Shareswatch Australia

752 responses so far ↓

• 1 Greg Atkinson // Jun 11, 2010 at 9:53 am

  Looks like the housing market might be cooling with home loan approvals falling for seven straight months as reported in this on the Bloomberg site. See: http://www.businessweek.com/news/2010-06-08/australian-home-loan-approvals-fall-for-seventh-month-update1-.html

  It looks like the reduction of cash to first home buyers is also having an impact (which is something a few of us were discussing last year) as Bloomberg reports:

  “Borrowing has tumbled since the start of the fourth quarter after Prime Minister Kevin Rudd’s government began reducing A$21,000 ($17,300) grants to first-time buyers of newly built dwellings. Those grants were lowered in two steps to A$7,000 on Jan. 1.”

  Since business and consumer confidence are both trending down now then I would be expecting to see house prices fall back, but so far they seem to have pushed upwards no matter what is happening!

• 2 Ned S // Jun 11, 2010 at 2:00 pm

  RBA reckons decline of FHBs in market is showing up as less lending and higher medians:

  http://www.smh.com.au/business/loss-of-stimulus-hits-home-20100610-y0hs.html

  Article also says “This explanation ignores the central role of housing investors, who on average borrow 40 per cent of all finance for home purchases.” Got to admit I’m not real tempted to rush out and pay $330K for stuff that I could have bought for maybe $295K before we had the stimulus though.

  But that’s just me who has no income that I especially feel to negatively gear. And I’m regularly wrong …

• 3 Ned S // Jun 11, 2010 at 2:23 pm

  Investors ARE picking up the slack maybe? :

  “data show investors continue to return to the market as investor finance rose 1.8% for April. This means an increase of 39% in investor finance since the start of 2009, with most of the interest appearing to be in the established market rather than the development of new projects”

  http://money.ninemsn.com.au/article.aspx?id=1067247&rf=true

• 4 Greg Atkinson // Jun 11, 2010 at 8:34 pm

  Ned makes sense that investors are heading towards property since the stock market is not that popular these days. It looks like many investors have given up on stocks and are heading for what they see as a safe haven for their money….residential property.

• 5 Anon // Jun 12, 2010 at 4:43 pm

  “It looks like many investors have given up on stocks and are heading for what they see as a safe haven for their money….residential property.”

  What a disaster in the making this will be. Move from an undervalued asset class into an overvalued one…ouch!

  Marc Faber has just given very sobering guidance re: Australian Residential Housing:

  “And as a special tip, I think I would short the Australian dollar, because talking about a housing bubble, Australia has 10 times a bigger bubble than China,” Faber said. “In Australia you have what you said we don’t really have in China, namely the low leverage that we have in China, we have the opposite in Australia, very high household leverage. … So I think a big downfall is about to happen.”

• 6 Biker // Jun 13, 2010 at 10:06 am

  “What a disaster in the making this will be. Move from an undervalued asset class into an overvalued one…ouch!”

  A cleaner and her retired husband didn’t flinch yesterday when I gave them both options: rent at $360 pw; or buy the house for $396K. They’ll rent their family home to someone else, either way.

  I’ve no idea if stocks will rise or fall. My eldest kid could lose hundreds of thousands in indexed funds. His younger brother, buoyed by his brother’s early success, has done a packet already. With world economies as they are, I’d almost rather they were online gamblers… . In a way, they are.

  In that scenario, the modest regular gains from rental properties shine like sanity in a freaking lunatic asylum.

• 7 Greg Atkinson // Jun 13, 2010 at 11:01 am

  Well I think we need to be careful when we say ‘world economies’ because a lot of the world exists outside Europe and the U.S.

  I don’t think it is gambling to expect that Asia as a economic region will power ahead in the next few decades. In general the region has plenty of savings and a middle class that is growing significantly. In Singapore and Malaysia the number of million dollar households for example is growing much more rapidly than Australia.

  As for regular income, well I like fully franked dividends myself.

• 8 Biker // Jun 13, 2010 at 11:57 am

  “Asia as a economic region will power ahead in the next few decades.”

  Completely agree.

  Will their rise be completely to ‘our’* advantage, I wonder?

  Are you bullish on China again, Greg?

  * ‘our’ in the most general ‘western’ context, here…

• 9 Ned S // Jun 13, 2010 at 3:02 pm

  “Move from an undervalued asset class into an overvalued one” -- Another way of looking at it might be to say “Move from a highly volatile asset class into a less volatile one” maybe.

  With the danger for a mug being that if he is in a highly volatile (and liquid) asset class, he’ll make mistakes both as the market goes up and down more than once with it not taking too many mistakes of even maybe 10 or 12% added end to end to see him very significantly poorer.

  Whereas in a less volatile asset class, same mug will more likely sit there and do nothing and at the end of the day say Well I started out with three houses and I still have three houses -- Albeit worth 15 or 20% less than what they once were perhaps?

  ‘Course if Steve Keen’s vision came to pass and he could buy back into his $526K apartment for $263K then things would start looking very significantly different all round I guess.

• 10 Greg Atkinson // Jun 13, 2010 at 3:09 pm

  Biker I am bullish about Asia as a region, not so much on China. I was just reading the other day for example how labour costs in China have risen to the point where companies are now looking to move manufacturing to other countries because costs are getting too high! Workers are actually striking for higher wages..seems they are capitalists after all

  But China’s possible loss will be someone else’s gain..Vietnam perhaps?

• 11 Anon // Jun 13, 2010 at 3:20 pm

  “With the danger for a mug being that if he is in a highly volatile (and liquid) asset class, he’ll make mistakes both as the market goes up and down more than once with it not taking too many mistakes of even maybe 10 or 12% added end to end to see him very significantly poorer.”

  Thats true Ned, and like you said the compounding of losses through mistakes can be very costly.
  Volatility can be controlled if you hedge investments with Out of the money puts. You buy long dated puts on the stock say 20% lower than your entry. Then you have a guaranteed sell price on that stock for say (1-2 years?) and it doesn’t matter where the stock price goes. This makes a huge difference psychologically when the stock falls through the floor.
  However this becomes expensive if the stock is inherently volatile (i.e. the premium paid on the puts are excessive).
  In fact excessive premiums on puts are usually the sign of a bottom…and i’m seeing very rich premiums on most of the puts out there currently.

  “Move from a highly volatile asset class into a less volatile one” maybe.”

  Good point…but we’d need to see if that holds up once housing mean reverts. People may then say stocks are better than housing.

• 12 Ned S // Jun 13, 2010 at 3:59 pm

  Thanks for that Anon. It was probably only about a year ago that I figured out that such things as stop losses existed. And that reading the saying “Sell in May and go away” maybe helped me understand why my practice of dumping a heap of loot into super around May/June each year when I had a reasonable idea what my taxable income would be, tended to have unsatisfactory immediate consequences. Add in the fact that the court let me keep my super as a reasonable portion of a property settlement that took place not long before the dot com crash, and I’ve probably got to admit that my opinion on stocks could be a bit biased.

• 13 Greg Atkinson // Jun 13, 2010 at 4:00 pm

  I think the volatility of the stock market is being talked up a touch. I have posted a few charts on this site and tried to explain previously that corrections are “normal”. Okay so the May correction was nasty, but let’s not forget that the run up from the low of March 2009 was pretty impressive.

  So maybe housing looks like a good investment at the moment and maybe it is. But if the stock market continues to struggle and house prices keep rising then we will have a serious disconnect.

  A lot of money flowing into our housing market is either from offshore borrowings or offshore investors. Either way it isn’t being fueled by wealth created in Australia alone.

  So the question for me is, how much more debt can we take on in Oz? If households still have the ability to borrow and can pay off loans then I guess house prices will keep tracking upwards?

• 14 Biker // Jun 13, 2010 at 4:00 pm

  Another way of looking at it might be to say “Move from a highly volatile asset class into a less volatile one” maybe.

  *Chuckle* (Couldn’t help m’self… .)

  “…we’d need to see if that holds up once housing mean reverts.”

  You mean ‘if’. That’s a little like me saying ‘when’ the ASX falls to 3200 again. A check on my posts will show that I’m going back in _IF_ the ASX falls to 3200.

  And I think many of us accept that some property marketS may drop. There are many I’d never buy into now… just as there are some stocks you wouldn’t touch with a bargepole.

  Can you imagine Keen’s glee, had Oz property fallen 54.5%?
  And remember that (our) mortgage rates fell by almost the same percentage during that period… .

  Yet any similar future prospect for property is heralded as:
  “What a disaster in the making this will be.”

• 15 Anon // Jun 13, 2010 at 4:04 pm

  “You mean ‘if’. That’s a little like me saying ‘when’ the ASX falls to 3200 again. A check on my posts will show that I’m going back in _IF_ the ASX falls to 3200.”

  Biker ok IF I shouldn’t speak in absolutes.

  “And I think many of us accept that some property marketS may drop. There are many I’d never buy into now… just as there are some stocks you wouldn’t touch with a bargepole.”

  Fair comment Biker

• 16 Anon // Jun 13, 2010 at 4:41 pm

  “And that reading the saying “Sell in May and go away” maybe helped me understand why my practice of dumping a heap of loot into super around May/June each year when I had a reasonable idea what my taxable income would be, tended to have unsatisfactory immediate consequences.”

  Yeah May-Novish generally is pretty shocking. But you have to be careful, stock seasonality does not hold up every year. It depends on valuations and sentiment etc and sometimes pure luck.
  I think some years May/June actually rose and July crashed. In 09 Feb/March crashed and then May onwards was great. I guess the trick is to know when it works and when it doesn’t

• 17 Ned S // Jun 13, 2010 at 5:14 pm

  I reckon it’s volatile when I look at the djia each day and providing it hasn’t moved up or down more than maybe 0.5% think of it as a nice quiet day for the markets. And that “fat finger” thing probably was NOT a mistake when one looks at the chart -- Someone knew something and made a mint has to be my guess.

  Housing and reverting to the mean -- I pretty much accept that lots of factors including dual income families, the size and style of our homes, negative gearing, the ease of obtaining comparatively low cost credit, high immigration and restrictive land release policies (even stuff like OH&S) have all shifted the mean up.

  To what extent will any or all such factors reverse/change? And if so when? Or might conditions become conducive to us producing a surplus of housing? (Spain seems to have shot itself in the foot big time in relation to the latter -- They’ve got 6 years worth of surplus supply I gather.) Or is it possible the deflationistas will finally have their way (in Oz?) Lots of questions and no catagorical answers from this corner is about all I can say.

• 18 Biker // Jun 13, 2010 at 9:45 pm

  Y’know, I wondered if the recent rise in the minimum wage might see a boost in confidence from that sector… and our recent spate of interest actually comes from that group. Not the cashed-up tradies and miners we’re used to, but a demographic we’ve had _no_ past interest from whatsoever…

  Yeah, I know, much too small a sample to be valid… but interesting, nonetheless.

  Our experiences in Spain and Italy indicated that the British middle class, riding on their ‘equity’, boosted their property markets. A lot of the stuff constructed for that market was jerry-built… and warnings were rife even back in 2005. Even the roads leading to some of these developments in southern Italy were highly sus… .

• 19 Ned S // Jun 14, 2010 at 3:13 am

  I find it a bit unsettling when Satyajit Das is this negative:

  http://www.abc.net.au/pm/content/2010/s2918803.htm

  http://www.marketwatch.com/story/europes-latest-fashion-rage-the-austere-look-2010-05-27

• 20 Greg Atkinson // Jun 16, 2010 at 7:03 am

  What do people make of this dire predication by Jeremy Grantham that the Australian housing market is in a bubble? See: http://www.theaustralian.com.au/business/housing-market-a-time-bomb-says-investment-legend/story-e6frg8zx-1225880119320

• 21 Max Manning // Jun 16, 2010 at 1:04 pm

  Rise or fall that is the question.

  I have been of the same thought for a long time, that house prices will come down and at present are far to inflated. Many times I thought that house prices would drop and I was ready to purchase a bargain, but it never happened, prices did steady but not the drop I was expecting.

  I do believe that if interest rates continue to rise it will have a definite impact on house prices but to what level I’m unsure (I wish I knew it would make investing so much easier). When I purchased my first home (as the article states) the cost of my home was about 2.5 times my wage but interest rates were also 16 to 17 percent, but now the same house at its current value is 5.5 times my wage and my wage is considerably more than when I initial purchased it. I also understand if interest rate were able to rise to 16-17% then it’s possible it can happen again.

  I believe that interest rate will be the major player in the determining where house prices will end up and most people understand that including the RBA. The RBA for good or bad have a juggling act to perform; they need to keep the economy moving and need to cool the economy when it start getting out of hand. Man…..I hope they get the balance right.

  Then again house price are what people are willing to pay at the time of purchase which is influenced by personal need and availability of money.

• 22 Firebug // Jun 16, 2010 at 1:32 pm

  If we look at historical data, then the case for a correction is strong. But are we going to see a very large correction as per the article? I doubt it.

• 23 Anon // Jun 16, 2010 at 2:29 pm

  I do hope you are right, and its not going to be deep and large, as the consequences for Australia would be a disaster.
  But I know i’m betting on something very deep and perhaps prolonged in terms of how fast prices will comeback. Albeit 42% is abit of a stretch…we are not Japan

• 24 Firebug // Jun 16, 2010 at 2:48 pm

  My prediction is that the ROI for real estate will be lower than other asset classes in the next few years.

  I think even if there is a second low in the stock market to say 3,000, it will rise back up and provide better return than houses in five to ten years.

  Of course this is generalisation as some areas be much better off than the others

• 25 Ned S // Jun 16, 2010 at 3:29 pm

  No mention of time when, or timeframe over which any such return to “long-term trend” might occur. Or how it might occur. Except to say “Sooner or later, the rates will go up and the game is over.” Which would tempt one to think Grantham reckons it will happen suddenly and catastrophically -- And it will be caused by higher interest rates. Or how high rates would have to be to cause lots of forced sales. Because one doesn’t get sudden crashes without those I’d guess?

  What can one say? Sudden and catastrophic is very bad for banks. And for nations. So the nation’s savers and taxpayers are called on to prevent it. (The Fannie/Freddie debacle could set the US taxpayer back anywhere up to $1t is the latest worst case scenario I read.)

  As to how might it happen? (Assuming it does happen.) Other than through high interest rates causing a catastrophic crash? -- Well, building housing that is more suitable to our needs would seem like a sensible way to decrease the median price to me. But I must admit that I’m not at all sure we will do that.

  Over what timeframe might any such change occur? Steve Keen’s second guess was sometime over the next 15 years I gather? A deflationist by the name of Mike Shedlock (who reckons the crash is pretty much here) also stated “Australia buyers might need to wait 5-7 years or more for reasonable valuations”; And on the off chance anyone still sees any likelihood of Oz riding Asia’s coat tails to Ken Henry’s “golden era”, it could play out over 40 years I guess; Albeit with a few speed bumps along the way.

  Plus at the same time we have lots of souls buying gold because they are concerned about high inflation -- Which could push house prices significantly higher in absolute terms even if not in real terms perhaps?

  So I’ll leave radical calls to those who have a bit more commitment to an extreme view than I’m qualified to take.

• 26 Biker // Jun 16, 2010 at 6:29 pm

  Tried to solicit our agent’s views about the sudden upswing here, this morning. She seems frantic to add the new house to their rental stock… but she may simply be concerned that our private signs on two properties are getting a lot of attention.

  Beginning to think that it’s a scarcity of great blocks/houses close to the beach. Maybe someone has seen the pricelist for the next release further south… and realises everything established is a steal. Must trot down to the developer’s office Tamara; to see if they have a pricelist.

  I feel a little out-of-the loop, at present.

  Grantham? I think Ned’s first take, a month back, on that rehash was correct.

  As with Soros’ views, it’s important to ask not simply about the timing of any announcement, but the possible purpose(s)…

  I recall friends and colleagues approaching us in the early-mid eighties, concerned that things were SO flat. Some had held great properties for several years… and valuations hadn’t moved one iota. Those who took our counsel to hold made five, six and seven times their original investment… and we did even better on one lot.

  Yes, those days are over. I never expect to see them again in my lifetime. But I do expect to see properties we hold double and treble in that time.

• 27 Greg Atkinson // Jun 16, 2010 at 10:54 pm

  Max what makes me worry is the Australian’s seem to be willing to keep taking on debt to fuel the housing market at a time when most other developed economies are trying to get their debt levels down.

  Is the Australian economy unique or are people simply talking themselves into believing it is?

• 28 Firebug // Jun 17, 2010 at 9:54 am

  Biker, are you saying that you believe house prices could double or trible in the next couple of decades?

  Do you predict the average income in Australia going up by the same %?

• 29 Max Manning // Jun 17, 2010 at 3:36 pm

  Greg, I agree with you about the spending by Australians, taking on debt seems to be a pass time for some. If you read today’s papers credit card debt has eclipsed mortgages. It could be another sign that people are not managing with their mortgage repayments and relying on credit cards to supplement their lifestyles. I guess we may get the answer in the coming months.

  The blame should not only be directed to the public in general but the banks and mortgage brokers need to take some responsibility.

  What I find strange is the way financial institution advertise bank loans. A while ago I went past a bank advertising a sale on home loans. The slogan went like this “Sale…. Sale…. On Home Loans today…. Come in and we’ll make a deal with you”. Now seriously, what am I buying, the pleasure of paying back more money than what I originally got…. Now that’s a bargain! And another line I remember from some time back by a well known financial institution…. “have we got a loan for you”…… OYCH!!! Now the banks and financial institutions need to stop and have a good look at themselves, they should not be promoting loans as a product. I personally know bankers and mortgage brokers and have spoken to them many times about the way they conduct themselves with regards to giving out home loans and I was surprised (well not really surprised) with some responses…… “in the end if they cannot pay back then they will have to sell up or the bank will shut them down… I got my commission/bonus”. I’m not saying that this is the case with all bankers and mortgage brokers; some are very diligent and place a lot of pride in what they do. But this behaviour does exist and we all know what happened in the US, I think it’s well documented.

• 30 Senator13 // Jun 17, 2010 at 8:32 pm

  A saying I found interesting – “Owe a bank one hundred thousand you have a problem; owe a bank one hundred million the bank has the problem.”

• 31 Anon // Jun 17, 2010 at 9:35 pm

  lol senator so true.

  This version is probably more accurate:

  “Owe a bank one hundred thousand you have a problem; owe a bank one hundred million the [Government] has the problem.”

• 32 Biker // Jun 18, 2010 at 1:10 pm

  Firebug: “Biker, are you saying that you believe house prices could double or trible in the next couple of decades? Do you predict the average income in Australia going up by the same %?”

  Yes

  No

  I predict that the wealth of a _significant number_ of Australians will more than treble in this period. My starting salary, as a qualified graduate with a degree, was $2200 per year. My earnings are now well over twenty times that. Had you told me what I’d be earning by 2010, I’d have laughed at you. Had you told me what even _half_ our assets would be, I’d seriously have tried to have you committed.

  What I’m suggesting is not simply that wages will rise beyond your wildest guess, but that the gulf which already exists, between those afraid to act… and those _continually acting_ with optimism… will become wider. I could put it more crudely, in terms of the ‘rich and poor’. I’m not that crass.
  It has been suggested however that the latter boost our population, reaffirming my optimism… .

• 33 Biker // Jun 18, 2010 at 2:38 pm

  “My starting salary, as a qualified graduate with a degree, was $2200 per year. My earnings are now well over twenty times that.”

  Well, I waited for laughter and derision, but it never came.
  You’re all too kind… .

• 34 Ned S // Jun 19, 2010 at 10:57 pm

  “You’re all too kind” … Nothing unbelievable about having a $440k plus pa income these days Biker.

  The gap between the “haves” and the “wants” -- Yeh, it’s one of the things the “wants” aren’t all that good at getting their heads around when their lives are so good in so many ways in our society perhaps?

• 35 Greg Atkinson // Jun 20, 2010 at 12:06 pm

  Max what I find surprising is that most Australian’s don’t appear to understand that we are getting more into debt as a nation as each day passes. People keep talking about a mining boom, but the fact is that we import more in dollar terms than we export, so we are actually living beyond our means.

  Besides commodities (hard and soft) our other major exports are in trouble; namely tourism and education. So I don’t understand why people expect Australia’s wealth to keep growing or why wages will keep heading up strongly.

  Perhaps the golden era of economic growth in Australia is over?

• 36 Ned S // Jun 20, 2010 at 2:47 pm

  “Perhaps the golden era of economic growth in Australia is over?” Could be Greg. And it wouldn’t be pretty because we have developed awfully high expectations! So I suspect it’s a good thing to have a personal Plan B and even a Plan C.

  Interesting reading about home ownership rates in Japan -- Less than 50% in Tokyo (in 2003) where prices (were -- ?) high. Although much higher in the rural areas this says:

  http://en.wikipedia.org/wiki/Housing_in_Japan#Home_ownership

  And given that Germany’s home ownership is only about 42%, it isn’t out of the question that we might see a fundamental shift in such stuff in Oz over time. Quite possibly with falling real prices. Absolute prices even if Oz did deflation.

  We’d go back to “the good ole days”; Sort of; Maybe? …

  There’s a lot of stuff here about inflation versus deflation:

  http://www.economist.com/economics/by-invitation/questions/inflation_or_deflation_greater_threat_world_economy

• 37 Ned S // Jun 20, 2010 at 8:14 pm

  Would certainly seem that the finest economic minds in Oz’s RBA don’t have any particuarly significant insights into what the heck is really happening over and above those who try to read a few economic reports regularly? :

  http://www.theaustralian.com.au/business/markets/rba-to-keep-interest-rates-steady-to-assess-inflation-risks/story-e6frg926-1225879971415

• 38 Vince L // Jun 20, 2010 at 8:26 pm

  Biker perhaps nobody cares about what you say you earn simply because there is no way to know for sure if what you say is correct or not. I really don’t see what value that little bit of information added to the debate.

• 39 Firebug // Jun 21, 2010 at 10:28 pm

  Biker,

  It is not hard to see your point.

  My in-laws’ first home, a two bedroom unit at Randwick was in the paper three months ago. It was auctioned off at about $600k. They sold it for $30k about 35 years ago. Nobody would have believed this kind of appreciation.

  However, I am not sure whether this trend would continue in a straight line though. The prices of houses may well be much higher in twenty, thirty years’ time. How do we know there won’t be ten years with no appreciation?

• 40 Biker // Jun 22, 2010 at 1:40 am

  “How do we know there won’t be ten years with no appreciation?”

  Nothing is impossible, FB.

  We can look back to the eighties when there was a five-year period of zero property value growth in WA. Property spruikers will tell you that these five-year plateaus are followed by two years of rapid appreciation. I’m not sure I believe that, but it’s precisely what we experienced.

  Currently, the period I’m hearing cited as the next boom is 2012. If the <3% unemployment figure predicted for WA that year is correct, it may well happen.

  I don't know why this 5 + 2 claim exists, other than to reason that after five years of developers and builders suffering low confidence and therefore _doing_ little, shortages start to occur and it all flares up again. We know of four large projects put 'on hold' in the last three years, due to lack of confidence. There's little sign that they're ready to go ahead soon. Watching all four I hope that when the earthmovers go into action, projects we have nearing completion, or ready to sell, will pre-empt the release of competitive developments.

  Note the 'I' here. My missus is quite happy to hold… and keep building… !

• 41 Greg Atkinson // Jun 26, 2010 at 9:07 am

  It seems the ABS is seeing the population growth in Australia slowing a touch so if this trend continues things could get interesting. You can read more here: Australia’s high population growth starts to slow: ABS

  If this trend were to continue it could make things interesting in regards to property prices.

• 42 Ned S // Jun 26, 2010 at 8:40 pm

  A bit of the March 2009 cuts to skilled immigration coming through in the stats Greg? :

  http://www.smh.com.au/national/immigration-slashed-to-protect-jobs-20090315-8yy2.html

• 43 Greg Atkinson // Jun 27, 2010 at 8:19 am

  Indeed Ned, that is probably a big reason the immigration numbers are down.

  The warning for the housing market is this. 64% of the population growth is being driven by net overseas migration and if the economy slows the numbers of migrants entering Australia will drop.

  This will then lead to lower economic growth and thus the economy could find itself in viscous circle where unemployment starts to creep up and net migration numbers fall again.

  Remember a lot of bullish calls made about the housing market are based on forecasts of high population growth for the next decade or so. I wonder if anyone has done some calculation regarding what would happen if we have a decade of much lower population growth?

  By the way, I also suspect the demand for rental apartments is probably going to get hit hard in some areas due to the decline in foreign students coming to Australia as a result visa changes and bad press. (i.e student bashings)

  So there seems to be quite a few factors at play that would normally cool housing prices…and yet this does not seem to be happening yet. Is that a good thing or a dangerous omen?

• 44 Ned S // Jun 27, 2010 at 9:08 pm

  “there seems to be quite a few factors at play that would normally cool housing prices” -- The expectation (again! ) would seem to be that they’ll cool Greg. With the question being whether and to what extent they could even correct. I wouldn’t mind a little buying opportunity in Brisbane personally. But am not sticking my neck out like I did in late 2008 and predicting I’m going to get one.

• 45 Biker // Jun 28, 2010 at 11:52 am

  If the unions put Gillard into power, then they’ll dictate immigration policy. This _will_ result in a labour shortage. Expect wages to rise.

  Our European friends will still bring relations out. So will all the South African and Brit miners. I wouldn’t write off our higher education imports too soon. They’re a big money-spinner for Oz… .

  Interesting markets here in WA. House prices may have levelled off somewhat, but block prices continue to rise. Bargain home right by the beach: $390K for a 4 BR, 2 BR, DG home, ten years old. If it’s there next week, we’ll check it out.

  Have evacuated our most recent project. Good to be home after months completing that one, seven days per week. Eleven serious rental inquiries. No sale, though… .

• 46 Anon // Jul 2, 2010 at 5:31 am

  So what bets are we making re: house prices?
  I think maybe 20-25% falls in median prices over the next several years…I feel the recovery will be much slower than people currently anticipate given most think a repeat of the 2008 situation is likely -- which inturn makes this more unlikely given rear view mirror bias.

  Bubbles usually come off slowly and then pick up pace as reality sets back in. So I wouldn’t be surprised with a small fall first and then it increases over subsequent years…perhaps a final capitulation in 2012?

  So theres usually a time lag between house price falls and loan losses at banks. And the brunt of the falls may not happen until another economic downturn occurs (i.e. 2011-2012). Reason being people are more likely to lose their jobs in economic downturns and combined with negative equity and/or inability to service loans they become forced sellers and the downwards dominoes effect occurs re: price falls. Then negative prices feeds fears of more price falls, supply drops. Rents dont increase as sellers who are unable to sell their properties are forced to rent them out.

  So I guess, i’m abit worried that Biker is seeing a slowing in offers/interest so quickly. And a thankyou to Biker for letting us know whats happening on the ground.
  Still not shorting Australian housing as I feel its too early, but am watching on with interest. The wolf packs are forming

  *All posts by this poster is not financial advice or reccomendations to do something.

• 47 Anon // Jul 2, 2010 at 5:33 am

  “Then negative prices feeds fears of more price falls, supply drops.”

  That should be demand drops btw (damn cant edit!!)

• 48 Ned S // Jul 2, 2010 at 9:53 am

  20-25% falls over the next few years? You are a brave man Anon! At around about those levels in that timeframe I suspect the whole game could unravel as a deflationary crash towards Steve Keen’s beloved 40%. 10-15% wouldn’t especially surprise me though. Followed by a plateau period. Such is the life of an Oz RE property owner!

• 49 Ralph // Jul 2, 2010 at 10:28 am

  Hard to really predict things with any great confidence, but I think we’re at or very close to the top of the curve. The biggest indicator is the lending figures, which had been trending downwards. However, I think May might have shown a slight uptick, I’m not sure. With house prices as high as they are, access to credit is the key to increasing house prices. Less credit for housing by definition means less money available to purchase over-priced housing.

  I agree with anon that prices will be slow to move down because vendors will be reluctant to believe that their asset can actually be worth less than they think it is. But if credit remains weak, vendors will have to reduce their prices if they want to sell. If people are not getting as much credit, how can they pay asking price? Or they pull their house off the market.

  The world is clearly worried about the massive levels of debt sloshing around, and rightly so. I think that makes banks wary and more inclined to not be quite so loose in giving out money. On top of that, I think the appetite for debt in the Aus community is moderating. Personal fiscal consolidation is the new black. There is a growing sense that house prices are high enough and the rush to ‘buy now or miss out forever’ is not as strong, which of itself suggests that the bubble is under threat.

  I think the key to things at this point is whether the government can come in with some more stimulus to keep the game going. That’s the ‘known unknown’ elephant in the room -- we know that Gillard/Abbott are unlikely to let the housing bubble go down without a fight. THey know that it’s got to the point where the entire economy is dependent on continuing high house prices. What a disgraceful situation to be in. However, I’m not sure how credible increased home buyers grants will be this time. The public knows it’s just an excuse to inflate house prices, so I think they’ll be more cynical this time. But perhaps the government will be so desperate they just don’t care. The government’s shown that they can be bought by the mining industry, so I think there’s a good chance that the RE industry will also have their way when the bubble starts to deflate. So they might try something else. Who knows. We’ll probably find out after the election.

  So I agree pretty much with Anon’s assessment of 20% falls in the near term. I think it’s really only limited by the extent to which the government tries to intervene. I hope they don’t come in with a ‘shock and awe’ approach, spending money willy nilly to keep house prices up. Unlikely with the current scare campaign about debt that’s being run by the Liberals. But it’s hard to predict what they’ll do if they’re desperate.

• 50 Greg Atkinson // Jul 2, 2010 at 11:00 am

  I know Biker will scold me for saying this but I think we should take note of what happened in Ireland regarding their housing market. One thing that happened was they kept building houses for people migrating to Ireland and as more people came, they built new houses.

  Eventually they ended up not only with too many houses, but too much building capacity in the housing sector. Of course none of this seemed to be case during their economic boom and everyone went around talking about a chronic housing crisis and home prices soared.

  Sound familiar?

  Have property prices now gone too high too quickly in Australia I wonder?

• 51 Ralph // Jul 2, 2010 at 11:44 am

  It’s hard to see how Australia’s going to get out of this. With modern media the way it is, plenty of Australians can see that Europe’s teetering on the brink and about to topple over because they’ve got too much debt. This is making people gloomy and reluctant to spend because there is an increased realisation that the sh*tstorm could be coming to a store near us soon. We see it in lower auction clearance rates and lower lending figures.

  Even if there is a housing shortage (and it’s debatable if there is), that’s not going to keep prices high and increasing banks aren’t lending and people don’t want to go into more debt. Of course, banks (and the gov’t) are in a catch-22 -- they need to lend big to keep the economy ticking over, but they are also scared that they are actively stoking the bubble.

  The more I think about it, the more I think that the main motivation is to get to the election as soon as possible. Then whichever party gets elected can breathe a sigh of relief because they’ll have 3 years to spend like crazy to pump up real estate prices and bail out the banks (again) before they have to face the people. I think this is all they have left.

• 52 Greg Atkinson // Aug 1, 2010 at 11:40 am

  Here is an interesting article by Michael Yardney about Australian house prices and the differences in opinion between views regarding the property market between Australian and overseas observers. See: Is Australian property really the most overpriced in the world?

• 53 Ned S // Aug 1, 2010 at 12:53 pm

  Michael Yardney’s article cum sales pitch -- I’m always a bit suspicious of those who tell me “fortunes will be made by those who understand what is really going on”.

• 54 Biker // Aug 1, 2010 at 2:11 pm

  “The Economist magazine’s latest survey of global housing reported that Australian property had the poorest return on investment of the 20 countries it evaluated.”

  Don’t mind either the Libs or Labor reading this article!

  We’ve been doing our Depreciation Schedule for the latest project, all Sunday morning. Our total cost was $326K + interest. We have around $90K equity in this one. At $350 per week rent, I’ve got to ask how terrible an investment this is, particularly after tax benefits are calculated!~

  We won’t _sell_ the house for less than $395K.

  While we recognise that some punters are getting better returns, ours are guaranteed, year-after-year. Anyone chasing quick(er) riches may be better off in another asset class, but neither our Super nor our cash-in-the-bank* are matching our property returns.

  * Although our offsets currently return 6.71% tax free… .

• 55 Biker // Aug 1, 2010 at 6:51 pm

  “Our total cost was $326K + interest”

  OK. Correction needed… that’s now up to $335K plus interest.
  We’d forgotten landscaping and fences… .
  Still pretty remarkable and underbudget.

• 56 Greg Atkinson // Aug 2, 2010 at 11:21 am

  I don’t think we are seeing much value being added by property commentators now. There is either a real estate bubble or there isn’t depending on how you view (or trust) the available data and the available data is pretty unreliable in my opinion.

  One thing does does strike me is that the pro-property crowd are all counting on Australia’s population growing fairly robustly for many years to come which means they must be counting on fairly high levels of immigration?

  But it seems both political parties may cut immigration numbers so I wonder what impact that might have on the housing supply/demand equation?

• 57 Ralph // Aug 2, 2010 at 12:26 pm

  Maintaining high house prices is the top priority of both political parties -- the economy as we know it depends on it. And don’t forget that property developers are massive donors to both sides. Immigration cuts will be quietly shelved or ‘massaged’ to keep enough migrants coming in so as to not weaken housing demand too much.

  The first monthly house price falls are in -- 0.7% down in June. Lending figures are also slowing and/or falling. In short, appetite for debt is down and this must logically flow through to reduced demand for housing. If this continues, the government will be sorely tempted to re-introduce some form of housing-related stimulus. First home owners boosts will look ridiculous so soon after the last ones, but a desperate government could resort to anything.

  Impossible to say with any great accuracy what will happen next. But it is clear that, left to its own devices, the housing market is about to embark on a bit of a downward trend. We now just wait and see what the government’s response is going to be.

• 58 Greg Atkinson // Aug 2, 2010 at 2:06 pm

  Yes Ralph I agree that both major parties will want to support house prices. It seems these days that property is one of the main ways people gauge their wealth/success by and politicians won’t want to tamper with it too much.

  There are some people say that “fondness” for owning/investing in property is a bit of a throw back to 18th/19th century thinking where the landed gentry wielded great power. But in Australia with so much favoring property perhaps real estate is a fairly safe asset class to invest in?

• 59 Biker // Aug 2, 2010 at 3:39 pm

  Ralph: “…0.7% down in June. Lending figures are also slowing and/or falling. In short, appetite for debt is down and this must logically flow through to reduced demand for housing….
  …left to its own devices, the housing market is about to embark on a bit of a downward trend.”

  No question that appetite for debt is down.

  You lose me in the next bit, where you argue that this means “…reduced _demand_ for housing”. It actually means reduced supply. We’ve put our construction on hold. We’ve withdrawn two properties from sale. Our builder calls us regularly… !!~

  If you argued that reduced immigration (less population growth) means less demand, or that rising rates mean less sales, I’d completely agree. In fact, fear of debt means reduced construction and less supply. Demand for shelter remains… unless you have a FHOG sucking 200,000 plus families from the rental pool. In WA, large numbers of young families took the $21K and built. Construction boomed.
  Despite our population being expected to rise by 120,000 in 11-12, due to the mining boom, construction is now right down.

  Greg, there’s no doubt that you’re right about the history.
  The reluctance of those renting to refer to themselves as ‘tenants’, preferring ‘renters’, harks back to the days of serfdom and tenant farmers. The term ‘landlord’ is also part of that heritage. The Eureka Stockade possibly marks one of the real breaks in that tradition.

  I think your closing sentence sums it up for us. As you know, that doesn’t mean that inexperienced buyers are safe buying at the top of the market or should ignore the need for equity… .

• 60 Ned S // Aug 3, 2010 at 12:37 am

  “It seems these days that property is one of the main ways people gauge their wealth/success by and politicians won’t want to tamper with it too much.” -- With the corollary being that when property prices fall, people judge themselves less wealthy/successful and spend less, which in an economy like ours is not viewed as ‘good’ by too many at all. It’s bit of a chicken and egg argument as to whether asset prices drive growth or growth drives asset prices with the cost and availability of credit seeming to be critical either which way?

  “18th/19th century thinking where the landed gentry wielded great power”/”the days of serfdom and tenant farmers” -- It goes back a long way alright. Of course, we’ve had 70% home ownership in Oz for 4 or 5 decades now. And still do. Must admit I’ve got doubts about wanting to see it go much higher than that though. Unless our pollies can come up with some sort of plan on how it might be supported long term? And I’ve seen nothing to indicate they are that bright or forward thinking.

• 61 Biker // Aug 4, 2010 at 12:00 am

  Riding north today, I was stunned to note large areas sprouting multiple dwelling projects. Most had street parking… those cutaway bays serving new residents’ accommodation. Our state government is attempting to address the lengthy list of those waiting for access (25,000+). Interesting to note that just 150 new residences were built last year… and that the ‘damage’ bill reached nearly eight million.

  My guess is that we’ll see ten times last year’s expenditure on public housing this financial year… the last of the stimulus funding no doubt. At that point, I predict the construction industry may take a dive. Mining may take up the slack here.

  Despite this, the HIA will be actively lobbying government for support… .

• 62 Plornt // Aug 7, 2010 at 4:57 am

  Begining to put probe bets in, against the Australian Housing market. In my modeling I am assuming 2-3 year capitulation and a 25% fall. But the longer I wait to take a position in this the more expensive its going to be. More and more hedgefunds are becoming aware about the aussie housing bubble trade, so might be abit of Euro reactive situation occuring in a few years. Don’t think it will be as bad as the Ireland situation, but the landing will not be soft i’m afraid. It will be hard and slow to recover. I will have to be careful buying real estate too quickly once the crash occurs.
  Rents have risen ~100% from the mid 90s whilst house price have risen ~180%. The two usually correlate closely together. This is arguably a better short than US treasuries.
  Also I could be completely wrong here (I regularly am) and this is not financial advice, I am just merely discussing my thoughts regarding how I am going about this position.

  All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.

• 63 Biker // Aug 7, 2010 at 10:53 pm

  “I will have to be careful buying real estate too quickly once the crash occurs.”

  Wouldn’t worry too much about this. The interest rate will be zero, perhaps less. Unemployment will be running around ten percent, so you’ll have little competition. Most owners will have gone to live with ma & pa anyway.

  All you’ll need is Monopoly money. Terrified FHOs and investors will throw houses at you… . If you use low-denomination notes,
  you’ll appear to be paying more… and they’ll probably queue to give you their keys.

  I figure you’ll have plenty of time. This is all unlikely to happen for several weeks.

• 64 Ned S // Aug 7, 2010 at 11:31 pm

  Steve Keen’s advice to aspiring home owners -- “I think it’s only going to be political change and getting those sorts of legal reforms I’m talking about, that’ll work. Don’t bother saving money for it.”

  http://www.finnewsnetwork.com.au/archives/finance_news_network15376.html

  Bloody government -- And property speculators -- Stitched him up -- When he was speculating on them going down!

• 65 Plornt // Aug 7, 2010 at 11:36 pm

  I suspect you and Ned will make a killing given your experience in the housing market, IF we do crash.
  Many fortunes will be made when the rug is pulled under the housing bubble no doubt.
  And like your said, when the negative psychology hits not many will be wanting to buy, meaning I can throw a dart and hit a bargain. Good for us inexperienced types

  “All you’ll need is Monopoly money”
  Got 40% in cash, in a term deposit waiting now, for a house deposit. Although I have 60% invested in equities now, but I heavily leverage my 60% (giving me a fully invested total portfolio) and borrow @ 1.3% in USD and get 6.5% on the other cash, getting a positive carry. When the stock market hit bottom I was getting paid to borrow USD on my portfolio, whilst being long the AUD (paid ~4% borrowing at USD 1.3% to buy AUD) in addition to the positive carry from the bank a/c -- quite crazy when they said that it was risky to buy in late May!! I dont see how its risky to buy severely depressed bluechips and get paid to borrow??

  “The interest rate will be zero, perhaps less. Unemployment will be running around ten percent,”

  10 percent is an extreme amount. Not sure it will get that high? Agree with the near zero interest rates, they will need to do that to stop the rot. Imagine the leverage you could get then!!

  All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.

• 66 Ned S // Aug 8, 2010 at 12:30 am

  I’d love to know Keen’s real storey -- He certainly does seem to have few clues on the perils of debt.

  I sometimes muse that he might have bought his apartment back in 1980 for maybe $25K; Dipped into the equity over many years to buy crap and do the occasional property settlement with a partner or two; Then with a potential sales price of $525K and a mortgage of maybe $225K and the strong sniff of a GFC coming up, went Yep, it’s now time to dig myself out of this hole!

  Only to see his hopes ‘n dreams for his dotage turn to poo -- And be paying $26K pa rent! Poor ole bugger … He wouldn’t be only clever man to ever mishandle his personal finances though.

  But he does have a heck of problem -- It’s not as if he can just quietly buy back in unless we do get a very significant drop now is it? And he sure would seem to be getting frustrated when he starts advising the youngies “Don’t bother saving money for it.” Wonder if he’ll live long enough to ever be a homeowner again?

• 67 Plornt // Aug 8, 2010 at 12:37 am

  Somehow I can envision Steve saying “we’ve got further to fall” when we are all pilling into housing in 2-3 years time.
  The hardest thing to do when you take an extremely bearish stance is to reverse your opinion when prices compensate you for the risk.

  All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.

• 68 Plornt // Aug 8, 2010 at 12:47 am

  Hows this for a traders screen setup?
  Perhaps abit overkill?

  http://www.stocktradingtogo.com/wp-content/uploads/2007/08/massive-trading-system-copy.gif

  Somehow i’m thinking brain cancer from that kind of radiation!

• 69 Ned S // Aug 8, 2010 at 1:00 am

  The gif definitely makes renovating houses look like a nice relaxing pastime!

• 70 Plornt // Aug 8, 2010 at 2:38 am

  lol Ned
  I wonder how much that trader paid to set that many screens up. Crazy stuff.

• 71 Ned S // Aug 8, 2010 at 3:48 am

  He’s got to be a computer geek who fancies himself as a trader on the side Plornt? Either that or he’s in for a hell of short career -- I reckon the whiplash injuries will nail him before anything else!

• 72 Plornt // Aug 8, 2010 at 4:17 am

  LOOOL Ned, almost fell off the chair.

  Oh dear.

  I’m not sure whether he knows what he’s doing. You do get some people who spend heaps on a huge setup thinking it will improve their performance. I reckon if you can’t make money on a basic setup first, you shouldn’t really outlay or expand until you can do that consistently.

  BTW I think i’d have an epileptic seizure, if I had to monitor that many screens Ned.

  My setup is really basic, although am in the process of adding another screen. I dont really monitor things enough, which is abit lazy and costly at times. I find the more I do, the lower the quality of my decision making and lowers returns (law of diminishing returns in effect), so generally do keep it simple and less is more.

  So the second screen is setup next to the television in the loungeroom, to force me to occasionally look at support levels. Its a risk management strategy against my procrastination

  All posts by this poster is not financial advice or a reccomendation to do something. Can change my mind quickly on any decision I make, given markets always change. Have positions in instruments discussed unless otherwise indicated.

• 73 Ned S // Aug 8, 2010 at 5:39 pm

  I’ve had a strong suspicion there is a lot more to the Yank housing crash saga than meets the eye for some time now. And the following seems to confirm it:

  http://www.bis.org/statistics/pp/pp.xls

  If my take on those numbers is correct, then the US is only down about 12% off its 2007 peak. (Existing single family houses) -- Although the new ones are a bit sicker at 15%

  And the UK is down 19% since their 2007 peak. (All dwellings)

  And yes, I do see Oz is up 5 or 6 times what we were in 1986. Similar level of naughtiness to Norway which is up about 4 times since 1992 maybe? What wicked Scandinavians they are -- The following certainly has a familiar ring to it:

  http://www.bloomberg.com/news/2010-06-29/norway-housing-bubble-risks-grow-as-euro-region-crisis-delays-rate-rise.html

  With Norway being worthy of mention as the other resource based economy listed perhaps?

• 74 Ned S // Aug 8, 2010 at 5:43 pm

  It isn’t exactly the sort of stuff that should smite a property investor with absolute fear and trembling -- Not for mine anyway?

  Although, yeh, I’m happy to hang out a bit longer on the thought that we might get a modest correction here too.

• 75 Biker // Aug 9, 2010 at 3:26 pm

  “Many fortunes will be made when the rug is pulled under the housing bubble…”

  Now I’m sure you mean ‘if’… .

  I agree with your views on Keen’s predicament, Ned.
  I’d hate to think he put his capital gain into the ASX!

  Probably did, as it was the one thing he failed to see coming…
  and everything else he prophesied failed to occur:

  Unemployment 10%
  Housing crash 40%
  Interest rates 0%

  If he was seeking fame, rather than fortune, he has certainly achieved his wish.

• 76 Ned S // Aug 12, 2010 at 11:33 pm

  I thought someone else out there might enjoy this. Amongst other things it points out some of the potential pitfalls of having socialised housing (and then trying to not have socialised housing) where it says:

  “Since the end of the Soviet Union, the government’s main policy has been to establish market relations throughout the housing sector. All residents in multi-apartment blocks were granted the right to privatize the apartment in which they were living, for free. Over 70% of all housing stock is now in private hands.

  This policy has left an enormous residue of problems. It was assumed that with this transfer the new owners would take over the management and maintenance of the housing stock. They have not.”

  http://www.globalpropertyguide.com/Europe/Russia/Landlord-and-Tenant

• 77 Biker // Aug 13, 2010 at 11:58 am

  “The recent improvement in capital growth performance of units is ascribed to affordability issues. The current capital city median unit price is $420 000 compared to houses at $495 000.”

  Good news if the majority of one’s homes are worth around $420K!
  

• 78 Greg Atkinson // Aug 17, 2010 at 1:32 pm

  Well another analyst has made another very bearish call regarding the housing market as reported today in The Australian.

  According to the article: Local property investors have become “Ponzi borrowers” in a market 40 per cent overvalued, according to a Morgan Stanley strategist.

  See: http://www.theaustralian.com.au/business/property/morgan-stanley-analyst-bearish-on-housing-market/story-e6frg9gx-1225906316683

  Sounds like a big call to me!

• 79 Ned S // Aug 17, 2010 at 3:17 pm

  Wouldn’t sound like Morgan Stanley is advising its clients to fund the Aussie banks then. Wonder what it is advising them to invest in.

• 80 Biker // Aug 17, 2010 at 4:10 pm

  Never heard the term ‘ponzi’ applied to Oz housing before.
  That must be a first.

  Same, too, with the ’40% overvalued’ call. Quite original!~

  But, coming from a US-based source, I guess they have to be right, right?!~ D)

• 81 Greg Atkinson // Aug 17, 2010 at 5:23 pm

  Biker -- the analyst who made the comments works for Morgan Stanley Australia and is Australian.

• 82 Biker // Aug 17, 2010 at 6:04 pm

  Oh, I get it. Sorry.

  It’s like there’s no connection between DR(US) and DRA… .

• 83 Greg Atkinson // Aug 17, 2010 at 6:21 pm

  To be fair I would not equate Morgan Stanley with DR. However the guy who made the call has been predicting house prices would fall for a couple of years so I guess he is a patient fellow.

  I see the property bubble theme is getting quite a bit of attention in the mainstream media lately..must be an election coming

• 84 Ned S // Aug 17, 2010 at 7:03 pm

  He’s certainly not sticking his neck out: “Mr Minack said the most plausible trigger for a correction in the Australian housing market — broad-based jobs losses — doesn’t appear likely in the near term. This means big price declines in the near term “seems low”.”

  And: “The real return on residential property over the next decade is likely to be negative, in my view.”

  Wonder if he’s a stagflationist.

  Some headlines DO make me laugh. I thought this was a classic: “Secular Bears tend to be long events” :

  http://pragcap.com/secular-bears-tend-to-be-long-events

• 85 Ned S // Aug 17, 2010 at 7:23 pm

  “the property bubble theme is getting quite a bit of attention in the mainstream media lately..must be an election coming” -- Actually Greg, it doesn’t seem to be a topic the pollies want to touch with a barge pole!

• 86 Biker // Aug 17, 2010 at 7:56 pm

  “…it doesn’t seem to be a topic the pollies want to touch with a barge pole!”

  And what does THAT tell us, Ned?!~

  I’d be worried by Greg’s attitude to Oz property, but for the fact that he _always_ balances the number of ‘negative’ links with ‘positive’ links about property.

• 87 Ned S // Aug 17, 2010 at 9:20 pm

  “And what does THAT tell us, Ned?” -- My suspicion would have to be that they don’t want to come out and say that they will always support house prices Biker. Because a) it will piss off the small percentage of the population who want to see them collapse and b) make a few others inclined to load up on risk that the government would definitely rather that they didn’t.

  On another issue, if (as we can probably quite reasonably hope -- except in an out and out deflationary global crash) any “bubble” slowly deflates (with wages rising and rents also rising to “catch up”) then real returns can be expected to improve -- And for me, that’s actually more important than real values -- And I imagine that anyone who can live on the real returns he’s getting now may well see it the same?

  I see the megabears going to great lengths and doing all sorts of calcs to explain why housing is such a lousy investment -- And by and large don’t care because they look at the whole exercise WAY different to me.

  Puts me in mind of an American blogger’s comment re offers he’d had to purchase his investment property -- Not interested -- What would he do with the cash? Put it in stocks where he could lose it -- No thanks. Put it cash where he’d get even less return -- No thanks. And that from a bloke who has presumably been on the warm end of a property correction.

• 88 Biker // Aug 18, 2010 at 10:44 am

  I see housing got a mention this morning, Ned:

  Joe: No bubble.

  Wayne: No bubble.

  Bet on: No change.

  You make a good point: What else would you do with the cash?

  We’re going through that very scenario, now… with our Key Questions exercise. We _may_ be better off keeping a half dozen highly productive properties… selling the rest… and mixing cash (no tax on bank interest to $50K) and Super (no tax at all).

  This plan would _not_ work if we were both working… or one of us was working… so it may have to wait until June 30th 2011.

• 89 Greg Atkinson // Aug 18, 2010 at 10:57 pm

  I don’t think I would rely on Joe or Wayne to spot a bubble for me

  I personally don’t see housing in Oz as being in a bubble, but like I have been saying for a while I reckon it will come off the boil.

  But even though housing finance is down I still haven’t read anything that would suggest prices nationwide are falling.

  Let’s face it, people who have predicting a housing crash in Oz since 2007 have egg all over their face.

• 90 Ned S // Aug 24, 2010 at 3:33 pm

  “people who have predicting a housing crash in Oz since 2007 have egg all over their face” -- You can call me an egghead then! (Although ‘correction’ rather than ‘crash’ has been my feeling)

  Matusik isn’t sounding especially positive today:

  http://www.couriermail.com.au/money/investors-disappointed-over-quick-housing-gains/story-e6freqoo-1225909165963

• 91 Biker // Aug 24, 2010 at 5:29 pm

  And Minack is doing a Keen: OK, I was wrong, but I wasn’t really.
  You-just-wait:

  http://news.domain.com.au/domain/real-estate-news/new-risks-threaten-house-price-bubble-20100822-13auc.html?posted=sucessful#makeComment

  To be fair, WA has taken a light hit: 2.5% in the capital, 6% elsewhere. As someone has pointed out, that’s a bad _day_ on the stock market!~

  I put our falls down to the mining tax debacle… .

• 92 Biker // Aug 25, 2010 at 4:15 pm

  Ned, you may want to register for this Webinar.
  It explores some fairly radical approaches to rentals. We’re already using some of the strategies ourselves, so we know it’s worthwhile.

  Think it’s entirely free:

  Webinar Session 1: NSW, VIC, QLD (AEST) 7:30pm or SA & NT (ACST) 7:00pm

  https://www2.gotomeeting.com/register/427922795

• 93 Ned S // Sep 14, 2010 at 3:16 pm

  31 and 52 m2 apartments to help affordability apparently:

  http://www.couriermail.com.au/property/small-units-now-rich-pickings-as-downsized-homes-gain-in-popularity/story-e6frequ6-1225917591408

  Not too sure about the prediction that in the future we’ll see shared TV rooms and suchlike though?

• 94 Biker // Sep 14, 2010 at 8:31 pm

  Interesting link. Definitely not happening here, yet. Our 3BR, 2BR, DG experiment hasn’t been our best initiative. At $335 pw, it’s paying itself off, but there’s no $urplu$… . We should have left the plan as a 4BR… and picked up an extra $25 pw.

  That Webinar was such a waste of time, BTW, Ned. Incredibly basic… an online kindergarten of realty investment.

• 95 Biker // Sep 15, 2010 at 9:16 am

  Brisbane units top rental list, Ned:

  http://www.watoday.com.au/wa-news/perths-best-and-worst-unit-rental-suburbs-20100914-15a6h.html

• 96 Ned S // Sep 19, 2010 at 4:47 pm

  The market is severely challenged over this way at the moment Biker. Both rentals and sales. Keep an eye on Sydney and Melbourne too though I guess. If they look like getting too quiet then some stimulus could be forthcoming.

• 97 Biker // Sep 19, 2010 at 7:35 pm

  A mate of mine has been house-minding in Brisbane for the last few weeks, Ned. He’s now heading towards Gladstone. It’s his first trip to QLD and he’s quite impressed.

  I guess your unemployment rate is the issue at present(?) We are looking at falling below 4% unemployment, which some contend may be close to full employment, if you factor in the number who don’t particularly want to work.

  Mining tax uncertainties must be affecting both our states… and SA’s recent moves complicate things. WA is humming at present, despite that. Restaurants and cafes are full and there are long queues at all the retailers. And every (other) b*stard is driving a new car!!

  If this is a recession, bring on a depression! You only have to look at Australia’s tourist imbalance this year. More of _us_ are off on overseas holidays than those visiting from abroad.

• 98 Ned S // Sep 19, 2010 at 8:59 pm

  Was talking to my property mgt agent recently Biker. One comment she made that I found very interesting was that she has a bunch of 1 BR units on her books pulling about $250 per week in rent. And running as high as $300. While my 3 BR brick place and 4 BR timber place are each pulling a touch under $350 per week. Money is just tight here maybe?

• 99 Biker // Sep 20, 2010 at 8:52 am

  “Money is just tight here maybe…”

  Hard to say, Ned. Single bedroom units are pulling the same figures here: $250 -- $300pw.

  Admittedly, only two of ours are getting under $360 per week, with $450pw our top rent. But over half our rentals are less than five years old and very well appointed.

  I’m a little surprised rents aren’t higher. We see very silly prices advertised: $500 -- $650pw, but we don’t know if owners are getting those rents. We’re just happy to have full houses… and great tenants.

• 100 Greg Atkinson // Sep 27, 2010 at 8:41 am

  Well we have yet another view of the Australian housing market this time by the chief economist at Goldman Sachs.

  According to an article in the SMH today: It’s not a bubble, but there’s other trouble brewing home prices are overvalued buy up to 35%.

  It was interesting to read in this article that the ABS does not take into account rural house or apartment prices into it’s statistics. I wonder what % of the market this excludes and is it significant?

• 101 Senator13 // Sep 27, 2010 at 9:23 am

  I’ve given up listening to these people. There is always a few boom or crash stories each week.

  Even if there is a 35% drop. By the time it comes around the market would have risen by that much already.

  Excluding apartments is a pretty dodgy way of doing it. Especially since apartments are becoming more and more apart of the mainstream. In the cities these days I doubt you would get an accurate picture of things by excluding apartments.

• 102 Greg Atkinson // Sep 27, 2010 at 9:31 am

  Senator, sorry I should have written regional property and regional unit prices. City apartment prices are included.

• 103 Biker Pete // Sep 29, 2010 at 4:32 pm

  Reduction of building in WA means that the expected boom of 2011-2012 could mean an extreme shortage of dwellings.

  We expect this may mean:

  * Likely shortage of rental accommodation, as in 2007 -- 2008;

  * Any increased costs (interest, etc) _will_ be passed on to
  tenants.

  Next year is the first we may see BBs downsizing, if reports about lack of retirement preparation are true. Friends who have already sold, probably to pre-empt a flood of $1mil+ homes on the market, are getting top dollar… up to half-a-mil over mid-to-late 2009 prices.

  There are no bargains at all right now. Developers are releasing lots at boom-level prices, probably in anticipation of boom times ahead. At the same time, it’s a s-l-o-w market at present. No-one is building… !

  Will QLD experience a Kiwi-led recovery, Ned? Interesting news item recently to hand indicates you’re the main recipients.
  Our two latest tenant families are ex-NZ. Not short of a quid, either!~

• 104 Ned S // Nov 1, 2010 at 6:15 pm

  The KHR contains some stuff in Box 6.1 on Housing Affordability at the bottom of this link:

  http://taxreview.treasury.gov.au/content/downloads/final_report_part_1/09_AFTS_final_report_chapter_06.pdfexternal link

  That last paragraph is particularly interesting:

  “While they may promote housing affordability, proposals that increase housing supply may reduce existing home values and change the shape of Australian cities in ways that many existing residents do not desire. This suggests a serious community dialogue is needed on the distribution and quality of housing across Australia. As a first step, the Council of Australian Governments should review zoning, planning and development approval policies and infrastructure charges to ensure they do not unnecessarily reduce housing supply.”

  Sounds like he is saying we have housing affordability issues and could fix them but need to have a good long chat about whether we really want to.

• 105 Greg Atkinson // Nov 2, 2010 at 8:40 am

  Ned sounds like we need to lock some people in a room and not let them out until they have a plan.

  I recall a while back reading about house prices in Alice Springs. Would you believe that prices had risen steeply there mainly due the lack of land available for housing?!? I reckon that says a lot about the problem across the country.

• 106 Ned S // Nov 2, 2010 at 12:45 pm

  Biker made the point elsewhere that the use of the word ‘unnecessarily’ in the phrase ‘unnecessarily reduce housing supply’ seemed pretty telling to him Greg.

  The powers that be are pretty much taking the line that we don’t have a bubble because we have a shortage of housing. Namely it’s a simple supply and demand thing. Of course that would get interesting if they are wrong. And especially so if in being wrong they actually encourage the industry to overbuild.

  Right now in Brisbane we no longer seem to have a shortage. Plenty of stock on the market in fact. And the Gold Coast is way oversupplied I gather.

• 107 Greg Atkinson // Feb 9, 2011 at 1:48 pm

  The problem I have with the demand and supply argument about housing is that the concept is being over simplified to the point where that many people seem to believe a shortage of houses will automatically lead to higher prices.

  For house prices to keep going higher people need to keep wanting to buy a house and also have the means to pay for it. (or borrow for it)

  So for example if wage growth in Australia slowed, then perhaps the demand for public housing will grow, but property prices in general could move sideways for some years.

  Yes people still need a place to live, but this could simply lead to a trend towards one bedroon studio flats while prices for typical suburban homes fell. Stranger things have happened.

• 108 Biker // Apr 28, 2011 at 7:15 pm

  Realise this is an old(er) post, but I’m observing a little of that trend you mentioned above, here in Singapore, Greg. Due to the relatively high cost of accommodation (our eldest is paying around the same for a two BR apartment, as we charge for 4BR, cinema, two loungerooms, two-bathroom, double garage rental by the beach) most of the young are just living at home with M & D until marriage…!~ The family unit appears to be much stronger, culturally… and there seems little pressure to leave the domicile; either from the kids OR the parents… .

  (That may be a case of economic necessity, rather than choice.)

  Units are, of course, the main accommodation. Our son’s mate lives in a higher (more elevated, more luxurious) unit, within 200m of his own. It would be worth well over AU one mil… and the rent would be A$50K+ pa… if his company wasn’t subsidising it around $40K pa.

  Shortage of land is, of course, the issue here; but we may be heading in that direction if inner-city living is the preferred option… and if fuel costs continue to rise… .

• 109 Greg Atkinson // May 23, 2011 at 1:02 pm

  Here is an article that people might find interesting: Homes are not ‘investments’

• 110 Ned S // May 23, 2011 at 4:47 pm

  Quoting from the article Greg:

  “Ask any economist. Buying a house or unit that someone else built is not an investment.

  For economists, investment requires sacrifices of consumption today to improve the capacity of the economy in the future. Machinery, new buildings, and university degrees: these are investments.

  Australians can swap title deeds at whatever velocity and price they like without bolstering the country’s economic capacity one jot.”

  Seems to me the same argument applies to ‘swapping’ the title of existing shares Greg? (As opposed to buying IPOs maybe???)

  None of which invalidates the argument -- But it puts it in the broader context of what most people (as opposed to “any economist”) think of as investments perhaps?

• 111 Ned S // May 23, 2011 at 5:39 pm

  That was a nasty slide in the market today Greg. Don’t know if it happened on volume or not? But either way the stuff that is up around 1.8% makes me twitchy.

• 112 Greg Atkinson // May 23, 2011 at 6:13 pm

  It’s probably good to be twitchy Ned, I have been that way for months. I keep looking at the numbers out of Europe/US and don’t see a lot to get excited about. The Chinese economy also looks to be slowing so that could make things interesting to say the least.

  As for houses and shares I see them as very different investment types. When you buy shares in a listed company you are in effect becoming a part owner in an entity which can (hopefully) create value and produce something which is a bit different to owning a house. (Although the lines do get a bit blurred once you start thinking about REIT’s, ETF’s etc.)

  Personally I think politicans and policy makers have relied on housing to keep the GDP numbers looking good for far too long.

• 113 Ned S // May 23, 2011 at 7:52 pm

  “The Chinese economy also looks to be slowing so that could make things interesting to say the least.” -- I guess we come back to the story that I (and I think you?) find it a bit difficult to imagine that China, India and for that matter, the rest of developing Asia are going to be denied development Greg? Though short and even medium term that doesn’t prevent severe corrections.

  “As for houses and shares I see them as very different investment types” -- The basic distinction is probably still wasted on me? (Though I do accept one can earn foreign income from stocks/businesses that by and large one can’t from housing. And that if one jags a ‘little bobby dazzler’ of a stock one can do WAY better than one might in housing. Though tend to offest that against the unliklihood that one might find the value of a house reduced to the extent that can happen with shares.)

  “Personally I think politicans and policy makers have relied on housing to keep the GDP numbers looking good for far too long” -- It’s one where people can be encouraged to go into more debt. Which helps GDP while it lasts. As to stocks for comparison purposes? Suspect that while the average punter doesn’t play on lots of debt and/or leverage re stocks, that there are others that do? And that some economies have been making a bit of a welter of that as well?

  Never given any thought to what an ‘ideal’ economy might look like -- How much foreign trade one might want; How much domestic consumption and such like? Though suspect it depends on where nations are in relation to their overall development and just what natural resorces and other production potential they might have? Just as the most general of comments along those lines I recall reading once that Russia whizzed through the Great Depression unharmed -- With the reason being given that it had effectively closed its borders to international trade well before the thing hit. Though they back then, as like now, weren’t short for any natural resources they might require either I’d guess?

• 114 Anon // May 24, 2011 at 12:37 am

  “But either way the stuff that is up around 1.8% makes me twitchy.”

  Can’t see a bottom yet, need more price action data.
  Perhaps 4,400 maybe bottom. June Tax selloff comming, so no need to rush.
  Need to see more people calling the end of the bull market, GFC 2 etc etc. Know what to look for with a major LT reversal and this doesn’t look like it. Could be wrong.

  This drivel is not advice. Seek a licensed financial advisor. Runaway from the incompetent ones. Investment ideas may change as things change, donot rely on them.

• 115 Ned S // May 24, 2011 at 2:27 am

  I don’t and never have traded or invested in the markets Anon -- Have just started taking a general interest in them over the last three years or so.

  Most recent stuff I’ve been reading that I’d give credance to goes along the lines of look for an ASX bottom by/at 4,500. (Which is similar enough to your 4,400 call.)

  If it punches through those levels we are looking at a turnaround 5% either way of 4,000 perhaps? Though can’t blame anyone else for that call. It’s just my own busted arsed guess.

• 116 Greg Atkinson // May 24, 2011 at 6:44 am

  What are Australian home prices likely to do if the stock market slumps further?

  My call…I see nothing but weakness ahead for house prices this year and next year.

• 117 Anon // May 24, 2011 at 10:37 am

  “If it punches through those levels we are looking at a turnaround 5% either way of 4,000 perhaps? Though can’t blame anyone else for that call. It’s just my own busted arsed guess.”

  Gotta have a guess Ned. Gotta start somewhere I’ve only been going since 2008, so got lots to understand myself.
  I guess we’ll know if 4,400-4,500 doesn’t hold and the charts show no sign of bottoming at that time. I’m seeing alot of retail investors wanting to open short selling accounts, which doesn’t provide me with alot of confidence re: long term reversal. Granted the sheep get it right for alot of the trend, but they usually get it wrong at the major turning points. My guess is they recognise the effects of the GFC and are now swinging into overly defensive, instead of just reading the markets as we go.

  Yeah Greg I don’t think they’ll be a rush of people into housing when equities go under. House prices will slump slowly next couple of years, agreed. Alot of people realise its a bubble now and returns are weakening.
  Probably a rush into gold and silver? Don’t see them running into gov bonds, the street is in love with the inflation, money printing story which maybe ominous for gold and silver short term. XAO has value; maybe the last refuge, given gold and silver have already had massive rallies.

  This drivel should not be taken as financial advice. Seek to obtain professional
  advice before proceeding with any financial decision.

• 118 Ned S // May 24, 2011 at 12:53 pm

  Houses -- I’m a bit north of Brisbane proper. We’ve had a weak market here for a year or more now. Truth be told I’m a bit surprised asking prices have held up as well as they have. Though there aren’t many sales and there’s plenty of stock -- A side neighbour whose property fronts a different street to mine that I very rarely ever drive up said to me just yesterday there are four houses for sale in that street and asked what I reckoned was going on? I suggested that as it’s not an especially affluent area where prices never went above maybe $320K, that they are most likely a mix of first home buyers who got their sums wrong and investors trying to get out because they aren’t seeing potential for growth anytime soon.

  And while I say that asking prices have held up, from what I can see there is also the occasional serious vendor out there who is asking 10 and even 15% less than they might have done maybe 18 months ago. Latest report was that the median for Brissy is down about 6% over the last year or somesuch?

• 119 Anon // May 24, 2011 at 2:00 pm

  Ned, lucky your gun is fully loaded and you’re waiting for the bargains Be fortunes to made longterm when the housing market implodes, but its generally better to be late in a housing crash than too early. This one won’t recover fast so plenty of time to get in; patience will be rewarded. Look at American real estate, been skidding at the lows for the past 3 years.

  From my limited knowledge, the markets that went parabolic will likely correct 70-80% and the ones that were abit more sensible maybe 30-50%. They say prices usually revert back to levels at the start of the bubble. You could argue that was whatever the price was in 2002-2003. It will be a bloodbath. And we’ve been harping on about it for years!

  “And while I say that asking prices have held up, from what I can see there is also the occasional serious vendor out there who is asking 10 and even 15% less than they might have done maybe 18 months ago.”

  Geez thats dangerous. Warning signs here. Rush to the exits when people stop being in denial about what is happening. I feel sorry and angry for the people who are stuck at the top, misled by all the property sprukers, saying it was safe to buy at any price if you live in it etc.

  This drivel should not be taken as financial advice. Seek to obtain professional
  advice before proceeding with any financial decision.

• 120 Biker // May 24, 2011 at 5:17 pm

  Anon: “It will be a bloodbath. And we’ve been harping on about it for years!”

  A bloodbath? You’re a little optimistic, surely, Anon.
  It will be CARNAGE! Vendors will be _on their knees,_
  clawing for our compa$$ion… throwing themselves
  at anyone kind enough to accept their homes.

  I thought most bears had ceased using the US example to talk Oz property down. Aussies will hold through any correction.
  Our banks are comparatively sound, unemployment is low.
  Yes, there will be some bargains, as Ned says.
  Bring ‘em on… .

• 121 Anon // May 24, 2011 at 6:54 pm

  Biker haha. The US example, i know there are real estate marketS, but im sure whatever differences occur at the time, i’ll spot em and adjust accordingly. Nothing correlates perfectly, be a fool to think that.

  This drivel should not be taken as financial advice. Seek to obtain professional
  advice before proceeding with any financial decision.

• 122 Biker // May 24, 2011 at 9:15 pm

  Have reread your comment No. 128 several times, but I can’t make any sense of it, sorry, Anon. What do you mean?

  My comments should not be taken seriously. I’m new to this property business. I’ve just been extremely lucky since ’76.
  Please ask someone more experienced if you need advice about land purchase, buying, building, writing options, or leasing.

• 123 Anon // May 24, 2011 at 9:41 pm

  Should have quoted which part of your reply i was refering to. My english needs work.

• 124 Anon // May 24, 2011 at 9:59 pm

  No disrespect to your experience Biker. You have been successful, and clearly are Nouveau riche.

  This drivel should not be taken as financial advice. Seek to obtain professional
  advice before proceeding with any financial decision.

• 125 Biker // May 24, 2011 at 10:00 pm

  OK, let’s look at your comment, Anon:

  Anon: “The US example, i know there are real estate marketS…”

  Comments I’ve made about marketS relate to differences between:

  Australian states

  Coastal vs Inland

  City vs Regional vs Rural

  Suburbs vs CBD

  High Employment vs Low Employment towns, suburbs

  Hillside vs Plateau

  Etc vs Etc

  Anon: “…but im sure whatever differences occur at the time, i’ll spot em and adjust accordingly.”

  What ARE these differences and HOW will you spot them?

  Anon: “Nothing correlates perfectly, be a fool to think that.”

  WTF does that mean, seriously??!!~

  My comments should not be analysed. I’m new to this property business. I’ve just been extremely lucky since ’76. Please ask someone more experienced if you need any advice about land purchase, buying, building, writing options, or leasing.
  I only comment on stuff I know absolutely _nothing_ about… .

• 126 Greg Atkinson // May 24, 2011 at 10:13 pm

  At the end of the day if sellers signifiantly outnumber buyers then prices in any market are likely to fall. Over the last 20 years or so the Australian residential property market has had a good run..maybe it will continue.

  But what people often overlook is that the commercial property market has been struggling. How can this be if the population is rising, land in cities is scarce and urban centres are expanding?

  Surely people need places to shop, companies need office space and so commercial property prices should be doing okay?

  Or maybe the first home buyers grant and the notion that homes are a safe investment have keep the residential market pushing higher when it should have undergone a similar correction as the commercial property market?

  I am not saying this is certainly the case. I am just tossing the thought out there for comment.

• 127 Anon // May 24, 2011 at 10:20 pm

  C’mon Biker, is that all ya got. I must be doing something right if i;m getting constantly criticized . Give me more criticism, it makes me a better person as I’ll learn from it. I love it, i thrive upon it.

  This drivel should not be taken as financial advice. Seek to obtain professional
  advice before proceeding with any financial decision.

• 128 Biker // May 24, 2011 at 10:46 pm

  Greg: “…the commercial property market has been struggling. How can this be if the population is rising, land in cities is scarce and urban centres are expanding? Surely people need places to shop, companies need office space and so commercial property prices should be doing okay?”

  I was always intrigued by the Tech Wreck of 2003, figuring it was evidence of progress-before-its-time. What we’re starting to see now is online buying like we’ve NEVER imagined.

  In the past month, for example, I’ve purchased over twenty items online. That isn’t including a dozen airline flights and numerous hotel reservations in four countries. Retailers are complaining that families actually try on clothing, scribbling furiously as they do so, in order to buy online with exact shoe, jeans and jacket sizes.

  The place I’d LEAST like to be right now is Australian retail;
  particularly while our buck is so buoyant… .

  I’m not really sure what all that has to do with Aussie housing. (Un)employment maybe?

  Perhaps I’m a little slow at the moment. Didn’t understand your comments about residential housing at all, Greg… .

  *************************************************************

  Please don’t take advice from the nouveau riche. We’re really new to this. Seek assistance from some keen professeur d’economie, s’il vous plait.

• 129 Biker // May 24, 2011 at 10:55 pm

  We’re ‘nouveau confortable’, BTW, Anon.
  It was like a $50 Lotto win. Just ‘appened overnight’.

• 130 Biker // May 24, 2011 at 11:07 pm

  OK… I’ve got it. You meant ‘commercial market’… not ‘residential housing market’… right?

• 131 Greg Atkinson // May 24, 2011 at 11:10 pm

  Biker the commercial property market is a bit broader than shops..it includes office spaces, factories, logistic centres and quite a bit more. If an economy is expanding then generally I would expect the commercial property market to be tracking upwards.

  Of course you can disregard the commercial property market if you assume all the new jobs that need to be created to keep the housing market rising don’t require any extra floorspace somewhere.

• 132 Anon // May 24, 2011 at 11:10 pm

  Anon: “The US example, i know there are real estate marketS…”

  Was talking about US housing market and Australian housing markets not being similar but still using it as a template for our housing crash.

  Anon: “…but im sure whatever differences occur at the time, i’ll spot em and adjust accordingly.”

  What ARE these differences and HOW will you spot them?

  No idea, will know at the time when it happens. Same as equities, expect the unexpected and take quick and decisive action.

  Anon: “Nothing correlates perfectly, be a fool to think that.”

  Talking about the US housing and Aus housing market declines and possible correlation. Main differences, probably in magnitude and duration of the falls.

  At the end of the day Biker, you can have the most exhaustive analysis, but the markets will be the judge. I just want to be kinda right, and not perfectly wrong .
  If we went back awhile, I remember saying Aussie housing would tank slowly then accelerate. I’ve been spot on so far, i think? Alhough noone can be right constantly, and i’m happy to admit mistakes quickly. Meanwhile you were talking about a plateau. Essentially you had recency bias, because it happened in the 90s, which is amazing for someone with 30 years experience

  This drivel should not be taken as financial advice. Seek to obtain professional
  advice before proceeding with any financial decision.

• 133 Biker Pete // May 24, 2011 at 11:40 pm

  Anon: ” I remember saying Aussie housing would tank slowly then accelerate. I’ve been spot on so far, i think?”

  Uhhh, you just referred to a bloodbath, I think?

  My issue is that I really DON’T understand your comments. Your ‘plateau nineties’ comment, for example, makes no sense to me at all.

  I was able to understand Greg’s comment, by rereading until I picked up his error (I think) but you and I are on utterly different wavelengths. You may be on higher ground sticking to safer topics: shares, PMs, bonds, etc.

• 134 Biker Pete // May 24, 2011 at 11:56 pm

  Greg: “…the commercial property market is a bit broader than shops..it includes office spaces, factories, logistic centres and quite a bit more. If an economy is expanding then generally I would expect the commercial property market to be tracking upwards…”

  Losses we’re seeing here are of three kinds, Greg:

  Outsourcing of commercial / construction offshore. State Gov’t either powerless to prevent it; or possibly actively encouraging it. I’ve heard this has affected one factory in Kwinana;

  Retail: Bookstores, electrical goods, jewellers, music, electronics, toys, clothing. Again, the market dictates what happens, given lack of intervention. Really only know of three examples of closures, though…

  Brain Drain: Attracted by higher recompense, we’re losing bright people at a rate-of-knots. Both my sons now work overseas, paid infinitely more than the market wants to pay them here.

  But we haven’t really _seen_ too much commercial damage in WA. Perhaps I’m wearing rosy glasses, but it all looks pretty good to me! I don’t personally KNOW anyone, anywhere, who has lost a job or lost a house.
  Everyone has a new car, more than one house, an annual overseas holiday and all the trimmings. If this is the-Great-Correction-we-have-to-have, let’s have more of this Hell!~

• 135 Anon // May 25, 2011 at 12:00 am

  Anyways, this is getting immature. Lets move on. I’m sure Greg does not appreciate us quibbling.

• 136 Biker // May 25, 2011 at 12:22 am

  I have no recency bias, as far as I’m aware.

  I bought property from ’71 on, then WE did, _seriously_ from ’76.
  By 1990, we were ‘nouveau confortable’. Where’s the ‘recency’ in the wealth we accumulated in less than 15 years? Where’s the ‘nouveau’? We bought and or sold (at least) another 20 or so properties from 1990 on.

  Where do you get this gem: “…Your recency bias stems from your real estate gains _over the last few years_ ” ?
  We made FAR more money ’87-’07 than we’ve made:
  “…in the last few years…”

  You can guess all you like about imploding bloodbaths, but it’s probably a mistake to guess about poor old bastards like me who are “stuck at the top”…. when we’re not simultaneously ‘running for the exits…”

• 137 Biker // May 25, 2011 at 12:29 am

  Anon: “Anyways, this is getting immature. Lets move on.”

  Agreed. The reason I contribute so little these daze is that I have so little of _informed_ relevance to contribute.

  Better to say nothing and be thought a fool than to open one’s mouth and remove all doubt…

• 138 Anon // May 25, 2011 at 1:06 am

  Hooray its over
  But seriously, you have done well in life, and I personally have very little money. So my opinion is probably worthless .

  This drivel should not be taken as financial advice. Seek to obtain professional
  advice before proceeding with any financial decision.

• 139 Greg Atkinson // May 25, 2011 at 7:25 am

  I don’t think disclosing personal information really adds much to the debate since none of this can be verified. It also starts a chain of claim and counter claim which is not particulary useful. (and is not that interesting for other readers to follow)

• 140 Greg Atkinson // May 25, 2011 at 11:44 am

  Now swinging back to the topic at hand I found this article from the SMH very interesting: How stagnant house prices are sapping spending

  Of particular interest was this section:

  Retailers can blame the poor housing market for lacklustre consumer spending and should expect the weakness to continue…

  Citigroup…found that changes in personal wealth, together with income and interest rates, play a big role in spending…

  The largest determinant of household consumption is income… But changes in the value of household assets are a leading determinant too. Houses comprise about 60% of household assets…

  A 10% increase in wealth translates to 1.7% growth in final consumption expenditure in the following quarter.

  This means that when house prices go up, people spend more.

  The problem for retailers has been that most peoples largest asset is their home, and property values have been falling, or have been at best flat in recent months

  Read more: http://www.smh.com.au/business/how-stagnant-house-prices-are-sapping-spending-20110524-1f1uf.html#ixzz1NKPuVuHr

• 141 Biker // May 25, 2011 at 12:45 pm

  Well, as you know, Greg, there are market

  Since you have editorial powerS, you may wish to correct your
  comment, above:

  “Or maybe the first home buyers grant and the notion that homes are a safe investment have keep the residential market pushing higher when it should have undergone a similar correction as the residential housing market?”

  No longer confuses me, but it may underwhelm other tourists…

• 142 Biker // May 25, 2011 at 7:03 pm

  Yez, Ned… the more things change, the more they stay the same.
  Getting ready for three months plus in US Alaska, the US itself, Canada and Mexico.

  Have two pretty wonderful fishing trips planned during this trip:

  * Floatplane trip in Alaska, for Silver Salmon
  http://www.youtube.com/watch?v=Ya-ncRkITDw
  Canadians call ‘em Coho…

  * Gamefishing off Mazatlan, Mexico.

  Twenty-two city trip, all-in-all.

  Hard life, but somebody has to do it… .

• 143 Ned S // May 25, 2011 at 8:06 pm

  “Hard life, but somebody has to do it…”

  One of my neighbours is a boatie -- Got his own little yacht (30 ft maybe???) that he takes out Sundays in the season. With the assistance of various crew.

  He’s off to the Greek Isles for 2 weeks later this year if he can get 2 more players. (Already has 3 plus himself.) Not in his yacht of course -- Hire one (plus a local skipper) over there.

  57 yo, single, no kids, a gov cleaner who has just signed up to drop back to a 4 day work week -- Good for him -- Can’t take it with ya hey!

• 144 Ned S // May 25, 2011 at 9:00 pm

  I’m a lot more negative on house prices than Biker I suspect Anon?

  But not negative to the point where I assume it’ll be a “bloodbath”.

  Though at the end of the day (allowing for the possibility the global economy [including Asia which is the bit that is important to Oz 'could' roll over]) I still end up coming back to the thought I’m happiest being in Oz housing (and cash) should it happen?

• 145 Senator13 // May 25, 2011 at 9:04 pm

  Some journalists would report a housing “bloodbath” even if prices drop 2 or 3 per cent in some areas… Even when the ASX can drop that in a day!

• 146 Anon // May 25, 2011 at 10:05 pm

  Just to clarify, I meant bloodbath at the end of it. I’ve said numerous times that the housing implosion would occur around 2012-2015, and that it would start off slowly. Its hard to pick an exact date, so its broad. Check post 126 at the end. And posts last year. Bubbles deflate slowly initially, with the first phase being denial.

  This drivel should not be taken as financial advice. Seek to obtain professional
  advice before proceeding with any financial decision.

• 147 Anon // May 25, 2011 at 10:08 pm

  From July 2010 post 52:

  Anon // Jul 2, 2010 at 5:31 am

  So what bets are we making re: house prices?
  I think maybe 20-25% falls in median prices over the next several years…I feel the recovery will be much slower than people currently anticipate given most think a repeat of the 2008 situation is likely – which inturn makes this more unlikely given rear view mirror bias.

  Bubbles usually come off slowly and then pick up pace as reality sets back in. So I wouldn’t be surprised with a small fall first and then it increases over subsequent years…perhaps a final capitulation in 2012?

  So theres usually a time lag between house price falls and loan losses at banks. And the brunt of the falls may not happen until another economic downturn occurs (i.e. 2011-2012). Reason being people are more likely to lose their jobs in economic downturns and combined with negative equity and/or inability to service loans they become forced sellers and the downwards dominoes effect occurs re: price falls. Then negative prices feeds fears of more price falls, supply drops. Rents dont increase as sellers who are unable to sell their properties are forced to rent them out.

  So I guess, i’m abit worried that Biker is seeing a slowing in offers/interest so quickly. And a thankyou to Biker for letting us know whats happening on the ground.
  Still not shorting Australian housing as I feel its too early, but am watching on with interest. The wolf packs are forming

  *All posts by this poster is not financial advice or reccomendations to do something.

• 148 Anon // May 25, 2011 at 10:15 pm

  Its important to note that that post was written whilst house prices were still rising, and people were predicting another 2008 type “quick fall and recovery.”
  But prediction is difficult, and can obviously be wrong. But you gotta start somewhere.

  Also Biker called for falls in some markets around the sametime. So I was incorrect with some of my arguments earlier. Hard to remember what was said last year. Happy to be wrong.

  *All posts by this poster is not financial advice or reccomendations to do something.

• 149 Anon // May 25, 2011 at 10:40 pm

  “I’m a lot more negative on house prices than Biker I suspect Anon?”

  Maybe. I know when housing implodes I will go all in and leverage to the hilt on the short side. I don’t do that unless im sure.
  But that could be many years away. And thankgod because short selling is so stressful and not easy to do.

  Also theres a possibility we don’t fall as hard. But I don’t believe in soft landings when we’ve risen so much and so many other international real estate markets have imploded.

  *All posts by this poster is not financial advice or reccomendations to do something.

• 150 Ned S // May 25, 2011 at 10:44 pm

  “Happy to be be wrong” -- Don’t sweat it Anon -- The good news is that to get to be really wrong lots of times (and I’m not saying you are), most of us have just got to live a reasonably long while … With that beating the alternative as they say?

• 151 Anon // May 25, 2011 at 10:58 pm

  Ned for sure. Being wrong is part of life. I think alot of what I have said in the past has been correct. I called oil at 80 to 100+, gold 2010, silver 2010 breakout. The recent silver bottom (although its probably short lived). The AUD.USD bottom at 80s?, the XAO DJIA bottom in 2010, the 2009 bottom. But I was wrong with the euro and gbp, calling bottoms too early. The insurance disasters and how we were overdue for catastrophies.
  The top of the housing market even though I have no experience in real estate lol
  But theres lots wrong obviously. But I try and correct myself quickly when its bad. Small problems usually get bigger if left alone.
  Oh and term deposits have fallen in yield alittle (depending on which bank) since i mentioned cash yields were great awhile back, and the banks had priced their term deposits incorrectly (at least temporarily)
  Oh and I predicted the US markets would outperform the Aussie markets in late 2009. So am predicting the opposite now and the XAO to outperform the DJIA.

  *All posts by this poster is not financial advice or reccomendations to do something.

• 152 Biker // May 26, 2011 at 10:46 am

  Anon: “I know when housing implodes I will go all in and leverage to the hilt on the short side.”

  Having advised us that you “…personally have very little money…” I’m afraid it’s difficult to see you as an Assyrian, Anon!:

  “The wolf packs are forming ”

  I don’t see ‘leveraging to the hilt’ as a sound strategy.
  Nor will any sensible Aussie bank permit you to do it.

  Our strategy has been to find a bargain, buy it, pay it off rapidly (or get it positively geared rapidly); then buy another using the _income-generation_ of properties owned. Only when we held numerous properties did we start buying up to five in any one year.

  Even now, our bank manager is unable to understand how we have accumulated what we have. She is from a different generation, so she assumes there was some ‘magic’ involved.
  There wasn’t. It was a lot of bloody hard work…
  and we enjoyed it.

  Enough personal history. Good luck, Anon.

• 153 Greg Atkinson // May 27, 2011 at 9:19 am

  If the RBA raises interest rates a couple of more times then I think we can count on home prices staying soft or even sliding back some more.

  Although the property analysts don’t like to admit it, it is near on impossible to predict where the real estate market will go simply because they are too many variable involved.

  I think the mining boom has done all it can to give home prices a nudge upwards and there appears to me to be a lot of optimism reflected in residential property market.

  Anyway by the end of the year we should be able to see if the trend is upwards, sideways or downwards.

• 154 Biker Pete // May 28, 2011 at 10:41 pm

  Ah, those IFs and WHENs…!

  Anon: ““I know WHEN housing implodes…”
  Maybe IF is a safer bet?

  Greg: “IF the RBA raises interest rates…”
  Maybe rates will fall?~

  Last I heard, the analysts iffed and whenned there’d be no rate rises for a year… .

  Even in a dead flat market, there’s good money to be made in property (and shares*) if you know what you’re doing. Relying on ‘ifs and whens’ is a bit of a non-starter. The improbable implosion of the housing market… and the probable, eventual rise of interest rates… are totally beyond your control.
  Why dwell on these im(probabilities)? What IS within
  your control?

  Have you maximised the factors _within_ your sphere of influence?

  * First to admit my ignorance within this asset class.

• 155 Biker // May 30, 2011 at 9:26 am

  Maybe rates will fall?~

  And, further to that premise:

  http://www.watoday.com.au/business/banks-slash-loan-rates-20110529-1fatn.html

• 156 Greg Atkinson // May 31, 2011 at 9:03 pm

  Well we will just have to see how things play out but it looks like Perth won’t be taking over Sydney for a while as the most expensive real estate market for a while according to this article:

  Perth property on the slide as Sydney steams ahead

  It will be an interesting year.

• 157 Biker // Jun 2, 2011 at 1:01 pm

  Never ever expected Perth to _approach_ either Sydney or Melbourne, in the property stakes, Greg!

  Our main investment suburb had 24% _annual_ growth in value between March 1999 and March 2009… and then fell to 0.6% growth by June 2009.

  Some of those who witnessed that change and bought (including us) then made up to 16.4% annually in just less than two years.

  Modest gains in comparison to those years in which we trebled (or better) our purchase prices, but gains nevertheless.

  Keen is now calling a 70% crash I believe.
  Should be some bargains!~

• 158 Ned S // Jun 2, 2011 at 2:22 pm

  “Keen is now calling a 70% crash I believe.
  Should be some bargains!”

  Did he venture a guess on how much the stock markets might go down Biker?

  Think I might just sit on my cash and buy some BHP shares when they are about $4 each!?!

• 159 Ned S // Jun 2, 2011 at 3:10 pm

  Prof Keen is confident alright:

  “if anything we have even more of a bubble than Japan had, and therefore if bubbles can be compared, and I think they can, then we’re looking at CERTAINLY 40 per cent over 10-15 years and in the short term, the 10-20 per cent fall is quite likely.” (caps mine)

  http://www.finnewsnetwork.com.au/archives/finance_news_network17809.html

  And those are nominal prices he’s talking about if I understand correctly? (With 70% -- based on the Japanese experience getting a mention.)

  Interesting statement here:

  “In terms of my current situation, I’m renting and my partner owns her own place. And, if we actually combine together, then if we had to take out a mortgage, which I would probably avoid, but if we had to, the service and the cost of that mortgage would be less that the cost of the rent I’m paying. So, that’s a sensible personal decision to do it.”

  Wonder if we’ll see him buy back in soon because he ‘has to’; Or for him, ‘it makes sense’???

  Anyway, he’s a deflationist; No question!

• 160 Biker // Jun 2, 2011 at 3:44 pm

  G’day, Ned. Looks like Keen is preparing to announce an acquisition. Wouldn’t the media have a field day with _that_?!~
  (Not that I’d personally ever comment on such a thing!)

  I liked that little aside: “…but if we had to…” !

  Does he mean:

  * if rents continue to climb(?)

  * if his partner is saying “Get over it, Steve! Being
  Australia’s most (in)famous tenant isn’t really a plus!”(?)

  * that her sale + my cash = McMansion… (?)

  “…but if we had to…” ! Curious.

  Have two RTW bikers in our guest chalet right now. Ex-Brits who
  now live on a BC island adjacent one we’ll be staying on in just six weeks. Very clever couple who are continually owner-building. Canadian tax rules are not dissimilar to our own in respect to owner-building. They’ve been riding RTW for 14 months now; over twice as long as any ride we’ve undertaken.
  Missus is starting to rev her engine again… .

• 161 Ned S // Jun 2, 2011 at 4:43 pm

  Yes, the “if we had to” is a damn curious comment alright Biker!

  I think there’ll be quite a few who’ll be interested to hear his reason why they “had to” if he should buy a place before he gets that 40% drop in the next 10-15 years that he regards as a “certainty”. (If bubbles can be compared; Which he believes they can.)

  But hey, maybe he’s head over heels with some little 18 yo student from an old fashioned family whose daddy bought a unit and the prospective pa-in-law is insisting on the good prof being a home owner before he’ll bless the union? That might sort of qualify as “had to” mightn’t it? (‘Specially if daddy’s a licenced shooter!)

  I do NOT envy you blokes all that travel! (Each to their own though of course.)

• 162 Biker // Jun 2, 2011 at 5:13 pm

  Ned: “I do NOT envy you blokes all that travel!”

  Tough life, but someone has to do it, Ned!!~

  Said to my doc (who is a pilot, I might add):
  “I feel exhilarated when I’m biking…”
  She responded: “Well, you’re aerated, anyway!” and then went on to point out that very few of us frequently inhale deeply enough. That rush of 02 provides a lift.

  Keen’s GF doesn’t look all that teenish, Ned. I recall that photo in which neither of them looked all that happy, as he accepted the cheque. The body language was pretty grim. (Apparently the house quickly rose 25% in value after sale.)

  Bottom line: For all his charm and charisma, apparently Keen could not persuade his partner to sell. Nor can he NOW, even though she’s about to LOSE 70%!!~ Love it!~

• 163 Ned S // Jun 2, 2011 at 5:31 pm

  “Tough life, but someone has to do it, Ned!” -- My better half (whom I’m supposed to be working on getting into Oz) was dropping hints a while back about how a trip to NZ might be nice ‘someday’.
  Think if I’m really pushed I’ll send her with my mum. (Mum likes to travel. )
  While the old man is probably the one bloke in the world I know who has almost as little interest in it as me?

  The good prof can be a worry. Read closely, some of his stuff is quite strange.

• 164 Greg Atkinson // Jun 2, 2011 at 8:08 pm

  I don’t understand how Steve Keen has any credibility left. He made a prediction, it was wrong and now he is making excuses while at the same time making further forecasts that are so vague that they make Nostradamus look like Mr. Clarity.

  I sense Keen has been hit with the media bug and now can’t stand being out of the limelight perhaps? He is even referring to the property bubble in Japan now I see. How that has anything to do with the real estate market in Australia is beyond me. I guess when you are an assistant professor any bubble is a good bubble hey?

• 165 Ned S // Jun 2, 2011 at 8:29 pm

  “He is even referring to the property bubble in Japan now I see. How that has anything to do with the real estate market in Australia is beyond me.”

  In fairness to him Greg, he always based his Oz housing predictions on what had happened in Japan as I understand it. Though, like you, I struggle to see huge similarities -- Apart from the obvious one which is the debt. (And with debt seeming to be the biggy for Keen?)

• 166 Plornt // Jun 2, 2011 at 9:38 pm

  Falling house prices for 10-15 years lol? I could believe house prices may not hit their recent highs until 10-15 years, but the Japan example seems improbable given population growth.

  Steve is probably right in terms of a housing price correction/crash, just wrong with magnitude and duration. History doesn’t repeat, but it rhymes.

  All posts by this poster is not financial advice or reccomendations to do something.

• 167 Anon // Jun 2, 2011 at 9:39 pm

  Falling house prices for 10-15 years lol? I could believe house prices may not hit their recent highs until 10-15 years, but the Japan example seems improbable given population growth.

  Steve is probably right in terms of a housing price correction/crash, just wrong with magnitude and duration. History doesn’t repeat, but it rhymes.

  All posts by this poster is not financial advice or reccomendations to do something.

• 168 Ned S // Jun 2, 2011 at 9:39 pm

  He’s a bit blinkered unless at the end of the day debt is the only thing that really counts perhaps ….. ? (And I don’t personally think it is.)

• 169 Anon // Jun 2, 2011 at 10:18 pm

  Not sure Ned. I dont follow Steve.

• 170 Ned S // Jun 2, 2011 at 10:50 pm

  Good move I’d say Anon. I don’t either -- But whenever I do read his stuff, bits of the analysis/opinion can strike me as quite strange. Amongst other things, it’s almost like he allows absolutely no possibility for inflation?

  Hey, he could VERY well know something on that score I don’t? But if he doesn’t, he’s going to come one hell of a bad gutser.

• 171 Biker // Jun 3, 2011 at 6:10 pm

  Up north again, Ned!~

  At the end of the day, Keen can’t convince his _partner_ the market will crash 70%… . She’s holding.

  I suspect the vast majority of Aussies owners will hold through any correction. Rents will rise steadily… and we see no sign whatsoever of interest rate rises.

  Think I mentioned our son has convinced ANZ to cut his rate to 6.8%, with no fees or charges whatsoever?

• 172 Plornt // Jun 3, 2011 at 7:11 pm

  “and we see no sign whatsoever of interest rate rises.”

  If you chart the last 40 years of 10 year Australian treasury bonds its painfully obvious the charts are overdue a massive spike and a very longterm reversal upwards. My targets are 10-15%. We just have to guess the catalyst. Saudi Arabia declaring its oil fields are in decline would probably move rates dramatically. War? Lots of random unpredictable events that we have no control over, but the price action allows us to prepare without knowing the specific catalyst in advance.

  Perhaps higher average rates for the next 20 years than the previous 20 -- based purely on technical observations. Everything has cycles and this one will turn at some stage. You could be right we may see lower rates, before higher rates. But the very longterm move is up.

  All posts by this poster is not financial advice or reccomendations to do something.

• 173 Ned S // Jun 3, 2011 at 8:21 pm

  “At the end of the day, Keen can’t convince his _partner_ the market will crash 70%… . She’s holding” -- If I was just a little bit more cynical Biker, I might be tempted to suspect the good prof sees his GF’s home ownership as his ‘hedge’ against his predictions being 100% accurate???

• 174 Ned S // Jun 4, 2011 at 1:09 pm

  “You could be right we may see lower rates, before higher rates. But the very longterm move is up.”

  I’m simply not sure Plornt/Anon -- Japan has been sitting on very low interest rates for 15 years now. (As an example Steve Keen presumably loves.) :

  http://www.tradingeconomics.com/japan/interest-rate

  And the RBA is currently talking in terms of our interest rates being slightly ABOVE the long term average??? (They take a different view of what long term means to what I do maybe?) :

  http://www.tradingeconomics.com/australia/interest-rate

  Though also bear in mind a general point Greg made once that things can genuinely change so much over time that long term comparisons can be fundamentally flawed -- Leastways that was his point if I understood it correctly.

  Anyway, the history of the GFC to date is that savers with cash in bank will be starved of interest to prop up the debtors. And with lots of people in the developed countries starting to hit retirement age and common sense saying they’ll go more to cash as they do (I think?), I won’t be terribly surprised at all to see fundamentally lower interest rates in those countries over the next 10 years to what we saw in the 10 years pre-GFC. While those countries attempt to recover from the GFC. (Could even be lower interest rates on average for 50 years giving the changing demographics? But that’s just TOO long a timeframe to be making guesses over.)

  Question is “Where does Oz fit in it all?” Well, I tend to see us as having characteristics of both a developed and a developing nation. But must admit I haven’t gotten round to giving it a great deal of thought past that.

• 175 Biker // Jun 4, 2011 at 7:24 pm

  Your ‘target’ is 10 -- 15%? You have a _target_?

  With a significant amount of money in investment accounts, I guess we too should ‘have a target’.

  How does this target setting actually work? What do you DO to achieve your target?

• 176 Greg Atkinson // Jul 29, 2011 at 1:16 pm

  Well it looks like house prices are now slowly drifting backwards but the big question is: Will the RBA really raise rates again soon in a vain effort to keep inflation within their comfort zone?

  If they do raise rates then that can only put further downward pressure on home prices. Also we should note that net immigration numbers are way below their recent highs so housing demand is also being reduced.

  Seems to me that a 10% drop in home prices is not out of the question.

• 177 Biker // Jul 29, 2011 at 11:55 pm

  Greg: “Seems to me that a 10% drop in home prices is not out of the question.”

  Meanwhile rents continue to rise by almost the same amount, _annually_ (8.7% in WA). We just raised the rent on one of our larger homes by 15.5%.

  Interest rates? Interestingly, WestPac and the ANZ are at odds over the question of an August interest rise. With reduced fixed rates equal to variable rates on offer, our family bank could be barking up the wrong tree. And, if the US loses its high credit rating, as Gilani asserts likely regardless of the current impasse, the days of interest rate rises are probably over for a while… (Swings & Roundabouts!)

  Windfall: Our Ozbuck exchange rate is a thing of beauty, while travelling in North America, especially with a no-exchange-fee card like 28 Degrees!~

• 178 Sally // Aug 13, 2011 at 12:59 pm

  Hi!
  I am just trying to do some research on house prices and have read through your blogs and am a little confused?!
  We have a large morgage and are wondering if now is the time to sell our house while we have equity? Any ideas on what is going to happen with house prices…..
  Do we get out now, save and buy a bargain in a few years or is this unlikely to happen?
  Thanks for your advice!

• 179 Greg Atkinson // Aug 14, 2011 at 8:41 am

  Sally we don’t try and provide any investment related advice from this site, we simply discuss investment related issues and provide a forum for people to share their views.

  It’s hard to predict where house prices will go as the property market is complicated and price trends vary across different locations. Also people tend to view the market differently depending if they are owner-occupiers, property market investors or renters for example.

  Have you spoken to your bank or a financial advisor about this issue? Perhaps that might be a good starting point.

• 180 Stillgotshoeson // Aug 16, 2011 at 10:44 am

  From the Business Spectator..

  “House asking prices in England and Wales have fallen for the second month running and are now lower than a year ago, a report says.

  The average asking price for a home dropped 2.1 per cent in August to 231,543 according to property website Rightmove, a fall that follows a 1.6 per cent drop in July.

  All regions registered a fall except Wales and Yorkshire and Humberside, which saw modest rises.

  London, which has been the strongest regional housing market this year, saw the largest month-on-month fall at 3.4 per cent. “

• 181 Greg Atkinson // Aug 21, 2011 at 10:59 pm

  Apparently there is an over-supply of homes in Victoria according to this article today in the HeraldSun: Victorian housing crash tipped

  “VICTORIA has a property oversupply of about 70,000 dwellings -- enough to house a city the size of Geelong, tax reform lobby group Prosper Australia says.”

  Interesting.

• 182 Biker // Aug 22, 2011 at 3:08 am

  Housing crash tipped?

  Now _there’s_ an original prediction for ya!~

• 183 Ned S // Aug 22, 2011 at 3:54 am

  I was also under the general impression that Melbourne was busy building itself an oversupply of apartments Greg. (Brisbane has one too is my understanding. And Anna Bligh’s ‘Builders Boost’ could well add to it.)

  Prosper Australia is a lobby group that believes the only taxes that should be levied are on land and resources is my understanding. They espouse the principals of Georgism that were originally put forward by the American economist Henry George in the 1800s:

  “Georgism (also called Geoism) is an economic philosophy and ideology that holds that people own what they create, but that things found in nature, most importantly land, belongs equally to all. … ”

  http://en.wikipedia.org/wiki/Georgism

  Their 70,000 figure could be a bit high -- Residex say it’s 24,000? The reason I say the Prosper figure could be high is because it’s also my understanding that they attempt to estimate the number of vacant dwellings (in Melbourne anyway -- that’s where they are based/focused for now???) that aren’t actually for rent for whatever reason so they ‘could’ be including them too?

  Certainly they believe that vacant dwellings that aren’t available for rent should be MADE available for rent. (As philosophically, the land that the sit on belongs to the people collectively under Georgism.) And they see the implementation of Georgist principles (high land tax in particuar) as a means of forcing vacant dwellings onto the rental market. As well as doing lots of other good things. (Including doing away with any need for people to pay tax on the fruits of their labour -- As that specifically belongs to the individual; Rather than to the people generally/collectively.)

  It gets a bit curly in that while George reckoned the land (and resources) philosophically belonged to the people collectively, he recognised it would be a pain to change to that from an existing system where land was owned by individuals -- So his solution was to ‘effectively’ socialise the beneficial ownership of land and resources by putting high taxes on them. (Ken Henry must have had a bit of a read up on Georgism before he proposed the Mining Tax maybe? )

• 184 Greg Atkinson // Aug 22, 2011 at 9:04 am

  Thanks Ned, I had never heard Georgism before. Thanks for the background information.

  I was not interested in the story because it predicted a price crash (there are plenty of those around) but because it suggested there was an oversupply of properties.

  Even an oversupply of 24,000 dwellings sounds quite high especially when you take into account immigration numbers have fallen in the last few years and the demand for overseas student rental accommodation has also taken a big hit.

  So no matter which way to look at it, demand has fallen for housing…but the question is how much is being built? I have read new home construction activity has fallen but it’s hard to get accurate or reliable numbers.

• 185 Biker // Aug 22, 2011 at 9:33 am

  The bears spruik oversupply as just one of a score of variables. One of our homes is mostly ‘unoccupied’. We own it and we claim nothing on it tax-wise… but it would be included in WA stats. Two couples our age are in the same situation. These holiday homes are provided without charge to friends and rellies… and we use each others’ cottages, cabins and chalets without charge.

  Regardless of this factor, which is hard to assess in the ‘oversupply’ claim, interest rates are falling; and rents are rising steadily, while residential construction is slowing. Looks OK to us. (From a cruise ship, anyway…)

• 186 Greg Atkinson // Aug 22, 2011 at 10:14 am

  Well this property bear appears to have done his homework and has included plenty of references to statistics.

  See: Australian Residential Housing Demand and Supply (Popping Bubble)

  In the conclusion the author states:

  “By looking at the results we may see that Australia is facing huge oversupply of residential dwellings. Since 1995, there were only two years of a construction undersupply (2008 and 2009) driven by huge immigration numbers. During the years before that, Australia was building the similar number of new homes while immigration and population increase was half or even third of the 2008 or 2009 levels. After 15 years of construction, almost 950 000 dwellings that now do not have primary resident were built. That is around 10% of total housing stock. This means that around 38% of newly constructed dwellings during this period were oversupply (not used as primary resident or holiday home).”

  It seems we have a big gap between the housing shortage and housing over-supply camps that’s for sure.

• 187 Ned S // Aug 22, 2011 at 3:15 pm

  No arguments from the RBA (in 2009) about the fact that more housing was being built than was required to account for new household formation. They put it down to a demand for holiday homes/second homes:

  “”Census data show that the number of dwellings built has exceeded the increase in the number of households by a large margin.”

  The ratio of the number of dwellings to the number of households has been rising over time with 8 per cent more dwellings in Australia than households in 2006.

  “Presumably, most of this surplus reflects holiday houses and second houses,” Mr Battellino said.”

  http://www.theage.com.au/business/high-home-prices-sustainable-rba-20091125-jp4z.html#ixzz1VjWszOuF

  Though the author of the article you link to doesn’t buy the holiday homes story apparently Greg?

• 188 Greg Atkinson // Aug 24, 2011 at 2:22 pm

  Ned the news about the housing market does seem to be getting more gloomy of late. I am not sure what happened the massive shortage of homes a few years back but it does seem to have evaporated.

  According to this article: Falling home prices threaten $20bn in annual foreign investment: http://www.theaustralian.com.au/business/property/falling-home-prices-threaten-20bn-in-annual-foreign-investment/story-fn9656lz-1226121311571

  “Behind the decline is a rush by property developers to build apartments for thousands of skilled migrants who are expected to seek work in the Pacific nation’s booming mining industry. Melbourne is home to the headquarters of two of the world’s biggest mining conglomerates, BHP Billiton and Rio Tinto. On the west coast, Perth lies at the centre of vast natural gas and iron ore fields that are supplying China with much of the raw material for its factories.”

  Sounds a bit like Ireland…they also rushed to build homes for skilled migrants they expected to keep flowing in, but when the music stopped, there weren’t many chairs to go around.

• 189 Ned S // Aug 24, 2011 at 7:52 pm

  Yep, Sydney ‘might’ have a shortage Greg??? But Melbourne and Brisbane don’t. (Not that Brisbane counts for that much nationally -- It just happens to be the market I take most interest in.)

  We’ll lose a lot more than just $20 billion in foreign investment in housing each year if there’s a major housing correction too. Lots of the money spent on home renos by Aussies will stop being spent as well I’d say. Plus the money that has been flowing into new building will decline significantly. (Both of which I’d be bearing in mind if I was into stocks?)

  I’m just happy enough being debt free at this time I suppose? -- Though given I’m about 50/50 cash and housing, I wouldn’t especially say I’m happy with everything that is happening generally as such! (Nevermind, my mum owns an Oz of Au; And she’s feeling quite cheery … )

• 190 Greg Atkinson // Oct 18, 2011 at 8:27 am

  Ned I reckon we are almost at the point where we will find out if the house prices are on the mend or if they will move sideways or even drift down further.

  P.S. According to an article in late September some NAB economists reckon:

  “A structural shortage of housing remains nationally, commencements are down, interest rates are expected to stay on hold for some time, and the unemployment rate is low, contributing to high job security. These factors are expected to maintain a floor under house price growth, which we see resuming at below 4% in 2012 after drifting down in 2011.”

  Source: http://www.marketwatch.com/story/australian-house-prices-fall-24-survey-2011-09-28

• 191 Ned S // Oct 18, 2011 at 12:21 pm

  Yes Greg. Interesting link Shoes put up on the other thread. Draws a lot of my thoughts together for me:

  http://www.theaustralian.com.au/business/property/property-values-sliding-says-bill-moss/story-fn9656lz-1226169144054

• 192 Not Fooled By Property Spruikers Hype // Oct 18, 2011 at 4:53 pm

  Err excuse me Biker Pete but do you even own any rental property or have any experience in being a landlord?

  In comment #39 on this link:
  http://www.shareswatch.com.au/blog/stockmarket/the-australian-economy-house-prices-and-economic-outlook/all-comments/#comments you say

  “Newsflash: Rental is situation crazy, Ned. Prospective tenant has not only accepted our increased rent, paying us three months’ rent in advance; but has just UPPED the rent by another $5 per week! References all check out.”

  So lets just check if I have this correct you have a tenant that is prepared to pay you 13 weeks rent in advance because that is what the market forces in the WA rental market is?

  Why else would he pay 13 weeks rent why not 6 or 8 or 10.

  FYI 13 weeks rent at the Perth median rent is $5,200 and he has upped the rent $5 pw to boot. No doubt you have snagged one of those crazy rich miners we have in WA that I keep hearing about.
  (Now you must name the suburb that has that much demand that people are willing to pay 13 week in advance $5 pw extra just to secure a house to live in)

  Do you even to bother reading back some of your posts to see if they have any believability. ?

  Now here is the thing that has me really confused & no doubt you can clear it up.

  The WA consumer affairs dept has some laws that prohibit landlords from doing exactly this. Here is what they say about paying rents in advance:

  ” Paying rent….A landlord must not ask for more than two weeks’ rent in advance before or during the first fortnight of a tenancy. After that, the agreement can provide for rent payments on a weekly, fortnightly, four-weekly or calendar-month basis or any other period as agreed by you and the landlord.” ….”The landlord must not ask for rent until the period covered by the previous payment is finished.”

  (Link of course: http://www.commerce.wa.gov.au/consumerprotection/content/Property_renting/Renting_and_tenancy/Tenants/Bonds_and_rent.html)

  Now you are on record as saying you use Agents to manage your houses, well these agents have to abide by WA consumer laws, so I would be interested in how you managed to get 13 weeks rent in advance?

• 193 Biker // Oct 18, 2011 at 5:29 pm

  NF: “So lets just check if I have this correct you have a tenant that is prepared to pay you 13 weeks rent in advance because that is what the market forces in the WA rental market is? Why else would HE* pay 13 weeks rent why not 6 or 8 or 10.”

  On many occasions when we have multiple applications for our excellent rentals (sometimes even queues) a family which _really_ wants the property will offer payments three or even four months_ in advance. In the most recent example, we believe the (successful) applicant believed we would probably decline HER*, as we do some other applicants.

  SHE* had an excellent rental reference, but was/is unemployed.
  Apparently SHE* put up a very good case, with unemployment payments, rental assistance, very large alimony payments and a substantial bank balance. SHE* suggested the three months’ payment in advance and SHE* suggested increased rent after six months.

  This is now the third such case we’ve experienced. On no occasion has _either_ of our realtors ever suggested this incentive. They don’t _need_ to offer any such incentives.
  Both our suburbs have vacancy rates below 1%… and no,
  we won’t disclose them. For two years, we’ve advised _many_ respondents to give you no location whatsoever, for very good reason.

  Your inexperience in WA property, combined with your own (doomed) agenda and bias, makes these cases unbelievable… hardly surprising since you advocate offering landlords far below their asking price(!) Your own tendency to disbelieve others is probably based on your own propensity to lie continually. You seem quite comfortable with this handicap.
  You may need to discuss this with a professional counsellor.

  * Your assumption that this was a male applicant could be expected, NF. Wrong assumptions are your stock-in-trade… .

• 194 Not Fooled By Property Spruikers Hype // Oct 18, 2011 at 6:59 pm

  Sorry Biker nobody in Perth needs to pay 13 weeks in advance.

  You have ZERO Cred. No Realtor would touch any deal like this as it is in breach of WA consumer laws

  http://www.commerce.wa.gov.au/consumerprotection/content/Property_renting/Renting_and_tenancy/Tenants/Bonds_and_rent.html

  Make up whatever stories you like.

  Proofof this is your pathetic attempt to divert attention by focusing on the “HE” in this comment

  “Why else would *** he *** pay 13 weeks rent why not 6 or 8 or 10.”

  Really that is what is important in the discussion? Just proves you are clutching at straws.

  Caught tell a untruth, making up stories about tenants throwing money at you.

  Why would a tenant with good references do this , they would not & don’t

  Name the suburb (Or I cant do that you will identify me excuse?) Well name any suburb.

  Guess what genius. In Port Hedland / Karratha / Dampier where there are 12 -- 18 month waiting lists this does not happen, so what you say is quite simply not a truth that you are able to substantiate.

  Step away from the shovel Biker you are just digging a deeper hole.

  BTW Ned do you believe this fanciful story.

• 195 Not Fooled By Property Spruikers Hype // Oct 18, 2011 at 7:27 pm

  Biker ” You’re an unqualified Brit with six years’ residence here, compared to my 64… yet you’re expert in WA property? Amazing! ”

  Bzzz Wrong born & raised WA.

  Lets see other things you got wrong errr “ANDY” Wrong … err “Melbourne Money Man” wrong …. errr “PUNTER” Wrong …. errr “Dullsville” Wrong

  You quote me saying:
  ” as interest rates rise this year investors will offload at any cost & buyers will be priced out as they fail to qualify for loans”

  but only quote a small part & take it out of context, this is what I said in full:

  “Australia may have their property dream unfortunately the reality is they can no longer afford it… 1980 -- 2010 Australian wages went up 5 times from $12.5k to $62K whilst Australian house prices went up 12.5 times from $40K to $500k. It cant keep doing this, the gap between wages & price cant keep expanding it has reached its limit it is that simple. Now show me any bank that will lend someone on a single income of $62K with the average 2 dependants $450K (Median price less 10% deposit) in 1980 they could do it on a single income today the bank would require two incomes to borrow the $450K. The Math will not work out for investors either as rental yield have also failed to keep up. With fewer buyers able to afford the inflated prices the chances of property prices rising in the future, like they have in the past are extremely slim & seeing investment in property is ONLY based on capital gains fewer investors are buying in this market further eroding the demand for property at these over inflated prices & as interest rates rise this year investors will offload at any cost & buyers will be priced out as they fail to qualify for loans.”

  This was June 2011 & the week before the RBA was warning of likely rate rises in interest rates later in the year, so it is quite valid to make the comment I made based on RBA warnings.
  (Keep clutching at straws it is showing your desperation)

  Keep digging a deeper hole champ you wil get there one day!!

  Tee Hee Hee

• 196 Biker // Oct 18, 2011 at 8:16 pm

  OK, you’ve had time to recover from that whack with my shovel. Next failed interest rise punt:

  “Now 2 years have lapsed & all these loans are going to revert to a 7.1% or 7.8% rate… They can ALL look forward to extra payments around $9000 PA.” Not Fooled By Property Spruikers Hype Perth -- February 12, 2011, Domain.
  http://theage.domain.com.au/blogs/talking-property/buyers-and-sellers-test-the-breeze-20110208-1akec.html?comments=72&comments=72

  In fact, fixed rates have fallen to 6.29%… and it’s likely they’ll fall further.

  Your problem? Scaremongers NEED to make all these silly predictions to hype up fear. You’ll keep making them, because you get off on being the 200,000-hit/slap/kick property guru. It didn’t work for Steven Keen (who is educated) and it can’t possibly work for a bumpkin like you. OK, answer that one with some feeble crack (blame the RBA again, perhaps) and we’ll get to your next brilliant interest rate spruik!~

• 197 Greg Atkinson // Oct 18, 2011 at 9:17 pm

  Please refer to the discussion forum moderation policy: http://www.shareswatch.com.au/blog/discussion-forum/

  I will be deleting comments accordingly when I have time.

• 198 Not Fooled By Property Spruikers Hype // Oct 18, 2011 at 10:34 pm

  Greg it is disappointing he engages in personal attacks rather than addressing the issues raised in a cohesive way.

  Ummmm Biker notice the Date? Feb 2011

  RBA raised rates nov 2010 Banks doubled the rise.

  E*V*E*R*Y*O*N*E* was saying that the RBA would raise rates at least another 2 times in 2011.

  It is perfectly legitimate in Feb 2011 to make the statement I did with the data available at the time.

  It is so easy to be a critic with the benefit of hindsight, you never take a position on anything so can never be wrong? Is that your secret.
  “Now 2 years have lapsed & all these loans are going to revert to a 7.1% or 7.8% rate… They can ALL look forward to extra payments around $9000 PA.” Not Fooled By Property Spruikers Hype Perth – February 12, 2011,

  So lets see someone coming off rates that were fixed in 2009 @ 5% would be paying around 7.5% in Feb 2011 & with the average loan around an increase of $9,000 pa on a typical loan of $400K.

  Now where am I wrong about this it is a accurate view of events in Feb 2011. Failed interest rate punt? Where I don’t see any Punt just a accurate assessment of facts.

  Whack with your shovel? Oh please I don’t think so. All you have done is dig a deeper hole. I told you you were just digging a deeper hole & to stand back from the shovel but would you listen?

• 199 Biker // Oct 19, 2011 at 8:01 am

  Not Fooled By Property Spruikers Hype, Comment 158:

  “Would love to see a link where I said interest rates would rise as I did not.”

  The beat goes on.

  NF: “Forget about a fixed rate at 7% for 2-3-5 years…”
  HaHa, you’re not wrong. Try 6.29% for three years instead… !

  http://www.perthnow.com.au/business/local-property-players-build-portfoilios/comments-e6frg2ru-1226080466625

• 200 Not Fooled By Property Spruikers Hype // Oct 19, 2011 at 9:54 am

  Sorry again Greg.

  Biker your comprehension skills are letting you down again. You are embarrassing yourself, I am beginning to feel pity for you & cannot help but wonder if I am having a debate with somebody that is intellectuality handicapped?

  I asked you to show where I made a forecast for interest rates, several times you have put up things which clearly show I am commenting about market conditions & referring to predictions made by other commentators. Then you attribute their predictions to me ?

  Your latest (Comment #212 ) again fails to show me making a prediction rather a accurate observation.

  It’s is there in full for the reader to see & affirm for themselves that you are trying to twist what was actually said.

  Why only post this small snippet “Forget about a fixed rate at 7% for 2-3-5 years…” ????

  Tell you what have a go at disproving my premis that a 7% interest rate today is comparable to paying a 22.5% rate in 1990.

  I will take your silence or failure to disprove or refute it as your affirmation that it is 100% accurate.

  “Property Spruikers will tell you Australia is OK we dont have a sub prime system? …. Forget about a fixed rate at 7% for 2-3-5 years because a 7% interest rate today is E_Q_U_A_L to a 22.5% Rate in 1990 ……The 1990 Median house price was $100K with a 20% deposit & a loan of $80K payments @17% interest over 30 yrs would be $1140 pm or 32% of wages with average family wage of $42K pa…so in 1990 @ 17% the worst interest rates in Aust history payments only ever got to 32% of average family income…Fast Fwd to 2010 Median price is $500K less 20% deposit & a loan of $400K payments @ 7% interest over 30 years are $2661 pm or 43% of wages with average family wage of $75K…in 2008 interest rates were 9.5% this would work out to payments of $3365 or 54% of current wages …. Now historically for the last 30 years interest rates have averaged 10.11% this would works out to payments of $3545 pm or 57% of wages going to mortgage payments ….So summing up current housing mortgage payments @ 7% is still worse than when rates were at 17% but just imagine what will happen when rates rise? AFFORDABILITY will not allow future CAPITAL GROWTH… & without this SPECULATORS are FLEEING Houses!!”

• 201 Not Fooled By Property Spruikers Hype // Oct 19, 2011 at 9:59 am

  Biker

  You say 6.29% fixed for three years? Where Link please?

• 202 Biker // Oct 19, 2011 at 10:11 am

  NF: “You say 6.29% fixed for three years? Where Link please?”

  Here link. Happy to help you apply, to add to your six investment properties in Karratha, Woodvale and Mandurah, NF.

  Apply here:

  http://ratedoctor1-px.rtrk.com.au/

• 203 Greg Atkinson // Oct 19, 2011 at 11:49 am

  Okay, this is just turning into a slanging match. This site is not for two people to enter into an endless debate. It is also not a site dedicated to the WA property market. So I am calling time out.

• 204 Not Fooled By Property Spruikers Hype // Oct 19, 2011 at 1:39 pm

  Sorry Biker but the link to loan doctor did not show a 6.29% fixed 3 year loan but a variable loan.

  Further more it was not a “Comparison” rate which is what you need to look at. This would make the loan closer to 6.92%

• 205 Biker Pete // Oct 19, 2011 at 1:49 pm

  My apologies, NF. Perhaps 6.19% for three years, instead?

  http://www.infochoice.com.au/institutions/SuperRate/697

• 206 Ned S // Oct 20, 2011 at 2:52 am

  Vacancy rates are 2% in each of the Brisbane suburbs I’m invested in. Ditto for another suburb I’m considering:

  http://sqmresearch.com.au/graph_vacancy.php?t=1

  No big hurry though. Returns are still considerably lower than I can get from cash in bank.

• 207 Biker // Oct 20, 2011 at 11:25 am

  Certainly a real shortage of rentals here, too, Ned.

  Interest? We’re getting 6.25% online with ANZ. Just switched all our cash to my name. Now I’m retired that makes sense, until the Missus pulls the pin. It’s extraordinary that we’re getting six times the return on cash that Canadians are.

  In WA, property has still outperformed interest for us this year.
  That sale in late March was definitely a major win. It’s only one example of a buy during the GFC returning high capital gain, but it does show (us, anyway) that even in very flat periods it’s possible to turn a great profit… . Land 16.4% pa, against interest 6.25% pa.

  We see our accountant a week Friday. This is the first financial year in which we’ll be able to see if the (new) tweaks we’ve applied really are the best we can do. My list of Key Questions has grown as the year has passed, so it will be interesting to get an update.

• 208 Not Fooled By Property Spruikers Hype // Oct 20, 2011 at 12:14 pm

  Shortage of Rentals?

  People feel comfortable investing in housing with a belief that Housing Shortages are going to keep prices up & stop prices crashing?

  This AUST GOVT report { http://www.infrastructure.gov.au/infrastructure/mcu/soac_files/INFRA_1211_MCU_SAC2011.pdf } … says the following on page #3.. “ Australia’s population has grown by three million in the past decade.” … so what you say? … Well in Australia we build over 140,000 homes every year & this works out to 1,400,000 homes. Now Australian Census data in 2006 said there are 2.6 people per household &this number is on the increase due to the high cost of housing kids are staying at home longer. Again you might be wondering so what? … Well in the past 10 years we had a population growth of 3 million but we built enough housing to house 3,640,000 !!! That’s 246,000 houses more than population demand required us to build. That’s for the whole of Australia.

  In WA our population increased by 330,000 in the last 10 years yet we built enough houses (220,000 plus) to house 572,000 people. It is difficult to see why there would be any shortage.

  Rents in WA have failed to keep pace with the rise in house prices which would indicate no real shortage.

• 209 Greg Atkinson // Oct 20, 2011 at 2:54 pm

  If the Chinese economy continues to cool and iron ore prices slide further then home prices in Australia will most likely move sideways or slip further back over the next few years I reckon.

  The Government has already factored a continued mining boom into its planning and at the moment the boom is starting to look a touch wobbly. Non mining related company tax revenues have already been hit and if the expected record high royalties from mining don’t roll in over the next few years then you can count on a government of any flavour making some spending cuts.

  So in that case we will would up with all major export sectors in the doldrums (education and tourism are already there) plus be a cycle where government spending is also being cut back.

  If that happens then I can’t see how/why home prices nationwide would rise.

  I am not suggesting there will be a crash, I am just making a few observations based on what is happening across the wider economy.

• 210 Biker // Oct 20, 2011 at 3:32 pm

  China slipping? China (almost) met its _own_ reduced growth target of 9.0%… with a 9.1% rate achieved. Reining in inflation, reducing the massive growth in wages and therefore production costs, are aligned goals. China is still calling the shots… .

  “…a cycle where government spending is also being cut back…” The reverse is likely. Most governments still favour… and apply… the Keynsian model…. ‘spend the crisis out of trouble’

  Keen was right about (just one) thing. In such an event, the interest rate would fall, perhaps as low as 0%. At that point,
  those with cash and significant equity would jump into the breech, buying property with all four hands!~
  (Look at BC’s ‘V’ cities… .)

  As suggested in the past, flexibility seems to be the way-to-go in times like these. All our best buys in recent years have been on the first day of someone else’s declined finance. That block we sold earlier this year had been on _one year’s_ hold for a Brit who finally admitted he couldn’t buy it. A (disgusted) developer sold it to us for a song… . A better example was the duplex block with _absolute_ beach frontage which, again, appeared on the market for less than 24 hours. We trebled our gain quickly on that one.

  Just as there will be incredible buys in individual stocks right now, there will be properties on the market, fleetingly, which represent amazing value and a quick return. Those waiting for ludicrous 50% crashes and sitting on their hands are unlikely to find or access these gems.

• 211 Greg Atkinson // Oct 20, 2011 at 4:21 pm

  Amazing isn’t it…a centrally planned command economy reports that it has met it’s objectives. The USSR also use to meet most of their economic targets as well..that is sort of how command tend economies work Biker.

• 212 Biker // Oct 20, 2011 at 4:55 pm

  Comparison with the USSR isn’t exactly appropriate, as you know, Greg. Did Russia even get close to the economic miracle which is modern China?

  I read all the anti-China media reports, usually with a grin. Take Avner Mandelman’s recent item in the Globe & Mail (8th October 2011) on “Chinas slowly crumbling economy”, which totally ignored China’s gradual, successful conversion to a domestic economy. To Canada’s south, meanwhile, a culture of huge pick-ups survives on 90c/litre gasoline, almost totally oblivious to future fuel prices, driving on some of the worst roads we’ve ever driven, at speeds up to 75mph. China will be producing the majority of the world’s EVs long before the US even considers the economic devastation of $6/gal petrol….

  We drove through many kilometres of desolate housing developments in some states… wastelands where $4/gal fuel had made it uneconomic to even _bother_ to drive to work. Infrastructure is crumbling, particularly in those states which are in economic crisis, or where it’s not deemed worthwhile to upgrade, because there are other more pressing priorities.

  If we’re going to compare, let’s forget comparison between China and Russia. Let’s compare the future-building of China to the future-crisis which faces the US, as its systems crumble; due to its past unwillingness to regulate, _control_ and punish those criminal traitors who pushed the US into this morass…

• 213 Greg Atkinson // Oct 27, 2011 at 7:35 am

  Well according to an article in The Australian today house prices appear on the way down in all major capital cities with the exception of Canberra. An extract from the article is posted below.

  Median prices have plummeted by 6.7 per cent in 12 months.

  The national median home price has now fallen for five successive quarters, marking an even worse stretch than during the global financial crisis in 2008, according to Australian Property Monitors’ gloomy report on the September quarter.

  Brisbane has gone from boom to gloom, reversing years of steep growth in its property market to lead the downturn with a 2.7 per cent decline in the quarter.

  APM senior economist Andrew Wilson said market confidence had been battered, with global economic turmoil fomenting fears of job insecurity in Australia.

  Source: Brisbane wins housing race to the bottom

• 214 Biker // Oct 27, 2011 at 9:17 am

  Greg: “Median prices have plummeted by 6.7 per cent in 12 months.”

  Less than half of shares.

  And rents are up as much as 10% here.

  A fall in residential construction has meant really great deals on solar hot water systems. Manufacturers and importers have been stuck with excess units. We’ve saved thousands, replacing conventional units… .

• 215 Biker // Oct 28, 2011 at 8:05 am

  New definition for ‘housing stress’?

  “And renters are most at risk, with 26 per cent in housing stress.”

  http://www.news.com.au/money/property/housing-stress-pms-struggles-to-find-a-rental-property/story-e6frfmd0-1226179004217

• 216 Not Fooled By Property Spruikers Hype // Dec 4, 2011 at 8:02 am

  Sorry Biker never happened.

  Not even in WA’s North West where there is an acute shortage of decent rentals do people need to pay 1 year in advance.

  When you make up Fairy Tails think about the details. Why would the Tenant just not park the years rent in a savings account, what did he get in return for paying a year in advance?

  Anyone keep score mark ZERO in the creditability column. Even funnier 10% growth PA or Rents doubling every 10 years. Come on Biker you must have thought this one through how much will wages rise to 3% 4% can’t be 5% because the RBA will put its foot down so your saying people will be able to earn the money from where to pay you the rent.

  Follow this SPRUIKER at your own peril.

  Tee Hee Hee nothing to see here folks a Mum & Dad investor sorry speculator out of his depth. Now tell the readers the 6.55% tax free yield you earn in a mortgage offset account. I don’t understand it & neither does anybody else. keep typing champ take goo aim at the foot.

• 217 Biker // Dec 4, 2011 at 8:56 am

  It amuses us that you see ‘Mum & Dad Investor’ as a slur, Nut Fool. It is _exactly_ what we are. We have agreed we are, several times. Why do you imagine you’re _insulting_ us with this perception?

  Your inability to see _why_ tenants make us very special offers, continually, illustrates your total lack of knowledge about:

  * Private rentals (as opposed to government housing);

  * What _we_ actually offer tenants. Yes, our rentals are better than nearly anything else on the market in a sensible price range. When we attempt to buy more, we find that we can design and build far superior _rentals_ for far less than asking price.

  * How much appeal our lovely homes have to interstate and overseas arrivals, stuck in a rental queue, with so little that is exceptional on offer.

  Over on PerthNow, you challenged our statement about rentals, asking how we ‘outperform’ the market. Let me first agree that we _DO_ outperform the general market. Second, we do not build anything we would not enjoy living in ourselves. Third, our rentals come with additional climatic and cost-saving (for tenants) initiatives. Fourth, our homes _look_ good. Tenants feel proud of living not only in attractively presented homes, but in very desirable locations. Fifth, there’s around a 1% vacancy-rate in our two key suburbs. The unemployment rate is probably lower. Sixth, we respond immediately to virtually every tenant request or concern. Seventh, we do not raise rents within a period of tenancy, unless we are very unhappy with a tenant. We have a reputation for fair dealing in the communities in which we build.

  Now let’s look at _you_:

  * You quote rental regulations without understanding them.
  So while you state: “…the agreement can provide for rent payments on a weekly, fortnightly, four-weekly or calendar-month basis OR ANY OTHER PERIOD as agreed by you and the landlord…” you don’t understand that last clause at all.
  Worse, you assume others don’t.

  * You’ve made outlandish claims about owning six properties, but elsewhere state that you ‘wouldn’t want to be a landlord’.
  Don’t you see how illogical and utterly opposed these two statements are? It marks YOU as the liar here.

  * You have continually made extreme predictions, many of them ‘dated by post’ about dire events and consequences. As these predictions eventually fail, you prevaricate… deny… demand links… then change the subject… . In two days we’ll see yet another foolism crash back to earth… .

  * You seem obsessed with ‘scores’ and ‘winning’. Several of your posts announce yourself as the winner. Winners don’t need to do that, son. (Nor do they need to crawl to web hosts.)

  “Tee Hee Hee? Fairy TAILS?” What are you trying to tell us?

• 218 Plornt // Dec 4, 2011 at 11:35 am

  NF i’d have to unfortunately and reluctantly agree with Biker, you have unintentionally misread part the clause or paraphrased version of the relevant act or regulations . He is allowed to accept one year payments.

• 219 Ned S // Dec 4, 2011 at 3:25 pm

  Had a slightly strange one myself recently -- Tenant has paid up to about 8 January. Namely about 3 weeks ahead of even the 2 weeks ahead that a good tenant tries to be. Don’t know why. And aren’t especially curious enough to ask.

  People do strangish things on occasion -- Though often for what they feel is a good reason. Paying a year’s rent ahead just could sound like a good idea to some if one is in a divorce situation and attempting to hide money from an ex maybe? Just as one “for instance”.

• 220 Stillgotshoeson // Dec 4, 2011 at 3:44 pm

  Whenever I go overseas I pay my rent in advance to cover the time I am gone + 1 month so I do not have to worry about it whilst gone or on my return, your tenant, Ned maybe just doing the same, covering him/her self over the christmas period.

• 221 Not Fooled By Property Spruikers Hype // Dec 4, 2011 at 4:24 pm

  Biker

  Name the fantasy suburb where rents will rise by 10% PA & where you claim people are compelled to pay 1 years rent in advance.

  Don’t hide behind the lame excuse that you don’t want to be identified, you have known I live in Woodvale for 2 years now & it makes little difference even with Dogman having access to RP Data & Mortgage data from the banking sector (ING Bank).

  How hard would it be how many loans would ING have in Woodvale. Point is no one can find out you just hide behind a lame excuse so you are not accountable.

  Not much to see here folks just a Confused Mum & Dad investor who thinks / claims he earns 6.55% Tax Free on funds he has in a mortgage offset account.

• 222 Ned S // Dec 4, 2011 at 5:02 pm

  “Whenever I go overseas I pay my rent in advance to cover the time I am gone + 1 month … your tenant, Ned maybe just doing the same”

  Quite possible Shoes. I did exactly the same re paying all my bills ahead the last time I went overseas for three months. (Good thing too -- The bloody apartment that was rented for me didn’t even have a phone line let alone an internet connection -- Despite assurances it would have both!)

  Success in life: A combination of knowing Murphy’s Law and The Boy Scouts motto perhaps?

• 223 Biker // Dec 4, 2011 at 6:25 pm

  You get no location(s) whatsoever from me, NF.

  I have continually advised every contributor to three forums to give you NO leads to their whereabouts, whatsoever.

  I’ve long suspected your own location to be provided by Her Majesty. Your talent for moving so easily between lies speaks of recidivism. You change your story like a suspect in an interview room. You have _far_ more time-on-your-hands than any of us, posting up to six consecutive l-o-n-g manifestos to a thread.

  Why else would you tell us you’re a Homeswest tenant on the dole who spends all his welfare provision on booze? Link?
  http://www.perthnow.com.au/business/local-property-players-build-portfoilios/story-e6frg2ru-1226080466625 (Comment # 39)
  I suspect the real story is likely to be far worse.

  Name the locations where rents are now rising over 10% pa?
  Happy to do so. Here’s a very recent direct quote:

  “Perth houses up 10.1 per cent… unit rents are up 8.4 per cent and 6.8 per cent over the year… The common denominator across Sydney, Brisbane and Perth’s strong rental conditions is that new housing supply has been insufficient relative to population growth… In Western Australia new dwelling starts have been 13 per cent below average.”

  You want the link? Have you figured out yet how to find it yourself?

• 224 Not Fooled By Property Spruikers Hype // Dec 4, 2011 at 6:32 pm

  Biker Link Please Yes

  In WA new starts are down 30% plus for a reason. No DEMAND!

  REIWA rents Dec 2008 $380 Perth Median Sept qtr $395.

  You do the Math.

• 225 Not Fooled By Property Spruikers Hype // Dec 4, 2011 at 7:11 pm

  Biker wrong again

  Rental supply is only down because smart investors (Not you) are selling & have taken stocks out the rental pool. To compound this new arrivals are choosing not to catch a falling knife by buying into a overinflated market that they know will fall, instead they are choosing to wait & rent lowering the vacancy rate in the Perth market.

  Post Christmas/ New Year will be interesting as investors either slash prices to get their sale or flood the market with their rentals they cant sell.

• 226 Stillgotshoeson // Dec 4, 2011 at 7:30 pm

  I have not bothered to look, however Travs/Biker has given plenty of clues to at least be able to narrow down the likely suburbs.

  Land Available (likes to build)
  Rental Vacancy Rate 1% or lower
  Prices around $350k to $450k level

  I would take a guess that many of the suburbs have 2 of 3 of the above attributes, all 3 would narrow the rang down somewhat.

  He has also given clues to his identity as well… those I won’t put here.

• 227 Biker // Dec 4, 2011 at 9:35 pm

  Why wait until Post Christmas / New Year for a result, N F?

  You forecast a major crash by _next Tuesday,_ 6th December 2011.

  Let me guess: false pretences, fraud, embezzlement…
  or murdering the English language?!~

• 228 Biker // Dec 4, 2011 at 10:12 pm

  Shoes:

  “Land Available (likes to build)
  Rental Vacancy Rate 1% or lower
  Prices around $350k to $450k level”

  You’ll have to give him _much_ more than that, Shoes!~

  This is a fella who, given a 56-word quote, can’t figure out how to find its source… .

  In a post (243) fraught with contradictions, look at his closing argument: “…investors either slash prices to get their sale or flood the market with their rentals they cant sell…”

  It’s a common mistake. Attempt to correlate sharetrading theory (intangibles) to property investment (tangibles). Property investors don’t set stop losses. Experienced property investors know their markets and create the flexibility needed to hold through long flat periods. Why would you sell a rental yielding ever-increasing rents, even if you owed money on it? Many months ago, anticipating rising rents and falling rates we described this as ‘the perfect storm’.

  In the eighties, we waited over five flat years for the _huge_ returns which ensued. Yes, a few sold. We bought from a few who panicked and sold beachfront lots for what they’d paid.
  It would be crass to disclose how much we made… .

  NO, we’re not smart, NF. Couldn’t make the millions you make from ‘commodities’ and ‘retirement savings’*. We’re just very patient, hard-working mum’n'dad investors who retired early, to live comfortably and enjoy extended travel.
  You’re the hotshot here, son!~

  * Link? http://seekingalpha.com/user/823973/profile

• 229 Ned S // Dec 4, 2011 at 10:43 pm

  The last 10 years sort of bolted when I wasn’t especially watching -- I’ll have to settle into a grinding 18 months minimum (25 years maximum???) back in the workforce to maybe balance my little oversight up? Damn!

  There’s just no timing these markets hey?

• 230 Biker // Dec 4, 2011 at 10:51 pm

  Mate, get your cheque book ready. In a little over 48 hours, mug punters like me will be _begging_ you to take our beachside rentals off our hands for 40 -- 60% less than we paid for them (apparently).

  (He’s back to puppets and neck-biting again. It’s known as regression to the mean… . )

• 231 Not Fooled By Property Spruikers Hype // Dec 5, 2011 at 7:12 am

  Biker

  What are you on about.Show where I said 40%-60% fall in prices. I never said it’s & you know it. In fact I think in the back of your mind you believe this will happen I think it’s called “repressed fear” but in you case it presents itself as “expressed fear” because you keep banging on about it?

  (Link & point to which comment number I say what you cliam I said)

  Betya cant do it?

• 232 Greg Atkinson // Dec 5, 2011 at 8:46 am

  Well we will have clearer picture what house prices are doing when we get the figures for the December Quarter from the ABS in February 2012.

  What we do know based on the September Quarter is that:

  Annually, house prices decreased in Brisbane (-5.2%), Darwin (-4.4%), Perth (-4.2%), Adelaide (-3.2%), Canberra (-2.2%), Melbourne (-2.1%), Sydney (-0.3%) and Hobart (-0.3%).

  Source: House Price Indexes: Eight Capital Cities, Sep 2011 (ABS)

  So at the moment the trend on an annual basis is down and I suspect the same will be true for December.

• 233 CraigR // Dec 5, 2011 at 9:26 am

  um Not fooled people do actually offer 1 years rent in advance in the hope it will show the property manager that they are prepared to commit to the house.

  I can’t provide you a link with this data sorry, we didn’t blog it as we offered the years rent.
  See in 2004 we had just moved back to Perth and really didn’t want to live with family anymore. we went to rent a house but about 20 other applicants were made. We offered the year in advance and were accepted. At no time did the Property Manager ask for the money to be paid. She even said that would not be necessary to pay.

  If you are so down on investing in property why do you even bother to reply to every topic about this subject? There are people out there still making a lot of money from IP’s. you certainly sound like the typical Australian that can’t be happy with another persons happiness and therefore have to put them down all the time.
  I certainly wouldn’t tell you where my investments were, why should anyone else!?

  See Not Fooled, I don’t believe there is a God that created everything, yet I know lots of people that do think this. We accept we have different views and live happily together. i don’t try to convince them nor they me. You have stated your case over and over, many times what you have said has been wrong from other peoples point of view. Accept it and move on. Worry about what you are doing and please, please stop trying to prove the world is still flat good day.

• 234 Plornt // Dec 5, 2011 at 10:48 am

  NF and Biker, both of you should take the higher ground and cease this as its arguably bordering on invective.
  Lets all leave the computer screens, get a coffee, sit down, relax and comeback with a more relaxed and courteous demeanour.

• 235 Not Fooled By Property Spruikers Hype // Dec 5, 2011 at 10:50 am

  @ Plornt

  Agree play the Ball & not the Man.

  Should make for a better discussion. After all I could be wrong about my views on property.

• 236 Not Fooled By Property Spruikers Hype // Dec 5, 2011 at 11:14 am

  Biker

  Your playing the man?

  Make your point or address the issue.

  You said I forecast a 40% or 60% fall in prices & clearly I made no such forecast.

  Now what’s this Dec 6th thing you keep talking about?

• 237 Stillgotshoeson // Dec 5, 2011 at 11:16 am

  One would think the banks are concerned about the current state of play in the economy or they would not have set this up…..

  http://www.perthnow.com.au/business/australian-bankers-association-launches-website-for-financially-stressed-homeowners-to-negotiate-hardship-packages/story-e6frg2qc-1226213812008

• 238 Stillgotshoeson // Dec 5, 2011 at 11:24 am

  Biker // Dec 5, 2011 at 10:56 am

  HaHa… You didn’t say it, but now it’s “…exactly the way you foresaw it…” ? And, just as I predicted, ‘neck-biting’

  Not taking sides in the argument, just pointing out, as I did about myself having paid rent months in advance.. The crux of NF’s long winded post was that affordability was around the corner… I see no direct quote from him about a % figure. However wages have gone up and house prices have come down so yes, affordability has improved.

  The issue now between bears and bulls is at what point affordability will stop continuing to improve.

• 239 Biker // Dec 5, 2011 at 11:26 am

  CRIKEY!~ Never seen _that_ link before, Shoes!~

  6th December 2011, Wayne G?

  “Not Fooled By Property Spruikers Hype Posted at 10:13 PM December 06, 2010 12 months time the US & Irish will be thankful things are not as bad as OZ … one Bubble at a Time or as some folks would say BOOM BOOM POW … ”

  And how bad did he predict it would be?

  “Not Fooled By Property Spruikers Hype Posted at 9:47 PM August 30, 2011: @ Too Easy nice attempt to Spruik the market & scare people into thinking the better buy now? What do you mean “Not Gonna Be Affordable” it is not affordable Today – Now. But this exactly what it was like in the US & Ireland then prices fell 40% – 60% & it became affordable. The days of affordable housing is (sic) just around the corner…”

• 240 Biker // Dec 5, 2011 at 11:37 am

  This is how it works, Shoes. If you’re silly enough to make specific, dated predictions and you get it wrong, you admit it.

  Take NF’s ‘I own SIX investment properties’ claim. He _finally_ admitted lying about it, after scores of denials. Why let some AH smack you about for a year-or-so, before you have that kind of admission _dragged_ out of you? But why not LEARN from it? Why continue to make stupid claims like “Biker, you’ve lost $400K this year…” ; “Owners costs will be up $9K in 2011″; “7% is really 22.5%”… and so on… and on… and on…

  Go back to Comment # 249 for an accurate picture of WA’s fall in home values this year. Now, contrast that with this year’s rise in rents.

• 241 Not Fooled By Property Spruikers Hype // Dec 5, 2011 at 11:39 am

  Biker

  You keep shooting yourself in the foot. As Shoes says there is no forecast of 40% or 60% it is all in your mind.

  The Dec 6th 2010 quote is incomplete & again no working link for the reader to check for himself. Put the comment up in full & a link & I will be more than happy to explain / discuss.

• 242 Biker // Dec 5, 2011 at 11:48 am

  I realise you are technically-challenged and the computers provided you are probably 486s, so I’ll _again_ give you the link, NF.

  http://www.perthnow.com.au/business/business-old/construction-slowdown-to-pause-rate-rise/story-e6frg2qu-1225960148535

  Shoes? An old biker mate from w-a-y back, who once wished me all the very best of health and mobility for life.
  Now _that’s_ a link.

• 243 Not Fooled By Property Spruikers Hype // Dec 5, 2011 at 12:38 pm

  OK Biker lets have a look at what I said in Full?

  Not Fooled By Property Spruikers Hype Posted at 10:13 PM December 06, 2010

  Spread Fear & Alarm??? … Oh please pot calling the kettle black? …. Fear & Alarm stock & trade of Property Inc … Ever hear ” BUY NOW OR RENT FOREVER ” or this classic “Prices Double every 10 years if you dont buy now you never will ” Fear/Alarm?? of course not that is just caring advice given to your fellow man? … Bottle Water Salesman ? it is Nothing like the SNAKE OIL liberally applied to the property sector bu SPRUIKERS INC … Wont work here ? … Oh yes it will … Just have to look at the length of your responses these days .. gone are your flippent 2 line remarks & quirky tales of Travel & Pirate Adventures … Now your scared all that money / wealth going down the drain ….. 12 months time the US & Irish will be thankful things are not as bad as OZ … POP POP POP one Bubble at a Time or as some folks would say BOOM BOOM POW … Ahh the good old days when Dogman still had his BOOM BOOM …..

  Comment 31 of 33

  The bit I think we are focusing on is “… Now your scared all that money / wealth going down the drain ….. 12 months time the US & Irish will be thankful things are not as bad as OZ … ”

  Looking at the above I see me saying nothing about 5% 10% 20% 40% 60% fall in prices? (I think it might be a suppressed fear that you have?)

  Can you explain how you came to that conclusion because I did not say it?

  Now on the 6th Dec 201 I said …”12 months time the US & Irish will be thankful things are not as bad as OZ ” the page was discussing “Construction Slowdown” & I was talking to the topic but you insist it was on price? So lets accept what you say & lets have a look at how I went either way?

  1) New Construction Starts in Australia are twice as bad as US & Irish markets so that a “WIN FOR ME”

  2) For the last 12 months Australian House prices have been dropping at 2 or 3 times the rate of US & Irish House prices. “WIN For ME” because on the 6th Dec 2011 {Exactly 12 months after I said it) someone in the US or Ireland reflecting back on the previous 12 months would have to be “THANKFUL” that their house prices are not falling as fast as they are here in Australia.

  3) “Now your scared all that money / wealth going down the drain ” as it turns out you had everyone reason to be fearful. Guess what Biker since I posted this you lost over $400,000 in equity on your housing investments. If only you took more notice of what I said you would be $400,000 better off.

  Now I dare say we will visit this topic again in another 12 months & still the US & Irish will be grateful things are not as bad as they are in Australia.

  (By all means save a link to this page to quote me in 12 months time I certainly will be)

  Come on Biker admit it I was right & we can move on from here?

• 244 Biker // Dec 5, 2011 at 5:05 pm

  Do you _remember_ making those two statements, NF?

  Would you like links?

  Do you _DENY_ having made those two requests?

  WHY did you make those requests?

  * Did you believe you had no accountability for lying and misleading others?

  * Did you believe that saturating the blogwaves with lies would make them ‘facts’?

  * Or did you realise some of us were onto you and you weren’t ‘winning’ as you’ve claimed so many times you are ? (Twice today, in fact… .)

  Is that ticking I hear the clockwork of puppetry and neck-biting… or the long-awaited countdown to Nut Fool Day?

• 245 Senator13 // Dec 5, 2011 at 9:08 pm

  No one cares who said what and when. It brings nothing to the conversation.

  Obviously neither is going to conceed so it is probably best to call it a night.

• 246 Greg Atkinson // Dec 5, 2011 at 10:39 pm

  Well said Senator. Around and around and around they go, where they will stop nobody can know Zzzzz….

• 247 Not Fooled By Property Spruikers Hype // Dec 6, 2011 at 12:27 am

  Greg

  I agree let the reader judge merit of arguments to date.

  Enough said by both of us.

• 248 Stillgotshoeson // Dec 6, 2011 at 12:59 am

  Biker // Dec 4, 2011 at 10:12 pm

  Shoes:

  “Land Available (likes to build)
  Rental Vacancy Rate 1% or lower
  Prices around $350k to $450k level”

  You’ll have to give him _much_ more than that, Shoes!~

  Near the sea

  I have had a look, Yanchep seems a likely candidate…

• 249 Biker // Dec 6, 2011 at 11:33 am

  Who cares who said what/when?

  One of the major issues we face in evaluating internet information is that it _does_ matter who said what.
  Hence if Soros or Buffett are the source, we’re more likely to assign comments more credibility, reliability and validity.

  When? Critical information, except for those who believe time-in-the-market is more important than timing.

  The fact remains that a bright spark with a 600,000-hit blogsite (and a serious case of RSI) told his wide readership (which apparently dwarfs your own, Greg) that by 10:13 am one year hence Australia’s property market would be in worse shape than those of Ireland or the USA:

  “Not Fooled By Property Spruikers Hype Posted at 10:13 PM December 06, 2010 “…12 months time the US & Irish will be thankful things are not as bad as OZ … one Bubble at a Time or as some folks would say BOOM BOOM POW … ”

  You cannot imagine my relief when 10:13 am passed this morning, without the four horsemen of the Apocalypse, thunder and lightning, fire and brimstone… and the crashing to earth of WA homes.

  It is officially Nut Fool Day. Property Bears (one in particular) won’t like it, but _every_ 6th December from here on, WA will celebrate another close call in the l-o-n-g list of foolistic predictions made by WA’s noisiest spruiker,
  a fella who has berated homeowners and investors for many years, most recently as Not Fooled By Property Spruikers Hype.
  

• 250 CraigR // Dec 6, 2011 at 11:46 am

  “Not Fooled By Property Spruikers Hype Posted at 10:13 PM December 06, 2010 “…12 months time the US & Irish will be thankful things are not as bad as OZ … one Bubble at a Time or as some folks would say BOOM BOOM POW … ”

  Not Fooled that does read that Australia is going to see a far worse crash than the USA and Irish property market saw when taken in context of the conversation at the time. Considering those markets and the state the Australian market is just now, I’d have to say you were way off. The same though as all the people saying the market will bounce back next month, no the month after, no wait could be 2099.

  the point is, your statement does imply that the Australian market is going to drop more than those markets did. Fair play you never said a date but people will always hold you to your word as you claim to be a property expert in that you always pop up spruiking your doomsday comments.

  you were wrong but take solace in that you weren’t the only one that was wrong.

• 251 Plornt // Dec 7, 2011 at 10:30 am

  Well, I think they’ve stopped? Or have I spoken too soon?
  This debate reminds me of two gumpy old men debating at the local canasta tournament.

• 252 Not Fooled By Property Spruikers Hype // Dec 7, 2011 at 11:32 am

  Plornt

  Hows the serenity?

• 253 Plornt // Dec 7, 2011 at 12:47 pm

  Lol NF. Hopefully the arguing has stopped indefinitely, people have calmed down and this isn’t just the eye of the cyclone .

• 254 Greg Atkinson // Dec 7, 2011 at 1:12 pm

  I hope so as well. I was getting close to using the block function which is something I don’t like to do. If people want to argue then they are free to put in the effort and set up a site for themselves.

• 255 Ned S // Dec 8, 2011 at 12:30 am

  NF exists to talk the Oz (and particularly WA housing market) down – From what I can see? And sees that as reasonable as there’s lots of vested interests that exist to talk the Oz housing market up.

  But Biker ain’t having none of it. Which also seems reasonable?

  Hmmm – I look forward to continuing to hear what both your thoughts are on things like global finances generally and bond and bullion and equity markets and inflation and deflation and Oz superannuation and things like GDP ratios to Private and Public Debt and yabba yabba yabba etc – Plus your plans for getting ahead going forward.

  But stuff like what’s been getting bounced round here recently is unendingly TIRESOME!

• 256 Greg Atkinson // Mar 13, 2012 at 6:48 am

  Well one thing that seems to be happening is that property prices are weak in many areas and there have been some pretty solid declines in others. Last year house prices on a national level posted declines but it’s probably too early to say prices are trending down or is it?

  According to this article -- Property prices battered: Top 10 worst hit areas revealed

  HOME prices have been slashed almost in half in some parts of Australia, with vendors forced into heavy discounting as properties languish for months in a skittish market.

  Read more: http://www.news.com.au/money/property/property-prices-battered-in-parts-of-australia-amid-heavy-discounting/story-e6frfmd0-1226297242759#ixzz1owRHvull

  I wonder how widespread the downturn is? I wouldn’t read too much into house price declines in areas hit by flood but what about other areas?

• 257 Plornt // Mar 13, 2012 at 8:45 am

  Doesn’t look good does it. This is probably just the start. Remember some areas in the United States went down 70-80%+ that experienced massive price appreciation (e.g. Florida -- esp costal homes). I know there are many real estate markets within Australia and worldwide, but I would prefer to wait until the correction is over which could take a few years. I think its unrealistic to expect a correction to be over so quickly when the rise was substantial and prolonged. Usually bubbles correct to where they began, so as a rule of thumb take 2001 prices and there is your floor.

  Historically real estate bubbles first pop in the luxury areas/Coastal, and then the dominoes start falling across the board. At the end you have some economic shock that forces higher unemployment, and then mass mortgage defaults occur, and a spade of panic selling and capitulation takes place; the dust settles and then it takes several years before people are confident to re-enter. History is rhyming again. Granted you may get a few gems early, but some of these properties could end up 70-80% down. I am not smart enough to pick the bottom, and will continue to avoid real estate heavily.

  This drivel should not be taken as financial advice. Seek to obtain professional
  advice before proceeding with any financial decision.

• 258 Leigh // Mar 14, 2012 at 9:13 am

  Historically real estate is a good thing to have simply because we can’t make any more of it while we can make lots more people who need to live on it. There is a claim that real estate doubles in value every seven years and it is generally true if you look at a 21/28/35 year term. A house I bought in 1971 for $10,500 I sold for $169, 000 in 1991. However, position is still everything, so if you buy in a flood plain, expect to be flooded. Real estate does work, but it is a long term investment and requires management. Sure prices are falling and those that have over committed and have to sell will loose, but if you have been prudent in your borrowings a two or three year downturn means nothing over the twenty to thirty year period that you should be committed to. Build equity and borrow against the equity to buy again. Over commitment
  is the killer, but like any form of gambling some people just can’t resist going all in.

• 259 Harry Lane // Mar 23, 2012 at 1:06 pm

  Let’s forget the heated argument and facts and figures thrown up by the bulls and bears and look at risk management 101.

  Best case scenario for a bull: the market manages to just keep up with inflation for a few years i.e zero real return.

  Option 1: Hang on: CON? Big drop, hard to sell in panicing market. PRO? I save the stamp duty I’d spend to sell out now and buy in later. Amount at risk? 10-20-30-40% of the house price -- let’s say hundreds of thousands.

  Worst case scenario for a Bear: the market just manages to keep up with inflation for a few years

  Option 2: Sell now and take a haircut. CON: I don’t get what I dreamt I might, I pay agents fees. PRO: I can buy back in if it doesn’t crash and goes sideways for only the stamp duty. Amount at risk? $40k for agent and stamp duty (all price dependent of course).

  So there you have it. If you hold you risk hundreds of thousands for little upside gain. If you sell you definitely miss out on say $40k (but even that is only a 10% loss).

  One option would bankrupt you, the other will hurt a little for a while.

  And this is based on an optomistic view for property prices!

  Pick one.

• 260 Greg Atkinson // Mar 23, 2012 at 2:45 pm

  Interesting: “Since late 2010, the Australian housing market has been quite weak with home values falling by 5.5 per cent across the combined capital cities since the market peaked,” the report said. “Buyers who purchased a home since this time have in many instances seen the value of their home move below their contract price.”

  Read more: http://www.theage.com.au/business/homes-with-negative-equity-on-the-increase-20120320-1vhe3.html#ixzz1puqizUCZ

  Looks like a 10% correction by the end of 2012 is a very real possibility now?

• 261 Lachlan // Mar 24, 2012 at 1:55 pm

  “Sell now”…if you can. Whether or not prices are destined to crash i know a lot of people who want to sell including family who have been sitting for a long time with little or no interest at all.

• 262 Greg Atkinson // Jun 23, 2012 at 8:55 am

  I have moved some links here that were posted under a post but are probably more relevant to the discussion here:

  Housing shortage all smoke and mirrors: http://www.theage.com.au/business/housing-shortage-all-smoke-and-mirrors-20120622-20szh.html

  Home owners staying put in slow market: http://www.perthnow.com.au/business/home-owners-staying-put-in-slow-market/story-e6frg2ru-1226404208969

  Sounds to me that we are near or at the top of the house prices cycle. There will be of course those who say property prices don’t move in cycles and they will keep rising but I was hearing that about commodities prices a year or so ago.

• 263 BP // Jun 23, 2012 at 9:36 am

  GA: “Sounds to me that we are near or at the top of the house prices cycle.”

  Then you haven’t factored in the near-doubling of rents in the last five years, reduced cost of interest, our rising population, or poor performance of all other income-producing assets.

  Your comment here negates your own claim that there are property marketS. I’ve no idea where we are in the ‘house prices cycle’ (nor would I ever claim to) but I suspect that those without homes suffer greater confirmation bias than those of us deriving comfortable income from property in retirement… .

• 264 Stillgotshoeson // Jun 23, 2012 at 11:50 am

  GA: “Sounds to me that we are near or at the top of the house prices cycle.”

  I, along with others think the peak has been and gone.

  BP // Jun 23, 2012 at 9:36 am

  Your comment here negates your own claim that there are property marketS.

  It is irrelevant if a dozen suburbs are doing ok when 2000 are in decline. (numbers for highlight purposes)

• 265 Greg Atkinson // Jun 24, 2012 at 11:08 am

  I see Steve Keen appears to be a lot more active recently and this article may be of interest to some: As the Australian housing bubble bursts, prices could fall a lot further than people expect: Steve Keen (Property Observer)

  Some interesting graphs & numbers but of course one could argue that you can’t really compare property markets across different nations.

  Also where is the chart of Australian house prices versus Canada or France..or many other nations for that matter? Sometimes both the property bears & bull seems to be a little selective with the charts & comparisons they use

• 266 BP // Jun 24, 2012 at 1:49 pm

  GA: “Sometimes both the property bears & bull seems to be a little selective with the charts & comparisons they use…”

  We watch Canada closely. Friends in Victoria BC, who own a nice apartment there, plot the market closely hoping to pick up a bargain, but prices on the west coast are buoyant.

  Keen used to be famous for his wild predictions, but he never figured on government intervention or China’s continuing rise.
  Now he’s simply our most famous tenant.

  Like the dotcom collapse, which pre-empted the real burst of technological business growth, China will have some hiccups, but it has not really hit its stride yet.

  I recall that after WW2, Japanese products were deemed inferior rubbish by western consumers. (Some items I bought during that period are still giving great service fifty years later!) To the present: We use three electric pumps on our main property, one as a back up for our mill, during windless spells. In 22 years, over a dozen of these pumps, all made in Oz, have failed. Recently I replaced yet another dud Oz pump with a Chinese XU1… at a quarter the cost of Aussie-made pumps. It pumps faster, cooler, higher and more quietly than the Oz pumps… and has the same warranty period.

  I suspect that we may replace more of our consumer goods with Chinese products in the (near) future, including our vehicles… and that as Third World citizens improve their living standards, they will buy Chinese.

  Not a good outlook for Australian industries, but maybe we need to build more quality into our stuff, or stand by consumers when it fails… .

• 267 Not Fooled By Property Spruikers Hype // Jun 24, 2012 at 2:22 pm

  Gee Wiz Biker Pete

  now your telling us WW2 stories.

  Time for the Nurses in your retirement home to review your medication.

  What has pumps made in Japan got to do with the price of OZ property.

  Time to get out the Sun old timer or put on a hat!!!

• 268 Stillgotshoeson // Jun 24, 2012 at 3:06 pm

  I too have a friend in Canada, he is in Vancouver and works in a bank and he says the real estate market in Vancouver is softening and he expects to see falls in prices, there has been some big changes in lending laws come through that will impact mortgages come re assessment time. My friend is one of these four..

  http://www.kickinthehead.com/profile.cfm?ID=20031229003223

  I also have another friend in Arkansas whom is a builder of custom homes, house prices have gone no where in 6 years he says. Not down nor up in the market sector he deals with. $600k to $1.5m range, materials are at 2003 prices.

  Japan were big on reverse engineering in the early stages of their boom years (like China). Japan went on to huge and better things. Further developed the APICS method in production, zero defect (out) rule and were destined to become the number 1 global economy. (like China) That never eventuated, costs got too high in Japan and manufacturers looked elsewhere.

  China too is now getting too expensive and already companies are looking to go elsewhere to set up shop. Some US firms in China are actually returning production to the US as labour rates have declined so much there and wages in China have risen (adding in shipping etc) it is now profitable to make the suff in the USA again. Some of the unionised shops in the USA that where paying $30+USD per hour anre now down to $12 to $15 an hour and people are lining up for these jobs.

  The company I work for has a China base, wages there have tripled since opening up. Also companies are finding that when they set up shop in China and want to leave, they have to leave everything there, China will not let you take your equipment out.

  Too many people have too high hopes for Chinas continued expansion and the flow on effect to Australia that would have.
  As Japan did, China too is peaking or just about peaked, will they die off to nothing? Of course not but the rate of growth will be in steady decline over the coming years and reach what will become the staus quo for them.

  As for SK, I remember Biker in another comment somewhere saying SK changed his bet/view. The bet was always 20% in a couple of years (lost) and 40% over a decade or so (still open) He then went on to say that it could be even worse and be 70% in some areas but did not add this to the bet, it was a generalised comment.

• 269 BP // Jun 24, 2012 at 5:59 pm

  Pumps made in Japan? Time to get out those cokebottle specs of yours, old timer. Who said anything about pumps made in Japan?

• 270 Stillgotshoeson // Jun 24, 2012 at 7:53 pm

  Need to work on your comprehension skills Biker, I make no mention of Japanese Pumps.

  The reference to Japan is in response to your comment about them being considered poor in the early days and went on to bigger and better things, like Chinese now is considered in some ways poor and cheap products, but “getting better” re: Chinese pumps are working great for you.

  Early Japanese, crap, got better and peaked.. over 20 or so years.
  China will do the same, time frame will be shorter.

• 271 Greg Atkinson // Jun 25, 2012 at 7:50 am

  I am struggling to grasp what the last few comments have to do with the Australian housing market so maybe we can drift back onto the topic?

• 272 Stillgotshoeson // Jul 9, 2012 at 8:36 am

  Melbourne is not doing too well in the current economic climate.

  http://theage.domain.com.au/real-estate-news/home-owners-facing-loan-repayment-disaster-20120708-21pkl.html

  One shudders to think how bad it would be if we did not have ultra low mortgage rates and low unemployment. Imagine if they were to rise…..

• 273 Biker // Jul 9, 2012 at 6:07 pm

  Greg Atkinson: ” Are there some signs of economic life out there or any hints of a global economic recovery… (?)”

  I know you’re always seeking positive signs of a turnaround, Greg. Property is often the first asset class to recover. This may help cheer us all up!:

  http://www.perthnow.com.au/business/wa-real-estate-bust-is-over/story-e6frg2ru-1226419803501?from=public_rss

• 274 Greg Atkinson // Jul 10, 2012 at 6:43 am

  How the analysts can make a call on the property market in WA without taking into account the slowdown in China is beyond me but it’s another sign that the mining boom mentality has set in.

  I don’t know if the property cycle will turn upwards or not, but I would suggest if commodities prices keep falling then it’s unlikely that house prices will be heading upwards in a significant way any-time soon.

  I also recall a few years ago when I was talking about house prices sliding back a touch that people tossed up all the reasons outlined in that article why that wouldn’t happen.

  Anyway demand does not always equal rising prices especially if prices are already high and people don’t have the capacity (or willingness) to take on the debt needed to keep pushing prices up.

• 275 Biker // Jul 10, 2012 at 10:01 am

  Goodness! I’d expected you to entirely believe the article and congratulate West Aussie property investors on our good fortune, Greg… .

  Seriously, we should all apply the same skepticism to the link supplied by an east coast contributor. Watching the video supplied in that last link, I was astonished at the disparity between the vidclip and text in that contribution:

  http://theage.domain.com.au/real-estate-news/home-owners-facing-loan-repayment-disaster-20120708-21pkl.html

  One shudders to think why an equally terse appraisal did not follow that gem… .

• 276 Greg Atkinson // Jul 11, 2012 at 7:36 am

  Actually Biker I don’t quite understand many of the doom & gloom articles as well. For example why would a owner-occupier face ruin because the potential market value of their home had fallen as long as they could keep up with the loan repayments?

  I also can’t see why a fall home prices would impact those who owned investment properties either as long as the rental returns were good.

  I never expected (& don’t expect) a U.S style property crash in Australia mainly because there isn’t a nationwide glut of homes (although there is in some areas) and we didn’t have had banks like Fannie Mae/Freddie Mac giving home loans to people who couldn’t afford them. Also you can’t hand the keys back to the lender in Oz and walk away from the loan -- that’s a significant difference as well.

  But I reckon it’s quite possible there will be some years of lower or no capital gains in Australia in many areas.

• 277 Biker // Jul 11, 2012 at 9:34 am

  Greg: “I don’t quite understand many of the doom & gloom articles as well. ”

  Among the bogeymen created by property bears, negative equity is a minor player, Greg.

  Possibly more useful is their assertion that we have oversupply. Australia’s history is replete in ghost towns where the vital resource ran out, where new technologies made it obsolete, or its value simply fell. Visiting these towns, you can immediately see scores, usually hundreds of empty dwellings no doubt still part of the statistics. There’s certainly oversupply in places where no-one _wants_ to live.

  While I completely accept your closing paragraph, I also believe it likely there will be major capital gains in areas where people _want_ to live, regardless of global factors like China’s prospects. Undersupply of homes, due to reduced residential construction… lack of land close to these centres… and particularly changing demographics… will mean steady growth in medians in these areas.

  Despite the huge number of Kiwis leaving NZ for The Promised Land, some of their cities are experiencing this, now:

  http://www.perthnow.com.au/news/breaking-news/no-boom-despite-rise-in-nz-home-sales/story-e6frg133-1226422383231

• 278 BP // Jul 30, 2012 at 5:20 pm

  Further to Comment # 667 in the ‘Australian Share Market Outlook’ thread: “IF rents blow out, home _sales_ and prices may increase steadily”… it appears rising rents may already be amping sales in WA:

  http://www.perthnow.com.au/business/bumper-month-as-home-sales-jump-24pc/story-e6frg2qc-1226438582892?from=public_rss

  Shoes: “…the catalyst for the coming decline in the ASX will be from overseas conditions…”

  Could add to accommodation demand though. There are record numbers of _new_ economic refugees arriving by sea, apparently… .

• 279 Greg Atkinson // Aug 8, 2012 at 9:30 am

  It appears Stockland for one is still seeing weakness in the property market according to this article in The Australian today: Stockland warns on property market outlook amid 35pc fall in FY profit

  “Managing director Matthew Quinn said that the property sector remained very challenging and would continue to prove difficult in the 2012/13 financial year.”

• 280 Lachlan // Aug 9, 2012 at 6:58 am

  RBA has left the target rate unchanged. I still believe they will have to cut it of course. They are caught between the inflation genie and a low real GDP, welfare state. But that’s almost the global status quo.

• 281 BP // Aug 10, 2012 at 8:41 am

  Greg: “It appears Stockland for one is still seeing weakness in the property market…”

  Often wondered if there might actually be property marketS.

• 282 Greg Atkinson // Aug 10, 2012 at 8:50 am

  There are of course property markets, but Stockland does have exposure to the major ones so for stock market investors it would be a bit foolish to ignore how Stockland is faring because some pockets of residential housing are doing well.

• 283 BP // Aug 10, 2012 at 11:55 am

  The _rental property_ market, for example, is going balli$tic.

  Stockland is exposed to a deteriorating residential construction market, primarily on the east coast.

  Property bears continue to assist us rental owners. We’ve continued to raise rents, _as leases expire_. Greg, your perception of property marketS may or may not include rentals. It probably should, given the extreme increase in these _dividends_; well beyond our hopes and expectations for income in retirement… .

• 284 Stillgotshoeson // Aug 10, 2012 at 9:24 pm

  It seems that AV Jennings is saying the same thing about their markets..

  http://www.heraldsun.com.au/business/housing-slump-blamed-for-av-jennings-295-million-loss/story-fn7j19iv-1226446663687

  The reality is residential construction is dropping off because there is no demand.
  Combination of factors, the FHBG brought forward those that would be buying now into an earlier buy period.
  Lack of confidence the economy and job security.
  Cost of living increases
  A reluctance to take on more debt and more willingness to save
  Debt reduction becoming more common among households

  My friend had 2 units waiting to be let for some time, a drop in the asking price for the properties was needed to get takers.

  Shoes, Sydney.

• 285 BP // Aug 11, 2012 at 7:22 am

  Shoes: “The reality is residential construction is dropping off because there is no demand.”

  Uhhh, you mean people now live outdoors? To a certain extent, you’re correct. The caravan parks are full over here…

• 286 Not Fooled By Property Spruikers Hype // Aug 11, 2012 at 8:12 am

  Shoes….. Your right despite a slowdown in new constructions Perth still has a 2484 rental vacancies ….. The true rental vacancy numbers are unknown because nobody actually have a accurate data collection set …. see this link it explains it in detail …. http://nfbpsh.blogspot.com.au/2012/04/reiwa-rental-vacancies-numbers-are.html

  Meanwhile Biker clutches to the dream thinking there is a shortage that will sustain prices

• 287 Greg Atkinson // Aug 11, 2012 at 11:36 am

  Clearly if Stockland & AV Jennings are seeing a weakness in the residential housing market then a weakness exists. CEO’s of listed companies are not known for talking down their company’s outlook for no good reason.

  If the Chinese economy continues to slow then 2013 could be challenging again for Stockland & A.V. Jennings.

• 288 BP // Aug 11, 2012 at 1:59 pm

  “Biker clutches to the dream…”

  Our dream (independence, comfort, and travel in retirement) has not only been achieved, but we’ve no need to _ever_ touch the principal (ie., sell any of our properties in our lifetimes.)

  Contrast that with that other fella’s record. How could you help him become a millionaire? Give him a billion dollars and let him invest in small caps.

• 289 Greg Atkinson // Aug 11, 2012 at 9:31 pm

  I found this extract from an article in The Australian interesting as it suggests it’s tough out there for many landlords.

  “Interestingly, landlords have yet to make money from the arrival of cashed-up but deposit-poor families. The latest taxation statistics for 2009-10 showed negative gearing still rules: after deducting interest and other costs from rental income, our landlords lost $4.8 billion. Total losses for the decade were $43.65bn.”

  From: Governments should avoid reviving the deflating property bubble

• 290 Lachlan // Aug 15, 2012 at 7:42 am

  I have not flipped any of my current investments either BP. I am in for the long haul. My business has started to look good on paper and in real time I enjoy it and have few competitors… so it is logical to leverage a little.
  I did select a block I would be very happy to live on if had to. It has beautiful views. But I am staying put here for now. My next dream is for the block I imagine retiring on. A few hundred acres of scrub soils and maybe a ridge thrown in somewhere etc ect. I like space and I can plant a forest of hardwoods to keep myself amused….and a long list of other projects. Gotta go. Cheers

• 291 Greg Atkinson // Aug 15, 2012 at 9:38 am

  Here is an article which suggests house prices in Australia are no even close to be in a bubble. RBA’s Stevens guillotines housing hyperbole

  Bear in mind that the author, Christopher Joye, tends to be always bullish regarding the property market.

  I found this quote by the RBA Governor Glenn Stevens interesting:

  “Scaled to measures of income, Australian dwelling prices on a national basis have in fact declined and are now about where they were in 2002. That is, housing has become more ‘affordable’. Four or five years ago we supposedly had a housing affordability ‘crisis’. Now it seems that the problem some people fear is that of housing becoming even more affordable.”

  I don’t think there are that many people who feel housing has become more affordable. Perhaps Glenn doesn’t get out of Canberra much?

• 292 BP // Aug 15, 2012 at 12:50 pm

  Interesting points.

  Certainly interest rates at <6.8% are better than the 9.45% we were initially paying for our last five builds. Incomes have risen appreciably, too, particularly in WA. Referring to side-by-side screenshots of income changes 2006 -- 2011 in our two main investment suburbs, it's the 'family income' area which has jumped markedly… around 45% in those five years.

  And prices have plateaued, even fallen in less desirable locations; and perhaps even at the top-end-of-town. I've spotted a bargain for $688K, but I'm reminded by my 'more rationale half' that two smaller rentals would generate more income.

  2002 prices? Maybe on the east coast… . _Really_ desirable properties in good WA locations haven't changed much since 2007. Rents have!~

• 293 BP // Aug 16, 2012 at 12:31 pm

  Further to that comment, David Bassenese (AFR, 6/08/’12, p.22) cited ABS data to comment “House prices are now only 4.7% below their recent June quarter 2010 peak.”

  While that same period offered buyers who did their research some prime beach blocks at remarkably low prices (due to developers’ need for cash flow) those days are over. In WA, the only housing bargains may be in the $650K -- $1.4 mil range… partly because homes in this range rarely deliver a return better than bank interest, despite better tax provisions than cash; but also because there are fewer buyers in this price range. Rising wages in WA might change that. ABS data appear to support a 9% pa rise in family income, in more affluent suburbs.

  Not the only factors in play, but interesting nonetheless… .

• 294 Lachlan // Aug 17, 2012 at 5:48 am

  It will be interesting to see how Australia goes with wages over the next decade.
  In China regular wage increases around the various provenances and municipalities, of quite some magnitude (percentages) are regular and state policy..so I read.

  http://www.thechinamoneyreport.com/2012/08/13/18-chinese-provinces-and-cities-raise-minimum-wage/

  “National regulations require provinces and municipalities across the country to raise their minimum wage at least every other year.”

• 295 BP // Aug 17, 2012 at 7:54 am

  http://www.thechinamoneyreport.com/2012/08/13/18-chinese-provinces-and-cities-raise-minimum-wage/

  I think that trend will continue, Lachlan. China bears suggest it will reduce China’s competitiveness in the global market. Offsetting that, perhaps, may be a gradual emergence of (much) higher quality products (as with Japan) especially in the automotive sector.

  Less than a day after I posted Comment 325 above, suggesting that WA _families_ in more affluent suburbs had benefitted from income increases around 9% pa, I read this seemingly contradictory report:

  http://www.perthnow.com.au/business/worklife/cheques-in-the-mail-who-got-the-biggest-pay-rise-this-year/story-fn7kjxsd-1226451786244

  While my premise may be true for the two suburbs in which we have most property, WA may simply be playing catch-up with more affluent suburbs along the east coast, both in property ‘values’ and rents.

  If wages continue to rise at this rate, it suggests we’ll see inflation re-emerge as a major issue, both in China* and Australia (along with higher interest rates, of course.) What we’ve noted, over more than three decades, is that house prices then actually jump, despite rate increases(!) And if that doesn’t happen, of course, we’d anticipate those wage increases sustaining higher rents.

  Our visit to the accountant reaffirms we have done the right thing (for us) and that we should now build another house, if the total cost can come in around $540K. I’m reminded that he stands to make _nothing_ from that recommendation, unlike a handful of shonky FAs who have tried it on and been tossed over the decades… .

  * Inflation _has_ been a major issue for China during its rapid growth. If wage rises really are ‘programmed’, it’s hard to see how inflation might fall, other than via The Great Hard Landing some propose… .

• 296 Greg Atkinson // Aug 30, 2012 at 9:19 am

  Here are some interesting points from Ben Hurely in the AFR today. (Please see: Neither a borrower nor a home owner be for the full article)

  The “rent money is dead money” argument is not as simple as some make it sound. If you borrow $500,000 for a home on a 25-year loan at a 7.5 per cent interest rate, you end up paying $1.1 million.

  The desire to recover that outlay, which goes far beyond the property’s value at the time of purchase, explains why many see steep capital growth as a right. A market without steep capital growth is seen as weak, not normal.

  But this is the problem with housing as an investment: people need a place to live. It’s reasonable to use the home as a hedge against inflation, or to build or renovate a home and profit from your work. But there is nothing heroic about using debt to get rich off soaring house prices or climbing rents. It looks like free money, but it actually comes from the next buyer (if it doesn’t catch up with the current owner)

• 297 Plornt // Aug 30, 2012 at 1:35 pm

  Australian building approvals MoM -17% v est -5%

  RBA are going to have to reduce rates again soon; massive AUD.USD carry trade unwind coming.

• 298 Greg Atkinson // Aug 30, 2012 at 2:14 pm

  I suspect rates will be coming down especially if the hard commodities rout continues. But even if rates are cut I doubt they will help the housing market much if the mining boom turns to bust.

• 299 BP // Aug 30, 2012 at 4:09 pm

  Greg: “BP it isn’t my quote.”

  Neither is Marv’s mine, Greg.

  Over the years we’ve read many such Hurls. Reread it and you’ll appreciate just where this bear is coming from. Like other hurls it reeks of generational discontent… envy… anger… and frustration… . Images of “What do we want? Half price houses! When do we want ‘em? NOW!” might well be the angry chant from the Instant Gratification Crew.

  Is there actually anything _new_ in this hurl?

  One thing I do appreciate is Hurley’s welcome recommendation that more folk _rent_… at a time when residential construction is slowing markedly and our population is still steadily rising*. Even the least-informed of economics students could see where this is heading… .

  * Over at PerthNow, some poor fool is on his knees praying for a mining boom collapse to bring it all down. None of that ol’ time religion here, TTL… !

• 300 Leigh // Aug 30, 2012 at 4:19 pm

  Greg, I think Ben Hurley (AFR) doth protest a little too much. If the banks are siphoning rivers of gold from housing debt, then Ben should be investing in the banks and getting some of it for himself. Why do we knock the banks and the miners when millions of us share in their profits?
  He also forgets that many who have investment properties got no government incentive to buy them and I hardly believe a capital gains tax on fifty per cent of profit you have made from money saved after you have already paid tax is generous. He also forgets about land tax. As with most of life in this lucky country it is a choice as to what you do with your money. He too can work another job and on weekends and he too can save instead of spend and not take holidays and perhaps he too can buy himself a home or an investment property, but it seems Ben has taken up the option of renting for life and complaining about it for the same period.

• 301 Greg Atkinson // Aug 30, 2012 at 4:42 pm

  Yes Leigh he does protest a little too much. It’s the old renter versus buyers debate but I do wonder if we are as a nation, we are pumping too much money into housing.

  I am also not a fan of the home buyers grant or stamp duty on home purchases. Seems to be some unnecessary money sloshing around.

• 302 Leigh // Aug 30, 2012 at 5:07 pm

  I thought that stamp duty would be one of the things that would go when the GST was introduced and I would like to see land tax go with it and perhaps the State Governments themselves could follow down the same hole. I think you are right in that some of this sloshing money seems to do little more than provide an income to pay for the department that collects it.

• 303 BP // Aug 30, 2012 at 5:53 pm

  I haven’t quite finished with Hurley’ hurl, yet.

  Take another look at that opener: “I would love to own a home. I could upgrade my crappy electric stove, get a hot water system that actually fills the bathtub, and stop asking the landlord for permission to put a nail in the wall.”

  He’d _love_ to own a home. He hates renting. And, as Leigh notes, he will bitch about it, endlessly… . Given time, he may actually overtake Australia’s Most Famous Tenant as our most persistent and furthest-throwing hurler… .

• 304 Lachlan // Aug 30, 2012 at 6:30 pm

  I guess if you are hard up getting credit then government grants may help people into houses but they just omit to tell you that you will have to pay a lot more for it. Having said that it seems some young people are often happy to make their own lot even worse by having to buy the very best of everything immediately rather than building up from an affordable, low pressure start. My first house was small but very neat and I sold it for three times the price 6 years later. A trawler fisherman bought it and (in between eating near foot long banana prawns) did all the add ons I had planned for in my original design (having planned for a much longer residence there). It looks great now.
  At the same time a person I knew bought the best of everything straight away and sold it later for a very slight gain.

• 305 Lachlan // Aug 30, 2012 at 6:34 pm

  Developing a property is a pleasure, we don’t often mention in these debates. No doubt it’s a tough time to do it.

• 306 Greg Atkinson // Aug 30, 2012 at 6:57 pm

  One thing that’s for sure and that is housing is a great way for politicians to make people feel better about the economy and help cook the GDP books. It’s one of the few things with the economy they feel they have some control over and you can be sure as night follows day they will exploit it to get elected or re-elected.

• 307 BP // Sep 2, 2012 at 3:07 pm

  Plornt: “…our housing bubble is BIGGER than the United States in terms of real prices historically…”

  For most of the last decade, the US generated _three times_ the number of housing starts per head of population as Australia. In 2006 -- 2007, there were 4.5 times the number of housing starts p.h.o.p., as in Australia. The US bubble had been steadily building since 2001, but in those two years construction went ballistic as supply not only peaked, but went into hyperdrive. By 2007 -- 2008, the US started cutting back, but even during 2009 -- 2010, an economy with oversupply AND a housing collapse was still more than doubling Australia’s building starts!

  As I’ve commented previously, comparisons between the US and Australia are laughable on that basis alone; even without factoring in their unemployment situation and minimal wage conditions… .

• 308 Not Fooled By Property Spruikers Hype // Sep 2, 2012 at 8:41 pm

  Biker you say

  ” For most of the last decade, the US generated _three times_ the number of housing starts per head of population as Australia. In 2006 — 2007, there were 4.5 times the number of housing starts p.h.o.p., as in Australia. The US bubble had been steadily building since 2001, but in those two years construction went ballistic as supply not only peaked, but went into hyperdrive.”

  Sorry not true where is you proof.

• 309 BP // Sep 2, 2012 at 9:34 pm

  Housing Starts per Head of Population Growth, Australia/United States, 2001 -- 2010, Source ABS, US Census, RBA, Macroplan Australia; cited in The Weekend Australian, October 16 -- 17, 2010, p. 6.

  Now sneak back into your Homeswest hideout and plan another feeble diversionary response, wunderkind.

• 310 Not Fooled By Property Spruikers Hype // Sep 2, 2012 at 11:16 pm

  Nope still wrong Biker.

  Why do you always make things personal?

  “Now sneak back into your Homeswest hideout and plan another feeble diversionary response, wunderkind”

  http://www.marketoracle.co.uk/Article25717.html

  Look at the long term trend & you will see it matched population growth.

  FYI many cities that did not have a large number of housing starts also fell in price including many areas that had / have a under supply.

• 311 Greg Atkinson // Sep 3, 2012 at 7:55 am

  Thanks for the link NF and I agree with you, there is no need to make things personnel.

• 312 BP // Sep 3, 2012 at 7:56 am

  Nut Fooled: “Why do you always make things personal?”

  I’m used to you demanding a valid source and replying with a feeble diversionary response (as you have once again… .)

  I can also provide numerous examples of you ‘making things personal’, if you like.

  Have you decided yet whether you’re a property investor with six WA properties, or an unemployed Homeswest tenant with substance-abuse issues? Given your lack of written communication skills, the latter is likely, but I’m happy to provide numerous links to demonstrate you’ve claimed you’re both, at different times, NF.

• 313 Ewen // Sep 12, 2012 at 9:11 pm

  Have any of you guys read the Speculative Vacancies Report by Phillip Soos? I have attached a link below, the link is within the article, there’s plenty to read and I’d be interested in hearing your responses. I am just an observer.

  What is the real state of the housing market in Australia? Is there an under or oversupply of housing and how does it affect the average Australian with housing affordability at all time highs, exorbitant rents and public housing in crisis?

  http://www.earthsharing.org.au/2012/07/03/housing-oversupply-evidence-builds/

  Ewen

• 314 BP // Sep 13, 2012 at 9:10 am

  A picture is worth a thousand words, isn’t it?

  Now consider the claim “…a 341,000-home oversupply…”

  If true, how does one explain ‘exorbitant rents’, I wonder? The writing’s on the wall all right and there will be more such impotent anger expressed as residential construction slows, population rises and rents (now reasonable) rise to levels which surprise even those happy souls who invested in Australian property… .

• 315 Not Fooled By Property Spruikers Hype // Sep 13, 2012 at 2:03 pm

  Seeing it is RU-OK day

  I will ask you Biker RU-OK?

  You see in your first line you claim….”how does one explain ‘exorbitant rents’ & then you go on to say ….”rents (now reasonable) ”

  So they are “Exorbitant” & “Reasonable” at the same time?

  Perth Rents Dec 2008 $380 pw & Now $420 (Medians)Not even keeping up with CPI nothing to get too excited about.

  I would be more concerned about the thousands & thousands of Mum & Dad property speculators just like yourself who have relied on Capital Growth that has not been there to offset negative rental returns to make their property speculations work who are now dumping property whilst the most gullible investors hang in there convinced the good old days will return.

• 316 Craig R // Sep 13, 2012 at 2:31 pm

  at Not Fooled. I have read for years now how you believe that property investing is bad. Please tell how you have amassed your wealth if indeed you have any at all?
  I only ask this because it would be wonderful for me if I could follow in the footsteps of such a knowledgeable person as yourself so I too don’t make an error in buying residential investments.

  btw I just read today that for the 3 months to August 2012 Perth median rental rate is $450/week with a vacancy rate of 1.8%, source REIWA. This is for Perth only though
  So IF I owned a house and have a mortgage of only $150,000 and receive a weekly rental income of $450 this is not good?

• 317 Craig R // Sep 13, 2012 at 2:38 pm

  by house I mean an investment property that I rent out and the mortgage is against that house

• 318 BP // Sep 13, 2012 at 5:57 pm

  No, _Ewan_ said rents were ‘exorbitant’, Nut Fool.

  I _cited_ Ewan.

  Since it’s apparently RU-OK Day, are you? Have you even decided who UR? Let’s repeat my question, at 350, above:

  “Have you decided yet whether you’re a property investor with six WA properties, or an unemployed Homeswest tenant with substance-abuse issues?”

• 319 BP // Sep 13, 2012 at 8:27 pm

  Let me help you here, son. ‘Cited’ doesn’t mean I saw Ewan (or Euan ). It simply means I’m _quoting_ him. ‘Quoting’ means I’m repeating what he has _said._ RU still following me, NF?

  The most delightful aspect of property bears’ communication is their ability to _alienate_ the other 99% of us… . Consider that use of a photograph depicting (and defending) graffiti. It’s inept… and it sums up perfectly your collective inability to communicate what might otherwise be a coherent and possibly even consistent message.

  Now in your particular case, your inconsistencies are truly quite wonderful. You’re on record boasting about your _expertise_ in this asset class… yet you attempt to demean, denounce and denigrate those who draw major dividends (rents) from property.

  RU a masochist, or what?!~

• 320 Lachlan // Sep 14, 2012 at 6:00 am

  http://www.youtube.com/watch?v=AFa1-kciCb4

  

• 321 Not Fooled By Property Spruikers Hype // Sep 14, 2012 at 8:45 am

  @ Craig comment #354

  Let see $450pw x 52= $23,400 less mgt fees 8% $1875= $21,25 less water rates & shire rates $3,000 =$18,525 less maintenance $2,000 = $16,250 less interest cost on $150,000 @6% $9,000 = $7,250

  Assume you are earning Median Rent on Median priced Perth property.

  Median Perth property = $475,000 minus -- $150,000 (Borrowed funds) = $325,000 equity invested in Perth property sector.

  $7,250 return on $325,000 invested = 2.25% or about $140pw

  V’s

  $325,000 in a bank @ 5%= $16,250 or $312pw

  FYI Perth property fell 4% ? 5% in the past 12-18 months so dont forget to take that into account.

  But then again it will double or triple
  any within the next 5 years because property always will do that, despite peoples incomes only rising by half that.

  Why the next 5 years you ask?

  Well Perth property is @ 2007 prices so naturally by 2017 it will be at least double 2007 prices. It has to just look at any property investment book & it will confirm this a a economic law!!

• 322 BP // Sep 14, 2012 at 9:37 am

  Rent-for-lifers just don’t get it, Craig. Perhaps today’s Perthnow report might help NF, but I doubt it:

  http://www.perthnow.com.au/news/western-australia/rent-consumes-nearly-half-weekly-pay/story-e6frg13u-1226473733709?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+PerthnowTopStories+%28PerthNow+%7C+Top+Stories%29

  Not only does NF (claimed owner of six WA properties: Karratha 4, Woodvale 1, Mandurah 1 ) have minimal knowledge of tax benefits of property, he’s obsessed with capital gain; but when one makes a large gain on land held for two years (as we did recently) NF tells us it didn’t happen… . (The ATO knows it happened, NF! )

  Sadly, Nut Fool still declines to respond to The Biq Question: “Have you decided yet whether you’re a property investor with six WA properties, or an unemployed Homeswest tenant with substance-abuse issues?” He has claimed repeatedly he’s both, but fails to explain these schizoid claims. No wonder he’s so au fait with RU-OK Day… .

• 323 BP // Sep 14, 2012 at 9:53 am

  As a collector of spaghetti westerns, I enjoyed the analogy, Lachlan…

  Now, for the best opening ever:

  http://www.youtube.com/watch?v=WYQX_hIBPZU&feature=related

• 324 Craig R // Sep 14, 2012 at 3:35 pm

  @ Not Fooled you still haven’t answered my question. Tell me how you do it please, I would really like to be as successful as you are.

  Also you have not taken in to account any tax advantages of using a negatively geared system that the Government has put in place to help property investors. Plus having your own finances correctly structured to help pay your mortgage off on your PHOR. Where in many cases this will reduce an average mortgage quite considerably more often than not in less than 10 years on a $400,000 mortgage. Not going to post the maths because that is your thing and I can’t be bothered. I know them and I am very happy with how it works.

  So are you saying Perth property prices will continue falling by double or triple? Or are you saying they will increase by the same amount? I can’t remember when but and I don’t care to look but I do recall you stating Perth property will not double or triple any time in the future and we will see a sharp decrease in property value like America has. So which is it because I am getting really confused?

  “$7,250 return on $325,000 invested = 2.25% or about $140pw” I am not paying you to assume anything. If you are going to make statements base them on the information provided please. At no time did I state how much the house was purchased for or it’s current value or even mention how long the property has been owned.Also if I am getting paid $7250 per year to own a house that you state is only going to double or even triple in value why would I not do it? Your reasoning makes no sense whatsoever :s Your argument here is also saying there will only be a ROI of $7,250 once if you own that investment over multiple years I’d say it is a tidy little earner considering I haven’t had to go and work harder for it especially when you do include equity .
  And if you never sell that property that money is yours to use how ever you want when you know how to legally.

  With regards to money saved in a bank account
  “$325,000 in a bank @ 5%= $16,250 or $312pw” what are the tax implications there? How long has it taken you to save that amount of money and on what income?
  In my line of work, which btw is no ones business but mine, I see hundreds of people a year and can prove (if I was allowed to but due to the privacy act I can’t) that of them only 1 has been able to save anywhere close to the amount of savings you talk of and this person has an income of $150,000 + per year. This has also taken them many, many years to achieve it as well. The average Australian person will never save anywhere near 6 figures in their life based on hundreds of my clients seen in 1 year.

  If you buy an investment for capital gain you are a speculator and nothing else. If you buy an investment for cashflow, which most people in WA don’t fully understand then it is more likely to fail than not.
  I look forward to you answering my question

  Regards

  Craig R

• 325 Not Fooled By Property Spruikers Hype // Sep 14, 2012 at 4:10 pm

  Craig

  Leave you to have the argument with yourself.
  Not interested, my point stands

• 326 Not Fooled By Property Spruikers Hype // Sep 14, 2012 at 4:13 pm

  Sorry Biker Pete did I called you Craig by mistake earlier.

  Credit where it’s due I always say!!

• 327 BP // Sep 14, 2012 at 4:47 pm

  I think Greg can confirm that I’m not Craig, Nut Fool.*

  As Craig has noted, you’ve very little understanding of the generous tax provisions applied to those who provide accommodation to almost a third of Australians.

  And, as I’ve noted previously, you always apply worst-case-scenarios to all aspects of property acquisition. Those of us who have bought and sold wisely over the years… and are now retired, are very comfortable in retirement. While we’ll never get a cent from an old age pension, or receive any health benefits or other concessions, we prefer complete our independence, freedom and mobility to the strictures of welfare on which you have claimed you exist.

  I suspect that Craig’s point regarding the source of your ‘wealth’ is beyond your limited capacity to answer, but if natural gas is ever depleted, your capacity to produce methane will be invaluable.

  * You must really miss that golden period in which PerthNow permitted you scores of posts daily, in a whole range of aliases. The best? Those in which you posted identical comments in different names… and those in which you _answered_ a hypothetical question before PerthNow actually _posted_ the question… . Classic Nut Fool… !

• 328 Craig R // Sep 14, 2012 at 8:12 pm

  not sure Not Fooled if you are trying to say I am BP or not, I don’t know who BP is other than someone I have read on posts with regards to property in the last 2 years or so. Can’t really remember how long to be precise.

  You also state I can have an argument with myself and your point stands…..what point is that btw because I am really confused with what you are saying with that bit.
  As for arguing with myself then what argument exactly?

  If that was a genuine error on your part mistaking BP for me then apology noted. If it was some way of trying to be witty and make yourself look good then that is peculiar at best.

  I am not making this personal, I just want to know….how you are creating your wealth without investing in property. I understand property is not for everyone and based on your understanding of property investing I would strongly recommend you do indeed stay away from it.

  I have read your posts on Perth Now today with regards to their latest report on Perth property and again it doesn’t match with things I have read from you over the last 2 years or thereabouts.

  Let’s look at the point you were trying to make earlier Not Fooled --

  “Let see $450pw x 52= $23,400 less mgt fees 8% $1875= $21,25 less water rates & shire rates $3,000 =$18,525 less maintenance $2,000 = $16,250 less interest cost on $150,000 @6% $9,000 = $7,250

  Assume you are earning Median Rent on Median priced Perth property.

  Median Perth property = $475,000 minus — $150,000 (Borrowed funds) = $325,000 equity invested in Perth property sector.

  $7,250 return on $325,000 invested = 2.25% or about $140pw”

  A yearly return of $7,250 is bad and I agree with you 100%, sort of.

  If a property is bought for $150,000 with a $150,000 mortgage (with no savings used at all to purchase this)and grows to the Perth median you have stated in the time frame you have given you need to then take in to account the year on year Capital Growth of that equation.
  Capital Growth over a 7 year period of $275,000 (which means as you said the value of the house has more than doubled ) equals $39142(CG) + $7,250(Yearly Income from IP) = yearly return of $46392 thinking your way or a week $892(plus change) a week. That is quite better wouldn’t you think? And the house hasn’t even been paid off yet!

  Even if there is no growth for the next 5 years and then 2 years later the property value doubles as you said to now $950,000 ($475,000x2 = $950,000) minus the costs you stated and not even allowing for the increasing of the rental income that would have to be, in my mind at least, a pretty good long term investment considering I have actually not contributed one single cent of my own money, wouldn’t you agree?

  nb only in this example and not to be compared to any other situation.

  BP or anyone else (other than Not Fooled) please show me where my thinking is wrong with this.

  Not Fooled I look forward to your answer to my original question put to you

  Regards

  Craig R

  p.s. I don’t shop at BP, only Shell because of Fly Buy rewards points

• 329 BP // Sep 14, 2012 at 11:20 pm

  Craig R: “…please show me where my thinking is wrong with this…”

  Well, after recently visiting our accountant, in the first year of my full retirement, I was sorely tempted to exult publicly online, on how good things really are. I moderated my excitement with a comment to the effect that “…property had been the right choice… for us… .”

  OK, let’s look at that rider: ‘for us’. If you’re afraid to buy when things look bleak, property isn’t for you. If you’re fearful, negative or pessimistic, forget property. If you always want a _quick_ return on your investment, don’t even _look_ at property.

  If, however, you are prepared to research, exercise patience, put in the hard yards, learn some basic rudimentary skills, and do physical manual labour when contractors’ quotes are just plain silly, maybe you have the nous to be a multi-millionaire by the time you retire.

  The nutfools of this world either have none of these attributes, or figure the system can be beaten by their ‘better’ system. In NF’s case, the methodology appears to be very flawed mathematics and noise.

  We _need_ the NFs of this world. They consume the minimal amount of public housing available, deter investment in residential construction (resulting in less supply and rising rents) and provide us with an amusing glimpse of the ‘winner’ mindset.

  And, apart from ‘Breaking Bad’, they’re the best entertainment available!!~

• 330 Craig R // Sep 16, 2012 at 9:54 am

  I understand BP exactly what you are saying. I love it when people tell me I am wrong and can prove their reasoning instead is very flawed.

  I love it when a plan comes together

• 331 BP // Sep 16, 2012 at 2:02 pm

  Craig R: “I love it when a plan comes together…”

  In our case, the plan has exceeded (my) expectations.
  My missus claims she always believed it would be this good, but a couple of extended overseas trips annually was one more than I’d anticipated.

  Planning the next two right now, in fact, Craig.

  Cheers!~

• 332 Craig R // Sep 16, 2012 at 3:04 pm

  excellent news BP.
  why wouldn’t you buy more investments if you can afford to do it? As long as they are structured correctly and getting the benefits now rather than later who wouldn’t buy at least one?

  Regards

  Craig R

• 333 BP // Sep 16, 2012 at 4:00 pm

  Craig: “…why wouldn’t you buy more…?”

  We probably have enough, Craig!~ I don’t know how I’d manage without a laptop*, in fact. We’re more experienced in property than our two property managers (different locations) and find the internet invaluable in helping them to manage our rentals now.

  I can’t stop my partner looking, though. Few days pass without her scoping one or more bargains…. but we really do have enough and it’s likely we’ll pass them on to the kids. Why ever _sell_ an asset that’s generating such generous retirement income?

  * The missus is hooked on her iPad… and I may buy one myself, if Apple releases the 7″ model before Christmas… . Travellin’ light(er)…

• 334 Not Fooled By Property Spruikers Hype // Sep 17, 2012 at 12:18 pm

  Interesting post on Australian Housing Markets:

  http://www.slideshare.net/fullscreen/k22geo/macro-housing-conditions-the-longterm-outlook-for-the-australian-housing-market-pdfpptx/2

• 335 Greg Atkinson // Sep 17, 2012 at 3:46 pm

  That’s an interesting presentation pack NF. Back in 2010 I wrote a piece entitled Can Australian home prices keep rising? in which I questioned if all the positives that were pushing home prices upwards could be sustained.

  Clearly some of the reasons home prices have done well over the last decade probably won’t be able to sustain the housing market for the couple of years.

  How that impacts the property market is anyone’s guess but I doubt we are going to see a strong property market next year.

  Over the longer term you would expect that house prices will head back upwards but then again, that’s what we said about stocks in 2009

• 336 BP // Sep 17, 2012 at 6:15 pm

  _Much_ more interesting ‘presentation pack’ here:

  http://www.perthnow.com.au/business/lynwood-and-viveask-the-hottest-market/comments-e6frg2ru-1226233871840?pg=2

  Comment 110, if you find the claim below as fascinating as many PerthNow readers did… .

  “For the record the “Lies I made up” was 4 Karratha Units Financed by drawing on the Equity in Woodvale House utilising Salary Packaging to obtain Finance at a 1% reduced rate (ING){Company Sponsored Subsidy} & also ownership of a DHA property south of the river (Not Mandurah)”

  Lies? Who knows. If true, leveraged right out to infinity… .

• 337 Not Fooled By Property Spruikers Hype // Sep 17, 2012 at 7:18 pm

  Thanks Greg

  I thought it raised some interesting points.

  Biker Pete.

  How about just discussing the Topic? If anyone wants to read the whole discussion thread you linked they would see your persona “Trav’s” discredited. Your problem is your not astute enough to realise it. But it is hilarious to know you link to it thinking it it you ha a win.

• 338 Greg Atkinson // Sep 17, 2012 at 10:11 pm

  BP dare I suggest that the Australian real estate market extends beyond a few hot spots in Perth. I’m happy to read that some areas in the west are doing well I but don’t think that’s a trend we are seeing on a national level.

• 339 Craig R // Sep 18, 2012 at 12:37 am

  many thanks to Not fooled for completely disregarding my question I put to him with regards to how he has made his wealth if any at all.

  For all the figures and charts/links anyone posted to “prove” the property market can’t continue growing can be just as equally be beaten by the same saying they can. Go back 30 years ago and people were saying wages can’t keep increasing nor can property prices yet they did.

  Will it keep happening in the future? it is more than likely that they will and we will all just learn to live with it as we do.

  My experience has shown me over time that everyone I have met that says property prices can’t keep rising have always been proven wrong. That is not to say that property prices don’t also fall either because again we know from history this has always happened. I would be surprised if that changes in the future. what will not happen is a house that cost $30,000 to build 30 years ago will ever fall back to that price in the future as long as it is kept in good condition. I would be very surprised if the same doesn’t happen again and again and again.

  People will always continue buying houses and people will always continue to rent houses. For me that makes property investing a viable option for the long term future and it will make me very wealthy.

  Now back to Not Fooled. With regards to my question and my reply to your points that I countered I would very much appreciate an answer. To completely ignore someone that has replied to you is not just rude but also leans towards a lack of knowledge on your part because most people, again from my experience, would if they honestly felt they were right, counter anything said in reply to them which on many occasions you do reply but not for this one time, is that maybe because you were wrong or you don’t actually know what you are talking about?

  Not Fooled I look forward to your reply.
  To BP like I said, if you can afford to buy more properties and this is what you want to do, then do it and be happy.

  Regards

  Craig R

• 340 Not Fooled By Property Spruikers Hype // Sep 18, 2012 at 9:28 am

  @ Craig R

  You will not get a response to your question because it is irrelevant how I made my wealth.

  If you care to demonstrate relevance I may reconsider however your logic is flawed & I will leave you to it.

• 341 Craig R // Sep 18, 2012 at 10:00 am

  @ Not Fooled the only thing that is flawed is your knowledge of how to get the best out of property investing and that has been shown time and time again with each response you make.

  The proof is in your reply to me in post 359 where you said “$7,250 return on $325,000 invested = 2.25% or about $140pw” You haven’t even taken in to account the year on year capital growth that you stated has happened as return! Plus nowhere did I invest $325,000 of MY money, the $325,000 you stated is the capital growth in the market I don’t actually have that money until a lender decides to secure my asset against that amount or I sell the property.

  You clearly don’t understand the basics of investing in property and to then deride it as a serious way of making wealth is ludicrous. I am not paying for it someone else is or if I am in many cases it is less than $50 per week. Why wouldn’t I do this? If I can continue this in the future through property why wouldn’t anyone else?

  How you made your wealth (if any at all) is relevant on several levels
  1: I would like to emulate what you have done since you don’t believe property is a way of making money in the future.
  2: It would then give me the ability to respect you more with your opinion backed up by your past successes in other areas. Plus all the really wealthy people I have met, do you know what they all have in common? They love to tell everyone how they became so wealthy.

  Regards

  Craig R

• 342 BP // Sep 18, 2012 at 11:02 am

  Craig, you’re unlikely to get any (consistent) response to your question, so let me help you understand NF with a few salient quotes from him:

  “I own 1 x DHA House South of Perth Lease expires 2011 July I think but dont hold me to that … Made a MOTZA … But fear I may be too late to put it on the market to get max Capital gain ….. Hindsight being 20 / 20 if only I bought it 2 years earlier I could have dumped it in 2009 ….” 15th Feb., 2009

  And, as late as 22nd Feb., 2011, NF was advising us his six properties “…were based on sound fundamentals…& a projected capital growth in line with CPI and wages. It is what TRUE investor have done for 100 years… Buy then let time pass & as rents rise it pays off the principle quicker… ”

  Given these comments and scores of others, all with links available, it’s evident that NF is a _property speculator_ . He buys and _dumps*_.

  But here’s a delightful little NF irony from November 2010. He acts on behalf of our _children_:

  “Eyes Closed … Thinking … Thinking … Thinking … Property in 15 -- 18 months will be very affordable in Perth when we follow the Irish & USA …. Thats got to be good news? ….My kids will be able to buy a house @ 3 -- 4 times their incomes & not be slaves to the Banks? …. Your kids too !!”

  * Yes, he dumps. And dumps. And dumps… .

• 343 Not Fooled By Property Spruikers Hype // Sep 18, 2012 at 11:03 am

  Sorry Craig

  You do have $325,000 of “YOUR” money invested in Property.

  Until you comprehend that you will not understand my point. So it is pointless discussing it further.

  Read what I said again:
  “Median Perth property = $475,000 minus — $150,000 (Borrowed funds) = $325,000 equity invested in Perth property sector.”

  Simple question the $325,000 “EQUITY” you have in your property is it invested in a “Bank” or “Property” & currently what “YIELD” are you getting on it?

  Look up “Opportunity Cost” & get a better understanding of investing.

  Sorry I just don’t have the time to educate every “Mum & Dad” property speculator who thinks the performance of the past will be repeated in the future.

  Property prices have exceeded incomes & cannot continue to do so.
  The danger pointed out in the article I linked to is that interest rates are at historic lows & that is what makes property sustainable today. When rates rise the penny will drop

• 344 BP // Sep 18, 2012 at 11:31 am

  NF: “I just don’t have the time to educate every “Mum & Dad” property speculator…”

  OK, NF has kids and we _know_he speculates.
  One can only speculate on how he perceives himself. A “Dad” property speculator, maybe?

  Ahhh, wait-a-bit… he’s a TRUE investor…*

  Craig, he tells us later (12th January 2012) he sold that Mandurah house to a “Schmuck”.
  This is a property bull like none other… .

  * Who, on 6th December, 2010, forecast an Australian property scene worse than the USA and Ireland: “…12 months time the US & Irish will be thankful things are not as bad as OZ … one Bubble at a Time or as some folks would say BOOM BOOM POW … ”

  NF _always_ provides a good laugh… .

• 345 Not Fooled By Property Spruikers Hype // Sep 18, 2012 at 11:40 am

  Biker

  I can only assume you choose to discuss me because you are unable to refute the issues raised in the link:

  http://www.slideshare.net/fullscreen/k22geo/macro-housing-conditions-the-longterm-outlook-for-the-australian-housing-market-pdfpptx/2

  Given a opportunity to put forward a reasoned argument you choose to go of on irrelevant topics.

  What is it that you fear biker?

• 346 Craig R // Sep 18, 2012 at 1:35 pm

  thanks Not Fooled you have proven to me that you really don’t understand how investing in property works. To deny the past as an indication for the direction of the future is a crazy notion that beggars belief.
  Even investors in shares look to the past to partially help predict the future to see that there has been solid growth in particular companies to warrant purchasing shares on future earnings.

  So you must be either a self employed person putting all of his money into his business feeling this is the only right path to take or you are indeed unemployed as BP is pointing out so well. I don’t feel he is making it personal, he is just further helping people understand that people like you are fun

  Now down to a little business.

  OK I probably need to break it down to the lowest level of understanding for you to understand where I am coming from. This is not only the way I think but the way many many people I work with and I come in to contact with think and it works for them.

  1) Yep the property is mine, bought with none of MY money invested. I borrowed money from a lender to finance 100% ($150,000 borrowed -- that’s the money invested in property not $325,000 as you state) of all costs.
  2)with Other People’s Money ($150,000), see not my money, I went out and bought a house for someone else to live in.
  3) I then rent that house out to someone else who happily pays me rent. This money is then used towards paying for my house that I still haven’t invested any of MY money in to.
  4) The tax department allows me to claim a loss on my property and says “hey you know what we have charged too much in tax to you this week so have some of that back” and now this money goes towards my PHOR. Still in this example none of MY money has gone towards the IP.
  5) The property increases in value over a 7 year period as you have stated and increases to a value of $475,000, again as you stated but I still haven’t invested ANY OF MY MONEY IN IT. Even though IF I either sold the house or borrowed against it I will have made $325,000 (only now is it my money because I can then use it for whatever I want after CGT has been paid) from $150,000 of other peoples money invested.
  6) I use my money for other things I want.
  7) So of my money invested based on your figures I have had a pretty damn good time making money from putting none of my money down which, is a bloody good ROI wouldn’t you agree? Well actually I know you wouldn’t because you appear to only see what the masses want you to see.

  Do I own the house? yep. Can I borrow against the house? yep but only if the bank agrees that value is there to start with. So until I actually get my hands on that money by either borrowing against MY asset or selling the property please tell me again exactly how much of MY money I have invested in to a property?
  As I said return on investment of MY MONEY is damn great because I haven’t used any of MY money but I still make money. What a crazy world we live in huh.

  So to quote your own words “Until you comprehend that you will not understand my point. So it is pointless discussing it further.” Well the last bit about pointless discussing it with you further I will ignore because I like talking with you,it shows me that I do know what I am doing is the right course of action to be taking.
  I think until you fully comprehend the difference between your money and other peoples money I would kind of shush up if I was you

  Not Fooled also said “Sorry I just don’t have the time to educate every “Mum & Dad” property speculator who thinks the performance of the past will be repeated in the future.”

  I am also so glad you don’t have the time to educate anyone in investing in property and I do hope that goes for all investments because based on everything I have read from you NOT FOOLED, I would suggest people do the exact opposite to what you tell them.

  Not Fooled you also said that “Property prices have exceeded incomes & cannot continue to do so.”
  Do you know what is funny? maybe you are not old enough to remember and your parents are maybe not old enough to remember either but I remember as do many other people. They felt the same way back in the early 80′s and 90′s and guess what!? Perth Property prices did exactly that, they kept rising and history has proven that since the 1st recorded mortgage that properties will always increase in value over a long period of time.
  There will be times, like right now where property will shift down a little but it is very unlikely in the Australian market that the prices will stop moving altogether upwards for the next 20-30 years and beyond.

  And do you know what? Even if I am wrong I have still had a blast of a time giving it a good go.

  Regards
  Craig R

• 347 Not Fooled By Property Spruikers Hype // Sep 18, 2012 at 2:18 pm

  Craig

  What can I say? Have a look at the commercial acumen of these mum & dad investors. Then take a minute to ponder the fact that this is what is currently sustaining the Perth property market>

  http://nfbpsh.blogspot.com.au/

  Then read further & see how I prove Perth rental vacancy numbers are a lie.

• 348 Not Fooled By Property Spruikers Hype // Sep 18, 2012 at 3:14 pm

  Biker

  Yet again you disappoint.

  Given a opportunity to have a sensible discussion on the topic, you choose to make personal attacks?

  How strong is your argument if you are not able to put it forward.

• 349 Greg Atkinson // Sep 19, 2012 at 11:30 am

  This is a forum to discuss the outlook for the Austrlaian real estate market. It is not a forum for people to argue about who is the better (anonymous) property investor or hurl abusive comments at each other.

• 350 BP // Sep 19, 2012 at 11:54 am

  GA: “This is a forum to discuss the outlook for the Austrlaian real estate market.”

  Hey, c’mon Greg…. .

  Discussion is really at its best when SHOUTED.

  Helps identify the trolls!~

• 351 Mr P Dooley // Sep 19, 2012 at 12:08 pm

  Property, on the Eastern side anyway, is unlikely to rise at any great rate in the short to medium term. Stay at home, share or continue to rent and save for a little while longer yet.

  Time is now on your side.

• 352 Not Fooled By Property Spruikers Hype // Sep 19, 2012 at 1:10 pm

  Sorry Greg

  I appear to bring out the worst in people.

  Difficult to understand why he wont debate the topic.

• 353 BP // Sep 19, 2012 at 1:16 pm

  You must be pleased to read that folks are, once again, camping out overnight in our fair city, to buy blocks sized from 448m2 from $279.9K up, NF!*

  And the RBA report noting that Perth land prices are about to rise sharply must also ‘bring out the best’ in you… .

  * The West Australian, p.3, Friday 14th Sept., 2012.

• 354 Greg Atkinson // Sep 19, 2012 at 9:30 pm

  Just watched an interesting interview with Professor Chip Case on MSNBC regarding the state of the U.S. housing market. A couple of points me made were:

  - The U.S. property market was actually about 5000 markets.
  - The high end of the market is doing well because of the low interest rates.
  - He reckons many people made a decision a few years ago not to sell. This means demand is higher than supply so prices have crept up but this doesn’t mean the overall market is recovering as such.
  - He mentioned something about the the rental market is growing much more strongly than the owner-occupier market.

  I wonder if we are seeing similar trends in the Australian property market?

• 355 BP // Sep 19, 2012 at 10:45 pm

  GA: “It is not a forum for people to argue about who is the better (anonymous) property investor…”

  So we’re now requiring _share market investors_ to use their real names(?)

  I noticed a very subtle shift in your stance after you sold your Australian ‘home’, Greg. You’re now clearly in the camp of the ‘voluntary homeless’ and your responses very subtly reinforce a hope that Australian prices will fall… whether you’re aware of it, or not.

• 356 BP // Sep 20, 2012 at 3:48 pm

  Mr P Dooley: “Time is now on your side.”

  Oh, good!~ Six years of hearing this mantra now means cheap houses. (Hang down ya head, Tom… )

  While I applaud your sentiment ‘share or continue to rent’ we’ve recently rejected well over a dozen ‘sharing’ applications. Owners of high-quality rentals are declining singles (too many vehicles, too many visitors, and high risk of sub-letting); thereby reducing risk in doing so (vehicles parked on lawns, additional ‘guests’, party animals, etc).

  There are l-o-n-g queues for high-quality rentals in highly-desirable locations. Even if demand lessened, we would continue to pick-and-choose who stays in our well-located, well-equipped homes.

  But, as I say, the latter part of your admonition, ‘continue to rent’ is music to our ears… .

• 357 Stillgotshoeson // Sep 20, 2012 at 4:07 pm

  http://www.perthnow.com.au/news/national/first-time-buyers-at-risk-of-home-loss/story-fndo6ejf-1226477993222

  WA 14.4%

  Yep, Housing market is strong, robust and safe..

• 358 BP // Sep 20, 2012 at 4:19 pm

  Jeez, gotta admit that this sharemarket aficionado has really good grasp (of what, one can only imagine. Certainly not his chosen asset class… . )

  Shoes: “Yep, Housing market is strong, robust and safe… )

  Well, yes, it is. Consider your current position, Shoes.
  Not too ‘classy’, is it?

  (Figured the ‘singles’ post might rouse some ‘Ire’.)

• 359 Not Fooled By Property Spruikers Hype // Sep 20, 2012 at 4:24 pm

  High Quality Biker?

  Oh please. Name a benchmark Suburb as a example & house type & price point.

  You don’t have to name the suburb you own stock in just a comparable one.

  In all these years you will not name a Suburb or house type / land type etc so that you are never accountable.

  Instead you hide behind anonymity so that you can never be proven wrong.

• 360 BP // Sep 20, 2012 at 4:40 pm

  NF: “Name a benchmark Suburb as ‘a’ example…”

  Where the hell were you educated, son? For years and years I’ve tried to help you with our language… and still Year Three grammar evades you.

  Name a suburb? Would you like me to review how _you_ respond when anyone names _any_ suburb, N Fool? I have some classics to show just how you respond!~ Go on… ask… .

  Hide behind anonymity? Nut Fool is your _real_ name?

• 361 Not Fooled By Property Spruikers Hype // Sep 20, 2012 at 8:25 pm

  Biker

  Rise above your fears & discuss the topic.

  Why go off on a tangent attacking someone for something irrelevant.

  How solid is the ground you are standing on when you are unwilling to engage in a reasonable debate.

  FYI English is my second language & I am pretty satisfied with my grasp of it.

  BTW I speak & communicate in three other languages just as well, not that’s it is important to the debate but how many languages are you fluent in?

• 362 BP // Sep 20, 2012 at 9:49 pm

  N Fool: “I speak & communicate in three other languages just as well, not that’s it is important to the debate but how many languages are you fluent in?”

  Apart from the fact that Frank Lowy has welcomed economic refugees from dying empires to our shores, with a hint that you should learn to speak English, _you’re_ off on a tangent… .

  I’m unwilling to engage in a reasonable debate? You ignore the points I make… and I ignore yours. Take my comment about the re-emergence of overnight camping to pay $280K for 450m2 blocks 25km from the CBD. You’re aware that most of them (70%) sold within 24 hours… and that they’re still selling… but that doesn’t help your argument, so you ignore it.

  As for your linguistic abilities, I’ll add that little gem to the *pile* of numerous other salient facts you’ve offered in the past… notable among them those six properties you bought so your kids could buy homes 3 -- 4 times their wages. And why just three languages, genius? Make it seven or eight.

• 363 Greg Atkinson // Sep 21, 2012 at 6:37 am

  Maybe time to move on from the Perth property market.

• 364 Craig R // Sep 21, 2012 at 8:24 am

  Greg the issue isn’t the Perth property market. there are areas Australia wide that are working and will continue to do so for many reasons. No I will not go in to it either.

  Someone here needs to learn to be honest in everything he says and does. Don’t hide behind silly names as well. Also when it has been shown he is wrong, admit it without being childish and calling everyone “mum & dad investors” just because he can’t see that other people maybe know a bit more than he does

  I am more than up for a bit of good discussion but when it goes childish and he says investing in property now is pointless is so wrong on many many levels.

  If you look at property the way the majority do then yes now is not the time but if you actually know how to get an IP to work for you through the good and bad times then every time is the right time

  Regards

  Craig R

• 365 BP // Sep 22, 2012 at 8:43 am

  Craig: “…every time is the right time…”

  Agreed. In fact, our best buys have been during the troughs and plateaus. It’s logical to buy when prices are flat or even depressed, rather than at the top of a market.

  Logic isn’t common in that sense.

  Talking about logic, how logical is it to:

  * Own six properties and talk the market _down_?

  * Claim four of those properties are in _Karratha_ and talk _mining_ and China down?

  * Use the equity in your home to highly-leverage five investment properties… and talk interest rates _up_?

  * Buy to make a ‘MOTZA’ in CG so your kids (and mine) can buy houses 3 -- 4 times their income?

  * Alternate between personalities as opposed as property bull (astute buyer of multiple properties) and property bear (claimed unemployed Homeswest client with substance abuse issues);

  * Provide timelines for earth-shattering events (crashes worse than Ireland & the US; interest rate rises; half-price homes, etc) then deny you’ve made these foolish predictions? Mine dew, he’s not alone there…!~

  I see API has predicted Sydney prices will also rise in the short term, not that a property investor should ever buy for the short term… .

• 366 Not Fooled By Property Spruikers Hype // Sep 22, 2012 at 2:25 pm

  Biter you ask:

  “* Own six properties and talk the market _down_?”

  Yes 4 were in the Karratha area not effected by Perth property discussion, one was a DHA home that was on a long lease & the other a family home in Woodvale that was not for sale but if it was it would be sold & another property would have been bought at a lower price point so no big deal.

  “Claim four of those properties are in _Karratha_ and talk _mining_ and China down?”

  Leased to the Gas Sector not effected by Iron Ore to China. (The bulk of Karratha is) Hedland/Newman are the worries & beside it is there not for sale but a income stream on retirement in fact they yield 7-9% after costs unlike other AU property that is typical under 3%

  “talk interest rates _up_?”

  Never talked interest rates up just warned gullible Mum & Dad property speculators that interest rates have historically been around 10% far better than burying your head in the sand & ignoring the risk.

  But why discuss me get over that obsession you have trying to prove me wrong. Just discuss the virtues or pitfalls of property investment.

• 367 Not Fooled By Property Spruikers Hype // Sep 23, 2012 at 11:17 am

  Greg has provided what I believe to be a great forum to raise & discuss aspects on the Australian Property market.

  So as not to spoil the discussion thread I will leave you to get over your Man Crush discussing me (I’m irrelevant)& will just stay on topic.

• 368 BP // Sep 23, 2012 at 3:37 pm

  On numerous occasions you’ve initiated these homosexual references, NF. I recall you baiting Ned and me countless times with that kind of innuendo.
  Sexual preference or reference has no place in these forums, but you persist…

  Learn to live with the reality that more than 14,000 of those Australian Mum & Dad investors you despise have six or more properties. You’re not alone. Like you, they’ve made an investment in an asset class which rewards their confidence in property.

  Your dilemma? You’re a property bear(?) who repeatedly confirms he ‘owns’ six properties. So many of your posts confirm this, that you’ve given up denying it. Moreover, your claim that Woodvale is worth three times what you paid for it; and that you’ve used its equity to highly-leverage investment properties, again reconfirms that you have great faith in WA property. Your inability to dump Mandurah and make a ‘MOTZA’ (your caps) marks you as a speculator. Nothing wrong with that (apart from the fact that you confess you “missed the boat”) but it’s difficult to reconcile that speculator with the same fella who claims to want to protect our kids from high housing costs.

  Whether or not this comment gets posted, be aware that I’ll continue to challenge your inconsistencies in any forum unbiased enough to recognise your utter nonsense.

• 369 Frank // Sep 27, 2012 at 10:47 am

  Glad I stumbled accross this site, best entertainment I have had in ages.

  I would like to comment. Firstly, if you can not see that the market in quality suburbs in Western Australia has bottomed out, then you need to open your eyes. I see no evidence of a return to 10%pa Year on Year growth, but equally I see no evidence of future falls.

  The Australian market in total is definately more hot and cold but those hoping that prices will crash will be sorely disappointed.

  Rental demand will continue to tighten until people move to owner occupying, which will in turn drive prices of housed up. It is the law of supply and demand, it can not be argued with Not Fooled so dont even try.

  Some Gems from Not Fooled though. I have been reading property blogs for about a year now, and reading NF’s comment 381 “Look up “Opportunity Cost” & get a better understanding of investing” drew a smile. I recall you fighting with a guy on Perthnow for about a week that this was actually “Lost Opportunity Cost”. So you wouldnt admit you were wrong there, but you do admit he was right here.

  Then the golden comment on PN that you are too busy with Gorgon, Bali Airport and Adelaide Superway to post, but really all you did was stop posting there and start posting here.

  As for your blog, well thats gold too. I have to ask who you are talking to in the Duggan blog as there is only one side of a conversation present. As for the rent blog, I will agree with the PN commentators there, you proved nothing. I will take the word of REIWA over yours son.

  Here is some investing advice -- if you can afford to, and you want to, then you would be mad not to.

• 370 BP // Sep 27, 2012 at 6:03 pm

  Frank: “Rental demand will continue to tighten…”

  Yes, we’d agree that’s the case, Frank. I just tallied the number of declined applications for a rental we have currently vacant. We have knocked back 23 applications from hopefuls so far during September.

  About half failed the referee-checking procedure. Several voluntarily offered increa$es at six months.

  The queues will get much, much longer… .

• 371 Frank // Sep 28, 2012 at 5:01 pm

  I laugh at the people who say that prospective tennants are not offering more money or increased deposits. I can assure you it is real, and no sign of it going away any time soon.

• 372 BP // Sep 28, 2012 at 6:52 pm

  The ‘smart money’ is always talking about trends, but can’t connect the dots, Frank. Decreased residential construction, increasing population, higher wages, low unemployment… .

  We’ve been surprised what folks are prepared to pay, both in advance rental payments and higher rent, just to jump the queues. We’re reviewing our 24th applicant for our vacant rental this weekend. We haven’t raised the rent on this one, despite fierce competition for it. We don’t need to… and the current rent is already much higher than we’d ever anticipated… .

• 373 Stillgotshoeson // Sep 29, 2012 at 1:48 am

  http://www.theage.com.au/business/will-spring-revive-the-sale-of-two-cities-20120928-26qws.html

  “By contrast, Melbourne’s vacancy rates are on the way up, beyond their current level of 2.3 per cent. And over the past year, the city has seen almost no rental income growth.”

• 374 BP // Sep 29, 2012 at 8:10 am

  Unit construction is up, slightly:

  http://www.news.com.au/realestate/news/australias-largest-home-building-companies-doing-it-tough/story-fncq3gat-1226482285574

• 375 BP // Sep 29, 2012 at 8:30 am

  Mine dew:

  http://www.watoday.com.au/business/migration-pushing-population-growth-higher-20120927-26n0t.html

• 376 Greg Atkinson // Sep 29, 2012 at 12:35 pm

  If you want to get a feel for where the property market might be heading I’d suggest watching the prices for iron ore, coal, natural gas & copper. The trends for these don’t look good & if the government couldn’t balance the books during the ‘boom’ then it’s really going to struggle during the downturn.

  Will the end of the commodities boom affect home prices? Some would say no because of continued population growth but if the Chinese economy keeps slowing (which it looks like it will) then the government may start looking for money where people don’t want them to. Could negative gearing for example be on the hit list?

• 377 Stillgotshoeson // Sep 29, 2012 at 3:37 pm

  Greg Atkinson // Sep 29, 2012 at 12:35 pm

  Will the end of the commodities boom affect home prices? Some would say no because of continued population growth but if the Chinese economy keeps slowing (which it looks like it will) then the government may start looking for money where people don’t want them to. Could negative gearing for example be on the hit list?

  It appears superannuation is the first target of the middle class and wealthy the government has in mind to boost its coffers.

  Increase in the contribution tax and removal of the tax free for over 60′s will be introduced soon.

  I would expect limits on lump sum withdrawals to be on the list into the future too, only annuity style pension payments allowed with maybe small lump sum payments allowed ($10000k limit per year at a guess)

  A return of the RBL* would be of no surprise to me. (Reasonable Benefits Limit) with an increase in tax payable on amounts above this limit.

  Total removal of negative gearing benefits would be unlikely. At this early stage anyway. Limiting it to new builds only would be the first stage of negative gearing changes I think.

  An increase in the GST rate is a possibility, both parties say it is off the table. Both parties are guilty of “changing their mind” when in power.

• 378 BP // Sep 29, 2012 at 4:58 pm

  Shoes: “Increase in the contribution tax and removal of the tax free for over 60?s will be introduced soon.”

  It’s always difficult to introduce such a turnaround when a _very_ large percentage of your electorate comprises such a large (voting) demographic; so I’d be interested to hear what ‘soon’ means… .

  Advised the missus the non-guaranteed component of her Super had earned her around 3.7% pa, this morning; and, at noon read in The West it had actually returned 3.77%… a pitiful return for the amount she has, despite her pulling $18K+ in TTR tax-free annually.

  Hitting Super will simply turn (more) investors towards buying established homes. At the moment, due to material and labour cost blowouts, it’s cheaper to buy existing homes. I expect we’ll see the lower end affected as those BBs slowed-by-the-GFC finally pull the pin and look for the reliable fortnightly dividends many of us already enjoy… .

  Would the removal of negative gearing _increase_ residential construction, alleviating the rental queues? I very much doubt it. Again, it won’t be retrospective, so residential construction shut-down would simply turn off the supply tap…. and rents would blow out, regardless of anyone’s views to the contrary.

  Years and years pass, with a long queue of bogeys, sickle-in-hand, marching towards the destruction of the Australian property market. Pulp fiction.

• 379 Stillgotshoeson // Sep 30, 2012 at 1:08 pm

  http://www.propertyobserver.com.au/title-tattle/top-end-price-revision-underway-as-banks-accept-40-mortgagee-loss-title-tattle

  Sydney too seems to not be unscathed through all this…

• 380 Frank // Sep 30, 2012 at 11:44 pm

  Greg Atkinson: If you want to get a feel for where the property market might be heading I’d suggest watching the prices for iron ore, coal, natural gas & copper. The trends for these don’t look good & if the government couldn’t balance the books during the ‘boom’ then it’s really going to struggle during the downturn

  Greg I have a foot in each shoe here. Certainly the underperfomance will not assist Property Pricing, however the Australian Property Market has sustained growth of around 8%pa through decades without this being a sustained factor.

  My belief -- the next 5 years will see an average 4-5% growth pa without a sustained mining boom. This will put the 10 year average growth back to around 8% in quality areas

  Add a mining boom into the mix, and the last 1% of shredability that numptys like Not Fooled have will be gone because another housing boom WILL happen.

  On the record here and now -- we can not afford that. Property prices are expensive, but not unaffordable. A shift through to unnafordable assists nobody -- when people can not afford to eat for example they will revert to crime.

  Nationally, if the market has not bottomed out, that bottom is inside its last $1,000

• 381 BP // Oct 1, 2012 at 10:41 am

  Frank: “Property prices are expensive, but not unaffordable.”

  In considering the complexity and range of homes across Australia, one could argue that most are, in fact, cheap. Let’s consider Shoes’ link, at # 426. Some homes, perhaps 1% of Australia’s houses, are actually very expensive. I offer that proposition as a retired Aussie who could afford to buy most of them, but exercises a ‘needs-over-wants’ imperative. Bottom line? Very few buyers at this level. Few Aussies _can_ afford this almost insignificant portion of the Aussie property market.

  And, yes, it’s patently obvious that not all Australia’s megahome ‘owners’ will recover initial expenditure. Their ‘owners’ probably suffered immense _share_ loss in the GFC… and are running out of time holding… or have sold off at up to 37% -- 54% losses. They _have_ to sell. Had their investments been in income-returning residential property, they’d be well ahead… .

  Frank: “…the last 1% of shredability that numptys like Not Fooled have will be gone…”

  Depending on which of his profiles you believe, it evaporated l-o-n-g ago, Frank. Is he:

  a.) a property speculator and landlord, with six homes, talking the property market down, down, down?

  …………………. or

  b.) an unemployed Homeswest tenant with substance abuse issues, talking the market down, down, down?*

  It’s easy to demonstrate, citing dated links, that he has claimed to be both. His last shreds are gone, gone with the tide. He’s not swimming naked. There ain’t even bubbles… !

  * This actually seems _likely,_ given his statement, two years ago: “I would hate to be a landlord in this market… “

• 382 Leigh // Oct 1, 2012 at 12:01 pm

  Negative Gearing? didn’t Paul Keating call it theft from the public purse and remove it, only to have to restore it two years later? It is what makes the system work for small investors and takes the pressure from governments to provide public housing.

  As far as house prices are concerned, it is still location, location, location. Good property in sought after areas will always return value over time. Huge rental returns in boom areas are only as good as the booms length. Boom rentals rely on the mining company not on the property or where it is?

• 383 Lachlan // Oct 1, 2012 at 2:19 pm

  Yep rental is the way to invest. I thought I might lean a sheet of tin against a stick in Moranbah and ask $300/week for it.

  http://www.realestate.com.au/property-house-qld-moranbah-406708916

• 384 Stillgotshoeson // Oct 1, 2012 at 3:56 pm

  WOW! Makes my 3BDR 2 Living room DBL GGE under roofline @$280pw (mowing included) look an absolute bargain.. Which it is.

  All the others are $340 to $380.. can’t beat mates rates;)

• 385 Lachlan // Oct 2, 2012 at 6:02 am

  That’s good Shoes. My ex-wifes new man is a miner but he has bought rural blocks in various places around SE QLD for reasonable prices. A fair move imo. He does not live in a bubbly estate next to a mine either rather in a reasonably priced area near a town of 5000 or so with a more farming feel to it.
  It seems to me there is a much disregard for the sort of personal wealth creation opportunities available from mines. A friend and colleague of mine put on three fellas to help in a very big job away from home but with otherwise very decent and subsidised food and bed..and beer even. Two of them did not not last a week despite absolutely incredible pay. They went home to their families and comfy, welfare supported lives again. They will regret that imo. Then you can make a lot of money in a mine and leave the whole lot right there if you pay too much for things and waste money on expensive habits.
  Anyhow my mate has been clever enough to make himself a rich young man and he started out as a scrounger in the bush like I did. He found a way to make a value from native plants and next found people who needed and were prepared to pay what he felt he was worth for it. Anyone can do it of course (ie something similar/same vain) in a theoretical sense. Rational choices vs poor choices, some faith, patience and delayed gratification.. etc

• 386 BP // Oct 2, 2012 at 3:41 pm

  Mates’ rates… . Another win for the FHBs who picked up that cool $21K, when interest rates were double or treble today’s. All down to ‘…some faith, patience and delayed gratification…”

  The trick with natives may be to sell tubes wholesale to the larger developers and the supermarkets. Mates can always buy them at wholesale prices direct from the nursery, of course… .

• 387 Lachlan // Oct 2, 2012 at 6:09 pm

  I always give patchy descriptions don’t I BP? If I do anything else you’ll get encyclopaedic version.

  Anyhow I collect seed from native trees and supply that product to companies who then sell maybe 99% of it to miners for direct seeding on their degraded sites… which must be rehabilitated by law. I market to end users also but no big sales there yet. A fair amount of seed is also used on roadside reveg.
  My mate I mention does the same thing but recently contracted himself out to a miner and takes care of the entire reveg process. Tube growers tap the market also of course.

  As for housing I am also liking the views on the block I just bought and can’t help looking into the idea of building there. There is a view of the dam next door with black swans and ducks etc. They make pleasant sounds on dusk. I bought the place for business activities (considerable amount of structures involved)…now I am thinking I don’t want to do such a thing to it. There is plenty to think about BP. Build and rent? Build and live there? Buy the next door block (only other small acreage that exists in the area bar large farms). In any event I’ll follow the Coles/Woolies MO and make hay while the economy is cool.

• 388 BP // Oct 3, 2012 at 4:12 pm

  We also collect native seeds, Lachlan. Our initial planting success has risen from about 2% to 50%; but we’ve now switched to tubes, which not only give us over 90% success, but grow faster than seeds or well-developed shrubs and trees… .

  Your block sounds ideal… and that small acreage sounds very attractive. We’ve owned a few over the last two decades… and probably should have kept them all… although the profits were always rolled over into more land and later, rental homes. I honestly believe that you can’t do better than special rural, or small rural properties, especially if there’s good water.

  Cutting our way back into our Stalag88 Chook Run, today. The gates are overgrown with grapevines, passionfruit vines and boysenberry canes. This extended travel abroad annually has its highs, but reality really hits home when the food jungle takes over… !!~

• 389 Not Fooled By Property Spruikers Hype // Oct 17, 2012 at 5:00 pm

  More signs the housing bubble in Australia is slowly deflating:

  http://www.news.com.au/realestate/news/houses-worth-less-than-loans-on-them/story-fncq3gat-1226497332060

• 390 Not Fooled By Property Spruikers Hype // Oct 17, 2012 at 5:01 pm

  Biker

  Still not convinced?

  ABC News 7.30 report last night showed that 40% plus of FHB from 2008 -- 2009 are now in housing stress. Follow this link & watch from the 14.30 minute mark & see if the alarm bells don’t start ringing in your head:

  http://www.abc.net.au/iview/#/view/1015530 & with unemployment rising it is only going to get much much worse.

• 391 BP // Oct 17, 2012 at 6:50 pm

  Thanks for your comments, N Fool the Property Speculator.

  I’m amused, NFTPS. Do you think I’m a First Home Buyer? And do you think most _tenants_ aren’t stressed, with rents rising rapidly?

  That old bogeyman, negative equity, got you all excited? And how about those 10% interest rates you spruik? Have you picked a favourite for Melbourne Cup Day yet? Doesn’t WA’s lower unemployment rate have you frothin’-at-the-mouth?

  NFTPS, we’re really enjoying the benefits of property investment. As a self-confessed _expert_ property speculator, you must be, too!~

• 392 Not Fooled By Property Spruikers Hype // Oct 18, 2012 at 11:07 am

  Biker Pete

  Me “Spruik” 10% interest rates?…. Never…. What I did do was point out that historically Australian Housing interest rates have averaged around 10% for the last 30 years. (Life of a typical home loan sold to FHB)…. All I have said is that people should be “Prudent” & budget for a 10% rate because that is “Reality”…. FYI a 10% rate is 60-70% more than today’s temporary low rates….. MUM & Dad property speculators don’t like this being pointed out because it scares new entrants to the “Australian Housing Property Ponzi Scheme” that they rely on to create demand & keep prices up.

• 393 BP // Oct 18, 2012 at 11:26 am

  The “Australian Housing Property Ponzi Scheme”, N Fool the Property Speculator?

  According to your posts, you’re a major player in that ponzi scheme, NFTPS, one of the 14,000 plus _Aussies_ with six or more homes, ‘owning’:

  “…4 Karratha Units Financed by drawing on the Equity in Woodvale House utilising Salary Packaging to obtain Finance at a 1% reduced rate (ING){Company Sponsored Subsidy} & also ownership of a DHA property south of the river…”

  ….and that very speculative Mandurah home highlights your speculating short-term punts…

  “…1 x DHA House South of Perth Lease expires 2011 July I think but dont hold me to that … Made a MOTZA … But fear I may be too late to put it on the market to get max Capital gain ….. Hindsight being 20 / 20 if only I bought it 2 years earlier I could have dumped it in 2009 ….”

  As a ‘Dad’ Property Speculator, you must be feeling a little exposed by this wild storm of doom you’re forecasting for West Aussies. Do you ever stop to reflect on the strange logic you employ in attempting to strike fear into the hearts of those who (actually) _own_ property? While your posts are quite humorous, they’re also a window to an ever-changing, conflicting set of misperceptions… .

• 394 Greg Atkinson // Oct 18, 2012 at 11:30 am

  This is not the place for an ongoing debate between two people about the Perth property market.

• 395 Not Fooled By Property Spruikers Hype // Oct 18, 2012 at 1:25 pm

  Sorry Greg

  I did try & make my comments & links applicable to the whole Aust Property market & not Perth centric.

  Biker insists on making it about me & Perth.

  The points raised in the article remains.

  40% of FHB in 2008 -2009 for the whole of Australia are now in Mortgage Stress with 20% in “Severe Stress” this despite interest rates remaining at historic lows of around 6-7%.

  Housing affordability remains a issue that will constrain future price growth that most investors rely on to offset negative rental returns.

  It is there to see on the links below if people care to look with a open mind.

  http://www.news.com.au/realestate/news/houses-worth-less-than-loans-on-them/story-fncq3gat-1226497332060

  http://www.abc.net.au/iview/#/view/1015530

• 396 Greg Atkinson // Oct 18, 2012 at 1:57 pm

  The links are fine. Just try and avoid getting into an endless debate.

• 397 Frank // Oct 18, 2012 at 2:52 pm

  Not Fooled do you always argue only one side of a coin? You endlessly spruik the long term interest rate averaging 10% as a reason why property prices can not continue to rise, yet ignore that since records began prices have averaged 8% YOY growth in the face of these high average interest rates.

  A smart man like you pretend to be should see that rates half the long term value, and 3 years of low to no growth is a vehicle to property growth, not further decline, should an end to speculation on the bonafides of our economy occur.

  Here is what I think (note I say think, not know) -- IF Labor retain Government and the poor spending and high taxing decisions that they have made remain, then property prices will remain at worst stagnant for the next 3 years, at best grow 2-3% per annum accross the board (more in central suburbs of all capital cities, less in outlying suburbs and country areas. This would see the 10 year growth rate in most suburbs fall below the historical 8% and be a vehicle for greater growth somewhere after year 4. This will also see low interest rates continue, CPI sit at <2% and unemployment rise as our Golden Goose farmers turn their attentions to Africa

  If on the other hand the Coallition take government as is widely expected, and repeal MRRT and Carbon Taxes as is promised, then confidence will return, and with it a re-energisation of business and consumer confidence, seeing, amongst other things, a rise in property prices of between 4% & 6% per annum. This will see the 10 year average remain at or slightly above the historical 8% per the statement above and prevent any real "boom" which this country does not need, nor can afford.

  IF you purchased a house in any strong suburb in any Australian Capity City today (within 10km of the CBD as I have always been taught since the 60's) for $600,000, then I would genuinely expect that property to be worth $950k minimum in 2022

  Thats what Frank thinks, and Frank reckons he is more right on this than a multi personality bear with a sore head (I have you as Louise H, Aaron, PT, Not Fooled, Who Will Catch The Falling Knife, Bomber Boy of Yanchep, Punter of Mindarie and a fewe others, you are a very busy troll bear indeed) who is pretending to be working on at last count 4 major projects in 2 countries and 3 states that has publically said he is too busy to post in blogs.

  Not this Self Funded Retiree is off for a late lunch at The Windsor, good day.

• 398 Frank // Oct 18, 2012 at 3:52 pm

  Not Fooled “It is there to see on the links below if people care to look with a open mind”

  An open mind old chap is the one thing that you do not posess on matters of property

• 399 Frank // Oct 23, 2012 at 11:24 pm

  Can Frank please make a frank observation on Property Commentators in Australia Greg?

  Here is what I notice -- The bears out there grasp absolutely any negative shred of information and use it to paint a doomful picture, while anyone who says they dont think the market will crash, and I mean crash, not stall, is called a fool, liar, uneducated, mum and dad investor or idiot, usually by the one guy under any of his 10 blogging aliases.

  Meanwhile absolutely any positive news is grasped as Spruiking from an unreliable source and immediately derided

  I mean, please let me post a link that I found interesting: http://nfbpsh.blogspot.com.au/2012_04_01_archive.html

  Now this is the blog of one of your regular contributors and one that I was drawn to when he posted the link into Perthnow.

  Why I find it interesting is because despite publishing his own “findings” as fact, 2 guys (from memory Matthew and Mike) tore him to shreds and he deleted comments not once but twice, then locked the blog for comment. This followed him deleting another entire blog where the Guy Matthew proved him a liar again and again. Unable to defend himself, he deleted everything. Not just the comments, the whole box and dice vanished.

  Final proof is that there is a blog where he ridicules a poster but has removed that posters comments so it looks like he is arguing with a mirror. From the deleted blog I expect Matthew or Mike again got him as a numpty with no credibility or knowledge on the subject.

  The reason I say this, and use the Fool as an example is because the Bears out There resemble the tale of the Russian Farmer. You know, the one where the Russian Farmers goat dies and he is miserable not because his goat is dead, but because his neighbours is alive, and he will never find happiness until his neighbour too finds loss.

  You see the thing with shares is that the transactional cost is low and the stock is high. So if I think CBA for example will fall I can sell my position quickly, and if I am wrong reaccumulate equally as fast at a fairly minimal penatly, all inside a week.

  But with property there is a limited stock, and the transactional cost is high (stamp duty etc) while the settlement period is long so if you get it wrong, then you are wrong or you comprimise (as in I want to buy a bank, but I buy BOQ who does not perform because CBA is sold)

  I find most bears carry one of two burdens:

  1) They sold out thinking they hit the top of the market only to see the market continue to rise or
  2) They resisted buying believing the market will fall and their desired stock will still be available, only to see the market rise and / or their preferred stock sell out

  (both russian farmer mentallity)

  One thing that is absolutely certain is that house prices in 10 years time will be more than they are today, just as the ASX value will be. The only question is by how much, not if. The speculation is not in the asset, it is in the timing of the purchase

  The speculation lies with the bears at the moment, not the bulls, and the spriuking is all the negative talk, not the positive.Just my observation, as a self funded retired multi millionaire with a portfolio of equal 3′s (cash, property & shares)

  My thoughts are published, the biggest issue remains our Governdebt, I mean Government. Replace Gillard with Turnbull and watch things swing up and bears go to hibernation

• 400 Not Fooled By Property Spruikers Hype // Oct 24, 2012 at 12:43 am

  Frank

  I must say you disappoint me making things personal. It is not about me but the issues effecting Australian housing.

  Last night on the ABC “The Business” program there was a interesting discussion about “Negative Gearing” (Starts at the 14.30 minute mark)

  Why not watch it & perhaps discuss the issue?

  http://www.abc.net.au/news/2012-10-23/suggestion-for-a-surplus/4330352

• 401 Greg Atkinson // Oct 24, 2012 at 7:11 am

  Frank from my point of view the bulls & bears both twist the data to suit their arguments.

  Also there are also no absolute certainties when it comes to investing. We may hope that stocks and property prices will be higher in 10 years time but that there is also a chance we could see them move sideways or even fall in relative terms.

  If people are buying a house to live in then I don’t consider them as active property investors. That’s a whole different market.

  For people investing in property then there are risks (as there are investing in stocks) so it’s fair enough for people to talk about them.

  Finally I am growing weary of those engaged in an ongoing debate about WA or Perth property prices from other sites bringing their dispute to this site. This is not the place to continue any arguments people have raging elsewhere.

• 402 Frank // Oct 24, 2012 at 8:50 am

  Greg please understand I was not making this a Perth property thing, I was making an observation about property commentators in general and clearly living in Perth used our head troll, i mean Bear as an example. I am sure that you can apply my theory above to all Australian property market commentators and find any number of bears out there with exactly the same approach. For what it is worth, I dont consider myself a bull, I think my anticipation that prices will grow at half historical rates makes me a realist, not optimist.

  Yes you are right, both sides of the coin are quite adept a puttig spin on the ball, but my observation is that while the bulls tend to deliver mild off spinners, the bears are Warnie like ripping leg breaks

  In South Australia for example where there are no demand pressures driving up rents and placing upward pressure on pricing I am sure it is bear Christmas every day, while in Darwin where the property prices are, some would argue, artifically high, and with Inpex about to invade the city, I am sure that the Bulls openly cartwheel down the streets and residents of the City of Palmerston rub their hands together with the very real prospect of high rents and significant property growth in the coming 5 years.

  I am sure that there is money to be made in day trading if you are smart enough to engage in it, I just look at the almost daily ASX announcements from TAH and EPG for example relating to NAB ceasing to be a substantial holder / becoming a substantial holder as evidence that you can trade to a profit or equally loss. I have never engaged in this passtime, in fact to this point in time I am yet to sell either a property or a share that I have purchased

  For Property however that is simply not possible, and anyone buying a house as an investment or to owner occupy, with sights on less than a 5 year holding period is more likely to lose “in real terms” than gain. If you can not afford to hold it for that period, then you shouldnt buy it in the first place, unless of course you are willing to risk a physical loss (taking Stamp Duty and Agent Selling fees into account amongst other things.

  Your comment “We may hope that stocks and property prices will be higher in 10 years time but that there is also a chance we could see them move sideways or even fall in relative terms.” is an interesting one.

  I will put my entire share portfolio on the fact that the actual ASX and Austrlaian Median Property Prices in 10 years time will sit above where they do today. I say that because globally things will not get bad enough from this point that either index can not recover its position in a decade.

  The “in relative terms” is the bit that I find interesting. I often here commentators say that you need to factor inflation into your price point to calculate net growth, and I agree that is the case. However you also have to acknowledge that 99.97% of the general public have not got the discipline to grow a cash base if not engaged in some form of investment be it property or shares. My kids dont understand why I have money in term deposits, or for that matter why I have a cheque book! If they dont invest in an asset (property or shares) then you will see them waste the money on Bali holidays and 70″ LCD TV’s. So if you had a $100,000 gain over 5 years in shares or property for example, while you may have a diminished “purchasing power” position with your gain, MOST people have a net gain that they otherwise would not have generated, hence the value.

  Not Fooled you say “I must say you disappoint me making things personal”. From you I find this more than just a bit rich as your first port of call is personal attack, so just as you are pretending to be hurt, please accept my pretend apology.

• 403 BP // Oct 24, 2012 at 9:11 am

  Frank: “…the Russian Farmers goat dies and he is miserable not because his goat is dead, but because his neighbours is alive, and he will never find happiness until his neighbour too finds loss…”

  Another apt description, Frank.

  Your situation sounds quite similar to mine, although we have no shares component (other than those we ‘buy’, indexed, through my wife’s Super, when stocks fall, then ‘sell’ back to cash when they rise.)

  I’m not aware of any sites where arguments are ‘raging elsewhere’. DRA closed that door long ago ; MMA closes its Comments section daily (before they open!) ; PerthNow now restricts NFTPS’s comments ; N Fool’s blogsite Comments section disappeared, as Frank notes above ; and Shareswatch now persists as one of the last bastions of free speech… !~ PerthNow now attracts more eastcoasters (like Brizzy Bear) than it did in the past. To put things back in perspective, the Doomers’ Ball has been canned this year… .

• 404 Frank // Oct 24, 2012 at 12:06 pm

  Not Fooled: “Last night on the ABC “The Business” program there was a interesting discussion about “Negative Gearing” (Starts at the 14.30 minute mark)

  Why not watch it & perhaps discuss the issue?”

  This is economics 101 Not Fooled -- Supply and Demand

  Removing negative gearing would have a very short term negative impact on property pricing as those using it as a tax deduction may elect to move to other sources of income, and an equal reduction in new housing starts as people are able to acquire established stock that enters the market.

  This would be followed by a very real rental crisis as 95% of people renting who can not afford to buy fight tooth and nail to secure the remaining positively geared investment properties in the market, and a housing price boom as during the period of consumption of established dwellings there would be insuffucient construction to meet population growth demand

  To remove Negative Gearing to plug a gap caused by our worst government on records wasteful spending would be a narrow mined unmitigated disaster. As such, if heaven forbid they get reelected, it is quite likely to occur.

• 405 Not Fooled By Property Spruikers Hype // Oct 24, 2012 at 12:56 pm

  Frank

  Watch the story when Negative gearing was removed by Keating rents only went up in a Perth & Sydney & not other cities. The cause of rent increases was due to other factors.

  If negative gearing was removed today landlords would be powerless to raise rents because their tenants are not able to borrow money to pay the higher rents.

  Landlords have rents at the maximum capacity of the market to pay now. (Economics 101)

  Look interest rates went up to 9.5% around July 2008 up from around 7.3% July 2006 (2 Years) despite landlords interest costs going up around 30% they were unable to raise rents to cover their increased costs.

  Yes rents did go up 40-50% in this period but the rise was not because Mum & Dad Landlords interest costs went up, it was increased house prices that drove rents up.

  If Gov’t was to remove Negative Gearing house prices would plummet as Mum & Dad property speculators sold driving rents & house prices down. Fewer new Mum & Dad investors entering the market would then force developers to reduce prices to shift stock already in the pipeline.

  Just think “Race to the Exits”

  But don’t worry or lose any sleep neither party would run the risk of a backlash before a election, but post any election $4-10 billion is too tempting.

• 406 BP // Oct 24, 2012 at 1:38 pm

  NFTPS: “But don’t worry or lose any sleep neither party would run the risk of a backlash before a election…”

  I imagine that, as the ‘owner’ of six very, very highly leveraged properties, this unlikely outcome doesn’t cost you sleep you at all, NFTPS. The real issues are that:

  * Such a change could not be retrospective;

  * Many of us own _all_ our rentals outright, or maintain offsets exactly equalling property debts;

  * Despite bears insisting abolition of negative gearing wouldn’t affect residential construction, there would be a major impact. Nearly _all_ our current rentals are houses we’ve built in the last decade. That way we’ve minimised taxes;

  * We’d raise rents, simply because we can… and to add to the political backlash which would ensue;

  * Your theory that there’s a ceiling to what folks will pay is flawed. Competition for rentals is already intense. The alternative really is ‘in tents’… .

  For many years you’ve offered interesting, expert theories about Australian property markets. It must be quite disconcerting to be continually proved wrong, but it’s actually very comforting to Dad’n'Mum investors like us, who continue to reap the rewards of research, hard work and patience… .

• 407 Frank // Oct 24, 2012 at 1:40 pm

  Not Fooled I did watch the story. The retracted period of 2 years is not sufficient to see any real impact long term impact. And the story stated that in WA and NSW where rents rose it was because rental vacancies were less than 2%. Please remind me what the current WA rental vancancy is reported as…..

  Anyway to the rest of your fiction, Frank says:

  NF: “If negative gearing was removed today landlords would be powerless to raise rents because their tenants are not able to borrow money to pay the higher rents”. You are wrong. A more likely scenario than the fiction you post would be a rise in shared accomodation to offset the very real increase in rents that would occur, and reduced number of available properties due to the basic principles of supply and demand.

  NF: “Landlords have rents at the maximum capacity of the market to pay now. (Economics 101″. You are wrong. Economics 101 would show an inelastic supply curve and elastic demand curve influenced by not the price, but the number of people requing rental accomodation. As more people require the accomodation, and no rental properties add to the pool, prices will increase. This is not speculation, it is economic law. Again all people need to live somewhere do they not?

  NF: “Look interest rates went up to 9.5% around July 2008 up from around 7.3% July 2006 (2 Years) despite landlords interest costs going up around 30% they were unable to raise rents to cover their increased costs” Increasing interest rates are the product of a strong growing economy and high inflation backed by a strong global economy or at the very least growth with our key trading partners. We have neither now, and will not have either in the next 5 years. Should however rates increase to 10% this will see more people exit the property investment market and the remaining people who can not afford to buy houses again bidding against each other for the remaining properties further driving up rents. Again this is not speculation, it is economic law

  NF: “Yes rents did go up 40-50% in this period but the rise was not because Mum & Dad Landlords interest costs went up, it was increased house prices that drove rents up” You are wrong. Supply and demand drove rents up. Just as rents are currently being driven up despite no real growth in house prices. People agian have to live somewhere and with an undersupply of available housing prices will continue to rise, until such time that equilibrium is reached (3% vacancy apparently). At that point rents will not fall, they will simply stop growing. You will need an oversupply to see rents fall, and removing negative gearing will not create that problem…

  NF: “If Gov’t was to remove Negative Gearing house prices would plummet as Mum & Dad property speculators sold driving rents & house prices down. Fewer new Mum & Dad investors entering the market would then force developers to reduce prices to shift stock already in the pipeline.

  And finally, you are wrong. If the government removed Negative Gearing tomorrow then people relying on this to fund their investment MAY (note not will, may) exit their investment position. People who have positively geared properties would not need to sell. People with cost neutral properties would not need to sell. People who can afford to hold the investment and were using negative gearing solely for the tax break would not need to sell. The net impact of property pricing would be perhaps a 3% fall for a defined period. Note NF, if they repealed this tax break tomorrow, you would not see all properties on the disposal market immediately, and only a small portion of the total investment market would be impacted.

  Essentially my uneducated friend, you are a scaremongerer without foundation. The scary thing with you fear peddlers is stuff that is factually wrong as you have posted in 439 above may influence someone into making a poor investment decision. Too much negativity in the world right now, and most of it like your claptrap above is unneccesary fiction

• 408 Greg Atkinson // Oct 24, 2012 at 2:20 pm

  There doesn’t need to be a wave of mass selling to drive prices down, this can also happen if there is a lack of buyers willing to enter the market at current price levels. This would effectively drive the price-point downwards even on relatively low volumes.

  The same happens with stocks often. It doesn’t matter what the book value of a stock is sometimes, if there are more sellers than buyers the price tends to head downwards.

  Having said all that, I doubt anyone will be touching negative gearing any time soon so it’s all a bit of a theoretical exercise at this point.

• 409 BP // Oct 24, 2012 at 2:38 pm

  GA: “There doesn’t need to be a wave of mass selling to drive prices down, this can also happen if there is a lack of buyers willing to enter the market at current price levels…”

  A ‘…lack of buyers willing to enter the market…” predicts less supply, at a time when demand for rentals is already cause for celebration among those who foresaw and predicted this outcome years ago.

  While I agree with your ‘five-year-proposition’ as a sensible rule, Frank, since around 2000 most of our sales have been far quicker than that, more like 2 -- 3 years. We’ve made some great purchases during the lull… and two pleasing sales (2011 and 2012) recently. These didn’t surprise us; we bought well. What has truly astounded us, surpassing our Perfect Storm analogy back in 2010, has been the return and length of the rental queues, with rents rising to match. Changes to negative gearing benefits would probably double the length of those queues within two years.

• 410 Frank // Oct 24, 2012 at 3:19 pm

  Greg you are spot on, but the premis of Not Fooled’s post is that every “Mum & Dad” investor will be forced to dump their investment if Negative Gearing is aboloshed causing a market crash. That is fanciful if nothing else!!

  I agree however, moving away from the current structure would cause the death of any government, the impact on low and medium income families trying to scratch together rent would be diabolical

  If 27% of properties in Australia are rental accomodation, then simply you require 27% of properties to be owned by investors. If investors retreat from this market, the onus would be on state and federal governments to step into the breach. Can you see that happening? No state government can keep on top of their own state housing requirements without tossing the need to back fill private rent into the mix.

  Reading post 439 from Not Fooled again just now, I really struggle to believe that a man with such a small grip on the realities of the Australian Property Market let alone the simple principles of Supply and Demand can have the gall to claim himself a “Property Insider” as he continues to do, or talk with any level of authority.

  Look everyone is entitled to an opinion, I just prefer a little bit of reality tossed in!!

• 411 BP // Oct 24, 2012 at 5:30 pm

  You really only have to analyse the nature of all of your links on property since that date, Greg.
  All negative… .

• 412 Greg Atkinson // Oct 24, 2012 at 6:27 pm

  BP I have moved to a bearish stance on stocks and commodities as well…perhaps you never got the memo that stocks, commodities, property etc move in cycles.

  The reality is that the overall mood in terms of the residential real estate market is somewhat negative. Go check the annual reports from major players like Stockland or Australand.

  If you can’t deal with investment cycles and people adjusting accordingly then then I suggest you stick to sites where your version of reality is not questioned.

  Your constant need to post comments and be critical of others is becoming monotonous.

• 413 Frank // Oct 24, 2012 at 9:28 pm

  GA: perhaps you never got the memo that stocks, commodities, property etc move in cycles

  Bingo Greg, that is exactly right. So we have had the decline, and we are in the stagnation, so the next move must therefore be….

  Apply this to property and shares equally. Per another thread where you agreed with me that the stock market is probably under valued by 10%, the mechanisms of property also point to the next move being north.

  The fundamental ingredient missing from both markets at the moment is confidence.

  As for the annual reports of Stockland etc, my view on annual reports is they are a record of the past, not an indication of the future. Of course these companies have battled, times have been tough in their sector. But they continue to report profits so the sector is clearly not dead.

  When the boom was running hot in both property and shares I took the view that the growth was unsustainable and therefore must come to an end which it did. My firm view after the past 3 years is that the next move must be up.

• 414 BP // Oct 24, 2012 at 9:49 pm

  “…major players like Stockland or Australand…”

  Just an interesting segue. You might as well cite the financial problems of Australia’s builders, as well as developers.

  What property bears fail to realise is that the troubles of builders and developers mean less residential _construction_… and less supply increases competition for existing homes. For those who own residential properties, the failures of these businesses is actually a bonus.

  Attempts to compare housing to stocks are misguided: “The same happens with stocks often. It doesn’t matter what the book value of a stock is sometimes, if there are more sellers than buyers the price tends to head downwards.”

  You simply cannot compare _shelter_ with _shares_. One is a critical necessity, the other a diversion (unless, of course you’re hooked… . ) You buy or you rent. Does anyone here imagine Australia’s population will shrink? In what far-flung flight of fantasy does _that_ proposition flutter?!~

• 415 Frank // Oct 24, 2012 at 10:55 pm

  BP: “While I agree with your ‘five-year-proposition’ as a sensible rule, Frank, since around 2000 most of our sales have been far quicker than that, more like 2 — 3 years. We’ve made some great purchases during the lull… and two pleasing sales (2011 and 2012) recently”

  Without deriding your research, and not saying that making money in property is dumb luck, I have no doubt this is the case. It was impossible not to make money between 2000 and 2008 when the market was piping hot, and there are bargains to be had now that it is stone cold.

  Two of my kids are doing pretty well at the moment but timing has worked against them. For example one of my sons took a 200,000 investment loan on his 30th birthday to buy shares and bought into the market at about 6,000 points. He does not bemoan the face value of his investment, he is raking in dividends and does not plan to sell.

  My eldest son likes to joke that the Fremantle property he purchased was the very peak of the market and it started to fall on settlement. I asked him when he plans to sell and he said he does not. I asked if he can afford his repayments and he says he can. So what does it matter? If he has negative equity it certainly does not worry him, after all you dont lose money on an asset that you are not looking to sell.

  Interesting to one of the NF links floating around, that same son is defined as being in Mortgage Stress because about 40% of his net income is needed to service his debt. He isnt too concerned though, the 60% remaining is about $2,000 per week….

  See bears the point is everything is relative. Partick is a statistic, but he certainly isnt losing any sleep about it, and unless we eradicate the need for Dentists he is unlikely to default on his mortgage.

  This is a good website Greg, I just feel it should be more about sharing stock and properyty tips than sucking fingers to judge the directioin of the wind!

  So here is a property tip -- buy inside the golden circle of 10km from the city centre of any capital city. Avoid junk outlying areas such as Mindarie in WA , too risky. In the circle is a guaranteed path to outperform the market

  And for shares, TFC is about 200% undervalued given it is about to commence harvest finalising the transition from MIS seller to producer.

• 416 BP // Oct 25, 2012 at 12:03 am

  Our situations align remarkably well, Frank. Our two sons have their money in property, indexed shares, bonds and cash. Like your kids, they’re in it for the long haul, although I recall the eldest bailed on gold before it hit $1000 /oz.

  Every major mistake I’ve made with land or residential housing was in _not_ buying what later turned out to have been a gift. I don’t include selling a property we could have held for longer (but achieved our price) in the ‘mistake’ category. We always rolled every cent back into more property.

  I’ve attempted to understand property bear thinking… but I confess I utterly fail on that score. It’s so fragmented and inconsistent, with so many diverse IFs as part of the rationale, I sometimes wonder why we bother, other than for a good laugh.

  As more and more years roll on since Keen first predicted a major property crash, I guess we’ll hear more and more anger and negativism from those hopefuls who believed that owners would donate their homes to them… .

• 417 Greg Atkinson // Oct 25, 2012 at 7:44 am

  Australand & Stockland presented their outlook for the property market in their annual reports. As do most listed companies.

  As for property being a “staple” which cannot be compared to shares this is simply incorrect. Just look at the list of ASX 200 companies and contemplate what product & services they provide. For example some of these companies provide the materials to build houses which makes them, I would suggest, more of a provider of our basic needs than a property developer..although property developers are also in the ASX 200. (as are companies which supply food, energy and other basic needs)

  Anyway the ‘basic shelter’ argument is quite irreverent when talking about current property prices or the outlook for the property market. Who in their right mind is suggesting there will be no need for housing? Time to move on from statements like that.

  As for more property tips..well this is not the site for those sort of discussion as they end up turning into people talking anonymously about what real estate investment legends they are -- without a single piece of evidence to back up their claims.

• 418 Frank // Oct 25, 2012 at 9:42 am

  True Greg, but I cant find too many companies that spruik high growth and earnings outlook in these reports, they are all fairly conservative arent they? Full of motherhood statements such as “the ongoing uncertainty in Europe and the US will provide challenges to us in the coming year”.

  Even the banks after reporting record profits and increased dividends all like to tell us that the costs of lending continue to rise and the coming year will provide many challenges…!

  As for “they end up turning into people talking anonymously about what real estate investment legends they are” you will always get that on a blog site anyway wont you? People hiding befind aliases pretending to be absolute experts. But it is fair discussion isnt it? I mean if I said “I own 100 houses in Western Australia (which I dont) and they have made me $100m in profit when I just sold them all to buy an entire street in Dandenong in Victoria because I like mullets and it should grow” then that is lie and speculation. If on the other hand you say “Henley Beach in Adelaide is undergoing a transformation and appears to be significantly undervalued. There are bargains to be had now and the suburb is likely to see a 5% growth this year” then I would consider that sound in formation sharing.

  Anyway, your site your rules

• 419 Greg Atkinson // Oct 25, 2012 at 9:58 am

  Frank the issue with property investment tips in general is they open the door for people to plant false information which then undermines the integrity of the site. With stocks it’s pretty easy to punch in the ASX code and do some basic checks but when comes to a particular area where the property market might be doing well it becomes more difficult for us to do that. Besides this isn’t really a site for property investors. Real estate is covered because it impacts ASX listed stocks and the stock market in general..but this site doesn’t aim to be a source of property market insights.

  However if a verified source put together an article on real estate then we would look at publishing it as we do for other areas such as gold & precious metals updates.

• 420 BP // Oct 25, 2012 at 10:11 am

  “…this isn’t really a site for property investors….”

  Comment # 437…

• 421 Frank // Oct 25, 2012 at 10:27 am

  GA: “Frank the issue … in general is they open the door for people to plant false information which then undermines the integrity of the site”

  So kind of like Not Fooled in post 421 above (I think it was 439 before, but the post numbers seem to move around a lot here for some reason)? I hear you loud and clear!

  I certainly would not underestimate the importance of property investment and the property market to the performance of the ASX outside of shares directly influenced by it. I know for me personally, and many other investors like me, I invested in property first, and used the equity in property to enter the share market. If I had to “save” to build enough capital to make a meaningful foray into the share market it would not have happened

• 422 Greg Atkinson // Oct 25, 2012 at 10:50 am

  Frank the post numbers have moved around due to “moderation”. There was an ongoing debate a while ago mainly between two people which added zero to the topic. I have recently had time to delete the insults & other rubbish posted so that shook up the numbering quite a bit.

  I rarely have to do that with discussions regarding stocks & the stock market.

• 423 Not Fooled By Property Spruikers Hype // Oct 25, 2012 at 11:14 pm

  Banksia Securities placed in receivership this afternoon.

  http://www.mmg.com.au/local-news/kyabram/banksia-securities-limited-in-receivership-1.33293

  Banksia Securities Limited (BSL) owes approximately $660 million to investors and advanced these funds to borrowers primarily to finance real property purchases.

  BSL holds first ranking real property mortgages to secure its advances.

  $660 million of peoples savings at risk or perhaps not,
  after all they had it backed or invested in “Bricks & Mortar” nothing safer than that is there?

  Now watch as several Victorian Developers follow suit now that their backers have run out of the cash they need to feed their PONZI developments.

• 424 Frank // Oct 26, 2012 at 8:58 am

  NF says: Banksia Securities placed in receivership this afternoon.

  Frank says: Fact, well done

  NF says: $660 million of peoples savings at risk or perhaps not,
  after all they had it backed or invested in “Bricks & Mortar” nothing safer than that is there?

  Frank says: Again you show limited grasp of business operation. Companies usually go into administration because their expenses exceed their income. No mention of loan defaults being the cause of the issues, a more likely reason is that they had a cost base out of line with their income. Therefore $660m of investor money is at risk because a company was poorly managed at a time that our major banks continue to report record profits

  NF Says: Now watch as several Victorian Developers follow suit now that their backers have run out of the cash they need to feed their PONZI developments.

  Frank Says: More speculative scaremongering from a guy with no grasp on the mechanics of free market operation

  I have to take my hat off to you Not Fooled, you are nothing if not consistent. Consistently wrong that is.

• 425 Not Fooled By Property Spruikers Hype // Oct 26, 2012 at 9:54 am

  Ah Frank feel better?

  Sorry Banksia Investments offered high interest returns to depositors & lent the money to property developers at high interest rates & relied on the “Security” of inflated property prices.

  These developers have property that they cannot sell or shift to pay their Bankers either the capital back or interest payments.

  Banksia have stared into their crystal ball & see no light at the end of the tunnel for them so admit that their loan book is insolvent.

  Now there will be a fire sale dragging prices down, but worse still this will put fear into depositors minds that perhaps the security of property backing their high interest rate returns is not really that secure making it harder for these type of Lending Institutions to attract funds.

  Notice something else Frank? I am talking about a topic that will effect property markets & prices. Give that a go see how that works out.

• 426 Frank // Oct 26, 2012 at 10:21 am

  NF : Ah Frank feel better? Never felt poor NF, thanks for asking

  NF : Sorry Banksia Investments offered high interest returns to depositors & lent the money to property developers at high interest rates & relied on the “Security” of inflated property prices.

  Frank : In what world NF does that sound like a sustainable long term business? Seems little wonder to me that it went broke. Also franks my comment above -- this business had expenses higher than their income

  NF: These developers have property that they cannot sell or shift to pay their Bankers either the capital back or interest payments.

  Frank: You are speculating again. I dont have time to teach you about the importance of cashflow to a business, but the evidence is pretty clear that Banksia got this fundamental bit of their structure wrong

  NF: Banksia have stared into their crystal ball & see no light at the end of the tunnel for them so admit that their loan book is insolvent.

  Frank: You are speculating again. Do you know what insolvency means? It means that they (being Banksia) do not have the liquidity to pay their debt. Therefore, again, fundamentally they have expenses greater than income. This really is economics 101, I am bewildered that you can not graps it. IF the business was well structured, and clearly it was not, then this would not be an issue. This is a reflection on the management of this specific organisation, not the wider property or lending markets

  NF: Now there will be a fire sale dragging prices down, but worse still this will put fear into depositors minds that perhaps the security of property backing their high interest rate returns is not really that secure making it harder for these type of Lending Institutions to attract funds.

  Frank: You are speculating again, and doing it very poorly.

  NF: Notice something else Frank? I am talking about a topic that will effect property markets & prices. Give that a go see how that works out.

  Frank: No NF, you are doom and glooming a very sad event that will impact a very limited number of people and have absolutely no real impact on the greater propertry market or its prices.

  Then in your usual way you toss in big words that you dont understand like “ponzi” and “fire sale” to intimate that this will have a material impact on the wider lending industry or property market.

  IT WILL NOT HAPPEN NOT FOOLED

  ASIC and the directors of Banksia have a lot of questions to answer. This is a tragic loss for at most 3,000 people

  Like I said mate, at least you are consistent

• 427 Greg Atkinson // Oct 26, 2012 at 11:57 am

  Property developers and those who lend to property developers that take on a lot of debt while not watching their cash-flow carefully sadly come unstuck quite often. A few years back quite a few high-flying property developers on the Gold Coast came crashing back to earth which was largely due to them being saddled with too much debt. A few listed companies also got caught in this mess..City Pacific is one that comes to mind.

  So perhaps in this case the situation is essentially a company/investment management issue rather than an indication of some bigger structural problems in the real estate sector?

  It is true I am bearish about the overall property sector for the next few years but I don’t expect we will see a Keen-like crash unless some clever modelling is done. Of course there will be real estate hot spots just as there are hot stocks even in bear market for shares.

  By the way I am actually on record as saying I expected a national level (capital city) correction of around 10% in the residential property market which I don’t think puts me in the doom category by the way.

• 428 Frank // Oct 26, 2012 at 12:22 pm

  GA: Property developers and those who lend to property developers that take on a lot of debt while not watching their cash-flow carefully sadly come unstuck quite often

  Precisely mate. This is a story of a poorly managed business, nothing more, nothing less.

  A 10% correction in property (so $50k in round numbers)? Not impossible, but I find it highly unlikely.

  What I see (and I base it on WA because this is where I live, but the mechanics are universal) is a number of suburbs that are highly overvalued (thinking in WA places like Mindarie, Woodvale, Wembley Downs, Wembley, Claremont, Hillaries) where a 10-15% reduction could be very real, particularly as Baby Boomers in these suburbs downsize in retirement to centrally located apartments.

  However there are a number of significantly under valued suburbs that are more central to the city (Como, Kensington, Victoria Park, Morley, Brentwood, Wilson, Mt Lawley, Carlisle etc) that should see solid gains.

  Then cheaper first home buyer locations such as Bentley, Redcliffe, Dianella could see reasonable growth, while mass developments in outlying suburbs such as Attwell, Hammond Park or Honeywood Estate for example will fall.

  If you take all of these swings and roundabouts into consideration, while the “Value” in the market will be down, I think the volume will be up making it very difficult for the median to fall.

  I say this with the following qualifier in mind -- The very real prospect of 5 years of significantly below average interest rates will underpin the fragile market in the absense of real economic confidence.

  I agree however a 10% fall is not doom or “bearish”, as should it occur it would excellerate the market upswing

• 429 Greg Atkinson // Oct 26, 2012 at 12:40 pm

  By the way these are the stats I usually look at regarding house price trends: House Price Indexes: Eight Capital Cities, Jun 2012

  I know some people get upset (for whatever reason) when I say that at the moment to property market is struggling but besides Darwin (which is a small city) then the ABS data suggests to me that solid capital gains are not out there at the moment.

  Yes people can do well from rental income but that also happens with stocks where you can actually earn fully franked dividends.

  So the situation appears to me that the property market is not crashing but clearly it isn’t surging ahead either on a “national” basis either.

• 430 Not Fooled By Property Spruikers Hype // Oct 26, 2012 at 1:28 pm

  Frank

  Speculation on my part you think?

  Let see…key extracts from article…. “Banksia fell into receivership after a recent review of its non-performing loans.” …”major residential, hotel and commercial developments in Sydney had faced multi-million dollar valuation and financing problems, helping to bring the collapse on.” ….

  http://www.perthnow.com.au/business/thousands-of-victorians-have-their-cash-frozen-after-collapse-of-banksia-financial-group/story-e6frg2qc-1226503824848

  Sorry Frank it has nothing to do with overheads or expenses (Your Speculation)

  Risky lending practices funding PONZI property schemes relying on a Greater Fool buying the dream. Across Australia developers are struggling to offload property on to the next Schmuck bringing down their house of cards & forcing their financiers to look again at what they are exposed to.

• 431 Frank // Oct 26, 2012 at 1:59 pm

  Thanks Greg for the link. You are right there solid gains are not there in the wider market, and no one would suggest that they are accross the board as they were 5 years ago. Darwin I think reflects a bubbling of pre-Inpex anticipation as well as solid defense housing construction that was occuring when I was involved in construction material supply 2-3 years ago.

  But there are gains in every market and just like shares research will lead you to the rewards.

  I am quite fond of my dividend steam as well and you make a good point there also

  I am half disapointed that you deleted Not Fooleds statement that Banksia going into recievership has nothing to do with overheads or expenses, I was looking forward to responding to that one!

• 432 Frank // Oct 26, 2012 at 5:56 pm

  NF: “Speculation on my part you think?”

  I dont think mate, I know. You are full of speculation, with a 100% inacuracy

  Not Fooled: “Sorry Frank it has nothing to do with overheads or expenses (Your Speculation”

  You ignorance and extreme lack of business accumen astounds me for a man who pretends to be intelligent.

  Let me explain to you how business works.

  At the top line they have their income, being the money that they receive for the services that they provide. In the case of Banksia this is interest on their loans.

  Then they have expenses, being the wages of their 100 employees, interest payments to depositors, insurance, marketing, rent on buildings, telecommunicaiton and internet costs.

  Then the really big expense of the payments that they owe on their borrowings outside of the above to other lenders.

  History shows that 100% of businesses, thats right all of them, that are able to have an income greater than their expenses, thats right ALL OF THEM, do not need to appoint insolvency administrators

  In this case from what has been reported, it is clear to anyone with even a mushy pea for a brain that the poor management of this company resulted in them defaulting on their borrowing covenants and therefore needing to pay more to their primary lender(s). This clearly placed them in a position where their income was insufficient to meet their creditor requirements.

  As a result of this, 3,000 people will lose a significant portion of their investments (assuming the administrator is unable to sell the loan book to other lenders), 100 people will lose their jobs, and the net impact on the property market will be +/-0.00000001%.

  Not Fooled says in relation to this specific article that he tendered as proof of a collapsing property market:

  1) Now watch as several Victorian Developers follow suit now that their backers have run out of the cash they need to feed their PONZI developments (WILL NOT HAPPEN)

  2) These developers have property that they cannot sell or shift to pay their Bankers either the capital back or interest payments. (SPECULATIVE AND WITH ABSOLUTELY NO PROOF)

  3) Banksia have stared into their crystal ball & see no light at the end of the tunnel for them so admit that their loan book is insolvent. (INACCURATE, SPECULATIVE AND WITH NO PROOF)

  4) Now there will be a fire sale dragging prices down, but worse still this will put fear into depositors minds that perhaps the security of property backing their high interest rate returns is not really that secure making it harder for these type of Lending Institutions to attract funds (ABSOLUTELY SPECULATIVE WITH ABSOLUTELY NO PROOF)

  Your bold statements in all 4 cases above are fundamentally flawed, pure speculation and scaremongering.

  Most rational people reading that article, like me, would be angry at the management of the company and feel sympathy for the investors who have lost money because of a poorly managed company (amount yet to be determined).

  You, and only you rush outside with your ruler in the hope that this sad but insignificant event has made the skay fall an inch closer to the ground, and then use it as “proof” of a looming property collapse that it will not influence.

  You have speculated, done so very poorly, taken 2+2 and equalled 10000

• 433 BP // Oct 26, 2012 at 6:15 pm

  Using the N Fool ‘system’, one might argue that the ANZ’s recent record result means there will be a boom in residential property sales. By now you’d _expect_ the doomer culture to trumpet a non-bank failure and amp it into cataclysmic catastrophe.

  That ‘selectivity’ which characterises NF’s most ardent leaps of faith is alive and kinking. This prediction of doom is just the latest in a very l-o-n-g line of failed punts…

• 434 BP // Oct 27, 2012 at 6:49 pm

  GA: “I know some people get upset (for whatever reason) when I say that at the moment to property market is struggling…”

  You know, I’m not too sure that’s true, even if there is just one property market, Greg. Auction clearance today was very high, with well over half a billion dollars spent, primarily in two east coast cities:

  “The clearance rate recorded on the day with the highest number of auctions held this year was 66 per cent compared to 60 per cent last weekend and 50 per cent on this weekend last year.”

  Many other indicators confirm a lift in marketS across Australia. Perhaps events like the recent non-bank crash will boost investment in housing(?) That elderly citizen who lost $400K, her life savings in the Banksia crash, probably believed cash really was king; but had she bought a rental home or unit, she would (still) be earning up to $25K p.a. in rent, rather than fighting to recover cents-in-the-dollar…

• 435 Not Fooled By Property Spruikers Hype // Oct 27, 2012 at 11:35 pm

  Biker Pete

  Actually the elderly Lady was assured by Banksia her money was safe because it was backed by “Bricks & Mortar” & perfectly safe.

  Now tens of thousands of “Elderly” people around Australia who put their savings in “High Yield” now realise that “Bricks & Mortar” is not all it is cracked up to be. (Look at the 3,000 plus impacted by Banksia)

  So these people are going to take their “Cash” funds & put it in proper banks (Big 4)

  So these developers are going to struggle to get funds to feed the Ponzi property developments they are trying to keep afloat.

  But look at the bright side … “less supply higher rents”… is that how the Mantra goes?

• 436 Frank // Oct 28, 2012 at 10:54 am

  NF Says: Actually the elderly Lady was assured by Banksia her money was safe because it was backed by “Bricks & Mortar” & perfectly safe.

  Frank Says: Thanks Not Fooled for more poor assumption. You were not there, you have not spoken to her you have no idea why she elected to invest her money there

  NF Says: Now tens of thousands of “Elderly” people around Australia who put their savings in “High Yield” now realise that “Bricks & Mortar” is not all it is cracked up to be. (Look at the 3,000 plus impacted by Banksia)

  So these people are going to take their “Cash” funds & put it in proper banks (Big 4)

  Frank Says: More speculation with absolutely no foundation, and an absolute insult to the as YOU put it “Elderly” in that you are implying they are fools. First rate generalisation there mate.

  NF Says: So these developers are going to struggle to get funds to feed the Ponzi property developments they are trying to keep afloat.

  Frank Says: And yey again you speculate and yet again do so with absolutely no foundation.

  Care to make a valid, structured, researched point anytime soon Not Fooled By Your Own Hype?

• 437 BP // Oct 28, 2012 at 12:04 pm

  You’ve missed the point completely (again), NF.

  I’ll explain it again, s-l-o-w-l-y, for you:

  1.) She could have bought a house or unit, made of bricks-and-mortar (or half a dozen other building materials) owning it outright, for that same $400K.

  2.) She chose _non-bank_ cash instead.

  Had she elected to do 1.) rather than 2.) she would _still_ have a.) her rental home b.) all the usual tax breaks c.) an income of up to $25K, less claimable expenses, annually.

  “…less supply higher rents”… is that how the Mantra goes?” was your question. Here was your _own_ answer, back on 22nd February 2011:

  “Buy then let time pass & as rents rise it pays off the principle quicker… ”

  It sounds to me as though we’re chanting the same mantra, NFTPS.

• 438 Not Fooled By Property Spruikers Hype // Oct 28, 2012 at 12:38 pm

  F_A_C_T

  Banksia Collapse will cause people to question the security of high interest offered on deposit backed by bricks & mortar.

  Developers will struggle to attract funds.

  Cheer up Biker thats a positive thing less supply higher rents?

  Anyway topic has been done to death. You two want to argue reality go right ahead

• 439 BP // Oct 28, 2012 at 1:48 pm

  NF: “Cheer up Biker thats a positive thing less supply higher rents?”

  With one property you say live in… and five rentals you claim you own, I’d say you’re on a winner, NF!

• 440 Frank // Oct 28, 2012 at 3:38 pm

  NF : F_A_C_T

  Banksia Collapse will cause people to question the security of high interest offered on deposit backed by bricks & mortar

  Developers will struggle to attract funds

  Mate, it is not a fact at all…. You really dont get it do you? People will be drawn to these investments for their own reasons in the future as they were in the past.

  Developers with sound projects will continue to attract finding and construction will continue to occur in the future, as it did in the past.

  You speculate and masquerade your opinions as facts, but that does not make them fact.

  Again, this is a sad event impacting a number of people but will have no major effect on the market as you purport it will.

  I agree though the topic has been done to death, noext time you want to spruik doom and gloom perhaps toss some fact into the mix hey?!

• 441 Not Fooled By Property Spruikers Hype // Nov 1, 2012 at 11:28 am

  Frank / Biker

  Public companies have to tell the market the “Truth” so this is what GWA has to say about housing in OZ.

  The alarm bells are ringing but you wont hear them with your fingers in your ears…….

  http://www.couriermail.com.au/business/housing-activity-dead-as-the-dodo-for-gwa/story-fnefl294-1226502442710

  “Nationally housing starts are the lowest for 17 years, it’s that bad,”

  “I don’t think you have to be a Rhodes scholar to understand what’s wrong and it’s weak house prices. People are very reluctant to do up their house if they think they’re going to over-capitalise it. People are pretty reluctant to buy… Most people are holding back and looking to see if house prices will stabilise, and I’m not talking about beach houses on the Gold Coast, I’m talking about normal houses.”

  Hello he is talking about “Normal Houses”

• 442 Frank // Nov 1, 2012 at 12:14 pm

  Not Fooled / Punter / Aaron / Louise H etc,

  Selective as ever I see grand bear.

  From the same article:

  “There are some signs that house prices have stabilised and are starting to creep up, so it gives me some confidence that a recovery will come around, I just can’t see it before the last quarter of the financial year, so probably April, May, June I would think.”

  So to sum up exactly what I have been saying for months, as have others, the worst is over and the next move is north.
  Not a rapid ascention, but growth none the less

  You have taken negative comment on the past made to reflect last years results as a sign of the future yet completely ignored his own assessment of that future.

  So you say “Public companies have to tell the market the “Truth”", truth shows growth from your own stated article.

  Clueless Muppet.

• 443 BP // Nov 1, 2012 at 3:21 pm

  Well, you couldn’t be further removed from the truth than if you had to travel to QLD to find a negative link, NFTPS. Where do you reside again?

  Have you missed several very positive reports emanating from the other states recently, or do you choose to totally ignore them?

  Finally, I may be frank in referring to you as ‘N Fool the Property Speculator’, but I’m not Frank. Just another miscall from a troll who hasn’t decided whether he’s an unemployed Homeswest client, or a big-time speculator with six homes. Do you _ever_ get it right, NFTPS?

• 444 Greg Atkinson // Nov 1, 2012 at 3:57 pm

  Let’s steer clear of the name calling…this is not Question Time. The reality is nobody knows if the housing market is on the way up or down.

  From the RP Data Press Release today:

  “Capital city dwelling values ease 1% in October after four months of rising values Dwelling values across all of Australia’s capital city housing markets, except Perth and Darwin, fell over October, interrupting a four month run of recovery.”

  Plenty of lovely graphs and data in the full media release. I can’t see a clear trend either way but I am sure if people try hard enough a trend can be found to support either side of the debate..as usual.

• 445 BP // Nov 1, 2012 at 4:23 pm

  “…except Perth and Darwin…”

  I’d suggest that’s a trend, Greg.

  “I am sure if people try hard enough a trend can be found to support either side of the debate…”

  My point was that NFTPS lives in WA. His ongoing predictions of a great property crash are primarily focussed on WA. And yes, we all bring to these reports the ‘confirmation bias’ of our beliefs. We rarely post a link which runs contrary to our situation, do we?

  Nice to have these beliefs / trends supported by the sale of a beach block recently. Tiny sample, but cause for cellarbration, anyway… !

• 446 Not Fooled By Property Spruikers Hype // Nov 1, 2012 at 4:31 pm

  Greg

  Name Calling?

  That’s a bit harsh to accuse Frank of that.

  I thought Frank was just signing his comment when he said:

  “Clueless Muppet”

• 447 Frank // Nov 1, 2012 at 4:57 pm

  Sorry Greg, I do apologise for calling Not Fooled a Clueless Muppet and will not stoop to his level again.

  However he has again demonstrated a clear inability to link what an article is actually saying with his usual message of doom and destruction and I am sure I am not the only one tiring of his poor approach and ill researched rants, particularly when he says things like “The alarm bells are ringing but you wont hear them with your fingers in your ears…….”

  Lets forget the short term, I have made it clear often enough that I dont measure things in weeks or months. But when a CEO of a publically listed organisation who as NF attests “must tell the truth” says that construction starts are at a 17 year low, that sets off alarm bells in my ears.

  Not that the market is poised to collapse, but in the face of:
  - organic population growth;
  - positive net migration;
  - reduced available rentals;
  - wages growing at 3.7% nationally against 1.9% CPI;
  - low unemployment and
  - historically low interest rates

  This tells me that if starts dont increase, and soon, then an undersupply will appear in a big hurry and prices will rise faster than they should naturally (also known as a boom)

  I am also on record as stating that I dont think we can afford another boom, but the laws of supply and demand are the laws of supply and demand, are they not?

  If you are smart enough to look at that without bear claws on, you will have to acknowledge that the prices simply can not plunge from here.

• 448 BP // Nov 1, 2012 at 5:34 pm

  Yes, I too must apologise for describing NFTPS as a troll. Normally, I’d only be tempted to use such a denigration to describe the kind of online identity who posts six _consecutive_ rants on a thread…

  I think you can add (at least) one more factor in your list Frank. It’s not just ‘reduced available rentals’, but the incredible rise in rents. And, not only did that $9K extra cost p.a. predicted by a bear (no, delete that term) contrary person, fail to materialise, but rents are now at record levels in WA… and rising… .

  Rising rents benefit speculators, as well as investors; so I’m always intrigued when contrary persons who own multiple properties, in three towns, contend rents have hardly risen at all.

  I admit it’s a puzzle… .

• 449 Greg Atkinson // Nov 1, 2012 at 6:07 pm

  I have to admit I almost choked on my coffee when I read Public companies have to tell the market the “Truth” More like they are suppose to..but they have been known to give the truth quite a stretch

  I’m not sure this discussion is going anywhere but in circles. Perhaps it’s time to pause until we have a clear trend to talk about?

• 450 BP // Nov 1, 2012 at 7:42 pm

  Clear trend? I think Auction Clearance Rates may be a ‘clear trend’. One of us posted them weekly, when the clearance rates were _low_ so it’s clearly a performance indicator.

  The list Frank supplied is 100% spot-on for WA… and if any property _bull_ posted a comment like “…this discussion is going… in circles…” during a flat or _low_ spell, he/she would be derided by bears.

  Your perception that there are property marketS was perhaps stating the bloody obvious, but you were the first commentator who summed it up concisely. Take another helicopter view now… and you’ll find that summation perhaps even more relevant and appropriate than when you first posted it… .

• 451 Matthew // Nov 1, 2012 at 11:31 pm

  Long time reader, first time poster. Firstly Frank I am the guy that caused Not Fooled to delete an entire blog after exposing lie after lie.

  Greg I agree that there is no trend to be found as yet, But as with Frank see next move upward.

  I would love to see an accurate argument from the bearpulation but can’t see one soon.

  Not Fooled, next time you see PT and The Punter in the mirror, perhaps focus on fact not fantasy.

  Next move? Yep, up

  Speaking of fantasy, exactly how are the 7 jobs in 6 countries that you pretend to be involved in progressing?

• 452 BP // Nov 3, 2012 at 8:36 pm

  Welcome to the thread, Matt.

  If trends are what will see the WA market rise, _undersupply_ is the-name-of-the-game:

  http://www.watoday.com.au/wa-news/renters-forced-to-dig-even-deeper-into-their-pockets-20121102-28png.html

  Having just sold off our last block, we’re down to rentals… and our primary property… so we’re maximising the latter; food production mainly. Still looking for bargains, but they’re now fewer, as rents rise. For the last couple of years we’ve anticipated reduced residential construction, increased population, undersupply, consequent rent rises and the tipping point at which buying becomes a viable option opposed to renting.

  The situation now? There just aren’t enough houses, whether families are renting _or_ buying. We called the rental shortage and the rise in rents … and now believe we’ll see a rise in house prices… .

• 453 Not Fooled By Property Spruikers Hype // Nov 3, 2012 at 9:09 pm

  Under Supply Biker?

  Are people living in Parks or under Bridges.

  Rising rents lets see Dec 2008 Perth median rent $380PW & Now 4 years later it is $450 pw… that’s 4.3% PA compounding … settle down.

  Rents are already at peoples income capacity. They are unable to borrow to pay more.

  Meanwhile Landlords suffered capital losses of around $20-$40K in the same period. That wipes out any rent increase.

  Interesting to note you are saying one thing & doing the opposite (Selling Land) see the writing on the wall I take it.

  How’s it go “Do as I say , Not as I do”?

• 454 Ned S // Nov 3, 2012 at 10:23 pm

  Some things just don’t change.

• 455 BP // Nov 4, 2012 at 8:34 am

  As previously stated, _everything_ we own, apart from our main property, is always for sale (and if someone offered us the right price, we’d sell that, too… . )

  Your comment: “How’s it go “Do as I say , Not as I do”?” is amusing, given your claims to own six properties… while talking down rents, the property marketS, and anything else you can badmouth. How do you reconcile these interchangeable polarities (given your repeated claims of multiple property ownership) with your comment 1st Sept., 2010: “I’d hate to be a landlord in this market… .”

  ‘Do as I say, not as I do?’ As others here have suggested, you’re more likely to be that other fella you’ve frequently claimed to be, that unemployed Homeswest tenant with substance abuse issues. You’re certainly not a landlord. You’d _hate_ to be a landlord… .

• 456 Frank // Nov 4, 2012 at 9:05 am

  More Comedy Gold Not Fooled, did that come straight from your Saturday night Dinner for Scmucks where you set 6 mirrors up around a table and lecture yourself and random aliases on sky falling in theories?

  Under Supply Not Fooled? If not real and here now, coming to a town or suburb near you in the near future, yes. 17 year housing start lows and growing population is not going to create an over supply now is it? Most reputable property monitors point to undersupply as a problem. As far as my limited research shows only you say there isnt one, and you are barely credible.

  Do people live under bridges and in parks NF? Um, well yes sadly they do.

  As for thje rest of your rubbish:

  Rising rents lets see Dec 2008 Perth median rent $380PW & Now 4 years later it is $450 pw… that’s 4.3% PA compounding … settle down. -- Thats still growth NF, and still above CPI is it not? Hardly sky falling in crisis

  Rents are already at peoples income capacity. They are unable to borrow to pay more. -- Proven you wrong on this before, and you have done nothing to prove yourself right since. Provide some valid evidence to your assumption or stop regurgitating your fantasy as fact, it is growing tiresome

  Meanwhile Landlords suffered capital losses of around $20-$40K in the same period. That wipes out any rent increase.

  And more proof you know nothing about investing in property. Landlords have suffered no capital losses if they have not sold. Most / Many have still capital growth returns of greater than 10%pa compound ontop of significant rental gains.

  As per usual you scaremonger to the minority of the market, who are probably not concerned as a combination of low interest rates and rising rents will offset and “paper growth” stagnation in capital value.

  The majority of the market it is a matter of how much better off am I.

  Thanks for being consistent mate. Consistently wrong that is.

• 457 Craig R // Nov 4, 2012 at 9:44 am

  Frank you may as well give up. I asked Not fooled a question ages ago and I still haven’t received an answer yet. I am not even going to go back and get the question again. It is clear this person knows nothing about investing in property and how to get the best benefit from him. All he looks for is capital growth. That to me is enough proof this person has no idea about investing in property.

  For me there are 3 reasons I invest in any property and these are 3 reasons I think every real, knowledgeable property investor would know about, Not Fooled only seems focused on 1.

  Craig R

• 458 Leigh // Nov 4, 2012 at 10:40 am

  It is interesting that in a blog called Shareswatch a discussion about house prices seems to be the most popular. I am of the Craig R mind at 437 in the three reasons to invest in property although I would never invest without considering capital growth. For me this is not such a priority in buying shares but in property capital growth has been essential so the equity can assist the purchase of the next property. Will house prices go down? Well that all has to do with time frame and position. I would like to see a house in Mosman NSW that is worth less than it was ten years ago. I would agree that we seem to be in a flat period but real estate can’t help but go up in value simply because you can’t make any more of it.

• 459 Frank // Nov 4, 2012 at 1:12 pm

  Craig R, I prefer that Not Fooled does not try to defend his incorrect assumptions because it just wastes time. I would rather he jut keep them to himself given he is so far off the mark he is diminishing the value of these pages.

  I am not sure what your 3 reasons for investing in property or shares are but I have only one -- to make more money than I can by leaving my money in the bank!

  If you add long term capital growth to the long term income growth of both property and shares (rents and dividends) then you over time will be significantly better off than otherwise.

  My balanced investments leave me a very comfortable man, and will eventually provide my children and their children with a solid asset backing when I am gone. Had I taken a the Not Fooled approach of term deposits only, I would have a very small amount of assets and probably still be slaving away in the office

  Fundamentally the reason for this is because I borrowed the money to buy the initial investment property way back when the sky was the same distance from the ground that it is now.

  Then I used someone elses money (rent) to pay back the bulk of the debt until the property became positively geared, at which point I did it again

  This allowed me to use MY money to buy shares.

  Anyone can do this if they take a long term view, as the saying goes no one has a mortgage on being a millionaire

  dinner for schmucks Not Fooled says….. He would be the star attraction every single week

• 460 Greg Atkinson // Nov 4, 2012 at 5:22 pm

  Leigh the property discussion is not the most popular topic -- it just seems to attract the same, repetitive comments. The property bulls ignore the statistics they don’t like and the property bears leap onto the figures that suit their point of view. Then round and round the discussion goes all with very little hard data to support either side. (with same primary school name calling thrown in for good measure)

• 461 BP // Nov 4, 2012 at 5:46 pm

  “Leigh the property discussion is not the most popular topic…”

  Howzat? Are you sure it’s just “…the property bulls ignoring the statistics they don’t like…” ?

• 462 Craig R // Nov 4, 2012 at 6:38 pm

  Frank the 3 things I look for are:

  1) money -- long term growth, this does not drive the reason for me to buy any investment though. I make sure I make my money on purchase.
  2)money -- other people’s money to purchase any investment and to pay it off. I make sure that none of my money or possessions are used where possible, or are only used for 20% of purchase price. Even then this is not actually my money and I think some people out there don’t understand this concept, Not Fooled is not the only person. I am also looking for the long term cash flow from my investment properties because I plan to live off this in the future.
  3)money -- the tax benefit I get that allows me to use more of my money for what is important for me. Rather than always keeping my IP’s negatively geared I want them all positive as quickly as possible so I can leverage them in to more properties.

  Leigh for me once your own mortgage is paid off why not start paying off the first IP, this in itself will help create equity to then buy another property and means you don’t have to rely only on the market going up. I use this strategy because it works for me just now.

  Craig R

• 463 Greg Atkinson // Nov 4, 2012 at 6:39 pm

  Not Fooled et.al. -- I say once again, it’s time to move on from the Perth/WA real estate market. Let’s try and stay on at national level please.

• 464 BP // Nov 4, 2012 at 7:12 pm

  I think you’ve outlined the reasons we like property very well, Craig.

  1.) Buy well

  2.) Use OPM, whether from rent or resale

  3.) Get positively-geared ASAP, regardless
  a host of tax benefits

  4.) Live well from property income in retirement.

  GA: “Let’s try and stay on at national level please.”

  We’re back to a property ‘market’ (as opposed to property marketS) focus? So we won’t enjoy reading stats about individual cities’ performance? No more reading about the flat Melbourne market, for instance?

  Yes, we could do that, I suppose, but it’s an extraordinary and novel caveat, isn’t it… !~

• 465 Frank // Nov 5, 2012 at 9:42 am

  Hey Greg just a question and you are welcome to shoot me down, but is it possible to talk property on a national basis? It is kind of like saying you cant speak about banks shares or if you are going to talk Qantas make sure you talk VA as well isnt it? Every day in the ASX shares trade wither side of the normal and property is the same

  Whether you (not you personally, the royal “you”) like it or not, there are a myriad of markets within this sector. (8 capital cities, then 1000′s of regional, apartments and units, FHB 2HB, luxuary, holiday, investment). I can not see how it is possible to look at this market collectively and make a determination its performance

  I think your frustration is that a couple of people talk only about it (WA), but that is more point of reference isnt it?

  As I have said before, I dont consider myself a property bull, and am intelligent enough to objectively read and assess any presented data. If you look at my posting history you will see I dont make outlandish false claims, I just refute (quite easily) the outlandish false claims of others

  If you really want a fair, reasonable and researched discussion process on property then you know where you need to focus!!

• 466 Greg Atkinson // Nov 5, 2012 at 10:17 am

  Frank that’s a good analogy -- the stock market is in fact many different markets and sectors similar to the property market. However we can still get a big picture view by looking at the national or index level. At the moment I think the big picture view in terms of property is fairly interesting as we should be seeing some impact from the recent rate cuts.

  What I want to avoid however is the argument that because a market area (say Perth) is doing well then the national trend doesn’t matter. That’s a bit like saying because many mining stocks held up during the GFC that the All Ords/ASX 200 were not in a bear market.

  In addition it’s worth remembering that keeping an eye on the stock market is useful for property investors and keeping an eye on the property market is useful for investors in shares. (which is why I look at the housing market from time to time)

  For example if we did see house prices fall further that would not be a positive sign for stocks in the retail sector or companies associated with home construction. Conversely if we see housing construction pick up and home prices rise that will probably help retailers and may other listed companies.

  So there are markets within markets and all these different markets are inter-connected. That’s what makes life interesting right?

• 467 Frank // Nov 5, 2012 at 10:57 am

  I wouldnt suggest for one second that WA doing well means that the rest of the country does not matter. In fact I would rather see a strong NSW and Vic economy.

  Here in the west I would suggest that the financial basket cases that are NSW, Vic and SA are a major drain on our economy (nationally and locally), and the inequitable distribution of income is a major reason why our countrys property and share markets are down on fair value.

  Please let me elaborate on this before someone flames me:

  The major economies having a poor income and inability to service their most basic requirements sees them recieve the bulk of federal funding, both directly and GST distribution. This means 2 things:

  1) Money recieved that should be spent on investment and development is instead directed to maintaining services in these states and

  2) the reduced investment in well performing states sees deferral or reduciton in investment in these states.

  As such less jobs are created, less flow on to the general economy, less activity across the nation.

  Close your eyes and imagine for a second that NSW and Vic were growing at 75% the rate of WA and Qld. What would that do to the property and share markets? There would not be a bear in sight!!

  But alas that is not the case.

  As to your comment “That’s a bit like saying because many mining stocks held up during the GFC that the All Ords/ASX 200 were not in a bear market.”

  This is an interesting one. Because solid shares were savaged in the GFC based on percection that they were over priced (think banks) and those who accumulated or purchased these have been well rewarded since, have they not?

  Put the same theory to the national property market, and focus clearly on the middle ($500k -- $800k range). This sector nationally has been “unfairly” restriced in growth because of the association to the bottom end and top ends struggling. Diamonds in the rough perhaps?

  Also as to national median house pricing trends, these really are meaningless to me. However, I heard on the radio the other day that, for example, FHB’s now represent something like 30% of the activity up from something like 20% (I dont have the exact numbers, but am sure the grand bear will enlighten us).

  Given the FHB’s usually buy toward the bottom, and the median is a measure of the middle, this would tell me that the next move in median values could be slightly down on the prior quarter.

  If given this fact however the next move is even marginally up, then that would tell me that the market is indeed becoming a more than a little bit warm.

  Now that is a fair bit of generalisation, so specifically I would say WA and NT will continue sound (note sound, not solid) and the marginal losses in other states will become marginal gains.

• 468 Frank // Nov 5, 2012 at 2:29 pm

  Hi Greg,

  Is there a trend in here worth following?

  http://www.perthnow.com.au/business/cheaper-to-buy-than-rent-in-more-suburbs/story-e6frg2qc-1226510420832

  Key points --

  ~ 388 suburbs nationally with rents higher than repayments
  ~ 147 in Qld (lets say this points to the market bottoming out from a price fall perspective in these suburbs)
  ~ Some cheap buying in SA near the CBD (not that you would wnat to live there goes the old joke)

  So despite the cries of oversupply by grand bear Just Fooled, facts of tightening rental markets and rising rents pushing those who can into a do (buy) position

• 469 Greg Atkinson // Nov 5, 2012 at 3:05 pm

  Frank I get the media releases directly from RP Rismark but don’t post them often because….well, they are not exactly an unbiased source. That’s why I generally stick to the boring ABS stuff. I also don’t post much of Steve Keen’s material either who is on the other side of the coin.

  No need for the bulls and bears to fight it out daily -- a trend should emerge eventually. We just need to be patient.

• 470 Not Fooled By Property Spruikers Hype // Nov 5, 2012 at 3:23 pm

  Unfortunately Frank the RP Data Rent Cheaper than buying report says the following in the fine print:

  When considering the figures it is important to note that the analysis does not provide consideration for transaction or other costs associated with either home ownership or renting which may include but are not limited to:
  1. Maintenance
  2. Council rates
  3. Electricity
  4. Water and sewerage
  5. Land tax
  6. Body corporate levies
  7. Stamp duty
  8. Legal and conveyancing fees

  So Maintenance $2000 PA Rates $1000 PA Water Rates $1000 PA Building Insurance $700 PA Stamp Duty $2000 PA ( $15K stamp duty divided by 7 years average term of ownership) Selling Cost $2000 pa (Same as Stamp duty 7 years turnover)

  Total = $8,700 divided into 52 weeks = $167 pw addition cost of home ownership added to their examples.

  Typical rents around Australia $450PW ?? so $167 pw extra works out to around 30% plus more ??

  Feel free to correct any errors

• 471 Frank // Nov 5, 2012 at 3:37 pm

  NF, I can only speak from my actual real world experience:

  So

  Maintenance $2000 PA (not more than $500 in ANY year -- if you are spending $2k per annum you have problems)
  Rates $1000 PA ($1,200)
  Water Rates $1000 PA ($750)
  Building Insurance $700 PA ($600)
  Stamp Duty $2000 PA (assumptive not real)
  Selling Cost $2000 pa (assumptive not real)

  Total REAL COSTS -- $3030 pa or $58 per week

  Note I will discount your repayments on stamp duty and selling costs as the first would be factored into deposit or costs of borrowings depending on the way you go about it and the second only applicable if you sold and then not a real consideration for many as you generally sell to “trade up” and capital growth would more than cover that cost in 99.999% of cases.

  Offset the above against 7 years of rising rents, inconvenience of tennancy, no certainty (what if the property sells as happened to my sons neighbour last week -- he is now looking for somewhere else to live as he has been kicked out for the owner to move in….)

  In real terms the difference is a carton of beer and Woolworths chook a week

• 472 Greg Atkinson // Nov 5, 2012 at 3:56 pm

  I have to say it’s a bit odd to leave out a heap of costs when doing a rent versus buy calculation.

  Strata Fees and the Sinking Fund can easily add $2000 a year to ownership costs in many apartment complexes.

  $58 might be right for some areas, $167 for others and there would be a heap of areas outside that range as well.

  I would have thought they could have done an estimate for each postcode area at least.

• 473 Frank // Nov 5, 2012 at 4:03 pm

  I would only say it is odd Greg if they apply, if they dont apply, I would say that it is odd to include them!

  When you say that there are $167 a week in costs applicable to ownership, and apply that to the average then you will achieve the skewed result Just Fooled was looking for.

  Equally, if I apply my real life situation, my real costs are significantly less.

  However given the very personal nature of home ownership the real question is what price my freedom?!

  You are correct, the true answer lies somewhere in the middle

  I think that the simple fact is that if you have always wanted to buy a house (which many do) and you can afford to buy a house (which many can) then now is a pretty damn good time to buy that house!

• 474 Not Fooled By Property Spruikers Hype // Nov 5, 2012 at 5:30 pm

  Sorry Frank

  My “assumptions” stand.

  Stamp Duty = $15K Sell Costs = $15K divided by number of 7 years the average persons stays = $82 per week to additional cost of home ownership.

  Stamp Duty & Selling Costs are unavoidable so have to be added to the cost of ownership.

  When doing a cost analysis they have to be included.

  Some people stay less than 7 years others may stay there 50 years, there is no getting away from it & the RP Data report fails to measure this.

  FYI HIA says the average Kitchen in a house is replaced / remodelled every 15 years & it is about a $20K job there is over $1K PA…. Bathrooms are every 20 years $1K PA + Carpets + Painting + Hot Water Systems etc etc etc my $2,000 is conservative even for a brand new house.

  So the true difference is 5 Cartons of Beer & a Chook from Wollies each & every single week.

• 475 Greg Atkinson // Nov 5, 2012 at 5:35 pm

  Ok please agree to disagree and move on. There must be other sites where the three of you can continue the battle.

• 476 Frank // Nov 5, 2012 at 5:38 pm

  Sorry Just Fooled, your assumptions are farcical.

  Stamp Duty = $15K Sell Costs = $15K divided by number of 7 years the average persons stays = $82 per week to additional cost of home ownership

  Cut cookies often Just Fooled?

  FYI HIA says the average Kitchen in a house is replaced / remodelled every 15 years…. and more rubbish that isnt true such as “conservative for a new house”

  So you factor in a remodel that may or may not happen depending on how long people stay on one hand…..

  Ah stuff it, you cant argue with a fool can you Greg?

  Lets just sum it up -- if you purchased and sold a house in Just Fooled’s very specific set of circumstances, then you may be up for his fantast amounts. You also reflect about 1/1000th of the home owning population (buy a house requiring full renos or not at all but still factor them in)….

  You are right Greg, this debate is pointless.

  No Not Fooled, you are not right, I am just giving up on your dead set rubbish. I have better things to do tonight, like head to The Raffles for a meal and nice bottle of Shiraz where I will toast your ongoing stupidity and shake my head in pure bewilderment

• 477 Matthew // Nov 5, 2012 at 10:38 pm

  Hi Greg,

  Please some lenience, I don’t for one second intend to become a regular proving Not Fooled wrong, but he has left a gaping hole in his above “assumptions” worthy of pointing out.

  If we strip back his assertions he is saying that the average Punter will:
  1) pay $15k in stamp duty
  2) spend $14k on renovations whether required or not
  3) stay 7 years then
  4) pay another $15k to sell

  So Not Fooled says to all people looking to buy a house that you will buy for $450k (across most states this will cost $15k in stamps, unless you are a 1HB, but that is a different story), spend $14k in necessary or unnecessary renovations, then sell for $500k to deliver the $15k selling cost generating a real loss

  His assumptions stand alright. Outside in the cold rain while anyone with a clue stands inside the real world pointing and laughing.

  Greg I understand your frustration, but here is my comical take on things. Frank and BP remind me of Statler and Waldorf (you know the old guys on the balcony of The Muppets?) heckling the rubbish tossed out by Not Fooled on the stage below. It irritates you becuase this is your blog, but from here it is quite amusing!!

  Anyway as opposed to NF who pretends to be busy, I am busy so I will leave you all to it.

  Cheers,
  Matthew

• 478 Frank // Nov 5, 2012 at 11:45 pm

  Very apt Matthew. My son often refers to me as “that old guy from the muppets”! I call Waldorf!

  Your assessment of Just Fooleds flaws are also spot on, only a life long tennant with an axe to grind would capture all costs (poorly) and ignore the basic element of capital growth.

• 479 Therealq2 // Nov 6, 2012 at 12:25 am

  Capital gains are not assured in the current property market. Nationally prices are down around 6% from peak.

  So property does not always increase in value, it can and does depreciate.

  There are also interest payments to consider.
  $350000 mortgage at 6$ over 10 years is a considerable sum in interest payments. Circa $175000 on a $500000 purchase price + other costs a seller is needing to get back $750000 to $800000 when they sell just to break even.

  As I said at start of post there is no guarantee that property prices (national average) will hold current values much less rise in the short to medium term.

  Low interest rates also are not guaranteed either into the future.

• 480 Frank // Nov 6, 2012 at 10:04 am

  Therealq2, you are absolutely correct, there are no guarantees in life, but history does provide a fair form guide.

  I cant follow your math because it jumps around a fair bit, but yes interest is a real cost of ownership, equally however once you finish paying off the loan, you no longer pay any interest. That is the real value of ownership I find.

• 481 Ned S // Nov 6, 2012 at 10:57 pm

  “… the average Kitchen in a house is replaced / remodelled every 15 years & it is about a $20K job there is over $1K PA …”

  My home was built in 1958. It still has the original kitchen. It’s a bit tired now. So I’ll probably whack on some new benchtops and splashbacks one of these days? Plus put in a new stove. (The cupboards are fine -- I’ll just give them a new coat of paint.) That’ll set me back about $3.5K I’d guess? Which works out to about $64.81 pa in today’s dollars I reckon -- Plus my labour -- Which I don’t actually place any great cost on when doing that sort of stuff -- Though if someone wants to give me a few bucks for it somewhere down the track in one way or another that’s nice. (Hmmm -- Just thinking about it the current stove is probably the second one that’s been in there -- So call it $92.59 pa in today’s dollars.)

  You come out with lots of good stuff when you aren’t wasting your time/amusing yourself baiting Not Fooled Biker.

• 482 Frank // Nov 7, 2012 at 1:29 pm

  Ned dont poke the bear. If NF says HIA say you must spend $2k per annum on renovations, even on a new home, then that is just the way it is….

  I have replaced appliances (fridge, dishwasher, mircowave) but like you have not touched the physical kitchen or bathroom.

  I do acknowledge that if I was to sell my house and command top dollar then a modernisation would be a sound investment, but functionally water still comes out of taps and my oven still makes food hot….

• 483 Greg Atkinson // Nov 7, 2012 at 1:51 pm

  Frank the article you posted was based on a media release based on a report which omitted this type of ownership cost altogether -- so why is NF being ridiculed because he has quoted a HIA estimate?

  NF is not saying people need to spend $2K a year, he says it’s an average that the HIA estimates is spent on such renovations. Some people would spend more, some less…it’s an average!

• 484 Frank // Nov 7, 2012 at 1:57 pm

  Perhaps Greg it is because as both Ned and I have pointed out, it is quite clearly a variable and not universally applicable.

  So when someone states quite difinitively in comment 484 “Maintenance $2000PA, then in 488 “My “assumptions” Stand” (a clear reference that he does not consider them assumptions at all) and “FYI HIA says the average Kitchen in a house is replaced / remodelled every 15 years & it is about a $20K job there is over $1K PA…. Bathrooms are every 20 years $1K PA + Carpets + Painting + Hot Water Systems etc etc etc my $2,000 is conservative even for a brand new house.”

  and my very real experience is contrary to that statement, am I not allowed to point out that this is a cookie cutter assessment as pointed out by Not Fooled? In my memory I have lived in 3 houses in my life, never once have we remodelled a kitchen or bathroom. I am yet to undertake such a renovation in one of my investment properties.

  It would be faier to say that the renovation costs will be between $0 and $2,000 per annum, than state the $2,000 is the minimum as NF asserts.

  I am happy to acknowledge that renovations are a real cost. But I will dispute the factual validity of Not Fooleds assertion, because it is quite simply wrong.

  Not Fooled has not presented his arguement as either a variable, or an average. He has stated it is a conservative sum even for a new home. Perhaps if Not Fooled wants to post without ridicule, Not Fooled needs to present his evidence without the undeserved smug arrogance and deliver it from ground level rather than his almighty property soap box.

• 485 Not Fooled By Property Spruikers Hype // Nov 7, 2012 at 2:05 pm

  OK Frank lets play

  You put a dollar value to how mush people spend on “AVERAGE” for home maintenance PA.

  Painting , Carpets, Gutters, Leaking Taps, Hot Water Systems, Fences, Gates, Door Locks, Leaking Roof Tiles,

  Not “FRANKS” house but across all housing.

  Lets put it this way Frank you are advising someone buying a Established House (80% of market is established & not new) either for a rental or to live in & your advice to them would be how much to set aside for maintenance costs????

  ZERO because Frank lives in a house that he spends no money on its upkeep?

• 486 Frank // Nov 7, 2012 at 2:11 pm

  Not possible to answer Not Fooled and if you had any idea you would understand that. It depends on where the house is in its lifecycle and how long the person holds the house.

  If as you assert a person sells their house aver 7 years, the maintenance cost will truly lie between $0.00 and $100,000. If you undertake a $100,000 renovation however then you would usually do that to add $150k in property value, and therefore I would consider that an investment and not a maintenance cost.

  If you purchased a brand new house, and sold in 7 years then you would reasonable expect to spend between $0.00 and $1,000 being the cost of repainting that house if, and only if necessary.

  My point is Just Fooled you took a smug, arrogant statement that the conservative cost per annum is $2,000 and you are wrong.

  I guess though, when you have rented your whole life as you have, maintenance costs arent something you have a real handle on are they?

• 487 Greg Atkinson // Nov 7, 2012 at 2:27 pm

  I can’t see any mention where NF says this is the minimum cost. To quote directly:

  FYI HIA says the average Kitchen in a house is replaced / remodelled every 15 years & it is about a $20K job there is over $1K PA…. Bathrooms are every 20 years $1K PA + Carpets + Painting + Hot Water Systems etc etc etc my $2,000 is conservative even for a brand new house.

  I see the words “average” and “about”… but no “minimum” mentioned

  Anyway an average takes into account varying amounts..that’s the whole point of using averages!

  Finally I could add my ‘real life’ experiences as well..but that’s hardly an estimate that would be applicable nationally across homes of all ages, conditions etc. Personally I reckon the HIA would have a better idea of what these costs were than me.

  In any case, this is drifting off the subject again, This is not a home renovators blog.

• 488 Frank // Nov 7, 2012 at 2:36 pm

  Comment 484 Greg “So Maintenance $2000 PA Rates $1000 PA Water Rates $1000 PA Building Insurance $700 PA Stamp Duty $2000 PA ( $15K stamp duty divided by 7 years average term of ownership) Selling Cost $2000 pa (Same as Stamp duty 7 years turnover)”

  He does not say average, and he uses the HIA averages to state his $2,000 per annum as conservative. He is really saying that it is more than $2k, and he is wrong

• 489 Ned S // Nov 7, 2012 at 3:57 pm

  There certainly are R&M expenses on property. But from an investor’s POV things like Kitchen and Bathroom replacements/remodels are very much discretionary expenditures in regard to the amount spent, the timing of the expenditure and even if anything is spent at all.

  I struggle a bit to think of an equivalent when it comes to share trading … Taking decisions on when and how much (if anything) one wishes to spend on professional advice, newsletters, magazines and computer software and hardware to assist them in making their trading decisions perhaps?

• 490 Greg Atkinson // Nov 7, 2012 at 4:24 pm

  Here is the Australian Dwelling Prices graph from the RBA Chart Pack released today.

  

  As I said earlier, the property market looks weak to me. I could draw some trend lines on this chart as I do for the share market index but that would probably send some people into a tailspin so I will refrain from doing so at the moment anyway.

• 491 Ned S // Nov 7, 2012 at 6:09 pm

  Yes, it’s still all looking a bit ordinary Greg.
  Tne most enthusiastic bulls are calling a bottom and looking for higher prices based on lower interest rates etc. The average punter is probably thinking in terms of a long lean spell/minimal growth at best? And the most enthusiastic bears are looking for a catastrophic crash worldwide with flow ons to Australian housing.

• 492 Matthew // Nov 7, 2012 at 11:23 pm

  The property market is weak Greg, so you can call it for what it is. But you can also clearly see what it is not which is in free fall or crashing or having a massive haircut as the bear of a million personalities claims.

  I for one have never said it is buoyant, but I can’t see a crash either. Even Adelaide which has nothing to get excited about on a broad scale isn’t tanking as it should if the market was as bad as people make out.

  All that is missing is business and consumer confidence. And I say that not only in relation to housing but the economy in general.

  It may be that a change of government is all we need

• 493 Lachlan // Nov 8, 2012 at 5:42 am

  “I could draw some trend lines on this chart as I do for the share market index but that would probably send some people into a tailspin.”
  Well Brisbane and Perth made a lower low while Aus itself is still in up trend. To reiterate, I am a sideways RE prediction man for the next five years or so but noting that prices did rise after the GFC event of 08/09 when this debate started. I am also aware that there is price weakness to some extent in residential here on the east coast of QLD. I feel things can bump up and down with gov interventions but generally sideways until a broad price inflation resolves much private sector debt. I am not seeing Asia or Oz by extension likely to suffer like the US or Europe. I feel confident to buy a property that you can snag with a discount at least. My prediction has been for rents to rise with the inflation I see as inevitable.

• 494 Frank // Nov 13, 2012 at 3:36 pm

  Bad news for the bears in todays press:

  “PROPERTY prices are showing signs of life but there will be no repeat of a 1990s-style housing boom, a senior Reserve Bank of Australia (RBA) analyst says.

  A growing population, the current low rate of new home construction and a tight rental market have created the right circumstances for an uptick in housing demand, RBA head of economic analysis Jonathan Kearns said on Tuesday.”

  Full story here http://www.perthnow.com.au/news/breaking-news/no-bubble-trouble-in-house-price-rise-rba/story-e6frg133-1226516067030

  Let me state again that I dont think prices will boom, however there is not a single indicator that Not Fooleds famed 40% cuts and 10% interest rates are in our immediate future either.

  Hard life coming for the bears, I recommend a vallium and a nice 7 year hibernation until the next south move in prices where they can spruik doom and destruciton again

• 495 Frank // Nov 16, 2012 at 10:47 am

  http://www.adelaidenow.com.au/realestate/news/aldingabeach-house-fetches-330k-more-than-reserve/story-fndbnymu-1226517465752

  Cant be possible can it Not Fooled? I mean in this crashing market you keep talking about how could a property sell at auction for $330k above reserve?

  Now Greg, I will not say that they market is booming, and we are all sitting back waiting for some indicators of future movement, but there are a lot of eggs falling in the “up” basket at the moment and not any in the “down” one

• 496 Greg Atkinson // Nov 16, 2012 at 9:52 pm

  That’s a great result for the seller in Adelaide but I’m sure others haven’t been quite as fortunate across Australia.

  Let’s just relax and wait until we can really spot a trend.

  P.S. Some comments have been moderated. As I have mentioned many times, this is not the place for people to rant on about the same points over and over again. Nor is it the place for people to endlessly boast about how well set up they are in the property market.

• 497 Matthew // Nov 17, 2012 at 10:49 am

  Some of your Moderated comments are very amusing though Greg, comedy bordering on farcical as per one you deleted overnight!

  You are right that is an outstanding result for the Adelaide seller. I wonder how many outstanding results in how many suburbs or cities are required for a trend?!

  I keep looking for a crash the bears carry on about but don’t see one, and can’t see a boom either. A boom is looking more likely than a crash though, not that I think that would be good news. 5 blocks of land in my suburb sold or under offer in the past 2 weeks, 3 to Asian buyers paying cash unconditional in 21 days. It certainly isn’t dead out there……

• 498 Greg Atkinson // Nov 17, 2012 at 11:59 am

  Matthew the markets are rarely dead..even during the height of the GFC there was money to be made in stocks. Anyway I pretty much agree with you -- I don’t see a crash nor do I see a boom and has been discussed before, maybe the property market will drift sideways for a few years?

  As for the moderated comments what can I say? When it comes to the stock market people are able to discuss trends etc calmly but with real estate it can quickly descent into name calling.

  Some are amusing the first ten times the same type of comment is posted..but after that they become spam like, take up space in the database and add no value.

• 499 Matthew // Nov 17, 2012 at 1:19 pm

  It has basically been treading water for 3 years now, the more I read and observe I think the most likely result will be 3 years of between 1% and 3% growth fueled by a couple of hotspots around the nation.

  Here is a prediction though -- reports that FHB’ are representing an above normal portion of buyers, and in the main they occupy lower valued housing. So in a normal market that would see a small fall in the median. If that happens watch the bears sieze it as doom.

  If on the other hand the next 6 months shows a steady or ring market with the above in mind, look to that as a sign of an improving market

  As for shares, my pre GST portfolio is still down about 23%. Shares I have accumulated during and since are up 12.5% so I agree it is possible to make money in almost any situation if you are smart about it

• 500 Matthew // Nov 18, 2012 at 2:08 pm

  Don’t worry too much about me BP, the pre GFC stocks that got savaged were Tab Corp, Westfield and Infigen Energy, all for their own reasons and the general impact of doing most of my buying above 5000 points. The crash allowed me to get banks, Rio, Woodside and BHP stock at comparatively bargain prices.

  Given I don’t plan to sell any of them ever, and only IFN isn’t paying a dividend I am as content with my stock portfolio as I am with my property one.

  I m a glass half full kind of guy, negative people don’t get too much of my attention

• 501 Frank // Nov 21, 2012 at 9:16 pm

  Hi Greg what going on mate?

  Look I dont want to stir the pot (OK, I have my big spoon out) but I was a guest of one of Austrlaias largest Roofing Screw suppliers today at a HIA breakfast at Crown in Melbourne where I am enjoying a holiday and tomorrow nights Melbourne Cup greyhound meeting where WA champ Miata will no doubt win on the under card

  I sat back with a smile as many people could not for the life of them understand how housing starts have remained so low against historical numbers in the face of market forces (growing population, low rental vacancy, rising rents etc etc)

  According to my hosts, they are forecasting the roofing screw market in Australia to grow at a rate of 10%PA for the next 5 years. Now sure some of that will be taking from the concrete and clay tile providers but with an evident undersupply looming and a fairly modest growth outlook for a primary supplier, isnt it fair to conclude that all signs point north?

  Now Not Fooled will pretend in his reply that he attended the same breakfast and that I am wrong, but to get on the front foot I am pretty sure that he has never left WA and the deletion of a blog where he was pointed out a liar again and again is testimony to that fact, so perhaps if he wants to wade in he will do so with fact and not usualy doom and gloom fantasy?

  Not a boom on the horizon Greg, but no doubt in the minds of the smart and sane, the market is moving up and not down Frank says

• 502 Not Fooled By Property Spruikers Hype // Nov 22, 2012 at 7:53 am

  Frank

  Interestingly other companies are saying the opposite:

  http://www.couriermail.com.au/business/housing-activity-dead-as-the-dodo-for-gwa/story-fnefl294-1226502442710

  Roofing screws may be a deceptive gauge because they are used in commercial buildings (Bunnings Warehouses for example)

  Other suppliers to residential construction like Boral / CSR / Fletchers / Holcim etc etc are all saying we have difficult times ahead.

  Below is a link to the AFR where there are several stories of companies refuting what your Roofing Screw supplier says:

  http://afr.com/tags;jsessionid=A1FD81797FD91D4A5ACA75AAC9578397?tag=C_BORAL%20LIMITED.-BLD

  Just look at their share prices & profit forecasts not good.

• 503 Frank // Nov 22, 2012 at 10:05 am

  NF you have bought out that Courier Mail article before and I again suggest you read more than just the headline.

  Lets go back to economics 101 -- if not enough houses are being built to cater for the demand what happens to prices of established houses? They go up.

  And when prices start to rise because there are not enough dwellings being built what happens next? More houses get built.

  I reckon the average primary school student is capable of grasping the simplicity of this, so why cant you Not Fooled? If you were ever right and you have not been yet, then the market would have fallen 20% 2 years ago and still be in decline. It isnt going to happen son, get over it.

• 504 Not Fooled By Property Spruikers Hype // Nov 22, 2012 at 12:03 pm

  Umm lets see.

  Rising Rents & vacancy rates down to 1% -- 1.5% yet house sales are at 1997 levels?

  Where is that demand? not like interest rates are at 10% (30 year historic average) & people are unable to borrow. No Interest rates are at 5-6%.

  No high unemployment either holding the market back plenty of jobs.

  Easy Credit as well banks lending at 5% deposits & some developers offering House & Land packages at ZERO deposits yet still no takers.

  Free Cars / $50,000 Bonuses / Pay your Rent for 12 months whilst you build etc etc etc yet nobody is signing up?

  BTW a house across the street was up for rent & was open for inspection. Yes there were 20 plus couples going through the home open. I knew the agent so had a chat. Guess what all these couples seeking the rental were already in a house but their rents went up so they were moving further out at a cheaper rent, not homeless just unable to afford the higher rents.

  But despite that they were not interested in buying yet either because ownership is $100-$200 pw more & house prices are going nowhere so no need to buy.

  Economics 101

• 505 Frank // Nov 23, 2012 at 1:01 pm

  Not Fooled anyone with half a brain can see that the demand is not here yet, that it is BUILDING. It will not be overnight it will take time to build the pressure. And that pressure is building.

  In fact all of the points that you raise above -- low rental vacancies (good to see you are admitting that your junk blog claiming they are actually 4.5% is and always was wrong), low interest rates, low unemployment.

  Only thing missing is consumer confidence, and that will return.

  As for “Guess what all these couples seeking the rental were already in a house but their rents went up so they were moving further out at a cheaper rent, not homeless just unable to afford the higher rents”

  I simply can not believe you typed that, but it does sum your clueless nature up pretty well. I would expect 99.99999% of applicants for rental properties are transitioning from one property to another, not coming in from under bridges or out of parks.

  If they are however moving 20km from the CBD in search of cheaper rent, well that just franks my comment doesnt it -- property within 10km of the CBD is where the growth will come, not the concrete jungles of suburbia

• 506 Frank // Nov 28, 2012 at 11:51 am

  Interesting….. http://au.news.yahoo.com/thewest/a/-/newshome/15498013/home-build-times-to-blow-out/

  Comments such as “He said a perfect storm was brewing, predicting a lot of pent-up demand for new homes would soon be unleashed on the market, putting pressure on prices”

  and

  “Mr Shaw said a 14 per cent rise in block sales in the September quarter showed buyers were ready to pounce.”

  and

  “He estimated that the build time for homes would double to a year if demand returned near levels experienced three to five years ago. He said that at the current rate of recovery, this was likely to happen by this time next year, though builders were waiting on figures due early next year to confirm that current activity would be sustained”

  do not point to a fabled crash or even further softenening do they?

• 507 Matthew // Nov 28, 2012 at 11:02 pm

  Frank I admire your fishing but the sites only bear will not bite. After all faced with his boarding passes from 2 different people and a series of comical lies and misdemeanors in his own blog Not Fooled By Not Fooleds Hypes stance was to delete it, not fight for it.

  I had a small laugh reading this on the front page of todays West, more economics 101 as you point out, demand is building to outstrip supply and accordingly prices look to rise a little at worst.

  Run for the exits, crash, catch the falling knife, next property victims, all catch cries of The Greatest Fool without a clue

  Now chaps if you don’t mind it is -1 in Tianjin where I am now and the factories wine has long worn off, me and my thermals are off to bed

• 508 Frank // Dec 5, 2012 at 10:18 am

  Cant be true can it Not Fooled? Nup it is. More bad news for the bears, I can deliver some neurofen to your place if you like, I am sure you are preferring not to show your face in public lately

  “Perth is failing to build enough homes to meet the demands of its rapidly growing population, mirroring an Australia-wide trend, according to a snapshot of cities to be released by Federal Infrastructure Minister Anthony Albanese today”

  http://au.news.yahoo.com/thewest/a/-/wa/15543195/house-building-not-keeping-up/

  Now Greg a little leniency please, I know the above relates to Perth but there is a big picture at play here. A 0.25% cut yesterday (sure only 0.18 -- 0.20 will probably find its way to the clients and economic data coming out today will show declining activity or at the very best subdued growth.

  This means that interest rates look likely to remain below historical average levels in Australia for at least the next 5 years (can get a 5 year fixed rate at the moment of 5.84% / 6.29% comparrison rate from NAB)

  Add to this house prices that have been stagnant / softening for the past 4 years

  Add to this a growing population

  Add to this a reduced building start rate

  Add to this strong employment growth accross the country in most sectors

  Add to this rising wages since prices stopped rising of conservatively of around 17%

  This is kind of like a camper starting a fire with two sticks, all this friction and pressure will eventually spark and then there will be a nice warm fire. If economic and consumer confidence returns, and we get a new government next year, it could be a bigger fire than he hoped for, but he is going to be warm at the very least.

  The market is clearly pointing up in the near future. There will be no future crash. The “we will be like Ireland and the US” rants of the bearpulation have been proven far from the mark.

  The market has softened as it must have, the boom could not last forever. But it did not crash. Astute investors have not done their shorts. People are not “running for the exits”. Commercial and residential construction continues, just not fast enough to meet the looming demand.

  Even king bear himself has dropped his blog rating from 41 false entries in 2011 to just 7 in 2012 (8 if you include the one he was foced to delete because he was proven wrong so often it became comical). Why? Because he cant find enough doom and gloom to spread fear with.

  I will make 2 predictions: 1) the market in Australia in the next 12 months will be up around 2%, and around 4.5% the year after. There will be no future falls no matter how small. WA, NT and QLD will outperform this for reasons previously outlined and 2) by May 2013 you will no longer hear from NFBPSH because he will have nothing to post about.

  Now I am not getting all bearish here, but I am looking at 2013 with significant confidence. The ONLY thing that will subdue it is a return of our labor government

• 509 Not Fooled By Property Spruikers Hype // Dec 5, 2012 at 12:25 pm

  Frank

  What can I say.

  Land developers still giving away Cars, $10K $20K $50K bonuses, builders throwing in $20K $30K $50K sweeteners ???

  Why? Trust market forces. Not like interest rates are high is it? Not like banks are asking for big deposits that people don’t have, many will accept no deposit deals.

  In fact Keystart have just lowered the bar further accepting a 2% deposit.

  Sorry reality is the market is stalled people don’t share your view & are not interested in buying or building in this over priced market.

  But do keep discussing me it just proves to me how important I am

• 510 Frank // Dec 5, 2012 at 1:27 pm

  Not Fooled thanks again for a worthless post that says plenty without actually saying anything at all. Market is on the swing but you can’t see it because you have one bear paw covering your eyes and the other covering your ears.

  Mate people don’t talk about you because you are important, they laugh at you because you have a 100% record of being wrong but only you can’t see it. 90% of you supporters are characters created by your own keyboard.

  Good to see a man who pretends to be working in Goegon, the super way and Bali airport still has time to blog junk in the middle of the working day. There is much to you NF, shame it is all a sham. More shame still you don’t know everyone can see straight through you

• 511 Not Fooled By Property Spruikers Hype // Dec 5, 2012 at 9:40 pm

  Frank

  It’s “Gorgon” & it’s working “ON” not “IN”

  You left out Adelaide Superway & I have also mentioned in the past I have worked on Pluto & other mining projects.

  I don’t work 9-5 or Monday to Friday.

  Go on Frank amuse me why would land developers give away Cars & discounts hidden as “BONUSES” if they expected next year to be better?

  Watch the papers a major Perth residential builder is struggling & may not last past Christmas.

• 512 Frank // Dec 5, 2012 at 10:08 pm

  NotFooled I will not accept spelling or grammatical corrections from you son, you make plenty yourself so act your age.

  The Superway is the Adelaide Superway muppet, thanks for showing again that you can not understand what you read and no, you are not working on the job so stop the lies.

  As for: “I don’t work 9-5 or Monday to Friday” you posted a comment yesterday on Perthnow accusing a GM of not being one because he can post during the day, yet you expect to be afforded that same opportunity? You are a walking contradiction chump, goose and gander and all that. Why would you pretend that you have better time management skills just because you make up your job and others have real ones?

  as for: “Go on Frank amuse me why would land developers give away Cars & discounts hidden as “BONUSES” if they expected next year to be better?”

  I assume you are again referring to Burns Beach? Thanks again for proving you are an idiot. See Not Fooled, when you release land a very long way from anything, and expect people to move there then you offer enticements for them to be there first. It isnt the first time, it wont be the last. Why would you move 30km north of the CBD nowhere near schools, universities, hospitals or other infrastructure without a sweetener. Do you see those offers within 10km of the CBD? NO. And nor do you need to because people pay more to live there naturally. You continue to grasp a bit and make it a universal law and in doing so do it very poorly indeed. I am willing to bet they still profit from the development, as they dont seem to go broke like you claim they will do they?

  Finally: Watch the papers a major Perth residential builder is struggling & may not last past Christmas

  I say bollocks. You toss junk like this out all the time and have not been right yet. Will not happen. But here is an equal prediction from me -- it might not be as hot this December as last year. Keep an eye on the paper……

  Cant wait for next year and your disappearance, the internet will be a better place without you.

• 513 Ned S // Dec 5, 2012 at 10:27 pm

  Perth is a piece of crud on the a’hole of the world -- Who could possibly care ‘cept the handful of people who reside in the a’hole of the world -- Boring, boring, boring …

• 514 Frank // Dec 5, 2012 at 10:40 pm

  Harsh Ned, I think you have Perth confused with Brisbane. Or Adelaide. Or Hobart. In fact it isnt a bad spot at all over here. Give us Daylight Saving and we are almost a real state!!

• 515 Matthew // Dec 5, 2012 at 10:53 pm

  Frank thanks for your support, I did reply to NF’s “taunt” on his junk blog, as expected the coward did not post it or reply, but he is what he is isn’t he!

  I think your comment in 526 is about right, market does appear to be showing signs of recovery, and a national housing shortfall in a couple of years time will not be assisted by soft building starts.

  Law of Supply and Demand is indeed a law, if there is more people than available properties then rents and base prices nationally can not fall. Prices might sway like a drunk man for the next 4 months but when they sober up they will head strongly to the left

• 516 Ned S // Dec 5, 2012 at 11:00 pm

  Perth -- A smidgen above Darwin?
  Getting up there with the likes of Denpasar or Auckland -- Boring, boring, boring.

• 517 Greg Atkinson // Dec 6, 2012 at 5:57 am

  Let’s steer clear of insults otherwise I will be forced to jump in and moderate and please don’t bring disputes from other sites here.

• 518 Not Fooled By Property Spruikers Hype // Dec 6, 2012 at 9:21 am

  Sorry Greg

  I seem to bring out the worst in people.

  This week the RBA reduced interest rates to emergency lows yet people choose to discuss me?

  The RBA reducing rates to these levels may facilitate many people reaching their “Dream” of home “Ownership” (They own nothing but debt) but rates of 5-6% cannot last.

  History shows that rates have averaged 9-10% over the past 30 years. (Life of Typical home loan)

  All we achieving is to kick the can further down the road. (the can is still there just further down the road it has not vanished)

  The very fact that rates need to be this low is alarming & indicative of problems in our economy.

• 519 Frank // Dec 6, 2012 at 10:06 am

  Not Fooled dont pretend you are important, you are an insignificant blip on the national property market and a source of regular comedy. Your ego should be deflated, comments like “This week the RBA reduced interest rates to emergency lows yet people choose to discuss me” just show how deluded you are.

  And the comedy rolls on.

  One more Not Fooled joke above ““Dream” of home “Ownership” (They own nothing but debt”

  You really dont understand home ownership do you? There are three planks to purchasing a property that make it wise if you can afford it:

  1) When you pay off the loan you never pay another cent. The typical borrowing may be 30 years but I would strongly suggest the actual payment term is not. I know not a single person who has taken 30 years to pay off their house, most take less than 20. SO you pay off your home, and assuming you dont sell it at some point (not day one) the cost of home ownership will become cheaper than renting as your mortgage does not increase with CPI or annually, or other market forces. And then you live rent free. That is the biggest benefit

  2) Capital appreciation -- and you can not get away from it -- will provide positive equity at some point of every home loan in Australia. In some cases that positive equity is 3x or 4x the purchase price. How do we know this? Because historically prices have risen 8% pa. Can you achieve this while renting? For 99% of the population the answer is no.

  3) when the inevitable time comes that you downsize your family home to something more managable 99.99999% of the population pocket a net gain. For many people that net gain is significant. For many baby boomers that net gain is exceeding their superannuation balances. Can you do that when you downsize your rental? No.

  Or of course you can do what you do and keep renting and never own anything, just be bitter that the people around you did all the while you criticise them for being fools.

  You finally make half a good point though: “The very fact that rates need to be this low is alarming & indicative of problems in our economy”

  I say it is half a good point. The underlying economy is doing ok, we are not in recession, employment and wage growth is reasonable -- what is missing is confidence in retail and property. That confidence will return at some point in March next year.

  You just keep wasting time while you should be pretending to be a busy important man at work though mate and anyone who reads your posts will keep shaing our heads in disbelief that one man can get it so wrong so often

• 520 Not Fooled By Property Spruikers Hype // Dec 7, 2012 at 8:36 am

  Ummm lets have a look at this chart shall we Matty?

  http://www.whocrashedtheeconomy.com/realhouseprices1880to2012.png

  1949 -- 1968 Zero Growth
  1973 -- 1988 Zero Growth
  1989 -- 1996 Zero Growth

  2007 -2012 ZERO Growth & “ALL” serious (RP Data , BIS , REIA etc et etc )commentators are saying that future growth will be “UNDER” 3-5% & the growth of the past can’t be sustained.

  People are unable to afford housing today with a 6% interest rate & full employment & higher than usual incomes.

  Housing markets have stalled & land developers are being forced to offer discounts hidden as bonuses to attract buyers, this is a clear indication that they don’t share your confidence in prices recovering any time in the near future.

  Ten’s of thousands of investors who bought since 2006 -- 2007 are sitting on ZERO capital growth to offset after tax negative returns of $20K -- $60K & the prospects of a recovery are slim so many will & are starting to sell, but worse still new investors are not buying either making matters worse.

  But you keep focused on the past but look ahead & you will see a bus on the wrong side of the road headed your way.

• 521 Craig R // Dec 7, 2012 at 8:57 am

  ” …but worse still new investors are not buying either making matters worse.”

  Can you please substantiate that statement with factual evidence.
  New investors are buying as are existing investors. Growth is good but growth is not everything a lot of people are investing in property for something that clearly you have no concept of CASH FLOW increases.
  People ARE able to afford houses today if they severely limit all unnecessary expenses such as car loans, credit card debt etc. Freeing up surplus cash will as always help people achieve their dream of home ownership. It just takes a little bit longer nothing new there.

  Funny that developers in my area don’t offer any cars, boats or other incentives to buy land. I have seen it in some areas but not all are doing it. You are implying that all developers in all areas are doing this which is very misleading and incorrect and is said by you to purely serve your own purposes of bringing down property as a viable investment in these times.

  The point you make that there has been zero growth between 2007-2012 is refuted by your example where after a period of time there was growth. So no matter when you buy there will eventually be growth in the property sector based on your own above example.

• 522 nsw // Dec 7, 2012 at 9:38 am

  Hi all, I enjoy the banter on this site even if it goes nowhere sometimes. A Stockland community I keep an eye on in north NSW doesn’t offer freebies with it’s blocks. However the average price 1-2 years ago was $200-220k. Prices now are around the $170-$180k mark. A decent fall if you bought recently. It is not in a capital city CBD so not comparable investment wise to some of the properties discussed on this site but indicative of Nth NSW / Gold Coast property mood. Still a very nice place to live. Who knows where prices will go from here but it’s fun to watch.

• 523 Not Fooled By Property Spruikers Hype // Dec 7, 2012 at 6:55 pm

  Craig

  You say “Funny that developers in my area don’t offer any cars, boats or other incentives to buy land.”

  Well look here: http://www.macrobusiness.com.au/2012/11/the-house-and-land-value-trap/

  OK Craig what area are you in? You don’t say (I wonder why)

  FYI the “Growth” you cling to between 2007 -- 2012 was a period that there was a GFC STIMULUS of $14K or $21K that enabled people to buy as well as record low interest rates.

  MS Gillard will not have the “BILLIONS” needed to stimulate the housing market (So dont hold your breath there)

• 524 Craig R // Dec 7, 2012 at 7:33 pm

  NF you can wonder all you want. Like you pretty much do about everything else and I can bet you’ll be wrong on that as well
  I am not saying developers aren’t doing it what I am saying is you are implying that ALL developers are doing it and this simply is not the case based on me driving around my local areas.

  I suggest you go read back to what you posted and then again read what I posted.

  You, NOT Fooled wrote:
  “1949 — 1968 Zero Growth
  1973 — 1988 Zero Growth
  1989 — 1996 Zero Growth”

  That means in between those times that you have so wisely posted there WAS GROWTH!So your own statement points to a fact that there WILL BE GROWTH eventually right now only pockets are showing growth. Again though you decide to blanket every area as dead when also clearly history has shown that is not the case at all.
  You also posted in “2007 -2012 ZERO Growth & “ALL” serious (RP Data , BIS , REIA etc et etc )commentators are saying that future growth will be “UNDER” 3-5% & the growth of the past can’t be sustained.” That there alone says even commentators are saying there will be growth, not a lot but growth none the less!

  So for your little bit “FYI the “Growth” you cling to between 2007 — 2012 was a period that there was a GFC STIMULUS of $14K or $21K that enabled people to buy as well as record low interest rates. ”

  Please, oh please copy and paste where I have said anywhere that I am clinging to GROWTH especially in the time frame you mentioned. I agree with the commentators, there will be growth in the housing market.

  I have to agree with Frank, you really do need to go back to school and learn to not only read but not generalize when trying to make factual statements that are clearly not true.

  As for Ms Gillard well…..if it has anything to do with the link you posted I didn’t read your link because..well in truth I don’t care enough

  THe housing market will in my opinion be pretty steady over the coming years and a lot of investors will be using the cash flow advantages of an investment property more than looking for capital growth. Clearly though you seem to fail to understand that.

  Craig R

• 525 Matthew // Dec 7, 2012 at 10:22 pm

  NotFooled the name is Matthew, do not take liberties that you are not welcome to.

  Just the two points other than that:

  1) people are not “unable to afford homes” you incompetent moron, houses continue to sell each and every day. If houses were unaffordable, then no one could buy them. Yes they are expensive, but so are 7 series BMWs and people keep buying them too. A smart man can see that, so why can’t you?

  2) like “Beaker from The Muppets that you are rambling but making no sense you say in one hand “1949……. No growth” then “but you keep focussed on the past…..” you really are just a giant blogging contradiction aren’t you?

  As for the rest of your posts, junk rubbish without foundation or proper research. Just let it go mate, you really are embarrassing yourself. Since you stopped blogging as PT as well your supporter base is nil. Really is just time to disappear Beaker and come back on the next downswing

• 526 Matthew // Dec 7, 2012 at 10:29 pm

  Oh and “2007-2012…… Record low interest rates”

  Care to reevaluate that factually incorrect sweeping statement? Dead set moron

• 527 Greg Atkinson // Dec 8, 2012 at 8:48 am

  Yes let’s keep the insults out of the discussion. Address the issues, don’t attack the person.

  Just one point from me: houses can be unaffordable and people do still buy them which actually creates a big problem. This for example was one of the problems in the U.S. market where Fannie Mae and Freddie Mac (prodded by the government) lent to people who really couldn’t afford the house they were buying.

• 528 Matthew // Dec 8, 2012 at 8:52 am

  Name is still Matthew Not Fooled, your immature petulance is wearing thin.

  You made a statement that people can not afford housing, that statement is factually incorrect.

  Your form in relation to personal insults in all forums including this one makes you crying to Greg for intervention at best comical, at worst hypocritical.

  Anyway mate it is Saturday shouldn’t you be putting your Town Crier uniform in, dusting off the old bell and going from home open to home open warning potential buyers that a crash is coming?

• 529 Matthew // Dec 8, 2012 at 9:21 am

  Greg people buying things they can’t afford (houses, cars, jetskis, TV’s etc) does not make the itm unaffordable, just unaffordable to that person.

  2 issues in Australian housing as I see it:

  1) people are unwilling to start at the bottom with a 3x1 villa or duplex or 2 bed apartment and are going straight to 200+sqm 4x2 plus theatre etc. Isn’t the way it was done 10 years ago, but is now

  2) as the land is more expensive the government should be changing zoning to encourage mor affordable housing solutions.

  Case in point 2, I own a large block of land I am developing in my suburb. I will build 2 very large 4x2 homes on this block and sell them for between $775k and $825k each.

  I would love to build 4 smaller 3x2 houses and sell them to FHB’s for $400k each, but I am not allowed. And I would love to build 3 larger 4x2 homes and sell them for $550k, but I am not allowed to. So we will do what we are doing.

  In all 3 scenarios my return would be the same, so makes no difference to me, but the planning regulations prevent me from creating a cheaper buying option.

  So is that my fault? Nope. But will I sell the houses to someone who can afford them? Yep

• 530 Greg Atkinson // Dec 8, 2012 at 2:48 pm

  nsw I’m also unsure where house prices will go next. There are plenty of reasons why prices could rise, but there are also reasons why prices could fall back again. There are many global economic issues at play of which the RBA has no influence over which could send prices in either direction in my opinion.

• 531 Stillgotshoeson // Dec 8, 2012 at 6:28 pm

  Melbourne property market is not looking good at the moment.

  Expect further declines in prices (in general, of course some individual suburbs will perform better)

• 532 Frank // Dec 11, 2012 at 9:43 am

  Not Fooled Says : FYI the “Growth” you cling to between 2007 — 2012 was a period that there was a GFC STIMULUS of $14K or $21K that enabled people to buy as well as record low interest rates.

  Look mate I am a bit busy to pick you apart in detail today, bit of Christmas shopping to get done and all that but thanks for being wrong again.

  Here is a question Not Fooled, given the stimulus targeted FHB’s and they (FHB’s) tend to buy at below median prices then any impact of this stimulus would have been negative, or at best neutral wouldnt it?

  And anyone with a mortgage between January 2007 and November 2011 where rates averaged 7.63% are laughing at your comment. Those who had mortgages January 2007 and November 2008 where the average was 8.63% have spat out their morning coffee and punched their computer screen….

  The average standard variable rate between Jan 2000 and November 2012 has been 7.28%. The average standard variable rate between January 2009 and November 2012 is 7.01%. Have a look at what property prices have done in both periods and you will realise just how far from the mark you consistently manage to be

• 533 Not Fooled By Property Spruikers Hype // Dec 11, 2012 at 10:17 am

  WELL Frank

  Ever heard of trickle up?

  FHB had no deposits to go out & buy a house (Or not enough) this “GIFT” enabled thousands of them to be able to buy houses.

  Then the RBA cut rates to emergency lows which allowed many more who were unable to borrow enough money at a 9.5% rate (July Aug 2008 rate) to now qualify for a large enough loan to buy a house.

  As a example instead of being confined to only bidding say $100K with a 9.5% rate they could bid $130K with a 6% rate.

  In 2009 lower end housing shot up across Australia, these people who sold to their homes to FHB were able to then trade up & armed with more money from gullible FHB & the RBA 6% interest rate “GIFT” were able to also bid more for their OZ Dream Home,,,,, then the people on the next level got higher prices & were able to bid more & so on & so on.

  Now here is the thing 40% of FHB who bought with the GFC stimulus are now in “Mortgage Stress” & 20% are now described as being in “SEVERE Mortgage Stress”

  Why? Because their incomes should have precluded them from home ownership because they could not save deposits & average interests rates around 9-10% stopped them from qualifying for loans big enough to buy a house.

  GFC Stimulus (Artificial Market Interference)cannot be repeated to save OZ housing markets because there is no “Costello” surplus left to raid. The cupboard is bare.

  Remember since 206-2007 there are ten’s of thousands of investors sitting on ZERO capital growth to offset negative rental returns & the prospect of things changing in the future are SLIM with most if not ALL commentators saying the era of 7-10% PA rises in house prices are behind us

• 534 Frank // Dec 11, 2012 at 10:30 am

  Not Fooled POSTING RUBBISH IN CAPITALS DOES NOT MAKE YOU MORE RIGHT OR SEEM INTELLIGENT so just type like a normal person ok?

  Yes I am aware of trickle up, but you made a statement that the FHB’s coupled with record low rates in a defined period accounted for all market growth. You were wrong (again).

  “2009 lower end housing shot up across Australia, these people who sold to these FHB were able to then trade up & armed with more money from gullible FHB & RBA 6% interest rate “GIFT” were able to also bid mor for their OZ Dream Home,,,,, then the people on the next level got higher prices & were able to bid more & so on & so on” -- that is an absolute insult to the intelligence of 99% of the home owners / buyers in this country. Stop makiung everyone out to be an idiot, it does you no favours.

  “Now here is the thing 40% of FHB who bought with the GFC stimulus are now in “Mortgage Stress” & 20% are described as being in “SEVERE Mortgage Stress”

  Go back and read my post 429 Not Fooled, specifically “Interesting to one of the NF links floating around, that same son is defined as being in Mortgage Stress because about 40% of his net income is needed to service his debt. He isnt too concerned though, the 60% remaining is about $2,000 per week….”

  See the thing is that many people are defined as being in mortgage stress, but it does not impact them negatively. They are not “running for the exits” or trying to “offload to the greater fool”. They are diligently paying down their debt all the while comforted by the fact that every year their earnings grow while their mortgage remains largely the same.

  Hell when I purchased my first house I was in mortgage stress. Not now though. Never defaulted on my loan or missed a payment. Sure things were tough at the beginning Not Fooled but they are a hell of a lot easier now son.

• 535 Frank // Dec 11, 2012 at 3:22 pm

  Care to read this Not Fooled, kind of sums up what I have been telling you:

  http://www.perthnow.com.au/realestate/renting/ask-the-property-professor/story-fndcyu0h-1226534460846

  I am fond of the key points:

  • In the first year, your mortgage repayments and house expenses are more than your rent. However after 10 years, your rent is greater.
  • Your rent will continue to increase to a stage where if you retire just after 65, your rent will be more than your retirement income.
  • You will pay far more in rent over your lifetime than you will in loan and property expenses.

  Oh and “However, if you rent and don’t invest in any assets over this 60 year period, you will be worth $0!”

  But YOU Not Fooled have chosen the best path. Lifetime tennant, golden

• 536 Not Fooled By Property Spruikers Hype // Dec 12, 2012 at 8:00 am

  Frank

  As my “Tag” implies I am Not Fooled by Property Spruikers but clearly you are.

  I just did a Google search on your idol “Property Professor Peter Koulizos” & in 2007 he was spruiking the same mantra.

  I fact this was my favourite article from 2007 where he promises to make property millionaires.

  http://au.news.yahoo.com/today-tonight/latest/article/-/40585/the-tafe-millionaire-factory/

  A property course costing $3K !!! Classic. Wonder how all his students are fairing today?

  Good Lord a TAFE Lecturer spruiking himself as a “PROFESSOR” & you swallow it hook line & sinker?

  http://buildadelaide.com.au/directory/index.html?busid=4.195

  Sorry Frank he is hardly worthy of any comment in any serious discussion about property.

  Go back & read the article you refer to. It is all based on continued property growth of 7% pa or doubling every 7-10 years!!

  You & the Nutty Professor must be the only 2 people left in Australia to believe this. Not even Biker Pete would touch any of this.

• 537 Matthew // Dec 12, 2012 at 8:41 am

  Quick question Not Fooled -- and I only want you to answer the question -- but What is the CAGR of Australian Capital City Median House Prices in the past 50 years?

  I think you will find the answer is 7-8% but go do your research and report your findings

  Oh and to save you typing 2 questions into Google CAGR is Compound Annual Growth Rate….

• 538 Frank // Dec 12, 2012 at 9:51 am

  Didnt call him my idol Not Fooled, but if the property market commentators credibility has a sum total 100 and there is only you and him speaking, from a credibility point of view the Professor holds 99.9999999% of the credibility with the balance undecided.

  My point Nut Fooled is just as you can post links to suit your agenda, indeed I can find links that refute your ill reasearched ramblings.

  Not Fooled there is ZERO (see I can type in capitals too) evidence to suggest that in 25 years time the annual average growth rate of property will not mirror the 25 years prior. Sure there is going to be a few more years of slow growth, and there must. No one is disputing this. I cant find a single person saying that prices will grow at 9% per annum from next year.

  See in my suburb (South Perth) the 10 year median price growth remains 10.3%, despite a 1.2% drop in 1 year and zero growth in 5 years. So yes it is very fair to assume that for the next 3 years growth rates in my suburb will be subdued. Perhaps as I have said before at most 4% per annum.

  HOWEVER I also fully expect that, as the property market like the share market moves in cycles, that in 20 years time the annual average will still indeed be very close to the historial average of, as Matthew says, around 8%. This will indeed include a 2-3 year period of 10+% growth at the peak of the market.

  I will give you credit for your “Tag”, it is very creative, but in your “crusade” you have lost the plot and while all serious property commentators agree that the market will remain “soft” or “patchy” only you and your alter egos continue to post long term crashes and destruction of wealth.

  Please read this last sentence slowly, and read it twice so it sinks in -- YOUR 20% -- 40% CRASH YOU HAVE BEEN BANGING ON ABOUT FOR 4 YEARS NOW WILL NOT HAPPEN. LET IT GO

• 539 Leigh // Dec 12, 2012 at 10:07 am

  Perhaps it might be time to take a few examples of capital growth to test the CAGR. I purchased a property in Adelaide in 1971 for $10.500 and sold in in 1992 for $165,000, so it did better than double every seven years, I purchase in Newcastle in 1982 for $35,000 and sold in 2005 for $477,000 so that one also did the seven year doubling act, another I sold with in five years of purchase did not do so well and the last five years appear to have been low growth but every time I have held property for ten years or more their value has doubled. There are lots of other factors to consider; renovation costs, land tax, finding tenants, agents, rates and position but if you are prepared to do the work it works.

• 540 Biker Pete // Dec 12, 2012 at 10:22 am

  Actually I agree with Frank, NF. And so did you, back in 2010, when commenting on your Woodvale home, you stated:

  “The house we currently live in bought 2002 for around $250K nothing done to it yet it is valued at over $750K.”

• 541 Frank // Dec 13, 2012 at 9:15 am

  more press confirming the approach of a bearpocalypse:

  http://www.perthnow.com.au/business/perth-set-to-lead-property-price-spike/story-e6frg2qc-1226535636877

  FORECASTS FOR MEDIAN HOUSE PRICES IN 2013
  - National average house prices are forecast to rise 3-5%
  - Sydney prices up 3-5%
  - Melbourne up 0-3%
  - Brisbane up 3-5%
  - Adelaide flat
  - Perth up 5-7%
  - Hobart flat
  - Darwin up 5-7%
  - Canberra up 0-3%

  I could have written this article, seems to be saying what I have been predicting for some months now….

• 542 Not Fooled By Property Spruikers Hype // Dec 13, 2012 at 9:20 am

  Frank / Biker / Matthew

  Pay attention I will type slowly.

  You are critical my predictions of a 20% -- 40% crash(BTW I have never said that) are way off for the last 4 years?

  Well property spruikers claim property would grow 7% -- 10% PA compounding over the same period? They need property to do this to offset negative rental returns of $6K -- $10K after tax pa.

  Guess what the ATO says the majority of Residential Property investors claiming tax deductions have a reportable taxable incomes of under $70K pa in other word they are not rich & are not able to sustain these losses for much longer.

  I’ts a PONZI scheme collapsing around you but hey look at it as a buying opportunity.

  Guy’s ever wonder why proper SUPER Fund managers don’t invest in this market?

• 543 Frank // Dec 13, 2012 at 9:43 am

  Not Fooled I am sure you type everything slowly, does not mean that it makes sense.

  NF Claims: “You are critical my predictions of a 20% — 40% crash(BTW I have never said that) are way off for the last 4 years?”

  Frank Replies: No NF, you regularly say that prices must deflate by at least 25%, then under your alter egos (Punter, Louise H, Aaron, PT, Bomber Boy etc) cry the 40% mantra. Dont pretend you dont post under multiple names Not Fooled, Biker has proven it so in these very pages. Yes I am critical of you. Because you are a scaremongering fool without a clue posting fantasy as fact.

  NF Claims: “Well property spruikers claim property would grow 7% — 10% PA compounding over the same period?”

  Frank Replies: No they dont “claim it” they report it, because it is fact based on the historical data that has been collected. Stating fact is not spruiking, why dont you get that? Oh, thats right because it does not suit your beargenda…

  NF Claims: “They need property to do this to offset negative rental returns of $6K — $10K after tax pa.”

  Frank Replies: they dont need to do this Not Fooled, agree with it or not but every long term property investment will eventually become positively geared as rents rise annually and costs remain largely the same. Clearly you have never invested in property and your famed claims are lies, because IF you had ever held an investment property for more than 5 years, you would know I am right

  NF Claims: “Guess what the ATO says the majority of Residential Property investors claiming tax deductions have a reportable taxable incomes of under $70K pa in other word they are not rich & are not able to sustain these losses for much longer.”

  Frank Replies: Pure speculation bordering on sheer ignorance. Good to see that you dont know the difference between actual income and taxable income….. You really must stop speculating about the financial positions of investors, let alone lumping ALL investors in the same boat

  NF Claims: “I’ts a PONZI scheme collapsing around you but hey look at it as a buying opportunity.”

  Frank Replies: Aah ponzi, the bears favourite word that they dont understand. But I like “collapsing around you” -- another toss away line that you cant back up with facts…

  NF Claims: “Guy’s ever wonder why proper SUPER Fund managers don’t invest in this market”

  Frank Replies: Not really, but have YOU ever wondered why a very large number of Self Managed Super funds include Property (residential and commercial)

  NF, you really are embarrasing yourself mate, it is time to let it go, your dream of a property crash is dead, not going to happen. Find a new hobby, I suggest golf where even a 27 handicapper can claim to be an expert and give tips to their playing partners….

  Again I say the Australian Property market will grow 3-5% in the coming couple of years followed by larger growth. Modest growth, nothing spectacular but growth none the less and not a crash. Yes there was a chance property prices would plunge, a very real chance indeed. But they did not and your dream son is over, for now at least. In 7 -- 10 years time there is a chance that they could crash again, but prices will indeed near on double between now and then.

  How do I know that? BECAUSE HISTORY SAYS THAT THEY ALWAYS HAVE, thats how mate.

• 544 Biker Pete // Dec 13, 2012 at 12:13 pm

  Rather than bore us all spitless (again ) with NF’s claims about his own extensive property investments, or his predictions of crashes worse than the US or Ireland, due December 2011, it is definitely worth examining a perspective Frank raises here:

  “…you dont know the difference between actual income and taxable income….. ”

  That seems likely, but unlikely if NF’s claims to own six properties are true. It’s relevant nonetheless.

  Perhaps the least appreciated aspect of Koulizos’ article is that for most, any mortgage stress initially experienced quickly diminishes… as rents continue to rise. Remember that NF himself stated, almost a year ago: ” My investments were based on sound fundamentals… & a projected growth in line with CPI and wages… It is what TRUE investor have done for 100 years… Buy then let time pass & as rents rise it pays off the principle quicker… ”

  Bottom line? NF acknowledges both expected capital growth and rising rents… and quick reduction of property debt over time.

  These principles (combined with the power of reduced debt through inflation) have allowed us two very ordinary Aussies to retire, affluent and very comfortable in our options. NF’s advice on property (22/2/2011) was spot on.

• 545 Matthew // Dec 14, 2012 at 11:11 pm

  Not Fooled thanks for avoiding my question but including me in a future comment. All the proof I needed that you can not substantiate your false claims.

  I like this site Greg, he can’t delete entire blogs or block comments when he is being shot down…. Got to love democracy…

• 546 Biker Pete // Dec 18, 2012 at 12:10 am

  From the outset, I admit I’ve been curious about NF’s goals. If you analyse the dominant theme, it has been ‘talk the market down’. Yes, there has been a secondary theme, involving insult, vilification and outright abuse… but the dominant message has been ‘crash-next-year’.

  What is most interesting about both these positions is that they’re utterly opposed to that other claim; his supposed ownership of six WA properties, ranging from just south of Perth (acknowledged in just one post as Mandurah) to Karratha, in the north.

  I confess I’m starting to lean towards the Total Troll Theory. NF is a fantasist. His claims of property ownership are the delusional fairytales of his other alter ego, that self-confessed loser he has morphed into so frequently. We should really pity him. How desperate and deluded he must be to _continue_ to maintain this sad charade… .

• 547 Not Fooled By Property Spruikers Hype // Dec 21, 2012 at 12:55 pm

  Looks like 2013 will be another bad year for property.

  Peet & Co are starting off the year with $50,000 discounts off blocks of land.

  I know many on here think what I have to say about property is worthless.

  But what about a group of professional developers & all their resources? All their Bean Counters / Sales & Marketing people are saying to them cut prices now & lets get rid of stock because prices are heading south.

  Peet & Co are not going to slash $50,000 off blocks of land if they don’t have to, they do it because they know that this time next year it will be worth far less.

  Just imaging buying a “Dream” block earlier this year to build that “Dream” home in 2013 only to see the developer has slashed $50,000 off the price you paid.

  FYI this will force other developers to follow suit or get left behind.

  http://www.peet.com.au/megalandsale/

• 548 Frank // Dec 21, 2012 at 1:09 pm

  All bow to the clown prince of property commentry. A quick look at the “mega sale” website reveals 2 things about this land:

  1) all the developments are in the middle of nowhere
  2) The ONLY development offering 50k off is in the avon valley as in the absolute dead set middle of nowhere.

  I predict this will impact Australian property prices in 2013 by around 0.000000000000000000001%. Yep that much.

  Not Fooled says “FYI this will force other developers to follow suit or get left behind” yep, possibly all developers in these suburbs will have to do that. But why would you pay $800sm for land out there in the first place?

  Well scaremongered Not Fooled but smart people will be Not Fooled by you at all.

  You did get this bit right though: “I know many on here think what I have to say about property is worthless”

• 549 Not Fooled By Property Spruikers Hype // Dec 21, 2012 at 1:38 pm

  Frank

  “Clown Prince of Property”

  Feel better making derogatory comments? Hope that will win the debate for you?

  All Peet’s land is discounted in all areas. Typically 9% -15%

  BTW seeing we are not just focusing on WA in these discussions also have a look at their Qld discounts.

  I will let the facts speak for themselves. Peet’s outlook for property in 2013 is negative.

• 550 Greg Atkinson // Dec 21, 2012 at 1:41 pm

  Maybe we can stick to the big picture? What someone read in the newspaper or some property sale somewhere doesn’t add much to the discussion.

• 551 Frank // Dec 21, 2012 at 2:09 pm

  That is spot on Greg. These minor marketing campaigns and reductions are really insignificant and quite normal. As has been said before but clearly not listened to if you want people to pay top dollar to move to remote areas then you have to offer them incentives and inducements. It is a simple fact of business life.

  Top suggest that this “mega land sale” is going to have anything other than no impact on the wider Australian property market is nothing short of foolish.

• 552 Biker Pete // Dec 21, 2012 at 5:36 pm

  “To suggest that this “mega land sale” is going to have anything other than no impact on the wider Australian property market is nothing short of foolish.”

  Correct, Frank. But let’s remember that by now the WA property scene was supposed to be worse than those of Ireland and the US, due to a whole bucketful of useful insights offered by NFTPS… .

  The world as we know it was to come to an end by 6th December 2011… but apparently we still have a few hours left… .

• 553 Not Fooled By Property Spruikers Hype // Dec 23, 2012 at 7:38 pm

  Looks like Credit Suisse (Well Respected Group) are expressing doubts about the Australian property markets. Look at what they have to say….

  Risks are concentrated on over-geared housing investors:

  . Leveraged investors are struggling to make money because net rental yields of 3.2%are well below mortgage rates of 6.4%. At most, investors can only afford to be 50% geared. However, the data suggest that borrowers are 60%+ geared,with a lot of this gearing on interest-only terms. Essentially, investors are subsidising losses on their property portfolios out of wages, in the hope of future capital gains. But their ability to keep doing this will be stretched if house prices do not rise, and if payment shocks hit.

  We are quite pessimistic about the prospect of house price inflation.

  Housing is 20% -- 40% overvalued by historical standards. Also, housing demand is extremely low, because potential buyers are very concerned about unaffordability and rising unemployment. If demand remains low relative to supply, house prices could fall substantially. Average home equity could fall disproportionately, making the re-financing of loans more difficult

  The average mortgagee may have a home equity buffer of around 40%
  but theaverage can be misleading. Even a 10% -- 20% decline in house prices could startwiping out the equity of more recent borrowers, that have benefited less from houseprice inflation (or have even lost as a result of house prices falling).

  It is possible that two income earners are now required to service debt (principal and interest).

  Put differently, if one income earner were to become unemployed, the other may not be able to continue servicing the mortgage. If this is the case, then Australian households have become more exposed to unemployment risk not less.

  Risks are quite concentrated in the investor housing space. Top-down analysis suggests that investors in the housing market are struggling to generate net income because rentalyields are so far below borrowing rates, and gearing levels are higher than what theyshould be. Therefore, it seems as though investors are subsidising losses on their propertyportfolios out of labour income, in the hope of future capital gains. However, we are quite pessimistic about the prospect of house price inflation
  particularly from such anovervalued starting point. On the contrary, the most recent data suggest that housing potential buyers are very concerned about unaffordability and rising unemployment. If housing demand remains low, house prices could fall substantially. The risk of house prices declining is significant because it means that the equity of borrowers could fall disproportionately, making it more difficult for investors to re-finance loans as payment shocks hit.

  Then again who are these crazy “Credit Suisse” people anyway. Not like anybody pays attention to what they say….. No wait people do listen & act on their opinions.

  http://www.scribd.com/doc/117494670/117438327-document-1005619251

• 554 Matthew // Dec 23, 2012 at 10:00 pm

  A brief diessection of Not Fooleds post 573:

  Risks are concentrated on over-geared housing investors -- A statement of fact. How many people does this actually relate to though? Probably not the greater majority. How many of those it does apply to are actually concerned? Probably not many.

  . Leveraged investors are struggling to make money because net rental yields of 3.2%are well below mortgage rates of 6.4%. At most, investors can only afford to be 50% geared. However, the data suggest that borrowers are 60%+ geared,with a lot of this gearing on interest-only terms. Essentially, investors are subsidising losses on their property portfolios out of wages, in the hope of future capital gains. But their ability to keep doing this will be stretched if house prices do not rise, and if payment shocks hit. MOTHERHOOD STATEMENT

  We are quite pessimistic about the prospect of house price inflation. REALISTIC -- BUT DOES NOT MEAN A CRASH

  Housing is 20% — 40% overvalued by historical standards. Also, housing demand is extremely low, because potential buyers are very concerned about unaffordability and rising unemployment. If demand remains low relative to supply, house prices could fall substantially. Average home equity could fall disproportionately, making the re-financing of loans more difficult -- MOTHERHOOD STATEMENT

  The average mortgagee may have a home equity buffer of around 40%
  but theaverage can be misleading. Even a 10% — 20% decline in house prices could startwiping out the equity of more recent borrowers, that have benefited less from houseprice inflation (or have even lost as a result of house prices falling). -- MOTHERHOOD STATEMENT

  It is possible that two income earners are now required to service debt (principal and interest). -- STATEMENT OF FACT INITIALLY AND REFLECTION OF CHANGING SOCIAL DEMOGRAPHICS, THEN A MOTHERHOOD STATEMENT

  Put differently, if one income earner were to become unemployed, the other may not be able to continue servicing the mortgage. If this is the case, then Australian households have become more exposed to unemployment risk not less. -- NATURAL RISK

  Risks are quite concentrated in the investor housing space. Top-down analysis suggests that investors in the housing market are struggling to generate net income because rentalyields are so far below borrowing rates, and gearing levels are higher than what theyshould be. Therefore, it seems as though investors are subsidising losses on their propertyportfolios out of labour income, in the hope of future capital gains. However, we are quite pessimistic about the prospect of house price inflation
  particularly from such anovervalued starting point. On the contrary, the most recent data suggest that housing potential buyers are very concerned about unaffordability and rising unemployment. If housing demand remains low, house prices could fall substantially. The risk of house prices declining is significant because it means that the equity of borrowers could fall disproportionately, making it more difficult for investors to re-finance loans as payment shocks hit. MOTHERHOOD STATEMENT, SPECULATION, MOTHERHOOD STATEMENT

  Then again who are these crazy “Credit Suisse” people anyway. Not like anybody pays attention to what they say….. No wait people do listen & act on their opinions.

  Know what that is Not Fooled? Where I come from that is a fence sitters evaluation. If this happens, that may be the outcome, and if that happens the outcome will differ. Another junk post from a serial junk poster.

  Here is the fact of life Not Fooled -- if you want to invest in property and YOU CAN AFFORD TO INVEST IN PROPERTY then you should.

  If you want want to be an owner occupier in property, and YOU CAN AFFORD TO BUY A PROPERTY then you should.

  It is when you are not in either of these camps that it becomes speulative. You as others have said before and others will continue to in the future tried to lump every one into one poorly cookie cut basket and come out looking foolish.

  Smart people will be Not Fooled by you Not Fooled, it is only the indecisive that you will scare off.

  Give it a rest son, you are proving nothing but bearish incompetance

• 555 Biker Pete // Dec 23, 2012 at 10:10 pm

  Housing demand is low? Pull the other one, NF. What is low is residential construction, resulting in high demand for accommodation in areas people _want_ to live. If you like, I’ll provide a list of both Australian and overseas ‘experts’ who have been blowing the same trumpet since late 2006. The walls are still standing, Joshua… and, as late as 6th December 2011, our property markets remain immune to that worse-than-Ireland-and-the-US-property-crash you predicted for that date.*

  Did you miss the rider at the end of this article?

  “Please note that this is an Australian equity strategy view, and is not necessarily shared by the Credit Suisse Australian banks team…”

  * I see we’ve all just dodged another crazy end-of-life-as-we-know-it scenario, folks. Gotta giggle at the gloom’n'doomers… .

• 556 Ned S // Dec 23, 2012 at 10:16 pm

  Yep, there’s pretty big risks with everything these days -- Housing could drop? Shares could drop? Banks could go broke?

  Just got back from a couple of weeks in the bit of crud hanging off the a’hole of the world -- Honest first impression: Underdeveloped little backwater; So surely has LOTS of potential; Charming -- “quaint” even?; Quite dependent on mining -- So no particular use to me -- SE QLD housing has that sort of general exposure anyway.

• 557 Biker Pete // Dec 23, 2012 at 10:38 pm

  Here’s a bit of mirth:

  “Leveraged investors are struggling to make money because net rental yields of 3.2% are well below mortgage rates of 6.4%.”

  You only need to analyse API data to see that most rentals in good suburbs are returning 5%+. And what poor, uninformed property investor is paying 6.4%, I wonder? Possibly Credit Suisse customers, I suppose! Funny how Australia’s generous tax treatment of property owners gets so little analysis in this article. It also fails to factor in not only our declining home construction pattern, but our declining interest rate. No wonder NF leapt on it with glee!

• 558 Not Fooled By Property Spruikers Hype // Dec 24, 2012 at 1:01 pm

  Biker

  5% + Returns?

  OK Other than mining Towns name 3 Suburbs where the rental yield is returning 5% plus?

  Remember that is after all costs, Agent Mgt Fees, Ins Rates Maintanence etc etc.

  Looking forward to you being unable to name 3 suburbs that can achieve that.

• 559 Matthew // Dec 24, 2012 at 4:04 pm

  Not Fooled my worst performing property is returning me 5.72% net of all fees and charges. It was a new build completed November 2010 and I acknowledge to all who ask I paid too much for the land.

  I have 2 other properties doing better than that in different suburbs so personally I have the 3 you are looking for. My best is returning 24.5% on what I paid for it and 6.75% on current market value.

  All suburbs are south of the river in Perth, not more than 10km from the CBD

  I am sure if you want to cookie cut suburan data then you could make numbers sing any song you want, but as I have said to you before I couldnt give a toss about the wider market and I am managing to out perform your own “impossible limits”

  Why dont you acknowledge that there are smarter people than you generating significant returns in property while you sit on the fence eagerly awaiting an apocolyptic event that is simply not going to happen?

• 560 Biker Pete // Dec 24, 2012 at 4:24 pm

  We’re returning over 11% on one of our rentals, NF. Others are in the vicinity of 5% -- 8%. Nothing we own is returning less than 5%.

  As a claimant for _six_ properties (if you really are) you know full well that you’re doing extremely well. (“…making a MOTZA…” you once claimed… and that was your Mandurah rental, FHS!!!~)

  Show you three suburbs where rentals are scoring 5%+ returns? Have you never heard of Australian Property Investor magazine?

  http://www.apimagazine.com.au/current/about

  Here’s a tip: Go into Woolworths. A central aisle will have a copy of API. Turn to the very back pages. There you’ll find a section on WA rental returns, with specific sections on Apartments and Houses. Count the _scores_ of suburbs achieving 5%+ returns. I’m astonished that a fella who claims he owns/knows so much about WA property is asking mum’n'dad investors like us for this kind of advice.

  Are you really sure you’re not _that other fella?_
  You know the one… .

• 561 Craig R // Dec 24, 2012 at 6:43 pm

  wait a moment! I am just ducking out to Woolworths for the latest copy of API………oh and some popcorn.

  I do wonder when Not Fooled is ever going to answer any of the questions I asked him. To me that says a lot about a person.

  If you say you can’t find any then you must be right after all hey Not Fooled

• 562 Biker Pete // Dec 24, 2012 at 7:58 pm

  I refrain from giving NF any location, Craig. In the past, those who fell into that little bear trap were told their locations are shite, usually with a graphic description of ‘that sewer’, its crime rate, etc.

  Classic NF response…

• 563 Not Fooled By Property Spruikers Hype // Dec 24, 2012 at 9:27 pm

  Biker

  Thank you it was a simple question yet you avoid answering.

  Name 3 Suburbs that have a 5% plus return after costs.

  Not interested in what you have (Or Matty)

  I can only conclude you are not able to find 3 suburbs where the yields are 5% plus as you claim.

  Remember excluding Mining towns

  One other thing Name the suburb not some vague 10Kmm from the CBD.

• 564 Matthew // Dec 24, 2012 at 10:37 pm

  Hey Nutty Fool,

  Take a quick look at post 557 where I asked you a VERY SIMPLE QUESTION and you have failed to answer it. Because you know the answer will embarrass you. Because most things you say are so factually wrong that the average kindergarden kid can see clean through your logic. So your comment “Thank you it was a simple question yet you avoid answering.

  Name 3 Suburbs that have a 5% plus return after costs.” is, as you would say when you post as “Punter of Mindarie” larffable.

  Let me name 10 suburbs for you -- South Perth, Como, Kensington, Redcliffe, Victoria Park, Queens Park, Carlisle, West Leederville, Wembley, Mount Pleasant.

  Now prove me wrong.

  But let me also make a warning to you very clean and clear -- if you try to compare median house prices to published average or median rents I will indeed declare you THE GREATEST FOOL.

  You may not care about the real returns generated by real investors and that is your perogtive. Makes you a moron, but your perogative none the less. Me Nut Foul -- ALL I CARE ABOUT IS MY RETURNS and MY RETURNS make you look every bit the poor property speculating fool that you are.

  Do you know who cares about statistics Not Fooled? Pathectic wannabes without the spine to get in the game. People actually investing, in property, shares or commodities only care about their real returns and mine are indeed fine and dandy thanks very much.

• 565 Biker Pete // Dec 25, 2012 at 12:03 am

  NF, I have provided a source of not just _three_ WA suburbs where returns exceed 5%, but a _free_ reference to assist your enquiries. I’ve done this in the true spirit of Christmas. You need expend not one cent of federal safety net support to affirm that there are _scores_ of WA suburbs exceeding a 5% return. Extract the digit and consult the data!

  Think of Woolworths as your free source of reliable property information. No longer will you need to make-it-up-as-you-go-along… you can simply flick through this magazine, memorise the data, then wander back home to the pixelface and post the figures (not only of Karratha, Karratha, Karratha, Karratha, Woodlands and Mandurah*) but _scores_ of locales exceeding Credit Suisse’s silly 3.2% fantasy.

  * OK, Mandurah is probably around 3%, but what property investor in their right mind would have bought in that MOTZA(?)-generating zone when the bypass was in its approval stage?!!~

• 566 Not Fooled By Property Spruikers Hype // Dec 25, 2012 at 1:38 am

  Thank You Biker Pete for affirming your inability to name 3 suburbs in OZ returning over 5% PA.

  Lets recap Creditability of “Credit Suisse” or “Biker Pete” ummm hard call especially with Biker Pete not dodging simple questions?

  Naah I put my money on “Credit Suisse”

• 567 Greg Atkinson // Dec 26, 2012 at 11:16 am

  Time to move on. Perhaps if people have an issue with the Credit Suisse report they could provide data & analysis to refute the conclusions reached by CS on a ‘national level’. If people wish to debate WA house in detail then I am sure there are plenty of sites where this can be done..Shareswatch is not one of them.

• 568 Biker Pete // Dec 26, 2012 at 1:34 pm

  Australian Property Investor provides this data on a _national_ level, Greg. Credit Suisse is suffering from that laughable perception that Australia has _one_ property ‘markeT’ and that markeT is returning 3.2% to landlords. They’re also off a full one percent on the variable rate they cite. Most property investors will be getting a rate of 5.4% or better. (My kids are!)

  Happy to move on to property matters of more national significance. These could include declining residential construction and falling interest rates. Nothing too parochial there… .

• 569 Ned S // Dec 26, 2012 at 5:12 pm

  This site seems to be primarily dedicated to chatting about the property price prospects of the bit of crud hanging off the a’hole of the world:

  http://nfbpsh.blogspot.com.au/

  Just a SUGGESTION? …

• 570 Biker Pete // Dec 26, 2012 at 9:25 pm

  It sounds as though you’ve experienced some major disappointments recently. Bitterness can leave an unpleasant taste in temperament, Ned.

  Hopefully you’re back in beautiful sunny Brisbane, repatriated with family… and able to appreciate that silver lining.

• 571 Matthew // Dec 27, 2012 at 10:31 am

  Greg I dont have an issue with the Credit Suisse report, it is a perfectly good research report full of motherhood statements and generalisations.

  They could write the exact same report about the ASX200. Would it stop you trading in shares though? Absolutely not, you would continue to seek out the products returning greater than that average to build your portfolio.

  So why should property be any different? There are going to be areas better performed than the numbers in this report. They probably are not going to be Beenleigh in Qld, Liverpool in NSW, Broadmeadows in Melbourne, Parrafield in SA or Woodvale in WA, but they certainly do exist. Find them and prosper.

  As I said mine are doing better than their stated average and I am sure that many others are as well. The key though is being able to service the shortfall should there be one

  The only line of any significance is “Risks are concentrated on over-geared housing investors”.

  And lets face it, if you are an over geared investor (property shares or both) then it is highly likely to end in tears.

  Only one man would take this report, smother it in cookie dough and claim it another plank in the end of the world. Smarter people than that read between the lines.

• 572 Matthew // Dec 27, 2012 at 10:36 am

  Ned comment 591 that site you provided a link to is certainly not a place of substance or authenticity where intelligent people would congregate to debate property prospects.

  And even if it was Kim Jong Un as self annointed overlord does not allow it as only messages from sympathisers will ever make it past “moderation”

• 573 Greg Atkinson // Dec 27, 2012 at 10:47 am

  Time will tell if Credit Suisse got it right or wrong. It’s a bit early to make a call either way.

• 574 Ned S // Dec 27, 2012 at 11:21 am

  It was a tongue in cheek comment Matthew.

  But the general point is that you lot (both bulls and bear) have gone way past the point -- and the time -- where what you are writing can be considered anything other than spam.

  It’s not a housing site. And it’s SURELY not a WA/Perth/Mandurah/Karratha housing site.

  “Housing Crash” is ANCIENT NEWS -- Anyone who cares is well aware of the fact there is risk. And of the fact that policy makers will act to mitigate any major declines in prices.

  So give it a bloody rest kids. And treat the man’s site with a bit of respect.

  Greg’s site strikes me as being one of the most balanced and sane ones around. And all you lot can do is spam the crap out of it endlessly.

  I personally think you all owe Greg one hell of a big apology.

• 575 Greg Atkinson // Dec 28, 2012 at 1:44 pm

  Cheers Ned. It’s sure hard to keep a discussion regarding real estate focused As I have said a few times I suggest we all calm down and wait until we see a trend that’s worth talking about rather than going over the same old ground again & again. (with the occasional insult thrown in)

• 576 Stillgotshoeson // Dec 28, 2012 at 2:38 pm

  Tis why I have not bothered with thread for some time, we all know each others positions in regards to the property market(s).

  Now Melbourne Auction clearance rates declined again I was not getting any requests to you know, keep posting them up like when they were rising for a bit back earlier in the year.

  Too much statistical noise to see any clear pattern. I still think Melbourne will suffer further falls next year, extent could be pointlessly argued, I just do not see the point. Housing and the state of the economy are related, we need to see more definitive moves +/- in the economy to have a more clear position.

  We have access to the same information, we interpret it differently obviously. We have our beliefs on what the economy is going to do and housing along with it. Now we wait for as you say Greg, some clear direction.

• 577 Matthew // Dec 29, 2012 at 10:38 pm

  Ned comment 574 I take what you have said on board, and I have emailed Greg on occasions to apologise for being involved in a derailment of discussion.

  But let me ask you a simple question -- if I were to tell you that from January 1 2013 the sun would commence rising in the west and setting in the east, and pulling together loose threads of unrelated data to support my opinion, would you keep quiet or call me to task?

  I for one have not made this a “WA housing thing” nor do I consider myself bullish on housing. In fact my belief is that property prices will settle to historical growth rates and then resume growing at historical growth rates. That can happen one of two ways -- the crash that smart people acknowledge will not happen, followed by rapid growth, or more likely a sustained period of below average growth followed by an equal period of above average growth.

  But I do view property in the same way as commodities and shares -- key is to find the ones above average. the only real difference is you can not day trade a house as you can shares or metals.

  Now I too would welcome a silence until May or June in this forum until a clear trend can be found, but that silence lies either in Gregs desire to moderate more heavily than current, or the two outliers keeping their yaps shut.

• 578 Greg Atkinson // Dec 30, 2012 at 3:24 pm

  Matthew I have moved some comments to the moderation queue which I do sometimes however one person seems to think that the way around that is to keep reposting the same comment again & again. All that does is make the filtering system think they are spam and annoys me so I end up deleting them.

• 579 Matthew // Dec 30, 2012 at 11:32 pm

  Hi Greg,

  The issue with the internet is that every idiot with an opinion can start a blog site or commence commenting on one, or both, and sling off fantasy as fact. I have always said that democracy does not work because it allows the most foolish to influence outcomes.

  I would welcome a more heavy moderation of this site -- afterall intelligent debate is one thing but in general commentary the first rule must surely be to remove the outliers.

  Anyway people I am off for a New Years holiday with my family. I can assure you two of two things that will not happen next year in the Australian property market:

  1) Prices will not fall by more than 1.5% killing off the bears, most notably king-bear-with-no-clues 40% drop theory

  2) Prices will not grow by more than 3.5% destroying the boom bull hype

  Happy New Year Greg, may it delivery all that you hope for.

• 580 Lachlan // Jan 2, 2013 at 6:37 am

  If you let everyone say there piece Matt then time will prove who was right and wrong. History determines who is wiser but without freedom of speech then we would never get such a benefit.

• 581 Ned S // Jan 3, 2013 at 9:54 am

  I actually wanted to make a suggestion/ask a question about housing investment. And came here to do it -- Twice. But on both occasions thought What’s the point? These blokes will just turn it into a bunfight and use it to try and score cheap points off each other.

  Anyway, some recent broadbrush stuff on the market here:

  http://www.smh.com.au/business/rate-cuts-losing-their-edge-as-house-prices-fall-again-20130102-2c5jr.html

• 582 Greg Atkinson // Jan 3, 2013 at 10:58 am

  Ned I know the feeling. It’s an interesting article and it is the sort of big picture view which I thinks adds value to the discussion here about the real estate market.

  From my point of view it looks like the recent interest rate cuts have resulted in some shift back into the stock market but have not been enough to stir up the property market. (I wonder if margin lending for stocks is on the rise?)

  Anyway dare I suggest that the national trend regarding home prices at the moment appears slightly downwards or at best flat?

• 583 Stillgotshoeson // Jan 3, 2013 at 2:35 pm

  Capital city index shows 5 cities down and 3 up so national trend being down a bit is a fair call at this time.

  It is a waiting game to see what further leves governments and central banks try pulling to influence the economy and to what extent they actually influence the economy.

  How soon does the 2013 economic predictions thread go up?
  Or do we let our bruises heal a bit first?

• 584 Matthew // Jan 4, 2013 at 12:14 am

  Stillgotalongname: I will expose some bruises and go our on a limb:

  Net i/r (NF that is interest rate) movement -.5

  National Property movement -- +2.25%

  State by state range:

  WA -- +3.5%
  NT -- +7.5%
  Qld -- +2.75%
  SA -- -1.25%
  Vic -- -.0001%
  NSW -- +1.75%
  TAS -- +1.95%
  ACT -- +2.25%

  CPI -- 2.25%

  Wage Growth -- 4.25%

  ASX -- 5,050

  Will be an average year, not great nor poor. Only the outliers will be disappointed, like the guy who said a major property developer would go broke by christmas, without naming that developer, or one going to the wall.

• 585 Ned S // Jan 4, 2013 at 12:29 am

  Matthew: “Only the outliers will be disappointed, like the guy who said a major property developer would go broke by christmas, without naming that developer, or one going to the wall”

  FFS, does the niggle NEVER stop?!? (Though just maybe you aren’t talking about anyone here making that comment Matthew? … Please let it be so.)

• 586 Greg Atkinson // Jan 4, 2013 at 8:50 am

  Stillgotshoeson I will work on a post for our calls for 2013 in a few days.

• 587 Matthew // Jan 4, 2013 at 11:17 am

  Ned, I just think is is going to be a spectacularly unspectacular year ahead on all fronts, that is all I am saying. Anyone who says the ASX will plumet or boom, or property the same, is going to be sorely disappointed. Gold will not double nor halve, Iron Ore will not hit $200/t not fall to $80/t

  Smart people are using rate cuts to pay debt down and not wasting it on consumer items, and there must be plenty of them because CPI remains low and providing room for further cuts.

  The much needed change in consumer sentiment that will come from the inevitable change of government will come too late to provide any real stimulus in 2013 and will be carried through the year after. In real terms people are profiting from subdued consumer confidence, but that must change eventually.

• 588 BP // Jan 5, 2013 at 10:59 am

  You really _must_ have sold a Melbourne home, to be so worried about this link, Greg.

  http://www.domain.com.au/Investors/BestWorstSuburbs.aspx

  I’m sure that your readers aren’t fooled by my disappearance, or your spam claim. ‘Fame’? Have you become as delusional as NF?

  OK… now delete it…

• 589 Greg Atkinson // Jan 5, 2013 at 11:25 am

  Must be wonderful to sit behind an alias and make accusations BP.

• 590 Ned S // Jan 5, 2013 at 12:15 pm

  When I read comment #580 I thought Yeah, but I’m still pretty sure Lachlan wouldn’t let his kids yell insults at each other endlessly for their own amusement when they’re all out in public shopping at the supermarket or suchlike.

• 591 BP // Jan 5, 2013 at 12:29 pm

  But we’re permitted to refer to each others’ cities as ‘the sh*t hangin’ off the A*hole of the earth’, Ned?

  Give us a break, mate!~

• 592 Ned S // Jan 5, 2013 at 12:32 pm

  In the hope it may have made you all see some sense -- The rest seem to have. But not you apparently.

• 593 Lachlan // Jan 6, 2013 at 7:02 am

  Hi Ned. Yeah my kids can have their blues about things at times. I give them bit of latitude so they can try and sort out their differences but I won’t let things get too out of hand. I try to explain why I dislike some of their behaviours and how I think they can get what they want peacefully. My comment may seem to imply support for anarchy but I was just worried about ideas being suppressed rather than some control being metered out over derogatory exchanges which can destroy productive debate if left totally unchecked. Cheers Ned

• 594 Not Fooled By Property Spruikers Hype // Jan 9, 2013 at 4:22 pm

  Property prices are going nowhere. Reserve Bank paper explains why

  by: Jessica Irvine, National Economics Editor
  From: News Limited Network January 08, 2013

  http://www.perthnow.com.au/news/home-prices-are-going-nowhere-reserve-bank-paper-explains-why/story-e6frg12c-1226549821631

  Jessica Raises some interesting points in her article.

  ” We have been forced to confront a fundamental truth about property: it is only worth what people can afford to pay for it.”

  “So expect prices to rise in line with incomes from here on in.”

  “The golden goose of property is well and truly plucked”

  “A lucky generation of older Australians grew wealthier as house prices rose. But they did so at the expense of their children.”

  “When the gains of one generation come at the expense of the next, it’s a zero sums game.”

  “‘Tis the season for bold predictions about property prices in the year ahead, so here’s mine: home prices are going nowhere. Because, well, they can’t.”

  And then to rub salt into the wounds this quote:

  “It is clear that the previous strong value growth conditions to which many home owners became accustomed of recent years are well and truly behind us,” concludes RP Data’s senior research analyst, Cameron Kusher.

  More & more negative articles more & more panic & the realisation by Mum & Dad property speculators that things might be coming to a end & they should sell but worse than sell they are thinking they should not buy.

  No buyers less demand more downward pressure on prices in 2013.

• 595 BP // Jan 9, 2013 at 4:47 pm

  Thinking the Reserve Bank paper ‘would explain why’, I clicked on this link, with interest. The only direct quote I found(?)

  ”This has allowed households to devote a greater share of their income to housing while still improving their standard of living,” according to the Reserve.”

  Hardly the great RBA expose promised, NF.

  That all ya got?

• 596 Matthew // Jan 11, 2013 at 9:55 pm

  Greg, I apologise for the denigration of your site and my involvement but disagree with your line in the sand being comment 595, again you will leave the instigator and remove the replies. Cut the rotting fish at the head, not the tail. Like the specific request I made for you to delete a lying post from this guy and you didnt until you saw the outcome

  I personally can not understand this self appointed legend of Australian Property being so reluctant to put on the record where he thinks property prices will move in a 12 month range.

  Look back through the last 200 comments on this board and the statements that he has made. He states doom, death and destruction of property like the sun rising and setting. But he wont put a numbe ron it

  Lets face it, it is opinion and not science. I have said I believe prices will grow 2.25% in the next 12 months, why wont this wizzard say they will fall 11%, if this is what he believes.

  Here is my opinion -- Not Fooled HOPES that property prices will fall, but believes they will rise. He WANTS them to fall to fulfill his personally driven egotistical rubbish but he knows he is wrong.

  If he had any courage, any spine, any conviction a man as vocal as him would make a bold and firm statement. He will not. Because he knows he is wrong. Nothing more, nothing less.

  Now to get this back on track Greg, lets face it your issue lies with one man. Moderate his comments and the banter will drop to nil guaranteed.

  Anyway mate, I am back at work on Monday and I have said my piece. Happy New Year, may it be full of health, wealth, and happiness for you and your family.

• 597 dogman // Jan 14, 2013 at 2:19 pm

  Not Fooled at comment 594, as you have never done proper research and analysis into any of your posts you misguidenly have quoted Jessic Irvine, who failry recently described people who think Australia is in a property bubble as ‘troubled souls”.

  Strange to think you are still making calls as to property direction when in 2009/ 2010 you were so far out it undermined all credibility all your future predictions.

  You have previously picked apart anything RP Data , SQM, APM says when the figures dont suit you but now present the Motherhood Statement words of Cameron Kusher as gospel across the board as they now suit what your ears wish to hear.

  Be grateful the moderator did not print my well directed montage of your numerous other hugely failed call ands quotes designed to mislead or misinform.

  I am happy to release them slowly when in context to the subject at hand for reference.

• 598 Greg Atkinson // Jan 14, 2013 at 3:16 pm

  This is the only topic on this site that I need to spend quite a bit of time moderating and this is due to the inability of a few people to follow the moderation rules.

  Once again and for the last time -- I will stress this is not the place for people to carry on debates they have had on other sites or engage in tit for tat arguments best suited for the kindergarten playground.

  If people can’t follow the moderation rules then don’t post a comment.

  Let me make it perfectly clear once again, if you want to have an ongoing argument where you call others names then this is not the site for you.

  I have let a few comments through moderation just so people can have their say but all the nonsense above will be deleted in a few days.

  I will apply a filter to automatically hold comments from people who continue to show a total disregard for the moderation rules.

  Finally there is an area for general site feedback so please use it if you wish to complain about the moderation rules.

• 599 dogman // Jan 15, 2013 at 10:27 am

  Matthew, I am impressed with the article/webpage you posted 31/05/2012.

  Can you open it up for comment.??

  Sadly two business class tickets for QANTAS is barely the beggining of that saga. The rabbit hole goes much deeper.

  Thank you Greg for clarifying your very fair ground rules needed to keep the discussion without abuse and on topic.

  I am sure most posters are happy to abide by the moderation rules

• 600 Matthew // Jan 15, 2013 at 10:54 pm

  Dogman, thanks for the feedback. It was always open for comment. It is a little more open now, so much so our mate has started commenting as Anonymous. Yep, he is that dumb.

  Go nuts

• 601 Ned S // Jan 16, 2013 at 8:09 am

  This whole conversation is SERIOUSLY STRANGE?!?

  “dogman // Jan 15, 2013 at 10:27 am

  Matthew, I am impressed with the article/webpage you posted 31/05/2012.

  Can you open it up for comment.??

  Sadly two business class tickets for QANTAS is barely the beggining of that saga. The rabbit hole goes much deeper.

  Thank you Greg for clarifying your very fair ground rules needed to keep the discussion without abuse and on topic.

  I am sure most posters are happy to abide by the moderation rules

  600Matthew // Jan 15, 2013 at 10:54 pm

  Dogman, thanks for the feedback. It was always open for comment. It is a little more open now, so much so our mate has started commenting as Anonymous. Yep, he is that dumb.

  Go nuts”

• 602 dogman // Jan 16, 2013 at 8:19 am

  Ned, its an article not on this site .

  Google nfbpbh. Provides insights

• 603 Greg Atkinson // Jan 16, 2013 at 8:25 am

  Gee thanks for using this site as a bulletin board dogman. I guess you will not be surprised when the comment ends up in the trash then.

  Ned my apologies if your last comment also ends up in the trash… along with mine

• 604 Greg Atkinson // Jan 16, 2013 at 9:09 am

  A media release/report from rpdata.com landed in my inbox dated Wednesday 16 January 2013 entitled: Value growth in property sluggish for five consecutive years (pdf doc)

  Now let’s be clear before people go off the rails..it isn’t my report — I am just going to post some parts from it for the benefit of readers.

  The author of the report is Cameron Kusher — RP Data senior research analyst.

  Some highlights:

  “Capital city home values have increased at an average annual rate of just 1.9 per cent over the past five years, which is significantly lower than over the previous two five-year periods, and reflective of changing consumer attitudes
  towards debt post GFC,” Mr Kusher said.

  Over the 15 years to December 2012, capital city house values have increased at an average
  annual rate of 7.6 per cent compared to 6.0 per cent for units.

  “The global financial crisis, and the subsequent changes in consumer attitudes that it has led to, has largely impacted the results of the most recent five years.
  However, it remains difficult to argue that value growth would have been as strong over the past five years as the previous five years even without the financial crisis.
  “As the cost of buying and selling continues to increase, albeit at a much slower pace, it seems unlikely that capital gains in the housing market will return to those levels enjoyed between 1997 and 2002 and will be more reflective of conditions
  over the most recent five years,” Mr Kusher said.

  Once again let me stress I am simply posting the above extracts from the report/media release for the benefit of readers. I am not endorsing it nor am I in position to poke holes in it.

• 605 dogman // Jan 16, 2013 at 10:46 am

  5 year flat spots aren’t new to the Australian Property Market .

  Perths had a reported 4 since the 1970′s.

  Considering the GFC wiped out most Western Countries for values , a slightly inclining price shows the strength of Austrlia’s market.

  The hand brake to values pre GFC was 9% interest rates so we can see a reversal of the factors that eroded growth.

  Pockets of growth in most cities through it all however.

• 606 Ned S // Jan 17, 2013 at 2:55 am

  Dogman: “5 year flat spots aren’t new to the Australian Property Market”

  The last Brisbane one was about 8 to 9 years (1994 through 2002); After a 10% decline in entry level stuff and maybe 17.5% in more prestigous property -- To get back up to where it fell from. As I recall anyway. (Must check my recollection against the ABS stats.)

  But anyway, Rudd forestalled the correction this time. So it’s not inconceivable the long flat spot could go on even longer this time -- To my way of thinking anyhow.

  Not saying it will happen of course -- Indeed at one level, a flat spot of 15 years or even more DOES seem almost inconceivable to me!

  But anyone who doesn’t weigh the possibilty under the current circumstances, isn’t considering even a reasonably moderate negative likelihood IMO.

  My basic financial position -- No debt; No shares; 50% property; 50% cash. And I continue to remain personally comfortable with that at this time.

• 607 dogman // Jan 17, 2013 at 1:04 pm

  Hi Ned, did Brisbane have any other flats spots since the 70S.??

  I’m thinking the post World Expo high there in 1988 may have rolled into Keatings recession we had to have.

  Outside QLd perception is the market there goes to extremes up and down like our mining towns do here that revolve around gold mining.

  Perth is often ying / yang with Sydney for price fluctuations

• 608 Matthew // Jan 30, 2013 at 11:46 pm

  Hmmmmm……

  http://www.perthnow.com.au/news/breaking-news/house-prices-jump-in-december-quarter/story-e6frg133-1226565519665

  Key points:

  1) House Prices up in every capital city
  2) Up nationally 1.9% for the quarter and 2.1% for the year
  3)Perth up 6.1%
  4)Melbourne record a positive gain for the year off a 2.4% last quarter growth

  These numbers dont seem to reflect people dumping property or running to the exits do they?

  Cant be too eloquent tonight Greg, bloody cold here in Shanghai and I am suffering from my hosts hospitality. It might be the rice wine talking but growth aint no drop now is it?

  I maintain my full year forecast for 2013, modest growth with an election providing certainty moving forward

• 609 Stillgotshoeson // Jan 31, 2013 at 8:48 am

  Hmmm, it is in the paper so it must be true…..

  Melbourne, annualised growth of 9.6% OMFG, rush out and buy or miss out forever!!!!!!!

  Those stats are off very low volume with most suburbs recorded having less than 30 sales.

  The average of the 3 price indexes is about .8% for Melbourne for the quarter. Which is barely equal with inflation.

• 610 Matthew // Jan 31, 2013 at 9:41 am

  Well done on going way over the top Shoes.

  For a start paper articles and opinion pieces seem to be the factual foundation for the other side of the fence, whats good for the left hand must be good for the right unless you are a hypocrite. Secondly the article is reporting published data with no real slant, at least not what I could read through blood shot eyes

  It doesnt say Melbourne had annualised growth of 9.6% and you can only measure the data presented

  Finally CPI for the quater Australia wide was 0.2%. Not only is it not barely keeping pace with CPI, it is 4x that mark

• 611 Stillgotshoeson // Jan 31, 2013 at 9:49 am

  “Even though we do look at the national figure -- and it has risen -- it really reflects a rising Sydney and Perth market but a flat-lining Melbourne market.”

  Melbourne house prices posted only a minor rise of 0.5 per cent to $526,300, buoyed by a strong close in the fourth quarter after a weak run earlier in the year.”

  Read more: http://www.smh.com.au/business/sydney-outpaces-melbourne-as-house-prices-recover-20130131-2dlv2.html#ixzz2JVen40Ih

  Annualised growth is 4x a quarters growth…… always has been.

• 612 frogmorton // Jan 31, 2013 at 10:16 am

  A little more respect, please, Matthew.

  You’re up against a seasoned investor, who made far more than 0.5% in the last twelve months…

• 613 Matthew // Jan 31, 2013 at 10:20 am

  frogmorton, you make that comment knowing nothing about my personal situation so I will treat it with the distinct lack of respect that it duly deserves.

  Shoes, yes annualised growth has always been 4x quarterly growth, but as you are indeed a “seasoned investor” I am sure you would take far more notice of 12 months rolling data which removes the spikes created by, as you said, low sales data?

• 614 Stillgotshoeson // Jan 31, 2013 at 10:53 am

  That is the problem with words on the screen, they often do not display tone or intent, like say.. sarcasm….

• 615 Greg Atkinson // Jan 31, 2013 at 11:22 am

  It will be interesting to see how all this looks when the ABS releases the next chart pack. Personally I don’t expect to have a good grasp of any trend until around the middle of this year.

  But maybe the upcoming election will give property buyers some extra confidence?

• 616 frogmorton // Jan 31, 2013 at 1:29 pm

  Perhaps the real problem with ‘the words on the screen’ is that he thought they were for him, Stillgotshoeson.

• 617 Greg Atkinson // Feb 1, 2013 at 8:15 am

  A media release from rpdata.com has just landed in my inbox -- here is the summary that came with the release.

  RP Data-Rismark January Hedonic Home Value Index results

  Capital city dwelling values rebound in January, largely driven by gains across the Brisbane, Sydney, and Perth markets

  Home values across Australia’s capital cities were up 1.2% in January, taking the annual movement in dwelling values back into the black with a 1.8% increase over the past twelve months.

  Highlights over the quarter:

  · Best performing capital city: Hobart +5.3 per cent

  · Weakest performing capital city: Darwin, -3.7 per cent

  · Highest rental yields: Darwin houses with gross rental yield of 6.3 per cent and Darwin Units at 6.2 per cent

  · Lowest rental yields: Melbourne houses with gross rental yields of 3.6 per cent and Melbourne units at 4.4 per cent

  · Most expensive city: Sydney with a median dwelling price of $576,500

  · Most affordable city: Hobart with a median dwelling price of $315,000

  The full report is available on their website: http://www.rpdata.com/

• 618 Stillgotshoeson // Feb 1, 2013 at 1:54 pm

  ” Lowest rental yields: Melbourne houses with gross rental yields of 3.6 per cent and Melbourne units at 4.4 per cent”

  Things still do not look that good for Melbourne. It indicates to me that prices need to retreat to bring more attractive yeilds into play or rents need to rise. With poor consumer confidence and continuing decline in manufacturing in Melbourne, I fail to see how there can be any major increases in the rental prices.. Some areas I believe I read in a report rental rates have actually dropped off a bit.

• 619 Not Fooled By Property Spruikers Hype // Feb 1, 2013 at 5:59 pm

  Shoes

  The other edge of the interest rate sword is that if rates stay low or fall further it is even more difficult for landlords to raise rents.

  Many Mum & Dad investors / speculators who have opted for fixed rates of 7%-7.5% offered recently for fixed terms or 5 years will struggle with rental yields like these.

  Raising rents is not a option for landlords because rents have already reached tenants capacity to pay more by cutting back on discretionary spending (They have already done that look at Retail Sales & Tourism Data) If landlords were capable of raising rents with rates this low gullible tenants will opt to buy rather than pay higher rents.

• 620 frogmorton // Feb 1, 2013 at 7:33 pm

  I can see you have a good grasp of economics, Not Fooled By etc, etc.

  This has nothing at all to do with supply and demand, population increase, increasing wages, or reduced residential construction. It’s all about rates. Tenants simply say to their landlords “You’re paying lower interest, I’m paying lower rent!” That will work!!!!

  I can see an honorary doctorate coming your way…
  probably from UNSW.

• 621 Matthew // Feb 2, 2013 at 12:01 am

  Greg, it has been a long week for me, 11 flights 3 countries and enough Chinese wine to kill a Balinese tourist. So you will have to excuse me for rubing my eyes in disbelief at what I have read in comment 619.

  “The other edge of the interest rate sword is that if rates stay low or fall further it is even more difficult for landlords to raise rents”

  Now from this guy, who decries “rates will rise to 10%” at all and any opportunity, as with his “prices must fall” mantra, this is an amazing acknowledgement. And almost half true.

  Lets address the half true bit first.

  Low interest rates in a tight rental market will indeed make it more difficult for landlords to increase rents. Not impossible, but more difficult. Why?

  Well lets revisit economics 101. Lower interest rates makes property against any baseline price more affordable, and more affordable property will drive renters like Anthony in comment 619 with the capacity to, to buy. This will reduce rental demand and to commence with stagnate rental prices (not drop them, but slow the gains)

  The flip side of this fact however is that as tennants move to buyers, the demand curve will shift and property prices will factually rise.

  Therefore in post 619 Anthony Mundine by Property Spruikers Hype is admitting an immenent increase in property prices.

  As for the rest of the post, more rubbish:

  “Many Mum & Dad investors / speculators who have opted for fixed rates of 7%-7.5% offered recently for fixed terms or 5 years will struggle with rental yields like these” --

  For a start the minority will be impacted by a reduction in rates, secondly to buy the property in the first place they must have capacity to service the debt at the locked in rate and finally rental rates are continuing to rise.

  Then:

  “Raising rents is not a option for landlords because rents have already reached tenants capacity to pay more by cutting back on discretionary spending (They have already done that look at Retail Sales & Tourism Data”

  But the fact that rents continue to rise, and tennants continue to pay indicates that there is room for more increases. That is not speculation, again, it is simple economic fact.

  And finally another acknowledgement that prices are about to rise:

  “If landlords were capable of raising rents with rates this low gullible tenants will opt to buy rather than pay higher rents.”

  I object to the insinuation that people who rent are gullible for paying market rates as opposed to being homeless, but lets not dwell on that and focus on the sentiment.

  Again Not Fooled By Property Spruikers Hype is acknowledging that prices are about to rise.

  No wonder he wouldn’t answer my challenge to put a number on a fall, he is backing in a rise.

  (Edited by Site Admin)

• 622 Greg Atkinson // Feb 3, 2013 at 3:28 pm

  Matthew I edited your comment basically as you suggested. In regards to the property market, in a few months we should have a clear idea of where it is heading.

• 623 Matthew // Feb 7, 2013 at 10:57 am

  Australand must be reporting false results, how could they post a 28% profit rise?

  http://www.perthnow.com.au/news/breaking-news/australand-profit-up-28/story-e6frg133-1226572482698

  One odd comment springs out: “Earnings from its investment properties were up eight per cent, and the value of its portfolio rose by $51.3 million”

• 624 Greg Atkinson // Feb 9, 2013 at 8:40 am

  Here is an interesting article regarding house prices which some readers may be interested in: The Easy Way To Know Where House Prices Will Go

  My only comment is that the RBA charts are interesting but of course you can interpret them in many ways.

• 625 Lord Lardy // Feb 10, 2013 at 1:22 pm

  Australian Property prices are due for a correction of around 50%. Obviously it won’t be a uniform decline. Reducing interest rates have stalled the correction. Falling interest rates are a lagging indicator of a weakening economy. Immigration and archaic planning controls will spread the 50% reduction over a decade so with allowance for inflation it won’t be so noticeable. The factor that will accelerate the decline is unemployment and underemployment. It’s healthy to deflate price bubbles so will be interesting to watch government policy and reserve bank.

  Personally wouldn’t be surprised if stamp duty was replaced by a property tax as that’d encourage economic activity and provide more predictable revenue streams for state governments.

  This commentary was supplied by a person that has lived through 3 major property price corrections in various jurisdiction within the past 30 years.

• 626 Be it as may be // Feb 13, 2013 at 3:42 am

  Lord Lardy = interesting observation. You no doubt have much wisdom, in parted by good and bad experiences.

  Matthew- no doubt you are right as always. Everything must go up they taught everyone that in Economics 101. Rents, inflation, population, property, stocks, the sun etcera etc…

  Life has taught me the world is a see-saw, pressure equalising, balancing, ying and yang, mixing….

  Theory and practical vary substantially. I and many dream of throwing many into a magic machine and it churning out a guaranteed bonus…

  No need to edit this comment Greg!

  I shall leave it to the wishful thinkers to dissect it with theories.

• 627 frogmorton // Feb 13, 2013 at 7:57 am

  “I and many dream of throwing many into a magic machine and it churning out a guaranteed bonus…”

  A delightful suggestion. A little lard might help.

• 628 Not Fooled By Property Spruikers Hype // Feb 16, 2013 at 6:54 pm

  http://www.abc.net.au/worldtoday/content/2013/s3691087.htm

  Friday’s “The World Today” Radio program ABC National Radio
  (See Link to Audio & Transcript)

  “Despite low interest rates, housing is taking a record percentage of income for many Australians.”

  I will resist putting my own spin on it . Instead let you read for yourselves.

  (Look for the Bit were Tim Lawless confirms Capital City Houses prices are 6 times incomes)

  When you find it consider this.

  In 1980′s when my friends & I were buying our first homes we did it on a single incomes of around $10K -- $12K & bought houses around $25-$35K (2-3 times single incomes)

  Tim Lawless example is 6 times income in Capital Cities. But note thats Joint Incomes.

  Remember in 1980 we were FHB on low incomes so Today’s Single FHB on a low income around $40K is having to pay 8-10 times to get into housing.

  Yet property speculators think prices will keep rising?

• 629 frogmorton // Feb 17, 2013 at 9:20 am

  “Today’s Single FHB on a low income around $40K is having to pay 8-10 times to get into housing.”

  Irrelevant. Anyone foolish enough to attempt this feat, even sub-letting, is doomed to failure. Banks would laugh at such an application, as they did 45 years ago, when I applied for a housing loan, straight out of uni.

  Singles compete for homes against working couples, in markets which discriminate against the unprepared, the poor and asset-poor. While this disadvantage has always existed, it has heightened with more women employed and increased female incomes.

  Where did you and your single friends buy homes for $35,000 in the 1980s? Two-bedroom asbestos shacks two hours north of Perth, perhaps?

• 630 Not Fooled By Property Spruikers Hype // Feb 17, 2013 at 10:52 am

  Frogmorton.

  See attached for Melbourne prices & wages:

  http://upload.wikimedia.org/wikipedia/commons/0/00/Real_Melbourne_House_Prices_1965_-_2010b.JPG

  Perth was cheaper than Melbourne. Now remember I was talking about the FHB / Starter market.

  The chart shows Median House & wages.

  Like today the Median house price might be $500K but the FHB is $350K -$400K & average wages might be $60K but the FHB typical wage is $40K.

  1982 a friend built a house in Heathridge Block $12.5K house = $20K Total= $32.5K he was earning $11K.

  Which brings me to another point. Land prices.

  Up until 1990 the “Golden” rule for property was 1/3 Land Value 2/3 House Value. After that people forgot or disregarded this rule. But the Professional developers never did.

  In 1982 you did not build a $50K house on a $15K block because you overcapitalised. Nor did you build a $15K house on a $15K block.

  Today people happily pay $250-$300K for a block of land & build a $150K house on it. (Wrong)

  A professional developer would look at a house for sale on a large block of land for redevelopment potential he would never pay more than 1/3 land cost for his development.

  EG; Pay $600K house on large block to put 4 units = $150K per unit Land cost + $125K Building Cost = $275K development cost. Sell price of units $400-$425K

  Same with Blocks of Land for apartment complexes etc

  Property has lost it’s way. Ask your Parents or Grand Parents if they would have put a $5K house on a $10K Block.

• 631 Lachlan // Feb 17, 2013 at 11:18 am

  Interesting link NF but looks like that chart is straining to hit 10 or 11 on the ratio side. Glen must have his machete handy for the target rate or something.

• 632 Matthew // Feb 17, 2013 at 11:36 am

  Not Fooled By Property Spruikers Hype // Feb 17, 2013 at 10:52 am

  “but the FHB typical wage is $40K”

  Prove it. If you are going to toss out junk statistics, back it up with some evidence please

• 633 frogmorton // Feb 17, 2013 at 1:20 pm

  You know, we’re in WA, so I thought your reference to $30K homes was a West Australian example. In the eighties, WA houses of any quality at all were double and triple that $30K you cite, so I guess you are talking fibro cement shacks, or worse.

  Matthew’s reference to ‘junk statistics’ is valid. It must be relatively easy to defend your claim. Just provide evidence that today’s single FHB earns $40K.

• 634 Stillgotshoeson // Feb 17, 2013 at 3:30 pm

  I purchased my first home in Melbourne in 1994 for $85k which was about 2x my earnings back then (43k) (sold 6 years later for $135k)

  Houses 10 years earlier were available in Melbourne in the $20k to $30k range. Low $20k range got you an ex HC home. Higher $20k and into the $30k range typically bought an adjoining suburb home.

  $40k would be close to a typical FHB’s wage. Some would be higher and some would be lower.
  They are typically younger and so have not built careers up to higher income levels or they work in unskilled/semi skilled lower paid positions. In household terms it is rarely 2x average incomes in the household too. One typically earns more than the other. (usually the male but not always) Household income also drops when part time of no work is the situation due to the arrival of children bringing the average down.

  Household income night be $110k ($55k each averaged) but child rearing years might bring that down to a part time working situation for one ($70k and $25k making $47.5k average) or a one not working household (70k and a $35k average)

• 635 Not Fooled By Property Spruikers Hype // Feb 17, 2013 at 7:15 pm

  Better Still Matty

  Prove me wrong!!

  I have better things to do than prove the existence of Gravity.

  Gravity exists !!

  You disagree that the Average wage of a Single FHB is around $40K prove me wrong?

  Or even better still put your number to it? $45K, $50K $100,000

• 636 Matthew // Feb 17, 2013 at 7:22 pm

  I have just gone through the salary files for our group of companies.

  Our lowest paid group of employees (a team of 17 warehouse employees on an EBA) have an annual base rate of $41,875 rior to leave loading, overtime or discretionary bonuses.

  We are taking our annual Graduate recruitment at the moment and I can not find a graduate willing to work in the fields of Accounting or Sales and Marketing for less than $47,500

  Experienced forklift operators are demanding not less than $50k per annum.

  Admin roles (AP, AR, Internal Sales) all north of $47,500

  I would suggest 2 things:

  1) The “average wage of a Single income FHB” that NF refers to is significantly north of $40k per annum

  2) anyone earning $40k wanting to buy a house would have to be incredibly disciplined in their spending, frugal in their selection of dwelling, or stick to renting.

  But what would I know, I just live in the real world where I employ and pay people. Mythical enigmas like Not Fooled, they are way smarter than I am…

• 637 Greg Atkinson // Feb 18, 2013 at 8:28 am

  Actually Not Fooled if you throw a figure out there as the basis for your analysis then I would say the onus is on you to provide the basis on which this figure was arrived at.

  I would think 40K was a bit low and if it were the correct figure then I suspect the properties these FHB’s were purchasing would be much less than the cost of an average home i.e. a one of two bedroom apartment perhaps?

  P.S. The comparison to gravity is not valid -- gravity is not a variable.

• 638 Matthew // Feb 18, 2013 at 9:22 am

  Not Fooled By Property Spruikers Hype // Feb 17, 2013 at 7:15 pm

  Better Still Matty

  Prove me wrong!!

  Prove you wrong? Been pretty much doing that on a weekly basis for the last year havent I Not Fooled?

  Thanks Greg, I am sure I am not the only one to notice the Not Fooled pattern:

  1) pick an obscure article that supports my agenda and make it “fact”
  2) toss out some junk made up stats of my own to support that arguement
  3) deny deflect deny when people who actually know what they are talking about rip me apart (is in above, or not being willing to prdict where property prices will go, or that if wages grow at more than 3.5% per annum the RBA will increase rates)
  4) GO silent on the topic and ignore all future requests to justify my rant
  5) Repeat

  FACT is he doesnt know the average salary of a single income earning FHB any better than you or I do, there is no published stat or science. No point in me putting a number to it because I would be wrong too. I could say $50k, not be right, but be a lot closer to the mark than Anthony, and the difference between $40k and $50k in this isntance is significant isnt it?

  And that is why cookie cutting does not work when taking property. Smart people understand that you cant take a catch all view of property. The article he refers to idetifies as much. So I wonder why this guy still doesnt get it?

• 639 Biker // Feb 18, 2013 at 6:03 pm

  “So I wonder why this guy still doesn’t get it?”

  Over three years of NF being continually proven wrong. It’s called masochism.

• 640 dogman // Feb 19, 2013 at 3:34 pm

  Not Fooled, only the most unskilled of the unskilled in Perth are on 40k , and then they may have a partner on the same wage to buy with. Most forkies , labourers , Kitchen staff are on at least 50k per annum. More with penalties and shift work.

  You prove nothing except you make your own figures up.

  You have been wrong about everything, and I mean everything. For years.

  House listings for Perth threatening to go below 9000. Thats bongo drum tight.

  Even the moderator it seems, needs to keep your comments in check.

• 641 Matthew // Feb 19, 2013 at 9:55 pm

  “Greg Atkinson // Feb 18, 2013 at 8:28 am

  Actually Not Fooled if you throw a figure out there as the basis for your analysis then I would say the onus is on you to provide the basis on which this figure was arrived at.”

  Well Greg, a day on it is fair to say that Anthony aka Not Fooled By His Own Hype not only acknowledges that I proved him wrong, but he can’t acknowledge the fact that you also called him out…

  I therefore refer to my point (4) in comment 638 above, and am very confident that we will not hear from this person again until his next propaganda piece surfaces….

  Edited by Admin

• 642 Not Fooled By Property Spruikers Hype // Feb 20, 2013 at 4:12 pm

  Busy Matty

  Will respond when I have a chance.

  FYI Retail Staff, Clerical Staff, Nurses, Hospitality, Cleaners etc juniors at the start of their careers are not earning $50K plus?

  Read my comments I was talking about YOUNG First Home Buyers buying a home on their own NOT with a partner.

  All my friends & I could do it when we were in our early 20′s on low wages…. thats the point.

  Your example of wages is wrong. Anyone can phone Skilled Engineering Labour hire & get a factory hand / warehouse staff for under $45K PA (THATS A EXPERIENCED ADULT) Clerical Staff $45K (THATS A EXPERIENCED ADULT)

• 643 Biker // Feb 20, 2013 at 6:39 pm

  You’re dealing with a person who has not managed to attract a decent wage yet, Matthew. This is AN inexperienced adult whose lack of education and employment prospects were always going to prejudice his earning capacity and outlook on life.

  As a result, NF has a very different view of the world. His imaginary friends, buying imaginary houses for an imaginary song are fantasies on a par with his current ownership of six WA properties. It took a little while for me to realise that he was fantasising (he tells a good yarn) but I now wonder why we still give this busy troll more than a laugh in passing… .

• 644 Matthew // Feb 20, 2013 at 9:24 pm

  Shame, I was looking forward to a few weeks peace…

  Anyway to the task at hand….

  Not Fooled By Property Spruikers Hype // Feb 20, 2013 at 4:12 pm

  FYI ….. Nurses,…. etc juniors at the start of their careers are not earning $50K plus?

  Read my comments I was talking about YOUNG First Home Buyers buying a home on their own NOT with a partner

  Do your research or look a Fool is my advice to you NF..

  Even a dumb blind fool cant miss the current pay claim by WA’s Nurses, being 6th highest paid in the country and all that.

  http://www.nursing.health.wa.gov.au/docs/working/wages.pdf

  A Graduate (read 21 / 22 year old) nurse in all bar 2 States or Territories has a starting wage of $53,222. Thats right, at the start of their career.

  Then they get shift loadings for afternoons (which they all do), evenings (which they all do), weekends (which they all do) and public holidays (which they all do)

  Not Fooled By Property Spruikers Hype // Feb 20, 2013 at 4:12 pm

  Your example of wages is wrong

  No its not mate. I have proven myself right, it is you that is wrong.

  More importantly chump, these kids at the start of their careers simply arent buying houses. they are still living at home. Surely even you can read the press and understand that kids are staying home longer, marrying older, having kids later. Your self appointed property guru Jessica Irvine calls her generation “generation rent”

  You try to compare the modern world with the 1980′s as if it is somehow relevant. It isnt mate. Stop looking in the past, you are missing the present and the future and just looking like a biggoted idiot in the process.

• 645 Matthew // Feb 20, 2013 at 10:02 pm

  Sorry, missed a bit…

  Not Fooled By Property Spruikers Hype // Feb 20, 2013 at 4:12 pm

  Anyone can phone Skilled Engineering Labour hire & get a factory hand / warehouse staff for under $45K PA (THATS A EXPERIENCED ADULT) Clerical Staff $45K (THATS A EXPERIENCED ADULT)

  You trying to tell me you can contract short / medium / long term labour for less than $22.77 per hour? You must be smoking crack mate.

  Anyone who has dealt with Skilled will know that the staff member will get around $25 per hour and the company will be charged around $40. It is casual contract labour moron, they have loadings in their pay for the uncertainty in their work.

  You really have no clue do you?

• 646 Lachlan // Feb 21, 2013 at 5:54 am

  Nurse pay would have to have been higher I would have thought.

  I would add to the discussion my only personal experience. If I am to put someone on they go under a horticulture award at roughly 18.30/hour plus super etc…which seems like it should be bumped up to me. Granted we are free to pay more. I know a nursery business up the road employing at the award (approx 4 blokes). I would guess cleaners would get similar but that is a guess.

• 647 Biker // Feb 21, 2013 at 7:27 am

  Can’t get a gardener, skilled or unskilled, to work at any of our properties for less than $25 per hour, Lachlan. There’s just so much work in WA for those who want to work… .

  And, as Matthew notes: “…these kids at the start of their careers simply aren’t buying houses. They are still living at home. Surely even you can read the press and understand that kids are staying home longer, marrying older, having kids later…”

  In his closing comment at #628 above, (apparently addressed to ‘property speculators’) NF identifies:
  “…today’s Single FHB on a low income around $40K…” He is yet to provide evidence that even one single FHB has been financed, let alone prove that this is the norm. All the waffle which followed our request for evidence is deflection, the usual smokescreen blown by this ‘busy’ contributor.

• 648 Greg Atkinson // Feb 21, 2013 at 8:08 am

  Well I think we have covered the wages issue enough now.

• 649 dogman // Feb 21, 2013 at 11:25 am

  NF , we know you lied about having bank contacts so here is some good oil for you seeings you are not big on research

  Borrowing power of a $45,000 FT employee, no other debts.

  ANZ $277,000 30 yrs variable

  ST George 3 Yr fixed . $323,000. Fixed at 5.29%

  Starter home for starter wage.

  “Covered the wage issue” indicates its pretty well established we have somemone totally out of the loop on wages.

• 650 Not Fooled By Property Spruikers Hype // Feb 21, 2013 at 1:10 pm

  AHH Matty & Biker

  Has the penny dropped yet?

  When we were young we lived in houses away from MUM because it was affordable to build or buy a home on a single income. Even a few friends on apprenticeships did it & none of us had to have our parents go surety.

  We could also have children at earlier ages because both parents did not need to work because you could buy a home on a single income. In fact banks would only consider 1/3 of the wives wages.

  Now Matty & Biker you better get to a hospital because you appear to have a self inflicted gunshot wounds to the foot. {Shot yourself in the Foot}

  Greg “Chump” “Moron”

  Matty lacks the discipline to have a reasoned discussion.

  More editing perhaps will bring out a more considered comment?

• 651 Frank // Feb 21, 2013 at 1:39 pm

  Not Fooled the only person shooting himself in the foot mate is you. You made a statement that single FHB’s earn $40k, was exposed terribly by people smarter than you, hid from your comment when you couldn’t back it up, and still somehow think you are winning the debate……

  You couldn’t win a debate between yourself and a mirror now go away and stop wasting everyone’s time

• 652 Stillgotshoeson // Feb 21, 2013 at 2:09 pm

  There is another factor that has influence on both unemployment numbers and earning capacity of people/households. That is the continued trend for part time and casual positions increasing.

  The unemployment rate has not moved much but a lot of full time jobs have gone to be replaced by part time/casual positions. It is still a job so gets counted in employment figures but has impact on discretionary spend and ability to save.

• 653 Not Fooled By Property Spruikers Hype // Feb 21, 2013 at 2:18 pm

  Frank

  Great to see you join the debate despite having limited comprehension skills.

  You claim I am saying ….”that single FHB’s earn $40k,”

  What I did say was:

  “in 1980 we were FHB on low incomes so Today’s Single FHB on a low income around $40K is having to pay 8-10 times to get into housing.”

  In the haste to shoot the messenger at all costs his message is distorted.

  In 1980 FHB’s on low incomes were able to buy housing & get a “Step on the Property Ladder” Today “LOW INCOME” let me repeat myself “LOW INCOME” First Home Buyers (NOT ALL FHB’s)

  Yes many FHB earn more than that , many buy as couples. But LOW INCOME young FHB that once could buy housing are now having to put it off till much much later in life. Taking longer & longer to save a deposit & climbing up income scales before being able to afford housing of their own.

  But I do enjoy the panic that sets in when anybody dares to question the housing affordability myths

• 654 Ned S // Feb 21, 2013 at 2:34 pm

  The three low income earning singles I’ve known who ended up owning a house basically just inherited them. (That’s definitely the case with one and I suspect it is the case with the other two as well.) And they all did so after living at home until their parents both died -- When the low income earning single was late 50s/early 60s. One of them inherited his grandparents’ and his brother’s house as well.

  Know another bloke who was a low income earner but owned a house when he married -- His parents bought it outright for him. So it was an ‘early inheritance’ one might say.

• 655 Frank // Feb 21, 2013 at 3:04 pm

  Nothing wrong with my comprehension skills Not Fooled, seems to be a glaring hole in your skill set though.

  We all see what you said and you still haven’t been able to prove your point because you know you can’t

  Greg kindly asked for this to be let go almost letting you off but you couldn’t help but wade back in and prove yourself a fool once more

  So again I say stop wasting people’s time and let it go

• 656 Biker // Feb 21, 2013 at 3:54 pm

  Bit of an oxymoron, isn’t it… that imaginary FHB who can borrow $400K on a $40K pa income(?)

  No more so than a NaiF who ‘owns’ six WA properties [Karratha (4), Woodlands (1) and Mandurah (1)] yet bleats ‘property crash’ at every opportunity.

• 657 Lachlan // Feb 21, 2013 at 4:22 pm

  Who knows what people are earning. Would be interesting if NF could quantify his claim but intuitively people feel that property is significantly dearer in real terms than decades back.
  I was talking to a farmer last week who is now a new neighbour. He borrowed fifty odd years back to buy an entire commercial farm block with no money down. They paid it off quickly and then borrowed and paid off two more. They were dairies at the time. Now covered in sorghum and wheat. I doubt many could do that now….unless they work in mining.
  And no I am not saying this means a crash.
  BP, as a contract labourer its easy enough to get 30/hr here also, even some time back….with a ute and a few tools of your own ie not much….and no tickets.

• 658 Biker // Feb 21, 2013 at 4:59 pm

  What puzzles me is the claim that one could buy a WA home back in the nineteen-eighties for $25K, Lachlan.

  We paid well over three times that much for a three-bedroom, single bathroom, single garage home… in a regional centre… in 1982. The claim that young fellas were picking up $25K Perth homes around then is humorous. As Matthew suggests, the young, low-paid worker was never a FHB candidate, now or then…

• 659 Frank // Feb 21, 2013 at 5:49 pm

  It’s all lies Biker. Median house price in Perth in1982 was $48,225. Even a backwater dump like Heathridge wouldn’t have a 30% discount against the median for a new build…. Shovels must be cheap at Bunnings this week the rate this guy is digging holes at

• 660 Lachlan // Feb 21, 2013 at 6:05 pm

  “What puzzles me is the claim that one could buy a WA home back in the nineteen-eighties for $25K, Lachlan.”
  Well me too guess. You know I am not the hardened property debater. I ain’t even packing my six shooters…. but I can share my own observations.

  My parents bought a good size modern brick home in 1976 for 38K and sold it in 1981 for 77K.
  Another house they bought (they moved a bit) was bigger and had a grand water outlook and was considered upper Joe average at the time (1983). It was 80K but it was nicely discounted for mates rates. They were actually previously neighbours and wanted out quick. I enjoyed living there a lot.
  In 1986 they bought a very decent and modern but otherwise average home near the beach in SE QLD. It cost 91K.

• 661 Ned S // Feb 21, 2013 at 7:34 pm

  I bought a ‘fixer upper’ in Brisbane mid North in late 1987 for $58K. Fixed it up (at minimal $ cost but lots of labour) and sold it in early 1993 for $124K

  Things had been running hot in Brisbane in 1987 (when Expo was) and for the couple of years preceeding it. Reckoned at 58K I was getting ripped. But was youngish and operating under instruction from my dad to buy. So did. (I paid half cash/my olds paid the other half cash -- No mortgage.)

  Inflation was also running hot back then as I recall -- High interest rates. But I had a nice secure gov job and my dad did too. So our salaries were presumably going up OK as well -- Though I don’t specifically recall any detail except my gross salary was maybe $20K pa back then and I could save about $7K pa after I paid rent on a 2 bedroom flat close in to the city centre and other general living/entertainment expenses.

• 662 Stillgotshoeson // Feb 21, 2013 at 8:45 pm

  Interesting list for Melbourne…

  http://www.simplesustainable.com/topic/2463-melbournes-median-house-prices-vs-wages-1965-2010/

  This is median, houses were certainly available above and below these figures…

• 663 Matthew // Feb 21, 2013 at 10:31 pm

  Apologies in advance Greg, but this is too good to let slip through!

  Not Fooled By Property Spruikers Hype // Feb 21, 2013 at 2:18 pm

  Frank

  Great to see you join the debate despite having limited comprehension skills.

  You claim I am saying ….”that single FHB’s earn $40k,”

  What I did say was:

  “in 1980 we were FHB on low incomes so Today’s Single FHB on a low income around $40K is having to pay 8-10 times to get into housing.”

  In the haste to shoot the messenger at all costs his message is distorted

  Well actually Anthony, what you said was:

  Not Fooled By Property Spruikers Hype // Feb 17, 2013 at 10:52 am

  Like today …. but the FHB typical wage is $40K.

  Which you were challenged on, asked by me to verify to which you said:

  Not Fooled By Property Spruikers Hype // Feb 17, 2013 at 7:15 pm

  Better Still Matty

  Prove me wrong!!

  You disagree that the Average wage of a Single FHB is around $40K prove me wrong?

  So it was $40k, then is $40k, then “around” $40k… either way the educated reader of this forum will not dispute you have been caught with your pants down again.

  But that is all semantics. This is what proves you have no grip on the current world:

  “We could also have children at earlier ages because both parents did not need to work because you could buy a home on a single income”

  You make it seem that finance is the major reason the current generation dont have kids in their 20′s? Mate they dont have them young because they dont want them young! It is a big world out there goose. Kids today take gap years, travel Europe, Asia and America, enjoy their lives while they are young and then settle down.

  Again Beaker of the Muppets, by the time the average first home buyer is done living and is ready to settle down, they are older than they were and not too unhappy with their circumstance.

  Your whole arguement from comment 628 on has absolutely no relevance to the current property market and your opinion no impact on affordability.

  Wrong again, wrong as always, as others have said Not Fooled, just let it go you are embarrasing yourself.

• 664 Not Fooled By Property Spruikers Hype // Feb 21, 2013 at 11:26 pm

  Tut Tut Tut Matty

  “Beaker of the Muppets”

  Are you really that Juvenile that you need to resort to name calling.

  Show some respect to Greg’s wishes to disengage from name calling.

  You claim to be the GM of a large Australian Company try & have a writing style that reflects it.

  Happy to engage you in a debate when you grow up.

• 665 Not Fooled By Property Spruikers Hype // Feb 22, 2013 at 12:50 am

  Greg see cross section of Wages for many typical jobs.

  Trust this meets my obligation to substantiate my claims that

  Many Young FHB are on Single incomes of around $40K

  Shop Assistant Median Wage $33K :

  http://www.payscale.com/research/AU/Job=Shop_Assistant/Hourly_Rate

  So naturally all are excluded from Biker Pete FHB list? Thats everyone working in KMart / IGA / Coles / Wollies / Big W / Bunnings / Target / Zamels / etc etc etc

  Admin Clerk Median wage $41K (Thats not a young junior but MEDIAN)

  http://www.payscale.com/research/AU/Job=Administrative_Clerk/Hourly_Rate

  Warehouse worker Median Wage $38K

  http://www.payscale.com/research/AU/Job=Warehouse_Worker/Hourly_Rate

  Administration Clerk Median Wage $40K

  http://www.payscale.com/research/AU/Job=Administration_Clerk/Hourly_Rate

  Hotel Housekeeping Median $38K

  http://www.payscale.com/research/AU/Job=Hotel_Housekeeping_Aide%2fAttendant%2fAssistant/Hourly_Rate

  OK now I think I will call this a “Win” for me Thousands of jobs where people would only earn around $40K

• 666 Matthew // Feb 22, 2013 at 8:10 am

  Not Fooled on more than one occassion I have reminded you my name is Matthew and you still call me “Matty” out of what I can only assume is purile immaturity. Yet you have the gall to cry to the umpire like a 5 year old school girl if the shoe lands on the other foot.

  You will not engage in this debate not because I called you Beaker from the Muppets, you will not engage in it because you know you are wrong and cant back up your false claim. Specifically you can not prove a single FHB has a $40k income let alone that it is as you stated the typical wage is $40k. I challenged you to, Greg challenged you to and you hid because you are wrong

  Yet instead of disappearing into the irrelevancy that is your life as a web troll, you keep coming back here as if posting the same rubbish again and again will somehow make it right.

  It does not. Now as Frank said stop wasting peoples time and go away.

  And in future, post fact not fantasy and do it in a balanced way and perhaps we will all be able to ignore it instead of ripping you to shreds. That will let Greg have what he deserves which is a balanced and educated discussion on property as he does in the other pages of this site.

  The only real difference between those pages and this one….. well is you dont post your junk anywhere else really.

• 667 Greg Atkinson // Feb 23, 2013 at 9:20 am

  Let’s use people’s names or ID’s as provided & move on from the slanging match & rumble in the sand-pit.

  P.S. Can we also move on from the debate regarding what people get paid or don’t get paid and the assorted links. The ABS does a fairly good job of tracking this data for example: Average Weekly Earnings, By Industry, Original, November 2012

• 668 Ned S // Feb 23, 2013 at 3:43 pm

  Put 2 of those $40K pa jobs together and you’ve got $80K pa.

  With low income single people historically not becoming homeowners in my experience. Except through inheritance.

• 669 dogman // Feb 23, 2013 at 4:05 pm

  Not Fooled, not one of your links comment 665 when I go on to the “By City” tab gives any info at all on Perth wages.

  That’s _Not One_ , with several states not getting a mention each link.

  The data you provided as usual is at best \highly inconclusive, at at worst useless considering the amount of assumptions/comments you have put on Perth property sites.

  As others have stated , you are embarrassing yourself with any wage argument

  “Many Young FHB are on Single incomes of around $40K “. .Thats everyone working in KMart / IGA / Coles / Wollies / Big W / Bunnings / Target / Zamels”

  Not Fooled, these staff are young kids most of the time.??

  We note into today’s W.A press FHO buyers & Investor purchase are up “en masse” despite your comments to the contrary.

  Rents for houses up again despite your comments to the contrary, listings for properties at emergency levels with the Premier saying on prime time TV 3 days ago 1000 -1500 people are arriving in WA a week making our population growth the countries largest. Despite your comments to the contrary.

• 670 Not Fooled By Property Spruikers Hype // Feb 23, 2013 at 6:03 pm

  Ned

  It was very very common once upon a time for low income earners to do just that.

  That’s the point I make.

  Today they are priced out of housing.

• 671 frogmorton // Feb 23, 2013 at 7:35 pm

  You may have missed the word ‘historically’ when you misread Ned’s comment, Not Fooled By Property Spruikers’ Hype.

  (Trusting I’ve spelt your name correctly. It is more than one spruiker you’re not fooled by, isn’t it?)

• 672 Frank // Feb 24, 2013 at 12:20 am

  He really is Like a punch drunk deer in the headlights…

  Not Fooled please let me quote Ronan Keeting…..

  “You Say It Best When You Say Nothing At All”

• 673 Lachlan // Feb 24, 2013 at 5:21 am

  NF has provided some evidence for wage deflation in terms of houses for individuals. So we are left with the question of who buys typically/historically. Singles or couples? I think Ned might be correct about that. However Ned, is it not true that couples typically used to be (decades ago) living on a single income anyhow? And with a wife and kid/s to support?

• 674 Ned S // Feb 24, 2013 at 7:07 am

  “However Ned, is it not true that couples typically used to be (decades ago) living on a single income anyhow? And with a wife and kid/s to support?”

  Jolly good point Lachlan. Indeed, old time unionists even had a catch cry of “One man; One job” -- The ladies didn’t really feature in the equation at all.

• 675 Lachlan // Feb 24, 2013 at 7:12 am

  Well they new where a woman’s place was eh Ned

• 676 Matthew // Feb 24, 2013 at 12:31 pm

  Not Fooled By Property Spruikers Hype // Feb 23, 2013 at 6:03 pm

  It was very very common once upon a time for low income earners to do just that

  Perhaps it was, but the buying profile of the 1980′s bears no significance to the buying profile of today.

  Dual income familes are now normal as opposed to rare. Many employers look at ways to retain quality employees when they leave to have children. Childcare is an entire industry born out of the need and / or desire of families to maintain dual incomes.

  Many females today detest the expectation of them to leave their careers for the sake of Children, many wives work nights or weekends not only to earn money but to maintain a normality as opposed to spending all day every day around their kids.

  These are the realities of the modern world and indeed the modern FHB. Comparing this to the 70′s or 80′s is simply pointless.

  Are there people priced out of the housing market today? Absolutely. Was this the case in the 1970′s as well? Absolutely.

• 677 Ned S // Feb 25, 2013 at 12:10 am

  The battle between the ‘true’ bear and the ‘true’ bulls on this thread brings to mind these two esteemeed gents (for some reason?):

  http://www.youtube.com/watch?v=14njUwJUg1I

  With the obvious exception that while they always agree to their own amusement, the ‘true’ bear and ‘true’ bulls here never agree for their own amusement.

  PS: I don’t actually read any comments on this thread anymore except those by Shoes and Lachlan and Greg.

  PPS: Given that my English expression/savvy isn’t always 100%, I just felt to ask … Is the comedic whit those two old muppets indulge in called farce?

• 678 Biker // Feb 25, 2013 at 9:02 am

  “PS: I don’t actually read any comments on this thread anymore except those by Shoes and Lachlan and Greg.”

  I always read Stillgotshoeson’s comments with great interest… and I imagine you have also gained materially from his advice, Ned.

• 679 Greg Atkinson // Feb 25, 2013 at 9:09 am

  Ned not only do they agree but they also have a healthy sense of humour!

  Anyway in a few months the ABS/RBA data covering home prices should be showing some signs of a trend and then we will have something tangible to sink our teeth into.

• 680 Lachlan // Feb 25, 2013 at 1:18 pm

  Those muppet old timers were funny.

  Here are some links I swiped from ol mate Ross at DR to see what the bulls n bears think.

  http://www.bankingday.com/nl06_news_selected.php?act=2&stream=1&selkey=14412&hlc=2&hlw=

  http://smh.domain.com.au/real-estate-news/sydneys-boomtime-auction-clearance-20130224-2ezb9.html

• 681 Ned S // Feb 25, 2013 at 4:18 pm

  Didn’t read the comment Dogman -- But glanced through it to see if it included the abbreviation “WA” -- It did. Like seriously, who gives a rat’s.

• 682 Ned S // Feb 25, 2013 at 5:01 pm

  And now Biker comes back with some comment about how I must have had a recent disappointment in life -- But I’m actually doing very nicely thanks -- And on an property investment to boot ta!

• 683 dogman // Feb 25, 2013 at 10:48 pm

  Pardon me Ned

  Sorry if you find Muppets more relavent than worthless inconclusive links regarding wages on a property blog Ned. Sort of ties in with another comment saying obscure articles are being presented as facts beyond scrutiny.

  Especially ones that exclude several states besides WA.

  Did I Mention WA?

• 684 Ned S // Feb 26, 2013 at 4:58 am

  Relabel the thread “Some silly old farts abuse each other (and everyone else) over their house prices in West Buttsville … Endlessly!”, archive it, and forget it perhaps Greg?

  As a QLDer, I’m interested in what is happening in Sydney regarding housing. And in Melbourne. As indicators of what’s happening generally in the Oz economy. And what could be likely to happen regarding interest rates. And other policies.

  But as a QLDer, I accept the fact that my little bit of North Buttsville is pretty insignificant -- In such regards.

  And yep, sure, while house prices here interest me, I’m a big boy who lives here and am quite capable of figuring out what’s happening with them myself.

  Maybe if I wasn’t, I would feel compelled to inflict this site with endless tirades of crap on what’s happening in my little bit of Buttsville? But I am. And don’t.

• 685 Ned S // Feb 26, 2013 at 11:13 pm

  This silly old fart’s tuppence worth -- Anytime I’ve bought considering the probable land development potential, I’ve not missed. Though anytime I haven’t I have.

• 686 Matthew // Feb 27, 2013 at 11:18 pm

  Ned S // Feb 26, 2013 at 11:13 pm

  This silly old fart’s tuppence worth — Anytime I’ve bought considering the probable land development potential, I’ve not missed. Though anytime I haven’t I have.

  Wise words Ned S. Here is this comparatively younger guys $’s worth:

  People who wait for a fall to buy the house they aspire to live in spend the exact same amount or more on a residence of lower quality when they realise the fall isnt coming.

  History shows the people in the game are more likely to succeed than the people sitting idle on the sidelines.

• 687 Greg Atkinson // Mar 5, 2013 at 11:17 pm

  RP Data-Rismark February Hedonic Home Value Index Results

  Released: Friday 1 March, 2013

  Growth trend continues with capital city dwelling values rising 0.3% in February

  With Australia’s housing market experiencing a mild recovery over the past twelve months, five of the country’s eight capital cities have recorded growth according to the February RP Data and Rismark home value index results.

  To the end of February 2013, the index results revealed that capital city dwelling values rose by 0.3 per cent, following a 1.2 per cent rise in January. The strength in the monthly result was largely driven by Australia’s second largest housing market, Melbourne, where dwelling values were up 1.5 per cent. Values also appreciated across Sydney (+0.1 per cent), Canberra (+1.9 per cent) and Darwin (+2.3 per cent), while the remaining capital cities recorded a fall in values.

  Highlights over the quarter

  · Best performing capital city: Hobart +4.2 per cent

  · Weakest performing capital city: Darwin, -2.5 per cent

  · Highest rental yields: Darwin houses with gross rental yield of 6.2 per cent and Darwin Units at 6.3 per cent

  · Lowest rental yields: Melbourne houses with gross rental yield of 3.6 per cent and Melbourne units at 4.4 per cent

  · Most expensive city: Sydney with a median dwelling price of $540,000

  · Most affordable city: Hobart with a median dwelling price of $310,000

• 688 Matthew // Mar 6, 2013 at 11:40 pm

  Greg, just seeing slow growth as predicted, no fall or crash, no doom or destruction. No boom either….

  Now loathe as I am to dredge up the past, ghosts do indeed haunt and I am intrigued by another doomsayers prediction gone amiss:

  Not Fooled By Property Spruikers Hype // Dec 5, 2012 at 9:40 pm

  “Watch the papers a major Perth residential builder is struggling & may not last past Christmas.”

  Care to name that fantasy major builder who was going broke but didnt Not Fooled? I mean anyone with half a clue about the Perth building market knows that 3-4 “people” own the 20 dominant brands (ABN Group, Scott Park, Ross North, BGC) and they are still rosey.

  Fear mongering without foundation, the NF way. I am hoping that 4 consecutive quarters of positive data will kill off this bears extremist views…

• 689 Not Fooled By Property Spruikers Hype // Mar 9, 2013 at 1:47 pm

  The Australian economy avoided the worst of the GFC that brought US / European economies to their knees.

  This was largely due to China & its demand for our Coal / Iron Ore / Gas etc to drive its State Controlled economy.

  Came across a interesting 60 Minutes story that looks behind the China Miracle & it is not looking good for our economy because of our reliance on Chinese consuming our exports.

  http://www.cbsnews.com/video/watch/?id=50142079n

• 690 Matthew // Mar 9, 2013 at 11:06 pm

  Not Fooled By property Spruikers Hype, thank you for that truly irrelevant link.

  If that story has any relevance to Australia, and it does not, then it certainly has no relevance to the Austrlaian House Price and Real Estate theme of this particular page. Unless you are suggesting that we are building a massive oversupply of houses which will destroy our market (which we are not) or like the developer said the apartment / average wage ratio is 43x (which it most certainly is not).

  If your fear mongering on this occasion is the demise of our Iron ore industry, well that too is misguided. Our major miners (Rio & BHP) are on record as saying the construction portion of the Chinese boom is coming to an end, and the next stage is consumerism. That means certainly less Iron ore, but certainly more nickel, copper, silver, rare earth’s etc etc so labour may shift, but not end.

  They will continue to consume our coal, gas and iron ore at a rate greater than they did last year or the year before and our small (by their standard) economy will continue to be relatively insulated against the massive swings felt elsewhere.

  Now please glance one comment north of yours, care to answer my very simple question? Nope? didnt think so.

• 691 Not Fooled By Property Spruikers Hype // Mar 11, 2013 at 3:45 pm

  Matthew

  To argue just for argument sake is pointless.
  So I’ll leave you to it.
  I clearly state that the Australian Economy has avoided the worst impacts of the GFC suffered by other economies because of China.
  If you think it is irrelevant you don’t understand the topic.

  Chinese internal consumerism saving the day ??
  With Average wages around $2 per day?
  With High Paid City workers at around $8-$10 per day?

  China is already starting to shift manufacturing / farming etc to Africa because wages are too high in China already.

  FYI Australian House prices are high because of the influx of migrants to fill jobs to meet China’s demand take away demand gone are the jobs, gone is demand for housing down go prices.

  Don’t expect Mum & Dad property speculators to understand at the moment all looks good. Watch the article again China is a Sham!!

• 692 Matthew // Mar 11, 2013 at 4:29 pm

  Not Fooled I do not argue for arguments sake. If I believe something is correct I will acknowledge that publically, or say nothing as I see fit. When I see something fundamentally wrong, I will invoke my right to dispute it.

  I fully understand the importance of China Not Fooled, indeed I spend quite a bit of time in the country. To that end I am typing this from the Executive Lounge at the Pullman Skyway in Shanghai, and looking down from my seat I see quite a bit of activity for this place that you call a sham…

  From your comments it is very clear that you do not nor ever have visited China and I would expect the pictures in your posted link the first you have ever seen of the country. The story you posted has no impact on future prosperity of Australia. If you believe that it does you are misguided.

  You either ignore or forget the fact that there are 6 provinces with greater than 10,000,000 residents, and that the city I am in now has a greater population than all of Australia.

  Your comment on the wages and incomes of the Chinese population is comical again. You seem to ignore the fact that there are in excess of 1 million “millionaire” households and over 100 billionaires, their middle class is expanding rapidly and numbers a few times our entire population. Do you think these people are happy living in mud huts and hunting food?

  They are becoming exceptionally discerning consumers and have a spending capacity that exceeds anything you could ever dream of. Take a trip to Pudong or Hongquio airports in Shanghai or Beijing and look at the private jets lined up on the tarmac, see the cars (number and make and model) on the road, the way the middle class even dress. If you had ever done so, and again clearly you have not, you would not have typed a single key stroke in the above.

  Australia’s house prices are what they are because of the balance between supply and demand. That is an economic law. Yes there are factors that influence this supply, and demand, but your inference that migrant labour coming to Australia to work on resource projects is a driver for the Australian property market is at best comical. Let me stop and laugh for a minute before I continue…….

  An instant end to the Australian Resources Industry and closure of all related mines (which is not ever going to happen) would have disastrous consequences for the towns and cities with a mining focus (Newcastle, Mt Isa, Karratha, Gladstone etc).
  However, according to the 2011 Census, The Australian Mining Industry accounts for just 1.8% of the national employment. The end of all production impacts around 100,000 people, significant yes, but world ending no. And don’t forget Not Fooled, that assumes the end of all mining which is not going to happen is it?

  Absolute best case for your credibility would be a slowing of growth in house prices, will not see a fall though.

  (Edited by Admin)

• 693 Matthew // Mar 18, 2013 at 6:21 am

  Greg you said around March we would know where Austrlaian property is heading. I think it is clear to anyone with half an eye where it is heading is not down. Some links from the last fortnight below to support just that.

  Seems to me the “hype” and “bubble” has been a combination of hot air and hope from the Bearpulation that has sadly missed its mark.

  Not to worry, these property cycles will give them a chance to be right again in 5-7 years……

  http://www.propertyobserver.com.au/residential/not-all-australian-property-markets-in-the-same-boat-says-rba-as-vendors-adopt-more-realistic-expectations/2013031459882

  http://au.news.yahoo.com/thewest/a/-/newshome/16385956/perth-house-price-hits-500k/

  http://www.theaustralian.com.au/business/economics/house-prices-jump-38pc-in-q4-quarter-on-quarter-reia-survey-shows/story-e6frg926-1226596233462

  http://www.smh.com.au/business/is-australian-property-worth-the-risk-20130308-2fpgd.html

• 694 Biker // Mar 18, 2013 at 2:08 pm

  Clearance rates on the east coast were once cited weekly here, Matthew. An interesting trend seems to be an absence of these weekly updates… .

• 695 Stillgotshoeson // Mar 19, 2013 at 8:27 am

  Once again we have Biker only tell part of a story… The updates ceased long before there was an uptick in clearance rates.

  When the clearance rates drop back down to the low 60′s percentile again (and they will) the weekly updates won’t come back then either… no point.

• 696 Stillgotshoeson // Mar 19, 2013 at 8:32 am

  Matthew, the global economic situation does not appeasr to be showing any self sustainable increases yet. It is still relying on stimulation and manipulation.

  Too early to call all clear yet.

• 697 Greg Atkinson // Mar 19, 2013 at 8:47 am

  Lower interest rates seemed to have helped and this has also given stocks a boost. But I think we need to keep an eye on the bigger picture which is why I posted a whole range of economic charts the other day.

• 698 Not Fooled By Property Spruikers Hype // Mar 19, 2013 at 10:25 am

  BIKER

  The clearance rates may be up but sales / transactions are at 1996-2000 levels.

  So a few years back the clearance rate may have been 70% on 800 homes being put up for auction today the rate may be back at 70% but thats on only 500 homes going to auction.

  Its a numbers thing 560 sales Vs 350 sales as a example.

  Home loans for FHB / Owner Occupiers / Investors at record lows. Sales / Transactions in all segments at record lows despite claimed pick up in sales in past 12 months.

• 699 Not Fooled By Property Spruikers Hype // Mar 19, 2013 at 11:17 am

  Sorry Biker

  Just to back up what I say a link:

  http://www.scribd.com/doc/130470494/15March2013PropertyPulseSalesTransactions

• 700 Biker // Mar 19, 2013 at 4:34 pm

  I read these auction reports with great interest, NFTPS. Stillgotshoeson alerted me to them a few years back… and his reports were frequent at one time.

  The last I downloaded confirms that auction sales have improved:

  http://view.email.realestateview.com.au/?j=fe5e1671746702757013&m=fe6d15707467007d7317&ls=fdeb12787664047472117970&l=fe9a15787660047f76&s=fe371572776c077c771170&jb=ff961776&ju=fe3716717566057f721174&utm_medium=Email&utm_source=ExactTarget&utm_campaign=&r=0

  I found the Perth data in your link interesting, as auctions aren’t the really big deal they are in the east. I also found it interesting that PerthNow chose to look back a year at Wirsz’s predictions of TGPC, recently. Like those of Keen, Grantham and a host of D & G prophets, he was way off the mark. It was fun reading back through readers’ comments… .

• 701 Frank // Mar 20, 2013 at 10:27 am

  NF try as I might to find validity in your comment 698 I can not. You can only measure what can be measured and what that is showing is that prices are rising, and rising in every capital city. Fact. Who gives a toss if the auction clearance rate is 70% of 50 homes, 500 homes or 5000 homes is is still 70%. Low home loan issues, low building starts, growing population, low stocks on the market, low inflation, high dollar, low unemployment, increasing wages, these are not conditions that will see prices fall

• 702 Biker // Mar 20, 2013 at 12:02 pm

  “…these are not conditions that will see prices fall…”

  Nor will rising rents, Frank. Ours have risen an average 8.6% pa during the last five years. We had anticipated far less return in retirement, so it’s difficult not to smile when NFTPS (Comment # 691) disses us Mum & Dad ‘property speculators’… .

• 703 Not Fooled By Property Spruikers Hype // Mar 20, 2013 at 3:11 pm

  Frank you say

  “Who gives a toss if the auction clearance rate is 70% of 50 homes, 500 homes or 5000 homes is is still 70%”

  It’s a numbers thing Frank I doubt you would understand. But I will try.

  The REIV are shouting from the roof tops that the clearance rate is back up to 70% or 80% or 100% but in reality sales are at record lows.

  As a example if there were normally 1000 homes put up for sale per week in a normal healthy market & the clearance rate was 70% there would be 700 sales.

  But if only 500 homes are put up for sale & the clearance rate is 70% there would be 350 sales.

  What that means is that there was a demand for 700 homes per week from home buyers but in today’s market there is only demand for 350 homes from home buyers.

  You see if demand stayed up where it should be with all these rich migrants coming to Australia by the Jumbo Jet load & only 500 homes went on the market the clearance rate would be 100% {Remember numbers Frank it cant be more than 100% clearance }

  Then REIV would have something to crow about demand exceeding supply.

  But in reality numbers like this indicate that demand has fallen.

  Be honest with me frank deep deep down you really do care about these numbers because if it was the other way around prices would be going through the roof & you would be rejoicing so I hope you understand why I don’t believe you when you say you don’t care about these numbers because you really really do.

• 704 Biker // Mar 20, 2013 at 3:49 pm

  If numbers count so much in respect to demand, perhaps you may recall your comments when supply was up to nearly 19,000 homes, NFTPS.
  Today’s figure is 8,500.

  You may choose to dismiss the lower figure, but we recall you crowing when it was over twice today’s… .

• 705 Not Fooled By Property Spruikers Hype // Mar 20, 2013 at 4:01 pm

  Biker

  Seeing you refuse to name the type of property you rent it is always difficult to challenge your claims on property.

  But lets look at your claim on the previous post that you have enjoyed rental growths of 8.6% PA for the last 5 years.

  Lets use REIWA Median rents for a house in Perth metro area?

  March 2008 (5 Years ago) it was $370pw @ 8.6% pa growth that you claim it would be $559.92 PW today !!!!

  But guess what REIWA say MEDIAN rents in Perth for March 2013 are only $450 pw that works out to 4.0%

  Biker your 8.6% claim is inflated by 100% Plus

  Confused Mum & Dad landlords think they are seeing rental growth of 8.6% pa when in reality it less than half. But they have a warm fuzzy feeling that they are getting ahead & dont factor in Rates / Insurance Costs rising at 2 or 3 times the growth they are getting in rents. (4% reality Vs 8.6% Perception}

  Edited by Admin

• 706 Frank // Mar 20, 2013 at 4:04 pm

  I understand numbers fine Not Fooled so climb down from your soap box and don’t try to lecture me son. Reality is that house sales have fallen below boom levels.

  There is a simple explanation as to why WE ARE NOT IN A BOOM.

  Demand is more normal and we are seeing more normal price growth but not the fall YOU claimed must come.

• 707 Biker // Mar 20, 2013 at 4:05 pm

  “…your absurd claims on property…”

  Clearly you haven’t studied the 2006 -- 2011 census, NFTPS. Would you like a quick analysis of where rents went during that period, according to the ABS?

• 708 Biker // Mar 20, 2013 at 4:14 pm

  Since a question like the latter may be off-putting and result in a l-o-n-g silence, here’s the analysis:

  “Tenants are paying almost double what they did in 2006, the latest Census shows. At the same time, the median wage has increased by only 32 per cent, to $662 per week. The median weekly rent has increased $170 to $300, with 8.9 per cent of renters spending more than 30 per cent of their income on rent, up from 7.4 per cent in 2006. The 2011 Census also shows there are 40,000 more tenants in the state compared to 2006, with the proportion of all households rising 2 percentage points.”

  Our 8.6% figure would be higher, were it not our policy to reward great tenants with zero percent increases during their leases. Following tenancies, we’ve increased rents as much as 21%.

  Edited by Admin.

• 709 Greg Atkinson // Mar 20, 2013 at 4:28 pm

  Not Fooled and Biker please consider taking your debate elsewhere. As I have said many, many times..this is not a site dedicated to the Perth property market.

  This is my last reminder before I activate the automatic spam filter.

• 710 Matthew // Mar 20, 2013 at 4:44 pm

  Hey Greg,

  Sitting in the Business Lounge in Brisbane this afternoon waiting for a bird to move cities I had the pleasure of watching some of Question Time. Back to Back questions from the opposition asked our esteemed Prime Minister how many illegal boats have arrived in the past two weeks.

  On both occasions the PM launched into a long, angry diatribe at the poser of the question, yet on neither occasion did she answer it.

  It was a pretty simple question, the answer only needed to be one word but she charged down a path of obscure irrelevance instead

  Made me laugh and reminded me of someone but I can not think of whom…..

• 711 Stillgotshoeson // Mar 28, 2013 at 7:59 am

  @Matthew Comment 693..

  and yet…
  http://finance.ninemsn.com.au/newsbusiness/aap/8633700/job-worries-keep-mortgage-holders-stressed

  “The latest Genworth homebuyer confidence index, which tracks the mood of people who own or are thinking of buying a property, found nearly a quarter of those with a home loan had problems meeting repayments.

  The result was up from 18 per cent six months ago, and reflects increasing concerns about unemployment and job security, ”

  “Overall, the homebuyer confidence index tumbled 5.1 per cent in March to its lowest level since 2008.”

  Yet home buyers have nver had it so good with ultra low interest rates….

  I fail to see how house prices can get any great leaps up happening in the near term. Further declines in Melbourne prices are being spouted by the RBA now.

• 712 Biker // Mar 28, 2013 at 10:32 am

  “I fail to see how house prices can get any great leaps up happening in the near term…”

  With Super looking so promising, you’re probably spot on… .

• 713 Stillgotshoeson // Mar 28, 2013 at 10:57 am

  http://www.theage.com.au/business/markets-live/markets-live-asx-floating-around-even-20130328-2gvga.html

  ”

  12:40pm: Melbourne home owners are being forced cut the asking prices of their properties at a steeper rate than even during the global financial crisis, highlighting the continued softness of the city’s housing market.

  The new research comes as the Reserve Bank of Australia yesterday issued an unusually frank assessment of Melbourne’s housing sector, forecasting that further price falls are ahead due to an oversupply in the new home and apartment markets.

  Analysts RP Data report that vendors are now selling their homes for 7.5 per cent less than they originally asked for when they listed their property for sale.

  The degree of ‘‘discounting’’ has risen from 5 per cent since the slump started in 2010 and surpassed the 6.9 per cent recorded in the wake of the GFC for the last two years.

  ‘‘It’s reflective of the fact that vendors haven’t yet adjusted to the changed conditions in the Melbourne market,’’ said Cameron Cusher.

  ‘‘People probably still have that expectation that they can get a higher price than a what their neighbour sold for six months ago. But the reality is that has simply not been the case.’’

  Melbourne posted one of the steepest discounting rates among the eight capital cities in January, topped only by Brisbane (-8.3 per cent) and Hobart (-9.4 per cent).

  Sydney, Brisbane, Adelaide, Perth and Darwin saw discounting decline this year. In Sydney, the level of discounting fell from more than 6 per cent to 5.4 per cent.

  ”

  If the Australian economy is doing so well, why do they need to raid our Superannuation to boost the budget bottom line.

  I do believe I told you they would be after our super some time ago…

• 714 Biker // Mar 28, 2013 at 11:27 am

  Many vendors always pad the asking price, knowing that buyers feel more ‘in control’ if they can knock 5% -- 10% off the asking price.

  We’ve never doubted for a moment that both parties would come after Superannuation. Under Labor, it has been happening for many years now. When our dual 70% Salary Sacrifice suffered its first $50K limit, we bought more property. When it was further reduced to 25%, we bought more property.

  Fear and greed rule markets. Cash returns are poor, experts tell us sharemarkets will soon crash as low as 4200, and Super has a large dark cloud over it. Fortunately there’s _always_ a silver lining… .

• 715 Matthew // Mar 28, 2013 at 2:08 pm

  Shoes, seems to support my forecast for the Melbourne Property market for the year, as in the prediction thread of Vic — -.0001%.

  However just as it is not all about Perth as seems to be said all the time, equally it is not all about Melbourne. The flat expectation for your city will be countered by strong growth in NT and WA, and moderate growth in NSW and Qld, as we are seeing in place now and will continue to see for the balance of the year.

  My point is simple, and remains unchanged. People waiting for a property price crash will be sorely disappointed. Will not happen. The correction that happened, and slow growth over the past 5 years was an economic necessity. However the next phase will be a rise in prices.

  Why does the government need to raid our super? Because they are inept and have spent more than anyone could comprehend without achieving anything, while creating instability in the market with poorly timed and executed taxation poilicies.

  They are now coming after the diesel rebate which will force farmers from the land, they really are that good….

• 716 Biker // Mar 28, 2013 at 4:51 pm

  Melbourne has always attracted (more than) its fair share of new arrivals.. and I’d be be surprised if it’s as flat, even in the short term, as some predict:

  http://www.watoday.com.au/business/migration-soars-and-fools-fly-in-20130328-2gw5u.html

  I’m sure you’d have to agree with Pascoe that we attract ‘the best and brightest’, Shoes…

• 717 Greg Atkinson // Apr 2, 2013 at 9:29 am

  RP Data-Rismark March Hedonic Home Value Index Results

  Capital gains over the March quarter the highest since May 2010

  Dwelling values across the combined capital cities of Australia recorded a 2.8% rise over the March quarter, taking the cumulative capital gain to 4.7% since the market bottomed out in May last year.

  Highlights over the quarter:

  · Best performing capital city: Hobart +6.1%

  · Weakest performing capital city: Adelaide, -0.5 per cent

  · Highest rental yields: Darwin houses with gross rental yield of 6.0 %and Darwin Units at 6.3%

  · Lowest rental yields: Melbourne houses with gross rental yield of 3.6 %and Melbourne units at 4.4%

  · Most expensive city: Sydney with a median dwelling price of $550,500

  · Most affordable city: Hobart with a median dwelling price of $332,500

  (Released: Tuesday 2 April, 2013)

  More information available from rpdata.com

• 718 Matthew // Apr 2, 2013 at 11:22 pm

  Cant be true Greg. Prices have to fall, I mean a regional lender went broke and the construction sector was going to collapse remember? And dont forget people renting are at capacity and cant borrow anymore money.

  And dont forget that major builder that will struggle to see Chistmas 2012 out.

  And something else about wages and blah blah.

  Want to know what the report you refer to is saying? Exactly what people who actualy follow property with an objective view point have been saying for 12 months.

  Not booming, but sure as hell not crashing, just a modest, below historical rise

• 719 Biker // Apr 4, 2013 at 4:39 pm

  I’m not sure you’re correct, Matthew.

  “REIWA reported today that the number of houses and units in XXXXX now on the market is below 7,000 which is 50% less than this time last year.”

• 720 Matthew // Apr 9, 2013 at 11:13 pm

  20 days of silence Greg. To quote Darryl Kerrigan from The Castle -- “hows the serenity”

• 721 Blondie girl // Apr 11, 2013 at 12:55 pm

  To Not Fooled, you need to realize that there is people out there who do know exactly what they are doing in property.

  Never assume.

  There are those who have not done their dough…

• 722 Greg Atkinson // Apr 23, 2013 at 4:18 pm

  Some interesting comments from The head of the Reserve Bank of Australia’s financial stability department, Luci Ellis, reported in The Australian today.

  Rather than post a quote, here is the link to the full article: Expect slow house price rises -- RBA

• 723 Matthew // Apr 23, 2013 at 11:49 pm

  A wise man has posted on this very site growth will be subdued…. I must canvas for a Board seat.

  Greg, I dont keep links of what I say on various sites because of my policy of only speaking fact unlike others I dont feel compelled to remember lies…!

  Anyway if I didnt say it here I have said elsewhere that around December 2011 sales of new houses at the display village level (as in not starts, but sales) of a major WA builder were around half the historical average.

  This said 2 things:

  1) A lack of confidence in property (undeniable) and
  2) A looming issues with housing starts and equal problem relating to supply vs demand factors.

  I had lunch with my same mate / contact / “insider” today. He said

  1) The budget brand in March sold 156% average
  2) The mid-market brand in March sold 200% average
  3) The premium brand sold 135% average.
  4) Less than 5% of sales will be built inside 10km of the CBD

  What does this tell me?

  3 very clear things:

  1) Not Fooleds claim that a prominent builder would not see Christmas was at best fantasy and a toss of a dart that deserves ridicule for its baseless scaremongering and

  2) The pent up demand that I have stated would lead to a real market price increase in the next 12 months as a result of low / slow building starts will be smoothed by the looming “boom” in construction starts.

  3) No matter the city you live in, stay inside 10km of the CBD and you will see above average returns.

  The lag betwen demand and supply will indeed lead to a price spike, it is inevitable, but once the new starts enter the market as complete homes we will see a natual price smoothing.

  Apply this nationally, as it is applicable, and you will see growth in the immediate future of <5%. And once the long term average corrects below 8% a larger growth.

  Falls or crashes though? Not going to happen.

• 724 Not Fooled By Property Spruikers Hype // Apr 24, 2013 at 12:40 am

  Yes Greg Luci Ellis also said in Aug 2008 …

  “It is all too clear that most episodes of financial disturbances have their roots in the build-up of risk in good times. While the specifics differ from episode to episode, there are some obvious common elements. In the boom, when economic conditions are benign and asset prices are rising, many investors perceive risk to be low and are prepared to borrow large amounts of money to purchase assets, with lenders all too willing to provide the finance. This reinforces the general sense of well being, with asset prices rising further and many people being emboldened to borrow even more. Given the sense of optimism, many people seek new and more risky ways of maintaining inflated expectations of returns, including by increasing their leverage, and the whole process is typically given extra fuel by a spurt of innovation in the financial sector. Those who caution that the good times may not continue are drowned out by this flood of optimism. And then something happens to put the whole process into reverse. The risk built up in the good times quickly crystallises. Asset prices fall, leverage needs to be reduced, a sense of pessimism pervades, and many people question why they, or at least their investment advisors, did not see the turnaround coming. This depiction is admittedly highly stylised, but it is not too far from the mark in describing events over recent years, or for that matter many other financial cycles.”

• 725 Blondie girl // Apr 24, 2013 at 12:42 pm

  The reality is that Australia is very well placed in both geographic & economic terms. Asia is growing & will continue to do so for decades.

  Capacity to save is indeed a function of income, but in this country the income is rising.

  There will always be people who struggle, frankly i don’t mind some tax $$ helping these vulnerable people.

  However for people, under the age of 40, who have enjoyed good quality education & have grown up this this lucky country of ours… I really don’t have the sympathy.

  I can assure you dwelling prices in Beijing have not gone down..a family associate gets 2 sms daily quoting real estate ….and the trend is up.
  Being worried about a crash & having a potential crash ..are 2 different things..

  The real world is showing a clear recovery in house prices continuing a solid expansionary phase of the cycle….lots & lots of good news out there.

  Not Fooled you are so funny..you are just so unhappy that the big Australian fantasy recession did not happen….

  Were you 1 of those who sold their house @ the bottom of the market?

• 726 Biker // Apr 24, 2013 at 6:54 pm

  One wonders how Luci imagines the accommodation needs of fast-growing states might be met…

  With WA, for example, hitting ‘an annual growth rate of 3.45 per cent’ and half as many houses listed for sale as this time last year, it seems likely that supply won’t keep up. Increased demand, at a time when economists are talking down the market, can only mean higher rents and higher prices.

• 727 Matthew // Apr 26, 2013 at 9:31 pm

  Greg,

  I do love your site and its ability to hold some accountable for their unfounded extremist opinions. Can I share some pre Christmas joy with you all?

  Not Fooled By Property Spruikers Hype // Dec 21, 2012 at 12:55 pm

  Looks like 2013 will be another bad year for property.

  Peet & Co are starting off the year with $50,000 discounts off blocks of land.

  I know many on here think what I have to say about property is worthless.

  But what about a group of professional developers & all their resources? All their Bean Counters / Sales & Marketing people are saying to them cut prices now & lets get rid of stock because prices are heading south.

  Peet & Co are not going to slash $50,000 off blocks of land if they don’t have to, they do it because they know that this time next year it will be worth far less.

  Just imaging buying a “Dream” block earlier this year to build that “Dream” home in 2013 only to see the developer has slashed $50,000 off the price you paid.

  FYI this will force other developers to follow suit or get left behind.

  http://www.peet.com.au/megalandsale/

  But but but but but Not Fooled if that is right then how does this happen:

  http://au.news.yahoo.com/thewest/a/-/wa/16875439/land-shortage-looms-as-demand-rockets/

  Now ok, ok, this is a WA article but lets just pick some high spots here:

  “Perth faces a land shortage within 12 months as developers struggle to release enough blocks to meet surging demand on the city’s sprawling urban fringe.”

  “Land sales have doubled over the past 18 months and developers have been bringing forward land releases for the sixth quarter running, according to the Urban Development Institute of Australia (WA).”

  “The development explosion has centred on Perth’s growing outer suburbs, such as the City of Wanneroo on Perth’s northern tip where 2581 lots were sold in the March quarter compared with fewer than 800 in the September quarter last year.”

  “Land developers sold an average 225 lots a week during the March quarter, a 15 per cent rise on the December quarter.”

  “The market has picked up quite rapidly,” UDIA WA chief executive Debra Goostrey said. “Because developers need buyers to put out the land, they were responding to the market as it was.

  “Now the market is beefing up, we are trying to play catch-up with our land supply.

  “Most developers are saying they’ve got very, very little stock at the moment.”

  Now that the market is beefing up…..

  Look out all the people, the sky is falling in, the sky is falling in…… says only Not Fooled By Property Spruikers Hype.

  People with half a clue on property were picking up the trends that were missed by Not Fooled and his slow reacting reference points.

  So to my point “I know many on here think what I have to say about property is worthless.”

  Yes we do Not Fooled By Property Spruikers Hype. Yes we do.

• 728 Biker // Apr 27, 2013 at 9:00 pm

  Accountability, Matthew?

  The trick has been nicely enacted by Steve Keen, who, caught out in a long punt, explained that _eventually_ he’d be proven right.

  In this version of the long punt, the gambler simply argues that years from now, t--i--m--e will prove him right… counting on any critics to eventually forget the _original_ bet (or die! )

• 729 Blondie girl // Apr 29, 2013 at 11:42 am

  Fact:
  House prices are not ridiculously high. You can buy starter packages for $300-400K. These have commuter links to our major cities.

  My family have been involved in property for many many years. I can tell you it’s a very rare happening for property prices to fall. I have always made profits for my last 20years in property.

  Fact: there is always going to be a demand for well located property.

  All this misled information by people hoping for a housing crash..its not happening so dream on.

  There is people who understand exactly what planning for growth in West Australia means..

  Yes there is rising cost of living in Oz but there is such a word called budgeting and living realism..

• 730 Not Fooled By Property Spruikers Hype // Apr 29, 2013 at 1:13 pm

  Greg

  In keeping with your wishes to discus property on a Australian wide basis, I will just ignore Matthews focus on me & the WA Housing market & instead address issues that would affect property markets.

  A big contributor to collapses in other housing markets (Spain/US/UK etc etc) were property speculators betting on ever increasing house prices for their housing strategy to work.

  The ATO tell us that the average Mum & Dad property speculator in Australia claimed losses of $9100 + in the 2009-2010 tax year. Now the ABS tell us that the average Household income is under $80,000.

  So the average Mum & Dad speculator is not a “High” income earner able to sustain years of ZERO or no capital growth to offset negative rental yields.

  Property spruikers continue to target the Gulliable Mum & Dad investor. Why? Because astute investors would not touch residential Australian property. Ever wonder why Super funds around Australia don’t invest in this sector?

  Came across this artice in a Brisbane newspaper the other day whilst visiting the Gold Coast {Now here’s a Train wreck}

  http://www.couriermail.com.au/news/real-estate-rort-ruining-thousands-of-lives/story-e6freon6-1226630727399

  As much as Matthew & others would like to deny it property is on the nose to most serious investors & therefore the need to go down the paths described in the article:

• 731 Blondie girl // Apr 29, 2013 at 3:23 pm

  Not Fooled:
  Yes there is some serious nasty rorts going on this country. I certainly don’t condone it. However, people should not be gullible and read everything carefully. They should also seek legal advice if they are not sure.

  Housing prices will only fall if the general economy is in some distress.

  There is those who have been predicting the following:
  .high interest rates
  .Banks to tighten their credit
  .Unemployment will rise
  .US Subprime will transfer to Australia
  .GFC
  .Housing stock levels to increase
  .Immigration will fall
  .Auction clearance rates to drop
  .Another GFC

  Still….. NO CRASH

• 732 Matthew // Apr 29, 2013 at 3:41 pm

  @ Not Fooled By Property Spruikers Hype:

  You say: “So the average Mum & Dad speculator is not a “High” income earner able to sustain years of ZERO or no capital growth to offset negative rental yields.”

  Well done on again taking small snippets of data (note data and not information) and making them into “fact” to support your fantasy world.

  Just the 3 points of rebuttal on this occasion:

  1) it is highly unlikely that the “average” Australian property investor is a single income household with an $80k income. In fact read todays Financial review, I enjoyed it on my flight to Sydney today and sadly left it on the plane. The article refers to property, specifically refuting most of your affordability claims (which is why I am sad I left it) and indicates that it is very much the minority of people who have investment properties let alone “average wage earners”.

  Common sense says a person with an after tax income of $61,228 is an unlikely representative of the Australian Property Investor so give it a rest

  2)And this I will type very slowly in the hope that it sinks in -- astute property investors do not rely on capital growth to offset negative rental yields. They rely on rising rents to create positive rental yields. The capital growth, which history shows nationally to be around 8% per annum, does indeed follow and is the cream on the investment cake.

  That is a fact. Wise property investors can see it, only you seem to continually miss this fundamental point of property investment, which is what makes it a LONG TERM STRATEGY. And also what shows clearly that you have never invested in property yourself irrespective of your claims to the contrary.

  3) Anyone to fall for the scam highlighted in your link is not an investor, they are gullible and sadly get what they deserve.

  So to my point “I know many on here think what I have to say about property is worthless.”

  Yes we do Not Fooled By Property Spruikers Hype. Yes we do.

• 733 Matthew // Apr 29, 2013 at 7:38 pm

  Just a second note:

  Not Fooled Blah Blah Blah Hype says:

  “As much as Matthew & others would like to deny it property is on the nose to most serious investors & therefore the need to go down the paths described in the article”

  So where are these “serious investors” pumping their money Nuffy Fool?

  Is it term deposits? nope
  Is it precious metals? Well gold reports lately would say not.
  Is it shares? possibly, but property is a more stable source at the moment

  OK, I get it now, the invesment sector of the economy that you lead (“intelligent investors”) have gone back to the basics of wealth preservation -- under the mattress or in a tin box under the lemon tree…

• 734 Matthew // Apr 30, 2013 at 7:51 am

  Not Fooled I am clearly on topic. I punched 3 very clear holes in your assertions in comment 730 and then asked you a simple question. You must have missed it so let me ask you again.

  You state that property is on the nose for investors and have claimed on many occasions that the smart money has exited property.

  There are four traditional investment methods in this country

  1) Cash
  2) Shares
  3) Property
  4) Precious metals

  So enlighten us Not Fooled just where has all the “smart money” you claim has exited property moved to? Very simple question so I am sure you will ignore it…

• 735 Greg Atkinson // May 1, 2013 at 8:47 am

  RP Data-Rismark April Hedonic Home Value Index Results

  Released: Wednesday 1 May, 2013

  Housing market softer in April after seasonally strong March quarter

  Dwelling values contracted by -0.5% over the month of April after posting a solid 2.8% gain over the first three months of 2013.

  Based on the April rpdata-Rismark Home Value Index, capital city dwelling values recorded their first month on-month decline since last December, posting a -0.5 per cent fall across the combined capital cities index. The April decline in dwelling values partly reverses the growth seen over the first quarter of the year where capital city dwelling values rose by 2.8 per cent.

• 736 Lachlan // May 1, 2013 at 12:49 pm

  ATO has new stats on income status of geared property investors too but I don’t have a link.

• 737 Blondie girl // May 1, 2013 at 5:18 pm

  Its easy to get confused with all the data, analysis,& reports by the media regarding real estate issues.

  One says a positive & the other a negative.

  People need to understand that property investing has its risks & should do their research. For eg you should not negative gear purely for the tax benefits which can be the incentive. The ultimate goal of investing is to CREATE LONG TERM WEALTH.

  There is a report by Larry Schlesinger/ ATO figures..

  Not sure if this is the report..Lachlan

  Those who are smart will use the bank loan $$ for as long as you can to eventually obtain capital growth on the highest combined value of the property that you can afford. You are essentially using the lenders $$ to accumulate capital growth..end result positive equity is made in long term.

  I am personally not worried by market forces these days as a positive portfolio has been achieved. It seems selfish, but I realize I still need to be aware whats happening..

• 738 Lachlan // May 1, 2013 at 7:07 pm

  “all the data, analysis,& reports by the media”
  Well yes BG I had not seen that particular article but they are some of the stats. I was trying to avoid linking to an opinion article so as to only introduce official stats here… and therefore delved instead into the ATO website but without finding what I wanted.
  As for market forces…crumbs. I have come to the conclusion that i will never know enough about them. We have all hopefully learnt that markets are affected by many things and many people that are unpredictable/unknowable quantities. I can’t therefore be so smart as to calculate a lot and win big in the short term. I can only keep a sober attitude which means in part… work to increase base income, buffer risks eg diversify, keep a long term mindset etc

• 739 Geoff B // May 13, 2013 at 6:51 pm

  I find some of the opinions and quotes of historical “facts” on this site quite amusing. The guy called Matthew reckons real estate values rise 8% per annum “historically”. When you consider that property owners near me ( north of Brisbane) have bought old houses, knocked them down, and built much larger houses and have , of course, experienced massive capital gains, then I would expect the median prices to rise in those areas. The only true statistics would be if they compared houses that have not had significant capital expenditure spent on them.
  Just out of interest it may be useful to know that the Big Four banks, AMP, Qantas, Telstra, and many other companies have returned, on average, over 50% in the last year to date. Also it is useful to note that none of these public companies required any expenditure by the shareholders to achieve these returns.

• 740 Biker // May 14, 2013 at 8:43 am

  “…the Big Four banks, AMP, Qantas, Telstra, and many other companies have returned, on average, over 50% in the last year…”

  It’s easy to cherry-pick, after the fact, Geoff. We can cite even better returns for several of our ‘land wins’.

  We’d be more impressed if you could predict (as one shares aficionado here does) a half dozen shares which will return over 50% during the _next_ year.

• 741 Matthew // May 14, 2013 at 10:29 pm

  Geoff B, I dont “reckon” property prices have grown at around 8%, that is what factual published data tells us. Some here make up figures to support their agendas, I am not one of them. Yes renovations, larger houses etc are an influence, but as most will tell you the value is largely in the land and thehouse is the depreciating thing you build on it…

  As for “Qantas, Telstra, and many other companies have returned, on average, over 50% in the last year to date. Also it is useful to note that none of these public companies required any expenditure by the shareholders to achieve these returns”

  True, and that is why timing is essential.

  See I am a Qantas shareholder. My initial buy in 2007 was at $5.08 per share. In the past 6 years I have recieved a cumulative $0.71 per share dividend yet not a cent since 2009.

  I added shars on the slide and my weighted price is mid $3′s. So YTD QAN may be up 50%, but at todays close of $1.72 I am still massively out of pocket.

  At the same time my property investments and owner occupied house in the same period have grown significantly.

  As you have done above, you can pick any theoretical line in the sand you want to prove a point, but that does not necessarily make it a point worth making!

• 742 Not Fooled By Property Spruikers Hype // May 15, 2013 at 12:46 am

  Matthew

  Finally something we can agree on?

  You said “timing is essential”

  Well now is not the time to be speculating in Residential Australian Property.

  Record low interest rates & FHB are dowmn 50% & Sales at 1996 levels (Yet population has grown 28%) Ouch!!

  Think about it 50 year low interest rates FHB should be flooding the market & sales across the board should be soaring.

  They are not that ringing in your ears you are choosing to ignore are warning bells.

  Mum & Dad property speculators forever the optimists

• 743 Frank // May 15, 2013 at 8:31 am

  Not Fooled, for a man who claims to be a property insider your lack of property knowledge is astounding.

  Care to tell your “followers” how much property will fall from here so they can time their market entry?

  After all as you say timing is everything…..

• 744 Not Fooled By Property Spruikers Hype // May 15, 2013 at 12:50 pm

  Frank

  Look again it was Matthew who was saying timing was everything . I was simply referencing him.

  Biker

  Still up to your selective quotes out of context I see. I said no such thing what I have said:

  “When we bought our current house in Woodvale 2002 it was $225K today after 8 years it is valued at $600K it should be $400K if we were to follow history? The bubble is between 2000 & 2010 the affordability & value of housing has eroded more than at any other time in Australian history. Go back before 1929 (GREAT DEPRESSION) & see what data you get 1910 -- 2010 why start at this point. Because it skews the data? I assume I am an idiot because I am negative? So could I draw on your WISDOM to answer the following question: HOW WILL PERTH PROPERTY DOUBLE IN PRICE BY 2020 WITHOUT WAGES GOING UP TO $200K PER FAMILY TO ENABLE BUYERS TO AFFORD A LOAN TO PURCHASE @ THE INFLATED PRICE & HOW WILL EMPLOYERS BE ABLE TO AFFORD TO PAY THESE WAGES WITHOUT LOOSING WORK/SALES TO IMPORTS CAUSING UNEMPLOYMENT TO RISE CAUSING A CRASH IN PROPERTY PRICES. Also History shows Perth property has ALWAYS been between 2.5 -- 3.0 Average earnings now it is twice this so is History showing us Perth property is over priced. Dont just look into History to see what you want to see?”

  Play fair Biker quote me in context & in full?

• 745 dogman // May 15, 2013 at 6:57 pm

  “Geoff B “…..

  Great cherry picking on time trame and companies .

  Point not taken.

• 746 Frank // May 15, 2013 at 9:22 pm

  Not Fooled my comment stands no matter who your rant was aimed at. Do I need to ask it again IN ALL CAPITALS or for once in your life are you going to man up and answer it?

  Don’t get all cute and stay silent yes or no

• 747 Matthew // May 15, 2013 at 10:53 pm

  Not Fooled to say I agree with you would mean that I have lost my ability to read a market, so I am afraid we remain as far apart as the many names you blog under.

  How about we make a deal -- you say nothing about over pricing of Australian property in any public forum for the next 12 months, I will do the same, and we will meet back here in May 2014 and see who was right.

  I mean, anyone with half a brain can see the market has bottomed out and the next move is up, but the world has earned your silence so how about it?

  Ball is in your court.

• 748 Geoff B // May 18, 2013 at 11:58 am

  Matthew and Dogman,

  No cherry picking here. Those seven companies make up about half the Australian sharemarket. Same with the dates. I chose 12 months ago to RIGHT NOW. Every Super fund and private portfolio would or should have these stocks.

  I wouldn’t attempt to pick stocks for the next twelve months. Some jockeys tip five different horses in the same race.

  I will however predict that the house prices will fall for at least five years using the half a brain that I have left. They tried to predict the bottom in Japan 15 years ago. Even with a mortgage rate of 1% and a bank base rate of about zero the prices have fallen 70% in the last eighteen (18) years.

  Due to the large amounts of money spent by rebuilders, extenders, and renovators it will appear that the median price will hardly fall at all. Unfortunately those that buy and then sell five or ten years down the track (without spending heaps in between) will be left scratching their heads.

• 749 Biker // May 18, 2013 at 1:30 pm

  Now we’re Japan…

  Vaguely remember Keen using the same logic!~

• 750 Geoff B // May 18, 2013 at 7:37 pm

  Matthew,

  I have a similar history to you with Qantas except that I first bought them when the Gov’t privatised the company in 1992. Also I couldn’t resist them when they were 95c recently. When you consider that Qantas has a Nett Tangible Asset (NTA) value of $2.40 per share the directors could throw up their hands and close the company down and all would come out ahead.

  It wasn’t just Forrest Gump who reckoned Qantas is the best airline of all. Some people judge an airline by the looks of the Hosties, the food, or the ticket price. The age of the fleet is the best guide and Qantas has the youngest fleet of all.
  Also Qantas is an ICON and icons cannot be allowed to fail (eg Holden).

  You must be thinking “cripes he must be old”. It gets worse. I bought my first block of land in 1971 and sold it in ’74 for twice its price. Now that was a BOOM.

• 751 Matthew // May 20, 2013 at 10:06 am

  Geoff B // May 18, 2013 at 11:58 am

  “Those seven companies make up about half the Australian sharemarket”.

  Hmmm. I would suggest those 7 companies make up 25% -- 30% of the ASX300

  Geoff B // May 18, 2013 at 7:37 pm

  It wasn’t just Forrest Gump who reckoned Qantas is the best airline of all.

  Wasnt that Dustin Hoffman in Rainman?

  Geoff B // May 18, 2013 at 7:37 pm

  The age of the fleet is the best guide and Qantas has the youngest fleet of all.

  You cant do too much flying Geoff! Qantas has one of the oldest fleets going around. They cant retire their 747 or 767 fleets because of delays on other purchases such as the 777. Their 737-800 fleet averages 10 years old. They still run the dinosaur 737-400 with monotonous regularity and that bird in instances is older than me.

  Domestically Virgin and Jetstar have a younger fleet. Internationally they are lagging well behing Cathay, Emirates and Singapore Airlines in terms of hard and soft product. They will be the big winner in the Emirates tie up…..
  because of Emirates

  Geoff B // May 18, 2013 at 7:37 pm

  Also Qantas is an ICON and icons cannot be allowed to fail (eg Holden).

  Sadly disagree. Emotional attachment and false sense of patriotism is no reason to allow cumbersome, inefficient, non cost competitive businesses to survive. They must evolve with the markets that they compete in and find ways to prosper, or sadly be consigned to the scrap heap.

• 752 Biker // May 20, 2013 at 12:02 pm

  On cherry-picking:

  A year or so ago I commented that the $1000 I’d left in Super a few years back was now worth around $870*.

  Some bright spark commented that had I put that thousand bucks into three stocks which had beaten the market, I’d have been much, much better off.

  Recent comments here follow the same drift… hindsight being 50/50 vision.

  Possibly even less productive are wild punts about immense future gains on penny stocks, particularly if believed by hopefuls who really need a win.

  Strange to see what gets deleted here… and what mines are left in the field for the unwary…

  * Now worth around $960…