Hi Ibuy,
Originally posted by Ibuycashflow:
Have you not heard of Price Elasticity of Demand (economics 101 again) Price is directly influenced by demand.
Yes, this I understand and agree with.
Lower interest rates will of course make it more affordable to buy a house, hence increased demand.
So a relatively small number of people who previously…[Read more]

Hi Woodsman, I was about to state that I think there is a causal relationship between house prices and interest rates, but I have reconsidered!

Interest rates are directly influenced by inflation. When inflation falls, the RBA ‘lowers interest rates’.

Falling interest rates have an inverse effect on investor psychology & sentiment and the wealth…[Read more]

Thanks Pelican,
It sounds like you currently have a win-win situation going. I’m glad all wrappers don’t fit the Jenman mould!
It still sounds risky to me, but I guess there’s always some risk in investing!
Cheers, F.[cap]

Originally posted by Monopoly:
How do YOU (or anyone for that matter) really define “fair value”??? [blink]

You’re right, it’s not “fair value” either… but I don’t know how else to describe it! Rational Value perhaps?
Cheers, F.[cap]

Originally posted by woodsman:
So whose figures are right? Don’t ask me I have no idea…[confused2]
It’s alright Woodsman, I’ve taken it easy with the links on today’s episode.
Thanks for the ASX link – top info.
I agree, housing statistics are a disgrace in this country. The same datasheet I quoted above has a column of RBA medians for Melbourne…[Read more]

Huzzah! I think you’re onto something here superman![smiling]
Professor Abelson’s report title, content and the passage I lifted were all focussed on real house prices (as in, adjusted for inflation) whereas we can only assume the quotes must have referred to nominal house prices! Kudos also to Derek and OSienna for alluding to this diff…[Read more]

Yes superman, the TV show that inspired me is on air here. Very funny stuff – The last one I caught involved a jelly filled dummy peeing on an electrified railway line[weird]! When compared to Adam & Jamie’s efforts, I think my occasionally tenuous links between ‘facts’ and ‘evidence’ stack up rather well![biggrin]

I have…[Read more]

Hi MoJoJo,
That’s a good theory. Unfortunately I can’t find any statistics on the matter, but the situation you describe would very quickly lead to a critical shortage of rental houses and units (or a massive increase of people living on the streets!). This undersupply would lead to a sudden spike in rents (and perhaps government rent controls?).…[Read more]

[tired]Ok, sure.
Pelican, I would still be interested to hear if you have found a way to avoid the issue I mentioned. PM me if you’d prefer as things are getting silly here![wacko]

Thanks, F.[cap]

No Ms Monopoly[crying], in my previous post I suggested that there are dangers in arranging wrap finance in the current economic climate for the reasons stated above. I am genuinely interested in any solution to this problem.
I may be mildly ignorant by your standards, but a troll?
Cheers, F.[cap]

[blink][blink]
Wow. I’m sorry for offending you Ms Monopoly. I have tried to be straight down the line with all my posts, including the one to Derek. I have a great deal of respect for the man as his posts are generally very interesting and considered, as I had for you until the last couple of days. While we obviously have differing views on the…[Read more]

Hello Woodsman,
If you don’t think many average folk believe that ‘immigration is destroying house affordability’, and ‘we have 2 IPs in Sydney which can’t grow any more because of the green wedges, so they will go up in price because everybody wants to live in Sydney!” then I don’t think you’ve been spending enough time around the water cooler!…[Read more]

Hi Pelican,
I’m curious about the wrap deals you are working on. I understand how this kind of arrangement can be structured to provide a positive deal for both parties in a rising market. However, what happens if the price of the property declines and the wrappee knows it? If they are facing a future capital loss, why would they not simply walk…[Read more]

Hi Derek,
Another top post as always. I must admit I’m a little surprised only 57% of the suburbs in your survey had achieved the double in 10 years ‘rule’ over the last 10 years.

Now with the data you have at hand, might I with all due respect enquire whether you believe that ‘House prices on average (will) double every 10 years’ over next ten,…[Read more]

Allways a pleasure Byronent!
Somehow though, the gist of your last couple of posts seems to have eluded me…[blush2]
I assume you are taking a stance opposing my assertion that the recent house price boom was caused by and will be sustained by population expansion?

If you’ve already made your point and it’s gone over my head, please be a little…[Read more]

Originally posted by byronent:
Man you must have no life or just simply bored <edited>less.
Don’t get uptight if you’re having trouble digesting the MYTH BUSTERS series Byronentent, I will ensure that when the MYTH BUSTERS series draws to a close I’ll write up a succinct summary and PM it to you![specool]

Stay tuned for tomorrow’s exciting…[Read more]

Thanks again for your insight and carefully considered thoughts superman.
Originally posted by superman:
thanks to the rise in debt levels, moves in interest rates are three times as potent as they were in the early 1990s.

Fortunately I think this is the reason we won’t be seeing 80’s-style interest rates within the next decade or so. Because the…[Read more]

Originally posted by woodsman:
F, so what are/have you investing/invested in?

Have invested in: Residential real estate & vacant land (my best investment to date), bank bonds, shares (directly & via funds), precious metals, cash and collectables.
Currently invested in: Direct shares, gold, silver, cash & collectables. Oh, and depending on POV, my…[Read more]

Originally posted by schawel:
3. The rent is below asking price.
Then logic indicates that your house is tennanted!
[blink]

While slightly off topic (sorry!), I think it is interesting to consider household indebtedness when looking at the graph of income vs house price.

A graph of household debt as a percentage of annual household disposable income can be found here under 01/12/04 Household debt in perspective 161KB

House prices broke their strong historical…[Read more]