MSM bear porn

From the Herald Sun yesterday:

Stamp duty cuts are failing to lure first-home buyers into the market as their numbers tumble to a seven-year low.

First-home buyers took out 6488 loans in the three months since the July 1 cut – 5 per cent fewer than the 6824 granted in the same period a year earlier and close to half the number recorded in 2009.

Budding new home owners accounted for 15 per cent of all mortgages granted in September, which was down from 17 per cent a year earlier and almost 30 per cent in 2009, according to figures released by the Australian Bureau of Statistics.

Any incentive offered by the 20 per cent stamp duty cut, which amounts to about $3800 on a $450,000 purchase, has been erased by the prospect of further falls in property prices and weak consumer confidence.

“First home buyers are subject to the same issues as all home buyers: reduced confidence because of the state of the international economy,” Real Estate Institute of Victoria spokesman Robert Larocca said.

“While the 20 per cent cut is welcome, it alone will not – and it really was not supposed to – lead to revival in the property market.”

It’s probably a fair point.  The exemption rises 10% per year each subsequent year to 50% in 2014 which isn’t exactly pump priming the market up front, though it surely is still a form of stimulus. The Real Estate Institute of Victoria (REIV) has a reputation for uber-bullishness so I can’t help wondering what it means when they start highlighting bearish statistics? Of course it may not have been the REIV that pitched the story into the HS. Perhaps the paper came up with it themselves, including the ABS data calcs. Nonetheless, the REIV has participated and it’s pretty clear that they are looking for: more help. And no wonder, here is the chart of FHBs by state:

Victoria is lagging the modest national bounce. Expect such pressure to grow.

Comments

  1. “First home buyers are subject to the same issues as all home buyers: reduced confidence because of the state of the international economy,” Real Estate Institute of Victoria spokesman Robert Larocca said.

    What’s the international economy got to do with it? For three years he’s been telling us there’s a shortage of physical shelter available……..or was that just a shortage of property available for speculative purposes?

    • spot on jimbo. in my veiw robert larocca is a shill, plain and simple. it has nothing to do with eu and he knows it. luckily for him the eu situation has blown up so the REIV has something to blame other than themselves. there was never a housing shortage in victoria despite the fact RL rammed this theory down peoples throats for 3 years. ive been in contact with RL personally about this for years and his “chronic housing shortage” responses were pathetic. the REIV never even did any work on it they just took the HIA’s assumption and made it there own, and why wouldnt they? REIV members have made squillions out of it. whats destroyed confidence in the housing market, and its only just begun so confidence is set to get alot worse, is that property market particpants are waking up to the fact that they have been conned all along by the very people who were trusted to provide them with factual and honest information on which to base their investment decisions. now they relaise they have been taken for fools they are heading for exits and will continue to do so.

    • He says: “What is most interesting, though, is how printing lots of money globally may cause a large inflationary situation which, funnily enough, would cause house prices to rise.”

      Is this true? If inflation goes up, wouldn’t the RBA have to hike?

      • Let us look at a real world example – US has had 2 rounds of QE, one of them specifically directed at getting toxic mortgages off the market and on to the Fed’s balance sheet, AND yet, they still had house prices falling.

      • Exactly, and the US CPI trending up.

        Here is the US CPI for 2011
        Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Ave
        2011 1.6 2.1 2.7 3.2 3.6 3.6 3.6 3.8 3.9 3.5

        So there is a name for this when CPI is trending high, and low economic growth, and high unemployment …..stagflation.

      • That depends if we get Aussie inflation. Inflation in the US reduces their exchange rate, pushing the AUD up and lowering our import costs, counteracting any local linked inflation. OTOH, it reduces the income for trade-exposed industries, but how much that flows back to CPI I’m not sure.

  2. I don’t quite get the “bear porn” point.

    The reduced stamp duty is just another bait on the fiscal child abusers trap for young first home buyers. Good for the young people if they have got wise to this exploitation racket.

    I personally know lot of young people who see OTHER young people a few years older REALLY STRUGGLING NOW after having fallen for the trap. We can’t expect young people to fall for it when they can now so readily see what has already happened to their older brothers, sisters, cousins, friends, etc.

  3. Diogenes the CynicMEMBER

    What other animals intentionally eat their young? Gen Y are many things but stupid is not usually one of their descriptor tags.

    • GenY is growing up in an age where information is readily available and not controlled by the vested interests anymore.

      It will get harder and harder for business and government to convince consumers and citizens by providing biased information.

      • Agreed….and it’s not just GenY…it’s…all of us…We all get to do much wider research than we could have done, even 10 years ago. We’d all have been hard pushed to get the media ‘property debate’ that we get on line; ‘here’ being a classic case in point….So whilst GenY might be relucant buyers, we GenX and BBers aren nervous holders and sellers?

      • That is why the government is trying to get the internet censorship introduced using child pornography as the justification. In reality, once a filter is introduced, they will be able to again control the news by banning sites which do not comply to the government’s agenda.

    • What other animals intentionally eat their young? Gen Y are many things but stupid is not usually one of their descriptor tags.

      Your statement sounds a bit cruel, but I’ve reflected this sort of generational tension between BBs and Gen Ys which has been presented more and more in every comment section of MSM’s article on Australian housing problem.

      Yes, we have perceived wealth gap between BBs and Gen Ys, especially in regards to housing assets. However, as pointed-out lots of times also that this gap is not so much an “issue” or “problem” considering the BBs will eventually die and left the housing assets to their Gen Y offspring.

      The only problem with the above simplification is that we also have many younger people (both Gen X and Y) who are new migrants and they arrived too late to join the housing ponzi scheme in time and many of them are now either locked-out of the housing ownership or accepting their fate as mortgage debt slaves for most of their remaining lives (unless they have rich parents overseas who can help). The other victim of this “problem” is the native / local youths with poor parents with no housing assets who basically face similar problem above with the new migrants.

      So, I tend to see our housing bubble in Australia not so much as “generational tension” thing between BBs and younger generations but more to “housing apartheid” system to the second-class residents i.e. the poor youths both local or migrant. Yes, it has racist flavor in it and Australians in general seem to have no problem with it.

      • Agree that it’s somewhat a “housing apartheid”

        When it’s harder to get into the market then it exacerbates the stigma of being a renter.

        I can feel it as a renter that there is a sense that you must be poor or stupid. It probably doesn’t help the appearance in that I share house, don’t own a car and eat rice and beans, although this is all by choice.

        It’s sad that we can’t view renters as equals who perhaps just don’t want to commit to one city or house.

      • Whilst I agree with you. I don’t think it is harder to get into the game, if you are happy renting this stigma or, said another way, bias is good. It is what keeps renting cheap.

        It keeps negative gearers holding their property at a loss for the payout that (now it would seen) isn’t coming, all for your benefit.

      • Tell me about the “renter” stigma.

        The Wife and I have four degrees between us covering education, mathematics, physical chemistry, human resource management and IT (the latter being a masters). We both have reasonable professional jobs but we’re renting due to the high cost housing and limited prospects for significant wage growth and the danger of negative equity.

        Yet at a BBQ the other weekend we had a relatively uneducated Baby Boomer couple screw them noses up at us and say we were “just renters”. No joke, can you get more pretentious and arrogant?

      • Yes, similar situation with me. Both of us are professional with good incomes but still can’t justify paying current price level to seal our fate as debt-slaves for the rest of our lives. Most of friends / families could not see the “downside risks” and therefore just assume we’re just not good with budgeting for the family.

      • Same here torchwood, 4.5 degrees between us, plus another two next week when we get a flatmate. Combin

      • What a classic Torchwood. What can you say…
        As a migrant who has never rented a place before moving to Australia as I owned property from early on and climbed the “ladder” before moving here, I find this loathing of renters in the media amusing -it’s part of the sales spin. We’ve been asked how the saving is going for a deposit and we just grin. It has been frustrating at times to defend our choice but some family members are beginning to get it now. We decided long ago that 1)we would not buy until the market was quiet, and that 2)we’d never join a bidding contest at an auction.
        For me this transition from a property owner to a renter has been quite interesting. I feel the time to buy is determined by how property looks like as an investment in comparison to other options. Taking business news, economics and trend following books as a hobby has its consequences.. 😉

      • …ed income of half the cost of the property, but still the sense that you can’t do the ‘bunnings’ talk at barbecues.

        Just because I don’t want to spend my weekend fixing stuff and don’t want to be enslaved to a mortgage?

      • Ooo, just realised how pretentious that came across. It just comes from my annoyance at how people look down on you based on one factor and ignore the rest of your skills and qualifications.

        In any case, one of those degrees is an arts degree 😉

      • Mining BoganMEMBER

        The problem here, Torchy, is that you are educated and are expected to have a civilised response to such an attack.

        Myself and my fellow bogans, however, are expected to glass the perpetrator of such outrageous statements.

        You need a bogan as a friend. The downside of this is the ‘only renters’ meme will probably be reinforced by the ride in the back of an ambulance.

      • You’re doing well. I can’t even get anyone to talk housing with me for the last 4 months.

        Yet for the last 5 years, at every social gathering, we’ve been getting the same questions…
        “Do you rent or own?”
        “So are you looking?”
        “what areas are you looking at?”

        No one wants to know about it now. It’s real head in the sand stuff. I observe that we are still only in the denial stage, of that I have no doubt.

      • Feel your pain Torchwood.

        We got a rude shock when The Princess (former research scientist) and I (former steering wheel attendant) became renters a few years ago.

        The bad taste left in mouth dealing with RE agencies who treat you like scum was spat out at our last rental (before we succumbed and became “Third Bank Renters” – to clarify, Jess Irvine wrote a great article this morning at The Age about why we call “First Home Buyers” – I suggested they should be called “First Bank Renters”)

        We still have a laugh when I notice a cobweb on “our” house now – after remembering being told by countless rental inspection agents to get rid of the one or two that sometimes crop up like we were 10 year old children…

        I also got the “are you just renting” quote from some BB friends who visited our new house on the weekend. I said yes and no, we rent this from the bank for the same price (i.e mortgage servicing cost) as renting from a landlord…

      • I’ve heard alot about bad real estate agents, haven’t had the pleasure ours are pretty good I would say.

        I would say though for some reason a lot of people assume if you have a lot of renters in an area it then automatically becomes Johannesburg or something LOL. (maybe they have never been to FHG’s most loved fringe suburbs before or the gold coast :-P)

      • It’s not the real estate people that get me, it’s the friends and family. Our folks are ok, they know not to try to encourage us with either a mortgage or kids, but friends, colleagues and extended family.

      • Australia won’t have a problem with it until it blows up! Either in the form of a bubble or in the form of civil unrest, if you think that can’t happen here just look at Cronulla.

        A bubble deflation will give the politicians the opportunity to perform the tax and planning reforms that we need to maintain productivity and ultimately our quality of life (think Latin American style financial inequities and the corresponding effects)

    • There is also behavioural differences to take into account between the generations.

      Us GenYers more than any other generation know just how globalised the world is, and we’re less interested in settling down and having a family at a young age.

      http://www.abs.gov.au/AUSSTATS/[email protected]/Lookup/4102.0Main+Features10Dec+2010

      We’re having babies later in life, and we’re looking to travel more while we are young. Our workforce is far more mobile and willing to move companies more often. GenY don’t have the “Australian Housing Dream” imprinted on them like GenX do.

      All of these factors point to lower levels of commitment to living in one place and commitment to servicing large amounts of debt.

      • +1 to that!!

        I am gen-X and went against the grain and have had such a better life because I didn’t get bogged down as a mortgage slave!

    • I thought that too, but if they stay this high through a decent recession I’ll probably change my mind, but only with a 50% plus deposit.

      Chances are though that they won’t hold up. And I already have friends that have lost all of their 20% deposit worth of equity because their suburb was one of the worst performers. So that discourages me for now.

  4. We moved back from the uk in Jan 2010 with child no1. Then had child no2 and still renting. 60% deposit but I refuse to buy at these levels. Getting harder and harder to justify the constant moves and upheavals as the kids enter schooling years. We are heading back for another couple of years in the uk. If house prices and the aud don’t come off it will all have been for naught.. Then there’ll be trouble!

  5. Cheers for that story torchwood, its good to see im not alone!

    Being on a rather large construction site in victoria (clue: jesus turned water into wine, we are turning salt water into much of the same) , one of the biggests discussions that happen around the site and the site sheds (apart from talks about the office girls haha) is housing or more namely housing ownership. When alot of the demography is around the 30’s and 40’s mark, they sure take an interest in the younger folk (im 24), constantly hitting with the sales pitch that we should get in now before its too late and that the market doubles every 7 years. too late for what exactly?

    • constantly hitting with the sales pitch that we should get in now before its too late and that the market doubles every 7 years. too late for what exactly?

      It is a bizarre concept, and it shows the absolute intellectual paucity of a large number of the investment property owning class.

      To suggest that a time to purchase property may be ‘too late’…. WTF?

      There is a chronology for purchasing housing? So what does that say to 15 year olds?

      It’s your fault you are born when you were, so cop a lifelong decline in your standard of living (the reverse of this is to suggest there is a virtue to be born early, and that WILL lead to generational warfare).

      How can one offload an asset if the following generation can never afford to buy it off you? Or people can only expect to inherit property in the future? A great concept for an immigrant nation!

      Quite simply, this mentality leads to people looking elsewhere for a better offer when it comes to life.

      • it shows the absolute intellectual paucity of a large number of the investment property owning class.
        .
        It is more like self-interest and greed rules out allowing for a bit of intellectual honesty.
        .
        BTW, some more MSM bear porn today – Real estate market in retreat
        .
        The REIV predicts Melbourne’s auction clearance rate to average about 57 per cent for 2011, once the final weekends of the year are included.
        .
        In Sydney, the clearance rates were 52.4 per cent last weekend, down from 55.1 per cent the previous weekend, Fairfax-owned Australian Property Monitors data show.
        .
        The national clearance rate in 2011 is 48.3 per cent, compared with 60.9 per cent in 2010 and 69.9 per cent in 2009, RP Data said.
        .
        Note the intellectual dishonesty that Chris Zappone displays by quoting 3 different clearance rates from 3 different agencies, with the bad one from RP Data hidden somewhere in the middle of the article.
        .
        It is not like RP Data does not have the clearance rate data for Melbourne and Sydney – They have and it is much more comprehensive compared to APM – but their Sydney/Melbourne rates have been below 50% for weeks now and Fairfax does not want to report that.

      • If it doubles every 7-10 years, taking a best case look ie. 10 years:

        Current value of australian housing stock is $3.75t, current GDP is $1.2t. To double in 10 years, we need to add $375B to the value each year, which means 31.25% of our GDP needs to go into the value of our housing stock.

        Given how poor an indicator of productivity GDP is, this is a very large proportion of a country’s labour.

        Of course this increases to 45% if we go with doubling every 7 years.

        Clearly this oft quoted remark is BS.