House prices to keep falling for years

[So_Cynical]

The author of that article, Christopher Joye, makes his living out of the property bubble via rismark international.

http://www.rismark.com.au/

Rismark International ("Rismark") is a global funds management business that has expertise in the execution of sophisticated real estate research and investment strategies. Rismark also has a long history of advising Australian and overseas governments on the development of innovative economic policies as they relate to housing and financial markets.

As a by-product of its quantitative research activities, Rismark has developed the technology and intellectual property underlying the market-leading RP Data-Rismark hedonic property price indices and related automated property valuation models.

 

[explod]

Well maybe you guys should all lobby for posts on the RBA board then??? Or maybe you just got lucky? Anyone can get a call right every now and then if you say it for long enough?


I guess a key thing to understand with economics is there are no certainties - only probabilities.

But I am still confident the bears on this thread will all be proven wrong re the great Australian real estate price crash that isn't going to happen. Time will tell!

Beej

Most of the bears could not care how they are proven and are not setting out to prove. If economics are studied properly as a science there are certainties. The top economic academics that I have followed got it right because they do know. The banking system only exists to make money for shareholders; and governments survive on popularity which is a very bad mix if you want proper and truthfull economic outcomes.

There are some contributors on these forrums who a retired bankers and university lecturers on economics and many other related backgrounds, but make thier contributions in a way that helps others learn by being part of normal discussion. If an ex Prime Minister was know by real identity he would be too busy signing autographs to take part in the general conversation.

Your post is one of the more ignorant that I have seen in awhile, there have been others just as bad in the past, but those who have hung in there have become part of this very good team and learnt that all is not just chance.

 

[numbercruncher]

hello,

all appreciating here in St Kilda Glen48, 14.7% Sept 08, $$$ in my eyes

i know i know, I have to wait it takes time 6mths, 1 yr

thankyou
robots

You still havnt proved St Kilda went up 14.7% in September yet you repeatedly say it did @!

Why are you doing this ?

 

[Temjin]

Yes well, I would tend to believe the analysis, data and views of the RBA with all their resources, expertise, and their ability to actually influence/manage economic matters through monetary policy, over a bunch of unknown screen names espousing gloomy and unproven views on a kooky internet forum anyway. But hey, that's just my opinion

Funny though, the same bearish independent economists/analysts also uses the SAME data that RBA do (through ABS and other public sources) with their research.

I would not put too much faith in RBA themselves anyway because they do have a vested interest in seeing the economy "not to fail".

Likewise, I would tend to believe the analysis, data and views of those with unbiased opinions and interests and their ability to analysis the economy through decades of studies than over a bunch of overly optimistic and vested interest parties who have much to loss if property prices fall.

The fact remains that the "bullish" views are also unproven at this stage as the whole crisis is not over yet. We should all come back here in 3 years time and see what happens.

And like I said again in many many posts ago (and got completely ignored), I don't expect to change the opinions of those with a bullish view here because it's practically impossible anyway. I use this an example. If I owned several IPs and I was bullish, why would I agree to anyone who think I was wrong and that I should start selling my properties? Impossible!

At least those who are undecided can look back the entire thread and take a good look at the arguments presented from both sides, and preferably from sources where the party has no vested interests or whatsoever. (i.e. ignore government analysis or property interest groups)

 

[grace]

It seems the Property Law Act in Qld already says that mortgagees must take reasonable care to sell at market value.

The Qld Govt are now putting a fine of $20 000 on banks if they don't take reasonable care.

Banks will be outlawed from conducting mortgage fire sales in Queensland in a move to protect struggling homeowners.

Premier Anna Bligh on Wednesday announced that laws would be fast-tracked through parliament this week to prevent financial institutions intentionally selling repossessed properties at below market value.

Ms Bligh said the practice saw banks accepting offers to cover their own costs, which left the home owner and their family with little or no equity to start again.

"Queenslanders deserve better, especially those most vulnerable to these tough times," she said.

Currently the Property Law Act requires mortgagees to take reasonable care to ensure the property is sold at market value.

The new laws will see lenders who fail to follow these requirement facing fines of up to $20,000.

The legislation will be introduced on Wednesday, to be passed by Thursday.

This fine would be hard to impose, after all, a property is only worth what someone is willing to buy it for.

 

[Ruincity]

You still havnt proved St Kilda went up 14.7% in September yet you repeatedly say it did @!

Why are you doing this ?

I too was wondering where he had plucked this one from..

Found this:

http://209.85.173.132/search?q=cach...Kilda+14.7%+Sept+08&hl=en&ct=clnk&cd=10&gl=au

*Under 30 houses sold so results might be skewed a little.

Some interesting data in there be interested to see the next results.

I personally think that St Kilda has been undervalued in the past few years anyway..
The fact that it is full of scum bags and drug heads doesn't help..

Great area regardless IMO.

 

[Temjin]

Funny though, the same bearish independent economists/analysts also uses the SAME data that RBA do (through ABS and other public sources) with their research.

I would not put too much faith in RBA themselves anyway because they do have a vested interest in seeing the economy "not to fail".

And to add onto this, it's funny how much people hated RBA back then for rising interest rates when their "resources, expertise and expert analysis" tell them that inflation is a threat to the economy.

Now when they start reducing them again, people start praising. Simply amazed with the vested interests of everyone and which side they tend to stick with when it's benefiting them. (and how much they don't side with when it doesn't!)


From dailyreckoning.com.au

If the RBA over-cooked things to the tight side in raising rates through 2007, you get the feeling they are making the same mistake on the loose side, and that it will lead to an unwelcome and massive rise in inflation in 2009, probably after the middle of the year. Central banks, like markets, tend to overshoot first and ask questions later.

 

[Temjin]

This fine would be hard to impose, after all, a property is only worth what someone is willing to buy it for.

It's a stupid law, and I agree the fine would be extremely difficult to enforce.

What is market value? What if everyone decided that the market value of a property is below what the government thinks it's good for the economy and its voters? Start fining everyone trying to buy properties at a low price? Crazy!

 

[2BAD4U]

If economics are studied properly as a science there are certainties.

That may be true, but the problem is most economists can never agree. Even when you study economics you are taught different views and ways to interpret data. So even the teachings of economics leads to disagreement.

I would not put too much faith in RBA themselves anyway because they do have a vested interest in seeing the economy "not to fail.

Vested interest, well derrrr. It's their job. In fact it is specified as one of their goals via the Reserve Bank Act, 1959.

And to add onto this, it's funny how much people hated RBA back then for rising interest rates when their "resources, expertise and expert analysis" tell them that inflation is a threat to the economy.

Not me. If they hadn't raised interest rates we would be in a far worse situation than we are now. How many more people would have jumped on the housing boom train and over committed themselves if rates hadn't been raised. Let's not forget inflation hit 5.0%.

 

[Glen48]

We never had a housing boom or any other sort of boom, this is a credit bubble nothing else, which explains why wages have been low yet everything else connected with money grew all on borrowed money, every time some one spend $180.00 only $100.00 was their own hard earned the rest was some one super or bankcard loan.
Like all loans they have to be paid back and if some one else is going to pay for your debt it will not fix the problem.
Meaning every thing connected to money has to deflate.It won't happen over night but it will happen.

 

[lakemac]

I am going to throw a share cat amoungst the property pigeons...

For those of you who are trying to make up their minds between investing in property vs shares have a look at this calculation I did here...
https://www.aussiestockforums.com/forums/showthread.php?t=4452&page=3

And thank you guys for the post from Bloomberg about property prices starting to drop in China. The start of the end phase has begun.

Get ready for the forclosures in China then buy into the market...

 

[2BAD4U]

Oh the poor down trodden worker, never had a pay increase, never had a tax cut, never changed jobs or got a promotion, never got a handout from the government. Bring on the revolution.

Doesn't matter how much people earn, they will always want 10% more and it will always be the same argument that wages aren't keeping pace with inflation. But you are right, economics is based around equilibrium and prices will move to maintain that equilibrium.

 

[Indie]

It seems the Property Law Act in Qld already says that mortgagees must take reasonable care to sell at market value.

First peak credit, now peak stupidity.

 

[lakemac]

Equilibrium of sorts.

More like an unstable equilibrium.
Prices (or supply and demand if you must) are only in equilibrium for a single transaction - when the buyer and seller agree on a price.

At all other times the equilibrium is unstable; always searching for a new price level based on more recent information.

What is worse is the classic economic supply demand curve for say the price of money gets distorted by the central banks when they artificially change interest rates and create more fake money. The equilibrium is anything but, it is a total distortion.

I have a series of power point slides for anyone interested in seeing how classical economic curves get wacked out of shape. Economics 202.

 

[lakemac]

First peak credit, now peak stupidity.

ROTFLMAO...
Lubricate that with some peak oil and add in a dash of climate panic and you have the perfect peaky whipped egg white for a pavlova.

I am salivating already

 

[robots]

Oh the poor down trodden worker, never had a pay increase, never had a tax cut, never changed jobs or got a promotion, never got a handout from the government. Bring on the revolution.

Doesn't matter how much people earn, they will always want 10% more and it will always be the same argument that wages aren't keeping pace with inflation. But you are right, economics is based around equilibrium and prices will move to maintain that equilibrium.

hello,

spot on 2bad crew,

get a better job, work 2, all of a sudden its not 7x salary its 5x salary

thats what most do in life,

how is that stat going? we still at 7x salary?

I have a spare highlighter if you want me to post it to you Numbercruncher, you can practice on some old notes (ie. highlight the entire town or suburb)

dont forget to tell the family you love them this morning and enjoy the ride team

thankyou
robots

 

[numbercruncher]

Oh the poor down trodden worker, never had a pay increase, never had a tax cut, never changed jobs or got a promotion, never got a handout from the government. Bring on the revolution.

Doesn't matter how much people earn, they will always want 10% more and it will always be the same argument that wages aren't keeping pace with inflation. But you are right, economics is based around equilibrium and prices will move to maintain that equilibrium.

We now have deflation, hopefully everyone gets a pay cut to keep pace !

 

[Beej]

And to add onto this, it's funny how much people hated RBA back then for rising interest rates when their "resources, expertise and expert analysis" tell them that inflation is a threat to the economy.

Now when they start reducing them again, people start praising. Simply amazed with the vested interests of everyone and which side they tend to stick with when it's benefiting them. (and how much they don't side with when it doesn't!)

Nice straw man!

Beej

 

[aleckara]

http://www.theaustralian.news.com.au/story/0,25197,24742139-7583,00.html

According to this house prices haven't fallen too much at all despite all the negative comments. Seems like the policy makers here have a lot more tools to keep the bubble going. Shouldn't governments encourage prices to go down giving greater wealth to everyone? The definition of price is just that - the cost or suffering required to get something. Seems like they want to bring suffering.
I don't know who's right in this debate and frankly the idea of just going into debt at the top of the boom and living with that burden dragging me down for the rest of my life scares me.

All I can say is I wish I was born 20 years earlier. My grandparents were telling me when you didn't need to speak English and you could still pay off a big block house in a few years.

 

[pistol72]

And like I said again in many many posts ago (and got completely ignored), I don't expect to change the opinions of those with a bullish view here because it's practically impossible anyway. I use this an example. If I owned several IPs and I was bullish, why would I agree to anyone who think I was wrong and that I should start selling my properties? Impossible!

spot on temjin,
rose coloured glasses! will brainwash ourselves into believing the outcome we want!
P