Auction Action: A few firm eggs!

As a deeply spiritual city, the Easter Weekend in Sydney is usually a slow time for auctions.

Most locals spend this special time of the shopping year with their families performing the sacred rituals of the fructose enriched egg hunt and undertaking pilgrimages to the purpose built shrine for the agricultural gods at Homebush.

Fortunately, as a rapidly evolving and culturally diverse city some still found time to burn a few joss sticks for our real estate gods (the one true faith) and there was some activity around the postcodes by our priestly auctioneer caste – ably assisted by their deacons in the suburban franchised agencies. Continue reading

RBA Watch: The Wizard loves the curtain

Governor Glenn delivered a speech yesterday to the ASIC Annual Forum 2016 that included the following – emphasis added.

“…On the topic of loan quality, the strengthening of lending standards for housing that has resulted from the actions of both APRA and ASIC was timely. So often over the years, tighter standards tended to come too late and reinforced a downturn after it had begun. These measures have occurred ahead, so far as one can tell, of the point in the cycle when measures of asset quality start to deteriorate. Some moderation in house prices in some of the locations where they had been rising most rapidly, while not the direct objective of the supervisory measures , is also, in my judgement, helpful…”

TGP operative PFH007 made the following comment – below the coverage of the speech at Macrobusiness Continue reading

Auction Action: APRA/RBA .. they shall reign forever and …

Over the last few weeks, the “spooky business” housing market scare campaign by the PM and his “precious” Treasurer has attracted a lot of attention, maybe too much attention, considering its complete lack of substance and the determination of the Sydney property market to demonstrate that “Fear-apalooza” is purely for the 6.30 news and the talking heads.

After a spectacular “Super Saturday” in Sydney yesterday where almost 200 more properties were listed than the same weekend last year to solid clearances and a median price of $1,169,500, now is the time to give praise to the Reserve Bank of Australia “RBA” and the Australian Prudential Regulation Authority “APRA” the real power duo behind the mighty Sydney housing market.

For they shall reign forever …and ever… and ever… and ever. Continue reading

RBA Watch: Bubble protected & back on the leash

Today the Reserve Bank released the minutes of the last Monetary Policy meeting of the RBA Board.RBA

Not very exciting – things went up and things went down and on balance they decided they did not need to yank on the household debt lever this month by cutting the target rate.

Key comment 1

“…Conditions in the established housing market had eased somewhat since September 2015, in part reflecting the effect of supervisory measures implemented in that year. In addition, after rising for some time, the growth in aggregate housing credit had stabilised over the past six months or so, with a significant easing in growth in lending to investors….”

Key comment 2

“..Members noted that continued low inflation would provide scope to ease monetary policy further, should that be appropriate to lend support to demand…”

Translation

“…Our Household Debt/House Price bubble was getting a bit frisky and expanding too fast (even for us ponzi lovers) so we threw a bit of “supervisory” cold water on investors – but don’t think we are going to stand back and let our precious bubble get soggy in an election year as we have plenty of “scope” to cut rates if we think our bubble needs a bit of fresh cheap household debt to keep it inflated..”

 

If you are holding your breath waiting for the housing market to pop – make sure it is a big one as the RBA and APRA are clearly determined to protect their bubble with juicier “bait rates” if necessary.

And politicians of all parties and most economic commentators will applaud them when it happens because down in sleepy Australia the idea of managing the money supply without pumping up household debt to the stratosphere is probably a decade away from being discussed in polite society.

To read the original version of this comment in the original context atMacrobusiness.com.au click this link. (link maybe locked – but there is a free trial available).

Auction Action: Still no fear in Sydney

 

In last week’s slice and dice, the Glass Pyramid enjoyed poking fun at the Negative Gearing / CGT reform “Fear-apalooza”  Festival that is travelling Australia at the moment.

While the festival is attracting plenty of media types – who are munching on the free Jatz and processed cheese slices served up by the LLA (Liberal Ladies Auxiliary) and are knocking back the Claytons “Special Edition” from Mr Morrison’s private stash – and most people are slightly horrified as Mr Turnbull tries to impress by licking the armpits of fruit bats live on stage – the crowds are not really interested in the “spooky” performance.

At least not in Sydney where years of the Daily Terror have made the population unimpressed by Mitt Romney-style scare mongering and the market is still showing plenty of vigor.

As the LNP  “meme/slogan repeaters” have formed a bizarro “Property – The End is Nigh” coalition with doomsters, crashniks, negative vibe merchants and a large portion of The Australian’s Op-ed writers it is necessary to tease out the signs of strength in this week’s auction report.

Auction volumes are NOT low – if you look at the auction numbers for the last few years 593 listed auctions is not a shockingly low number.  Have a  look at the number for this weekend in 2013 if you want to know what a low number looks like.

Median prices are NOT falling – A $200K increase on this weekend last year and $300K on this weekend in 2014 and almost $500K on 2013 demonstrates that there is a lot of debt being sprayed around.

Clearance rates are pretty FIRM – Even if you hate the APM % of reported auctions figure (76%) and prefer a % of listed of auctions (47%) and the patent pending “Pre-Auction Panic” (22%) and “Hammer Time” (30%) characterisations of the Glass Pyramid – this week’s numbers are not a cause for concern and may more reflect a burst of laziness on the part of agents who dropped the ball and failed to report almost 30% of the listed auctions by late Saturday.

It is not just the end of Chinese New Year – If the figures purely reflected a bunch of off shore students getting mum and dad to buy them a palace to study in for Uni – after Chinese New Year – those kids are slouchers as Uni started two weeks ago. No tiger mum would stand for that!

There is no way to get around the fact the market in Sydney is looking pretty solid and is ignoring the claims of the LNP hysterics that the ALP proposals to restrict the ability to claim losses on some investments against wage and salary income and to reduce the current 50% discount to 25% – on the amount of capital gains that are assessable – will destroy the property market.

Sure some are claiming that property investors are stupid lemmings or simply believe that the ALP will not be elected or will not proceed with the reforms if they do get elected – but a more plausible explanation is that property investors DO NOT believe that the reforms will make much difference to the one thing that gets their hearts a beating.

Excessive and exuberant capital gains!!!!

And why would they be worried?

Our monetary system since the mid 1990s has been based on driving households deeper and deeper into debt.  Since the GFC and especially since the LNP got back into misgovernment in 2013 it has been more of the same on bigger steroids.

As long as the RBA and APRA are prepared to keep cutting the price of debt to ZIRP and beyond and facilitating the flow of cheap debt and households are willing to keep signing themselves up to 30 year contracts of debt servitude – land and house prices will continue to rise.

Household Debt2

When was the last time you heard either the RBA or APRA say that they were going to increase the price of mortgage debt to discourage overinvestment in residential real estate?

Yep – NEVER.

When was the last time you heard a member of the LNP, ALP or GREENS come out and say that over investment in residential real estate by using debt to bid up the price of existing housing was a bonkers economic policy and that the simplest way to slow it was to increase the price of the debt that is fuelling it?

Yep – NEVER.

Driving interest rates lower and inducing households to take on ever larger amounts of debt is a Tri-Partisan projects and NO ONE is talking about it.  Not even when we are clocking a massive foreign debt and gutting our industrial base with an inflated exchange rate to do so.

Notice how the graph (from the excellent Macrobusiness ) stopped climbing after the GFC then took off again after 2013. Take a bow APRA . (Hmmm was there a change of government in 2013?)

CaPZUI-UkAAAihd

So why on earth would any rational property investor be worried about proposals that AT BEST might knock a bit of foam off the joys of property investment but will have NO impact on the determination of the RBA and APRA and all the levels of government to drive house prices higher on an ever expanding mountain of household debt.

While the cheap debt keeps pumping the house prices will keep rising.

In Ireland, Spain and the US the cheap debt stopped pumping and the housing markets crashed.  Since the GFC that is the one thing the Central Banks (including RBA and APRA) have made clear – the cheap debt will never cease to flow.

If you want to know who really is driving the current household bubble – check out this graph and imagine a “guy called Glen” who is preparing to ride off into the sunset of his retirement on a fat public pension.

The combination of RBA “bait rates”, APRA opening the gates wide to off shore ZIRP/NIRP hot money  and the failure to ensure low cost new land is available for housing development, has been like a rocket under house prices and there are few signs that is going to change.

interest rate and house prices

Anyway that is enough ranty for the week.

The Sydney Morning Herald and Australian Property Monitors report records that agents reported just 72% of the 593 listed auctions for this weekend which is a shabby effort.

160312 - Snapshot

Note:   In order to encourage agents to help APM collate the most complete stats each Saturday night, the Glass Pyramid is presenting all results as a percentage of the number of Auctions Listed.  The reason for this is that agents are more likely to report ‘good results’ sooner and that can tilt the figures when results are presented as a % of what agents have bothered to report on Saturday afternoon.

Anyhow – onto the good stuff!

There are two tables this week.  The first contains yesterday’s APM fitter and fatter report sliced and diced.  The second contains a summary of the last few weeks.

A few comments on yesterday:

  • Pre-Action Panic – softened to 22% of listed auctions with 129 listed auctions not being tested by the hot forge of the market.
  • Hammer Time – softened to 30%
  • Seller Sadness – softened to 9% of listed auctions .

A lot of this softening is probably due to the fact that 28% of auctions listed were not reported by agents.

Table 1 – Saturday 12 March 2016

160312

Table 2 – Summary of recent results.

160312 - Summary

And one for those who hate missing columns – this is the chart for 27 Feb 2016 – when Glass Pyramid had insufficient petty cash for the Sunday penalty rates.

160227

 

Tony Windsor strikes back – Barnaby in the spotlight

One the great things about the interwebs is that debate rolls in every direction and with some basic tools everyone can take part.NG2

Below this article on Macrobusiness a negative gearing debate bubbled up (as they tend to do) with one contributor posting a link to an article that he had written on the issue arguing against changes to the regulations concerning negative gearing.

NG1

That  prompted the Glass Pyramid to post a response on Macrobusiness responding to the cross linked article.    That response is reproduced below.

All part of the fun of life on the interwebs

 

Continue reading

Our Neo-liberal “lefties” and Macroprudential

Below are a couple of comments made under the following article at Macrobusiness. click this link. (link may be locked – but there is a free trial available)

crack

First this 

PFH007

Yep – and you only need to hear so called lefties like Penny Wong peddling rubbish on QandA about, how Handy Andy Robb and the LNP are correct and Australia cannot ‘develop’ unless we agree to sell it off bit by bit, to know that neo-liberal stupid still runs very deep in the party.

With $2T in super and hundreds of billions of foreign debt invested in Caesar stone and electric pineapple splashbacks the idea that we need foreign capital is not just confused and moronic it is an outright lie.

For all his many faults Alan Jones understands it is a lie – even if he is not clear on exactly why.

Unproductive capital inflows are serving one purpose – funding the consumption of the current generation with a massive sale of assets and IOUs to be paid for by future generations (aka your kids) who will not own the capital assets required to make the repayments. Continue reading

Auction Action: LNP “Negative Gearing” hysteria meltdown

Malcolm Turnbull and Scott Morrison have been struggling the last few weeks.   The LNP party room back bench has made it clear that the kind of “reform” they like most is the “reform” that does least.

To make matters worse there have been confirmed sittings of former PM Abbott prowling just beyond the shark nets of party discipline in a pair of snug red speedos to a bass heavy sound track – dumb, dumb-dumb….

With the possibility of doing anything constructive ruled out, Malcolm and Morrison have resorted to running through the streets screaming the “little red books” are coming and announcing that the world will end if anyone so much as gives residential real estate policy a touch of “side eyes” action. Continue reading