Leith van Onselen

35

Moody’s identifies another $540b of Chinese problem loans

Following on from today’s post on Gary Shilling’s warning that China is headed for a hard landing, credit ratings agency, Moody’s Investor Services, today released a report claiming that it has identified an additional 3.5 trillion yuan ($US540 billion) of potential problem loans that the Chinese National Audit Office (NAO) did not disclose in their

79

Gary Shilling: China heading for a hard landing

Back in February, I published a video interview with Gary Shilling, president of A. Gary Shilling & Co., Inc. and author of the best selling book The Age of Deleveraging, in which he outlined why China’s economy is headed for a hard landing and what to do in order to profit from the slowdown. Now Mr Shilling has

59

UK moves to reflate housing market

I have talked previously about how the United Kingdom (UK) operates the worst kind of housing policy – one that pumps demand while placing a tight straight jacket on land/housing supply – the outcome of which is both unaffordable housing and a propensity for boom/bust property cycles (see below chart). Now the UK Government is

96

Block sizes shrinking. Blame government policy

You have heard it before. One of the reasons why Australian home prices are high is because our new houses are supposedly the largest in the world. For example, consider this slide from last year’s infamous CBA investor presentation: Or this explanation from HSBC’s Paul Bloxham: …the quality of the housing stock is high. Australia

43

Dutch show how not to run housing policy

Following on from my earlier posts on the German, UK and Swedish housing markets, I now want to turn your attention to the Netherlands – a country that, in my view, offers a prime example of how not to run housing policy. The Dutch have devised a system that all but guarantees unaffordable housing and a

15

Credit growth remains subdued

The RBA has just released its Financial Aggregates for May. It is more of the same with credit growth remaining subdued, with housing credit growing at the slowest rate in 35 years of current data and at a three month annualised pace of just 5.2%. Below is a summary of the RBA’s release with charts of

39

Another China ghost city filled

Back in April I published an article, China’s largest ghost cities filled, providing an ‘eyes on the ground’ report from Wendell Cox, co-author of the Annual Demographia Housing Affordability Survey, who was touring China at the time. Wendell had provided photographic evidence showing that one of China’s famed ‘ghost cities’, Zhengzhou New District, was in

35

S&P strikes back

It appears yesterday’s speech by RBA Assistant Governor (Financial Markets), Guy Debelle, has done little to allay the fears of the ratings agencies about the Australian banks’ heavy reliance on offshore wholesale funding. In today’s Australian Financial Review (AFR), Standard & Poors (S&P) issued its second warning in as many months on the banks funding

38

Myth: Tight rental market boosts home prices

Fellow econblogger, Cameron Murray, has written a thought provoking post on his Blog about the link between tight rental vacancy rates and home prices. Cameron’s post has been re-produced below for your reading pleasure. A common housing market myth is that low vacancy rates lead to rent increases, which lead to price increases (or at the very

69

Forecasting error

BIS Shrapnel are never afraid of making a bullish property forecast. In July last year, near the peak of the last housing cycle, BIS chief, Frank Gelber, made the following bold prediction on the future direction of house prices in Australia [my emphasis]: Frank Gelber gave members at a Real Estate Institute of Victoria lunch

25

Lack of posting

On behalf of MacroBusiness, we wish to apologise for the lack of posting over the past week. Our colleague, David Llewellyn-Smith (aka Houses and Holes), is currently recovering from an illness and out of action. We wish David a speedy recovery and hope that he will be back on board next week. With David’s absence

48

Spruikalicious

Once in a while a real estate article gets published in the mainstream media that is so bad that it just has to be dissected.  Mark Armstrong, an independent [sic] property analyst, adviser and director of Armstrong Property Planning, published one such article yesterday in Fairfax, entitled Bold investors buy in a softer market. Here

44

Aussie investors flock to US housing fund

As reported in Fairfax last week, the US Masters Residential Property Fund (Investment Overview provided below) recently closed its initial public offering (IPO) for Australian investors, receiving more than double the minimum subscription. The Fund raised $69.5 million from over 1,500 investors, well above the minimum subscription level of $30 million, with the majority of

33

Bank offshore funding coming back to bite

The risks inherent in the Australian banks’ heavily reliance on offshore funding has received a lot of attention on this blog (for example see here). Now with the European debt crisis seemingly reaching a crescendo, it looks like these borrowings might now be coming back to bite. From the Australian: AUSTRALIAN and South Korean banks

20

RBA debunks immigration boosters

The media’s response to the reported slowing of Australia’s population growth on Thursday summoned the usual hysterical commentary from those concerned about skills shortages and the flow-on impacts to wages growth and inflation. For instance, the usually reliable Tim Colebatch made the following comments in an article published yesterday in Fairfax [my emphasis]: NET migration

36

SocGen on China’s construction bubble

Societe Generale (SocGen) has released a fascinating 50-page research report entitled Chinese construction bubble – Preparing for a potential burst. The report argues that the exponential growth of real estate and infrastructure spending in China is unsustainable and a painful adjustment will occur sooner or later, although SocGen acknowledges that it is impossible to predict when the slowdown or correction

25

Sweden’s bubblicious housing

In conducting research for last night’s post on the German housing market, I came across some interesting information on the housing bubble developing in Sweden. It’s a story worth sharing since it offers important insights and parallels for Australia. Before I kick-off, first consider the below chart of real house prices since the mid-1980s: As

36

China’s property bubble spreading

China Daily has published an interesting article, Record realty prices head to lower-tier cities, explaining how tightening measures undertaken by the Chinese Government to curb soaring property values in China’s major cities is causing bubble-like conditions to spread to second and third tier cities [hat tip World Housing Bubble]. Below are some of the key

12

Australia’s population growth slowing

The Australian Bureau of Statistics (ABS) has just released its latest population figures, and it shows Australia’s population growth rate for the 2010 calender year slowing to only 1.5%, 0.7% below the peak growth rate of 2.2% reached in the 2008 calender year. Here’s the ABS media release  and summary data relating to the release: MEDIA

69

How Germany achieved stable & affordable housing

A few months ago, after posting numerous articles advocating the Texan approach to land-use planning,  I promised fellow MacroBusiness blogger, The Prince, that I would undertake an analysis of the German housing system, which is regarded as amongst the most affordable and liberal in Europe. In my findings presented below, I have compared and contrasted the German housing system

26

Gail Kelly on loan arrears

Earlier today, Delusional Economics published a ripping post, Bad bank provisioning, analysing Westpac Chief Executive, Gail Kelly’s, public reassurances that the Australian housing market is robust and that the recent rise in mortgage delinquencies is not a major concern for the economy or the banks’ profits. Delusional concluded with the following insight into the motivations behind Ms Kelly’s public assurances

16

Charting China’s five-year plan

Bernard Hickey at Interest.co.nz yesterday alerted me to an interesting presentation by the Brookings Institution on China’s latest 5-year plan, which has been widely discussed as focussed on sustainable growth and reducing inflation, rather than going for growth for the sake of it. The presentation contains a series of excellent charts summarising China’s progress and

42

Can super save the housing market?

This blog has talked a lot about government policies that have contributed to Australia’s sky high cost of housing – from supply constraints to the first home buyers grant, negative gearing and implicit and explicit support provided to Australia’s mortgage lenders. One topic that has yet to be discussed is the Government’s recent changes to superannuation laws enabling

41

Central banker makes housing sense!

I was disappointed in RBA Governor, Glenn Stevens, speech Wednesday. I had expected that Mr Stevens would at least acknowledge Australia’s Achilles heel – its high level of household indebtedness and house prices – and warn of the significant risks that these pose to the economy. Instead, Mr Stevens ignored the debt Godzilla and linked Australia’s house price appreciation to population growth. Interestingly,

29

The debt that killed the UK economy

Back in April, Dr Oliver Marc Hartwich from the Centre for Independent Studies wrote an article in Fairfax on the worrying parallels between the UK and Australian economies and housing markets. The current mood in Australia triggers eerie memories for me. I feel as if I have experienced this scenario before – not in Australia

5

Churn baby, churn (a follow-up)

Following on from last night’s article on the relationship between home sales and home prices, a few readers asked me how the charts looked for the smaller capital cities, namely Canberra and Darwin. I originally left these cities off the original article due to time constraints as well as the fact that annual sales data was not

23

Churn baby, churn

Last week, Delusional Economics posted an article entitled The market needs churn, which showed that the rate of issuance of new loans is a leading indicator for house prices. A follow-up article was posted by Delusional Economics the next day, confirming their findings (see The secret to house price rises). Delusional’s posts inspired me to

73

The baby boomer conundrum

The ageing of the large baby boomer generation is viewed as a huge problem for government finances in the developed world. A working paper released last year by the Bank for International Settlements (BIS) forecast large and rising future costs relating to the ageing of their populations unless drastic measures are taken to curb the rapid growth of health care and pension obligations (see

8

Age of the credit hawk

Yesterday, Delusional Economics asked whether Fitch would consider downgrading the Australian banks after they lowered credit standards on mortgages to boost flagging loan demand. Today, Fitch reported that it is updating its mortgage default models, which are currently based on the performance of mortgages during the 1991 recession. The change in model methodology reflects the

120

Beware the housing elites

If there is one thing in this world that drives me crazy, it is social engineering based on ideology rather than an objective examination of facts. A classic example was on display in two related articles recently published in the mainstream media. Both articles relate to recent work undertaken by Dr Robert Crawford, an academic