House Prices Need 'US Style' Collapse

[Tim]

What garbage, how dare these people suggest Australian property is over priced and due for a correction, its obvious our property is not nearly as expensive as other property around the world.....

http://www.news.com.au/business/money/story/0,28323,26070663-5013951,00.html

It's actually an outrage that someone can suggest these things with no concrete prooof..... highly disturbing.

 

[BV]

Tim
A correction (if it ever comes) is not necessarily a bad thing, it will allow us to accumulate more properties

 

[msplants]

Houses are way overpriced for what you get here compared to in the US. I can buy 3x2 homes with 2+ car garage on a nice lot with all the latest appliances for $100k - $150k all day long there.

Design is so poor here and the quality of appliances is poor and way overpriced.

 

[Piston Broke]

It's only the people who are leveraged way too much and are being bailed out by the taxpayers that are outraged by these suggestions.

 

[Propertunity]

I think since Professor Steve Keen has recanted on his dire predictions of a 40% fall in prices (that turned into a 7% rise in prices – of Steve Keen’s own home unit, had he kept it he'd be sitting on some good CG) that this Dr Joe Flood has taken up the doom & gloom challenge.

I am starting to see the downside to having a University education

 

[Tim]

It's only the people who are leveraged way too much and are being bailed out by the taxpayers that are outraged by these suggestions.

Piston Broke even if you are highly leveraged and you are being helped by the taxpayer, hang in there because it might work out OK for you by B&H.

TIm

 

[13910]

"On the one hand Australia is vulnerable to a collapse like the United States, where prices fell by a half during the sub-prime collapse ... or to a long slow decline as in Japan since 1988," Dr Flood said.

I'd like to know what's on the other hand?

Regardless, I have work mates in the US (two different areas) that have bought before and during the financial crisis and prices in all four areas haven't declined during this time.

Not saying places haven't been hammered (put your hand up for Detroit), but the idea that every house plummets in value isn't correct. Just means it's time to double check that your DD is concrete...something you should always check, but a booming market can help cover one's carelessness whereas uncertain times can be more punishing.

Cheers
Greg

 

[turk]

What garbage, how dare these people suggest Australian property is over priced and due for a correction, its obvious our property is not nearly as expensive as other property around the world.....

http://www.news.com.au/business/money/story/0,28323,26070663-5013951,00.html

It's actually an outrage that someone can suggest these things with no concrete prooof..... highly disturbing.

Love your sarcasm Tim.

Another analytical report by university academics supported by research such as

Quote----" Australia is vulnerable to a collapse like the United States, where prices fell by a half during the sub-prime collapse."

Below is the Case-Schiller property indices which seems to be the standard measure for US property movements, peak to trough the fall was about 32%and is now rising.

________________________________________________
Selected Quarterly S&P/Case-Shiller Index Values[5]
YEAR Q1 Q2 Q3 Q4
1987 62.03 64.09 65.32 66.18
1988 66.67 69.27 70.50 71.22
1989 72.43 74.40 75.22 75.37
1990 75.58
1991 73.43
1992 74.30
1993 74.46
1994 76.46
1995 77.74
1996 79.61
1997 81.82
1998 85.71
1999 92.08
2000 100.00
2001 109.27
2002 118.00
2003 130.48
2004 146.26 152.92 158.53 163.06
2005 169.19 176.70 183.08 186.97
2006 188.66 189.93 188.11 186.44
2007 184.83 183.16 179.94 170.39
2008 159.17 155.68 150.29 139.18
2009 128.81
_______________________________________________

Still a huge fall, but nowhere near 50%.

Aahh the quality and accuracy of analytical reports from academia these days.


Then again Tim as you say ---"It's actually an outrage that someone can suggest these things with no concrete prooof..... highly disturbing."

Tim, I'm certainly glad you have the sense not to believe everything that you read.

Cheers

Pete

 

[ianvestor]

Credibility always gets thrown out the window when they misspell 'median':

The researchers found that after 1996, average house prices increased by three times on average - to around 6.8 times medium household income - and debt levels surged.

Lucky for them it's towards the end of the article, because I normally stop reading after that.

 

[Ausprop]

"...amid very tight housing and land markets and little prospect of restoring the balance," Dr Flood said."

"Dr Flood and his team assessed Census data to conclude that Australia's housing market is in "a very dangerous and unstable situation which has received little adverse attention"."

so there is little prospect of it happening yet it's a very dangerous and unstable situation? I am confused, which is it?

"...or tax away the imbalance - so that all Australians may benefit."

The guy is pushing some socialist agenda. The article is drivel.

I would like a new Mercedes, we would all benefit if they collapsed by 40% in price. Governments should work in unison with trade departments to make this happen.

Next!

 

[yieldmatters]

Still a huge fall, but nowhere near 50%.

Aahh the quality and accuracy of analytical reports from academia these days.

Try it in real terms. (i.e. after CPI is backed out).

 

[quoll]

The guy is pushing some socialist agenda. The article is drivel.

I would like a new Mercedes, we would all benefit if they collapsed by 40% in price. Governments should work in unison with trade departments to make this happen.

I agree, drivel.

Is it as simple as they haven't yet bought a house and would like a cheap one?

There were no suggestions on others ways of reducing house prices, eg inflation. I think the media are very lazy, they need to find better stuff to write about.

Enjoy
Graeme

 

[topcropper]

Houses are way overpriced for what you get here compared to in the US. I can buy 3x2 homes with 2+ car garage on a nice lot with all the latest appliances for $100k - $150k all day long there.

Design is so poor here and the quality of appliances is poor and way overpriced.

Yet, a decent 4 bed, 2 bath, double garage house costs 300k or so to build including the land. Hard to see how prices can drop too much if they are held up by the cost of a new house?



I reckon this bit is funny,....

......."many lower income earners in the 25-44 age bracket were unlikely to ever own their own homes because their parents were spending their inheritances and prices remained high.



So the Gen X's [of which I'm one] and Y's are having their inheritances spent by their boomer parents. Those naughty naughty parents. Shame on youse you old farts


See ya's.

 

[evand]

If a spelling error loses credibility this forum must have very little.

and:

phew!!..lucky for them indeed. Imagine their distress if you didn't read the rest of the article.

Credibility always gets thrown out the window when they misspell 'median':



Lucky for them it's towards the end of the article, because I normally stop reading after that.

 

[ToDo]

Mr Flood does not have anything in common with Steve Keen. Steve was predicting housing crash, this scoundrel simply pleads the Government to induce housing crash by either increasing supply or "taxing away the difference". In other words, he wants:

- every available piece of land to be released into housing
- developers to be forced to build at a loss
- taxation regime to change that home owners subsidise renters

There are few problems with this plan.
First, there is not much of a new land to be released. Of course you can chop down national parks and kick out suburban farmers. I would not mention impact on grocery prices, but it is for certain that "Green lungs" around our capitals are being kept to an absolute minimum at the moment.

- Second, you either need a dramatic improvement in the property prices so builders have an incentive to build, or you need gigantic subsidies to create an artificial incentive. Alternatively you put them into concentration camps and force them to build by regular flogging.

-Third, taxing the property owners would create temporary glitch in prices as those who "invest" for NG purposes will be forced to sell. On the other hand it will only create shortage of rental properties which will allow few remaining landlords to pass tax onto tenants.

This is a pure utopia plan on how to allow Mr Flood to get into property ownership at the expense of others.

Both Flood and Keen are bright demonstration of the damage to our Universities that was caused by paranoic cuts to education by previous Government.

 

[Propertunity]

Both Flood and Keen are bright demonstration of the damage to our Universities that was caused by paranoic cuts to education by previous Government.

Why don't you stop beating around the bush and tell us what you really mean?

 

[MichaelW]

- Second, you either need a dramatic improvement in the property prices so builders have an incentive to build, or you need gigantic subsidies to create an artificial incentive. Alternatively you put them into concentration camps and force them to build by regular flogging.

Bring on the subsidies!

At what point is the government going to realise that they need to introduce supply side support instead of demand side support if they want to put more property on the market without lifting the current price of that product?

Instead of giving $30K to FHBers. give $30K per unit to developers. They can then charge the current market price and make a margin that might mean the project is now viable. The alternative just lifts the price and distorts the market as it favours one particular group of buyers.

Not that I've got a vested interest or anything... Just wish NSW would hurry up and take section 94 contributions away from local council and levy a much reduced rate on developers at the state level as they've been suggesting for some time now.

Cheers,
Michael

 

[Shadow]

Houses are way overpriced for what you get here compared to in the US. I can buy 3x2 homes with 2+ car garage on a nice lot with all the latest appliances for $100k - $150k all day long there.

Yes, but you would have to live in the USA.

I believe property in Peru is even cheaper. Also Romania.

 

[kum yin lau]

Exactly!! And to put it in better perspective, the last I looked, the type of properties I'm interested in living in or investing in were no where near the prices that were suggested.

I'd challenge anyone who says that US houses are 'cheaper' than Australian ones.

Ask Oprah and any number of wealthy Americans, ask even a middle of the road banker, or someone more 'ordinary'.

KY

 

[ToDo]

Bring on the subsidies!

Instead of giving $30K to FHBers. give $30K per unit to developers. They can then charge the current market price and make a margin that might mean the project is now viable. The alternative just lifts the price and distorts the market as it favours one particular group of buyers.


Cheers,
Michael

It is kind of hard to see what the difference is - as if it is nt yourself who grabs FHOG at the end of the day.

Besides, replacing the FHOG with developers' subsidy woudl be wrong politically. Stop gicving free money to average Joe Blogg and give it to capitalist pig developer - you expect from voters to be excessively intelligent to understand that there is no difference.

Question is though where FHOG money is coming from. FHOG original purpose was combat GST effects. Say on average $300K unit Government taxes you $30K and gives 21K back to buyer. Even after input credits, they are in profit. Give with the one and, take with the other. And the beaty of FHOG is that it is temporary, i.e. it hurts bottom line for a limited time only (unlike developers subsidies or removal of GST from properties alltogether).

As to developer's levies - they are complete disgrace. Taxing people who build houses for the infrustructure that is used by everybody - including businesses and Government themselves has to be paid for by Government.