That’s very curious Adam, what makes you think the banks won’t let them?

It will be the banks leading the charge. When a mortgagee sale takes place, the banks get what ever they can for it and then lump the outstanding balance straight back on the borrower, unless he or she goes into bankruptcy.

To justify all this, all the banks have to cry out is WE HAVE RESPONSIBILITY TO SHARE HOLDERS. …you all heard that bank-bullshit before.

No Adam, the banks assett and liabilities will take precedence when it comes to push and shove.

I said 91% of people will still be employed, and they will be the ones to capitalise on the forced sales. Employed meaning in employment, working, having a vocation trade or career which is still continuing and ongoing.

I do agree there will be some areas of softening. Yes, you will see some areas where there will be for sale signs springing up all over the place. These areas are the ones where there will be some price declines, largely because the people in them should never have been lent the money to begin with, but to think nobody will get burnt in the hard times is a bit optimistic.

I think you are over-reacting to things a bit, as is Steve Keen. Yeah I get the Leverage argument, similair to the inverse relationship between price and yield sort of thing, but to argue that a 5% reduction in lender’s LVR’s will result in a 50% reduction in property prices is just silly. Yes there will be some forced sales, but they wont go for 50% less. The bank won’t let them, but if they do I’ll borrow to the absolute hilt and buy as many as I can.

Ok, so spelling and maths were never my strong point, and I am obviously not as intelligent as you Adam.

(((( We already have vacant housing shortages and this won’t change, where are these people going to go live, in cars? ))))

In Sea Containers Adam. You can have a 20ft or 40ft container, complete with windows and double doors at the front…self locking too. I have heard that these Sea Containers are a “renovators delight” and if you buy down near the Docklands it’s guaranteed to be “Tightly Held.”

…but you don’t have to be a Rhodes Scholar to realize that unemployment will be the catalyst for over-supply in the market. Just take a quick trip out to the Burbs and see for yourself, in some areas the For-Sale signs are 1 in 4.

We don’t need statistics Adam, to tell us what we see with our own eyes, and unemployment in real terms is only just beginning and even the threat of unemployment will be enough to curtail investment.

(((I did not ignore the point on employment I made the point that even if the rate rises to 9%, there are still 91% of people employed. These people will be the ones to capitalise on the ‘forced sales’.))))))

How can they Adam, if they don’t have a job?

Yes Banks do have their limits but we are not going to see forced sales on the scale of the US or UK, we do not have an oversupply of housing like they do (see Detroit or Ohio, Cleveland) we have a chronic undersupply. Our population continues to grow and will do so into the future. We already have vacant housing shortages and this won’t change, where are these people going to go live, in cars? Will we see a return to the nomadic gypsies of the past? I doubt it.

If people are forced to sell they will rent. This will force rents up and see investors return to capitalise on these sales.

I did not ignore the point on employment I made the point that even if the rate rises to 9%, there are still 91% of people employed. These people will be the ones to capitalise on the ‘forced sales’.

There may be bargains to be had in the market, true. There will be softening in some areas yes. But we will not see the collapses doom harbingers such as Steve Keen are discussing.

I will close by reiterating my previous point - it has never been easy to buy a house. Deal with it.

It’s unemployment that will be the “king hit” that produces the “forced” sale.

Yes ,the banks love it when the punters are on the ropes. Recapitalization is a very profitable tool for the banks when under the guise of compassion and avoiding the TV Tabloids, but those same banks have got their limits when it comes to asset sheets and profit and loss.

I saw all this in the early 90’s when you were probably still in your dypers…it was n’t the Lord of the Flies then, but hang onto your hat this time.

The fact is, people will just stop selling. If somehow, magically, people could only offer me $200,000 instead of $400,000 for a property because they had a $20,000 deposit which would have covered it at $400,000 and 95%, and now is 10% deposit, I’d take an infamous line and ‘Tell em they’re dreamin’ and wait until someone who could afford it came along.

Oh sure, what about those unemployed hordes who are on the way who need to sell? I can assure you it won’t happen. The banks will continue to fund their loans, they will simply reduce their repayments for a period, or capitalise the interest. Banks have no desire to end up on tabloid TV such as Today Tonight for forcing people out of their homes. When the economy recovers it will be in their best interest to have people remaining in their homes so they can repay all that extra amount that has been capitalised.

Besides 9% unemployment is still 91% employment. Figure that.

Japan is a basket case and has been for years. They have an aging population (much moreso than our own) and a declining population too. Australia is growing rapidly. Comparing the Japanese experience to Australia is like comparing apples and oranges.

To be fair I see some softening of house prices coming, in particular in places where the economy has boomed, like WA and mining towns, but the falls you are predicting simply will not happen. Like I said previously, if they did, I’d be more concerned about my health and safety than the value of my home as it would be Lord of the Flies time.

Huhh!!!..I dunno how anybody can arrive at that when creeping unemployment turns into an avalanche, so I suspect it’s wishful thinking and more real estate industry hocus pocus.

The realestate industry will have us believe anything and will do anything, to hang on to those big fat commissions they recieved over the last few years from those ramped-up prices for those broken down ol shacks.

The real estate industry hates the idea of selling 10 properties at $350,000.00 when previously they only had to sell one property at $350,000.00 to get the same take home commission…the maths might be out there but I am sure you get my point.

The word from the street ( the most reliable and trustworthy economic indicator yet ) is that real estate investment, unless it’s a gimme, is no longer on the agenda.

To even compare the Japanese housing bubble with Australian housing prices is incredibly silly. At one time the Emperor’s place was worth more in value than the entire state of California. The australian government sold its embassy for A$600 million (from memory).

Even suggesting they resemble each other in amplitude is hubris of the worst order.

As for the index, I recall you telling me you were happy to use the RP Data-Rismark Index since we noted that the ABS Index excludes apartments, terraces and semis — or 20% of the housing stock.

I’m not exactly sure what you agreed with Rory.

For example:Reserve Bank governor Glenn Stevens’ housing speech will inevitably trigger a lot of uninformed comment, says Christopher Joye, but here it is straight…

He has it straight and anyone who doesn’t agree with him is uninformed.

I’d be more interested if he actually took on their point of view before the emotive terms.

But thats just me