House Price vs House Loan

[MichaelW]

hobo-jo,

I almost wasn't going to bother, which is an approach I'm taking a lot more lately as I don't much care any more if there's a bunch of ignorant folk out there reading armageddon in their tea leaves. But I've got to point out to you FWIW, and I don't reckon its worth much as most people have stopped listening and caring about the truth anyway, but your above posts are completely wrong.

Firstly, as kum yin lay pointed out to you, there's no correlation between those charts. You're making it up.

Secondly, those statements by the RBA don't mention any correlation between house prices and owner occupier activity. Read them again. You're making it up.

What the RBA is saying is that high auction clearance rates and turnover = high prices. But that's exactly what's happening right now! Prices are going up and activity is higher than it has ever been on record at least in Sydney. I posted this recently either in this thread or another one. Some record $XXX Billion in turnover in March and May for Sydney. All time records. Sure, owner occupier as a percent of the mix might be down a bit but it will bounce back in a month or two. Greece jitters spook buyers.

You're trying to find trend lines and force correlations where they aren't any. With all possible politeness, you're miles off the mark.

Cheers,
Michael

 

[hobo-jo]

I almost wasn't going to bother, which is an approach I'm taking a lot more lately as I don't much care any more if there's a bunch of ignorant folk out there reading armageddon in their tea leaves.

Funny how those that are negative about short term property prices are always given these ultra bearish labels, like "expecting Armageddon", "doomsdayers" or "housing bears". Personally I would consider myself simply a "realist". Mind you it's the same on the "bear" forums, only 12-18 months ago I was being labeled a "bull" simply because I pointed out opportunities to purchase PPORs in some areas for a cost close to renting in the same suburb. It seems there is no middle ground, you are classified either a bull or a bear and it's a shame that respected forum members here choose to do the same.

I am expecting a period much like the early 90's where property stagnates and drops. I am not expecting across the board falls more than 20%. Further to this I will actually be looking to this time as an opportunity and expect to come out the other side of the next decade with several property purchases (where today I own no property). If that makes me reading "Armageddon in my tea leaves", then so be it.

Secondly, those statements by the RBA don't mention any correlation between house prices and owner occupier activity. Read them again. You're making it up.

No it doesn't refer specifically to OO loans, but it does correlate ALL loan approvals with prices (e.g. Graph 8). OO purchases/loans are a larger part of the market than investment purchases/loans and as per Graph 4 around 75-80% of all OO purchases are with a mortgage. The correlation is there, at the end of the day it comes down to more credit/loans = higher prices and in most cases the reverse is also correct. The RBA goes on in the article about how the composition in housing turnover has been effected by an increase in FHB activity (which was due to the boost) and then the drop-off the last 6 months. They finish the article on this note: "As the composition of housing turnover normalises, the more typical relationship between housing price growth, loan approvals and auction clearance rates is likely to be re-established."

Some record $XXX Billion in turnover in March and May for Sydney. All time records. Sure, owner occupier as a percent of the mix might be down a bit but it will bounce back in a month or two. Greece jitters spook buyers.

Overall, housing credit is still expanding on the whole so it does not surprise me to hear that represented in dollars the market is still making record $'s in turnover.