Posted by: Steven Shaw | October 24, 2008

The Search For Stability

A series of lectures given by former RBA governer Ian Macfarlane given back in November and December of 2006. If economics and monetary policy is your thing it will make for interesting listening.

The Golden Age

From Golden Age to Stagflation

Reform and Deregulation

The Recession of 1990 and it’s Legacy

The Long Expansion

Challenges for the Future

Posted by: Steven Shaw | September 24, 2008

Coming Financial Tsunami

The credit crisis (which should be called a debt crisis) is hitting the news in a big way here in Australia again. People are tending to think that the crunch has “hit” already last week or perhaps that this is the “second hit”. However, I get the feeling that we are all on the beach watching the tide go way out. Perhaps we come across a few insolvent US investment banks in the wet sand. Don’t just sit there! Get off the beach and head inland at pace!

What does this mean for Brisbane property prices? I can only imagine that the recent news will at least give buyers pause. A sustained pause would be enough to melt away a few percentage points. I’ve seen recent commentary which puts the bottom of the market ahead in 2010. I figure that’s a little optimistic and that the property market slump will be somewhat more sustained than that – say bottom in 2012.

Posted by: Steven Shaw | August 29, 2008

Auction Clearance Rate Plummet reports that auction clearance rates have plummeted across the nation. Brisbane has fallen to 23% from 48% last year. The direction of auction clearance rates is a well-known leading indicator for property prices.

Posted by: Steven Shaw | August 5, 2008

House prices set to slide in capital cities

It’s unusual to hear gloomy news from but here it is: House prices set to slide in capital cities. Some highlights:

  • Credit growth slows to 15 year low
  • Michael McNamara of Australia Property Monitors predicts 10% fall in prices this year

Even the article Maybe not all doom and gloom (by McNamara) is certainly negative on the property market saying that you need a long term view as an investor and that short-term speculators don’t make much money using that strategy anyway.

In Up or down? Next three months are crucial, Tim Colebatch discusses the slowing economy and the possibility of cash rate cuts by December.

Lateline Business was certainly very negative on the economy. The RBA left the cash rate unchanged today and everyone seems very excited that the RBA governer, Glenn Stevens, said today that rates were likely to go down next. Well, that’s not quite what he said but it does seem a reasonable way to interpret his words: “with demand slowing, the board’s view is that scope to move towards a less restrictive stance of monetary policy in the period ahead is increasing”. I guess we must wait to be sure that inflation is under control after all CPI to June is running at 4.5%.

I was glad to see Steve Keen on Lateline Business last night who said “I don’t think there is any way of avoiding a recession” and it will not help even if the RBA were to reduce the cash rate. Steve mentioned that 40% of house prices were merely fueled by speculation and that “when this expectation goes, ultimately goodbye 40% of the current price of houses”.

Posted by: Steven Shaw | July 31, 2008

Debt tsunami – price drops in all captial cities

See article on Bloomberg entitled Australia Facing `Once-in-100-Year’ Housing Slump.

The data from Residex showed that there were prices drops between 0.6% and 2.2% across Australian capital cities. The median Australian house dropped 3%. One analyst predicts 30% drops by 2010 and a spokesperson from the Salvation Army calls it a “debt tsunami”. The tide certainly does seem to be heading out a long way…

Note that the article does not mention which month the Residex data is for. i.e. May, June or July. I imagine it’s June.

Posted by: Steven Shaw | June 10, 2008

50% drops predicted for UK property

The Guardian newspaper writes “Traders predict house prices will fall by 50% in 4 years“. This includes 8% drop over the last few months and is in real terms (using RPI of 4% for adjustment). Traders predict approximately 10% drop in prices year on year for 2008, 2009, 2010 and 2011 with rock bottom occurring in 2011.

The IMF has been stating in it’s World Economic Outlook that Australian property prices are the world’s 4th most overvalued just behind the UK. This should be taken as a strong indicator for those of us here in Australia.

Posted by: Steven Shaw | June 5, 2008

two excellent Australian resources

I have just today come across two excellent Australian resources.

The bubblepedia front page describes why “It’s a crazy idea to buy a house in Australia at the current prices“, blows away the myth of the housing shortage and answers many common questions to the nay sayers.

The Contrarian Investors’ Journal seems to be a economics commentary with an Austrian Economics slant (i.e. not a mainstream economics viewpoint). I have been on a journey of late into Austrian Economics and Libertarianism. It started with videos such as “Money as debt” and “The money masters” which introduce the little known facts about where money comes from. I’m currently finding free resources from the Mises Institute very interesting. The Contrarian Investors’ Journal provides a much needed Australian perspective as much of the information available about the Austrian/Libertarian economics viewpoint is from a purely American perspective.

Posted by: Steven Shaw | June 3, 2008

"property crash not likely" says’s article “Property crash not likely” only helps convince me that the bust is already on the way :). ABC’s MediaWatch have reported that the “rental crisis” may not be as bad as all that. Domain’s article does say there’s a “tight rental market” particularly in Brisbane (but it’s Sydney where we have seen all the footage on TV!). It seems however that this is the real estate agents pushing this line in the news. Trying to make the last few easy dollars out of bubble. They say that increasing rents would lead to investors gaining interest again however the rental yields would still be below average even if rents go up 50% over the next 2-3 years! And once the “full employment” myth is blown away that will have it’s affect on confidence along with making future immigrants reconsider their options ;).

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