Steven Keen may have been right all along...
- Thread starter DanielG
- Start date
There's nothing like a well balanced article by Keen 
So lets think about this - all of a sudden lenders are now willy nilly giving people non-recourse loans with no deposit , lax lending criteria and no savings history are they ?
The guy would have more credence if he gave real reasons why house prices may drop in SOME parts of Australia.
For example - over building (like where my IP in Brisbane is which I have just sold as this area now has an oversupply of property fro the next 24 months or so)...that area will have house price drops IMO as part of the usual cycle Brisbane has every 14 years or so - when unemployment rises , net immigration falls and NSW / VIC people get homesick for the former states. Also the price there (in my IP suburb) being on par with middle suburbs in Sydney when it used to be half the price 5 years ago.
Banks currently are NOT falling over each other to lend - their lending criteria has tightened and the slow speed at which loans are being approved are more likely reasons why house prices MAY drop than his reasons. Yes unemployment rises will affect prices...but dont use the term to describe it as "Australian housing market holds sub-prime danger" - thats just complete sensationalist BS.
Sub-prime in USA did not happen because banks had tight lending criteria - quite the opposite actually. Our house price falls in SOME parts of Australia
will happen from unemployment , less population growth and tightening credit.
Get it right Keen....
So lets think about this - all of a sudden lenders are now willy nilly giving people non-recourse loans with no deposit , lax lending criteria and no savings history are they ?
The guy would have more credence if he gave real reasons why house prices may drop in SOME parts of Australia.
For example - over building (like where my IP in Brisbane is which I have just sold as this area now has an oversupply of property fro the next 24 months or so)...that area will have house price drops IMO as part of the usual cycle Brisbane has every 14 years or so - when unemployment rises , net immigration falls and NSW / VIC people get homesick for the former states. Also the price there (in my IP suburb) being on par with middle suburbs in Sydney when it used to be half the price 5 years ago.
Banks currently are NOT falling over each other to lend - their lending criteria has tightened and the slow speed at which loans are being approved are more likely reasons why house prices MAY drop than his reasons. Yes unemployment rises will affect prices...but dont use the term to describe it as "Australian housing market holds sub-prime danger" - thats just complete sensationalist BS.
Sub-prime in USA did not happen because banks had tight lending criteria - quite the opposite actually. Our house price falls in SOME parts of Australia
will happen from unemployment , less population growth and tightening credit.
Get it right Keen....
yet he sold his house in the middle of it... hes Nostradamus alright. "sub-prime light" you really have to question when moronic "experts" start catering their language to suit the media as they know it will get a run. He is the paris hilton of so called experts...
Don't you just love the media. The addition of these first two paragraphs says a lot imo.
ECONOMIST Professor Steve Keen has a knack of being able to predict gloomy developments, such as the global financial crisis (GFC).
So when he warns Australia faces a "sub-prime lite" financial disaster, it pays to listen.
http://www.news.com.au/adelaidenow/story/0,22606,25222386-5006336,00.html
Why bubbles occur. The lessons are never accepted
Sigh..... Ignore the facts just crucify the whistle blowers.
Sigh..... Ignore the facts just crucify the whistle blowers.
Keen's arguments aren't unique to him, and their logic is rigorous. If you apply your mind to following what he says, you will be better informed.
Unfortunately, the media can't and doesn't. And I have never seen his peers argue his major premises with academic discipline. It is all highly public 60 second sound bite ridicule, which is no defence in academia.
Keep in mind that none of his critics called the last few years correctly. He is an outcast because he challenges the consensus. But consensus is not as warranted in economics as it is in the harder sciences based on randomized controlled trials and stable laws of nature.
and I don't think he ever set it in stone that Australia would see a 40% drop in house prices, which is what the forum seems to see as heretical. From what I've read, he says property could see a top to bottom fall as large as 40%. It doesn't take a subtle mind to see the difference.
His recent review of the effects of the FHOG is comprehensive and sound, and should be taken seriously.
Australia is richer for hearing Keen's views. Without them, the RBA's, the govt's, and other vested interest views would go unchallenged.
Unfortunately, the media can't and doesn't. And I have never seen his peers argue his major premises with academic discipline. It is all highly public 60 second sound bite ridicule, which is no defence in academia.
Keep in mind that none of his critics called the last few years correctly. He is an outcast because he challenges the consensus. But consensus is not as warranted in economics as it is in the harder sciences based on randomized controlled trials and stable laws of nature.
and I don't think he ever set it in stone that Australia would see a 40% drop in house prices, which is what the forum seems to see as heretical. From what I've read, he says property could see a top to bottom fall as large as 40%. It doesn't take a subtle mind to see the difference.
His recent review of the effects of the FHOG is comprehensive and sound, and should be taken seriously.
Australia is richer for hearing Keen's views. Without them, the RBA's, the govt's, and other vested interest views would go unchallenged.
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Keen was back on the ABC news last night. The report stated that
"some ecomomists like A.P. Steven Keen predict that property could fall by 20% over the next 2 yrs".
Not sure if Keen has softened his forcast from the 40% or the ABC misquoted his view.
The usual spiel from Keen like "they've got to plunge no matter what you do" and "dangerous time to use borrowed money to dive into the property market when it's about to collapse because the economy is going to collapse around it"
Also had Tanya Plibersek and Chris Lamont from the HIA opposing the argument - as they would.
http://www.abc.net.au/iview/#/news 10min 40sec into the bulletin if you have forgotten what he looks like.
"some ecomomists like A.P. Steven Keen predict that property could fall by 20% over the next 2 yrs".
Not sure if Keen has softened his forcast from the 40% or the ABC misquoted his view.
The usual spiel from Keen like "they've got to plunge no matter what you do" and "dangerous time to use borrowed money to dive into the property market when it's about to collapse because the economy is going to collapse around it"
Also had Tanya Plibersek and Chris Lamont from the HIA opposing the argument - as they would.
http://www.abc.net.au/iview/#/news 10min 40sec into the bulletin if you have forgotten what he looks like.
My understanding was either he or Rory Robertson walked from Canberra to the top of Mt Kossy wearing a T-shirt stating 'I WAS WRONG ABOUT HOUSE PRICES - ASK ME WHY' depending on whether they fell by 40% or not.
And in one of SK's responses to that post he says....
Perhaps you could start a thread stating the thrust of his arguments & we could debate it here. However, I couldn't see anything in his post that hasn't already been debated here.
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Robertson walks if prices fall top to bottom by 20% or more.
Please point out on the forum where the following were discussed:
- debt's contribution to demand
- how much 'fhog % of market' increased
- comparative average loan size taken by fhb's
- fhb's LVRs
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Sigh.... Ignore the facts ignore economics 101 demand & supply.
And remind me again which fact are you pointing to exactly? The fact that bubbles always burst? Sorry thats not a fact, they deflate as well.
So are you like Keen arguing that the property bubble in Australia (if there is one right now which i disagree) has yet to burst?
Notice how Keen has toned down the rhetoric, "sub-prime light". Why light? if there is a bubble then any additional buyer at todays prices is simply one more straw on the camels back is it not?
I am tired of this clown and more tired given the "fact" its been 12 months since this convo started on Keen and his rubbish started to come out especially given the the FACT, Keen is still WRONG, how long must i hold my breath for his prediction to pan out?
So tiring...
And remind me again which fact are you pointing to exactly? The fact that bubbles always burst? Sorry thats not a fact, they deflate as well.
So are you like Keen arguing that the property bubble in Australia (if there is one right now which i disagree) has yet to burst?
Notice how Keen has toned down the rhetoric, "sub-prime light". Why light? if there is a bubble then any additional buyer at todays prices is simply one more straw on the camels back is it not?
I am tired of this clown and more tired given the "fact" its been 12 months since this convo started on Keen and his rubbish started to come out especially given the the FACT, Keen is still WRONG, how long must i hold my breath for his prediction to pan out?
So tiring...
great post, and warrants a sedated response.
My issue is not with Keen's research or more to the point him expressing it.
My gripe is when it gets summed up with comments such as "40% drops" (and I am sorry he did say it and yes the only way you can have a drop is from a high point to a low there is no other method).
He as an academic and presumably with more than one brain cell would know that such comments will be the headline and his years of research will be reduced by the media and Keen as their will servant to gutter journalism.
Keen is only to "keen" to turn his own research into rubbish in exchange for being a media wh*re.
And at risk of repeating myself his actions is completely contradictory to his own words a perfect case of do what i say not what i do.
Its tiresome it really is.
My issue is not with Keen's research or more to the point him expressing it.
My gripe is when it gets summed up with comments such as "40% drops" (and I am sorry he did say it and yes the only way you can have a drop is from a high point to a low there is no other method).
He as an academic and presumably with more than one brain cell would know that such comments will be the headline and his years of research will be reduced by the media and Keen as their will servant to gutter journalism.
Keen is only to "keen" to turn his own research into rubbish in exchange for being a media wh*re.
And at risk of repeating myself his actions is completely contradictory to his own words a perfect case of do what i say not what i do.
Its tiresome it really is.
Spoken at length.
So i don't waste my own time and instead yours how about you give me the % of the Australian market that took out loans 90%+ or lodoc, nodoc, halfdoc, bakeddoc, whatsupdoc loans?
While your at it tell me if now that rates have more than halved what does that do to the remaining people ability to borrow? increase or fall?
And then when you have answered those two q's tell me honestly "do you think demand for housing will increase or fall??"
Your statement wreaks of "oh but look at the states" kind of arguments that constantly riddles this forum. Oh but it happened over there.. so it should happen here.. but look the credit crisis no one can get money and hence demand will shrivel.
You are much better off asking if people believe today de-leveraging mentality may translate into lower demand. Atleast that proposition may hold water, but i tell you what offer people no stamp duty and 21k (24k) grants they will buy regardless if citibank goes broke or not. Sorry to say this but i would say more than half of first home buyers think "bear sterns" was the expression yogi bear made when he got angry.
All recent phenomenon due to falling interest rates and the increase in the grant. Keen has argued the same rubbish prior to this so I am not going to use recent changes as part of the debate that has been raging for 12+ months now.
This is chasing ones tail. I had eluded to this in several previous posts, in short, Keen lives in a bubble where governments dont react, rates dont change and certain assumptions are treated as fact.
I am sure he HATES!! that first home owners have re-entered the market how dare something ruin or in his view delay his unwaivering and incorrect views.
So we are in agreement that it's set in stone that Keen walks if prices don't fall by 40% ?
Debts contribution to demand - IIRC you've brought that up in the past.
How much 'fhog % of market' increased - I think our Western Sydney contributors (to their cost) have mentioned frequently that FHB are the majority of the market ATM
Comparative average loan size taken by fhb's - I've mentioned that point frequently - everyone except FHB have a big deposit from their previous PPOR sale.
fhb's LVRs - I've mentioned that - an acquaintance has done exactly what Keen is suggesting is common (95% LVR with tiny savings+FHOG for a deposit).
If you think these points need some/more debate ya know whatta do
Keen was back on the ABC news last night. The report stated that
"some ecomomists like A.P. Steven Keen predict that property could fall by 20% over the next 2 yrs".
Not sure if Keen has softened his forcast from the 40% or the ABC misquoted his view.
The usual spiel from Keen like "they've got to plunge no matter what you do" and "dangerous time to use borrowed money to dive into the property market when it's about to collapse because the economy is going to collapse around it"
Also had Tanya Plibersek and Chris Lamont from the HIA opposing the argument - as they would.
http://www.abc.net.au/iview/#/news 10min 40sec into the bulletin if you have forgotten what he looks like.
afaik Keen's reference to 'as high as 40%' was top to bottom within the next 15 years. ie 2008-2023.
usual uninformed self interest skew by labor and hia.
Far be it from an ABC reporter to ask
"if all is rosey in the property market (because we are so unlike the US), why is every property purchaser category, apart from FHBs, declining in the face of falling rates and stagnant or falling prices?"
as usual, the abc, being less informed about economics than aboriginal rights, can't ask probing questions of an economics bent.
So we are in agreement that it's set in stone that Keen walks if prices don't fall by 40% ?
Debts contribution to demand - IIRC you've brought that up in the past.
How much 'fhog % of market' increased - I think our Western Sydney contributors (to their cost) have mentioned frequently that FHB are the majority of the market ATM
Comparative average loan size taken by fhb's - I've mentioned that point frequently - everyone except FHB have a big deposit from their previous PPOR sale.
fhb's LVRs - I've mentioned that - an acquaintance has done exactly what Keen is suggesting is common (95% LVR with tiny savings+FHOG for a deposit).
If you think these points need some/more debate ya know whatta do
It's all in the Keen link above Keith. Why not read it, then you'll have some more info to flesh out your fuzzy anecdotes. Meanwhile, I need to get back upstream and read about trends in the bond/treasuries market.
No, he definitely specified 40%. And here is an excellent example of Keen's infallible logic. When asked to explain why he thought house prices in Australia would fall by 40%, he gave this response...
So prices in Japan fell by 42%, therefore that sounds 'about right' for Australia too, but it might be even more based on a Demographia estimate of affordability. Yeah, great analysis there Steve. Because we're just like Japan, and Demographia is such an excellent survey.
I did read it. I thought there was nothing new. He's mostly unbalanced - he has an end result he's looking for & finds data to support it & his cheerleaders love him for it. You're an expert on biases - I'm sure you can tell us which ones he suffers from
.Glad you like an anecdotes
.... although you're the only one I know that made a special effort to come back & 'smurk' at them .I repeat, if there's stuff he mentions that you think is worthy of debate then start a thread here.
what's wrong with demographia's survey?
Who sponsors it ? Developers.
Do you seriously think Demographia is an unbiased survey ?
Some commentary here.
