[booboo]

I thought that it was about time someone created this thread. I'll kick it off with the spruiks articles from a bit over a week ago.

The first aricle claims FHBs in Melbourne face "gloom" due to high prices, which will remain high due to some shallow analysis which proves a "positive market". Of course, Dr Wilson fails to mention that it's FHBs who prop up the market.

Quote

First timers' gloom

Andrew Wilson
March 14, 2011 THE prospects for Melbourne's property market in 2011 remain positive, with recent data indicating a strengthening of Victoria's economic fundamentals. According to the latest Bureau of Statistics figures, full-time employment continues to grow significantly, the participation rate is at record levels and wages are rising.

Higher incomes as a consequence of increasing competition for labour will fuel home buyer capacity and confidence. The prospect of stable interest rates in the shorter-term will also add to improved buyer sentiment.

Activity by first home buyers, however, seems set to remain recessed. ABS data for home loan commitments for January released last week revealed a dramatic fall in the numbers of first home buyers in the marketplace.

Housing finance commitments for first home buyers fell by a record 33 per cent in January compared to the previous month and was the lowest recorded for nearly seven years. First home buyers strengthened the market in 2009 and into 2010, driven by government stimulus policies designed to support the property market.

Affordability constraints for first home buyers however seem set to remain an ongoing issue.

In the second article, Dr Wilson proves that Sydney is the most expensive city by showing it has the most suburbs over $1M. Fair enough analysis, in fact, this is actually a rare piece of decent writing from Dr Wilson. Problem is, the title doesn't match the article, until the last paragraph which just posts some claim that Sydney price growth will outpace other capital cities without proof. Fascinating this, as in the above article (published about the same time) he also claimed that Melbourne would also get more expensive.

Quote

Sydney to widen price gap with other capitals

Andrew Wilson
March 13, 2011 AUSTRALIAN house prices have been the focus of much media attention lately with various analyses proposing that price levels are high compared with other national markets.

Measuring and comparing the relative price affordability of houses between markets is problematic and various methodologies are used by analysts in an attempt to gain an effective insight into this issue.

As measured by median house prices, Sydney remains Australia's most expensive city for housing. According to December quarter 2010 data from Australian Property Monitors, the Sydney median house price stands at $637,258.

The next highest capitals are Canberra and Melbourne with median house prices of $577,870 and $574,850 respectively.

Melbourne has been closing the gap on Sydney in terms of median house prices and is now only a little over $60,000 cheaper than its northern neighbour.

The closing gap between Sydney house prices and other capitals is due to the Sydney market's stagnation between 2005 and 2009 when the median house prices of other capital cities were growing strongly.

Sydney house prices have doubled over the past 10 years. However, the median house price of all other capitals has trebled over the same period. It would appear, then, that on this measure Sydney housing is becoming relatively less expensive.

Other measures, however, reinforce the magnitude of Sydney's national house price leadership. Sydney has 11 suburbs with a 2010 median house price over $2 million with the top two suburbs, Vaucluse and Bellevue Hill, recording prices of $3.68 million and $3.37 million respectively.

By comparison Melbourne has only two suburbs with a median house price over $2 million – Toorak with $2.18 million and Kooyong with $2.15 million. The only other suburb with a median house price over $2 million is Dalkeith in Perth with a 2010 median house price of $2,800,000.

Other data reinforces the significance of Sydney's house prices. It has 127 suburbs with a median house price over $1 million, compared with Melbourne's 38, Perth's 18, Brisbane's three, Canberra's two and Adelaide's one. Sydney is also the clear leader in median house prices between $750,000 and $1 million recording 94 suburbs in that price range compared with Melbourne's 48, Perth's 36, Brisbane's 14, Adelaide's 11 and Canberra's three.

Expect the gap between Sydney's house prices and those of the other capitals to widen as strong economic growth reinforces Sydney's position as Australia's commercial capital with growing demand for mid- to high-price-range properties to emerge this year.

Dr Andrew Wilson seems to be spruiking creating a constant theme in his articles - that prices will pick up in the later half of the year, due to vague unsubstantiated reasons. At least he's consistent.

[booboo]

In this article on Melbourne Dr Andrew Wilson claims that "soaring buyer confidence has reversed a decline", as determined by some cherry picked data and not much else. Of course, keen readers of Dr Wilson's other articles will be wondering where the hell this decline came from! Good thing, then, that Dr Wilson didn't read some of the other articles on Domain, such as this one on the Melbourne market and lying price guides for auctions, as it included the following quote:

Quote

At the coalface, buyers’ advocates report that numbers of people at open-for-inspections appeared substantially down yesterday compared to recent weeks.

Obviously they buyers' advocates are incorrect, and should subscribe quick smart to the Dr Andrew Wilson newsletter.

[booboo]

Every week the good Dr seems to release an article on Sydney and an article on Melbourne (generally, both pretty darn bullish no matter the state of the market).

Here's the Sydney article for the week, complete with unsubstantiated claims.

Quote

Auction sales point to a market on the move

Andrew Wilson
March 19, 2011 The Sydney housing market appears to be gathering some momentum after a quiet finish to 2010, according to reliable indications of market activity.

Auction clearance rates are an important forward indicator of housing market activity. Almost every weekend during the year, houses are offered for sale by auction.

The rate at which houses are sold at auction can provide a reliable and accurate indication of housing market activity. This reliability is, however, dependent on the number of properties offered for auction each weekend.

Holiday periods, major sporting events or other significant occurrences can significantly affect the number of properties scheduled for auction.

Over the past four weeks, the number of weekend auctions scheduled in Sydney has fluctuated between a low of 415 and a high of 591 properties. The clearance rate has been about the 60 per cent mark.

Sydney housing market activity flattened towards the end of last year as buyer demand was reduced by the impact of interest rate rises and rising house prices. Weekend auction clearance rates fell to a low of about 50 per cent in December.

Early last year, however, weekend auction clearance rates were about 70 per cent as high levels of buyer demand, particularly from cashed-up first-home buyers and investors, fuelled the market.

Weekend auction clearance rates are currently about 60 per cent and rising. This indicates that the buyer's market of late 2010 is stabilising with the prospect of growing demand and moderate price increases from midyear. (bolding mine)

Good to see the mid-year meme is strong in Dr Andrew Wilson, and no doubt we'll see it continue in the weeks to come.

Let's look at his claim of increasing clearance rates in Sydney, though. And let's also ignore that clearance rates are considered short term indicators, as opposed to indicating some magical gains that apparently will occur mid-year.

Let's use Dr Andrew Wilson's Saturday (unrevised) figures first of, from Sat Feb 5th: 48%, 69%, 63%, 65%, 56%, 63%, 62%. The obviously stable market, as shown by the obviously stable clearance rates, and the obviously rising trend obviously supports the obvious claim from Dr Andrew Wilson that clearance rates are obviously rising. And therefore, an obviously rising market in the second half of the year. I've added the term "obvious", whereby my statement is for varying and creative values of "obvious".

Of course, we can look at his two revised values for back to back weeks (of 55% and 58%) and he looks right. So let's look at the RP Data values, starting from the week ending 6th Feb: 50.0%, 61.7%, 58.2%, 60.2%, 53.4%, 53.3%, (due Wed). For rather varying values of "obvious" indeed.

This post has been edited by booboo: 22 March 2011 - 01:32 AM

[booboo]

Actually, the RP Data series is interesting. To get some comparison to the current auction market, I'll post the RP Data auction results (from Sydney) starting from the week ending Oct 31st 2010 to the week ending Dec 19th 2010:

58.7%, 53.8%, 53.1%, 50.6%, 52.3%, 49.2% (by now the results are are well and truly undergoing a seasonal tailing off as we get into Dec), 48.7%, 50.3%.

Looks like the auction results are a falling back into a continuation of October / November results, which was a slightly falling market for Sydney. The series also supports DataDawg's notion of continuing the declining trend of clearance rates for Sydney. I suspect that a seasonally adjusted series would show the declining trend quite clearly.

[booboo]

Today's Dr Andrew Wilson spruik, er, property report is a video where you can see his shifty little eyes in person.

But don't dig too deep! Apparently, last year, Sydney's auction clearance rates were at 70% at this time. Thanks to PNT from CC, here's the actual values:

Quote

Date|No.|Sold|Withdrawn|%Cleared| Total | Median 13/02/2010|175|129|6|71%| $98,888,096 | $713,250
20/02/2010|261|196|11|72%| $158,449,792 | $776,000
27/02/2010|316|259|9|80%| $224,597,600 | $810,500
6/03/2010|270|207|12|73%| $175,601,776 | $840,500
13/03/2010|247|174|24|64%| $143,250,096 | $840,000
20/03/2010|296|247|20|78%| $212,451,280 | $865,000
27/03/2010|426|337|29|74%| $285,469,152 | $827,000

Actually, if he compared the same weekend from last year, he'd have 78% against 63%. If the good Dr was comparing last years' revised figures, well, he wasn't comparing revised figures from this year. And don't mention that RP Data's figures are hovering at 53%. Also, the a lot of the 50% clearance rates from last year came from a seasonal downturn. Oh, and he's really pushing the increasing clearance rates meme.

I don't have the Melbourne figures, sorry, but I'm guessing that are just as selective and fudged.

[booboo]

The weekly Dri Andrew Wilson Sydney spruik, er, report. Damning the Inner West with faint praise, and once again comparing revised auction results from the previous week with unrevised auction results from the current week. Look, they've gone up!!! (© Enzo and REIV)

My favourite by this week is when he gives this platitude (bolding mine):

Quote

The inner west still represents some of the best value given its proximity to the city and the quality of its facilities and amenities including the light rail, private and government schools, shopping, cafes and restaurants, hospitals, universities, parkland and foreshore recreation.

Best value compared to what? Derived from what?

Oh wait, because houses are so cheap there, especially near Syd Uni - the median house price is so unbelievably cheap it's in thie high 800s to low 900s. Better buy 'em up now - I'll take 2, no wait, 3!!!

Quote

The best-value inner-west suburbs in terms of proximity are clearly Pyrmont and Forest Lodge, with median house prices and distance to the CBD of $880,000 and 1.5 kilometres, and $866,000 and three kilometres, respectively.

Other inner-west proximity value suburbs include Erskineville, Alexandria, Stanmore and Enmore, all within five kilometres of the Sydney CBD and with current annual median house prices under $900,000. Recent auction clearance rates for inner-west properties indicate that CBD proximity value is being recognised more and more.

Oh yeah, and don't forget to mention those auction clearance rates...which are significantly lower YoY. But we won't mention that now, will we?

[Bernard L. Madoff]

This thread should be a blog in its own right. Keep it up. Very entertaining.

[booboo]

Nice to see people actually read this thread! After a week or two of being lazy and letting the articles build up like a bad case of toxic sperm, I've forgone the opportunity to ejaculate them all at once and have a choice quote from one or two showing Dr Andrew Wilson's level of intelligence and analysis, and then a laugh at a second where Dr Ando says a butterfly farting in South America makes house prices in Australia go up.

Seems first home buyers in Melbourne and Sydney were the topics for Dr Andrew Wilson in the last week. In the Melbourne article he came dangerously close to discovering the problem when FHBs abandon the market - but don't worry, because Dr Andrew Wilson doesn't fall back to bearish arguments, but instead has beautiful unsupported platitudes that make everything all right, like...

Quote

The expected influx of new inner-city apartments this year and in 2012 may provide some relief for these buyers, who are already showing a growing interest in this style of accommodation.

Good thing those FHBs are willing to pay over the top prices because they have apparently "an interest" in apartments! Reading between the lines one might say that the article actually looks negative; a cynic and realist would say that the article is priming for APM to cry "stimulate!" to the government, especially as the percentage point delta between their auction clearance rate and RP Data's auction clearance rate has mysteriously started dropping.

But, I digress. What Dr Andrew Wilson is really saying is that we need a $200k FHB grant to get those FHBs off the rental market and into a magic new home. This will have the added benefit of freeing up the rental market. Yes, that's right, according to Dr Andrew Wilson, FHBs not buying only make the rental market worse!

Quote

As a consequence, many are being forced into an already tight rental market, putting increased upward pressure on rentals.

Good to see that FHBs only create supply problems when they rent, and when they buy it's one of those magic mushroom homes which doesn't ever subtract from rental supply.

Anyways, now to the big daddy Dr Andrew Wilson spruiking aticle of them all, whereby Dr Ando finally comes out and says that we've all known: he's a disengenous spruiker who only sees/wants/calls higher prices because it's in his and APM's interests to do so. Here it is, bit by bit.

Quote

Lacking direction, but slow recovery still favours buyers

Andrew Wilson
April 11, 2011 - 5:04PM The first quarter of 2011 has ended with the Sydney housing market yet to give a clear indication of the direction of buyer activity.

Weekend auction clearance rates - normally a reliable indicator of market activity - have consistently floated around the 60 per cent mark over the past month with no sign of a significant breakout either up or down from this level.

Whoa, hold on that Dr Ando. What about the last two weekends, whereby your Saturday results were under 60% at around 57% and 53%? The last weekend sounds pretty breakout to me. And really don't mention your revised results, or RP Data's results, which include more reported auctions and have been hovering at about 52% - 53%. And so we begin the disengenuous twisting of statistics...

Quote

This indicates that the market, although recovering slowly from the softening in activity evident late in 2010, still remains in favour of buyers. This situation, however, may not last for long.

The fundamental housing market drivers continue to be encouraging, indicating the likelihood of increased buyer activity through the year.

BUY NOW OR BE PRICED OUT FOREVER!

Quote

Unemployment rates are low and growth in full-time jobs and incomes continues. According to the Australian Bureau of Statistics, the NSW unemployment rate for March fell to 4.8 per cent, which was the lowest figure recorded since June 2008 and indicates an economy close to full employment.

Jobs growth continues to surge with nearly 100,000 full-time jobs being created over the past year. With declining population growth expect demand for workers to continue to increase with more competition among employers for labour adding to upward pressure on wages and salaries.

No housing prices can fall with low unemployment. I mean, look at the US, look at Ireland...uhm...but it's ok, we're different here.

Wait. Hold on. Declining population growth = house prices to the moon! Finally, someone pointed it out. I mean, here we were being told for the last two or three years that our high population growth meant house prices to the moon; thankfully Dr Ando has come along and corrected it.

Wait. Hold on again. 4.8% unemployment in NSW? The headling SA rate was 5.1% - good to see Dr Ando cherry picking the trend series at 4.8% to support his case.

Quote

Consumers generally are de-leveraging and becoming cashed-up, saving at rates not seen for nearly 40 years. Credit card debt is rapidly being reduced, mortgages paid down ahead of time and discretionary spending by many is on hold.

Interest rates also remain on hold with the expectation of a benign medium-term outlook by the Reserve Bank. With every month passing without a rise in interest rates, buyers become more confident.

Disleveraging is such a bullish indicator, isn't it? I mean, consumers not spending, not putting that money into the economy, with retailers suffering...why, it must mean that house prices will go up! I mean, consumers not spending must mean that are saving up to spend the hard earned on housing, right?

Not only that, but flat interest rates are positive signs too, regardless of the level of interest rates and people's ability to pay them. Can't have enough positive signs now, can we?

Quote

The cost of renting as a substitute to buying continues to climb. The Sydney rental market remains tight with low vacancy rates and upward pressure on rents. With rising rentals and the expectation that the current apparent buyers' market in Sydney will end soon, investors are likely to become more active in the marketplace.

Meanwhile, rents are flying up! According to an article from last week, rents are flying up at the high rate of flatness in Melboune and Syney last quarter, and at around 2.7% over the last year, which is less than inflation. House prices to Jupiter! In case you weren't sure, APM have confirmed it on twitter, so it must be true.


And the buyers' market will be ending soon. Good think that Dr Anrew Wilson has been warning us of this in nearly every article. It's almost like he believes if he says it enough, it will happen.

Quote

The level of new dwellings coming onto the market continues to be significantly less than that required by the underlying growth in the number of Sydney households. Building approvals continue at chronically low numbers with only 738 new houses and 171 new units approved for construction in Sydney in February.

And to end this edition of spruik bingo, we have the shortage. Thanks for coming!

Quote

A clearer picture will emerge in the next few weeks as the pre-Easter auction selling season reaches its crescendo with large numbers of properties being offered for sale in Sydney. Expect median house prices to rise moderately in Sydney this year, with particular demand for middle- to upper-price-range properties and properties close to the city, notably in the inner-west suburbs.

Time for the conditioning. House prices will rise, because not only are there more properties on the market to choose from, but because of all the truthiness in our spruikiness. And you know it's true - because APM confirmed it on their twitter. The most amazing thing is that with all of this economic good news it's only a slow recovery.

[tom]

Thanks booboo, thats gold!

I imagine the dr is after finishing off his articles then frantically writing to policy makers saying the market is heading for a cataclysmic collapse that without government intervention will have us all eating soup within months...

[tor]

Does anyone else think that buyers "who are already showing a growing interest in this style of accommodation" are doing so because they can't afford a house?

I can't see the "want to own my own home" sentiment changing in the near future but I can see the "we can't afford a house, what's next best" logic coming through.

I guess they just have to hope that apartments go up in price enough that they can trade up.

[booboo]

tor; that's the thing, though - hoping that apartments will go up in price more than a free standing house doesn't exactly sound like a great bet.

I doubt that the difference in price between an inner city apartment and middle to outer ring free standing price is not too huge anyway. You are right that probably people are buying what they can afford in or near the area they want to live, but I doubt they have really thought logically how the "property ladder" really works, as opposed to just believing the myth that it's better to get onto it, no matter how you do it.

[tor]

 booboo, on 12 April 2011 - 02:02 AM, said:

tor; that's the thing, though - hoping that apartments will go up in price more than a free standing house doesn't exactly sound like a great bet.

I doubt that the difference in price between an inner city apartment and middle to outer ring free standing price is not too huge anyway. You are right that probably people are buying what they can afford in or near the area they want to live, but I doubt they have really thought logically how the "property ladder" really works, as opposed to just believing the myth that it's better to get onto it, no matter how you do it.

Oh no I am not saying it is a sensible or logical choice. Just saying that is what I would guess is going through a fair few peoples minds. 5 years ago they would have bought a crappy house and tried to trade up. Now they are stuck at the next rung down.

[tom]

 tor, on 12 April 2011 - 02:08 AM, said:

Oh no I am not saying it is a sensible or logical choice. Just saying that is what I would guess is going through a fair few peoples minds. 5 years ago they would have bought a crappy house and tried to trade up. Now they are stuck at the next rung down.

and possibly will be for the next 25 years...

[tor]

 tom, on 12 April 2011 - 02:13 AM, said:

and possibly will be for the next 25 years...

and what was the expected lifetime of a modern apartment?

[tom]

 tor, on 12 April 2011 - 02:21 AM, said:

and what was the expected lifetime of a modern apartment?

50 years design life generally.

This is only the structure though. It can get to a point long before this that it is not viable to keep repairing especially with all the mod cons in modern apartments. The walk up sh*tboxes of the 1970s are likely to still be standing only due to their simplicity long after more modern highrise...

I don't think this is a good thing because the old ones really do look sh*thouse and are often in otherwise nice areas like Crows Nest etc.

Edit: Sorry that 50 years is assuming normal maintanance and inspections even on the structure. If you leave a structure to rot / corrode with no inspections etc you cannot assume it will always go the distance.

[hamish]

 tom, on 12 April 2011 - 02:58 AM, said:

50 years design life generally.

This is only the structure though. It can get to a point long before this that it is not viable to keep repairing especially with all the mod cons in modern apartments. The walk up sh*tboxes of the 1970s are likely to still be standing only due to their simplicity long after more modern highrise...

I don't think this is a good thing because the old ones really do look sh*thouse and are often in otherwise nice areas like Crows Nest etc.

Well, apart from the price, that's another great reason to avoid buying one of those high rise jobs, like an expensive European luxury car it sounds like the upkeep when stuff starts to go wrong will make them a real liability when they start getting a bit older.

Agree about the older 3 storey walk ups, the older ones have aged quite badly aesthetically, and I would love to replace most of them just on those grounds, but they are mostly pretty solid and strata'd so will be around fro ages. Thing is, the really really old ones from the 20s & 30s show how nice apartments can be if a little care is taken with the design.

[tom]

 hamish, on 12 April 2011 - 03:18 AM, said:

Well, apart from the price, that's another great reason to avoid buying one of those high rise jobs, like an expensive European luxury car it sounds like the upkeep when stuff starts to go wrong will make them a real liability when they start getting a bit older.

Agree about the older 3 storey walk ups, the older ones have aged quite badly aesthetically, and I would love to replace most of them just on those grounds, but they are mostly pretty solid and strata'd so will be around fro ages. Thing is, the really really old ones from the 20s & 30s show how nice apartments can be if a little care is taken with the design.

Actually, you are right about the 1930s and 40s. Some of them around Rose Bay are rippers if they have been refurbished tastefully.

[hamish]

 tom, on 12 April 2011 - 04:00 AM, said:

Actually, you are right about the 1930s and 40s. Some of them around Rose Bay are rippers if they have been refurbished tastefully.

I could add that many European cities also show how good higher density apartment developments can be, where as we seem hell bent on proving how crap they can be.

[booboo]

It seems that SMH has enabled comments for that last spruik from Dr Andrew Wilson. Only 4 so far, but all rubbishing the article.

Quote

What a load of rubbish, the clearance rate was 52%last week no where near 60%, on the northern beaches it was 22% and 33% the week before. Keep telling yourselves its going to go up soon and have some maths lessons!!!

spado - April 11, 2011, 9:37PM

Quote

This has got to be one of the flimsiest and most laughable attempts to talk up a collapsing market I have seen to date. I find it amusing that the previously spruiker touted argument that strong immigration growth would push up prices, but now as if by magic, weaker immigration growth will push it up because of wage pressure!! Win win!! Take a look at Wayne Swan's tweet about the upcoming budget. Personal income tax revenue has fallen short of expectations by $1 billion for the first 8 months of the financial year. Wage pressure indeed!
Rents would have to go up a very long way indeed to get even close to a point where it is worth considering buying as an alternative. But since they are determined by the market and what people actually earn, rather than credit and tax break fueled speculation they will keep more in line with inflation.
Articles like this are designed to lure the gullible and naive into making an irrational and foolish decision by preying on their fear of never owning their own home. It is quite simply disgraceful.

MaxPower | Sydney - April 12, 2011, 11:34AM

Quote

So, Dr Andrew Wilson...I'd love to know what you're a doctor in.

I'd also like to know what planet you are living on when you claim that median house prices in Sydney are likely to increase this year.

I really truly honestly don't think you believe this at all.

Equally, I honestly don't think you believe that the current buyer's market will end any time soon.

If you really do think this then you will no doubt think that the moon's made of cheese, the earth's flat and the world will end on 11.11.2011 or some other such date.

In any case, I hope that when your bold predictions don't come true you will write a nice article of apology to set the record straight.

The bubble has started to deflate and you're fiddling whilst Rome burns. It's actually embarrassing to read.

PP | Bondi - April 12, 2011, 1:12PM

[tom]

Quote

The bubble has started to deflate and you're fiddling whilst Rome burns. It's actually embarrassing to read.

That has to hurt...