Flying Circus: Housing bears “shitting themselves”

From the Flying Circus today:


Guess who’s long bank hybrids then?

I note that the housing package will be jobs supportive so that’s good for housing in a general sense. A few renos will do it no harm.

But more supply isn’t. And I’m pretty sure that the Flying Circus would have felt more than a pang of disappointment that the grants do not encompass established dwellings.

I remain bearish as rents crater along with mortgage standards tightening, weak immigration and high unemployment.

It’s more accurate to say that poop is spraying generally from the direction of the Flying Circus.

David Llewellyn-Smith

Comments

    • The90kwbeastMEMBER

      We were just thinking of reno’ing our bathrooms actually.

      If this does get released, to quote the very easy to hate Gerry Harvey, “thanks government!”

      • DominicMEMBER

        Yep, I have three that need a reno. If I can snag $40k … even 20 would be good

  1. Goldstandard1MEMBER

    Chris Joye is such a child. Such intelligent commentary.
    Burn hybrid Joye Boy.

    • You won’t hear from him in 2 years, he will be remembered only for this egotistical call

      I’ve read his commentary, he shows no valid argument…

      Bank Hybrids- what a disaster

      Don’t listen to any of these guys, just quietly rent for 5 years and take advantage of higher AUD to buy AUDGOLD 2400 around if you can

      If you want a calm and no stress future of freedom and good health

      Just buy gold, rent and stay out of debt

      ***Shhhh, buy a bit of silver too around 20 AUD per ounce

    • There’s a case that he is right, though.

      This grant will push up house prices. Plus there are many cashed up Hong Kongers with rights to live in Australia who will be returning.

      Shorting Aussie property makes sense, until you realise the game is rigged: Aussie house prices will never fall, shorting them or banks or hybrids is a widow-maker trade.

      • Goldstandard1MEMBER

        You could be right, but you are a fool if you think pulling the same lever will work the same as previous times. This is VERY different.
        Global
        Jobs gone
        Immigration gone
        Tight credit

        Some advice for you. Never assume an outcome with so many variables.

      • kannigetMEMBER

        true, but it gets to the point that it has started starts to look attempting to push on a rope.
        $20K is nothing in the grand scheme of things, it wont cover the stamp duty, it wont cover even a reasonable bathroom reno these days and forget a kitchen.

        People have to have the income to pay the mortages to buy housing, when you have a mass increase in unemployment, extremely high debt levels and banks that have become extremely cautious, I can see more and more people falling into the cant afford it category.

        • Jumping jack flash

          “People have to have the income to pay the mortages to buy housing”

          Its all about debt eligibility.

          The banks basically write these rules, they could easily hand out more debt, they have free QE money now which is meant to give them as much money as they need to lend out. They don’t even need to go to overseas banks to get it now.

          They should be lowering their lending standards, not tightening them. There is absolutely no risk because the growing debt papers over the cracks as the house prices grow because of it. If they inject enough debt they will be sure to be able to recover any bad debts by ensuring that the buyers of the bad assets receive enough debt so the banks can get paid out their dues, plus the seller gets some extra in their pockets from capital gains. There’s simply no risk at all!

          If I was the government I’d be asking for my QE money back right about now. Seriously. Frydenburger, get a clue.

      • Yep, the gov porked me in 2012 when I thought the market was done and I sold. Never underestimate the bastards, its a losing bet.

  2. Ok so Gov borrows more money to give to people so they can borrow more money….that will never be repaid

    The quicker he disappears the better for our country

    • And the CBs will keep printing more reserves to allow increased leading to continue for ever. Its worked for the last 50 years and will continue to do so until we are Zimbabwe.

    • What an amazing Pyramid. 50K from government, 40K from super for a couple(2x2x10K) JK for weekly earnings, and Labor asking to expand the 5% down government backed LMI free mortgages. Interest only loans are back too. This is beyond the kitchen sink.

    • Jumping jack flash

      “Gov borrows more money to give to people so they can borrow more money.”

      Now you’re on the trolley.

      And don’t forget this doozy:
      The banks hand people enough debt so they can hand it to someone else to pay off the remainder of their mortgage plus interest owing and have a bit left over called “capital gains” to put in their pocket.

      Isn’t the New Economy great?

    • Any thoughts on what the reno grant will do to affordability? Existing homes will get $20-$50k upgrades; as most transactions are existing properties will existing owners expect $20-$50k more and will they get it?

  3. Weak immigration is temporary, any extra houses will be filled quickly, so best to front run now. Joye is going to be correct here, and the reason is because he understands how the system works. He is betting on the sociopathic traits of our leaders, there’s no way he can lose.

      • Forrest GumpMEMBER

        Scotty From marketing W.I.L.L open the gates to immigration. Its only a matter of time.
        It will either be the front door or it will be a back door mass immigration, but either case it WILL come.

        If there is one certainty you can back in these uncertain times: If Scotty is PM, then the housing market WILL BE stimulated..Back that horse!

    • I have no doubt leaders want mass immigation to resume asap but who knows.
      assuming a vaccine is unlikely (base case) question is, will virus be raging in 12 months?
      also they are keen to finish up JobKeeper asap, what will unemployment and underemployment be like?
      I have no doubt they will try and get more people in, but it is not exactly easy ……

        • GunnamattaMEMBER

          I must confess if I was Morrison I would be thinking an election later this year might deliver amazing electoral dividends.

          It would need to be while jobkeeper is still in play, but if he can spark a boom in housing construction with a mega grant (as seems to be the news today) then he would be thinking he is in with a chance. The ALP is pretty much wedged into the bumcrack of the electorate, and about as relevant to their daily cogitations. He would want to keep the campaign real short (so 6 weeks), and there would be real risks of the macro settings changing on a whim (China Trump, COV19 etc), but if they can get a little pocket of electoral sentiment stability I reckon they would look at it – especially if iron ore can hold on for maybe another 4-5 months.

          …..and just imagine some of the ideological toys in their kit bag if say the unions arent playing bat and ball vis stimulus. I think in that context they would easily go to the electorate and state they will population ponzinomic away (not blatantly, but for sure there would be plenty of reference to a ‘strong’ immigration program etc.

          • Hopefully the incredible cynicism of calling an election as soon as the polls look very good will leave a bad taste in voters’ mouth.

            I recall Theresa May lost seats and had to make deals with the DUP doing that because Corbyn was polling badly. Although she still won.

          • DominicMEMBER

            Yep, given that 2021 looks like it’ll be an extremely challenging year for the global economy, going later this year may be the way forward — heaps of lollies on offer to the people right now.

        • PaperRooDogMEMBER

          Yes if I was ScoMo I’d be calling an election ASAP before the SHTF and the full impact of the recession we are going to have shows in full. And while he is high in the polls

    • India records “8,000 new cases despite draconian crackdown”…we ain’t bringing them back anytime soon. Be relying on China only, only half previous levels

  4. David in order to qualify for a housing grant you have to have a job. Rudds stimulus was top down – so every single cent was going to be spent.

    Scomos grant relies on unemployed people (30% plus – probably 40%) getting a grant.

    The building industry did not collapse – tradies did not suffer nearly as much as tourism, education, hospitality, services. This stimulus will do 99.99% of nothing as absolutely NONE of it goes to helping those who are unemployed.

    So those people will remain unemployed – and not take out loans, and not use the grant.

    I walked around 4 major shopping strips this week handing out flyers. At an absolute MINIMUM – 25% -40% of shops are closed.

    All that really remained were shops for old, middle aged women.

    I had a very good hard look at what is going on in our economy from that effort. Shops consist of real estate agents, womens clothes, womens jewelers, womens hair dressing, womens nail salons, womens massage (non sexual), yoga studios, physios, divorce lawyers, divorce accountants, cafe’s, take away, and really dodgey news agents and at least 4 pharmacies every 200 meters. (No , not joking).

    There were also an inordinate amount of eye wear shops, physio, bone, muscle places and pet accessory stores. (All aimed at old women).

    Basically the entire economy appears to be around servicing wealthy older female boomers. I was completely blown away at just how specific everything was geared to this demographic.

    Good luck with your housing stimulus – everything – and I seriously mean that – EVERYTHING is shut, not temporarily – GONE.

    • Alot of those shops are closed because if you and the missus can pick up $1500 per week from BludgeKeeper provided revenues are well down, why would you bother opening when you are making as much or more at home.

    • Reus's largeMEMBER

      All valid points, but nothing gets the housing boom booming like the smell of free money in the morning, the boom is back for at least 18 months

    • We already have too much housing supply right now, how is building more going to support prices?

    • Spoke to an old friend and his wife who made similar observations along their shopping strip. More than 50% of shops closed, and new lease signs popping up everywhere. Some of these were up pre-covid, so not looking likely they’ll be anything much happening soon. The only male orientated shop that seems to have survived is the local hobby shop which kept things ticking over due to more people in isolation needing something to do, as well as ongoing business from long time regulars hooked on “plastic crack.”

    • I don’t know where I read it, probably here, but the quote is something like:
      “You’ll never go broke selling to female insecurities.”
      It probably explains a lot of the money Instagram ‘influencers’ make too.

    • I think you left out Bunnings – adjacent to most shopping malls and doing a roaring trade throughout the lock down without too many older women to be seen. Sure, all those nail, hair, chemist, jewelry, clothing shops and cafes etc will die and go to heaven. And the job losses will largely be felt by those small businesses run and owned by enterprising and hardworking women.

    • I thought women did the was majority of the spending despite the gender wage gap, an middle aged women probably spend the most

  5. Every time Joye pipes up he should be ridiculed and mocked for his disappearing daily Hedonic Index.

  6. So DLS, this is rennos for existing stock right? Because in one of the other posts I think I inferred from your commentary that it is new stock (which doesn’t make sense).

      • cheers!

        I will literally spew if I can’t buy something in time after *just* selling a place that could have used this – kitchen, laundry size reduction + second bathroom, remove AC…etc etc

        #notwhiningjustwaxingwhimsical

        Hope they take time (a lot of time) to bed this down. 6months would be handy.

        Can see a lot of 5x5m decks going up

        Wonder what this will do for those who’ve been considering listing – will you hold, renno, look to capture the uplift in price? Will this reduce turnover and thus stamp receipts?

        fascinating to watch

        • On the subject of decks, some neighbours were recently quoted $50,000 to replace some decking across the back of the house.
          $7,000 of this was demolition of the old deck.
          They don’t live in a palace, not even a mansion!
          As both are currently out of the workforce( his contract ended recently, not renewed), they’ve decided to do it themselves.
          At that kind of price range, even if people take up the grants, they won’t have much to show for it.

          • Does sound a bit pricey, depending on size.

            But….

            I really don’t want to volunteer what a 10x6m deck with pergola plus another 8m x 4m flyover costs….but here goes – with treated pine sub floor, over-engineered footings (1.5×1.5 deeper holes than needed), 90mm lam Jarrah posts, beams 240×55 LVLs, solid merbau railing, merbau decking, protectadeck joist protector, removing asbestos FC cladding from rear professionally and recladding in corro, adding a sliding door to deck from house (replace window), deck extenders over top plate, LVL rafters (7m, 240×42 – yes overkill but cheaper than hardwood), insulated, lined with hardiflex (next time I’d save 12k by not doing insulation and lining), outdoor electrical, capping, flashing, termite flashing between poleplate and house, 3cubes of concrete, stormwater runs to tank, cladding deck with merbau wrapping, marine stainless balustrading (I did all that plus swaging myself, came up a treat), solid merbau double gates to deck, labour, delivery etc….not much change from 80k. That’s just what it costs.

            Magnificent, though. Mrs Swampy puts the kids out there, heaps of room for toys, outdoor setting (12 seater), etc, and safe from the snakes. Lots of redbacks have moved in underneath though!

            But….I would probably never pay someone to lay decking again (that’s just me, unless I wanted it done quick). It’s so very easy, although, for a rank amateur like me, painstakingly slow (I had an Easter break to lay 30sqm) until you have your lengths/patterns worked out. I did 1/2 the decking, all the balustrading, helped pitch rafters, beams, wrapped the deck, poured concrete….

            Depending on your friends’ capability, and how high up it is, I’d be demo-ing and relaying myself.
            Compound slider, appropriate tools (Macsim pre drill a g0dsend), decent drill and impact driver…
            Fun to do, and very fulfilling (I ended up building a 12m x 4m carport between house and existing shed myself too as a result).

            Good on them for having a crack!

            You’re right, 40k won’t go far. You could do a 5x5m deck pretty cheap, especially without pergola, and no need for permit – I think it’s a tick and flick approval in most states (DA exempt). Get someone in to do the posts and bearers to get it level (or do it yourself from YouTube – probably need to know how to operate a dumpy and laser leveller – someone here more knowledgeable than me can comment) then do the joists etc yourself. Probably someone to do poleplate to house, tie down etc etc if applicable.

            Fun and games anyway!

        • I have a feeling buyers will start to expect new bathrooms/kitchens as a basic right, so not even lift actual house value much-lots to choose from with shiny shiny…

  7. The cheapest 2br in the Melbourne CBD is $250/w
    It’s pretty new.

    https://www.realestate.com.au/rent/with-2-bedrooms-in-3000/list-1?activeSort=price-asc

    Which, with the rule of thumb numbers implies it could sell for 250k.
    Which lines up not terribly with the cheapest of 1855 properties for sale in 3000 of 270k.

    https://www.realestate.com.au/buy/with-2-bedrooms-in-3000/list-1?activeSort=price-asc

    So…
    What the government is hoping for out of this is that people will buy newly constructed properties.
    Which will put a premium on them over these existing ones.

    Which… Is somehow supposed to lift the whole market while these ones remain empty?

    Can’t possibly go tits up.

  8. SnappedUpSavvyMEMBER

    Scotty Cam deserves 400k a year to market this tradie racket to the dumbest fckn country on the face of the earth

      • Mate there’s a $50k housing grant available right now. Hasn’t done squat. Now factor in 40% of the country without a job or massively reduced hours.

        Oh – and China in 3,,,,2,,,,,1,,,

        • DominicMEMBER

          I was having a joke. Who knows what will happen this time round, but yes, it will all fall over eventually. Zero doubt about that.

  9. Sounds good. Now just need to find a new place that’s not overpriced.
    Honestly, established 2 br appratment in my area are $1m. New ones are $1.5m
    I would be a FHB but 20k wont help.

  10. mikef179MEMBER

    Just took a look at the twitter replies and can’t find even one comment that’s not critical of him.

      • mikef179MEMBER

        Surely there would be a few people on his side. Are we suggesting that only bears follow Joye?

    • Twitter is one thing, but the comments in the more conservative Australian are universally negative. It’s being compared to Pink Batts and the fact that tradies haven’t really been hit hard by COVID19 compared to tourism, retail etc.

      Link from Lindsay David’s tweet appears to bypass the paywall: https://twitter.com/linzcom/status/1267257442687057921

      • DominicMEMBER

        There’s some cracking comments under Lindsay David’s tweet. Shows we’re definitely not alone here at MB …

        • I liked the FTTP renovation comment. If it became popular it would be a hilarious unintended consequence that probably wouldn’t benefit any tradies at all.

        • darklydrawlMEMBER

          Wow.. Thanks for the link. Whilst I felt this announcement had ‘fraud and fiasco’ written all over it I thought I might be in the minority, but after reading that, I am not so sure. It is almost like SloMo and his village idiot sidekick have jumped the shark. Hell, when the comments section of the Australian is overwhelmingly negative against the LNP then our marketing guru has a bigger problem than I realised.

          • DominicMEMBER

            Yep. Loving it. Scummo’s had the tap on the shoulder from ole mate Harry and he’s about to get hosed down for it.

    • Amazed they haven’t all been blocked. Only have to breathe in his general direction and see ya later.

  11. Jumping jack flash

    Just a matter of time.

    Debt eligibility is the key.

    With QE, the banks have the capacity to create as much debt as anyone could ever need, but the problem is that they keep raising the eligibility critera! They need to lower it!

    This move will make many more people eligible for the gargantuan piles of debt that are essential, and will push house prices up again. Its a winner.

    7 trillion in mortgages by 2030! Here we come!

  12. It’s rather negative for the what, 25-30% of existing dwelling stock (MEL, SYD, SEQLD) that are units, as it removes the entire bid. This feels like Perth late 2014. Rents are collapsing and they are going to build their way out of recession by building more, rents fell for a further three years and prices at last check are still falling.

    • DominicMEMBER

      Fair point. The mass migration spigot is meant to fill the gaps but I’m not so sure it’ll work this time.

  13. this grant will just reduce demand for existing housing thus make downward pressure onto house prices

    • What do you reckon a 20k kitchen will add to the sticker price for a house when listed….

      I can see rorting scope

      ie if you’ve got tradie mates, inflated invoices, pay those, get a kick back

      • $ZERO. Everyone wants their own new kitchen. Not someone else’s idea of a new kitchen.

    • Jumping jack flash

      if you renovate a house and then don’t live in it during and after the renos, then put it straight on the market, does that count as new? How much renoing do you need to do? 20K worth? More?

      • To count as new it needs to be “substantially rebuilt” and they specifically state “just updating kitchen and bathrooms does not meet the test”.

        Here ya go:

        “ Substantial renovations

        A substantial renovation is when all, or most, of the structural or non-structural components of a building are removed or replaced.

        Most of the rooms in the building must have been affected, and the renovations must have affected the building as a whole for it to be considered a substantial renovation.

        Non-substantial renovations

        A home has not been substantially renovated if:

        only cosmetic work has been done to the home (e.g. painting)
        only one part of the building has been renovated (e.g. renovation of one bedroom in a 4-bedroom house; removal and replacement of a kitchen and bathroom with little else being done to the building, apart from minor repair work).”

        https://www.qld.gov.au/housing/buying-owning-home/financial-help-concessions/qld-first-home-grant/renovated-houses-first-home

        Doesn’t seem to vary much in other states.

  14. Have to admit I’m curious as to how this will work. I look after an elderly relative who recently gained mobility impairment so I would like to redo the bath room to make it safer. If I can get some grant money for a Reno of some kind I would do it. Is there any real info yet to say how this would work.

  15. Over the years the peeps here (myself included) have suggested that govt would one day resort to ridiculous schemes to keep house prices high and prevent young Aussies from obtaining decent shelter at a fair price.

    Some of the suggestions of what govt would, or could, do to prevent prices from falling have been truly ludicrous (a free Australian passport with every house purchase springs to mind). However I believe that this renovation subsidy scheme is more stupid than anything that has been suggested here in jest. I just shake my head at the thought of it.

    What’s next? Paying rev heads to pimp their motor?