Comments on: House Prices Always Go Structurally Higher in Australia

By: Biker Pete

Biker Pete — Mon, 20 Jul 2009 15:30:40 +0000

Ha,ha Bargeass... you should emigrate to the UK if you want to see overpriced. We've just travelled over 540 miles in the last fortnight and we've observed that home prices in England and Scotland dwarf those back in Australia. Less for more. And if you're paying more than 15% of your income in tax, you really need to do your sums, or get organised, FA!

By: Bargeass

Bargeass — Sun, 19 Jul 2009 09:28:21 +0000

If you tax people to death and then make one exemption (family home) of course the they will become overvalued and what better way to control the population than the yoke of a huge mortgage against the family home that is several times larger than it's true value. Who needs chains, whips and soldiers to control the slaves.

By: Ash

Ash — Thu, 16 Jul 2009 01:04:18 +0000

Can someone explain if the author is saying he literally talked to a guy on a plane to Adelaide? or is it just a literary tool?

Been reading DR and DR oz for a few years now, and was just wondering.

By: Coffee Addict

Coffee Addict — Tue, 14 Jul 2009 03:51:27 +0000

Richo // Pete

What's wrong with a small gas powered power station in each town? We have one close to where I live.

At the moment you would pay about $40,000 to maybe generate about $1000 or so of renewable energy (for electricity) off solar cells on your roof. This may change and they may come a day when cost effective roofing materials will include integrated solar cells. I have started researching some of the US firms involved in this technology and in the improvement of lithium ion batteries. There are some good speculative buys out there.

Yeah ... Ian Thorpe can keep the cold showers he recommends!

Cheers

By: rag

rag — Tue, 14 Jul 2009 03:37:57 +0000

The housing equation - the investment horizon is 50 years [average life expectancy say starting at 20] - buying property you get capital gains - expenses = renting you pay rent and can invest the difference between rent and a mortgage in other assets [equities, cash, metals, art etc] = so the analysis should be over the your lifetime

if housing returns 2-3% above inflation you are down on the investment while paying the mortgage and pickup for the remainder of the 25 years - but you get an income from not paying mortgage and investing = rent you are always paying rent but investing over the 50 years in other assets - is this the basic equation of living - and can build a spreadsheet with its assumptions and make rational decision

as to solar - upfront fees is the killer [assume you mean $$$ to get the panels and link it to the grid and the payback period is 10 years or so] but the equation changes if you get a loan and pay back over 5 years with the interest pauyment somewhat vcovered by savings in lower electricity bills

and also you can assume the grid payments for generating electricity can change from its pathetic model now to something more reasonable in the future - or not = but it is all dynamic and worth the punt - as there are business models that allow no upfront payment and so the dynamic changes in the payback period

By: Pete

Pete — Tue, 14 Jul 2009 03:23:48 +0000

Richo: What happens in that town at night-time, or the early morning hot showers?

By: Greg Atkinson

Greg Atkinson — Tue, 14 Jul 2009 00:46:51 +0000

Biker Pete I just thought I would toss that article in because it shows how people can look at the same data and come to different conclusions. We often knock economists working for the banks etc. but they do churn out some good research and they are generally not headline seekers.

By: Richo

Richo — Tue, 14 Jul 2009 00:34:27 +0000

Digging up the solar electricity again.
The reason not to go on the grid is that
1) You get charged a large connection fee. For most consumers this is the biggest part of their bill. For generators, it is an avoidable cost.
2) They pay you significantly less for the power that you generate, than you would pay for the same electricity if you bought it from them.

This presents an opportunity for a small community eg regional town or new housing development, for everyone to have solar electricity and interconnet their houses. Every participant avoids connection fees to the grid (= a huge saving) and there is a decent amount of security in that if your solar system dies, or you use more than you generate, you can buy in electricity from your neighbours instead of cooking over a camp fire.

By: Biker Pete

Biker Pete — Mon, 13 Jul 2009 23:21:22 +0000

Very balanced article, Greg. There are four aspects we find interesting: 1.) Low returns on rents. The figures are now outdated... yields are up to double those cited; 2.) Availability: We think it varies. There are many vacancies in areas affected by unemployment. Where job vacancies exist, there are still _queues_; 3.) It's likely that because of lack of confidence, fewer investors are buying or building. That will have some major long-term effects; 4.) As the rest of the world becomes aware of Australia's relative buoyancy, we can expect the population to rise. Limits on immigration mean that the only successful immigrants (apart from refugees!) will be high-income, skilled people we need for essential industries and professions. Our experience indicates that these people value property highly, pay higher rent, pay in advance despite no request to do so(!) and respect their accommodation. There's no question that property has plateaued in two of three sectors, but we've yet to benefit from falls in the two sectors we target... .

By: Greg Atkinson

Greg Atkinson — Mon, 13 Jul 2009 09:56:52 +0000

Here is another view of the housing market from Dr Shane Oliver with plenty of data that people might find interesting. See: http://www.investblue.com.au/imgresource/amisc/item_26.pdf It is a little dated but well worth reading.