More positive stuff from the RBA

[sparky23]

I have just received an email to the speech in this link and thought it was a nice positive one to share!

http://www.rba.gov.au/Speeches/2009/sp_so_260309.html

 

[Petal]

Yes it is good but pity they didn't put the correct year on the report itself

 

[sparky23]

LOL lets hope the rest of the numbers are right!

 

[our obsession]

Hey thanks for that Sparkey, interesting reading. I like (relatively) longterm stats.

 

[topcropper]

Yeah, thanks Sparky. That is a good report with some nice charts.

See ya's.

 

[BV]

Sparky
Thanks
The date has been corrected btw
cheers

 

[nhb74]

Very nice thanks for that.

 

[sash]

Will be interesting to see what happens when unemployment goes past 7% and the flow on from tightening of credit by the banks. Whilst credit for home loans were tightened earlier in the US and UK...it was not as bad here.

My feeling is that FHB and developers will find it harder to borrow, particularly when state and fed government also borrow.

My feeling is that prices may fall further in high end, stabilise in the low and rents will be edging up due to the shortfall in accomodation.

Time will tell.....

 

[Perth Investor]

I note that that "Dwelling Price to Income Ratio" is at about 4.25, which is the average for the last 16 years, and only a factor of one above the 1993 rate (which after the property crash in the early 90's I am guessing was quite low). How is it that D&Gers keep saying this figure is way too high and unsustainable?

 

[Shadow]

I note that that "Dwelling Price to Income Ratio" is at about 4.25, which is the average for the last 16 years, and only a factor of one above the 1993 rate (which after the property crash in the early 90's I am guessing was quite low). How is it that D&Gers keep saying this figure is way too high and unsustainable?

Yes, affordability is back to 2000 levels (just before the boom).

The gloomers usually make the mistake of basing their affordability calculations on average single income rather than household income.

Also they are generally unaware of the fact that disposable income has increase to a much greater extent than total income.

 

[Aaron Sice]

so if DPIR is back to average (4.5%), and UE gets back to average (7%) and affordability is better can we not expect average growth again?

 

[Pushka]

Unemployment is going to be the great unknown. Partner and I predicted 10% mid last year, when the 'experts' were saying much less. Their estimates have been revised, upwards, I see.

 

[keithj]

so if DPIR is back to average (4.5%), and UE gets back to average (7%) and affordability is better can we not expect average growth again?

The D&G crowd would argue that the average is wrong because the boom distorts it upwards, and it needs to revert to the pre 93 level of 3 x income.

 

[Aaron Sice]

why 3x? because it's just a nice comfortable round figure? or because it's a general opinion amongst a group of people?

and the figure isn't about personal income, it's HOUSEHOLD income.

single income people - traditionally - haven't been able to buy houses. only recently they have - which would imply that the D&G crowd either >

< want single people to be able to afford houses, therefore bringing houses down to a value to suit single income ratios, which is ludicrous or

< the D&G crowd aren't ignoring single income figures for affordability ratios - which again, is ludicrous.

just because ¼ of the population are living by themselves, doesn't mean they're all up and coming individuals and deserve a home. basing economic rationale on this is, again, ludicrous. the figures are skewed by

druggies
widowers
single mums
ex-pats
imported workers

etc etc

too bad, so sad.

 

[keithj]

why 3x? because it's just a nice comfortable round figure? or because it's a general opinion amongst a group of people?

and the figure isn't about personal income, it's HOUSEHOLD income.

single income people - traditionally - haven't been able to buy houses. only recently they have - which would imply that the D&G crowd either >

< want single people to be able to afford houses, therefore bringing houses down to a value to suit single income ratios, which is ludicrous or

< the D&G crowd aren't ignoring single income figures for affordability ratios - which again, is ludicrous.

Yes... that's my issue with reversion to the mean.

Which mean do we revert to & why ?
There are good reasons why means (& medians) change - in the last decade there have been significant changes - dual incomes (as you mention), easier credit, higher disposable incomes, lower IRs, different household density, different size houses, and more.

3x income may have been a good average up til 1993, but significant things have changed since then & consequently 3 x income is no longer relevent.

 

[Aaron Sice]

well that's just logical