Joye: Property cheap, cheap cheap!

As much of the press tips into phony handwringing over house prices again, even as it relies entirely on the bubble for its only source of profit growth, Chris Joye is having none of it. He argues that:

  • Property is the cheapest it has been in a very long time.
  • Buyer incomes have been lifted by fiscal largesse.
  • The RBA’s rate cuts and the Term Funding Facility have made debt super cheap.
  • The boom is global.
  • Australian prices will rise 20-30% ahead.
  • Mass immigration will resume before long “very material ” rises in skilled migration will follow, crushing wage inflation.
  • The RBA will eventually normalise to a 2% cash rate.

A few points in riposte:

  • Property is cheap so long as you don’t factor in repaying principal and crushed wages growth but nobody bothers with that these days so there you go.
  • I agree the boom has further to run.
  • I disagree that the RBA will ever normalise. The low rates will be capitalised into prices and the higher interest burden will prevent it.
  • As well, China is steadily shifting ex-growth and as we move into 2022, commodity prices will fall, denuding Australia of income.
  • Macroprudential will stall the market at some point and there is a risk that Labor reconfigures the monetary mandate for it and APRA to include house prices.
  • It is just as likely that the RBA cuts from here as it is that rates rise.

Finally, it interesting that Chris has moved from being one of Australia’s most persistent inflationists to become a doyen of lowflation.

Houses and Holes
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      • The Traveling Wilbur

        That they should soon be Australian, or just invest in Australian Property instead of NZ Property?

        • kiwikarynMEMBER

          That they should be Australian. You are still subject to the same property tax rules in NZ if you buy property in Australia.

  1. “Property is the cheapest it has been in a very long time.”

    Presumably what he really means is that mortgage repayments are the cheapest they have been in a long time.

      • Do people even care about the principal these days? I mean, people just look to see if they can afford the monthly repayments on those mortgage calculators. And if the monthly repayment on the $1M house is cheaper now than it was a few months ago then “houses are cheaper than they have been in a long time”.

        • Which is why, to get people to come back once the house surge is over, they need to be able to drop the rates. What else is going to shift the number on the calculator by any significant degree?

  2. Duke_Wellington

    We have been here before. We know what is going to happen and we know they want it to happen.

      • Jumping jack flash

        It surely wont be the same as Zimbabwe even if we did have 1000%. Its debt. Its different here. Debt is accounted for differently.

  3. Display NameMEMBER

    Cameron was banging on about this on Twitter recently.

    Renting money super cheap. BUT… for most people a mortgage is a 20-30 proposition. Lets see you bet against mortgages rising in that period. When capital markets no longer work, how long can we get away with BS monetary policy? I am calling an un intended consequence (or two) in the lifetime of most mortgages taken out in the last few years.

    • We are still waiting for all this to magically fix itself.

      And waiting… and waiting… and waiting… 10 years has passed…

      So when Interest Rates reach -5% and the Currency is cactus, will we still be waiting?

    • Frank DrebinMEMBER

      Next innovation might be to introduce 20-30 year fixed loans aka the US.

      Would be reasonably simple and fairly popular you would think.

      Combine that with a cheeky $50k super withdrawal for First Home Buyers (investment or OO) and you laughing.

      So much more can kicking and financial wizardry that can be done to keep this thing alive and growing.

  4. Arthur Schopenhauer

    Is there any better place in Asia Pacific to blow a couple of million on a house and a pool? Just saying…

    (Asking for 3 billion plus people.)

    • Frank DrebinMEMBER

      You could dump it into freehold in a couple of other countries around the region, but good luck retaining ownership if it goes tits up with the locals. Either in spite of your local spouse, or most likely because of them.

    • Tiliqua scincoides

      This is a key – there are plenty of wealthy people across the world making plans to move to Australia in the near future. We are the least bad of the region and many other parts of the world. Despite all the whinging Australia was one of the best places to be during the pandemic by quite a margin.

        • Arthur Schopenhauer

          Which translates to regular Australians having to compete with Asia’s upper-middle class. A very small portion of a very large number is still, by Australia standards, a very large number.

          • Compare and save..MEMBER

            Eg A standalone house in Beijing or London, cold and polluted – $ 10 million.
            A house in Australia 3 million. Houses here can go to 6 million !

      • I actually think scummo stuffed that up. Eventually, who will want to come to an unvaccincated country that has continual lockdowns?

    • Since when do we Politicise Death? ASIO is like, ” We dont condone murder in this Country “. Fine. So why arent Politicians getting investigated for there deaths of Australian Citizens?

      This isnt Politics. Its Genocide.

      We call it Politics but its really Murder.

    • This sort of scam was happening a lot in Ireland when I lived there. Post 08′. Lots of people had deposits stolen. Very sad.

  5. Feels like we are in a crack up ‘asset boom ‘ including Property , Land, Stocks and Crypto and 2nd hand cars , its like everyone knows what $ you spend today …will only buy you less goods tomorrow.

    • High end carbon bikes and mech/group. It’s off the charts. Just listed my Cervelo R5 near new with Durace mech so let’s see

      Mate just told me pro teams are hoarding mech/group as evidently there’s not enough out there

    • Jumping jack flash

      Likely very short-lived. As soon as the stimulus, primarily super, is all spent it will vanish as quickly as it started.

      There is a slight possibility that US stimulus may wash through the country. It was a pretty big lump of debt thrown in the global debt ocean after all. See what happens i guess

    • Tiliqua scincoides

      He has proven himself to be the most consistently accurate commentator on property – I agree.

      I’m in the process of buying two properties this year. Just had my place valued and price has risen 43% since it was purchased at the end of 2016. That’s according to the conservative estimates of valuers working for two different banks. Not leveraging onto more property would be un-Australian.

      • ChristopherMEMBER

        Place we built in 2014 for $660k was just valued at $1.1m to $1.2m in todays market!

      • Ronin8317MEMBER

        The apartments in my area are being sold below the price from 2016. COVID-19 really made living in apartments unattractive.

        19/41-43 Veron Street, Wentworthville. sold 610k in 2016.
        4/41-43 Veron Street, Wentworthville. sold 520k in 2021.

        Don’t buy apartments!!

      • I know two people who are selling apartments they bought for over $650k nine and twelve years ago.

        Both nice 3 bedders with water views. First one didn’t say how much he’d lost (but it was a lot) the second one is hoping to get $480k and she is feeling that might be optimistic.

        I’m starting to see some “Price reduced” updates on The agents pumped the price up and and absolutely rode that wave for as long as they could. Some are now seeing that they want to squeeze the last few sales they can out of it before it stops or adjusts back to more normal levels.

      • yup – cos he believed there is nothing that our corrupt erstwhile leaders wont do to protect the biggest welfare grifters in Australian the Property Hegemony – and he is right, the kitchen sink can be bare and the hegemony will find something to fling at it – until?

      • yup Joye got it right – cos he believed there is nothing that our corrupt erstwhile leaders wont do to protect the biggest welfare grifters in Australian the Property Hegemony – and he is right the kitchen sink can be bare and the hegemony will find something to fling at it – until?

  6. happy valleyMEMBER

    Chris Joye – Mr 110% self-interest and the RBA’s no. 1 spruiksperson (far exceeding what Peter Martin and Terry McCrann ever did).

    He may be right on things, but I basically switch off to him now. And was there any mention of having to repay the debt out of after-tax income over 20 to 30 years and save for retirement? Oh, that’s right – Josh will legislate away ever having to repay the debt?

  7. “The RBA will eventually normalise to a 2% cash rate.” And he says wage inflation will be crushed.

    If wage inflation is crushed then by the time the RBA has put IR’s to 1%, property prices will be falling, and vested interests will be bleating and screaming.

    The only reason why Joye has been always right, is because he says house prices will always go up and the government dutifully does whatever it has to to make it come true. I’m not convinced he really knows what’s going on or where the limits to stimulating the market are.

    • Jumping jack flash

      Not a great chance of wage inflation without CPI.

      Id wait for CPI to move first before getting all excited about wages.

      What business is going to take increased wages out of their current profit (growth) to hand to their workers? Many business owners are still locked into wage theft mode (and up to their eyeballs in personal debt). Thats why they keep asking for 3rd world slaves, and bemoaning the lack of available workers (for the pay they’re offering).

  8. I was shopping the other day. I saw this van in the shopping car park. While I was putting the grocerys in the boot, I looked up and saw a 60 year old lady washing dishes in the back of her van.

    I pointed at it and said, ” Look at that lady in a Van “. The person I was with said, ” Probably a southerner coming north on holiday “. You could clearly see it wasnt the case. They where homeless.

    I admit, I didnt see much of this stuff a few months back. Now Im beginning to see it everywhere.

    Its sad when you see kids in them. I think a lot of Southerners have got sick of the high prices, headed north and now we’ve got these road trains of homeless people living in Vans.

    What can you do? Its worse when your in Queensland and realise the jerks down South ( the guys who consistently bully your state and remind you how useless you are ) have done this. I often wonder why Queensland doesnt just build an army and invade the state.

    I do find it ironic that Boomers in there 60s are now the product of there own Homelessness. The idea of living in a van intrigues me. Electric Solar Car would be insanely cheap. How would you get your mail? Pensioners on Centrelink? Wierd.

    That old lady. She didnt look too healthy. She looked very deathly. When you see this stuff, its pretty hard to unsee it. She was real pale, frail and stick like in a cramped van. I remember thinking, ” She wont last long “. Whatevers coming, it aint gonna be nice. There’s gonna be a lot of death coming up in Australias future, I think.

    • Ronin8317MEMBER

      Living in a van in QLD will be hard, as it is illegal to sleep in your car in QLD.

    • There are more boomers in that catagory or close to it, than in the commonly assumed $2M house, mega super, + franking credits + 3 IPs. As an article in MB spellt out a couple of weeks ago

    • I found a pensioner going through my recycling. He was collecting bottles to make some extra cash.

      I was rather gobsmacked. After a bit of a chat, it turned out he was doing this to make ends meet and also to help support his wifes family back in the Philippines. They have been hit hard by Covid and nobody has any work.
      He was rather frail looking too.

      I had a stockpile of pasta and rice (from when it looked like all of Australia was going into lockdown) that I was never going to use, so I gave him that too – but it made me unbearably sad that this is what Australia has become. Pensioners going through the trash.

      • working class hamMEMBER

        We have a couple of blokes who do that around here as well, bin night, they do the whole street. Huge bags on their backs.

      • UpperWestsideMEMBER

        Everyday happening here in NYC. There is a lot recycling from the apartment buildings, you get a deposit back on most glass bottles (5-10cents) so they get cash at the local supermarket ( usually the ones that take WIC checks also take bottles).

        I kid you not but in winter there is a lady in my area who collects bottles in a mink coat!


    From eminently sensible Philip Soos:

    Philip Soos Tweet
    Apr 10
    Joye is speaking crap – housing is not affordable. What he and every other vested interest points to is the static first year mortgage payment of ownership, not over the life of the loan which is how you measure actual affordability.

    • Know IdeaMEMBER

      My guess would be that those taking out the mortgages would not come to that realisation until a few years down the track, if at all.


        A few years down the track you just sell the place for a bucket load more and re-leverage into something new!

  10. He is probably right about that. House prices haven’t really done much over the past 3 years. There is plenty of scope for catch up.

    • Jumping jack flash

      There is a TON of pent-up demand.
      The problem is debt eligibility and ponzi buy-in.

      As prices rise, so does the buy-in fee, and that is the barrier for many, not the loan repayment, debt has never been cheaper.

      Since debt is absolutely, positively essential, the government and RBA should assist people who may earn enough to repay a colossal debt mountain, but cannot save the ponzi buy-in for whatever reason, mostly pressures of gouging oligopolies on costs of living.

  11. One way to solve the debt repayment burden is just to make the debt repayment or part of it a balloon payment at the end of the loan term.

    • working class hamMEMBER

      I like your thinking. We can all live the instagram life we always dreamed of, beach houses, infinity pools and land cruisers to the the moon.
      Is it really a can kick if it keeps happening?

      • But say now for example. The RBA is pinning down the 3 year yield, ie promising the same interest rates in three years.
        So why not just delay loan repayments for three years? It won’t make any difference to the quality of the credit.
        Then apply same reasoning to 30 years.

    • UpperWestsideMEMBER

      Zero coupon PIK bonds . If you want to really get the ponzi going way out over its ski’s zero coupon PIK bonds for first home owners.

      Don’t pay any interest until the end.
      Pay the capital amortization by issuing more ZC Pik’s.

      Sure it all blows up in the end , but if you issue long enough bonds the home owner will be dead by then.
      And the Govt, they don’t give a rats as long as it beyond the election after next.

      Financial engineering – genius or what!

  12. I don’t get this whole property to the moon boom thing really. We have next to zero growth in population at the moment or at least that’s what I’m thinking is the case, we have an economy that is sort of OK for a mid pandemic type economy with closed borders but many businesses supposedly in trouble, we have next to zero wage growth, admittedly we have banks flushed to the gills with money to dish out at record low interest rates & with all this we have property prices going way over the top with extreme price increases? Even with ridiculously low interest rates where is the “demand” coming from? I mean with all the above (& more that I have not listed) if someone is rushing in to buy a house & many others as well, such that they make that price go up so much, where were they all living before? What happens to the dwelling they were in previously even if it was a rental? Who is buying that or now renting that? & who is buying the one after that? If there is no increase population & no increase income how is the price going up so much? When does the frenzy stop, assuming same population & income growth?
    Does it mean all the pent up demand is from everyone who bought a high rise apartment? So big demand for house from apartment dwellers & now no demand for apartments? I just can’t get my head around the hysteria.

    • UpperWestsideMEMBER

      Think of housing as a weird perpetual bond
      That makes it of exceedingly long duration.
      Interest rates go down, value of bond goes up, and VV

    • I agree. It’s fascinating. I think the freeze on turfing out tenants has had a small impact which will just start to show now. There must be spaces in aged care homes that people aren’t taking up, they’re staying home or they’re buying a new place. O/s people must still be buying, there must be a backlog of people moving to a place they want to be, I know people renting as they renovate, that’s caused a bit of a ripple. But still, houses on the edge of our cities that were being sold to immigrants, and apartments must be dropping. There must be uni lodges with empty beds.

    • 480,000 expats (many highly skilled) have returned to Australia in the last year…more than what immigration was previously, and a good portion have plenty of cash from well paying jobs overseas…