Unconventional Economist


CoreLogic weekly Australian house price update: more universal falls

By Leith van Onselen In the week ended 11 April 2019, the CoreLogic 5-city daily dwelling price index, which covers the five major capital city markets, fell another 0.15%: Values fell across all major markets: So far in April, home values have fallen by 0.28% at the 5-city level, again with all major capitals falling:


Links 12 April 2019

Global Macro / Markets / Investing: The Problem With Putting a Price on the End of the World – NY Times Oil and gas ‘could lose 95% of its value’ by 2050, consultancy warns – FN London Can we use physics to forecast long run global economic growth? – Nephologue Investors Should Worry If Climate


Canberra: the nation’s capital for dodgy construction

By Leith van Onselen It seems poetic that the nation’s capital of corrupt policy making also appears to be the capital of shonky building practices. From The Canberra Times: The ACT government has temporarily shut down 32 construction sites in the past three months, as part of a renewed crackdown on dodgy building work. Access


BIS Oxford: Residential building boom turning bust

By Leith van Onselen BIS Oxford Economics is bearish about the near-term outlook for Australia’s housing construction market. The firm has forecast that the sector will be hit by a two-year correction, with the number of new dwelling starts tipped to fall to 161,000 a year. This compares with between 220,000 and 230,000 annually over


AFR fake news alert: $130k is not “middle-income”

By Leith van Onselen The AFR’s John Kehoe has penned a highly spurious article claiming Labor’s 49% tax rate will “hit middle-income earners”: Taxpayers earning between $130,000 and $160,000 today could be hit by Labor’s budget repair levy and 49 per cent top tax rate within four years as income growth pushes them into the


HIA: Housing supply falling, bring in more migrants!

By Leith van Onselen From The Housing Industry Association (HIA) comes another huge dose of hypocrisy (my emphasis): “Home ownership remains one of the most important aspiration for all Australians. It is critical that an incoming federal government recognises that many Australians move into home ownership through the private rental market,” said HIA Managing Director,


Final auction clearances still stuck in gutter

By Leith van Onselen Last weekend, CoreLogic released its preliminary auction clearance rates, which revealed the following results: Today, CoreLogic has released its final auction results, which reported a 4.6% decline in the final national auction clearance rate to 52.6% – slightly above last week’s final clearance rate of 52.6%: As you can see, Sydney’s final


Desperate developers rain “massive” incentives to clear stock

By Leith van Onselen As stalled developments spread over the east coast amid the surge in completions: Desperate developers are throwing incentives at buyers: Free mortgage payments are among the latest incentives on offer as developers try to lock in buyers in Sydney’s cooling market. In addition to the stamp duty rebates, rental guarantees, frequent flyer


Chris Bowen wrongly blames states for poor housing affordability

By Leith van Onselen Labor’s shadow treasurer, Chris Bowen, has showed that he is not serious about housing affordability, effectively blaming the states. From News.com.au: Labor today is warning its controversial proposal for a negative gearing overhaul will not make housing more affordable… Chris Bowen today made clear the main purpose would be as a


The escalating cost of Australian infrastructure projects

By Leith van Onselen In already built-out cities like Sydney and Melbourne, the cost of retrofitting new infrastructure to accommodate greater population densities is prohibitively expensive because of the need for land buy-backs, tunnelling, as well as disruptions to existing infrastructure. These are what economists call ‘dis-economies of scale’. The Productivity Commission (PC) has been


Here comes the dwelling construction bust

By Leith van Onselen With yesterday’s release of dwelling construction data for the December quarter, it’s once again time to examine how Australia’s dwelling supply is tracking against population growth. The below charts track the following, which are based on the latest available quarterly data: Dwelling approvals to December 2018; Dwelling commencements to December 2018;


Survey: 72% of Australians are sick of population growth

By Leith van Onselen Dr Bob Birrell and Dr Katharine Betts from the Australian Population Research Institute have released a new research paper examining Australian voters’ attitudes towards immigration, which is based on a random survey of 2,029 voters conducted from October/November 2018. Below is the Executive Summary along with the key charts: Previous research


Links 11 April 2019

Global Macro / Markets / Investing: Nobody on Wall Street seems afraid. Here’s why that’s scary – CNN A ‘wealth tax’ presents a revenue estimation puzzle – Washington Post College Grads Sell Stakes in Themselves to Wall Street – Bloomberg Global Growth Forecasts Shift Downward—What’s Behind the Numbers and Why It Matters – Econ Browser


Josh Frydenberg joins negative gearing budget farce

By Leith van Onselen As expected, Treasurer Josh Frydenberg has jumped on the faux rage over Chris Bowen’s understatement of the share of negatively geared investment into newly constructed dwellings: Josh Frydenberg has accused Labor of “lying” about inaccurate figures behind its negative gearing reforms, and warns there could be “a big black hole” in


Dwelling commencements collapse

By Leith van Onselen The ABS has released dwelling construction data for the December quarter, which recorded a sharp quarterly fall in commencements and a smaller decline in completions. According to the ABS, the number of dwelling commencements fell by a seasonally-adjusted 16.3% over the December quarter and were down by 16% over the year.


S&P gets it. Warns on Aussie household bust

S&P Global has released an excellent new report, entitled Australian Corporates Vulnerable To A Thrifty Consumer, which warns of the impending household bust: Australian consumer sentiment is listless. But for Australian corporates it has hardly mattered. A migration boom and consumers’ penchant to live beyond their means have underwritten corporate profitability. However, deteriorating household conditions


Migrants cry foul at “unfair” elderly parent visas

By Leith van Onselen Starting this month, the federal government will issue up to 15,000 sponsored parental visas to migrants who wish to bring their elderly parents to live in Australia for a continuous period of three, five or 10 years. However, members of the Indian community have attacked these visas, labelling “unfair” the need


International students probed over systemic exploitation

By Leith van Onselen Last month, the Migrant Workers’ Taskforce released its final report, which found that “wage underpayment is widespread and has become more entrenched over time”, with as many as half of all migrant workers exploited. Prevalent among the exploited are international students: Underpayment of migrant workers is certainly not a new problem.


Negative gearing debate enters post-truth zone

By Leith van Onselen Yesterday evening, The Australian’s and The AFR’s lobbying against Labor’s negative gearing policy went into overdrive, attacking shadow Treasurer Chris Bowen for understating the share of negatively geared investment into newly constructed dwellings, and claiming that Labor has therefore overstated its Budget savings. Here’s The Australian: Opposition Treasury spokesman Chris Bowen


NY Times goes gaga on Aussie ponzi craponomy

By Leith van Onselen The New York Times’ Neil Irwin has penned an incredibly superficial article hailing Australia’s ‘miracle’ economy, arguing that the rest of the world could learn from our purported success: I had flown 16,000 miles not to study economic malaise, but its opposite: the remarkable resilience of the Australian economy, which has


Housing finance crash signals more property pain

By Leith van Onselen Yesterday’s Lending to households and businesses release from the ABS revealed that total mortgage lending (excluding refinancings) recovered slightly in February, but still tanked by 19% over the year in trend terms, driven by an epic 27% crash in investor commitments, whereas owner-occupied commitments also fell by 15%: As shown above,


Melbourne’s hidden ghost city revealed

By Leith van Onselen Prosper Australia has released its 2018 Speculative Vacancies Report, which estimates up to 16% of investor-owned residential properties in Melbourne are vacant, based on water usage data. The Chinese mecca Box Hill in Melbourne’s East is estimated to have the highest percentage of vacant investment properties. Prosper Australia recommends Victoria implement


Links 10 April 2019

Global Macro / Markets / Investing: Ray Dalio says wealth inequality is a national emergency – CBS News Davos panel on inequality becomes discussion about the very rich ‘paying their fair share’. – Infadium Top Candidate to Lead the Bank of England Explains Why Capitalism May Not Survive the 21st Century – Hidden Forces Sony


NBN: A $50 billion white elephant

By Leith van Onselen ACCC head, Rob Sims, has hit out at the $50 billion National Broadband Network (NBN), claiming that many households are paying more for worse internet. From The Australian: Australian Competition & Consumer Commission boss Rod Sims yesterday warned NBN Co was failing to deliver on its promise of faster and affordable


Housing finance records dead cat bounce

By Leith van Onselen Today’s housing finance data for February from the ABS recorded a small bounce after a long period of declines: As shown above, total finance commitments (excluding refinancings) rose by 2.7% in February, with owner-occupied commitments rising 2.4% and investor commitments rising 0.9%. Over the year, total finance commitments (excluding refinancings) crashed by


More AFR negative gearing fake news

By Leith van Onselen The AFR’s lobbying against Labor’s negative gearing policy couldn’t get any worse: “The numbers shadow treasurer Chris Bowen is quoting for new housing stock created by investors is not just incorrect, it is substantially incorrect,” said Tim Reardon, chief economist for the Housing Industry Association, the nation’s building industry peak body. “Labor’s


Peter Costello admits compulsory super is failing

By Leith van Onselen Former Treasurer, Peter Costello, claims that Australia’s compulsory superannuation level of 9.5% will not generate anywhere near enough funds for retirement, even for workers that contribute for the entire of their working lives. From The ABC: Former treasurer Peter Costello says Australians will not have enough money to become self-funded retirees