Australia's property bubble: it's here

Discussion in 'Property Market Economics' started by Tropo, 25th Mar, 2010.

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  1. bigbuddha

    bigbuddha Active Member

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    I hope you are talking only about australian property here. Cause US and UK property had a little crash over the last year or two.

    Also these "cycles" are not normal, they are a function of government interventionism and central banker inflationary policies. The creation of money out of thin air has created these massive booms and bust "cycles" which have been incorrectly labelled "business cycles".
     
  2. Chris C

    Chris C Well-Known Member

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    Fair points, especially the point about there being nothing "natural" about this "business cycle".

    Though with this said I also think the public need to step up to the plate and accept their fair share of the blame in taking on the inflationary debt levels that have cause the bubbles. No one force a gun to anyone's head and said they must leverage themselves up (though I can definitely appreciate how easy it is to conclude that it would seem like the smart choice when being inundated with a narrowly focused and dumbed down mass media).
     
  3. dudek

    dudek Well-Known Member

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    Even if the cycles are the bypass product of manipulation and greed no one will be able to change it.
    Last time they tried we ended up with much hated system called - communism.

    Whether you like it or not we are all part of this cycle. Our daily life goes around these cycles, no escape so why not to take maximum advantage of it?
     
  4. dudek

    dudek Well-Known Member

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    Chris,

    Why should “public” take any responsibility for actions of the incompetent individuals sitting in parliament or behind the close doors of major corporation?
    We choose government and give them a mandate to lead us not to rip us of.
    The “public” takes responsibility for choosing politicians, the “public” takes responsibility for voting for directors of companies to lead them and make right decisions. How much more responsibility ‘public” must bear? Nothing will change for very long time from now.
     
  5. Chris C

    Chris C Well-Known Member

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    LOL not with that attitude we won't.

    Though rest assured we will change and we will make progress.

    If there is one thing homo sapiens are good at, it is working out how to do things better. We are not at the apex of existence yet, and I have no doubt we will make progress over the coming decades and centuries, which is a little slower than I'd like, but I'll have to find satisfaction that it's better than nothing.

    Just because we have failed in the past, doesn't mean we should stop trying or experiment.

    Oh don't worry, there are loads of people that make a living out of speculating/trading in both the short and long term, the problems lies in that many people don't understand that they are engaged in speculating and trading.

    Why should we... because not taking responsibility for even our small role in events disempowers ones ability to take charge and make a positive change:

    Diffusion of responsibility - Wikipedia, the free encyclopedia

    Though it's not uncommon for people to have their feelings of "not being to blame" the reality is they are as much to blame as anyone else - and that is the powerful way to approach the problem.
     
  6. bigbuddha

    bigbuddha Active Member

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    Dudek,

    I am a free market guy, through and through, it's the manipulations and "cycles" as you call them that prevent free markets from working properly and moves us closer to socialism/communism. Government hand outs like the fohg is socialism as are bailouts of banks and financial insitutions.

    What I advocate is the removal of central banks like the RBA because interest rates and monetary policy should be set by markets not a "board of so called experts".

    So simply put Dudek, your "cycles" are just a symptom of the socialist agenda of governments and reserve banks.

    cheers,

    Bigbuddha
     
  7. dudek

    dudek Well-Known Member

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    No argument here..agreed 100% Biggest offender is IMF but that is a different story.
     
  8. dudek

    dudek Well-Known Member

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    Put you money where you mouth is: sale your IP with no profit or loss.
     
  9. Chris C

    Chris C Well-Known Member

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    Are you happy to put your money where your mouth is and buy it off me for my break even point?

    :)
     
  10. dudek

    dudek Well-Known Member

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    Well, in my current position I can only get $320K from my bank, do we have a deal?
     
  11. Chris C

    Chris C Well-Known Member

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    LOL unfortunately that would put me at quite a loss...

    :p
     
  12. GregReid

    GregReid Well-Known Member

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    Its a long post series.
    Chris raises some very valid points but misses others. I am not sure anyone can pinpoint what drives markets, which of the list of 100 or so points he raised is more important at any stage in time.

    I disagree that housing should be seen as a commodity because it simply doesn't act it. People have an emotional link to the asset in most part, still 70% are owner occupiers. It provides a roof over their head, comfort at night, family memories etc. You an add value to it. You cannot do that with a share or a bucket of oil or even a bar of gold.

    Perhaps the real issue is our tax system where so many benefits are tied into owner occupied homes, tax exemptions, CGT, stamp duty concessions, pension exemptions etc. This may be what drives prices more than has been considered, people continue to upgrade.

    I work with older folks who live off a pension and would never consider selling their home but will live on bake beans instead. I work with those like Chris's parents (or their age group) who are beginning to understand their superannuation will not give them the lifestyle they want and they will not be able to save enough in their remaining working life, so they invest but want to do it with a degree of safety, hence property.

    Until there is a driver where the supply is greater than the demand, I cannot see housing prices dropping significantly, certainly they may stagnate but not fall wholesale or across multiple areas. As you can see from previous graphs, Sydney had a period of very strong growth earlier than other states then stagnated overall based on median prices but there were still areas of Sydney that did rise consistently through the mid 2000's.

    I have lived through a number of cycles and I see this as just another cycle, certainly not as strong as some previously but it comes from a background where people 'lost' much money in the share market crash in 2007/8 and it effected their superfunds. Some are moving into property and more are buying using their SMSF's.

    I have little faith in the governments acting in our interests or the RBA but it is the environment we live in and need to take responsibility for.
    Greg
     
  13. bundy1964

    bundy1964 Well-Known Member

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    US has lending practices and gov policy to blame for it's crashed property prices. A policy that put people into homes regardless on if they could afford them or not, honeymoon rates that could be refinanced into, poor lending practices and when the music stopped no recourse loans that put a 7 year blip on credit reports but leave the bank holding the toxic mess.

    Asia has also had a property bust in the recent past, Japan is still suffering from it's effects.

    I must be the poster boy for debt fueled asset bubbles with me only contributing some office space for a company to work from for around 40% of my income and buying debt mostly of banks that is borrowed from a bank who is not concered if you never pay off any of the debt as long as your LVR stays within limits as well as buying on the ASX for some growth to allow for greater debt in the future. So basicly I consume more services than I provide, I could of also taken the sociable acceptable path of blowing my final payout and living off gov handouts...
     

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