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Australian property spruikers who’s who of 2011 named

The property spruikers are at it again talking up the Aussie residential real estate market contrary to objective and factual market information.

Recently the Adelaide property market was booming  and now the Brisbane market is predicted to grow by 10% in 2012.  We always appreciate well researched analysis and well informed commentary.  We enjoy reading articles that demonstrate objectivity and provide factual information. Articles that give the reader a true sense of what is occuring in the market place, so you can make well informed decisions.

However when we read articles that are subjective, false, misleading and deceptive our blood pressure rises.  How do you know what to believe?  How can you discern what information is accurate and reliable?   You might believe that conducting your own research and due diligence is the way to go?  But let’s face it most people are time poor and are not able to find all the information they need.

Between 2007 and 2011 we have been monitoring media reporting on the Australian property market, and have a pretty good feel for who is reporting accurately.  Some analysts might be a little bullish or might be a little bearish, but they report accurate, reliable, and factual information. There will always  be a little bit of bias towards one point of view or another, and that’s okay.  Other analysts might be highly bullish or highly bearish and they report inaccurate, unreliable, subjective, highly biased and at times false information.  This is not okay.

Whether the market was booming in 2006-2007 or dropping in 2010-2011 we respected reporting that offered accurate, reliable, and objective information.  However throughout that time we have observed serial offenders who offer highly bullish or highly bearish opinions.  Their reporting at times is simply false, misleading and deceptive.

It is about time these spruikers were exposed.

Over a period of time we have reviewed media posts and articles and responded to points of view and commentary.  We would like to publish our analysis and name these spruikers. If you are looking for accurate, reliable, objective and factual information we hope we can help you out.

Here’s a recent post from Australian Property Monitors   predicting 10% growth in the Brisbane market

It states “The Brisbane housing market is set to revive in 2012 off the back of the  Queensland resources boom that will gather strength through the year – weather  conditions notwithstanding.  Dwelling shortages, population increases, rising incomes and the improvement  in confidence as a consequence of the reconstruction program should contribute  to a recovery in buyer activity. “Brisbane has the clear potential of double  digit growth in median house prices over 2012.”

Let’s review each key point and assess the drivers of growth that influence any property market.

• The resource industry only accounts for 2.4% of employment in QLD according to Moody’s Investor Services
• Mineral prices in 2011 are decreasing and we expect property  prices to increase in 2012? Is that likely?
• QLD’s tourism-dependent Gold Coast region not only has Australia’s third worst mortgage performance with 3.11% delinquencies, but also contributes the most delinquent loans outright with 6.9% of such loans in Australia located in the region.
• Check out this article Australian Mortgage Delinquencies Increasing Despite Mining Boom, Regions Performing Very Poorly Increases Fourfold: Moody’s Investor Services
• Check out this post Find the worst postcodes in Queensland for home loan delinquencies
• Now lets get down to some basic drivers of property growth
• Supply of listed property is at an all time high
• Demand for property from buyers is at an all time low
• The Eurozone crisis is deepening and will affect credit availability in 2012
• This will reduce buyer numbers in the Australian market
• China’s economy is cooling and their property bubble has burst
• The number of Foreign Chinese Investors will reduce
• Consumer buying sentiment is poor despite 2 interest rate cuts   in 2011
• Baby boomers are retiring in record numbers, which is reducing home buyer demand..

 

APM state “dwelling shortages, population increases, rising incomes and the improvement  in confidence as a consequence of the reconstruction program should contribute  to a recovery in buyer activity”.

 

• Anthony Street,  Institute of Actuaries Australia fellow and former Macquarie real estate securities funds manager states there isn’t an undersupply of housing in Australia
• Prominent real estate writer and author Terry Ryder supports this position with don’t believe real estate hype on property shortages
• The Australian Bureau of Statistics (ABS) Population Projections, Australia, 2006 to 2101 indicates steady population growth.  But what it does not reflect is the demand for residential housing versus aged care accomodation in the future.
• From 2022 onwards 1.37m baby boomers will start moving from residential accomodation into aged care accomodation.  As a result housing supply will increase significantly and housing demand will not match the supply.  House prices are likely to fall.
• Aug 2011 figures show that real (inflation adjusted) weekly disposable household income actually fell slightly over the past two years, dropping from $859 a week in 2007/08 to $848 a week in 2009/10.  The result marks the first time in 14 years that household disposable income has fallen.
• Consumer confidence in 2011  has not risen in Australia

Population Growth Statistics

The Australian net overseas migration levels peaked in 2008-2009 at 299,900 places and has dropped to a 2011-2012 Migration Planning Program level of 185,000 places.  A total drop of 114,900 places (38%) since 2008-2009.

Check out the Department of Immigration and Citizenship 2011-2012 Migration Program  which indicates that there was an increase of  increase of 16 300 places from 2010-11 planning levels.  12,000 places were allocated to the skill stream in regional locations.  This is not exactly an avalanche of population increase in the current period.

Previous Migration Program planning levels  were set in:

• 2006-2007 at 232,800 places
• 2007-2008 at 277,300 places
• 2008-2009 at 299,900 places
• 2009-2010 at 215,600 places
• 2010-2011 at 168,700 places
• 2011-2012 at 185,000 places

The Australian Bureau of Statistics Population Clock On 20 December 2011 at 11:48:25 AM (Canberra time), the resident population of Australia is projected to be 22,779,434. This projection is based on the estimated resident population at 30 June 2011 and assumes growth since then of:

• one birth every 1 minute and 47 seconds,
• one death every 3 minutes and 36 seconds ,
• a net gain of one international migration  every 2 minutes and 49 seconds, leading to
• an overall total population increase of one person every 1 minute and 34 seconds .

Births are contributing to population growth, however without stating the obvious children generally stay at home until they find a job and move out.  The average young adult living at home in Australia is 25 years of age.  So we cannot expect any increase in this buyer demand for another 25 years.

Net overseas migration levels contribute directly to current property demand and this has dropped 38% or  114,900 places since 2008-2009.

If you have been spruiking the Australian property market you will be named and shamed.

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