The self fulfilling prophecy of Steve Keen
- Thread starter joe jo jo
- Start date
Obviously he has a very strong view that the property market isnt looking good and going to fall by 40%. Its not good to just dismiss what he is saying especially if he predicted where we are now. I dont agree with him but I am also not saying that we will have boom in next few years as others are predicting. We need to be cautious regardless.
This guy is dangerous, he is making his 'money' by spreading the doom. Australia is not like other countries, we don't have a surplus of homes. 10% fall in a month in his area? So what, that could be due to a number of factors. He cant sell his house? What is the price he has put on it and where does he plan to live when it is sold?
Actually I think our (ppor) property was over valued in the first place, there were some stupid prices being paid for houses in our street and I always put a 'stupidity' factor into the price we could expect for our home. I think my grandma would describe him as a 'half sucked peppermint'
Actually I think our (ppor) property was over valued in the first place, there were some stupid prices being paid for houses in our street and I always put a 'stupidity' factor into the price we could expect for our home. I think my grandma would describe him as a 'half sucked peppermint'
I do not agree with Professor Keen....however there is a silver lining if people listen to him.
In which case it will be a case of "wealth moves from the uneducated (stupid) to the educated (smart)". I believe in Warren Buffet's first rule....which is not to lose money. I haves structured my portfolio like this since inception and I intend to hold my properties indefinitely.
Also, I am fortunate I won't need my super for at least 14 years as I am 41.
Cheers
Sash
In which case it will be a case of "wealth moves from the uneducated (stupid) to the educated (smart)". I believe in Warren Buffet's first rule....which is not to lose money. I haves structured my portfolio like this since inception and I intend to hold my properties indefinitely.
Also, I am fortunate I won't need my super for at least 14 years as I am 41.
Cheers
Sash
Come on Push.....YOu are being a bit one sided.....Keen said something valid....that his cold blanket over property hadn't overwhelmed the hot air fueling price rises since the late 90s.
If anyone has been dangerous, it is the RBA and lenders who have lent money out at low rates and high LVRs in the face of price rises tripling in 8 years.
Anyone relying on that trend for their passive wealth creation strategy is not only a danger to others, but to themselves.
Like the dangerously low 9.5% standard variable rate during the Brisbane boom of 2007 when house prices went up an average of 21%. Thats a classic example of cheap credit being the rocket fuel necessary for any boom.
Furthermore I agree with WW and think we should go back to the good old days of max 65% LVR. That would make sure that FHB would never ever get into the market and we could have an entire generation of renters for life. Fantastic stuff.
Not your usual shining wit Boomer....
How many cycles have you been doing property now?
Do you remember when investment property rates were higher than owner occupier rates, due to the higher risk of the former?
Do you remember when there was no alternative to borrow apart from the major banks? or when building societies started lending? and the rate differential through time?
Do you remember when mortgage managers entered the game?
Do you remember when loan fee structure was a totally different ball game?
Do you remember when loan terms were set in concrete, fixed rates, extended repayment periods, and redraw and offset facilities didn't exist,
Were you investing pre securitization, or before Australia was borrowing 30% from overseas to drive property prices?
Do you know how far 9.5% is above the 30 year median interest rate Boomer?
Do you remember when investment property rates were higher than owner occupier rates, due to the higher risk of the former?
Yes. Wasn't even that long ago. I didn't tell the bank till I had to refinance my PPOR into IP when the loan term ran out.
Do you remember when there was no alternative to borrow apart from the major banks? or when building societies started lending? and the rate differential through time?
Yes. But the building societies did allow lower deposits than the banks. I remember buying at only 10% deposit which was a real shock.
Do you remember when mortgage managers entered the game?
Yes
Do you remember when loan fee structure was a totally different ball game?
Yes. Which would I prefer higher interest rates or fees? Hmmmmm
Do you remember when loan terms were set in concrete, fixed rates, extended repayment periods, and redraw and offset facilities didn't exist,
Yes
Were you investing pre securitization, or before Australia was borrowing 30% from overseas to drive property prices?
Yes. But I gave it all to ex in 1992 for peace and quiet.
Do you know how far 9.5% is above the 30 year median interest rate Boomer?
No. But its about 0.63 above the 49 year average variable rate and 1.45 above the median variable rate since 1959.
Cheers
Shane
Still cant sell his property though,
I should make him an offer he can't refuse, it will be 40% less...
At a guess I would say about 1.3% above median.
There is no doubt that a 7.25% cash rate target is into the contractionary side of monetary policy. Hence my annoyance about blaming recent CG on "low" rates. Brisbane boomed on "high" rates although credit standards are admittedly looser than they have ever been.
Hi all,
WW,
Yes I do!
Yes I do!!
Yes I do!!!
Still yes!!!!
God I'm old, yes again!!!!!
No I don't!!! but I figured that I better get the trusty calculator out and the official stats from the RBA to see what the 30 year average was..
Here they are starting in Oct '79 for standard bank variable rate, as of October that year 9.13, 10.25,12.5,13.5,12,13.3,13.5,15.5,14.5,14.5,17,16,12.5,10,8.75,9.5,10.5,9.25,6.7,
6.7,6.55,8.05,6.3,6.55,6.55,7.05,7.3,7.8,8.3,8.55
OK, using the October figures, the average interest rate over the last 30 years comes out at 10.28%.
Hmmm, maybe a trick question WW, sorry.
bye
WW,
Yes I do!
Yes I do!!
Yes I do!!!
Still yes!!!!
God I'm old, yes again!!!!!
No I don't!!! but I figured that I better get the trusty calculator out and the official stats from the RBA to see what the 30 year average was..
Here they are starting in Oct '79 for standard bank variable rate, as of October that year 9.13, 10.25,12.5,13.5,12,13.3,13.5,15.5,14.5,14.5,17,16,12.5,10,8.75,9.5,10.5,9.25,6.7,
6.7,6.55,8.05,6.3,6.55,6.55,7.05,7.3,7.8,8.3,8.55
OK, using the October figures, the average interest rate over the last 30 years comes out at 10.28%.
Hmmm, maybe a trick question WW, sorry.
bye
After watching 60 minutes, my advice, invest in a SVU, as they are much better to sleep in
no way, I am sleeping in my bed...
The median is a little lower though, at 9.375%.
Median (or better yet, average) would be kinda nice right now...
GP
And why is he only waiting until now to sell it. Didn't he "predict" this years ago.
no trick in it Bill considering the context......which was.
Like the dangerously low 9.5% standard variable rate
Which I interpreted as boomer-sarcasm for saying 9.5% isn't a low rate...
(maybe you did mean it was a dangerously low rate Boomer
)My (rhetorical) question attempted to remind Boomer the ironyst, that 9.5% is actually a very average interest rate historically speaking......which you just confirmed, by showing that it is 0.8% below the 30 year average.
Though I did say the 30 year median, not average.....which at 9.375%, made my point better..........
Just in case you missed the original Gen Y debt program on 60 minutes, you can view it here:
http://sixtyminutes.ninemsn.com.au/article.aspx?id=640543
They have an "interesting" attitude to debt.
EC
i agree that his views seem a bit extreme. but i haven't done the research that he has.
as far as if he is dangerous, i think his views are needed to temper a bit of the unreality that pervades australia in relation to housing prices. in a separate thread here i read a post by someone calculating the value of the property based on the assumption that CG will appreciate at 10%/annum for the next 3-5 years. not even a hint of awareness that 10%/year is an exceptional return for property--and completely unsustainable.
elsewhere i read people saying that housing prices are fine except for the affordability factor. minor problem that. if nobody can afford them, it does tend to put a dent in things.
i dont post here just to antagonise people. i have read some really good posts that i have learned a lot from and i am grateful for that. and i do hold back a lot of the time because i know i am not saying anything new--if people dont believe it the first 20 times they hear it, they wont believe it now. but i do hope that people start being a little more proactive in protecting themselves from potential financial disaster. better to earn a little than to lose a lot (yep, nathan, im talking to you!).
bubbles do happen, and when they do happen they invariably burst. if you think you are safe because everyone else is doing it and not everyone can be wrong, look at the US. according to 60 mins, 1 in 6 people owe more than their house is worth. true, if they can ride this storm out they will be fine in 3-4 years, but man - that will be a really, really scary 3-4 years.
as far as if he is dangerous, i think his views are needed to temper a bit of the unreality that pervades australia in relation to housing prices. in a separate thread here i read a post by someone calculating the value of the property based on the assumption that CG will appreciate at 10%/annum for the next 3-5 years. not even a hint of awareness that 10%/year is an exceptional return for property--and completely unsustainable.
elsewhere i read people saying that housing prices are fine except for the affordability factor. minor problem that. if nobody can afford them, it does tend to put a dent in things.
i dont post here just to antagonise people. i have read some really good posts that i have learned a lot from and i am grateful for that. and i do hold back a lot of the time because i know i am not saying anything new--if people dont believe it the first 20 times they hear it, they wont believe it now. but i do hope that people start being a little more proactive in protecting themselves from potential financial disaster. better to earn a little than to lose a lot (yep, nathan, im talking to you!
).bubbles do happen, and when they do happen they invariably burst. if you think you are safe because everyone else is doing it and not everyone can be wrong, look at the US. according to 60 mins, 1 in 6 people owe more than their house is worth. true, if they can ride this storm out they will be fine in 3-4 years, but man - that will be a really, really scary 3-4 years.
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