Sunday, November 28, 2010

Fantasy Comments by Byron Rose Still Making the Rounds

The Real Estate Buyers Association of Australia president's comments from The Daily Telegraph November 17th sure have legs. The comments contain some points (much repeated) worth noting to point and laugh at later. We seem to be in the wishful thinking phase of this bubble. Things are getting wobbly and those with a large vested financial interest in keeping the markets inflated get defensive and grab hold of any evidence to support a solid reality to justify bubble prices. This phase is also marked by these same people attacking analysts and bloggers as causing the downturn. Which is always a hilarious accusation.

The only part of this article which is true, is the "unprecedented international land grab". Yup, but you say that like it's a good thing. Leaving it out there as a metric of something other than excessive foreign money distorting the local market. These outside buyers are not smarter than the local buyers, they are in a frenzy. That doesn't add up to a precedent to follow or anything.

Doozy number one:
“They know the market is depressed - they are making huge capital gains and are reinvesting into the market.”
"Depressed"? Where to even go with that? Take a look at any Australian property price chart. Like maybe this one. That price scale ought to be plotted logarithmically it is so elevated.

CBRE senior managing director of international investments Rick Butler blamed Australian banks for the situation. “The banks are saying they are lending but in my view they aren’t,” . . .
The banks actually maybe learned a lesson from the U.S./U.K./Ireland crash you are saying? Banks in the U.S. were twisting the arms of appraisers to raise valuations. If they had kept valuations realistic, their books would look better and we wouldn't have 919 banks on the unofficial problem bank list. Still. Years after the crash. Complaining about bank valuations being too strict is the same as arguing that you want the subsequent downturn to hurt as long as possible.

“The foreigners are there because they see Australia as safe, secure and actually having growth, which puts us in a much better position than old Europe and the US.”
Growth based on what? Exports and what else? Real Estate.

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