Saturday Summary – the most interesting articles I’ve read this week (2014/11/08)

There are more interesting articles, commentaries and analyst reports on the Web every week than anyone could read in a month.

Each Saturday morning I like to share some of the ones I’ve read during the week.

Enjoy your weekend….and please forward to your friends by clicking a social link buttons on the left.

Australian Land Values Soaring

In his blog regular Property Update contributor Pete Wargent explains that while residential land values have boomed over the years, commercial land values have been virtually flat since 2008 and have simply never performed in the same manner.

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“This is not surprising, since the entire Australian financial and taxation system is set up for us to strive for home ownership and in many cases, to strive for property investment on top.

I noted the year 2008 above because it was at that time that the Australian property bubble theory really garnered support (to be fair, much of the financial world outside of Australia was imploding at that time), with some big studies eventually being released explaining why the Australian land value bubble must collapse.

The data series produced were never wrong, but they were frequently misinterpreted because users of the data took no account whatsoever of the factors which did not support their theory that land prices must collapse.

For example, disregarded were many of the real world factors which have served or continue to serve to push land values higher, including the deregulation of the financial system, interest rates falling substantially from above 15 percent to only 2.50 percent today, massive population growth in Australia, and a string of other factors as often discussed here before.

Six years on, let us now consider on what has happened to land values according this latest ABS data.”

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Read more here.

What property investors can learn from farmers | Difficulties buying interstate | Silent auctions | Traps with bank break fees

Another great Real Estate Talk show produced by Kevin Turner. If you don’t already subscribe to this excellent weekly Internet based radio show.

Details of this week’s show:

Carolyn Boyd from Domain takes a look at the difficulties you will experience if you buy interstate
Ken Raiss tackles a question about a little known trap with break fees that the banks don’t want to talk about
Patrick Bright details why property investors need to carefully consider their property investment strategy before buying, if they want to make money
Jo Chivers, renovation and development expert, questions if how you work and the way you live are separated by an invisible line in the sand?

Why house prices will keep surging

Adam Carr explains in Business Spectator that even though house price growth has slowed, values will keep increasing because of the returns investors are receiving:

“The spread of your total return to borrowing costs (i.e. the difference between what it costs to borrow and the return you get on that from property) is much more favourable and rises to 12.6% in Sydney.

This is important, because left unchecked house price inflation creates its own momentum. That’s especially the case when:

  1. Interest rates are on hold and;
  2. Household debt servicing is low – the lowest in about a decade.

Low debt servicing means that households can take on more debt — there is no point in highlighting record debt levels when the cost of servicing that debt is so low. It’s meaningless.”

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“At the same time all that’s happened, there is another concerning development. Building approvals have slumped.

Numbers released by the ABS show approvals fell 11% in September, which is the biggest fall in over two years.

Ok, the numbers are lumpy and the 11% fall we saw in September follows two months of gains – around 5.6% on a cumulative basis.”

Demographics: fewer Chinese want second child than expected

China has a demographic problem, so it decided to relax its one-child policy. That isn’t working as planned: 

“The world’s most populous country has restricted most families to a single child since the late 1970s, but the Communist party said in November that couples would be allowed to have two offspring so long as one of the parents was an only child, rather than both.

Authorities had expected the change to result in more than 2 million extra births a year, but out of more than 11 million couples eligible, only 700,000 had applied for permission by the end of August, the China Daily newspaper said, citing the National Health and Family Planning Commission.

Of those, 620,000 had been authorized, it added.”

We are living at one of the most peaceful times in history:

According to Henry Blodget, despite what you may think, fact is our world is becoming a safer place to live:

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If there’s a housing shortage, where’s the rental growth?

Some things to ponder:

  1. Borrow money from pessimists – they don’t expect it back.
  2. 42.7% of all statistics are made up on the spot.
  3. A clear conscience is usually the sign of a bad memory.
  4. All those who believe in psychokinesis, raise my hand.
  5. I almost had a psychic girlfriend but she left me before we met.
  6. OK, so what’s the speed of dark?
  7. How can you tell when you’re out of invisible ink?
  8. Depression is merely anger without enthusiasm.
  9. If Barbie is so popular, why do you have to buy her friends?
  10. What happens if you get scared half to death twice?
  11. Why do psychics have to ask you for your name?
  12. A conclusion is the place where you got tired of thinking.
  13. The hardness of the butter is proportional to the softness of the bread.
  14. The problem with the gene pool is that there is no lifeguard.
  15. I’d kill for a Nobel Peace Prize.

Weekend video: Fun perpetual motion machine powered by dogs and their toys

Here’s one of those fun perpetual motion machines powered by dog’s. Enjoy…

 

Blogs you may have missed this week:

If you didn’t have a chance to read my daily blog, here’s a list of some of the blogs you missed this week:

What’s the right property for our future needs | Michael Matusik

How long will it take you to become a millionaire? [calculator]

Employment growth drives property markets | Pete Wargent

Solid Gains, But House Price Growth Likely To Moderate | ANZ Bank

Sydney leads way from the weekend’s auction market results | Robert Larocca



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About

Michael is a director of Metropole Property Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


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