House prices to keep rising for years

Uncle Festivus · 21 October 2009

trainspotter said:
Look at it any way you will .... Doctor/Professor robots is technically correct when he states the name of this thread "House prices to keep rising for years." Graphic evidence in the form of a graph from the most trusted of sources. The Guvmnt. We can theorise about sustainablility and macro and micro economic factors and "push pull" fiscal policies with RBA's interetst rate rises and KRudds stimulus packages all we like. Bottom line is that the residential RE is rising. How long will it last? It keeps on going, man.

Or maybe just keeping up with money supply inflation while making people think they are making real money? Take RMBS - $10B just for the direct government 'subsidy' to the big boy banks, and another $8B for the juniors that missed out?

PRESSURE is mounting on Treasurer Wayne Swan to start winding back the government guarantee that has underwritten debt raisings for banks, with the Reserve Bank board suggesting Australia has started to lag the world on ending the program.
------
Government-guaranteed bonds have accounted for the majority of corporate bond issues in 2009, with some $56 billion issued in the domestic market so far this year.

Then pile on all the other 'schemes', grants, tax subsidies, negative gearing etc etc and you have a subsidised free market capitalist system which starts to look a lot like socialism/communism, except that (Chinese) communism now looks like old capitalism???

The bottom line is that there is no free lunch - someone will be left holding the baby, the only unknown is the timing.......flip away

MrBurns · 21 October 2009

trainspotter said:
It has morphed into an entertaining thread as it seems that robots the good human is on some really, really good gear called property and he can't wait to tell all and sundry about it VS the guys who believe that they should take the bait every time he posts. "Don't feed the trolls" I think they call it !! LOL.

Yep it's bloody hillarious actually.....

MrBurns · 21 October 2009

nunthewiser said:
Might be a good idea to totally ignore any japanese graphs/data then guys ..

It could never happen here after all

might pay to compare a few graphs actually and compare the lengths and velocitys of various countries "bubbles" though but i dare say we can always come up with reasons that this time "its different"

and a BIG thanks to all the SPECIAL people here

sunshine and lollipops , nirvana and a 6 pack and a pizza thanks

anyways ........ as you were

Yeah what might get the professor investigated by the FBI is if the market actually goes down for a prelonged period........it could happen.

wayneL · 21 October 2009

trainspotter said:
Look at it any way you will .... Doctor/Professor robots is technically correct when he states the name of this thread "House prices to keep rising for years." Graphic evidence in the form of a graph from the most trusted of sources. The Guvmnt. We can theorise about sustainablility and macro and micro economic factors and "push pull" fiscal policies with RBA's interetst rate rises and KRudds stimulus packages all we like. Bottom line is that the residential RE is rising. How long will it last? It keeps on going, man.

The important thing to note is that numerical rises have been engineered by governments several to avoid monetary collapse, such is the importance of rising house prices to how western economies (and particularly Oz) are structured. This does via inlation.

"Real" values (as measured by comparing to wages/rents etc) have in fact collapsed several times.

Real estate paid for with cash has at times been a very very poor investment, it is gearing which makes it work over the long term.

Macquack · 21 October 2009

MrBurns said:
I guess you could also say that shares also only rise over time.

This whole thread is BS, of course property rises over time, what is also true is that there are times when it goes in reverse.

However property, like shares always recovers and goes forward, the way to succeed in either is to have impecable timing, not possible, only luck, or be almost debt free or have an ability to service debt regardless of economic conditions.

Very good Burns, I actually like this!

nunthewiser · 21 October 2009

Macquack said:
Very good Burns, I actually like this!

Last edited by wayneL : Today at 10:49 PM. Reason: Let's all be nice to each other.

hahahahahah would love to know what you changed there wayne

Macquack · 21 October 2009

nunthewiser said:
hahahahahah would love to know what you changed there wayne

I said that he has an ego, hardly an insult.

Macquack · 21 October 2009

wayneL said:
The important thing to note is that numerical rises have been engineered by governments several to avoid monetary collapse, such is the importance of rising house prices to how western economies (and particularly Oz) are structured. This does via inflation.

"Real" values (as measured by comparing to wages/rents etc) have in fact collapsed several times.

Real estate paid for with cash has at times been a very very poor investment, it is gearing which makes it work over the long term.

This has me thinking, why does the RBA have a target rate of inflation of say 2-3% when it could have a target rate of 0%. Would gearing become obsolete?

wayneL · 21 October 2009

Guys,

There has been a lot of agro on the forum lately.

Sorry if appearing to come down too hard in some instances, but we all need to make an effort to tone down.

Please don't get angry with us mods, just trying to get the forum back the way it was. It might seem OTT sometimes, and we won't catch all instances, but it should be a temporary situation.

Thanks for understanding.

wayneL · 21 October 2009

Macquack said:
This has me thinking, why does the RBA have a target rate of inflation of say 2-3% when it could have a target rate of 0%. Would gearing become obsolete?

Not if you could positively gear property with a reasonably small deposit. That would still make a good investment (depending on the #'s.) .

MR. · 22 October 2009

Beej said:
Yes, but in the bank you have exactly ZERO opportunity for capital growth, and no ability to leverage to benefit further from any capital growth (with commensurate downside risk of course), and also no hedge/protection against inflation. I think the inflation hedge aspect plus potential steady returns equivalent to bank cash rates may be what are/will attract SMSF investors into the market in the coming months. We shall see!

I think the inflation hedge

Real estate is an inflation hedge?

The 70's in particular!

http://i187.photobucket.com/albums/x308/LPShadow/HousePrices1970-2003.gif
View attachment cpi vs REAL ESTATE.bmp

http://www.rba.gov.au/Speeches/2003/_Images/100403_dg_graph1.gif
View attachment cpi2.bmp

Uncle Festivus · 22 October 2009

MR. said:
I think the inflation hedge

Real estate is an inflation hedge?

Which inflation - CPI or Money Supply? Is property 'returning' more than the money supply inflation rate? An inconvenient truth when it comes to determining the real return from property? Anybody really think the prices of assets like gold or oil are going up because of increasing demand? It's all about how much money is being thrown at things, property included.

MrBurns · 22 October 2009

Real estate is an inflation hedge against the price of real estate, thats all that matters, otherwise it might just get beyond you while you're not looking.

Beej · 22 October 2009

MR. said:
I think the inflation hedge

Real estate is an inflation hedge?

The 70's in particular!

MR it looks to me like that house price index graph is measuring "real" (ie inflation/CPI adjusted) prices, given that in 1970 you could buy a median house in Sydney for $17.5k and today it costs $550k a nominal price index should show a 31x change from the base value in 1970. So therefore it actually proves quite clearly that property is a good CPI inflation hedge. I think that was your point though?

Uncle Festivus said:
Which inflation - CPI or Money Supply? Is property 'returning' more than the money supply inflation rate? An inconvenient truth when it comes to determining the real return from property? Anybody really think the prices of assets like gold or oil are going up because of increasing demand? It's all about how much money is being thrown at things, property included.

I agree with your last point. Is property returning more than money supply inflation? No probably not. It is however beating CPI by a consistent margin over the long term. The thing isn't that the idea? If you are a self funded retiree, CPI is what matters to you, not the price of property, so if your capital is hedged against CPI and then some and you have income (from rent) growing with CPI, then you are sweet? I'd want as least a part of my portfolio set-up like that anyway.

Cheers,

Beej

gfresh · 22 October 2009

MrBurns said:
Real estate is an inflation hedge against the price of real estate, thats all that matters, otherwise it might just get beyond you while you're not looking.

Unfortunately this is so.. everything else is always affordable, and even become more affordable (with more features over time, e.g. technology, cars, appliances), it's only house prices that are the inefficient market.

http://www.theage.com.au/business/housing-affordability-worsens-20091022-ha2q.html

What was it the realestate industry was banging on about, "record affordability" during multi-decade low interest rates! what a croc, it was only a very temporary phenomena that was always going to swing the other way.

And migrants with a proper international perspective aren't going to keep paying higher and prices when they can get a higher standard of living o/s...

http://www.theage.com.au/business/m...roperty-market-20091021-h8of.html?autostart=1

One former expat, Daniel returned to Sydney from a five-year stint in London. Now he and his wife “don't intend to go anywhere near the Australian property market” despite having saved more than $200,000 for a deposit on a home.

“The price of property (and living) is more expensive here than most places we have travelled,” he said, declining to give his full name.

...

Dutch-Canadian Frans Kuiper and his Australian wife sold their home in the Netherlands in 2004 on the expectation of buying after moving to Adelaide. But five years later the couple continues to rent.

“If prices do not come down in the future, we are prepared to move overseas again,” said Mr Kuiper.

Coming from overseas, Mr Kuiper said he had no experience with house auctions, while his wife, who had lived outside of Australia for 10 years, had little inkling of how far property prices had risen during her absence.

“Although we can ‘afford’ to buy a home in Australia we have chosen to rent as we believe house prices here are grossly overpriced,” he said.

MR. · 22 October 2009

Beej said:
MR it looks to me like that house price index graph is measuring "real" (ie inflation/CPI adjusted) prices, given that in 1970 you could buy a median house in Sydney for $17.5k and today it costs $550k a nominal price index should show a 31x change from the base value in 1970. So therefore it actually proves quite clearly that property is a good CPI inflation hedge. I think that was your point though?

Beej,
No it wasn't. (I should be keeping quite) I was questioning the discrepancy. The housing price chart is in “real” prices. (ie: House prices less inflation.)

Clearly house prices for the last 40 years have been a good hedge against inflation. In 1975 inflation was 16% and the price of Australian houses kept up with CPI. Interesting that in 1975 the housing loan interest rate was 10%.

If the housing loan rate was at 10% the RBA must have had the cash rate at approx 8%. While inflation was at approx 16%, that was for near 3 years. Oil shock or whatever it appears to be fact.

As I said before I want to be in the glass half full group but:
That spike towards the end didn't look right to me in this chart and it saved me alot of $$$

The spike towards the end of this chart doesn't look right either. So.....

View attachment cpi vs REAL ESTATE.bmp

robots · 22 October 2009

hello,

classic reading that article from the age,

those people should be looking at/taking to the cleaners all the bloggers, cfd salesman, reporters, forex traders, cfd companies, economists, anti-property forums (which are all about laying the boot into the wealthy) who spread the propaganda

they all got it amazingly WRONG,

they also wanted to return to Australia to have a family and live the life which a recent survey supports is one fantastic ride, that costs, yes it costs $ it aint free

and those in have typically done the hard yards, saving, working to get to a way of life no other country in the world comes close to

paradise, in and outside the front door for all

thankyou
Doctor Robots

MR. · 22 October 2009

MR. said:
The spike towards the end of this chart doesn't look right either.

and that chart ends at 2003.

afternoon robots....

robots · 22 October 2009

nunthewiser said:
Might be a good idea to totally ignore any japanese graphs/data then guys ..

It could never happen here after all

might pay to compare a few graphs actually and compare the lengths and velocitys of various countries "bubbles" though but i dare say we can always come up with reasons that this time "its different"

and a BIG thanks to all the SPECIAL people here

sunshine and lollipops , nirvana and a 6 pack and a pizza thanks

anyways ........ as you were

hello,

good afternoon MR., another great day

top effort Nun, great place and we all got each others back

thankyou
Doctor Robots

robots · 22 October 2009

hello,

any hip hop fans check kissfm.com.au now for some fine tracks 87.60 fm dial

thankyou
doctor robots

House prices to keep rising for years

Uncle Festivus

MrBurns

MrBurns

wayneL

VIVA LA LIBERTAD, CARAJO!

Macquack

nunthewiser

Macquack

Macquack

wayneL

VIVA LA LIBERTAD, CARAJO!

wayneL

VIVA LA LIBERTAD, CARAJO!

MR.

Uncle Festivus

MrBurns

Beej

gfresh

MR.

robots

hello

MR.

robots

hello

robots

hello

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