Saturday, May 14, 2011

Dracula In Charge of The Blood Bank

Nigel Satterley

NIGEL Satterley has been appointed to an independent body investigating housing affordability and land supply issues nationally. 

The NHSC { National Housing Supply Council } was established by the Federal Government in 2008 as an independent body to provide forecasts, analysis and advice on land supply and construction activity to meet housing demand and improve affordability over a 20 year forecast period.

The NHSC’s immediate priority will be to develop and deliver the third “State of Supply Report” which provides data on housing supply and affordability, housing demand and the supply-demand gap.

This would be equivalent to appointing Gail Kelly CEO at WESTPAC to a committee advising Gov't on reforms required in the Banking Sectors!!!  

This man is a Developer who is restricting the supply of land & inflating its price to maximize profits on land he is developing.

Satterley Group has Millions upon Millions of Dollars of land that they trickle onto the market they are the biggest part of the problem.

What chance of Mr Satterley putting a recommendation to Gov't to tax developers who hold land ??

Developers like this are the problem in the first place!!

Now he is going to advise the Gov't on supply issues?

To make matters even worse – the other addition to this panel is another Property Developer from  Stockland Residential CEO,-  Mark Hunter.

Excuse me Just how many people with vested interest are advising the Minister??

But If that is not bad enough look at what  Mr Satterley has to say about house prices in a property report in The West Aust (14-05-2010)

He is forecasting property prices will go up 100% in 8-9 years!!!

In fact he states quite clearly that this is "INEVITABLE"

So if he really thinks that it is "INEVITABLE" why bother sitting on this panel.

Step aside & let someone without a vested interest in property prices going up 100% every 8-9 years have a go!!! 

Just another Blood Sucking Developer with vested interests

Wednesday, May 11, 2011

Developers Doing A Dump in Mandurah

Port Bouvard offering 3.99% Interest Rates!!

40% Discounts & 3.99% Interest Rates Fixed for 4 Years !! Panic has set in & the Dumping has begun in Perth / Mandurah. 

Pressure is now on for others Developers to match the offer.

Late 2010 Port Bouvard were offering their $1mill Dollar plus Apts at discounts of 40% to shift stocks that were no longer selling.

After 3 Months of Full Page Adverts in All weekend Papers / TV Mags / 150+ TV Commercial spots they were only able to shift 4 Aparts.

So now they are offering buyers Fixed interest rates of 3.99% for 4 years. This is  on top of the Discounted Prices so effectively this is a further discount of 16% 

How happy would you be signing up in 2007 $1-$ 3 million for a Beach Side Luxury Apt on a Golf Course to see it's prices SLASHED 56% by the developer.

Industry sources say there are 13 Apts for sale in this complex from people who bought thinking they could FLIP it at a profit when the project was complete?

Now these SPECULATORS are going to get burnt because they are now competing with the developers who sold them this junk in the first place!!!

And they say you can never go wrong buying "QUALITY" !!!

Yeah Right!

Interesting that the Developers are using tricks like "Interest Rebates" to hide the fact that they are slashing prices & are Desperate.

Developers are not fools they are not in the business of throwing money away they are doing these deals now because they know it is only going to get worse.
My Sources tell me if this fails to shift stock they plan to offer "INTEREST FREE" for 5 years if you put a 50% deposit down.

(Have a look at the Link & Advert) 

Wednesday, May 4, 2011

Paying too much in Woodvale again.

17 Grey Smith Gardens
 First Sold 21-08-2008 for $647,000
Approx $80K Spent Renovating &
then Flipped to a Greater Fool
Resold 21-06-2010 for $855,000 
{What were these buyers thinking?}

Oh thats right it is not important what you pay because property always goes up in value? (Yeah Right)

Well #16 next door is now for sale @ $699,000after having failed to sell at their asking of $835,000 when it first listed in Oct 2010
(Remember that Just 4 months after these fools @ #17 paid $855,000)

So #16 has been slowly coming down in price & yet at $699,000 it is attracting no buyers? despite 6 long months & now being discounted by $136,000!!
So what do I think #16 is worth in todays market?
Well I would not pay more than $625,000!! 
Why $625K
You see another house @ #15 Grey-Smith sold for $398,000 in 2003 & assuming houses double every 10 years 
(BTW I don't subscribe to that Crap!!) 
#15 would be worth only $636K today 
& this is what the owners of #17 should have also paid not $855k
But what about the $80K renovations you ask? This would warrant a premium?
No because all houses have a renovating factor already built into the costs of property always doubling every 10 years. 
People forget the remodelling / extensions/ pool / landscaping that is done to all houses & these costs are already in all houses that go up, you should not add renovation cost again that would be double counting. 

Think it through the penny will drop!

Monday, May 2, 2011

WA Current Perth Sales Data

Click on Image Below showing Current Sales for Perth 
Data from Landgate site I have done the conversion showing typical average monthly sales & in Red I have shown what sales for that month is currently tracking at.

Click on this link to Landgate confirming the accuracy of the numbers!!

Don't Like the Data or what it says about falling sales? Take it up with Landgate not me!!


Sunday, May 1, 2011

Oversupply of Australian Housing

Australia's Housing Oversupply

Below extract from Money Morning Site showing the "MYTH" of under supply  in the Australian housing market. Stick with the article & it falls into place.

by Kris Sayce on 2 May 2011
Why Scale Matters

Money Morning
reader Paul sent us an interesting document late on Friday.
It was from the Institute of Actuaries of Australia.
Before you fall asleep, stay with me… it’s worth it.
The document is titled, A house or a home? Finding value in Australian residential property.
You can download the document, accompanying presentation and audio by clicking here and searching for the author’s name, Anthony Street.
In part of his presentation, Mr. Street picks up on the numbers the Commonwealth Bank of Australia used in its presentation to international investors last year.
Revealing the real numbers
You may recall, your editor was the first in Australia to pick up on CBA’s neat little trick. We printed these two charts in this article. First the one the CBA used in its presentation:
Comparing apples with rabbits
At the time we smelt a rat. Note the sources the CBA used – Demographia and UBS. At first glance you notice the house price to income ratios for Australia are on a par with other cities overseas – except Vancouver. More on Canada later.
But having actually read the Demographia report, we sensed something was up. Turns out the CBA used Demographia numbers for all other cities, but UBS numbers for Australian cities. This is second chart we printed showing how the numbers would look if Demographia data was used for all cities:
Comparing apples with apples
Spot the difference?
You’re looking at a nearly 50% increase in the ratio. No wonder the banks don’t want you to see that.
But Mr. Street went one step further. He actually called the CBA and asked them if it was fair to use two difference sources, especially when the methodology for the data was different.
Here’s Mr. Street’s take on the conversation:
“I did get put in touch with the author of the report and… he admitted that he calculated the Australian numbers… using the Australian accounts information and calculated… using an average income number for the denominator and so… I did sort of question well, do you think calculating… the Australian number using average income and comparing it to other countries that have a median income that maybe it’s not a… like-for-like measure?
[Laughing by actuaries in audience]
“And his response was, well, you’re an actuary so you understand that kind of stuff, but none of the clients I took it to noticed anything!”
[More laughter].
But that wasn’t the main thing that stood out. Mainly because we already knew about the CBA’s neat trick. What pricked our ears was his analysis of a chart we had seen many times before.
Such as this one used in an ANZ report last year:

Source: ANZ
This is one of the spruikers favourite charts. They use it to “prove” an undersupply in housing. They point out supply and demand were closely tied until around 2006 when demand shot higher and supply ground to a halt.
Massive undersupply?
But tell me something. What do you notice about the chart?
The clue is in the headline of today’s Money Morning.
That’s right, the scale.
Mr. Street produces two charts of his own. First, one that’s similar to the ANZ chart:

Source: Mr. Anthony Street
It shows the same thing. Supply and demand almost locked in step, until 2006 when population growth took off and annual dwelling starts stopped.
But here’s where it gets interesting. Mr. Street reproduces the same data, but changes the scale. Here’s what he comes up with:

Source: Mr. Anthony Street
Why is the change in scale important? What Mr. Street did is move the scale of the annual population growth to be 2.5 times the number of dwelling starts. For example, 200,000 on the right hand scale is 2.5 times greater than 80,000 on the left hand scale.
Chronic oversupply
This number represents the approximate number of people per dwelling.
In other words, if the average household size is 2.5 people, then you arguably need one dwelling per 2.5 people.
So, if the population increases by 200,000 you could expect to need 80,000 dwellings.
As this chart shows, for most of the 1980s, 1990s and early 2000s the ratio was closer to one new dwelling per 1.5 people. Or to put it another way – an oversupply of housing.
In fact, a chronic oversupply of housing.
Most likely as a result of negative gearing rules that encouraged investors to build housing at a loss. So what this chart shows is far from there being a chronic undersupply of housing, there has been a chronic oversupply of housing for all but the last two years!
It’s amazing what a change to the scale can do to perceptions isn’t it?
But let’s get back to house price to income ratios. We’ll admit, this is a difficult one to accurately measure.
There are all sorts of numbers put about by spruikers and non-spruikers. The spruikers claim the price to income ratio is only 4—4.5 times. Whereas Demographia claims it’s as high as nine times in some cases.
Big-time US investor Jeremy Grantham reckons the Australian house price to income ratio is about seven times.
Who do you believe?
Australian housing IS expensive
We had a bash at it ourselves in 2009. Based on our estimates, the house price to income ratio was about six times… but even then we thought we were being conservative.
But, given we’re due to take part in a property bubble debate on 7th June [click here to sign up], we thought we’d have another crack at comparing house prices to incomes.
Again, we’re not saying it’s a fool-proof comparison, but we’ll throw it out to you and you can send feedback to to let us know if we’re on the money or off the mark.
We reckon we’re on the money.
We’ll publish the responses – if we get any – later in the week.
Here’s what we’ve come up with. In the table below you’ll see a comparison of estimated housing values for Australia, United States, UK, Ireland and Canada.
Next is the estimated GDP for each nation. We’ve chosen GDP because it supposedly measures the total income produced each year for an economy. Again, it’s not a perfect measure, but at least it’s a consistent measure of income across all four economies.
Then in the final column you’ll see the ratio of house prices over income:
Country Housing Stock GDP Ratio
Australia 2011 $3.5 trillion $1 trillion 3.5:1
USA 2007 $22 trillion $14.1 trillion 1.5:1
USA 2011 $16.4 trillion $14 trillion 1.2:1
UK 2009 £4 trillion £1.3 trillion 3:1
Ireland 2007 €520 billion €172 billion 3:1
Ireland 2009 €400 billion €151 billion 2.6:1
Canada 2011 $4.5 trillion $1.28 trillion 3.5:1
For the Australian housing stock value, we’re being conservative. $3.5 trillion was a number bandied around two years ago, so by the peak late last year it was probably even higher.
But any way you slice and dice it, compared to countries where property prices have crashed – US, UK and Ireland – Australia’s housing is expensive… by a fair way.
And even near the peak of the US housing bubble, the ratio didn’t exceed 1.5 times GDP.
Now, that’s not to say Australia’s will fall to 1.2:1 like in the US, but a similar percentage drop would see the ratio slip from 3.5:1 to 2.8:1. Trust me, that’s a big drop, and in percentage terms it’s similar to the drop seen in Ireland.
Considering Jeremy Grantham reckons the UK housing market is still in a bubble, that number is set to get worse too.
The only country in the above table with a similar housing stock to GDP ratio is Canada, also around 3.5:1.
That shouldn’t come as any surprise. In fact, in a way it confirms this method of measurement could be accurate, as many have claimed the Australian and Canadian housing markets are similar…
Similar in that that both display signs of being in a housing bubble.
Anyway, as we see it, it’s more proof and evidence for our bearish view on housing. As we get closer to the debate in Sydney in June we’ll give you more insights into the content of our presentation – a presentation that’s likely to have the bulls ducking for cover!