House prices to keep falling for years

[singlefished]

... you either know its happening or you dont. And if you dont then clearly "reality" means a show involving kyle sandilands ;-) ).

 

[CamKawa]

I'm surprised to read such a bearish article from the Property Spruikers Times.

House sales tumble as slump bites

 

[explod]

Yep, absolute front page of the Melbourne Age, "Property sales down 44%

Cuuummmooorrrnnn.. Robots, out of bed, its getting a bit one sided here.

 

[wayneL]

Well, the poo is really hitting the propeller over here as Crash Gordon wants to put all his last remaining chips on zero... the treasury know it's ****ing insanity.

This PM is a madman and a ****ing idiot!!!!!!

http://www.dailymail.co.uk/news/art...ng-rages-Browns-40bn-State-mortgage-plan.html

 

[xoa]

The situation is desperate, if they need to use taxpayer money to prop up property prices.

Why should the taxes of working class people be used to prop up the property portfolios of buy-to-let slum lords and greedy speculators? It's like reverse socialism.

 

[wayneL]

The situation is desperate, if they need to use taxpayer money to prop up property prices.

Why should the taxes of working class people be used to prop up the property portfolios of buy-to-let slum lords and greedy speculators? It's like reverse socialism.

Exactly ===>>> Grade AAA MORAL HAZARD!

Totally insane; I'm ****ing absolutely livid and furious and ripping my hair out.

 

[Macquack]

Exactly ===>>> Grade AAA MORAL HAZARD!

Totally insane; I'm ****ing absolutely livid and furious and ripping my hair out.

Wayne, where does the money actual go.

If the public money is repaid with interest, what is the problem. Or, is this just pouring money into a black hole?

 

[wayneL]

Wayne, where does the money actual go.

If the public money is repaid with interest, what is the problem. Or, is this just pouring money into a black hole?

The risk is transfered (and these are all the crap loans that will probably default) from the banks who entered into the risk, onto the taxpayer, who had no part in assuming any such risk.

The government is buying the bank's defaulters.

MORAL HAZARD.

The thinking is that if all the totally crap loans are taken off the bank's books, they'll open the lending spigots and prop up a dysfunctional and malodorous property market.

 

[xoa]

Wayne, where does the money actual go.

If the public money is repaid with interest, what is the problem. Or, is this just pouring money into a black hole?

Repaid with interest? The market is a falling knife, and will be for years - which is why no intelligent investor wants to be in it. Brown is eager to pump taxpayer money into this sick market, while he's selling his own portfolio.

 

[pepperoni]

Yes they are happy to overcook the hell out of the economy to feather their own beds ... like company directors overstating results to hit their bonus hurdles ... or HIH directors.

With all the US bank failures Im actually wondering if this will ever push the US Govt down .. I mean fannie may and freddie mac arent that far removed from US govt anyway.

And yes if the money was repaid with interest there would be no such mess ... its a little thing called the sub prime crisis. The losses are just being socialised.

 

[wayneL]

Holy Hell!

Even the BTL laden journos at The Mail can see the folly of this:

http://www.dailymail.co.uk/news/art...-want-fool-pen-agreeing-Browns-loan-plan.html

 

[Shane Baker]

While I admit that I have not personally "peer-checked" his PHD study, I am not in any position to verify his methodologies anyway. So to check whether his methodology is wrong will require a fair amount of probing and not to mention a sufficient academic qualified person to do so.

However, I don't see some of your questions is related to the main message that house prices have historically tracked inflation/wage growth rate (i.e. 3-4%) over the last 100+ years. (except for the last 20-30 years) No one has ever disputed that fact, because they are based on real historic data.

The problem lies on how do people interpret the data.

Hi Temjin

I probably phrased that poorly. The value of a study is limited to the methodology used to manipulate the data and reach the conclusions. This study is widely quoted and extrapolated without questioning the basic methodology of the study, such as the questions I raised previously. As you have said there has been a fundamental change in the relationship of house prices to wage/inflation growth. That is the useful aspect of the study. I feel the question to ask is why and what does it portend for the future?

As an aside, I do have a couple of research Master's degrees in different disciplines and have worked with students designing their research projects. I feel that I am at least qualified to understand the basics of a study and question whether the conclusions are able to be extrapolated further than the basic thesis conclusions. There have been other studies by the RBA and ABS examining some of these questions and the data is interesting.

Cheers and good luck

Shane

 

[pepperoni]

Hi Temjin

I probably phrased that poorly.

Ironic way to start 10 lines of waffle!!!!

I feel the question to ask is why and what does it portend for the future?

I feel we are about 3 threads and 300 pages into the "why" being credit bubble and the "portend" being flat or falling prices in the short to medium term.

Again the study is a good one and stands up well to nitpicking ... if anyone has any others feel free to post.

 

[Temjin]

Hi Temjin

I probably phrased that poorly. The value of a study is limited to the methodology used to manipulate the data and reach the conclusions. This study is widely quoted and extrapolated without questioning the basic methodology of the study, such as the questions I raised previously. As you have said there has been a fundamental change in the relationship of house prices to wage/inflation growth. That is the useful aspect of the study. I feel the question to ask is why and what does it portend for the future?

As an aside, I do have a couple of research Master's degrees in different disciplines and have worked with students designing their research projects. I feel that I am at least qualified to understand the basics of a study and question whether the conclusions are able to be extrapolated further than the basic thesis conclusions. There have been other studies by the RBA and ABS examining some of these questions and the data is interesting.

Cheers and good luck

Shane

Hi Shane,

Please excuse me but I still do not have a clear understanding of your "main" point. What are you trying to illustrate here? This is beside your view that we should not extrapolate the future based only on the results produced by this report in which you say its methodologies "may" be flawed.

I do not recall myself making an opinion on the future direction of the Australia property market based on this report ALONE. I considered myself as a big picture thinker and thus, I tend to place less value on any particular piece of information when I make my view. As pepperoni was saying, there are far more to it than the report alone.

I would like to know your views on the local property market (and in the US and UK) BESIDE this report alone.

Cheers,

Temjin

 

[Shane Baker]

Hi Temjin

My point is that you headed your post 329 with THE FACTS just above posting swathes of Nigel's study. They are one set of facts looking at the market with a particular viewpoint. You have now clarified your own statements regarding the value of the report with the fact that you are a big picture thinker who assimilates lots of varied information. There is lots of varied info and studies out there. I find the RBA publications site quite interesting and there are some recent papers regarding Australian housing below.

http://www.rba.gov.au/Speeches/2008/sp_so_270308.html

http://www.rba.gov.au/Speeches/2008/sp_so_270308.html

http://www.rba.gov.au/Speeches/2008/sp_ag_160508.html

http://www.aph.gov.au/SEnate/committee/hsaf_ctte/report/index.htm

My "big picture" thoughts are that Australia has a different set of issues facing it than the US. We have a housing supply shortage and a growing population through immigration and local growth. This places demand side pressures on the housing market.

The supply side of the markets also has pressures with expensive limited land release on the suburban fringe and expensive redevelopment of inner city sites both limiting the supply side.

Supply is also limited due to the holding costs of interest which has risen significantly recently.

The securitisation of credit markets contributed to some of the boom in the last decade but have not contributed to it over the last twenty to thirty years as it is a recent development particularly here in Australia. So clearly there were other factors some of which I raised in those questions relating to Nigel's article and his use of particular metrics such as income/housing debt ratios etc. As the recent crisis in credit markets subsides (and there is some freeing up of credit markets starting here) access to money will be easier than in the past year and spreads will reduce.


Pepperoni

I agree that housing markets in Australia will probably be flat or falling (depending on markets and subsegment) in the short to medium term. I disagree that the credit bubble (as you put it) was the sole reason for the house price boom in Australia. It is clearly more complex than that although the easier supply of credit was a contributor.

Cheers

Shane

 

[CamKawa]

My "big picture" thoughts are that Australia has a different set of issues facing it than the US. We have a housing supply shortage and a growing population through immigration and local growth. This places demand side pressures on the housing market.

Shane,

How do you see our housing market in comparison to the UK market?

 

[numbercruncher]

Shane ,


What percentage of your wealth is dedicated to realestate ?

 

[robots]

hello,

anymore info out from ABS number? or now everybody has to accept your surveillance work

its good fun out cruising the street as apparently you are now doing seeing all those signs

thankyou
robots

 

[Shane Baker]

Shane,

How do you see our housing market in comparison to the UK market?

Hi CamKawa

Personally I am less familiar with the UK market although I am aware from the media reports of the housing market situation there. I feel that Australia is more resilient due to the commodities boom and that the demand from China and India (and others) will not decrease anytime soon. The great unknown is peak oil but Australia as a net food and energy exporter should be better placed than most countries to weather any storms.

Cheers

Shane

 

[Shane Baker]

Shane ,


What percentage of your wealth is dedicated to realestate ?

Hi NC

I am not of the relevance of this question as that would depend how I leverage using my assets and cashflow. The mix of my assets is variable dependent upon market conditions and my view of the markets at that moment.

Cheers

Shane