The future of Australian property prices

[StumpyPhantom]

An Australian, Steve Keen, is widely published on this subject. See for example:

http://www.debtdeflation.com/blogs/poolroom/media-coverage/

http://www.crikey.com.au/2011/12/19/house-price-experts-off-key-on-the-new-reality/

As we draw further and further from GFC (1?), his predictions seem to have moderated. The latest I think is a 6-10% drop this year, which was probably going to be close to the mark without interest rate reductions by the RBA.

With China's property bubble as an extreme example (60 million unoccupied units in 10-20 ghost cities), the critical thing seems to be whether it's a gradual decline or whether it's a calamitous drop, with the latter having strong ripple effects right through other parts of the economy.

If there is no tsunami approaching from outside Australia, the former scenario is more likely to play out. But lose the mining boom, European debt contagion, Iran gets bombed and the black swan event will have arrived. The Gold Coast is already there, then Perth, then Gladstone, then Brisbane, and so on. But thaat's GFC2, so wait and watch.

 

[doctorj]

An Australian, Steve Keen, is widely published on this subject. See for example:

Keen's view's are largely focused on the extraordinary growth in household debt levels, shown below

 

[MACCA350]

Certainly considering selling off our land, though I may have missed the peak of this bubble.

Cheers

 

[Uncle Festivus]

Wealth is just an illusion for the property bulls - we're not getting any richer?

 

[trainspotter]

*GOSH* ... has anyone been paying attention??

JOBS JOBS JOBS ....... IS THE TRIGGER POINT !!!!!!

1st Fleet closes it's doors and 600 jobs lost.

http://www.news.com.au/business/st-.../story-e6frfm1i-1226345440090?from=public_rss

What does 1st Fleet do? Why a trucking company of course !! So deliveries of product to various outlets is now in jeapordy thusly affecting supply of goods to the retailer causing an accordian effect to the consumer.


3000 Public Sector Jobs to go in the next budget as Juliar Gizzards razor gang gets busy.

http://afr.com/p/national/public_sector_could_lose_jobs_union_gBCnqpA4D4DBhn9m3rj1eM

Dear oh Dear !! The Unions will not be liking this one. Vive' le Revolution !!

700 jobs in Optus and 1000 jobs in Qantas in the balance here.

http://www.news.com.au/optus-signal...ly-as-next-month/story-fn7x8me2-1226304551759

Sooooooooooooo once again for comedy purposes only. Residential prices in Australia will fall at a faster pace due to job losses. But I only have been banging on about this fact for a couple of years now.

Good to see Steve Keen followers as well as the man himself have moderated their views on the percentile of possible deflation of property.

Let the hatchet job begin.

 

[trainspotter]

Wealth is just an illusion for the property bulls - we're not getting any richer?

View attachment 46987

Aaaaaaaaah yes Uncle F ..... but but but the little red line is spending a lot more time above the datum point.

 

[young-gun]

*GOSH* ... has anyone been paying attention??

JOBS JOBS JOBS ....... IS THE TRIGGER POINT !!!!!!

1st Fleet closes it's doors and 600 jobs lost.

http://www.news.com.au/business/st-.../story-e6frfm1i-1226345440090?from=public_rss

What does 1st Fleet do? Why a trucking company of course !! So deliveries of product to various outlets is now in jeapordy thusly affecting supply of goods to the retailer causing an accordian effect to the consumer.


3000 Public Sector Jobs to go in the next budget as Juliar Gizzards razor gang gets busy.

http://afr.com/p/national/public_sector_could_lose_jobs_union_gBCnqpA4D4DBhn9m3rj1eM

Dear oh Dear !! The Unions will not be liking this one. Vive' le Revolution !!

700 jobs in Optus and 1000 jobs in Qantas in the balance here.

http://www.news.com.au/optus-signal...ly-as-next-month/story-fn7x8me2-1226304551759

Sooooooooooooo once again for comedy purposes only. Residential prices in Australia will fall at a faster pace due to job losses. But I only have been banging on about this fact for a couple of years now.

Good to see Steve Keen followers as well as the man himself have moderated their views on the percentile of possible deflation of property.

Let the hatchet job begin.

this is indeed the most 'open to the idea of a fall in prices' post I have seen from you train spotter, it's refreshing.

 

[trainspotter]

this is indeed the most 'open to the idea of a fall in prices' post I have seen from you train spotter, it's refreshing.

Aaaahhhh but Grasshopper ..... Go and read post #5984 on Page 300 that I wrote on the 8th of August 2011. Really take note of the "QUOTE" from myself in this post.

There were many more before that but I cannot be bothered trolling through the years/pages/posts that I have been writing about only to fall on myopic eyes and views with the inability to comprehend what I have been diatribing about.

To know your enemy is to keep them close.

 

[young-gun]

Aaaahhhh but Grasshopper ..... Go and read post #5984 on Page 300 that I wrote on the 8th of August 2011.

There were many more before that but I cannot be bothered trolling through the years/pages/posts that I have been writing about only to fall on myopic eyes and views with the inability to comprehend what I have been diatribing about.

To know your enemy is to keep them close.

you will have to forgive me for also not wanting to go back through them all, your posts that I have read have been far from dominated by the idea of a fall. ill get back to you.

 

[young-gun]

LOL Uncle Festivus. All you permabulls. SHUCKS I am honoured you think this way. Where did I say that property will be doing fine? Where were you when I wrote this?



Hey Uncle .... people have to live somewhere you know? They all just can't wander the streets aimlessly or sleep under bridges. This is why people rent houses.

As for interest rates going down means that the majority of people will still be able to pay the mortgage. Yes yes yes there will be the usual victims that overleveraged and will have to sell due to foreclosures. Ho hum. Happened before it will happen again.

Last week everyone was squawking the reason property was going to fall was that interest rates were going to go UP and people would not be able to afford the repayments along with all the costs of living going UP etc. Looks like it will be going down now. SHUCKS, now aint that a biatch.

Any liquidity like cash or shares. Hahahhaahaaa sell your shares?? Who is gonna buy them in this market Uncle? 40 billion wiped out in 2 days of ASX trading. Liquidate your cash into what exactly? Interest bearing accounts? LOL .... now that's a good one. To qualify as liquid, you must be able to sell the asset quickly without a loss of value.

I have repeatedly explained that property has fallen in CERTAIN areas as well as the risk involvement in trading in property.

But alas, alack it falls on deaf ears and mute eyes and stagnant brains.

I might join robots in the dark room and observe as the bears come down to feast on the carcass of what was once an enjoyable thread.

finally something we agree on. But i don't believe that unemployment is the sole trigger(although possibly the most noticeable) to falling prices, there is a huge array of factors the contribute to such an event.

I also think you are putting too much faith in the ability of lower interest rates to stop a fall. Sure it helps people to hold their houses a little longer if they are in strife, but I think there would be a point at which people go "oh ****, I need to get out now before I lose any more money!" regardless of their repayments. And as you have pointed out, interest rates are redundant if you cant make the repayments at all

In fact I think interest rates are redundant in every way in the current market, as evident throughout the world at present.

 

[trainspotter]

you will have to forgive me for also not wanting to go back through them all, your posts that I have read have been far from dominated by the idea of a fall. ill get back to you.

I have not changed my position. I have always maintained that prices are trancing sideways and or falling in CERTAIN areas. I have also maintained that there is still moeny to be made in CERTAIN areas.

I have given clear and concise reasons as to WHY I think house prices will fall and given valid and factual explanations as to how to make money in RE both commercial and also residential. Even down to percentages of profit as well as amount of capital input required.

My main objection is that other "posters" have claimed 30% to 40% reductions overall ala Steven Keen style. I have called for a more orderly "leaking of the balloon" style due to the amount of banks/guvmint/business/corporations involved along with the FACT that we are not like America or Spain or Greece or Ireland blah blah blah as our fiscal policy as well as the amount of money involved is chicken **** compared to what they have over there tied up in RE. Our Guvmint is not broke but they are working on it !!!

We are only 22 million people for CHRISSAKE ..... Not even a decent city in China.

What did Commbank come out and say about passing on the interest rate reduction? "We have to think of our 3 million DEPOSITORS compared to our 800,000 mortgage holders first." Hmmmmmmmmm over securitised you think?

 

[wayneL]

Viva La Revolución! (Or Vive depending on the specific source)

One mustn't cross tongues. :

 

[trainspotter]

finally something we agree on. But i don't believe that unemployment is the sole trigger(although possibly the most noticeable) to falling prices, there is a huge array of factors the contribute to such an event.

I also think you are putting too much faith in the ability of lower interest rates to stop a fall. Sure it helps people to hold their houses a little longer if they are in strife, but I think there would be a point at which people go "oh ****, I need to get out now before I lose any more money!" regardless of their repayments. And as you have pointed out, interest rates are redundant if you cant make the repayments at all

In fact I think interest rates are redundant in every way in the current market, as evident throughout the world at present.

MY GOD MAN !!! You actually agree with one of my posts???

Once again you misinterpreted what I wrote in the quote !!

Read it again please "If this happens then I can easily see a quickening slide on the 8 capital city average home price due to foreclosures"

Note the word "quickening" ..... and that I recognised that the home prices were already sliding in the 8 capital cities?

This is what I am talking about ... the "selective" interpretations of my posts.

My position has not changed.

 

[trainspotter]

One mustn't cross tongues. :

LOL ...... Good on ya WayneL .... my faux pas !!

 

[young-gun]

I have not changed my position. I have always maintained that prices are trancing sideways and or falling in CERTAIN areas. I have also maintained that there is still moeny to be made in CERTAIN areas.

I have given clear and concise reasons as to WHY I think house prices will fall and given valid and factual explanations as to how to make money in RE both commercial and also residential. Even down to percentages of profit as well as amount of capital input required.

My main objection is that other "posters" have claimed 30% to 40% reductions overall ala Steven Keen style. I have called for a more orderly "leaking of the balloon" style due to the amount of banks/guvmint/business/corporations involved along with the FACT that we are not like America or Spain or Greece or Ireland blah blah blah as our fiscal policy as well as the amount of money involved is chicken **** compared to what they have over there tied up in RE. Our Guvmint is not broke but they are working on it !!!

We are only 22 million people for CHRISSAKE ..... Not even a decent city in China.

What did Commbank come out and say about passing on the interest rate reduction? "We have to think of our 3 million DEPOSITORS compared to our 800,000 mortgage holders first." Hmmmmmmmmm over securitised you think?

This chart isnt the most recent, but me thinks that australia has just as much money tied up in RE as anywhere else?
http://www.macrobusiness.com.au/201...orsens-recessions/imf-mortgage-debt-to-gdp-8/

I know you hate keen(im not his biggest fan either), but he pulled these charts from the RBA, putting our mortgage debt to gdp at around 85%.
http://www.debtdeflation.com/blogs/2012/01/07/australian-house-prices-again/

and finally this recent article from the irish times
http://www.irishtimes.com/newspaper/finance/2012/0221/1224312114714.html

There is no escaping personal debt in this country. It is a massive problem. Just how massive was revealed in a recent report by consultants McKinsey, which put Ireland’s household debt as a percentage of gross domestic product at the end of the second quarter of last year at 124 per cent. The average for a mature economy is 77 per cent. And while in some respects Ireland is performing much better than other financially troubled countries, when it comes to our personal debt mountain we are out on our own. Greece has a personal debt to GDP ratio of 66 per cent, in Portugal it stands at 99 per cent and in Spain it is 82 per cent, while Italy’s personal debt to GDP ratio is an admirable 45 per cent.

please note that the above figures are HOUSEHOLD debt, not just mortgage debt. it would seem our mortgage debt alone is above most countries entire household debt, unless im missing something.

and whats our population got to do with it? ireland only has 4.5 million and their RE has fallen?

im not trying to pick you apart, please feel free to correct me if i have missed something with my myopic view

 

[trainspotter]

This chart isnt the most recent, but me thinks that australia has just as much money tied up in RE as anywhere else?
http://www.macrobusiness.com.au/201...orsens-recessions/imf-mortgage-debt-to-gdp-8/

I know you hate keen(im not his biggest fan either), but he pulled these charts from the RBA, putting our mortgage debt to gdp at around 85%.
http://www.debtdeflation.com/blogs/2012/01/07/australian-house-prices-again/

and finally this recent article from the irish times
http://www.irishtimes.com/newspaper/finance/2012/0221/1224312114714.html


please note that the above figures are HOUSEHOLD debt, not just mortgage debt. it would seem our mortgage debt alone is above most countries entire household debt, unless im missing something.

and whats our population got to do with it? ireland only has 4.5 million and their RE has fallen?

im not trying to pick you apart, please feel free to correct me if i have missed something with my myopic view

Errmmmmmmm go and do some research and get back to me. I have enucleated my position more than enough in here. This topic has been covered a Brazillian times already.

Start with the Google search "Ireland is part of the European Union "

 

[young-gun]

MY GOD MAN !!! You actually agree with one of my posts???

Once again you misinterpreted what I wrote in the quote !!

Read it again please "If this happens then I can easily see a quickening slide on the 8 capital city average home price due to foreclosures"

Note the word "quickening" ..... and that I recognised that the home prices were already sliding in the 8 capital cities?

This is what I am talking about ... the "selective" interpretations of my posts.

My position has not changed.

haha you make out as though this view of yours is something you portray all the time, I'd like to point out that it isn't the most frequent idea that you post, in fact as I said its the first time I have seen you talk about it in recent times.

It's not so much that I disagree with your posts, as it was a dislike for your inability(how i perceived you at the time) to see both sides of an argument. but i feel much better now that I know you do in fact see a threat there and of course i can concede there are opportunities out there, I have never argued there isn't, but I'll leave those opportunities to you and tech, and keep my cards close to my chest for now.

 

[wayneL]

To be fair Young Gun, I do recall TS repeatedly being 'realistic' about the prospects of RE throughout this thread since that original quote.

 

[McLovin]

I was watching Selling Houses Australia last night (yes I was that bored). Anyway, they had a property in South Coogee, with nice enough views, but the house was an absolute knock-down rebuild job. The vendor wanted $3m. Thinking this was a new episode I almost choked on my Ron Zacapa. Then I realised it was from early 2008. How times change. For $3m these days you could buy a decent place in Vaucluse.

 

[Uncle Festivus]

Aaaaaaaaah yes Uncle F ..... but but but the little red line is spending a lot more time above the datum point.

That's a yearly trend change down for 20 years now, and a flattening of the GDP as well. It's all part of the big picture globally - too much liquidity creating property bubbles. Looks like one last hurrah from the late comers with the interest rate reduction, perhaps may arrest the decline momentarily, but for all intents we are probably just now at the start of the property bust coinciding with the next leg down of the GFC?

Anyway, welcome to the dark side

PS it's now 2 years since the Robots peak.....