Move over banana smoothie

As the Australian housing bubble lurches, the CBA has launched a new marketing tool for would-be investors, an online game. “Investorville” is “fun and friendly” where you can make choices “just like a real investor”. In time, you’ll get so good at it that you’ll be able to “give it a go in the real world”. What could possibly go wrong?

Check it out for yourself at CBA’s media release is available here

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  1. There is your clue (or cue?) on which bank to short FIRST, when the housing bubble goes belly up.

    • CBA and NAB have got some good setups at the moment. BEN is also a contender (having had a quick H&S setup that has rebounded slightly).

      Usual disclosure etc ad nauseam….

    • Well, it depends on how Suncorp funds its mortgages issuance.
      To my untrained, layman’s eye, Suncorp seems to be more of a RMBS issueing servicer rather than a full-fledged ADI. So the default risk is passed on to the mugs who bought the AAA rated RMBS from Suncorp. Risk to Suncorp is that growth can hit a nuclear bunker wall if RMBS funding market goes off life support (AOFM) and dies again. But they can still earn fees off the pile of mortgages they have already issued.

      • I shorted them in May (Options) when they were $8.50 (more with the QLD mortgage exposure than the disaster exposure to QLD, Vic and NZ), in <3 months they were flopping around $7.48.

        $8.50 – $7.50 in 3 months? Things are crook in Tullarook.

  2. Strongly agree with you there, Mav. It’s a bit like taxi drivers giving you stock market tips… when everyone is in on it then you know that’s your cue to GET OUT FAST!

    I haven’t even looked at the link myself yet but I’m sure that its a fun residential property investment game that teaches people (no doubt) that residential property is like a giant never-ending pokie machine payout with no risks and ever-increasing returns. Everybody KNOWS that, don’t they!

    And to think that houses used to be just places to live… nowdays we have a national economy driven by the whole scheme. Let’s just hope that we don’t socialise the losses like they did in Ireland.

    • look how many voters will be screaming for losses to be socialised and how politically profitable it will be to do so..

    • She has savings? Well step right this way…..

      I’m surprised that her local branch manager didn’t put in a courtesy phone call to see if there’s anything else they can do for her just to throw a bit of the ol’ “and by the way, have you seen our new offers on housing finance?”

      Anywhere her money lands will earn her a shiny target sticker for some sort of leveraged investment scheme – that’s just the way they roll these days.

  3. It’s wonderfully realistic, as they say, based on actually results without those pesky tax things.

    I was a single person with $50K and a $52K/pa salary and I ended up with a net worth of $300K in 3 years! I purchased a property, set the rent above market value (and yet it still rented). My property price nearly doubled in the three years, my rental income went up by a third and I had massive tax returns and a timely inheritance of $50K.

    I am now totally convinced that property investment is the only way to increase my wealth (well, unless I get a few more of those inheritances coming my way).

  4. Extraordinary

    I also started with $50,000 and an income of $52,000. In 15 years I had 6 properties and a net worth of $2.2million. My net worth increased by 9%pa. Rents and prices were going up so quickly I couldn’t keep up.

    I didn’t pay much attention to what I was doing either, I just picked properties that were advertised as being high yield.
    Imagine how well I will do in real life!

  5. Century 21 also have a similar game – but unfortunately (fortunately?) it tends to crash my browser:

    After a few turns in the CBA game I was able to buy property after property by refinancing my loans to unlock the equity. CBA loves the magical equity fairy!

    • Wow… stunned, this website seems at home in the la la land of 2004-07. I wonder whether Freddie and Fannie also had these games?!

  6. I like how they create an accurate simulation with routine 15% pay rises and inheritences.

    Funny how they don’t include negative impacts, such as unpredicted health problem or sudden job loss.

  7. I hope this latest stunt by the CBA will get APRA horrified enough to do more than just send letters to bank boards:
    “The Australian Prudential Regulation Authority has urged major banks to maintain standards in mortgage lending as the battle for market share leads to increasingly risky practices, according to The Australian Financial Review newspaper.”

  8. “Norris World” ..somewhere between a ralph and chuck,of smooth hits and lumps of pain….JR

  9. Property is about the most boring market anybody could invest in. Why would anyone want to simulate the experience?

  10. Wow, this is simply reprehensible.

    No capital gains tax or land tax, and yet the CBA has the nerve to call it a “realistic property investment scenario”.

    I also love how the “simulation” wont allow you to use cash to buy a house outright, you need to take out a minimum 10% loan.

    Just incredible.

  11. Just been playing the game. What is really interesting is that they start off with capital returns at between 10 – 15% and by the time you get to year 2019 they are only assuming capital gains of 0.3% on new properties….. I guess they are predicting a ‘flat’ market for some time to go.

  12. If you didnt laugh youd cry

    It appears it wont let me take out a loan with a term of less than 25yrs?? Here i was thinking I would be better off minimising total interest and paying it off quickly. CBA always there to help out the uneducated like myself

    • Yeah,move over B-smoothie…swallow this new yellow potion everyone ,and never let anyone tell you the
      opposite of milk is Soul…it’s Yogurt..
      Trust me ,Just sign here,
      and here…..cheers

  13. The first periods simulate up to 19% cap gains, middle periods simulate 1% to flat and the end periods go back to 19% again.

    I ran both a rent/out right purchase scenario and a cap gain maximising/leveraged scenario – obviously the cap gain one kicked the rent ones ass (19% P.A., seriously?)

    I also ran a cap gain, rent, cap gain scenario and that ended up with a 12% average.

    It’s interesting to note that they don’t show a rent return % once you’ve purchased the house, making it hard to figure out what kind of rent return you’re getting – probably on purpose so as to force people to use leverage. Cap gain forecasts are plastered everywhere.

    I think it’s quite fun to be honest. Every time I saw 45% capital gain in 18 months I giggled to myself and felt a little sad, wondering how many people are getting drawn in to this rubbish thinking they’re going to be the next property mogul.

    • I tried a renovate-flip scenario, based on securing a lot of one bedder slumlord apartments early at a 6% fixed IO loan (available second turn) and crazy above market rents.

      The extremely “realistic” simulator adds significantly more value to a house than the cost of a reno. The simple tactic of buying a heap of houses for a lot less than market cost, setting well above market rents, then renovating and selling all of them next turn was a winner – I ended up with millions of net worth half way through.

      Not to mention it was giving me tens of thousands in multiple tax returns per turn, along with the inheritances, pay rises, lack of CGT and agents fees, etc.

  14. This one is a classic.

    I forwarded it through to a few on as I saw it on the news. My commentary was almost word for word macro business.

    Just to be fair I did play with it for a while.

    I bought myself a lovely apartment on the gold coast for $340,000 and within 8 years It was worth $480,000. Oh and that was without completing the $60,000 in renovations apparently required. Not to worry though as I’m pretty sure my salary doubled during that time and let’s not forget I have no taxes to pay.

    Interestingly, is there a way to track the cumulative interest payments?? the only thing I saw was the “net worth” calculation which includes all sorts of fabulous assumptions.

    At least Westpac’s Banana’s were harmless!

  15. I played an amazingly realistic casino game once on the old playstation. I made $14 million playing Baccarat in just 3 hours.

    It was so easy I am off to the closest casino to play for real.
    How could I possibly lose !!!!!!

    Goes back to the old saying
    How do you make a small fortune in the casino
    Start with a large one!!!!

    I used to work in casinos by the way. I have seen plenty of losers and very few winners. A bit like the property market to come.