Sur­vey on Aus­tralian House Prices

Flattr this!

I have been asked to post a sur­vey to gauge inter­est in a poten­tial finan­cial prod­uct related to Aus­tralian house prices. If you are inter­ested in such a prod­uct, please click here to take this sur­vey.

About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.
Bookmark the permalink.
  • royle­fam­ily

    Hmmm,

    If it worked I might con­sider buy­ing a house. I would look very care­fully at the counter-party risk. They would need very deep pock­ets to insure Aus­tralian house prices.

  • TruthIs­ThereIs­NoTruth

    they would prob­a­bly hedge by some­how short­ing a prop­erty index or highly cor­re­lated shares, maybe using the pro­ceeds to buy puts and pock­et­ing the dif­fer­ence.

    not long ago they were talk­ing about prop­erty deriv­a­tives to stop poten­tial buy­ers from being priced out of the mar­ket, highly ‘cre­ative’ stuff.

    I guess there are vested inter­ests on both sides of the spec­trum.

  • GG

    Steve, would you please give us a lit­tle back­ground — who is ask­ing, what’s the aim, etc — before we click to an exter­nal web page that seems to be hosted by a sur­vey com­pany.

  • Hi GG,

    The sur­vey is some­thing I put together with an online sur­vey com­pany, so there’s no prob­lem there.

    The prod­uct itself may be devel­oped by a com­pany called BBN Asset Man­age­ment:

    http://www.bbnasset.com.au

    I’ve been cor­re­spond­ing with and meet­ing with them for over a year now. The aim is to pro­duce a prod­uct that gives a guar­an­tee of cap­i­tal preser­va­tion, but also ben­e­fits from down­side to bank shares.

    The firm has wanted to develop this prod­uct for some time, and saw my web­site as a way to reach the poten­tial mar­ket. In return they will pay a fee to the Cen­tre for Eco­nomic Sta­bil­ity (half of which will then be a dona­tion to Swags for Home­less [www.swags.org.au]) based on the takeup of the prod­uct.

    The prod­uct would only be avail­able to Aus­tralian res­i­dents, given the licence under which BBN Assets oper­ates.

  • noah cross

    I think it is slightly decep­tive to ask ques­tions and then ask for per­sonal details as a recruit­ment device. It should be cleaner at the out­set. Not really mar­ket research soci­ety rules.

  • BBN

    Fur­ther to Steve’s com­ment:

    Many investors have expressed their con­cerns about the sus­tain­abil­ity of Aus­tralian house prices. BBN is sim­ply try­ing to gauge inter­est from those investors in a poten­tial finan­cial prod­uct aimed at hedg­ing the risks of falling house prices and pre­serv­ing the value of invest­ment port­fo­lios. We are con­sid­er­ing a vari­ety of strate­gies and a final struc­ture will be deter­mined when the extent of investor inter­est becomes clear. If a prod­uct even­tu­ates, all of that would be detailed in a Dis­clo­sure Doc­u­ment.

  • I’m no expert noah, so I could eas­ily have got that wrong.

    How­ever if you answer that you’re not inter­ested in the prod­uct, then no per­sonal details are requested.

  • ak

    Steve, BBN,

    I under­stand that this is a seri­ous pro­posal com­ing from seri­ous peo­ple to develop a deriv­a­tive finan­cial prod­uct. The rea­son I did not com­plete the “sur­vey” is very sim­ple — I might be inter­ested in such a prod­uct in the future but I am reluc­tant to pro­vide my per­sonal details to a com­pany which does not spec­ify upfront how it com­plies with the pri­vacy reg­u­la­tions:
    http://www.privacy.gov.au/materials/types/guidelines/view/6849

    Here is an exam­ple how this issue can be han­dled:
    http://www.jpmorgan.com/pages/privacy

    As an IT pro­fes­sional I might be obsessed with pri­vacy and infor­ma­tion secu­rity issues but I think that there may be good rea­sons have that atti­tude.

  • Fair enough AK,

    Tony Jovevski, the prin­ci­pal of BBN, has said he appre­ci­ates your con­cerns here and he will send a reply on this point shortly.

  • Alan­green­spin

    Not sure if you will post my entry but I had to get it off my chest… pos­si­ble real­ity check ?…

    I have been read­ing this site for a few years. It used to be a stand­out place for some straight talk­ing (at times over my head), but ‘stick it to them’ qual­ity based argu­ments con­firm­ing the insan­ity of cur­rent house prices — and the greed based sheep who have caused/contributed to it. 

    Then there was ‘the bet’ that wasn’t a bet and watch­ing Steve try to explain what hap­pened which made us all uncom­fort­able.

    Then, and, in my view the biggest insult to our intel­li­gence (or lack of…), this site/Steve approving/pushing for a house ‘buy­ers strike’ — a think­ing man might see this as ensur­ing cer­tain pre­dic­tions and tim­ings come to pass with a lit­tle ‘help­ing hand’? — amaz­ing stuff — was I the only one who noticed this?

    And now, in the final act to destroy in remain­ing respect, it’s read­ers can protect/increase their wealth by invest­ing in a hedge prod­uct which ensures your par­tic­i­pa­tion in the hous­ing bub­ble mad­ness is pro­tected — so we are now part of the prob­lem rather the the cure…

    I thought I would never see this sort of thing on this site..

    I firmly believe we have a hous­ing price bub­ble how­ever this site has lost all cred­i­bil­ity and I will not be return­ing. It has lost the plot…..

  • sir­ius

    @Alangreenspin

    And now, in the final act to destroy in remain­ing respect, it’s read­ers can protect/increase their wealth by invest­ing in a hedge prod­uct which ensures your par­tic­i­pa­tion in the hous­ing bub­ble mad­ness is pro­tected – so we are now part of the prob­lem rather the the cure…”

    For what it is worth I totally agree.

    Dis­clo­sure: I am not Aus­tralian. I believe that (amongst many things) that money is a promise put into numeric form. The bank­ing sys­tem essen­tially cre­ated a sit­u­a­tion where a whole load of promises that could not be kept were cre­ated. This was done by sev­eral means, some fraud­u­lent and some which are not con­sid­ered fraud­u­lent but nev­er­the­less were. 

    Promises that can­not be kept need to be bro­ken since else some­one is forced to keep a promise that can­not be kept. Given the nature of our money sys­tem this “forc­ing” can be placed upon peo­ple who were not sig­na­to­ries to the con­tract.
    In fact there is a case in UK law that states that if a con­tract is unsound then it becomes void even though one of the par­ties did not know this.

    I want to write more but I have promised myself to try to stop get­ting into “details”.

  • sir­ius
  • sir­ius

    How about this for an idea?

    I give some­body who has a mort­gage 5,000 AUD who then gives it to the bank under the fol­low­ing con­di­tion. The bank is told that it has to offer that 5,000 AUD to another per­son who has a mort­gage and that per­son is told that he can only accept it if he will use it as a pay­ment on hs mort­gage. The bank thus gets the 5,000 AUD again and is told that it has to offer it to another mort­gage holder on the same terms. 

    After this has been done 100 times you will see that 100 peo­ple have had their amount out­stand­ing reduced by 5,000 AUD and the 5,000 AUD is still avail­able.

    Rinse and repeat the num­ber of times desired. Prob­lem sorted.

  • Fraud: How it is done, er, ad con­tin­uum — by the FedRes

    http://jessescrossroadscafe.blogspot.com/2011/04/how-far-can-fed-go-in-manipulating.html

    It now must be clear to every­one here that the eco­nomic, fis­cal, polit­i­cal, mon­e­tary, finan­cial sit­u­a­tion with the World’s socio-econ­omy has reached the sate of total and utter des­per­a­tion and panic. Aus­tralia just fol­lows but the UK and the US both are in the worst posi­tion, Yes, far worse that Europe even with Fin­land ris­ing in oppo­si­tion.

    The Uni­ver­sity of Texas just took deliv­ery of USD1b in Gold bars. The BRICS are dump­ing the USD. Japan has major prob­lems denied and China tight­ens while RBA — as always — pro­tects the Banks under the direc­tion of “lead­er­ship”.

    A Gov­ern­ing body is elected by its peo­ples in demo­c­ra­tic prin­ci­ples where the objec­tive is under­stood to be that those elected will rep­re­sent those elect­ing.
    Don’t hold your breathe.

    The Global Dark Age (demo­graph­i­cally expressed) is now far nearer and undaunted by the sticks and stones being through at it by the bar­bar­ians of our shores with their bones and back room fan­cies. I believe that the hous­ing issues in Aus­tralia are now mute; it doesn’t mat­ter — it is too late.

    Expect some new smoke and mir­rors from Can­berra but look for the smoke sig­nal that become more urgent now as the mid 2011 period arrives.

    Hous­ing is a cock­roach indus­try and tomor­row it will be for­got­ten replaced by des­per­a­tions at per­sonal lev­els.

    Sad, but true.

    Georges Seu­rat

  • Lyon­wiss

    I agree mostly with Alan­green­spin April 19, 2011 at 12:18 am and
    sir­ius April 19, 2011 at 5:37 am:

    The strength of this site is eco­nom­ics and not pol­i­tics. It serves the truth and exposes lies and decep­tions. To con­tinue, we need to avoid con­flicts of inter­est which could com­pro­mise the pur­pose.

  • This is a bet against the bub­ble, AlanG, not a par­tic­i­pa­tion in it.

    I will explain later since I am very short for time now, but I am amazed that you have inter­preted this poten­tial pro­duce as ori­ented to main­tain­ing the bub­ble.

  • I am too busy to reply to these com­ments now, with an inter­view com­ing up at ABC News 24 about the US debt down­grade. Briefly how­ever this sur­vey was dis­cussed at a recent com­mit­tee meet­ing of the cen­tre for eco­nomic sta­bil­ity and endorsed there. I also believe that we have to be engaged in pol­i­tics against bad poli­cies, since they are a cause of the eco­nomic sit­u­a­tion we are in. That was a rea­son for form­ing the Cen­tre in the first place–and if the web­site and organ­i­sa­tion of that had been com­plete, this would have been posted there.

  • I agree with Steve, whole­heart­edly; please remem­ber where you are — as guests:

    If one can­not be allowed to demon­strate one’s the­ses in prac­ti­cal terms then it is all worth­less and just the­o­ret­i­cal, aca­d­e­mic rum­bling. As we can clearly see, Dr. Bernanke is try­ing to prove his the­sis play­ing with the Global Econ­omy — trou­ble there, is that the US sys­tem is totally cor­rupted all down the pipe, and more. The whole of the US is a — now — trans­par­ent cor­rupted and manip­u­lated, finan­cial hor­ror show — that serves only vested inter­ests.

    And, BTW, this Blog *is* Steve Keen — and that is who I am here to wit­ness in action.

    Steve: I will you to do what you think best and I will respect that while at the same time, reserve the right to dis­agree. We should be able to do this with col­le­gial­ity and con­struc­tively.

    ” Sci­ence is the soul of our exis­tence,
    the gen­er­a­tive impulse of human­ity.
    If it were not for the slow progress of sci­ence,
    we would be but prim­i­tive beings clad in ani­mal skins.

    Aye, let us go forth.

  • TruthIs­ThereIs­NoTruth

    does the cen­tre for eco­nomic sta­bil­ity believe it is sta­bil­is­ing to lever­age into short mar­ket posi­tions?

  • @ Lyon­wiss April 19, 2011 at 10:00 am | #
    “The strength of this site is eco­nom­ics and not pol­i­tics.”

    Au con­traire:-

    I believe that: that which is play­ing out on the World stage shows clearly, indis­putably, and with­out ques­tion pre­cisely the oppo­site; that is to say, that what passes for or is inter­preted as “eco­nom­ics” across the Global this day, from the inner sanc­tums of Cen­tral Banks to heavy investors; insti­tu­tional and oth­er­wise, hedge funds, bul­lion banks, mints, “puts” etc., etc., is mainly pure “pol­i­tics”.

    ship of fools’ — indeed!

  • The Great Col­lapse: Just in from Shad­ow­Stats aka John Williams

    http://www.shadowstats.com/article/hyperinflation-special-report-2011#_Toc287944624

    /quote

    Great Col­lapse Nears

    The U.S. eco­nomic and sys­temic-sol­vency crises of the last four years only have been pre­cur­sors to the com­ing Great Col­lapse: a hyper­in­fla­tion­ary great depres­sion. Such will encom­pass a com­plete col­lapse in the pur­chas­ing power of the U.S. dol­lar; a col­lapse in the nor­mal stream of U.S. com­mer­cial and eco­nomic activ­ity; a col­lapse in the U.S. finan­cial sys­tem as we know it; and a likely realign­ment of the U.S. polit­i­cal envi­ron­ment. Out­side tim­ing on the hyper­in­fla­tion remains 2014, but there is strong risk of the cur­rency cat­a­stro­phe begin­ning to unfold in the months ahead. It may be start­ing to unfold as we go to press in March 2011, but mov­ing into a full blown hyper­in­fla­tion could take months to a year, beyond the onset, depend­ing on the devel­op­ing global view of the dol­lar and reac­tions of the U.S. gov­ern­ment and the Fed­eral Reserve.

    /quote off

    Note the Chart below:

  • GG

    Steve,
    thanks for explain­ing the back­ground to the sur­vey.

  • Philip

    Alan­green­spin,

    You are accus­ing an econ­o­mist who does not hold a pol­icy-mak­ing posi­tion of attempt­ing to burst the largest bub­ble in Aus­tralian his­tory, which is quite non­sen­si­cal given that the prob­lem is insti­tu­tional. If Steve was the RBA gov­er­nor and then made a nation-wide address con­cern­ing the prop­erty bub­ble, per­haps then he would be able to have some effect.

    What Steve is attempt­ing to do is pro­vide a respectable and com­mon­sense analy­sis of the crazy eco­nomic the­ory that in turn jus­ti­fies insane poli­cies such as the FHOG, neg­a­tive gear­ing, secu­ri­ti­za­tion and finan­cial dereg­u­la­tion, which is the cause of the bub­ble.

    While I don’t like finan­cial wiz­ardry of any sort, it is under­stand­able that Steve needs fund­ing for his Cen­tre.

  • Anti­Moral­Haz­ard

    I don’t see why hedg­ing against the fall­out from the hous­ing bub­ble con­sti­tute as being “part of the prob­lem”. The mech­a­nism to hedge (or short the mar­ket) makes the mar­ket freer and fairer. If the rise of the hous­ing bub­ble is a wealth trans­fer, then shorting/hedging is the cor­re­spond­ing reverse wealth trans­fer. That’s fair and square. Fur­ther­more, the abil­ity to hedge helps to limit the dam­age wrecked on the econ­omy. Remem­ber in 2008, when short­ing was banned and what was the result? The ASX fell by an unprece­dented 8% in one day.

    I also don’t see any­thing wrong with Steve Keen encour­ag­ing mem­bers to take part in activist cam­paigns like GetUp. The whole point of FHO strike is to save poten­tial FHO from the com­ing cat­a­stro­phe. Some may inter­pret it as try­ing to ‘lend’ a help­ing hand to ensure that the ‘pre­dic­tion’ comes true but that’s sim­ply not true. Since the hous­ing mar­ket is a bub­ble, it is des­tined to crash, whether any ‘help­ing hands’ are there or not. ‘Help­ing hands’ only served to has­ten the tim­ing of crash. If you know a crash is inevitable, then it is your moral imper­a­tive to warn and per­suade as many as pos­si­ble to stay away.

    Talk­ing about ‘help­ing hands’, the FHOG is another type of ‘help­ing hand’ to delay the inevitable.

  • As I say Banker deceit, stealth and total vile cor­rup­tion is ubiq­ui­tous and per­va­sive and has the full sup­port of “lead­er­ship”.

    From H & H

    http://macrobusiness.com.au/2011/04/another-ponzi-trick-exposed/

    Sur­pris­ingly, the aver­age bank cost-of-liv­ing assump­tion is seven per cent lower than the poverty index, 14 per cent lower than our bare­bones bud­get, and even more for our adjusted [liv­ing costs, based on] ABS sur­vey [data], says the report.”

    These guys are good and worth fol­low­ing: imo