Leith van Onselen


Japan enters Aussie mortgage market

By Leith van Onselen Bank of Tokyo-Mitsubishi has launched the first major salvo by a Japanese bank into the Australian mortgage market, extending a $500 million one-year mortgage-backed facility to AMP Ltd. Under the arrangement, Bank of Tokyo-Mitsubishi will provide AMP with short-term “warehouse” financing while mortgages wait to be split into pools and then


RBNZ’s mortgage caps are working

By Leith van Onselen I noted last week how the Reserve Bank of New Zealand’s (RBNZ) speed limits on high loan-to-value ratio (LVR) mortgage lending were showing early signs of success, with the latest housing loan approvals data from the RBNZ suggesting that mortgage demand was falling as evident by year-on-year growth in the number


Land tax must kill negative gearing, stamp duty

By Catherine Cashmore, a market analyst and journalist with extensive experience in all aspects relating to property acquisition. Follow Catherine on Twitter or via here Blog. There’s been a lot of debate around property taxation in Australia – significantly negative gearing, which allows an investor to use the short fall between interest repayments and other


Links 26 November 2013

Global Macro / Markets: There is no easy escape from secular stagnation – Financial Times Hedge Funds Have Been Getting Smoked This Year – Business Insider Washington turns bond market upside down – Financial Times A simple explanation of how money moves around the banking system – gendal In Bitcoin’s Orbit: Rival Virtual Currencies Vie


ASX at the close

Most Asian markets got off to a positive start with equities riding the momentum from another record close on Wall Street. The yen crosses have continued to be a focal point, with yen weakness setting the tone early in Asia and helping to drive equities. USD/JPY has trumped July highs and traded as high as


Petrol prices to rise

From CommSec: According to the official data, the national petrol price has now lifted by 2.5 cent a litre in the past fornight. And unfortunately for motorists there will be further price hikes ahead. Motorists will be hit by the double-whammy of higher crude prices and a weaker Aussie dollar – pushing up the cost


Bitcoin versus gold

Above is an interesting take on Bitcoins from Peter Schiff, CEO and Chief Global Strategist of Euro Pacific Capital. In the video, Schiff explains why Bitcoin is not “gold 2.0” but modern day alchemy (termed “tulip mania”): “While I have a lot of sympathy with what the bitcoin community is trying to achieve, I just think they


Crap arguments for affordable housing

By Leith van Onselen Canstar has come out with some rather dubious analysis today attempting to justify Australia’s high housing costs: AUSSIE mortgage sizes may have quadrupled in the past few decades but experts say today’s borrowers are enjoying far better economic conditions. New research by financial ratings firm Canstar found the national average mortgage


Ending the one percent’s free-ride

By Leith van Onselen Regular readers will know that I am a big fan of shifting state tax bases away from stamp duties on property transactions towards broad-based land taxes. The benefits of broad-based land taxes are numerous, but include: Less volatility in revenue collection than stamp duties, since land taxes are not dependent on


Abolish negative gearing to save Budget billions

By Leith van Onselen While the Grattan Institute’s new report, Balancing budgets: tough choices we need, was centred around winding back entitlements to older, wealthier Australians, it also included a section on abolishing negative gearing, which it claims would save the Budget around $4 billion per year initially, falling to a saving of around $2


Workforce decline is all about the aged

By Leith van Onselen Last week, the head of the Macroeconomics Group at the Australian Treasury, David Gruen, forecast that Australia’s average per capita income growth will halve over the next decade to the lowest rate of growth experienced in 50 years. One of the reasons behind the slower income growth is Australia’s ageing population,


RP Data weekend property market update

Click to view RP Data’s latest weekly housing market update, which provides a useful snapshot of the housing market as at 24 November 2013. This week’s report includes: Latest weekly dwelling value results; Auction results & clearance rates Latest median house & unit prices; Average time on market & vendor discounts;; Mortgage market activity; and


Auction clearances weaken again

By Leith van Onselen Reported auction clearance rates in Australia’s two biggest markets weakened again over the weekend. In Australia’s biggest auction market – Melbourne – the preliminary clearance rate was 66% on 944 auctions reported to the REIV, with 139 auctions listed as “no result”, which could result in some small downward revision once


Links 25 November 2013

Global Macro / Markets: Shadow Banking: What It Is, How it Broke, and How to Fix It – The Atlantic A Record Market Is Not All That It Seems – New York Times ’I can’t look at myself in the mirror’: Hendry reveals why he has turned bullish – Investment Week Gold Analysts Most Bearish


Mining cliff to keep interest rates low

By Leith van Onselen The AFR’s David Bassanese has this afternoon doubled-down on his view that the anticipated pick-up in residential building activity won’t be anywhere near enough to offset the hit to growth and employment as the once-in-a-century mining investment boom unwinds, noting that the ensuing economic weakness will keep interest rates low in


Three reforms to fix Australia’s retirement system

By Leith van Onselen Business Spectator’s Callum Pickering has this afternoon provided some sensible suggestions on how to improve the sustainability of Australia’s retirement system, which echos reforms proposed by me previously (for example, see here and here): To address rising age pension expenditures, I’d recommend a couple of things. First, the asset test for


Hockey: No plans to raise retirement age

By Leith van Onselen As expected, the Federal Government has today rejected the Productivity Commission’s call to raise the retirement age to 70: A spokesperson for Treasurer Joe Hockey said the Productivity Commission was an independent body and there were no current plans to follow its advice… The Labor opposition was at least more circumspect: Shadow


Confessions of a quantitative easer

Above is an interesting segment aired on ABC’s The Business last night featuring Andrew Huszar, who in 2009-10 managed the Federal Reserve’s $1.25 trillion agency mortgage-backed security purchase program. According to Huszar, who has also written an opinion piece in the Wall Street Journal, quantitative easing (QE) is nothing more than a backdoor Wall Street


Bill Evans dissects RBA’s tactics and policies

From Westpac’s Chief Economist, Bill Evans, comes the following assessment of the RBA’s tactics and policies, with Evans maintaining his call for further interest rate cuts: The last week has seen some important “events” with regard to helping us assess the Reserve Bank’s current approach to policy. Recall that in the November Statement on Monetary


Why we should give the wealthy a tax amnesty

Cross-posted from The Conversation The Australian Taxation Office continues its campaign to track down the offshore bank accounts of wealthy Australians, amid a global effort to improve tax transparency. One option the ATO has in its kit bag is a tax amnesty, which it is considering for wealthy Australians who may have inherited sizeable Swiss


Use land taxes to lower the Aussie dollar?

By Leith van Onselen For some time now, I have lobbied to shift state tax bases away from stamp duties on property transactions towards broad-based land taxes. The benefits of land taxes are numerous, but include: Less volatility in revenue collection than stamp duties, since land taxes are not dependent on the volume of transactions;


Bowen offers debt ceiling compromise

By Leith van Onselen The debt ceiling farce might be drawing to a close, with shadow Treasurer, Chris Bowen, offering to support the $200 billion increase in the debt ceiling (to $500 billion), provided the Government agrees to release updated forecasts to justify the need for the higher debt limit than Labor/Greens proposed $100 billion


Aged policy reform must go beyond pension age

By Leith van Onselen The Productivity Commission has released a new report warning of a Budget crisis unless reforms are made to raise the aged pension and compel retires to pay for more of their own health costs. From The AFR: Launching a major study into the policy effects of Australia’s ageing population, Productivity Commission


Weekly RP Data Australian house price update

By Leith van Onselen In the week ended 21 November 2013, the RP Data-Rismark 5-city daily dwelling price index, which covers the five major capital city markets, was unchanged. The flat result followed last week’s 0.1% fall (see next chart). Values rose in three major capitals and fell in two (see next chart). Values are


Gary Banks: Policy must transcend the spin cycle

By Leith van Onselen Speaking at the Institute of Public Administration annual conference in Canberra yesterday, the former head of the Productivity Commission, Gary Banks, criticised “a decade in which spin has often triumphed over substance in policy making”, lambasting a range of poorly thought-out government policies that have come “out of the blue”, introduced


Links 22 November 2013

Global Macro / Markets: Fragile global recovery stumbles as Europe, China falter – Reuters Central banks words weild double-edged power – Business Spectator Anxiety Over Asset Bubbles From Homes to Internet Rising in Poll – Bloomberg North America: A world-class flaw in the Fed’s plot – Business Spectator Yellen Should Focus on Innovation, Not Inflation


Canadian house prices set another record

By Leith van Onselen October’s house price results released recently by Teranet revealed that Canadian house values rose marginally over the month (+0.1%) to a new record high, with prices also 30% above their April 2009 trough: In real terms, Canadian house prices also hit a new peak, with prices also 20% above their April