AUS vs UK - if it happens there it happens here???

[tcocaro]

People,

Found an interesting article by Christopher Joye comparing AUS property market with that of the UK. I have time and time again expressed my hatred of the mantra that if it happened there it will happen here with the usual sarcastic comments like "oh yeh were different".

The truth is we are and comparing the Australian situation with any nation in the world requires more commonality than English speaking nations.

This being said I feel this article at the very least puts a damper on the deluded idea that the Australian property market is somehow running at levels comparable to pre GFC of markets like the UK and hence setting ourselves up for a spectacular fall.

In short it dispels the notion that many might have that our prices are rocket high versus says the UK today and given they had a crash then we should...

http://bit.ly/nWfI0y

 

[hobo-jo]

For anyone wanting to read the full article:

Google "A shot of courage for Aussie housing" then click link from Google as above link will try and get you to register before viewing.

 

[tcocaro]

thanks i didnt realise that..

For anyone wanting to read the full article:

Google "A shot of courage for Aussie housing" then click link from Google as above link will try and get you to register before viewing.

 

[Tony3008]

Three quarters of [UK] home buyers are concerned about mortgage rates, fearing it would take only a small hike to send them over the edge, a new report shows .... http://www.dailymail.co.uk/news/article-2024429/Three-quarters-homebuyers-fear-rate-hike-push-edge.html

... and this is people paying 4% or less. How would they cope if rates got back to what was once considered normal?

 

[hobo-jo]

Unconventional Economist posted a rebuttal to the above article by CJ this morning:

http://www.macrobusiness.com.au/2011/08/housings-straw-man-argument/

 

[tcocaro]

I will look into this with more time but my initial impression especially after scrolling through literally every single one of his twitter posts is that this economists mind is made up and his information is framed around confirming his position.

I know you will disagree with me hobo-jo but just look at his tweets they are literally all revolving around crashes, mistakes in analysis and nothing in way of position or anything positive which surely must exist even under dire situations.

The same might be said about CJ i.e. overly positive but I just feel his views opinions are much more subjective and avoids extremes. His article didnt at the end say something like and for these reasons we will see property boom but rather saying for these reasons we wont see property crash and burn.

This is a circular argument and one were rarely anyone switches side of opinion on wether property will rise, stablise or fall.

My personal opinion is that property wont boom, wont crash but will stabalise and we will see volatility thanks to some motivated sellers trying to get sales from a shrinking pool of buyers. However I dont see a free-fall and more importanlty as it relates to this thread I strongly disagree with the it happened over there so it should happen here argument. Different economies have a myriad of differences.

I dont want to overly simplyfy things but social issues (riots), unstable governments (US) ontop of supply, cost issues, unemployment and many more wide ranging issues affect property. Take for instance AUS what is our low sentiment not seen since the early 90s a result of? If our economic situation suddenly applied to the united states there would be literally celebrations in the streets, Obama would be hailed as a hero for saving the economy and property prices would RISE.

In short since it happened there doesnt mean it will happen here and if anything this article poves that i.e. there is a 100 ways of looking at things which means no one, two of group of comparable measures in isolation really tell us much either way.

Unconventional Economist posted a rebuttal to the above article by CJ this morning:

http://www.macrobusiness.com.au/2011/08/housings-straw-man-argument/

 

[hobo-jo]

I know you will disagree with me hobo-jo but just look at his tweets they are literally all revolving around crashes, mistakes in analysis and nothing in way of position or anything positive which surely must exist even under dire situations.

I have been reading UE's analysis on MacroBusiness since the site was launched and even previously on his personal blog. From what I've seen he has only been analysing Australian property for 18 months. It susprises you that his posts shed property in a negative light? What has property done over the past 18 months? Sure there have been a few exceptions here and there... but overall...

The same might be said about CJ i.e. overly positive but I just feel his views opinions are much more subjective and avoids extremes.

I can't say I've seen an extreme view from UE, can you please post an excerpt from one of his articles that is an 'extreme view'? Sure he explores some bearish possibilities, but from reading his articles I get the feeling he thinks a slower decline (like the one they are experiencing in New Zealand) is more likely unless we see some serious shock to the market from other influencing factors.

http://www.macrobusiness.com.au/2011/06/pascoe-should-look-to-new-zealand/

I would say UE is much more objective than CJ. No one can really blame CJ for trying to talk the market up though, how can he be objective when the the company he works for benefits from rising house prices??

What benefit is UE receiving from falling prices (except for maybe a larger reader base over time as the market continues to fall)?

This is a circular argument and one were rarely anyone switches side of opinion on wether property will rise, stablise or fall.

I saw potential for property to rise in 2006/2007 when I bought and was looking for more. Now I think we will see further price falls. I try and look at the market objectively. Maybe I'm an exception to the rule.

 

[VYBerlinaV8]

Ultimately, no-one has a crystal ball. About all we can do is analyse and discuss market pressures as we see them.

All things considered, I'm still sticking with my opinion of stagnation for some time to come in the markets where I invest. Sure, it got expensive and has risen above the longer term average for some time, but there are also too many people chasing a limited number of dwellings, many of whom still have well paying and stable employment.

Jumps and falls of under 5% are really just noise in the short term, although they can add up to trends in the longer term.

With a positive cashflow portfolio of property in areas of high demand, I'm happy to just sit back and watch it run.

 

[tcocaro]

I see price falls of round about 5% what do you see? I see sydney relatively strong as with the ACT... what do you see?

I see prices not crashing what do you see?

I see people predicting a crash year in year out but we are all still waiting what do you see?

we will never see eye to eye hobo jo, you post immediately after every single post I ever make and like in this case scan the internet find a rebuttle to the article I posted and then say here is my view... its absurd. What does the rebuttle basically state? that he doesnt like the method CJ used in his analysis? - sigh. So are you telling me that you read CJ article and said, I object to this because of the methods used?? very very very doubtful much more likely you didnt like the end outcome and scanned for a rebutle - this to me is blind faith rather than thoughtful discussion and debate.

Even as I posted it I clearly stated my intent\argument was to simply to reinforce my past stance that the what happened over there so it will happen over here argument is very light unless backed up with a tremendous level of similiarities which given the key factors of economic growth and unemployment I find such comparisons simplistic.

Extreme in my view is anyone claiming this is "unique" this is a "special period" that the game has changed. No its not special at all its this is simply a down market, this is a buyers market thats all, this is a market that punishes bad decisions but its not a market in freefall.

Money is made in the best of times, the worst of times and the so so times. The property market is not crashing and burning and instead we are now back to a state of affairs were investments need to be thought through rather than thinking everything will rise in price to cover our mistakes and turn a profit.

I have been reading UE's analysis on MacroBusiness since the site was launched and even previously on his personal blog. From what I've seen he has only been analysing Australian property for 18 months. It susprises you that his posts shed property in a negative light? What has property done over the past 18 months? Sure there have been a few exceptions here and there... but overall...


I can't say I've seen an extreme view from UE, can you please post an excerpt from one of his articles that is an 'extreme view'? Sure he explores some bearish possibilities, but from reading his articles I get the feeling he thinks a slower decline (like the one they are experiencing in New Zealand) is more likely unless we see some serious shock to the market from other influencing factors.

http://www.macrobusiness.com.au/2011/06/pascoe-should-look-to-new-zealand/

I would say UE is much more objective than CJ. No one can really blame CJ for trying to talk the market up though, how can he be objective when the the company he works for benefits from rising house prices??

What benefit is UE receiving from falling prices (except for maybe a larger reader base over time as the market continues to fall)?


I saw potential for property to rise in 2006/2007 when I bought and was looking for more. Now I think we will see further price falls. I try and look at the market objectively. Maybe I'm an exception to the rule.

 

[hobo-jo]

Jumps and falls of under 5% are really just noise in the short term, although they can add up to trends in the longer term.

Need to remember though that a 5% fall is not equivalent to a 5% rise.

A nominal 5% rise is really only a 2-3% increase after inflation, a 5% nominal fall is 7-8% in comparison. So when we talk about 5% falls annual falls we are talking about negative growth equivalent to the strong growth we've seen over some of property's better years.

 

[tcocaro]

so long as you remember that 5% falls are incredibly normal. If you disagree then in your view whats a normal down cycle? And also remember 5% that we referred to was the worse of the states, the better acheived much lower figures with some in positive.

Need to remember though that a 5% fall is not equivalent to a 5% rise.

A nominal 5% rise is really only a 2-3% increase after inflation, a 5% nominal fall is 7-8% in comparison. So when we talk about 5% falls annual falls we are talking about negative growth equivalent to the strong growth we've seen over some of property's better years.

 

[VYBerlinaV8]

Need to remember though that a 5% fall is not equivalent to a 5% rise.

A nominal 5% rise is really only a 2-3% increase after inflation, a 5% nominal fall is 7-8% in comparison. So when we talk about 5% falls annual falls we are talking about negative growth equivalent to the strong growth we've seen over some of property's better years.

Yep, understand and agree. What interests me, though, is that regardless of inflation's inexorable march, my loan principle and costs are stuck at a point in time (other than the occasional fluctuation of interest rates). What this means, then, is that over time the value of the loan and cost of the interest get smaller and smaller, but in the longer term there is upward pressure on both the value of the asset and the rent it achieves. For someone like me who has no plans to sell, holding through such a stagnation (which is a drop in value in real terms) is no problem at all. If anything, higher inflation for a time hastens the erosion of the loan and holding costs. Eventually, the market cycle continues and prices rise again.

My strategy is, and has always been, to hold through several cycles, harvesting equity for other investments at key points.

 

[hobo-jo]

I see price falls of round about 5% what do you see? I see sydney relatively strong as with the ACT... what do you see?
I see prices not crashing what do you see?
I see people predicting a crash year in year out but we are all still waiting what do you see?

I see you continuing to peg everyone that's bearish in the 'crash' camp.
I see price falls relatively inline with my expectations for 2011 expressed 8 months ago.

2011
Without changes to interest rates I suspect we will see nationwide falls of 2-4%. With at least 2 increases to the cash rate I suspect prices would be more likely to fall 4-6% or greater.

http://www.bullionbaron.com/2011/01/gold-silver-stocks-property-predictions.html

 

[The Fence]

I see you continuing to peg everyone that's bearish in the 'crash' camp.
I see price falls relatively inline with my expectations for 2011 expressed 8 months ago.

So what is your forecast for int rates now and property going forward..? Looks like the 2 rate rises are on the dust heap...No?

 

[hobo-jo]

So what is your forecast for int rates now and property going forward..? Looks like the 2 rate rises are on the dust heap...No?

Barring any unexpected shocks to the market that could be caused by a GFC/liquidity crisis (Europe/US), spiking unemployment, hard landing in China, etc then I expect we will continue to see further price weakness in the vicinity of 3-5% falls per annum for at least several years (on nationwide basis, of course there will be exceptions).

Would rather not speculate on what interest rates will do (how many flip flops have we seen in outlook for rates in the last 6 months?), but if we saw them increase then in my opinion it would increase the size of above price falls.

 

[tcocaro]

ok. so your rebuttle of the article means what? because the fall in the UK was more than 5%.

So you argue for arguement sake? You give me a headache to be honest hobo jo... you argue against anything that says Keen is dead wrong, argue against people saying AUS is NOT the UK and then turn around and say we will see neglible falls.

??????????????????????????????????????????????????????????????????????

I see you continuing to peg everyone that's bearish in the 'crash' camp.
I see price falls relatively inline with my expectations for 2011 expressed 8 months ago.


http://www.bullionbaron.com/2011/01/gold-silver-stocks-property-predictions.html

 

[tcocaro]

ok, now I understand. Your entitled to your view.

Barring any unexpected shocks to the market that could be caused by a GFC/liquidity crisis (Europe/US), spiking unemployment, hard landing in China, etc then I expect we will continue to see further price weakness in the vicinity of 3-5% falls per annum for at least several years (on nationwide basis, of course there will be exceptions).

Would rather not speculate on what interest rates will do (how many flip flops have we seen in outlook for rates in the last 6 months?), but if we saw them increase then in my opinion it would increase the size of above price falls.

 

[hobo-jo]

I was simply providing another point of view to that expressed by CJ in the article you linked and let's face it whether UE or CJ end up right on house price growth (and interest rates, etc) I'm sure you can see that there are some huge discrepancies in the data CJ has used to push his bias point of view (one day a particular set of data isn't good enough for CJ, the next he is using it in his own arguments ).

The link was not posted to troll you (or any other memeber of the forum). It was not to suggest that everything in the article I linked was my point of view. It was simply FYI and I think UE makes a good case that CJ uses his bias to draw conclusions and then finds data to make it look so.

I don't really have time for the long winded back and forths spanning multiple pages that I used to on this forum, I'm too busy making money elsewhere. Concentrating efforts on proving prices are going to fall is pretty useless when they already are which is now widely publicised.

 

[tcocaro]

Personally I find it weird when someone say me posts and then another say you post nothing more than an article from someone who has a view to the contrary.. I find it weird especially when your own views aparently are in line with the original poster (me) and I would suspect even CJ.. a shared view atleast this calendar year.

Enjoy making money elsewhere, ill continue making mine in property.

I was simply providing another point of view to that expressed by CJ in the article you linked and let's face it whether UE or CJ end up right on house price growth (and interest rates, etc) I'm sure you can see that there are some huge discrepancies in the data CJ has used to push his bias point of view (one day a particular set of data isn't good enough for CJ, the next he is using it in his own arguments ).

The link was not posted to troll you (or any other memeber of the forum). It was not to suggest that everything in the article I linked was my point of view. It was simply FYI and I think UE makes a good case that CJ uses his bias to draw conclusions and then finds data to make it look so.

I don't really have time for the long winded back and forths spanning multiple pages that I used to on this forum, I'm too busy making money elsewhere. Concentrating efforts on proving prices are going to fall is pretty useless when they already are which is now widely publicised.

 

[hobo-jo]

CJs forecast for slow property growth or slightly negative (for 2011) was on the assumption that we see two rate rises which haven't occurred.

I'm sure my view of 15-20% nominal falls (25-30% or greater in real terms by the end of the correction) over several years to a decade are not shared by CJ.