Property

There’s a very genteel debate going on over at Fairfax – and for once it’s not about what to do with the legacy business.

This time it’s about the relevance of those house auction clearance rates you see being reported and used to reflect the hype (or otherwise) in the property market at the weekend. And what else do we find? Well surprise, surprise, we discover real estate agents are salesmen not actuaries. continue…

by Roger Montgomery Posted in Insightful Insights, Property.

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The Australian residential property market has had a spring in its step recently. Auction clearance rates have been healthy, and rising prices have prompted media commentary on the possibility of an emerging housing “bubble”.

I’m no property expert, and so it may be wise to avoid putting an oar in on this debate, but let’s put wisdom aside for a moment and think about whether the application of value investing principles can add anything to a discussion on house prices. continue…

by Tim Kelley Posted in Property.

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In this interview with Ticky Fullerton on ABC’s The Business, Roger talks about whether he’s enthusiastic about the property market in Australia – and whether value investors should be.

by Roger Montgomery Posted in Insightful Insights, Property.

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It was interesting to read in yesterday’s Australian Financial Review that auction clearance rates surged past 70% at the weekend. There’s almost an air of desperation at some auctions. The fear of missing out is a much greater influence on investor behaviour than the fear of loss.
continue…

by Roger Montgomery Posted in Insightful Insights, Property.

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Enjoy the next in our 2013 exclusive subscriber-only Whitepaper series.

by Roger Montgomery Posted in Property, Whitepapers.

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Question to the world’s biggest property developer:  Is there a bubble [In China]?

Answer:  Yes of course.

Watch this video broadcast by CBS last week.

Watch here.

by Roger Montgomery Posted in Insightful Insights, Property.

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In his Short Cut column for the Herald Sun published 27 February, Roger highlights how the buoyant share price of GWA Group is not supported by the company’s recent performance.  Read here.

by Roger Montgomery Posted in In the Press, Insightful Insights, Property.

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Ben Hurley – the AFR journo typical of Gen Y – will soon be buying a house cheap from boomers who have no-one else to sell to.

Last week Ben (here) wrote:

“I would love to own a home. I could upgrade my crappy electric stove, get a hot water system that actually fills the bathtub, and stop asking the landlord for permission to put a nail in the wall.
But I’m reluctant because I think buying a home is a dud deal. And renting, while expensive, is less of a dud deal because renters typically give the landlord a return of about 3 per cent on the asset’s value. A lot of my friends in their early 30s feel the same way.”

Ben goes on to explain why renting makes more sense than buying and I reckon he’s right, but for an entirely different reason.

continue…

by Roger Montgomery Posted in Market commentary, Property.

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In late 2008 Steve Keen, Associate Professor of Economics and Finance at the University of Western Sydney had a bet with Rory Robertson, who at the time was Interest Rate Strategist at Macquarie Bank. The bet was Australian housing prices would decline by 40% in two years, and the loser would walk 200km from Canberra to Mt Kosciuszko.  Despite losing the bet, Steve Keen still has his supporters. Last week, Dean Baker the co-founder of US based the Centre for Economic and and Policy Research said the housing bubbles of the United Kingdom, Canada and Australia, are larger, relative to the size of their economies,  than the one that collapsed and wrecked the US economy. In each county, there has been a sharp increase in the sale price of homes that has not been matched by a corresponding increase in rents. In Australia’s case, Baker claims house prices rose by more than 80 per cent between 2001 and 2009, a period when rents rose by roughly 30%.   Baker argues the price of the median house in Australia is 225 per cent of the median house in the US.  Given that wages in the US are higher it is difficult to see how this huge gap in house prices can make sense, said Baker.

by Roger Montgomery Posted in Insightful Insights, Property, Value.able.

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Over the past fifty years, US housing starts have averaged 1.5m per annum. Currently, starts are less than half the long term average.

In recent months there have been some tentative signs of recovery from this record low base. According to the Economist, America’s houses on average “are now among the world’s most undervalued: 19% below fair value, according to our house-price index”.

While Deutsche Bank have cut their 2013 and 2014 housing start expectations in Australia to 128,000 and 144,000, respectively,they are looking for a jump in US housing starts to 1.0m by 2014 and 1.4m by 2016, as follows.

by Roger Montgomery Posted in Insightful Insights, Property, Value.able.

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