By: mentawaisurf
26/10/2009
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Ang, Michael Hudson was one of only a handful of economists to warn of an impending debt crisis, along with our own Steve Keen of course, prior to the initial phase of the GFC.
Hudson was recently on the Sky Business Show warning that Australia has one of the largest housing bubbles in the world and that Australian's have among the highest level of household debt to income in the world. When asked if Australia's 'supposed' housing shortage (and let's ignore the estimated one million vacant houses in Australia for now, everyone seems to) would prevent a collapse in housing prices he replied that supply and demand and investment mania can only drive prices so high. It is the ability to service the debt that places limits on asset prices and supply shortages do not prevent a housing bubble from bursting. Those who ignored his warnings in the US prior to their housing market collapse would advise that we do not do the same here too. |
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By: jaymarcel
26/10/2009
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| Good reply ang I agree with you but I would like to offer yuhongli a chance to give his reasons for a property collapse as he hasn't given any yet. |
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By: ang101000
26/10/2009
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Mr Yuhongli64,
1) I really don't know who started this string and don't really care. It is irrelevant to the unfolding argument.
2) You are correct; everybody can and should be able to believe and write what ever they want.
3) Those who believe that house prices should correct by 40 to 50% have the choice of waiting for the right opportunity to buy property at a cheaper price.
4) In contrast, those who don't expect any price collapse (in the nine ten years) should (perhaps) hold their properties.
5) Maybe the RBA is right in aiming for price stability with interest rates increases, or maybe not.
6) I don't have any problem whatsoever with Menta's writing or even with any informed property commentary.
7) I don't even have a problem with any uninformed opinion writing in regards to property or any other investment.
8) We all have the choice of NOT reading each-others written rubbish.
9) My sense of humour is mine, if my writing offends don't read it or report it to moderators.
10) At the end of the day, Mr Yuhongli, you are in charge of your own destination.
Bye |
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By: yuhongli64
25/10/2009
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...Continued
site:edu
when the above is typed in, things you find should most of time reserch/journal articles which are writen by people who are less likey biased in the subject area and, the articles have to pass some fairly high levels to be published. |
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By: yuhongli64
25/10/2009
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When we need to check out something on internet, we should try to find some unbiased information. Otherwise we are misled by people, such as banks, realestate agencies, home loan companies and builders etc.
I could not believe when reading an article published by The Australians(I always thought it was a quality paper)
Please read the article'Housing disaster looms if rates rise'. This was writen by a billionaire builder and read the comments (100 fo them)from our dear readers!!!
http://www.theaustralian.news.com.au/business/stor y/0,28124,26164175-30538,00.html
It is wise to type in your key works with 'site:edu' on websites such as google.com.au. The you are likely to get some fairly nutrual information. |
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By: yuhongli64
25/10/2009
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ang
'Please, don't keep repeating the housing collapse theory, it has failed in Australia'
We didn't care when you flirt with all sorts of men on this forum,it is your freedom and if men are happy imagining your doing pole dancing I am happy for you too.BUT when you asserted the above I say it is still too early to make this conclusion.
Just because you have bought several houses you can't stop us express our free views.
Predict house prices to drop 40-50%.
we like it and believe it's a very good sensible statment
So start your own forum subject if you don't want to be here.
Menta, you have my 100% support. |
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By: ang101000
25/10/2009
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Menta,
You can't be confident that house prices will drop 40 to 50% or even 10 to 15%!
Have you seen the latest projected migration and population growth figures. I rest my case.
Just as the property spruikers should be prosecuted for false advertising (claiming excessive capital growth on property investment), so should those (including Keen) who state on public forums the opposite (frighten people with capital loss).
Please, don't keep repeating the housing collapse theory, it has failed in Australia. |
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By: dr.xingli_writes
25/10/2009
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Great posts qitulong!
The straightforward manner in which you communicate what you have to share is most refreshing.
Generally speaking, property across the country is now priced far in excess of value which can be supported by current economic conditions.
Accordingly, it is only a ,matter of time until the prices begin to fall and the resulting panic caused leads to a huge downward price adjustment. |
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By: qitulong
25/10/2009
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| Buying house is big problem now for most everyone who want to do it. When I hear someone who is working man talking about buy his house for himself instyead of renting I always think what my granny said to me about time to buy and time to save. She said, "NOT BUY WHEN PRICE MOST HIGH. KEEP MONEY IN POCKET TO BUT WHEN PRICE IS CHEAP". I think this good advice for everyone now just like it was good advice to me when I was young man starting out to find new life in new country. Now is time of price of house is MOST HIGH I am thinking. So no good time to buy house. Maybe wait see what happen to prices now. Then maybe buy later I am thinking is best idea. The prices they going to drop like a stone as Guy he said in post he made here too! Better not buy now if you have not need to rush into property market is best I believing for sure 100% right!!! |
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By: qitulong
25/10/2009
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| Mr. mentawaisurf. I agree with you. Of course many people not want to see it is similar though. They want to think only that prices go up always and they get richer all time. But it not so. Now is time of high prices and maybe get a bit higher.. maybe not.. BEFORE collapse. Salary of working man is not going up. More people now unemployed and we see recently stil many BIG job loss occur here in different place. But price of average house is very big price for anyomne want to buy in are where popular place for live and bring family up. I was shock when I see average house is price of nearly $500, 000 in Melbourne area now!! How it can be bought by working man wothout he go in deep of debt? and |
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By: mentawaisurf
23/10/2009
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| That's right Ralph, they aren't currently projected to apply for Australia. That's why everyone is becoming so bullish with all the good economic news recently. It reminds me of the late 1980s. Then it was Ja pan's booming economy and endless investment in Australia that 'guaranteed' our booming export economy and housing bubble would not deflate. "It's different this time", we heard from the so-called experts back then too. Deja vu. |
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By: enoughwealth
23/10/2009
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The forecast you quoted has a 45% property decline for Ireland based on a couple of factors that aren't currently projected to apply for Australia:
* "...Ireland experiences a deep recession". vs. Australia only had one quarter of negative GDP and a relatively mild recession.
* "The agency expects unemployment to increase to 12.5% in 2009, and 15% in 2011, forcing property prices down to align with affordability." vs. unemployment expected to peak at less than 8% in Australia.
If Australia had gone into a DEEP recession and treasury etc. were projected unemployment to reach 15% by 2011 I'd be less sanguine about Sydney property prices too! |
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By: enoughwealth
23/10/2009
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Yes, but...
Ireland was traditionally an underperforming economy with no real growth in the property market until the recent boom. They experienced an economic boom which lead to a real estate boom (with spill-over effects due to the English property market being relatively expensive) that was unsustainable once the economy suffered a severe reversal.
In comparison, Australia (esp. Sydney) has had strong real gains in residential housing prices since the 60s, and the economic prospects look quite good due to the growing importance and performance of the IC economies to Australia. The demographics projected for the next 20-30 years are also vastly different.
I visited Ireland last year, and the results of the property boom could be seen everywhere, with new McMansion houses having been built on rural blocks throughout the country. IMHO there's a big difference in the price sensitivity of a $1m house sitting on a 10 acre block in the middle of nowhere in country Ireland, and the price sensitivity of a typical house on a 700m2 block 10-km from the Sydney CBD.
If you wish to put a timeframe and specific locations for your price drop expectations, we'll be able to see who's right. Eg. what are you predicitions for the median sale prices in the two suburbs I quoted below? eg. For next June, and in say 2 or 5 years time? |
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By: mentawaisurf
23/10/2009
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Ralph, that's exactly what everyone said in Ireland just a few short years ago. The 'Celtic Tiger' was the tech boom economy of Europe, just like Australia is supposedly the resource boom economy of Asia. Likewise, all our eggs are in one basket - resources to China. Reality hit home hard in Ireland - and their housing debt bubble is still unwinding. Let's not forget, Australia's housing bubble is even bigger than Ireland's at their peak. Reality will slowly dawn here too, over coming years.
Ireland to see 45% house price crash
http://www.homemove.co.uk/news/21-10-2009/ireland- to-see-45-house-price-crash.html |
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By: enoughwealth
23/10/2009
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I don't know about "house prices" in general, but I own two houses in Sydney and predict/expect the average sales price in the suburbs they are in to rise about 5% from current level by June '10 (and continue up from there). If the prices in these suburbs are EVER down 40-50% from current levels at any time in the next decade I'd be amazed.
Check back when the June '10 price data is published (next July) to see who's right ;)
http://www.homepriceguide.com.au/snapshot/price/in dex.cfm?action=view&source=apm
Current (6 mths to Sep 09 median) prices:
2086 $800,000 (Frenchs Forest)
2087 $781,000 (Forestville)
Unemployment is still very low compared to the long term average, immigration is set to boost demand for the next 20-30 years, and supply in the Sydney basin is constrained both geographically and politically (zoning, land release and infrastructure costs). Which way do prices normally move when demand is increasing and supply is restricted? |
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By: yuhongli64
17/10/2009
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HI!! andrewcmeier
"Even the people making the policy decisions (ie ministers) usually have a conflict of interest because they own a piece of real estate themselves which they have an interest in seeing the price continue to rise."
I can't agree with you more.
BUT this is a big BUT they have gone too far this time right now. Their policies and interference have reach the limit.
If they are cleaver, they can run now, otherwise if they are too confident. Though for them too. HA HA!! |
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By: yuhongli64
17/10/2009
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When the housing situation hugely relys on the first home buyers, it is the LAST STRAW for the banks and the governments.
I and my friends have been in very bad situation before. Have you heard 'SEA RATS'? Yes I was one of them.
But I and my friends have learned and recoered. We have plenty cash in our hands now and waiting for the housing market to get more resonable and snap several properties then.
You can in life to 'observe the pain or feel the pain'. Well I have certainly felt it, the choice is yours.
Take care and good luck!!! |
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By: guy.longshank1
17/10/2009
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| Excellent post mentawaisurf! The "Government Home Ownership Carrot" (as I believe Rodney first called it) has done nothing except cause the already over inflated pricing of Oz housing to be supported longer than it rightly should have been. Accordingly, given that our current, (and near future at least) economic conditions shall not be sufficient to in itself support such inflated values the anticipated and already overdue property crash shall occur. It is not just a question of when.. |
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By: ang101000
12/10/2009
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Hi Akdoc,
'However the resulting GDP gain did not come from increasing the countries wealth but by increasing debt.'
Agree, please see my argument posted to Firefy on Keens prediction... |
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By: mentawaisurf
12/10/2009
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| firefly, they may believe it - just as the Ja panese government and central bank believed it too. Our government, central bank and influential property lobbyists have only succeeded in enticing a record number of marginal borrowers (led by FHBs) into a grossly over-inflated housing bubble thereby delaying the inevitable collapse which will now result in even a greater number of victims and magnified economic carnage. |
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By: firefly_au
12/10/2009
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Hi Menta :)
I suspect that they believe that they can stop it before it gets started! By purchasing mortgage securities and preventing run away unemployment along with other stimulus measures. In my view so far they have but it remains to be seen if they can succeed in the long run!
But no doubt you are correct once it takes hold there is very little that a Government or Bank can do to prevent it running its course.....
BYE :) |
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By: mentawaisurf
12/10/2009
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As I've mentioned before, the big-4 have been so busy greedily chasing market share that they have now accumulated some 85% of the Australian mortgage market while ignoring the risks associated with such a huge exposure to our housing bubble. That simply means it will only take a moderate correction of house prices to threaten the very stability of our so-called 'Four Pillars'.
Crucially, our government will be unable to stem the flow of forced sales and debt defaults as our housing bubble inevitably deflates. Even increased incentives and stimulus would no longer have the desired affect with buyers unwilling to borrow to purchase into a falling market while banks would become increasingly reluctant to lend against falling asset values. This is the classic deflationary spiral that governments and central banks fear most because they know they are powerless to prevent it from occurring. |
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By: firefly_au
12/10/2009
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Hi Menta :)
I suspect killing any competition in the banking industry here is good for the big 4 banks profit margins.
Mortgages here are much tougher for the mortgagee to escape from than in the US and since there are Government safeguards in place for defaulting mortgages I suspect no tax payer(voters) will like to see this come to pass! So the Govt and Banks will do all they can to stop it occurring!! Including buying $8billion and more in mortgage securities.
If they keep this up indefinitely how do you see the mortgage market and RE prices falling????
BYE :) |
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By: mentawaisurf
12/10/2009
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The Australian government is investing another $8 billion (of our taxes) into the purchase of RMBS (residential mortgage-backed securities) to try and further prop up housing lending and Australia's housing bubble because they know that a major correction in housing prices would place so much stress on our banks (our big-4 have invested about 65% of their capital into Australia's housing bubble - the highest percentage of any banks in the world) that they would require a massive tax-payer bailout (just as we saw in the UK, US and other nations whose housing bubble did not even grow to be as big as Australia's).
Yet, our banking economists, financial pundits and regulators continue to believe that the enormous investment by Australian banks in residential housing actually makes our banking system more stable and secure than our international peers. This is evident with JP Morgan just today upgrading their outlook for Australia's big-4 banks (which have recently increased their market share of Australia's residential mortgages to a staggering 85%). |
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By: lasty49
12/10/2009
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Those who are retiring will need to be replaced, therefore expect more taxpayers to enter the workforce whether by domestic employment or foreign.
The govt's problem is sorting out a cashflow issue.
Costello recognised this with the invention of the future fund.Swan and Rudd have their eyes on the prize. |
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