Not sure if my ‘Monday Rant’ is a thing, but it seems to becoming one. Here’s what’s on my mind:
+ If recent events hadn’t convinced you that you should largely ignore market forecasts and headlines, here’s a friendly reminder.
+ Auction clearance rates in Melbourne and Sydney over the weekend still strong.
Even after the rate hikes by the banks, the RBA’s attempt to talk down the property “bubble”, as well as APRA’s pressure on the banks, we’re still seeing strong clearance rates. We can dance around the issue for as long as we like, however, at some point in time, we will need to face reality. The reality that we have a supply issue. And until such time as the supply side is dealt with, we will see prices continue to rise over the long run.
It’s as simple as this, yet we all try and over complicate it.
+ China’s market turmoil = Rise in Australian real estate prices?
A guy overseas put this info graphic together about a year ago to help justify the rise in Canadian property prices. I thought it was as relevant to the Australian property market and wanted to share it with you. It’s a great little summary of what is happening.
Source: Ludovic Siouffi
The key, as I wrote about in my previous point, stands out again…supply. Cover it with whatever you like, at the heart of it, this is what it is.
+ Foreign buyers aren’t as prominent as you think.
NAB recently released their property survey, and here’s my favorite chart. Total foreign purchases by state, broken down for property type. Foreign purchases make up around 1 in every 3 of house purchases. Apartments are a lot higher, which is more in line with the lifestyle of those purchasing.
Just because the Chinese looking guy outbid you at an auction, it doesn’t make him a foreigner with millions of dollars. He might simply be working two (maybe three) jobs.
+ Here’s where each capital city’s house price sits on the property cycle according to Dr Andrew Wilson of Domain Group.
We still have a little whole to go folks. Low rates, foreign money, limited supply = higher prices.
+ Innovation is not new, it’s just sounds a lot cooler today. I was reading the 1897 Washington Post over the weekend, well…sort of, and came across this paragraph:
…ban cars, because it will frighten the horses.
For every “disruptive” and “innovative” path we take is simply evolution. I’m an optimist. I believe in our ability to progress, to better our lives and the lives of our children, through persistence, through hard times, and through technology. Think about this:
- The iPhone is not even 10 years old. Think about what mobile phones were prior to the iPhone. I’m only asking you to think back to 2006.
- We now Google everything, when we used to have to look it up in the Encyclopedia. How cool was it when Encyclopedia made it onto CD-ROM!
- Facebook went live in 2004. Prior to that we were chatting on ICQ, MSN, and mIRC. Facebook now has close to 2 billions active users a month.
- A Garmin GPS used to cost close to $1,000. It’s now free with Google Maps.
- Think about how much it cost to speak with someone international. It’s now free with Skype.
- You book a random guys house for your holiday using your phone.
- You book a car in minutes, and you know exactly who it is, where it is, how far away it is, and when you’ll make it to your destination.
Why am I telling you this? I’m telling you this because the world is ever-changing. What was yesterday is not tomorrow. Just because we’re seeing a new trend today, it doesn’t mean it’s some sort of bubble that is going to explode any minute or a fad that is going to wear off in a months’ time (unless it’s Pokemon Go). I’m tired of people telling me and others why things can’t be done, why things won’t work, and why things should be the way they were.
Here are all the stories you will hear and the things people will tell you why we can’t and won’t progress. Yet the picture tells us a different story. Click for larger image.
Over the last 20 years we have seen remarkable global progress:
- The world now has the largest generation of young people. Ever. In fact, 1/3 of the population.
- People living in extreme poverty has been cut in half.
- The world’s population has grown by a quarter.
- Adolescent childbearing has fallen by half.
- Maternal deaths were almost cut in half.
- Life expectancy around the world has grown by 5.2 years.
- New HIV/AIDS infections have dropped by 33%.
- More children are attending school than ever.
- More than half of all people live in urban areas.
- We could be living in the most peaceful time in history (as difficult as this my be to believe right now).
I’m sure one day I’ll tell my children how I used to ride around in yellow cars, after waiting 30 minutes for them to arrive, after waiting 20 minutes on hold to book the darn thing. Just like I’ll tell them I bought the Australian stock market index at 5,800 points. Play the long-game – you’ll always be ahead.