Billed as the "property punch-up of the century" by News.com.au, and as "Fight Night" by Sky Business TV, I went head-to-head for 30 heated minutes with mega perma-bear John Adams last night on Peter Switzer's television show. I thought I smashed Adams pretty convincingly, and Switzer appeared to agree in his post-fight analysis, where he concluded:
I think Joye confidently batted off most of John’s points and was a better debater...Some might call it a knockout to Chris but I’d make it a points decision by a healthy margin.
You can watch the full battle here:
I actually didn't realise that John Adams was an economist...
I still don't know what the debate was over? You both agreed house prices are going down 15%+ even without an exogenous shock. Clearly it was over How Bad.
Sorry Chris, I think you're probably underestimating the risk of much higher levels of unemployment due to consumers deleveraging. Of course interest rates will be suppressed via QE but this will impact on the AUD. Not likely that anyone in Australia will be expanding their balance sheets over the next 10 years. Credit growth can't expand at 5% pa when wage inflation is well below 2% pa. Inevitably, this is not going to end well.
Adams & North make their money around times of Property Market-Peaks and consolidating Property Markets (immediately following Market Peaks). They start peddling their fear and rhetoric - become the darlings on the MSM for a time - and then fade to the background, again. They do have SOME fair points, but even a broken Clock is correct twice-a-day.
Oh dear, that was hardly a fair fight..
Chris claiming house prices are 3% undervalued shows just how out of touch he is with reality. Try telling that to an average Australian family and see how far you get! Chris showing that graph to try and say that median house prices are inline with households' borrowing capacity because mortgage rates are low shows that he doesn't understand the problem at all. The historical 3-4 times income rule of thumb exists because anything higher than that means that households will struggle to make the repayments (irrespective of interest rates). By allowing people to borrow 8 or more times their income, even small changes in their cost of living, circumstances or interest rates will have a much greater impact on the household's ability to make repayments. He claimed that mortgage repayments as a proportion of income was "quite low". I'd like to know what he considers "quite low" and where the data to support that assessment comes from. He said Australians debt serviceability is "perfectly fine" because we have 5000 year low interest rates. He then went on to say that assuming the RBA cash rate stays at 1.5% forever we don't have a serviceability problem, but then goes on to say that he doesn't believe they will stay this low and that they should normalise! At this point he's lost the debate. As Chris himself admits, his whole argument hinges on the world nor Australia going into recession. Well good bloody luck with that. The world economy is slowing and we haven't had a recession in 27 years so it's well over due. Every indication is that our GDP is sliding with construction and retail already in decline. Not to mention China's slowing growth that will reduce demand for our exports. I reckon when the 2nd quarter's numbers come in we'll be in a recession because there's not a single indicator to suggest otherwise and Adams will unfortunately be proven correct.
Adams knocked out cold