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Forum: Australian Bubble Forum

Forums->Australian Bubble Forum->$150,000 above trendline

David	$150,000 above trendline
	A very interesting update of US, UK, Canada and Aus house prices against an assumed trendline. We are $150,000 above it and that's assuming a median price of $468,000. Those of you who lurk on S&S will recognise it, my apologies but it is worth repeating for others. http://trendlines.ca/economics.htm#realty
	on: Thu 29 of Jul, 2010 [11:08 UTC] reads: 885

Posted messages Style Plain Threaded Headers Only Sort Newest first Oldest first Find author message SafetyBear  Re: $150,000 above trendline on: Fri 30 of Jul, 2010 [01:13 UTC] Their chart suggests the bubble was higher in 2007. That could not possibly be the case here in Melbourne. No way. They also give a figure some way below the Economist's 61% overvalued which in my opinion would tie in with their 2007 figures much more accurately. author message pb123  Re: $150,000 above trendline on: Fri 30 of Jul, 2010 [02:18 UTC] This is because the trendline is much steeper here. After the fall in 2008 and the pick up in 2009 the peak has not kept pace with the trendline. I am not sure why the trendline is steeper compared to other countries? author message pb123  Re: $150,000 above trendline on: Fri 30 of Jul, 2010 [02:22 UTC] .. ok the trendline is 3.1 times the family income. Maybe according to them the incomes are set to grow in Australia. author message inorog  Re: Re: $150,000 above trendline on: Fri 30 of Jul, 2010 [03:29 UTC] > .. ok the trendline is 3.1 times the family income. Maybe according to them the incomes are set to grow in Australia. Faaark! you must know something I don't know! It truly is different here, ey? Oh... wait - you were being sarcastic! Carry on! Ino author message aardvark  Re: $150,000 above trendline on: Fri 30 of Jul, 2010 [22:37 UTC] http://trendlines.ca/economics.htm#realty The comment that “home prices . . detached from the long term Price/Family-Income ratio of 3.1 way back in 1996” should be viewed in perspective: 1. Long term “way back” to 1996 is not accurate. Long term can be seen by considering much earlier trends (1950s – 1980s)*. 2. “Family-Income” today is more likely 2 incomes. The ‘trendlines’ article calculates 4.8 times “Family-Income” as the peak in 2007. In 1950s terms, that is about 9.6 ‘average earnings’ (one income per family). And still, house prices are overpriced $150k. Little wonder the govt has no intention actually reducing the number of dollar-wielding foreign buyers propping up the market, nor of reducing investor advantage delivered via the tax system**, let alone pull the banks into line and modify their reckless lending habits. If govt did all of that, prices would be affordable & excess capital could be used for other stuff – like business that makes things for export. Imagine if govt directed capital into export businesses (address Current Account Balance*** situation) rather than encourage property speculation: http://en.wikipedia.org/wiki/List_of_countries_by_current_account_balance For some strange reason(s), this cannot be allowed to happen. Australia, Fair Go, Gone. References: Earlier trends (1950s – 1980s)* from 2008 Senate Select Committee on Housing Affordability in Australia – A good house is hard to find Inquiry: http://www.aph.gov.au/Senate/committee/hsaf_ctte/report/b01.htm “the average house price in the capital cities is now equivalent to over seven years of average earnings; up from three in the 1950s to the early 1980s.” Investor advantage delivered via the tax system** - from RBA submission to Productivity Commission Inquiry on First Home Ownership (2004): http://www.rba.gov.au/publications/submissions/prod-comm-frst-home.html Point13 - The dominant role played by investors in Australia in the current cycle is the result of interaction between: the desire of investors to earn capital gains from investing in rental property; the ease of obtaining finance to enter this activity; and the taxation treatment of investments in residential property. Point22 - ''Second, the most sensible area to look for moderation of demand is among investors. . . the taxation treatment in Australia is more favourable to investors than is the case in other countries. In particular . . : the ability to negatively gear an investment property when there is little prospect of the property being cash-flow positive for many years; the benefit that investors receive by virtue of the fact that when property depreciation allowances are 'clawed back' through the capital gains tax, the rate of tax is lower than the rate that applied when depreciation was allowed in the first place. the general treatment of property depreciation, including the ability to claim depreciation on loss-making investments. '' Current Account Balance*** Note on CAB list: top of list are productive countries, bottom of list are the PIIGS and US and other cellar dweller nations - the debtor nations.

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