The future of Australian property prices

[Mr Z]

Hot Flopper... that is funny.

On the consumer durable house thing... that is why you can depreciate a new rental dwelling, it has a life like a fridge or car.... albeit a long life but hey it needs $$$$ chucked at it to stay in shape!

I think BHP will go to $54 in the next 10 months :

Nighty night!

 

[trainspotter]

Hot Flopper... that is funny.

On the consumer durable house thing... that is why you can depreciate a new rental dwelling, it has a life like a fridge or car.... albeit a long life but hey it needs $$$$ chucked at it to stay in shape!

I think BHP will go to $54 in the next 10 months :

Nighty night!

LOLOL ... now you getting with the spirit !

One of the most common of all consumer durables would be the furniture found in the home. This would include items such as sofas, chairs, tables, bed frames, and storage pieces such as chests of drawers and bookshelf units. While once thought to be limited to only items made of sturdy metal or wood, any type of furniture today that is intended for use over the period of at least a few years can rightly be classified as consumer durables.

Another common example of customer durables in the possession of most households is appliances. These items may include ovens, refrigerators, toasters, and gas or electric water heaters. Consumer durables of this type are intended for use on a continuing basis, and often are sold with some type of warranty or service contract that helps to ensure the appliance will continue working for an appreciable period of time.

The family car is also understood to be among the various consumer durables owned by many households. Considered a major investment by many consumers, the expectation is that the vehicle will remain operational for at least the amount of time it takes for the consumer to pay off any loans associated with the acquisition. Further, consumers anticipate that the vehicle can be utilized on a regular basis without fear of being destroyed by the frequent usage.

http://www.wisegeek.com/what-are-consumer-durables.htm

A house indeed !! Pffffffffffffft !

 

[Mr Z]

hello,

Ubi can you please tell MrZ this is a property thread and if wants to discuss gold go to the commodities zone

Oh yeah MR isnt life a ride man and i also must take time out to thank everyone here, you wouldnt change it for a second
Thankyou
Robots

42 Bots, 42!

Jeez... achtung! you vill be myopic for the purposes of this thread!

Sleep tight, don't let the hookers bite.

 

[Mr Z]

A house indeed !! Pffffffffffffft !

So classify it then... smarty!

I had a car that was older than some houses ever saw, better build as well! The car is a consumer durable and the building we call a house is not??? WTF? It is consumed over time and it is durable.... Pfffffffffffffffffffffffffft all you want, that is the correct economic reference for it. Go look at a dilapidated 100 year old weather board and tell me with a straight face that it is not used up! HA!

 

[trainspotter]

So classify it then... smarty!

I had a car that was older than some houses ever saw, better build as well! The car is a consumer durable and the building we call a house is not??? WTF? It is consumed over time and it is durable.... Pfffffffffffffffffffffffffft all you want, that is the correct economic reference for it. Go look at a dilapidated 100 year old weather board and tell me with a straight face that it is not used up! HA!

I thought you said Nighty Night? Your logic has me bluffed. I have googled, binged, asked Jeeves, answers.com and they all give me the same answer. Houses are not classified as a consumer durable. I will call my accountant in the morning to clarify this situation. She could do with a laugh.

Goods that have a useful life of more than three years. Orders for durable goods, which are tracked by the Commerce Department on a monthly basis, indicate the extent to which businesses and manufacturers are willing to invest capital for future needs Several months of increases in durable goods orders are a sign of a strong economy, and vice versa.

Long-lasting merchandise such as televisions, appliances, hardware, furniture, or recording equipment; also called hard goods.

http://www.answers.com/topic/durable-goods

But if you want to call it that for sake of continuing the discussion I will allow it. Just this once, just to be sociable. OK.

My 1993 Landcruiser is better built than most houses these days but you did not hear that from me.

 

[Mr Z]

With all due respect to your accountant they don't know their 'a' from their elbow when it comes to economics! They are good with rules and calculators! While you are at it why don't you ask her what the main ideological clashes between Keynes and the Austrian School of Economics are. She will be a rare bird if she knows!

You will not find a lot of things in the definition for consumer durable because its a list of examples...

1. It must be eventually consumed.
2. It must be reasonably durable (things like shoes don't make it!)

You will find that it is not included in statistics as a consumer durable because housing is treated separately, mainly I think because the land content would distort the data making it meaningless considering what they are trying to learn when looking at consumer durables. Also its such a large body of $$$ there is merit in treating it separately, unlike say washing machines You could argue that for statistical purposes they are not and I think that is quite sensible.

Regardless the building we call a house, not the property its on, meets the definition of a consumer durable. They deteriorate, they depreciate and they are eventually replaced. Over the long run the house tends to loses value but because the land typically more than compensates due to growth in our cites etc, many people tend to ignore or just not consider that fact. They are purchased by consumers to meet a long term need... its not so hard is it?

Anyway... semantics! Way to subvert the point :

 

[MR.]

You will find that it is not included in statistics as a consumer durable because housing is treated separately, mainly I think because the land content would distort the data making it meaningless considering what they are trying to learn when looking at consumer durables.

Mr Z, which data do you speak?

http://www.abs.gov.au/ausstats/abs@.nsf/mf/6401.0

Although, a percentage change in Housing can be offset by a percentage change in Clothing and Footware, the "amount" changed could be quite different!

 

[Mr Z]

When you see references specifically to "consumer durable" sales.

And yes... the devil lives in the detail of the numbers that is for sure.

 

[Mr Z]

Yeah BABY! go on click the link, you know you want to!

Hmmmmmmm... it is definitely not the sign of a bottom, I know that much.

 

[Temjin]

Source: Gerard Minack, Morgan Stanley Research (via Money Morning) (data sourced from ATO public source)

Source: Gerard Minack, Morgan Stanley Research (via Money Morning) (data sourced from ATO public source)

Great charts from Gerard Minack who originally posted the article about ponzi scheme on real estate properties.

Pretty self explanatory.

However, it does show the interest cost of investment properties have been rising disproportionately over the last two decades and largely contribute to the increasingly "negative" net rental return on investment properties.

Great investments really. Time to buy more properties with negative rental return and wait for capital appreciation to double in less than 7 years!

 

[electronicmaster]

Source: Gerard Minack, Morgan Stanley Research (via Money Morning) (data sourced from ATO public source)

Source: Gerard Minack, Morgan Stanley Research (via Money Morning) (data sourced from ATO public source)

Great charts from Gerard Minack who originally posted the article about ponzi scheme on real estate properties.

Pretty self explanatory.

However, it does show the interest cost of investment properties have been rising disproportionately over the last two decades and largely contribute to the increasingly "negative" net rental return on investment properties.

Great investments really. Time to buy more properties with negative rental return and wait for capital appreciation to double in less than 7 years!

Ouch..

 

[robots]

hello,

thats great, dont buy then and invest elsewhere no big deal right

oh yeah, thanks for your opinion Gerard Minack, how have your funds performed that you want me to invest in? will you stop redemptions at any point?

gee everyone has blown Keen now you onto this next spruiker Minack

oh well

thankyou
professor robots

 

[Agentm]

robots

what part of Gerard Minack's report is inaccurate or incorrect.

i read the report today myself and the opinions looked sound.

just curious which part of the opinions you dont agree with?

TIA

 

[robots]

hello,

a. australian house prices are in a bubble

b. RE is/has been a dud investment

c. "inflation adjusted" or "in real terms" prices in 1891 have just been surpassed/or matched in 2001 in Melbourne

just a few I quickly picked out, i did read it the other day

shiller all over again

thankyou
professor robots

 

[trainspotter]

Minacks report is sound and he speaks with forked tongue. He claims we are in a bubble but he also quantifies the RBA decision to stall growth. Read the full article. He also claims it wil be a deflation rather than a pinprick.

I have said all along that for this RE to burst many things must happen.

1) Wholesale job losses - then people cannot afford to pay their mortgage.
2) Massive increase in interet rates - yet RBA scribblings deny this is going to happen.
3) One of the big 4 banks falling over - unlikely but possible. (Govt backed I believe)
4) Toxic debt and non recourse and ratchet loans kicking in - We don't have ANY of these.
5) Secondary wave of GFC - possible but unlikey due to this Guvmint printing money to prop the industry up.

Minacks summary only concudes that No #1 is most prevelant but also must unlikely. I have referenced the data about 20 or so posts ago.

UNTIL one of you can produce the hardship you are so KEEN to quantify I will proffer my backing with Profesor Robots. Afterall .... he has got it right.

Meanwhile back at the ranch:- property that I own is going to setllement. I signed tha land transfer today ... A tidy sum of speculation of 23% within 12 months. Oh well ... must be real terms before I know what I am doing.

 

[trainspotter]

When you see references specifically to "consumer durable" sales.

And yes... the devil lives in the detail of the numbers that is for sure.

My accountant had a hysterectomy at your association of words to try and count houses as a consumer durable. It took a full 2 minutes of guffaws before she was in a mean state to talk rationally to. UMMMM NOPE. According to the ATO what you are talking about is a throw away item. It has a shelf life for tax deductibility and is a negative asset.

A house does not meet these criteria. Oh and by the way she is a CPA with 600 clients. Just to really push the point home she is also my sister. Oh well ... what the hell would she know?

 

[electronicmaster]

Anyone have Charts of Housing priced in Gold and/or Silver?

Please post them here.

 

[trainspotter]

Great investments really. Time to buy more properties with negative rental return and wait for capital appreciation to double in less than 7 years!

Clearly you have not been keeping up with this thread. It has been decided by the quorum that we agree to agree that property has stagnated. We also agree that it has shown signs of reversal and into negative equity in certain areas. It has dipped NATIONALLY in a seasonally adjusted terms ... wait for it ... wait for it ..... 0.7% overall. (by the ABS)

Can anyone tell me what happend in the stockmarket over the same period of time? HUH ... anybody? Lets go say ....... I dunno ....... overall nationally seasonally adjusted 3 years ago as to what happened and how much did it lose in this period?

Now for all those people who say isn't it wonderful I am in base metals and going at 800% on certain stocks !! WELL DONE YOU !!! I kiss the living earth at your feet .. you are so clever! Yo have a piece of paper in a company that is making a profit and it is reflected on the stock market.

But alas it is not for me. You see when I invest in property I am employing people, people that matter. Their kids play with my kids at school. I have a vested interest in their future (and mine because I want to make money) No point having a businees unless you are in it for profit.

Now which would you prefer ? Holding a piece of paper and sprouting I made 800% return or spreading the wealth and keeping people employed.

Your choice .. you decide. I have made my choice. You choose yours.

 

[Mr Z]

TS..

Is it good or a service?
Do consumers or producers purchase it?
Does it last more than three years?

Consumer Durable Good

So why is it different in an economic sense from any other durable good consumers purchase? You need to argue that it is different to impact the argument I was making... bright spark!

What the ATO thinks is irrelevant.... seriously, I can't see the great economic thinkers saying oh bugger we have to revise our ideas because the ATO says for tax purposes x is y. So you base your economic thinking on ATO definitions and accountants, what a narrow outlook. I also find it kinda quaint that you have so much faith in the RBA, their numbers and capabilities. You do love authority don't you? Hell why not, we should all take what they tell you as gospel! Easier than thinking!

Seriously accountants count beans and play with rules, and I am glad they do, it is mind numbing bullchit that they wade through, but I am afraid when it comes to economics they are ignorant, CPA's are not known for their great macro calls now are they really? It amuses me that you felt the need to ask your CPA! No really, it does!

Well done you with the house! Who is a clever boy then!?... Now back inflation out of the 23% and you will find you made a gain in real terms. Stuns me that you and bots can't deal with that concept... speaks volumes really.

So, anyway what has that got to do with the prospects going forward? If you where the last guy to sell say Hotdog before the whole tech boom went bang did that make you smart or lucky? You know? Get it? Just because you made it doesn't make what you did clever... but apparently it makes you think you are clever. LOL, never believe your own press.

Nope, I don't think you will get it...

I am getting bored... have you got anything interesting?

 

[Mr Z]

Clearly you have not been keeping up with this thread. It has been decided by the quorum that we agree to agree that property has stagnated. We also agree that it has shown signs of reversal and into negative equity in certain areas. It has dipped NATIONALLY in a seasonally adjusted terms ... wait for it ... wait for it ..... 0.7% overall. (by the ABS)

Can anyone tell me what happend in the stockmarket over the same period of time? HUH ... anybody? Lets go say ....... I dunno ....... overall nationally seasonally adjusted 3 years ago as to what happened and how much did it lose in this period?

Now for all those people who say isn't it wonderful I am in base metals and going at 800% on certain stocks !! WELL DONE YOU !!! I kiss the living earth at your feet .. you are so clever! Yo have a piece of paper in a company that is making a profit and it is reflected on the stock market.

But alas it is not for me. You see when I invest in property I am employing people, people that matter. Their kids play with my kids at school. I have a vested interest in their future (and mine because I want to make money) No point having a businees unless you are in it for profit.

Now which would you prefer ? Holding a piece of paper and sprouting I made 800% return or spreading the wealth and keeping people employed.

Your choice .. you decide. I have made my choice. You choose yours.

What a holier than thou BS! You clearly don't understand capital markets and their function. People who buy stocks and finance these companies create more in terms of jobs and real wealth for this country than speculators that mark up properties. Face it all you are doing is making a given property more expensive than it needs to be. All well and good while the market lets you get away with it but for cripes sake don't go puffing yourself up over it! Talk about the pot screaming black at the kettle, you are playing pocket billiards there pal. Taking the moral high ground on that is just sickening. Why are you on a stock forum anyway?