Shareswatch Australia

287 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 Anon // Jun 14, 2010 at 4:05 am

  Soceroos match is on…
  I haven’t watched them for several years, but was lead to believe we have improved. I can say definitely that we are hopeless.
  How did we get in the world cup?
  Thank christ I didn’t bet on this mob! Might aswell burn the money beforehand

• 21 Firebug // Jun 14, 2010 at 11:59 am

  The Soceroos game was depressing, like the bad old days in the mid 90′s

• 22 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

• 23 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.

• 24 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.

• 25 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

• 26 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

• 27 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.

• 28 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.

• 29 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?

• 30 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 %?

• 31 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.

• 32 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.”

• 33 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.”

• 34 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… .

• 35 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… .

• 36 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?

• 37 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?

• 38 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

• 39 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

• 40 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.

• 41 Biker // Jun 21, 2010 at 8:55 am

  Just do the Math, Vince. Twenty times $2200 = ?

• 42 Firebug // Jun 21, 2010 at 10:58 am

  Thanks Biker for your reply

• 43 Ned S // Jun 21, 2010 at 2:13 pm

  I got an extra zero in there!!! Nevermind, as we all know there certainly are blokes out there with pretty reasonable incomes.

• 44 Biker // Jun 21, 2010 at 7:35 pm

  Well, your figure is closer to our combined income, Ned.
  A figure of twenty times starting salary was selected simply because there’s no way anyone would disbelieve it… .

  The fact remains that my current income is (_well_) over twenty times my salary exiting uni.

  None of us can predict our future incomes. Nor can we predict anything else over the very long term. Way back when bank bonds interest rates were running at 18.75%, friends retired in their forties. Major mistake… .

  When I predicted double and triple values on Aussie homes, I was being quite conservative. My first home recently resold for over eighteen times what I paid. Had I suggested we’d see _that_ kind of appreciation, Vince would still be laughing at me…

  You’re welcome, Firebug.

• 45 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?

• 46 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… !

• 47 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.

• 48 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

• 49 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?

• 50 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.

• 51 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… .

• 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.

• 53 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!!)

• 54 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!

• 55 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.

• 56 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?

• 57 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.

• 58 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?

• 59 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”.

• 60 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… .

• 61 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.

• 62 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?

• 63 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.

• 64 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?

• 65 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… .

• 66 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.

• 67 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… .

• 68 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.

• 69 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.

• 70 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!

• 71 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.

• 72 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?

• 73 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.

• 74 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!

• 75 Ned S // Aug 8, 2010 at 1:00 am

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

• 76 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.

• 77 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!

• 78 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.

• 79 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?

• 80 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.

• 81 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.

• 82 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

• 83 Biker // Aug 13, 2010 at 11:09 am

  Someone else did, Ned. Thanks.

  So what’s different(?) I mused as I read the first two paragraphs.

  After that, I was simply amused… .
  Who would invest in housing there?

  Interesting to see unit price growth in WA streaking ahead of houses, Ned. (Told my kids to buy, rather than rent, two years ago. Their response… that they don’t know where they want to live yet… was rational in a sense, but six-month ownership would have been sufficient to permit renting, more than covering any repayments.

  Can’t complain about their lifestyle. I’m a little envious, really.

• 84 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!
  

• 85 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!

• 86 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.

• 87 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)

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

  Biker -- the analyst who made the comments works for Morgan Stanley Australia and is Australian. So the sources is very much from Down Under.

• 89 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… .

• 90 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

• 91 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

• 92 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!

• 93 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.

• 94 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.

• 95 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.

• 96 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.

• 97 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

• 98 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… .

• 99 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

• 100 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?

• 101 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.

• 102 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

• 103 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.

• 104 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.

• 105 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?

• 106 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.

• 107 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?

• 108 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.

• 109 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.

• 110 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!~

• 111 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.

• 112 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.

• 113 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.

• 114 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.

• 115 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… .

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

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

• 117 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?

• 118 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.

• 119 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.

• 120 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?

• 121 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.

• 122 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.

• 123 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.

• 124 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.

• 125 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?

• 126 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.

• 127 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… .

• 128 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.

• 129 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.

• 130 Anon // May 24, 2011 at 9:41 pm

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

• 131 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.

• 132 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… .

• 133 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.

• 134 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.

• 135 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.

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

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

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

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

• 138 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.

• 139 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.

• 140 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.

• 141 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!~

• 142 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.

• 143 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…”

• 144 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…

• 145 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.

• 146 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)

• 147 Biker // May 25, 2011 at 10:29 am

  I don’t think terms like ‘nouveau riche’ add much to the debate, either. Nor does silliness like ‘bloodbath’… .
  Bears will be bears.

  Online purchasing?

  http://www.perthnow.com.au/business/study-finds-massive-store-mark-ups-with-most-shoppers-committed-to-the-net/story-e6frg2qc-1226062394936?referrer=email&source=PN_Bus_email_nl&emcmp=PNBus&emchn=Newsletter&emlist=Member

  Probably threatens (un)employment more than the Green movement~
  Yet we are all going to participate.

• 148 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

• 149 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…

• 150 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… .

• 151 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!

• 152 Biker // May 25, 2011 at 8:23 pm

  Missus just did the same (4-day week) Ned.
  Means we get three-day weekends… and, half-a-dozen times each year, four-day weekends.

  I’m a yachtie, but my missus gets seasick in _harbours_ so we now restrict our voyages to outings with three different couples (Lakes Entrance, Sydney Harbour, Victoria BC.)

  Enjoyed your crab comments over at DRA. We were paying S$32 per muddie in Singapore! Kinda silly, since they’re plentiful, along with Blue Manna (Blue Swimmers) here. Herring running here, at present. I smoke a dozen at a time; waiting for the salmon.

  All completely off-topic. WGAFF?

• 153 Ned S // May 25, 2011 at 8:39 pm

  The off topic conversations can sometimes be the most enjoyable ones?

  Glad to hear the missus is down to a 4 day week Biker. About 2 days a week would suit me if I ever am forced to go back to work maybe? With my preference still being for 0 days per week now …

• 154 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?

• 155 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!

• 156 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.

• 157 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.

• 158 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.

• 159 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.

• 160 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?

• 161 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.

• 162 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.

• 163 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.

• 164 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.

• 165 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

• 166 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.

• 167 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!~

• 168 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!?!

• 169 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!

• 170 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… .

• 171 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.)

• 172 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!~

• 173 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.

• 174 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?

• 175 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?)

• 176 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.

• 177 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.

• 178 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.)

• 179 Anon // Jun 2, 2011 at 10:18 pm

  Not sure Ned. I dont follow Steve.

• 180 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.

• 181 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?

• 182 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.

• 183 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???

• 184 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.

• 185 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?

• 186 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.

• 187 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!~

• 188 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!

• 189 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.

• 190 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. “

• 191 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.

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

  Housing crash tipped?

  Now _there’s_ an original prediction for ya!~

• 193 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? )

• 194 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.

• 195 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…)

• 196 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.

• 197 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?

• 198 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.

• 199 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 … )

• 200 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

• 201 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

• 202 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?

• 203 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… .

• 204 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.

• 205 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

• 206 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!~

• 207 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.

• 208 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?

• 209 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

• 210 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!!”

• 211 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?

• 212 Biker // Oct 19, 2011 at 10:06 am

  Four indicators so far that you expected interest rates to rise in 2011, Nut Fool… and lied about it. *Tsk* *Tsk*

  7% interest = 22.5%? Wonderful Mathematics! Did you elect to study Alchemy, Scientology and Nutfoolery instead?

  “TEE HEE HEE” (Is that a quote from a Miss America contestant?)

• 213 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/

• 214 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.

• 215 Biker // Oct 19, 2011 at 12:15 pm

  I’ve sometimes wondered why property even features on a Shareswatch site, Greg. Yes, I accept that over 90% of posts are property-related, so that helps the numbers/advertising aspects, but the negativism generated may not be worth the small amount of income derived. Property is a highly-emotive topic. We probably have Keen, Karan and Emerson to thank for that…

  And this kind of negativism doesn’t help at all:

  “There’s no buyers. There’s no demand. The economy is just not strong enough, and in which case we could go back to test some horrible lows.” Are they talking about the property market? NOPE, the share market: http://www.perthnow.com.au/business/business-old/market-to-track-sideways-for-six-months/story-e6frg2qu-1226074127886

  I enjoy ‘debating’ property with a bear whose stated goal for two years has been to *POP* the WA market. I’ve attempted to do that in a light, breezy manner. After all, as Michael J Fox notes in his delightful book ‘A Funny Thing Happened on the Way to the Future’:

  “Be kind to very negative people. They’re in pain.”

  Happy for you to delete anything which doesn’t comply with policy, as usual… .

• 216 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%

• 217 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

• 218 Greg Atkinson // Oct 19, 2011 at 2:03 pm

  Maybe Biker it’s because property related stocks trade on the ASX and that this site covers thee big picture as well. That’s why I track commodities prices, the BDI, GDP etc. Also the stock market is impacted by what happens in the property market so it would be a bit silly for me not to pay attention what is happening out there.

• 219 Biker // Oct 19, 2011 at 2:07 pm

  “A quick check of this shows that the rate is in fact 6.73%.”

  Still better than the 7.1 -- 7.8% you based your $9K extra a year in 2011 on, NF. But yes, it does look like you’ll miss out on that seventh WA property…. .

  I’d wait-a-bit. Fella I know says the Big Crash will hit on 6th December 2011!

• 220 Biker // Oct 19, 2011 at 2:11 pm

  Greg: “…it would be a bit silly for me not to pay attention what is happening out there…”

  Yes, I guess that’s so. If you visit the many sites which analyse property, you’ll hear far worse vitriol from the Property Bears. On a positive front, the New Improved NF is a great advance on the cussin’, rantin’ bloke on those sites!~

• 221 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.

• 222 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.

• 223 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.

• 224 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.

• 225 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.

• 226 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.

• 227 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…

• 228 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

• 229 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… .

• 230 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

• 231 Biker // Dec 4, 2011 at 12:01 am

  And how _are_ your patients coming along, Dr Atkinson?

• 232 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.

• 233 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?

• 234 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.

• 235 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”.

• 236 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.

• 237 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.

• 238 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?

• 239 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?

• 240 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.

• 241 Biker // Dec 4, 2011 at 6:34 pm

  What an interesting response to my assertions.

• 242 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.

• 243 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.

• 244 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?!~

• 245 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

• 246 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?

• 247 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… . )

• 248 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?

• 249 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.

• 250 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.

• 251 Biker // Dec 5, 2011 at 10:07 am

  History repeats itself… ad infinitum…

  * I state that NF said XYZ;

  * NF denies it;

  * I provide the link;

  * NF changes the subject, or reverts to neck bite/puppet play.

  Here’s the direct quote:

  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 JUST AROUND THE CORNER.” (My caps)

  Here’s how you find the link, NF:

  1. Copy a dozen of the words in the direct quote;

  2. Paste them into Google.

  3. BINGO!~ Up comes the link…

  What IS it with you, son? Are you _terminally_ thick?
  Were you a highly successful liar as the child of very gullible parents? Has lying consistently worked for you as an adult? What pattern of behaviour has trapped you in this undesirable habit?

  In your current domicile, counselling is free. Get help for a condition which has very likely restricted your freedom immeasurably… .

• 252 Not Fooled By Property Spruikers Hype // Dec 5, 2011 at 10:36 am

  Biker

  I don’t make a forecast in the post you put up? No not me!!

  Poor comprehension skills at play here that explains why your still in the property sector.

  I am making a O*B*S*V*A*T*I*O*N not a forecast I am simply saying that the same conditions that prevailed in the American & Irish markets at the time of their property market collapse & prevalent in the Australian property market today. I then go on to say that because of this the “Days of Affordable for Australia are just around the corner” I don’t actual put a percentage or number to it do I?

  No I observe that the same conditions that we have led to their markets falling 40% -- 60% exist in our market today. I don’t even give a hint as to how much our prices will fall.

  That was done by you & only you.

  FYI that reference is from AUG 2011 & since then REIWA & RP Data & APM have reported that house prices dropped so my “OBSERVATION” is accurate!!

  BTW you keep harping on about Dec 6th I say I never said what you claim I said but you cant put up anything yet to support your assertions? (Perhaps because I never said it)

  Keep digging CHAMP the hole is only getting deeper!!

• 253 Not Fooled By Property Spruikers Hype // Dec 5, 2011 at 10:39 am

  aBiker

  Too scared to put a link up at the same time as the comment because it will show the context the comments were made in

  Chicken?

• 254 Not Fooled By Property Spruikers Hype // Dec 5, 2011 at 10:45 am

  Psst Biker

  When people resort to this:
  “What IS it with you, son? Are you _terminally_ thick?
  Were you a highly successful liar as the child of very gullible parents? Has lying consistently worked for you as an adult? What pattern of behaviour has trapped you in this undesirable habit?

  In your current domicile, counselling is free. Get help for a condition which has very likely restricted your freedom immeasurably… .”

  I know I have won the debate & I have got under their skin.

  $400,000 in lost equity in the past 12 months & still prices are falling.

  “Making Housing in Australia more affordable” exactly the way I forecast it.

  Tee He Hee … Back to biting your own neck CHAMP

• 255 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.

• 256 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.

• 257 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’.

  Plornt, what we have here is a serial offender:

  http://www.perthnow.com.au/business/australian-bankers-association-launches-website-for-financially-stressed-homeowners-to-negotiate-hardship-packages/comments-e6frg2qc-1226213812008

  Comments 2, 3, 4 and 5. Not as virulent as the six-in-a-row we’ve become used to, but the day isn’t over, yet!

• 258 Biker // Dec 5, 2011 at 11:01 am

  Uhhh… Sorry… and Comment # 8.
  10:00am and already NF has logged (at least) 62.5% of the posts.

  Spot his signature?

• 259 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?

• 260 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

• 261 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.

• 262 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…”

• 263 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.

• 264 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.

• 265 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.

• 266 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?

• 267 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?

• 268 Biker // Dec 5, 2011 at 5:32 pm

  Yes, I can see you’re winning right here:

  http://www.perthnow.com.au/business/australian-bankers-association-launches-website-for-financially-stressed-homeowners-to-negotiate-hardship-packages/story-e6frg2qc-1226213812008

  Third admission you’ve _repeatedly_ lied online.
  I’m digging a hole? You’ve _buried_ y’self, son!

• 269 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.

• 270 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….

• 271 Greg Atkinson // Dec 5, 2011 at 10:45 pm

  Not Fooled and Biker, you are testing my patience.

• 272 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.

• 273 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…

• 274 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.
  

• 275 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.

• 276 Biker // Dec 6, 2011 at 11:00 pm

  HaHa… . He never said a date? Could this fidiot have BEEN more specific?

  Who else was wrong? List his aliases… .

• 277 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.

• 278 Not Fooled By Property Spruikers Hype // Dec 7, 2011 at 11:32 am

  Plornt

  Hows the serenity?

• 279 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 .

• 280 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.

• 281 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!

• 282 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?

• 283 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.

• 284 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.

• 285 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.

• 286 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?

• 287 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.