Unconventional Economist


Why Australia needs foreign ownership

Cross-posted from Paul Wallbank Such are the vagaries of radio that I’ve been asked to comment on ABC Radio South Australia about foreign ownership based on an article that was picked up by The Drum 14 months ago. That article was written shortly after Dick Smith came out grumbling about the prospect of Woolworths selling


CBA pulls back mortgage LVRs (sort of)

By Leith van Onselen From Monday, the CBA, in conjunction with its Lenders Mortgage Insurer, Genworth Financial, will lower its maximum permissible loan-to-value ratio (LVR) on loan applications where an investment property has been used as a security to 95%, from 97% currently. From the CBA communication to third party brokers: From Monday 22 April


Louis Christopher talks housing

  By Leith van Onselen Please find above a short video interview between Peter Switzer and SQM Research’s Louis Christopher. In the interview, Louis tackles property spruikers, dodgy auction statistics, the current state of the housing market, and the outlook for the residential sector. Louis sees particularly strong housing market conditions in Sydney, but ongoing


Should the public sector be cut?

By Leith van Onselen Earlier this week, the president of the Business Council of Australia (BCA) called for a “hard cap” on the size of Government, which comes as the incumbent federal Labor Government faces pressure to cut the bureaucracy of more than 900 agencies and bodies. It’s an interesting topic. As noted previously, the


ASIC warns on spruikers as SMSFs leverage into property

By Leith van Onselen The Australian Securities and Investments Commission (ASIC) yesterday released a report on Self Managed Super Funds (SMSFs), which summarises the findings of its 2012 investigation into risks in the SMSF sector, based on 18 entities that provided a financial service involving the establishment of an SMSF. The Report shows that SMSFs


The inconvenient truth about emissions

By Leith van Onselen Politics is full of contradictions. Take my pet topic, housing, where all sides profess to care about affordability, yet continue to run policies that run counter to that goal, including biased tax rules (e.g. negative gearing), demand-side stimulus, restrictions on land supply, and inadequate provision of infrastructure. Arguably, the biggest contradiction


Property industry confidence hits 18-month high

By Leith van Onselen The Property Council-ANZ Property Industry Confidence Survey was released yesterday and showed confidence amongst property industry professionals rising for the second consecutive quarter, with the index hitting an 18-month high of 124 (a score of 100 is considered ‘neutral’). According to ANZ Chief Economist Warren Hogan: “Notwithstanding renewed European concerns and rising


The BCA’s contradictory wish list

Cross-posted from The Conversation There is much to consider when thinking about our future as a nation. We are a small, resource-rich, open economy facing a volatile global environment. We are particularly vulnerable to the impact of climate change. As in other developed countries, our population is ageing, which will have significant implications for taxation,


The most important graph for the UK economy?

Cross-posted from FalseEconomy.org.uk I’ve argued before that if I was forced to choose just one graph to understand the UK economy over the last two and half decades, the one I’d go for is the household savings ratio. I’ve marked the three stages of the UK economy since 1992. The ‘great moderation’ of unbroken growth


Links 19 April 2013

Global Macro/Markets: Reinhart/Rogoff and Growth in a Time Before Debt – Next New Deal How a student took on eminent economists on debt issue – and won – Reuters What’s causing sharp declines in crude oil prices? Sober Look Fed and Bank of Japan caused gold crash – The Telegraph Trading houses go cool on


Mining town rental vacancies rising

By Leith van Onselen From SQM Research comes news that rental vacancy rates remained broadly steady in March across the capital cities but have increased slightly over the year: SQM notes that rental vacancies in Canberra have risen strongly since July 2012, which may be associated with the large increase in apartment developments, together with


Land sales signal weak housing recovery

By Leith van Onselen The HIA-RP Data Residential Land Report for the December quarter, released today, revealed a tepid recovery in land sales and provided further confirmation that the RBA’s plan for housing construction to fill the void left as the mining boom unwinds is looking shakier by the day. According to the Media Release:


RBA: Bank offshore borrowings won’t increase

By Leith van Onselen The Q&A session of Tuesday’s speech by RBA Assistant Governor, Guy Debelle, contained an interesting tid-bit on bank offshore borrowings, which Debelle believes will not grow from their current level, and might even fall slightly, over the foreseeable future: Certainly, Debelle’s comments that bank offshore borrowings have peaked are backed-up by


Canadian house prices bounce back

By Leith van Onselen The Canadian housing market staged a recovery overnight, with the Teranet repeat sales index registering a 0.4% increase nationally over March, breaking a run of six straight months of falls (see next chart). Canadian house prices have now fallen by -1.4% since values peaked in August 2012, but remain 25% above


Australia’s economic Hari-Kari

Cross-posted from Paul Wallbank. “The Golden Era of Credit is Now Over” writes Maximillian Walsh in the Australian Financial Review today. Max’s story relies mainly on the April edition of Bill Goss’ monthly newsletter where the founder of investment firm PIMCO writes about the talents of today’s market wizards; All of us, even the old


Canberra unit glut hits landlords

By Leith van Onselen Back in February, the Canberra Times reported heavy discounting from landlords amid an influx of new developments that had reportedly pushed rental supply to 15-year highs: AN INFLUX of developments has pushed Canberra’s rental market to new levels of supply as anecdotal reports of discounted rents begin to emerge. The vacancy


Links 18 April 2013

Global Macro/Markets: The Great Debt Delusion: How Math Keeps Proving Austerity Wrong – The Atlantic Austerity after Reinhart and Rogoff – Financial Times Reinhart-Rogoff on Debt and Growth: Fake but Accurate? – Bloomberg Reinhart, Rogoff, and How the Macroeconomic Sausage Is Made – HBR Reinhart-Rogoff recrunch the numbers – Financial Times Inside a Bitcoin ‘Grow


Dwelling completions fall

By Leith van Onselen The ABS has just released dwelling completions data for the December quarter, which registered a -3.2% decrease in the total number of dwellings completed over the quarter, with detached house construction falling by -1.4% and unit & apartment construction falling by -6.1% (see next chart). At the state level, falls were


US housing market continues to recover

By Leith van Onselen The US Census Bureau last night released housing construction data for the month of March, which confirmed the ongoing recovery in US housing. According to the Census Bureau, the number of dwelling starts increased by 7.0% in March to a seasonally-adjusted annual rate (SAAR) of 1,036,000, which was the highest level


Bloomberg: Australia should prepare for worse

By Leith van Onselen While local economic commentators see Australia having “the perfect economy”, many offshore commentators, most notably Michael Pettis, see an economy that has become increasing undiversified and far too dependent on the mining sector and China to drive employment and growth. This outsider’s view is encapsulated nicely by Bloomberg’s Asia Pacific correspondent, William


Auckland housing goes bananas

By Leith van Onselen Please find above a cracking interview between Interest.co.nz’s Gareth Vaughan and John Bolton, principal of Squirrel Mortgage Brokers, discussing the Auckland housing market. As readers might recall, last week Auckland’s stratified median house price hit $600,000 for the first ever time, according to the Real Estate Institute of New Zealand, following


The Budget is toast for whoever rules

By Leith van Onselen Yesterday, Jessica Irvine has posted an interesting article on Business Spectator on the budgetary headaches facing the federal government as the commodity price boom unwinds: At one point, nominal GDP was growing 7 per cent plus a year, while the real economy grew just 3 or 4 per cent. As commodity


Links 17 April 2013

Global Macro/Markets: Response to the Kouk’s claim that gold is a novelty; a useless bubble – Bullion Baron How the violent gold collapse may pose a systemic risk to the financial system – Quartz Serious flaws in Reinhart-Rogoff’s public debt-to-GDP analysis – Rorty Bomb North America: The Outlook for the National and Local Economy –


What now for Browse Basin gas?

Cross-posted from The Conversation Last Friday, Woodside announced it would no longer be developing a gas processing plant at James Price Point in Western Australia. The announcement was greeted with enthusiasm by environmental groups. But this is by no means the death knell for gas development in the Browse Basin. Peter Coleman, CEO and Managing