Shareswatch Australia

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

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

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

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

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

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

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

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

  We expect this may mean:

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

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

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

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

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

• 104 Ned S // Nov 1, 2010 at 6:15 pm

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

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

  That last paragraph is particularly interesting:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  Quoting from the article Greg:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

• 119 Anon // May 24, 2011 at 2:00 pm

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

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

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

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

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

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

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

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

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

• 121 Anon // May 24, 2011 at 6:54 pm

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

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

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

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

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

• 123 Anon // May 24, 2011 at 9:41 pm

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

• 124 Anon // May 24, 2011 at 9:59 pm

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

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

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

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

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

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

  Australian states

  Coastal vs Inland

  City vs Regional vs Rural

  Suburbs vs CBD

  High Employment vs Low Employment towns, suburbs

  Hillside vs Plateau

  Etc vs Etc

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

  What ARE these differences and HOW will you spot them?

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

  WTF does that mean, seriously??!!~

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  What ARE these differences and HOW will you spot them?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

• 138 Anon // May 25, 2011 at 1:06 am

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

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

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

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

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

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

  Of particular interest was this section:

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

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

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

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

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

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

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

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

  Well, as you know, Greg, there are market

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

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

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

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

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

  Have two pretty wonderful fishing trips planned during this trip:

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

  * Gamefishing off Mazatlan, Mexico.

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

  Hard life, but somebody has to do it… .

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  From July 2010 post 52:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  “The wolf packs are forming ”

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

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

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

  Enough personal history. Good luck, Anon.

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

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

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

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

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

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

  Ah, those IFs and WHENs…!

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

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

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

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

  Have you maximised the factors _within_ your sphere of influence?

  * First to admit my ignorance within this asset class.

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

  Maybe rates will fall?~

  And, further to that premise:

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

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

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

  Perth property on the slide as Sydney steams ahead

  It will be an interesting year.

• 157 Biker // Jun 2, 2011 at 1:01 pm

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

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

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

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

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

• 158 Ned S // Jun 2, 2011 at 2:22 pm

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

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

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

• 159 Ned S // Jun 2, 2011 at 3:10 pm

  Prof Keen is confident alright:

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

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

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

  Interesting statement here:

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

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

  Anyway, he’s a deflationist; No question!

• 160 Biker // Jun 2, 2011 at 3:44 pm

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

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

  Does he mean:

  * if rents continue to climb(?)

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

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

  “…but if we had to…” ! Curious.

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

• 161 Ned S // Jun 2, 2011 at 4:43 pm

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

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

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

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

• 162 Biker // Jun 2, 2011 at 5:13 pm

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

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

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

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

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

• 163 Ned S // Jun 2, 2011 at 5:31 pm

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

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

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

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

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

• 165 Ned S // Jun 2, 2011 at 8:29 pm

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

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

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

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

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

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

• 167 Anon // Jun 2, 2011 at 9:39 pm

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

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

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

• 168 Ned S // Jun 2, 2011 at 9:39 pm

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

• 169 Anon // Jun 2, 2011 at 10:18 pm

  Not sure Ned. I dont follow Steve.

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

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

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

• 171 Biker // Jun 3, 2011 at 6:10 pm

  Up north again, Ned!~

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

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

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

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

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

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

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

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

• 173 Ned S // Jun 3, 2011 at 8:21 pm

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

• 174 Ned S // Jun 4, 2011 at 1:09 pm

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

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

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

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

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

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

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

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

• 175 Biker // Jun 4, 2011 at 7:24 pm

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  From the Business Spectator..

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

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

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

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

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

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

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

  Interesting.

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

  Housing crash tipped?

  Now _there’s_ an original prediction for ya!~

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  In the conclusion the author states:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

  Make up whatever stories you like.

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

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

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

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

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

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

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

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

  BTW Ned do you believe this fanciful story.

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

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

  Bzzz Wrong born & raised WA.

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

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

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

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

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

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

  Tee Hee Hee

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

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

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

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

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

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

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

  I will be deleting comments accordingly when I have time.

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

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

  Ummmm Biker notice the Date? Feb 2011

  RBA raised rates nov 2010 Banks doubled the rise.

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

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

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

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

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

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

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

  Not Fooled By Property Spruikers Hype, Comment 158:

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

  The beat goes on.

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

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

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

  Sorry again Greg.

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

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

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

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

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

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

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

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

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