Glenn Stevens: "I think it is a mistake to assume that a riskless easy guarantee way to prosperity is just to be leverage up into property..."
wiki link said:The Australian property bubble is an observation that real estate prices in Australia appear to be great inflated (when compared to most other developed economies, when compared to the long-term historical average, when compared to rental yields, and when compared to average income), and that this may constitute a real estate bubble.
OK, time to get back on the thread. 3 Weeks ago I met an old ex navy man in Manly. We got talking about stuff when I asked him where he lived, he told me he lived in Beacon Hill. Beacon Hill is roughly 25 kms from the Sydney CBD, it is not serviced by train and is totally reliant on buses and private motor vehicle for transport.
This man told me than in 1967 he had an agent try to convince him to by the house off the plan in Beacon Hill for $6,000. It took the agent all day to convince him that is was a good idea. He told me he was so scared to do it and that it was just so much money and that he was uncomfortable about it all. He said the only thing that convinced him was that a few Navy mates had already done it and that is was a good idea. In the end he decided he would go for it. He put down the deposit and from that time on his weekly salary paid for the repayments.
The man was not bragging but he said it was the best thing he ever done.
Now this Timber home on brick foundations is worth $800,000..... Will property prices rise in future? Absolutely no doubt in my mind.
Anyone see the interview with Glenn Stevens today on Sunrise?
http://au.tv.yahoo.com/sunrise/video/play/-/6994337/em-rba-em-governor-glenn-stevens/
When the man who writes the rules says to not over leverage in real estate then you know there is a bubble. He's of-course not going to admit there is one but you can tell he doesn't like the current situation RE is in.
"I think it is a mistake to assume that a riskless easy guarantee way to prosperity is just to be leverage up into property..." - Glenn Stevens
He wanted to make a point, that's for sure.The nation's top central banker has taken the unprecedented step of being interviewed on commercial television, warning property buyers not to borrow too much.
He wanted to make a point, that's for sure.
He didn't go as far as quoting Alan Greenspan. Perhaps he should have.
LOL there's an Australian property bubble wiki
http://en.wikipedia.org/wiki/Australian_property_bubble
Just do a google for "property bubble Australia" and you will find obscure forums with pages and pages of debate just like ASF...its strange.
The Treasurer (in 2004) who told Australians: "Work for a living and we’ll tax you at close to 50 cents in the dollar; speculate and we’ll only take 25 cents. Not only that but, as a special deal - while stocks last - we’ll pay half your speculating costs."
a couple of points to ponder....
I thought it was the cashed up Asians who were driving up the prices.....in cash, no loans or mortgages with australian banks involved....
so what is the point of raising rates and making all the borrowers pay, when they have no involvment in this scheme....
History has shown that managing a slow decline in real asset values relative to income is indeed difficult.
RBA Glen Stevens :
"I think it is a mistake to assume that a riskless easy guarantee way to prosperity is just to be leverage up into property..."
Look at the past decade of rising property prices.
The problem is the masses think the "way to prosperity is just to be leverage up into property".
What would he know? I advocate everyone to borrow as much as possible and buy the dream before it is too late. Not long now before the average home will be worth half a million. Good luck to the suckers who still rent
I guess you would like to think that but my guess is you know better....I thought it was the cashed up Asians who were driving up the prices.....in cash, no loans or mortgages with australian banks involved....
so what is the point of raising rates and making all the borrowers pay, when they have no involvment in this scheme....
History has shown many times that economic bubbles pop rather than slowly deflate.Really?? Which history is that?? I think you find the opposite is in fact the case......at least for Australia anyway?
You guys have a warped view of rising interest rates in property.
It WILL slow sales
It WILL increase the prices of property.
It WILL decrease affordability.
Higher interest rates will "increase the prices of property"
got it!
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