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Old Jul 12th 2010, 6:55 am   #526
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Default Re: OZ BOOM is over?...house prices falling & rates might drop

The flaw in the article (and pomtastic's response) is the underlying assumption that people are all renting at fair value.

Pomtastic says :

"I agree with the article because rents are driven by what people can actually afford to pay versus house prices are determined by credit."

This is incorrect. Rental prices are not driven by what people can afford to pay. They are driven by what people are willing to pay, whether they can afford it or not. This is supply and demand in action, nothing less. Rental pricing comes down to supply and demand, it is no different from any other form of pricing.

The Economist article assumes that any deviation from the long term average, must mean that property is either "under" or "over" valued. There is the implicit assumption that rental prices are always at fair value......

On top of that, The Economist assumes that the long term average ratio, is a good representation of fair value in the first place. Historic data doesn't take into account changes that have happened in the real world.

Aus prices 61% too high, Japanese prices 34% too low... ?!! Complete garbage based on flawed assumptions.
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Old Jul 12th 2010, 6:56 am   #527
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Default Re: OZ BOOM is over?...house prices falling & rates might drop



Last edited by DeadVim; Jul 12th 2010 at 6:59 am.
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Old Jul 12th 2010, 7:04 am   #528
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Default Re: OZ BOOM is over?...house prices falling & rates might drop

That graph will tell you more about house prices that the Economist article.
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Old Jul 12th 2010, 11:18 am   #529
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Default Re: OZ BOOM is over?...house prices falling & rates might drop

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Old Jul 13th 2010, 5:19 am   #530
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Default Re: OZ BOOM is over?...house prices falling & rates might drop

Have you got the chart for Ms. Pac-man for comparison?
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Old Jul 13th 2010, 5:50 am   #531
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Default Re: OZ BOOM is over?...house prices falling & rates might drop

Quote:
Originally Posted by coolshadows View Post
Have you got the chart for Ms. Pac-man for comparison?
Afraid not, I'm working on Froggernomics and Donkey Kong Analysis now.
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