http://www.businessspectator.com.au/bs.nsf/Article/Housing-nears-the-precipice-pd20100610-69RPH?OpenDocument


Quote:

Housing nears the precipice Steve Keen Published 6:49 AM, 10 Jun 2010 Last update 9:55 AM, 10 Jun 2010    Last month I argued that "The next two months’ data on home lending should be enough to confirm which way things are going" (The home lending dive will continue, May 18) – and the first of those two instalments, the ABS lending data released yesterday, does nothing to change my view that we are well past the turning point in the deflation of the great Australian housing bubble.    Previously I highlighted the fact that the only group increasing their borrowing for housing was investors – owner occupiers have been backing away from borrowing since mid-2009. As Adam Carr noted yesterday, on an annual basis the number of new loans is down 25 per cent since June 2009, while at the same time the number of loans made to investors has risen 26 per cent.    There are plenty of ways to slice up this data, but the telling figure is the rate at which owner-occupier buyers are leaving the market (see chart below). In both number and value terms the people who actually want to live in houses are increasingly sceptical of taking on massive debt to buy a home. In trend terms, the number of loans for all borrowers excluding refinancing of existing home-loans has fallen in nine of the last 10 months. In value terms, it's eight of the last 10 months. (Also nine and eight out of the last ten months respectively in seasonally adjusted terms.)

http://www.businessspectator.com.au/bs.nsf/0bd6ea4d7e0e401eca257300000473fc/286a75b5a063617eca25773d006ec400/bodyrich/0.CB2!OpenElement&FieldElemFormat=gif



Quote:

Investors, as described last month, continue to increase their borrowing – which is masking some of the departure of owner occupiers in the aggregate figures. This line from the ABS release says it all: "In trend terms, the total value of dwelling finance commitments excluding alterations and additions decreased 0.8 per cent. Owner occupied housing commitments fell 2.4 per cent, while investment housing commitments increased 2.0 per cent."    So the Great White Hope for the housing market is the White Shoe Brigade of housing investors. But here yet another reality check is required: even with the growth in investor lending of the last decade, the national debt stock, worth about $1.1 trillion in total, comprises $770 billion to owner occupiers and $330 billion to investors – so a lot more investors would have to jump into the market to counterbalance the owner occupiers who are bailing out.    What these figures represent is the enduring belief amongst investors that "prices will always go up" for properties, even as potential home-buyers send the clear message "not if we have to borrow that much to buy them!"    Expect this lending data to take some time to bite in terms of capital city auction clearance rates and prices – but bite they will. Next month's data should give some indication of how soon this will happen.

And straight from the horses mouth a real estate agent chimes in and backs up Steve Keen !!


Quote:

Gerry Thibault wrote: Steve, you are right on the money again. (See Housing nears the precipice, June 10) As an agent on the front line, I have seen this coming. But now it has arrived. The past three or four weeks have seen property enquiries virtually stop. Not just slow down, but stop. The phones have stopped ringing. The activity is from people listing their properties for sale. And they are now flooding in. Sales for May and June will be down substantially. The media is not seeing this yet. But as this flows through the system they will report it and the public at large will, in turn, react to it. This will send prices down hard. The fact is, no one buys in a falling market – they wait for evidence of a bottom unless they really need a home to live in today. So you can see how quickly this will be upon us in real terms. My colleagues and I are planning to see a 10 per cent price drop by Christmas and a bigger drop next year. Steve, you will soon not be a lone voice in the wilderness. Just hope people listened to you back when they had the chance because it will soon be too late to sell at the prices they want.

It would have happened over a year ago if the government in all their wisdom hadn't decided to inflate the real estate bubble even further, by giving the first home owners grant.

I wonder what they will come up with this time? They might have no choice but to let it deflate naturally. House prices might finally go back to what they should be, affordable for the average working family, without them having to borrow at least $300,000.

I've always believed Steve Keen had it right.

Ex Dame Pansi wrote on Aug 2^nd, 2010 at 6:47am:

It would have happened over a year ago if the government in all their wisdom hadn't decided to inflate the real estate bubble even further, by giving the first home owners grant. I wonder what they will come up with this time? They might have no choice but to let it deflate naturally. House prices might finally go back to what they should be, affordable for the average working family, without them having to borrow at least $300,000. I've always believed Steve Keen had it right.

If labor gets back in they will probably quadruple the first home buyers scam and let more chinese speculators in to prevent the bubble from deflating :(

Desperate times with desperate measures :(

No word from the eternal economic optimist badweekend58 ;) LOL

You're really into this guy hey Last Nail lol :)

Surprise! The property spruikers are still flogging the same tired old line of a housing shortage, even though Melbourne will increase their boundaries by an extra 5%, enough land for another 134,000 homes. Other cities with the capabilities are sure to follow their lead.

There never has been a housing shortage.

http://www.moneymorning.com.au/

Don't understand why we have 2 topics on the same subject matter ...

Lisa Jones wrote on Aug 3^rd, 2010 at 1:47pm:

Don't understand why we have 2 topics on the same subject matter ...

Because it's better than having 2 topics on Julia Guillotine or Tony Abort. I'm so over those two :(

Ahh my sentiments exactly Last Nail!

Here have a read (and a laugh) at what I posted earlier ..


Lisa Jones wrote on Aug 3^rd, 2010 at 1:02pm:

... which brings me to a point I've been deliberating over for  some time .. Is anyone here overly charmed by EITHER Abbott OR Gillard?? I know I'm not!

Lisa Jones wrote on Aug 3^rd, 2010 at 1:11pm:

Perhaps this ought to come under a separate topic titled: Honest reflections on BOTH leaders" .. but both leaders are boring me shitless!!!! They look wrong, they talk wrong, they walk wrong, they laugh wrong .. and they're all 2nd rate predictable BS rhetoric driven puppets. No oratory flair or charisma to be seen anywhere. Surely both parties could have pushed forward better candidates??? Surely??? sighs .. Could someone please wake me up when this pre scripted amateur and cringeworthy rerun is all over?

Lisa Jones wrote on Aug 3^rd, 2010 at 1:24pm:

and those oh so tacky political advertisement which makes one cringe and reach out for skewers! Seriously .. it all beggars bloody belief! What do we ALL want?? A government damn it .. just bloody get in there and govern .. govern our economy first and foremost .. and FFS lead us not into the temptation to vote you out because of your botched up bungled buffoonery  .. because we're over it! Just frigging manage/lead/perform/and above all else DONT screw us around and expect us to say, "Thanks could you do it again .. coz that isn't going to happen!"

It kinda says it all really lol :)

Lisa Jones wrote on Aug 3^rd, 2010 at 12:47pm:

You're really into this guy hey Last Nail lol :)

He has no vested interests that's why I take what he says seriously.

Put it this way, are you going to believe what a real estate agent says who is hanging out for his easy commission or are you going to believe what Steve Keen says ?

Oh bugger I missed out on the debate between Tony Abort and Julia Guillotine. Here are some highlights of it :) LOL

http://www.toyzine.com/auctions/bertoia-toyauction-200504-pst/PunchandJudy-toy-2.jpg

http://www.thebourneshow.com/images/mr_punch_and_mrs_punch.jpg

Neither.

I'd much rather believe and do what many in the real estate industry are doing/have been doing .. (as stated earlier in here/your other topic) these professionals are buying up good sized and well positioned land value properties with a long term investment straetgy in mind. The beneficiaries for such investments? Their family/future family.

LMAO @ Last Nail's last post lol :)

Sir lastnail wrote on Aug 2^nd, 2010 at 1:49am:

http://www.businessspectator.com.au/bs.nsf/Article/Housing-nears-the-precipice-pd20100610-69RPH?OpenDocument Quote: Housing nears the precipice Steve Keen Published 6:49 AM, 10 Jun 2010 Last update 9:55 AM, 10 Jun 2010    Last month I argued that "The next two months’ data on home lending should be enough to confirm which way things are going" (The home lending dive will continue, May 18) – and the first of those two instalments, the ABS lending data released yesterday, does nothing to change my view that we are well past the turning point in the deflation of the great Australian housing bubble.    Previously I highlighted the fact that the only group increasing their borrowing for housing was investors – owner occupiers have been backing away from borrowing since mid-2009. As Adam Carr noted yesterday, on an annual basis the number of new loans is down 25 per cent since June 2009, while at the same time the number of loans made to investors has risen 26 per cent.    There are plenty of ways to slice up this data, but the telling figure is the rate at which owner-occupier buyers are leaving the market (see chart below). In both number and value terms the people who actually want to live in houses are increasingly sceptical of taking on massive debt to buy a home. In trend terms, the number of loans for all borrowers excluding refinancing of existing home-loans has fallen in nine of the last 10 months. In value terms, it's eight of the last 10 months. (Also nine and eight out of the last ten months respectively in seasonally adjusted terms.) http://www.businessspectator.com.au/bs.nsf/0bd6ea4d7e0e401eca257300000473fc/286a75b5a063617eca25773d006ec400/bodyrich/0.CB2!OpenElement&FieldElemFormat=gif [quote]Investors, as described last month, continue to increase their borrowing – which is masking some of the departure of owner occupiers in the aggregate figures. This line from the ABS release says it all: "In trend terms, the total value of dwelling finance commitments excluding alterations and additions decreased 0.8 per cent. Owner occupied housing commitments fell 2.4 per cent, while investment housing commitments increased 2.0 per cent."    So the Great White Hope for the housing market is the White Shoe Brigade of housing investors. But here yet another reality check is required: even with the growth in investor lending of the last decade, the national debt stock, worth about $1.1 trillion in total, comprises $770 billion to owner occupiers and $330 billion to investors – so a lot more investors would have to jump into the market to counterbalance the owner occupiers who are bailing out.    What these figures represent is the enduring belief amongst investors that "prices will always go up" for properties, even as potential home-buyers send the clear message "not if we have to borrow that much to buy them!"    Expect this lending data to take some time to bite in terms of capital city auction clearance rates and prices – but bite they will. Next month's data should give some indication of how soon this will happen.

[/quote]

I haven't really followed much of what Keen has said, but there are a couple of obeservations which WILL influence future Existing & New Housing -
1) Over the next 20 years, around 5 Million Australian Baby Boomers, will retire, wanting to downsize out of their McMansions and many will pass on, permanently.

2) That means that the assured, automatic growth in Demand for Housing that has now been in place for some 60 years will cease, unless immigration remains at current high levels.

3) However, it is highly unlikely that immigration will remain at current levels, considering the effects of Declining Energy sources, other Essential Resources & the negative effects that Climate Change will have on Food & Water.

4) It is therefore likely that immigration will decline, over the next 20 years, as will the demand for Housing, both Existing & New, particularly as Baby Boomers start dying on mass. 

The net effect of all of this, is that Housing Demand Growth will start to lessen, before finally housing available exceeds demand and then Prices start to decline.

And, these are some of the reasons for the current gap in land availability, as planners can see what is comming just over the horizon.