Steven Keen may have been right all along...

[Shadow]

Don't you need to be smart to be a real professor ?

No, apparently that's not a requirement of the esteemed University of Western Sydney.

 

[yorke]

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? .

Was that 40% fall against something more stable like the US$ or gold ? Or just against the yen which increased its buying power over the last 2-3 decades ?

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.

Yet all these new money floating around will have to find a good home. If they make it to difficult to take a loan the banks will be stuck with piles of cash getting eaten away by inflation.

No, apparently that's not a requirement of the esteemed University of Western Sydney.

But then again he's not really a professor at the moment, he just associates with them.

 

[Token Funder]

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?

Easy tiger. Read slowly.

I was saying that 6 months into a credit crisis you were suggesting that one of the future moves to keep house prices up would be a more flexible credit.

That is, that you made the comments 6 months into a credit crisis.

To be fair you didn't put a date on it but given it was in the context of your strong/good growth for 08/09 thread, I think it is reasonable to assume you were referring to a similar timeframe.

Did you have some other time frame in mind, perhaps.

You know very well that I don't expect the next surge in property prices until 2010-2011.

Actually, I'm not sure what you expect. We know what you said a year ago and you have been good enough to clarify that you didn't mean to say "strong growth" in 08/09, rather "moderate" or "good" growth.

As far as 2010/2011, last time we spoke we were referring to last years prediction of a "construction boom" in 2010/2011. Is that still happening or are we now saying general resi boom in 2010/2011 followed by a construction boom or is it in conjunction with?

Lending will get easier. Nobody said it would happen in 6 months.

See above.

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?

I expect, as a matter of certainty, for the sun to cool and the earth to die in the future.

Everything else is about probabilities given the data.

So, since you ask, given an unprecedented collapse in the global financial markets, the loss of securitisation as a funding mechanism, a paranoid apra, a global recession, which of the following would I consider more likely in the next three years:

a)pre-June 2007 credit appetite is quickly reinstated
b)banks hold the risk ground they've taken back for a while (< 6 months) but then revert to pre-June 2007 standards
c)banks hold the risk ground they've taken back for a couple of years
d)banks retreat further and stay there for 2-3 years, inching forward in some areas but pulling back behind the scenes.

..based on the facts available today, I'd go with (d).

BTW, at the time and in response to your view around "good growth" in Sydney, I pointed out (gently...I was more patient back then):

I think the optimism over the medium term needs to be tempered. Even if we assume the US doesn't go in to recession and stop buying stuff from China who, in turn, ease off buying stuff from Oz it seems to me that:

*the property boom of the last decade has been fueled by credit availiability and low credit costs, not income growth (I'll exclude Perth from this but in part)
*for the disconnect to continue and property price growth to be maintained ad infinitum, easy money needs to remain or continue to get easier.
*increased credit availability has been a function of (a) increased competition driven largely by the non-bank sector, (b) increasing LVRs and (c) decreasing serviceability benchmarks.
*the non-Banks can't loss lead anymore
*credit is retightening
*the mortgage insurers are getting nervous so the banks can't as easily offload the risk
*interest rates are going up due to liquidity issues and the driver of same (sub-prime crisis) is far from over.
*today's move by the NAB will be the first of several over the next few weeks.

If the future buyer of your property can't borrow (in relative terms) as much as you could when you bought the thing, what happens?

 

[devo76]

Easy tiger. Read slowly.

I was saying that 6 months into a credit crisis you were suggesting that one of the future moves to keep house prices up would be a more flexible credit.

That is, that you made the comments 6 months into a credit crisis.

To be fair you didn't put a date on it but given it was in the context of your strong/good growth for 08/09 thread, I think it is reasonable to assume you were referring to a similar timeframe.

Did you have some other time frame in mind, perhaps.




Actually, I'm not sure what you expect. We know what you said a year ago and you have been good enough to clarify that you didn't mean to say "strong growth" in 08/09, rather "moderate" or "good" growth.

As far as 2010/2011, last time we spoke we were referring to last years prediction of a "construction boom" in 2010/2011. Is that still happening or are we now saying general resi boom in 2010/2011 followed by a construction boom or is it in conjunction with?



See above.



I expect, as a matter of certainty, for the sun to cool and the earth to die in the future.

Everything else is about probabilities given the data.

So, since you ask, given an unprecedented collapse in the global financial markets, the loss of securitisation as a funding mechanism, a paranoid apra, a global recession, which of the following would I consider more likely in the next three years:

a)pre-June 2007 credit appetite is quickly reinstated
b)banks hold the risk ground they've taken back for a while (< 6 months) but then revert to pre-June 2007 standards
c)banks hold the risk ground they've taken back for a couple of years
d)banks retreat further and stay there for 2-3 years, inching forward in some areas but pulling back behind the scenes.

..based on the facts available today, I'd go with (d).

BTW, at the time and in response to your view around "good growth" in Sydney, I pointed out (gently...I was more patient back then):

I thought it was believed that the sun was heating up and swelling in size eventually burning us all up and going super nova. Makes investing pointless really. See Ya

 

[Shadow]

To be fair you didn't put a date on it but given it was in the context of your strong/good growth for 08/09 thread, I think it is reasonable to assume you were referring to a similar timeframe.

You know what they say about assuming, don't you TF? If you had actually read that thread you would see that I don't expect the next phase of strong growth to begin until 2010-2011, leading to a boom around 2014-2015.

Did you have some other time frame in mind, perhaps.

Yes, 2010-2011. How many times do I need to repeat it? Do you have some form of selective forum hearing, where you can memorise particular sections of my old posts, yet 'forget' something that I said two posts ago?

Actually, I'm not sure what you expect. We know what you said a year ago and you have been good enough to clarify that you didn't mean to say "strong growth" in 08/09, rather "moderate" or "good" growth.

Oh noes! Shadow used the word 'strong' when he should have said 'good'.

Can you spell the word 'pedant' perchance TF?

As far as 2010/2011, last time we spoke we were referring to last years prediction of a "construction boom" in 2010/2011. Is that still happening or are we now saying general resi boom in 2010/2011 followed by a construction boom or is it in conjunction with?

Nobody said anything about a boom in 2010-2011. That's when the next phase of strong house price growth and construction will first kick off. The 'boom' phase doesn't start until 2014-2015. Seriously TF, get with the program. It's not that hard to remember!

So, since you ask, given an unprecedented collapse in the global financial markets, the loss of securitisation as a funding mechanism, a paranoid apra, a global recession, which of the following would I consider more likely in the next three years:

a)pre-June 2007 credit appetite is quickly reinstated
b)banks hold the risk ground they've taken back for a while (< 6 months) but then revert to pre-June 2007 standards
c)banks hold the risk ground they've taken back for a couple of years
d)banks retreat further and stay there for 2-3 years, inching forward in some areas but pulling back behind the scenes.

..based on the facts available today, I'd go with (d).

d) 2-3 years. That almost aligns with my 2010-2011 prediction then. Looks like we're in agreement. Glad you've seen some sense at last. See - it wasn't so hard to talk you round after all.

 

[WinstonWolfe]

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.




... can we have less points scoring and more debate.....

Keith, I thought you were astute and mature enough not to resort to puerile irrelevant digs like my 'expertise re bias' and 'smurk'....or maybe you think 'subtle put down' is something Queenslanders are too sunstruck to get.

And I prefer you refer to me as Winston. I don't use the forum as a profit centre, so have no reason for self promotion. maybe you should ask MichaelW why he dropped his surname (you know him I presume), and why several requests were made by forumites to have their identities suppressed. The derision aimed at some somersoft members on G*H*P*C might only be the tip of an iceberg if a seriously nasty depression unfolds....whether you think it possible or not, is immaterial to me, as I won't be hiding in the Blue Mountains.

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 ?

This thread is aptly named for a discussion re Keen.

If you want to challenge Keen, start by critiquing his argument re the risks of Labor increasing the FHOG in this climate. And I think Keen made reasonable assumptions not dependent on non existent demographic FHB data, though you obviously feel such data was central to his thesis, or you just couldn't find a stronger straw to prod with at the time.



And while you are at it Keith et al, if you are up to attacking Keen for 40%, then you better deride Robert Schiller, who agrees with Keen that the Japanese experience is not unrealistic for Australia (Lateline).


And then you can tell us what a lightweight Roubini is (quoted below) for not having a problem with Keen's conclusions.



Australian Housing Market: Affordability Crisis Abating

• Australia's housing market softened in 2008 on the exit of speculators due to high credit costs, but an ongoing housing shortage will keep a floor under prices - especially as fiscal and monetary support for first homebuyers fortifies owner-occupier demand
• House prices: Australia has 2nd least affordable housing market in the world (Pauletich). House prices have yet to fully correct from the housing boom and overvaluation of 2001-04 and housing rental yields remain extremely low (AMP). Average house prices have only fallen 3.3% in the year to December 2008. If Australia avoids a deep recession, falls in house prices will be limited (ANZ). If not, prices could fall 40% if they mean-reverted, 50% if reverted to pre-bubble mean (Keen)
• Building approvals: Number of building approvals down for 13 month in a row in Dec 2008, when approvals slumped -33% y/y, lowest reading since 1980s recession. Total value of nonresidential building approvals plunged 42% y/y December
• Housing finance: The number of loans to owner-occupiers rose 1.3% in November, while the value of loans to investors fell 6.1% in November. The number of first home buyers jumped by 17.8% as Australians took advantage of the gov't fiscal stimulus package that doubled grants to first homebuyers
• Housing shortage: Australia is failing to build enough homes to satisfy rising demand. This "underbuild" helps explain why house prices have held up, despite poor affordability, and why residential rents have been rising at the fastest pace for two decades and keeping a floor under house prices (JPMorgan). 153k dwellings are being built annually, well below the 175k starts/yr required (Commonwealth)
• Origins of housing shortage: Monetary tightening, prohibitive development costs, builder caution amid tighter credit conditions is capping construction activity (ANZ). Strong demand from migrants to commodities-rich West and chronic housing shortage in East to support home prices
• Government intervention: $6.4 billion of the $42 billion stimulus package announced Feb 3 will be committed to replenishing and expanding the public and community housing stock

Feb 5, 2009

 

[Aaron Sice]

i see a start of a "new boom" in around 2010 forming with a re-structured credit market.

when i say "start" i mean "restored confidence".

the bull run will last until 2020 - 2025 - still my call and always has been. i will be watchig everything like a hawk from 2020 onwards for the first sign of weakness because it'll be the bull run to end all runs.

appreciate your lack of security, Mr S.

 

[WinstonWolfe]

i see a start of a "new boom" in around 2010 forming with a re-structured credit market.

a boom driven by what exactly?

- Australian cash used to consume Australian made goods and services?

-Australian debt serviceability used to acquire existing houses?

-Australian debt serviceability used to invest in commercial entreprises that create jobs?

-Australian exports to ??????? some nations that have enough cash or credit serviceability to consume our stuff that others value add to?

 

[turk]

This thread is aptly named for a discussion re Keen.

If you want to challenge Keen, start by critiquing his argument re the risks of Labor increasing the FHOG in this climate. And I think Keen made reasonable assumptions not dependent on non existent demographic FHB data, though you obviously feel such data was central to his thesis, or you just couldn't find a stronger straw to prod with at the time.



And while you are at it Keith et al, if you are up to attacking Keen for 40%, then you better deride Robert Schiller, who agrees with Keen that the Japanese experience is not unrealistic for Australia (Lateline).


And then you can tell us what a lightweight Roubini is (quoted below) for not having a problem with Keen's conclusions.



Australian Housing Market: Affordability Crisis Abating

• Australia's housing market softened in 2008 on the exit of speculators due to high credit costs, but an ongoing housing shortage will keep a floor under prices - especially as fiscal and monetary support for first homebuyers fortifies owner-occupier demand
• House prices: Australia has 2nd least affordable housing market in the world (Pauletich). House prices have yet to fully correct from the housing boom and overvaluation of 2001-04 and housing rental yields remain extremely low (AMP). Average house prices have only fallen 3.3% in the year to December 2008. If Australia avoids a deep recession, falls in house prices will be limited (ANZ). If not, prices could fall 40% if they mean-reverted, 50% if reverted to pre-bubble mean (Keen)
• Building approvals: Number of building approvals down for 13 month in a row in Dec 2008, when approvals slumped -33% y/y, lowest reading since 1980s recession. Total value of nonresidential building approvals plunged 42% y/y December
• Housing finance: The number of loans to owner-occupiers rose 1.3% in November, while the value of loans to investors fell 6.1% in November. The number of first home buyers jumped by 17.8% as Australians took advantage of the gov't fiscal stimulus package that doubled grants to first homebuyers
• Housing shortage: Australia is failing to build enough homes to satisfy rising demand. This "underbuild" helps explain why house prices have held up, despite poor affordability, and why residential rents have been rising at the fastest pace for two decades and keeping a floor under house prices (JPMorgan). 153k dwellings are being built annually, well below the 175k starts/yr required (Commonwealth)
• Origins of housing shortage: Monetary tightening, prohibitive development costs, builder caution amid tighter credit conditions is capping construction activity (ANZ). Strong demand from migrants to commodities-rich West and chronic housing shortage in East to support home prices
• Government intervention: $6.4 billion of the $42 billion stimulus package announced Feb 3 will be committed to replenishing and expanding the public and community housing stock

Feb 5, 2009

Hi WW

Interesting thread, however looking at Roubinis report that you have quoted
the only statements from Roubini seems to be the heading

"Australian Housing Market: Affordability Crisis Abating"

and the 1st paragraph

"Australia's housing market softened in 2008 on the exit of speculators due to high credit costs, but an ongoing housing shortage will keep a floor under prices - especially as fiscal and monetary support for first homebuyers fortifies owner-occupier demand"

Interested in you views on this part of Roubinis report as you seem to respect his opinion?


What follows are statistics and reports from various sources, Government,
Institutions and individuals concerning

House prices
Building approvals
Housing finance
Housing shortage
Origins of housing shortage
Government intervention

Nowhere can I see any comments from Roubini agreeing or disagreeing with
any of the reports listed.

I think that you are being deliberately misleading when you state that Roubini
has no problems with Keens conclusion.

However if I misread you then obviously on this basis you consider that Roubini has no problem with the other reports he has included.


Cheers

Pete

 

[WinstonWolfe]

However if I misread you then obviously on this basis you consider that Roubini has no problem with the other reports he has included.

Pete

Check the last bit under House Prices

 

[keithj]

WW... can we have less points scoring and more debate.....

Keith, I thought you were astute and mature enough not to resort to puerile irrelevant digs like my 'expertise re bias' and 'smurk'....or maybe you think 'subtle put down' is something Queenslanders are too sunstruck to get.

And I prefer you refer to me as Winston. I don't use the forum as a profit centre, so have no reason for self promotion. maybe you should ask MichaelW why he dropped his surname (you know him I presume), and why several requests were made by forumites to have their identities suppressed. The derision aimed at some somersoft members on G*H*P*C might only be the tip of an iceberg if a seriously nasty depression unfolds....whether you think it possible or not, is immaterial to me, as I won't be hiding in the Blue Mountains.

Obviously you're here to score points & not debate

This thread is aptly named for a discussion re Keen.

If you want to challenge Keen, start by critiquing his argument re the risks of Labor increasing the FHOG in this climate. And I think Keen made reasonable assumptions not dependent on non existent demographic FHB data.

What are his arguments ?

And while you are at it Keith et al, if you are up to attacking Keen for 40%, then you better deride Robert Schiller, who agrees with Keen that the Japanese experience is not unrealistic for Australia

(Lateline).


And then you can tell us what a lightweight Roubini is (quoted below) for not having a problem with Keen's conclusions.



Australian Housing Market: Affordability Crisis Abating

• Australia's housing market softened in 2008 on the exit of speculators due to high credit costs, but an ongoing housing shortage will keep a floor under prices - especially as fiscal and monetary support for first homebuyers fortifies owner-occupier demand
• House prices: Australia has 2nd least affordable housing market in the world (Pauletich). House prices have yet to fully correct from the housing boom and overvaluation of 2001-04 and housing rental yields remain extremely low (AMP). Average house prices have only fallen 3.3% in the year to December 2008. If Australia avoids a deep recession, falls in house prices will be limited (ANZ). If not, prices could fall 40% if they mean-reverted, 50% if reverted to pre-bubble mean (Keen)
• Building approvals: Number of building approvals down for 13 month in a row in Dec 2008, when approvals slumped -33% y/y, lowest reading since 1980s recession. Total value of nonresidential building approvals plunged 42% y/y December
• Housing finance: The number of loans to owner-occupiers rose 1.3% in November, while the value of loans to investors fell 6.1% in November. The number of first home buyers jumped by 17.8% as Australians took advantage of the gov't fiscal stimulus package that doubled grants to first homebuyers
• Housing shortage: Australia is failing to build enough homes to satisfy rising demand. This "underbuild" helps explain why house prices have held up, despite poor affordability, and why residential rents have been rising at the fastest pace for two decades and keeping a floor under house prices (JPMorgan). 153k dwellings are being built annually, well below the 175k starts/yr required (Commonwealth)
• Origins of housing shortage: Monetary tightening, prohibitive development costs, builder caution amid tighter credit conditions is capping construction activity (ANZ). Strong demand from migrants to commodities-rich West and chronic housing shortage in East to support home prices
• Government intervention: $6.4 billion of the $42 billion stimulus package announced Feb 3 will be committed to replenishing and expanding the public and community housing stock

Feb 5, 2009

Roubini is sitting on the fence..... he says

If Australia avoids a deep recession, falls in house prices will be limited (ANZ). If not, prices could fall 40% if they mean-reverted, 50% if reverted to pre-bubble mean (Keen)

I'm sure in a few years time, some people will be worshiping him for his foresight in predicting house prices fell by 40%, or 50%, or not at all. IIRC, there's a bias that refers to this selective memory.

You're appear to find it v. hard to commit to a debate..... can you tell us what Keens arguments are that you'd like to critique ?

 

[turk]

Check the last bit under House Prices

Hi WW

I have read the report.

Robini has posted his outlook at the top of the report and then gone on to list his references under various headings with a quick summary of the authors position, nowhere in his report has he endorsed any of the references he has used.

Roubinis conclusions are quote,


"Australian Housing Market: Affordability Crisis Abating

Australia's housing market softened in 2008 on the exit of speculators due to high credit costs, but an ongoing housing shortage will keep a floor under prices - especially as fiscal and monetary support for first homebuyers fortifies owner-occupier demand "

Robinis conclusions would seem to disagree with Keens conclusions

As I asked you in my previous post what is your view on Robinis conclusion as you seem to respect his views?

Should you wish to duck this question again just let me know and save me
wasting my time asking again.

Cheers

Pete