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Leith van Onselen

 
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  • Australian Treasury Warns of Housing Bubble [View article]
    Steven. Here is a critique of the median dwelling price-to-income ratio Paul has quoted. It is complete bunkum.

    macrobusiness.com.au/2.../
    Feb 14 12:41 AM | 1 Like Like |Link to Comment
  • Australian Treasury Warns of Housing Bubble [View article]
    Be careful in using that median dwelling price-to-income ratio Paul. It is complete bunkum since it:
    1) compares average incomes to median dwelling prices;
    2) includes imputed rent as income; and
    3) includes superannuation contributions as income.

    Here is a critique of the methodology behind this ratio:
    macrobusiness.com.au/2.../

    Second, your claim that a halving of interest rates allows double the borrowing amount is broadly true. However, you are confusing credit availability with affordability. I suggest that you read this article:
    macrobusiness.com.au/2.../
    Feb 14 12:38 AM | 1 Like Like |Link to Comment
  • Australian Treasury Warns of Housing Bubble [View article]
    Hi Paul. I know of many Baby Boomers that are selling out (my father among them) in order to free-up funds for their retirement and because better returns are available in a bank term deposit.

    Remember that the Boomers, who comprise 25% of the population and hold around 50% of property assets, are entering retirement. This will be a massive headwind going forward.

    I have no idea whether we are headed for a crash or a long slow melt. Either way, property is a poor bet right now, given its low yield and high cost.
    Feb 8 10:42 PM | Likes Like |Link to Comment
  • The Truth About the U.S. Housing Market [View article]
    There is a huge amount of literature out there on the role that suplly-side constraints play in helping to cause bubbles/busts and unaffordable housing.

    These papers fully support my contention.

    Check these out:

    depts.washington.edu/t.../
    depts.washington.edu/t...
    www.google.com.au/url?...

    And here's a nice paper from the Federal Reserve:

    www.google.com.au/url?...
    Jan 10 06:37 PM | 2 Likes Like |Link to Comment
  • The Truth About the U.S. Housing Market [View article]
    Rimaye. There is a huge amount of literature out there on the role that suplly-side constraints play in helping to cause bubbles/busts and unaffordable housing.

    Check these out:

    depts.washington.edu/t.../
    depts.washington.edu/t...

    And here's a nice paper from the Federal Reserve:

    www.google.com.au/url?...
    Jan 10 06:33 PM | Likes Like |Link to Comment
  • The Truth About the U.S. Housing Market [View article]
    All those points are valid Paul. But inelastic supply will make prices far more volatile when demand changes. This is supported in both theory and practice. Here's an interesting article from the Dallas Fed supporting my findings.

    www.google.com.au/url?...
    Jan 10 06:27 PM | 1 Like Like |Link to Comment
  • The Truth About the U.S. Housing Market [View article]
    Thanks for the negativity John.

    This piece was never meant to be an all encompasing examination of the causes and effects of the US housing bubble. Rather its aim was to shine a light on a key factor that is so often mis-understood/ignored by commentators. And given that the article has received the Editors' Pick, 19 recommendations, over 250 comments (many positive), and has been re-published all over the internet, It looks like I have succeed.
    Jan 9 07:00 PM | 2 Likes Like |Link to Comment
  • The Truth About the U.S. Housing Market [View article]
    True Thomas. But they can only 'corner the market' and pump-up land prices when zoning is in place and the market for land is no longer contestable. When land markets are deregulated, developers that try to corner the market soon find that they are under-cut by new land supply brought to market down the road.

    It's this contestability of land markets that reduces monopolistic behavior and keeps land prices down.
    Jan 8 04:48 PM | 2 Likes Like |Link to Comment
  • The Truth About the U.S. Housing Market [View article]
    All fair points. Some markets, like Vancouver and Sydney, have natural physical barriers to further development and will, therefore, always be prone to bubbles since new supply is more difficult to bring to market quickly and efficiently. Poor planning will obviously exacerbate this effect.
    Jan 8 04:40 PM | 2 Likes Like |Link to Comment
  • The Truth About the U.S. Housing Market [View article]
    Disagree Bob. It gets down to German's relaxed planning regime. This article explains how:

    www.blacklink.me/news/...

    Here's an extract:

    Hartwich, originally from Germany, points to the example of his own country as a different model. In 2007 67% of German households were renter occupied, thanks mainly to a de-centralized planning system that works and a legal system that tenants are decorated with more security and more freedom to promote their own homes. While, in the UK house building targets set by Whitehall, in Germany, where central government subsidies to population and tax revenue are connected, active local politician to win the competition by more people, their cities, by a pleasant place to live. Any revenue goes back into the local community -. Construction of a new swimming pool, for example, or lowering parking fees

    If the residents clearly the advantages of building comfortable housing in order to attract new residents to a city, says Hartwig it disarms the kind of non-in-my-backyard mentality that prevails in Britain. Switzerland has a similar model – only one third of Swiss households are condos – and both countries are building new houses that are on average 40% larger than their British equivalents. Where the supply of new homes meet the public demand, prices will remain stable. And because home prices are stable, there is no incentive for people to buy as an investment opportunity.

    “You can still buy a house in Germany for the same price, real, how in the 1970s,” says Hartwig. “When I look at the example of my parents’ -. They were in no hurry to buy because they could very well live in a rented apartment to put their money in a bank account and bought their first home when they were in their early 50s, there was eliminating them six or seven years, a small mortgage. They had to learn very relaxed. “

    In the UK, however, a new building is severely restricted and property prices rose steadily as a result. There is a waiting list of 1.8 million applicants for social housing and the houses we build are the smallest and most expensive in Europe – “rabbit hutches on postage stamps,” as the economist Alan W Evans once put it.

    Why? David Orr, chief executive of the National Housing Federation blames “our” NIMBY “culture and planning system” that “stifled new offer at a level far below what was otherwise made available to do so. The focus of this obsession is [with home ownership], the fact that we have a market, property prices has seen rise created by 3% per year for 20 years – fueled largely by a chronic undersupply of new homes “
    Jan 8 04:34 PM | 1 Like Like |Link to Comment
  • The Truth About the U.S. Housing Market [View article]
    metaforge. The reason why the homes were 'gobbled-up' by speculators is because the artificially restricted supply in Vegas led to sharply rising prices. Speculators then jumped on board in anticipation of further price rises. And so on.

    Had new cheap homes been brought to market quickly (like in Texas or Atlanta), prices would never have risen significantly and speculation would not have been encouraged. Nothing breeds speculation like perceived scarcity.
    Jan 8 04:35 AM | 2 Likes Like |Link to Comment
  • The Truth About the U.S. Housing Market [View article]
    aphor

    This article explains the interplay between supply and demand well:

    www.newgeography.com/c...

    For a more rigorous literature review, try this one:

    www.google.com.au/url?...
    Jan 8 04:29 AM | Likes Like |Link to Comment
  • The Truth About the U.S. Housing Market [View article]
    Great point WAdem. Artificial supply constraints encourage housing speculation and 'flipping' for a quick buck. You don't get this behaviour in places with unrestricted supply because price volatility is very low.
    Jan 8 02:41 AM | 1 Like Like |Link to Comment
  • The Truth About the U.S. Housing Market [View article]
    Fair points Bob. But you have to ask yourself whether prescriptive cities like LA, Las Vegas and Phoenix have achieved better outcomes in the areas that you mention than the de-regulated cities. I very much doubt it.
    Jan 8 02:37 AM | Likes Like |Link to Comment
  • The Truth About the U.S. Housing Market [View article]
    Absolutely PatW. You need easy credit too. Bubbles are not possible without it.
    Jan 7 11:58 PM | 1 Like Like |Link to Comment
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