By Leith van Onselen For several years now, I have been a passive observer of the Canadian economy and housing market, which has some striking similarities to Australia. Both economies are commodity exporters. Both countries have experienced high rates of immigration. Both countries largely dodged the global recession that shocked the developed world. Both countries use
By Leith van Onselen For years I have argued that the retirement of the large baby boomer generation – a cohort that represents around 25% of Australia’s population but holds roughly half of the nation’s housing and financial assets – would eventually pose stiff headwinds for asset values, since many boomers would look to divest
By Leith van Onselen Former Reserve Bank of New Zealand (RBNZ) and New Zealand Treasury special adviser, Michael Reddell, has made some outstanding contributions over the years. While working at the RBNZ last year, Reddell wrote a cracking paper questioning the merits of New Zealand’s high immigration program, which appears to have crowded-out (through higher interest
By Leith van Onselen Former Reserve Bank of New Zealand (RBNZ) and New Zealand Treasury special adviser, Michael Reddell, is a rare breed. While working at the RBNZ last year, Reddell wrote a cracking paper questioning the merits of New Zealand’s high immigration program, which appears to have crowded-out (through higher interest rates and a high
By Leith van Onselen In an interesting contrast to the Abbott Government’s do-nothing approach, the Conservative Government in the United Kingdom (UK) has announced that it will wind-back its own form of ‘negative gearing’ in a bid to give first home buyers greater access to housing. From The AFR: David Cameron’s Conservative Party has handed
By Leith van Onselen The shortsightedness of Glenn Stevens’ comments last year that macro-prudential controls on high risk mortgage lending were “dreaded” and the “latest fad” has, once again, been exposed with a new literature review from economists Kenneth N. Kuttner and the Bank for International Settlements’ Ilhyock Shim finding that macro-prudential controls are effective in
Last night saw a big move in global bond yields. The trigger was the return of European inflation in May registering an overpowering 0.3% on the year: That sent German bunds into a tizzy with the long end flogged 21bps (or 40%) to 0.71%: The US followed despite weak data on the night and its yield
By Leith van Onselen The…ahem…shortsightedness of Glenn Stevens’ comments last year that macro-prudential controls on high risk mortgage lending were “dreaded” and the “latest fad” has, once again, been exposed with a new working paper from the International Monetary Fund (IMF) which evaluates evidence from 119 countries over the 2000-13 period and finds that macro-prudential policies
By Leith van Onselen Yesterday, while reading Interest.co.nz’s Top 10, I came across an interesting article published last month in The Economist, which explained how for decades banks in developed nations have been boosting mortgage lending at the expense of businesses, hurting entrepreneurship and productivity in the process: … the traditional view that banks primarily
By Leith van Onselen There’s a lot of media reports today about the impact of falling oil prices on the Canadian housing market, which has led to a dramatic fall in sales, particularly near the oil patch in Alberta. According to the Canadian Real Estate Association (CREA), Canadian home sales fell by 3.1% in January
By Leith van Onselen Thousands of Londoners gathered outside City Hall over the weekend protesting over spiraling housing costs and the lack of affordable housing options across the capital. According to The Guardian, The March for Homes brought together 5,000 campaigners, tenants and trade unionists to demand building of council homes and the curbing of
By Leith van Onselen Interest.co.nz’s Bernard Hickey wrote an interesting post over the weekend analysing land banking in and around Auckland, which has been “turbo charged” by the city’s urban growth boundary (UGB), called the “Metropolitan Urban Limit” or MUL: Expectations are a powerful thing. They’re the reason as many as 45,000 sections in Auckland
By Leith van Onselen CBRE Global Research and Consulting has released its annual Global Living report, which examines property performance across nations relative to London. The report reveals that out of the 18 countries surveyed, Australian house price inflation increased the second most over the past 30 years, behind the UK, rising by a whopping 221.4%
By Leith van Onselen Over the weekend, VOX published interesting research paper examining long-run house price trends across 14 advanced economies and some of the reasons behind the rapid global escalation of house price costs since the 1970s. First, the paper presents the (unweighted) mean and median of the 14 house price indices since 1870,
By Leith van Onselen Capgemini and Royal Bank of Canada (RBC) has released their 2014 Asia Pacific Wealth Report, which reveals that Australia’s high net worth individuals (HNWIs) have the biggest appetite for residential property in the world despite increasing concern that there might be a property bubble developing in Australia: At 33.1%, the allocation
by Chris Becker I tend to give the Germans a hard time when it comes to their intra-European policy – i.e take the benefits of a cheaper Mark (euro), overburden southern Europeans with cheap debt, delight in the profits and massive current account surplus and then demand fiscal austerity when it all goes pear-shaped. But
By Leith van Onselen The International Monetary Fund (IMF) has dealt the RBA/APRA another credibility blow, endorsing macro-prudential controls on high risk mortgage lending in its communique to the G20: To mitigate financial stability risks from a prolonged period of low interest rates and prevent premature monetary tightening, macro-prudential tools should be the first line
By Catherine Cashmore, a market analyst, journalist, and policy thinker, with extensive industry experience in all aspects relating to property. Follow Catherine on Twitter or via her Blog. “Bill, how high can you make it so that it won’t fall down?” reportedly asked financier John J. Raskob, as he pulled out a thick pencil from
I like Krugman. He takes a common sense approach to economics and writes clearly for a broad audience. But, like others, I have to take issue with his insistence that quantitative easing (QE) and low interest rates punish the wealthy and fulfil some progressive distributional objective. In fact they achieve the opposite result. Here is
By Catherine Cashmore, a market analyst, journalist, and policy thinker, with extensive industry experience in all aspects relating to property. Follow Catherine on Twitter or via her Blog. Five years on since the US recession ‘officially’ ended in June 2009, urban land prices are rising, the pattern of history is repeating, and this time, the
By Leith van Onselen As noted by Houses & Holes earlier this morning, the Bank of England (BoE) has announced that it will implement so-called macro-prudential controls on higher risk mortgage lending by limiting 15% of all new mortgage lending (per bank) to 4.5 times income. It is a positive step, and should help to
By Chris Becker It seems you can’t go wrong speculating on property, as capital gains in London – 19% for the year or £71,000 – are almost double the average post-tax income for Londoners! A shocking chart from FT Alphaville tells the tale: It’s even better in Sydney where house prices are up nearly 15% this year
By Leith van Onselen The International Monetary Fund (IMF) last night published a blog post warning of the reemergence of frothiness in the world’s housing markets, where values are once again rising at an accelerating rate (see next chart). According to the IMF, “33 out of 52 countries in our Global House Price Index showed
By Leith van Onselen In 2005, the UK’s Policy Exchange released a fascinating research paper describing (amongst other things) Ireland’s dysfunctional urban planning system, whereby the Government granted planning permits too late in response to rising demand, resulting in the building of large numbers of standardised, small, poor quality homes in satellite locations far away
By Leith van Onselen While Australia’s Reserve Bank continues to bury its head in the sand, the Bank of England (BoE) has joined the Reserve Bank of New Zealand in issuing stern warnings about risks building in the housing market, and is now looking to implement macro-prudential controls on mortgage lending. In an interview with
By Leith van Onselen Professor Paul Cheshire from the London School of Economics has produced a new report slamming UK planning policy, which has dramatically forced-up urban land prices, especially in the South East, and disproportionately harmed the poor. From The Guardian: …restrictive planning laws have turned houses in the south-east into valuable assets in
Cross-posted from the UK Conversation: In what he described as the most sweeping changes to pensions and savings since 1921, the United Kingdom’s George Osborne radically changed the rules which govern how pensioners get hold of their retirement savings. He may have just lit a fuse underneath an already heated housing market too. His decision
By Leith van Onselen Capital Markets’ Roger Bootle has published an interesting article in the UK Telegraph asking whether housing is “the greatest investment delusion known to man”: The worst aspect of all this [escalating house prices] is that although particular individuals become better off as a result, people overall do not. The housing market
A bunch of stories today show that the capital flight out of China and into Western real estate is not a localised phenomenon, nor are the risks associated with it. In London, it become an issue worthy of street protests: Cheryl Coyne shouted “No more homes for millionaires!” with protesters dressed as pirates outside London
By Leith van Onselen The Guardian has posted an interesting article about a new proposal in the UK aimed at alleviating London’s housing shortage by taxing investors that buy new dwellings and then leave them vacant: “Buy-to-leave” investors could be fined up to £60,000 in an assault on empty housing being considered by a London
