Global Housing

10

UK moves to prevent bubbles

In 1998, following the release of the Financial System (‘Wallis’) Inquiry’s final recommendations on financial system regulation, the Australian Government implemented a new organisational framework for the regulation of the financial system. Prior to the Wallis Inquiry, regulation was either governed by the states for some products or based on a sectoral approach with industry

78

The 1980s Texas housing bubble myth

Over the past few months, I have argued feverishly that housing markets with responsive land supply are both more affordable and less prone to bubbles/busts than markets where land supply is constrained by physical and/or regulatory barriers. In many of these articles, I have used Texas as an example of a housing market largely free

29

Unemployment and house prices

Following on from Popping Bubble’s recent post, Australia’s low level of unemployment is often held-up as a reason why home values won’t fall. According to this argument, home values will remain supported as long as people have jobs and can continue meeting their mortgage repayment obligations. For example, in last year’s infamous CBA investor presentation,

47

Irish bust video

Max Keiser yesterday posted a video exposé (below) on the damage caused by the bursting of the Irish housing bubble and how the bad debts of the Irish banks have been transferred to Irish taxpayers (h/t Mish and Rota Fortuna). For readers unfamiliar with what happened in Ireland, consider reading my December article, Unluck of the

34

Lessons from the UK housing crash

It’s time for another trip down memory lane. It’s September 2007 and home prices in London have just started to fall, but are still holding up nationally (see below chart). UK households are growing increasingly nervous. After embarking on an almighty borrowing binge over the 2000s, as evident by household debt to disposable incomes rising

4

Hong Kong’s housing headed for a crash?

This years Demographia International Housing Affordability Survey ranked Hong Kong as the most unaffordable housing market out of the seven countries surveyed, with median home prices a whopping 11.4 times incomes. After falling some 23% over 6 months in the wake of the global financial crisis, Hong Kong’s housing market has been on a tear,

36

So much for the Californian housing shortage

Let’s take a trip down memory lane. It’s early 2006 and the median house price in Los Angeles-Orange County, California has hit $582,000. Demographia has just released its latest International Housing Affordability Survey showing that Southern California has the most expensive housing market out of the six nations surveyed. Property speculation is at fever pitched.

18

That’s not a first home owner grant!

This is a first home buyer grant. From the UK Telegraph: [A] controversial new mortgage deal is being launched by five local authorities and backed by Lloyds Banking Group, one of the lenders bailed out by the taxpayer during the credit crisis. The scheme is aimed at struggling first-time buyers who are unable to afford the

31

The Economist on housing supply

I was disappointed with The Economist’s recent special reports on housing. Whilst the reports captured the psychology and the demand-drivers of bubbles well (discussed in an earlier post), they failed to adequately capture the role of supply-side constraints. As far as I could see, the only reference to the supply-side of the housing market were

34

House prices, gold, and long-term investing

One thing I’ve always believed about investing (as opposed to speculating) is that it’s important to step back and take a look at the long-term picture. In the shorter term, markets are subject to periodic “manias, panics and crashes”, as Charles Kindleberger put it in his classic study of financial crises. But in the long-term,

17

Will Canada’s Housing Market be the Next to Fall?

Canada and Australia have a lot in common. Both economies are commodity exporters. Both countries have experienced similar rates of immigration. Both countries largely dodged the global recession that has recently shocked the developed world. And both are said to have world-beating banking systems, with Canada’s ranked as the strongest and Australia’s ranked third strongest in the world by the World Economic Forum’s

5

US housing still cactus

In the latest Breakfast with Dave,  David Rosenberg makes it very clear that the US housing market has begun another leg down and has a long long way to go before the bottom is found. The Case-Shiller home price index sagged 1% MoM in December with 19 of the 20 cities deflating. This was the fifth decline

45

Bizarro World

Today I promised myself that I would take a break from the housing market in order to tackle other areas of interest, such as demographics, China, population policy, and investing. But then I was handed an article by a colleague entitled Why must we make the same old policy failures in the housing market?   At

22

UK deleveraging: “standard of living to plunge at fastest rate since 1920s”

The Telegraph today published a disturbing article on the dire state of the UK economy: Households face the most dramatic squeeze in living standards since the 1920s, the Governor of the Bank of England warned, as he reacted to the shock disclosure that the economy was shrinking again. Families will see their disposable income eaten up as

18

Australia: Following Canada into a Financial Black Hole

No doubt many readers have heard that the Australian Government is looking to follow Canada’s lead and implement a Government guarantee of residential mortgage-backed securities  (RMBS), in order to foster greater competition in mortgage lending and reduce the power of the big four banks. Following on from David Llewellyn-Smith’s critique of this proposal, I thought it timely

8

Canadian Housing: Another Debt-Fuelled Bubble?

Canada and Australia have a lot in common. Both economies are commodity exporters. Both countries largely dodged the global recession that has recently shocked the developed world. And both countries are said to have world-beating banking systems, with Canada’s ranked as the strongest and Australia’s ranked third strongest in the world by the World Economic Forum’s Global Competitiveness Report 2009-2010. As