No Property Growth for 350 Years

Robert Schiller, author of "Traders, Guns and Money" has undertaken research on property dating back to 1629 and asserts that real house price growth is less than 1% at best.

The following article has information on this:
Economist's View: Shiller: Long-Term Perspectives on the Current Boom in Home Prices

 

My understanding is that the longer your time series the more likely you are to track inflation, say like gold. Which is really nothing more than common sense.

a 1% annual real rate of increase over a multi century study would seem to be unusually large.

Thanks for the link, very interesting material.

 

Going back to 1600s one can argue that to own land or property goes beyond dollar value. I am not the biggest fan of statistics as they can be manipulated either way.

 

It's not just Robert Shiller who is arguing that property is a poor investment. Steve Keen here in Australia is arguing that property in Australia is overvalued.

Keen claims that currently Australian house prices are about 7 or 8 times median annual income, which is the highest in the world. Statistics of real house prices of all countries over a very long period of time (200 years) shows that house prices never go up permanently and average about 3 times median annual income. There is also much volatility and bubbles can be sustained for long periods of time.

Check out the following podcast where Steve Keen talks about the issue: The property bubble - Counterpoint - 22 September 2008

 

I would never take Mr. Keen seriously after watching 60 minutes few weeks ago.
He was contradicting himself claiming he is trying to sale his unit with not much luck. If he was so smart and could predict down site of the economic cycle why he didn’t sale it at the pick of the cycle? Zero credibility Mr Keen.

 

As I understand it, he has now sold his flat for 515K.

I think his message is pretty near spot on.

 

You will be disappointed because the sky won't fall and the earth won't split open...

 

Well mine won't anyway....but I'm not so not so sure about all the other folks who have seen their pensions shrink by 50% in the last month and their real estate holdings continuing to head lower and/or are likely to lose their job.

The social consequences of this debt deleveraging are only now showing up.

There will be many divorces and resulting broken families.
There will be suicides.
Crime will escalate.

If things really go hammer and tong there will be social unrest the likes we have never before witnessed in the post WWII west.

Is it any wonder why billionaires build themselves mega yachts that can remain offshore for months if necessary and away from trouble? They are the ultimate secured compounds ...and mobile.

 

02

What pensions sunk 50%???
Our pensioners will get a one off payment of $1400 each or $2100 per couple and their pensions are now being revised and are about to be increased.

Mate, this doom and gloom you are picking up from the web and elsewhere
is starting to affect your ability to think sensibly.
I suggest you forget the D&G forums and to go on a vacation.

It will help clear up your head from all those bad thoughts..

Cheers

 

This is already happening regardless of economic cycle.

That is why you will run from Germany on the first ship to safest continent - Australia just like they did 70 years ago and I will be more than happy to rent my property to you.

 

Actually the author of 'Traders, Guns & Money' is Satyajit Das, have the book on my shelf.

 

Sorry, I forgot you call it super annuation. The rest of the world call it pension (super annuation) ...ie state pension(Oz pension) or private pension(super). If you travel outside oz and start talking about super to an American, Englishman or European they will have no idea what the hell you're talking about.

Bill, you're clearly under estimating the current global situation and although oz is only now showing signs of stress it will become more far more pronounced in 2009.

I just returned from holiday, was grand.


PS - I sold out of the SP500, looks like the coming week will be a history maker.

plus , these 'bad thoughts' have saved me a mint.

 

What??? Have you heard of piracy? It's been around for centuries....

Timbo

 

02

I don't know where you get your information from.

Looking at our superannuation performance, the balanced fund which is the default and most common plan for a lot of people here, lost approx 6% last financial year and 9.5% this year (so far).

Check it out.
Investments - AustralianSuper

btw, I switched all my super to cash last November so I haven't lost anything. I am not near retirement age (although I'd retire tomorrow if I could... ) but I am conservative so I am sure that most people who are near retirement would also be on conservative plans and wouldn't have lost much money.

What pension funds are you referring to?

cheers

 

Yes, well you should have been in cash anyway.
Be patient, Rome wasn't built in 1 day...

 

Hi 02bsure,

Just to confuse the rest of the world we don't even call it state pension, we call it Age Pension and the private pensions can be Allocated Pensions or Annuities (which you may be a little more familiar with).

Our government just likes to confuse everyone!

Cheers,

Dan