Take a look in the mirror, Terry Ryder

By Leith van Onselen

Terry Ryder has written a vitriolic post in Property Observer, entitled Company at the bottom for faulty market forecasters, lambasting everyone that has held a bearish view on Australian property at one point or another, including yours truly:

Fringe dweller Leigh van Onselen, who has a lifetime of raging against real estate, stated in February 2012 that the “slow melt” in Australian house prices would continue.

There’s an old saying that people in glass houses shouldn’t throw stones. Well let’s take a look at some of Ryder’s unmitigated disasters when it comes to forecasting.

Here’s what Ryder wrote in February 2011 in an article entitled Property killings to be made in the Pilbara boom [my emphasis]:

Port Hedland and Karratha, the key regional centres of the Pilbara, have the most expensive housing markets in regional Australia. They are also the most remarkable because, while you can pay $800,000 for the average house, you can still earn a 10 per cent rental return, with typical rents topping $1600 a week.

The value of Karratha homes has grown an average 16-17 per cent a year over the past decade, which suggests values have been doubling every 4-5 years on average. It’s the same story in Port Hedland, where the median house price has grown from $190,000 to $835,000 in less than 10 years…

These are locations where there really is a shortage of accommodation relative to demand.

The pressure on prices and rentals is likely to grow, given the scale of resources developments impacting on these towns…

The population of both towns [Karratha and Port Hedland] will triple, with more than 10,000 new homes in each over 15-20 years.

Again in January 2012, Ryder picked Port Hedland as a key investment opportunity in an article entitled Mining towns lead list of property hotspots:

[Ryder] describes Port Hedland as having “the most extraordinary property market, with house prices rising an average 22% per year for the past 10 years and the median price now $1.04 million”.

“Just when you think they can’t go any higher, they do. The median price rose 11% in 2011. Despite these ridiculously high prices, you can still get 10% yields because typical rents are above $1,800 per week. There is no other market like this in Australia,” he says…

Now let’s take a look at how these “hotspots” have performed.

SQM Research’s data on asking prices and rents provides up-to-date information on the crash in Pilbara property.

The below graphics of asking prices for three-bedroom houses in Port Headland reveals prices for three-bedroom houses shot up in 2012 to $1.3 million, but have since tumbled to just over $571,000. Prices for three-bedroom houses are down almost 27% in the last year alone and by more than 40% over the past three years:

ScreenHunter_12011 Mar. 13 18.12

Asking rents for houses in Port Headland are even worse! From a peak of $3000/week in early 2012, rents have crashed to a more modest (but still excessive) asking rent of $665,600/week, according to SQM Research – an incredible 70% drop in three years:

ScreenHunter_12012 Mar. 13 18.14

In Karratha, another Pilbara town, the story is similar. While house prices never soared like they did in Port Headland, the below graphics show that asking prices for three-bedroom houses have crashed by 55% over the past three years, down to just under $330,600.

ScreenHunter_12013 Mar. 13 18.17
Asking rents for houses in Karratha have fallen from a peak of $2000/week in 2011 to $472/week now, with asking rents down by 64% over the past three years:

ScreenHunter_12014 Mar. 13 18.18


Now that is what I call forecasting error!

[email protected]

Unconventional Economist


  1. Fair enough UE.
    Terry Rider’s credibility may be dented a little but, and to be frank, MB’s credibility has taken a big ding of its own.

    I’ve been reading MB for a few years now and always impressed with your and, particularly, HnH’s reading of the market.

    No Longer!

    Iron ore in the $20’s or $30’s appears less and less likely – a favourite theme.
    AUD against the US$ more likely to be 80 cents and rising rather than 60 cents and falling – another favourite theme..

    The defence – “we might have got it wrong, but not as wrong as…….” unfortunately shows MB on the back foot.
    On the back foot – with good reason.

    • I partially agree, but in the bigger picture I still think the MB hypothesis and forecasts are likely to be better than most others in the media. I especially think HnH has a great knowledge of commodity markets, which as we know is closely linked to the performance of the AUD. As for Aussie housing, it’s like the superhuman henchman from a James Bond film, it just can’t be killed….yet. I’m just an interested reader on macro topics, but I do know getting the timing right on complex, long term, big picture forecasts (eg. bubble-driven house prices, declining AUD, etc.) is incredibly difficult. Like investing or speculating, it’s more a question of who is more correct more often.

    • Hang on mate, MB is just shining a light on macro. Amongst a load of opinions this is a good honest one.

      You might have been late to the party, but calls on IO and the dollar and Woodside have been awesome. Anyone that dumped big iron ore, gas and hedged AUD has smashed it. We are talking about more than 100% losses for passive investors that believed the narrative from the sell side and the MSM.

      As for housing, well the government has thrown the kitchen sink at it. Look at that debt! Just look at! And if you were using this site well you might have paid heed to the many voices that called the growing bubble – fundamentally a private debt bubble.

      And in any event I reckon MB were right, just late, just underestimated how shameless our politicians and the RBA would be in loading up the debt mules. Incomes are crashing and evidence of housing distress is everywhere in the periphery. This is the crash.

      • “…..just underestimated how shameless our politicians and the RBA would be in loading up the debt mules….

        I don’t think anyone predicted that from 2013 the RBA and APRA would green light another massive leg up in household debt and more importantly the use of private (but taxpayer guaranteed) foreign debt to drive that growth.

        In hindsight we should have expected that the LNP led by “Boy Soldier” Abbott would not hesitate to throw millions of Australian households further under the debt bus.

        And they still want to do it.

        The no ideas govt has one idea.

        The LNP hysteria about CGT and NG is really about stopping anything that might reduce its secret economic weapon – driving the economy with the sweat of a growing army of household debt slaves with heavier and heavier variable interest rate chains around their ankles.

    • Bento,

      We focus on structure not cycle, in other words on trend not noise. There have been other periods much longer than this one (the Aussie was 68 cents one month ago!) when our outlook appeared wrong for a time.

      None of the down trends in the prices you mention are anywhere near broken and my outlooks for the Aussie in the low 60s and iron ore to spike into the $20s (briefly) this year are unchanged.

      If you’re going to judge us by short cyclical changes in the market then you’re going to be disappointed frequently.

    • Tassie TomMEMBER

      Another bear bites the dust – see you at the auction BentoBento.

      When H&H and UE finally say “F**k this, I’m buying an investment property”, it will be a signal that the last bears have capitulated and there are no “bigger fools” left. If you see these guys at an auction, it’s time to sell!

      • moderate mouse

        There was an auction in my street at the weekend – oh what a spectacle! I couldn’t work out what was going on at first, all these good looking people descending en mass, striding purposefully up the street, some talking loudly into phones, others clutching lattes and paperwork….I think Reusa even did a drive-by in his Rolls. Then when they all emerged there was a glow about them, like they’d just witnessed an epic Melbourne Cup or something. They looked happy, satisfied, alive. Even if they didn’t win that one…they knew they were all winners.

      • It’s true, beating the bears is what this all about. Extreme public policy aimed at getting people to believe that taking on more private housing debt is a one way bet. The problem is that incomes are genuinely collapsing, the real economy is really toast.

        Who wins? The tsunami of government policy v the chasm of income. It’s what makes markets interesting.

        My comment is that we can see real incomes collapsing everywhere other than the FIRE sector in the big rent seeker cities. Sans China stimulus or a the Aussie government going all in on infrastructure, this is the crash.

      • That’s what I find so weird, aj. Incomes on the slide for YEARS and yet people focus on gdp and house prices. Cognitive dissonance is an unstoppable force.

      • @ McP – it’s even simpler than that. Marketing works, and it works really well.

        The Australian people have been heavily marketed to, it has set their understanding and their expectation. The government and the RBA are underpinning this marketing because they know without increasing the collateral of housing (and thus the purchasing power of the citizens – no-one saves anymore), the whole thing collapses into an income abyss.

        Everyone i know who has recently bought a house has bemoaned the debt but focussed on the FOMO – that is what marketing is all about, influencing decisions without people realising it.

    • There are two aspects: Fundamentals and market pricing. MB runs a macro view with fundamentals, and also has a trading view every morning. The trading view warned of the AUD rebound before it happened. I suspect no one claims to guess how far it would run. I certainly failed to do so. The unusual aspect in Australia is that the RBA is hoist on its own petard. The Deputy Governor said, just before the rebound, words to the effect that .65 would be fair value for the AUD… and so it would. Yet they cannot lower interest rates without blowing the property bubble again and raising imports through consumption. AUD at .80 puts our services bump at risk and certainly any manufacturing recovery is on hold. So, underneath the surface we continue to hemorrhage. Invisible except for the lower economic pulse. Time to watch some Jim Chanos videos perhaps. For me, I’m building up the trading account, but making no predictions on timing. The bottom line – MB has a long term view, and a trading view. The long term view looks ominously plausible, the trading view called the rebound. Any losses I took, or lost profits on my prematurely sold calls are mine, a cost of relearning my trading. MB has saved my bacon many times over.

    • casewithscience

      MB’s assessment of the currency has been buggered by interest rates staying up (something that MB also predicts to drop). So long as the RB remain in la la land, I think this is getting postponed, but the core reasoning of its inevitability is sound.

  2. Point taken, aaronx.
    The MB reputation is tarnished, is all I’m saying.
    Disappointing, nothing more, nothing less.
    Could be we’re in the middle of some classic blip in the trend? – time will tell.

    • Judge us at the end of 2017, Bento, not now. We have always taken a structural view. Not a short-term cyclical (dead cat bounce view).

      If you believe the iron ore and AUD bounce is sustainable, then good for you.

      BTW. This site is about the only place that picked the commodities/TOT/Budget/Income crash years ago. It has been far more “right” than “wrong”.

      Ignore the short-term cycles. Otherwise you are no better than the Kouk and you will flip/flop regularly.

      • I reckon I’m just running out of patience (and popcorn)……..

        and I’m not Bento (didn’t realise there was one until I saw a Bento post a few days ago….)
        I’m BentoBento! …(so good they named me twice………..)

      • Actually saying the name twice is diminutive in many Asian countries, so you are Little Bento.

      • saying the name twice is diminutive in many Asian countries
        What about have 88 or 888 on their car number plate? Is that diminutive in many Asian countries?

      • Claw,

        I think that is about maximising luck

        Big luck – medium luck – and any little bits of luck left lying around.

    • “Could be we’re in the middle of some classic blip in the trend? – time will tell.”
      You’d have be asleep not to understand that ALL these markets are being manipulated UP & DOWN by the Hedge Funds & the Banks. Bullion included. These economic A$$holes are for some reason allowed to get away with their HFT etc . ALL markets are so dangerous right now that you’d want BIG balls to play alongside the manipulators. There’s been nothing wrong about MB assumptions – just the playing field is rigged so timeframes are unknown & likely to change in a blink.

  3. Those aforementioned locations are in effect Australia’s economic engine room. As they power down so must the good ship OZ

  4. Wave 5: Wave five is the final leg in the direction of the dominant trend. The news is almost universally positive and everyone is bullish. Unfortunately, this is when many average investors finally buy in, right before the top. Volume is often lower in wave five than in wave three, and many momentum indicators start to show divergences (prices reach a new high but the indicators do not reach a new peak)……bears may very well be ridiculed


    The basic question I keep asking myself is “Are things better now than when September 2008 showed us the extent of the problem?” My answer is still, No, they are in fact worse. But for those who think, yes, that is the only reason to be bullish. Unless we really believe that all that ails us has been fixed, it hasn’t, and so will have to complete the price action that happens up to March 2009 ( that was artificially suspended by CB interference. It may, in fact , have been the bottom then, but we never got to find out!)

    • Artificially suspended by CB interference ……..

      Hmmm yes, well can’t that just happen again?

      • One must not forget government spends money into existence along with all the lobbyists directing the flow of funds as well as offsets like tax preferences…. e.g. CB’s are not the tail that wags the dog but an ointment liberally applied after events…

    • Thanks Janet, I have been pulling that one out for all and sundry the last couple of weeks

    • It’s astonishing how long the can kick has gone. But fundamentally things are worse, in my opinion.

      Private household debt nearly doubled, Dutch Disease hollowed out non mining even further, manufacturing now down to contributing about 5% to GDP, business investment in the shitter and the next generation loaded up with even more debt and less opportunities than they had despite two and a half decades of economic growth and more education education education than ever before.

      How much longer will the can kicking go on for before we get a housing correction/crash and recession? I wouldn’t put a date on it, but one thing I feel certain about – the longer we keep living like this the worse it will be and the longer it will take Australia to dig its way out of the private debt hole we dug for ourselves.

    • Unstoppable Mullet Power

      Things only seem worse when viewed from a the paradigm that they have deviated too strongly from a historical norm.

      But that historical norm is kaput.

      Home ownership ratios, debt to income ratios, foreign ownership limits, non-performing loans. Historical norms – kaput !

      Australia’s mortgage debt may be rising, but we at the cusp of a massive, long-term structural shift, the big debt for equity swap, wherein the native population, the non-nouveau riche Chinese of this country, will be tenants and employees. And employees under a whole new regime of manicured expectations.

      And this will be the new normal.

      Sometimes you just have to cut your mullet to match the times.

  5. I am not sure what the argument is. This is a macroecon blog and as such the monthly variations in currencies and assets are not its business. If I look at the trends for the last 4 years in Brisbane, they still point down. The current dollar spike is annoying, but I am still up overall. Should AUD, properties, etc keep going up and stay up by 3Q then maybe I would also get hot under the collar. However the one who appears suprisingly annoyed is Mr Ryder; strange considering how “awesome” things are.

  6. The fact that during one of housing boom, FIRB wastes their resources to troll a bearish site tells alot about their fears.

  7. This is fundamentally part of the property lobby wanting to scare off criticism and it is pretty vile. Property speculators are part of the great unwind of housing and home ownership equality. They are the voice of sad self-interest interest and greed that would see a return to feudal poverty where we all pay rents to use the land owned by a few.

    Not only are they wrong financially, hilariously as shown above, they are wrong on a policy and ethics level as well.

  8. Has anybody worked out how much BHP and RIO stand to lose from the current AUD spike, in particular if Fe retraces into the 40´s again? Doesn´t this give the upper hand to Vale?

  9. The truth is before we’re done EVERYTHING will be tossed under the wheels of this bus for an added spurt of power and hopefully a moment of traction. Our reputations will be l,east of our concerns, so they’ll be amoungst the early causalities.
    wrt Australia over the long term I’m not in the least bit concerned that my bearish opinion might be wrong, however I’m very concerned that I’ll be right.

  10. Forgive Terry, he’s still pissed that Property Investor Magazine didn’t crown him Property Investor of the Year in 2012.

    • Tassie TomMEMBER

      LOL – That pesky Kate Moloney read his wise words and gazumped him at the last minute. Bitch. She was the blue wren who hid under the pelican’s wing.

  11. I am a housing bear that has given up

    we intend on building a nice family home in a lovely area.

    there is more to life then money

    I am sick and tired of spending my w.e’s looking at real estate…it cuts away from family time

    saying that, we have a truly massive deposit..

    I feel sorry for people not on my wicket….the rba and the govt, both sides, have seriously mismanaged things..

    tbh housing has already gone down since 2012 when looked at in USD terms

    if both my wife and I were younger, we would emigrate to the states, and less of the nanny state in Australia where you cant even go for a country drive without speed camera notices every 10km

    advice for young people without a big deposit…leave..you can always come back to Australia, enjoy the world and what it offers..Australia is very nice and safe but there are other beautiful countries in the world too

    • Tassie TomMEMBER

      Sorry to hear Dan, and good luck.

      Remember – loan to income is everything. It doesn’t matter if the “value” of your family home drops and you’re in negative equity, or if the “value” of your family home doubles and you’re a millionaire. You’ve still got to pay back the loan and you’ve still got to live somewhere.


      • thks Tassie..

        we would have hardly any loan anyway…

        thank goodness we don’t live in syd or melb..who would want to live there??

        advice for youngsters…get out of Australia if you can, work OS for years and years instead of nanny state australia

      • There are other options Dan. Just leaving the big smoke of Brisbane sees opportunities arise. Make sure there is at least decent internet in existence now though as promises are not being fulfilled for country people getting offered satellite coverage instead of the proposed fibre. Every other issue can be fixed. I moved out to Nthn NSW and it is brilliant in every way.

    • Another bear bites the dust,
      And another ones down, another bear bites the dust!
      Down, down down, another bear bites the dust.
      I can just hear Freddie Mercury singing this, it could be a huge hit.

    • Like I posted last night, I heard the same advice from a property consultant who is predicting a 20% – 50% drop in Sydney property prices. His advice, find what you will be happy with at a price point that you can afford at 3 times the current interest rates and still leaves you sufficient income to live well. Hard in Sydney I know but still housing should be always about a place to live not just a capital gain.

    • Mining BoganMEMBER

      Just stop caring man. I used to own. Took up too much time. Now I realise I get more contentment out of one walk with Jack the overweight dog than years of home ownership gave me.

      I reckon Jack feels the same.

    • Feel for you man. In the same boat and one of the reasons we moved back to Brisi was to “settle down”. However, I think I got the Mrs onside for another year because she is very keen to build and finding land, at any price, in inner Brisbane is difficult. So we will rent for another year while we look. Don’t think I will have much to stand on after that if the bubble continues.

      • thks FF

        in our price bracket there aint to investors

        there is more to life than property etc

        will IR go up eventually..hell yes

        will property stagnate a long time..probably

        stability and a comfortable home cant be measured….as a renter you have neither…

        the cards are against renters in Australia…that’s just the way it is..everything from being unable to get solar panels to getting fully taxed on anything in the bank whilst people who take out massive loans get to gear against their primary salary..

        I have given up, and if we buy well I don’t really care if it goes down as I will be living in it for 20yrs plus

    • “-advice for young people without a big deposit…leave..you can always come back to Australia, enjoy the world and what it offers..Australia is very nice and safe but there are other beautiful countries in the world too”

      Pity about the $hit advice – – One of the “beautiful countries” is definitely NOT the USA !
      Which rock do you hide under or do you get your misinformation from Lord Ha Ha ?

    • Unstoppable Mullet Power

      It may be true there is more to life than money, but it is equally true that there is no more to Australia than property.

      It is our Holy Trinity.

      All who eat of it shall forever be made whole.

      Those who spurn it shall be condemned to forever walk in the Valley of Dearth.

      To live without buying property is like severing one’s own limbs so that one may live unencumbered by their weight.

      One should therefore not be surprised to sink and struggle while others bound freely among them.

      This is the way of the Mullet. Its power is unstoppable.

  12. Those asking sale prices and rentals in mining towns anywhere are a lot of cobwebs. You need to be a magician to find a buyer or a renter at any price and you’ll be waiting till the cars come home while your mortgage and expenses keep mounting up. The best investment for those dreamers will be a bankruptcy court. This is invariably on the way to all other places where there is/will be a gross oversupply of “dogboxes in the sky”.

    • It’s not just mining towns, go anywhere outside of the big rent seeker cities and things are pretty bleak. Most of the rest of australia was a mining town because that was where the income came from. The big rent seeker cities were always in the game of leveraging this income up into housing.

      • Tassie TomMEMBER

        I agree with that comment. There are several “school dads” from my son’s year at school who FIFO from Tassie to mining regions, as well as my wife’s brother and her cousin’s husband.

        My brother in law has also met plenty of other Tasmanians in the mining regions.

  13. Markets for certain commodities, stocks, whatever always let off steam on the way up or down. Most often this is in the back drop of a macro of supply/demand dynamic that does not make sense when compared to the price action. This doesn’t always invalidate an overall “macro” view of the situation. The price needs to consolidate to signal that this is so.

  14. You know what, he always covers his arse at a later date proclaiming the growth in that area is over. There’s an article I saw him write about PH. I’ve seen him do it with a few Central Queensland stinkers too.

    I thought property investing was meant to be a long term thing? Building wealth for retirement so they’re so honourably not using the pension in the future, while providing rental accommodation for the unfortunates in the now, not a timing the market strategy for quick cash made within a couple of years.

  15. Now they say mining towns were “speculative” whereas capital cites aren’t. I really wonder then what happened to Perth, Darwin, Los Angeles, Tokyo, Dubai, Madrid, Miami, Surfers Paridise…….etc., etc., etc.

  16. @aj nailed it with marketing of FOMO. It’s been around since 2003 in my opinion however given a trendy acronym in last few years to make it acceptable. People start to believe it FOMO is areal thing & in years to come will justify it as something they had like ADHD – another label given to a selection of sometimes unacceptable behaviour. They will say in all seriousness “I had FOMO so I had no choice I had to buy.” It will become a medical condition complete with drug to alleviate the excruciating symptoms much like grief after death of a loved one is classified by DSMV as mental condition treatable with anti depressant. We will see spike in drugs & alohol then a major spike in tailor made medication to treat the depression associated with consequences of financial decisions (taking on massive mortgage) when afflicted by the dis-ease known as FOMO. I bet people will forget what it stood for on the first place – the drugs will need to be that strong – erasing memory of profound greed & stupidity & any potential for taking personal responsibility. Suicide is already on the rise – front page news but no truth in the motivating cause – housing, debt, bankruptcy & relationship pressures – this shit cuts both ways for men & women.

  17. You would have thought that those “property professionals” at the PROPERTY INVESTMENT magazine would have foreseen what was on its way in mining towns before they handed down their winner’s award in 2012.

    Don’t worry, the other nominees will meet same fate as the winners. This is guaranteed!