Unconventional Economist


Governments fail to boost new house sales

By Leith van Onselen Property Observer today has released a great primer summarising the various incentives on offer from Australia’s state and territory governments for purchasers of “off the plan” dwellings. This is a good chance to compare the grants with sales and gauge their efficacy to date. Below are the incentives on offer (quoted


Auction clearances solid

By Leith van Onselen The Real Estate Institute of Victoria (REIV) yesterday released its preliminary auction results for the weekend just gone, which registered a small dip in the auction clearance rate and a high number of missing results. The REIV reported a preliminary clearance rate of 69% on 884 auctions. This compares to last


The coming inter-generational war

By Leith van Onselen Stanley Druckenmiller, founder of Duquesne Capital, has given an excellent interview on Bloomberg Television’s “Market Makers” on the global economy, the demographic bubble and politics. The above video is an extract showcasing Druckenmiller’s views on the coming demographic challenge in the US, whereby the ageing of the population and transfer payments to the


QLD relaunches FHB grant

By Leith van Onselen January’s new home sales figures, released last week by the Housing Industry Association (HIA), were disastrous for Queensland, registering the worst monthly house sales and the lowest annual sales in the series’ 16.5 year history (see next chart). The poor result has clearly worried the Queensland Government, which over the weekend


New home sales climb to their knees

By Leith van Onselen The Housing Industry Association (HIA) has just released new homes sales data for the month of January, which continued its tentative recovery. Below is the Press Release: New home sales hit the right note for the new year, posting a fourth consecutive rise in January, said the Housing Industry Association, the


Another developer books a loss

By Leith van Onselen From Property Observer comes news today that AV Jennings has posted a -$19.1 million loss for the first half of the 2013 financial year compared to a $3.3 million profit a year ago. This follows news earlier in the week that Becton had fallen into receivership as well as the first


NZ sets macroprudential timeframe

By Leith van Onselen From Interest.co.nz comes news today that New Zealand is pushing ahead with a plan to develop macroprudential policy tools by the middle of the year: Finance Minister Bill English says he expects to sign a deal with Reserve Bank Governor Graeme Wheeler by the middle of the year on the central


US housing recovery on track

By Leith van Onselen Over the past few weeks, both the University of Michigan and the Conference Board released consumer sentiment figures for February, which beat economist’s expectations registering strong gains over the month. The University of Michigan preliminary index of consumer sentiment lifted to 76.3 in February from 73.8 in January. Economists had expected


IMF tackles asset bubbles

By Leith van Onselen Earlier this month, the International Monetary Fund (IMF) published a working paper, Asset Price Bubbles: A Selective Survey, which provides an overview of recent literature on asset price bubbles and examines some of the behavioural drivers behind those bubbles. The IMF uses a very straightforward definition of an asset price bubbles,


LNG exports safe, for now

By Leith van Onselen Over the past few months I have warned that two of Australia’s major export commodities – thermal coal and liquefied natural gas (LNG) are at risk from the shale gas boom currently underway in the US. The threat is two-fold. First, the huge increase in natural gas production derived from shale


Trade deficit increased in the December quarter

By Leith van Onselen The Australian Bureau of Statistics (ABS) has just released its Balance of Payments – Goods and Services data for the December quarter, which: Provides preliminary quarterly estimates of goods and services data including preliminary quarterly estimates of Chain Volume Measures for goods debits. Preliminary seasonally adjusted quarterly balance on goods and


Restoring trust in global banking

By Leith van Onselen Please find below a speech by Mark Carney, Governor of the Bank of Canada and Chairman of the G20’s Financial Stability Board (FSB), on restoring trust in the global banking system. In the speech, Carney notes that there has been a “significant” loss of public trust in the financial system, based


More ACTion on NZ housing

By Leith van Onselen New Zealand’s ACT Party continues to raise the bar on New Zealand housing policy, challenging the two major parties – Labour and National – to undertake meaningful reform. On 25 August 2011, former leader and ex-Reserve Bank of New Zealand governor (1988 to 2002), Dr Don Brash, gave a speech in


Adelaide developers go mad

By Leith van Onselen It seems Adelaide developers have joined their east coast brethren by offering generous incentives to buyers of house and land packages. From Adelaide Now: State government grants and record low interest rates are starting to have an impact, with Housing Industry Association figures revealing new home approvals in South Australia increased


US housing moves back into shortage

By Leith van Onselen In Friday’s article, How a property shortgage can turn to surplus, I noted how a perceived housing shortage in the US in the lead-up to the Global Financial Crisis (GFC) quickly switched into a surplus as the deteriorating economic conditions caused household formation rates to slump to 65-year lows in the


Busting negative gearing’s myths

Please find below another interesting article from Philip Soos debunking some of the common misconceptions around negative gearing of Ausralian property. Philip is a Masters research student at the School of Humanities and Social Sciences, Deakin University. In Australia, few housing market policies are more contentious than negative gearing (NG). At the forefront of defending


Do PPPs have a future?

The below article, which has been cross-posted from The Conversation, examines the future of toll road Public-Private Partnerships (PPPs) in Australia. The author is Dr Stephen King, who is an Economics Professor at Monash University. BrisConections has been placed into administration only seven months after opening the Brisbane Airport Link toll road/tunnel. It has not


Mortgage Choice lobbies for FHB ponzi scheme

By Leith van Onselen Publicly-listed Australian mortgage broking firm, Mortgage Choice, has taken self-interest to another level in the wake of the sharp fall in first home buyer (FHB) mortgage demand, whereby the proportion of mortgages to FHBs fell to the lowest level since June 2004 following the recent cancellation of grants to first-time buyers


How a property shortage can turn to surplus

By Leith van Onselen ‘Underlying demand’ (or ‘pent-up’ demand) is the common method used in calculating whether there is a housing shortage. Put simply, underlying demand estimates what the demand for newly-built housing might be given the growth in population, trends in household size, demand for second (or holiday) homes, and economic conditions (e.g. employment,


Weekly RP Data house price update

By Leith van Onselen In the week ended 21 February 2013, the RP Data-Rismark 5-city daily dwelling price index, which covers the five major capital city markets, recorded a 0.01% increase, which followed las week’s 0.16% increase (see next chart). Value gains were driven by Melbourne and Brisbane, which more than offset falls in the