Steve keen latest update. 2017 recession, 20-70% drop in house prices

He was a teacher or something wasn't he?
Those who can do, those who can't...

 

AKA a Monday expert.

 

He was a lecturer in NSW. He is now a lecturer in UK.

He knows a bit about economics and economic history. He presumes he knows a lot about the Australian property market by translating what he knows about overseas markets. He famousl betted on that basis and lost humiliatingly. He had multiple tries at guessing where the Australian market will head.

His supporters excuse his modest wealth on the basis that his involvement in the Australian property market is out of academic pursuit rather than meeting personal financial goal.

 

Hi Barny

I really never worry about this stuff, though I am not foolish enough to believe that markets will never fall and booms last forever, the gravey train will certainly come to an end.

What I do believe in is managing debt and by this I mean selling down and taking some profits off the table, when markets are close to peak, reducing debt and creating cash flow.

If I have debt under control then if the **** hits the fan its no issue for me to hold.

The only investors I have seen get in massive trouble/lose their shirts are those who over leveraged to the max, out of control dreamers who believe markets never fall.

MTR

 

At this point I think a recession is inevitable. How big the correction is will be will vary from area to area. Some properties in Perth have already dropped 30% from peak prices but this is isolated to areas that overshot. In Melbourne last year, some areas were going backwards while others were booming. Its a real mixed bag. I would not try to predict overall price falls. Some areas a bit, some areas a lot.

 

Just do the opposite of what this guy says and you will be on your way to riches

 

Yeah, his modest wealth is because he backed himself - and was hopelessly wrong.

 

Perth is a country town subject to the vagaries of the mining industry. When it booms, it goes through the roof but if you jump on for the ride at the wrong part of the cycle, leverage to the hilt and don't manage risk you'll lose 30%+ without trying.

 

Credit dries up, smashes demand, sales plummet, followed later by prices plummeting.
Same cause of most property markets that crashed in the GFC. It´s all about credit, which has exploded in Australia in the last couple of decades.

 

If prices drop 70%, Moranbah will be basically free.

I better get my cash ready!!!

 

Well he addressed credit which is needed to keep a country growing, and restricting credit will do the opposite which is what has happened already as we know.
He's also mentioned other countries he believes will also fall.

I posted the vid as the questions and answers were things that many of us think about. Regardless of it being Steve keen with the worst track record.
I found it interesting, watch it if you like as it will address you're questions.

 

I will pay a nominal $1 for every property in Moranbah.

 

Yeah I can see where you are going, but people need housing. As long as serviceability is OK, and we have low LVR we will ride it out. If prices plummet, I would hope to be buying.

 

If property does drop in prices it will be great to buy again if cash is available. But would totally suck if your portfolio of existing homes just dropped by a huge amount.
Are you prepared with cash in offset or line of credit?

 

Too many buy into the hype and hold off on buying not wanting to risk it waiting for the "bargains" to come after the chaos. Waiting. . . .

I have a friend like this who is about to come into enough money from a windfall to buy a 500k+ PPOR, with cash, in a 400k median area. Now wants to hold off 2-3 years to buy somebody else's loss 100k cheaper because a real estate agent friend pointed out this article, and he must know right cause he's a gun real estate agent and all. I advised my friend to just buy a nice house on decent land. Job done. 100% equity position is better deployed later on if and when the post crash bargains come and they're a little more educated on property investment. In the meantime the windfall is safe as houses.

 

Anyone know what happened to America's population after the gfc hit, did they loose population?

 

I believe that the GFC was the start of the reverse of migration (legal and illegal) from Latin America to the USA.

 

I have a friend who said this back 20 years ago. He waited and waited and finally bought at the peak of the last boom.

 

Steve may seem like the boy who cried wolf, but don't forget the wolf did end up attacking the flock of sheep. Complacent sheep are the easiest to catch and taste the nicest.

 

If house prices did ever crash, buying a house would be the last thing on your mind. Everything will have turned to crap if that happens.