Debunking clearance rates

Back in May Louis Christopher from SQM Research appeared on Channel 7’s Sunrise to give the Australian real estate market a jolly good mauling. On the weekend he returned to the program to give the market yet another serve, including an amusing attack on vested interest reporting of real estate auction results.

I’ll leave you to pass judgement on the presenters, Koshi and Channel 7’s bizarre graphics.


  1. It’s just disgusting that the MSM really has no clue about what they are reporting on. How can they not know the clearance rate numbers are voluntary and are fudged. Yet they are so happy to be giving out advice, “its a great time to buy etc” without having the proper disclosure the rest of us have to abide by when giving advice.

  2. Black Dragon, I guess it was too much to expect you to correct Kochie when he goes on and on about non-recourse loans in the US. 🙂
    Kochie is wrong, of course. Nearly half the states have full-recourse loans and they all crashed as well.
    (anti-UGB libertarians.. This isn’t your cue to chime in with your “Texas miracle” narrative. Please stay away from this comment. I have heard enough about the “Texas miracle” to last me a year)

    • Mav +1000

      re: texas miracle meme

      I have been waiting for
      someone with some sense
      to make such a comment

      urban designer, Melb

        • suburbia:
          – all the disadvantages of the
          country and none of the advantages
          of the city

          ‘its not that the road to hell is
          paved with good intentions, the
          road to hell is paved’

          all the data in the world cant
          measure the qualitative

          the outer outer burbs of melb
          are pretty shitful (Doreen)
          – and now going very cheap – so much for the housing shortage

        • I have long ago accepted that UGB need to be relaxed ala Texas. Even Arch-Devil Paul Krugman accepts that.
          But I didn’t want this discussion about non-recourse loans to be derailed by you know who (PB).

    • Non-recourse loans help the consumer, who is usually less informed than the lender, to stay out of permanent financial strife and bankruptcy.
      Our full recourse loans help our banks to pursue people they shouldn’t be lending excessive amounts to. I guess the only positive thing I can say about our system is that it does encourage some people who may otherwise default to keep on paying their loan ahead of some other gratification seeking bahaviour.

      • We should have them here, as it seems to carry less of a stigma than bankruptcy.

        I’ve also read that non-recourse isn’t the complete get out of gaol free card it is presented as anyway. It trashes your credit rating which can create a whole list of problems for you in the future. It is not something people do lightly.

        • It’s not a get out of jail free card but I think non-recourse mortgage lending is a great thing.

          If you default, your liability is limited to the asset you borrowed against (forcing the banks to seriously evaluate your credit-worthiness) and you lose your good credit rating (which is fair enough because you’ve defaulted on a loan).

    • Yeah MAV, those comments about non-recourse came up in the MSM a month or two ago. Of course I found out from here they were (at least partially) wrong…… again. I’m a bit tired of MSM trying to think of reasons why its different, we’re different, China is going to save us, etc. etc.

    • dumb_non_economist

      +1 on the non-recourse loans bs.


      It’s not a good idea to bight the hand that feeds you, especially when for one (Fairfax), that hand is your own.

      • That’s my point, clear conflict of interest. In any other industry this is a prosecutable offence. The RE industry needs to come under the same law.

    • Yes 1+.

      It is yet more fudging and half truths.

      Can’t somebody PLEASE take that “hand in keys and walk away thing ” on head on in the MSM next time.

      And really – the presenters, if they truly don’t know about the auction clearance rate situation they don’t deserve to be up there.

      They think they are pandering to their demographic I suppose, reflecting what they think their viewers level of knowledge is, but I think they are beginning to get that assumption about RE naivete wrong now.

      People, even Sunrise watchers, are cottoning on. Now it just comes across as cringing uninformed, perhaps even arrogantly disintersted – in something of cruicial importance to not just their viewship bu the whole Country.

      They are (supposedly) journalists for Crikey’s sake!

      Anyone out there with however tenous a link to anyone connected with Sunrise – could you send them a link to this tread and get them to lift their game.

    • We might not have non-recourse loans, but I’ve seen a few friends declare bankruptcy of late and it doesn’t seem like a big deal…. Seems similar to the process of non-recourse that I’ve read about in NY Times…

  3. Thanks DE.

    I see the old oversimplified jingle-mail furphy still gets top billing as ‘why it’s different here’.

  4. Somebody should also debunk Black Dragon’s “rental vacancy rate” – number that aims to be vacancy rate but in fact, it’s some number based on selected online listings over some random period. It is likely there are multiple times more vacant rental properties on market, while some of properties he counts as vacant are actually not vacant. His number is bad measure of some kind of an absolute rental surplus (not needed even for tenant switchovers or renovations) – it mostly includes properties that are vacant and have no contract signed for future period. Still, he insists on “rental vacancy rate” name. In all other developed countries rental vacancy rate is estimated using survey that counts all vacant properties

  5. I thought it was pretty good (apart from the jingle-mail comment). Sensible advice if you are a home owner and listening – build up your equity (easier said than done) to about 25% to protect yourself in any downturn.

    • +1. A very sober assessment from the MSM.

      It would’ve been nice for the MSM to run stories this balanced three years ago though.

      • It’s average advice, why put cash into an asset who’s value is falling? It’s advice that assumes there is intrinsic value in owning a house, dangerous assumption at the moment I think.

        Seems like every mainstream piece of wisdom is just a rear guard action to prolong the status quo “just a little bit longer”. In this context the Steve Keen’s of the world are just a sideshow rather than someone with a legitimate point of view based on the evidence presented (thats not to say I believe him unfailingly I just use him as an easy example).

    • dumb_non_economist

      Talk about waiting until the horse has bolted.

      Why wasn’t the msm out there advising this ie LVRs of 80% yrs ago? They spruik the hype and then give advice on what to do after following their spruiking.

      • Why wasn’t the msm out there advising this ie LVRs of 80% yrs ago?

        Because housing doubles in value every 7 to 10 years and home ownership is the best start young people can make towards securing their financial future.

      • Maybe because alot of the MSM was being funded by RE advertisements and they were just talking it up like they were suppose to.

        Now the ad’s are drying up, they are free to do some bearing segments here and there.

        Afterall, they would be lynched like the bankers and RE agents if they just kept up the blind spruiking even when all about them is plummeting!

        Self serving pricks the lot of them.

  6. Make sure you’ve got a 25-30% equity buffer? That’s about as bearish as Kochie gets.

    This is about on cue – MSM about 12m behind reality.

    • And if you’re an aspiring FHB that would mean going in with a 25-30% deposit. Even purchasing a very modest starter home in a dodgy area (say,$300K) that would mean saving between and $75K and $100K.

      If every potential FHB followed Kochie’s advice their numbers would tank to unheard of lows.

  7. Come on guys I thought I was pretty balanced there who else do you see in the MSM talking about vested interests even on the ABC for that matter (kohler is the top end of towns bitch), I am one of the straightest shooters out there.

  8. Still no mention of Australi’a massive household debt. It barely gets a mention in the mainstream media. Oh well, at least we have the best public finances in the world so I guess she’ll be right mate.