Monday, November 02, 2009
Rory Robertson writes:
· I don’t know much about racehorses or the Melbourne Cup, but my winner this week already is home and hosed!
· With the ABS measure of house prices today having punched to a new high (see chart below), high-profile pessimist Dr Steve Keen has lost our year-old bet.
· Dr Keen said repeatedly that Australian house prices would fall by 40% from peak to trough. In our bet, he agreed to use the ABS measure, and agreed that the starting point was 131.0. (For ABS data, see first table in "Downloads")
· On the agreed ABS measure, house prices fell by just 5.5% (to 123.8) and now are at a new high (134.4) in Q3. Dr Keen could scarcely have been more wrong – out by a factor of seven! Thus the bet has been won and lost.
· Indeed, Dr Keen has conceded he’s now due to walk over 200km from Canberra to the top of Mt Kosciuszko wearing a tee-shirt saying “I was hopelessly wrong on house prices! Ask me how”. I wish Dr Keen well on his long walk.
· For fun, if Australian house prices ever fall by 40% from any peak in my lifetime, I will follow in Dr Keen's footsteps. Similarly, if Dr Keen proves the existence of the Loch Ness Monster, I will take the walk.
For the record, Dr Keen’s big miss on house prices largely reflects a big miss on his "Depression in Australia" forecast: "Best case scenario is a recession more severe than 1990 and lasting one and a half times as long. Worst case is something up to the level of the Great Depression which was 20 per cent unemployment and lasting up to a decade"
Joye: "I think we can claim at least some partial credit for Rory’s conviction on this subject"
CBD: On the road to Kosciuszko
. House prices surge for 8th consecutive month - Steve Keen to walk to Kosciusko!
. Could house prices actually be climbing?
. Rory Robertson vs Steve Keen