 37 per cent in real terms this financial year and next, she said.

About all our governements are good for is taxing


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## RodC (30 March 2006)

This just looks like a push by the Property Council to get more government handouts/subsidies to prop up their industry.

Re: the government taxing. the amount of tax isn't the real issue, it's what it gets used for (wasted on) - government advertising, consultants etc.

Rod.


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