[itching]

Australian House Prices down 10% from Peak


http://www.debtdefla...n-10-from-peak/

[Ugg]

itching, on 01 May 2012 - 07:03 AM, said:

Australian House Prices down 10% from Peak


http://www.debtdefla...n-10-from-peak/

Thanks. It is always nice to have these charts updated.

I still don't get this (from Keen)

Quote

The motive force behind Australia’s bubble was the same as in the USA and Japan: accelerating debt drove rising house prices during the boom

Isn't the more fundamental question: what is the motive force behind accelerating debt?

[savagegoose]

unnnaturally low interest rates. is what drove the debt. funny how now with low rates everywhere, we still cant get dmand back up,,,, o wait apparently no ones borrowing. i guess drop mortgage rates to %3.5% here we'll a bubble like the world aint ever seen here in oz

This post has been edited by savagegoose: 01 May 2012 - 07:44 AM

[zaph]

savagegoose, on 01 May 2012 - 07:41 AM, said:

unnnaturally low interest rates. is what drove the debt. funny how now with low rates everywhere, we still cant get dmand back up,,,, o wait apparently no ones borrowing.

and no one's lending (in bubbles that have burst)

[cobran20]

Ugg, on 01 May 2012 - 07:26 AM, said:

Isn't the more fundamental question: what is the motive force behind accelerating debt?

Mood/confidence of the herd. Now it is working the other way.

[Mr Medved]

itching, on 01 May 2012 - 07:03 AM, said:

Australian House Prices down 10% from Peak

In nominal terms. It's closer to 25% measured in ounces of gold.

[sydney3000]

cobran20, on 01 May 2012 - 07:50 AM, said:

Mood/confidence of the herd. Now it is working the other way.

I wish the RBA would understand it.

[Chimerica]

Thanks Itching for posting.

Just hope this gets MSM attention for Steve Keen and to speed up capitulation from the Boomers and neg geared zombies.

[staringclown]

itching, on 01 May 2012 - 07:03 AM, said:

Australian House Prices down 10% from Peak


http://www.debtdefla...n-10-from-peak/

All those BBQ's and dinner parties where I totally killed the conversation with talk of doom.

10% isn't exactly doom but I have never hoped for doom per se. But it is enough for me to claim some vindication from certain long time associates that I am less of a crackpot than they may have first thought, so I'm happy.

It is sweet for me but it must be sweeter for the long suffering Keen. Well done SK. It's not a gloat but it is an I told you so moment . Those charts don't look particularly encouraging either. The 50 point rate cut might help but there doesn't seem to be the appetite for another FHOG boost. Quite the contrary from the victorian government tonight. Time will tell but I'm still in no rush to buy.

[cobran20]

staringclown, on 01 May 2012 - 11:11 AM, said:

All those BBQ's and dinner parties where I totally killed the conversation with talk of doom.

10% isn't exactly doom but I have never hoped for doom per se. But it is enough for me to claim some vindication from certain long time associates that I am less of a crackpot than they may have first thought, so I'm happy.

It is sweet for me but it must be sweeter for the long suffering Keen. Well done SK. It's not a gloat but it is an I told you so moment . Those charts don't look particularly encouraging either. The 50 point rate cut might help but there doesn't seem to be the appetite for another FHOG boost. Quite the contrary from the victorian government tonight. Time will tell but I'm still in no rush to buy.

If it's like Japan, SK will be dead from old age before the bottom is found!

[savagegoose]

i dont know what comparing house pricesfrom over seas does for the avg punter, but for me it makes me say NO F'KIN WAY when i see our local dog box prices. it has to have some sort of effect even if we dont plan on buying in europe/ america, we still can see what people can get there. when i went to my last auction i made a point of discussing the foreign prices with an agent.

[Mr Medved]

savagegoose, on 01 May 2012 - 11:23 AM, said:

i dont know what comparing house pricesfrom over seas does for the avg punter, but for me it makes me say NO F'KIN WAY when i see our local dog box prices.

I think income/price ratios are a better gauge as it could be argued we have overpriced wages/salaries too. I could buy a house in a village in central Asia for 3-5k but those prices are relative to local income levels.

Of course 8x median income for a median house is not sustainable...

[cobran20]

cobran20, on 01 May 2012 - 11:17 AM, said:

If it's like Japan, SK will be dead from old age before the bottom is found!

Latest from Kris Sayce's daily emails:

Quote

How Did We Get It So Wrong on Aussie Housing?

It's hard to admit it when you get something wrong.

The fact is, we predicted a huge and painful Aussie house price crash.

With the exceptions of the Gold Coast, some areas in Perth, and the holiday home market, the house price crash hasn't happened.

So, after getting it so wrong, how come we're so keen to talk about it? The answer is simple...

While we predicted disaster for the Aussie housing market, what we didn't predict is what's happening right now.

And that is something much, much worse than anything we could have predicted.

We Told You This Two Years Ago

It's funny, in recent months almost every reason the property spruikers gave to support their argument has collapsed.

One argument they could still fall back on was the idea that the Reserve Bank of Australia (RBA) could cut rates to support the housing market.

But even that argument is dead. After the release of the latest RP Data housing index, National Australia Bank economist Rob Henderson told The Age:
'Three months after two interest rate cuts, what has happened to house prices? They have fallen.

'So it doesn't suggest interest rate cuts are much of a panacea for the housing market does it?'
They laughed at your editor when we said lower interest rates wouldn't help house prices.

Two years ago we pointed out the level of interest rates was only part of the reason for the housing bubble. The biggest factor was the credit boom.

The credit boom blew up the bubble...the lack of a credit boom would burst the bubble.

So when the credit boom ends - as it has - it would be over for the Aussie housing market.

But rather than a crash, what's happening to the Aussie housing market is worse. It's a slow and painful death. The reason it's so bad is that most homebuyers and homeowners can't see what's happening.

They assume because prices haven't crashed, they must be doing OK. But according to RP Data, Melbourne house prices fell 7% over the past year.

Add to that interest repayments of 7% and that's a 14% hit. Add another year of even a flat housing market and thanks to interest repayments, the average homebuyer is down 21%.

We don't know about you, but in our portfolio any investment where we lose 21% within two years is a bad investment.

As we've said many times, at these prices Aussie housing is a bad investment.

And if you think low interest rates will help the housing market, think again. You only have to look at the U.S. housing market to see that nearly four years of low interest rates haven't helped to boost house prices.

This post has been edited by cobran20: 02 May 2012 - 01:30 AM

[Ugg]

cobran20, on 01 May 2012 - 07:50 AM, said:

Mood/confidence of the herd. Now it is working the other way.

Agreed. So where does Keen talk about the drivers for mood/confidence?

[savagegoose]

Mr Medved, on 01 May 2012 - 11:33 PM, said:

I think income/price ratios are a better gauge as it could be argued we have overpriced wages/salaries too. I could buy a house in a village in central Asia for 3-5k but those prices are relative to local income levels.

Of course 8x median income for a median house is not sustainable...

yeah true a local cannot afford those bargain prices, be it in Zimbabwe, Texas or London. non of them have jobs. i also meant the house price to income ratio, but was too lazy to type it. but i still look at basic prices, a sh*t hole usa, vs sh*t hole aus. and you get a bigger pile for ya buck in usa. quality and quantity. at least doulbe the value, never mind the tenants or jobs.

[cobran20]

Ugg, on 02 May 2012 - 01:45 AM, said:

Agreed. So where does Keen talk about the drivers for mood/confidence?

Not sure if Minsky's theory is that advanced!

[ummester]

Ugg, on 02 May 2012 - 01:45 AM, said:

Agreed. So where does Keen talk about the drivers for mood/confidence?

Why would he, numbers can tell the story for him.

Mood turned mid/late last year. You could feel it.

I went to a wedding in Adelaide late 2011 and was speaking with an RP data rep - of course I had to get into a house price conversation with him:)

He said we were around 7% down, that the bubble gains from 2008 had been lost.

I asked him about the bubble gains in the early naughties.

He changed the conversation.

[Rocket]

staringclown, on 01 May 2012 - 11:11 AM, said:

10% isn't exactly doom ...

But it is 1/4 of Keen's 40% down prediction.

[Ugg]

Revision to SK's charts makes things all a little bit worse for OZ housing propects

update

[Crest]

Ugg, on 31 May 2012 - 06:33 AM, said:

Revision to SK's charts makes things all a little bit worse for OZ housing propects

update

Wow, just wow. If I were overleveraged right now I would be pooping my pants.

Those charts just say it all and say it so well.

There is so much that has been hidden from the Australian public by the vested interests. Thank goodness for Keen showing us where things are really at and what the vested interests have done to us. Australian home buyer beware.