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Disparate groups slam Australia’s housing affordability

In the wake of the 2011 Demographia International Housing Affordability Survey, which identified Australia as having the most unaffordable housing in the Anglosphere, it appears that pressure is building on the Australian Government to take corrective action. Over the past two weeks, concerns have been raised by three disparate groups: the Sacred Heart Mission, the Real Estate Institute of

Latest posts

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Paul Krugman is wrong (updated)

A few days ago, Nobel Laureate Paul Krugman declared again that there is no ‘financialisation’ element to the current commodity price surge. He began: I’ve been getting a fair bit of correspondence insisting that political unrest, in the Arab world and elsewhere, is being caused by … Ben Bernanke. You see, quantitative easing is responsible for

8

Queensland’s cyclone

Cyclone Yasi has been upgraded to a Category 5 storm ( the highest level ) and on current estimates is expected to hit between Cairns and Innisfail at around 10pm tonight. The size of this storm is overwhelming, and the bureau of meteorology has announced that this is largest recorded storm ever to hit Queensland. Weatherzone

20

The China domino

The stated goal of the Hu Jintao-led Chinese government is a “harmonious society”. Perhaps that is why the word “Egypt” was blocked on certain search engines over the weekend. Multiple factors are in play in Egypt, but there is one vital similarity with China: Food inflation of a breadth and severity that few in the

14

Macro 101 – Sectoral balance

I note today that the PM has announced the introduction of a flood levy, some policy changes and cuts of $2.8 billion dollars in government spending including a cut of the national rent assistance scheme. That last point is something I want to discuss in a future post because it will have some interesting effects on housing. All

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UK deleveraging: “standard of living to plunge at fastest rate since 1920s”

The Telegraph today published a disturbing article on the dire state of the UK economy: Households face the most dramatic squeeze in living standards since the 1920s, the Governor of the Bank of England warned, as he reacted to the shock disclosure that the economy was shrinking again. Families will see their disposable income eaten up as

17

China’s Demographic Time Bomb

The 21st century will be the century of old age, where declining birth rates meet longer life expectancies. Nowhere are these demographic shifts occurring as quickly as in China, which is facing demographic challenges that threaten to slow its long-term expansion. China’s demographic headwinds stem from its ‘one child policy’, which was brought into effect in 1979 and is

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Detailed Report: The 2011 Demographia Housing Affordability Survey (By Leith van Onselen)

The 7th Annual Demographia International Housing Affordability Survey has just been released and, once again, it has delivered a stern condemnation of housing policy in Australia. This year, the Demographia survey has been expanded to 325 markets in seven countries: Australia, Canada, Hong Kong, Ireland, New Zealand, the United Kingdom, and the United States. The

12

The Days of Easy Credit are Numbered

Back in December, I wrote the following: In the early-1990s, non-bank lenders entered the Australian mortgage market and began raising funds via securitisation on wholesale debt markets. The rise of these non-bank lenders caused an intensification of competition amongst mortgage lenders. With no formal regulator and no rules outside of regular trade practices and corporations law, they

22

Guest Post: Changing the Rules: Why our Property Boom is Over (Part 1)

Sam Birmingham runs a top quality networking site for young professionals called WeBe, which provides up-to-date information on financial matters, work-related issues, lifestyle news and reviews, and current affairs and opinion pieces. WeBe also provides a platform where members can have their voices heard, express opinions and share ideas with other like-minded Young Professionals. Yesterday, Sam published the first in

31

Why not copy Houston?

Following on from my recent articles on land-use regulations and housing affordability, I want to take readers through Texas’ deregulated urban planning system, and how this system has assisted in providing Texans with housing that is among the most affordable in the Western world despite very high population growth. Adam Smith would be proud: Possibly the best description

41

Planning Gone Mad

My previous article, The Truth about the US Housing Market, has obviously divided opinion on the important issues of housing affordability and the causes of housing bubbles. In only 48 hours, this article has been read by over 5,000 people, making it my second most popular article of all time, behind Australian Housing: a Bubble in

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Reader asks "How desperate is St George ?"

Mr A writes. Do you think a bank should be doing this – encouraging and inflating the housing bubble? As a “good” customer of theirs they gave me this little beauty when I logged online to check my account. Welcome to An Investors Guide to the Nation, commissioned by St.George exclusively or you as a

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The Truth about the US Housing Market

Last week, the United States Case-Shiller 20-cities Composite house price index took an unexpected plunge, falling 1.3% in October from a month earlier. Prices have now fallen by around one-third (see below chart). Month-over-month prices fell in all metro areas covered by the index. And in six markets – Atlanta, Charlotte, Miami, Portland, Seattle and Tampa – house prices have

5

Is Australia Running out of Luck?

An interesting article appeared in yesterday’s Sydney Morning Herald entitled “Slugging it out over our future direction” (hat tip to John Murray for alerting me to it). In the article, investment ‘experts’ are asked to make predictions on the Australian economy for 2011. While a number of analysts are fairly positive on China and the

0

SOW – Heath Behncke

Australian politicians reacting to out of cycle mortgage re-pricing perceive a lack of banking competition as the reason. The more likely answer is a rising cost of capital and ongoing structural change in bank funding globally. The evidence is clear when you look at banking systems around the globe. We are not alone. In fact,

4

Christmas Guest Post : Homes4aussies on Spruikers

Brett Edgerton is a long time campaigner for affordable housing and an advocate for social equity in housing policy. He runs a website Home4aussies and is also a long time contributor to bubblepedia. Although the post below is about his perceptions on current real estate market strategies, he has a very broad expertise in housing

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Beware the Unintended Consequences of Increased Bank Competition

The Federal Treasurer, Wayne Swan, is due to announce the Australian Government’s reforms to increase competition in the banking sector on Sunday 12 December. In anticipation of this announcement, I want to take readers through some of the key proposals put forward in submissions to the Senate Inquiry into Competition in the Banking Sector, which is

25

Unluck of the Irish

Earlier this week, Alan Kohler wrote an article in Business Spectator on the misery created by the Irish housing bubble/bust and its lessons for Australia: After 2002, when Ireland joined European Monetary Union and adopted the euro, the two things combined to create a massive property boom and, in essence, the government was able to

16

Negative Gearing Revisited

My cousin, Peter van Onselen, writes for the Australian. In my opinion, he is one of the more insightful and balanced commentators on their roster (of course I am biased). Today he published an article explaining the political sensitivities and difficulties of reforming Australia’s housing policy, in particular our overly generous taxation concessions (such as negative gearing)

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The Six Million Dollar Central Bank

This blog delivered the RBA a bit a of a serve for inconsistency late last week after the boffins’ appearance in Parliament. Having read the hansard, however, what is also obvious is just how much the RBA is rebuilding itself from the ruins of the crashed debt pilots of yesteryear. Let’s take a look. Gone

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Baby Boomers, Retirement and Asset Prices

In this week’s post, I’ve undertaken a detailed analysis of one of the key macro factors I believe will exert significant downward pressure on Australian asset values, in particular housing, over the next decade: the retirement of the Baby Boomer generation. But before I launch in, here’s an overview on what I have said previously about this issue on

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Deep T – The Capital Rort

It really is an extraordinary situation Australia finds itself in right now. Whilst we can learn much from history, don’t look there for the answer on this one as the financial position of the country is unprecedented. Although this is par for the course for just about the entire globe, ours seems to be a

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Australia: Following Canada into a Financial Black Hole

No doubt many readers have heard that the Australian Government is looking to follow Canada’s lead and implement a Government guarantee of residential mortgage-backed securities  (RMBS), in order to foster greater competition in mortgage lending and reduce the power of the big four banks. Following on from David Llewellyn-Smith’s critique of this proposal, I thought it timely

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Corporate dissonance

According to Elisabeth Knight at the SMH: If BHP’s management is to be criticised for this offer it should be on the basis of potentially under- estimating the political backlash from the Canadians. It is too early to make that call, given the final adjudication has not yet been made. BHP knows from recent experience

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No wood, all trees…

According to Banking Day: In a speech to a Finsia financial services conference, [RBA boffin Luci] Ellis argued that far from being complacent about a bubble, the RBA was searching for danger signs. But, she said, it was important to go beyond statistical averages to understand the housing market. As an example, she set out

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US Housing Market: From Bad to Diabolical

We all know that the US housing market is in bad shape. Following the onset of the sub-prime turned ‘Global Financial Crisis’ (GFC), US house prices have tanked to be near their long-run trend: Some markets where supply restrictions were present – most notably California, Nevada and Florida – have fallen hardest, whereas those with liberal land

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Unpleasant scenarios

The blowoff in gold and oil must mean that we are rapidly approaching the zenith of this charming QE2 rally, which has morphed swiftly into outright currency war. Helicopter Ben is now completely boxed in by the stock market which has rightly interpreted his Jackson Hole pledge to print money “if” needed as a rock

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Housing velocity

Population growth is often cited as a causal factor in the overvaluation of Australian real estate. And indeed, strong population growth is a factor, particularly in recent years when housing starts have diminished, most especially in NSW. But one infrequently quoted housing statistic that calls into question the strength of population growth causation is what