crisis=opportunity

[want2bewealthy]

Residential property prices are to rise 10%. This is yet to play out but the first signs of this have been in the less wealthy first home buyer areas.

Exactly, the cheapest areas surrounding capital city's will rise first and by the most %
as I'm experiencing at the moment.

One property of mine that falls within this category has risen 15% in 8 months

Another purchased in Jan this year has risen 11% which goes against what some research study's show, for instance one market researcher says this particular area has grown 4% while simply not up to date or just innacurate but in saying that I do think the property was a bargain buy.

 

[Token Funder]

Residential property prices are to rise 10%. This is yet to play out but the first signs of this have been in the less wealthy first home buyer areas.

I thought the high-end pulled rather than the bottom-end pushed?

Yes, and this is what we are seeing at the moment, with the high-end suburbs surging ahead (which is how the booms usually begin). However, after a few years, this top end growth starts to drag up the lower-end suburbs too... because people go to buy a house in the top-end suburbs, realise the price has moved beyond their reach, and start to look at the middle-end suburbs, which drags up the prices in middle-end suburbs, and so on eventually through to all suburbs, with the bottom-end suburbs moving right at the end of the boom.

In early '08 you were using the standard arguments to support a "strong growth" in 2008 & 2009 story. Are you expecting the 10% this year or later?

 

[Shadow]

I thought the high-end pulled rather than the bottom-end pushed?

In early '08 you were using the standard arguments to support a "strong growth" in 2008 & 2009 story. Are you expecting the 10% this year or later?

I guess you don't 'get' irony then TF...

My post was in response to NR's equally vacuous assertion that the falls at the top-end were a guaranteed precursor to 50% falls across the entire residential market.

I don't expect Australian residential property prices to demonstrate 10% growth this year. It is as likely as a 50% fall.

Of course, some properties will rise by 10%, but not across the board.

(Note the 'roll eyes' emoticon in my post above).

 

[kayanat]

How will the american economic slowdown, with the worsening housing market, effect property markets in Asia?
I own property in Cambodia in Southeast Asia, where the housing market is presently very good, with property values increasing by almost 40% per annually. I am concerned that the US economic slump with its numerous housing forclosures, will eventually effect the housing market in Cambodia as well. I want to know what to expect - will the US economic crisis effect Cambodia or not?

The Cambodian currency is tied closely to the US dollar. With the dollars recent fall on world money markets how will this effect the Cambodian market?

 

[Token Funder]

I guess you don't 'get' irony then TF...

My post was in response to NR's equally vacuous assertion that the falls at the top-end were a guaranteed precursor to 50% falls across the entire residential market.

I don't expect Australian residential property prices to demonstrate 10% growth this year. It is as likely as a 50% fall.

Of course, some properties will rise by 10%, but not across the board.

(Note the 'roll eyes' emoticon in my post above).

Technically your comment was sarcastic rather than ironic, but point taken, I should have noticed the smiley!

In my own defence, sans smileys the sarcastic comments are indistinguishable in content and style from the straight-laced versions of yore.

In any case, to serious matters; in early 2008 you were using the oft-discussed Graphs and Lists as support for the proposition of "strong growth" in 08/09, boom 10/11 and bust thereafter.


For example see previously quoted and:

I believe it will... that property will continue to grow as per the trend lines shown below. Which means that the median price in Sydney will exceed one million dollars within the next 7 or 8 years. I expect this massive boom is just round the corner, and in fact that the preliminary growth phase has already begun in several cities...

But will it be followed by the worst bust in history? Again, yes I think it will.

Cheers,

Shadow.

I take it you no longer subscribe to that position. Which variable evidenced in The Graphs or The Lists do you think is the culprit?

 

[AUSPROP...]

I take it you no longer subscribe to that position. Which variable evidenced in The Graphs or The Lists do you think is the culprit?

my guess would be none - it's the timeframe that's the problem - needs to extend pre the massive expansion of credit? tho we do now have, generally speaking, 2 incomes servicing. Weird huh? You use to be able to own a house whilst one person went to work, now the same house takes 2 persons to work. Who took the money? Or perhaps the house isn;t the same??

 

[Shadow]

In my own defence, sans smileys the sarcastic comments are indistinguishable in content and style from the straight-laced versions of yore.

In any case, to serious matters; in early 2008 you were using the oft-discussed Graphs and Lists as support for the proposition of "strong growth" in 08/09, boom 10/11 and bust thereafter.

I take it you no longer subscribe to that position. Which variable evidenced in The Graphs or The Lists do you think is the culprit?

No, I've never said that I expect strong growth in 2008 or 2009, or a boom in 2010. That sounds like something you made up. In fact I have always said that I don't expect strong growth until 2010-2011, and then only for Sydney, with the other capitals to follow a year or two later. Sydney to boom around 2014-2015, then bust after that. I've been pretty consistent in that forecast for the past year or so, along with my belief that those cities that grew by 20%+ in 2007 will experience a correction similar to what Sydney experienced after the Sydney market peaked in 2003.

I expect you've been spending too much time as Yossarian in the other forum, soaking up the inane gibberish that they prattle on about on a daily basis. They do possess some wild ideas about what Shadow did or did not say regarding the next big property boom. They generally just make this stuff up now, since they actually deleted all 3000+ of my posts there in a big book burning exercise to get rid of my 'dangerous words'. They seem quite obsessed actually.

I did (in late 2007/early 2008) expect Sydney to show moderate growth of a few percent above CPI during 2008 and 2009, which hindsight was a bit optimistic given the magnitude of the GFC, but I'm still sticking with 2010-2011 for the strong growth to begin in Sydney.

The Sydney median is already down about 20% in real terms from the 2003 peak, and another year or two of flattish prices means Sydney could be down 25-30% in real terms. Not too far off Steve Keen's prediction! The next year or two will represent an excellent buying opportunity for Sydney, before the strong growth kicks off around 2010-2011.

Are you ready for the next big boom?

Cheers,

Shadow.

PS: Thanks for taking such an interest in my old threads. It is always a good idea to study historical works of genius.

 

[Token Funder]

No, I've never said that I expect strong growth in 2008 or 2009, or a boom in 2010. That sounds like something you made up. In fact I have always said that I don't expect strong growth until 2010-2011, and then only for Sydney, with the other capitals to follow a year or two later.

I tend not to make things up, though you've made the suggestion before, so thanks.c

In any case, was this "irony" then (my bolding)?

The growth is already happening... Look at Melbourne and Brisbane growth in 2007. Look at the curve for Sydney just starting to head in the upwards direction. It is already happening. Now is the time to get in, before the newspapers all start reporting on it... yes the actual 'boom' part may hit in 2010, 2011, but growth will still be strong in 2008-2009. If you wait until 2010 to buy, I believe prices will be up to 20% higher than they are right now.

So, given "strong growth" by your definiton is 10-15%....

My definitions...


Boom: +15 to +25% nominal per annum

Strong growth: +10 to +15% nominal per annum

Moderate growth: +5 to +10% nominal per annum

Stagnation: +5 to -5% nominal / -5 to -15% real over several years.

Cyclical correction: -5 to -10% nominal / -15 to -20% real over several years.

Crash: -10 to -20% nominal / -20 to -30% real over several years.

Major Crash: -20% to -35% nominal / -30% to -45% real over several years.

Ed Karan Crash: -40% over two years from tipping point in Q1 2008.

**** Crash: -70% to -90% in one year. All specufestors burned. Participation in ponzi schemes decreed punishable by death.


Would be interested to hear others definitions...

Cheers,

Shadow.

...what elements underpinning the position you appear to have come to in January 2008 do you think need revisiting?

 

[Shadow]

I tend not to make things up, though you've made the suggestion before, so thanks.c

In any case, was this "irony" then (my bolding)?

So, given "strong growth" by your definiton is 10-15%....

...what elements underpinning the position you appear to have come to in January 2008 do you think need revisiting?

Hahaha - OK you've got me there. In my post to FHB last January I should have used the word 'moderate' instead of 'strong'. Clearly I was typing too fast and not spending enough time ensuring that my wording was absolutely consistent across all posts.

In any case, I apologise for suggesting you made up the bit about me using the word 'strong' since it seems I did use the word 'strong' in one post last January when I should have tried to be 100% consistent with my other posts and used the word 'moderate'. I guess I felt that I wasn't using it in the same strict context at the time. Little did I realise that this colossal blunder would come back to haunt me 15 months later. I will spend some quiet time reflecting on my faux pas.

(Although you did make up the bit about me saying there would be a boom in 2010. The post that you quoted above was my response to FHB's suggestion that there may be a boom in 2010).

To answer your last question, I did temper my predictions early last year after having spent a considerable amount of time on the other forum. In fact, it was as a result of that thread that you quoted from above that I discovered the other forum, since some of the gloomers invited me over to discuss the issues with them. I learned quite a lot while I was over there, but after 6 months they decided my words were too dangerous, since I tended to shatter the '40% crash by end 2009' D&G illusion that prevailed over there at the time, so they banned me and destroyed all my posts in a big book burning exercise. Only 9 months to go for the remaining 37% fall!

PS: How much time do you spend analysing my old posts for inconsistency? And why?

 

[Token Funder]

Apology accepted.

(Although you did make up the bit about me saying there would be a boom in 2010. The post that you quoted above was my response to FHB's suggestion that there may be a boom in 2010).

Well, I may have misinterpreted:

*snip*
As interest rates fall, the credit crunch eases, and house prices start rising again, I expect a new construction-led boom to kick off in Australia, probably around 2010-2011.

However, I think there is a good chance we will make the same mistake as the US... we will eventually build too many houses (there are currently 18.6 million empty houses in the US).

This oversupply will create a massive glut of property late next decade, just as the baby boomers start to die off, which will further increase supply and reduce demand. This is what will trigger the next big crash.
*snip*

Were you suggesting a boom in construction but not in resi pricing?

If so, I stand corrected.

However, given the prevailing view of underbuilding in Australia (which I don't subscribe to) has not been addressed at recent/current pricing levels, are you suggesting a "construction-led boom" could occur with prices for existing stock at today's levels or below?

If so, what structural change did you think (at that time) would occur to alter the economics for builders or buyers of new homes?

PS: How much time do you spend analysing my old posts for inconsistency? And why?

It's actually not that time consuming. You quote/reference yourself a lot in threads so it's like following Hansell and Gretel

Why? For the same reason I have a collection of all the ANZ Economics guys presentations for the last couple of years.

Making predictions is easy and lots of people do it. In this forum, as is the case elsewhere, the enthusiasm with which any given prediction is met is for the most part directly correlated with the extent to which is supports the preferred outcome of the observer.

As a general proposition if I want to form a view as to whether someone's predictions are worth paying any attention to, I look less at what the current ones are and have a look at their form.

Given you've been appointed The King of graphs, trends and lists around here, I thought I'd check out what essentially the same set of graphs, trends and lists were leading you to predict 12 months ago.

On form, I'd suggest you revisit your data/hypotheses

 

[BoatBoy]

my guess would be none - it's the timeframe that's the problem - needs to extend pre the massive expansion of credit? tho we do now have, generally speaking, 2 incomes servicing. Weird huh? You use to be able to own a house whilst one person went to work, now the same house takes 2 persons to work. Who took the money? Or perhaps the house isn;t the same??

What, you mean the average home wasnt always 4 bedroom 2 bathroom with a jacuzzi, brick and porcelain tile with double lock up garage, ducted air, granite benchtops, Bosche or Mielle appliances, leather lounges in the theatre, TV's the size of a wall etc etc

Not to mention the new cars in the garage to complete the illusion.

Oh the humanity.

Dave

 

[Shadow]

Were you suggesting a boom in construction but not in resi pricing?
If so, I stand corrected.

Booms have to start somewhere. I think construction will kick off strongly, along with residential prices, around 2010-2011. Leading to a boom around 2014-2015.

However, given the prevailing view of underbuilding in Australia (which I don't subscribe to) has not been addressed at recent/current pricing levels, are you suggesting a "construction-led boom" could occur with prices for existing stock at today's levels or below?

If so, what structural change did you think (at that time) would occur to alter the economics for builders or buyers of new homes?

- Underlying demand increasing due to lack of prior construction.
- Interest rates at lower levels than before.
- Credit conditions easing.
- House prices rising.
- Government incentives.
- GFC ending.
- Improving confidence.

It's actually not that time consuming. You quote/reference yourself a lot in threads so it's like following Hansell and Gretel

I rarely quote myself. Maybe once in every 50-100 posts? (No - that's not a challenge to go and count them).

By the way - Hansel and Gretel were not followed. In fact it was they who tried (unsuccessfully) to follow a trail of breadcrumbs.

Making predictions is easy and lots of people do it. In this forum, as is the case elsewhere, the enthusiasm with which any given prediction is met is for the most part directly correlated with the extent to which is supports the preferred outcome of the observer.

As a general proposition if I want to form a view as to whether someone's predictions are worth paying any attention to, I look less at what the current ones are and have a look at their form.

Sure, but we're all just anonymous internet avatars here. I wouldn't obsess too much over what anyone predicts on a web forum. I take all predictions with a pinch of salt myself. Who really knows what the future holds. It's not as if anybody is accountable for what they say here.

Given you've been appointed The King of graphs, trends and lists around here, I thought I'd check out what essentially the same set of graphs, trends and lists were leading you to predict 12 months ago.

King of Graphs? First I heard about it. Sounds nice though. Where can I pick up my crown?

On form, I'd suggest you revisit your data/hypotheses

Sure, I do this all the time.

 

[Token Funder]

It's not as if anybody is accountable for what they say here.

Given the enthusiastic advice given to many newbies, perhaps they should be.

 

[Ms Jade]

- Underlying demand increasing due to lack of prior construction.
- Interest rates at lower levels than before.
- Credit conditions easing.
- House prices rising.
- Government incentives.
- GFC ending.
- Improving confidence.

I think "house prices rising" would be the result of most of the other conditions on the list. Well done for mentioning "credit conditions easing," as I don't think enough people here have recognised that this is a critical predictor of the housing market. I think we are only seeing the beginning of credit tightening and hopefully the more dire predictions don't eventuate or it could take a long time until the $ flows again. I will be keeping an eye on the return of easy credit as a lead indicator for the next boom.

 

[Token Funder]

Booms have to start somewhere.

But they don't need to start.

I think construction will kick off strongly, along with residential prices, around 2010-2011. Leading to a boom around 2014-2015.

- Underlying demand increasing due to lack of prior construction.
- Interest rates at lower levels than before.
- Credit conditions easing.
- House prices rising.
- Government incentives.
- GFC ending.
- Improving confidence.

Interestingly, pre-GFC we had:

- Underlying demand increasing due to lack of prior construction.
- Interest rates no worse than average.
- Easy credit conditions.
- House prices rising.
- Government incentives.
- No GFC.
- Massive confidence based on an unprecendent mining boom.

...but no construction boom.

What's up with that?

In any case, to save me time next year, how would you define this "construction-led boom". Based on your previous views, would it be reasonable to say something like a 15-25% nominal increase pa in building starts followed by 15-25% nominal increases pa in median Australian house prices 2014/2015?

Around the mark?

 

[Shadow]

Interestingly, pre-GFC we had:

- Underlying demand increasing due to lack of prior construction.

Much worse now due to the record high population growth and extremely low construction activity.

- Interest rates no worse than average

Rates will be lower this time... record low interest rates coming up.

- Government incentives.

There are plenty of disincentives such as inadequate land release, high taxes, lack of infrastructure at the edges of our cities, height restrictions, and DA red tape.

The recent 14K FHOG boost for new builds is an incentive. Although it would be a better incentive if it only applied to new builds, and not also to existing but never occupied dwellings.

 

[Token Funder]

Much worse now due to the record high population growth and extremely low construction activity.

So if it was bad and nothing happened and is now worse (and nothing has happened), what's special about 2010?

Rates will be lower this time... record low interest rates coming up.

Because we're entering a recesssion. What makes you think low rates plus recession = housing boom, or do you think we'll skip the recession. If we skip the recession, why low rates?

There are plenty of disincentives such as inadequate land release, high taxes, lack of infrastructure at the edges of our cities, height restrictions, and DA red tape.

Here's the biggy according to your friend and mine, Chris Joye.

Do you know something we don't? What changes are you expecting to address this barrier next year?

The recent 14K FHOG boost for new builds is an incentive. Although it would be a better incentive if it only applied to new builds, and not also to existing but never occupied dwellings.

Not quite understanding the last bit.

In any case, to borrow the traditional phrase, it's not different enough next year!

BTW, have we agreed a definition of boom?

 

[Shadow]

So if it was bad and nothing happened and is now worse (and nothing has happened), what's special about 2010?

2010-2011. Those are just the years that appeared in my crystal ball when I last gazed in.

No, I expect the GFC to be over, global growth positive again, credit conditions easing, confidence back up, and lots of inflation due to the quantitative easing.

In that case why will interest rates not skyrocket you may ask? Because the governments and central banks of the world don't learn from their mistakes, and will keep rates too low for too long again, terrified of halting the recovery in its tracks. That's what happened in the USA last time there was a danger of recession. And what did they get in response - a construction boom.

Because we're entering a recesssion. What makes you think low rates plus recession = housing boom, or do you think we'll skip the recession. If we skip the recession, why low rates?

We already have low rates and no technical recession yet. The USA kept rates very low for a very long time with no recession. Rates are kept low to encourage growth. Rates here will be kept low for longer than necessary because the Labor government and RBA won't want to be blamed for halting the recovery.

Do you know something we don't? What changes are you expecting to address this barrier next year?

Improved land release, lower taxes, better infrastructure at the edges of our cities, less height restrictions, less DA red tape.

Not quite understanding the last bit.

The 14K FHOG boost for new builds is also available for purchase of dwellings that have already been built but never occupied.

In any case, to borrow the traditional phrase, it's not different enough next year!

2010-2011 has always been my prediction. I have another 33 months before you can prove me wrong.

BTW, have we agreed a definition of boom?

I doubt you and I are going to agree on very much!