Blog

Aug 31, 2017
by Spiro
This figure shows you which states will boom

Construction costs are rising quickly... but not everywhere. Take a look at this table here and tell me what you see: This is a table of total construction costs in Australia. It's looking at how much more it costs to build a dwelling this year compared to last year. This comes from the property analyst Michael Matusik - one of the best in the game. So what does it tell you? Well it tells you construction costs are booming in New South Wales, and Queensland. So what does it mean? Well, on the face of it, it means that tradies are getting more expensive. Or materials. Or both. It just costs a lot more to build a dwelling in each of these states. But want to know what I see? I see price pressures building in the pipe-line. In many ways it's the flow of new

Aug 22, 2017
by Spiro
If people think there's a bubble, show them this

Can a frenzy of irrational buyers create a rental crisis? No. Renters are doing it tough, it seems. That's the word from The Department of Health and Human Services in Victoria: Booming house prices and wage stagnation have been blamed for making rental affordability the worst it's ever been in Victoria. The Department of Health and Human Services (DHHS) collects data on the availability of affordable new housing for low income earners in the state. It's now at the lowest level since 2000, when the survey began. A decade ago, about 30 per cent of rental properties in metropolitan Melbourne were considered affordable for struggling families. Now it's just 5.7 per cent. Only 0.4 per cent of one-bedroom rentals are considered affordable for low-income singles... "What we'r

Jul 20, 2017
by Spiro
More people, higher prices

Today I unpack one of the key drivers of house prices. There are a lot of reasons why house prices are high in Australia, and just keep on going higher. "Because there's a bubble" is the least convincing and laziest of all reasons. And I think that's its appeal. For people who can't be bothered unpacking the complex reasons that drive house prices, the "Housing Bubble" is very convenient. Anyway, I'm not going to unpack it all here, but one of the key factors driving higher house prices is solid population growth. More people means more demand for houses, means higher prices. There are a few general trends to keep in mind when we're talking about people. The first is that Australia's birth rate was looking a little dire in the late 90s. But it's picked up from the early

Jul 26, 2017
by Spiro
So what if I'm jealous?

Jealousy isn't the monster we make it out to be. In fact, it's your friend. I know that we've been brain-washed as kids to be like Cinderella. I mean, you know Cinderella was a good person because even though her life was shi!tty, she was happy and content and didn't bother anybody by complaining. And when her sisters went to the ball without her, she didn't get jealous. She just quietly wallowed in self-pity. What a good girl. Jealousy, we're told, is a monster. If we let ourselves get jealous it's like inviting in some sort of demonic possession. And in that sense, if you get jealous, it means you have a weak will and a feeble mind. You need to develop some character and become a better person. What a load of garbage. Jealousy can be your friend. Now I'm not s

Jun 16, 2017
by Spiro
Why shares suck

Share indices overstate performance... by design! Ok, one of the debates I get drawn into all the time is "are shares better than property?" There's a few reasons why property is a better fit with me. I like it. I can understand it. I can also work with it. If I try to bump up a property's value by adding another bathroom, or doing a workover of the back garden, I can end up on the cover of "Better Homes and Gardens" magazine. But if I try and bump up a share's value somehow, it's called fraud and I end up in jail. You can't do anything with shares. It's totally out of your hands. It's all comes down to what your company is doing, and what the market is doing. (And if it's out of your hands, isn't it just gambling?) So I like property. And look, I can see why peopl

Jun 28, 2017
by Spiro
Yep, there's fewer houses to choose from now

Data is actually pointing to the strongest conditions in years. We're still waiting for any evidence that the property market is slowing. It's certainly not in the listings data. SQM reckon that the amount of stock on the market is now 7.5% lower than a year ago. That's substantial. And what it means is that if there's less houses for sale (less supply), and demand doesn't change (which I don't think it has) then prices have to go up. And if prices are going up then there can't be a market crash. (It's amazing how many people don't get this point.) It's a bit of mixed bag across the country. There were increases in Perth and Darwin, which you'd expect with a softer market. There was also an increase in Sydney, which was a little curious, but it's hard to read too muc

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