How about the fact they classify 'the world' as 5 countries?
Steven Keen may have been right all along...
- Thread starter DanielG
- Start date
How about the fact they classify 'the world' as 5 countries?
The Demographia survey has been thoroughly debunked. There are massive flaws in that survey. It uses a very basic measure of 'affordability' - i.e. median house price to median income. This is a very blunt tool. Demographia compares house price to income ratios across various countries, however there is no reason why house price to income ratios would be consistant across different countries, because there are substantial differences between each countries housing markets. The survey fails to consider the following factors:
- Disposable/discretionary income
- Employment rate
- General cost of living
- Interest rates
- Rental yield
- Availability of public housing
- Marginal tax rates
- Mortgage default rates (Australian defaults are way below UK and USA default rates)
- Tax incentives such as negative gearing, FHOG, CGT reductions
- Land/Block size
- Dwelling size and quality
- Proximity to transport and infrastructure
- Currency exchange rates
- Economic and political stability
- Home ownership rates
- Urbanisation (much higher in Australia than in US, UK or Japan)
- Population growth - Australia (1.8%), compared to USA (0.9%), UK (0.4%) and Japan (negative)
- Demographics (ironic that a survey called Demographia ignores demographics!)
Of course, no survey is perfect and no survey can possibly hope to account for all these factors. The best we can do is try to look at as many different surveys as possible, each of which addresses a few of these factors, and this will give an better general impression of comparative affordability in each country, rather than looking at just one survey (I have linked to nine alternative surveys below).
We should note that the historical '3-4 x income' house price affordability ratios that some D&Gers cling to are no longer valid, because interest rates are historically low, and a large number of buyers today have large deposits, dual incomes, and high disposable income. These are the people who drive property markets - not the FHBs.
However, the RBA has also demonstrated that 25-40 year olds today still have more disposable income left over after buying a 30th percentile house than at any time in the past (Keithj has some good posts on this).
Regarding the 'demographic' failings of the Demographia survey, take for example its assertion that a certain 'sea-change' town in Australia is particularly unaffordable. They base this on the median house price to medium income in that town. What they fail to consider is that the median income there is largely irrelevant, because much of the population are cashed-up retirees (no income) who have saved up for their whole lives and purchased a nice big beach house, often with very low borrowings. Sure, these beach houses may be unaffordable for a first home buyer who lives there and works in the local supermarket, but that's not the primary demographic driving prices that town. In reality, the Demographia survey is comparing apples with oranges.
Another key issue with Demographia is that it only compares Australia with five other countries, yet the media proceeds to claim that Australia is the 'most expensive country in the world'. The survey conveniently ignores all the many cities around the world with much higher house prices than Australia. For example Moscow, Tokyo, Oslo, Seoul, Hong Kong, Geneva, Zurich, Milan, Paris, Singapore, Monaco. Here are some alternative studies...
World's Top 10 Priciest Cities To Own A Home
http://www.forbes.com/2009/02/09/cities-top-expensive-lifestyle-real-estate_0209_cities.html
Sydney - not in the top 10
GlobalProperty Most Expensive Cities 2008 (apartment price per sqm):
http://www.globalpropertyguide.com/investm...-cities-in-2008
Sydney - Number 13: US$7,085 per sqm
Mercer Most Expensive Cities (cost of living, including housing)
http://www.mercer.com/costofliving
Sydney - Number 21
CityMayors Expensive Cities
http://www.citymayors.com/economics/expensive_cities2.html
Sydney - Number 24
Knight Frank Survey (prime residential property)
http://www.finfacts.com/irelandbusinessnew..._10010019.shtml
Sydney - Number 8: EU$13,100 per sqm
Overseas Property Mall Survey
http://www.overseaspropertymall.com/proper...tional-markets/
Average home values for select 2,200 square foot single-family dwellings with four bedrooms...
Tokyo - $785,818
Sydney - $683,109
Aneki (most expensive countries to live in)
http://www.aneki.com/expensive.html
Australia - Not shown in the top 20
Most expensive countries in the world
http://www.associatedcontent.com/article/1...the.html?page=2
Australia - Not in the list
Most expensive rental markets
http://www.forbes.com/2008/02/11/properties-world-rent-forbeslife-cx_mw_0212realestate.html
Australia - Not in the list
(Three of the above surveys are sort of duplicates of others - i.e. they quote data from the others, but they do also add their own additional information and commentary, so I have included them anyway).
Cheers,
Shadow
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*yawn* I have them.. it was for your benefit. So lets both have a look, -3.3 over 12 months? Run for the hills? 36.7% to go.
Annerley posted positive growth figures over the same period - I must be just lucky right? or part of that underground developer conspiracy group.
Point is, Keen is wrong has been for 12 months continues to be and bores the hell out of me. I cannot beleive he has the audacity to "tweak" his predictions by over 20% and still put on a straight face.
Annerley posted positive growth figures over the same period - I must be just lucky right? or part of that underground developer conspiracy group.
Point is, Keen is wrong has been for 12 months continues to be and bores the hell out of me. I cannot beleive he has the audacity to "tweak" his predictions by over 20% and still put on a straight face.
starting already....
Race on for IPs:
http://www.news.com.au/business/money/story/0,28323,25227271-5013951,00.html
I guess old blind freddy could see that positive cash flow IPs will support the market
Race on for IPs:
http://www.news.com.au/business/money/story/0,28323,25227271-5013951,00.html
I guess old blind freddy could see that positive cash flow IPs will support the market
goodness me!!! IRs at 5% and yields at 7% + depreciation?
the sky is falling!!!!
the sky is falling!!!!
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.
come on Keith, you're being a little intellectually apathetic in not rising to the occasion and validating anecdotes with some stats mate. you must have as much time as Keen to skew your pov, so get to it.
You're an expert on biases - I'm sure you can tell us which ones he suffers from.
not the bias of supporting an argument with generalizations and selective non random samples, like 'our Western Sydney contributors'.
Glad you like an anecdotes
dear me Keith. regressing back into schoolboy shorts as a compensation mechanism for?......avoiding going away and digging up the stats to validate that everything Keen says is BS. a little intellectual inertia creeping in?
special effort? maybe you are right Keith, it is taking a special effort to get you to offer anything specific to counter Keen. I'll have to add you to the smurk list of small picture anecdoters if you don't rise to the occasion.
I repeat, if there's stuff he mentions that you think is worthy of debate then start a thread here.
You repeat?...did you die and reincarnate as Sim???
I repeat....... come on Keith, fire up the intellectual furnance, go away until dins and find some stats to validate why Keen is wrong on all accounts, and your anecdotal reality is right, on all accounts.
Back in post #71, you asked me point out on the forum where the following were discussed.....
....so I did. Now you appear to be criticising that I'm not validating anecdotes with stats
.You'll note that Keen's post states
.... you did read his post ?
I repeat, if there's stuff he mentions that you think is worthy of debate then start a thread here.
Sorry.... dunno what you're on about.
I politely asked in post#70
Perhaps you could start a thread stating the thrust of his arguments & we could debate it here.
and repeated in #77
If you think these points need some/more debate ya know whatta do
and then again in #83
I repeat, if there's stuff he mentions that you think is worthy of debate then start a thread here.
WW...... I'd love to fire up that intellectual furnace, but you appear to be struggling to find any SK point you think is worthy of debate ???
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You are right, no survey or analysis is perfect.
And to argue the Australia wide new median price/household income ratio will remain above 5.5
- because house prices are supported by dual incomes....and bugger the long term birth rate, child rearing, quality of life, or job security.
- because interest rates are historically low......and bugger when they revert to the mean and house prices don't.
reveals I am better off having a 'smurk', keeping my responses short, and focusing on what's happening in the bond market.
Back in post #71, you asked me point out on the forum where the following were discussed.....
....so I did. Now you appear to be criticising that I'm not validating anecdotes with stats
I retorted with
- debt's contribution to demand
- how much 'fhog % of market' increased
- comparative average loan size taken by fhb's
- fhb's LVRs
you responded with
'western sydney contributors'......
and you criticize demographia?
I criticise Demographia because of it's sponsors & it's flawed methodologies.
And on a completely different subject.....
Keen has no stats for FHB demographic, neither do I.
WW... can we have less points scoring and more debate.....
If SK has any points worth debating please start a new thread (5th time I've asked
). Are the above 4 points worth debating further ?
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Nr/WW, you're wasting your time endeavouring to put the detail/context around Keen's position or the analysis that underpins it.
The blue-sky types have created a straw man based loosely on Keen that they bring up and debate, even though his position of a peak to trough real drop of the size and over the sort of period seen in Japan is not particularly extreme if you think about it.
Not guaranteed by any means, but not an extreme position.
Mind you, their denial is such that at least a couple were suggesting 12 months ago that there was a real possibility of lending getting more flexible in the future, thereby keeping growth going. Yes, 6 months in to a global credit crunch, lending was going to get easier.
I'm sure they would accept today that it was a dumb call, but I doubt they could accept that their then position was driven actually by a need for it to be true rather than a well founded but incorrect forecast based on the facts available at the time.
It really is like debating evolution and the age of the earth with Christian fundamentalists in that they can't allow reality to impinge on their belief system.
The blue-sky types have created a straw man based loosely on Keen that they bring up and debate, even though his position of a peak to trough real drop of the size and over the sort of period seen in Japan is not particularly extreme if you think about it.
Not guaranteed by any means, but not an extreme position.
Mind you, their denial is such that at least a couple were suggesting 12 months ago that there was a real possibility of lending getting more flexible in the future, thereby keeping growth going. Yes, 6 months in to a global credit crunch, lending was going to get easier.
I'm sure they would accept today that it was a dumb call, but I doubt they could accept that their then position was driven actually by a need for it to be true rather than a well founded but incorrect forecast based on the facts available at the time.
It really is like debating evolution and the age of the earth with Christian fundamentalists in that they can't allow reality to impinge on their belief system.
Shad,
Thanks for that *again*.
Lists lack utility.
You don't happen to have a list of P/E ratios of housing around the world, perchance?
Unless these 25-40 year olds are like dingaling, hg and a few others who have gambled everything on the stock market and are now 70%-80% in the hole. Then they come here to tell us that the single digit correction on some properties its the end of the world and a major crash like we have not seen since the Big Depression.
What are your thoughts on the following analysis by Keen? Do you reckon he has a strong argument here? I know you realise the Demographia survey is flawed yourself, so I guess you must believe his other argument is the clincher - i.e. that we will have a 40% fall because Japan had one?
So you're saying that Japan did not have an 'extreme' property boom followed by an 'extreme' crash, by historic and global standards. In that case, what alternative property crashes do you believe were extreme, and why were they more extreme than what occurred in Japan.
Lending will get easier in the future. Your '6 months into a global credit crunch' statement however is just one of your typical strawman arguments. I don't think many people said lending would be easier in 6 months.
This is a very strange statement. Who made this 'dumb call'. And why would they need it to be true? That whole statement sounds like something you made up.
Yeah those Christian fundamentalists annoy me too.
So was he saying that in 15 years properties will be 40% lower then they are now ? Unless he expects that his salary to be also 40% lower in 15 years he needs to redo his calculations, this time with some fresh batteries. LOL
Keen is not getting any younger either. Doubtful if he will even be around in 15 years to witness this Nirvana. And if he is, I expect the senility will be even worse... hopefully that won't prevent him making it up to full professor rank though.
Don't you need to be smart to be a real professor ?
I'm sure he's gonna be around, in the queue at the State Housing Commission office looking for an affordable rental.
And where exactly is the 'in 6 months time' part?
Seriously TF, are you going all out to misrepresent the truth? Do you need me to remind you which part of your strawman argument I was refuting?
Shadow said:
You know very well that I don't expect the next surge in property prices until 2010-2011.
Lending will get easier. Nobody said it would happen in 6 months.
You're a chancer TF!
By the way - is it your position that lending will never get easier? Or do you concede that I was right when I said lending will get easier in the future?
Oh yes, and if you could address the part about why I would need it to be true. Cheers.
