pomtastic

Word.

littda01

@Asprilla - as I was a bit rushed, I forgot to mention the most relevant "slow burst" bubble.

Melbourne house prices peaked in 1891 and troughed around 1915.

Thats a fairly gradual pop :-)

asprilla

I think I'll have to apologise to you on this... you're right, I'm wrong.

I was thinking about it this morning.... and my earlier post was too simplistic. Yes, if you are looking at a graph showing a 10yr period, then the technology bubble can clearly be seen to burst, but a property bubble wouldn't necessarily show up in the same way.

But look at the graph again, over a 100 year period, and you see a different picture.

littda01

No problem, understood.

Your point on sensationalising - on both sides of the argument - was certainly valid.

ABCDiamond

I've not produced any figures for the CBA since about 1992

Actually those CBA stats that you say are fudged, in what way are they fudged ?

ABCDiamond

I wonder what effect, if any, world war 1 had on those prices.

Steve2009

http://www.thirdwavegroup.com.au/tid...ousing-market/

ABCDiamond

I see... quoted from your link.

What is the difference between the Demographia numbers and the UBS numbers. ?

Everyone seems to use different numbers to justify whatever they want to justify, and ignore reality whenever it gets in the way.

littda01

ABCD, the CBA fudging of numbers received worldwide coverage, to the point where CBA cancelled a meeting with a potential investor. Essentially they are all over the place, they have selectively used different sources to present the best-possible story.

As regards WW1, I am sure it had an effect, but probably the rise and fall of the bubble was a lot related to the gold rush and its aftermath.

But as you will see from the chart, it took until 2001 for prices to recover to their 1891 levels.

No doubt there is not the same inflation this time, but its always worth understanding history because it reminds you that the fundamentals of economics do not change a whole lot over time. Asset spruikers always argue that "something is different" this time.

ABCDiamond

Thinking about it, just like this thread title... Big fall in migrant arrivals -32% in past year

And what are the real migrant numbers ?

ABS figures for Number of movements ; Permanent Settler Arrivals ;
12 months ended Mar-2009 162,310
12 months ended Mar-2010 143,260

Down by 11.7%

But hey, that's not much, so let's add students and temporary worker visas into the migrant numbers, to make it more newsworthy

32% ... Now that's a better story

littda01

"So why the large divergence between the CBA’s and Demographia’s numbers? Well it gets down to how they measure household disposable income (the denominator of the ratio). You see, instead of using the Australian Bureau of Statistics (ABS) measure of median household disposable income - $1,366 per week or $71,018 per year as at 2007/08 (see below table) – the CBA has used UBS’ estimated average disposable income figure of $98,000 as its starting point! The scary thing is that the UBS estimate wrongly includes ‘imputed rent’ in its calculation of disposable income, which is the estimated market rent that a dwelling would attract if it were to be commercially rented.

By contrast, Demographia's household income data appears to be based on single full-time earnings, which yields a lower disposable income figure than the ABS.

It shouldn't necessarily matter which disposable income measure is used as long as they are applied consistently across countries and across time periods. However, with the CBA applying the higher UBS measure of disposable income for Australia whilst using the lower Demographia measure for the other countries, they have deliberately made Australia’s house prices appear much more affordable relative to overseas markets, whilst down playing the risk of a housing bubble. Very sneaky.
"

I assume that this means UBS included some type of 'projected rental income' factor to add in the effects of a homeowners home value. Nice in theory, and maybe appropriate to some analyses, but not reflecting reality and not appropriate in a discussion about affordability.

http://www.unconventionaleconomist.c....html#comments

ABCDiamond

I am wary about 'relying' on what I read in the media, and like to try to check things first.

The pregnant man also received worldwide coverage, but it turned out he was a woman first

What in hell am I doing trying to protect the CBA.... I have absolutely no reason to, they are my least favourite bank...

Steve2009

Are you deliberately playing dumb? You read the article...

littda01

Fair enough, IMO in this case I think the evidence the CBA are "at it" is pretty clear cut. I find it hard to believe they thought they could get away with this, its schoolboy stuff. Did they not notice the GFC, which came about largely because of over-optimistic mortgage investments?

ABCDiamond

So it should be these figures then:
which gives the median Sydney house price in 2007/08 as $646,000 ($71,018 x 9.2)

But the ABS shows a figure of only $500k.

I personally think the balance lies somewhere in the middle.

And fancy using 'Bristol and Bath' in the UK, in a comparison with New York, San Francisco and Sydney , where did London disappear to ?