Monthly Archives:September 2019

For those interested in the Australian residential property market, a long history makes for fascinating reading. Australians are fortunate because much data on real estate and financial markets is publicly available, going into depth not seen in other countries. Careful scrutiny can yield useful ratios that go back over a century and offer context for where the market is now.
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Comparing housing prices to inflation is one of the more common indicators in property market analysis. If the trend is fairly even over time, then there is no indication that people are favouring housing relative to other goods and services.

On the other hand, if there is a wide divergence between housing prices and inflation, this tells us that people are considering housing to be relatively more important. Interestingly, every rise in real prices has led to a downturn, with the one exception of 1961-1964.

Another popular method of determining property valuation is comparing housing prices to rents. In a fairly efficient market, the costs of buying and renting should closely match each other, though due to factors such as taxes, risks and interest rates, it is unlikely that costs will equal. Since the post-World War II boom, the ratio has unevenly decreased. Upswings in the ratio suggest the presence of a bubble: the mid-’70s, early ’80s, late ’80s and today.

As with inflation and rents, housing prices have also outstripped incomes. Unfortunately, the ABS does not provide a long-term median household disposable income (HDI) series, so the denominator is derived by dividing aggregate real gross household income by the number of occupied households on an annual basis. This results in an unusually high HDI as averages are typically greater than medians, and is further amplified as the HDI is stacked with artefacts like superannuation which cannot be drawn upon to finance debt repayments. While the outcome is a rather low ratio, it keeps in line with that developed in Stapledon’s 2012 housing paper and shows a substantial increase from 1996 onwards. A more realistic median measure would result in a higher ratio.

It is easy to see the major cause of the Great Depression: a deflating land bubble, centred in the commercial property market. Every major rise in the ratio has resulted in a downturn, correlating with, and arguably causing, the economic recessions of the mid-’70s, early ’80s and early ’90s. The ratio has doubled from the trough in 1996 through to the peak in 2010. The substantial rise in the ratio during the late 1970s was likely due to an anomaly in splicing multiple land value series together, though part of the rise is justifiable because of a residential bubble.

The primary determinant of the boom and bust cycle in the land market is availability of credit/debt used to speculate on rising capital values of real estate. While data on private debt goes back to 1861, aggregate land values only begin in 1910. Debt peaked in 1893, driving a colossal commercial land bubble that burst, causing the worst depression in Australia’s recorded history. This also occurred in the 1920s, with the same result. It took until the 1970s for the debt cycle to assert itself once again, with one boom and bust after another. Debt reached the highest peak on record in 2008, driving the largest land boom on record.

Unsurprisingly, the cause for the massive rise in housing prices and land values, along with net rental income losses, is the colossal increase in household debt, primarily composed of mortgage debt. It has more than quadrupled since 1988, rapidly accelerating during the ’90s and 2000s. The ratio peaked in 2010, as did housing prices, which is clearly no coincidence.

While land booms have been a continual feature of the Australian economy, what separates this cycle is the relative size of the boom in both land values and private debt.

It is often claimed that “this time is different”. It certainly is, but not for the reasons usually given: Australia has not experienced a land boom, or bubble, of this magnitude in its history.

Philip Soos is a master’s research student at the School of Humanities and Social Sciences, Deakin University. The full chart pack on the history of Australian property values is available free at MacroBusiness

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BORAL is several months away from completing the first stage of its restructure as it battles severe headwinds from cheap imports and overcapacity in sectors of the building products market.
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On Wednesday it disclosed a net loss of $25.3 million for the December half, a reversal from the profit of $152.7 million posted a year earlier, on revenue of $2.8 billion, up from $2.4 billion a year earlier.

It posted a loss of 4.1¢ a share for the half, after earning 20.4¢ a share a year earlier.

Even so, directors have sought to retain investor confidence by declaring a 5¢ interim dividend, down from 7.5¢ a year earlier. This helped push up the shares 5¢ to $4.92.

Last month, Boral said it would axe 700 jobs – a quarter of its head office staff – as it attacks an ”entrenched bureaucracy”, according to the chief executive, Mike Kane.

A third of head office staff will probably lose their jobs by the time the restructuring is completed. ”Our internal focus was getting in the way [of focusing on customers],” he said.

Boral refused to provide guidance for year to June earnings, since several decisions about the future of key building products are yet to be made. ”Right now we’re moulting, and it’s not pretty,” Mr Kane said of the restructuring.

Analysts welcomed his directness in outlining Boral’s problems. ”It’s a turnaround story, not a cyclical recovery story,” said one analyst, who pointed out ”it is a six to nine-month story”.

”CEOs who tell it how it is are always welcomed by investors. He’s put his reputation on the line” in committing to getting costs out of the business.

Key problem areas are cement and building products – bricks, timber and windows – while the US is yet to turn round even with the small rise in housing starts there.

In the US, Boral expects housing starts this financial year will reach 860,000 units and rise to 1 million units next financial year. Changing market conditions there have pushed back Boral’s break-even point to just above 1 million units, it said. Boral lost $38.7 million in the US before interest and tax, while the building products division lost $17.8 million.

In the cement division, Boral is to halt the production of clinker at Waurn Ponds in Victoria, with further changes planned.

”In cement … the dynamics are changing – and changing rapidly,” Mr Kane said. ”With import [price] parity the ceiling, a low import price out of Asia and no price leverage, the halcyon days of the past won’t come back. We’re taking costs out on a phased basis.”

Problems remain with the timber division as well, where the sale of several masonry units is yet to be completed, and also east coast bricks, where excess capacity is hurting margins.

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Pope Benedict XVI leads the Ash Wednesday service at the St. Peter’s Basilica in Vatican City, Vatican. Photo by Franco Origlia/Getty Images Pope Benedict XVI leads the Ash Wednesday service at the St. Peter’s Basilica in Vatican City, Vatican. Photo by Franco Origlia/Getty Images
苏州美甲美睫培训

Pope Benedict XVI leads the Ash Wednesday service at the St. Peter’s Basilica in Vatican City, Vatican. Photo by Franco Origlia/Getty Images

Pope Benedict XVI leads the Ash Wednesday service at the St. Peter’s Basilica in Vatican City, Vatican. Photo by Franco Origlia/Getty Images

Pope Benedict XVI leads the Ash Wednesday service at the St. Peter’s Basilica in Vatican City, Vatican. Photo by Franco Origlia/Getty Images

Pope Benedict XVI leads the Ash Wednesday service at the St. Peter’s Basilica in Vatican City, Vatican. Photo by Franco Origlia/Getty Images

Pope Benedict XVI leads the Ash Wednesday service at the St. Peter’s Basilica in Vatican City, Vatican. Photo by Franco Origlia/Getty Images

Pope Benedict XVI leads the Ash Wednesday service at the St. Peter’s Basilica in Vatican City, Vatican. Photo by Franco Origlia/Getty Images

Pope Benedict XVI leads the Ash Wednesday service at the St. Peter’s Basilica in Vatican City, Vatican. Photo by Franco Origlia/Getty Images

Pope Benedict XVI leads the Ash Wednesday service at the St. Peter’s Basilica in Vatican City, Vatican. Photo by Franco Origlia/Getty Images

Pope Benedict XVI leads the Ash Wednesday service at the St. Peter’s Basilica in Vatican City, Vatican. Photo by Franco Origlia/Getty Images

Pope Benedict XVI leads the Ash Wednesday service at the St. Peter’s Basilica in Vatican City, Vatican. Photo by Franco Origlia/Getty Images

Pope Benedict XVI leads the Ash Wednesday service at the St. Peter’s Basilica in Vatican City, Vatican. Photo by Franco Origlia/Getty Images

Pope Benedict XVI leads the Ash Wednesday service at the St. Peter’s Basilica in Vatican City, Vatican. Photo by Franco Origlia/Getty Images

Pope Benedict XVI leads the Ash Wednesday service at the St. Peter’s Basilica in Vatican City, Vatican. Photo by Franco Origlia/Getty Images

Pope Benedict XVI leads the Ash Wednesday service at the St. Peter’s Basilica in Vatican City, Vatican. Photo by Franco Origlia/Getty Images

Pope Benedict XVI leads the Ash Wednesday service at the St. Peter’s Basilica in Vatican City, Vatican. Photo by Franco Origlia/Getty Images

Pope Benedict XVI leads the Ash Wednesday service at the St. Peter’s Basilica in Vatican City, Vatican. Photo by Franco Origlia/Getty Images

Pope Benedict XVI leads the Ash Wednesday service at the St. Peter’s Basilica in Vatican City, Vatican. Photo by Franco Origlia/Getty Images

Pope Benedict XVI leads the Ash Wednesday service at the St. Peter’s Basilica in Vatican City, Vatican. Photo by Franco Origlia/Getty Images

Pope Benedict XVI leads the Ash Wednesday service at the St. Peter’s Basilica in Vatican City, Vatican.

Ash Wednesday opens the liturgical 40-day period of Lent, a time of prayer, fasting, penitence and alms giving leading up to Easter.

After more than two years of silence, the Israeli Government has admitted a prisoner it held in detention for “security reasons” – believed to be the Australian Ben Zygier – committed suicide in custody.
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Amid increasing pressure on the Israeli and Australian Governments to reveal what they knew about the December 2010 death of Mr Zygier in solitary confinement in Ayalon Prison, Israel’s Justice Ministry released a statement on Wednesday night announcing that the court’s gag order had been partially lifted.

Without naming Mr Zygier or identifying him as an Australian citizen, the statement said: “For security reasons, the prisoner was held under a pseudonym, but his family was notified of the arrest immediately. The prisoner was held by proxy of an arrest warrant issued by the court. The proceedings were overseen by senior officials in the Justice Ministry and he was duly represented in all the proceedings against him by attorneys Roi Belcher, Moshe Mazor and Boaz Ben-Zur.

“The prisoner’s legal rights were observed at all times, according to the law,” the statement said.

One of Israel’s most prominent human rights lawyer, Avigdor Feldman, told the Israeli news site ynet苏州美甲美睫培训: “I’m the last lawyer who saw him alive. They asked me to see him and a day after that he was gone.

“When I saw him, I saw no signs that he was going to kill himself. He sounded rational and he asked pertinent legal questions that I can’t expand on.”

The Justice Ministry’s statement said the prisoner was found dead in his cell two years ago and that Jude Daphna Blatman Kedrai – president of the Rishon LeZion Magistrate’s Court – ordered an inquiry into his death.

Six weeks ago, the investigation ruled the prisoner’s death a suicide and the judge recommended that the state pursue a negligence investigation in the matter, Ynet reported.

“National security prevents the release of any other details in this case,” the Justice Ministry statement reads. “These aspects of national security have been reviewed by the Central District Court, which decided to impose a comprehensive gag order on the case.

“The order was given at the request of the defence establishment, and was approved by the Justice Ministry.”

Human rights groups had long campaigned for details about the circumstances of Prisoner X’s arrest, detention and suicide to be made public.

The Association of Civil Rights In Israel sent a letter on Wednesday to the deputy attorney-general, Shai Nitzan, asking that he allow the disclosure of additional details in the case of Prisoner X, who is widely believed to be Mr Zygier.

“Was this indeed a suicide? Was there negligence in the supervision of the detainee? Has any official body taken responsibility? What steps have been taken to prevent the recurrence of similar events in the future?,” the letter from the association’s chief legal counsel, Dan Yakir, said.

It was of deep concern that “people could disappear and be held in prison in total secrecy and isolation”, Mr Yakir told Fairfax Media.

Fairfax Media spoke to Mr Zygier in Israel early 2010 after learning that ASIO was investigating at least three dual Australian-Israeli citizens who had emigrated to Israel in the past decade. ASIO would not comment on the case then or now.

In each case, the men had used the new passports to travel to Iran, Syria and Lebanon – all countries that do not recognise Israel and do not allow Israelis to enter. Israel also bans its citizens from travelling to these countries.

“I have never been to any of those countries that you say I have been to,” Mr Zygier told Fairfax Media at the time. “I am not involved in any kind of spying.”

* Support is available for anyone who may be distressed by calling Lifeline 131 114, Mensline 1300 789 978, Kids Helpline 1800 551 800

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HSV ClubSport R8.HSV stakeholders say the performance car market is alive and well in Australia after celebrating the release of the brand’s 75,000th vehicle locally.
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A blue HSV ClubSport that rolled off the production line in Claymore last month became the 75,000th vehicle built by Holden’s performance arm.  

The car is now headed for an HSV dealership in Fremantle, where the lucky buyer will receive a personalised letter from managing director, Phil Harding, authenticating the build number.

HSV marketing manager Damon Paull said the milestone reflected healthy interest in performance vehicles and bucked the trend of fewer large car sales domestically.  

“It’s really significant for our company, especially in the time we’ve done it – we’re really proud of it,” Mr Paull said.

“Obviously the large car segment has been in decline in recent years but we seem to have bucked that trend somewhat, which is pretty encouraging.

“In the last few years, our run rate has stayed relatively constant and I think what it shows is that we’ve got a solid core support-cum-owner base that are pretty passionate about our products.”

The milestone caps a solid 12 months for HSV. In 2012, the ClubSport outsold Holden’s SS-V Commodorewith 735 sales, while almost 700 Maloo utes were snapped up by Aussie buyers.

HSV also celebrated its 25-year anniversary in October last year.

The HSV range is expected to see significant changes when the new Holden VF Commodore arrives later this year.

In line with the changes associated with VF Commodore, the HSV range is expected to see the addition of a new supercharged V8 engine. That 6.2-litre powerplant produces significantly more grunt than anything else currently in the HSV range, with 410kW – an increase of 26 per cent over the current performance heroes, which offer 325kW.

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