Shareswatch Australia

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• 201 Steven // May 20, 2009 at 8:12 pm

  Yeah I understand your concerns Greg
  but this is the 3rd time he has accused me of saying something I never said its getting quite frustrating:

  1.Accused me of saying he was lying in regards to his sons wealth
  2.Accused me of calling hard working people as ‘thieving’
  3.Accuused me of denying I called property investment as a form of ‘thieft’

• 202 Pete // May 24, 2009 at 8:01 pm

  Steven:
  I hear your points. But like Senator said, there’s no point repeating them over and over.

  By all means voice your opinion, but don’t argue with Biker. All he does is avoid the point and attack the person. So far he has constantly attacked you, and you keep coming back for more. All you are ultimately succeeding in doing is providing him with further platforms to gloat about something or other (which says a lot about his character).

  He says things like this “Yes, it’s a correction, Greg. By definition, that means win/win. It’s ‘correct’.”

  Not even worth reading. No new ideas coming from there, just the same old shenannigans from an old man who cannot adapt to a changing world.

  You do not need to argue, or attempt to win an argument. Let time and patience do that for you.

  However if you do have new ideas, theories, or questions, by all means post them. I’d like to hear them.

• 203 Biker Pete // May 24, 2009 at 8:29 pm

  Ah, the song of the Property Wannabes, as quite distinct from that of the Property Bears. Oh to be young again… homeless… and know it all!

• 204 Pete // May 25, 2009 at 12:24 am

  I certainly hope old age does not affect my ability to understand logic as it appears to have done to you Biker.

  We are from different worlds. And we are headed to different ones too. I doubt I will agree with you on most things you say, because your vision is clouded by favourable economic times in the past that you falsely attribute to ‘wisdom’.

  There is no point in us discussing anything. And every day I feel much better knowing that I won’t need to try and provide a rational alternative to your emotive real estate bullishness. It seems the media and good old reality is starting to do that for me.

  So you may say what you like, you may misquote me on DR (again) and give out your poor advice. I’m happy to ignore it and will stick to my pursuit of logical reasoning.

• 205 Greg Atkinson // Jun 1, 2009 at 9:54 am

  U.K. House Prices Stop Falling for First Time in 20 Months By Jennifer Ryan (extract)

  June 1 (Bloomberg) — U.K. house prices stopped falling in May for the first time in 20 months, adding to evidence the property market slump is abating, a survey of real-estate agents by Hometrack Ltd. showed.

  Average prices in England and Wales held at 155,600 pounds ($251,000) after they declined 0.3 percent in April, the London- based property researcher said in an e-mailed statement today. On the year, values dropped 9.6 percent.

  The U.K.’s worst recession in at least three decades may be easing as the Bank of England pumps newly-printed money into the economy. Reports last week showed that consumer confidence held at the highest level in almost a year and house prices unexpectedly jumped by the most since 2007.

• 206 Pete // Jun 16, 2009 at 12:17 am

  The U.K.’s worst recession in at least three decades may be easing as the Bank of England pumps newly-printed money into the economy. Reports last week showed that consumer confidence held at the highest level in almost a year and house prices unexpectedly jumped by the most since 2007.

  LOL -- …pumps newly-printed money into the economy

  Ah, it’s all fixed then! Lets wait 12 months, check the trend, and also have a little look at their inflation rate.

  I’ll be very interested to see if there comes a point when they stop printing money. Can a Gov. who has started down that path, actually stop themselves? Or will it be the “hey this appears to be working, lets not suffer any longer, print a bit more to make things even better” approach that I expect?

  I think it will be an addiction that is very hard to kick.

• 207 Ned S // Jul 11, 2009 at 5:08 pm

  On 26 November 2008 Steve Keen had this to say about the bet: “If house prices drop less than 20% peak to trough, I lose; if they fall 40% or more, Rory loses, and the loser has to walk from Parliament House to Kosciusko.”

  http://www.debtdeflation.com/blogs/2008/11/26/parliamentary-library-vital-issues-seminar/

  That seems to be a pretty convoluted bet -- Despite the much vaunted 40% drop figure that would turn the other bloke into a walker, Keen’s only risking blisters if they don’t drop by at least 20% -- While I’d still regard it as a gutsy punt by Keen, it isn’t anywhere near as radical as betting on them going down by at least 40%

  Seems to me like a drop of anywhere between 20% and 39.99% means they both get to keep sitting on their bottoms and playing with their mathematical models -- Maybe I’m misreading it???

• 208 Greg Atkinson // Jul 11, 2009 at 10:23 pm

  Ned this is the pretty standard sort of prediction made by many economists and market “experts”. They leave themselves so much wriggle room that is hard for them to ever be wrong. A good example is the people who reckon they saw the current stock market crash coming..what they actually predicted was a market crash but they generally never defined exactly what that meant and were not very precise about the timing. Since we have some sort of major market correction every few years they had to be right sooner or later!

  Here is my big prediction..there will be another stock market bull run and it will drive up the All Ords by around 10% or more. That covers me now for any rally that is above 8% or more over the next year or so. Am I a legend if this turns out to be true? No, just very vague.

• 209 Dan // Jul 12, 2009 at 8:03 am

  Yeah, politicians are so much like car salesmen -- “we’ll even throw in 6 months warranty*” .. then you read the fine print and it says “warranty is for the engine, but not if the engine falls out of the bottom of the car when driving over a bump.. etc etc”. They tell whatever misleading crap they can get away with.

  The fundamental question I ask myself is.. is the economy screwed up, or is it sound? That’s the only question that needs answering, because if it’s screwed up, then it’ll be hyperinflation, and unemployment, and soup kitchens and all the trauma. If it’s sound, full of green shoots and all that, then it’ll be low interest with low inflatin, and steady, predictable growth with sustained consumer demand. Which will it be?

• 210 Greg Atkinson // Jul 12, 2009 at 9:39 am

  Dan the I think future of the Australian economy is largely beyond Australia’s control. If there is a strong demand for our commodities then we should be okay but I see warning signs on the horizon. For example the Japanese have developed a way to make high quality steel using an electric furnace which means no coal is needed. If this technology was to spread to steel makers around the world then they would be able to wean themselves off a lot of Australian coal and this may start to hurt our export earnings.

• 211 Cynical Cyril // Aug 4, 2009 at 12:25 am

  If the Japanese furnace is electric then they still need to power the turbines to generate electricity… Uranium? Gas? Both are resources Australia can supply for many years to come… We are not just a coal producer. I would agree that yes, it might hurt our coal industry but the Uranium and Gas producers will see increased demand if this type of technology takes off.

  And as for RE being 7 or 10 times average incomes… Average household income is, in my opinion, the true gauge to use for historical comparison as times have changed with regard to workforce participation (i.e. many married women in the workplace) which was initiated by the equal rights movements, our aspiration to have bigger and better and the need to keep up with the Jones’ etc. Now it is just seen as normal.

  I believe, from memory, that average household income in Australia is circa $100k… This would make a $400k house 4 times average household income which is a bit more reasonable I’d say. We need to compare apples with apples, not 1970′s oranges. Times have changed dramatically folks!

• 212 Greg Atkinson // Aug 4, 2009 at 9:13 am

  Cyril -- I agree with you about incomes and home prices etc. I have been ranting on about such things for a while. I generally see no use going back more than 10 years when looking at most data because things change so much.

  In Japan they use mainly nuclear power and so exports of Australian Uranium should do okay. Australian exports of LNG should also do well but in both areas there are alternative suppliers and so Australia should not assume that in the future our mining companies can set prices like they did with iron ore during the commodities boom. (and remember, some of the mining companies may no longer even be Australian owned!)

• 213 Anon // Sep 27, 2009 at 5:11 pm

  That charts source article is here: http://www.whocrashedtheeconomy.com/blog/?p=397

  Household debt, as a percentage of household disposable income:
  http://www.whocrashedtheeconomy.com/householddebt09.gif
  Source Article: http://www.whocrashedtheeconomy.com/blog/?p=556

  I have looked at that debate. It is quite extensive. I wont spend much more time on the housing debate. I think the bubble is clear and the consequences obvious. We will see who is correct in a few years.

• 214 Greg Atkinson // Sep 27, 2009 at 5:24 pm

  Anon thanks for the links. I have moved your comment over here since it is more related to the home price debate. By the way, I am not holding up your comments, the system does that if there are three or more links. (it helps stop spammers)

  I will have a look into the information you posted and comment later…time for dinner now, about to head out for some yakitori

  P.S. Here is the original link to the chart you posted earlier in case anyone else wants to have a look: http://www.whocrashedtheeconomy.com/realhouseprices1880to2008.gif

• 215 Greg Atkinson // Sep 28, 2009 at 10:47 am

  Anon one thing I always struggle with when I look at a home prices graph is what exactly they consider is a “home”. How do you compare a home for example in the early 1900′s to a home now? I am guessing if you looked at the price of aircraft since the early 20th century to now it would look like we are in an aircraft prices bubble perhaps, but of course we are not comparing apples to apples as the saying goes.

  To get over this I see the creator of the graph uses an index, but I cannot see how this index was calculated? I am not saying anything is wrong with the index, but both sides of the property debate do tend to tweak data to suit their point of view.

  As for debt, I do worry that people tend to take on a lot of debt these days but the GFC has cooled things down somewhat. I think most people so far that have run into serious trouble with loans were investors who took on large margin type loans, not so much “standard” home loans as such. For example many of the people who have sold homes in the top end of the market used the equity in their homes to leverage into shares, and so when the stock market went into free-fall they were basically wiped out.

  Having said all of the above, if Australian home prices do not take a bit of a breather next year then I might start to get very nervous.

• 216 Biker Pete, Vancouver // Sep 28, 2009 at 2:51 pm

  Thanks for the graph, Anon. It demonstrates the resilience and strength of the Australian housing market, as opposed to the severely troubled US market. There are numerous reasons (none applicable to Oz) why the US and UK housing markets crashed. One of the eight threats to validity is the tendency for naive researchers to generalise findings to dissimilar contexts… . An example is Keen’s assumption that because US and UK housing markets crashed, this would occur in Australia. Our world travels reinforce our view that, in highly desirable locations, adjacent areas of high employment, prices are steadily rising; almost as fast as rents. It appears that those waiting (years!) for the Great Property Crash are falling steadily behind. Those who claimed cash as king are around 2.6% worse off annually… before tax! As many of these tragics stated two years ago: Time will tell. (Time certainly is telling… .)

• 217 Anon // Sep 28, 2009 at 4:01 pm

  When people begin to justify bubbles we should all run for the hills. Alot of smart people justified the dotcom bubble prices, which made alot of sense at the time, but in hindsight were rediculous.
  History has shown bubbles eventually deflate. How far into the future this occurs is uncertain.
  This happened in the super cycle, the “new era”, the dotcom boom, peak oil, the credit boom, the tulips boom. They all ended the same way. Speculators continue to make the same mistakes over and over.
  The longer this housing boom goes for the more parabolic the drop.

• 218 Pete // Sep 28, 2009 at 8:31 pm

  You’re right on Anon.

• 219 Ned S // Sep 28, 2009 at 9:54 pm

  I think most people were expecting a correction -- Rudd did the FHOG thing. The RBA crashed interest rates. And the banks rushed out and recapitalised so they could withstand housing price declines.

  But our good friends in Asia who had worked hard and saved during the boom years were cashed up and kept buying our stuff. And hopefully still will.

  I suspect that demonstrates the resilience and strength of Asian nations that are in surplus rather than of the Australian housing market as such though Biker? And it means that Oz housing effectively got stimulated without a recession to offset the stimulus.

  In that light, Mr Obama’s desire to see Asia change it’s frugal saving ways is worth bearing in mind. If that should happen, Asia (and thus Oz) become more at risk of recession than we have been of late. Might be time (for me) to start paying a bit more attention to Asia and a bit less to the US.

• 220 Pete // Oct 1, 2009 at 12:38 am

  Ned:

  Incidentally our “good friends in Asia” may not be our good friends for too long. Not if we keep straining the relationship.

  See this from the FIRB: Keep stake at 15%: FIRB
  Looks like we are playing hard to get. It may not work.

  Some other points that strain relationships with China:
  - the Uyghurs issue
  - Stern Hu issues
  - issues with Rio and BHP previously not honouring resource contracts and playing dirty with China
  - the Rio/Chinalco investment debacle
  - other investment issues (such as the Woomera testing site)

  I am sure there is more.

  Also, India is starting to dislike us thanks to a few Indian student bashings (and their media, which over sensationalises things -- it is crazy).

  And it is worth noting that China has been depleting their reserves…by stockpiling and buying up assets, etc. From my understanding they don’t have a whole lot left. The more the USD destroys itself, the less they have, and also the less they will be able to sell to the US (which means less profits too).

• 221 Ralph // Oct 1, 2009 at 9:35 am

  Well, the first home buyers boost halves today. So now is the time to start watching what happens. Absent any more interference, I’d expect to see a stabilising of prices in the first instance with falls over time -- perhaps the next 12 months. As Greg has said, probably only 10% or so -- I think the expectation of future price rises in Australia is ingrained.

  I see the RBA making noises about house prices recently too. Does this mean they are going to raise rates or just jawboning? I reckon a bit of both. Even so, I think that even a small rate rise has the potential to soften house prices.

  My view is that the housing market is very precariously placed right now. It was poised to fall last year before the government stepped in to prop it up. Now the props are being taken away, I think we’ll see how it copes without support. If real estate is so strong, it shouldn’t need government support. Should it? Now that support is being taken away, we’ll see how strong it really is.

• 222 Anon // Oct 1, 2009 at 10:11 am

  good points ralph

• 223 Pete // Oct 1, 2009 at 1:33 pm

  Ralph:

  My view is that the housing market is very precariously placed right now. It was poised to fall last year before the government stepped in to prop it up. Now the props are being taken away, I think we’ll see how it copes without support. If real estate is so strong, it shouldn’t need government support. Should it? Now that support is being taken away, we’ll see how strong it really is.

  I agree with you there. If the property bubble starts to gain downwards momentum, things could get nasty.

  Couple this with any potential stock market corrections and we will probably get ourselves into an interesting situation whereby banks are less willing to lend -- further adding to the issue of sustaining adequate numbers of buyers.

  It will be interesting to see how it plays out anyway. But we shouldn’t expect changes to be instantaneous … unlike the stock market, property bubbles do not ‘pop’, they deflate slowly. This is due to the fact that it takes time and effort to sell a house, but only seconds to sell some shares (its all about liquidity of the assets).

  Look out for spruikers or property bulls claiming early victories when the bubble doesn’t look like it has deflated at all. They are simply impatient.

• 224 Ralph // Oct 1, 2009 at 2:14 pm

  Funny, Pete!

  Biker, if the government does come out and replace the FHOG with a universal hand out to prop up house prices, the game really is over. Can they really do it, despite all the gumpf they have gone on with over the years about housing affordability? That will be a signal to the nation that real estate prices are the most protected species in the country. Banks, big polluters, car manufacturers and inflated house prices -- the things that must be protected at all costs.

  If that is the case, buying a house will be the closest to a one way bet that there is. Until the government changes its mind at some stage down the track. What a disgraceful situation to be in. I guess we’ll have to wait and see what comes of it.

• 225 Ralph // Oct 1, 2009 at 2:29 pm

  Furthermore, I’m just shaking my head at the thought that the government will be brazen enough to do such a thing. What justification would they try on for doing it? Here -- everyone have some free money to go out and buy a house.

  If it happens, then I’m afraid Biker Pete has won the argument hands down. It will be open slather. I just hope that Kevvie and Goose don’t resort to that.

• 226 Pete // Oct 1, 2009 at 2:46 pm

  Ralph:

  Funny thing is that if the Government makes it clear it is a one-way bet -- then prices will rise even further. Not just a little bit, but a lot.

  Why dabble in the sharemarket if the Government will allow you to have a zero risk investment?

  The Opposition would have plenty to talk about then. Because the Gov would be clearly going against the advice of the RBA. And the RBA, what would they do? Talk themselves in circles and not do anything? (I wouldn’t put it past them though).

  I agree that if this happens, it will be a disgraceful situation to be in. But ultimately it will be the Government going against the natural forces of market even further. And just like an elastic band, the further they push, the stronger the backlash will be when they finally run out of options.

  If the Gov does choose such a path, people will still suffer:
  - through increased taxation (some type of taxation)
  - non-home owners bailing out home owners
  - extremely low housing affordability
  - paying for the needs of the boomers with money from the future
  - banks with even more leverage

  The way I see it, the bubble has no “make everyone happy” option. House price falls will hurt homeowners, banks, all sorts -- but will make housing affordable for future generations. House price gains will make people relying on capital gains happy, but will hurt future generations. There is no win/win scenario, and the choices are simply to either govern for the now or govern for the future. Personally I hope the Gov doesn’t continue to choose the now.

• 227 Greg Atkinson // Oct 1, 2009 at 3:29 pm

  What I have been watching from a distance is how the Gold Coast property market has been fairing. A few years ago this was suppose to be the place to invest (along with Dubai) because the population was increasing, new roads/transport links were going in and because of the lifestyle. But in the last few months a number of higher-end developments have run into serious trouble and some properties have been auctioned off for less than it cost to build them. I do not dare to suggest this has any application to other markets in Australia but it does show:

  1. The varied nature of the real estate market in Australia.

  3. It is possible for certain areas to fall even when interest rates are low and Government grants exist. and;

  3. Given enough stimulus, over-development etc. it is possible for regional property bubbles to form.

  So I wonder if we have other areas out there similar to the Gold Coast?

• 228 Ralph // Oct 1, 2009 at 4:23 pm

  Frightening stuff. I agree with Pete that a universal home buyers grant would have to be hugely inflationary. Is a booming real estate market really that important? Surely the government wouldn’t be so stupid.

  I don’t think people really believe a crash is about buying a mcmansion for a bargain. Well, maybe some do. I think it’s more a case of people are seeing affordability running away rapidly and it’s concerning. The national dream seems to be on the way towards becoming just that for many people. I think most people just want to buy a reasonable house without putting themselves into overwhelming debt. I thing Greg’s suggestion of a 10% fall would achieve that.

  So overall, I think it’s going to come down to government decisions. I think the government is acutely aware of how much home ownership means to the public and won’t want affordability getting too much further out of control. Too much unaffordability would have to damage their electability as much as homeowners taking a hit to their equity.

• 229 Ralph // Oct 1, 2009 at 4:28 pm

  Also, I reckon it’s getting into the climate change sort of territory -- the public value home affordability for future generations, even if their own house values stagnate or fall a bit. I think it will get to a point where ever increasing house prices will be seen as a negative that politicians need to act on. Are we there yet? I don’t think so, but I don’t think it’s too far off.

• 230 Biker Pete, Vancouver // Oct 2, 2009 at 12:38 am

  It’s possible that people unsure where property markets are headed may jump on every side issue for reassurance. Ralph, I could quote verbatim _countless_ angry souls whose comments assert they’ll wrest palatial homes from weeping owners. These go back almost two years now… .

  Having crossed Canada, I’m more than certain that Greg is right on the money about property marketS. In five provinces we saw superb homes, in stunning locations, for $100K -- $360K. In one province we saw median prices on a par with Australia’s.
  In BC we’re seeing what _you’d_ term a ‘bubble’ in prices, with very, very ordinary city homes all around a million… . People will pay these prices, compete for the opportunity in fact, out-bidding each other in the process.

  It comes down to this: Where most people most want to live is where most people want to live. I’d feel empathy for anyone who faces this dilemma, which is, in my view an expensive folly. I’ve never once hoped that a crash would provide me with the opportunity to make a killing; but on the other hand, I’m happy to ask well beyond the going price for anything the very, very, very wealthy want.

  Pete, your statement: “…you just talk about yourself and have a few digs at others… ” has some truth to it. It would be cruel to quote back to you some of the vicious little taunts you’ve dedicated to a range of individuals and professions over time! I don’t need to… you no doubt recall them quite clearly. And yes, I do often provide examples from past experience. Perhaps that’s because I find it more relevant than stargazing, presenting _long_ lists of fanciful futuristic scenarios in which the puritanical Pied Peter, playing and replaying the same tired tune, leads the rodents to the river for retribution. I always know I’ve struck a chord when, time-and-time-again, stuck for a sensible response, you tell me I’m not welcome here… go find another forum… . While many of your posts provide mirth, it’s that bitter little jibe which provides us both with a good old-fashioned giggle!

• 231 Ned S // Oct 2, 2009 at 6:16 am

  Biker mentioned the big picture elsewhere -- As much as I might dislike it, the big picture is inflationary -- I really do think it is very unlikely that central banks will allow us to emerge from this mess (in a decade or so maybe?) with their fiat currencies buying more stuff (be it houses or stocks or gold) rather than less.

  As always, I could be very, very wrong of course -- But does anyone else seriously think that the Oz dollar they have in their wallet today will buy more stuff in Oz in 10 years time than it does now? (And that is not meant to be a rhetorical question -- If anyone does seriously think that I’d really like to hear why you think it.)

• 232 Biker Pete, Vancouver // Oct 2, 2009 at 7:09 am

  No, you’re correct, Ned. For a couple of decades, a group of us have met to celebrate New Years… and seal an envelope full of our predictions for five years hence. A lot of the issues we try to predict are whimsical: Who’ll win the Grand Final(?); Who will be running the country(?; Who will the US be fighting(?) and so on… . But there are a few which pose questions like: How much will a loaf of bread cost(?); How about a litre of milk(?); And a litre of petrol(?); What will the standard variable interest rate be(?) How much will the ‘basic’ Holden cost(?) etc, etc. Without fail, all the ‘basic necessities’ have risen beyond most of our predictions… . (Relative to income of course one could argue that in many cases, some items are cheaper!) Great prize for the winner… .

  I’m certain that the Oz dollar won’t buy more in five years. I’m positive we’ll have many more dollars… and need them! Not sure if we’ll be any worse, or better off. My first brand new car cost $2200.00. My annual salary was $2400.00. My first house was $32,000.00. My annual salary was around $6K and interest was well over twice today’s rates… . Even so, back then we thought we were really well off. I’d have laughed at anyone who predicted my 2009 income, the value of our main property, or any of a score of other assets, including Super.
  Wouldn’t bat an eyelid now if a punter declared a loaf of bread will soon be six bucks, water $10 per kilolitre*, a basic car $60K, and the median Australian house price a million dollars… .
  * Once had an insurance payout of $12K for a builder’s negligence in accidentally emptying a 30,000 gallon tank. Water cartage is probably even higher, now… .

• 233 Pete // Oct 2, 2009 at 12:51 pm

  Ned:
  The big picture does look inflationary long-term, globally (mostly through the US). I think it is too early to call Australia’s fate in that yet.

  I think something to keep in mind is that inflation will not be ‘even’ across all assets, wages, CPI, etc.

  Biker:

  Pete, your statement: “…you just talk about yourself and have a few digs at others… ” has some truth to it.

  No kidding!?

  I note that you say that you think a “win/win” scenario is possible, but typically give no indication as to why you think that. Disagreeing for disagreements sake is something i’d expect from someone a tenth of your age.

  Wouldn’t bat an eyelid now if a punter declared a loaf of bread will soon be six bucks, water $10 per kilolitre*, a basic car $60K, and the median Australian house price a million dollars…

  So essentially you are expecting inflation in all sorts of prices. Note you don’t mention wages. I wonder how all these people are going to afford to even breathe in your infinitely inflationary utopia? A place where even groceries are bought using credit.

  I do often provide examples from past experience. Perhaps that’s because I find it more relevant than stargazing

  Ah, just like the foolish economists who didn’t see the GFC coming. It’s like you’re driving down a highway in reverse -- watching traffic and scenery you have already passed and expecting more of the same.

  Extrapolating trends into the future without context is a fools game. It is what drives people buy high and sell low. Without considering different economic climates, volatility and systemic changes, you’re no better than someone who takes advice from the mass media.

  So Biker if you are going to argue, why not explain your argument and have a healthy debate. Having digs at people and gloating about yourself only proves that you’re a shallow, insecure person.

• 234 Anon // Oct 2, 2009 at 1:01 pm

  “I wonder how all these people are going to afford to even breathe in your infinitely inflationary utopia?”

  lol

  “Extrapolating trends into the future without context is a fools game”

  I’ve been guilty of this

• 235 Greg Atkinson // Oct 2, 2009 at 1:57 pm

  I guess it all depends on how big the glass is? Anyway I think you two “Pete’s” quite often agree if you read back a bit. Would be great to get you guys together for a beer some time…separated by safety glass of course

• 236 Greg Atkinson // Oct 2, 2009 at 4:31 pm

  ….and moving right along back onto the topic at hand! I wonder if anyone else thinks it was strange that the RBA started talking about the danger of home prices going to high just as the first home buyers grant was being wound back. Wasn’t the time to be talking about that back when the Government started handing out the cash? Why now?

• 237 Pete // Oct 2, 2009 at 8:40 pm

  Greg:

  I guess more and more it seems that the RBA may formulate their policy with the Government, rather than independently.

  Either that or they just play the game strangely. They were so caught up with the ‘confidence’ thing and were so worried about the economy that they were probably too scared to say anything, lest its effects be negative.

  Also, I do wonder about the RBA board. Remember many months ago that (scum) Ric Battelino from the RBA was actually out pushing property in a way only the RBA can. The RBA board could be full of ego’s, conservatives, flip-floppers or children. And they may have hidden agendas or ulterior motives (I hope not).

  It might be that the RBA is not forward looking at all (and we assume that they are, right?) and is in fact always so behind the times that they are completely reactionary to the economy as it stands, not as it will be.

  I wonder if the RBA is concerned that the Gov would actually take action against them, if they strongly opposed Gov policy? Perhaps there is a hidden threat of some form of action there.

  So hard to tell when we don’t know what goes on behind the doors at the RBA. Mr Stevens is very careful in his dialogue.

• 238 Biker Pete, Vancouver // Oct 3, 2009 at 12:17 am

  “I wonder if anyone else thinks it was strange that the RBA started talking about the danger of home prices going too high just as the first home buyers grant was being wound back.” Greg

  Precisely my inference in Comment 230. We’re being prepared for November… .

  Meanwhile our population grows faster than India’s. Holy cow!!

• 239 Greg Atkinson // Oct 3, 2009 at 7:38 am

  Pete the RBA is starting to worry me to be honest as I mentioned in my blog yesterday. They seem to think they are looking forward and are masters of the universe but when I look at what they have actually done in the last couples of years they seem to be continuously caught out. So perhaps they have gone “ooops” again and realise that their actions combined with the Government’s home buyers. grants etc. has put a little too much heat in the market?

  Biker Pete I worry about Australia’s reliance on immigration for growth. Why does a country as rich in resources as we do, need immigration so much to push growth? It seems to be that we have got ourselves into the trap now of relying on high immigration levels to keep the economy moving forward and we can’t wean ourselves off it. The question is, what would happen in terms of the housing market if the record high levels of people moving to Australia dropped significantly?

• 240 Ned S // Oct 3, 2009 at 9:01 am

  It costs too much to birth, raise and educate our own Greg. Way cheaper to buy foreign made I’d think? Especially given that we have plenty to choose from and if we are at all picky (which we are) we get a much higher quality end product overall. That is ready, willing and able to start many years of productive work at a pretty high level. And pay lots of tax. (NZ imports being the obvious exception -- Not sure why we accept them -- Part of our foreign aid effort to underdeveloped nations perhaps? )

• 241 Biker Pete, Vancouver // Oct 3, 2009 at 11:46 am

  All interesting points, Greg and Ned. A few responses:

  * Increasing population is inevitable. Australia is one of the world’s best-kept secrets (other than Nova Scotia!) We’re the only ‘western’ nation predicted to experience growth next year… and we have a wealth of natural resources. (Love it…
  but we’ll still bail to the NH every Australian winter!!! )

  The Aussie lifestyle is envied by much of the western world.
  We have a relatively relaxed mien, very cheap quality wines, good beer, stacks of sunshine, a geology considered relatively stable, low unemployment, a tax system which benefits hard workers; and opportunities unlimited for those who recognise them. We don’t particularly _need_ hordes from Europe, Africa, the US (once the best-kept-secret is out) and most of Asia… but as economies fail and unemployment abroad rises, Australia is going to look pretty damn good!

  However haphazard, we’ve built it… and they _will_ come.
  One of the fastest growing businesses in Europe and Asia is that of immigration lawyers, who _make it happen_ for a _large_ fee. (Note I haven’t mentioned refugees here.)

  * What would happen if we could stem the tide south? Perhaps it might slow the rental market a little. Doubt this will happen in WA, where new projects are all-over-the-map. Mining engineers, technical engineers and estimators from a dozen countries, on 457 Visas, get their residency after four years. Their partners (often doctors, dentists, secondary teachers, etc) _tend_ to earn wages higher than the Australian average.
  (This is _our_ market, BTW… .)

  * I spoke of events likely in November. I think these will reduce our rental income marginally, but assist our family (and most Australian families) positively overall. For a good giggle scan back over previous posts, to gauge the reactive horror of posts 229 and 232. (I acknowledge their quick return to equilibrium…! )

  * Too much heat in the market(S)? Greg, you’ve fallen on the same sword as the bears! We know there are _numerous_ markets. Just one of those has risen appreciably. It is _still_ a buyer’s market in _most_ property markets in Oz.
  We’ll all (self included) look back on this period and wonder why we bought and built so little.

  Great outlook from the deck. We can see right down on the multi-storey decks of cruise ships as they pass on their way to Alaska.

• 242 Pete // Oct 3, 2009 at 3:21 pm

  RBA aside, it seems that many of us have come to agree that, without Government intervention, the property bubble will deflate (to some extent).

  So we find ourselves in a position where we are trying to second-guess future Government actions in order to determine a likely outcome.

  I really do not see how this can be a position of ‘confidence’.

  As I have discussed before, it would seem that most Government actions will have negative financial repurcussions in the future (most would be very significant), including selling a large portion of our resource assets (although the FIRB wants only 15% stakes).

  The less significant financial repurcussions would involve immigration and overseas investment -- however the repucussions to these would be to make property even less affordable for Australians, and to significantly affect the current Australian standard of living (if we even thought that it was sustainable).

  I do not think that what happens to prices in the property market between now and November is particularly significant. Large falls in price in such a short period of time would be unexpected. However the problem being that if price falls gain momentum later on, they will require significant intervention by the Gov to prop them up. If this scenario occurs, as Ralph said, “buying a house will be the closest to a one way bet that there is.”

  In which case our economy will suffer greatly, because the incentive for business growth will be reduced, and replaced with incentive to speculate in property. Capital will flow to where it can achieve the greatest returns (relative to risk) and speculation in the property market may then be considered “easy money” (again).

  It will be interesting to see how this unfolds and whether there is something we have overlooked.

• 243 Greg Atkinson // Oct 3, 2009 at 4:52 pm

  Biker Pete the angle I am coming from is pretty much related to my latest blog…in other words will we really see growth next year and where for example is our GDP going to get a lift from?

  Mining? Perhaps…but prices and volumes are down. New mining projects..perhaps again, but can they offset declines in other areas of the economy. W.A might look great, but NSW is a basket case.

  So that has me thinking about immigration. I wonder at what level of unemployment the Government would scale back immigration levels again. (remember they have scaled them back once already)

  I am not a property bubble sort of guy as you know, but the actions of the RBA and the home buyers grant without doubt have helped the market and these supports are now starting to be removed somewhat. So what will happen if another support i.e. population growth comes off the record high levels? Is that not possible?

  Yes I know Australia is a great place to live, but our attraction can wane. Just look at the fall in tourism numbers

  Just some thoughts.

• 244 Ned S // Oct 3, 2009 at 5:15 pm

  If the Oz economy cools Greg, we’ll see more stimulus. With the stimulus being inflationary. And specifically targetting housing again if required. (Rudd and the RBA [and Bernanke and China] have made a believer of me -- Smile!)

  Not that I think Oz housing is great value at today’s prices. But given that it will be protected against significant falls and the future is looking decidedly inflationary, it sounds OK to someone who isn’t a smart stock market trader.

• 245 Senator13 // Oct 3, 2009 at 5:58 pm

  Greg, Re: 231 -- I think the Gold Coast is very cyclical. Another Gold Coast boom will come but I doubt it will be back for a good 3-5 years at least. Too many over extended and pushed too far. But it is a lifestyle thing up there. It is not my cup of tea but people really do enjoy that kind of lifestyle. You just have to look at the people that are flooding in from NSW to the Gold Coast area (and I assume from over seas as well?). Prices will probably pick up again in that area when the population gets to the amount to fill up all the currently empty apartment buildings and unsold developments.

  To me it seems a pretty unique little area given its position to good beaches, warm climate and lots of things to do for young people and fairly close to Brisbane. Not too many areas offer all of that. But, I don’t know where they all work on the Gold Coast that supports the market? Commuting to Brisbane might get to be a pain after a while as well?

  Not sure if WA has any areas that are unique like the Gold Cost area. But at least they seem to have the jobs to support their housing market…

  I think one thing we can conclude is that Australians are in love with property. Emotions play a very important part in any market. Emotion alone would almost be enough to prop up the RE market in Australia. There is a real estate article just about every day in the papers and hundreds of articles around the internet on the subject.

  I am not too sure what the RBA was getting at with their latest remarks. It does send mixed signals. But they do seem to be laying the ground work for further rate rises. But will their timing be right?

  I think I agree with you Ned -- out of all the asset classes -- Aust RE is looking, if not safer then others, possibly more predictable at this point in time…

• 246 Ned S // Oct 3, 2009 at 6:14 pm

  * While I agree with you about the inevitability (spelling?) of Oz population growth Biker, I’d much rather head to the NH in the Oz summer than our winter -- Although it would probably suit me better personally to buy a shack on the SW coast of Tassie and spend our summer there with a metal detector. (While I don’t hanker after lots of gold as an investment, I surely do think it is very pretty -- Smile!)

  * What’s a basic block of land cost over your way? I seem to recall you mentioning $135k a few months back??? (In Anna Bligh ripoff land we need $185k to buy stuff about 30 km from Brisbane city!)

  * November -- Too enigmatic a reference for me -- My only really wild “tip” at this time would be that if a bloke really, really wanted to purchase an existing property using negative gearing (as opposed to a newly constructed one), then consider doing it before Ken Henry just maybe (?????) says We’d prefer it if all you future investors added to supply by buying NEW houses please!

  * “Just one of those has risen appreciably.” -- SE Qld mightn’t have done nearly as well as Perth Biker, but with the % increase being maybe 20% in 3 years and 200% in 10 years, I’d say it is holding its own for now at least.

  Cheers!

• 247 Ned S // Oct 3, 2009 at 6:47 pm

  Pete -- I think outguessing government/policy maker/central bank (and bankster) manipulation is the new investment norm. It probably always was? But now a few more fringe dwelling dummies like myself have been wised up. There is no “free” market -- Never has been. But the illusion has been credible -- To the really naive and ignorant -- Like me.

  Which all gives me faith in property -- Now. As I see it, the value (cost!!!) is in the land. And in Oz we have a bunch of really no talent drones running state and local government who will push land costs higher because they are not clever enough to figure out how to work within a budget. With the Commonwealth government backstopping these no talent drones with our tax money.

  So betting on Oz land prices is a bet on state and local governments continuing to be no talent drones that will push land prices up -- In an inflationary environment. I have decided to take that bet. Although I will certainly wait until Henry reports -- Because I want my strategy to incorporate his real big picture and long term view.

• 248 Biker Pete, Vancouver // Oct 4, 2009 at 12:14 am

  I believe you’re wise to wait for the Henry Report, Ned. I would not be surprised to see a massive shift in asset classes if it goes the way I suspect it might. We haven’t purchased land for over eight months, so I’m not sure of current values. Last block came in at $135K, but this included $9K of (future) landscaping and all fencing. We still have two very good vacant blocks, both with water views, waiting for the next step… after November. A new house commenced on a third block, just after we left. It should be completed by the time we return, mid-January.

  As for market(S), one of our tenants, a very clever bloke, is still buying and selling in areas well beyond our confidence level. He’s getting rents of $2000 -- $2300 per week. (He’s paying US just $450 rent per week! ) We _could_ play in that market, but we prefer to operate in a relatively risk-free environment.

  As you say, much of the value (in our case, anyway) is in the land. We could put a bulldozer through the two architect-designed homes on our main property… and still sell at nearly eight times purchase price… about the same as we’d get with the houses intact. As unlikely as that seems, it’s true. It conjures up all kinds of interesting questions, doesn’t it?

  Greg, we don’t believe the market value of most of our homes in the $380K -- $700K range has changed significantly in the last two years. We believe that market remains pretty flat. Rents, however, have increased 12 -- 15% in the last year, except where we’ve valued tenants so highly we’ve renewed leases at the same rents. At least three sets of tenants will enjoy that situation again _next_ year, providing inspections warrant this.

  Yes, the government may well scale back immigration. Pressure from WA will mean that select people with valued skills, high incomes (and funds) will keep our markets steady. I suspect that the variance in different states’ property values might soon be similar to those in provinces here. We can buy a beautiful mansion in lovely Nova Scotia for just $350K, but a comparative home is $3mil here in BC. (In a few weeks we’ll move into our friends’ beautiful $8mil holiday home in Whistler, while they’re holidaying in Hawaii. Is it _worth_ $8mil? Won’t know until we try it… ! )

• 249 Ned S // Oct 4, 2009 at 7:20 am

  Senator -- I can’t get a handle on where policy makers would like to see us go on a number of pretty important issues. For example:

  * Do they want to see us putting more into super or not?

  * Do they want to encourage us to save or do they want us to spend (and then borrow more) while relying on foreign capital for investment purposes?

  Some things that there wouldn’t seem to be much doubt about is that they think there is a shortage of housing and would like to see more of it built but reckon that higher house prices don’t make us any wealthier as a nation but don’t want to see significant house price declines either.

  On the international level we’ve even got strange things going on like surplus and deficit nations and the G20 and the IMF chatting about whether money is best viewed as “made round to go round” or “made flat to stack” and given that the deficit nations certainly think the former is best, trying to figure out how it might be possible to encourage the surplus nations to give up their frugal saving ways.

  It may turn out that we were fortunate that the GFC came along when it did in relation to the Henry tax review. In that such issues will hopefully be being considered. And while the answers will presumably be that some sort of balance is required, I’m hoping to get an idea of just which way that balance might lean -- Given that in an unforeseen crisis situation they reckon they can stimulate like crazy (and presumably then destimulate like crazy?) and it will all be “fixed” -- As best it can be anyway.

  The thought has certainly crossed my mind that I could be hoping for too much from the Henry tax review. But at this stage one just has to wait and see. In relation to pretty much everything. With housing specifically being of great interest of course.

  While it could be that Henry sidesteps it as too hard for now and says something like that will be reported on seperately later, last year’s senate review of housing affordability did put the ball in his court when it said things like the following:

  Recommendation 4.1 (p. 62)
  In the interests of more informed discussion of arrangements to encourage affordable housing, the Treasury be asked to publish current estimates of various taxation and related measures affecting the housing market.

  Recommendation 4.2 (p. 69)
  The committee recommends that Australia’s Future Tax System Review Panel consider the implications for housing affordability, as well as the overall fairness of the tax system, of the:
  • tax discount for capital gains on investor housing;
  • exemption from land taxation of owner-occupied housing; and
  • current negative gearing provisions.

  http://www.aph.gov.au/SEnate/committee/hsaf_ctte/report/b02.pdf

• 250 Biker Pete, Vancouver // Oct 4, 2009 at 8:16 am

  Ned, I guess you’d also have to ask this: “What single policy initiative might Labor take to:

  a.) create equity and fairness right across the board(?)

  b.) increase availability of housing…

  c.) … keeping rental returns low(?)

  c.) protect Australia’s construction industry(?)

  d.) increase land development across Australia(?)

  e.) guarantee their re-election(?)”

  The question of retrospectivity is interesting, too. It’s generally the principle that if new tax policies are introduced, acquisitions prior to that date are exempt. We’re unable to think of any situation in which that hasn’t been the case. However in that sense buying prior to the actual date of declaration might make sense; but that’s too tough a call… .

  Wouldn’t rule anything out, but some possibilities would be political suicide. Others would raise rents through the roof.* Still others would see super contributions dry up… ; or bank deposits dwindle. It really _IS_ brain surgery plus rocket science!!

  * Son (24) happily paying $2700/month rent in Montreal.

• 251 Greg Atkinson // Oct 4, 2009 at 8:26 am

  Reading all the comments over the last few weeks makes me think that the most likely outcome for the residential property market is a correction of around 10% over the next couple of years, although as Biker Pete knows, I don’t like trying to bunch together the varied real estate markets in Australia into one overall statistic.

  Some “mini bubbles” have already been deflated in places like Palm Beach just north of Sydney, many of the new developments on the Gold Coast and in plenty of top end markets where the once mighty masters of the financial markets have fallen.

  I would guess homes in the first home buyer’s range will also ease back next year but maybe a phased correction in real estate prices might just be the way to get an orderly correction?

  Then if prices remain fairly flat and interest rates don’t soar we might just get a nice soft landing where few people get burnt.

  But could the Ken Henry review shake things up? Maybe that is material for another post as we seem to be going down that path.

• 252 Ned S // Oct 4, 2009 at 9:59 am

  Retrospectivity -- I suspect the principle is pretty much enshrined in tax culture Biker. It would be extremely unusual -- To assist people who’d been very badly disadvantaged in a totally unintentional manner just maybe? Or to close a “loophole” that was exploited SO blatantly it could be argued independently in the highest court of the land that the actions were fraud irrespective of what the tax legislation said? But anything much else would undermine confidence in the taxation system in a totally unacceptable way.

  As to the challenge question regarding making all of the people happy all of the time -- The tax payer gets to subsidise new land developments perhaps? But can that be achieved without smarty developers and state and local governments effectively adding the subsidy to the final land cost? While also bearing in mind that in a lot of regions, the preference really is for higher density dwelling, rather than more land as such? Tricked if I know. I might have a bit more of a read on the NRAS though.

• 253 Biker Pete, Vancouver // Oct 4, 2009 at 11:44 am

  Why should investors alone get a tax break on their mortgages, Ned? It seems unfair that one group of property owners should get a 40% break… and others nothing… .

  And, yes… the taxpayers _would_ pay for this. A few, who owned their homes outright… would be alarmed… until they realised the potential… ha,ha..!!

  As I say, a lot of things _might_ happen. Who would have expected $900 cheques in the mail and $21K FHOGs(?) And Yes, giving ALL home owners a tax claim for their mortgages would achieve the six goals I listed…

  Regardless of whether my supposition comes to pass or not (we don’t need it, anyway) you’re right, Greg. Could be a whole lotta shakin’ goin’ on…!

• 254 Ned S // Oct 4, 2009 at 2:19 pm

  It would at that Biker! One of the suggestions re the FHOG (in hindsight) was that it would have been better given out over a number of years rather than as a lump sum up front. I’m looking forward to seeing the pollies’ reactions to what is proposed though -- Seeing them say we won’t do THAT; When you know that if it’s recommended it is probably not so much a matter of if as when.

• 255 Pete // Oct 4, 2009 at 5:14 pm

  I suspect that one of the next steps the Rudd Gov will consider is to give investor bonuses, for new (or maybe existing?) rental properties -- probably for low income earners.

  Eg, if you build a new place, you might get a rental subsidy. Lets say you build (or buy) a place for $400k, yet would normally only get less than 5% rental yield on it -- the Gov could pay you 3%, providing you drop your yield to 4% (total 7%). The increased yields could encourage people to buy up (and build) houses as investments a bit more.

  The supposed benefits would be:
  - renters happy
  - investors happy
  - property bubble price increases, or at least some support

  At taxpayers expense of course. And at the expense of keeping a bubble inflated for a bit longer until the next bright idea comes up.

  I guess we’ll see. The fact that Government intervention is required says a lot about this country -- and its future.

• 256 Ned S // Oct 4, 2009 at 6:01 pm

  Hot damn -- I’ve been expecting this to come:

  http://www.smh.com.au/national/treasury-signals-tax-break-on-savings-20091001-ger8.html

  And getting frustrated by the lack of any mention of it.

  I think the penny has dropped as to what you meant when you said “We know there are numerous markets. Just one of those has risen appreciably” too Biker! Hmmm.

  Never mind Pete -- At least we weren’t actively short the housing market like we might have been if they were stocks. The NRAS has a lot of the elements that you mention.

• 257 Senator13 // Oct 4, 2009 at 8:55 pm

  I think it is an excellent idea to tax savings at a lower rate. It is not much incentive for many people the way things are currently. There are a lot of people out there that are not savers by nature so anything to help people save is a good thing.

  Going from recommendation to policy implementation is another thing. Rudd can just pick and choose from the review recommendations. He can take the ones he likes and claim that “the review recommended it” and the ones he does not like he will claim “the purpose of the review was to only look at all options across the board…”

  The Review was originally conceived pre GFC – how many recommendations will have a pre GFC mentality and how many will have post GFC type recommendations? Too much of either mentality will not be good. Striking the right balance will be hard. I just hope that the review is not used as an excuse for blatant tax grabs. Rudd has a history of pushing things further then originally planned and always makes sure he has written in little outs for him self so that it is never his fault. It is always someone else’s recommendation – even though he is the one implementing them and ultimately has the final say.

• 258 Ned S // Oct 4, 2009 at 11:14 pm

  The full spiel is here Senator:

  http://taxreview.treasury.gov.au/Content/Content.aspx?doc=html/speeches/09.htm

  He does at least seem to be committing himself to putting the pollies in the hot seat when he says at the end “Judgement is required. Over the next couple of months, we will be refining our judgements on these important issues as we finalise our report on the tax and transfer system.”

• 259 Pete // Oct 5, 2009 at 5:34 am

  Great comment Senator, I very much agree.

• 260 Greg Atkinson // Oct 5, 2009 at 8:28 am

  Senator I think the whole tax review should have been put on ice until things settled down a bit. As I wrote a few days ago in: A slow global recovery, the Australian economy & the stock market I believe the Ken Henry review is just simply making people nervous when the focus should be on doing exactly the opposite.

• 261 Ned S // Oct 5, 2009 at 9:30 am

  I feel the opposite Greg -- I’ll be extremely happy to get some feel for direction.

  I was pretty concerned given the pre GFC mentality that Oz saw itself as an endless cash cow that could just continue to dole out the bounties of the harvest to all and sundry regardless of their labours in the fields. And during it that some turkey might say saving really is very bad -- We want people to spend, spend, spend. Whereas Henry seems to being about as sensible as one could hope for under the circumstances -- And a bit smarter on some potential risks than he might otherwise have been.

  I expect we very well may get a report that empathsises investing for the greater good to the overall future advancement of Oz socialism as manipulated by pork barrelling pollies. But at least saving and investing is getting a good rap and that is a positive -- From where I sit as a natural enemy of the ever growing welfare mentality.

• 262 Greg Atkinson // Oct 5, 2009 at 10:00 am

  Ned S the report I guess will only be stage one of a very long and drawn out process. We all know what Henry suggests and what actually happens will be two different things. The confusion will be that nobody will know what Rudd is likely to pick up and what will be dumped, and he won’t know until he has some poll numbers. In the meantime how can anyway be sure what will happen? I just not think it is a good time to have an ETS and a tax review hanging in the air.

  But since we are talking about home prices maybe what you say is true..maybe home owners/property investors prefer the review to be out in the open and feel confident Henry will do the right thing by them?

• 263 Biker Pete, Vancouver // Oct 5, 2009 at 11:38 am

  Thanks for that link, Ned. Seems like a sensible initiative.

  “The Review was originally conceived pre GFC – how many recommendations will have a pre GFC mentality and how many will have post GFC type recommendations?” Senator13, 265.

  An excellent point, S13. Any ideological tenets must be tempered with the current and likely future financial situation in mind. Even the current situation is difficult to define. Bonner’s claim that we’re experiencing a ‘depression’ not only doesn’t ring true for most of the world, we’ve personally seen no evidence of this even in the US, so far. Yes, it’s a recession in the US, with unemployment about to hit 10%. Rudd & Swan’s predictions in that respect haven’t yet come to pass in Australia. It may well be that our unemployment figure settles at half that of the US… !

  The ‘stuff we know about’ is thought-provoking. It seems likely, for the US at least, that there’s a lot that hasn’t yet surfaced.

  There’s a strong possibility that very little may change as a result of the Henry Review…. the probability that Rudd & Co will bury some recommendations which are political suicide. Death taxes come immediately to mind… .

• 264 Ned S // Oct 5, 2009 at 2:29 pm

  I think a very thoroughly thought out report on what is seen as desirable and even necessary by someone in Henry’s position measured against the broad views of Australian society as he perceives them to be could be extremely useful to me personally Greg.

  As I’ve mentioned before, I’ve only been back in Oz basically fulltime for a couple of years now. And there is certainly much that I’m critical of. It’s a danger in going away and coming back and finding “it’s” changed and that a bloke hasn’t changed with it I guess. (Or while he has changed, he’s changed in different directions.)

  But either way it is not good. And at some point I’ll need to decide what I’m going to do about it. And am hoping that Henry’s assessment of just really where we are at and should be going as a nation could help clear up any misconceptions I might have -- It is just possible I’m seeing the differences and overexaggerating them off course -- Or underestimating their potential to swing back to something a bit more middle of the road in time.

  Or then again Henry just might say, Nope, that really is what Oz is about these days Ned so you better figure out if you want to like it or lump it!

  Rudd will to all intensive purposes kill off the stuff that is deemed politically unacceptable at this time. So unless a ginormous stuff up is made, it shouldn’t be destabilising -- The opposite in fact even I suspect. With “that” being out of the way being the general perception.

  As to housing specifically, nothing that is destabilising at this time is the only possible call I imagine.

  Death duties Biker -- Even as a kid growing up in a working class family I can remember being shocked that such a thing existed. The concept of taxing old dead people just felt fundamentally grubby at the time and still does. There are plenty of ways to tax the living and if really necessary I’m sure we can find plenty more. So I really do hope that as a nation we can’t see our way clear to stooping to that -- It just wouldn’t help me feel better about Oz generally at all. And would quite possibly serve to confirm some of my less flattering suspicions about what we have become.

• 265 Biker Pete, Vancouver // Oct 5, 2009 at 2:59 pm

  Fair comment, Ned.

  Yes, I grew up watching the trauma of family farms lost by grieving families who not only lost their parent(s) but also lost properties they’d worked for generations. It’s the meanest, dirtiest of all taxes.

  I once posted my belief that the best position to be in was to have options… choices. It was an argument for spreading one’s assets across at least three classes, in our case property, super and cash. These might in fact be the three areas most affected by the Henry Report. I imagine a lot of Aussies have a similar spread. We’ve already seen some major shifts in capital as a result of two recent financial decisions (bank guarantees, super caps) and I suspect we’ll see more after November. Both had desirable and undesirable effects, claimed by opponents to have been unforeseen. The old Confucian curse applies here, now…

• 266 Ned S // Oct 5, 2009 at 8:27 pm

  Yeh, what happened to “cockies” back in the 60′s was a damn nonsense Biker. Even my mob who were also using newspaper as toilet paper in those days reckoned it was a bit over the top. Probably doesn’t pay to dwell on it though! Smile.

• 267 Biker Pete, Vancouver // Oct 6, 2009 at 1:15 am

  You had _NEWSPAPER_???!!! Luxury… ! We were forced to use handfuls of leaves and grass… . You young people don’t know what true hardship… etc… etc….

• 268 Ralph // Oct 6, 2009 at 1:08 pm

  Hi all,

  Been away a little, but the discussion is still booming!

  So it seems like something’s going to go down. I’m guessing there will be something to encourage property investment in Henry’s tax review. But I still maintain that Rudd won’t be in a position to come out with more brazen support for house prices in the near term. The economy is appearing to be going too well (as far as the public is concerned) to be able to justify a direct handout to keep property prices up. But he just might try it -- the opposition is floundering so badly that Rudd might just imagine that he can get away with some Whitlamesque policy.

  Meanwhile, we’re in a holding pattern for a little while as the market adjusts to the unwinding first home owner’s boost. As I see it, the property market is on knife-edge -- teetering on the brink and ready to go in either direction. I think that the government would be sitting back and watching all of this and trying to assess just how much they can try.

  And now we see interest rates going up. Confidence?

  But one thing is for certain, Australian residential real estate is the most protected and mollycoddled market in the world. In the US, there is moral hazard when it comes to big banks. In Australia, it’s the banks and house prices. Someone said that it’s now about trying to second guess the policymakers. Wouldn’t it be great to be a fly on the wall in parliament house right about now?

• 269 Biker Pete, Vancouver // Oct 6, 2009 at 1:39 pm

  “Australian residential real estate is the most protected and mollycoddled market in the world.” Ralph, 276.

  It has kept rents relatively low, Ralph. I think that’s about to change: fast-growing population, rising interest rates, less construction happening. We built five homes last year… one maybe two next year, depending on changes in November. Won’t build any more if it doesn’t pay us a lot more than super or bank interest, neither of which involve any effort.

  Our son (24) is paying $675 rent per week in Montreal. Can’t imagine what Aussies will do when high rents begin to hit Aussie cities… . Maybe a ‘packed-to-the-rafters’ scenario… 30 -- 45 year olds moving back home with mum and dad, perhaps with grandkids, too… . Most likely there will also be an exodus from the cities, as there was when I was young and couldn’t afford a city home; but frankly, the drift seems to be the other way; young people moving into larger centres. Jeez, the future doesn’t look too good, does it?!

• 270 Greg Atkinson // Oct 6, 2009 at 6:40 pm

  Well we are off and running now with the RBA raising rates and the first home buyers grant being wound back. Should be interesting early next year to see how home prices are tracking!

• 271 Ned S // Oct 6, 2009 at 8:28 pm

  Oz house prices -- Yep, I was a bear -- To the tune of 20% maybe. In the FHO market I dapple in. But the RBA and Kev knocked me off.

  All sounds flat to middling with inflation to eventually kick in and another crisis in 2 or 5 or 10 years time Greg … Which is much the same as saying the sun will most likely rise again tomorrow perhaps?

  A right bugger for anyone who was actually hoping for some change perhaps … But there we have it hey? Sounds boringly repetitious to me -- And called stagflation. (Although the risk is a bit freaky!!!)

  Ah, toilet paper Biker! Yep, I gather that the high fibre Spinifex based brand favoured by the bushies is what truly made Aussies men of steel who did not cry easily? With the meek and mild townies who crumpled up the local rag while hidden from view, contributing a bit too.

• 272 Biker Pete, Vancouver Island // Oct 7, 2009 at 2:38 am

  Maybe the RBA is trying to give the economy a psychological shot-in-the-arm… (?) We’re probably the only country to actually raise interest, when others still appear to be lowering it. Let’s hope it works. November could be the crux.

  Greg, watching rents rise before January could be another indicator. We don’t need to put ours up, so we won’t; but there will be investors who don’t need to who will raise them in sheer pique, I imagine. A further indicator will be the effect on construction. Another interest rate rise and we’ll just sit on our empty blocks… and leave the money in the bank and in super.
  What might reduced construction do to unemployment figures?

  Ned, I finally discovered the answer to that old rhetorical question: “Does a bear sh*t in the woods?”
  The answer is “NO, it sh*ts on every damned running and walking track in the woods…!”

• 273 Ned S // Oct 7, 2009 at 7:53 am

  Yes I seem to recall hearing there are bears on the island Biker. Along with some pretty nice property -- Let me know what you think of the lakeside stuff maybe?

  I’ve never seen a Kanuk bear -- Although if they anything like the squirrels I’d keep away from them -- Way too much risk of catching mange!

• 274 Greg Atkinson // Oct 7, 2009 at 3:03 pm

  Biker Pete I just hope the rates decision was not impacted at all by the desire to be the first G-20 nation to raise them..i.e. for the sake of bragging rights.

  Yes rents and construction activity will be interesting indicators to watch. It is all happening as they say

• 275 Biker Pete, Vancouver Island // Oct 7, 2009 at 3:57 pm

  Very much like squirrels, Ned… just bigger nuts!

  A small black bear scampered off a track while we were running last night. It was at least 100m away, so we never got a good look at it. Bears sometimes raid the garbage bins at night here, so our hosts (who have left for Spain for a month) have given us pretty strict instructions about how to dispose of ‘edibles’.

  I’ll check out realty here. Much of the coastline has spectacular views. A sea view is really no big deal(!) A small motel next to us is $1.2 mil, so real estate appears reasonable at first glance.

  Figure you may be right, Greg. Could just be about bragging rights. As you say, things are happening… !

• 276 Ned S // Oct 8, 2009 at 6:10 pm

  Sea views and all that sort of stuff -- I got spoilt as a kid and figured it made your window frames and cars rust and killed the vegie garden. Which just points out the difference between investments and choosing where one really wants to live for themselves I think Biker. With sharing it with mangy black bears and sqirrel’s (or Oz possums?) probably not being much of an issue at all …

• 277 Biker Pete, Vancouver Island // Oct 9, 2009 at 6:10 am

  G’day Ned. Funny about the stars. They definitely don’t work here.

  Gun laws are more relaxed than in Oz… no doubt about that. Friends have different handguns, including 9mm.
  Joined the gym, anyway. Half the cost of our WA gyms, with similar equipment. Decided to carry a large knife while running…. . Has to beat chucking _rocks_ at large-clawed toothy predators, anyway!!!

  We really can’t blame Keen for his stance. He saw the US and UK crash… and decided to play guru /prophet. He’s locked into that position now. I guess from a financial position, he _could_ have a proxy buy back in on his behalf… say a GF… but the critics would have a field day, if it ever got out…
  as it always does. Enough ignomy as it is… .

  Now take our mate in the UK. Says he has property… (Where?) If he believes Keen is right, he’d sell anything in Oz. My guess is that he bought into the UK property scene and prices fell. Can’t sell now; can’t buy back in Oz. Think about it… . Makes good sense, doesn’t it?! Poor bastard… .

  Cheers, Ned!

• 278 Ned S // Oct 9, 2009 at 11:09 am

  Keen didn’t do me any favours with his predictions Biker -- One would have to assume noises like he was making were at least partially responsible for the aggressive actions taken by Rudd and the RBA. And my call was 15 to 20% drops as you know, with me being positioned to buy using cash. So I found myself in cash with lousy interest rates being paid but entry level house prices going up rather than down -- Chunner, chunner! But it’s a big hard world and we all pays our money and takes our chances …

  Hopefully a couple of good things that have come from his stance are a) a recognition that our debt is a bit peaky with various smarties having a think about just what should be done about it, and b) policy makers have figured out that very large house price drops would be bad for the real economy and should be avoided -- Call me a sook by all means, but I’ve never been at all comfortable with the prospect of going through Great Depression II.

  Yes, it is a very real risk in changing countries -- I known more than one to get caught that way. It was actually a large part of the reason I bought a couple of properties in early 2008 -- Prices in Brisbane were hot! And I was heading overseas for three months and reckoned it would be longer before I could buy of course so while I figured a correction of maybe 10% (that was pre-GFC) was quite possible, I’d hedge my bets and buy two just in case I was wrong -- And sit on cash for another two just in case I was right! (Which I wasn’t.)

  Cheers to you too … And try to not trip and fall on your knife when jogging!!! Cougars … Buhhhh -- Give me a nice sociable old brown snake any day.

• 279 Biker Pete, Vancouver Island // Oct 9, 2009 at 3:00 pm

  Not sure Keen influenced the government, Ned. I really believe that it’s about employment… shoring up construction and all the associated industries it supports. Before we became _seriously_ involved in building, I had minimal knowledge of the impact a slowdown in construction would have. Labor fears the spectre of unemployment; so much in fact, that they were out around 30% in their prediction…
  I think, that with interest rates rising now, they _may_ actually get it right, unless Henry’s November decisions support the industry. We’ll certainly spend $700K less(1) than we’d anticipated next year… and, as bloggers remind me frequently, we’re very small tiddlers(!)

  We’re also getting lousy cash rates (on our super, anyway.) On the credit side, even with TTRs paying us another two tax-free incomes, we’re still making around the same amount in a half year as six months abroad is costing us. I guess our bank offsets will return 5.36% as a result of the RBA’s decision.

  As I’ve mentioned previously, we probably paid a little too much for three of our blocks blocks at the peak. I’d put that at about $45K. But we also scored the very highest rents on those properties once that raft of five houses were finished.
  Swings and roundabouts… .

  Fished the mouth of the Oyster River for coho this afternoon. The rest of my companions were wearing waders (wimps!(2) I caught two cutthroat trout, which apparently school with the big fellas and eat their eggs! No-one got a coho and both my wild trout (with intact adipose fins) were released.

  Slipped a sheathed Estwing hatchet onto my belt, in case I needed to fend off a fishing bear… !

  (1) If Henry gets it wrong, we’ll use it to build here instead.
  (2) Couldn’t get their spare waders to fit; my feet too big

• 280 Ned S // Oct 9, 2009 at 3:05 pm

  It does make me wonder about Steve Keen -- Unless he’s been through an awful lot of dry gullies he’s got to be on the wrong side of 60 I’d reckon?

  If he has a few mill stashed in some nice safe low risk super account I’ve got no real issues with his apartment selling stunt. But if not and I was a wise old mamma sorting through prospective hubbies for my little girl, I doubt I’d pick the Aussie my tarot cards said was going to be 60 and not own a home.

  If he’d gotten twitchy and flogged off an investment property I could certainly understand that. But selling your PPR which you presumably bought at some time because you reckoned it represented something close to acceptable value for money then is a biggy alright.

• 281 Ned S // Oct 9, 2009 at 4:08 pm

  My personal suspicion is that George Bush broke the bad news to Kev Rudd in a phone call where the media fortuitously got all distracted as to whether George knew what the G20 was? With Keen’s views being a bit of confirming background noise that had been around for a while. But that’s all water under the bridge now.

  I still haven’t written off the possibility of a modest little correction Biker as the real economy is allowed to reassert itself -- To a degree. But while I was pretty confident of a correction before, about all I’m confident of now is that drops of more than 20% would only be allowed to happen over the tax payer’s bled white corpse.

  Interesting to hear that you are backing off the building for a while. As I’ve said often enough, I’m just sitting until I hear the tax review report. Then I’ll make a few decisions. It could even be that I’ll look at building two. I’ve had the land since the mid nineties -- I just need to get rid of an old tmber house that sits on a double block.

  Ah decisions, decisions, decisions … Yes, the old Oriental adage as you say.

  Cor, fancy having to fight a bear for a feed of fish -- No wonder people migrate to Oz! And if they want to get in the water with the sharks and crocodiles then on their own heads be it.

• 282 Biker Pete, Vancouver Island // Oct 9, 2009 at 11:26 pm

  I’m with Greg on the ‘different markets’ theory, Ned. Some will go up, others down… . Our decision to finish the current house and wait is mainly about November’s possibilities. I think this really is a time for holding. If that turns out to have been too conservative, I’ll wear it. We do have a lot of property… .
  (Sold a very old timber house once, by tender. A tradie bought it, moved it, renovated it and subsequently sold it for $420K, at the market’s peak. Not a bad move, since he only paid us $2K. It would have _cost_ me that to demolish it… .)

  I see the Aussie dollar is rising against the quid and buck. Good for us personally, while travelling, but not sure it’s all win for Oz. Canada has been panicking recently because the loonie has been doing so well against the buck. More of that to come, I think.

  Your shark & croc comparison makes sense, Ned. As a longtime diver, I was always armed. Here, it makes good sense to carry something with a bit of reach, particularly in bear and cougar country… and while the rivers are alive with salmon. Most people using the trails have a dog, which at least provides a diversion. Bears do pull down deer (which makes you think!) but bear and cougar attacks on humans are rare. A hatchet seems like a handy tool to carry in the woods, anyway… .

• 283 Ned S // Oct 10, 2009 at 9:25 am

  I’ve got no issues at all with the different markets thing Biker -- Even in the US while some markets were down by 50% there was stuff that held up and even grew a bit -- Least that was the storey a year or so back -- I don’t especially follow their property.

  I’m having a good hard think what to do with that timber house Biker -- It definitely isn’t junk as such -- Too many options almost. But it is big and the cost of land to move it to is high.

  The big issue at the moment is that there is so much unashamed manipulation of markets going on worldwide (property, currency, stocks, bonds … you name it), plus jawboning, it would be a brave man who’d make any high probability calls on what will actually happen -- Except to say that if the West doesn’t achieve inflation, it won’t be through the lack of desire.

  In the absence of an epiphany, your property, super and cash combination sounds like a sensible way to guard against unacceptable losses coming out the other end. While keeping a real close eye on the inflationary prospects I think?

  I’m glad you’ve got something other than a knife -- I was having a few issues with the mental image of Tarzan wrestling a lion in the African jungle with a knife clenched between his teeth and trying to reconcile it with a potential Biker, Canadian forest, cougar equivalent …

• 284 Biker Pete, Vancouver Island // Oct 10, 2009 at 11:30 am

  Perhaps it’s worth getting an appraisal from an engineer, Ned. It’s possible you have options with that house you haven’t considered. I have to call in some expertise when I get back… . A major subdivision has just been approved on two of our main property boundaries, giving us the same option(s).

  Yes, our asset mix is pretty sound, I think. Two classes allow swift transfer… and the third promises fortnightly dividends, without the need to ever sell. Inflation? I think it’s inevitable, except in technology. As someone else has noted, virtually all forms have become cheaper, relative to income, over time. We expect to see the steady, relentless erosion of our dollars’ value over time… and accept this as a given.

  Looking into lithium at present, in both its forms. I need to do due diligence before we move, but it’s likely we may commit some funds. Now, if one could find thorium adjacent lithium!

  Large toothy beasts? Can you imagine just standing there, throwing pebbles and shouting at a bear or cougar, as the local papers suggest one should? Give me a sharp hatchet every time!

• 285 Ned S // Oct 10, 2009 at 2:52 pm

  Timber house -- Amongst many other thoughts, the possibility of raising it, putting a chainsaw through the middle with a concrete block wall to seperate the two bits and building in underneath has occurred to me -- I like houses and would rather not demolish perfectly sound and even vaguely attractive old ones if avoidable. Which is a weakness when it comes to making money. Yes, it would be best to get some advice -- I am out of my depth on this one I think. (Unless I can find a suitable and cost effective block of land for removal -- And they are like the proverbial hen’s teeth.)

  I’ll have a read up on Lithium.

  Personal protection -- I was out shopping with a mate a while back (a Brit in Russia) and he was dead keen on getting a baseball bat -- Seemed strange -- Neither Brits nor Russians are big on baseball of course. On enquiring further it seems his plan was to drill some holes in the fat end and glue in some nails with the pointy bits facing out -- And Yes, he was a footy hooligan in his younger days. But a currency trader in the US and Japan plus some sort of financial thingy back home. I laughed at him and said Geez mate, that’s a mace! He tamed it down a bit and settled for putting some screws in the fat end with the blunt ends pointing out. Then went through with his plan of waiting quietly for a few nights inside a partially constructed property he was unhappy about things vanishing from after dark (Insurance works rather differently over there I suspect?) -- He had a chat with the nocturnal visitors and they saw it his way and decided to not come back. The world is a fascinating place Biker -- One has to be willing to try and adapt I think?

• 286 Biker Pete, Vancouver Island // Oct 11, 2009 at 12:11 am

  Ned, in the absence of a suitable block, I think I’d wait it out.
  I take it the house is rented out?

  Enjoyed the urban jungle analogy!

• 287 Ned S // Oct 12, 2009 at 7:57 am

  I won’t make any decision on the timber house before March I think Biker. And yep, it’s rented out alright -- I like income!

  Thinking about it a bit more, I suspect the urban jungle analogy illustrates the advantages of operating in a culture and legal system and tax regime etc, etc, etc that one is reasonably familiar with as opposed to dabbling offshore.

  Interesting though … One of my thoughts on the bit of Russia I was in was that with the changes that had gone on over there they were just maybe starting to move into a suburbanization phase. With more people having cars plus considerably more cash than in the past maybe? Long term, their demograhics aren’t good though with a declining population.

• 288 Biker Pete, Vancouver Island // Oct 12, 2009 at 2:39 pm

  We’re constantly weighing it all up, Ned. With the majority of my wife’s family in Canada… and one of our two sons now living here, we can see advantages investing here, particularly if November turns sour. It’s likely our other son will move north once his doctorate is completed later this year, anyway.

  We’ve planned to visit northern and eastern Europe within two years. Your visit sounds like quite an experience!~

• 289 Ned S // Oct 12, 2009 at 7:27 pm

  BC is a nice bit of the world Biker -- It isn’t easy to leave home of course. But in a lot of ways home is where the family is to my way of thinking. With family (in that regard) being one’s parents and kids.

  And Yes, if our policy makers get any sillier than they are, it certainly could make making a difficult decision easier. (Even though I’m in no rush to leave Oz! Damn! Damn!! Damn!!!)

  But providing one has fiddled things so they can see their way clear to come home should that really sound best as things change (which they always do) then you’ve probably done the best for all concerned I think … If that that ramble makes any sense?

• 290 Greg Atkinson // Oct 21, 2009 at 5:22 pm

  Of course our view of housing may change if the Government decides to tweak the tax system. I wonder how people would react to capital gains on the family home becoming taxable?

• 291 Ned S // Oct 21, 2009 at 6:50 pm

  I doubt that Henry will discuss that one mate -- Except to say why he didn’t recommend it if he is brave enough to broach the topic at all? Could be a different kettle of fish in the 2035 tax review perhaps … But that’s a bit long term for me right now. We’ll see though -- Never say never!

• 292 Ralph // Oct 22, 2009 at 7:54 am

  I agree with Ned. It would be a ‘courageous’ move to tax capital gains on the family home. And courage is something in short supply amongst our bureaucrats and politicians.

  I do think there will be something for property investment in the tax review though. Real estate speculation is a key Australian industry that needs to be supported.

• 293 Ned S // Oct 22, 2009 at 2:04 pm

  It will be an interesting one Ralph -- The tradeoff with that sort of stuff has to be allowing people to claim a tax deduction on their mortage payments on their homes of course. So it is quite feasible that it could push house prices significantly higher again -- Ouch! And I don’t get the feeling that is what they really want to encourage right now -- We will see soon enough though. Cheers!

• 294 Greg Atkinson // Nov 3, 2009 at 8:49 pm

  Well interest rates went up again this month and the first home buyers handout is being scaled back so next year will be interesting at least as house prices are concerned. I wonder if Australia has managed to create a mini-property bubble due to the meddling of the RBA and Government?

• 295 Pete // Nov 3, 2009 at 11:18 pm

  I wonder if Australia has managed to create a mini-property bubble due to the meddling of the RBA and Government?

  Ha ha ha?

  I don’t get it?

• 296 Ralph // Nov 4, 2009 at 12:23 pm

  It certainly is going to be interesting.

  The funny thing is that prices still seem to be booming despite the handout being wound back and interest rates being ramped up. If anecdotes about banks tightening credit are true, this suggests that credit overall should be getting tighter. But it doesn’t seem to be putting much downward pressure on house prices. Where is the extra money coming from to keep bidding up prices? Perhaps it’s just irrational exhuberance and a feeling that Aussie real estate really is the magic pudding. Maybe Biker Pete was right after all.

  I reckon the clock must be ticking for the gov’t to announce their next housing-related stimulus. This bubble is so big that they can’t let it go now -- they’ve gotta go ‘all in’. Their electoral fortunes depend on it.

• 297 Ned S // Nov 4, 2009 at 1:40 pm

  What has really changed since a year ago when people were moaning about the costs of housing but still paying their mortgages regardless?

  * Prices have gone up a bit.
  * And people feel more confident buying in rising markets rather than falling ones.
  * Interest rates have gone down a lot -- And while that trend is now up, there is no guarantee at all that they’ll go back to 7% or more anytime soon. (The RBA said a while back they’d like to get them up to about the 5% [or 6% ?] level over a couple of years).
  * Unemployment of 6.75% is forecast now rather than 8.5%
  * People are pretty confident government will act to prevent a major property crash in Oz.

  Presumably there has to be some sort of trigger for a crash? And at this point most people probably aren’t especially seeing one. Plus feel that government will protect them against any particularly big and particulary nasty surprise shock/s anyway.

• 298 Pete // Nov 4, 2009 at 1:54 pm

  Ralph I am beginning to question Australia’s property data sources.

  Think about who we get the info from and what they have to gain from property prices going up or down?

  It’s all up.

  That’s not to say that it is completely wrong -- it may not be. But I don’t think we should accept their ‘statistics’ as fact.

  That said, with any luck house prices will double from here in the next 10 years, whilst wages will increase only 30%.

  All that means is that (hypothetically):
  - the median wage would be about $80K or so
  - the average house price in Sydney would be over $1million
  - the deposit requirement would be at least 10% or $100K
  - the interest-only repayments alone would be 7% or $70K (an ultra conservative estimate)

  Obviously that person won’t have enough money to pay for it by themselves (or even enough to pay their tax) so his partner (who takes home the same wage) will:
  - remain childless because she cant afford child care, or have a child and no money at all
  - pay for all of the household bills, including rates and home maintenance
  - will have to pay the mortgage principle component (say $20K a year? Thats only about a 40 year mortgage)
  - will have to pay for all the living costs of the family, including food, fuel, clothing, luxury items

  And will have virtually nothing left over.

  For the good part of 25 years of a 40 year mortgage.

  That isn’t living. Not being able to afford children unless you are ‘rich’ is not living.

  What then? The bogans living in Gov. housing will have huge tribes of children, the middle-class will have little or no children and poverty, and the upper-class will have whatever they like.

  For some reason that reminds me of the past. The very distant past. Perhaps I should shine-up my armour for any upcoming jousting tournaments.

  Now…let’s imagine that houses doubled yet again on top of those, whilst wages did not keep up. You’d need 4 adults per house just to live. But that isn’t exactly conducive to a housing shortage is it -- more people per dwelling.

  Okay, i’m almost at the end of my rant. I simply think that ludicrously and unjustifiably high property prices are not sustainable, and are even worse foundations for growth. This does not mean that growth won’t happen, however it does mean that any growth is a product of an irrational market. Irrational markets revert to the mean over time -- however they can stay irrational for a lot longer than people like myself might suspect.

  It is all too easy to join the mainstream consensus and because going against it doesn’t “feel right”. But the mainstream consensus is wrong more times than it is right. Individuals can be quite stupid, but groups take it to the next level.

• 299 Pete // Nov 4, 2009 at 2:03 pm

  Almost sounds like you trust the Gov. there Ned.

  Have things changed that much? Now we’re trusting what the Gov. says and forecasts?

  They certainly don’t make me feel warm and fuzzy. Not when I read about them intentionally deceiving us over and over again.

  Each to his own I guess.

• 300 Anon // Nov 4, 2009 at 2:05 pm

  “Ralph I am beginning to question Australia’s property data sources.”

  I’m starting to give up on any official data sources ! They should put warnings on all of them. **Maybe distorted to seem better than it is**

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