HSBC has dropped its fixed rate home loans as follows:
2 year fixed - 4.69%
3 year fixed - 4.79%
5 year fixed - 5.09%
The major Aussie banks are also offering very low fixed rates now as the competition for market share hots up.
Shares finally seeing a brighter trade up ~1.60% so far, with they bank stocks rebounding...
Saturday, 24 August 2013
Halo 2
Features
- Master Chief can now wield two weapons at once, board Covenant vehicles and steal Covenant weapons like the incredible double energy sword
- Lead an all-new unit of super-soldiers, the ODST -- tougher, badder and deadlier versions of your old comrades
- New enemies, allies and surprises around every corner - intense combat action with enhanced AI and real-time lighting
- Immense single-player action with maassive landscapes and huge cities to explore and defend - destructible and interactive environments
- Take the action online with your Xbox Live and switch sides, to become a Covenant Elite!
- Works with an Xbox 360 console
List Price: $19.99
Special Offer: check this out!
Amazon.com
Halo 2 is one of those rare video games that garnishes attention from regular folk who wouldn't know which direction to point a game controller. With more than 1.5 million pre-orders and a massive release party in Times Square, the game enjoys the sort of buzz, and sales, generally reserved for boy wizards. But does it merit the hype?
Opening Scene
Halo 2 opens with a cut scene in the Covenant Holy City of High Charity. Much has happened since Master Chief (that's you) created so much havoc for the Covenant in the first Halo, and the Arbiter has much atoning to do for his failures. This first cut scene is long, but the lush graphics, orchestral sound, and polished voice talent for both this and other cut scenes as well as the game itself put most animated television shows to shame.
Much has happened since Master Chief created so much havoc for the Covenant in the first Halo, and the Arbiter has much atoning to do.
In the end, though, Halo 2 is unabashedly a first-person shooter. It has a Mature rating and is not meant for kids. Gameplay is constant and intense. No sooner is one bunch of aliens taken care of than another descends. The controls are identical to the first game so those familiar with it will be up and blasting in no time. And the sound and graphics have been beefed up so that Halo 2 is undoubtedly one of the most beautiful console games available.
Opening Fire
Most of the weapons from the first game return, although strangely the MA5B Assault Rifle (the default weapon in the first game) is not available. There is a single melee weapon known as the Covenant Sword, but the controls for it are the same as that for all the shooter weapons, making it difficult to direct. Also, for a new twist, you can hold two of the smaller guns at the same time and shoot double-fisted.
Halo 2 - GameSpot.com Halo 2 trailers, reviews, release dates, news, screenshots, walkthroughs, cheats, and more on GameSpot. Halo 2 - Wikipedia, the free encyclopedia Halo 2 is a first-person shooter video game developed by Bungie Studios. Released for the Xbox video game console on November 9, 2004, the game is the second ... halo 2 trailer - YouTube its the halo 2 trailer what more to say ... Sign in with your Google Account (YouTube, Google+, Gmail, Orkut, Picasa, or Chrome) to add Brendan McCann 's ... Halo 3 - Wikipedia, the free encyclopedia Halo 3 is a first-person shooter video game developed by Bungie for the Xbox 360 console. The third installment in the Halo franchise, the game concludes the story ... halo.bungie.org Community site with the latest news, forums, comics, fan art, Bungie exclusives. Amazon.com: Halo 2: Xbox: microsoft: Video Games Halo 2 is one of those rare video games that garnishes attention from regular folk who wouldn't know which direction to point a game controller. With more than 1.5 ... Bungie All News Latest News. Destiny; Bungie; Community; The Mail Sack Festival Once a week, we let the sun shine in. Breaking In - Wesley Olson Breaking new ground ... Amazon.com: Halo 2: Pc: Windows Vista: Video Games The entertainment phenomenon that conquered the digital universe is once again out to save the planet as the award-winning, best-selling Halo 2 is coming to the ... LEGO Halo 2 - YouTube What the headline says. http://www.xbox360fanboy.com Source: http://halo.bungie.org/news.html?item... Halo 2 Mods, Halo 2 Maps, Halo 2 Downloads Halo 2 Mods, Maps, Patches, and More. At FileFront's ... What's New? This service is for site members only. Get a complete overview of Files, News, and other content ...
Thursday, 22 August 2013
Retail trade, construction too soft-- RBA needs to cut
A veritable data-fest today.
Let's start with the retail trade data, which came in very weak at only 0.1% growth seasonally adjusted.
"The seasonally adjusted estimate rose 0.1% in May 2013. This follows a fall of 0.1% in April 2013 and a fall of 0.6% in March 2013."
Hmm, not good.
So when the RBA was "bricking itself" in November about accelerating consumer activity (if indeed any bricking actually took place) it needn't have done.
Source: ABS
Meanwhile, engineering construction activity fell by a seasonally adjusted 3.0% in the quarter.
It's likely to be all downhill from here on in (with one exception: Queensland) as the capex boom unwinds. More central bank stimulus needed.
Source: ABS
Very little traction evident here, and that's just not good enough.
The RBA needs to cut interest rates again, and soon.
Absent another collapse in the Aussie dollar in the next month or a seemingly unlikely spike in inflation this quarter, you can factor in another interest rate cut in August.
Today's data has seen futures markets pricing in a 57% chance of a cut on August 6, a leap from the 47% chance factored in yesterday.
As if to underscore the point, RBA Guv'nor Glenn Stevens stated that the RBA "deliberated for a very long time" about its last interest rate decision, implying that the decision to keep rates on hold was a close-run affair.
Was this just 'jawboning' or was he being fair dinkum?
Hard to say, but it's amazing what just six simple words can do to the markets!
The share markets shed a thumping 1.9% and the Aussie dollar plummeted to just 90.7 cents, a world away from the 106 cents plus of not so long ago.
Interest rate cut coming...
Is Australia really like Japan?
Japan - the basket case
Another week, another article comparing Australia's property markets to Japan. If only I had a buck for every time people said "but in Japan"...then we'd definitely never experience price deflation Down Under because I would be a zillionaire and would be out spending like a certified madman.
There's no question that Australian property prices can and do fall, and indeed so they did in 2011 and early 2012. And they remain below previous peaks in all capital cities, except in Sydney which zooms on to fresh heights. I don't rate the neverending comparisons with Japan, though.
It's actually the brutal effect that Japan's deflation had on its economy and living standards that leads nervous central banks such as the Fed in the US and the Bank on England in the old dart to drop interest rates to the effective bottom of the zero-bound range and engage in 'quantitative easing' (QE) - they must avoid deflation of the currency at all costs.
It's impossible to read the minds of our central bank Board, of course, but one assumes that they would err on the side of caution with regards to inflation and not make the mistakes which Japan made (namely, failing to create a sustained increase in the broad money supply, and tightening monetary policy again too soon when deflation was strangled, leading to its famous 'lost decade').
Incidentally, Japan finally seems to have learned its lessons and is engaging in so-called 'Abenomics' which promotes a range of policies include radical QE, the setting of negative interest rates and targeted inflation which has seen GDP growth return promisingly. Japanese Yen don't have a use-by date printed on them, but almost may as well have: check out how the stock market has responded (+56.5% on last year, despite the recent wobble).
Forget fundamentals, this is the new normal: booming asset valuations when the QE tap is turned on, and a panicked stampede for the exits at the merest hint of it being switched off again.
Forget fundamentals, this is the new normal: booming asset valuations when the QE tap is turned on, and a panicked stampede for the exits at the merest hint of it being switched off again.
Source: Bloomberg
Ageing demographics
A large part of Japan's problem has been demographic, with its population ageing and more than a fifth of the population being aged over 65 - some 30 million 'older people'. Worse still, the population has been falling, which is never going to be a positive dynamic for economic growth.
Whether we like it or not, although Australia will face the ageing population problem and issues related to its dependency ratio, she will not allow her population to fall. Instead, our population is soaring, by 392,500 heads in the last 12 months recorded.
My Pommie pal Catherine Cashmore, who is always worth listening to (not just because she's English; rather because she is 'in the property market' every day and not only stuck behind a desk) argues in this article that while population growth might not cause property prices to grow in an upswing, it can sometimes hold prices up in a downturn.
Cashmore also explains why established dwellings in Australia's inner suburbs are frequently favoured by homebuyers and investors to new housing stock in the outer and fringe locations, and, importantly, that while the supply and demand of dwellings have an impact on prices, perhaps the supply of and demand for credit have a greater bearing.
Why deflation will be avoided at all costs
It's all too common for people to criticise our inflationary economy, but maybe it's worth re-capping on why deflation should and will be countered at all costs.
In theory, you might think that price deflation could be a good thing. We could go down to the servo and find that instead of being charged an extortionate 100 bucks fill up the Holden Thunder ute and acquire a four 'n' twenty pie with a pack of Lamington fingers (for this is how most Australians live, of course), it might only cost us $80 and we'd be effectively richer as a result. Cool.
Rewind the clock, though, to the Great Depression, where price deflation was accompanied with falling prices (including real estate prices), banks collapsing, countless companies going bust, astronomical levels of unemployment and the most brutal period of the 20th century across the globe. Just like the more recent global financial crisis, the Great Depression was preceded by debt-funded greed and speculation, and the Dow Jones index increasing by a preposterous fivefold in just six years.
When prices fall, those who hold debt are punished, and this is particularly so in the housing market. You could buy a house with a $500,000 mortgage today only to discover that the underlying asset is only worth $400,000 next year, leading to what is known euphemistically as being in 'negative equity' (i.e. up the creek, minus paddle).
It's fairly common today for people to say that anyone with mortgage debt has got it coming to them, and they'd deserve all they get. That may be so, but the real problem with a deflationary economy is the potentially relentless downward spiral.
The deflationary spiral
If you think you can buy the Lamingtons and the four 'n' twenty next week for fewer dollars than this week, you'd likely become discinclined to spend, and this leads to consumers hoarding cash. Retail trade dries up and Caltex probably have to drop their prices further to entice you back to the servo.
This becomes a total nightmare for Caltex because they still have to pay the pump attendant a $40,000 salary, but their turnover and margins are getting clobbered. They probably have to lay off one of the pump attendants.
Of course, with no job, the ex-pump attendant won't be borrowing money to buy a house, so the amount of money in the economy falls. It's the exact opposite of inflation where too much money is chasing too few goods pushing up prices.
The real risk in this circumstance is accelerating deflation (which is what Professor Steven Keen erroneously predicted would happen to house prices in the latter half of 2012; instead they increased strongly, largely due to investors returning to the market in anticipation of further price gains).
The best case outcome for the Australian housing market (in my humble opinion, at least - renters always disagree) is that prices continue to increase, but only moderately and at a lower level than the growth in wages, thereby effectively becoming cheaper over time. Unfortunately, price movement is rarely so uniform.
High inflation also brings its own uncertainties and can lead to boom-bust cycles, which is why we have a target range of inflation of 2-3%.
What if Australia stumbles towards recession?
Three things would happen. Firstly, interest rates would be dropped. Unfortunately interest rates in Australia can only drop so far until they hit a number starting with a '0', so if that doesn't work, the 'printing presses' will be switched on (QE), which actually means that the RBA will start buying assets (e.g. bonds), effectively increasing the money supply.
And thirdly, specifically with regards to the property markets, if prices began to slide dramatically, there would likely be other interference, such as, for example, relaxing the rules on foreign buyers, or other meddling. Non-property owners don't like it being said, but that's what, in my opinion, would probably happen.
It's easy for pundits to be critical the RBA's policy of targeted inflation, but, much like when we complain about getting older, it sure as heck beats the alternative.
Cashmore also explains why established dwellings in Australia's inner suburbs are frequently favoured by homebuyers and investors to new housing stock in the outer and fringe locations, and, importantly, that while the supply and demand of dwellings have an impact on prices, perhaps the supply of and demand for credit have a greater bearing.
Why deflation will be avoided at all costs
It's all too common for people to criticise our inflationary economy, but maybe it's worth re-capping on why deflation should and will be countered at all costs.
In theory, you might think that price deflation could be a good thing. We could go down to the servo and find that instead of being charged an extortionate 100 bucks fill up the Holden Thunder ute and acquire a four 'n' twenty pie with a pack of Lamington fingers (for this is how most Australians live, of course), it might only cost us $80 and we'd be effectively richer as a result. Cool.
Rewind the clock, though, to the Great Depression, where price deflation was accompanied with falling prices (including real estate prices), banks collapsing, countless companies going bust, astronomical levels of unemployment and the most brutal period of the 20th century across the globe. Just like the more recent global financial crisis, the Great Depression was preceded by debt-funded greed and speculation, and the Dow Jones index increasing by a preposterous fivefold in just six years.
When prices fall, those who hold debt are punished, and this is particularly so in the housing market. You could buy a house with a $500,000 mortgage today only to discover that the underlying asset is only worth $400,000 next year, leading to what is known euphemistically as being in 'negative equity' (i.e. up the creek, minus paddle).
It's fairly common today for people to say that anyone with mortgage debt has got it coming to them, and they'd deserve all they get. That may be so, but the real problem with a deflationary economy is the potentially relentless downward spiral.
The deflationary spiral
If you think you can buy the Lamingtons and the four 'n' twenty next week for fewer dollars than this week, you'd likely become discinclined to spend, and this leads to consumers hoarding cash. Retail trade dries up and Caltex probably have to drop their prices further to entice you back to the servo.
This becomes a total nightmare for Caltex because they still have to pay the pump attendant a $40,000 salary, but their turnover and margins are getting clobbered. They probably have to lay off one of the pump attendants.
Of course, with no job, the ex-pump attendant won't be borrowing money to buy a house, so the amount of money in the economy falls. It's the exact opposite of inflation where too much money is chasing too few goods pushing up prices.
The real risk in this circumstance is accelerating deflation (which is what Professor Steven Keen erroneously predicted would happen to house prices in the latter half of 2012; instead they increased strongly, largely due to investors returning to the market in anticipation of further price gains).
The best case outcome for the Australian housing market (in my humble opinion, at least - renters always disagree) is that prices continue to increase, but only moderately and at a lower level than the growth in wages, thereby effectively becoming cheaper over time. Unfortunately, price movement is rarely so uniform.
High inflation also brings its own uncertainties and can lead to boom-bust cycles, which is why we have a target range of inflation of 2-3%.
What if Australia stumbles towards recession?
Three things would happen. Firstly, interest rates would be dropped. Unfortunately interest rates in Australia can only drop so far until they hit a number starting with a '0', so if that doesn't work, the 'printing presses' will be switched on (QE), which actually means that the RBA will start buying assets (e.g. bonds), effectively increasing the money supply.
And thirdly, specifically with regards to the property markets, if prices began to slide dramatically, there would likely be other interference, such as, for example, relaxing the rules on foreign buyers, or other meddling. Non-property owners don't like it being said, but that's what, in my opinion, would probably happen.
It's easy for pundits to be critical the RBA's policy of targeted inflation, but, much like when we complain about getting older, it sure as heck beats the alternative.
Tuesday, 20 August 2013
Infinity Reference 860w 8-Inch 1,000-Watt High-Performance Subwoofer (Single Voice Coil)
Features
- 8-inch single voice coil subwoofer with 1000 Watts peak power handling
- High-efficiency polypropylene woofer cone with large-roll rubber surrounds ensure efficient, clean bass
- Vented polepieces provides additional cooling to increase power handling
- Modest mounting depth allows for use in most ported, sealed and bandpass sub enclosures
- One-year warranty
List Price: $99.95
Special Offer: check this out!
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Infinity's 860w 8-inch Single Voice Coil Subwoofer makes the perfect upgrade to your factory system or where space is an issue.
The Infinity Reference Series Infinity's Reference Series has been engineered to deliver best-in-class performance for those looking to replace or upgrade their factory speakers. Features like Infinity's Plus One (patent pending) woofer cones and edge-driven-dome tweeters have helped position Infinity Reference as the number-one line of automotive loudspeakers for the past six years straight.
The perfect upgrade to your factory system or where space is an issue.
Infinity 860w Features
Large-roll rubber surrounds
This material provides optimum cone-edge suspension and absorbs distortions that may travel up the cone edge, ensuring clean, tight bass.
Vented pole pieces
Provides additional cooling of the motor structure is provided. The subwoofer's thermal capabilities are augmented, thus increasing power handling.
High-efficiency polypropylene woofer cones
This lightweight and popular material is used to ensure maximum woofer efficiency. The benefit is high output with modest amplifier power.
Progressive Spider
Progressive spider construction better controls speaker excursion. Translation? Better sound with less distortion.
Mounting Versatility
The subwoofer's mounting depth allows for use in most sub enclosures--ported, sealed and bandpass.
Infinity 860w Specifications Power Handling, RMS: 250 Watts Power Handling, Peak: 1000 Watts Sensitivity: 91dB Frequency Response: 30Hz - 400Hz Impedance: 4 Ohms Mounting Depth: 5-3/16 inches(131 mm)
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Trust and ownership rights
How long is a metre?
A metre is defined as the length of distance which light travels in a vacuum in 1/299,792,458 of a second.
Like most people, I don't have the first clue how far light travels in any given period of time (in a vacuum or otherwise), but I do remember my junior school teacher Mrs. Mitchell telling us that somewhere in France there is a one metre bar which we actually could go and check to prove how long a metre is.
I just looked it up...and there is! In 1885 a prototype one metre bar was built and stored in agreed conditions in France.
Not that in reality we'd ever get to see it, though. To a great extent, we still have to trust that the metre is what we are told it is, because without that trust the metre would be redundant as a measurement of distance.
Without the trust, in fact, we'd be in a spot of bother - how would we ever know how far a centimetre or a kilometre was? Would the whole system of distance measurement disintegrate? Would we have to invent a new system?
Without standards, enforceable laws, property rights and a government to police them, what we would be left with would be chaos: an anarchist system.
Reliance on trust
The reliance on trust extends to the wider capitalist system. One of the reasons why Britain was the world leader at the time of the Industrial Revolution was that it had a well-developed and regarded system of law which allowed capitalism to flourish. European countries such as Germany did not exist in the form which we know today - instead they often consistent of many smaller states where land disputes and conflicts continued unabated for decades.
Fundamental to the capitalist system are property rights.
If you or I buy a plot of land in Sydney or South Australia tomorrow, we need to be able to prove that we own the land so that someone can't later claim it as theirs, leaving us wondering why we parted with our stash. This is one of the challenges facing countries such as East Timor where repeated internal displacements of the past lead to land rights disputes in the present.
Indeed, the notion of property rights now extends beyond the ownership of physical property such as land and buildings. There are also property rights relating to brands, ideas and words - intellectual property rights. And this is one of the challenges which the world faces in coming decades as countries with cheaper labour such as China become able to clone products originally made in developed countries.
This morning, I can tune in to watch the Ashes cricket on my laptop i-Player, for a cost of £10, payable to Sky Television. Alternatively, I could probably find a free live stream on the internet. It would be illegal because Sky own the rights to the broadcast, but, realistically, who is going to police their ownership?
They say that there is no such thing as a victimless crime, but who would be the victim in this case? Arguably the players would miss out because I hadn't paid my ten quid, but more likely it would be Sky Television, who would then ultimately pass on the cost to other viewers in the future. In the end, we'd all lose out.
This is why the policing of intellectual property rights and piracy is also important to allow capitalism to succeed, just as is the governing of rights to physical property.
The tragedy of the commons
One of the many reasons why 'mixed' housing developments are preferred to social housing only estates is that it has been realised that property dwellers are generally more likely to redecorate property which they own rather than property which they do not.
The worst case scenario is what is known in economics as the tragedy of the commons - resources can be abused by people if they do not own then.
The most pertinent modern example is perhaps the environment: because officially nobody 'owns' the environment, we feel more able to pollute it, because there is not always a dollar cost attributed to pollution. Although of course in a sense, we all own the environment - we only have one planet for us to share - and the potential cost of pollution over the long-term could be unimagineable.
One of the reasons that capitalist economies have flourished where communist systems have flagged has been related to ownership rights. Food shortages often occurred in eastern European states where farmers did not own the land and therefore were disincentivised to maximise production, instead allowing fields to lie fallow.
Trust in property investment
The word trust crops up in modern property investment frequently.
Property investors may elect to hold their assets in a trust as a means of asset protection.
If you use property professionals, you need to trust that they will do the right thing by you and offer the service you require for a reasonable fee.
When a bank lends you money via a mortgage, it needs to trust that you will eventually be able to pay it back and not default on the repayments.
If you become an experienced investor, you may eventually be able to borrow many millions of dollars from the bank, but only once you have established a level of trust between yourself and the lender.
If you are buying a property, you need to be able to trust that the counterparty holds up their end of the bargain, as well as been able to trust your reliance on the contract laws and the legal system in place in that state.
Perhaps most importantly of all, we need to trust that our government bodies continue to provide a fair and consistent legal system which they enforce.
A large part of being a successful investor, therefore, is being able to make yourself someone that can be trusted - someone others view as truthful, strong, consistent and reliable.
In the meantime, we'd better hope that no-one loses that prototype metre bar. Because if they do, we're all stuffed.
Housing bust has been a real fizzer
The 'inevitable Australian housing bust' has turned out to be a real fizzer. We haven't been short of property crash predictions in Australia, but so far the forecasts have come to nought, with market sentiment once again reversing northwards from mid-2012 as interest rates were dropped. Until the day we get a crash, of course, we never will be short of predictions, but yesterday's housing finance data showed further increases in May.
Some housing bust predictions
Some housing bust predictions
Neil Jenman, 2001: "The real estate market will crash".
Jenman reiterated his coming Melbourne property crash prediction in 2003, noting that: "The peak will probably turn out to be late 2001 to mid 2002, around time that we issued our first warnings."
But we never really got a property crash. Instead we got something of a slowdown in many markets, but prices in Melbourne have since surged and more than 80% higher than they were at that time, while Australia's city populations have surged.
I note in passing that the Australian population when Jenman made his first crash call, as recorded in the 2001 Australian Census, was 18.972 million, as compared to 23.115 million today. Demand for housing in capital city suburbs is rising with every passing week.
The property crash predictions have continued, yet prices in many areas have kept on climbing:
I note in passing that the Australian population when Jenman made his first crash call, as recorded in the 2001 Australian Census, was 18.972 million, as compared to 23.115 million today. Demand for housing in capital city suburbs is rising with every passing week.
The property crash predictions have continued, yet prices in many areas have kept on climbing:
Professor Steven Keen, 2008: "When the expectation [of rising asset prices] goes, ultimately goodbye 40% of the current price of houses."
David Llewellyn-Smith, 2010: "This blogger reconfirms his assessment of the bust ahead for Australian housing."
Leith van Onselen, 2010: "In my opinion, an Australian house price crash is inevitable and cannot be avoided."
Philp Soos, 2011: "Australia's property bubble will inevitably burst."
Jordan Wirsz, 2011: "Property prices will crash by 60%."
Jordan Wirsz, 2012: "Buy gold." (immediately before the gold price crash).
David Collyer, 2012: "I predict that property prices will fall by 15-20% in 2012".
Harry Dent ,2012: "The real estate market will crash in 2012. Prices could fall by more than 60%."
Philip Soos, 2013: "Australian housing will crash."
So, the first thing we can ascertain is that the timings of asset price cycles are far more unpredictable than we tend to believe they are.
But while it might appear that Australian real estate is on the up, on closer inspection, I'd suggest that perhaps in many markets a long, slow decline in real terms is already well underway, which in all fairness to Keen is precisely what his words seemed to imply back in 2008. In particular, property markets in Adelaide, Brisbane, Canberra and many regional markets have not yet responded in any meaningful way to stimulatory monetary policy.
In fact, only Sydney's housing markets have broken through to new highs, with all other markets below previous peaks, which thus represents something of a decline in real terms.
In fact, only Sydney's housing markets have broken through to new highs, with all other markets below previous peaks, which thus represents something of a decline in real terms.
Housing finance data
Has the risk of a property crash gone away? No. Whilst prices remain high, there is always the chance of a crash. However, yesterday's housing finance data suggests that no housing bust is imminent, with the value of dwelling commitments rising seemingly inexorably over the past year:
Source: ABS
To instigate a property market crash, given that there is no real over-supply of dwellings in most cities, we'd probably need a credit shock, a sharp rise in unemployment, much higher interest rates or a policy change such as a reform of the negative gearing tax laws (or, of course, a 'black swan' event, which by its very nature is an unforeseeable trigger). These factors look to be unlikely in the short term, but we could yet see unemployment rising materially as the labour-intensive mining construction boom unwinds.
Prices declining in real terms?
Prices declining in real terms?
There could also be some hidden good news for homebuyers in some Australian cities. Prices have essentially gone nowhere for years in cities such as Adelaide, Canberra and Brisbane, which means that prices in real terms have been declining and are becoming more affordable, particularly with interest rates falling to record lows.
FHBs
FHBs
Plenty have said that this can't be a property recovery without the participation of first homebuyers, and some have also said that prices cannot move higher without first homebuyers propping up the bottom of the market (not that this has ever held back London house prices over the past quarter century).
However, you choose to define the word 'recovery', it's heartening to see the number of first homebuyer commitments picking up over the last few months, although the value of their commitments remains relatively low to date. I have long felt that FHBs will gradually come back into the market once they believe that prices won't fall further, but this is one data set to keep a close eye on.
Investors are leading the recovery
However, you choose to define the word 'recovery', it's heartening to see the number of first homebuyer commitments picking up over the last few months, although the value of their commitments remains relatively low to date. I have long felt that FHBs will gradually come back into the market once they believe that prices won't fall further, but this is one data set to keep a close eye on.
Investors are leading the recovery
There have been some reports 'on the ground' that at last activity in Brisbane is beginning to pick up. And some have also been arguing that prices in Adelaide are going to now pick up strongly after a slack five years. I'm not so sure about Adelaide, as the supply appears to be meeting the demand for housing.
A closer look at the figures shows that investor activity in Australia (value of investor commitments) is up an astonishing 24% over the year which in part explains why Sydney recorded yet another extraordinary 81% clearance rate on Saturday. Investors are pumping up the market.
Sydney prices are up +8.5% in this cycle already, with the inner west markets running very hot (as I've been saying forever and a day now, it's the $500k-$1 million inner west suburbs which represent the hot markets).
Sydney prices are up +8.5% in this cycle already, with the inner west markets running very hot (as I've been saying forever and a day now, it's the $500k-$1 million inner west suburbs which represent the hot markets).
The 'positive cashflow investors' who are suggesting that regional centres and fringe suburbs are going to beat inflation and be good investments over the next decade are, in my opinion, stuck in the past - in 2005 to be precise, which is when households stopped leveraging up and began saving.
It may not have been a bad strategy from 1993-2005 for those for whom servicing investment mortgages was an issue, but it's the wrong strategy today. If you are waiting for households to simply keep on taking on ever more mortgage debt in perpetuity and prices to magically keep increasing ahead of incomes you are likely to be very disappointed.
It may not have been a bad strategy from 1993-2005 for those for whom servicing investment mortgages was an issue, but it's the wrong strategy today. If you are waiting for households to simply keep on taking on ever more mortgage debt in perpetuity and prices to magically keep increasing ahead of incomes you are likely to be very disappointed.
The recovery in property markets has been investor-led, which means that quality inner-city markets will be the likely outperformers - the regional markets/fringe suburbs look much more likely to me to struggle badly. If you want to outperform you will need to anticipate where the next huge wave of speculative investment capital is heading, and that is to the four main capital cities, and in particular, to Sydney suburbs close to the city.
Melbourne has already experienced a tremendous boom in prices since 2007. Perth is travelling very strongly again with its low unemployment levels of just 4.6% and booming population growth. And prices in Sydney seem set for more very strong growth. I'll be forced to change the broken record on Sydney's inner west at some point, but judging from the scorching auction clearance rates recorded on Saturday, not for quite some time to come yet.
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