Excellent presentation on Scribd on Australian housing

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This presentation was noted by a blog member today. Take particular note of slides 21-20 which compare the balance sheets of US and UK banks to that of one Australian bank, the Commonwealth.

How to Profit From the Coming Aussie Property Crash (and Banking Crisis)

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132 Responses to Excellent presentation on Scribd on Australian housing

  1. rhk says:

    The graph comparing historical inflation with house prices is misleading.

    The 2 lines pretty much mirror each other … until the early 1990s’.
    This is when the Global economy fully emerged and China became a deflationary force on the world.

    The CPI is no longer a good proxy for inflation.

    If it was … and house prices are in a mad speculative boom… then there would be a large gap between the cost of building a new house and the price of an already existing house… ( In NZ that is not the case )

    A better graph would be one comparing money supply growth and building cost inflation with house price growth.

    I believe that home prices are not as over valued as people think… but that over the last 30 yrs peoples incomes have declined hugely… in real terms ..( measured in terms of money supply growth )

    I don’t see any kind of crash… Off the cuff maybe 20% down in nominal terms… 40% down in real terms.. over a few yrs.

    I don’t think Aussie banks are as exposed as the USA banks are. In USA it was complete madness… ( liar loans.. for god sakes)

  2. Steve Keen says:

    Welcome aboard rhk.

    I haven’t made much comment on this particular anti-bubble argument, but perhaps now is the time: a speculative bubble is probably easier when it’s not new assets that are being shuffled, but existing ones. Building homes in new areas–or even new homes in old areas–is riskier in terms of expected price appreciation than buying and selling existing houses in an established area.

    BTW, please note–as some reproductions of this presentation have not–that I did not put this presentation together, and I don’t know who did do it. But I thought that especially the comparison of bank assets between the USA and Australia was worth sharing.

  3. Bruce says:

    Wow, check our this latest forecast by the OECD:

    http://www.smh.com.au/business/property/home-loan-rates-tipped-to-hit-86-20100526-wegh.html

    Very reminiscent of their forecast for the continuing global economic growth just prior to the onset of the GFC 🙂

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  6. Marco2 says:

    @gaday (#105)

    My friend, you don’t post much, but when you do, you often have something valuable to say.

    The more I read your posts, the more I find that common-sense is something missing among a whole lot of people who should know better.

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