Prof Steven Keen.

[JBY]

http://www.news.com.au/business/money/story/0,28323,25750335-5013951,00.html

I feel embarrassed for Prof Steven Keen. Really I do. This guy needs to seriously give it a rest and chill out.

On a more positive note, I just negotiated below market value from a nice and probably slighlty anxious vendor. A reasonable bargain. Bring it on!

And the world still keeps turning.......

Ha!

 

[VYBerlinaV8]

I wouldn't be at all surprised if the overall Australian property market stagnated for much of the next 5-10 years, bringing the correction some people talk about. That doesn't mean that property is a 'bad' investment, just that consideration needs to be given to the strategy you use. Of course, there'll be variance between the different suburbs, areas and market levels.

I for one am planning to buy later this year, and again next financial year.

 

[Ausprop]

yes but he didn't say that property would stagnate. So if it is up 7% now, it must first fall by that 7% and then a further 40%.

I thought the guy would have gone away and hoped everyone forgot he ever opened his mouth. the trouble with radical forecasts is you will either be a legend or a fool. If you look like being a fool I wouldn't go around promoting myself further!

 

[Philip Thomas]

Look at the Real Estate Cycles

I wouldn't be at all surprised if the overall Australian property market stagnated for much of the next 5-10 years

Property “stagnation” is certainly not what I’m seeing in the residential sector of Sydney.

If this is “stagnation” then it would be hard to imagine what a hot market would look like.

Keep in mind that property is cyclic.

In Sydney I believe we have bounced off the bottom (certainly in the costal city areas & near city locations). I believe we are in the start of the recovery / upturn phase. This is the time when developers buy property & begin development with the intention to have completed product on the market later in the cycle.

Most investors get into the market very late in the cycle, when conditions seem safe. This is usually when the cycle is moving into the rapid growth phase & peak stages. At this point the developers are selling the investors their finished product.

This doesn’t mean that you can call yourself a "developer" & go out & buy any bit of dirt & make a motza. You have to do your homework & this includes defining your market, doing your cost analysis, assessing risk & managing your cash flow. This is your feasibility & its done before you purchase that dream bit of dirt.

The property cycles are different across Australia & are different for each property type (industrial, commercial, residential). So just because Sydney residential may be moving, doesn’t mean Adelaide or Perth residential is moving. Even within Sydney, from suburb to suburb you will see different demand for different types of property.

You watch the media. It will slowly begin reporting on snippets of positive sentiment. Then more & more. Then positive will out way the negative. Eventually optimistic stories will be everywhere; this is mainstream optimism. Even the media is cyclic.

Philip

 

[chilliaa]

yes but he didn't say that property would stagnate. So if it is up 7% now, it must first fall by that 7% and then a further 40%.

I thought the guy would have gone away and hoped everyone forgot he ever opened his mouth. the trouble with radical forecasts is you will either be a legend or a fool. If you look like being a fool I wouldn't go around promoting myself further!

I feel sorry for the poor fools who acted on his 'advice'.
Armchair economists are just that, their debates are fine in academia land (they are still debating the efficient market hypothesis 40 years after its initial 'creation' and upon which all modern day share valuation strategies are based).

Give me people like Soros anyday, if Soros speaks and acts, i pay very close attention. Why? because he has made incredible amounts of money over LONG periods of time (and hence is not a one shot wonder). The same goes for investors who have out performed the market over long periods of time such as Warren Buffett and Peter Lynch. Their views are like gold (even if in the short term the market doesnt follow them).

 

[Propertunity]

If this is “stagnation” then it would be hard to imagine what a hot market would look like.

Another level headed view which happens to agree with mine - so kudos to you Philip

 

[Aaron Sice]

lmao i still remember this quote from the Australian...

Dr Keen is holding to his view that rates will fall to 2 per cent by the end of 2009, and zero per cent in 2010 - he says the RBA will cut rates by another 50 basis points next month.

aren't all the banks expecting 4.25% cash by the end of 2010? isn't there a thread around here somewhere about it?

 

[Ausprop]

nice one BC. People need to be held accountable for these crazy forecasts. The conviction behind them is the scary bit... not forecasts, almost visions of the future

 

[Aaron Sice]

there's a reason that photo in the original link is him in a tshirt in his house, and not behind his big oak desk with plaques and books behind him in a fancy wool suit....

 

[evand]

I'm sure people realise the billions the govt has thrown at the economy is the only reason it is relatively buoyant. And that includes property prices.

While i don't think people should get too smug, i think a 40% fall is extreme. It could happen in a lot of places tho, just as it did in the 90's.

BTW: Quite a few upper price properties have seen 40% falls. If that spreads down the price sectors when the stimulus is removed - LOOKOUT!

 

[Aaron Sice]

no one's being smug, just people are starting to see the wood for trees.

 

[Ausprop]

despite the big end of town takign a hit and the inevitable median drops that you would expect from FHBs distorting the sales distribution, we have still seen increasing prices. Once FHBs are removed from the stats there could be some real upside.

 

[willair]

http://www.news.com.au/business/money/story/0,28323,25750335-5013951,00.html

I feel embarrassed for Prof Steven Keen. Really I do. This guy needs to seriously give it a rest and chill out.

Yes they do,but what happens over time say like over a five years investment time span one year or two is nothing in the big scale of things ,everyone seems to be looking for instances that would prove his initial theory wrong and that's fair enough by me, but what if he is right?,just like crossing the street blindfolded at 7 in the morning..imho willair..

 

[Propertunity]

there's a reason that photo in the original link is him in a tshirt in his house, and not behind his big oak desk with plaques and books behind him in a fancy wool suit....

It is very tempting to alter the caption below that photo to read: "This is the young Prof. Keen still waiting for the price of Real Estate to come down" - shown here in his rented apartment.

 

[Propertunity]

despite the big end of town takign a hit and the inevitable median drops that you would expect from FHBs distorting the sales distribution, we have still seen increasing prices.

Yes, yes we have.

Once FHBs are removed from the stats there could be some real upside.

Well Ausprop I'm sure you know that FHBs will never be "removed" from the stats or from buying of course. They will continue to be represented with or without a Grant or a Boost.

The Victorian FHBs seem to be in clover at the moment being eligible for up to $36,500 in grants if they buy in regional Vic.

 

[fokas]

Forget Keen who will probably live to regret his sale...what about all the comments from the 'everyday' folk? I'm amazed at home some people think...
It's very interesting to see things from a different perspective...even if they are so sqewed from my own.

 

[BayView]

I feel sorry for the poor fools who acted on his 'advice'.
Armchair economists are just that, their debates are fine in academia land (they are still debating the efficient market hypothesis 40 years after its initial 'creation' and upon which all modern day share valuation strategies are based).

Give me people like Soros anyday, if Soros speaks and acts, i pay very close attention. Why? because he has made incredible amounts of money over LONG periods of time (and hence is not a one shot wonder). The same goes for investors who have out performed the market over long periods of time such as Warren Buffett and Peter Lynch. Their views are like gold (even if in the short term the market doesnt follow them).

aah...music to mine ears, C!

Did you see the photo of his nice little loungeroom with the after-thought spilt system up near the sliding door? Not that you shouldn't live in something like this - we all have ( I actually do right now - renting).

But come on - this is a very experienced (read: old), highly respected and high profile ECONOMIST. Don't these people have their finger on the pulse of the world, and should be able to stay ahead of the game and clean up?

I wouldn't be at all surprised if the overall Australian property market stagnated for much of the next 5-10 years, bringing the correction some people talk about. That doesn't mean that property is a 'bad' investment, just that consideration needs to be given to the strategy you use. Of course, there'll be variance between the different suburbs, areas and market levels.

V8, I agree - in part. I don't see the length of time for stagnation being that long. More like a slowish growth period of a couple of % per year over that term I'm thinking.

Why?

Lack of credit available for construction and business, lower rates, continued population growth (apparently) will add up to under supply, but with a bit of buyer activity due to the lower (historical) rates.

 

[Propertunity]

what about all the comments from the 'everyday' folk? I'm amazed at home some people think...

IF those comments are from everday folk - then YES - it is absolutely staggering to read the way people really think.

I think they published me at Comment 148 of 155

 

[steveadl]

He's a media tart, of course he has to stick to his previous guesstimate - more publicity with the original claim.

I know when looking for serious financial strategy advice and opinion, I head straight for the local university lecture circuit.

 

[keithj]

If the availability of debt was the only thing that house prices depended upon, then SK would probably be right. However, out in the real world there are many other factors to consider - govt intervention, disposable income, multiple wage earners, interest rates, supply, immigration, rent, ....

Peak oil is another example of narrow minded thinking - some of Harry Dents stuff is too. Unbalanced people who forecast events based on a single factor can be safely ignored.