The Australian economy, house prices and economic outlook
April 5th, 2011 · Greg Atkinson · 194 Comments
Back in April last year I suggested that the Australian economy was not quite as robust as most market commentators appeared to think and that it was quite possible for economic conditions to deteriorate quite markedly over the next few years. So now one year later after I wrote about a possible economic slump in Australia let’s have a look at how events have unfolded since then.
Before I start let me just remind readers that I am not a journalist. This means I provide sources or links to the material I quote from or refer to, I admit I could be wrong and I don’t try and tell you want to think – I lay out some thoughts and ask people to draw their own conclusions.
So please don’t ever think I have some unique insight into the stock market, economy or the global markets, I could be and may possibly be, a complete loon.
The article I wrote back in April 2010 about a possible economic downturn was entitled: What might an Australian economic slump look like? and this is what I will use as a base to reflect on how the economy is faring now in April 2011.
I suggested back then that the rosy economic outlook and forecast from the Government, Reserve Bank and market experts were based on the expectation that the Australian economy would continue to enjoy an environment where:
- House prices keep rising.
- Incomes keep rising.
- Inflation remains under control.
- Iron ore and coal prices continue to rise.
- The population continues to grow at records levels but the economy is able to keep creating jobs in order to keep unemployment low.
- Taxes are not raised.
- Government spending is kept in check.
- The Chinese economy continues to grow strongly.
So let’s now look briefly at each of the areas above and see how they are tracking at the moment.
Australian House/Home Prices
The Australian residential property sector has held up remarkably well over the last few years and has done much better than I expected. But with interest rates at current levels it can be a bit misleading just to look at the rise in home prices and say all is well.
What is a possible area of concern is that we could be entering a phase where house price gains will be less than inflation.
According to an article in The Australian recently RP Data senior research analyst Cameron Kusher is quoted as saying:
“When you consider that Australian inflation was 2.7 per cent in the year to December 2010, in real terms, Australian residential property values have been declining, which is a good outcome for prospective buyers”
(Source: House prices flat in Australian capital cities as market cools: survey)
This is based on data showing that for the 12 months to February 2010 capital city house prices rose by just 0.8%.
Maybe this is just a short term trend and home prices will post strong gains this year, but I doubt it. So it looks quite possible that Australian home prices could be about the enter a period of little or negative growth and if so, then one of the pillars that has propped up the economy is about to be removed.
Income Levels
It appears that wages in Australia are still generally speaking, on the rise which in turn is giving some of the folks at the Reserve Bank of Australia (RBA) heartburn.
Without getting into the reasons why wages are still edging upwards I will simply note that at the moment income levels at present don’t seem to be in a holding pattern and are still growing.
Inflation remains under control
Rising energy costs and rising wages suggest to me that the RBA would still be concerned about rising inflation. I would not go so far as to say inflation is out of control, but the so called inflation genie does appear to be out of the bottle again although I doubt the Australian Treasurer Wayne Swan will ever admit that.
But underlying inflation seems be at decade low according to this report from Reuters: Australia core inflation running at decade low so maybe all is well?
At this stage I would have to say that in my view inflation at the moment still appears under control but inflation does appear more likely to edge upwards than downwards over the next six months.
Iron ore, coal prices continue to rise
I have been expecting a short, sharp correction to hit coal and iron ore prices for quite a while but alas they still seem to be holding up very well. So at present the higher than long term average commodities prices are propping up GDP and the commodities boom appears to be still rolling along.
However I would like to point out that back in April 2010 the Baltic Dry Index was trading around the 3000 level whereas today it is trading at around half that level. This leads me to believe that a commodities correction might not be that far away.
Growing population/low unemployment
The growth in Australia’s population has slowed over the last 12 months mainly due to lower immigration as a result of some Visa changes made by the Government. It’s hard to say if this will have a long term impact on population growth or not so at the moment I simply look as this as a short term trend.
All I think we can conclude at present is that the unemployment rate is still relatively low at just under 5% and Australia’s population is still rising enough to stimulate demand.
Taxes are not raised
I believe it’s only a matter of time before a whole range of tax increases will start to be rolled out either directly or indirectly such as the Mining Tax and Carbon Tax.
In addition State Governments have been creeping up public transport fares and levies for some time, so slowly the tax burden on individualise and businesses is on the rise.
So it appears to me that taxes will be raised and this is likely to have a negative knock-on effect into areas such as consumer spending and home prices.
Government spending is kept in check
Need I write anything here? Does anyone seriously believe the Federal Government has spending under control? Government debt continues to rise, the NBN budget grows each hour and funds seem to be so scarce that a levy has to be raised to help fund the rebuilding in Queensland after the recent severe floods.
The Chinese economy continues to grow strongly
At present the economy in China still appears to be expanding quickly but it also becoming fairly clear that this growth is slowing.
Recently in an article in the China Daily Barry Eichengreen made the following observation:
“….a significant slowdown in Chinese growth appears imminent. The question is whether the world is ready, and whether other countries following in China’s footsteps will step up and provide the world with the economic dynamism for which we have come to depend on the People’s Republic.”
(Source: A slowing Chinese economy?)
When it comes to China you can either pretend all is well and that nothing will slow the growth of the world’s latest economic miracle or you can accept that like all other fast growing economies, China will run into some pretty serious speed bumps sooner rather than later.
I tend to agree with Barry Eichengreen and reckon that the Chinese economy is due for a major slowdown. If that happens, then I have little doubt that the Australian economy will be dragged down as well.
—————————————————————-
So putting all the pieces together I would say this – that the Australian economy is closer to entering a period of economic downturn than it is to entering a period of strong economic growth. I also doubt that in April next year I will be writing about a booming Australian economy or surging Australian stock market.
But it’s also quite possible I am looking at the economic data in the wrong way and misreading short term trends as long term ones. So I welcome as always any dissenting views or comments.
Search terms: australian economic outlook, australian economy 2012, Australian economy forecast, australia economic outlook, current economic climate in australia 2012, australian economy outlook
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194 responses so far ↓
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101 Stillgotshoeson // Oct 8, 2011 at 10:22 pm
Told you things are not so good here in Melbourne..
http://www.heraldsun.com.au/news/more-news/home-owners-300-blow/story-fn7x8me2-1226162101573
“By the time the market bottoms at the end of next year, Residex expects the city’s median house price to have shed 15 per cent. Families living in a $500,000 home can expect to see $75,000 wiped from its value.
“The adjustment process in Melbourne is just beginning,” Mr Edwards said.”
102 Biker // Oct 9, 2011 at 3:37 am
“Families living in a $500,000 home can expect to see $75,000 wiped from its value.” There ya go, Shoes. Be patient.
By December 2012 Keen might be 37% right!
“Interest-rate watchers are predicting a Melbourne Cup day interest-rate cut of 0.25 per cent by the Reserve Bank.”
Mind you, smart(er) folk than us might just rent ‘em rather
than sell ‘em. It’s happened before, ya know!~
103 Stillgotshoeson // Oct 9, 2011 at 8:07 am
Seeing as a $500,000 house has come down from around $540,000 to $550000 already that would bring Keen closer circa 80% right and that is an above average score in any school… even the school of economics.
Rate cut is a line ball call, Retail Spend is up, (steady rates bring a little confidence too ) New Car sales are still tipped to break a million for the year, Dollar has come down taking a little pressure of exporters and there is still the strong possibility that even if the RBA does lower rates the banks will hold firm citing the overseas funding costs/turmoil.
If the banks wanted to lower variable rates, they could do it now, nothing to stop them acting outside the RBA (they have proved this before) Lowering the variable rate outside any move by the RBA would probably be good PR. (Until next year when the banks put em up again
)
104 Not Fooled By Property Spruikers Hype // Oct 9, 2011 at 8:14 am
Have a look how Perth investors went in the last 18 months. Even without a mortgage. Lets assume on the 1st July 2010 the property was worth $500K & it rents for $500 pw or $25K pa -3% vacancy factor & 5% property Mgt charges= $23K -rates -water -- insurance -- maint =$18K less 7.5% capital loss past 12 months -$37.5K (Source RP DATA) = Loss of $19,500.00 it cost you almost $20,000 to accommodate you tenant for 12 months (You have to count capital loss even though you have not realised the loss because investors always count the capital growth even though they have not realised it) Now investors have to get a capital growth of at least 8% in the next 12 months just to get back to where you were in July 2010 (FYI thats 2 years wasted) The chance of capital growth in the next 12 months is nil in fact all serious commentators predict a further fall of at least 8% by the end of June 2012 Remember July 1.63% price fall & Aug 2% price fall so half of the 8% fall has already happened in the first 2 months. Investors had a $37.5K loss not including the interest on a mortgage of say $22K plus. Ouch $60K loss in 12 months & the same in the next 12. Down 3.6% first 2 months of the year! Ouch!
(Hey biker why so shy on Perth Now Site? )
105 Greg Atkinson // Oct 9, 2011 at 8:53 am
House prices move in cycles just like everything else despite how hard we might wish it were otherwise. It’s more of a question of how the current housing cycle plays out not if there is one.
Some markets appear to be holding up well on paper (like inner Sydney) but there are plenty of other areas in Sydney where prices have been stagnant or drifting down for years.
The RBA might just sit on their hands for the rest of the year as far as rates go. They don’t appear to be in any rush to cut rates.
We should also not forget that the benefits(?) of negative gearing sometimes appear to confuse people. I have heard so many people happily talk about how they can write off a loss to the taxman without apparently understanding what this actually means.
106 Not Fooled By Property Spruikers Hype // Oct 9, 2011 at 10:31 am
Hey Biker / Trav’s the times you are posting don’t addup you are slipping on your fantasy world trip you fraud. property owner with millions of assets flying “Jetstar” across OZ then LA to BC. Oh please sounds like you never travelled before why the milk run? Amateur!!
107 Greg Atkinson // Oct 9, 2011 at 10:49 am
Let’s stay on topic please.
108 Not Fooled By Property Spruikers Hype // Oct 9, 2011 at 11:05 am
Greg your “Biker” is our “Trav’s” on Perth Now website. he has been caught out many times pretending to be in Canada but keeps getting AM & PM confused.
OK Lets stick to topic.
Trav’s says he has 10 houses in the $300K -- $400K range fully offset. That works out to about $3.5 million Trav’s has in the “Property Game” & in the past 12 months property has gone down at least 6.3% ($220K) Plus the CPI went up around 3% plus so in real terms Trav’s has LOST $330,000 CAPITAL V’s Rental income of under $150,000 (After all costs) for a nett loss in the vicinity $180,000 (5%) or $3,500 PW . Now just imagine if Trav’s was like most investors & had his investments leveraged with 80% debt he would also have a interest bill of $196,000 to give him a total loss of over $376,000 in the past 12 months. Hardly surprising there not a lot of investors keen to enter the market. In fact it might explain why the number of ex investment properties up for sale is currently up 500% Investors have seen the light & are either leaving or staying out of the market till house prices return to 11 times rental yields. Remember if you are house hunting & you see it is a vacant ex-rental the Vendor is going to be very very keen to get out quick smart before he loses even more money.
RP Data compounded Trav’s problems reporting a further 2% fall in Perth prices for the month of Aug, that’s another $70K wiped off his assets.
Yet he persists trying to bite his own neck, refusing to acknowledge that with hindsight it would have been better to sell out in 2010.
109 Greg Atkinson // Oct 9, 2011 at 11:11 am
When people post under an alias they can claim to be whatever they want. That’s why facts, links, data and analysis work best I reckon.
110 Biker // Oct 9, 2011 at 5:07 pm
Not Fooled By Property Spruikers Hype, Posted at 10:13 PM December 06, 2010 “12 months time the US & Irish will be thankful things are not as bad as OZ … one Bubble at a Time or as some folks would say BOOM BOOM POW …”
Link: http://www.perthnow.com.au/business/business-old/construction-slowdown-to-pause-rate-rise/story-e6frg2qu-1225960148535
Extent of the crash predicted by NFBPSH?:
http://www.perthnow.com.au/business/wa-building-approvals-fall-to-27-month-low/comments-e6frg2ru-1226125558870
Biker,
)
Vancouver
(I’m back in Canada, NF… . You’re way off in FantasyLand.
111 Not Fooled By Property Spruikers Hype // Oct 10, 2011 at 9:56 am
Again you try to quote me out of context? Is that the best you have? Nothing positive to say about property? How come you are so quiet on Perth Now Site these days?
The topic I was discussing was “Construction Slowdown” I was talking about construction slowdown & said in 12 months time the US & Irish would be glad things were not as bad as they were here down in OZ. Through your poor perception skills you concluded prices would drop 40% or 60% & you then go on attribute your thoughts to me? With your poor perception skills you stayed in the property market not able to read the signals that were there for all to see. No wonder your investments in the property market have lost you $3,500 pw for the past 12 months & if you have still not realised it yet they continue to cost you $3,500 pw.
BTW have you worked out that the funds you have deposited in your offset accounts are yielding less than 3% pa? Do you still think you are earning 7% plus tax free?
BTW in addition to this RP Data said Perth property fell 2% in Aug 2011 so you can chalk up another $70,000 in equity dilution in one month of 10% for this financial year. You must be kicking yourself for not listening to me this time last year.
Also whilst your away another block of apartments in Perth have been put up for “Distress Sale” with 35% discounts.
112 Biker // Oct 10, 2011 at 12:56 pm
NFBPSH: “You must be kicking yourself for not listening to me this time last year.”
Why would I pay any heed whatsoever to someone who has been consistently, publicly, wrong, NF?
Take this statement, for example: “…your investments in the property market have lost you $3,500 pw for the past 12 months…” (That’s $182K, NF.)
First, you have no idea either what we own, where it is, or what it’s worth. Second, you have no idea what we owe. Third, you really don’t understand how property investment works. Fourth, your past posts demonstrate you have no idea how tax benefits work for property.
I could go on, but let’s simply look at the flawed logic you used in your original (screenshot) post, in which you claimed I wasn’t abroad… but concluded that while I’d been _away,_ I’d lost these fictional sums of money. Do you not understand these continual contradictions?
Here’s an opportunity to show me up for the fraud you claim I am. Ask our host to check my current location. It’s a very easy ask, NF. Ask Greg. Don’t be shy…
Biker,
Vancouver, BC
113 Not Fooled By Property Spruikers Hype // Oct 10, 2011 at 3:36 pm
Tell me Biker still earning 7% plus tax free on funds deposited in 10 offset accounts or do you only earn the yield the property has after expenses?
You said you had 10 offset accounts against 10 properties & you are on record saying you like the lower end of the market. ($300-$400K)
10 x $350k = $3.5 mil down 10% = $350K
Wealthy property investor on holidays in Canada spending most of his time blogging on websites trying to breath some life into a declining market.
Biker you should chillax you made sound investment choices over many years why worry about a piddly $350K drop in 12 months & $70K in Aug.
In ten years time you will haver the last laugh property prices will have doubled you will have assets of $7 mil plus & this minor hicup will just be a distant memory and I will still be bitter & angry in my homeswest flat.
Enjoy your wealth your a great man you deserve all the spoils you have.
114 Biker // Oct 10, 2011 at 10:47 pm
NF: “Enjoy your wealth your a great man you deserve all the spoils you have.”
No, I’m simply the ‘dad’ component of the ‘Mum & Dad Investor’ team you once derided me for being.
All your assumptions are wrong. We have more properties than you have listed. We have one property with a 100% offset. It’s earning, untaxed, 6.8%. Your summary of our assets falls well short of the figure you cite. We lost no money in the last 12 months. To the contrary, not only did we make a comfortable living, we raised rents on vacated rentals by 10%. Our annual income tax return alone is sufficient for us to be comfortable.
NF: “In ten years time you will haver the last laugh property prices will have doubled you will have assets of $7 mil…”
Again, you base such calculations on unknowns. There are too many Xs in such an equation. The _last_ laugh? Remember we sold a property late March 2011 for a profit far greater than three months abroad has cost us, after owning it two years. Times of uncertainty present great opportunities for anyone with resources and experience, providing they’re not greedy…
Finally, your list of cities we’ve visited was less than a fifth of those we’ve enjoyed in three months. Clearly I haven’t been “…spending most of (his) time blogging on websites…” I have, however, picked up a lot of useful information from folk who know much more about investment than we do, by _listening_. Travelling abroad is a tough job, but someone has to do it… .
115 Not Fooled By Property Spruikers Hype // Oct 11, 2011 at 12:03 am
Oh Biker I must have come down in the last shower.
Now I don’t want you to name a suburb you have any investments in but I would dearly love to know any suburb in Australia where a residential property returns 6.8% “Untaxed” .
116 Biker // Oct 11, 2011 at 1:11 am
NF: “I must have come down in the last shower.”
Some of our properties earn as much as 11% after tax, NF.
And we made 16.4% _annually_ on the one we sold this year.
I’m not sure which shower you descended in, but your illusions about property returns, if shared by tenants across Australia, probably mean we’ll continue to live, laugh and (l)earn in some comfort.
Boarding… . Gotta fly.
117 Greg Atkinson // Oct 11, 2011 at 10:12 am
At the end of the day we can only go on what information is publicly available. Investing in residential property can financially rewarding but it can also bring down even the biggest of developers as several high profile Gold Coast types found out recently.
In any case Perth is just one corner of the Australia-wide property market. Overall nationwide house price data appears to indicate that at the moment house prices are fairly flat or falling back a touch.
But perhaps the best indicator to how the property might be fairing is to look at what the big four banks are doing and at the moment they are all in cost-cutting mode. Perhaps this means that amongst other things they are anticipating a downturn in their home mortgages business?
118 Stillgotshoeson // Oct 11, 2011 at 10:03 pm
http://www.heraldsun.com.au/business/home-cheap-home-becomes-reality/story-fn7j19iv-1226164289890
“But in the residential market, would-be house buyers would be deterred by a likely 100-basis point increase in interest rates over the next few years as economic growth and inflation climb. Such a rise would take the official rate to 5.75 per cent.”
“mortgage rates of 9%” In a few years… this does not bode well for many.
119 Biker // Oct 12, 2011 at 10:08 am
“At the end of the day we can only go on what information is publicly available.” (?)
For example, check out this up-to-the-minute ‘report’:
http://www.perthnow.com.au/business/perth-house-price-to-surge-20pc-by-2014-qbe-insurance/story-e6frg2ru-1226164112395?class=mostpop-item-link&
Surge? 7% per year increase? Even if ‘true’, 7% pa is hardly the stuff of major ‘surgery’!~
120 Greg Atkinson // Oct 12, 2011 at 2:36 pm
Biker the link to the report is broken.
121 Not Fooled By Property Spruikers Hype // Oct 12, 2011 at 5:04 pm
Greg Here is a working link that Biker tried to supply to a story to support his position.
http://www.perthnow.com.au/business/perth-house-price-to-surge-20pc-by-2014-qbe-insurance/comments-e6frg2ru-1226164112395
The article is just a SPRUIK for the property sector, but Biker gets comfort from it.
However if he took the time to read the readers comments he would see that the sentiment of the Australian property buying public is negative & he is in a asset class that is on the decline.
122 Biker // Oct 14, 2011 at 6:52 am
Thanks for correcting that link, Shoes.
“Biker gets comfort from it…”
It’s possible you misunderstand our situation. Rents now provide a major part of our retirement income. We don’t care if folk rent or buy. If they don’t buy or build, our retirement income increases. A ten percent increase (so far) this year is better than the average 8.7% for the last five years.
Readers comments? There are very, very few individuals commenting. I accept that your own comment there is genuine.
You are correct that I do gain some comfort from reading these reports. I particularly enjoy revisiting many experts’ and respondents’ prophecies as their stated timelines expire.
123 Stillgotshoeson // Oct 14, 2011 at 8:27 pm
Biker // Oct 14, 2011 at 6:52 am
Thanks for correcting that link, Shoes.
Umm was not me it was NF.. If you think I am NF and he is me then you are mistaken, I assure you of that….
I am far more bearish than NF.. Property, Shares and precious metals are all going to drop in value, not at the same time and likely not by the same amounts. If I am reading the economy right over the next few years I think I am going to (continue) to do well.
Whilst bearish I am ultimately bullish on the Australian economy in that Australia will prosper into the future. Bad times will be upon us before these prosperous times though.
124 Biker // Oct 14, 2011 at 9:24 pm
Sorry about that, Shoes. Sometimes mixed up black bears with grizzlies, too.
“I am far more bearish than NF.”
True. I have a list of your predictions.
As I stated almost immediately you first posted, it’s always interesting to study online economists, particularly when they often _date_ their predictions so precisely, rushing in where angels fear to tread.
Sometimes these punts are sold to us as ‘optimism’. There may be some strange truth in that… a kind of hopefulness when the only direction left to look is up. The other admirable trait is of course, patience. The ability to wait (quietly) for the collapse of the universe, year-after-year, is extraordinary. Even when certainties fail to be fulfilled, bears can find (and list) more… .
What perseverance!
125 Stillgotshoeson // Oct 14, 2011 at 10:06 pm
Melbourne a few months ago 40 Suburbs in the Million Dollar Club, now 28…
http://www.heraldsun.com.au/news/more-news/melbourne-property-prices-falling-amid-global-gloom/story-fn7x8me2-1226167095993
Biker: “As I stated almost immediately you first posted, it’s always interesting to study online economists, particularly when they often _date_ their predictions so precisely, rushing in where angels fear to tread. ”
I care not a one little bit if I am 12 months, 18 months or 5 years out on my “predictions” They will still come about and I will be as prepared as I can possibly be.
126 Biker // Oct 15, 2011 at 8:16 am
“I care not a one little bit if I am 12 months, 18 months or 5 years out on my “predictions” They will still come about and I will be as prepared as I can possibly be.”
Let me guess, direct quote from Steven Keen?
“…my “predictions” … will still come about…”
OK. I get it. You’re God, right?
You must be well-placed for tonight’s Lotto…
127 Not Fooled By Property Spruikers Hype // Oct 16, 2011 at 8:16 am
Biker aka Trav’s
Did you see or bother to read the readers sentiment?
These are the people property speculators are relying on to pay them higher prices so they are able to offset their losses on negative rental yields.
These speculators are not as shrewd as you earning 6.8% plus tax free after all holding costs (Rates- Ins -- Vacancy- Mgt Fees etc)
How do you do that again you buy a property for $500K put a $100K deposit {20% so you don’t have LMI}& borrow the rest with a loan that has a Mortgage Offset Facility @ 6.8% then you pay it down so that the balance is Zero & the property then yields 6.8% despite the rental income being under 3% nett?
I tried to explain this to my accountant but struggled to do so there were too many blanks that did not make sense to him & frankly I did not know the answers.
I know we have had our moments over the years but could you explain this concept in more detail so as to help my understanding better?
128 Biker // Oct 16, 2011 at 11:00 am
NF: “How do you do that again you buy a property for $500K put a $100K deposit {20% so you don’t have LMI}& borrow the rest with a loan that has a Mortgage Offset Facility @ 6.8% then you pay it down so that the balance is Zero & the property then yields 6.8% despite the rental income being under 3% nett?”
When did I (ever) buy a property for $500K, NF?!~
NF: “I tried to explain this to my accountant but struggled to do so there were too many blanks that did not make sense to him & frankly I did not know the answers.”
No wonder you were unable to explain it, NF. If you start out with _invented_ figures, you’ll shoot blanks every time.
I prefer to work with (f)actual, known quantities. Take your stated online prediction that by 6th December 2011 our property market would be in ‘popping’ worse shape than the markets of Ireland and the US, for example.
Explain _that_ one to your ‘accountant’.
129 Biker // Oct 16, 2011 at 11:07 am
NF: “I tried to explain this to my accountant but struggled to do so there were too many blanks that did not make sense to him & frankly I did not know the answers.”
Mathematics issues? You probably need to study this very helpful clip, NFBPSH:
http://jezebel.com/5815965/should-math-be-taught-in-schools
130 Not Fooled By Property Spruikers Hype // Oct 16, 2011 at 11:55 am
Oh biker that was a disappointing response. I had hoped to learn so much for you.
Why are you avoiding the question.
Forget what the actual number was $500K , $300K $200K it is the concept you employ in your investment strategy that truly interest me.
I remain open minded that you may have stumbled on to something that the Accounting Fraternity has missed.
Come on Biker be a Champ explain how I too can be earning 6.8% plus “Tax Free” investing in residential housing using a Mortgage Offset Account facility like you do. Forget about my numbers put up any example you like.
BTW it is still saddening that you were not able to comprehend my comments on the 6th of Dec 2010, the discussion was about the construction industry stalling & I was saying that in 12 months time the US & Irish would be grateful things were not as bad as they would be in OZ.
I was discussing construction & unfortunately you took it to mean pricing.
131 Biker // Oct 16, 2011 at 12:04 pm
NF: “BTW it is still saddening that you were not able to comprehend my comments on the 6th of Dec 2010, the discussion was about the construction industry stalling & I was saying that in 12 months time the US & Irish would be grateful things were not as bad as they would be in OZ.”
Untrue. You were talking about the property ‘bubble’, as you term it:
Not Fooled By Property Spruikers Hype Posted at 10:13 PM December 06, 2010 “12 months time the US & Irish will be thankful things are not as bad as OZ … one Bubble at a Time or as some folks would say BOOM BOOM POW … ”
You’ve now invented a ‘construction bubble’? Priceless!~
132 Not Fooled By Property Spruikers Hype // Oct 16, 2011 at 12:25 pm
Sorry Biker,
I missed your explanation on how you can make 6.8% “Tax free” using a Mortgage Offset Account.
What’s holding you back?
Voodoo Economics at work here perhaps?
133 Biker // Oct 16, 2011 at 5:02 pm
* Built a home for $258K, land included. Current rental $390pw.
* Bought a display home for $375K. Builder paid us $600pw for 30 months. Now rented for $495pw.
Two examples of many. You want more? Want to know what each home is _now_ worth? Both have performed at least as well as the house you claimed _you_ were living in, NF:
“The house we currently live in bought 2002 for around $250K nothing done to it yet it is valued at over $750K” (Want a link for your claim this property trebled in three years?)
I can see you’re _keen_ to forget about your Big Day Out.
Here’s a much earlier _classic_ quote supporting your inane prophecy about the great 6th December Property Crash. Made just after you morphed into your New PerthNow Identity, BTW:
Not Fooled By Property Spruikers Hype of Perth Posted at 4:49 PM Today: @ WA is Good comment # 71 …Eyes Closed … Thinking … Thinking … Thinking … Property in 15 -- 18 months will be very affordable in Perth when we follow the Irish & USA…. Thats got to be good news? … My kids will be able to buy a house @ 3 -- 4 times their incomes and not be slaves to the Banks? Your kids too!” Comment 72 of 73
Jeez, you’re a laugh, son. Hoist with yer own petard… .
134 Biker // Oct 16, 2011 at 6:16 pm
Correction: NF: “The house we currently live in bought 2002 for around $250K nothing done to it yet it is valued at over $750K” (Want a link for your claim this property trebled in EIGHT years?)
135 Not Fooled By Property Spruikers Hype // Oct 16, 2011 at 8:16 pm
Biker you get less than 2.5% yield after tax on your funds you have invested in the property sector.
The fact you are not able to grasp this indicates at best a naivety about investing.
This is what you get from $700 pa investment advice.
You avoid giving dates or suburbs so that nothing is verifiable.
Clearly you have something to hide otherwise you would be more forthcoming.
136 Biker // Oct 16, 2011 at 8:55 pm
What tax? The fact that you don’t understand the simplest aspects of property is highly amusing, NF, but let’s return to your prophecy of an early December property crash, shall we?
You don’t get off that easy, son!~
Not Fooled By Property Spruikers Hype Posted at 9:47 PM August 30, 2011: “@ Too Easy nice attempt to Spruik the market & scare people into thinking the better buy now? What do you mean “Not Gonna Be Affordable” it is not affordable Today -- Now. But this exactly what it was like in the US & Ireland then prices fell 40% -- 60% & it became affordable. THE DAYS OF AFFORDABLE HOUSING IS JUST AROUND THE CORNER.” (My caps)
I’m intrigued why, in these days of instant technological recall, amateur economists make these silly online punts. Are they made in an alcohol-or-drug-induced funk? When the world’s ‘best’ economists continually get it entirely wrong, what makes very average laymen think they have crystal balls? Do they actually follow their own advice? Perhaps they do:
http://www.perthnow.com.au/business/first-home-owners-grant-needs-upgraded-mortgage-broker/comments-e6frg2ru-1226075720580 (Comment 26 of 63):
“I am a bitter Homeswest Tenant who drinks half his Dole cheque. …I am a fraud who claimed he owned property all over the state.”
One of the very few times we’ve heard NF speak with any real clarity. Do you regret leaving the UK six years ago, NF? Perhaps WA was a mistake(?) Britain is imploding. Why not seek sobriety and success back in JOE? Let’s face it, you’re not likely to ever commit to buying WA property, despite your claims to ownership of six WA properties… .
I recall _you_ do list the suburbs of these fictional homes:
Woodvale, Mandurah, Karratha, Karratha, Karratha, Karratha.
You want links with that?!~
137 Not Fooled By Property Spruikers Hype // Oct 16, 2011 at 11:24 pm
Yes please Trav’s I will have a link with that.
138 Not Fooled By Property Spruikers Hype // Oct 16, 2011 at 11:26 pm
Biker
I missed your explanation on how you can make 6.8% “Tax free” using a Mortgage Offset Account.
What’s holding you back?
You keep deflecting a simple question. Why?
The fact you talk about me & not the topic is amusing to say the least.
Now go back to biting your own neck
139 Biker // Oct 17, 2011 at 8:17 am
NF: “I missed your explanation on how you can make 6.8% “Tax free” using a Mortgage Offset Account.”
I supplied the numbers. You called 2.5% after tax!
Explain your maths on that figure.
As usual, your calculations depend on figures you _don’t_ have.
You _assume_ we actually _pay_ tax after submitting tax returns.
You continually base your (mis)calculations on sheer guesswork.
Explain your ownership of six houses as a Homeswest tenant.
Does Homeswest have this information?
Bottom line: The ‘biting-your-own-neck’ taunt is pretty tired.
You use it when you have _nothing_ else. I suspect that describes
your situation well.
140 Greg Atkinson // Oct 17, 2011 at 8:32 am
Okay time out. A debate between two people that goes over the same points is not adding any value and is not in the spirit of this thread. Please agree to disagree.
141 Not Fooled By Property Spruikers Hype // Oct 17, 2011 at 9:36 am
Greg
Agreed let the reader judge.
142 Not Fooled By Property Spruikers Hype // Oct 17, 2011 at 10:01 am
Greg
What is often lost or forgotten in the housing debate when people only focus on interest rates is afforadability.
Forget about interest rates look at percentages of wages to service a mortgage.
In 1975 only 24% of average income was needed to service a typical Australian mortgage. This was with a prevailing interest rate of 10.38% --
By 1985 it was still steady at 24% of average income needed to service despite interest rates soaring to 13.5% --
By 1990 Interest rates went to 16% plus but you still only had to use 34% of average income to service a mortgage.-
By 1995 you needed to use 29% of average income to service a mortgage (10.5% Interest rate)-
By 2005 it had soared to 40% (7.3% Interest Rate)-
Now in 2010 it takes a staggering 50% of average income to service a typical Australian mortgage despite HISTORICALLY LOW interest rates of 7.79% (Norm 10.11%)-
REALTORS continue to say Australian property prices will double every 7-10 years? -- How will anyone pay for it? --
Historically interest rates have averaged 10.11% over the past 30 years --
Just 3 years ago in 2008 it was 9.5% --
A 7% interest rate is equal to paying a 22.5% rate in 1990 in comparative terms.
Investors strategy in residential property investing is to obtain sufficient capital growth to offset negative rental yields. For property investment to work for them they must get capital growth of 7% -- 10% or property doubling every 7 -- 10 years.
This has worked in the past as home buyers have sacrificed spending money elsewhere to achieve the great OZ home ownership dream.
But with 50% -- 60% of income going to service mortgage & home ownership costs today, home buyers incomes are now limiting what they can bid up houses prices by, thus denying investors the capital growth they need & without the capital growths of the past investors are exiting or not entering residential property sectors.
Property speculators have had a 10 year sweet spot where easy credit has allowed house prices to sky rocket.
This link explains this in better detail: http://www.khanacademy.org/video/the-housing-price-conundrum?playlist=Credit+Crisis … Take the time to watch all 4 videos in the series & discover where the real demand drivers that drove prices up came from.
http://nfbpsh.blogspot.com/2011/01/home-ownership-getting-tougher.html
143 Greg Atkinson // Oct 17, 2011 at 10:38 am
We also seem to assume that rising house prices are always a good thing and I talked about this a little in this post: Are rising Australian home prices good the economy?
But at the moment it appears many people are willing to push their finances to the limit to own a home.
144 Biker // Oct 17, 2011 at 12:46 pm
Greg: “But at the moment it appears many people are willing to push their finances to the limit to own a home.”
I don’t believe the stats support this at all, Greg. I believe more and more people are now renting. Anecdotal evidence may indicate they’re caught in the rental net in retirement, with at least 60% of combined pensions committed to rent.
Rising house prices are not ‘a good thing’… if you haven’t got a home. Rising rents are not ‘a good thing’ if you haven’t got a home. Both are pretty damned good if you _do_ have a home… and you _do_ have rentals, I can assure you.
Good the economy? I suppose one could argue that our inability to get one cent in pensions saves the economy a dual welfare payment for the period of our longevity. Mine dew, that one also evokes the negative-gearing benefits we received for three decades, doesn’t it?
I see you’ve opened up the debate again. Enter NF… .
145 Greg Atkinson // Oct 17, 2011 at 1:15 pm
Actually Biker I was not opening the debate again, I was simply pointing to where such a debate had already been covered.
Also I said “many” not “more” & the ABS/RBA statistics do support what I said. Maybe there is a short term trend change in progress regarding renting versus ownership but according to the ABS:
“Home ownership rates have been fairly stable at around 70% for many decades. As measured in the ABS Census of Population and Housing, in 1971 the home ownership rate was 69% and in 2006 it was 70%, with small fluctuations around 70% in the intervening Censuses.”
That sounds like many to me.
Source: ABS: LEVELS OF HOME OWNERSHIP
146 Biker // Oct 17, 2011 at 1:38 pm
Thanks for that data, Greg. It will be interesting to see the latest figures.
I expect home ownership will be even higher after 6th December 2011…!
I take your point that investors should commit to asset classes which strengthen the Australian economy. Funnily enough, folk just seem to selfishly put their own needs first… .
And governments? Even worse. They want to get re-elected!
Very short-sighted, counter-productive and unethical…
147 Not Fooled By Property Spruikers Hype // Oct 17, 2011 at 1:55 pm
Biker “6th Dec 2011″? What’s happening then?
Since the 6th Dec 2010 housing in WA is about 10% cheaper on average, are you expecting it to get even more affordable by Dec 2011. Interesting forecast you make I will keep a eye on that.
Greg I agree rising houses prices are not good for our economy as housing draws more & more dollars from other sectors.
Also despite Australian savings have improved since the GFC in 2008 a large part of funds used by our Banks to fund rising house prices are sourced from offshore & the subsequent interest costs go offshore. Money taken from our economy to support speculation in our property sector.
148 Biker // Oct 17, 2011 at 2:35 pm
NF: Biker “6th Dec 2011?? What’s happening then?
Selective memory? Amnesia? Alzheimer’s, perhaps?
Not Fooled By Property Spruikers Hype, Posted at 10:13 PM December 06, 2010 “12 months time the US & Irish will be thankful things are not as bad as OZ … one Bubble at a Time or as some folks would say BOOM BOOM POW …”
http://www.perthnow.com.au/business/business-old/construction-slowdown-to-pause-rate-rise/story-e6frg2qu-1225960148535
You should have settled for my
response to his last nonsense, Greg… 
149 Not Fooled By Property Spruikers Hype // Oct 17, 2011 at 3:13 pm
Keep up old timer read the article again it is about “Commercial” construction.
What has that to do with residential property being “Even Higher”
Tell you what biker see my comment #142 above , go to town find a fault in that?
You continue with this Dec 6th thing , keep clutching at straws you appear to be losing the plot.
150 Biker // Oct 17, 2011 at 3:27 pm
Three separate posts demonstrate clearly that you believed The Big Crash would occur in early December 2011, NF.
Many more indicate that you believed that rising interest rates in 2011 would be the cause.
More still show that you expected owners’ costs to be an EXTRA $9K in 2011.
Man up. Admit you got it _hopelessly_ wrong, son!*
* I see you’re also running from your ‘rents are flat’ claim over at PerthNow. How many links (more) do you need to ‘man up’ (your term, BTW) and admit this latest in a l-o-n-g series of miscalls?!~
151 Greg Atkinson // Oct 17, 2011 at 3:31 pm
Didn’t you both get my hint above to agree to disagree? Time to move on. This site was not set up for people to have running debates which end up going in circles. I will be moving into comment delete mode soon.
152 Biker // Oct 17, 2011 at 3:36 pm
Didn’t YOU get my smiley hint that I _accepted_ your decision, Greg? Deleting it and posting your own bearish sentiment was your right, as site owner, of course, but I wonder(ed) why it was necessary…
153 Stillgotshoeson // Oct 18, 2011 at 12:56 am
Very good article…
Explains how and why property is going to continue to decline in price…
http://www.theaustralian.com.au/business/property/property-values-sliding-says-bill-moss/story-fn9656lz-1226169144054
I await the obvious response…. from_someone. any_guesses_whom_that_could_be?
154 Biker // Oct 18, 2011 at 8:18 am
I think the focus may have been on commercial property, Shoes(?)
If you were bold, you’d probably predict a collapse of say, 54%, in Melbourne residential property(?)
155 Not Fooled By Property Spruikers Hype // Oct 18, 2011 at 10:48 am
Shoes,
What many property speculators fail to understand is the drivers in the market that were responsible for the rapid rise in property prices.
Many Speculators wrongly think it is was under-building / migration or population growth that drove prices up.
However ABS Data says the Australian population grows by 1 person every 97 seconds (Births minus deaths plus immigration minus outbound migration)
{ http://www.abs.gov.au/ausstats/abs%40.nsf/94713ad445ff1425ca25682000192af2/1647509ef7e25faaca2568a900154b63?OpenDocument }
This works out to a population increase of 325,000 people PA in Australia & with census data indicating there are 2.6 people per household we should be building about 125,000 homes pa to accomodate this population increase.
The HIA have come out & said that even with our current record low housing starts we built 151,000 homes in the past 12 months,{ http://www.news.com.au/money/property/housing-starts-crash-as-home-buyers-stay-clear/story-e6frfmd0-1226137516424 }
But this works out to enough housing for 392,000 or 25,769 too many homes Australia wide. Record low housing starts yet we are still building too many.
Just imaging how much excess housing we have built in previous years when our housing start numbers were around 175,000.
I certainly hope nobody’s investment strategy is based on strong capital growth due to a shortage in housing supply.
No wait that is exactly what all investors are banking on to offset negative rental returns. Ouch that hurts!!
In Californian prior to their housing collapse Property Spruikers were warning of upcoming housing shortage, yet years later they have a glut?
The link I posted previously in comment #142 { http://www.khanacademy.org/video/the-housing-price-conundrum?playlist=Credit+Crisis } clearly demonstrates that lax lending standards & easy credit were the real drivers of property prices.
It supports what your link in comment # 153 says about easy money… “Debt is necessary to inflate asset values; take it away and asset values fall,” …… “Imagine a world with no debt and there would be less development, smaller buildings, cheaper finishes and fewer home owners.”….”Once you turn off debt, the property market begins to act like equities.”…”The balance between spending on shelter, food, energy, and health is changing. This will affect all forms of real estate. How we own it, finance it and rent it.”
Most property speculators in the Australian property market are “Mum & Dad” investors with little knowledge other than 30 minutes at a property seminar or a relative that made money in property before so naturally they can do the same.
The biggest problem is that the Tax office is on record saying that the average investor claiming deductions for residential property investments has a taxable income of under $72,000 pa so they are not wealthy enough to keep sustaining negative rental yields in the vicinity of $6,000 pa after deductions with no prospect of capital growth to offset these losses.
In fact Perth prices are now back to 2006 levels so investors in Perth have had losses of $30,000 with no capital growth to offset it against. Now they are faced with a number of years with little if any capital growth ahead as housing has hit it’s affordability ceiling & without capital growth over 8% -- 10% PA property investing is not viable.
Owner occupiers in US / UK / Irish markets were not the ones that drove prices down, they stayed in their houses as prices plummeted because speculators were exiting the market at any price, but more importantly they were not entering the market either removing a major demand driver that was either sustaining prices or driving prices up.
156 Biker // Oct 18, 2011 at 12:05 pm
NF’s comparisons with the US and Ireland are laughable
For most of the last decade, the US generated _three times_ the number of housing starts per head of population as Australia. In 2006 -- 2007, there were 4.5 times the number of housing starts p.h.o.p., as in Australia. The US bubble had been steadily building since 2001, but in those two years construction went _crazy_ as supply not only peaked, but went into hyperdrive. By 2007 -- 2008, the US started cutting back, but even during 2009 -- 2010, an economy with oversupply AND a housing collapse was still more than doubling Australia’s building starts!! Comparisons between the US and Australia are just silly. We have a strong, resource-based economy; sound banks; half their unemployment; stable property prices (as NF’s own $250K -- $750K capital gain in eight years shows!); much higher consumer confidence; and manageable debt levels. NF’s predicted interest rate rises in 2011 demonstrate how far from reality (and realty) he’s travelled into the ether!~
Nor did our Aussie banks permit the massive borrowing excesses of the US and Europe. “Non-conforming housing loans (the closest Australian equivalent to “sub-prime”) accounted for only around 1% of the mortgage market in mid-2007, compared to around 13% in the United States….”
This report is well worth studying, to show just how ‘different’ Australian property markets are to those NF would like ours to become: http://www.financialstabilityboard.org/publications/r_110926b.pdf
Meanwhile, 6th December 2011, the Day of Reckoning NF states will make Ireland’s and the US property markets look good, rolls on… . Delightful!~
157 Not Fooled By Property Spruikers Hype // Oct 18, 2011 at 12:17 pm
Biker ” Meanwhile, 6th December 2011, the Day of Reckoning NF states will make Ireland’s and the US property markets look good, rolls on… . Delightful!~”
I will not respond. It is unfortunate you don’t have the maturity or respect for Greg’s request to agree to disagree & just discuss the topic.
Perhaps Greg should delete the comment to set the boundaries?
158 Not Fooled By Property Spruikers Hype // Oct 18, 2011 at 12:35 pm
“NF’s predicted interest rate rises in 2011″ No I did not!
Would love to see a link where I said interest rates would rise as I did not.
Again why quote me out of context am I that big a threat to your property dreams?
If anyone examines my comments they would see that I point to other economic forecasters who in late 2010 & early 2011 were saying that rates would rise in 2011. Not me saying it but them.
I then said to people that with forecasters (Again not me)saying interest rates will rise in 2011 if they are not able to afford a higher rate they should look at selling before they are trapped.
Late 2010 & early 2011 it was a perfectly legitimate & well founded observation to make.
As for your “demonstrate how far from reality (and realty) he’s travelled into the ether!~” comment…. demonstrates your desperation to shut down debate by ridiculing anyone who’s opinion differs from yours.
159 Biker // Oct 18, 2011 at 12:38 pm
Your continual ill-advised comparisons with the Irish/US debacle invite comment, NF. Even if Greg deletes my response, your silly claims, based on the US/Irish experience will follow you l-o-n-g after that day passes _without_ The Big Aussie Property Crash…
I KNOW you’d love to see that comment deleted. You have _no answer_ to the two points I’ve made about housing construction and borrowing. For that reason. I’ve just copied both, to use repeatedly whenever you make these foolish comparisons, here and elsewhere.
You probably need to eventually come up with some reasoned responses.
160 Biker // Oct 18, 2011 at 12:42 pm
NF: “Would love to see a link where I said interest rates would rise as I did not.”
OK, it’s on the way. You’ll ignore it, of course, as you always do, when:
a. you demand a(ny) link…
…and…
b. …I supply it.
You really should be aware by now that I track and record every little bit of your ongoing nonsense… .
161 Biker // Oct 18, 2011 at 12:47 pm
OK, here’s the FIRST. (How many do you want?)
PerthNow, Comment 10, 21st Jan 2011
http://www.perthnow.com.au/business/business-old/rate-rise-risk-from-inflation-figures/comments-e6frg2qu-1225994191839
“…now interest rates are rising people have stopped buying & you might be too late…”
162 Stillgotshoeson // Oct 18, 2011 at 1:19 pm
Biker // Oct 18, 2011 at 8:18 am
If you were bold, you’d probably predict a collapse of say, 54%, in Melbourne residential property(?)
http://www.prosper.org.au/2011/10/18/house-price-falls-steeper-that-the-us/
163 Biker // Oct 18, 2011 at 1:34 pm
Well, there ya go, Shoes. The Doom’n'Gloom Mob say 50% drop by 2017*. You’ll be in like Flynn, son!
Maybe you should have ‘dove’ right in just over a year ago:
Shoes: “I think we will see an average decline (Melbourne at least) of around 20% If I was to be bold and to presume the real estate market in a share market theme.. The share market dove 54% at it’s worst but yet some shares have thrived, some stayed the same.”
You should have boldly gone where no man has gone before!~
Uhhh, wait-a-bit, Steve K probably trekked before you!
* You should definitely buy in 2017. By your own reckoning you’ll be retired _well_ before that. Right?
164 Biker // Oct 18, 2011 at 1:37 pm
NF: “Would love to see a link where I said interest rates would rise as I did not.”
LOVED that one, did you, NF? Don’t be shy, Oliver Twits.
Ask for MORE!~
165 Not Fooled By Property Spruikers Hype // Oct 18, 2011 at 1:56 pm
For most of the last decade, the US generated _three times_ the number of housing starts per head of population as Australia. In 2006 – 2007, there were 4.5 times the number of housing starts p.h.o.p., as in Australia. (Wrong)
The US bubble had been steadily building since 2001, but in those two years construction went _crazy_ as supply not only peaked, but went into hyperdrive.
(2000 -- 2010 WA population increased by 330,000 people yet we built enough housing to house 572,000 clear oversupply here)
By 2007 – 2008, the US started cutting back, but even during 2009 – 2010, an economy with oversupply AND a housing collapse was still more than doubling Australia’s building starts!! (Wrong)
Comparisons between the US and Australia are just silly.
(Why because you say so?)
We have a strong, resource-based economy;
(China all our eggs in one basket, FYI all of Chinas markets are in decline & cutting back flow on to OZ to follow)
sound banks;
(You mean like bank of America & Irish banks that had “AAA” ratings prior to the crash. What are the levels of exposure to the housing sector do our banks have as a percentage of their loan books? 60% -70%++ twice what US banks had)
half their unemployment;
(Unemployment in the US did not go above 5% till July 2008 2.5 years after housing markets had stalled & prices had been falling)
stable property prices.
(Prices exceeding incomes is not how you would describe a stable housing market in fact it is a indicator of a unstable housing market, also prices have been falling for 12 months WA prices down 10% plus in the past 12 months with a fall of 2% in Aug 2011 alone,listings soaring, sales down 25% plus, defaults rates rising etc etc this would hardly be described as a stable market)
much higher consumer confidence;
(Retail spending down, manufacturing sector laying off or cutting back hours, tourism sector struggling with high AU dollar, Overseas eduction sector down 30% again high AU $,)
manageable debt levels.
(housing costs at close to 50% of income is not manageable in the long term0
NF’s predicted interest rate rises in 2011.
(No I did not that is a lie)
Nor did our Aussie banks permit the massive borrowing excesses of the US and Europe.
(Low doc Loans?, LVR down, Same Same)
OK Biker easy question, what is your forecast for the property prices in 5 years , 10 years
166 Not Fooled By Property Spruikers Hype // Oct 18, 2011 at 2:13 pm
Sorry Greg
OK Biker you were challenged to show where I predicted that interest rates would rise in 2011 so in comment #161 you put up a link to a article & selectively show this snippet whisch is out of context:
OK, here’s the FIRST. (How many do you want?)
PerthNow, Comment 10, 21st Jan 2011
http://www.perthnow.com.au/business/business-old/rate-rise-risk-from-inflation-figures/comments-e6frg2qu-1225994191839
“…now interest rates are rising people have stopped buying & you might be too late…”
Firstly is says nothing about forecasting a interest rate rise so your wrong there & here it is in proper context:
Remember this is from Jan 2011 the RBA had put rates up in Nov 2010 & the banks doubled the RBA increase citing the increase in borrowing funds offshore.
“if you were a smart INVESTOR & not a simple SPECULATOR you would have read these FUNDAMENTALS in 2008 & started to exit the market as prices had started to fall but was saved by the GFC & the RBA dropping rates plus the BOOST to the FHBG … now interest rates are rising people have stopped buying & you might be too late”
So in Jan 2011 this comment is accurate & prudent. I have to question your motives to quote people out of context what are you frightened off the truth?
You say you save every comment I make? Well I save nothing you say because frankly what you have to say is often dishonest & irrelevant to any sensible debate.
I have to wonder just how much you fear the truth. You are supposed to be a wealthy investor with many assets you you spend all your time on internet sites trying to talk up the property sector?
167 Biker // Oct 18, 2011 at 2:19 pm
NF: “OK Biker easy question, what is your forecast for the property prices in 5 years , 10 years”
Easy question? You just DON’T get it do you? Read back through my posts and you’ll find I continually question the crystal ball approach to investment. You’re an unqualified Brit with six years’ residence here, compared to my 64… yet you’re expert in WA property? Amazing!~
But I do admit I enjoy ridiculing escapees from failed NH economies, who parachute down here… and then attempt to *POP* our Aussie economy, with statements like they’ll “offload at any cost…” and predicted 50% crashes…
Now you’ve returned, let’s continue with your (failed, again) prediction that interest rates would rise this year. Try this:
Not Fooled By Property Spruikers Hype Posted at 3:35 PM June 23, 2011: “… as interest rates rise this year investors will offload at any cost & buyers will be priced out as they fail to qualify for loans….”
http://www.perthnow.com.au/business/local-property-players-build-portfoilios/comments-e6frg2ru-1226080466625
You believed rates would rise. You cited additional costs of $9K extra for 2011. Would you like _more_ reminders of your inane crystal-ball gazing?
168 Greg Atkinson // Oct 18, 2011 at 3:57 pm
I suggest that any ongoing debate head over to the discussion forum: http://www.shareswatch.com.au/blog/australia-house-prices-and-real-estate-discussion/
169 Ross T // Oct 23, 2011 at 10:53 am
I am following posts over at Menzieshouse.com concerning the property rights threats being engineered by our green council LEP’s and DCP’s. Recommend those with property investments take a look.
170 Biker // Oct 23, 2011 at 1:18 pm
Unable to find that link, Ross.
Interesting read here:
http://au.news.yahoo.com/thewest/a/-/breaking/10588767/pilbara-prices-hit-city-rentals/
As Greg suggested long ago, we should remember there are property marketS. I see the Shoeless One has recently discovered this… .
171 Biker // Oct 30, 2011 at 8:50 am
“These so-called experts have now changed their positions stating that we have started a new bull market in recent weeks. How can anyone take these people seriously?”
Or fudge the facts to reduce the incredulity: “We’ve spent the last THREE YEARS trying to convince you and other Australians that house prices can and will fall.” (CAPS mine.)
http://www.moneymorning.com.au/20111027/if-a-butterfly-flaps-its-wings-in-frankston-will-house-prices-fall-in-st-kilda.html#comments
172 Stillgotshoeson // Nov 16, 2011 at 1:02 pm
http://finance.ninemsn.com.au/newsbusiness/aap/8374866/falling-home-prices-a-pain-for-refinancing
Seems some of the late entrants into the property market may not be able to take advantage of new lower rates even if they wanted.
173 Biker // Nov 16, 2011 at 7:44 pm
Delightful article. Check out Mr Happy, here:
http://www.perthnow.com.au/business/tough-to-refinance-as-home-values-fall/story-e6frg2ru-1226196825086
Our sons renegotiated 7.28% (ME) down to 6.55% (ANZ) …. and got $1K expenses funded on each loan transfer, by ANZ.
How are _your_ predictions for 2011 progressing, Shoeson?
Month-and-a-half to go, son… .
174 Stillgotshoeson // Nov 17, 2011 at 9:42 am
Who would have thought that the banks would be in trouble this year?
Who would have thought that the RBA could go into rate drop mode and we find ourselves in a position where the banks will not pass on those RBA rate reductions and will in fact continue to raise mortgage rates due to the European FInancial Crisis?
Some people even thought that with the reduction in fixed rate mortgages meant that variable rates would also follow the downward trend..
http://www.perthnow.com.au/business/business-old/nab-chiefs-credit-alert/story-e6frg2qu-1226197614073
Side note: Has anyone else noted the large push in credit card advertising from the banks and other financial institutions?
175 Biker // Nov 17, 2011 at 11:29 am
The banks in trouble?
http://www.watoday.com.au/business/nab-posts-55b-record-profit-20111027-1mkr6.html
http://www.perthnow.com.au/business/westpac-posts-699-billion-profit/story-fn7kjv7y-1226183205191
http://www.watoday.com.au/business/anz-profit-tops-5-billion-20111103-1mwe1.html
http://www.perthnow.com.au/business/business-old/commonwealth-bank-on-track-for-record-profit/story-e6frg2qu-1226195343996?from=public_rss
Are you _really_ living in Australia, Shoeson?
176 Not Fooled By Property Spruikers Hype // Nov 19, 2011 at 12:57 pm
Shoes
I have a friend in Real Estate & he has 5 Vendors who wish to sell but are not able to because the proceeds from the sale would not allow them to discharge the mortgage, so the bank will not allow the deal. They are trapped & will ride the market down.
One of these vendors parents have now provided them with $35,000 so that the sale can go through & they can cut their losses.
Total loss will come to $85,000 inc parents $35K
There must be hundreds if not thousands of recent home buyers who cannot afford to keep their homes but due to falls in prices they cannot afford to sell them either.
177 Biker // Nov 22, 2011 at 11:35 am
So they’re going to _rent_ if they sell?
http://www.watoday.com.au/?gclid=CJqo882NyawCFWRNpgodSlf_pw
You have a _friend_ in real estate?
178 Not Fooled By Property Spruikers Hype // Nov 22, 2011 at 6:35 pm
Yes Trav’s they are going to rent at half the cost of ownership.
Dec 2006 rents $280 pw 5 years later it is $395 pw a rise of 52%.
Just look at the bright more customers for you to offset capital losses in the vacinity of $40K per house in the last 15 months.
179 Biker // Nov 22, 2011 at 7:38 pm
Yes, the queues grow longer every day, NF. And as residential construction dwindles, rents will continue to climb.
http://news.domain.com.au/domain/home-investor-centre/rental-yields-to-continue-climb-due-to-low-supply-20111119-1noah.html
As a Homeswest tenant, you’re unaffected by rent increases, queues or references. Nor can you afford to buy any more homes.
Have you sold those six you own, or have you personally ‘lost’ a quarter-mil in the last fifteen months? Like your real estate mate, it’s all fiction, of course.
180 Greg Atkinson // Jan 17, 2012 at 4:56 pm
Well one thing we know for sure and that is the rate of growth in China has slowed. The big question now is how will the Chinese property market hold up? Also from what I have read Foreign Direct Investment (FDI) into China is also slowing so that is going to have an impact over the next 6 months.
So far parts of the Australian economy have held up fairly well but I think even the most bullish of commentators would admit that cracks are starting to appear.
181 Ned S // Jan 17, 2012 at 10:02 pm
Where’s me ole mate Biker? I’m missing him.
182 Lachlan // Jan 18, 2012 at 4:27 pm
Australian property is going to go down 50% tomorrow Ned
183 Ned S // Jan 19, 2012 at 7:17 pm
Appreciate the effort Lachlan, but it just doesn’t seem the same as an original Biker type comment …
184 Not Fooled By Property Spruikers Hype // Jan 20, 2012 at 7:11 am
Ned
If you need a “Biker” fix he is still active on the Perth Now property page under the name of “Trav’s”
His latest clanger is the in 30 years he has never paid a single dollar in advertising to sell a property because the quality of the properties he buys are so good they sell themselves with buyers knocking on his door throwing money at him. (Full Market price)
FYI: He is also “Mike of Perth” on this site
http://www.perthnow.com.au/business/property
185 Ned S // Jan 21, 2012 at 12:28 am
Goodo — I’ll keep that in mind if I ever want to observe or participate in a poo pouring pageant where no sane moderator exists then …
186 Greg Atkinson // Jan 30, 2012 at 5:52 pm
Interesting to see that a rating agency has put the spotlight on the big four banks. According to a report today in The Australian:
AUSTRALIA’S four largest banks were placed on rating watch negative by Fitch Ratings today, which said the lenders continue to have a weaker funding profile than similarly-rated peers.
Source: Fitch puts Commonwealth Bank, NAB, Westpac, ANZ on ratings watch negative
187 Ned S // Jan 30, 2012 at 6:02 pm
Yes, I saw that. I’m just waiting for Swannie to come out with another “Oz is just fine and dandy -- Don’t you worry about that!” type statement.
Be interesting to see if the BDI goes down another 50 points or so tonight hey?
188 Greg Atkinson // Jan 31, 2012 at 8:33 am
Ned the BDI is just above 700 now and not far from the low it hit during the GFC. I am surprised how little attention this is getting in the mainstream business & finance media. Maybe it’s a bit too complex to write a cut & paste article about
189 Stillgotshoeson // Oct 1, 2012 at 2:35 pm
http://www.theage.com.au/business/manufacturing-contraction-picks-up-pace-20121001-26uc3.html
http://www.theage.com.au/money/saving/households-struggle-to-save-cash-20120930-26tj2.html
These are not signs of a healthy and prosperous economy.
Currently working on site for a large multi national firm.
Decommissioning 2 lines, pulling down another to send to their facility in NZ and leaving the remaining 2 here.
Workforce of 80 here, 26 go at Christmas, 24 more in May 2013.
190 Stillgotshoeson // Oct 1, 2012 at 3:51 pm
and further to above…..
http://afr.com/p/national/income_to_fall_as_mining_slump_bites_hK1Z3Rdbj5L37zUAtXCybI
191 Anonymous // Oct 11, 2012 at 12:33 am
Well done on making an accurate prediction. The reality is Australia is in for some tough times ahead.
192 Greg Atkinson // Oct 11, 2012 at 9:30 am
Well I’m not sure my forecast was all that accurate but I reckon I did do a better job of reading the tea leaves than the RBA, Treasury & Government
193 Phill George // Dec 13, 2012 at 12:05 pm
Incredible accurate prediction. The RBA, Treasury & Government are definitely wrong in their economic outlook for 2013. Times are going to get hard.. Real hard.
194 Greg Atkinson // Dec 13, 2012 at 4:23 pm
Thanks Phill. I find it hard to understand where the Government, RBA & Treasury get their optimism from. Must be something in the water coolers in Canberra?
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